SECOND DIVISION
While G.R. No. 67125 was pending, the Monetary Board
G.R. No. 156761
October 17, 2006
LADY LYDIA CORNISTA-DOMINGO,
Petitioners,
- versus -
NATIONAL LABOR RELATIONS
COMMISSION, Respondents.
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DECISION
GARCIA, J.:
By this petition for review on certiorari,[1] petitioners
seek the review and reversal of the consolidated
Decision[2] dated December 21, 2001 of the Court of
Appeals (CA) in CA-G.R. SP No. 51218, CA-G.R. SP No.
51219 and CA-G.R. SP No. 51220 declaring as null and
void the September 14, 1993 decision and the
November 22, 1993 resolution of the National Labor
Relations Commission (NLRC) and reinstating the
decision dated March 31, 1993 of Labor Arbiter Eduardo
J. Carpio. Likewise, assailed is the CA Resolution
of January 8, 2003, denying the petitioners motion for
reconsideration.
The ultimate facts material to the resolution of the case
are as follows:
On April 10, 1983, by virtue of Resolution No. 334 of the
Central Banks Monetary Board, the Philippine Veterans
Bank (Bank, hereafter) was placed under receivership.
In consequence, the Bank adopted a retrenchment and
reorganization program which was challenged before
this Court by the Philippine Veterans Bank Employees
Union (Union, hereafter) on the ground that the
program allegedly violated the security of tenure of the
Banks employees, in G.R. No. 67125 entitled Philippine
Veterans Bank Employees Union-NUBE v. Philippine
Veterans Bank.
issued Resolution No. 612, dated June 7, 1985, ordering
the liquidation of the Bank. The Monetary Board then
appointed a liquidator who, pursuant to the authority
vested by the same Board, terminated the employment
of all the employees of the Bank effective June 15, 1985.
Thereafter, the liquidator commenced payment of
separation pay and other benefits to the terminated
employees.
Although a number of the Bank employees accepted
their separation pay and other benefits and executed
quitclaims and releases therefor in favor of the Bank,
others chose to question their termination. Thus,
on September 25, 1985, the Unionfiled a supplemental
petition for prohibition with preliminary injunction in
G.R. No. 67125 opposing Monetary Board Resolution
No. 612.
On August 24, 1990, the Court promulgated a
consolidated[3] en banc Decision[4] in G.R. No. 67125
upholding the authority of the Monetary Board to place
the respondent Bank under liquidation as well as the
legality of the termination of all the Banks employees,
including the members of the Union. The Court also
rejected the dismissed employees claim for back wages
as it held that they were not illegally dismissed but
lawfully separated as a result of the Banks liquidation
upon order of the Monetary Board.
On January 2, 1992, Congress enacted Republic Act
(R.A.) No. 7169,[5] authorizing the Central Bank to
reopen the Bank.
To facilitate the implementation of R.A. No. 7169, a
Rehabilitation Committee was created by the Monetary
Board. The committee thus created was given the
power to select and to organize an initial manning force
headed by a management team to be staffed by a
trained workforce. Hiring preference was given the
veterans and their dependents, other qualifications
being equal.[6]

At this juncture, several employees of the Bank initiated
a series of cases claiming that the enactment of R.A. No.
7169 nullified Monetary Board Resolution No. 612
placing respondent Bank under liquidation and, in
effect, also nullified the liquidators termination of the
Banks employees.
On January 20, 1992, the Union filed a petition with the
Secretary of Labor and Employment charging the Bank
with unfair labor practices and praying that the
Rehabilitation Committee be directed to cease and
desist from screening and hiring new employees and to
immediately reinstate the Banks former
employees. The petition, docketed as NLRC NCR No. 00-
02426-92, also sought payment of the accrued
collective bargaining agreement benefits and back
wages of the employees from the time they were
terminated from employment in 1985 up to the time of
their actual reinstatement. Several other petitions
seeking essentially the same relief were consolidated
with NLRC NCR No. 00-02426-92.
In the meantime, on August 3, 1992, the respondent
Bank resumed operations.
On March 31, 1993, Labor Arbiter Eduardo J. Carpio
rendered a decision[7] dismissing NLRC NCR No. 00-
02426-92 and all cases consolidated therewith for lack
of merit. The dispositive portion of said decision reads:
Wherefore, premises considered,
the claim of the Union for reinstatement
of the individual complainants it
represents as well as the claims for
payment of backwages, other benefits
and damages are hereby, as they should
be, dismissed for lack of merit.
The charge for unfair labor
practice filed by the Union against the
respondent Bank is likewise dismissed
for lack of factual and legal basis.
SO ORDERED.
In time, the Union appealed the Labor Arbiters decision
to the NLRC proper.
On September 14, 1993, the NLRC rendered a
Decision[8] reversing and setting aside that of the Labor
Arbiter. Additionally, the NLRC directed the immediate
reinstatement of all Union members subject to the
operational requirements of the Bank which it likewise
ordered to cease and desist from further hiring new
employees. More specifically, the fallo of the NLRC
decision reads:
ACCORDINGLY, the decision of
the Labor Arbiter is hereby SET ASIDE
and a new one entered, finding the claim
for reinstatement of the appellant to be
legal and proper. Accordingly, Appellee
bank therefore is hereby ordered to
immediately reinstate all members of
the appellant union inclusive of those
who have executed their quitclaims and
release and all the rest of the PVBEU
members, who will signify their intention
to be reinstated from the date of this
Decision. In the meanwhile, however,
that the bank has not fully reopened and
activated all its operational
departments, offices and branches, the
employees reinstatement shall be
conditioned to actual personnel
requirement of the department branch
office to be reopened, for which reason,
preference shall be given to employees
formerly occupying the position being
reinstated or reactivated or at the
prerogative and discretion of
management, to any position in the
office provided the latter is of equivalent
rank and at least has the same rate of
pay.
For this purpose, appellee is
hereby ordered to temporarily cease and
desist from further hiring new
employees which might affect the full
compliance to this Decision. The claim
for backwages and other CBA benefits
are hereby denied for lack merit.
The claim for unfair labor practice
is also hereby denied for lack of merit.
SO ORDERED.
 terms and conditions of the Compromise
On October 1, 1993, the Bank sought a reconsideration
Agreement.
of the said decision. Six days later, or on October 7,
1993, the Union also moved for its partial SO ORDERED.

reconsideration. Both motions, however, were denied

by the NLRC in its resolution of November 22, 1993.
A number of the employees, in separate appeals to the
NLRC, contested the foregoing Order of the Labor
Therefrom, the Bank and the Union interposed
Arbiter. They argued that the compromise agreement is
separate petitions to this Court.
contrary to law and jurisprudence.

The Bank, in its petition, docketed as G.R. No.

On February 29, 1996, the Bank and the Union filed
113423,[9] sought to nullify the NLRC decision
before the Court their Joint Motion to Dismiss Petition
of September 14, 1993, reinstating the members of
in G.R. Cases No. 113423 and 115421.
the Union, and its Resolution of November 22, 1993,
denying the Banks motion for reconsideration. While in
In a Resolution dated June 17, 1996, the Court denied
its petition, docketed as G.R. No.
said Joint Motion. In the same resolution, the Court
115421,[10] the Union sought a modification of the same
gave due course to an Urgent Motion for Leave to
decision so as to include the award of backwages.
Intervene and to Oppose Motion to Dismiss Petition
filed by the bank employees led by a certain Nestor
On January 26, 1996, while G.R. Nos. 113423 and
Garcia and the Urgent Motion With Leave of Court for
115421 were pending before the Court, the Union,
Individual Union Members Petitioners to Intervene and
through its duly authorized officers, and the Bank
to Participate in Their Individual Capacities And To
entered into a Compromise Agreement[11] for the
Oppose Joint Motion to Dismiss Petition filed by the
amicable settlement of all other cases and claims then
herein petitioners Lady Lydia Domingo, et al.
pending with the NLRC and/or other tribunals arising
from the employment of the individual complainants
On October 2, 1996, the NLRC decided the
with the Bank.
aforementioned separate appeals from the Labor

A substantial majority of the members of Arbiters Order of February 16, 1996 approving the

the Union ratified the compromise agreement. compromise agreement. The NLRC ruled that those who
received and acknowledged receipt of the first

On February 16, 1996, Labor Arbiter Eduardo J. Carpio payment, as agreed upon in the questioned

approved the compromise agreement and issued an Compromise Agreement, and who executed the

Order[12]which reads: corresponding Quitclaim, Waiver and Release were

bound by the same Compromise Agreement.
WHEREFORE, finding the terms The decision dispositively reads:
and conditions set forth in the
Compromise Agreement to be not
WHEREFORE, in the interest of
contrary to law, morals and public policy,
substantial justice and fair play, the
the same is hereby approved and
order appealed from is hereby partially
considered as in complete and full
vacated and Set Aside in that:
satisfaction of the Decision in the above-
entitled case dated September 14, 1993.
a) For those union members who
received and acknowledged receipt of
The parties are hereby enjoined
the first payment as agreed upon in the
to comply strictly and faithfully with the
Compromise Agreement dated January
 26, 1996 and who executed the
corresponding Quitclaim, Waiver and
Release will be bound by the said
Compromise Agreement which was
made the basis of the Order dated
February 16, 1996 appealed from and
they shall continue to receive the money
due them on the second and third
payments due on December 15, 1996
and December 15, 1997, respectively.
b) For those union members who
signified their opposition and those who
are similarly situated who did not receive
and acknowledge receipt of the money,
let the case be remanded to the
Arbitration Branch of origin for further
proceedings. The Labor Arbiter so
designated to hear is hereby ordered to
proceed with dispatch so as not to
prejudice the parties as the disposition
hereof has been duly delayed.
SO ORDERED.
Separate petitions were then filed with the Court by the
Bank, the Union and the petitioners. The Bank assailed
the reinstatement of union members while
the Union questioned the lack of award for
backwages. For their part, the petitioners questioned
the validity of the compromise agreement.
On December 7, 1998, the Court issued a Resolution
referring the three aforesaid petitions to the CA for
appropriate action and disposition, pursuant to St.
Martin Funeral Homes v. NLRC.[13] In the CA, the Banks
petition, PVB v. NLRC, et al., was docketed as CA-G.R. SP
No. 51218, that of the Union, PVBEU-NUBE v. NLRC, et
al., was docketed as CA-G.R. SP No. 51219, and that of
herein petitioners Lady Lydia Cornista Domingo, et al. v.
NLRC, et al., was docketed as CA-G.R. SP No. 51220. The
three (3) petitions were thereafter consolidated.
On December 21, 2001, the CA rendered the herein
challenged consolidated decision declaring that the
NLRC gravely abused its discretion in ordering the
reinstatement of the union members and accordingly
declared null and void its September 14, 1993 decision
and the November 22, 1993 resolution, and instead
reiterated the March 31, 1993 decision of the Labor
Arbiter, to wit:
PREMISES CONSIDERED, the assailed
NLRC decision dated September 14,
1993 as well as its Resolution
dated November 22, 1993 (CA-G.R. SP
No. 51218) are both declared NULL and
VOID and SET ASIDE. The Decision
dated March 31, 1993 of the Labor
Arbiter Eduardo J. Carpio is hereby
ordered REINSTATED.
Accordingly, the other two (2) petitions,
CA-G.R. SP No. 51219 and CA-G.R. SP No.
51220 are hereby DISMISSED for lack of
merit.
SO ORDERED.
Partly says the CA in its decision:
1. The Supreme Court said in G.R. No.
67125 (189 SCRA 14) that the PVB
employees were not illegally dismissed
but lawfully separated. This is a
pronouncement, as categorical as can
be, that the employment relationship
between the Bank and the separated
employees had definitely ceased to exist
as of that time;
xxx xxx xxxx
4. It is a well-settled doctrine that
reinstatement is proper only in cases of
illegal dismissal. The pronouncement of
the Supreme Court that the PVB
employees were not illegally dismissed
forecloses any right of reinstatement
under any circumstance.
While the PVB employees concerned
should be given priority in hiring, they
cannot demand it as a matter of right.
xxx xxx xxx
Evidently, Domingo, et al. ratified the
Compromise Agreement and even
voluntarily received the first payment
under that agreement, executing the
corresponding Quitclaim, Waiver and
Release in the process. Having done that,
they are deemed bound by the
Compromise Agreement under the
previously discussed principle of res
judicata and/or estoppel.
xxx xxx xxx
 rehabilitation affect the Courts pronouncement
in Philippine Veterans Bank Employees Union-NUBE v.
Petitioners are now before the Court via the present
Philippine Veterans Bank[15] that the actions of the
recourse essentially arguing that the CA committed
Monetary Board and its duly appointed liquidator were
reversible error in foreclosing their right to be
valid and that the former employees claim for back
reinstated to their former employment with the Bank
wages must be rejected as they were lawfully
upon its rehabilitation and in upholding the validity of
separated. Reinstatement is a relief accorded only to an
the Compromise Agreement entered into by the Bank
employee who was illegally dismissed.[16]
and the Union.

To reiterate, the forcible closure of the Bank by

Petitioners argue that the passage of R.A. No.
operation of law permanently severed the employer-
7169,[14] which reopened and rehabilitated the Bank,
employee relationship between it and its employees
gave them the right to be reinstated and entitled them
when it ceased operations from April 10,
to the payment of back wages and other benefits. They
1983 to August 3, 1992. Thus, the claim for
call the Courts attention to Congress Resolution No.
reinstatement and payment of back wages and other
1104 expressing the sentiments of some congressmen
benefits, having no leg to stand on, must necessarily fall.
to give preference to veterans and their dependents in
the employment with the Bank. This resolution,
Whilst House Resolution No. 1104 expressed
according to petitioners, strengthens their claim for
sentiments of some congressmen that preferential right
reinstatement.
to employment be given to veterans and their
dependents under Section 7(b) of R.A. No. 7169,
We are not persuaded.
without more, such sentiments did not operate as a
compulsion to the newly opened Bank to accept an
As we see it, upon implementation of Monetary Board
employee earlier separated from work as a result of its
Resolution No. 612 and prior to the passage of R.A. No.
closure. If at all, such sentiments only provide that all
7169, the Bank ceased to exist. Its subsequent
things being equal, preference shall be given to veterans
rehabilitation was not an ordinary rehabilitation. R.A.
and their dependents in the hiring of new employees.
No. 7169 had to be passed as a legislative fiat to breathe
While the employees concerned should be given
life into the Bank. While it is true that the Bank used its
priority in hiring, they cannot demand it as a matter of
old name, a new law had to be enacted to restructure
right.
its outstanding liabilities. As it is, the Banks present state
of finances, the enormous cost of backwages and other
Verily, the clear wordings of Section 7 of R.A. No. 7169
benefits that have to be paid its employees seeking to
gave the rehabilitation committee created thereunder a
be reinstated would surely put an end to the economic
free hand in the selection and appointment of the
viability of the Bank.
Banks new employees. We quote Section 7 of the law:

The enactment of R.A. No. 7169 did not nullify

Sec. 7. Rehabilitation Committee.
Monetary Board Resolution No. 612 which earlier To facilitate the implementation of the
provisions this Act, there is hereby
placed the Bank under liquidation and caused the
created a rehabilitation committee
termination of employment of the petitioners. The which shall have a term of three (3)
Banks subsequent rehabilitation did not, by any test of months from the date of the approval of
this Act composed of the following: the
reason, revive what was already a dead relationship Executive Secretary, as Chairman, and
between the petitioners and the Bank. Neither did such the Administrator of the Philippine
 Veterans Affairs Office, the President of
in the hiring of new employees, it would have clearly
the Veterans Federation of the
Philippines, a representative from the stated this in R.A. No. 7169. The fact that it did not only
executive board of the Veterans shows its clear legislative intent to give the new bank a
Federation of the Philippines and a
representative from the Board of free hand in the selection and hiring of its new staff.
Trustees of the Veterans of World War II
or their respective representatives, as
members. We have to acknowledge the sad reality that giving in to
petitioners demand of wholesale reinstatement with
Specifically, the committee shall:
back wages, bonuses, holiday pay, vacation and sick
(a) Prepare, finalize and leave benefits would be a fatal blow to the very
submit a viable intention of R.A. No. 7169 to rehabilitate the Bank. The
rehabilitation plan
to the Monetary payment of such substantial amounts would definitely
Board of the further dissipate the remaining assets of the Bank and
Central Bank;
cripple its finances even as, at this point, the Bank is
(b) Select and organize an barely making a profit under the weight of its present
initial manning
liabilities, and ultimately make impossible its desired
force headed by a
management rehabilitation. This clearly contravenes the intent and
team to be spirit of R.A. No. 7169.
composed of
competent,
experienced and Petitioners fault the CA in upholding the validity of the
professional
managers who Compromise Agreement. They claim that said
must possess all agreement is not binding on employees who did not
qualifications and
ratify it and even to those who were allegedly tricked
none of the
disqualifications and/or deceived by the Union into accepting the first
provided under payment under the same agreement.
Central Bank rules
and
regulations. The The argument is utterly baseless. A labor unions
management
team shall be function is to represent its members. It can file an action
staffed by a or enter into compromise agreements on behalf of its
trained
members. Here, majority of the Banks employees
workforce: Provid
ed, That authorized the Union to enter into a compromise
preference shall
agreement with the Bank on their behalves. Union
be given to the
veterans and their members were bound by the resulting compromise
dependents, other agreement when they affixed their signatures thereon,
qualifications
being equal; thereby giving their individual assent thereto, and when
they accepted the benefits due them under that
agreement. As it is, the Compromise Agreement in
The mandate given the Banks rehabilitation committee
question detailed the amounts to be received by each
to select and organize an initial manning force shows
employee. Petitioners and other employees of the Bank
that the lawmakers recognize the fact that the new bank
knew exactly what they were ratifying when they
is entirely without any working force. Congress,
affixed their signatures in the said compromise
therefore, gave the Bank full authority and discretion to
agreement.
recruit and form a new staff. Had Congress intended
that separated employees be rehired and given priority
Further, respondent Union is a closed shop union. For
this reason, it was the only one with legal authority to
negotiate, transact, and enter into any agreement with
the Bank. The Compromise Agreement was ratified by
282 Union members representing a majority of its entire
529 membership. The ratification of the Compromise
Agreement by the majority of the Union members
necessarily binds the minority.
The general rule that the Labor Arbiter must be present
during the signing of the compromise agreement is not
immune to certain exceptions. Here, the submission of
the Compromise Agreement on joint motion of the
parties for approval by the Labor Arbiter cured
whatever defect the signing of the agreement in the
absence of the Labor Arbiter would have caused. So it is
that in Santiago v. De Guzman,[17] the Court ruled:
A compromise agreement
entered into by the parties not in the
presence of the Labor Arbiter before
whom the case is pending shall be
approved by him, if after confronting the
parties, particularly the complainants, he
is satisfied that they understand the
terms and conditions of the settlement
and that it was entered into freely and
voluntarily by them.
It is incumbent upon the Labor
Arbiter not only to persuade the parties
to settle amicably, but equally to ensure
the compromise agreement is a fair one
and that the same was forged freely,
voluntarily with full understanding of the
terms and conditions embodies therein
as well as the consequences thereof.
It is likewise noteworthy that as of March 31, 2004,
thirty (30) of the herein thirty-seven (37) petitioners
already received payment under the same Compromise
Agreement. The acceptance by said petitioners of the
benefits bars them from repudiating the
agreement. They cannot be allowed to adopt an
inconsistent position at the expense of the
Bank. Petitioners cannot belatedly reject or repudiate
their acts of accepting the monetary consideration
under the compromise agreement, to the prejudice of
the Bank.[18] We, thus, quote with approval the
following observation of the CA in its challenged
Decision of December 21, 2001:
As regards the third petition for
certiorari filed by Lady Lydia Cornista
Domingo, et. al. (CA-G.R. SP No. 51220),
the position taken by the petitioners is
that NLRC committed grave abuse of
discretion by: a) ordering petitioners
who received the first payment under
the Compromise Agreement to be bound
by it, and b) resolving to remand the case
to the Labor Arbiter for further
proceedings insofar as those who did not
receive payment are concerned.
Petitioners Domingo et. al. allege
that (a)s found out by the respondent
NLRC, the Compromise Agreement was
not entered into in the presence of the
labor Arbiter and it (NLRC) faulted the
latter in not calling the parties especially
the complainants, to a conference and
satisfy himself that they (complainants)
understand the terms and conditions of
the settlement; and that the agreement
was entered into freely and voluntarily
(Rollo of SP No. 51218-20, p. 886) as
called for under Section 2, Rule V of the
New Rules of Procedure of the NLRC.
Further, petitioners contend that
(h)ad the respondents NLRC and Labor
Arbiter Carpio followed the rules, they
would have found out that those who
received the first payment were only
tricked and deceived in(to) receiving the
payment; that had the respondents
Labor Arbiter and NLRC been more
circumspect in their solemn duties, they
should have required the respondent
union officers to present a special power
of attorney as required under Article
1878(3) of the Civil Code. (Ibid., pp. 886-
887).
We are not convinced.
Evidently, Domingo, et. al.
ratified the Compromise Agreement and
even voluntarily received the first
payment under that agreement,
executing the corresponding Quitclaim,
Waiver and Release in the
process. Having done that, they are
deemed bound by the Compromise
Agreement under the previously
 discussed principle of res judicata and/or
Records reveal that when the Bank offered termination
estoppel.
or separation pay to its remaining employees by way of
We find that the subsequent a compromise agreement, a great majority of them
decision of petitioners Domingo, et. al. to
repudiate the Compromise Agreement accepted the amount as justifiable settlement of their
was merely an afterthought, whatever claims.[21] Like these quitclaims and releases, there are
would be the reason for their
subsequent change of mind. Since they voluntary agreements which represent reasonable
had entered into a binding contract on settlements and are considered binding on the
their own volition and received benefits
parties.[22] Petitioners, therefore, cannot renege on the
therefrom, they are therefore estopped
from questioning the validity of said compromise agreement they entered into after
contract later on. Parenthetically, it is accepting benefits earlier simply because they may have
interesting to note that while the
petitioners try to impugn the felt that they committed a mistake in accepting their
Compromise Agreement that they termination/separation pay. As no proof was presented
themselves entered into, they have not
made any offer or effort to return the to show that the compromise agreement in dispute was
money they received as first payment entered into through fraud, misrepresentation or
under said agreement.
coercion, the same must be recognized as valid and
The other allegation of the binding upon all the 529 employees of the Bank. In fine,
petitioners that those who received the the petitioners and the other employees are estopped
first payment were only tricked and
deceived in(to) receiving the payment from questioning the validity of the Compromise
deserves scant consideration. Said Agreement.
petitioners are not only ordinary laborers
but mature, educated and intelligent In law, a compromise agreement, once approved, has
people with college degrees, and the effect of res judicata between the parties and
considering the size of their group, it is
should not be disturbed except for vices of consent,
unbelievable that they could have been
easily duped into doing something forgery, fraud, misrepresentation and coercion,[23] none
against their will and self- of which exists in this case. The Compromise Agreement
interest. Absent a showing that they
were indeed victims of trickery and between the Union and the Bank binds the minority
deception, outside of their own self- Union members.
serving affidavits, the petitioners
allegation does not hold water.
All told, the Court finds and so holds that the CA
committed no reversible error in rendering its
Here, the petitioners and other employees legally challenged decision of December 21, 2001 and
separated were in fact given termination or separation Resolution of January 8, 2003.
pay despite the staggering loss sustained by the
Bank. They were given a very good bargain in the IN VIEW WHEREOF, the instant petition is DENIED.
compromise agreement. They, therefore, have no
reason to complain. Without the subject compromise No pronouncement as to costs.
agreement, they would not have received any
separation pay in light of our ruling in State Investment SO ORDERED.
House, Inc. v. CA,[19] and North Davao Mining
Corporation v. NLRC,[20] where we held that in cases of
serious losses or financial reverses, the Labor Code does
not impose any obligation upon the employer to pay
separation benefits, for obvious reasons.
G.R. No. 158075 June 30, 2006
PHILIPPINE DIAMOND HOTEL AND RESORT, INC.
(MANILA DIAMOND HOTEL), Petitioner,
vs.
MANILA DIAMOND HOTEL EMPLOYEES
UNION, Respondent.
DECISION
CARPIO MORALES, J.:
The Court of Appeals, by the assailed decision of
November 21, 2002,1 declared the strike staged by
respondent, Manila Diamond Hotel Employee’s Union
(the union), illegal and its officers to have lost their
employment status. It ordered, however, among other
things, the reinstatement and payment of backwages to
its members.
On November 11, 1996, the union, which was registered
on August 19, 1996 before the Department of Labor and
Employment (DOLE),2 filed a Petition for Certification
Election3 before the DOLE-National Capital Region
(NCR) seeking certification as the exclusive bargaining
representative of its members.4
The DOLE-NCR denied the union’s petition as it failed to
comply with legal requirements, specifically Section 2,
Rule V, Book V of the Rules and Regulations
Implementing the Labor Code, and was seen to
fragment the employees of petitioner.5
On June 2, 1997, Francis Mendoza (Mendoza), one of
the Hotel’s outlet cashiers, was discovered to have
failed to remit to the Hotel the amount of P71,692.50 at
the end of his May 31, 1997 duty.6 On being directed to
explain such failure, Mendoza claimed that after
accomplishing his daily cash remittance report, the
union president Jose Leonardo B. Kimpo (Kimpo) also an
outlet cashier, who signed the same and dropped his
remittances.7
Kimpo, who was thus directed to explain why no
administrative sanction should be imposed on him for
violating the standard procedure for remitting cash
collections, informed that he was not aware of any such
procedure.
Mendoza was subsequently suspended for one week, it
being "the responsibility of the cashier
to personally drop-off his remittances in the presence
of a witness."8 In the meantime or on July 14, 1997,9 he
was re-assigned to the Hotel’s Cost Control
Department.10
Through its president Kimpo, the union later notified
petitioner of its intention to negotiate, by Notice to
Bargain,11 a Collective Bargaining Agreement (CBA) for
its members.
Acting on the notice, the Hotel, through its Human
Resource Development Manager Mary Anne
Mangalindan, advised the union that since it was not
certified by the DOLE as the exclusive bargaining agent,
it could not be recognized as such.12
The union clarified that it sought to bargain "for its
members only," and declared that "[the
Hotel’s] refusal to bargain[would prompt] the union to
engage in concerted activities to protect and assert its
rights under the Labor Code."13
By Notice14 to its members dated September 18, 1997,
the union announced that its executive officers as well
as its directors decided to go on strike in view of the
management’s refusal to bargain collectively, and thus
called for the taking of strike vote.
Petitioner thereupon issued a Final Reminder and
Warning15 to respondent against continuing
misinformation campaign and activities which confused
the Hotel employees and disturbed their work
performance.
The union went on to file a Notice of Strike16 on
September 29, 1997 with the National Conciliation and
Mediation Board (NCMB) due to unfair labor practice
(ULP) in that the Hotel refused to bargain with it and the
rank-and-file employees were being harassed and
prevented from joining it.17
Conciliation conferences were immediately conducted
by the NCMB on October 6, 13, and 20, 1997 during
which the union insisted on the adoption of a CBA for its
members.18
In the meantime, or on or about November 7, 1997,
Kimpo filed before the Arbitration Branch a complaint
for ULP against petitioner.19
More conferences took place between petitioner and
the union before the NCMB.
In the conference held on November 20, 1997, the
union demanded the holding of a consent election to
which the Hotel interposed no objection, provided the
union followed the procedure under the law. Petitioner
then requested that the election be held in January
1998.20
The parties agreed to meet again on December 1,
1997.21
In the early morning of November 29, 1997, however,
the union suddenly went on strike. The following day,
the National Union of Workers in the Hotel, Restaurant
and Allied Industries (NUWHRAIN) joined the strike and
openly extended its support to the union.22 At about
this time, Hotel supervisors Vicente T. Agustin (Agustin)
and Rowena Junio (Rowena) failed to report for work
and were, along with another supervisor, Mary Grace U.
de Leon (Mary Grace), seen participating in and
supporting the strike.23
Petitioner thus filed on December 1, 1997 a petition for
injunction before the National Labor Relations
Commission (NLRC) to enjoin further commission of
illegal acts by the strikers.24
Mary Grace, who was directed to explain her
participation in the strike, alleged that she was merely
trying "to pacify the group."25 Petitioner, finding her
explanation "arrogant" and unsatisfactory as her active
participation in the strike was confirmed by an eye
witness, terminated her services, by communication
sent on December 9, 1997, drawing her to file a
complaint for illegal dismissal against
26
petitioner. Agustin, who was also terminated, filed a
similar complaint against the Hotel.27
An NLRC representative who conducted an ocular
inspection of the Hotel premises confirmed in his Report
that the strikers obstructed the free ingress to and
egress from the Hotel.28
By Order of December 8, 1998, the NLRC thus issued a
Temporary Restraining Order (TRO) directing the
strikers to immediately "cease and desist from
obstructing the free ingress and egress from the Hotel
premises."29
The service upon the strikers of the TRO
notwithstanding, they refused to dismantle the tent
they put up at the employee’s entrance to the Hotel,
prompting the Hotel’s security guards to, on December
10, 1997, dismantle the same during which the strikers
as well as the guards were hit by rocks coming from the
direction of the construction site at the nearby Land
Bank Plaza, resulting to physical injuries to some of
them.30
Despite the efforts of the NCMB, which was joined by
the Department of Tourism, to conciliate the parties,
the same proved futile.
On January 14, 1998, Rowena, whose services were
terminated, also filed a complaint against petitioner for
illegal dismissal.
For its part, petitioner filed on January 28, 1998 a
petition to declare the strike illegal.
As then DOLE Secretary Cresenciano Trajano’s attempts
to conciliate the parties failed, he, acting on the union’s
Petition for Assumption of Jurisdiction, issued on April
15, 1998 an order certifying the dispute to the NLRC for
compulsory arbitration, and directing the striking
officers and members to return to work within 24 hours
and the Hotel to accept them back under the same
terms and conditions prevailing before the strike.31
On petitioner’s motion for reconsideration, then DOLE
Acting Secretary Jose Español, Jr., by Order of April 30,
1998, modified the April 15, 1998 Order of Secretary
Trajano by directing the Hotel to
just reinstate the strikers to itspayroll, and ordering
that all cases between the parties arising out of the
labor disputes which were pending before different
Labor Arbiters be consolidated with the case earlier
certified to the NLRC for compulsory arbitration.32 It
appears that the said order of the Acting Secretary
directing the reinstatement of the strikers to the Hotel’s
payroll was carried out.
By Resolution of November 19, 1999, the NLRC declared
that the strike was illegal and that the
union officers and members who were reinstated to
the Hotel’s payroll were deemed to have lost their
employment status. And it dismissed the complaints
filed by Mary Grace, Agustin, and Rowena as well as the
union’s complaint for ULP.33
On appeal by the union, the Court of Appeals affirmed
the NLRC Resolution dismissing the complaints of Mary
Grace, Agustin and Rowena and of the union. It
modified the NLRC Resolution, however, by ordering
the reinstatement with back wages of union members.
Thus it disposed:
WHEREFORE, in view of the foregoing, the petition is
granted only insofar as the dismissal of the union
members is concerned. Consequently, the ruling of the
public respondent NLRC to the effect that the union
members lost their employment status with the Hotel is
hereby reversed and set aside. Private respondent Hotel
is hereby ordered
to immediately reinstate the members with backwage
s from the time they were terminated. The Court finds
no grave abuse of discretion on the part of the NLRC,
and therefore affirms the ruling of the NLRC as follows:
(1) that the strike is illegal;
(2) that the union officers lost their employment
status when they formed the illegal strike; and
(3) That the dismissal of Ms. Mary Grace U. de Leon,
Vicente C. Agustin and Rowena Junio is valid.
SO ORDERED.34 (Underscoring supplied)
In so ruling, the appellate court noted that petitioner
failed to establish by convincing and substantial
evidence that the union members who participated in
the illegal strike committed illegal acts, and although
petitioner presented photographs of the striking
employees, the strikers who allegedly committed illegal
acts were not named or identified.35
Hence, the present appeal by petitioner faulting the
appellate court:
I As did the NLRC and the Court of Appeals, this Court
IN ORDERING THE REINSTATEMENT AND THE PAYMENT
OF BACKWAGES OF THE INDIVIDUAL
RESPONDENTS WHOSE EMPLOYMENT STATUS WERE
PREVIOUSLY DECLARED TO HAVE BEEN LOST BY THE
NATIONAL LABOR RELATIONS COMMISSION, THE
COURT OF APPEALS HAS IN EFFECT DECIDED A
QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW
WHICH HAS NOT YET BEFORE BEEN DETERMINED BY
THIS HONORABLE COURT, [AND]
II
IN [THUS] DEVIAT[ING] FROM ESTABLISHED DOCTRINES
LONG SETTLED BY CONSISTENT JURISPRUDENCE
ENUNCIATED BY THIS HONORABLE
36
COURT. (Underscoring supplied)
Petitioner argues that:
IT WAS THE NLRC WHICH DECLARED THAT THE UNION
OFFICERS AND MEMBERS HAVE LOST THEIR
EMPLOYMENT AS A CONSEQUENCE OF THEIR STRIKE
WHICH IT ALSO DECLARED AND FOUND TO BE ILLEGAL.
SUCH BEING THE CASE, IN THE EVENT THE NLRC’s
DECISION IS NOT UPHELD AS FAR AS THE
UNION MEMBERS’ LOSING THEIR EMPLOYMENT IS
CONCERNED, PETITIONER SHOULD NOT BE HELD LIABLE
TO PAY THEIR BACKWAGES.
UNDER THE CIRCUMSTANCES, NEITHER CAN
PETITIONER BE VALIDLY DIRECTED TO REINSTATE
THEM.37(Emphasis and underscoring supplied)
Respondents, upon the other hand, pray for the
dismissal of the petition, they arguing that:
A. Respondent [union members] must be reinstated and
paid full backwages because their strike was legal and
done in good faith.
B. Even assuming arguendo, that the strike started as an
illegal strike, the union’s unconditional offer to return to
work, coupled with the hotel’s unfair labor practices
during the strike, transformed the strike into a legal
strike.
C. Even assuming arguendo, that the strike is illegal, the
reinstatement of the strikers and the payment of full
backwages is consistent with the ruling in Telefunken
Semiconductors Employees Union-FFW v. Secretary,
283 SCRA 145 which states that the individual liability of
each of the union officers and members determines
whether or not strikers should be reinstated.
D. Even assuming arguendo, that the strike is illegal,
Article 264 of the Labor Code directs the reinstatement
of and payment of full backwages to the
respondents.38 (Underscoring supplied)
finds the strike illegal.
Article 255 of the Labor Code provides:
ART. 255. EXCLUSIVE BARGAINING REPRESENTATION
AND WORKERS’ PARTICIPATION IN POLICY AND
DECISION-MAKING
The labor organization designated or selected by the
majority of the employees in an appropriate collective
bargaining unit shall be the exclusive representative of
the employees in such unit for the purpose of collective
bargaining. However, an individual employee or group
of employees shall have the right at any time to present
grievances to their employer.
Any provision of law to the contrary notwithstanding,
workers shall have the right, subject to such rules and
regulations as the Secretary of Labor and Employment
may promulgate, to participate in policy and decision-
making process of the establishment where they are
employed insofar as said processes will directly affect
their rights, benefits and welfare. For this purpose,
workers and employers may form labor-management
councils: Provided, That the representatives of the
workers in such labor management councils shall be
elected by at least the majority of all employees in said
establishment. (Emphasis and underscoring supplied)
As the immediately quoted provision declares, only the
labor organization designated or selected by the
majority of the employees in an appropriate collective
bargaining unit is the exclusive representative of the
employees in such unit for the purpose of collective
bargaining.
The union (hereafter referred to as respondent) is
admittedly not the exclusive representative of the
majority of the employees of petitioner, hence, it could
not demand from petitioner the right to bargain
collectively in their behalf.
Respondent insists, however, that it could validly
bargain in behalf of "its members," relying on Article
242 of the Labor Code.39 Respondent’s reliance on said
article, a general provision on the rights of legitimate
labor organizations, is misplaced, for not every
legitimate labor organization possesses the rights
mentioned therein.40Article 242 (a) must be read in
relation to above-quoted Article 255.
On respondent’s contention that it was bargaining in
behalf only of its members, the appellate court,
affirming the NLRC’s observation that the same would
only "fragment the employees" of petitioner,41 held
that "what [respondent] will be achieving is to divide
the employees, more particularly, the rank-and-file
employees of [petitioner] . . . the other workers who
are not members are at a serious disadvantage, because
if the same shall be allowed, employees who are non-
union members will be economically impaired and will
not be able to negotiate their terms and conditions of
work, thus defeating the very essence and reason of
collective bargaining, which is an effective safeguard
against the evil schemes of employers in terms and
conditions of work."42 This Court finds the observation
well-taken.
It bears noting that the goal of the DOLE is geered
towards "a single employer wide unit which is more to
the broader and greater benefit of the employees
working force."43 The philosophy is to avoid
fragmentation of the bargaining unit so as to strengthen
the employees’ bargaining power with the
management. To veer away from such goal would be
contrary, inimical and repugnant to the objectives of a
strong and dynamic unionism.44
Petitioner’s refusal to bargain then with respondent can
not be considered a ULP to justify the staging of the
strike.
The second ground alleged by respondent to justify the
staging of the strike – that petitioner prevented or
intimidated some workers from joining the union
before, during or after the strike – was correctly
discredited by the appellate court in this wise:
. . . a careful study of the allegations of petitioners in
their petition reveals that it
contained general allegations that the Management of
the Hotel committed unfair labor practices by refusing
to bargain with the union and by alleged acts of union
interference, coercion and discrimination tantamount
to union-busting. Since it is the union who alleges that
unfair labor practices were committed by the Hotel, the
burden of proof is on the union to prove its allegations
by substantial evidence.
Moreover, while petitioner Union continues to accuse
the private respondent Hotel of violating their
constitutional right to organize by busting the Union,
this Court cannot overlook the events that transpired
prior to the strike that the Union staged on November
29, 1997. It is beyond argument that a conciliatory
meeting was still scheduled to be held on December 1,
1997 before the NCMB. In this conciliatory meeting,
petitioner Union could have substantiated and
presented additional evidences. Thus, as held by the
Supreme Court in the case of Tiu vs. National Labor
Relations Commission:
"The Court is not unmindful of this rule, but in the case
at bar the facts and the evidence did not establish
events [sic] least a rational basis why the union would
[wield] a strike based on alleged unfair labor practices it
did not even bother to substantiate during the
conciliation proceedings. 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."
It is also evident from the records of the instant petition,
specifically from the Notice of Strike, that their principal
ground for the strike was the "refusal of the Hotel
Management to bargain collectively with the Union for
the benefit of the latter’s members." In the instant case,
it is not disputed that the petitioner UNION is not a
certified bargaining unit to negotiate a collective
bargaining agreement (CBA) with private respondent
Hotel . . . 45 (Underscoring supplied)
On top of the foregoing observations, this Court notes
that respondent violated Article 264 which proscribes
the staging of a strike on the ground of ULP during the
pendency of cases involving the same grounds for the
strike.
Further, the photographs taken during the strike, as well
as the Ocular Inspection Report of the NLRC
representative, show that the strikers, with the use of
ropes and footed placards, blockaded the driveway to
the Hotel’s points of entrance and exit,46 making it
burdensome for guests and prospective guests to enter
the Hotel, thus violating Article 264 (e) of the Labor
Code which provides:
ART. 264 (e) No person engaged in picketing shall
commit any act of violence, coercion or intimidation or
obstruct the free ingress to or egress from the
employer’s premises for lawful purposes, or obstruct
public thoroughfares. (Emphasis supplied)
Furthermore, the photographs indicate that indeed the
strikers held noise barrage47 and threatened guests with
bodily harm.48
Finally, the police reports mention about the strikers’
exploding of firecrackers, causing the guests to panic
and transfer to other areas of the Hotel.49
It is doctrinal that the exercise of the right of private
sector employees to strike is not absolute. Thus Section
3 of Article XIII of the Constitution, provides:
SECTION 3. x x x
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. They shall be entitled to
security of tenure, humane conditions of work, and a
living wage. They shall also participate in policy and
decision-making processes affecting their rights and
benefits as may be provided by law. (Emphasis and
underscoring supplied)
Even if the purpose of a strike is valid, the strike may still
be held illegal where the means employed are illegal.
Thus, the employment of violence, intimidation,
restraint or coercion in carrying out concerted activities
which are injurious to the rights to property renders a
strike illegal. And so is picketing or the obstruction to
the free use of property or the comfortable enjoyment
of life or property, when accompanied by intimidation,
threats, violence, and coercion as to constitute
nuisance.50
As the appellate court correctly held, the union officers
should be dismissed for staging and participating in the
illegal strike, following paragraph 3, Article 264(a) of the
Labor Code which provides that ". . .[a]ny union officer
who knowingly participates in an illegal strike and any
worker or union officer who knowingly participates in
the commission of illegal acts during strike may be
declared to have lost his employment status . . ."
An ordinary striking worker cannot, thus be dismissed
for mere participation in an illegal strike. There must be
proof that he committed illegal acts during a strike,
unlike a union officer who may be dismissed by mere
knowingly participating in an illegal strike and/or
committing an illegal act during a strike.51
The appellate court found no convincing and substantial
proof, however, that the strikers-members of
respondent who participated in the illegal strike
committed illegal acts.
In the present case, private respondent Hotel failed to
established [sic] by convincing and substantial evidence
that these union members who participated in the
illegal strike committed illegal acts. Consequently, they
cannot be terminated from service for their
participation in an illegal strike. Moreover, private
respondent Hotel presented as evidence photographs
of the striking employees, the question that comes to
our mind is: why were these strikers who allegedly
participated in illegal acts not identified or named?
Instead the arbitral tribunal found it worthy of credence
to summarily dismiss all the union members without
them being named or identified . . . 52
This Court finds otherwise. As reflected above, the
photographs show that some of the workers-strikers
who joined the strike indeed committed illegal acts –
blocking the free ingress to and egress from the Hotel,
holding noise barrage, threatening guests, and the like.
The strikers were, in a list53 attached to petitioner’s
Position Paper54 filed with the NLRC, named.
The list failed to specifically identify the ones who
actually committed illegal acts, however. Such being the
case, a remand of the case to the Labor Arbiter, through
the NLRC, is in order for the purpose only of
determining the respective liabilities of the strikers
listed by petitioner. Those proven to have committed
illegal acts during the course of the strike are deemed
to have lost their employment, unless they have been
readmitted by the Hotel, whereas those not clearly
shown to have committed illegal acts should be
reinstated.
Whether those ordered reinstated are entitled to
backwages is, however, another matter.
For the general rule is that backwages shall not be
awarded in an economic strike on the principle that "a
fair day’s wage" accrues only for a "fair day’s
labor."55 Even in cases of ULP strikes, award of
backwages rests on the court’s discretion and only in
exceptional instances.56
Thus, J.P. Heilbronn Co. v. National Labor
Union,57 instructs:
When in case of strikes, and according to the C[ourt of]
I[ndustrial] R[elations] even if the strike is legal, strikers
may not collect their wages during the days they did not
go to work, for the same reasons if not more, laborers
who voluntarily absent themselves from work to attend
the hearing of a case in which they seek to prove and
establish their demands against the company, the
legality and propriety of which demands is not yet
known, should lose their pay during the period of such
absence from work. The age-old rule governing the
relation between labor and capital or management and
employee is that of a "fair day’s wage for a fair day’s
labor." If there is no work performed by the employee
there can be no wage or pay, unless of course, the
laborer was able, willing and ready to work but was
illegally locked out, dismissed or suspended. It is hardly
fair or just for an employee or laborer to fight or litigate
against his employer on the employer’s time. (Emphasis
and underscoring supplied)
This Court must thus hearken to its policy that "when
employees voluntarily go on strike, even if in protest
against unfair labor practices," no backwages during the
strike is awarded.
In Cromwell Commercial Employees and Laborers Union
(PTUC) v. Court of Industrial Relations,58 this Court made
a distinction between two types of employees involved
in a ULP: those who are discriminatorily dismissed for
union activities, and those who voluntarily go on strike
even if it is in protest of an ULP. Discriminatorily
dismissed employees were ordered entitled to backpay
from the date of the act of discrimination, that is, from
the day of their discharge, whereas employees who
struck as a voluntary act of protest against what they
considered a ULP of their employer were held generally
not entitled to backpay.59
Jurisprudential law, however, recognizes several
exceptions to the "no backwages rule," to wit: when the
employees were illegally locked to thus compel them to
stage a strike;60 when the employer is guilty of the
grossest form of ULP;61 when the employer committed ELECTROMAT G. R. No. 172699
discrimination in the rehiring of strikers refusing to MANUFACTURING and
readmit those against whom there were pending RECORDING
criminal cases while admitting nonstrikers who were CORPORATION,
Petitioner,
also criminally charged in court;62 or when the workers
who staged a voluntary ULP strike offered to return to
- versus - Present:
work unconditionally but the employer refused to
reinstate them.63 Not any of these or analogous CARPIO, J.,
instances is, however, present in the instant case. Chairperson,
LEONARDO-DE CASTRO,*
Respondent urges this Court to apply the exceptional
HON. CIRIACO BRION,
rule enunciated in Philippine Marine Officers’ Guild v.
LAGUNZAD, in his capacity PERALTA,** and
Compañia Maritima64 and similar cases where the
as Regional Director, PEREZ, JJ.
employees unconditionally offered to return to work, it National Capital Region,
arguing that there was such an offer on its part to return Department of Labor and Promulgated:
to work but the Hotel screened the returning strikers Employment; and HON.
and refused to readmit those whom it found to have HANS LEO J. CACDAC, in July 27, 2011
perpetrated prohibited acts during the strike. his capacity as Director of
Bureau of Labor Relations,
It must be stressed, however, that for the exception Department of Labor and
in Philippine Marine Officers’ Guild to apply, it is Employment,
required that the strike must be legal.65 Public Respondents.
Reinstatement without backwages of striking members
NAGKAKAISANG
of respondent who did not commit illegal acts would
SAMAHAN NG
thus suffice under the circumstances of the case. If
MANGGAGAWA NG
reinstatement is no longer possible, given the lapse of ELECTROMAT-WASTO,
considerable time from the occurrence of the strike, the Private Respondent.
award of separation pay of one (1) month salary for x-------------------------------------------------------------------------
each year of service, in lieu of reinstatement, is in ---------------x
order.66
WHEREFORE, the Decision dated November 21, 2002 of
DECISION
the Court of Appeals is, in light of the foregoing
ratiocinations, AFFIRMED with MODIFICATION in that BRION, J.:
only those members of the union who did not commit
illegal acts during the course of the illegal strike should We resolve the present petition for review
be reinstated but without backwages. The case is, on certiorari[1] assailing the decision[2] and the
therefore, REMANDED to the Labor Arbiter, through the [3]
resolution of the Court of Appeals (CA) dated February
NLRC, which is hereby directed to, with dispatch,
3, 2006 and May 11, 2006, respectively, rendered in CA
identify said members and to thereafter order
G.R. SP No. 83847.
petitioner to reinstate them, without backwages or, in
the alternative, if reinstatement is no longer feasible,
that they be given separation pay at the rate of One (1) The Antecedents
Month pay for every year of service.
SO ORDERED. The private respondent Nagkakaisang Samahan ng
Manggagawa ng Electromat-Wasto (union), a charter
SECOND DIVISION
affiliate of the Workers Advocates for Struggle,
Transformation and Organization (WASTO), applied for
registration with the Bureau of Labor Relations (BLR).
Supporting the application were the following
documents: (1) copies of its ratified constitution and by-
laws (CBL); (2) minutes of the CBLs adoption and
ratification; (3) minutes of the organizational meetings;
(4) names and addresses of the union officers; (5) list of
union members; (6) list of rank-and-file employees in
the company; (7) certification of non-existence of a
collective bargaining agreement (CBA) in the company;
(8) resolution of affiliation with WASTO, a labor
federation; (9) WASTOs resolution of acceptance; (10)
Charter Certificate; and (11) Verification under oath.
The BLR thereafter issued the union a Certification of
Creation of Local Chapter (equivalent to the certificate
of registration of an independent union), pursuant to
Department Order No. (D.O.) 40-03.[4]
On October 1, 2003, the petitioner Electromat
Manufacturing and Recording Corporation (company)
filed a petition for cancellation of the unions
registration certificate, for the unions failure to comply
with Article 234 of the Labor Code. It argued that D.O.
40-03 is an unconstitutional diminution of the Labor
Codes union registration requirements under Article
234.
On November 27, 2003, Acting Director Ciriaco A.
Lagunzad of the Department of Labor and Employment
(DOLE)-National Capital Region dismissed the
petition.[5]
In the appeal by the company, BLR Director Hans Leo J.
Cacdac affirmed the dismissal.[6] The company
thereafter sought relief from the CA through a petition
for certiorari, contending that the BLR committed grave
abuse of discretion in affirming the unions registration
despite its non-compliance with the requirements for
registration under Article 234 of the Labor Code. It
assailed the validity of D.O. 40-03 which amended the
rules of Book V (Labor Relations) of the Labor Code. It
posited that the BLR should have strictly adhered to the
union registration requirements under the Labor Code,
instead of relying on D.O. 40-03 which it considered as
an invalid amendment of the law since it reduced the
requirements under Article 234 of the Labor Code. It
maintained that the BLR should not have granted the
unions registration through the issuance of a
Certification of Creation of Local Chapter since the
union submitted only the Charter Certificate issued to it
by WASTO.
The CA Decision
In its decision rendered on February 3, 2006,[7] the CA
Tenth Division dismissed the petition and affirmed the
assailed BLR ruling. It brushed aside the companys
objection to D.O. 40-03, and its submission that D.O. 40-
03 removed the safety measures against the
commission of fraud in the registration of unions. It
noted that there are sufficient safeguards found in
other provisions of the Labor Code to prevent the
same.[8] In any event, it pointed out that D.O. 40-03 was
issued by the DOLE pursuant to its rule-making power
under the law.[9]
The company moved for reconsideration, arguing that
the unions registration certificate was invalid as there
was no showing that WASTO, the labor federation to
which the union is affiliated, had at least ten (10) locals
or chapters as required by D.O. 40-03. The CA denied
the motion,[10] holding that no such requirement is
found under the rules. Hence, the present petition.
The Case for the Petitioner
The company seeks a reversal of the CA rulings, through
its submissions (the petition[11] and the
memorandum[12]), on the ground that the CA seriously
erred and gravely abused its discretion in affirming the
registration of the union in accordance with D.O. 40-03.
Specifically, it assails as unconstitutional Section 2(E),
Rule III of D.O. 40-03 which provides:
The report of creation of a
chartered local shall be accompanied by
a charter certificate issued by the
federation or national union indicating
the creation or establishment of the
chartered local.
The company points out that D.O. 40-03 delisted some
of the requirements under Article 234 of the Labor Code
for the registration of a local chapter. Article 234 states:
ART. 234. Requirements of
[13]
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 reconsideration dated February 22, 2006 in CA G.R. SP
the labor
No. 83847, which the union adopted as its comment on
organization, the
minutes of the the present petition.[16]
organizational
meetings and the list Through this comment/opposition,[17] the union
of the workers who submits that the company failed to show that the CA
participated in such
meetings; committed reversible error in upholding the registration
certificate issued to it by the BLR. Citing Castillo v.
(c) The names of all its National Labor Relations Commission,[18] it stressed that
members comprising the issuance of the certificate by the DOLE agencies was
at least twenty
supported by substantial evidence, which should be
percent (20%) of all
the employees in the entitled to great respect and even finality.
bargaining unit where
it seeks to operate; The Courts Ruling

(d) If the applicant union

has been in existence We resolve the core issue of whether D.O. 40-03
for one or more years, is a valid exercise of the rule-making power of the
copies of its annual DOLE.
financial reports; and
We rule in the affirmative. Earlier in Progressive
(e) Four (4) copies of the
constitution and by- Development Corporation v. Secretary, Department of
laws of the applicant Labor and Employment,[19] the Court encountered a
union, minutes of its similar question on the validity of the old Section 3, Rule
adoption or
II, Book V of the Rules Implementing the Labor
ratification, and the
list of the members Code[20] which stated:
who participated in it.
Union affiliation; direct
membership with a national union. - The
The company contends that the enumeration of the affiliate of a labor federation or national
union may be a local or chapter thereof
requirements for union registration under the law is
or an independently registered union.
exclusive and should not be diminished, and that the
same requirements should apply to all labor unions a) The labor federation or
whether they be independent labor organizations, national union concerned
shall issue a charter
federations or local chapters. It adds that in making a
certificate indicating the
different rule for local chapters, D.O. 40-03 expanded or creation or establishment of a
amended Article 234 of the Labor Code, resulting in an local or chapter, copy of
invalid exercise by the DOLE of its delegated rule- which shall be submitted to
making power. It thus posits that the unions certificate the Bureau of Labor Relations
within thirty (30) days from
of registration which was issued in violation of the
issuance of such charter
letters of Article 234 of the Labor Code[14] is void and of certificate.
no effect, and that the CA committed grave abuse of
discretion when it affirmed the unions existence. xxxx

e) The local or chapter of a labor

The Case for the Union federation or national union
shall have and maintain a
In a Resolution dated January 16, 2008,[15] the Court constitution and by-laws, set
directed union board member Alex Espejo, in lieu of of officers and books of
accounts. For reporting
union President Roberto Beltran whose present address purposes, the procedure
could not be verified, to furnish the Court a copy of the governing the reporting of
union comment/opposition to the companys motion for independently registered
 unions, federations or
national unions shall be
observed.
Interpreting these provisions of the old rules,
the Court said that by force of law,[21] the local or
chapter of a labor federation or national union becomes
a legitimate labor organization upon compliance with
Section 3, Rule II, Book V of the Rules Implementing the
Labor Code, the only requirement being the submission
of the charter certificate to the BLR. Further, the Court
noted that Section 3 omitted several requirements
which are otherwise required for union registration, as
follows:
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 organization
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-laws and
the list of the members who
participated in it.[22]
Notwithstanding these omissions, the Court
upheld the governments implementing policy
expressed in the old rules when it declared
in Progressive Development
Undoubtedly, the intent of the law in
imposing lesser requirements in the case
of a branch or local of a registered
federation or national union is to
encourage the affiliation of a local union
with a federation or national union in
order to increase the local unions
bargaining powers respecting terms and
conditions of labor.[23]
It was this same Section 3 of the old rules that D.O. 40-
03 fine-tuned when the DOLE amended the rules on
Book V of the Labor Code, thereby modifying the
governments implementing policy on the registration of
locals or chapters of labor federations or national
unions. The company now assails this particular
amendment as an invalid exercise of the DOLEs rule-
making power.
We disagree. As in the case of D.O. 9 (which introduced
the above-cited Section 3 of the old rules) in Progressive
Development, D.O. 40-03 represents an expression of
the governments implementing policy on trade
unionism. It builds upon the old rules by further
simplifying the requirements for the establishment of
locals or chapters. As in D.O. 9, we see nothing contrary
to the law or the Constitution in the adoption by the
Secretary of Labor and Employment of D.O. 40-03 as this
department order is consistent with the intent of the
government to encourage the affiliation of a local union
with a federation or national union to enhance the
locals bargaining power. If changes were made at all,
these were those made to recognize the distinctions
made in the law itself between federations and their
local chapters, and independent unions; local chapters
seemingly have lesser requirements because they and
their members are deemed to be direct members of the
federation to which they are affiliated, which
federations are the ones subject to the strict
registration requirements of the law.
In any case, the local union in the present case has more
than satisfied the requirements the petitioner
complains about; specifically, the union has submitted:
(1) copies of the ratified CBL; (2) the minutes of the CBLs
adoption and ratification; (3) the minutes of the
organizational meetings; (4) the names and addresses
of the union officers; (5) the list of union members; (6)
the list of rank-and-file employees in the company; (7) a
certification of non-existence of a CBA in the company;
(8) the resolution of affiliation with WASTO and the
latters acceptance; and (9) their Charter Certificate.
These submissions were properly verified as required by
the rules. In sum, the petitioner has no factual basis for
questioning the unions registration, as even the
requirements for registration as an independent local
have been substantially complied with.
We, thus, find no compelling justification to
nullify D.O. 40-03. Significantly, the Court declared in
another case:[24]
Pagpalain cannot also allege that
Department Order No. 9 is violative of
 public policy. x x x [T]he sole function of
our courts is to apply or interpret the
laws. It does not formulate public policy,
which is the province of the legislative
and executive branches of government.
It cannot, thus, be said that the principles
laid down by the Court
in Progressive and Protection
Technologyconstitute public policy on
the matter. They do, however, constitute
the Courts interpretation of public
policy, as formulated by the executive
department through its promulgation of
rules implementing the Labor Code.
However, this public policy has itself
been changed by the executive
department, through the amendments
introduced in Book V of the Omnibus
Rules by Department Order No. 9. It is
not for us to question this change in
policy, it being a well-established
principle beyond question that it is not
within the province of the courts to pass
judgments upon the policy of legislative
or executive action.
This statement is as true then as it is now.
In light of the foregoing, we find no merit in the
appeal.
WHEREFORE, premises considered, we DENY the
petition for lack of merit. The assailed decision and
resolution of the Court of Appeals are AFFIRMED. Costs
against the petitioner Electromat Manufacturing and
Recording Corporation.
SO ORDERED.
[G.R. No. 169717, March 16 2011]
SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL
SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR
EMPOWERMENT AND REFORMS (SMCC-SUPER),
ZACARRIAS JERRY VICTORIO - UNION PRESIDENT,
PETITIONER,VS. CHARTER CHEMICAL AND COATING
CORPORATION, RESPONDENT.
DECISION
DEL CASTILLO, J.:
The right to file a petition for certification election is
accorded to a labor organization provided that it
complies with the requirements of law for proper
registration. The inclusion of supervisory employees in
a labor organization seeking to represent the bargaining
unit of rank-and-file employees does not divest it of its
status as a legitimate labor organization. We apply
these principles to this case.
This Petition for Review on Certiorari seeks to reverse
and set aside the Court of Appeal's March 15, 2005
Decision[1] in CA-G.R. SP No. 58203, which annulled and
set aside the January 13, 2000 Decision[2] of the
Department of Labor and Employment (DOLE) in OS-A-
6-53-99 (NCR-OD-M-9902-019) and the September 16,
2005 Resolution[3] denying petitioner union's motion
for reconsideration.
Factual Antecedents
On February 19, 1999, Samahang Manggagawa sa
Charter Chemical Solidarity of Unions in the Philippines
for Empowerment and Reforms (petitioner union) filed
a petition for certification election among the regular
rank-and-file employees of Charter Chemical and
Coating Corporation (respondent company) with the
Mediation Arbitration Unit of the DOLE, National Capital
Region.
On April 14, 1999, respondent company filed an Answer
with Motion to Dismiss[4] on the ground that petitioner
union is not a legitimate labor organization because of
(1) failure to comply with the documentation
requirements set by law, and (2) the inclusion of
supervisory employees within petitioner union.[5]
Med-Arbiter's Ruling
On April 30, 1999, Med-Arbiter Tomas F. Falconitin
issued a Decision[6] dismissing the petition for
certification election. The Med-Arbiter ruled that
petitioner union is not a legitimate labor organization
because the Charter Certificate, "Sama-samang
Pahayag ng Pagsapi at Authorization," and "Listahan ng
mga Dumalo sa Pangkalahatang Pulong at mga
Sumang-ayon at Nagratipika sa Saligang Batas" were
not executed under oath and certified by the union
secretary and attested to by the union president as
required by Section 235 of the Labor Code[7] in relation
to Section 1, Rule VI of Department Order (D.O.) No. 9,
series of 1997. The union registration was, thus, fatally
defective.
The Med-Arbiter further held that the list of
membership of petitioner union consisted of 12
batchman, mill operator and leadman who performed
supervisory functions. Under Article 245 of the Labor
Code, said supervisory employees are prohibited from
joining petitioner union which seeks to represent the
rank-and-file employees of respondent company.
As a result, not being a legitimate labor organization,
petitioner union has no right to file a petition for
certification election for the purpose of collective
bargaining.
Department of Labor and Employment's Ruling
On July 16, 1999, the DOLE initially issued a Decision[8] in
favor of respondent company dismissing petitioner
union's appeal on the ground that the latter's petition
for certification election was filed out of time. Although
the DOLE ruled, contrary to the findings of the Med-
Arbiter, that the charter certificate need not be verified
and that there was no independent evidence presented
to establish respondent company's claim that some
members of petitioner union were holding supervisory
positions, the DOLE sustained the dismissal of the
petition for certification after it took judicial notice that
another union, i.e., Pinag-isang
Lakas Manggagawa sa Charter Chemical and Coating
Corporation, previously filed a petition for certification
election on January 16, 1998. The Decision granting the
said petition became final and executory on September
16, 1998 and was remanded for immediate
implementation. Under Section 7, Rule XI of D.O. No. 9,
series of 1997, a motion for intervention involving a
certification election in an unorganized establishment
should be filed prior to the finality of the decision calling
for a certification election. Considering that petitioner
union filed its petition only on February 14, 1999, the
same was filed out of time.
On motion for reconsideration, however, the DOLE
reversed its earlier ruling. In its January 13, 2000
Decision, the DOLE found that a review of the records
indicates that no certification election was previously
conducted in respondent company. On the contrary, the
prior certification election filed by Pinag-isang Lakas
Manggagawa sa Charter Chemical and Coating
Corporation was, likewise, denied by the Med-Arbiter
and, on appeal, was dismissed by the DOLE for being
filed out of time. Hence, there was no obstacle to the
grant of petitioner union's petition for certification
election, viz:
WHEREFORE, the motion for reconsideration is
hereby GRANTED and the decision of this Office dated
16 July 1999 is MODIFIED to allow the certification
election among the regular rank-and-file employees of
Charter Chemical and Coating Corporation with the
following choices:
1. Samahang Manggagawa sa Charter Chemical-
Solidarity of Unions in the Philippines for Empowerment
and Reform (SMCC-SUPER); and
2. No Union.
Let the records of this case be remanded to the Regional
Office of origin for the immediate conduct of a
certification election, subject to the usual pre-election
conference.
SO DECIDED.[9]
Court of Appeal's Ruling
On March 15, 2005, the CA promulgated the assailed
Decision, viz:
WHEREFORE, the petition is hereby GRANTED. The
assailed Decision and Resolution dated January 13, 2000
and February 17, 2000 are hereby [ANNULLED] and SET
ASIDE.
SO ORDERED.[10]
In nullifying the decision of the DOLE, the appellate
court gave credence to the findings of the Med-Arbiter
that petitioner union failed to comply with the
documentation requirements under the Labor Code. It,
likewise, upheld the Med-Arbiter's finding that
petitioner union consisted of both rank-and-file and
supervisory employees. Moreover, the CA held that the
issues as to the legitimacy of petitioner union may be
attacked collaterally in a petition for certification
election and the infirmity in the membership of
petitioner union cannot be remedied through the
exclusion-inclusion proceedings in a pre-election
conference pursuant to the ruling in Toyota Motor
Philippines v. Toyota Motor Philippines Corporation
Labor Union.[11] Thus, considering that petitioner union
is not a legitimate labor organization, it has no legal
right to file a petition for certification election.
Issues
I
Whether x x x the Honorable Court of Appeals
committed grave abuse of discretion tantamount to lack
of jurisdiction in granting the respondent [company's]
petition for certiorari (CA G.R. No. SP No. 58203) in spite
of the fact that the issues subject of the respondent
company['s] petition was already settled with finality
and barred from being re-litigated.
II

Whether x x x the Honorable Court of Appeals
committed grave abuse of discretion tantamount to lack
of jurisdiction in holding that the alleged mixture of
rank-and-file and supervisory employee[s] of petitioner
[union's] membership is [a] ground for the cancellation
of petitioner [union's] legal personality and dismissal of
[the] petition for certification election.
III
Whether x x x the Honorable Court of Appeals
committed grave abuse of discretion tantamount to lack
of jurisdiction in holding that the alleged failure to
certify under oath the local charter certificate issued by
its mother federation and list of the union membership
attending the organizational meeting [is a ground] for
the cancellation of petitioner [union's] legal personality
as a labor organization and for the dismissal of the
petition for certification election.[12]
Petitioner Union's Arguments
Petitioner union claims that the litigation of the issue as
to its legal personality to file the subject petition for
certification election is barred by the July 16, 1999
Decision of the DOLE. In this decision, the DOLE ruled
that petitioner union complied with all the
documentation requirements and that there was no
independent evidence presented to prove an illegal
mixture of supervisory and rank-and-file employees in
petitioner union. After the promulgation of this
Decision, respondent company did not move for
reconsideration, thus, this issue must be deemed
settled.
Petitioner union further argues that the lack of
verification of its charter certificate and the alleged
illegal composition of its membership are not grounds
for the dismissal of a petition for certification election
under Section 11, Rule XI of D.O. No. 9, series of 1997,
as amended, nor are they grounds for the cancellation
of a union's registration under Section 3, Rule VIII of said
issuance. It contends that what is required to be
certified under oath by the local union's secretary or
treasurer and attested to by the local union's president
are limited to the union's constitution and by-laws,
statement of the set of officers, and the books of
accounts.
Finally, the legal personality of petitioner union cannot
be collaterally attacked but may be questioned only in
an independent petition for cancellation pursuant to
Section 5, Rule V, Book IV of the Rules to Implement the
Labor Code and the doctrine enunciated in Tagaytay
Highlands International Golf Club Incoprorated v.
Tagaytay Highlands Empoyees Union-PTGWO.[13]
Respondent Company's Arguments
Respondent company asserts that it cannot be
precluded from challenging the July 16, 1999 Decision
of the DOLE. The said decision did not attain finality
because the DOLE subsequently reversed its earlier
ruling and, from this decision, respondent company
timely filed its motion for reconsideration.
On the issue of lack of verification of the charter
certificate, respondent company notes that Article 235
of the Labor Code and Section 1, Rule VI of the
Implementing Rules of Book V, as amended by D.O. No.
9, series of 1997, expressly requires that the charter
certificate be certified under oath.
It also contends that petitioner union is not a legitimate
labor organization because its composition is a mixture
of supervisory and rank-and-file employees in violation
of Article 245 of the Labor Code. Respondent company
maintains that the ruling in Toyota Motor Philippines vs.
Toyota Motor Philippines Labor Union[14] continues to
be good case law. Thus, the illegal composition of
petitioner union nullifies its legal personality to file the
subject petition for certification election and its legal
personality may be collaterally attacked in the
proceedings for a petition for certification election as
was done here.
Our Ruling
The petition is meritorious.
The issue as to the legal personality of
petitioner union is not barred by the
July 16, 1999 Decision of the DOLE.
A review of the records indicates that the issue as to
petitioner union's legal personality has been timely and
consistently raised by respondent company before the
Med-Arbiter, DOLE, CA and now this Court. In its July 16,
1999 Decision, the DOLE found that petitioner union
complied with the documentation requirements of the
Labor Code and that the evidence was insufficient to
establish that there was an illegal mixture of supervisory
and rank-and-file employees in its membership.
Nonetheless, the petition for certification election was
dismissed on the ground that another union had
previously filed a petition for certification
election seeking to represent the same bargaining
unit in respondent company.
Upon motion for reconsideration by petitioner union on
January 13, 2000, the DOLE reversed its previous ruling.
It upheld the right of petitioner union to file the subject
petition for certification election because its previous
decision was based on a mistaken appreciation of
facts.[15] From this adverse decision, respondent
company timely moved for reconsideration by
reiterating its previous arguments before the Med-
Arbiter that petitioner union has no legal personality to
file the subject petition for certification election.
The July 16, 1999 Decision of the DOLE, therefore, never
attained finality because the parties timely moved for
reconsideration. The issue then as to the legal
personality of petitioner union to file the certification
election was properly raised before the DOLE, the
appellate court and now this Court.
The charter certificate need not be
certified under oath by the local union's
secretary or treasurer and attested to
by its president.
Preliminarily, we must note that Congress enacted
Republic Act (R.A.) No. 9481[16] which took effect on
June 14, 2007.[17] This law introduced substantial
amendments to the Labor Code. However, since the
operative facts in this case occurred in 1999, we shall
decide the issues under the pertinent legal provisions
then in force (i.e., R.A. No. 6715,[18] amending Book V of
the Labor Code, and the rules and
regulations[19] implementing R.A. No. 6715, as amended
by D.O. No. 9,[20]
series of 1997) pursuant to our ruling in Republic v.
Kawashima Textile Mfg., Philippines, Inc.[21]
In the main, the CA ruled that petitioner union failed to
comply with the requisite documents for registration
under Article 235 of the Labor Code and its
implementing rules. It agreed with the Med-Arbiter that
the Charter Certificate, Sama-samang Pahayag ng
Pagsapi at Authorization, and Listahan ng mga Dumalo
sa Pangkalahatang Pulong at mga Sumang-ayon at
Nagratipika sa Saligang Batas were not executed under
oath. Thus, petitioner union cannot be accorded the
status of a legitimate labor organization.
We disagree.
The then prevailing Section 1, Rule VI of the
Implementing Rules of Book V, as amended by D.O. No.
9, series of 1997, provides:
Section 1. Chartering and creation of a local chapter -- A
duly registered federation or national union may
directly create a local/chapter by submitting to the
Regional Office or to the Bureau two (2) copies of the
following:
(a) A charter certificate issued by the federation or
national union indicating the creation or establishment
of the local/chapter;
(b) The names of the local/chapter's officers, their
addresses, and the principal office of the local/chapter;
and
(c) The local/chapter's constitution and by-laws
provided that where the local/chapter's constitution
and by-laws [are] the same as [those] of the federation
or national union, this fact shall be indicated
accordingly.
All the foregoing supporting requirements shall be
certified under oath by the Secretary or the Treasurer of
the local/chapter and attested to by its President.
As readily seen, the Sama-samang Pahayag ng Pagsapi
at Authorization and Listahan ng mga Dumalo sa
Pangkalahatang Pulong at mga Sumang-ayon at
Nagratipika sa Saligang Batas are not among the
documents that need to be submitted to the Regional
Office or Bureau of Labor Relations in order to register
a labor organization. As to the charter certificate, the
above-quoted rule indicates that it should be executed
under oath. Petitioner union concedes and the records
confirm that its charter certificate was not executed
under oath. However, in San Miguel Corporation
(Mandaue Packaging Products Plants) v. Mandaue
Packing Products Plants-San Miguel Corporation
Monthlies Rank-and-File Union-FFW (MPPP-SMPP-
SMAMRFU-FFW),[22] which was decided under the
auspices of D.O. No. 9, Series of 1997, we ruled -
In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon.
Laguesma, 331 Phil. 356 (1996), the Court ruled that it
was not necessary for the charter certificate to be
certified and attested by the local/chapter
officers. Id. While this ruling was based on the
interpretation of the previous Implementing Rules
provisions which were supplanted by the 1997
amendments, we believe that the same doctrine
obtains in this case. Considering that the charter
certificate is prepared and issued by the national union
and not the local/chapter, it does not make sense to
have the local/chapter's officers x x x certify or attest
to a document which they had no hand in the
preparation of.[23] (Emphasis supplied)
In accordance with this ruling, petitioner union's charter
certificate need not be executed under oath.
Consequently, it validly acquired the status of a
legitimate labor organization upon submission of (1) its
charter certificate,[24] (2) the names of its officers, their
addresses, and its principal office,[25] and (3) its
constitution and by-laws[26]-- the last two requirements
having been executed under oath by the proper union
officials as borne out by the records.
The mixture of rank-and-file and supervisory
employees in petitioner union does not
nullify its legal personality as a legitimate
labor organization.
The CA found that petitioner union has for its
membership both rank-and-file and supervisory
employees. However, petitioner union sought to
represent the bargaining unit consisting of rank-and-file
employees. Under Article 245[27] of the Labor Code,
supervisory employees are not eligible for membership
in a labor organization of rank-and-file employees. Thus,
the appellate court ruled that petitioner union cannot
be considered a legitimate labor organization pursuant
to Toyota Motor Philippines v. Toyota Motor Philippines
Corporation Labor Union[28] (hereinafter Toyota).
Preliminarily, we note that petitioner union questions
the factual findings of the Med-Arbiter, as upheld by the
appellate court, that 12 of its members, consisting of
batchman, mill operator and leadman, are supervisory
employees. However, petitioner union failed to present
any rebuttal evidence in the proceedings below after
respondent company submitted in evidence the job
descriptions[29] of the aforesaid employees. The job
descriptions indicate that the aforesaid employees
exercise recommendatory managerial actions which are
not merely routinary but require the use of independent
judgment, hence, falling within the definition of
supervisory employees under Article 212(m)[30] of the
Labor Code. For this reason, we are constrained to agree
with the Med-Arbiter, as upheld by the appellate court,
that petitioner union consisted of both rank-and-file
and supervisory employees.
Nonetheless, the inclusion of the aforesaid supervisory
employees in petitioner union does not divest it of its
status as a legitimate labor organization. The appellate
court's reliance on Toyota is misplaced in view of this
Court's subsequent ruling in Republic v. Kawashima
Textile Mfg., Philippines,
Inc.[31] (hereinafter Kawashima). In Kawashima, we
explained at length how and why the Toyota doctrine
no longer holds sway under the altered state of the law
and rules applicable to this case, viz:
R.A. No. 6715 omitted specifying the exact effect any
violation of the prohibition [on the co-mingling of
supervisory and rank-and-file employees] would bring
about on the legitimacy of a labor organization.
It was the Rules and Regulations Implementing R.A. No.
6715 (1989 Amended Omnibus Rules) which supplied
the deficiency by introducing the following amendment
to Rule II (Registration of Unions):
"Sec. 1. Who may join unions. - x x x Supervisory
employees and security guards shall not be eligible for
membership in a labor organization of the rank-and-
file employees but may join, assist or form separate
labor organizations of their own; Provided, that those
supervisory employees who are included in an existing
rank-and-file bargaining unit, upon the effectivity of
Republic Act No. 6715, shall remain in that unit x x x.
(Emphasis supplied)
and Rule V (Representation Cases and Internal-Union
Conflicts) of the Omnibus Rules, viz:
"Sec. 1. Where to file. - A petition for certification
election may be filed with the Regional Office which has
jurisdiction over the principal office of the employer.
The petition shall be in writing and under oath.
Sec. 2. Who may file. - Any legitimate labor organization
or the employer, when requested to bargain
collectively, may file the petition.
The petition, when filed by a legitimate labor
organization, shall contain, among others:
x x x x
(c) description of the bargaining unit which shall be the
employer unit unless circumstances otherwise require;
and provided further, that the appropriate bargaining
unit of the rank-and-file employees shall not include
supervisory employees and/or security
guards. (Emphasis supplied)
By that provision, any questioned mingling will prevent
an otherwise legitimate and duly registered labor
organization from exercising its right to file a petition for
certification election.
Thus, when the issue of the effect of mingling was
brought to the fore in Toyota, the Court, citing Article
245 of the Labor Code, as amended by R.A. No. 6715,
held:
"Clearly, based on this provision, a labor organization
composed of both rank-and-file and supervisory
employees is no labor organization at all. It cannot, for
any guise or purpose, be a legitimate labor organization.
Not being one, an organization which carries a mixture
of rank-and-file and supervisory employees cannot
possess any of the rights of a legitimate labor
organization, including the right to file a petition for
certification election for the purpose of collective
bargaining. It becomes necessary, therefore, anterior
to the granting of an order allowing a certification
election, to inquire into the composition of any labor
organization whenever the status of the labor
organization is challenged on the basis of Article 245 of
the Labor Code.
x x x x
In the case at bar, as respondent union's membership
list contains the names of at least twenty-seven (27)
supervisory employees in Level Five positions, the union
could not, prior to purging itself of its supervisory
employee members, attain the status of a legitimate
labor organization. Not being one, it cannot possess the
requisite personality to file a petition for certification
election." (Emphasis supplied)
In Dunlop, in which the labor organization that filed a
petition for certification election was one for
supervisory employees, but in which the membership
included rank-and-file employees, the Court reiterated
that such labor organization had no legal right to file a
certification election to represent a bargaining unit
composed of supervisors for as long as it counted rank-
and-file employees among its members.
It should be emphasized that the petitions for
certification election involved
in Toyota and Dunlop were filed on November 26, 1992
and September 15, 1995, respectively; hence, the 1989
Rules was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus
Rules was further amended by Department Order No. 9,
series of 1997 (1997 Amended Omnibus Rules).
Specifically, the requirement under Sec. 2(c) of the 1989
Amended Omnibus Rules - that the petition for
certification election indicate that the bargaining unit of
rank-and-file employees has not been mingled with
supervisory employees - was removed. Instead, what
the 1997 Amended Omnibus Rules requires is a plain
description of the bargaining unit, thus:
Rule XI
Certification Elections
x x x x
Sec. 4. Forms and contents of petition. - The petition
shall be in writing and under oath and shall contain,
among others, the following: x x x (c) The description of
the bargaining unit.
In Pagpalain Haulers, Inc. v. Trajano, the Court had
occasion to uphold the validity of the 1997 Amended
Omnibus Rules, although the specific provision involved
therein was only Sec. 1, Rule VI, to wit:
"Section. 1. Chartering and creation of a local/chapter.-
A duly registered federation or national union may
directly create a local/chapter by submitting to the
Regional Office or to the Bureau two (2) copies of the
following: a) a charter certificate issued by the
federation or national union indicating the creation or
establishment of the local/chapter; (b) the names of the
local/chapter's officers, their addresses, and the
principal office of the local/chapter; and (c) the local/
chapter's constitution and by-laws; provided that where
the local/chapter's constitution and by-laws is the same
as that of the federation or national union, this fact shall
be indicated accordingly.
All the foregoing supporting requirements shall be
certified under oath by the Secretary or the Treasurer of
the local/chapter and attested to by its President."
which does not require that, for its creation and
registration, a local or chapter submit a list of its
members.
Then came Tagaytay Highlands Int'l. Golf Club, Inc. v.
Tagaytay Highlands Employees Union-PGTWO in which
the core issue was whether mingling affects the
legitimacy of a labor organization and its right to file a
petition for certification election. This time, given the
altered legal milieu, the Court abandoned the view
in Toyota and Dunlop and reverted to its
pronouncement in Lopez that while there is a
prohibition against the mingling of supervisory and
rank-and-file employees in one labor organization, the
Labor Code does not provide for the effects thereof.
Thus, the Court held that after a labor organization has
been registered, it may exercise all the rights and
privileges of a legitimate labor organization. Any
mingling between supervisory and rank-and-file
employees in its membership cannot affect its
legitimacy for that is not among the grounds for
cancellation of its registration, unless such mingling was
brought about by misrepresentation, false statement or
fraud under Article 239 of the Labor Code.
In San Miguel Corp. (Mandaue Packaging Products
Plants) v. Mandaue Packing Products Plants-San Miguel
Packaging Products-San Miguel Corp. Monthlies Rank-
and-File Union-FFW, the Court explained that since the
1997 Amended Omnibus Rules does not require a local
or chapter to provide a list of its members, it would be
improper for the DOLE to deny recognition to said local
or chapter on account of any question pertaining to its
individual members.
More to the point is Air Philippines Corporation v.
Bureau of Labor Relations, which involved a petition for
cancellation of union registration filed by the employer
in 1999 against a rank-and-file labor organization on the
ground of mixed membership: the Court therein
reiterated its ruling in Tagaytay Highlands that the
inclusion in a union of disqualified employees is not
among the grounds for cancellation, unless such
inclusion is due to misrepresentation, false statement
or fraud under the circumstances enumerated in
Sections (a) and (c) of Article 239 of the Labor Code.
All said, while the latest issuance is R.A. No. 9481, the
1997 Amended Omnibus Rules, as interpreted by the
Court in Tagaytay Highlands, San Miguel and Air
Philippines, had already set the tone for
it. Toyota and Dunlop no longer hold sway in the
present altered state of the law and the
rules.[32] [Underline supplied]
The applicable law and rules in the instant case are the
same as those in Kawashima because the present
petition for certification election was filed in 1999 when
D.O. No. 9, series of 1997, was still in effect.
Hence, Kawashima applies with equal force here. As a
result, petitioner union was not divested of its status as
a legitimate labor organization even if some of its
members were supervisory employees; it had the right
to file the subject petition for certification election.
The legal personality of petitioner union
cannot be collaterally attacked by respondent
company in the certification election proceedings.
Petitioner union correctly argues that its legal
personality cannot be collaterally attacked in the
certification election proceedings. As we explained
in Kawashima:

Except when it is requested to bargain collectively, an

employer is a mere bystander to any petition for
certification election; such proceeding is non-
adversarial and merely investigative, for the purpose
thereof is to determine which organization will
represent the employees in their collective bargaining
with the employer. The choice of their representative is
the exclusive concern of the employees; the employer
cannot have any partisan interest therein; it cannot
interfere with, much less oppose, the process by filing a
motion to dismiss or an appeal from it; not even a mere
allegation that some employees participating in a
petition for certification election are actually
managerial employees will lend an employer legal
personality to block the certification election. The
employer's only right in the proceeding is to be notified
or informed thereof.

The amendments to the Labor Code and its

implementing rules have buttressed that policy even
more.[33]

WHEREFORE, the petition is GRANTED. The March 15,

2005 Decision and September 16, 2005 Resolution of
the Court of Appeals in CA-G.R. SP No. 58203
are REVERSED and SET ASIDE. The January 13, 2000
Decision of the Department of Labor and Employment
in OS-A-6-53-99 (NCR-OD-M-9902-019) is REINSTATED.

No pronouncement as to costs.

SO ORDERED.