ANTAMOK GOLDFIELDS MINING COMPANY vs. COURT OF
Leaño
INDUSTRIAL RELATIONS
G.R. No. 46892 | 1940-06-28
IMPERIAL, M:
Esta es una apelacion mediante certiorari interpuesta por la recurrente contra
la orden dictada por el Tribunal de Relaciones Industriales el 6 de mayo de
1939 que le obligo a que reponga en sus anteriores trabajos o en otros
substancialmente equivalentes a los 45 obreros enumerados en la peticion del
31 de marzo de 1939 y a los 10 obreros encabezados por A. Haber que fueron
excluidos indefinidamente, dentro de 10 dias desde que reciba copia de la
orden; que pague a estos 55 obreros los jornales que debieron haber percibido
desde la fecha de su suspension o separacion hasta la de su reposicion; y que
pendiente de resolucion las otras cuestiones que las partes han sometido, la
recurrente se abstenga, bajo pena de desacato, de despedir o excluir, sin
permiso previo del tribunal, a cualquier obrero o empleado que se hallaba
bajo su servicio en la epoca en que surgio la disputa que este actualmente
trabajando en las minas o que sea repuesto en su trabajo de conformidad con
la orden; y contra la resolucion del mismo tribunal del 17 de agosto de 1939
que denego la mocioon de reconsideracion de la recurrente presentada el 26
de mayo de 1939.
El 12 de diciembre de 1938 la recurrida National Labor Union, Inc., en
representacion de los obreros y empleados de la recurrente que eran
miembros de dicha union obrera, dirigio una carta a la recurrente solicitando
21 reclamaciones en favor de sus afiliados. La carta fue recibida por la oficina
de la recurrente en Manila en un sobre timbrado por la estafeta de Baguio el
30 del mismo mes. Los funcionarios de la recurrente convocaron a un
meeting a sus empleados el 2 de enero de 1939 y en el informaron a todos
sus obreros que algunas de las demandas se habian aceptado y se habian
puesto ya en practica, otras serian consideradas y las restantes iban a ser
rechazadas por ser irrazonables, y se les aconsejo que no recurrieran a la
violencia y observaran metodos legales en el arreglo de sus diferencias con
la recurrente. En la noche del mismo dia los obreros y empleados de la
recurrente se declararon en huelga y abandonaron sus trabajos. La recurrente
dio cuenta inmediatamente de esta huelga al Departamento del Trabajo y
solicito su intervencion con el fin de solucionarla. El Secretario del Trabajo
designo a Adolfo Umengan, Investigador Especial del Departamento, y a
Eladio C. Leaño, Defensor Publico de la Provincia Montanosa, para que
intervinieran y vieran la manera de solucionar la huelga. Estos funcionarios
convocaron una conferencia a la que acudieron funcionarios de la recurrente,
representante de los huelguistas y Luis Lardizabal, Jefe de la Baguio
Federation of Labor, una organizacion obrera afiliada a National Labor
Union, Inc. Como resultado de la conferencia las partes convinieron en el
siguiente arreglo amistoso:
"AMICABLE SETTLEMENT
"In order to have the present strike of the contractors and laborers of the
respondent company who staged a walk-out on January 3, 1939, amicably
settled, the parties hereby mutually agree to end the said strike under the
condition that all laborers will be readmitted upon the execution of this
agreement; provided, that all laborers whose services should be dispensed
with due to lack of work in those tunnels where they are no longer needed
will be given not less than fifteen days employment from the date of this
settlement or resumption of work, and provided, further, that as soon as the
stopes in 1360 and 1460 levels are opened and the services of men are
needed, the company will give preference to efficient laborers when reducing
the personnel as above mentioned in those working places and may transfer
them to other divisions to replace inefficient men."
"In witness hereof, the laborers represented by a committee composed of
Messrs. Luis Lardizabal, Tomas Dirige, Victoriano Madayag, Maximo
Conaoi, Daniel Lambinicio, and Juan Cerilo and the Antamok Goldfields
Mining Co. as represented by its President, Mr. Andres Soriano, have
hereunto placed their signatures this 4th day of January, 1939."
El convenio fue firmado por las partes el 4 de enero de 1939, pero los obreros
no se presentaron sino a las 9 de la mañana del 6 del mismo mes. La gerencia
de la recurrente no permitio, sin embargo, a ningun obrero que entrara en la
seccion subterranea conocida como "830 level" por la razon de que el aire se
habia viciado con motivo de la huelga y era necesario renovarlo con aire puro
con el fin de evitar desgracias personales. Esta precaucion la tomaron los
obreros como una negativa de la recurrente a que ellos trabajaran de nuevo,
por lo que se declararon otra vez en huelga. A los huelguistas se unieron por
simpatia los obreros que trabajaban en la mina denominada "680 division,"
que es otra mina separada y situada a 3 kilometros de la fabrica. Otra vez
intervino el Departamento del Trabajo y por la mediacion de Eladio C.
los obreros volvieron al trabajo en la noche del 6 de enero de 1939 en que los
trabajos de mina se reanudaron paulatinamente.
El 9 de enero de 1939 el Departamento del Trabajo endoso la disputa al
Tribunal de Relaciones Industriales de conformidad con el articulo 4 de la
Ley No. 103 del Commonwealth y dicho Tribunal celebro la primera vista
del asunto el 13 del mismo mes en la Ciudad de Baguio. En esta vista se
discutieron una por una las 21 reclamaciones de la recurrida National Labor
Union, Inc., y se llego por las partes a un acuerdo sobre algunas de ellas, se
sometieron otras a la decision del Tribunal y las demas se dejaron pendientes
para ser vistas y resueltas mas tarde.
El 31 de marzo de 1939, hallandose pendiente aun de decision la mayor parte
de las reclamaciones antes mencionadas, la recurrida National Labor Union,
Inc., presento una mocion en que alego que el capataz A. Haber y otros 9
obreros de la recurruente habian sido indefinidamente suspendidos el 29 del
mismo mes; que estos obreros habian sido transferidos anteriormente a
trabajos exteriores con el fin de proporcionar a la recurrente una excusa para
separarles mas tarde del servicio; que otro grupo de cerca de 30 obreros
fueron despedidos por la compañia sin motivo alguno y sin autorizacion del
tribunal; y que las suspensiones y separaciones que asi se hicieron eran actos
de venganza y discriminatorios para los obreros, por cuya razon se pidio que
los funcionarios de la recurrente responsables de dichos actos sean castigados
por desacato y que la recurrente sea obligada a reponer a los obreros en sus
primitivos trabajos dentro de las minas y a pagarles sus salarios
correspondientes al periodo en que fueron separados del servicio. La
recurrente contesto la mocion negando los hechos imputados y alego que
Haber y sus 9 companeros fueron suspendidos por su continua holgazaneria
durante las horas de trabajo y por haberse negado constantemente a trabajar,
y que los 45 obreros encabezados por el capataz Victoriano Madayag fueron
despedidos por haber rehusado senalar a los responsables del maltrato del
capataz Juan Moldero en la manana del 30 de marzo de 1939. La mocion se
vio el 3 de abril de 1939 y en la vista las partes presentaron sus testigos. El
tribunal designo a uno de sus agentes especiales para que se constituya en las
minas de la recurrente y practicara una investigacion con el fin de
suplementar los hechos que se durante la vista. Despues de considerar las
pruebas presentadas ante el y los hechos hallados por el comisionado
nombrado, el tribunal en su orden del 6 de mayo de 1939 declaro probados
los hechos siguientes:
"1. The discharges and indefinite suspensions alleged in the motion were
made by the respondent without first securing the consent of the Court in
violation of the order of this Court of January 23, 1939."
"2. The discharges and indefinite suspensions were made by the respondent
without just cause."
En la misma orden el Tribunal de Relaciones Industriales hace las siguientes
consideraciones que apoyan las conclusiones a que ha llegado:
"In the order of January 23, 1939, the respondent was enjoined to refrain from
discharging any laborer involved in the dispute without just cause and
without previous authority of the Court. It appears and no denial of the fact
is made by the respondent that the dismissal in one case and the alleged
suspension for an indefinite time in the other, which has all the effects of a
discharge, were made without seeking the authority of the Court."
"The charge that Haber and the group of nine laborers were indefinitely
suspended because of continuous loafing and refusal to work was not
established. The real motive behind the lay off was the completion of their
work 'outside.' Under the circumstances, the provision of the order of March
21, to the effect that these men should be returned to their work underground
after the completion of their work 'outside' should have been observed. The
respondent instead of complying with the order laid off the men."
"The discharge of Victoriano Madayag and his forty-four companions as a
result of the Moldero incident also lacks justification. In the case of Madayag,
although he was present with Haber when Moldero was attacked, neither one
is accused of the aggression. The two of them were conversing with Moldero
when the latter was stoned from behind without anybody apparently being
able to point out the aggressor. Less justification can be found for the
discharge of the forty-four men as a result of the incident. The investigation
disclosed that at the time of the assault, they were at the Creek busy with their
work. Both the distance and the topographical situation of the place where
the men were working, which is far and well below the bank of the place of
the incident, precluded their hearing or seeing clearly what transpired above
them in the place where Moldero was assaulted. An ocular inspection of the
premises made by the investigator confirmed this view. So far as is known,
despite the investigations conducted by the officials of the company and the
policemen of the camp and by the constabulary authorities in Baguio, the
person or persons responsible for the stoning has not been determined. The
precipitate and unwarranted dismissal of the forty-five men after the incident
seems to have been spurred by an over anxious desire on the part of the
company to get rid of these men."
"As previously found, in the order of this Court of March 21, 1939, about
134 underground laborers of the respondent were transferred and made to
work 'outside of the mines' or surface work. The majority of these men were
muckers, miners, timbermen, trammers, and mine helpers and had to their
favor from 6 months to 5 years service in the mines of the company and not
a few of them have done underground work in several capacities and in
different tunnels and divisions of the mine. Among them are found leaders
of the movement of the laborers for higher pay and better working conditions
which culminated in the strike called on January 3, 1939. These leaders have
been prominent in the formation of the union and its activities and in
connection with the strike. The temporary transfer of these men to 'outside'
work was authorized by the Court in said order on the strength of the
assurance of the respondent that no more work suited for them inside the
mines existed. It was directed, however, in the aforesaid order that as soon
as their work outside was completed the laborers should be immediately
returned to their respective work inside the mines. Subsequent events and
acts of the officials of the respondent in charge of the mines have convinced
the Court that work existed and exists for the men inside the tunnels and their
transfers were made to provide an opportunity to the company to dispense
with their services as soon as the work outside is completed. The unwarranted
discharges of Haber and nine others and those of Victoriano Madayag and
his forty-four companions amply demonstrated this conclusion. Upon the
company's own admission, as shown in its reports in the records and upon
the findings of the investigator of the Court, more than four hundred (400)
workers of different classes among them, muckers, miners, timbermen,
trammers and capataces coming from different mines in the region have been
employed by the respondent as fresh laborers. Almost all, if not all, of these
men are not members of the petitioner, the National Labor Union, Inc."
"At the same time the work in different tunnels and divisions in the mines
are allegedly being completed, the old workers are being laid off. Although
a small number of the men found transfer to other divisions being operated,
the majority are being left without work. Instead of laying hands on the old
men laid off and making them work in the tunnels needing hands and
reinstating in the tunnel work those laborers transferred to the 'outside'
department, the respondent preferred to take in and hire other workers
coming from different places because evidently they are not members of the
union."
"There is no doubt in the mind of the Court that a good number of the
positions given of the men who were employed after the strike numbering
more than four hundred to date could have been offered to the strikers who
are now doing work 'outside' and other who have been laid off on the
allegation that the underground work in which they were engaged had been
completed. To believe that not a single man or say a few among the latter
could have met the requirements set by the technical men of the company to
perform the different classes of work for which the fresh men were engaged
because they lack the required efficiency, experience, physique, intelligence
and skill of the four hundred fresh laborers would be shutting the eyes of the
court to realities. These men prior to the occurrence of the dispute, had
worked for months and many for years in the mines of the respondent and it
can not be easily accepted that their experience gained in their particular lines
in the very property of the respondent would be inferior to that attained by
the other workmen in other mines in the district for an equal period of time.
Their inefficiency as a whole group can not be successfully sustained now
because they were not transferred to surface work for this reason but because
of the alleged lack of work or completion of their work underground. Had
any of them been inefficient in the past, it can not be explained why such
laborer continued in the service as the records of the company abound with
instances of discharges made in the past of laborers who were found either
inefficient or incompentent or whose services were unsatisfactory."
"The company asserts ignorance of the union affiliations of the men in the
mine but the evidence stands uncontradicted that before the strike was called
a petition was presented by the men to the management carrying the
signatures of about eight hundred (800) workers demanding higher pay and
better working conditions. When the men struck, the operation of the mine
was completely paralyzed and there is a strong indication that a great
majority of the workers joined openly the strike. It would not have been
difficult for the respondent, with the means at its command, to find for itself
the employees and laborers who remained loyal to the company and to
consider those who struck as either members of the union or its
sympathizers."
"The respondent's claim as to the motive for the suspension and discharges
lacks substance and support in the evidence and the inferences to be drawn
from it. From all what appears, it is inferred that the respondent desires to
discourage membership in the union and to rout it if possible. The wholesale
discharges were the expression of such desire. The acts in the mind of the
Court, are calculated to have two effects. They will not only immediately
affect the discharged laborers but would also discourage other laborers from
joining or remaining members of the union."
"The allegation that it has always been the policy to consider the laborer's
connection with the company terminated upon termination of the working
place in which he is employed is not supported by the facts. It has been shown
that as a general rule when work in a place is completed, workers are
transferred to another working place in one level or to another level, although
in some instances days may elapse before all the men in a bunch can be
absorbed in different levels."
"It is alleged that mining operations in the property vary and involve several
types, and that a miner, for example, may be good in one type, but that it does
not necessarily follow that he can do good work in another type. And that the
employment of men in particular jobs not suitable for them increased the cost
of production as a result of lower output. Consequently; the respondent
vehemently insists in its right of selecting the men that it should employ and
that in the exercise of this right it should not be restrained or interfered with
by the Court. It contends that as to the fitness of a laborer to do a particular
type of work the opinion of the management or its technical men should be
respected. But all these arguments are meaningless in the face of the finding
of the Court that the underground laborers transferred to the 'outside' work
are not wanting in experience, efficiency and other conditions alleged to be
found among the fresh laborers. The special qualifications to do particular
work can not rightly be invoked in favor of the employment of new laborers
most especially in those cases of common or unskilled labor like muckers,
trammers, helpers, etc."
"Under normal circumstances, the exercise of Judgment of the employer in
selecting men he is to employ should not be interfered with. But when such
judgment is arbitrarily exercised to the prejudice of members of a labor union
whose rights should be safeguarded in consonance with the policies of the
law, the Court not only feels it justified but rightly its duty to interfere to
afford protection to the laborers affected."
La recurrente presento una extensa mocion de reconsideracion de la indicada
orden, mocion que fue denegada por la resolucion del 17 de agosto de 1939.
La orden del 6 de mayo de 1939 y la resolucion del 17 de agosto del mismo
ano son las que dieron lugar a la apelacion interpuesta por la recurrente.
La recurrente sostiene que la Ley No. 103 del Commonwealth, conforme ha
sido enmendada por las leyes Nos. 254 y 355, es anticonstitucional (1) porque
infringe el principio de separacion de poderes; (2) porque por ella la
Asamblea Nacional abdico de su facultad legislativa violando la doctrina
sobre delegacion de poderes; (3) porque las facultades judiciales que la ley
confiere al Tribunal de Relaciones Industriales, consideradas separadamente,
son arbitrarias e irrazonables y permiten la privacion de la libertad y
propiedad sin el debido proceso de ley; y (4) porque suponiendo que la ley
es valida y constitucional en su totalidad, la porcion, por lo menos, del
articulo 20 que dispone que el Tribunal de Relaciones Industriales "adoptara
sus reglamentos de procedimiento" debe declararse nula e invalida porque
infringe el articulo 13 del Titulo VIII de la Constitucion de Filipinas que
obliga al Tribunal de Relaciones Industriales a observar las reglas generales
de procedimiento aplicables a los tribunales de justicia. La recurrente alega
en este respecto que como a ella se le ha sometido a un procedimiento
arbitrario y distinto del que se aplica a los demas litigantes en 105 tribunales
de Filipinas, se le ha negado el debido proceso de ley y el principio de igual
proteccion ante las leyes.
La Ley No. 103 del Commonwealth que, como su titulo indica, provee a la
proteccion del obrero, creando un Tribunal de Relaciones Industriales
facultado para fijar un jornal minimo para los obreros y la renta maxima que
se ha de pagar por los inquilinos; para poner en vigor el arbitraje obligatorio
entre patronos o propietarios y empleados o inquilinos, respectivamente, y
prescribe penas por la infraccion de sus decretos, se ha promulgado por la
Asamblea Nacional en virtud de los preceptos contenidos en el articulo 5,
Titulo II; articulo 6, Titulo XIII; y articulos 1 y 2, Titulo VIII, de la
Constitucion de Filipinas que disponen:
"ART. 5. El Estado cuidara de promover la justicia social a fin de asegurar
el bienestar y la establidad economica de todo el pueblo."
"ART. 6. El Estado debera proteger a todos los trabajadores, especialmente
a las mujeres y a los menores de edad, y debera regular las relaciones entre
propietarios e inquilinos, y entre el trabajo y el capital en la industria y la
agricultura. El Estado podra establecer el arbitraje obligatorio."
"ART. 1. El Poder Judicial estara investido en un Tribunal Supremo y en
otros tribunales inferiores que se establezcan por ley."
"ART. 2. La Asamblea Nacional tendra la facultad de definir, prescribir y
distribuir la jurisdiccion de los varios tribunales, . . ."
En cumplimiento de los preceptos constitucionales transcritos, la Asamblea
Nacional promulgo la Ley No. 103 del Commonwealth que crea el Tribunal
de Relaciones Industriales que es un tribunal especial con facultades
judiciales (Pambusco Employees Union vs. Court of Industrial Relations et
al., G. R. No. 46727; Ang Tibay et al. vs. Court of Industrial Relations et al.,
G. R. No. 46496, opinion concurrente del Magistrado Jose P. Laurel). El
articulo 1 de dicha ley provee que el Tribunal de Relaciones Industriales
ejercera jurisdiccion para considerar, investigar, decidir y zanjar toda
cuestion, asunto, conflicto o disputa que afecte o surja entre patronos y
empleados u obreros, y entre propietarios e inquilinos o aparceros, y para
regular las relaciones entre los mismos, con arreglo y sujecion a las
disposiciones de la ley. El articulo 4 dispone que el tribunal tomara
conocimiento, para fines de prevencion, arbitraje, decision y ajuste, de
cualquier conflicto agrario o industrial que motive o de lugar a una huelga o
paro a causa de diferencias que surjan en la cuestion de jornales, participacion
o compensacion, horas de trabajo o condiciones de aparceria o empleo, entre
patronos y empleados u obreros, y entre propietarios e inquilinos o aparceros,
siempre que el numero de empleados, obreros, inquilinos o aparceros
afectados exceda de treinta, y que el conflicto agrario o industrial se someta
al tribunal por el Secretario del Trabajo, o por una o ambas partes interesadas,
cuando el referido Secretario del Trabajo certifique en cuanto a su existencia
y la conveniencia de la intervencion del tribunal en bien del interes publico.
Y el articulo 20 preceptua que en la vista, investigacion y resolucion de
cualquier cuestion o conflicto, y en el ejercicio de cualquiera de sus deberes
y facultades, el tribunal actuara de acuerdo con la justicia y la equidad y los
meritos substanciales de la causa, sin consideracion a los tecnicismos o
formulismos legales, y no estara sujeto a cualesquier reglas tecnicas de
prueba legal, sino que formara juicio de la manera que crea justo y equitativo.
La Ley No. 103 confiere al Tribunal de Relaciones Industriales plena facultad
discrecional para resolver y decidir las disputas agrarias e industriales de la
manera que crea justo y equitativo, prescindiendo de los tecnicismos y
formulismos legales, y la facultad asi concedida es judicial y no legislativa,
por lo que no infringe el principio de separacion de poderes, la prohibicion
sobre delegacion de facultades legislativas ni la proteccion iqualitaria ante la
ley. Como se ha dicho en el asunto de Cincinnati, W. & Z. R. Co. vs.
Comm'rs, of Clinton County '1852), 1 Ohio St., 88, citado en el asunto de
Rubi et al contra La Junta Provincial de Mindoro, 39 Jur. Fil., 675, "Existe
una verdadera diferencia entre delegar la facultad para dictar leyes, lo cual
supone necesariamente discrecion en cuanto a lo que hayan de ser aquellas,
y conferir tribucion o discrecion para hacerlas cumplir, discrecion que debe
ejecitarse con arreglo a la ley. La primera no puede hacerse en modo alguno;
contra la segunda no cabe interponer objecion alguna."
Para reforzar los argumentos en favor de la anticonstitucionalidad de la Ley
No. 103 la recurrente hace hincapie en lo resuelto en el asunto de Schechter
vs. United States (1935), 295 U. S., 496, 79 Law. ed. 270, en que el Tribunal
Supremo de los Estados Unidos declaro anticonstitucional la National
Recovery Act. Existe, sin embargo, una marcada diferencia entre dicho
asunto y el que se considera porque la National Recovery Act en vez de crear
un tribunal de justicia, creo juntas con facultades legislativas y autorizo al
Presidente de los Estados Unidos a promulgar codigos que prescriban las
reglas de precedimiento con el fin de realizar los propositos de la ley.
El ultimo fundamento que se alega en contra de la validez de la Ley No. 103
se hace consistir en que las facultades judiciales que concede al Tribunal de
Relaciones Industria!es son tan arbitrarias e irrazonables que permiten la
privacion de la libertad y la propiedad sin el debido proceso de ley; y que su
articulo 20, por lo menos, adolece de este defecto fundamental porque
confiere al Tribunal de Relaciones Industriales la facultad de dictar sus
propias reglas de procedimiento, lo cual contraviene el articulo 13, Titulo
VIII, de la Constitucion que prescribe que el Tribunal Supremo dictara reglas
concernientes a los escritos de alegaciones, practica y procedimiento
uniformes para todos los tribunales de la misma categoria.
El articulo 20 de la Ley No. 103 se lee asi:
"ART. 20. Reglamentos del Tribunal. El Tribunal de Relaciones Industriales
promulgara sus reglas de procedimiento y tendra las demas atribuciones que
en general corresponden a un tribunal de justicia: Entendiendose, sin
embargo, Que en la vista, investigacion y resolucion de cualquier cuestion o
conflicto, y en el ejercicio de cualquiera de sus deberes y facultades en virtud
de esta Ley, el Tribunal actuara de acuerdo con la justicia y la equidad y los
meritos'substanciales de la causa, sin consideracion a los tecnicismos o
formulismos legales, y no estara sujeto a cualesquiera reglas, tecnicas de
prueba legal, sino que formara juicio de la manera que crea justo y
equitativo."
Una simple lectura de dicho articulo demuestra que la ley no ha facultado al
Tribunal de Relaciones Industriales a investigar y resolver las cuestiones y
conflictos entre obreros y patronos, e inquilinos y propietarios, de una
manera arbitraria y caprichosa sin someterse a una norma de conducta
determinada. El articulo dispone claramente que las reglas de procedimiento
que adopte, a las cuales debera ajustarse el tribunal, deberan inspirarse en la
justicia y la equidad, y prescribe que el criterio que se forma debera fundarse
en los meritos substanciales de la causa sin consideracion a los tecnicismos
o formulismos legales. La Ley No. 103 que crea un tribunal especial
denominado Tribunal de Relaciones Industriales con facultad para dictar sus
propios reglamentos y para resolver y decidir los conflictos agrarios e
industriales de acuerdo con los dictados de la justicia y equidad, no puede ser
impugnada bajo el fundamento de que autoriza la privacion de la libertad y
propiedad sin el debido proceso de ley; ni pugna con el precepto del articulo
13, Titulo VIII, de la Constitucion porque el Tribunal de Relaciones
Industriales no es de la misma categoria que los juzgados municipales,
juzgados de paz y juzgados de primera instancia para los cuales se han
dictado los reglamentos de los tribunales por el Tribunal Supremo.
En relacion con la validez y constitucionalidad de la Ley No. 103 Y SUS
enmiendas, insertamos a continuacion la opinion concurrente del Magistrado
Laurel en el asunto de Ang Tibay, supra, cuyas observaciones serviran para
rebustecer la proposicion sentada de que la referida ley y sus enmiendas es
valida y no infringe la Constitucion.
"It should be observed at the outset that our Constitution was adopted in the
midst of surging unrest and dissatisfaction resulting from economic and
social distress which was threatening the stability of governments the world
over. Alive to the social and economic forces at work, the framers of our
Constitution boldly met the problems and difficulties which faced them and
endeavored to crystalize, with more or less fidelity, the political, social and
economic propositions of their age, and this they did, with the consciousness
that the political and philosophical aphorism of their generation will, in the
language of a great jurist, 'be doubted by the next and perhaps entirely
discarded by the third.' (Chief Justice Winslow in Gorgnis v. Falk Co., 147
WiS., 327; 133 N. W., 209.) Embodying the spirit of the present epoch,
general provisions were inserted in the Constitution which are intended to
bring about the needed social and economic equilibrium between component
elements of society through the application of what may be termed as the
justitia communis advocated by Grotius and Leibnits many years ago to be
secured through the counterbalancing of economic and social forces and
opportunities which should be regulated, if not controlled, by the State or
placed, as it were, in custodia societatis. 'The promotion of social justice to
in sure the well-being and economic security of all the people' was thus
inserted as vital principle in our Constitution. (Sec. 5, Art. II, Constitution.)
And in order that this declaration of principle may not just be an empty
medley of words, the Constitution in various sections thereof has provided
the means towards its realization. For instance, section 6 of Article XIII
declares that the State 'shall afford protection to labor, especially to working
women and minors, and shall regulate the relations between landowner and
tenant, and between labor and capital in industry and in agriculture.' The
same section also states that 'the State may provide for compulsory
arbitration.' In extraordinary cases mentioned in section 16, Article VI, of the
Constitution, the President of the Philippines may be authorized by law, for
a limited period and subject to such restrictions as the National Assembly
may prescribe, to 'promulgate rules and regulations to carry out a declared
national policy.' Albeit, almost at the same time the Congress of the United
States approved the National Labor Regulations Act (49 Stat., 449) on July
5, 1935, commonly known as the Wagner Act, we were in the Philippines
headway towards the adoption of our fundamental law, pursuant to
congressional authority given in the Tydings-McDuffie Independence Act,
approved March 24, 1934. In our Bill of Rights we now find the following
provision 'The right to form associations or societies for purposes not
contrary to law shall not be abridged.' (Par. 6, section 1, art. III, Constitution.)
What was an agitation in the United States which brought about the
recommendation by the Commission on Industrial Relations created by an
Act of Congress in 1912 for the adoption of a Labor Bill of Rights as an
amendment to the United States Constitution is, in our case, virtually an
accepted principle, which may be expanded and vitalized by legislation to
keep pace with the development of time and circumstances.
"By and large, these provisions in our Constitution all evince and express the
need of shifting emphasis to community interest with a view to affirmative
enhancement of human n conformity with the constitutional objective and
cognizant of the historical fact that industrial and agricultural disputes had
given rise to disquietude, bloodshed and revolution in our country, the
National Assembly enacted Commonwealth Act No. 103, entitled 'An Act to
afford protection of labor by creating a Court of Industrial Relations
empowered to fix minimum wages for laborers and maximum rental to be
paid by tenants, and to enforce compulsory arbitration between employers or
landlords, and employees or tenants, respectively; and by prescribing
penalties for the violation of the orders' and, later, Commonwealth Act No.
213, entitled, 'An Act to define and regulate legitimate labor organizations.'
(As to this last act, vide 'findings and policy,' preamble [sec. 1] of the Wagner
Act [49 Sta., 449]).
"Commonwealth Act No. 103, .approved October 29, 1936, was originally
Bill No. 700 of the National Assembly. More light is shed by the explanatory
statement of the Bill than by what transpired in the course of the deliberation
of the measure in the legislative chamber. 'El presente proyecto de ley,' thus
begins the explanatory statement of Bill No. 700, 'crea una Junta de
Relaciones Industriales . . . y provee el arbitraje obligatorio . . . de acuerdo
con el Articulo 6, Titulo XIII de la Constitucion, el cual provee que 'El Estado
podra establecer el arbitraje obligatorio." "Incorporating the conclusion
reached by a committee appointed, a year or so before it was observed that
'bajo la legislacion actual'" evidently referring to Act No. 4055 'no existe
instrumento adecuado para evitar las huelgas. El Departamento de Trabajo
desempena meramente el papel de pacificador entre las partes en controversia
y sus decisiones no son obligatorias ni para los patronos ni para los obreros.
El pueblo ha llegado a un grado de desarrollo industrial, que hace imperiosa
el que la intervencion del gobierno en estos conflictos sea mas efectiva . . .'
The creation of a Court of Industrial Relations was thus proposed, endowed
"no solamente del poder de arbitrar sino tambien del deber de investigar,
decidir, y hacer recomendaciones sobre las cuestiones en conflicto y los
problemas que afectan al Capital y al Trabajo en la Industria y la Agricultura
bajo la direccion del Presidente de la Mancomunidad de Filipinas o a peticion
del Secretario del Trabajo.'
"From what has been stated, it appears that the legislation which are now
called upon to construe was enacted in pursuance of what appears to be the
deliberate embodiment of a new social policy, founded on the conception of
a society integrated not by independent individuals dealing at arms' length,
but by interdependent members of a consolidated whole whose interests must
be protected against mutual aggression and warfare among and between
divers and diverse units which are impelled by countervailing and opposite
individual and group interests, and this is particularly true in the relationship
between labor and capital. Social and industrial disturbances which fifty
years ago were feudal-like and of isolated importance may now well result
in a serious strain upon the entire economic organism of the nation. In the
United States labor legislation has undergone a long process of development
too long to narrate here, culminating in the enactments of what were
commonly known as the Clayton Act, the Norris-La Guardia Act, and finally,
the Wagner Act and the Fair Labor Standards Act of 1938. The Wagner Act
created the National Labor Relations Board as an instrumentality of the
Federal Government in the settlement of labor disputes, which device is
aimed at the avoidance of unnecessary friction between labor and capital and
the establishment of industrial peace. Scrutiny of legislation in that country
and of pronouncements made by its Supreme Court reveals a continuous
renovation and change made necessary by the impact of changing needs and
economic pressure brought about by the irrisistible momentum of new social
and economic forces developed there. In the light of changes that have
occurred, it is doubted if the pronouncements made by the said Supreme
Court in 1905 (Lochner v. New York, 198, U. S., 45) or in 1908 (Adair v. U.
S., 52 Law. ed. 430, 208 U. S., 161, and Coppage v. Kansas, 236 U. S., 1)
cases which are relied upon by the petitioner in its printed memorandum still
retain their virtuality at the present time. In the Philippines, social legislation
has had a similar development, although of course to a much smaller degree
and of different adaptation giving rise to several attempts at meeting and
solving our peculiar social and economic problems. (See Commonwealth
Acts Nos. 37, 104, 139, 211; Presidential Message to the National Assembly,
September 2, 1936; Executive Order No. 49, S. 1936). The system of
voluntary arbitration devised by Act No. 4055 of the defunct Philippine
Legislature has apparently been abandoned by the enactment of the
aforementioned Commonwealth Acts Nos. 103 and 213. In the midst of
changes that have taken place, it may likewise be doubted if the
pronouncement made by this court in the case of People vs. Pomar (46 Phil.,
440) also relied upon by the petitioner in its printed memorandum still retains
its virtuality as a living principle. The policy of laissez faire has to some
extent given way to the assumption by the government of the right of
intervention even in contractual relations affected with public interests."
xxx xxx xxx
"In Commonwealth Act No. 103, and by it, our Government no longer
performs the role of a mere mediator or intervenor but that of the supreme
arbiter."
En su siguiente senalamiento de error la recurrente alega que la conducta del
investigador, la investigacion que practico y la manera como conocio del
asunto el Tribunal de Relaciones Industriales le privaron de una vista
imparcial y justa, y constituyen privacion de su propiedad sin el debido
proceso de ley. Para demostrar la carencia de fundamento del senalamiento
de error, creemos suficiente reproducir a continuacion la forma como se
practico la investigacion por el comisionado nombrado por el Tribunal de
Relaciones Industriales y la manera como se celebro la vista por dicho
tribunal, tal como se expone en la orden del 6 de mayo de 1939.
"Hearing was held on April 3, 1939, where witnesses for both the petitioners
and the respondent testified. To supplement the facts brought out at the
hearing, the Court ordered one of its Special Agents to proceed to the
premises of the mines to conduct a further investigation."
El comisionado fue nombrado por el Tribunal de Relaciones Industriales en
el ejercicio de su facultad conferida por el articulo 10 de la Ley No. 103 del
Commonwealth y en la inspeccion y vistas que celebraron el comisionado y
el tribunal, respectivamente, las partes estuvieron representadas
debidamente, fueron oidas y presentaron las pruebas que tenian disponibles
y creyeron conveniente ofrecer. Tales inspeccion y vistas tenian el caracter
de una vista judicial imparcial y justa y constituyen el debido proceso de ley
que garantiza la Constitucion.
Sostiene igualmente la recurrente que la orden del 6 de mayo de 1939 es
arbitraria porque no existen pruebas substanciales ni competentes que la
sostengan. Sobre este extremo, las conclusiones de hecho que ha sentado el
Tribunal de Relaciones Industriales demuestran que la orden impugnada esta
sostenida por el resultado de la investigacion practicada por el comisionado
y las pruebas que las partes presentaron directamente ante el Tribunal. En
dichas conclusiones se han considerado y analizado por el Tribunal de
Relaciones Industriales todas las pruebas que las partes presentaron y resulta
inevitable la conclusion de que la orden no es arbitraria y esta justificada y
sostenida por los hechos probados.
El ultimo seiialamiento de error guarda relacion con la parte de la orden del
6 de mayo de 1939 que dispone que la recurrente pague a los 55 obreros
repuestos los jornales que dejaron de percibir durante su separacion del
servicio. La recurrente sostiene que esta parte de la orden equivale a una
sentencia por danos y perjuicios que el Tribunal de Relaciones Industriales
no puede pronunciar por carecer de jurisdiccion. La pretension no es
meritoria. El Tribunal de Relaciones Industriales, conforme ya se ha dicho,
es un tribunal especial y como tal tiene facultad para disponer que la
recurrente pague los jornales de sus empleados y obreros que han sido
repuestos. Los articulos 1 y 4 de la Ley No. 103 del Commonwealth, segun
ha sido enmendado el primero por el articulo 1 de la Ley No. 254, confieren
facultad y jurisdiccion al Tribunal de Relaciones Industriales para conocer,
resolver y decidir todas las cuestiones, controversias y disputas entre
patronos y obreros y propietarios y terratenientes, y los jornales de los
obreros repuestos, durante el tiempo en que fueron separados del servicio,
estaban incluidos en las controversias y disputas sometidas al Departamento
del Trabajo y certificadas por este al Tribunal de Relaciones Industriales.
Se deniega el recurso de certiorari y se confirman la orden del 6 de mayo de
1939 y la resolucion del 17 de agosto del mismo ano, con las costas a la
recurrente. Asi se ordena.
UNIVERSITY OF IMMACULATE, CONCEPCION, INC. vs THE
HONORABLE SECRETARY OF LABOR
G.R. No. 151379 | 2005-01-14
AZCUNA, J.:
This is a petition for review of a decision of the Court of Appeals and the
resolution denying reconsideration thereof. The principal issue to be resolved
in this recourse is whether or not the Secretary of Labor, after assuming
jurisdiction over a labor dispute involving an employer and the certified
bargaining agent of a group of employees in the workplace, may legally order
said employer to reinstate employees terminated by the employer even if
those terminated employees are not part of the bargaining unit.
This case stemmed from the collective bargaining negotiations between
petitioner University of Immaculate Concepcion, Inc. (UNIVERSITY) and
respondent The UIC Teaching and Non-Teaching Personnel and Employees
Union (UNION). The UNION, as the certified bargaining agent of all rank
and file employees of the UNIVERSITY, submitted its collective bargaining
proposals to the latter on February 16, 1994. However, one item was left
unresolved and this was the inclusion or exclusion of the following positions
in the scope of the bargaining unit:
a. Secretaries
b. Registrars
c. Accounting Personnel
d. Guidance Counselors [1]
This matter was submitted for voluntary arbitration. On November 8, 1994,
the panel of voluntary arbitrators rendered a decision, the dispositive portion
of which states:
WHEREFORE, premises considered, the Panel hereby resolves to exclude
the above-mentioned secretaries, registrars, chief of the accounting
department, cashiers and guidance counselors from the coverage of the
bargaining unit. The accounting clerks and the accounting staff member are
hereby ordered included in the bargaining unit.[2]
The UNION moved for the reconsideration of the above decision. Pending,
however, the resolution of its motion, on December 9, 1994, it filed a notice
of strike with the National Conciliation and Mediation Board (NCMB) of
Davao City, on the grounds of bargaining deadlock and unfair labor practice.
During the thirty (30) day cooling-off period, two union members were
dismissed by petitioner. Consequently, the UNION went on strike on
January 20, 1995.
On January 23, 1995, the then Secretary of Labor, Ma. Nieves R. Confessor,
issued an Order assuming jurisdiction over the labor dispute. The dispositive
portion of the said Order states:
WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to
Article 263 (g) of the Labor Code, as amended, this Office hereby assumes
jurisdiction over the entire labor dispute at the University of the Immaculate
Concepcion College.
Accordingly, all workers are directed to return to work within twenty-four
(24) hours upon receipt of this Order and for Management to accept them
back under the same terms and conditions prevailing prior to the strike.
Parties are further directed to cease and desist from committing any or all
acts that might exacerbate the situation.
Finally, the parties are hereby directed to submit their respective position
papers within ten (10) days from receipt hereof.
SO ORDERED.[3]
On February 8, 1995, the panel of voluntary arbitrators denied the motion for
reconsideration filed by the UNION. The UNIVERSITY then furnished
copies of the panel’s denial of the motion for reconsideration and the
Decision dated November 8, 1995 to the individual respondents herein:
1. Lelian Concon – Grade School Guidance Counselor
2. Mary Ann de Ramos – High School Guidance Counselor
3. Jovita Mamburam – Secretary to [the] Vice President for Academic
Affairs/ Dean of College
4. Angelina Abadilla – Secretary to [the] Vice President for Academic
Affairs/ Dean of College
5. Melanie de la Rosa – Secretary to [the] Dean of [the] College of
Pharmacy/ Academic Affairs/ Dean of College
6. Zenaida Canoy – Secretary to [the] Vice President for Academic
Affairs/ Dean of College
7. Alma Villacarlos – Guidance Counselor (College)
8. Josie Boston – Grade School Psychometrician
9. Paulina Palma Gil – Cashier
10. Gemma Galope – High School Registrar
11. Leah Cruza – Guidance Counselor (College)
12. Delfa Diapuez – High School Psychometrician [4]
Thereafter, the UNIVERSITY gave the abovementioned individual
respondents two choices: to resign from the UNION and remain employed
as confidential employees or resign from their confidential positions and
remain members of the UNION. The UNIVERSITY relayed to these
employees that they could not remain as confidential employees and at the
same time as members or officers of the Union. However, the individual
respondents remained steadfast in their claim that they could still retain their
confidential positions while being members or officers of the Union. Hence,
on February 21, 1995, the UNIVERSITY sent notices of termination to the
individual respondents.
On March 10, 1995, the UNION filed another notice of strike, this time citing
as a reason the UNIVERSITY’s termination of the individual respondents.
The UNION alleged that the UNIVERSITY’s act of terminating the
individual respondents is in violation of the Order of the Secretary of Labor
dated January 23, 1995.
On March 28, 1995, the Secretary of Labor issued another Order reiterating
the directives contained in the January 23, 1995 Order. The Secretary also
stated therein that the effects of the termination from employment of these
individual respondents be suspended pending the determination of the
legality thereof. Hence, the UNIVERSITY was directed to reinstate the
individual respondents under the same terms and conditions prevailing prior
to the labor dispute.
The UNIVERSITY, thereafter, moved to reconsider the aforesaid Order on
March 28, 1995. It argued that the Secretary’s Order directing the
reinstatement of the individual respondents would render nugatory the
decision of the panel of voluntary arbitrators to exclude them from the
collective bargaining unit. The UNIVERSITY’s motion was denied by the
Secretary in an Order dated June 16, 1995, wherein the Secretary declared
that the decision of the panel of voluntary arbitrators to exclude the individual
respondents from the collective bargaining unit did not authorize the
UNIVERSITY to terminate their employment. The UNIVERSITY filed a
second motion for reconsideration, which was again denied in an Order dated
July 19, 1995. Undeterred, the UNIVERSITY filed a third motion for
reconsideration. In the Order dated August 18, 1995, then Acting Secretary
Jose S. Brilliantes denied the third motion for reconsideration, but modified
the two previous Orders by adding:
xxx
Anent the Union’s Motion, we find that superseding circumstances would
not warrant the physical reinstatement of the twelve (12) terminated
employees. Hence, they are hereby ordered placed under payroll
reinstatement until the validity of their termination is finally resolved.[5]
x x x
Still unsatisfied with the Order of the Secretary of Labor, the UNIVERSITY
filed a petition for certiorari with this Court on September 15, 1995.
However, its petition was referred to the Court of Appeals, following the
ruling in St. Martin Funeral Homes v. Court of Appeals. [6]
On October 8, 2001, the Court of Appeals promulgated its Decision,
affirming the questioned Orders of the Secretary of Labor. The dispositive
portion of the Decision states:
WHEREFORE, the instant petition is DISMISSED for lack of merit.[7]
The UNIVERSITY then moved for the reconsideration of the
abovementioned Decision,[8] but on January 10, 2002, the Court of Appeals
denied the motion on the ground that no new matters were raised therein that
would warrant a reconsideration.[9]
Hence, this petition.

The UNIVERSITY assigns the following error:
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN
AFFIRMING THE ORDERS OF THE SECRETARY OF LABOR THAT
SUSPENDED THE EFFECTS OF THE TERMINATION OF TWELVE
EMPLOYEES WHO WERE NOT PART OF THE BARGAINING UNIT
INVOLVED IN A LABOR DISPUTE OVER WHICH THE SECRETARY
OF LABOR ASSUMED JURISDICTION.[10]
The Court of Appeals relied upon the doctrine in St. Scholastica’s College v.
Torres.[11] In the case therein, this Court, citing International
Pharmaceuticals Incorporated v. the Secretary of Labor,[12] declared that:
x x x [T]he Secretary was explicitly granted by Article 263(g) of the Labor
Code the authority to assume jurisdiction over a labor dispute causing or
likely to cause a strike or lockout in an industry indispensable to the national
interest, and decide the same accordingly. Necessarily, the authority to
assume jurisdiction over the said labor dispute must include and extend to all
questions and controversies arising therefrom, including cases over which
the Labor Arbiter has exclusive jurisdiction.
The UNIVERSITY contends that the Secretary cannot take cognizance of an
issue involving employees who are not part of the bargaining unit. It insists
that since the individual respondents had already been excluded from the
bargaining unit by a final and executory order by the panel of voluntary
arbitrators, then they cannot be covered by the Secretary’s assumption order.
Indeed, it is clear that the act of the UNIVERSITY of dismissing the
individual respondents from their employment became the impetus for the
UNION to declare a second notice of strike. It is not a question anymore of
whether or not the terminated employees, the individual respondents herein,
are part of the bargaining unit. Any act committed during the pendency of
the dispute that tends to give rise to further contentious issues or increase the
tensions between the parties should be considered an act of exacerbation and
should not be allowed.
With respect to the Secretary’s Order allowing payroll reinstatement instead
of actual reinstatement for the individual respondents herein, an amendment
to the previous Orders issued by her office, the same is usually not allowed.
Article 263(g) of the Labor Code aforementioned states that all workers must
immediately return to work and all employers must readmit all of them under
the same terms and conditions prevailing before the strike or lockout. The
phrase “under the same terms and conditions” makes it clear that the norm is
actual reinstatement. This is consistent with the idea that any work stoppage
or slowdown in that particular industry can be detrimental to the national
interest.
In ordering payroll reinstatement in lieu of actual reinstatement, then Acting
Secretary of Labor Jose S. Brillantes said:
Anent the Union’s Motion, we find that superseding circumstances would
not warrant the physical reinstatement of the twelve (12) terminated
employees. Hence, they are hereby ordered placed under payroll
reinstatement until the validity of their termination is finally resolved.[18]

This Court finds no merit in the UNIVERSITY’s contention. In Metrolab
Industries, Inc. v. Roldan-Confessor,[13] this Court declared that it
recognizes the exercise of management prerogatives and it often declines to
interfere with the legitimate business decisions of the employer. This is in
keeping with the general principle embodied in Article XIII, Section 3 of the
Constitution,[14] which is further echoed in Article 211 of the Labor
Code.[15] However, as expressed in PAL v. National Labor Relations
Commission,[16] this privilege is not absolute, but subject to exceptions.
One of these exceptions is when the Secretary of Labor assumes jurisdiction
over labor disputes involving industries indispensable to the national interest
under Article 263(g) of the Labor Code. This provision states:
(g) When, in his opinion, there exists a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national interest,
the Secretary of Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of
automatically enjoining the intended or impending strike or lockout as
specified in the assumption or certification order. If one has already taken
place at the time of assumption or certification, all striking or locked out
employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same terms
and conditions prevailing before the strike or lockout. x x x
As an exception to the rule, payroll reinstatement must rest on special
circumstances that render actual reinstatement impracticable or otherwise not
conducive to attaining the purposes of the law.[19]
The “superseding circumstances” mentioned by the Acting Secretary of
Labor no doubt refer to the final decision of the panel of arbitrators as to the
confidential nature of the positions of the twelve private respondents, thereby
rendering their actual and physical reinstatement impracticable and more
likely to exacerbate the situation. The payroll reinstatement in lieu of actual
reinstatement ordered in these cases, therefore, appears justified as an
exception to the rule until the validity of their termination is finally resolved.
This Court sees no grave abuse of discretion on the part of the Acting
Secretary of Labor in ordering the same. Furthermore, the issue has not been
raised by any party in this case.
WHEREFORE, the Decision of the Court of Appeals dated October 8, 2001
and its Resolution dated January 10, 2002 in CA-G.R. SP No. 61693 are
AFFIRMED.
No costs.
SO ORDERED.

When the Secretary of Labor ordered the UNIVERSITY to suspend the effect
of the termination of the individual respondents, the Secretary did not exceed
her jurisdiction, nor did the Secretary gravely abuse the same. It must be
pointed out that one of the substantive evils which Article 263(g) of the Labor
Code seeks to curb is the exacerbation of a labor dispute to the further
detriment of the national interest. In her Order dated March 28, 1995, the
Secretary of Labor rightly held:

It is well to remind both parties herein that the main reason or rationale for
the exercise of the Secretary of Labor and Employment’s power under
Article 263(g) of the Labor Code, as amended, is the maintenance and
upholding of the status quo while the dispute is being adjudicated. Hence,
the directive to the parties to refrain from performing acts that will exacerbate
the situation is intended to ensure that the dispute does not get out of hand,
thereby negating the direct intervention of this office.

The University’s act of suspending and terminating union members and the
Union’s act of filing another Notice of Strike after this Office has assumed
jurisdiction are certainly in conflict with the status quo ante. By any
standards[,] these acts will not in any way help in the early resolution of the
labor dispute. It is clear that the actions of both parties merely served to
complicate and aggravate the already strained labor-management
relations.[17]
VICTORIA vs. INCIONG
G.R. No. L-49046 | 1988-01-26
FERNAN, J.:
Petition for review of the Order of the then Acting Secretary of Labor Amado
G. Inciong dated June 6, 1978, in NLRC Case No. RB-1764-75, reversing
the decision of the National Labor Relations Commission dated November
17, 1976 and holding that, under the law and facts of the case, there was no
necessity for private respondent to obtain a clearance for the termination of
petitioner's employment under Article 257 [b] of the Labor Code, as
amended, and that a mere report of such termination was sufficient, under
Section 11 [f]. Rule XIV of the Rules and Regulations implementing said
Code.
Petitioner Saturno Victoria was employed on March 17, 1956 by private
respondent Far East Broadcasting Company, Incorporated as a radio
transmitter operator. Sometime in July 1971, he and his co-workers
organized the Far East Broadcasting Company Employees Association. After
registering their association with the then Department of Labor, they
demanded recognition of said association by the company but the latter
refused on the ground that being a non-profit, non-stock, non-commercial
and religious corporation, it is not covered by Republic Act 875, otherwise
known as the Industrial Peace Act, the labor law enforced at that time.
Several conciliation meetings were held at the Department of Labor and in
those meetings, the Director of Labor Relations Edmundo Cabal advised the
union members that the company could not be forced to recognize them or to
bargain collectively with them because it is a non-profit, non-commercial and
religious organization. Notwithstanding such advice, the union members led
by Saturno Victoria as its president, declared a strike and picketed the
company's premises on September 6, 1972 for the purpose of seeking
recognition of the labor union.
As a countermeasure, the company filed a case for damages with preliminary
injunction against the strikers before the then Court of First Instance of
Bulacan docketed as Civil Case No. 750-V. Said court issued an injunction
enjoining the three-day-old strike staged against the company. The complaint
was later amended seeking to declare the strike illegal.
Upon the declaration of martial law on September 21, 1972 and the
promulgation of Presidential Decree No. 21 creating the National Labor
Relations Commission, the ad hoc National Labor Relations Commission
took cognizance of the strike through NLRC Case No. 0021 entitled "Far
East Broadcasting Company Employees Association, complainant versus Far
East Broadcasting Company, respondent" and NLRC Case No. 0285 entitled
"Generoso Serino, complainant, versus Far East Broadcasting Company,
respondent", both cases for reinstatement due to the company's refusal to
accept the union's offer to return to work during the pendency of the case in
the Court of First Instance.
On December 28, 1972, Arbitrator Flavio Aguas rendered a joint decision in
the two cases mentioned above recognizing the jurisdiction of the Court of
First Instance of Bulacan, the dispositive portion reading as follows:
"IN VIEW WHEREOF, and in the interest of justice and equity, it is hereby
directed that:
1. That striking members of the Far East Broadcasting Company Employees
Association return to their respective positions in the corporation;
2. The respondent Far East Broadcasting Company Incorporated to accept
back the returning strikers without loss in rank seniority or status;
3. The workers shall return to work within ten [10] days from receipt of this
resolution otherwise they shall be deemed to have forfeited such right;
4. The respondent shall report compliance with this decision within fifteen
[15] days from receipt hereof.
This Order shall, however, be without prejudice to whatever decision the
Court of First Instance of Bulacan may promulgate in Civil Case No. 750-V
and to the requirements the existing order may need of people working with
the mass media of communications.
IT IS SO ORDERED." 1
The decision of the arbitrator was successively appealed to the ad hoc
National Labor Relations Commission, the Secretary of Labor and the Office
of the President of the Philippines, and was affirmed in all instances.
On April 23, 1975, the Court of First Instance of Bulacan rendered judgment,
to wit:
"WHEREFORE, judgment is hereby rendered:
1. Making injunction against defendants permanent;
2. Declaring that this Court has jurisdiction to try and hear the instant case
despite Section 2 of Presidential Decree No. 2;
3. Declaring that plaintiff Far East Broadcasting Company is a non-profit
organization since it does not declare dividends;
4. Declaring that the strike admitted by the defendants to have been declared
by them is illegal inasmuch as it was for the purpose of compelling the
plaintiff-company to recognize their labor union which could not be legally
done because the plaintiffs were not covered by Republic Act 875;
5. Declaring that the evidence presented is insufficient to show that
defendants caused the damage to the plaintiff consequent on the destruction
of its relays and its antennas as well as its transmission lines.
SO ORDERED." 2
On April 24, 1975, by virtue of the above decision, the company notified
Saturno Victoria that he is dismissed effective April 26, 1975. Thereupon, he
filed Case No. RB-IV-1764 before the National Labor Relations
Commission, Regional Branch IV against the company alleging violation of
Article 267 of the Labor Code which requires clearance from the Secretary
of Labor for every shutdown of business establishments or dismissal of
employees. On February 27, 1976, Labor Arbiter Manuel B. Lorenzo
rendered a decision in petitioner's favor declaring the dismissal to be illegal,
thereby ordering reinstatement with full backwages. On appeal, the arbiter's
decision was affirmed by the National Labor Relations Commission. But
when the commission's decision was in turn appealed to the Secretary of
Labor, it was set aside and in lieu thereof the questioned Order dated June 6,
1978 was issued.
In view of its brevity and for a better understanding of the reasons behind it,
We quote the disputed Order in full:
"O R D E R
This is an appeal by respondent from the Decision of the National Labor
Relations Commission, dated November 17, 1976.
The Commission upheld the Decision of the labor arbiter dated February 27,
1976 ordering respondent to reinstate with full backwages herein
complainant Saturno A. Victoria based on the finding that respondent did not
file any application for clearance to terminate the services of complainant
before dismissing him from his employment.
Briefly the facts of this case are as follows:
Complainant Saturno Victoria is the president of the Far East Broadcasting
Company Employees Union. On September 8, 1972, the said union declared
a strike against respondent company. On September 11, 1972, respondent
filed with the Court of First Instance of Bulacan, Civil Case No. 750-V, for
the issuance of an injunction and a prayer that the strike be declared illegal.
On October 24, 1972, complainant together with the other strikers filed with
the ad hoc National Labor Relations Commission Case Nos. 0021 and 0285
for reinstatement. The Arbitrator rendered a decision in said case on
December 28, 1972, wherein he ordered respondent to reinstate complainants
subject to the following condition:
'This Order shall, however, be without prejudice to whatever decision the
Court of First Instance may promulgate on Civil Case No. 750-V and to the
requirements the existing order may need of people working with the mass
media of communications.'
Since said decision was affirmed by the NLRC, the Secretary of Labor, and
the Office of the President of the Philippines, complainants were reinstated
pursuant thereto.
In a Decision dated April 23, 1975, in Civil Case No. 750-V, promulgated by
the Court of First Instance of Bulacan, the strike staged by herein
complainant and the other strikers was declared illegal. Based on said
Decision, respondent dismissed complainant from his employment. Hence,
complainant filed the instant complaint for illegal dismissal.
Under the aforecited facts, we do not agree with the ruling of the Commission
now subject of this appeal that an application for clearance to terminate
herein complainant is mandatory on the part of respondent before terminating
complainant's services. We believe that what would have been necessary was
a report as provided for under Section 11 [f], Rule XIV, Book V of the Rules
and Regulations Implementing the Labor Code. Moreover, even if an
application for clearance was filed, this Office would have treated the same
as a report. Otherwise, it would render nugatory the Decision of the
Arbitrator dated December 28, 1972 in Case Nos. 0021 and 0285 which was
affirmed by the Commission, the Secretary of Labor and the Office of the
President of the Philippines, ordering his temporary reinstatement, subject to
whatever Decision the CFI of Bulacan may promulgate in Civil Case No.
750-V. It could be clearly inferred from said CFI Decisions that if the strike
is declared illegal, the strikers will be considered to have lost their
employment status under the then existing laws and jurisprudence, otherwise
strikers could stage illegal strike with impunity. Since the strike was declared
illegal, respondent acted in good faith when it dispensed with the services of
herein complainant.
For failure of respondent to file the necessary report and based on equitable
considerations, complainant should be granted separation pay equivalent to
one-half month salary for every year of service.
WHEREFORE, let the decision of the National Labor Relations Commission
dated November 17, 1976 be, as it is hereby, set aside and a new judgment is
entered, ordering respondent to give complainant separation pay equivalent
to one-half month salary for every year of service.
SO ORDERED." 3
Petitioner elevates to Us for review on Certiorari the aforequoted Order
seeking to persuade this Court that then Acting Secretary of Labor Amado
G. Inciong committed reversible error in holding that, under the law and facts
of this case, a mere report of the termination of the services of said petitioner
was sufficient. Petitioner assigns the following errors:
I twice. In this regard, the mandatory rule on clearance need not be applied.
WHETHER OR NOT A CLEARANCE FROM THE SECRETARY OF
LABOR IS STILL NECESSARY BEFORE THE PETITIONER HEREIN
COULD BE DISMISSED CONSIDERING THE RESTRICTIVE
CONDITION IN THE DECISION OF THE COMPULSORY
ARBITRATOR IN NLRC CASE NOS. 0021 AND 0285.
II
WHETHER OR NOT THE DECISION OF THE COURT OF FIRST
INSTANCE OF BULACAN IN CIVIL CASE NO. 750-V IPSO FACTO
GAVE THE RESPONDENT COMPANY AUTHORITY TO DISMISS
HEREIN PETITIONER WITHOUT ANY CLEARANCE FROM THE
SECRETARY OF LABOR. 4
The substantive law on the matter enforced during the time of petitioner's
dismissal was Article 267 [b] of the Labor Code [in conjunction with the
rules and regulations implementing said substantive law.] Article 267 reads:
"No employer that has no collective bargaining agreement may shut down
his establishment or dismiss or terminate the service of regular employees
with at least one [1] year of service except managerial employees as defined
in this book without previous written clearance from the Secretary of Labor."
Petitioner maintains that the abovecited provision is very clear. It does not
make any distinction as to the ground for dismissal. Whether or not the
dismissal sought by the employer company is for cause, it is imperative that
the company must apply for a clearance from the Secretary of Labor."
In a recent case 5 penned by Justice Abraham F. Sarmiento promulgated on
June 30, 1987, we had occasion to rule in agreement with the findings of then
Presidential Assistant for Legal Affairs Ronaldo Zamora that the purpose in
requiring a prior clearance from the Secretary of Labor in cases of shutdown
or dismissal of employees, is to afford the Secretary ample opportunity to
examine and determine the reasonableness of the request.
The Solicitor General, in relation to said pronouncement and in justification
of the Acting Labor Secretary's decision makes the following observations:
"It is true that Article 267 [b] of the Labor Code requires that before any
business establishment is shutdown or any employee is dismissed, written
clearance from the Secretary of Labor must first be obtained. It is likewise
true that in the case of petitioner, there was no written clearance in the usual
form. But while there may not have been strict compliance with Article 267
there was substantial compliance. The Secretary of Labor twice manifested
his conformity to petitioner's dismissal.
"The first manifestation of acquiescence by the Secretary of Labor to the
dismissal of petitioner was his affirmance of the decision of the arbitrator in
NLRC Case Nos. 0021 and 0285. The arbitrator ordered the reinstatement of
the strikers but subject to the decision of the CFI of Bulacan in Civil Case
No. 750-V. The Secretary of Labor affirmed the decision of the arbitrator. In
effect, therefore, the Secretary of Labor issued a carte blanche to the CFI of
Bulacan to either dismiss or retain petitioner.
"The second manifestation was his decision in NLRC Case No. RB-IV-1764-
65 wherein he said that clearance for the dismissal of petitioner was not
required, but only a report; that even if an application for clearance was filed,
he would have treated it as a mere report. While this is not prior clearance in
the contemplation of Article 267, it is at least a ratification of the dismissal
of petitioner." 6
We agree with the Solicitor General. Technically speaking, no clearance was
obtained by private respondent from the then Secretary of Labor, the last step
towards full compliance with the requirements of law on the matter of
dismissal of employees. However, the rationale behind the clearance
requirement was fully met. The Secretary of Labor was apprised of private
respondent's intention to terminate the services of petitioner. This in effect is
an application for clearance to dismiss petitioner from employment. The
affirmance of the restrictive condition in the dispositive portion of the labor
arbiter's decision in NLRC Case Nos. 0021 and 0285 by the Secretary of
Labor and the Office of the President of the Philippines, signifies a grant of
authority to dismiss petitioner in case the strike is declared illegal by the
Court of First Instance of Bulacan. Consequently and as correctly stated by
the Solicitor General, private respondent acted in good faith when it
terminated the employment of petitioner upon a declaration of illegality of
the strike by the Court of First Instance of Bulacan. Moreover, the then
Secretary of Labor manifested his conformity to the dismissal, not once, but
The strike staged by the union in 1972 was a futile move. The law then
enforced, Republic Act 875 specifically excluded respondent company from
its coverage. Even if the parties had gone to court to compel recognition, no
positive relief could have been obtained since the same was not sanctioned
by law. Because of this, there was no necessity on the part of private
respondent to show specific acts of petitioner during the strike to justify his
dismissal.
This is a matter of responsibility and of answerability. Petitioner as a union
leader, must see to it that the policies and activities of the union in the conduct
of labor relations are within the precepts of law and any deviation from the
legal boundaries shall be imputable to the leader. He bears the responsibility
of guiding the union along the path of law and to cause the union to demand
what is not legally demandable, would foment anarchy which is a prelude to
chaos.
Petitioner should have known and it was his duty to impart this imputed
knowledge to the members of the union that employees and laborers in non-
profit organizations are not covered by the provisions of the Industrial Peace
Act and the Court of Industrial Relations [in the case at bar, the Court of First
Instance] has no jurisdiction to entertain petitions of labor unions or
organizations of said non-profit organizations for certification as the
exclusive bargaining representatives of said employees and laborers. 7
As a strike is an economic weapon at war with the policy of the Constitution
and the law at that time, a resort thereto by laborers shall be deemed to be a
choice of remedy peculiarly their own, and outside of the statute, and as such,
the strikers must accept all the risks attendant upon their choice. If they
succeed and the employer succumbs, the law will not stand in their way in
the enjoyment of the lawful fruits of their victory. But if they fail, they cannot
thereafter invoke the protection of the law for the consequences of their
conduct unless the right they wished vindicated is one which the law will, by
all means, protect and enforce. 8

We further agree with the Acting Secretary of Labor that what was required
in the case of petitioner's dismissal was only a report as provided under
Section ll [f] of Rule XIV of the Rules and Regulations implementing the
Labor Code which provides:

"Every employer shall submit a report to the Regional Office in accordance

with the form presented by the Department on the following instances of
termination of employment, suspension, lay-off or shutdown which may be
effected by the employer without prior clearance within five [5] days
thereafter:

xxx xxx xxx

[f] All other terminations of employment, suspension, lay-offs or shutdowns,

not otherwise specified in this and in the immediately preceding sections."

To hold otherwise would render nugatory the conditions set forth in the
decision of Labor Arbiter Aguas on the basis of which petitioner was
temporarily reinstated.

Inasmuch as there was a valid and reasonable ground to dismiss petitioner

but no report as required by the implementing rules and regulations of the
Labor Code was filed by respondent Company with the then Department of
Labor, petitioner as held by the Acting Secretary of Labor, is entitled to
separation pay equivalent to one-half month salary for every year of service.

WHEREFORE, the petition is dismissed. The decision of the acting

Secretary of Labor is AFFIRMED in toto.

SO ORDERED.
ESTATE OF NELSON R. DULAY vs. ABOITIZ JEBSEN MARITIME,
INC.
G.R. No. 172642 June 13, 2012
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to reverse and set aside the Decision1 and
Resolution2 dated July 11, 2005 and April 18, 2006 of the Court of Appeals
(CA) in CA-G.R. SP No. 76489.
The factual and procedural antecedents of the case, as summarized by the
CA, are as follows:
Nelson R. Dulay (Nelson, for brevity) was employed by [herein respondent]
General Charterers Inc. (GCI), a subsidiary of co-petitioner [herein co-
respondent] Aboitiz Jebsen Maritime Inc. since 1986. He initially worked as
an ordinary seaman and later as bosun on a contractual basis. From
September 3, 1999 up to July 19, 2000, Nelson was detailed in petitioners’
vessel, the MV Kickapoo Belle.
On August 13, 2000, or 25 days after the completion of his employment
contract, Nelson died due to acute renal failure secondary to septicemia. At
the time of his death, Nelson was a bona fide member of the Associated
Marine Officers and Seaman’s Union of the Philippines (AMOSUP), GCI’s
collective bargaining agent. Nelson’s widow, Merridy Jane, thereafter
claimed for death benefits through the grievance procedure of the Collective
Bargaining Agreement (CBA) between AMOSUP and GCI. However, on
January 29, 2001, the grievance procedure was "declared deadlocked" as
petitioners refused to grant the benefits sought by the widow.
On March 5, 2001, Merridy Jane filed a complaint with the NLRC Sub-
Regional Arbitration Board in General Santos City against GCI for death and
medical benefits and damages.
On March 8, 2001, Joven Mar, Nelson’s brother, received ₱20,000.00 from
[respondents] pursuant to article 20(A)2 of the CBA and signed a
"Certification" acknowledging receipt of the amount and releasing AMOSUP
from further liability. Merridy Jane contended that she is entitled to the
aggregate sum of Ninety Thousand Dollars ($90,000.00) pursuant to
[A]rticle 20 (A)1 of the CBA x x x
xxxx
Merridy Jane averred that the P20,000.00 already received by Joven Mar
should be considered advance payment of the total claim of US$90,000.[00].
[Herein respondents], on the other hand, asserted that the NLRC had no
jurisdiction over the action on account of the absence of employer-employee
relationship between GCI and Nelson at the time of the latter’s death. Nelson
also had no claims against petitioners for sick leave allowance/medical
benefit by reason of the completion of his contract with GCI. They further
alleged that private respondent is not entitled to death benefits because
petitioners are only liable for such "in case of death of the seafarer during the
term of his contract pursuant to the POEA contract" and the cause of his death
is not work-related. Petitioners admitted liability only with respect to article
20(A)2 [of the CBA]. x x x
xxxx
However, as petitioners stressed, the same was already discharged.
The Labor Arbiter ruled in favor of private respondent. It took cognizance of
the case by virtue of Article 217 (a), paragraph 6 of the Labor Code and the
existence of a reasonable causal connection between the employer-employee
relationship and the claim asserted. It ordered the petitioner to pay
₱4,621,300.00, the equivalent of US$90,000.00 less ₱20,000.00, at the time
of judgment x x x
xxxx
The Labor Arbiter also ruled that the proximate cause of Nelson’s death was
not work-related.
On appeal, [the NLRC] affirmed the Labor Arbiter’s decision as to the grant
of death benefits under the CBA but reversed the latter’s ruling as to the
proximate cause of Nelson’s death.3
Herein respondents then filed a special civil action for certiorari with the CA
contending that the NLRC committed grave abuse of discretion in affirming
the jurisdiction of the NLRC over the case; in ruling that a different provision
of the CBA covers the death claim; in reversing the findings of the Labor
Arbiter that the cause of death is not work-related; and, in setting aside the
release and quitclaim executed by the attorney-in-fact and not considering
the P20,000.00 already received by Merridy Jane through her attorney-in-
fact.
On July 11, 2005, the CA promulgated its assailed Decision, the dispositive
portion of which reads as follows:
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED
and the case is REFERRED to the National Conciliation and Mediation
Board for the designation of the Voluntary Arbitrator or the constitution of a
panel of Voluntary Arbitrators for the appropriate resolution of the issue on
the matter of the applicable CBA provision.
SO ORDERED.4
The CA ruled that while the suit filed by Merridy Jane is a money claim, the
same basically involves the interpretation and application of the provisions
in the subject CBA. As such, jurisdiction belongs to the voluntary arbitrator
and not the labor arbiter.
Petitioner filed a Motion for Reconsideration but the CA denied it in its
Resolution of April 18, 2006.
Hence, the instant petition raising the sole issue of whether or not the CA
committed error in ruling that the Labor Arbiter has no jurisdiction over the
case.
Petitioner contends that Section 10 of Republic Act (R.A.) 8042, otherwise
known as the Migrant Workers and Overseas Filipinos Act of 1995, vests
jurisdiction on the appropriate branches of the NLRC to entertain disputes
regarding the interpretation of a collective bargaining agreement involving
migrant or overseas Filipino workers. Petitioner argues that the
abovementioned Section amended Article 217 (c) of the Labor Code which,
in turn, confers jurisdiction upon voluntary arbitrators over interpretation or
implementation of collective bargaining agreements and interpretation or
enforcement of company personnel policies.
The pertinent provisions of Section 10 of R.A. 8042 provide as follows:
SEC. 10. Money Claims. - Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including
claims for actual, moral, exemplary and other forms of damages.
Article 217(c) of the Labor Code, on the other hand, states that:
xxxx
(c) Cases arising from the interpretation or implementation of collective
bargaining agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed by the Labor
Arbiter by referring the same to the grievance machinery and voluntary
arbitration as may be provided in said agreements.
On their part, respondents insist that in the present case, Article 217,
paragraph (c) as well as Article 261 of the Labor Code remain to be the
governing provisions of law with respect to unresolved grievances arising
from the interpretation and implementation of collective bargaining
agreements. Under these provisions of law, jurisdiction remains with
voluntary arbitrators.
Article 261 of the Labor Code reads, thus:
ARTICLE 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary
Arbitrators. – The Voluntary Arbitrator or panel of Voluntary Arbitrators
shall have original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or implementation of
the Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies referred to in
the immediately preceding article. Accordingly, violations of a Collective
Bargaining Agreement, except those which are gross in character, shall no
longer be treated as unfair labor practice and shall be resolved as grievances
under the Collective Bargaining Agreement. For purposes of this article,
gross violations of Collective Bargaining Agreement shall mean flagrant
and/or malicious refusal to comply with the economic provisions of such
agreement.
The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes,
grievances or matters under the exclusive and original jurisdiction of the
Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately
dispose and refer the same to the Grievance Machinery or Voluntary
Arbitration provided in the Collective Bargaining Agreement.
The petition is without merit.
It is true that R.A. 8042 is a special law governing overseas Filipino workers.
However, a careful reading of this special law would readily show that there
is no specific provision thereunder which provides for jurisdiction over
disputes or unresolved grievances regarding the interpretation or
implementation of a CBA. Section 10 of R.A. 8042, which is cited by
petitioner, simply speaks, in general, of "claims arising out of an employer-
employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages." On the other hand, Articles 217(c)
and 261 of the Labor Code are very specific in stating that voluntary
arbitrators have jurisdiction over cases arising from the interpretation or
implementation of collective bargaining agreements. Stated differently, the
instant case involves a situation where the special statute (R.A. 8042) refers
to a subject in general, which the general statute (Labor Code) treats in
particular.5 In the present case, the basic issue raised by Merridy Jane in her
complaint filed with the NLRC is: which provision of the subject CBA
applies insofar as death benefits due to the heirs of Nelson are concerned.
The Court agrees with the CA in holding that this issue clearly involves the
interpretation or implementation of the said CBA. Thus, the specific or
special provisions of the Labor Code govern.
In any case, the Court agrees with petitioner's contention that the CBA is the
law or contract between the parties. Article 13.1 of the CBA entered into by
and between respondent GCI and AMOSUP, the union to which petitioner
belongs, provides as follows:
The Company and the Union agree that in case of dispute or conflict in the
interpretation or application of any of the provisions of this Agreement, or
enforcement of Company policies, the same shall be settled through
negotiation, conciliation or voluntary arbitration. The Company and the
Union further agree that they will use their best endeavor to ensure that any
dispute will be discussed, resolved and settled amicably by the parties hereof
within ninety (90) days from the date of filing of the dispute or conflict and
in case of failure to settle thereof any of the parties retain their freedom to
take appropriate action.6 (Emphasis supplied)
From the foregoing, it is clear that the parties, in the first place, really
intended to bring to conciliation or voluntary arbitration any dispute or
conflict in the interpretation or application of the provisions of their CBA. It
is settled that when the parties have validly agreed on a procedure for
resolving grievances and to submit a dispute to voluntary arbitration then that
procedure should be strictly observed.7
It may not be amiss to point out that the abovequoted provisions of the CBA
are in consonance with Rule VII, Section 7 of the present Omnibus Rules and
Regulations Implementing the Migrant Workers and Overseas Filipinos Act
of 1995, as amended by Republic Act No. 10022, which states that "[f]or
OFWs with collective bargaining agreements, the case shall be submitted for
voluntary arbitration in accordance with Articles 261 and 262 of the Labor
Code." The Court notes that the said Omnibus Rules and Regulations were
promulgated by the Department of Labor and Employment (DOLE) and the
Department of Foreign Affairs (DFA) and that these departments were
mandated to consult with the Senate Committee on Labor and Employment
and the House of Representatives Committee on Overseas Workers Affairs.
In the same manner, Section 29 of the prevailing Standard Terms and
Conditions Governing the Employment of Filipino Seafarers on Board Ocean
Going Vessels, promulgated by the Philippine Overseas Employment
Administration (POEA), provides as follows:
Section 29. Dispute Settlement Procedures. − In cases of claims and disputes
arising from this employment, the parties covered by a collective bargaining
agreement shall submit the claim or dispute to the original and exclusive
jurisdiction of the voluntary arbitrator or panel of arbitrators. If the parties
are not covered by a collective bargaining agreement, the parties may at their
option submit the claim or dispute to either the original and exclusive
jurisdiction of the National Labor Relations Commission (NLRC), pursuant
to Republic Act (RA) 8042, otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction
of the voluntary arbitrator or panel of arbitrators. If there is no provision as
to the voluntary arbitrators to be appointed by the parties, the same shall be
appointed from the accredited voluntary arbitrators of the National
Conciliation and Mediation Board of the Department of Labor and
Employment.
The Philippine Overseas Employment Administration (POEA) shall exercise
original and exclusive jurisdiction to hear and decide disciplinary action on
cases, which are administrative in character, involving or arising out of
violations of recruitment laws, rules and regulations involving employers,
principals, contracting partners and Filipino seafarers. (Emphasis supplied)
It is clear from the above that the interpretation of the DOLE, in consultation
with their counterparts in the respective committees of the Senate and the
House of Representatives, as well as the DFA and the POEA is that with
respect to disputes involving claims of Filipino seafarers wherein the parties
are covered by a collective bargaining agreement, the dispute or claim should
be submitted to the jurisdiction of a voluntary arbitrator or panel of
arbitrators. It is only in the absence of a collective bargaining agreement that
parties may opt to submit the dispute to either the NLRC or to voluntary
arbitration. It is elementary that rules and regulations issued by
administrative bodies to interpret the law which they are entrusted to enforce,
have the force of law, and are entitled to great respect.8 Such rules and
regulations partake of the nature of a statute and are just as binding as if they
have been written in the statute itself.9 In the instant case, the Court finds no
cogent reason to depart from this rule.1âwphi1
The above interpretation of the DOLE, DFA and POEA is also in consonance
with the policy of the state to promote voluntary arbitration as a mode of
settling labor disputes.10
No less than the Philippine Constitution provides, under the third paragraph,
Section 3, Article XIII, thereof that "[t]he State shall promote the principle
of shared responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to foster industrial peace."
Consistent with this constitutional provision, Article 211 of the Labor Code
provides the declared policy of the State "[t]o promote and emphasize the
primacy of free collective bargaining and negotiations, including voluntary
arbitration, mediation and conciliation, as modes of settling labor or
industrial disputes."
On the basis of the foregoing, the Court finds no error in the ruling of the CA
that the voluntary arbitrator has jurisdiction over the instant case.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 76489 dated July 11, 2005 and April
18, 2006, respectively, are AFFIRMED.
SO ORDERED.
ST. MARTIN FUNERAL HOME vs. NATIONAL LABOR
RELATIONS COMMISSION
G.R. No. 130866 | 1998-09-16
REGALADO, J.:
The present petition for certiorari stemmed from a complaint for illegal
dismissal filed by herein private respondent before the National Labor
Relations Commission (NLRC), Regional Arbitration Branch No. III, in San
Fernando, Pampanga. Private respondent alleges that he started working as
Operations Manager of petitioner St. Martin Funeral Home on February 6,
1995. However, there was no contract of employment executed between him
and petitioner nor was his name included in the semi-monthly payroll. On
January 22, 1996, he was dismissed from his employment for allegedly
misappropriating P38,000.00 which was intended for payment by petitioner
of its value added tax (VAT) to the Bureau of Internal Revenue (BIR).1
[Rollo, 17.]
Petitioner on the other hand claims that private respondent was not its
employee but only the uncle of Amelita Malabed, the owner of petitioner St.
Martin's Funeral Home. Sometime in 1995, private respondent, who was
formerly working as an overseas contract worker, asked for financial
assistance from the mother of Amelita. Since then, as an indication of
gratitude, private respondent voluntarily helped the mother of Amelita in
overseeing the business.
In January 1996, the mother of Amelita passed away, so the latter she took
over the management of the business. She then discovered that there were
arrears in the payment of taxes and other government fees, although the
records purported to show that the same were already paid. Amelita then
made some changes in the business operation and private respondent and his
wife were no longer allowed to participate in the management thereof. As a
consequence, the latter filed a complaint charging that petitioner had illegally
terminated his employment.2 [Ibid., 18-19.]
Based on the position papers of the parties, the labor arbiter rendered a
decision in favor of petitioner on October 25, 1996 declaring that no
employer-employee relationship existed between the parties and, therefore,
his office had no jurisdiction over the case.3 [Ibid., 19.]
Not satisfied with the said decision, private respondent appealed to the NLRC
contending that the labor arbiter erred (1) in not giving credence to the
evidence submitted by him; (2) in holding that he worked as a "volunteer"
and not as an employee of St. Martin Funeral Home from February 6, 1995
to January 23, 1996, or a period of about one year; and (3) in ruling that there
was no employer-employee relationship between him and petitioner.4 [Ibid.,
16.]
On June 13, 1997, the NLRC rendered a resolution setting aside the
questioned decision and remanding the case to the labor arbiter for immediate
appropriate proceedings.5 [Ibid., 21.] Petitioner then filed a motion for
reconsideration which was denied by the NLRC in its resolution dated
August 18, 1997 for lack of merit,6 [Ibid., 23-24.] hence the present petition
alleging that the NLRC committed grave abuse of discretion.7 [Ibid., 6.]
Before proceeding further into the merits of the case at bar, the Court feels
that it is now exigent and opportune to reexamine the functional validity and
systemic practicability of the mode of judicial review it has long adopted and
still follows with respect to decisions of the NLRC. The increasing number
of labor disputes that find their way to this Court and the legislative changes
introduced over the years into the provisions of Presidential Decree (P.D.)
No. 442 (The Labor Code of the Philippines and Batas Pambansa Blg. (B.P.
No.) 129 (The Judiciary Reorganization Act of 1980) now stridently call for
and warrant a reassessment of that procedural aspect.
We prefatorily delve into the legal history of the NLRC. It was first
established in the Department of Labor by P.D. No. 21 on October 14, 1972,
and its decisions were expressly declared to be appealable to the Secretary of
Labor and, ultimately, to the President of the Philippines.
On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines,
the same to take effect six months after its promulgation. 8 [Article 2.]
Created and regulated therein is the present NLRC which was attached to the
Department of Labor and Employment for program and policy coordination
only. 9 [Article 213.] Initially, Article 302 (now, Article 223) thereof also
granted an aggrieved party the remedy of appeal from the decision of the
NLRC to the Secretary of Labor, but P.D. No. 1391 subsequently amended
said provision and abolished such appeals. No appellate review has since then
been provided for.
Thus, to repeat, under the present state of the law, there is no provision for
appeals from the decision of the NLRC.10 [While Art. 223 bears the epigraph
of "Appeal," it actually refers only to decisions, awards, or orders of the labor
arbiter which shall be final and executory unless appealed to the NLRC by
any or both parties within ten calendar days from receipt thereof.] The present
Section 223, as last amended by Section 12 of R.A. No. 6715, instead merely
provides that the Commission shall decide all cases within twenty days from
receipt of the answer of the appellee, and that such decision shall be final and
executory after ten calendar days from receipt thereof by the parties.
When the issue was raised in an early case on the argument that this Court
has no jurisdiction to review the decisions of the NLRC, and formerly of the
Secretary of Labor, since there is no legal provision for appellate review
thereof, the Court nevertheless rejected that thesis. It held that there is an
underlying power of the courts to scrutinize the acts of such agencies on
questions of law and jurisdiction even though no right of review is given by
statute; that the purpose of judicial review is to keep the administrative
agency within its jurisdiction and protect the substantial rights of the parties;
and that it is that part of the checks and balances which restricts the separation
of powers and forestalls arbitrary and unjust adjudications.11 [San Miguel
Corporation vs. Secretary of Labor, et al., G.R. No. L-39195, May 15, 1975,
64 SCRA 56; Scott vs. Inciong, et al. G.R. No. L-38868, December 29, 1975,
68 SCRA 473; Bordeos, et al., vs. NLRC, et al., G.R. Nos. 115314-23,
September 26, 1996, 262 SCRA 424.]
Pursuant to such ruling, and as sanctioned by subsequent decisions of this
Court, the remedy of the aggrieved party is to timely file a motion for
reconsideration as a precondition for any further or subsequent remedy,12
[Zapata vs. NLRC, et al., G.R. No. 77827, July 5, 1989, 175 SCRA 56.] and
then seasonably avail of the special civil action of certiorari under Rule 65,
13 [See, for instance, Pure Foods Corporation vs. NLRC, et al., G.R. No.
78591, March 21, 1989, 171 SCRA 415.] for which said Rule has now fixed
the reglementary period of sixty days from notice of the decision. Curiously,
although the 10-day period for finality of the decision of the NLRC may
already have lapsed as contemplated in Section 223 of the Labor Code, it has
been held that this Court may still take cognizance of the petition for
certiorari on jurisdictional and due process considerations if filed within the
reglementary period under Rule 65.14 [Mantrade, etc. vs. Bacungan, et al.,
G.R. No. L-48437, September 30, 1986, 144 SCRA 511.]
Turning now to the matter of judicial review of NLRC decisions, B.P. No.
129 originally provided as follows:
SEC. 9. Jurisdiction. - The Intermediate Appellate Court shall exercise:
(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari,
habeas corpus, and quo warranto, and auxiliary writs or processes, whether
or not in aid of its appellate jurisdiction;
(2) Exclusive original jurisdiction over actions for annulment of judgments
of Regional Trial Courts; and
(3) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders, or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards, or commissions, except those falling
within the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.
The Intermediate Appellate Court shall have the power to try cases and
conduct hearings, receive evidence and perform any and all acts necessary to
resolve factual issues raised in cases falling within its original and appellate
jurisdiction, including the power to grant and conduct new trials or further
proceedings.
These provisions shall not apply to decisions and interlocutory orders issued
under the Labor Code of the Philippines and by the Central Board of
Assessment Appeals.15 [75 O.G. 4781, August 29, 1983.]
Subsequently, and as it presently reads, this provision was amended by R.A.
No. 7902 effective March 18, 1995, to wit:
SEC. 9. Jurisdiction. - The Court of Appeals shall exercise:
(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari,
habeas corpus, and quo warranto, and auxiliary writs or processes, whether
or not in aid of its appellate jurisdiction;
(2) Exclusive original jurisdiction over actions for annulment of judgments
of Regional Trial Courts; and
(3) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards or commissions, including the Securities
and Exchange Commission, the Social Security Commission, the Employees
Compensation Commission and the Civil Service Commission, except those
falling within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this Act, and of subparagraph
(1) of the third paragraph and subparagraph (4) of the fourth paragraph of
Section 17 of the Judiciary Act of 1948.
The Court of Appeals shall have the power to try cases and conduct hearings,
receive evidence and perform any and all acts necessary to resolve factual
issues raised in cases falling within its original and appellate jurisdiction,
including the power to grant and conduct new trials or further proceedings.
Trials or hearings in the Court of Appeals must be continuous and must be
completed within, three (3) months, unless extended by the Chief Justice."
It will readily be observed that, aside from the change in the name of the
lower appellate court,16 [Executive Order No. 33 restored the name of the
Court of Appeals, in lieu of the Intermediate Appellate Court, effective July
28, 1986.] the following amendments of the original provisions of Section 9
of B.P. No. 129 were effected by R.A. No. 7902, viz.:
1. The last paragraph which excluded its application to the Labor Code of the
Philippines and the Central Board of Assessment Appeals was deleted and
replaced by a new paragraph granting the Court of Appeals limited powers
to conduct trials and hearings in cases within its jurisdiction.
2. The reference to the Labor Code in that last paragraph was transposed to
paragraph (3) of the section, such that the original exclusionary clause therein
now provides "except those falling within the appellate jurisdiction of the
Supreme Court in accordance with the Constitution, the Labor Code of the
Philippines under Presidential Decree No. 442, as amended, the provisions
of this Act, and of subparagraph (1) of the third paragraph and subparagraph
(4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948."
(Italics supplied)
3. Contrarily, however, specifically added to and included among the quasi-
judicial agencies over which the Court of Appeals shall have exclusive
appellate jurisdiction are the Securities and Exchange Commission, the
Social Security Commission, the Employees Compensation Commission and
the Civil Service Commission.
This, then, brings us to a somewhat perplexing impasse, both in point of
purpose and terminology. As earlier explained, our mode of judicial review
over decisions of the NLRC has for some time now been understood to be by
a petition for certiorari under Rule 65 of the Rules of Court. This is, of course,
a special original action limited to the resolution of jurisdictional issues, that
is, lack or excess of jurisdiction and, in almost all cases that have been
brought to us, grave abuse of discretion amounting to lack of jurisdiction.
It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now
grants exclusive appellate jurisdiction to the Court of Appeals over all final
adjudications of the Regional Trial Courts and the quasi-judicial agencies
generally or specifically referred to therein except, among others, "those
falling within the appellate jurisdiction of the Supreme Court in accordance
with x x x the Labor Code of the Philippines under Presidential Decree No.
442, as amended, x x x." This would necessarily contradict what has been
ruled and said all along that appeal does not lie from decisions of the
NLRC.17 [The different modes of appeal, that is, by writ of error (Rule 41),
petition for review (Rules 42 and 43), and petition for review on certiorari
(Rule 45) obviously cannot be availed of because there is no provision for
appellate review of NLRC decisions in P.D. No. 442, as amended.] Yet,
under such excepting clause literally construed, the appeal from the NLRC
cannot be brought to the Court of Appeals, but to this Court by necessary
implication.
The same exceptive clause further confuses the situation by declaring that the
Court of Appeals has no appellate jurisdiction over decisions falling within
the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the provisions of B.P. No. 129, and those specified cases in
Section 17 of the Judiciary Act of 1948. These cases can, of course, be
properly excluded from the exclusive appellate jurisdiction of the Court of
Appeals. However, because of the aforementioned amendment by
transposition, also supposedly excluded are cases falling within the appellate
jurisdiction of the Supreme Court in accordance with the Labor Code. This
is illogical and impracticable, and Congress could not have intended that
procedural gaffe, since there are no cases in the Labor Code the decisions,
resolutions, orders or awards wherein are within the appellate jurisdiction of
the Supreme Court or of any other court for that matter.
A review of the legislative records on the antecedents of R.A. No. 7902
persuades us that there may have been an oversight in the course of the
deliberations on the said Act or an imprecision in the terminology used
therein. In fine, Congress did intend to provide for judicial review of the
adjudications of the NLRC in labor cases by the Supreme Court, but there
was an inaccuracy in the term used for the intended mode of review. This
conclusion which we have reluctantly but prudently arrived at has been
drawn from the considerations extant in the records of Congress, more
particularly on Senate Bill No. 1495 and the Reference Committee Report on
S. No. 1495/H. No. 10452.18 [An Act Expanding the Jurisdiction of the
Court of Appeals, Amending for the Purpose Section 9 of Batas Pambansa
Blg. 129, known as the Judiciary Reorganization Act of 1980.]
In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his
sponsorship speech19 [Transcript of Session Proceedings (TSP), S. No.
1495, February 8, 1995, 31-36.] from which we reproduce the following
excerpts:
The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129,
reorganized the Court of Appeals and at the same time expanded its
jurisdiction and powers. Among others, its appellate jurisdiction was
expanded to cover not only final judgment of Regional Trial Courts, but also
all final judgment(s), decisions, resolutions, orders or awards of quasi-
judicial agencies, instrumentalities, boards and commissions, except those
falling within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the provisions of BP Blg. 129 and of subparagraph 1
of the third paragraph and subparagraph 4 of Section 17 of the Judiciary Act
of 1948.
Mr. President, the purpose of the law is to ease the workload of the Supreme
Court by the transfer of some of its burden of review of factual issues to the
Court of Appeals. However, whatever benefits that can be derived from the
expansion of the appellate jurisdiction of the Court of Appeals was cut short
by the last paragraph of Section 9 of Batas Pambansa Blg. 129 which
excludes from its coverage the "decisions and interlocutory orders issued
under the Labor Code of the Philippines and by the Central Board of
Assessment Appeals."
Among the highest number of cases that are brought up to the Supreme Court
are labor cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions
enumerated in Section 9 and, additionally, extends the coverage of appellate
review of the Court of Appeals in the decision(s) of the Securities and
Exchange Commission, the Social Security Commission, and the Employees
Compensation Commission to reduce the number of cases elevated to the
Supreme Court.
xxx
Senate Bill No. 1495 authored by our distinguished Colleague from Laguna
provides the ideal situation of drastically reducing the workload of the
Supreme Court without depriving the litigants of the privilege of review by
an appellate tribunal.
In closing, allow me to quote the observations of former Chief Justice
Teehankee in 1986 in the Annual Report of the Supreme Court:
x x x Amendatory legislation is suggested so as to relieve the Supreme Court
of the burden of reviewing these cases which present no important issues
involved beyond the particular fact and the parties involved, so that the
Supreme Court may wholly devote its time to cases of public interest in the
discharge of its mandated task as the guardian of the Constitution and the
guarantor of the people's basic rights and additional task expressly vested on
it now "to determine whether or not there has been a grave abuse of discretion
amounting to lack of jurisdiction on the part of any branch or instrumentality
of the Government."
We used to have 500,000 cases pending all over the land, Mr. President. It
has been cut down to 300,000 cases some five years ago. I understand we are
now back to 400,000 cases. Unless we distribute the work of the appellate
courts, we shall continue to mount and add to the number of cases pending.
In view of the foregoing, Mr. President, and by virtue of all the reasons we
have submitted, the Committee on Justice and Human Rights requests the
support and collegial approval of our Chamber.
xxx
Surprisingly, however, in a subsequent session, the following Committee
Amendment was introduced by the said sponsor and the following
proceedings transpired:20 [TSP, id., February 15, 1995, 18-19.]
Senator Roco. On page 2, line 5, after the line "Supreme Court in accordance
with the Constitution," add the phrase "THE LABOR CODE OF THE
PHILIPPINES UNDER P.D. 442, AS AMENDED." So that it becomes clear,
Mr. President, that issues arising from the Labor Code will still be appealable
to the Supreme Court.
The President. Is there any objection? (Silence) Hearing none, the
amendment is approved.
Senator Roco. On the same page, we move that lines 25 to 30 be deleted.
This was also discussed with our Colleagues in the House of Representatives
and as we understand it, as approved in the House, this was also deleted, Mr.
President.
The President. Is there any objection? (Silence) Hearing none, the
amendment is approved.
Senator Roco. There are no further Committee amendments, Mr. President.
Senator Romulo. Mr. President, I move that we close the period of
Committee amendments.
The President. Is there any objection? (Silence) Hearing none, the
amendment is approved.
xxx
Thereafter, since there were no individual amendments, Senate Bill No. 1495
was passed on second reading and being a certified bill, its unanimous
approval on third reading followed.21 [TSP, id., id., 19-21; Record of the
Senate, Vol. V, No. 63, pp. 180-181.] The Conference Committee Report on
Senate Bill No. 1495 and House Bill No. 10452, having theretofore been
approved by the House of Representatives, the same was likewise approved
by the Senate on February 20, 1995,22 [TSP, id., February 20, 1995, pp. 42-
43.] inclusive of the dubious formulation on appeals to the Supreme Court
earlier discussed.
The Court is, therefore, of the considered opinion that ever since appeals
from the NLRC to the Supreme Court were eliminated, the legislative
intendment was that the special civil action of certiorari was and still is the
proper vehicle for judicial review of decisions of the NLRC. The use of the
word "appeal" in relation thereto and in the instances we have noted could
have been a lapsus plumae because appeals by certiorari and the original
action for certiorari are both modes of judicial review addressed to the
appellate courts. The important distinction between them, however, and with
which the Court is particularly concerned here is that the special civil action
of certiorari is within the concurrent original jurisdiction of this Court and
the Court of Appeals;23 [The Regional Trial Court also shares that
concurrent jurisdiction but that cannot be considered with regard to the
NLRC since they are of the same rank.] whereas to indulge in the assumption
that appeals by certiorari to the Supreme Court are allowed would not
subserve, but would subvert, the intention of Congress as expressed in the
sponsorship speech on Senate Bill No. 1495.
Incidentally, it was noted by the sponsor therein that some quarters were of
the opinion that recourse from the NLRC to the Court of Appeals as an initial
step in the process of judicial review would be circuitous and would prolong
the proceedings. On the contrary, as he commendably and realistically
emphasized, that procedure would be advantageous to the aggrieved party on
this reasoning:
On the other hand, Mr. President, to allow these cases to be appealed to the
Court of Appeals would give litigants the advantage to have all the evidence
on record be reexamined and reweighed after which the findings of facts and
conclusions of said bodies are correspondingly affirmed, modified or
reversed.
Under such guarantee, the Supreme Court can then apply strictly the axiom
that factual findings of the Court of Appeals are final and may not be reversed
on appeal to the Supreme Court. A perusal of the records will reveal appeals
which are factual in nature and may, therefore, be dismissed outright by
minute resolutions.24 [TSP, S. No. 1495, February 8, 1995, pp. 32-33.]
While we do not wish to intrude into the Congressional sphere on the matter
of the wisdom of a law, on this score we add the further observations that
there is a growing number of labor cases being elevated to this Court which,
not being a trier of fact, has at times been constrained to remand the case to
the NLRC for resolution of unclear or ambiguous factual findings; that the
Court of Appeals is procedurally equipped for that purpose, aside from the
increased number of its component divisions; and that there is undeniably an
imperative need for expeditious action on labor cases as a major aspect of
constitutional protection to labor.
Therefore, all references in the amended Section 9 of B.P. No. 129 to
supposed appeals from the NLRC to the Supreme Court are interpreted and
hereby declared to mean and refer to petitions for certiorari under Rule 65.
Consequently, all such petitions should henceforth be initially filed in the
Court of Appeals in strict observance of the doctrine on the hierarchy of
courts as the appropriate forum for the relief desired.
Apropos to this directive that resort to the higher courts should be made in
accordance with their hierarchical order, this pronouncement in Santiago vs.
Vasquez, et al.25 [G.R. Nos. 99289-90, January 27, 1993, 217 SCRA 633.
See also Tano, et al. vs. Socrates, et al., G.R. No. 110249, August 21, 1997,
278 SCRA 155.] should be taken into account:
One final observation. We discern in the proceedings in this case a propensity
on the part of petitioner, and, for that matter, the same may be said of a
number of litigants who initiate recourses before us, to disregard the
hierarchy of courts in our judicial system by seeking relief directly from this
Court despite the fact that the same is available in the lower courts in the
exercise of their original or concurrent jurisdiction, or is even mandated by
law to be sought therein. This practice must be stopped, not only because of
the imposition upon the precious time of this Court but also because of the
inevitable and resultant delay, intended or otherwise, in the adjudication of
the case which often has to be remanded or referred to the lower court as the
proper forum under the rules of procedure, or as better equipped to resolve
the issues since this Court is not a trier of facts. We, therefore, reiterate the
judicial policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts or where
exceptional and compelling circumstances justify availment of a remedy
within and calling for the exercise of our primary jurisdiction.
WHEREFORE, under the foregoing premises, the instant petition for
certiorari is hereby REMANDED, and all pertinent records thereof ordered
to be FORWARDED, to the Court of Appeals for appropriate action and
disposition consistent with the views and ruling herein set forth, without
pronouncement as to costs.
SO ORDERED.
PHILIPPINE AIRLINES, INC. VS. AIRLINE PILOTS
ASSOCIATION OF THE PHILIPPINES
G.R. No. 200088 | 2018-02-26
MARTIRES, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking the reversal of the 26 August 2011 Decision[1] and 05 January 2012
Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 113985,
which affirmed with modification the 27 April 2009[3] and 26 February
2010[4] Resolutions of the National Labor Relations Commission (NLRC)
in NLRC LAC No. 036558-03 (RA-10-08), which likewise affirmed with
modification the 22 April 2008 Decision[5] of the Labor Arbiter (LA) in
NLRC NCR No. 04-04906-03.
THE FACTS
The present case arose from a labor dispute between petitioner Philippine
Airlines, Inc. (PAL) and respondent Airline Pilots' Association of the
Philippines (ALPAP), a duly registered labor organization and the exclusive
bargaining agent of all commercial pilots of PAL. On 9 December 1997,
ALPAP filed with the Department of Labor and Employment (DOLE) a
notice of strike alleging that PAL committed unfair labor practice. On 23
December 1997, the Secretary of DOLE (SOLE) assumed jurisdiction over
the dispute and thereafter prohibited ALPAP from staging a strike and
committing any act that could exacerbate the dispute.[6]
Despite the prohibition by the SOLE, ALPAP staged a strike on 5 June 1998.
A return-to-work order[7] was issued by the SOLE on 7 June 1998, but
ALPAP defied the same and went on with their strike. Consequently, on 1
June 1999, the SOLE issued a resolution[8] which declared the illegality of
the strike staged by ALPAP and the loss of employment status of the officers
who participated in the strike.
The SOLE's resolution was upheld by the CA in CA-G.R. SP No. 54880.[9]
The matter was eventually elevated to this Court in G.R. No. 152306. In a
Resolution,[10] dated 10 April 2002, the Court dismissed ALPAP's petition
for failure to show that the CA committed grave abuse of discretion or a
reversible error. The resolution attained finality on 29 August 2002.[11]
On 22 April 2003, or almost eight (8) months :from the finality of the Court's
10 April 2002 Resolution, PAL filed before the LA a complaint[12] for
damages against ALPAP, as well as some of its officers and members.
PAL alleged, among others, that on 6 June 1998, the second day of the illegal
strike conducted by ALPAP, its striking pilots abandoned three (3) PAL
aircraft, as follows: (i) PR 730 bound for Paris, France, at Bangkok, Thailand;
(ii) PR 741 bound for Manila, at Bangkok, Thailand; and (iii) PR 104 bound
for Manila, at San Francisco, California, U.S.A. Because of the deliberate
and malicious abandonment of the said flights, its passengers were stranded,
and rendered PAL liable for violation of its contract of carriage. Thus, PAL
was compelled to incur expenses by way of hotel accommodations, meals for
the stranded passengers, airport parking fees, and other operational expenses.
PAL further alleged that its operation was crippled by the illegal strike
resulting in several losses from ticket refunds, extraordinary expenses to cope
with the shutdown situation, and lost income from the cancelled domestic
and international flights. PAL claimed that, as a result of the illegal strike, it
suffered actual damages in the amount of P731,078,988.59. PAL further
prayed that it be awarded P300,000,000.00 and P3,000,000.00 as exemplary
damages and attorney's fees, respectively.
The LA Ruling
In its decision, dated 22 April 2008, the LA dismissed PAL's complaint. It
ruled that it had no jurisdiction to resolve the issue on damages. It noted that
the SOLE did not certify the controversy for compulsory arbitration to the
NLRC nor in any occasion did the parties agree to refer the same to voluntary
arbitration under Article 263(h) of the Labor Code. Hence, jurisdiction to
resolve all issues arising from the labor dispute, including the claim for
damages arising from the illegal strike, was left with the SOLE to the
exclusion of all other fora.
The LA further ruled that PAL's cause of action had already been barred by
prescription. It opined that since the complaint was premised on the illegality
of the strike held by the respondents, the accrual of PAL's cause of action
should be reckoned either on 5 June 1998, the first day of the strike, or on 7
June 1998, when the respondents defied the SOLE's return-to-work order.
Hence, PAL's 22 April 2003 complaint was filed beyond the 3-year
prescriptive period set forth in Article 291 of the Labor Code. The LA
suggested, however, that PAL's cause of action may be treated as an
independent civil action in another forum. The dispositive portion reads:
WHEREFORE, the complaint is DISMISSED for lack of merit.
SO ORDERED.[13]
Aggrieved, PAL elevated an appeal to the NLRC.
The NLRC Ruling
In its resolution, dated 27 April 2009, the NLRC affirmed with modification
the LA's 22 April 2008 decision. It ruled that labor tribunals have no
jurisdiction over the claims interposed by PAL. It opined that the reliefs
prayed for by PAL should have been ventilated before the regular courts
considering that they are based on the tortuous acts allegedly committed by
the respondents. It explained that the airline pilots' refusal to fly their
assigned aircrafts constitutes breach of contractual obligation which is
intrinsically a civil dispute. The dispositive portion of the resolution states:
WHEREFORE, except for the MODIFICATION that the phrase "for lack of
merit" in the dispositive portion is deleted therefrom, the appealed Decision
is hereby AFFIRMED.
SO ORDERED.[14]
PAL moved for reconsideration, but the same was denied by the NLRC in its
resolution, dated 26 February 2010.
Unconvinced, PAL filed a petition for certiorari under Rule 65 of the Rules
of Court before the CA.
The CA Ruling
In its assailed Decision, dated 26 August 2011, the CA partially granted
PAL's petition. It ruled that while the NLRC correctly sustained the LA's
dismissal of the complaint for lack of jurisdiction, it declared that the NLRC
gravely abused its discretion when it affirmed the LA's pronouncement that
PAL's cause of action had already prescribed.
The appellate court concurred with the NLRC's opinion that exclusive
jurisdiction over PAL's claim for damages lies with the regular courts and
not with the SOLE. It ratiocinated that while Article 263(g) of the Labor
Code vests in the SOLE the authority to resolve all questions and
controversies arising from a labor dispute over which it assumed jurisdiction,
said authority must be interpreted to cover only those causes of action which
are based on labor laws. Stated differently, causes of action based on an
obligation or duty not provided under the labor laws are beyond the SOLE's
jurisdiction. It continued that only those issues that arise from the assumed
labor dispute, which has a direct causal connection to the employer-employee
relationship between the parties, will fall under the jurisdiction of the SOLE.
It pointed out that the damages caused by the wilful acts of the striking pilots
in abandoning their aircraft are recoverable under civil law and are thus
within the jurisdiction of the regular courts.
Further, the appellate court held that PAL's cause of action accrued only on
29 August 2002, the date when this Court's resolution sustaining the finding
of the strike's illegality had attained finality. The dispositive portion of the
assailed decision reads:
WHEREFORE, premises considered, the Petition for Certiorari is
PARTIALLY GRANTED. The April 27, 2009 and February 26, 2010 NLRC
Resolutions are MODIFIED as follows:
1) The complaint for damages arising from the illegal strike claimed by the
petitioner lies not within the jurisdiction of the DOLE Secretary or the Labor
Arbiter but with the regular courts; and
2) Petitioner's cause of action for damages has not yet prescribed.
No costs.
SO ORDERED.[15]
PAL moved for partial reconsideration but the same was denied by the CA
in its assailed Resolution, dated 5 January 2012.
Hence, this petition.
THE ISSUE
WHETHER THE NLRC AND THE LABOR ARBITER HAVE
JURISDICTION OVER PAL'S CLAIMS AGAINST THE RESPONDENTS
FOR DAMAGES INCURRED AS A CONSEQUENCE OF THE
LATTER'S ACTIONS DURING THE ILLEGAL STRIKE.
THE COURT'S RULING
The petition is partially meritorious.
Labor tribunals have jurisdiction
over actions for damages arising
from a labor strike.
Under Article 217 [now Article 224] of the Labor Code, as amended by
Section 9 of R.A. No. 6715, the LA and the NLRC have jurisdiction to
resolve cases involving claims for damages arising from employer-employee
relationship, to wit:
ART. 217. Jurisdiction of Labor Arbiters and the Commission-- (a) Except
as otherwise provided under this Code, the Labor Arbiters shall have original
and exclusive jurisdiction to hear and decide, within thirty (30) calendar days
after the submission of the case by the parties for decision without extension,
even in the absence of stenographic notes, the following cases involving all
workers, whether agricultural or nonagricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms and
conditions of employment
4. Claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code including
questions involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare
and maternity benefits, all other claims, arising from employer-employee
relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement.
[emphases supplied]
It is settled, however, that not every controversy or money claim by an
employee against the employer or vice-versa falls within the jurisdiction of
the labor arbiter.[16] Intrinsically, civil disputes, although involving the
claim of an employer against its employees, are cognizable by regular
courts.[17]
To determine whether a claim for damages under paragraph 4 of Article 217
is properly cognizable by the labor arbiter, jurisprudence has evolved the
"reasonable connection rule" which essentially states that the claim for
damages must have reasonable causal connection with any of the claims
provided for in that article. A money claim by a worker against the employer
or vice-versa is within the exclusive jurisdiction of the labor arbiter only if
there is a "reasonable causal connection" between the claim asserted and
employee-employer relations. Only if there is such a connection with the
other claims can the claim for damages be considered as arising from
employer-employee relations.[18] Absent such a link, the complaint will be
cognizable by the regular courts.
The appellate court was of the opinion that, applying the reasonable
connection rule, PAL's claims for damages have no relevant connection
whatsoever to the employer-employee relationship between the parties. Thus,
the claim is within the exclusive jurisdiction of the regular courts. It
explained that Article 217 of the Labor Code does not include a claim for
damages wherein the employer-employee relation is merely incidental, and
where the claim is largely civil in character.
The appellate court is mistaken.
The Court agrees with PAL that its claim for damages has reasonable
connection with its employer-employee relationship with the respondents.
Contrary to the pronouncements made by the appellate court, PAL's cause of
action is not grounded on mere acts of quasi-delict. The claimed damages
arose from the illegal strike and acts committed during the same which were
in tum closely related and intertwined with the respondents' allegations of
unfair labor practices against PAL. This could not even be disputed as even
the appellate court recognized this fact. In its 26 August 2011 Decision, the
CA made the following statements:
The damages caused by the willful act of the striking pilots in abandoning
their aircrafts, together with the passengers and cargo, which resulted in
injury to petitioner's business is recoverable under civil law.[19] [emphasis
supplied]
xxx
1) The complaint for damages arising from the illegal strike claimed by
petitioner lies not within the jurisdiction of the DOLE Secretary or the Labor
Arbiter but with the regular courts; xxx[20] [emphasis supplied]
Since the loss and injury from which PAL seeks compensation have
reasonable causal connection with the alleged acts of unfair labor practice, a
claim provided for in Article 217 of the Labor Code, the question of damages
becomes a labor controversy and is therefore an employment relationship
dispute.
This issue is not novel. It has been previously decided by the Court in several
cases.
In Goodrich Employees Association v. Hon. Flores,[21] the Court stressed
the rule that cases involving unfair labor practices are within the jurisdiction
of the Court of Industrial Relations (CIR), the labor tribunal at that time. The
Court further emphasized that where the subject matter is within the
exclusive jurisdiction of the CIR, it must be deemed to have jurisdiction over
all incidental matters connected to the main issue.
Thus, in Holganza v. Hon. Apostol,[22] the Court reaffirmed the exclusive
jurisdiction of the labor tribunal over actions for damages arising from labor
controversies. In the said case, the Social Security System (SSS) filed with
the then Court of First Instance (CFI) of Rizal a complaint for damages with
writ of preliminary attachment against several of its employees. It alleged
that it sustained damages as a consequence of the picketing carried on by its
striking employees during a strike held against it. The striking employees
moved for the dismissal of the complaint on the ground of lack of
jurisdiction, but the trial court denied the same. Eventually, the issue reached
this Court which opined that the trial court is devoid of any jurisdiction to
entertain the said complaint for damages. In so ruling, the Court declared that
exclusive jurisdiction over disputes of this character belonged to the then
CIR. To hold otherwise would be to sanction split jurisdiction which is
obnoxious to the orderly administration of justice.
A similar controversy arose in Philippine Long Distance Telephone
Company v. Free Telephone Workers Union.[23] The Court reiterated the
rule that regular courts are devoid of any jurisdiction over claims for damages
arising from a labor strike, thus:
It is clear from the records that the subject complaint for damages is
intertwined with or deeply rooted from the 1964 certified labor dispute
between appellant and appellees. As can be gleaned from the aforesaid
complaint, appellant is claiming against appellees damages it allegedly
sustained as a consequence of the strikes declared by the appellees. It is
therefore obvious in the light of the established jurisprudence as aforestated
that the lower court, Court of First Instance of Manila, Branch XII, did not
have jurisdiction over the aforesaid complaint for damages; hence, all the
proceedings taken therein are void for lack of jurisdiction.[24]
The rule stands even if the strike is illegal. In Antipolo Highway Lines
Employees Union v. Hon. Aquino.[25] Francisco De Jesus, the owner of
Antipolo Highway Lines (AHL), instituted a complaint for damages with
injunction against AHL Employees Union (AHLEU) and its officers before
the CFI of Rizal. De Jesus alleged that AHLEU staged a strike and posted
picket lines along AHL's compound, thereby preventing its employees from
performing their work and causing it to suffer losses and damages from the
non-operation of its buses. The Court ruled that the trial court lacked
jurisdiction over the complaints for damages and injunction because the
illegal strike and picket which allegedly caused damages to De Jesus were
mere incidents of the labor dispute between the parties, to wit:
Although it was artfully made to appear that the suit was one for damages
that did not divest the Court of Industrial Relations of its jurisdiction. The
Complaint itself, in paragraph 5, adverted to an "illegal strike" and "picket
lines," which are but mere incidents or consequences of the unfair labor
practice complained against by petitioner Union. In other words, it is clear
that the cause of action for damages "arose out of or was necessarily
intertwined with" an alleged unfair labor practice committed by DE JESUS
in refusing to sit at the bargaining table. It is still the labor court: therefore,
that has jurisdiction, particularly under the principle that split jurisdiction is
not to be countenanced for being "obnoxious to the orderly administration of
justice."[26]
Indeed, the aforecited cases were decided by this Court under R.A. No. 875
or the Industrial Peace Act. The Court is also not unmindful of the fact that
R.A. No. 875 had been completely superseded in 1974 by Presidential Decree
(P.D.) No. 442 or the Labor Code of the Philippines. Nevertheless, it could
not be denied that the underlying rationale for the rule finds application even
with the effectivity of the Labor Code. As in the Industrial Peace Act,
splitting of jurisdiction is abhorred under the Labor Code.[27]
A case in point is National Federation of Labor v. Hon. Eisma,[28] decided
by the Court under the provisions of the Labor Code. In case, as in those
cited, the employer, Zamboanga Wood Products, Inc., filed, before the CFI
of Zamboanga City, a complaint for damages against the officers and
members of the labor union. The employer alleged that it incurred damages
because the union officers and members blockaded the road leading to its
manufacturing division, thus preventing customers and suppliers free ingress
to or egress from their premises. The labor union, however, contended that
jurisdiction over the controversy belongs to the labor arbiter because the acts
complained of were incidents of picketing by the defendants who were then
on strike against the employer.
The Court ruled in favor of the labor union and nullified the proceedings
before the trial court. The Court opined that the complaint for damages is
deeply rooted in the labor dispute between the parties and thus should be
dismissed by the regular court for lack of jurisdiction. The Court stressed that
the wordings of Article 217 of the Labor Code is explicit and clear enough
to mean that exclusive jurisdiction over suits for damages arising from a
strike belongs to the labor arbiter, thus:
Article 217 is to be applied the way it is worded. The exclusive original
jurisdiction of a labor arbiter is therein provided for explicitly. It means, it
can only mean, that a court of first instance judge then, a regional trial court
judge now, certainly acts beyond the scope of the authority conferred on him
by law when he entertained the suit for damages, arising from picketing that
accompanied a strike. That was squarely within the express terms of the law.
Any deviation cannot therefore be tolerated. So it has been the constant ruling
of this Court even prior to Lizarraga Hermanos v. Yap Tico, a 1913 decision.
The ringing words of the ponencia of Justice Moreland still call for
obedience. Thus, "The first and fundamental duty of courts, in our judgment,
is to apply the law. Construction and interpretation come only after it has
been demonstrated that application is impossible or inadequate without
them." It is so even after the lapse of sixty years.[29] [Citations omitted]
Jurisprudence dictates that where the plaintiffs cause of action for damages
arose out of or was necessarily intertwined with an alleged unfair labor
practice, the jurisdiction is exclusively with the labor tribunal. Likewise,
where the damages separately claimed by the employer were allegedly
incurred as a consequence of strike or picketing of the union, such complaint
for damages is deeply rooted in the labor dispute between the parties and
within the exclusive jurisdiction of the labor arbiter. Consequently, the same
should be dismissed by ordinary courts for lack of jurisdiction.[30]
From the foregoing, it is clear that the regular courts do not have jurisdiction
over PAL's claim of damages, the same being intertwined with its labor
dispute with the respondents over which the SOLE had assumed jurisdiction.
It is erroneous, therefore, for the CA to even suggest that PAL's complaint
should have been ventilated before the trial court.
A separate complaint for damages
runs counter to the rule against
split jurisdiction.
While there is merit in the contention that regular courts do not have
jurisdiction over claims for damages arising from a labor controversy, the
Court opines that PAL could no longer recover the alleged damages.
It must be recalled that the SOLE assumed jurisdiction over the labor dispute
between PAL and the respondents on 23 December 1997. In this regard, it is
settled that the authority of the SOLE to assume jurisdiction over a labor
dispute causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes and extends to all questions and
controversies arising therefrom.[31] It has also been opined that when the
very reason for the SOLE's assumption of jurisdiction is the declaration of
strike, any issue regarding the strike is not merely incidental to but is
essentially involved in the labor dispute itself. [32]
It bears emphasis, even at the risk of being repetitious, that it is beyond
question that the issue on damages is a controversy which arose from the
labor dispute between the parties herein. Consequently, when the SOLE
assumed jurisdiction over the labor dispute, the claim for damages was
deemed included therein. Thus, the issue on damages was also deemed
resolved when the SOLE decided the main controversy in its 1 June 1999
resolution declaring the illegality of the strike and the loss of employment
status of the striking officers of ALPAP, as well as when the case was finally
settled by this Court in its 10 April 2002 Resolution in G.R. No. 152306. This
is true even if the respective resolutions of the SOLE, CA, and this Court
were silent with respect to the damages.
To insist that PAL may recover the alleged damages through its complaint
before the LA would be to sanction a relitigation of the issue of damages
separately from the main issue of the legality of the strike from which it is
intertwined. This runs counter to the proscription against split jurisdiction –
the very principle invoked by PAL.
Likewise, PAL's claim for damages is barred under the doctrine of
immutability of final judgment. Under the said doctrine, a decision that has
acquired finality becomes immutable and unalterable, and may no longer be
modified in any respect, even if the modification is meant to correct
erroneous conclusions of fact and law, and whether it is made by the court
that rendered it or by the Highest Court of the land. Any act which violates
this principle must immediately be struck down.[33]
Whether the damages claimed by PAL are recoverable and to what extent
would depend on the evidence in the illegal strike case which had long
attained finality.[34] PAL's recovery, therefore, would entail a relitigation
of the illegal strike case. The subject claim for damages would ultimately
require the modification of a final judgment. This cannot be done. The
dismissal of the present petition as well as the complaint for damages is
therefore in order.
In any event, PAL only has itself to blame for this blunder. It was already
aware that it had sustained damages even before the SOLE issued its
resolution. It must be remembered that the damages allegedly sustained by
PAL were incurred as a consequence of the acts committed by the
respondents on the second day of the strike on 6 June 1998, or almost a year
prior to the issuance of the SOLE's resolution. However, PAL did not assert
its claim during the proceedings before the SOLE and, instead, acted on it
only after the decision on the main case attained finality. This is a grave error
on the part of PAL.
The proper recourse for PAL should have been to assert its claim for damages
before the SOLE and, as aptly stated by the LA, to elevate the case to the CA
when the SOLE failed to rule on the matter of damages. The 22 April 2008
LA decision, therefore, deserves reinstatement insofar as it dismissed PAL's
22 April 2003 complaint for lack of jurisdiction for the reason that the SOLE
has exclusive jurisdiction over the same. Thus, the Court quotes with
approval the following pronouncements by the LA:
The respondents maintain that the complainant simply slept on its rights
when it failed to elevate the matter of damages to the Court of Appeals. In
this regard, we find the argument of the respondents availing considering that
upon the assumption of jurisdiction of the Secretary of Labor over the labor
disputes at PAL, all other issues had been subsumed therein including the
claim for damages arising from the strike. This is clear from the language of
Article 263(g) of the Labor Code granting the Secretary to order the
"dismissal or loss of employment status or payment by the locking-out
employer of back wages, damages and other affirmative relief even criminal
prosecution against either or both."
xxx

There is no quarrel regarding the jurisdiction of labor arbiters to rule on the

legality of strikes and lock-outs under Article 217(a)(4) but this refers to
strikes or lock-outs in establishments that are not indispensable to national
interest. However, if in his opinion the dispute affects industries imbued with
national interest, the Secretary of Labor who has the authority, may assume
jurisdiction over the dispute and may opt to hear the same until its final
disposition as is obtaining at bar, or to certify the same for compulsory
arbitration to the NLRC, where it is the Commission that will hear and
dispose of the certified cases under Rule VIII of the Revised Rules of the
NLRC. Even in voluntary arbitration, should the disputants agree to submit
the dispute to voluntary arbitration, the Voluntary Arbitrator is not precluded
from awarding damages.

As the issue on the illegality of the strikes of June 5, 1998 has already been
passed upon by the Secretary of Labor when he assumed jurisdiction to the
exclusion of all others, all incidents arising from the main issue of the legality
of the strike are presumed to have been ruled upon because they are deemed
subsumed by the assumption by the Secretary of Labor.[35]

In sum, the Court finds meritorious PAL's claim that the CA erred in its
decision. Indeed, the CA erred when it ruled that regular courts have
jurisdiction to entertain claims for damages arising from strike as the same
violates the proscription against splitting of jurisdiction. The Court, however,
also finds that the LA was already divested of its jurisdiction to entertain
PAL's claim for damages as such issue was deemed included in the issue of
legality of strike of which the SOLE had assumed jurisdiction, pursuant to
the rule against splitting of jurisdiction. Unfortunately, for PAL's failure to
raise the claim during the pendency of the illegal strike case before the SOLE,
the same is deemed waived.

WHEREFORE, the 26 August 2011 Decision and 5 January 2012 Resolution

of the Court of Appeals (CA) in CA-G.R. SP No. 113985 are SET ASIDE.
The 22 April 2008 Decision of the Labor Arbiter is REINSTATED insofar
as it dismissed the 22 April 2003 Complaint filed by Philippine Airlines, Inc.
in NLRC NCR No. 04-04906-03 for lack of jurisdiction.

SO ORDERED.
PHILIPPINE TRANSMARINE CARRIERS, INC. vs. LEGASPI
G.R. No. 202791 | 2013-06-10
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the January 5, 2012 Resolution 1 and July 20, 20 I 2 Resolution2 of
the Court of Appeals (CA), in CA-G.R. SP No. I I 6686, which denied the
petitioner's motion to amend the dispositive portion of the June 29, 201 I CA
Decision.
The Factual and Procedural Antecedents
Respondent Leandro Legaspi (respondent) was employed as Utility Pastry
on board the vessel “Azamara Journey” under the employment of petitioner
Philippine Transmarine Carriers, Inc. (petitioner). Respondent’s employment
was covered by a Collective Bargaining Agreement (CBA) wherein it was
agreed that the company shall pay a maximum disability compensation of up
to US$60,000.00 only.
While on board the vessel, respondent suffered “Cardiac Arrest S/P ICD
Insertation.” He was checked by the ship’s doctor and was prescribed
medications. On November 14, 2008, respondent was repatriated to receive
further medical treatment and examination. On May 23, 2009, the
companydesignated physician assessed his condition to be Disability Grade
2.
Not satisfied, respondent filed a complaint for full and permanent disability
compensation against petitioner before the Labor Arbiter (LA).
The Labor Arbiter’s Ruling
In its January 25, 2010 Decision,3 the LA ruled in favor of respondent, the
dispositive portion of which reads:
WHEREFORE, respondents (now petitioner) are hereby ordered to pay
complainant jointly and severally, the following:
1. US$80,000.00 or its peso equivalent at the time of payment as permanent
disability compensation;
2. US$1,320.00 or its peso equivalent as sick wages;
3. Attorney’s fees equivalent to 10% of the total award.
SO ORDERED.
Notably, the LA awarded US$80,000.00 based on the ITF Cruise Ship Model
Agreement for Catering Personnel, not on the CBA.
Not satisfied, petitioner appealed the LA decision before the National Labor
Relations Commission (NLRC).
The NLRC’s Ruling
In its May 28, 2010 Decision, the NLRC affirmed the decision of the LA.
Petitioner timely filed its motion for reconsideration but it was denied by the
NLRC in its July 30, 2010 Resolution. On September 5, 2010, the NLRC
issued the Entry of Judgment stating that its resolution affirming the LA
decision had become final and executory.
On October 22, 2010, during the hearing on the motion for execution before
the NLRC, petitioner agreed to pay respondent US$81,320.00. The terms and
conditions of said payment were embodied in the Receipt of Judgment
Award with Undertaking,4 wherein respondent acknowledged receipt of the
said amount and undertook to return it to petitioner in the event the latter’s
petition for certiorari would be granted, without prejudice to respondent’s
right to appeal. It was also agreed upon that the remaining balance would be
given on the next scheduled conference. Pertinent portions of the said
undertaking provide:
xxxx
3. That counsel (of the petitioner) manifested their willingness to tender the
judgment award without prejudice to the respondent’s (now petitioner) right
to file a Petition for Certiorari and provided, complainant (now respondent)
undertakes to return the full amount without need of demand or a separate
action in the event that the Petition for Certiorari is granted;
4. That complainant’s counsel was amenable to the arrangement and
accepted the offer. NOW THEREFORE complainant and his counsel hereby
acknowledge RECEIPT of the sum of EIGHTY-ONE THOUSAND THREE
HUNDRED TWENTY AND 0/100 (US$81,320.00) covered by CITIBANK
CHECK with No. 1000001161 dated October 21, 2010 payable to the order
of LEANDRO V. LEGASPI and UNDERTAKES to RETURN the entire
amount to respondent PHILIPPINE TRANSMARINE CARRIERS,INC. in
the event that the Petition for Certiorari is granted without prejudice to
complainant’s right to appeal. Such undertaking shall be ENFORCEABLE
by mere motion before this Honorable office without need of separate
action.5 [Emphases and underscoring supplied]
On November 8, 2010, petitioner timely filed a petition for certiorari with the
CA.6
In the meantime, on March 2, 2011, the LA issued a writ of execution which
noted petitioner’s payment of the amount of US$81,320.00. On March 16,
2011, in compliance with the said writ, petitioner tendered to the NLRC
Cashier the additional amounts of US$8,132.00 as attorney’s fees and
P3,042.95 as execution fee. In its Order, dated March 31, 2011, the LA
ordered the release of the aforementioned amounts to respondent.
The CA’s Ruling
Unaware of a) the September 5, 2010 entry of judgment of the NLRC, b) the
October 22, 2010 payment of US$81,320.00, and c) the writ of execution
issued by the LA, the CA rendered its Decision, dated June 29, 2011. The
CA partially granted the petition for certiorari and modified the assailed
resolutions of the NLRC, awarding only US$60,000.00 pursuant to the CBA
between Celebrity Cruise Lines and Federazione Italianaa Transporti CISL.
Petitioner then filed its Manifestation with Motion to Amend the Dispositive
Portion, submitting to the CA the writ of execution issued by the LA in
support of its motion. Petitioner contended that since it had already paid the
total amount of US$89,452.00, it was entitled to the return of the excess
payment in the amount of US$29,452.00.
In its assailed January 5, 2012 Resolution, the CA denied the motion and
ruled that the petition should have been dismissed for being moot and
academic not only because the assailed decision of the NLRC had become
final and executory on September 5, 2010, but also because the said judgment
had been satisfied on October 22, 2010, even before the filing of the petition
for certiorari on November 8, 2010. In so ruling, the CA cited
the pronouncement in Career Philippines Ship Management v. Geronimo
Madjus7 where it was stated that the satisfaction of the monetary award
rendered the petition for certiorari moot.
Petitioner filed a motion for reconsideration but it was denied by the CA in
its assailed July 20, 2012 Resolution.
Hence, this petition.
ISSUES
I. WHETHER THE COURT OF APPEALS COMMITTED SERIOUS
REVERSIBLE ERROR OF LAW IN RULING THAT PETITIONER IS
ESTOPPED IN COLLECTING THE EXCESS PAYMENT IT MADE TO
THE RESPONDENT NOTWITHSTANDING THE RECEIPT OF
JUDGMENT AWARD SIGNED BY THE RESPONDENT
II. WHETHER THE COURT OF APPEALS COMMITTED SERIOUS
REVERSIBLE ERROR IN INVOKING THE RULING OF CAREER V.
MADJUS
Petitioner argues that it clearly filed its petition for certiorari within the 60-
day reglementary period and, thus, the NLRC resolutions could not have
attained finality. Citing Delima v. Gois,8 petitioner avers that the NLRC
cannot declare that a decision has become final and executory because the
period to file the petition has not yet expired. Petitioner, thus, contends that
the finality of the NLRC judgment did not render the petition moot and
academic because such is null and void ab initio.
Petitioner also argues that the Receipt of the Judgment Award with
Undertaking, which was never refuted by respondent, clearly stated that the
payment of the judgment award was without prejudice to its right to file a
petition for certiorari with the CA. Petitioner asserts that the case relied upon
by the CA, Career Philippines, is not applicable as it is not on all fours with
this case. Instead, it asserts that the applicable case should be Leonis
Navigation Co., Inc. v. Villamater,9 where it was held that the satisfaction of
the monetary award by the employer does not render the petition for certiorari
moot before the CA.
On the other hand, respondent reiterates the CA ruling, asserting that the
voluntary satisfaction by petitioner of the full judgment award rendered the
case moot, and insists that it was a clear indication that it had already been
persuaded by the judiciousness and merits of the award for disability
compensation. He also avers that this petition is merely pro-forma as it is a
reiteration of petitioner’s previous issues and arguments already resolved by
the CA.
The Court’s Ruling
Petition for Certiorari, Not Moot
Section 14, Rule VII of the 2011 NLRC Rules of Procedure provides that
decisions, resolutions or orders of the NLRC shall become final and
executory after ten (10) calendar days from receipt thereof by the parties, and
entry of judgment shall be made upon the expiration of the said period.10In
St. Martin Funeral Home v. NLRC,
11 however, it was ruled that judicial review of decisions of the NLRC may
be sought via a petition for certiorari before the CA under Rule 65 of the
Rules of Court; and under Section 4 thereof, petitioners are allowed sixty
(60) days from notice of the assailed order or resolution within which to file
the petition. Hence, in cases where a petition for certiorari is filed after the
expiration of the 10-day period under the 2011 NLRC Rules of Procedure
but within the 60-day period under Rule 65 of the Rules of Court, the CA can
grant the petition and modify, nullify and reverse a decision or resolution of
the NLRC.
Accordingly, in this case, although the petition for certiorari was not filed
within the 10-day period, petitioner timely filed it before the CA within the
60-day reglementary period under Rule 65. It has, thus, been held that the
CA’s review of the decisions or resolutions of the NLRC under Rule 65,
particularly those which have already been executed, does not affect their
statutory finality, considering that Section 4,12 Rule XI of the 2011 NLRC
Rules of Procedure, provides that a petition for certiorari filed with the CA
shall not stay the execution of the assailed decision unless a restraining order
is issued. In Leonis Navigation, it was further written:
The CA, therefore, could grant the petition for certiorari if it finds that the
NLRC, in its assailed decision or resolution, committed grave abuse of
discretion by capriciously, whimsically, or arbitrarily disregarding evidence
that is material to or decisive of the controversy; and it cannot make this
determination without looking into the evidence of the parties. Necessarily,
the appellate court can only evaluate the materiality or significance of the
evidence, which is alleged to have been capriciously, whimsically, or
arbitrarily disregarded by the NLRC, in relation to all other evidence on
record.13 Notably, if the CA grants the petition and nullifies the decision or
resolution of the NLRC on the ground of grave abuse of discretion amounting
to excess or lack of jurisdiction, the decision or resolution of the NLRC is, in
contemplation of law, null and void ab initio; hence, the decision or
resolution never became final and executory.14
Career Philippines not applicable
In Career Philippines, believing that the execution of the LA Decision was
imminent after its petition for injunctive relief was denied, the employer filed
before the LA a pleading embodying a conditional satisfaction of judgment
before the CA and, accordingly, paid the employee the monetary award in
the LA decision. In the said pleading, the employer stated that the conditional
satisfaction of the judgment award was without prejudice to its pending
appeal before the CA and that it was being made only to prevent the imminent
execution.15
The CA later dismissed the employer’s petition for being moot and academic,
noting that the decision of the LA had attained finality with the satisfaction
of the judgment award. This Court affirmed the ruling of the CA, interpreting
the “conditional settlement” to be tantamount to an amicable settlement of
the case resulting in the mootness of the petition for certiorari, considering
(i) that the employee could no longer pursue other claims,16 and (ii) that the
employer could not have been compelled to immediately pay because it had
filed an appeal bond to ensure payment to the employee.
Stated differently, the Court ruled against the employer because the
conditional satisfaction of judgment signed by the parties was highly
prejudicial to the employee. The agreement stated that the payment of the
monetary award was without prejudice to the right of the employer to file a
petition for certiorari and appeal, while the employee agreed that she would
no longer file any complaint or prosecute any suit of action against the
employer after receiving the payment.
In contrast, in Leonis Navigation, after the NLRC resolution awarding
disability benefits became final and executory, the employer paid the
monetary award to the employee. The CA dismissed the employer’s petition
for certiorari, ruling that the final and executory decisions or resolutions of
the NLRC rendered appeals to superior courts moot and academic. This
Court disagreed with the CA and held that final and executed decisions of
the NLRC did not prevent the CA from reviewing the same under Rule 65 of
the Rules of Court. It was further ruled that the employee was estopped from
claiming that the case was closed and terminated, considering that the
employee’s Acknowledgment Receipt stated that such was without prejudice
to the final outcome of the petition for certiorari pending before the CA.
In the present case, the Receipt of the Judgment Award with Undertaking
was fair to both the employer and the employee. As in Leonis Navigation,
the said agreement stipulated that respondent should return the amount to
petitioner if the petition for certiorari would be granted but without prejudice
to respondent’s right to appeal. The agreement, thus, provided available
remedies to both parties.
It is clear that petitioner paid respondent subject to the terms and conditions
stated in the Receipt of the Judgment Award with Undertaking.17 Both
parties signed the agreement. Respondent neither refuted the agreement nor
claimed that he was forced to sign it against his will. Therefore, the petition
for certiorari was not rendered moot despite petitioner’s satisfaction of the
judgment award, as the respondent had obliged himself to return the payment
if the petition would be granted.
Return of Excess Payment
As the agreement was voluntarily entered into and represented a reasonable
settlement, it is binding on the parties and may not later be disowned simply
because of a change of mind.18 Respondent agreed to the stipulation that he
would return the amount paid to him in the event that the petition for
certiorari would be granted. Since the petition was indeed granted by the CA,
albeit partially, respondent must comply with the condition to return the
excess amount.
The Court finds that the Receipt of the Judgment Award with Undertaking
was a fair and binding agreement. It was executed by the parties subject to
outcome of the petition. To allow now respondent to retain the excess money
judgment would amount to his unjust enrichment to the prejudice of
petitioner.
Unjust enrichment is a term used to depict result or effect of failure to make
remuneration of or for property or benefits received under circumstances that
give rise to legal or equitable obligation to account for them. To be entitled
to remuneration, one must confer benefit by mistake,fraud, coercion, or
request. Unjust enrichment is not itself a theory of reconveyance. Rather, it
is a prerequisite for the enforcement of the doctrine of restitution.19 There is
unjust enrichment when:
1. A person is unjustly benefited; and
2. Such benefit is derived at the expense of or with damages to another.20
In the case at bench, petitioner paid respondent US$81,320.00 in the pre-
execution conference plus attorney’s fees of US$8,132.00 pursuant to the
writ of execution. The June 29, 2011 CA Decision, however, modified the
final resolution of the NLRC and awarded only US$60,000.00 to respondent.
If allowed to return the excess, the respondent would have been unjustly
benefited to the prejudice and expense of petitioner.
Petitioner's claim of excess payment is further buttressed by, and in 1 line
with, Section 14, Rule XI of the 20 II NLRC Rules of Procedure which
provides:
EFFECT OF REVERSAL OF EXECUTED JUDGMENT. -Where the
executed judgment is totally or partially reversed or annulled by the Court of
Appeals or the Supreme Court, the Labor Arbiter shall, on motion, issue such
orders of restitution of the executed award, except wages paid during
reinstatement pending appeal. [Emphases supplied]

Although the Court has, more often than not, been inclined towards the plight
of the workers and has upheld their cause in their conflicts with the
employers, such inclination has not blinded it to the rule that justice is in
every case for the deserving, to be dispensed in the light of the established
facts and applicable law and doctrine.21

WHEREFORE, the petition is GRANTED. The Court of Appeals

Resolutions, dated January 5, 2012 and July 20, 2012, are hereby
REVERSED and SET ASIDE. Respondent Leandro Legaspi is ORDERED
to return the excess amount of payment in the sum of US$29,452.00 to
petitioner Philippine Transmarine Carriers, Inc. The amount shall earn
interest at the rate of 12% per annum from the finality of this judgment.

SO ORDERED.
ADTEL, INC. VS. VALDEZ
G.R. No. 189942 | 2017-08-09
CARPIO, J.:
The Case
Before the Court is a petition for review on certiorari[1] assailing the 28 May
2009 Resolution[2] and the 8 October 2009 Resolution[3] of the Court of
Appeals (CA) in CA-G.R. SP No. 108169.
The Facts
Adtel, Inc. (Adtel) is a domestic corporation engaged in the distribution of
telephone units, gadgets, equipment, and allied products. On 9 September
1996, Adtel hired Marijoy A. Valdez (respondent) to work as an accountant
for the company. Adtel promoted respondent as the company's purchasing
and logistics supervisor.[4] Adtel then entered into a dealership agreement
with respondent's husband, Angel Valdez (Mr. Valdez), to distribute Adtel's
wideband VHF-UHF television antennas. The dealership agreement was for
twelve (12) months and the agreement was extended for another three (3)
months.[5] On 3 February 2006, Mr. Valdez filed a civil case against Adtel
for specific performance and damages for the execution of the terms of the
dealership agreement.[6] On 10 May 2006, Mr. Valdez also instituted a
criminal complaint for libel against Adtel's chairman, president, and
officers.[7]
On 22 May 2006, Adtel issued a memorandum[8] directing respondent to
show cause in writing why she should not be terminated for conflict of
interest and/or serious breach of trust and confidence.[9] The memorandum
stated that the filing of cases by respondent's husband created a conflict of
interest since respondent had access to vital information that can be used
against Adtel.[10] Respondent was placed under preventive suspension by
Adtel. On 23 May 2006, respondent denied the charges of Adtel. Respondent
contended that the cases had nothing to do with her being an employee of
Adtel and had not affected her performance in the company.[11]
On 29 May 2006, Adtel terminated respondent from the company.
Respondent filed a complaint for illegal dismissal with the Labor Arbiter. In
her Position Paper,[12] respondent alleged that she did not violate any
company rule or policy; neither was she guilty of fraud, nor willful breach of
trust. Respondent contended that she was illegally dismissed without just
cause and was entitled to separation pay, backwages, and damages.
The Decision of the Labor Arbiter
In a Decision[13] dated 24 May 2007, the Labor Arbiter dismissed
respondent's complaint for illegal dismissal. The Labor Arbiter found that
there existed a conflict of interest between respondent and Adtel. The Labor
Arbiter ruled that respondent was not an ordinary rank-and-file employee but
a managerial employee with a fiduciary duty to protect the interest of Adtel.
The Labor Arbiter held that the civil and criminal cases initiated by
respondent's husband indubitably created a conflict of interest that was a just
cause for her dismissal by Adtel.
The dispositive portion of the Labor Arbiter's decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
DISMISSING the instant complaint for utter lack of merit.
SO ORDERED.[14]
The Decision of the National Labor Relations Commission
In a Decision[15] dated 21 May 2008, the National Labor Relations
Commission (NLRC) reversed the decision of the Labor Arbiter. The NLRC
ruled that Adtel illegally dismissed respondent. The NLRC held that Adtel
failed to substantially prove the existence of an act or omission personally
attributable to the respondent to serve as a just cause to terminate her
employment.
The dispositive portion of the NLRC's decision states:
WHEREFORE, the appeal is GRANTED and the assailed Decision is hereby
REVERSED and SET ASIDE. A new one is hereby rendered ordering the
respondent company to pay to the complainant the following amounts:
1. P283,000.00 - representing her separation pay for her almost ten years of
service to the company;
2. P684,600.58 - representing her backwages from May 29, 2006 up to the
date of this Decision;
Plus ten percent (10%) of the total monetary awards, as and for attorney's
fees.
Other claims and charges are dismissed for lack of merit.
SO ORDERED.[16]
Adtel filed a Motion for Reconsideration which was denied by the NLRC on
24 December 2008. Adtel received the NLRC Resolution on 5 February
2009. On 7 April 2009, the last day for filing its petition for certiorari with
the CA, Adtel filed a motion for extension of time with the CA. On 22 April
2009, fifteen (15) days after the last day for filing or the 75th day, Adtel filed
its petition for certiorari with the CA.[17]
The Decision of the CA
On 28 May 2009, the CA denied the motion for extension and dismissed
Adtel's petition for certiorari for being filed beyond the reglementary period.
The CA ruled that Adtel had until 7 April 2009 to file its petition for
certiorari. Instead of filing the petition for certiorari, Adtel filed a motion for
extension of time on 7 April 2009 and subsequently filed its petition for
certiorari on 22 April 2009, the last day of the extended period prayed for by
Adtel. The CA held that the reglementary period to file a petition for
certiorari can no.longer be extended pursuant to A.M. No. 07-7-12-SC which
amended Section 4, Rule 65 of the Rules of Court.[18]
The dispositive portion of the CA's Resolution states:
WHEREFORE, the Motion is DENIED. Instead, the petition is DISMISSED
for being filed beyond the reglementary period.
SO ORDERED.[19]
Adtel filed a motion for reconsideration which was denied on 8 October
2009.[20]
The Issues
Adtel presented the following issues in this petition:
A. The Court of Appeals committed a reversible error in denying the
petitioners' motion for reconsideration and in dismissing the petition for
certiorari on the sole basis of technicality.
B. Technicalities should give way to a judgment on the merits considering
that the Labor Arbiter justly and correctly ruled that the complaint for illegal
dismissal against petitioner was baseless and unmeritorious only to be later
reversed by the NLRC upon respondent's appeal.[21]
The Decision of this Court
We deny the petition.
A.M. No. 07-7-12-SC which amended Section 4, Rule 65 of the Rules of
Court states:
Sec. 4. When and where to file the petition. — The petition shall be filed not
later than sixty (60) days from notice of the judgment, order or resolution. In
case a motion for reconsideration or new trial is timely filed, whether such
motion is required or not, the petition shall be filed not later than sixty (60)
days counted from the notice of the denial of the motion.
If the petition relates to an act or an omission of a municipal trial court or of
a corporation, a board, an officer or a person, it shall be filed with the
Regional Trial Court exercising jurisdiction over the territorial area as
defined by the Supreme Court. It may also be filed with the Court of Appeals
or with the Sandiganbayan, whether or not the same is in aid of the court's
appellate jurisdiction. If the petition involves an act or an omission of a quasi-
judicial agency, unless otherwise provided by law or these rules, the petition
shall be filed with and be cognizable only by the Court of Appeals.
In election cases involving an act or an omission of a municipal or a regional
trial court, the petition shall be filed exclusively with the Commission on
Elections, in aid of its appellate jurisdiction.
A.M. No. 07-7-12-SC states that in cases where a motion for reconsideration
was timely filed, the filing of a petition for certiorari questioning the
resolution denying the motion for reconsideration must be made not later
than sixty (60) days from the notice of the denial of the motion. In Laguna
Metts Corporation v. Court of Appeals,[22] this Court held that following
A.M. No. 07-7-12-SC, petitions for certiorari must be filed strictly within 60
days from the notice of judgment or from the order denying a motion for
reconsideration. In Laguna Metts Corporation, this Court stated the rationale
for the strict observance of the 60-day period to file a petition for certiorari,
to wit:
The 60-day period is deemed reasonable and sufficient time for a party to
mull over and to prepare a petition asserting grave abuse of discretion by a
lower court. The period was specifically set to avoid any unreasonable delay
that would violate the constitutional rights of the parties to a speedy
disposition of their case.[23]
In Laguna Metts Corporation, this Court ruled that the 60-day period was
non-extendible and the CA no longer had the authority to grant the motion
for extension in view of A.M. No. 07-7-12-SC which amended Section 4 of
Rule 65.
However, in Domdom v. Third and Fifth Divisions of the Sandiganbayan[24]
this Court held that the strict observance of the 60-day period to file a petition
for certiorari is not absolute. This Court ruled that absent any express
prohibition under Rule 65, a motion for extension is still permitted, subject
to the Court's sound discretion. Similarly, in Labao v. Flores,[25] this Court
recognized that the extension of the 60-day period may be granted by the
Court in the presence of special or compelling circumstances provided that
there should be an effort on the part of the party invoking liberality to
advance a reasonable or meritorious explanation for his or her failure to
comply with the rules. Likewise, in Mid-Islands Power Generation v. Court
of Appeals[26] this Court held that a motion for extension was allowed in
petitions for certiorari under Rule 65 subject to the Court's sound discretion
and only under exceptional or meritorious cases.
Petitioner prays for such other relief which may be deemed just and equitable
under the circumstances.[29] (Boldfacing and underscoring supplied)
In Yutingco v. Court of Appeals,[30] this Court held that the circumstance
of heavy workload alone, absent a compelling or special reason, is not a
sufficient justification to allow an extension of the 60-day period to file a
petition for certiorari, to wit:
Heavy workload, which is relative and often self serving, ought to be coupled
with more compelling reasons such as illness of counsel or other emergencies
that could be substantiated by affidavits of merit. Standing alone, heavy
workload is not sufficient reason to deviate from the 60-day rule. Thus, we
are constrained to state that the Court of Appeals did not err in dismissing the
petition for having been filed late.[31]
In Thenamaris Philippines, Inc. v. Court of Appeals,[32] this Court held that
the heavy workload of counsel is hardly a compelling or meritorious reason
for availing a motion for extension of time to file a petition for certiorari.
Similarly, in Mid-Islands Power, this Court ruled that the heavy workload
and the resignation of the lawyer handling the case are insufficient reasons
to justify the relaxation of the procedural rules under Rule 65. In both
Thenamaris and Mid-Islands Power, this Court denied the motions for
extension of time to file a petition for certiorari and held that the heavy
workload of counsel was not a compelling reason contemplated by the Rules
of Court.
As previously stated in Labao,[33] there should be an effort on the part of the
party invoking liberality to advance a reasonable or meritorious explanation
for his or her failure to comply with Rule 65. Accordingly, in the absence of
a more compelling reason cited in the motion for extension of time other than
the "undersigned counsel's heavy volume of work," the CA did not commit
a reversible error in dismissing the petition for certiorari.
WHEREFORE, we DENY the petition. We AFFIRM the Resolutions of the
Court of Appeals dated 28 May 2009 and 8 October 2009 in CA-G.R. SP No.
108169.
SO ORDERED.

The exception to the 60-day rule to file a petition for certiorari under Rule 65
was also applied by this Court in a more recent case in Republic of the
Philippines v. St. Vincent de Paul Colleges, Inc.,[27] to wit: "[u]nder
exceptional circumstances, however, and subject to the sound discretion of
the Court, [the] said period may be extended pursuant to [the] Domdom,
Labao and Mid-Islands Power cases."[28]

Therefore, the rule is that in filing petitions for certiorari under Rule 65, a
motion for extension is a prohibited pleading. However in exceptional or
meritorious cases, the Court may grant an extension anchored on special or
compelling reasons.

Adtel's motion for extension filed with the CA on 7 April 2009 reads:

MOTION FOR EXTENSION OF TIME TO FILE PETITION FOR

CERTIORARI

1. Petitioner's Petition for Certiorari was due for filing yesterday, 06 April
2009 or sixty (60) days from 05 February 2009, the date of receipt of the
Resolution dated 24 December 2008 issued by the National Labor Relations
Commission (NLRC). Considering that yesterday was a holiday, the petition
in effect is due today, 07 April 2009.

2. While a draft of the pleading had already been prepared, final revisions
have yet to be completed. However, due to the undersigned counsel's heavy
volume of work, petitioner is constrained to request for an additional period
of fifteen (15) days from today or up to 22 April 2009 within which to file
the Petition for Certiorari.

3. This motion is not intended to delay the proceedings but is prompted solely
by the above-stated reason.

PRAYER

WHEREFORE, petitioner respectfully prays for an extension of fifteen (15)

days from 07 April 2009 or up to 22 April 2009 within which to file its
Petition for Certiorari.
ABBOTT LABORATORIES PHILIPPINES, INC. vs. ABBOTT
LABORATORIES EMPLOYEES UNION
G.R. No.131374 | 2000-01-26
DAVIDE, JR., C.J.:
This special civil action for certiorari and mandamus assails the action of the
then Acting Secretary of Labor and Employment Cresenciano. B. Trajano
contained in its letter dated 19 September 1997,1 [Annex "1" of Petition;
Rollo, 39; Original Record, vol. I (hereafter I OR), 344.] informing petitioner
Abbott Laboratories Philippines, Inc. (hereafter ABBOTT), thru its counsel
that the Office of the Secretary of Labor cannot act on ABBOTT's appeal
from the decision of 31 March 19972 [Annex "2" of Petition; Ibid., 40-50;
Ibid., 235-225.] and the Order of 9 July 19973 [Annex "3" of Petition; Id, 51-
53; Id, 337 -335.] of the Bureau of Labor Relations, for lack of appellate
jurisdiction.
ABBOTT is a corporation engaged in the manufacture and distribution of
pharmaceutical drugs. On 22 February 1996,4 [I OR, 56-51.] the Abbott
Laboratories Employees Union (hereafter ALEU) represented by its
president, Alvin B. Buerano, filed an application for union registration in the
Department of Labor and Employment. ALEU alleged in the application that
it is a labor organization with members consisting of 30 rank-and-file
employees in the manufacturing unit of ABBOTT and that there was no
certified bargaining agent in the unit it sought to represent, namely, the
manufacturing unit.
On 28 February 1996,5 [31 March 1997 Decision in BLR-A 10-25-96, Rollo,
40.] ALEU's application was approved by the Bureau of Labor Relations,
which in due course issued Certificate of Registration No. NCR-UR-2-1638-
96. Consequently, ALEU became a legitimate labor organization.
On 2 April 1996,6 [Id, 69-59.] ABBOTT filed a petition for cancellation of
the Certificate of Registration No. NCR-UR-2-1638-96 in the Regional
Office of the Bureau of Labor Relations. This case was docketed as Case No.
OD-M-9604-006. ABBOTT assailed the certificate of registration since
ALEU's application was not signed by at least 20% of the total 286 rank-and-
file employees of the entire employer unit; and that it omitted to submit
copies of its books of account.
On 21 June 1996,7 [I OR, 131-123. Per Regional Director Romeo A. Young.]
the Regional Director of the Bureau of Labor Relations decreed the
cancellation of ALEU's registration certificate No. NCR-UR-II-1585-95.8
[What was actually sought to be cancelled was Registration Certificate No.
NCR-UR-2-1638-96. Apparently, the Regional Director in NCR-OD-M-
9604-006 unwittingly erred in ordering the cancellation of Registration
Certificate No. NCR-UR-11-1585-95 since this refer to the certificate of
registration ssued to ALEU on 4 November 1995 which later became the
subject matter of Case No. NCR-OD-M-9512-038 entitled "Ma. Luisa
Mariazeta, et al. v. Abbott Laboratories (Phils.) Employees Union." The
Registration Certificate No. NCR-UR-11-1585-95 was cancelled in view of
the decision dated 28 February 1996 of the Bureau of Labor Relations, which
became final since the ALEU did not appeal therefrom. See Petition for
cancellation of union registration, I OR, 69-61.] In its decision, the Regional
Director adopted the 13 June 19969 [Id., 120-110. Per Med-Arbiter Renato
D. Parungo.] findings and recommendations of the Med-Arbiter. It ruled that
the union has failed to sliow that the rank-and-file employees in the
manufacturing unit of ABBOTT were bound by a common interest to justify
the formation of a bargaining unit separate from those belonging to the sales
and office staff units. There was, therefore, sufficient reason to assume that
the entire membership of the rank-and-file consisting of 286 employees or
the "employer unit" make up the appropriate bargaining unit. However, it
was clear on the record that the union's application for registration was
supported by 30 signatures of its members or barely constituting 10% of the
entire rank-and-file employees of ABBOTT. Thus the Regional Director
found that for ALEU's failure to satisfy the requirements of union registration
under Article 234 of the Labor Code; the cancellation of its certificate of
registration was in order.
Forthwith, on 19 August 11996,10 [I OR, 198-177.] ALEU appealed said
cancellation to the Office of the Secretary of Labor and Employment, which
referred the same to the Director of the Bureau of Labor Relations. The said
appeal was docketed as Case No. BLR-A-10-25-96.
On 31 March 1997,11 [Id., 235-225. Per Director Benedicto Ernesto R.
Bitonio, Jr.] the Bureau of Labor Relations rendered judgment reversing the
21 June 1996 decision of the Regional Director, thus:
WHEREFORE, the appeal is GRANTED and the decision of the Regional
Director dated 21 June 1996 is hereby REVERSED. Abbott Laboratories
Employees Union shall remain in the roster of legitimate labor organizations,
with all the rights, privileges and obligations appurtenant thereto.12 [Id.,
225.]
It gave the following reasons to justify the reversal: ( 1) Article 234 of the
Labor Code does not require an applicant union to show proof of the
"desirability of more than one Ibargaining unit within an employer unit," and
the absence of such proof is not a ground for the cancellation of a union's
registration pursuant to Article 239 of Book V, Rule II of the implementing
rules of the Labor Code; (2) the issue pertaining to the appropriateness of a
bargaining unit cannot be raised in a cancellation proceeding but may be
threshed out in the exclusion-inclusion process during a certification
election; and (3) the "one-bargaining unit, one-employer unit policy" must
not be interpreted in a manner that shall derogate the right of the employees
to self-organization and freedom of association as guaranteed by Article III,
Section 8 of the 1987 Constitution and Article II of the International Labor
Organization's Convention No.87.
Its motion to reconsider the 31 March 1997 decision of the Bureau of Labor
Relations having been denied for lack of merit in the Order13 [IOR, 337-
335.] of 9 July 1997, ABBOTT appealed to the Secretary of Labor and
Employment. However, in its letter dated 19 September 1997,14 [Id., 344.]
addressed to ABBOTT's counsel, the Secretary of Labor and Employment
refused to act on ABBOTT's appeal on the ground that it has no jurisdiction
to review the decision of the Bureau of Labor Relations on iappeals in
cancellation cases emanating from the Regional Offices. The decision of the
Bureau of Labor Relations therein is final and executory under Section 4,
Rule III, Book V of the Rules and Regulations Implementing thc Labor Code,
as amended by Department Order No. 09, s. of 1997. Finally, the Secretary
stated:
It has always been the policy of this Office that pleadings denominated as
appeal thereto over decisions of the BLR in cancellation cases coming from
the Regional Offices are referred back to the BLR, so that the same may be
treated as motions for reconsideration and disposed of accordingly. However,
since your office has already filed a motion for reconsideration with the BLR
which has been denied in its Order dated 09 July 1997, your recourse should
have been a special civil action for certiorari with the Supreme Court.
In view of the foregoing, please be informed that the Office of the Secretary
cannot act upon your Appeal, except to cause the BLR to include it in the
records of the case.
Hence, this petition. ABBOTT premised its argument on the authority of the
Secretary of Labor and Employment to review the decision of the Bureau of
Labor Relations and at the same time raised the issue on the validity of
ALEU's certificate of registration.
We find no merit in this petition.
At the outset, it is wortl1y to note that the present petition assails only the
letter of the then Secretary of Labor & Employment refusing to take
cognizance of ABBOTT's appeal for lack of appellate jurisdiction. Hence, in
the resolution of the present petition, it is just appropriate to limit the issue
on the power of the Secretary of Labor and Employment to review the
decisions of the Bureau of Labor Relations rendered in the exercise of its
appellate jurisdiction over decisions of the Regional Director in cases
involving cancellations of certificates of registration of labor unions. The
issue anent the validity of ALEU's certificate of registration is subject of the
Bureau of Labor Relations decision dated 31 March 1997. However, said
decision is not being assailed in the present petition; hence, we are not at
liberty to review the same.
Contrary to ABBOTT's contention, there has been no grave abuse of
discretion on the part of the Secretary of Labor and Employment. Its refusal
to take cognizance of ALEU's appeal from the decision of the Bureau of
Labor Relations is in accordance with the provisions of Rule VIII, Book V
of the Omnibus Rules Implementing the Labor Code as amended by
Department Order No. 09.15 [Department Order No. 09 Series of 1997,
which took effect on 21 June 1997, amends and renumbers numerous
provisions of Book Vof the .Rules Implementing the Labor Code.] The rule
governing petitions for cancellation of registration of any legitimate labor
organization or worker association, as it now stands, provides:
SECTION 1. Venue of Action --If the respondent to the petition is a
local/chapter, affiliate, or a workers' association with operations limited to
one region, the petition shall be filed with the Regional Office having
jurisdiction over the place where the respondent principally operates.
Petitions filed against federations, national or industry unions, trade union
centers, or workers' associations operating in more than one regional
jurisdiction, shall be filed with the Bureau.
SECTION 3. Cancellation of registration;. nature and grounds. -- Subject to
the requirements of notice and due process, the registration of any legitimate
labor organization or worker's association may be cancelled by the Bureau or
the Regional Office upon the filing of an independent petition for
cancellation based on any of the following grounds:
(a) Failure to comply with any of the requirements prescribed under Articles
234, 237 and 238 of the Code;
(b) Violation of any of the provisions of Article 239 of the Code;
(b) Commission of any of the acts enumerated under Article 241 of the Code;
provided, that no petition for cancellation based on this ground may be
granted unless supported by at least thirty percent (30%) of all the members
of the respondent labor organization or workers' association.
Section 4. Action on the petition; appeals -- The Regional or Bureau Director,
as the case may be, shall have thirty (30) days from submission of the case
for resolution within which to resolve the petition. The decision of the
Regional or Bureau Director may be appealed to the Bureau or the Secretary,
as the case may be, within ten (10) days from receipt thereof by the aggrieved
party on the ground of grave abuse of discretion or any violation of these
Rules.
The Bureau or the Secretary shall have fifteen ( 15) days from receipt of the
records of the case within which to decide the appeal. The decision of the
Bureau or the Secretary shall be final and executory.
Clearly, the Secretary of Labor and Employment has no jurisdiction to
entertain the appeal of ABBOTT. The appellate jurisdiction of the Secretary
.of Labor and Employment is limited only to a review of cancellation
proceedings decided by the Bureau of Labor Relations in the exercise of its
exclusive and original jurisdiction. The Secretary of Labor and Employment
has no jurisdiction over decisions of the Bureau of Labor Relations rendered
in the exercise of its appellate power to review the decision of the Regional
Director in a petition to cancel the union's certificate of registration, said
decisions being final and inappealable.16 [Even under the old rule, decisions
of the Bureau of Labor Relations and the Secretary are final and inappealable.
Section 9, Rule II, Book V of the Omnibus Rule provides that: The labor
organization may, unless the law provides otherwise, within fifteen (15)
calendar days from receipt of the decision cancelling or revoking its
certificate of registration, file an appeal to the Bureau, or in case of
cancellation by the Bureau, to the Secretary, on any of the following grounds:
a) grave abuse of discretion; and
b) gross incompetence.
The Bureau/Secretary shall have fifteen (15) calendar days from receipt of
the records of the case within which to decide the appeal. The decision shall
be final and inappealable.] We sustain the analysis and interpretation of the
OSG on this matter, to wit:
From the foregoing, the Office of the Secretary correctly maintained that it
cannot take cognizance of petitioner's appeal from the decision of BLR
Director Bitonio. Sections 7 to 917 [Now Rule VIII, Implementing Rules of
Book V, specifically sections 1, 3 and 4.] (of the Implementing Rules of the
Labor Code) thus provide for two situations:
(1) The first situation involves a petition for cancellation of union registration
which is filed with a Regional Office. A decision of a Regional Office
cancelling a union's certificate of registration may be appealed to the BLR
whose decision on the matter shall be final and inappealable.
(2) The second situation involves a petition for cancellation of certificate of
union registration which is filed directly with the BLR. A decision of the
BLR cancelling a union's certificate of registration may be appealed to the
Secretary of Labor whose decision on the matter shall be final and
inappealable.
Respondent Acting Labor Secretary's ruling --that the BLR's decision
upholding the validity of respondent union's certificate of registration is final
and inappealable --is thus in accordance with aforequoted Omnibus Rules
because the petition for cancellation of union registration was filed by
petitioner with a Regional Office, specifically, with the Regional Office of
the BLR, National Capital Region (vide pp.1-2, Annex 2, Petition). The
cancellation proceedings initiated by petitioner before the Regional Office is
covered by the first situation contemplated by Sections 7 to 9 of the Omnibus
Rules. Hence, an appeal from the decision of the Regional Office may be
brought to the BLR whose decision on the matter is final and inappealable.
In the instant case, upon the cancellation of respondent union's registration
by the Regional Office, respondent union incorrectly appealed said decision
to the Office of the Secretary. Nevertheless, this situation was immediately
rectified when the Office of the Secretary motu proprio referred the appeal
to the BLR However, upon reversal by the BLR of the decision of the
Regional Office cancelling registration, petitioner should have immediately
elevated the BLR decision to the Supreme Court in a special civil action for
certiorari under Rule 65 of the Rules of Court.
Under Sections 3 and 4, Rule VIII of Book V of the Rules and Regulations
implementing the Labor Code, as amended by Department Order No. 09,
petitions for cancellation of union registration may be filed with a Regional
office, or directly, with the Bureau of Labor Relations. Appeals from the
decision of a Regional Director may be filed with the BLR Director whose
decision shall be final and executory. On the other hand, appeals from the
decisions of the BLR may be filed with the Secretary of Labor whose
decision shall be final and executory .
Thus, under Sections 7 to 9 of the Omnibus Rules and under Sections 3 and
4 of the Implementing Rules (as amended by Department Order No. 09), the
finality of the BLR decision is dependent on whether or not the petition for
cancellation was filed with the BLR directly. Under said Rules, if the petition
for cancellation is directly filed with the BLR, its decision cancelling union
registration is not yet final and executory as it may still be appealed to the
Office of the Secretary. However, if the petition for cancellation was filed
with the Regional Office, the decision of the BLR resolving an appeal of the
decision of said Regional Office is final and executory.18 [Rollo, 144-146;
279-281.]
It is clear then that the Secretary of Labor and Employment did not commit
grave abuse of discretion in not acting on ABBOTT's appeal. The decisions
of the Bureau of Labor Relations on cases brought before it on appeal from
the Regional Director are final and executory. Hence, the remedy of the
aggrieved party is to seasonably avail of the special civil action of certiorari
under Rule 65 of the Rules of Court.19 [Bordeos, et al. v. NLRC, et al., 262
SCRA 424 (1996); See also St. Martin Funeral Homes v. NLRC, et al., 295
SCRA 494 (1998)]
Even if we relaxed the rule and consider the present petition as a petition for
certiorari not only of the letter of the Secretary of Labor and Employment but
also of the decision of the Bureau of the Labor Relations which overruled the
order of cancellation of ALEU's certificate of registration, the same would
still be dismissable for being time-barred. Under Sec. 4 of Rule 65 of the
1997 Revised Rules of Court the special civil action for certiorari should be
instituted within a period of sixty (60) days from notice of the judgment,
order or resolution sought to be assailed. ABBOTT received the decision of
the Bureau of Labor Relations on 14 April 1997 and the order denying its
motion for reconsideration of the said decision on 16 July 1997. The present
petition was only filed on 28 November 1997, after the laps of more than four
months. Thus, for failure to avail of the correct remd4y within the period
provided by law, the decision of the Bureau of Labor Relations has become
final and executory.
WHEREFORE, the Petition is DENIED. The challenged order in BLR-A-
10-25-96 of the Secretary of Labor and Employment embodied in its 19
September letter is hereby AFFIRMED.
SO ORDERED.
GUAGUA NATIONAL COLLEGES VS. COURT OF APPEALS
G.R. No. 188492 | 2018-08-28
BERSAMIN, J.:
This case focuses on the correct period for appealing the decision or award
of the Voluntary Arbitrator or Panel of Arbitrators. The issue arises because
the decision or award of the Voluntary Arbitrator or Panel of Arbitrators is
appealable to the Court of Appeals (CA) by petition for review under Rule
43 of the Rules of Court, which provides a period of 15 days from notice of
the decision or award within which to file the petition for review. On the
other hand, Article 262-A (now Article 276)[1] of the Labor Code sets 10
days as the period within which the appeal is to be made.
The Case
Petitioner Guagua National Colleges (GNC) hereby assails by petition for
certiorari the resolution promulgated on December 15, 2008,[2] whereby the
Court of Appeals (CA) denied its Motion to Dismiss filed vis-à-vis the
respondents' petition for certiorari in the following manner:
This Court resolves:
1. x x x
2. To Deny:
a) respondent's Motion to Dismiss dated 22 July 2008. While it is true that
Coca-Cola Bottlers Philippines, Inc., Sales Force Union-PTGWO-Balais vs.
Coca-Cola Bottlers Philippines, Inc. held in part:
"x x x [U]nder Section 6, Rule VII of the same guidelines implementing
Article 262-A of the Labor Code, this Decision, as a matter of course, would
become final and executory after ten (10) calendar days from receipt of
copies of the decision by the parties x xx unless, in the meantime, a motion
for reconsideration or a petition for review to the Court of Appeals under
Rule 43 of the Rules of Court is filed within the same 10-day period. x xx;",
We, more importantly recognize the pronouncement of the Supreme Court in
Manila Midtown vs. Borromeowhich reads in part:
"Upon receipt of a copy of the Voluntary Arbitrator's Decision, petitioner
should have filed with the Court of Appeals, within the 15-day reglementary
period, a petition for review x xx"
Coca-Cola Bottlers is not in direct conflict with Manila Midtown as there is
no categorical ruling in the former that the petition for review under Rule 43
of the Rules of Court assailing the decision of the Voluntary Arbitrator
should be filed within ten (10) days from receipt thereof and not the
customary reglementary period of fifteen (15) days. Likewise, Leyte IV
Electric Cooperative, Inc. vs. LEYECO IV Employees Unio-ALU,
reiterating the landmark Case of Luzon Development Bank vs. Association
of Luzon Development Bank Employees, declared that the proper remedy
from the award of a voluntary arbitrator is a petition for review to the CA,
following Revised Administrative Circular No. 1-95, which in turn provides
for a reglementary period of fifteen (15) days within which to appeal.
Keeping in mind Article 4 of the Labor Code which mandates that all doubts
in the implementation and interpretation of its provisions, including its
implementing rules and regulations, should be resolved in favor of labor and
considering that technicalities are not supposed to stand in the way of
equitably and completely resolving the rights and obligations of labor arid
capital, We rule that the Petition for Review was seasonably filed. Moreso
that We have already granted petitioners' Urgent Motion for Extension.
3. x x x
SO ORDERED.
Antecedents
Under Section 5(2)[3] of Republic Act No. 6728 (Government Assistance To
Students and Teachers In Private Education Act), 70% of the increase in
tuition fees shall go to the payment of salaries, wages, allowances and other
benefits of the teaching and non-teaching personnel. Pursuant to this
provision, the petitioner imposed a 7% increase of its tuition fees for school
year 2006-2007.[4]
Shortly thereafter, and in order to save the depleting funds of the petitioner's
Retirement Plan, its Board of Trustees approved the funding of the retirement
program out of the 70% net incremental proceeds arising from the tuition fee
increases.[5] Respondents GNC-Faculty Labor Union and GNC Non-
Teaching Maintenance Labor Union challenged the petitioner's unilateral
decision by claiming that the increase violated Section 5(2) of R.A. No. 6728.
The parties referred the matter to voluntary arbitration after failing to settle
the controversy by themselves.[6]
Decision of the Voluntary Arbitrator
After hearing the parties, Voluntary Arbitrator Froilan M. Bacungan
rendered his decision dated June 16, 2008 in favor of GNC,[7] holding that
retirement benefits fell within the category of "other benefits" that could be
charged against the 70% net incremental proceeds pursuant to Section 5(2)
of R.A. No. 6728.
After receiving a copy of the decision on June 16, 2008, the respondents filed
an Urgent Motion for Extensionpraying that the CA grant them an extension
of 15 days from July 1, 2008, or until July 16, 2008, within which to file their
petition for review.[8]
Ruling of the CA
On July 2, 2008, the CA issued a resolution granting the Urgent Motion for
Extension.[9] The respondents filed the petition for review[10] on July 16,
2008.[11]
Subsequently, the petitioner filed its Motion to Dismiss,[12] asserting that
the decision of the Voluntary Arbitrator had already become final and
executory pursuant to Article 276 of the Labor Code and in accordance with
the ruling in Coca-Cola Bottlers Philippines, Inc. Sales Force Union-
PTGWO-Balais v. Coca-Cola Bottlers Philippines, Inc.[13]
The CA acted on the Motion to Dismiss on December 15, 2008 through the
now assailed resolution denying theMotion to Dismiss.[14]
The petitioner sought reconsideration,[15] but the CA denied the motion for
reconsideration on January 30, 2009.[16]
Hence, the petitioner instituted its petition for certiorari.
Issue
The petitioner submits the lone issue that—
THE COURT OF APPEALS, WITH ALL DUE RESPECT, IS ACTING
WITHOUT OR IN EXCESS OF ITS JURISDICTION IN CA-G.R. SP NO.
104109 CONSIDERING THAT THE DECISION OF THE VOLUNTARY
ARBITRATOR IN AC-025-RB3-04-01-03-2007, FOLLOWING RULE
[276] OF THE LABOR CODE AND THE DECISION OF THE
HONORABLE COURT IN COCA-COLA BOTTLERS PHILIPPINES,
INC. SALES FORCE UNION-PTGWO- BALAIS v. COCA-COLA
BOTTLERS PHILIPPINES, INC. XXXX, HAD ALREADY BECOME
FINAL AND EXECUTORY, HENCE UNCHALLENGEABLE SINCE
THE "URGENT MOTION FOR EXTENSION" DATED 30 JUNE 2008
AND 16 JULY 2008 RESPECTIVELY, OR TEN (10) DAYS AFTER THE
UNIONS AND THEIR COUNSEL OF RECORD WERE PERSONALLY
SERVED THE VOLUNTARY ARBITRATOR'S DECISION ON 16 JUNE
2008.[17]
The petitioner argues that the CA went beyond its jurisdiction when it denied
the Motion to Dismiss despite the finality of the decision of the Voluntary
Arbitrator pursuant to Article 276 of the Labor Code; that following the
pronouncement in Coca-Cola Bottlers Philippines, Inc. Sales Force Union-
PTGWO-Balais v. Coca-Cola Bottlers Philippines, Inc.[18] the CA was no
longer authorized to exercise its appellate jurisdiction;[19] that the CA's
reliance on the rulings in Manila Midtown Hotel v. Borromeo[20] and Leyte
IV Electric Cooperative, Inc. v. Leyeco IV Employees Union-ALU[21] was
misplaced because said rulings did not define the reglementary period to
appeal the decision or award of the Voluntary Arbitrator;[22] and that the CA
misapplied the rule on equity in the absence of strong or compelling reasons
to suspend the rules of procedure.[23]
The petitioner emphasizes the need to harmonize Rule 43 of the Rules of
Court with Article 276 of the Labor Code in view of their conflicting
provisions on the period for the appeal from the decision of the Voluntary
Arbitrator. It maintains that unless Congress amends Article 276 of the Labor
Code, the reglementary period within which to appeal the decision or award
of the Voluntary Arbitrator is 10 days following the ruling in Coca-Cola
Bottlers Philippines, Inc. Sales Force Union-PTGWO-Balais v. Coca--Cola
Bottlers Philippines, Inc., instead of 15 days under Rule 43 of the Rules of
Court.
In contrast, the respondents insist that they have a meritorious case because
the controversy involves the interpretation of Section 5(2) of R.A. No. 6728
on the disposition of the tuition fee increase;[24] that the CA did not abuse
its discretion given the rule on the liberal application of rules of procedure to
achieve substantial justice, and the policy on the liberal construction of laws
in favor of labor;[25] that a long line of jurisprudence[26] set the remedy of
appeal under Rule 43 of the Rules of Court as applicable in challenging the
decisions or awards of the Voluntary Arbitrator.
Did the CA gravely abuse its discretion in denying the petitioner's Motion to
Dismiss despite the finality of the decision of the Voluntary Arbitrator
pursuant to Article 276 of the Labor Code?
Ruling of the Court
We dismiss the petition for certiorari.
I petitions. Thus, we have ruled:
The petition for review shall be filed within 15 days
pursuant to Section 4, Rules 43 of the Rules of Court;
the 10-day period under Article 276 of the Labor Code
refers to the filing of a motion for reconsideration
vis-à-vis the Voluntary Arbitrator's decision or award
In resolving whether or not the CA committed grave abuse of discretion, the
Court has first to determine which between the two periods found in Article
276 of the Labor Code and Section 4 of Rule 43 of the Rules of Courtgoverns
the appeal from the decision or award by the Voluntary Arbitrator or Panel
of Arbitrators.
The petitioner posits that the appeal from the decision or award of the
Voluntary Arbitrator should be filed within 10 days in view of Article 276 of
the Labor Code which reads in full:
Article 276. Procedures. – The Voluntary Arbitrator or panel of Voluntary
Arbitrators shall have the power to hold hearings, receive evidences and take
whatever action is necessary to resolve the issue or issues subject of the
dispute, including efforts to effect a voluntary settlement between parties.
All parties to the dispute shall be entitled to attend the arbitration
proceedings. The attendance of any third party or the exclusion of any
witness from the proceedings shall be determined by the Voluntary Arbitrator
or panel of Voluntary Arbitrators. Hearings may be adjourned for cause or
upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory for the Voluntary
Arbitrator or panel of Voluntary Arbitrators to render an award or decision
within twenty (20) calendar days from the date of submission of the dispute
to voluntary arbitration.
The award or decision of the Voluntary Arbitrator or panel of Voluntary
Arbitrators shall contain the facts and the law on which it is based. It shall be
final and executory after ten (10) calendar days from receipt of the copy of
the award or decision by the parties.
Upon motion of any interested party, the Voluntary Arbitrator or panel of
Voluntary Arbitrators or the Labor Arbiter in the region where the movant
resides, in case of the absence or incapacity of the Voluntary Arbitrator or
panel of Voluntary Arbitrators, for any reason, may issue a writ of execution
requiring either the sheriff of the Commission or regular courts or any public
official whom the parties may designate in the submission agreement to
execute the final decision, order or award. (Bold underscoring supplied for
emphasis)
Article 276 is an amendment introduced by R.A. No. 6715.[27] Prior to the
effectivity of the amendment on March 21, 1989,[28] Article 262 (the
predecessor provision) stated that voluntary arbitration decisions or awards
would be final, unappealable and executory. Despite such immediately
executory nature of the decisions and awards of the Voluntary Arbitrators,
however, the Court pronounced in Oceanic Bic Division (FFW) v.
Romero[29]that the decisions or awards of the Voluntary Arbitrators
involving interpretations of law were within the scope of the Court's power
of review. The Court explained:
x x x x We agree with the petitioner that the decisions of voluntary arbitrators
must be given the highest respect and as a general rule must be accorded a
certain measure of finality. This is especially true where the arbitrator chosen
by the parties [enjoys] the first rate credentials of Professor Flerida Ruth
Pineda Romero, Director of the U.P. Law Center and an academician of
unquestioned expertise in the field of Labor Law. It is not correct, however,
that this respect precludes the exercise of judicial review over their decisions.
Article 262 of the Labor Code making voluntary arbitration awards final,
inappealable, and executory except where the money claims exceed
P100,000.00 or 40% of paid-up capital of the employer or where there is
abuse of discretion or gross incompetence refers to appeals to the National
Labor Relations Commission and not to judicial review.
Inspite of statutory provisions making '"final" the decisions of certain
administrative agencies, we have taken cognizance of petitions questioning
these decisions where want of jurisdiction, grave abuse of discretion,
violation of due process, denial of substantial justice, or erroneous
interpretation of the law were brought to our attention. There is no provision
for appeal in the statute creating the Sandiganbayan but this has not precluded
us from examining decisions of this special court brought to us in proper
"Yanglay raised a jurisdictional question which was not brought up by
respondent public officials. He contends that this Court has no jurisdiction to
review the decisions of the NLRC and the Secretary of Labor 'under the
principle of separation of powers' and that judicial review is not provided for
in Presidential Decree No. 21.
"That contention is a flagrant error, it is generally understood that as to
administrative agencies exercising quasi- judicial or legislative power there
is an underlying power in the courts to scrutinize the acts of such agencies
on questions of law and jurisdiction even though no right of review is given
by statute' (73 C.J.S. 506, note 56).
"The purpose of judicial review is to keep the administrative agency within
its jurisdiction and protect substantial rights of parties affected by its
decisions' (73 C.J.S. 507, Sec. 165). It is part of the system of checks and
balances which restricts the separation of powers and forestalls arbitrary and
unjust adjudications.
"Judicial review is proper in case of lack of jurisdiction, grave abuse of
discretion, error of law, fraud or collusion (Timbancaya vs. Vicente, 62 O.G.
9424; Macatangay vs. Secretary of Public Works and Communications, 63
O.G. 11236; Ortua vs. Singson Encarnacion, 59 Phil. 440).
"'The courts may declare an action or resolution of an administrative
authority to be illegal (1) because it violates or fails to comply with some
mandatory provision of the law or (2) because it is corrupt, arbitrary or
capricious' (Borromeo vs. City of Manila and Rodriguez Lanuza, 62 Phil.
512, 516; Villegas vs. Auditor General, L-21352, November 29, 1966, 18
SCRA 877, 891). [San Miguel Corporation v. Secretary of Labor, 64 SCRA
60].
xxx xxx xxx
"It is now settled rule that under the present Labor Code, (Presidential Decree
No. 442, as amended [1974] if lack of power or arbitrary or improvident
exercise of authority be shown, thus giving rise to a jurisdictional question,
this Court may, in appropriate certiorari proceedings, pass upon the validity
of the decisions reached by officials or administrative agencies in labor
controversies. So it was assumed in Maglasang v. Ople, (L-38813, April 29,
1975, 63 SCRA 508). It was explicitly announced in San Miguel Corporation
v. Secretary of Labor, (L-39195, May 16, 1975, 64 SCRA 56) the opinion
being penned by Justice Aquino. Accordingly, cases of that character
continue to find a place in our docket. (Cf. United Employees Union of
Gelmart Industries v. Noriel, L-40810, Oct. 3, 1975, 67 SCRA 267) The
present suit is of that category. [Kapisanan ng mga Manggagawa sa La
Suerte-Foitaf vs. Noriel, 77 SCRA 415-416].
A voluntary arbitrator by the nature of her functions acts in a quasi-judicial
capacity. There is no reason why her decisions involving interpretation of
law should be beyond this Court's review. Administrative officials are
presumed to act in accordance with law and yet we do not hesitate to pass
upon their work where a question of law is involved or where a showing of
abuse of authority or discretion in their official acts is properly raised in
petitions for certiorari.[30]
Accordingly, the decisions and awards of Voluntary Arbitrators, albeit
immediately final and executory, remained subject to judicial review in
appropriate cases through petitions for certiorari.[31]
Such was the state of things until the promulgation in 1995 of the ruling in
Luzon Development Bank v. Association of Luzon Development Bank
Employees.[32] Therein, the Court noted the silence of R.A. No. 6715 on the
availability of appeal from the decisions or awards of the Voluntary
Arbitrators. In declaring the Voluntary Arbitrators or Panels of Voluntary
Arbitrators as quasi-judicial instrumentalities, Luzon Development Bank v.
Association of Luzon Development Bank Employees pronounced the
decisions or awards of the Voluntary Arbitrators to be appealable to the CA,
viz.:
It will thus be noted that the jurisdiction conferred by law on a voluntary
arbitrator or a panel of such arbitrators is quite limited compared to the
original jurisdiction of the labor arbiter and the appellate jurisdiction of the
National Labor Relations Commission (NLRC) for that matter. The state of
our present law relating to voluntary arbitration provides that "(t)he award or
decision of the Voluntary Arbitrator x x x shall be final and executory after
ten (10) calendar days from receipt of the copy of the award or decision by
the parties," while the "(d)ecision, awards, or orders of the Labor Arbiter are
final and executory unless appealed to the Commission by any or both parties
within ten (10) calendar days from receipt of such decisions, awards, or
orders." Hence, while there is an express mode of appeal from the decision
of a labor arbiter, Republic Act No. 6715 is silent with respect to an appeal
from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is,
more often than not, elevated to the Supreme Court itself on a petition for
certiorari, in effect equating the voluntary arbitrator with the NLRC or the
Court of Appeals. In the view of the Court, this is illogical and imposes an
unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al., on the settled premise that
the judgments of courts and awards of [quasi-judicial] agencies must become
final at some definite time, this Court ruled that the awards of voluntary
arbitrators determine the rights of parties; hence, their decisions have the
same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et
al. v. Romero, et al., this Court ruled that "a voluntary arbitrator by the nature
of her functions acts in a quasi-judicial capacity." Under these rulings, it
follows that the voluntary arbitrator, whether acting solely or in a panel,
enjoys in law the status of a quasi-judicial agencybut independent of, and
apart from, the NLRC since his decisions are not appealable to the latter.
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides
that the Court of Appeals shall exercise:
"xxx xxx xxx (3) Exclusive appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of Regional Trial Courts and quasi-
judicial agencies, instrumentalities, boards or commissions, including the
Securities and Exchange Commission, the Employees' Compensation
Commission and the Civil Service Commission, except those falling within
the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under Presidential Decree
No. 442, as amended, the provisions of this Act, and of subparagraph (1) of
the third paragraph and subparagraph (4) of the fourth paragraph of Section
17 of the Judiciary Act of 1948.
xxx xxx xxx"
Assuming arguendo that the voluntary arbitrator or the panel of voluntary
arbitrators may not strictly be considered as a [quasi-judicial] agency, board
or commission, still both he and the panel are comprehended within the
concept of a "quasi-judicial instrumentality." It may even be stated that it was
to meet the very situation presented by the quasi-judicial functions of the
voluntary arbitrators here, as well as the subsequent arbitrator/arbitral
tribunal operating under the Construction Industry Arbitration Commission,
that the broader term "instrumentalities" was purposely included in the
above-quoted provision.
An "instrumentality" is anything used as a means or agency. Thus, the terms
governmental "agency" or "instrumentality" are synonymous in the sense that
either of them is a means by which a government acts, or by which a certain
government act or function is performed. The word "instrumentality," with
respect to a state, contemplates an authority to which the state delegates
governmental power for the performance of a state function. An individual
person, like an administrator or executor, is a judicial instrumentality in the
settling of an estate, in the same manner that a sub-agent appointed by a
bankruptcy court is an instrumentality of the court, and a trustee in
bankruptcy of a defunct corporation is an instrumentality of the state.
The voluntary arbitrator no less performs a state function pursuant to a
governmental power delegated to him under the provisions therefor in the
Labor Code and he falls, therefore, within the contemplation of the term
"instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him
within the exceptions to said Sec.. 9 since he is a quasi-judicial
instrumentality as contemplated therein. It will be noted that, although the
Employees' Compensation Commission is also provided for in the Labor
Code, Circular No. 1-91, which is the forerunner of the present Revised
Administrative Circular No. 1-95, laid down the procedure for the
appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in
amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the Court of Appeals, in line with
the procedure outlined in Revised Administrative Circular No. 1-95, just like
those of the quasi-judicial agencies, boards and commissions enumerated
therein.
This would be in furtherance of, and consistent with, the original purpose of
Circular No. 1-91 to provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial entities not expressly excepted from the
coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute.
Nor will it run counter to the legislative intendment that decisions of the
NLRC be reviewable directly by the Supreme Court since, precisely, the
cases within the adjudicative competence of the voluntary arbitrator are
excluded from the jurisdiction of the NLRC or the labor arbiter.[33]
In other words, the remedy of appeal by petition for review under Rule 43 of
the Rules of Court became available to the parties aggrieved by the decisions
or awards of the Voluntary Arbitrators or Panels of Arbitrators.
In the 2004 ruling in Sevilla Trading Company v. Semana,[34] the Court
ruled that the decision of the Voluntary Arbitrator became final and
executory after the expiration of the 15-day reglementary period within
which to file the petition for review under Rule 43. Manila Midtown Hotel
v. Borromeo[35] also ruled so. The 15-day period was likewise adverted to
in the ruling in Nippon Paint Employees Union-Olalia v. Court of
Appeals,[36]promulgated in November 2004.
In 2005, the Court promulgated the decision in Coca-Cola Bottlers
Philippines, Inc., Sales Force Union-PTGWO-Balais v. Coca-Cola Bottlers
Philippines, Inc.,[37] wherein it made reference for the first time to the 10-
day period for the filing of the petition for review vis-a-vis decisions or
awards of the Voluntary Arbitrator provided in Article 262-A (now Article
276).[38] Within the same year, Philex Gold Philippines, Inc. v. Philex
Bulawan Supervisors Union[39] applied the period of 10 days in declaring
the appeal to have been timely filed.
Thereafter, the Court has variantly applied either the 15-day or the 10- day
period as the time within which to appeal the decisions or awards of the
Voluntary Arbitrators or Panels of Arbitrators. Thus, in the 2007 ruling
inLeyte IV Electric Cooperative, Inc. v. Leyeco IV Employees Union-
ALU,[40] the Court recognized the 15-day reglementary period under Rule
43. This was reiterated in AMA Computer College-Santiago City, Inc. v.
Nacino(2008),[41] Mora v. Avesco Marketing Corporation[42] (2008),
Samahan Ng Mga Manggagawa sa Hyatt-NUWHRAIN-APL v. Bacungan
(2009),[43] Saint Luis University, Inc. v. Cobarrubias[44] (2010), Samahan
ng mga Manggagawa sa Hyatt (SAMASAH-NUWHRAIN) v. Magsalin[45]
(2011) and Royal Plant Workers Union v. Coca Cola Bottlers Philippines,
Inc.-Cebu Plant (2013). [46]
But in Philippine Electric Corporation (PHILEC) v. Court of Appeals[47]
(2014), Baronda v. Court of Appeals[48](2015), and NYK-FIL Ship
Management, Inc. v. Dabu[49] (2017), the Court, citing Article 276 of the
Labor Code, applied the 10-day period. Notably, the Court opined in
Philippine Electric Corporation (PHILEC) v. Court of Appeals that despite
the period provided in Rule 43, the 10-day period should apply in
determining the timeliness of appealing the decision or award of the
Voluntary Arbitrator or Panel of Arbitrators, to wit:
Despite Rule 43 providing for a 15-day period to appeal, we rule that the
Voluntary Arbitrator's decision must be appealed before the Court of Appeals
within 10 calendar days from receipt of the decision as provided in the Labor
Code.
Appeal is a "statutory privilege," which may be exercised "only in the manner
and in accordance with the provisions of the law." "Perfection of an appeal
within the reglementary period is not only mandatory but also jurisdictional
so that failure to do so rendered the decision final and executory, and deprives
the appellate court of jurisdiction to alter the final judgment much less to
entertain the appeal."
We ruled that Article 262-A of the Labor Code allows the appeal of decisions
rendered by Voluntary Arbitrators. Statute provides that the Voluntary
Arbitrator's decision "shall be final and executory after ten (10) calendar days
from receipt of the copy of the award or decision by the parties." Being
provided in the statute, this 10-day period must be complied with; otherwise,
no appellate court will have jurisdiction over the appeal. This absurd situation
occurs when the decision is appealed on the 11th to 15th day from receipt as
allowed under the Rules, but which decision, under the law, has already
become final and executory.
Furthermore, under Article VIII, Section 5 (5) of the Constitution, this court
"shall not diminish, increase, or modify substantive rights" in promulgating
rules of procedure in courts. The 10-day period to appeal under the Labor
Code being a substantive right, this period cannot be diminished, increased,
or modified through the Rules of Court.
In Shioji v. Harvey, this Court held that the "rules of court, promulgated by
authority of law, have the force and effect of law, if not in conflict with
positive law." Rules of Court are "subordinate to the statute." In case of
conflict between the law and the Rules of Court, "the statute will prevail."
The rule, therefore, is that a Voluntary Arbitrator's award or decision shall be
appealed before the Court of Appeals within 10 days from receipt of the
award or decision. Should the aggrieved party choose to file a motion for
reconsideration with the Voluntary Arbitrator, the motion must be filed
within the same 10-day period since a motion for reconsideration is filed
"within the period for taking an appeal."[50]
The ratiocination in Philippine Electric Corporation (PHILEC) v. Court of
Appeals backstopped the ruling in NYK-FIL Ship Management, Inc. v.
Dabu.
Given the variable rulings of the Court, what should now be the period to be
followed in appealing the decisions or awards of the Voluntary Arbitrators
or Panel of Arbitrators?
In the 2010 ruling in Teng v. Pagahac,[51] the Court clarified that the 10-day
period set in Article 276 of theLabor Code gave the aggrieved parties the
opportunity to file their motion for reconsideration, which was more in
keeping with the principle of exhaustion of administrative remedies, holding
thusly:
In the exercise of its power to promulgate implementing rules and
regulations, an implementing agency, such as the Department of Labor, is
restricted from going beyond the terms of the law it seeks to implement; it
should neither modify nor improve the law. The agency formulating the rules
and guidelines cannot exceed the statutory authority granted to it by the
legislature.
By allowing a 10-day period, the obvious intent of Congress in amending
Article 263 to Article 262-A is to provide an opportunity for the party
adversely affected by the VA's decision to seek recourse via a motion for
reconsideration or a petition for review under Rule 43 of the Rules of Court
filed with the CA. Indeed, a motion for reconsideration is the more
appropriate remedy in line with the doctrine of exhaustion. of administrative
remedies. For this reason, an appeal from administrative agencies to the CA
via Rule 43 of the Rules of Court requires exhaustion of available remedies
as a condition precedent to a petition under that Rule.
The requirement that administrative remedies be exhausted is based on the
doctrine that in providing for a remedy before an administrative agency,
every opportunity must be given to the agency to resolve the matter and to
exhaust all opportunities for a resolution under the given remedy before
bringing an action in, or resorting to, the courts of justice. Where Congress
has not clearly required exhaustion, sound judicial discretion governs, guided
by congressional intent.
By disallowing reconsideration of the VA's decision, Section 7, Rule XIX of
DO 40-03 and Section 7 of the 2005 Procedural Guidelines went directly
against the legislative intent behind Article 262-A of the Labor Code. These
rules deny the VA the chance to correct himself and compel the courts of
justice to prematurely intervene with the action of an administrative agency
entrusted with the adjudication of controversies coming under its special
knowledge, training and specific field of expertise. In this era of clogged
court dockets, the need for specialized administrative agencies with the
special knowledge, experience and capability to hear and determine promptly
disputes on technical matters or intricate questions of facts, subject to judicial
review, is indispensable. In Industrial Enterprises, Inc. v. Court of Appeals,
we ruled that relief must first be obtained in an administrative proceeding
before a remedy will be supplied by the courts even though the matter is
within the proper jurisdiction of a court.[52] (Emphasis supplied)
Hence, the 10-day period stated in Article 276 should be understood as the
period within which the party adversely affected by the ruling of the
Voluntary Arbitrators or Panel of Arbitrators may file a motion for
reconsideration. Only after the resolution of the motion for reconsideration
may the aggrieved party appeal to the CA by filing the petition for review
under Rule 43 of the Rules of Court within 15 days from notice pursuant to
Section 4 of Rule 43.
The Court notes that despite the clarification made in Teng v. Pagahac, the
Department of Labor and Employment (DOLE) and the National
Conciliation and Mediation Board (NCMB) have not revised or amended the
Revised Procedural Guidelines in the Conduct of Voluntary Arbitration
Proceedings insofar as its Section 7 of Rule VII[53] is concerned. This
inaction has obviously sown confusion, particularly in regard to the filing of
the motion for reconsideration as a condition precedent to the filing of the
petition for review in the CA. Consequently, we need to direct the DOLE and
the NCMB to cause the revision or amendment of Section 7 of Rule VII of
the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration
Proceedings in order to allow the filing of motions for reconsideration in line
with Article 276 of the Labor Code.
II
Certiorari does not lie in assailing
the CA's denial of a motion to dismiss
Generally, the denial of a motion to dismiss cannot be assailed by petition
for certiorari. As we indicated inBiñan Rural Bank v. Carlos:[54]
The denial of a motion to dismiss generally cannot be questioned in a special
civil action for certiorari, as this remedy is designed to correct only errors of
jurisdiction and not errors of judgment. Neither can a denial of a motion to
dismiss be the subject of an appeal which is available only after a judgment
or order on the merits has been rendered. Only when the denial of the motion
to dismiss is tainted with grave abuse of discretion can the grant of the
extraordinary remedy of certiorari be justified.
Although it admits being aware of this rule, the petitioner insists on the
propriety of its petition for certioraribased on its belief that the CA had
gravely abused its discretion in assuming jurisdiction over the respondents'
petition. It argues that the decision rendered by Voluntary Arbitrator
Bacungan had already become final pursuant to Article 276 of the Labor
Code, and, accordingly, the CA could no longer exercise its appellate
jurisdiction.
The petitioner is mistaken.
Grave abuse of discretion means either that the judicial or quasi-judicial
power was exercised in an arbitrary or despotic manner by reason of passion
or personal hostility, or that the respondent judge, tribunal or board evaded a
positive duty, or virtually refused to perform the duty enjoined or to act in
contemplation of law, such as when such judge, tribunal or board exercising
judicial or quasi-judicial powers acted in a capricious or whimsical manner
as to be equivalent to lack of jurisdiction.[55]
Here, the CA did not act arbitrarily in denying the petitioner's Motion to
Dismiss. It correctly noted that Coca-Cola Bottlers Philippines, Inc. Sales
Force Union-PTGWO-Balais v. Coca-Cola Bottlers Philippines, Inc. did not
make a definitive ruling on the correct reglementary period for the filing of
the petition for review. Given the varying applications of the periods defined
in Article 276 and Section 4 of Rule 43, the CA could not be objectively held
to be guilty of grave abuse of discretion in applying the equitable rule on
construction in favor of labor. To be underscored is that the underlying aim
for the requirement of strict adherence to procedural rules, particularly on
appeals, should always be the prevention of needless delays that could enable
the unscrupulous employers to wear out the efforts and meager resources of
their workers to the point that the latter would be constrained to settle for less
than what were due to them.[56]

ACCORDINGLY, the Court DISMISSES the unmeritorious petition for

certiorari; AFFIRMS the decision promulgated on December 15, 2008 by the
Court of Appeals; and DIRECTS the Department of Labor and Employment
and the National Conciliation and Mediation Board to revise or amend the
Revised Procedural Guidelines in the Conduct of Voluntary Arbitration
Proceedings to amend the Revised Procedural Guidelines in the Conduct of
Voluntary Arbitration Proceedings to reflect the foregoing ruling herein.

No pronouncement on costs of suit.

SO ORDERED.
KAPATIRAN SA MEAT AND CANNING DIVISION vs. CALLEJA
G.R. No. 82914 | 1988-06-20
GRIá'O-AQUINO, J.:
The petitioner, Kapatiran sa Meat and Canning Division (TUPAS Local
Chapter No. 1027) hereinafter referred to as "TUPAS," seeks a review of the
resolution dated January 27, 1988 (Annex D) of Public respondent Pura
Ferrer-Calleja, Director of the Bureau of Labor Relations, dismissing its
appeal from the Order dated November 17, 1987 (Annex C) of the Med-
Arbiter Rasidali C. Abdullah ordering a certification election to be conducted
among the regular daily paid rank and file employees/workers of Universal
Robina Corporation-Meat and Canning Division to determine which of the
contending unions:
The fact that TUPAS was able to negotiate a new CBA with ROBINA within
the 60-day freedom period of the existing CBA, does not foreclose the right
of the rival union, NEW ULO, to challenge TUPAS' claim to majority status,
by filing a timely petition for certification election on October 13, 1987
before TUPAS' old CBA expired on November 15, 1987 and before it signed
a new CBA with the company on December 3, 1987. As pointed out by Med-
Arbiter Abdullah, a "certification election is the best forum in ascertaining
the majority status of the contending unions wherein the workers themselves
can freely choose their bargaining representative thru secret ballot." Since it
has not been shown that this order is tainted with unfairness, this Court will
not thwart the holding of a certification election (Associated Trade Unions
[ATU] vs. Noriel, 88 SCRA 96).

a) Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 WHEREFORE, the petition for certiorari is denied, with costs against the
(or "TUPAS" for brevity); petitioner.

b) Meat and Canning Division New Employees and Workers United Labor SO ORDERED.
Organization (or "NEW ULO" for brevity);

c) No Union.

shall be the bargaining unit of the daily wage rank and file employees in the
Meat and Canning Division of the company.

From 1984 to 1987 TUPAS was the sole and exclusive collective bargaining
representative of the workers in the Meat and Canning Division of the
Universal Robina Corporation, with a 3-year collective bargaining agreement
(CBA) which was to expire on November 15, 1987.

Within the freedom period of 60 days prior to the expiration of its CBA,
TUPAS filed an amended notice of strike on September 28, 1987 as a means
of pressuring the company to extend, renew, or negotiate a new CBA with it.

On October 8, 1987, the NEW ULO, composed mostly of workers belonging

to the IGLESIA NI KRISTO sect, registered as a labor union.

On October 12, 1987, the TUPAS staged a strike. ROBINA obtained an

injunction against the strike, resulting in an agreement to return to work and
for the parties to negotiate a new CBA.

The next day, October 13, 1987, NEW ULO, claiming that it has "the
majority of the daily wage rank and file employees numbering 191," filed a
petition for a certification election at the Bureau of Labor Relations (Annex
A).

TUPAS moved to dismiss the petition for being defective in form and that
the members of the NEW ULO were mostly members of the Iglesia ni Kristo
sect which three (3) years previous refused to affiliate with any labor union.
It also accused the company of using the NEW ULO to defeat TUPAS'
bargaining rights (Annex B).

On November 17, 1987, the Med-Arbiter ordered the holding of a

certification election within 20 days (Annex C).

TUPAS appealed to the Bureau of Labor Relations (BLR). In the meantime,

it was able to negotiate a new 3-year CBA with ROBINA, which was signed
on December 3, 1987 and to expire on November 15, 1990.

On January 27, 1988, respondent BLB Director Calleja dismissed the appeal
(Annex D).

TUPAS' motion for reconsideration (Annex E) was denied on March 17,

1988 (Annex F). On April 30, 1988, it filed this petition alleging that the
public respondent acted in excess of her jurisdiction and with grave abuse of
discretion in affirming the Med-Arbiter's order for a certification election.

After deliberating on the petition and the documents annexed thereto, We

find no merit in the petition. The public respondent did not err in dismissing
the petitioner's appeal in BLR Case No. A-12-389-87. This Court's decision
in Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, upholding the
right of members of the IGLESIA NI KRISTO sect not to join a labor union
for being contrary to their religious beliefs, does not bar the members of that
sect from forming their own union. The public respondent correctly observed
that the "recognition of the tenets of the sect . . . should not infringe on the
basic right of self-organization granted by the constitution to workers,
regardless of religious affiliation."
REYES vs. TRAJANO
G.R. No. 84433 | 1992-06-02
NARVASA, C.J.:
The officer-in-charge of the Bureau of Labor Relations (Hon. Cresenciano
Trajano) sustained the denial by the Med Arbiter of the right to vote of one
hundred forty-one (141) members of the "Iglesia ni Kristo" (INK), all
employed in the same company, at a certification election at which two (2)
labor organizations were contesting the right to be the exclusive
representative of the employees in the bargaining unit. That denial is assailed
as having been done with grave abuse of discretion in the special civil action
of certiorari at bar, commenced by the INK members adversely affected
thereby.
The certification election was authorized to be conducted by the Bureau of
Labor Relations among the employees of Tri-Union Industries Corporation
on October 20, 1987. The competing unions were the Tri-Union Employees
Union-Organized Labor Association in Line Industries and Agriculture
(TUEU-OLALIA), and Trade Union of the Philippines and Allied Services
(TUPAS). Of the 348 workers initially deemed to be qualified voters, only
240 actually took part in the election, conducted under the supervision of the
Bureau of Labor Relations. Among the 240 employees who cast their votes
were 141 members of the INK.
The ballots provided for three (3) choices. They provided for votes to be cast,
of course, for either of the two (2) contending labor organizations, (a)
TUPAS and (b) TUEU-OLALIA; and, conformably with established rule and
practice, 1 for (c) a third choice: "NO UNION."
The final tally of the votes showed the following results:
TUPAS 1
TUEU-OLALIA 95
NO UNION 1
SPOILED 1
CHALLENGED 141
The challenged votes were those cast by the 141 INK members. They were
segregated and excluded from the final count in virtue of an agreement
between the competing unions, reached at the pre-election conference, that
the INK members should not be allowed to vote "because they are not
members of any union and refused to participate in the previous certification
elections."
The INK employees promptly made known their protest to the exclusion of
their votes. They filed a petition to cancel the election alleging that it "was
not fair" and the result thereof did "not reflect the true sentiments of the
majority of the employees." TUEU-OLALIA opposed the petition. It
contended that the petitioners " do not have legal personality to protest the
results of the election," because "they are not members of either contending
unit, but . . . of the INK" which prohibits its followers, on religious grounds,
from joining or forming any labor organization . . . ."
The Med-Arbiter saw no merit in the INK employees' petition. By Order
dated December 21, 1987, he certified the TUEU-OLALlA as the sole and
exclusive bargaining agent of the rank-and-file employees. In that Order he
decried the fact that "religious belief was (being) utilized to render
meaningless the rights of the non-members of the Iglesia ni Kristo to exercise
the rights to be represented by a labor organization as the bargaining agent,"
and declared the petitioners as "not possessed of any legal personality to
institute this present cause of action" since they were not parties to the
petition for certification election.
The petitioners brought the matter up on appeal to the Bureau of Labor
Relations. There they argued that the Med-Arbiter had "practically
disenfranchised petitioners who had an overwhelming majority," and "the
TUEU-OLALIA certified union cannot be legally said to have been the result
of a valid election where at least fifty-one percent of all eligible voters in the
appropriate bargaining unit shall have cast their votes." Assistant Labor
Secretary Cresenciano B. Trajano, then Officer-in-Charge of the Bureau of
Labor Relations, denied the appeal in his Decision of July 22, 1988. He
opined that the petitioners are "bereft of legal personality to protest their
alleged disenfranchisement" since they "are not constituted into a duly
organized labor union, hence, not one of the unions which vied for
certification as sole and exclusive bargaining representative." He also
pointed out that the petitioners "did not participate in previous certification
elections in the company for the reason that their religious beliefs do not
allow them to form, join or assist labor organizations."
It is this Decision of July 22, 1988 that the petitioners would have this Court
annul and set aside in the present special civil action of certiorari.
The Solicitor General having expressed concurrence with the position taken
by the petitioners, public respondent NLRC was consequently required to
file, and did thereafter file, its own comment on the petition. In that comment
it insists that "if the workers who are members of the Iglesia ni Kristo in the
exercise of their religious belief opted not to join any labor organization as a
consequence of which they themselves can not have a bargaining
representative, then right to be represented by a bargaining agent should not
be denied to other members of the bargaining unit."
Guaranteed to all employees or workers is the "right to self-organization and
to form, join, or assist labor organizations of their own choosing for purposes
of collective bargaining." This is made plain by no less than three provisions
of the Labor Code of the Philippines. 2 Article 243 of the Code provides as
follows: 3
ART. 243. Coverage and employees right to self-organization. All persons
employed in commercial, industrial and agricultural enterprises and in
religious, charitable, medical, or educational institutions whether operating
for profit or not, shall have the right to self-organization and to form, join, or
assist labor organizations of their own choosing for purposes of collective
bargaining.
Ambulant, intermittent and itinerant workers, self-employed people, rural
workers and those without any definite employers may form labor
organizations for their mutual aid and protection.
Article 248 (a) declares it to be an unfair labor practice for an employer,
among others, to "interfere with, restrain or coerce employees in the exercise
of their right to self-organization." Similarly, Article 249 (a) makes it an
unfair labor practice for a labor organization to "restrain or coerce employees
in the exercise of their rights to self-organization . . . ."
The same legal proposition is set out in the Omnibus Rules Implementing the
Labor Code, as amended, as might be expected. Section 1, Rule II
(Registration of Unions), Book V (Labor Relations) of the Omnibus Rules
provides as follows: 4
"SEC. 1. Who may join unions; exception. All persons employed in
commercial, industrial and agricultural enterprises, including employees of
government corporations established under the Corporation Code as well as
employees of religious, medical or educational institutions, whether
operating for profit or not, except managerial employees, shall have the right
to self-organization and to form, join or assist labor organizations for
purposes of collective bargaining. Ambulant, intermittent and itinerant
workers, self-employed people, rural workers and those without any definite
employers may form labor organizations for their mutual aid and protection.
xxx xxx xxx"
The right of self-organization includes the right to organize or affiliate with
a labor union or determine which of two or more unions in an establishment
to join, and to engage in concerted activities with co-workers for purposes of
collective bargaining through representatives of their own choosing, or for
their mutual aid and protection, i.e., the protection, promotion, or
enhancement of their rights and interests. 5
Logically, the right NOT to join, affiliate with, or assist any union, and to
disaffiliate or resign from a labor organization, is subsumed in the right to
join, affiliate with, or assist any union, and to maintain membership therein.
The right to form or join a labor organization necessarily includes the right
to refuse or refrain from exercising said right. It is self-evident that just as no
one should be denied the exercise of a right granted by law, so also, no one
should be compelled to exercise such a conferred right. The fact that a person
has opted to acquire membership in a labor union does not preclude his
subsequently opting to renounce such membership. 6
As early as 1974 this Court had occasion to expatiate on these self-evident
propositions in Victoriano v. Elizalde Rope Workers' Union, et al., 7 viz.:
". . . What the Constitution and Industrial Peace Act recognize and guarantee
is the 'right' to form or join associations. Notwithstanding the different
theories propounded by the different schools of jurisprudence regarding the
nature and contents of a 'right,' it can be safely said that whatever theory one
subscribes to, a right comprehends at least two broad notions, namely: first,
liberty or freedom, i.e., the absence of legal restraint, whereby an employee
may act for himself without being prevented by law; second, power, whereby
an employee may, as he pleases, join or refrain from joining an association.
It is therefore the employee who should decide for himself whether he should
join or not an association; and should he choose to join, he himself makes up
his mind as to which association he would join; and even after he has joined,
he still retains the liberty and the power to leave and cancel his membership
with said organization at any time (Pagkakaisa Samahang Manggagawa ng
San Miguel Brewery vs. Enriquez, et al., 108 Phil. 1010, 1019). It is clear,
therefore, that the right to join a union includes the right to abstain from
joining any union (Abo, et al. vs. PHILAME [KG] Employees Union, et al.,
L-19912, January 20, 1965, 13 SCRA 120, 123, quoting Rothenberg, Labor
Relations).
Inasmuch as what both the Constitution and the Industrial Peace Act have
recognized, and guaranteed to the employee, is the 'right' to join associations
of his choice, it would be absurd to say that the law also imposes, in the same
breath, upon the employee the duty to join associations. The law does not
enjoin an employee to sign up with any association."
The right to refuse to join or be represented by any labor organization is
recognized not only by the law but also in the rules drawn up for
implementation thereof. The original Rules on Certification promulgated by
the defunct Court of Industrial Relations required that the ballots to be used
at a certification election to determine which of two or more competing labor
unions would represent the employees in the appropriate bargaining unit
should contain, aside from the names of each union, an alternative choice of
the employee voting, to the effect that he desires not to be represented by any
union. 8 And where only one union was involved, the ballots were required
to state the question "Do you desire to be represented by said union?" as
regards which the employees voting would mark an appropriate square, one
indicating the answer, "Yes," the other, "No."
To be sure, the present implementing rules no longer explicitly impose the
requirement that the ballots at a certification election include a choice for
"NO UNION." Section 8 (Rule VI, Book V of the Omnibus Rules) entitled
"Marking and canvassing of votes," pertinently provides that:
". . . (a) The voter must write a cross (X) or a check (/) in the square opposite
the union of his choice. If only one union is involved, the voter shall make
his cross or check in the square indicating 'YES' or 'NO.'
xxx xxx xxx"
Withal, neither the quoted provision nor any other in the Omnibus
Implementing Rules expressly bars the inclusion of that choice of "NO
UNION" in the ballots. Indeed, it is doubtful if the employee's alternative
right NOT to form, join or assist any labor organization or withdraw or resign
from one may be validly eliminated and he be consequently coerced to vote
for one or another of the competing unions and be represented by one of
them.
Besides, the statement in the quoted provision that "(i)f only one union is
involved, the voter shall make his cross or check in the square indicating
'YES' or 'NO,' is quite clear acknowledgment of the alternative possibility
that the "NO" votes may outnumber the "YES" votes indicating that the
majority of the employees in the company do not wish to be represented by
any union in which case, no union can represent the employees in collective
bargaining.
And whether the prevailing "NO" votes are inspired by considerations of
religious belief or discipline or not is beside the point, and may not be
inquired into at all.
The purpose of a certification election is precisely the ascertainment of the
wishes of the majority of the employees in the appropriate bargaining unit:
to be or not to be represented by a labor organization, and in the affirmative
case, by which particular labor organization. If the results of the election
should disclose that the majority of the workers do not wish to be represented
by any union, then their wishes must be respected, and no union may properly
be certified as the exclusive representative of the workers in the bargaining
unit in dealing with the employer regarding wages, hours and other terms and
conditions of employment. The minority employees who wish to have a
union represent them in collective bargaining can do nothing but wait for
another suitable occasion to petition for a certification election and hope that
the results will be different. They may not and should not be permitted,
however, to impose their will on the majority who do not desire to have a
union certified as the exclusive workers' benefit in the bargaining unit - upon
the plea that they, the minority workers, are being denied the right of self-
organization and collective bargaining. As repeatedly stated, the right of self-
organization embraces not only the right to form, join or assist labor
organizations, but the concomitant, converse right NOT to form, join or assist
any labor union.
That the INK employees, as employees in the same bargaining unit in the
true sense of the term, do have the right of self-organization, is also in truth
beyond question, as well as the fact that when they voted that the employees
in their bargaining unit should be represented by "NO UNION," they were
simply exercising that right of self-organization, albeit in its negative aspect.
The respondents' argument that the petitioners are disqualified to vote
because they "are not constituted into a duly organized labor union" "but
members of the INK which prohibits its followers, on religious grounds, from
joining or forming any labor organization" and "hence, not one of the unions
which vied for certification as sole and exclusive bargaining representative,"
is specious. Neither law, administrative rule nor jurisprudence requires that
only employees affiliated with any labor organization may take part in a
certification election. On the contrary, the plainly discernible intendment of
the law is to grant the right to vote to all bona fide employees in the
bargaining unit, whether they are members of a labor organization or not. As
held in Airtime Specialists, Inc. v. Ferrer-Calleja: 9
"In a certification election all rank-and-file employees in the appropriate
bargaining unit are entitled to vote. This principle is clearly stated in Art. 255
of the Labor Code which states that the 'labor organization designated or
selected by the majority of the employees in an appropriate bargaining unit
shall be the exclusive representative of the employees in such unit for the
purpose of collective bargaining.' Collective bargaining covers all aspects of
the employment relation and the resultant CBA negotiated by the certified
union binds all employees in the bargaining unit. Hence, all rank-and-file
employees, probationary or permanent, have a substantial interest in the
selection of the bargaining representative. The Code makes no distinction as
to their employment status as basis for eligibility in supporting the petition
for certification election. The law refers to `all' the employees in the
bargaining unit. All they need to be eligible to support the petition is to
belong to the 'bargaining unit.'"
Neither does the contention that petitioners should be denied the right to vote
because they "did not participate in previous certification elections in the
company for the reason that their religious beliefs do not allow them to form,
join or assist labor organizations," persuade acceptance. No law,
administrative rule or precedent prescribes forfeiture of the right to vote by
reason of neglect to exercise the right in past certification elections. In
denying the petitioners' right to vote upon these egregiously fallacious
grounds, the public respondents exercised their discretion whimsically,
capriciously and oppressively and gravely abused the same.
WHEREFORE, the petition for certiorari is GRANTED; the Decision of the
then Officer-in-Charge of the Bureau of Labor Relations dated December 21,
1987 (affirming the Order of the Med-Arbiter dated July 22, 1988) is
ANNULLED and SET ASIDE; and the petitioners are DECLARED to have
legally exercised their right to vote, and their ballots should be canvassed
and, if validly and properly made out, counted and tallied for the choices
written therein. Costs against private respondents.
SO ORDERED.
FEU-DR. NICANOR REYES MEDICAL FOUNDATION, INC. vs. Ambulant intermittent and itinerant workers, self-employed people, rural
TRAJANO workers and those without any definite employers may form labor
G.R. No. 76273 | 1987-07-31 organizations for the purpose of enhancing and defending their interests and
PARAS, J.: for their mutual aid and protection." (emphasis supplied).

This is a petition for certiorari seeking to annul and set aside the decision of
the respondent Director which affirmed the Order of the Med-Arbiter in the
petition for certification election (NCR-LRD-N-2-050-86) filed by private
respondent, thus ordering the holding of a certification election among the
rank and file employees of the herein petitioner.
The facts of the case are as follows:
The petitioner, Far Eastern University-Dr. Nicanor Reyes Memorial
Foundation, Inc., has a work force of about 350 rank and file employees,
majority of whom are members of private respondent Alliance of Filipino
Workers.
On February 13, 1986, private respondent filed a Petition for Consent and/or
Certification Election with The Ministry of Labor and Employment. The
petitioner opposed the petition on the ground that a similar petition involving
the same issues and the same parties is pending resolution before the
Supreme Court, docketed as G.R. No. L-49771.
Under the aforequoted provision, there is no doubt that rank and file
employees of non-profit medical institutions (as herein petitioner) are now
permitted to form, organize or join labor unions of their choice for purposes
of collective bargaining. Since private respondent had complied with the
requisites provided by law for calling a certification election (p. 15, Rollo),
it was incumbent upon respondent Director to conduct such certification
election to ascertain the bargaining representative of petitioner's employees
(Samahang Manggagawa Ng Pacific Mills, Inc. vs. Noriel, 134 SCRA 152).
As held in Quimpo v. Dela Victoria, 46 SCRA 139, in order that the pendency
of another action between the same parties for the same cause may be availed
of as a ground to dismiss a case, there must be, between the action under
consideration and the other action: (1) identity of parties, or at least such as
representing the same interest in both actions; (2) identity of rights asserted
and relief prayed for, the relief being founded on the same facts; and (3) the
identity on the two preceding particulars should be such that any judgment
which may be rendered on the other action will, regardless of which party is
successful, amount to res judicata in the action under consideration.

In its position paper, private respondent admitted: that as early as May 10,
1976, private respondent filed a similar petition for certification election with
the Ministry of Labor and Employment but the petition was denied by the
MED Arbiter and the Secretary of Labor on appeal, on the ground that the
petitioner was a non-stock, non-profit medical institution, therefore, its
employees may not form, join, or organize a union pursuant to Article 244 of
the Labor Code; that private respondent filed a petition for certiorari with the
Supreme Court (docketed as G.R. No. L-49771) assailing the
constitutionality of Article 244 of the Labor Code; that pending resolution of
the aforesaid petition, or on May 1, 1980, Batas Pambansa Bilang 70 was
enacted amending Article 244 of the Labor Code, thus granting even
employees of non-stock, non-profit institutions the right to form, join and
organize labor unions of their choice; and that in the exercise of such right,
private respondent filed another petition for certification election with the
Ministry of Labor and Employment (NCR-LRD-N-2-050-86).
In the instant case, any judgment which may be rendered in the petition for
certiorari pending before the Supreme Court (G.R. No. L-49771) will not
constitute res judicata in the petition for certification election under
consideration, for while in the former, private respondent questioned the
constitutionality of Article 244 of the Labor Code before its amendment, in
the latter, private respondent invokes the same article as already amended.
Petitioner, however, has pointed out that respondent Director should not have
arrogated upon himself the power to declare the aforesaid petition for
certiorari (G.R. No. L-49771) moot and academic, as the same is sub-judice
and only the Supreme Court can decide the matter. The Director cannot be
faulted for he had to make a decision.
WHEREFORE, this petition is DISMISSED, and the decision appealed from
is hereby AFFIRMED.

On April 17, 1986, the Med Arbiter issued an Order granting the petition, SO ORDERED.
declaring that a certification election be conducted to determine the exclusive
bargaining representative of all the rank and file employees of the petitioner
(p. 4, Rollo)

Respondent Director affirmed said Order on appeal. In dismissing the appeal,

however, respondent Director said that:

". . . respondent's (petitioner herein, reliance on the petition with the Supreme
Court involving as it does the provisions of Article 244 of the Labor Code
vis-a-vis the character of the hospital, which has been alleged as a non-profit
medical foundation, has been rendered moot and academic by virtue of the
amendatory BP #70, which allows employees of non-profit medical
institutions to unionize.

Whatever doubt there may be on the right of the workers in a medical

institution has been laid to rest by BP#70.

WHEREFORE, premises considered, the present appeal is hereby dismissed

for lack of merit and the Order of the Med-Arbiter dated 17 April 1986
affirmed . . ." (p. 19, Rollo)

Hence, this petition, raising the issue of whether or not respondent Director
gravely abused his discretion in granting the petition for certification
election, despite the pendency of a similar petition before the Supreme Court
(G.R. No. 49771) which involves the same parties for the same cause.

The Petition is devoid of merit.

At the time private respondent filed its petition for certification election on
February 13, 1986, Article 244 of the Labor Code was already amended by
Batas Pambansa Bilang 70, to wit:

"Art. 244. Coverage and employees' right to self-organization. All persons

employed in commercial, industrial and charitable, medical, or educational
institutions whether operating for profit or not, shall have the right to self-
organizations of their own choosing for purposes of collective bargaining.
TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB
INCORPORATED vs. TAGAYTAY HIGHLANDS EMPLOYEES
UNION-PGTWO
G.R. No. 142000 | 2003-01-22
CARPIO-MORALES, J.:
Before this Court on certiorari under Rule 45 is the petition of the Tagaytay
Highlands International Golf Club Incorporated (THIGCI) assailing the
February 15, 2002 decision of the Court of Appeals denying its petition to
annul the Department of Labor and Employment (DOLE) Resolutions of
November 12, 1998 and December 29, 1998.
On October 16, 1997, the Tagaytay Highlands Employees Union (THEU) . .
. Philippine Transport and General Workers Organization (PTGWO), Local
Chapter No. 776, a legitimate labor organization said to represent majority
of the rank-and-file employees of THIGCI, filed a petition for certification
election before the DOLE Mediation-Arbitration Unit, Regional Branch No.
IV.
THIGCI, in its Comment[1] filed on November 27, 1997, opposed THEU's
petition for certification election on the ground that the list of union members
submitted by it was defective and fatally flawed as it included the names and
signatures of supervisors, resigned, terminated and absent without leave
(AWOL) employees, as well as employees of The Country Club, Inc., a
corporation distinct and separate from THIGCI; and that out of the 192
signatories to the petition, only 71 were actual rank-and-file employees of
THIGCI.
THIGCI thus submitted a list of the names of its 71 actual rank-and-file
employees which it annexed[2] to its Comment to the petition for
certification election. And it therein incorporated the following tabulation[3]
showing the number of signatories to said petition whose membership in the
union was being questioned as disqualified and the reasons for
disqualification:
# of Signatures Reasons for Disqualification
13 Supervisors of THIGCI
6 Resigned employees of THIGCI
2 AWOL employees of THIGCI
53 Rank-and-file employees of The Country Club at Tagaytay Highlands,
Inc.
14 Supervisors of The Country Club at Tagaytay Highlands, Inc.
6 Resigned employees of The Country Club at Tagaytay Highlands, Inc.
3 Terminated employees of The Country Club at Tagaytay Highlands, Inc.
1 AWOL employees of The Country Club at Tagaytay Highlands, Inc.
4 Signatures that cannot be deciphered
16 Names in list that were erased
2 Names with first names only
THIGCI also alleged that some of the signatures in the list of union members
were secured through fraudulent and deceitful means, and submitted copies
of the handwritten denial and withdrawal of some of its employees from
participating in the petition.[4]
Replying to THIGCI's Comment, THEU asserted that it had complied with
all the requirements for valid affiliation and inclusion in the roster of
legitimate labor organizations pursuant to DOLE Department Order No. 9,
series of 1997,[5] on account of which it was duly granted a Certification of
Affiliation by DOLE on October 10, 1997;[6] and that Section 5, Rule V of
said Department Order provides that the legitimacy of its registration cannot
be subject to collateral attack, and for as long as there is no final order of
cancellation, it continues to enjoy the rights accorded to a legitimate
organization.
THEU thus concluded in its Reply[7] that under the circumstances, the Med-
Arbiter should, pursuant to Article 257 of the Labor Code and Section 11,
Rule XI of DOLE Department Order No. 09, automatically order the conduct
of a certification election.
By Order of January 28, 1998, [8] DOLE Med-Arbiter Anastacio Bactin
ordered the holding of a certification election among the rank-and-file
employees of THIGCI in this wise, quoted verbatim:
We evaluated carefully this instant petition and we are of the opinion that it
is complete in form and substance. In addition thereto, the accompanying
documents show that indeed petitioner union is a legitimate labor federation
and its local/chapter was duly reported to this Office as one of its affiliate
local/chapter. Its due reporting through the submission of all the
requirements for registration of a local/chapter is a clear showing that it was
already included in the roster of legitimate labor organizations in this Office
pursuant to Department Order No. 9 Series of 1997 with all the legal right
and personality to institute this instant petition. Pursuant therefore to the
provisions of Article 257 of the Labor Code, as amended, and its
Implementing Rules as amended by Department Order No. 9, since the
respondent's establishment is unorganized, the holding of a certification
election is mandatory for it was clearly established that petitioner is a
legitimate labor organization. Giving due course to this petition is therefore
proper and appropriate.[9]
Passing on THIGCI's allegation that some of the union members are
supervisory, resigned and AWOL employees or employees of a separate and
distinct corporation, the Med-Arbiter held that the same should be properly
raised in the exclusion-inclusion proceedings at the pre-election conference.
As for the allegation that some of the signatures were secured through
fraudulent and deceitful means, he held that it should be coursed through an
independent petition for cancellation of union registration which is within the
jurisdiction of the DOLE Regional Director. In any event, the Med-Arbiter
held that THIGCI failed to submit the job descriptions of the questioned
employees and other supporting documents to bolster its claim that they are
disqualified from joining THEU.
THIGCI appealed to the Office of the DOLE Secretary which, by Resolution
of June 4, 1998, set aside the said Med-Arbiter's Order and accordingly
dismissed the petition for certification election on the ground that there is a
"clear absence of community or mutuality of interests," it finding that THEU
sought to represent two separate bargaining units (supervisory employees
and rank-and-file employees) as well as employees of two separate and
distinct corporate entities.
Upon Motion for Reconsideration by THEU, DOLE Undersecretary
Rosalinda Dimalipis-Baldoz, by authority of the DOLE Secretary, issued
DOLE Resolution of November 12, 1998[10] setting aside the June 4, 1998
Resolution dismissing the petition for certification election. In the November
12, 1998 Resolution, Undersecretary Dimapilis-Baldoz held that since THEU
is a local chapter, the twenty percent (20%) membership requirement is not
necessary for it to acquire legitimate status, hence, "the alleged retraction and
withdrawal of support by 45 of the 70 remaining rank-and-file members . . .
cannot negate the legitimacy it has already acquired before the petition;" that
rather than disregard the legitimate status already conferred on THEU by the
Bureau of Labor Relations, the names of alleged disqualified supervisory
employees and employees of the Country Club, Inc., a separate and distinct
corporation, should simply be removed from the THEU's roster of
membership; and that regarding the participation of alleged resigned and
AWOL employees and those whose signatures are illegible, the issue can be
resolved during the inclusion-exclusion proceedings at the pre-election stage.
The records of the case were thus ordered remanded to the Office of the Med-
Arbiter for the conduct of certification election.
THIGCI's Motion for Reconsideration of the November 12, 1998 Resolution
having been denied by the DOLE Undersecretary by Resolution of December
29, 1998,[11] it filed a petition for certiorari before this Court which, by
Resolution of April 14, 1999,[12] referred it to the Court of Appeals in line
with its pronouncement in National Federation of Labor (NFL) v. Hon.
Bienvenido E. Laguesma, et al.,[13] and in strict observance of the hierarchy
of courts, as emphasized in the case of St. Martin Funeral Home v. National
Labor Relations Commission.[14]
By Decision of February 15, 2000,[15] the Court of Appeals denied
THIGCI's Petition for Certiorari and affirmed the DOLE Resolution dated
November 12, 1998. It held that while a petition for certification election is
an exception to the innocent bystander rule, hence, the employer may pray
for the dismissal of such petition on the basis of lack of mutuality of interests
of the members of the union as well as lack of employer-employee
relationship following this Court's ruling in Toyota Motor Philippines
Corporation v. Toyota Motor Philippines Corporation Labor Union et al[16]
and Dunlop Slazenger [Phils.] v. Hon. Secretary of Labor and Employment
et al,[17] petitioner failed to adduce substantial evidence to support its
allegations.
Hence, the present petition for certiorari, raising the following
"ISSUES/ASSIGNMENT OF ERRORS:
THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING
THE RESOLUTION DATED 12 NOVEMER 1998 HOLDING THAT
SUPERVISORY EMPLOYEES AND NON-EMPLOYEES COULD
SIMPLY BE REMOVED FROM APPELLEES ROSTER OF RANK-AND-
FILE MEMBERSHIP INSTEAD OF RESOLVING THE LEGITIMACY
OF RESPONDENT UNION'S STATUS
THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING
THE RESOLUTION DATED 12 NOVEMBER 1998 HOLDING THAT
THE DISQUALIFIED EMPLOYEES' STATUS COULD READILY BE
RESOLVED DURING THE INCLUSION AND EXCLUSION
PROCEEDINGS
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT HOLDING
THAT THE ALLEGATIONS OF PETITIONER HAD BEEN DULY
PROVEN BY FAILURE OF RESPONDENT UNION TO DENY THE
SAME AND BY THE SHEER WEIGHT OF EVIDENCE INTRODUCED
BY PETITIONER AND CONTAINED IN THE RECORDS OF THE
CASE"[18]
The statutory authority for the exclusion of supervisory employees in a rank-
and-file union, and vice-versa, is Article 245 of the Labor Code, to wit:
Article 245. Ineligibility of managerial employees to join any labor
organization; right of supervisory employees. - Managerial employees are
not eligible to join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in a labor organization of the
rank-and-file employees but may join, assist or form separate labor
organizations of their own.
While above-quoted Article 245 expressly prohibits supervisory employees
from joining a rank-and-file union, it does not provide what would be the
effect if a rank-and-file union counts supervisory employees among its
members, or vice-versa.
Citing Toyota[19] which held that "a labor organization composed of both
rank-and-file and supervisory employees is no labor organization at all," and
the subsequent case of Progressive Development Corp. " Pizza Hut v.
Ledesma[20] which held that:
"The Labor Code requires that in organized and unorganized establishments,
a petition for certification election must be filed by a legitimate labor
organization. The acquisition of rights by any union or labor organization,
particularly the right to file a petition for certification election, first and
foremost, depends on whether or not the labor organization has attained the
status of a legitimate labor organization.
In the case before us, the Med-Arbiter summarily disregarded the petitioner's
prayer that the former look into the legitimacy of the respondent Union by a
sweeping declaration that the union was in the possession of a charter
certificate so that 'for all intents and purposes, Sumasaklaw sa Manggagawa
sa Pizza Hut (was) a legitimate organization,'"[21]
petitioner contends that, quoting Toyota, "[i]t becomes necessary . . ., 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."[22]
Continuing, petitioner argues that without resolving the status of THEU, the
DOLE Undersecretary "conveniently deferred the resolution on the serious
infirmity in the membership of [THEU] and ordered the holding of the
certification election" which is frowned upon as the following ruling of this
Court shows:
We also do not agree with the ruling of the respondent Secretary of Labor
that the infirmity in the membership of the respondent union can be remedied
in "the pre-election conference thru the exclusion-inclusion proceedings
wherein those employees who are occupying rank-and-file positions will be
excluded from the list of eligible voters." Public respondent gravely
misappreciated the basic antipathy between the interest of supervisors and
the interest of rank-and-file employees. Due to the irreconcilability of their
interest we held in Toyota Motor Philippines v. Toyota Motors Philippines
Corporation Labor Union, viz:
'x x x
"Clearly, based on this provision [Article 245], 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 posses 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." (Emphasis by petitioner)
(Dunlop Slazenger (Phils.), v. Secretary of Labor, 300 SCRA 120 [1998];
Underscoring and emphasis supplied by petitioner.)
The petition fails. After a certificate of registration is issued to a union, its
legal personality cannot be subject to collateral attack. It may be questioned
only in an independent petition for cancellation in accordance with Section 5
of Rule V, Book IV of the "Rules to Implement the Labor Code"
(Implementing Rules) which section reads:
Sec. 5. Effect of registration. The labor organization or workers' association
shall be deemed registered and vested with legal personality on the date of
issuance of its certificate of registration. Such legal personality cannot
thereafter be subject to collateral attack, but may be questioned only in an
independent petition for cancellation in accordance with these Rules.
(Emphasis supplied)
The grounds for cancellation of union registration are provided for under
Article 239 of the Labor Code, as follows:
Art. 239. Grounds for cancellation of union registration. The following shall
constitute grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification, and the list of members who took part in
the ratification;
(b) Failure to submit the documents mentioned in the preceding paragraph
within thirty (30) days from adoption or ratification of the constitution and
by-laws or amendments thereto;
(c) Misrepresentation, false statements or fraud in connection with the
election of officers, minutes of the election of officers, the list of voters, or
failure to subject these documents together with the list of the newly
elected/appointed officers and their postal addresses within thirty (30) days
from election;
(d) Failure to submit the annual financial report to the Bureau within thirty
(30) days after the losing of every fiscal year and misrepresentation, false
entries or fraud in the preparation of the financial report itself;
(e) Acting as a labor contractor or engaging in the "cabo" system, or
otherwise engaging in any activity prohibited by law;
(f) Entering into collective bargaining agreements which provide terms and
conditions of employment below minimum standards established by law;
(g) Asking for or accepting attorney's fees or negotiation fees from
employers;
(h) Other than for mandatory activities under this Code, checking off special
assessments or any other fees without duly signed individual written
authorizations of the members;
(i) Failure to submit list of individual members to the Bureau once a year or
whenever required by the Bureau; and
(j) Failure to comply with the requirements under Articles 237 and 238,
(Emphasis supplied),
while the procedure for cancellation of registration is provided for in Rule
VIII, Book V of the Implementing Rules.
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 above-quoted Article 239 of the Labor Code.
THEU, having been validly issued a certificate of registration, should be
considered to have already acquired juridical personality which may not be
assailed collaterally.
As for petitioner's allegation that some of the signatures in the petition for
certification election were obtained through fraud, false statement and
misrepresentation, the proper procedure is, as reflected above, for it to file a
petition for cancellation of the certificate of registration, and not to intervene
in a petition for certification election.

Regarding the alleged withdrawal of union members from participating in

the certification election, this Court's following ruling is instructive:

"'[T]he best forum for determining whether there were indeed retractions
from some of the laborers is in the certification election itself wherein the
workers can freely express their choice in a secret ballot.' Suffice it to say
that the will of the rank-and-file employees should in every possible instance
be determined by secret ballot rather than by administrative or quasi-judicial
inquiry. Such representation and certification election cases are not to be
taken as contentious litigations for suits but as mere investigations of a non-
adversary, fact-finding character as to which of the competing unions
represents the genuine choice of the workers to be their sole and exclusive
collective bargaining representative with their employer."[23]

As for the lack of mutuality of interest argument of petitioner, it, at all events,
does not lie given, as found by the court a quo, its failure to present
substantial evidence that the assailed employees are actually occupying
supervisory positions.

While petitioner submitted a list of its employees with their corresponding

job titles and ranks,[24] there is nothing mentioned about the supervisors'
respective duties, powers and prerogatives that would show that they can
effectively recommend managerial actions which require the use of
independent judgment.[25]

As this Court put it in Pepsi-Cola Products Philippines, Inc. v. Secretary of

Labor:[26]

Designation should be reconciled with the actual job description of subject

employees x x x The mere fact that an employee is designated manager does
not necessarily make him one. Otherwise, there would be an absurd situation
where one can be given the title just to be deprived of the right to be a member
of a union. In the case of National Steel Corporation vs. Laguesma (G. R.
No. 103743, January 29, 1996), it was stressed that:

What is essential is the nature of the employee's function and not the
nomenclature or title given to the job which determines whether the
employee has rank-and-file or managerial status or whether he is a
supervisory employee.[27]

WHEREFORE, the petition is hereby DENIED. Let the records of the case
be remanded to the office of origin, the Mediation-Arbitration Unit, Regional
Branch No. IV, for the immediate conduct of a certification election subject
to the usual pre-election conference.

SO ORDERED.
PEPSI - COLA PRODUCTS PHILIPPINES, INC. vs. HONORABLE
SECRETARY OF LABOR
G.R. No. 96663 | 1999-08-10
PURISIMA, J.:
These are petitions for certiorari relating to three (3) cases filed with the Med-
Arbiter, to wit: MED ARB ROX Case No. R100-9101-RU-002 for
Certification Election filed by Pepsi Cola Supervisors Union-UOEF (Union),
MED ARB Case No. R1000-9102-RU-008, Re: Petition to Set Aside, Cancel
and/ or Revoke the Charter Affiliation of the Union, and MED-ARB ROX
Case No. R1000-9104-RU-012, for Cancellation of Registration Certificate
No. 11492-LC in favor of the Union.
G. R. No. 96663
The facts that matter can be culled as follows:
Sometime in June 1990, the Pepsi-Cola Employees Organization-UOEF
(Union) filed a petition for certification election with the Med-Arbiter
seeking to be the exclusive bargaining agent of supervisors of Pepsi-Cola
Philippines, Inc. (PEPSI).
On July 12, 1990, the Med-Arbiter granted the Petition, with the explicit
statement that it was an affiliate of Union de Obreros Estivadores de Filipinas
(federation) together with two (2) rank and file unions, Pepsi-Cola Labor
Unity (PCLU) and Pepsi-Cola Employees Union of the Philippines (PEUP).
On July 23, 1990, PEPSI filed with the Bureau of Labor Relations a petition
to Set Aside, Cancel and/or Revoke Charter Affiliation of the Union, entitled
PCPPI v. PCEU-UOEF and docketed as Case No. 725-90, on the grounds
that (a) the members of the Union were managers and (b) a supervisors' union
can not affiliate with a federation whose members include the rank and file
union of the same company.
On August 29,1990, PEPSI presented a motion to re-open the case since it
was not furnished with a copy of the Petition for Certification Election.
On September 4, 1990, PEPSI submitted its position paper to the BLR in
Case No. 725-90.
On September 21, 1990, PEPSI received summons to appear at the pre-trial
conference set on September 25, 1990 but which the hearing officer
rescheduled on October 21, 1990.
On October 12, 1990, PEPSI filed a Notice of Appeal and Memorandum of
Appeal with the Secretary of Labor, questioning the setting of the
certification election on the said date and five (5) days after. It also presented
an urgent Ex-Parte Motion to Suspend the Certification Election, which
motion was granted on October 18, 1990.
On November 12, 1990, the Secretary of Labor denied the appeal and Motion
for Reconsideration. Even as the Petition to Cancel, Revoke and Suspend
Union Charter Certificate was pending before the BLR, PEPSI found its way
to this Court via the present petition for certiorari.
On February 6, 1991, the Court granted the prayer for temporary restraining
order and/or preliminary injunction.
The pivot of inquiry here is: whether or not a supervisors' union can affiliate
with the same Federation of which two (2) rank and file unions are likewise
members, without violating Article 245 of the Labor Code (PD 442), as
amended, by Republic Act 6715, which provides:
"Art. 245. Ineligibility of managerial employees to join any labor
organization; right of supervisory employees.- Managerial employees are not
eligible to join, assist or form any labor organization. Supervisory employees
shall not be eligible for membership in a labor organization of the rank-and-
file employees but may join, assist or form separate labor organizations of
their own."
In its Comment dated March 19, 1991, the Federation argued that:
"The pertinent portion of Article 245 of the Labor Code states that.
"Supervisory employees shall not be eligible for membership in a labor
organization of the rank and file employees but may join, assist or form
separate labor organization of their own."
This provision of law does not prohibit a local union composed of
supervisory employees from being affiliated to a federation which has local
unions with rank-and-file members as affiliates.
xxx xxx xxx
xxx the Petition to Cancel, Revoke or Set Aside the Charter Certificate of the
private respondent is anchored on the alleged ground that certain managerial
employees are included as members thereof. The grounds for the cancellation
of the registration certificate of a labor organization are provided in Section
7 of Rule II, Book V of the Omnibus Rules Implementing the Labor Code,
and the inclusion of managerial employees is not one of the grounds. xxx (in
this case, the private respondent herein) remains to be a legitimate labor
organization."1 [Pepsi - Cola Supervisory Employees Organization - UOEF,
Comment, pp. 4-6, Rollo, pp. 71-73.]
On April 8, 1991, the Secretary of Labor and Employment, through the
Office of the Solicitor General, sent in a Comment, alleging inter alia, that:
"xxx under Article 259 of the New Labor Code, only orders of the Med-
Arbiter can be appealed through the Secretary of Labor and only on the
ground that the rules and regulations for the conduct of the certification
election have been violated. The Order of the Representation Officer is
"interlocutory" and not appealable.
xxx until and unless there is a final order cancelling its certificate of
registration or charter certificate, a labor organization remains to be a
legitimate labor organization entitled to exercise all the rights and duties
accorded to it by the Labor Code including the right to be certified as a
bargaining representative.
xxx Public respondent cannot be deemed to have committed grave abuse of
discretion with respect to an issue that was never presented before it for
resolution. xxx
Article 245 of the New Labor Code does not preclude the supervisor's union
and the rank-and-file union from being affiliated with the same federation.
xxx xxx xxx
A federation of local union is not the labor organization referred to in Article
245 but only becomes entitled to all the rights enjoyed by the labor
organization (at the company level) when it has complied with the
registration requirements found in Articles 234 and 237. Hence, what is
prohibited by Article 245 is membership of supervisory employees in a labor
union (at the company level) of the rank and file. xxx
xxx In other words, the affiliation of the supervisory employee's union with
the same federation with which the rank and file employees union is affiliated
did not make the supervisory employees members of the rank and file
employee's union and vice versa."2 [Rollo, pp. 86-89, 92.]
PEPSI, in its Reply dated May 7, 1991, asserted:
"It is our humble contention that a final determination of the Petition to Set-
Aside, Cancel, Revoke Charter Union Affiliation should first be disposed of
before granting the Petition for the Conduct of Certification Election. To
allow the conduct of the certification election to proceed would make any
decision arrived at by the Bureau of Labor Relations useless inasmuch as the
same would necessarily be rendered moot and academic."3 [Rollo, p. 104.]
On June 7, 1991, petitioner again filed a Supplemental Reply stressing:
"It is likewise stressed that officials of both the PCLU and PEUP are top
ranking officers of UOEF, the federation of supervisors' union, to wit:
POSITION IN RANK AND FILE UNION POSITION IN FEDERATION
1. Rogelio de la Cruz PCLU -President General Vice President
2. Felix Gatela PEUP - President General Treasurer
3. Carlito Epino PCLU Board Member Educational Research Director
xxx xxx xxx
The respondent supervisory union could do indirectly what it could not do
directly as the simple expedient of affiliating with UOEF would negate the
manifest intent and letter of the law that supervisory employees can only
"join, assist or form separate labor organizations of their own" and cannot
"be eligible for membership in a labor organization of the rank and file
employees."4 [Rollo, p.110.]
On August 6, 1991, the Secretary of Labor and Employment filed a
Rejoinder, claiming thus:
"xxx an employer has no legal standing to question the validity of a
certification election.
xxx For this reason, the Supreme Court has consistently held that, as a rule,
a certification election is the sole and exclusive concern of the employees
and that the employer is definitely an intruder or a mere bystander
(Consolidated Farms vs. Noriel, L-47752, July 31, 1978, 84 SCRA 469;
Filipino Metals Corporation vs. Ople, L- 43861, September 4, 1981, 107
SCRA 211; Trade Unions of the Philippines and Allied Services (TUPAS)
vs. Trajano No. L-61153, January 17, 1983, 120 SCRA 64].
xxx xxx xxx
In Adamson & Adamson, Inc. vs. CIR No. L-35120, January 31, 1984, 127
SCRA 268, the Supreme Court (then dealing with the interpretation of
Section 3 of the Industrial Peace Act, from which Section 245 of the Labor
Code was derived) grappled with the issue in the case at bar. It held that,
'There is nothing in the provisions of the Industrial Peace Act which provides
that a duly registered local union affiliating with a national union or
federation loses its legal personality, or its independence.'
xxx xxx xxx
However, there is absolutely nothing in the Labor Code that prohibits a
federation from representing or exercising influence over its affiliates. On the
contrary, this is precisely the reason why federations are formed and are
allowed by law to exist."5 [Rejoinder, pp. 2,3,10,14; Rollo, pp. 125,126,
133,137.]
On November 8, 1991, the Union also filed a Rejoinder.
On December 9, 1991, the Court resolved to DISMISS the case for "failure
to sufficiently show that the questioned judgment is tainted with grave abuse
of discretion."
In a Resolution dated March 2, 1992, the Second Division of the Court
resolved to grant the motion for reconsideration interposed on January 28,
1992.
G.R. No. 103300
What are assailed in this case is Med-Arbiter Order dated May 23, 1991 and
the Decision and Order of the Secretary of Labor and Employment, dated
October 4, 1991 and December 12, 1991, respectively.
The decretal portion of the Med-Arbiter Order under attack, reads:
"WHEREFORE, premises considered, an order is hereby issued:
1. Dismissing MED ARB ROX CASE NO. R1000-919104-RU-012 and
R1000-9102-RU-008 for lack of merit; and
2. Ordering the conduct of a Certification Election to be participated by and
among the supervisory workers of the respondent company, Pepsi-Cola
Products Philippines, Inc. at its plant at Tin-ao, Cagayan de Oro City,
including all the satellite warehouse within the territorial coverage and
control of the Cagayan de Oro Pepsi-Cola Plant. The choices are as follows:
1. Cagayan de Oro Pepsi-Cola Supervisors Union (U.O.E.P.)
2. No union
The parties are directed to attend a pre-election conference on June 10, 1991,
2:30 p.m. at the Regional Office to determine the qualification of the voters
and to thresh out the mechanics of the election. Respondent/employer is
directed to submit five (5) copies of the names of the rank and file workers
taken from the payroll on October 1-31, 1991, alphabetically arranged (sic)
indicating their names and positions and dates of employment and to bring
the aforementioned payroll during the pre-election conference for
verification purposes."6 [OSG Comment, pp. 3 -4, Rollo, pp. 145 - 146.]
The supervisory employees of the Union are:
ÂÂ
POSITION
1. Felipe Valdehueza Route Manager
2. Gerberto Vertudazo C & C Manager
3. Paul Mendoza Sales Service Department Manager
4. Gilberto Emano, Jr. Route Manager
5. Jaime Huliganga Chief Checker
6. Elias Edgama, Sr. Accounting Manager
7. Romanico Ramos Route Manager
8. Raul Yacapin Route Manager
9. Jovenal Albaque Route Manager
10. Fulvio Narciso Route Manager
11. Apolinario Opiniano Route Manager
12. Alfredo Panas Route Manager
13. Simplicio Nelie Route Manager
14. Arthur Rodriguez Route Manager
15. Marco Ilano Warehouse Operations Manager and
16. Deodoro Ramos Maintenance Manager
On June 6, 1991, PEPSI appealed the said Order to the Secretary of Labor
and Employment on the ground of grave abuse of discretion, docketed as
Case No. OS-A-232-91.
On October 4, 1991, the Secretary modified the appealed decision, ruling
thus:
"WHEREFORE, the Order of the Med-Arbiter dated 23 May 1991 is hereby
modified to the effect that MED ARB ROX Case No. R1000-9104-RU-012
and R1000-9102-RU-008 are hereby referred to the Office of the Regional
Director which has jurisdiction over these cases. The call for certification
election among the supervisory workers of the Pepsi-Cola Products
Philippines, Inc. at its plant at Tin-ao, Cagayan de Oro City is hereby
sustained."7 [OSG Comment, p. 5, Rollo, p. 147.]
On October 19, 1991, PEPSI presented a motion for reconsideration of the
aforesaid Order but the same was denied on December 12, 1991.
Meanwhile, the BLR issued Registration Certificate No. 11492-LC in favor
of the Union. Dissatisfied therewith, PEPSI brought the instant petition for
certiorari, contending that:
"PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN RULING THAT PRIVATE RESPONDENT'S
OFFICERS AND MEMBERS ARE NOT MANAGERIAL EMPLOYEES;
PRIVATE RESPONDENT IS PROHIBITED FROM AFFILIATING
ITSELF WITH A FEDERATION ALREADY AFFILIATED WITH THE
RANK AND FILE UNION;
PUBLIC RESPONDENT COMMITTED GRAVE OF (SIC) ABUSE OF
DISCRETION IN RULING THAT THE INSTITUTION OF A PETITION
FOR CANCELLATION OF UNION REGISTRATION DOES NOT
CONSTITUTE A PREJUDICIAL QUESTION TO A PETITION
CERTIFICATION ELECTION."8 [Petition, pp. 8, 13, 14; Rollo, pp. 9, 14,
15.]

The petitions must fail for want of merit.
At the outset, it must be stressed that on September 1, 1992, there was a
Resolution of the Union withdrawing from the Federation, to wit:
"BE IT RESOLVED, as it is hereby RESOLVED, that this UNION
WITHDRAW, as it hereby WITHDRAWS its affiliation from the Union de
Obreros Estivadores de Filipinas, and at the same time, give our thanks to the
said federation for its help and guidance rendered to this Union in the past."9
[Annex I, Rollo, p. 213.]
The issue in G.R. No. 96663, whether or not the supervisors union can be
affiliated with a Federation with two (2) rank and file unions directly under
the supervision of the former, has thus become moot and academic in view
of the Union's withdrawal from the federation.
In a long line of cases (Narciso Nakpil, et. al., vs. Hon. Crisanto Aragon, et.
al.,, G. R. No. L - 24087, January 22, 1980, 95 SCRA 85; Toribio v. Bidin,
et. al., G.R. No. L-37960, February 28, 1980, 96 SCRA 361; Gumaua v.
Espino, G.R. No. L- 36188 - 37586 February 29, 1980, 96 SCRA 402), the
Court dismissed the petition for being moot and academic. In the case of F.
C. Fisher v. Yangco Steamship Co., March 31, 1915, the Court held:
"It is unnecessary, however to indulge in academic discussion of a moot
question.
xxx The action would have been dismissed at any time on a showing of the
facts as they were . The question left for the court was a moot one. Its
Resolution would have been useless. Its judgment would have been
impossible of execution xxx."
However, in the case of University of San Agustin, Inc., et al. vs. Court of
Appeals, et al., the court resolved the case, ruling that "even if a case were
moot and academic, a statement of the governing principle is appropriate in
the resolution of dismissal for the guidance not only of the parties but of
others similarly situated. xxx"10 [230 SCRA 761, 770, citing Eastern
Broadcasting Corporation (DYRE) vs. Dans, etc, et al., 137 SCRA 628.]
In Atlas Lithographic Services, Inc. v. Laguesma, 205 SCRA 12, [1992]
decided by the Third Division with J. Gutierrez, Jr., as ponente and JJ.
Feliciano, Bidin, Romero and now Chief Justice Davide, Jr., as members it
was ratiocinated:
" xxx xxx xxx
Thus, if the intent of the law is to avoid a situation where supervisors would
merge with the rank-and-file or where the supervisors' labor organization
would represent conflicting interests, then a local supervisors' union should
not be allowed to affiliate with the national federation of union of rank-and-
file employees where that federation actively participates in union activity in
the company.
xxx xxx xxx
The prohibition against a supervisors' union joining a local union of rank and
file is replete with jurisprudence. The Court emphasizes that the limitation is
not confined to a case of supervisors' wanting to join a rank-and-file union.
The prohibition extends to a supervisors' local union applying for
membership in a national federation the members of which include local
unions of rank and file employees. The intent of the law is clear especially
where, as in this case at bar, the supervisors will be co-mingling with those
employees whom they directly supervise in their own bargaining unit."
Anent the issue of whether or not the Petition to cancel/revoke registration is
a prejudicial question to the petition for certification election, the following
ruling in the case of Association of the Court of Appeals Employees (ACAE)
vs. Hon. Pura Ferrer-Calleja, in her capacity as Director, Bureau of Labor
Relations et. Al., 203 ACRA 597, 598, [1991], is in point, to wit:
xxx It is a well-settled rule that "a certification proceedings is not a litigation
in the sense that the term is ordinarily understood, but an investigation of a
non-adversarial and fact finding character." (Associated Labor Unions
(ALU) v. Ferrer-Calleja, 179 SCRA 127 [1989]; Philippine Telegraph and
Telephone Corporation v. NLRC, 183 SCRA 451 [1990]. Thus, the technical
rules of evidence do not apply if the decision to grant it proceeds from an
examination of the sufficiency of the petition as well as a careful look into
the arguments contained in the position papers and other documents.
"At any rate, the Court applies the established rule correctly followed by the
public respondent that an order to hold a certification election is proper
despite the pendency of the petition for cancellation of the registration
certificate of the respondent union. The rationale for this is that at the time
the respondent union filed its petition, it still had the legal personality to
perform such act absent an order directing the cancellation.
xxx xxx xxx"
As regards the issue of whether or not confidential employees can join the
labor union of the rank and file, what was held in the case of National
Association of Trade Unions (NATU) - Republic Planters Bank Supervisors
Chapter vs. Hon. R. D. Torres, et. al., G.R. No. 93468, December 29, 1994,
applies to this case. Citing Bulletin Publishing Corporation vs. Sanchez, 144
SCRA 628,635, Golden Farms vs. NLRC, 175 SCRA 471, and Pier 8
Arrastre and Stevedoring Services, Inc. vs. Hon. Nieves Roldan-Confessor
et al., G.R. No. 110854, February 14, 1995, the Court ruled:
"xxx A confidential employee is one entrusted with confidence on delicate
matters, or with the custody, handling, or care and protection of the
employer's property. While Art. 245 of the Labor Code singles out
managerial employee as ineligible to join, assist or form any labor
organization, under the doctrine of necessary implication, confidential
employees are similarly disqualified. This doctrine states that what is implied
in a statute is as much a part thereof as that which is expressed, as elucidated
in several case; the latest of which is Chua v. Civil Service Commission
where we said:
No statute can be enacted that can provide all the details involved in its
application. There is always an omission that may not meet a particular
situation. What is thought, at the time of the enactment, to be an all embracing
legislation maybe inadequate to provide for the unfolding events of the
future. So-called gaps in the law develop as the law is enforced. One of the
rules of statutory construction used to fill in the gap is the doctrine of
necessary implication xxx, Every statute is understood, by implication, to
contain all such provisions as may be necessary to effectuate its object and
purpose, or to make effective rights, powers, privileges or jurisdiction which
it grants, including all such collateral and subsidiary consequences as may be
fairly and logically inferred from its terms.
In applying the doctrine of necessary implication, we took into consideration
the rationale behind the disqualification of managerial employees expressed
in Bulletin Publishing Corporation v. Sanchez, thus "xxx if these managerial
employees would belong to or be affiliated with a Union, the latter might not
be assured of their loyalty to the Union in view of evident conflict of interests.
The Union can also become company - dominated with the presence of
managerial employees in Union membership." Stated differently, in the
collective bargaining process, managerial employees are supposed to be on
the side of the employer, to act as its representatives, and to see to it that its
interest are well protected. The employer is not assured of such protection if
these employees themselves are union members. Collective bargaining in
such a situation can become one-sided. It is the same reason that impelled
this Court to consider the position of confidential employees as included in
the disqualification found in Art. 245 as if the disqualification of confidential
employees were written in the provision. If confidential employees could
unionize in order to bargain for advantages for themselves, then they could
be governed by their own motives rather than the interest of the employers.
Moreover, unionization of confidential employees for the purpose of
collective bargaining would mean the extension of the law to persons or
individuals who are supposed to act "in the interest of" the employers. It is
not farfetched that in the course of collective bargaining, they might
jeopardize that interest which they are duty bound to protect. Along the same
line of reasoning we held in Golden Farms, Inc. vs. Ferrer-Calleja reiterated
in Philips Industrial Development, Inc., NLRC, that "confidential employees
such as accounting personnel, radio and telegraph operators who, having
access to confidential information, may become the source of undue
advantage. Said employee(s) may act as spy or spies of either party to a
collective bargaining agreement."
The Court finds merit in the submission of the OSG that Route Managers,
Chief Checkers and Warehouse Operations Managers are supervisors while
Credit & Collection Managers and Accounting Managers are highly
confidential employees. Designation should be reconciled with the actual job
description of subject employees. A careful scrutiny of their job description
indicates that they don't lay down company policies. Theirs is not a final
determination of the company policies since they have to report to their
respective superior. The mere fact that an employee is designated manager
does not necessarily make him one. Otherwise, there would be an absurd
situation where one can be given the title just to be deprived of the right to
be a member of a union. In the case of National Steel Corporation v.
Laguesma, G. R. No. 103743, January 29,1996, it was stressed that:

"What is essential is the nature of the employee's function and not the
nomenclature or title given to the job which determines whether the
employee has rank and file or managerial status, or whether he is a
supervisory employee."

WHEREFORE, the petitions under consideration are DISMISSED but

subject Decision, dated October 4, 1991, of the Secretary of Labor and
Employment is MODIFIED in that Credit and Collection Managers and
Accounting Managers are highly confidential employees not eligible for
membership in a supervisors' union. No pronouncement as to costs.

SO ORDERED.
MANILA ELECTRIC COMPANY vs. THE HON. SECRETARY OF
LABOR AND EMPLOYMENT
G.R. No. 91902 | 1991-05-20
MEDIALDEA, J.:
This petition seeks to review the Resolution of respondent Secretary of Labor
and Employment Franklin M. Drilon dated November 3, 1989 which
affirmed an Order of Med-Arbiter Renato P. Parungo (Case No. NCR-O-D-
M-1-70), directing the holding of a certification election among certain
employees of petitioner Manila Electric Company (hereafter "MERALCO")
as well as the Order dated January 16, 1990 which denied the Motion for
Reconsideration of MERALCO.
The facts are as follows:
On November 22, 1988, the Staff and Technical Employees Association of
MERALCO (hereafter "STEAM-PCWF") a labor organization of staff and
technical employees of MERALCO, filed a petition for certification election,
seeking to represent regular employees of MERALCO who are: (a) non-
managerial employees with Pay Grades VII and above; (b) non-managerial
employees in the Patrol Division, Treasury Security Services Section,
Secretaries who are automatically removed from the bargaining unit; and (c)
employees within the rank and file unit who are automatically disqualified
from becoming union members of any organization within the same
bargaining unit.
Among others, the petition alleged that "while there exists a duly-organized
union for rank and file employees in Pay Grade I-VI, which is the
MERALCO Employees and Worker's Association (MEWA) which holds a
valid CBA for the rank and file employees 1 , there is no other labor
organization except STEAM-PCWF claiming to represent the MERALCO
employees.
The petition was premised on the exclusion/disqualification of certain
MERALCO employees pursuant to Art. I, Secs. 2 and 3 of the existing
MEWA CBA as follows:
"ARTICLE I
SCOPE
xxx xxx xxx
SECTION 2. Excluded from the appropriate bargaining unit and therefore
outside the scope of this Agreement are:
(a) Employees in Patrol Division;
(b) Employees in Treasury Security Services Section;
(c) Managerial Employees; and
(d) Secretaries.
Any member of the Union who may now or hereafter be assigned or
transferred to Patrol Division or Treasury Security Services Section, or
becomes Managerial Employee or a Secretary, shall be considered
automatically removed from the bargaining unit and excluded from the
coverage of this agreement. He shall thereby likewise be deemed
automatically to have ceased to be member of the union, and shall desist from
further engaging in union activity of any kind.
SECTION 3. Regular rank-and-file employees in the organization elements
herein below listed shall be covered within the bargaining unit, but shall be
automatically disqualified from becoming union members:
1. Office of the Corporate Secretary
2. Corporate Staff Services Department
3. Managerial Payroll Office
4. Legal Service Department
5. Labor Relations Division
6. Personnel Administration Division
7. Manpower Planning & Research Division
8. Computer Services Department
9. Financial Planning & Control Department
10. Treasury Department, except Cash Section 11. General Accounting
Section.
". . ." (p. 19, Rollo).
MERALCO moved for the dismissal of the petition on the following
grounds:
I
The employees sought to be represented by petitioner are either 1)
managerial who are prohibited by law from forming or joining supervisory
union; 2) security services personnel who are prohibited from joining or
assisting the rank-and-file union; 3) secretaries who do not consent to the
petitioner's representation and whom petitioner can not represent; and 4)
rank-and-file employees represented by the certified or duly recognized
bargaining representative of the only rank-and-file bargaining unit in the
company, the Meralco Employees Workers Association (MEWA), in
accordance with the existing Collective Bargaining Agreement with the
latter.
II
The petition for certification election will disturb the administration of the
existing Collective Bargaining Agreement in violation of Art. 232 of the
Labor Code.
III
The petition itself shows that it is not supported by the written consent of at
least twenty percent (20%) of the alleged 2,500 employees sought to be
represented. (Resolution, Sec. of Labor, pp. 223-224, Rollo)
Before Med-Arbiter R. Parungo, MERALCO contended that employees from
Pay Grades VII and above are classified as managerial employees who, under
the law, are prohibited from forming, joining or assisting a labor organization
of the rank and file. As regards those in the Patrol Division and Treasury
Security Service Section, MERALCO maintains that since these employees
are tasked with providing security to the company, they are not eligible to
join the rank and file bargaining unit, pursuant to Sec. 2(c), Rule V, Book V
of the then Implementing Rules and Regulations of the Labor Code (1988)
which reads as follows:
"Sec. 2. Who may file petition. The employer or any legitimate labor
organization may file the petition.
"The petition, when filed by a legitimate labor organization, shall contain,
among others:
"xxx xxx xxx;
"(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 security
guards
(As amended by Sec. 6, Implementing Rules of EO 111).
". . ." (p. 111, Labor Code, 1988 Ed.)
As regards those rank and file employees enumerated in Sec. 3, Art. I,
MERALCO contends that since they are already beneficiaries of the MEWA-
CBA, they may not be treated as a separate and distinct appropriate
bargaining unit.
MERALCO raised the same argument with respect to employees sought to
be represented by STEAM-PCWF, claiming that these were already covered
by the MEWA-CBA.
On March 15, 1989, the Med-Arbiter ruled that having been excluded from
the existing Collective Bargaining Agreement for rank and file employees,
these employees have the right to form a union of their own, except those
employees performing managerial functions. With respect to those
employees who had resented their alleged involuntary membership in the
existing CBA, the Med-Arbiter stated that the holding of a certification
election would allow them to fully translate their sentiment on the matter,
and thus directed the holding of a certification election. The dispositive
portion of the Resolution provides as follows:
"WHEREFORE, premises considered, a certification election is hereby
ordered conducted among the regular rank-and-file employees of
MERALCO to wit:
"1. Non-managerial employees with Pay Grades VII and above;
"2. Non-managerial employees of Patrol Division, Treasury Security
Services Section and Secretaries; and
"3. Employees prohibited from actively participating as members of the
union.
within 20 days from receipt hereof, subject to the usual pre-election
conference with the following choices:
"1. Staff and Technical Employees Association of MERALCO (STEAM-
PCWF);
"2. No Union.
"SO ORDERED." (p. 222, Rollo)
On April 4, 1989, MERALCO appealed, contending that "until such time that
a judicial finding is made to the effect that they are not managerial employee,
STEAM-PCWF cannot represent employees from Pay Grades VII and above,
additionally reiterating the same reasons they had advanced for disqualifying
respondent STEAM-PCWF.
On April 7, 1989, MEWA filed an appeal-in-intervention, submitting as
follows:
A. The Order of the Med-Arbiter is null and void for being in violation of
Article 245 of the Labor Code;
B. The Order of the Med-Arbiter violates Article 232 of the Labor Code; and
C. The Order is invalid because the bargaining unit it delineated is not an
appropriated (sic) bargaining unit.
On May 4, 1989, STEAM-PCWF opposed the appeal-in-intervention.
With the enactment of RA 6715 and the rules and regulations implementing
the same, STEAM-PCWF renounced its representation of the employees in
Patrol Division, Treasury Security Services Section and rank-and-file
employees in Pay Grades.
On September 13, 1989, the First Line Association of Meralco Supervisory
Employees. (hereafter FLAMES) filed a similar petition (NCR-OD-M-9-
731-89) seeking to represent those employees with Pay Grades VII to XIV,
since "there is no other supervisory union at MERALCO." (p. 266, Rollo).
The petition was consolidated with that of STEAM-PCWF.
On November 3, 1989, the Secretary of Labor affirmed with modification,
the assailed order of the Med-Arbiter, disposing as follows:
"WHEREFORE, premises considered, the Order appealed from is hereby
affirmed but modified as far as the employees covered by Section 3, Article
I of the existing CBA in the Company are concerned. Said employees shall
remain in the unit of the rank-and file already existing and may exercise their
right to self organization as above enunciated.
"Further, the First Line Association of Meralco Supervisory Employees
(FLAMES) is included as among the choices in the certification election.
"Let, therefore, the pertinent records of the case be immediately forwarded
to the Office of origin for the conduct of the certification election.
"SO ORDERED." (p. 7, Rollo)
MERALCO's motion for reconsideration was denied on January 16, 1990.
On February 9, 1990, MERALCO filed this petition, premised on the
following ground:
"RESPONDENT SECRETARY ACTED WITH GRAVE ABUSE OF
DISCRETION AND/OR IN EXCESS OF JURISDICTION AMOUNTING
TO LACK OF JURISDICTION IN RULING THAT:
"I. ANOTHER RANK-AND-FILE BARGAINING UNIT CAN BE
ESTABLISHED INDEPENDENT, DISTINCT AND SEPARATE FROM
THE EXISTING RANK-AND-FILE BARGAINING UNIT.
"II. THE EMPLOYEES FROM PAY GRADES VII AND ABOVE ARE
RANK-AND-FILE EMPLOYEES.
"III. THE SECURITY GUARDS OR PERSONNEL MAY BE LUMPED
TOGETHER WITH THE RANK-AND-FILE UNION AND/OR THE
SUPERVISORY UNION." (p. 8, Rollo)
On February 26, 1990, We issued a temporary restraining order (TRO)
against the implementation of the disputed resolution.
In its petition, MERALCO has relented and recognized respondents
STEAM-PCWF and FLAMES' desired representation of supervisory
employees from Grades VII up. However, it believes that all that the
Secretary of Labor has to do is to establish a demarcation line between
supervisory and managerial rank, and not to classify outright the group of
employees represented by STEAM-PCWF and FLAMES as rank and file
employees.
In questioning the Secretary of Labor's directive allowing security guards
(Treasury/Patrol Services Section) to be represented by respondents,
MERALCO contends that this contravenes the provisions of the recently
passed RA 6715 and its implementing rules (specifically par. 2, Sec. 1, Rule
II, Book V) which disqualifies supervisory employees and security guards
from membership in a labor organization of the rank and file (p. 11, Rollo).
The Secretary of Labor's Resolution was obviously premised on the
provisions of Art. 212, then par. (k), of the 1988 Labor Code defining
"managerial" and "rank and file" employees, the law then in force when the
complaint was filed.
At the time, only two groups of employees were recognized, the managerial
and rank and file. This explains the absence of evidence on job descriptions
on who would be classified managerial employees. It is perhaps also for this
reason why the Secretary of Labor limited his classification of the Meralco
employees belonging to Pay Grades VII and up, to only two groups, the
managerial and rank and file.
However, pursuant to the Department of Labor's goal of strenghthening the
constitutional right of workers to self-organization, RA 6715 was
subsequently passed which reorganized the employee-ranks by including a
third group, or the supervisory employees, and laying down the distinction
between supervisory employees and those of managerial ranks in Art. 212,
renumbered par. [m], depending on whether the employee concerned has the
power to lay down and execute management policies, in the case of
managerial employees, or merely to recommend them, in case of supervisory
employees.
In this petition, MERALCO has admitted that the employees belonging to
Pay Grades VII and up are supervisory (p. 10, Rollo). The records also show
that STEAM-PCWF had "renounced its representation of the employees in
Patrol Division, Treasury Security Service Section and rank and file
employees in Pay Grades I-VI" (p. 6, Rollo); while FLAMES, on the other
hand, had limited its representation to employees belonging to Pay Grades
VII-XIV, generally accepted as supervisory employees, as follows:
"It must be emphasized that private respondent First Line Association of
Meralco Supervisory Employees seeks to represent only the Supervisory
Employees with Pay Grades VII to XIV.
"Supervisory Employees with Pay Grades VII to XIV are not managerial
employees. In fact the petition itself of petitioner Manila Electric Company
on page 9, paragraph 3 of the petition stated as follows, to wit:
'There was no need for petitioner to prove that these employees are not rank-
and-file. As adverted to above, the private respondents admit that these are
not the rank-and-file but the supervisory employees, whom they seek to
represent. What needs to be established is the rank where supervisory ends
and managerial begins.'
and First Line Association of Meralco Supervisory Employees herein states
that Pay Grades VII to XIV are not managerial employees. In fact, although
employees with Pay Grade XV carry the Rank of Department Managers,
these employees only enjoys (sic) the Rank Manager but their
recommendatory powers are subject to evaluation, review and final action by
the department heads and other higher executives of the company."
(FLAMES' Memorandum, p. 305, Rollo).
Based on the foregoing, it is clear that the employees from Pay Grades VII
and up have been recognized and accepted as supervisory. On the other hand,
those employees who have been automatically disqualified have been
directed by the Secretary of Labor to remain in the existing labor organization
for the rank and file, (the condition in the CBA deemed as not having been
written into the contract, as unduly restrictive of an employee's exercise of
the right to self-organization). We shall discuss the rights of the excluded
employees (or those covered by Sec. 2, Art. I, MEWA-CBA later.
Anent the instant petition therefore, STEAM-PCWF, and FLAMES would
therefore represent supervisory employees only. In this regard, the authority
given by the Secretary of Labor for the establishment of two labor
organizations for the rank and file will have to be disregarded since We
hereby uphold certification elections only for supervisory employees from
Pay Grade VII and up, with STEAM-PCWF and FLAMES as choices.
As to the alleged failure of the Secretary of Labor to establish a demarcation
line for purposes of segregating the supervisory from the managerial
employees, the required parameter is really not necessary since the law itself,
Art. 212-m, (as amended by Sec. 4 of RA 6715) has already laid down the
corresponding guidelines:
"Art. 212. Definitions . . .
"(m) 'Managerial employee' is one who is vested with powers or prerogatives
to lay down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment. All employees not falling within any of the above
definitions are considered rank-and-file employees for purposes of this
Book."
In his resolution, the Secretary of Labor further elaborated:
". . . Thus, the determinative factor in classifying an employee as managerial,
supervisory or rank-and-file is the nature of the work of the employee
concerned.
"In National Waterworks and Sewerage Authority vs. National Waterworks
and Sewerage Authority Consolidated Unions (11 SCRA 766) the Supreme
Court had the occasion to come out with an enlightening dissertation of the
nature of the work of a managerial employees as follows:
'. . . that the employee's primary duty consists of the management of the
establishment or of a customarily recognized department or subdivision
thereof, that he customarily and regularly directs the work of other employees
therein, that he has the authority to hire or discharge other employees or that
his suggestions and recommendations as to the hiring and discharging and or
to the advancement and promotion or any other change of status of other
employees are given particular weight, that he customarily and regularly
exercises discretionary powers . . . (56 CJS, pp. 666-668.)'" (p. 226, Rollo)
We shall now discuss the rights of the security guards to self-organize.
MERALCO has questioned the legality of allowing them to join either the
rank and file or the supervisory union, claiming that this is a violation of par.
2, Sec. 1, Rule II, Book V of the Implementing Rules of RA 6715, which
states as follows:
"Sec. 1. Who may join unions . . . .
"xxx xxx xxx
"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; . . .
". . ."
Paragraph 2, Sec. 1, Rule II, Book V, is similar to Sec. 2 (c) Rule V, also of
Book V of the implementing rules of RA 6715:
"Rule V.
REPRESENTATION CASES AND INTERNAL-UNION CONFLICTS
'Sec. 1. . . .
"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:
"(a) . . .
"(b) . . .
"(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;
". . ."
Both rules, barring security guards from joining a rank and file organization,
appear to have been carried over from the old rules which implemented then
Art. 245 of the Labor Code, and which provided thus:
"Art. 245. Ineligibility of security personnel to join any labor organization.
Security guards and other personnel employed for the protection and security
of the person, properties and premises of the employer shall not be eligible
for membership in any labor organization."
On December 24, 1986, Pres. Corazon C. Aquino issued E.O No. 111 which
eliminated the above-cited provision on the disqualification of security
guards.
What was retained was the disqualification of managerial employees,
renumbered as Art. 245 (previously Art. 246), as follows:
"ART. 245. Ineligibility of managerial employees to joint any labor
organization. Managerial employees are not eligible to join, assist or form
any labor organization."
With the elimination, security guards were thus free to join a rank and file
organization.
On March 2, 1989, the present Congress passed RA 6715. 2 Section 18
thereof amended Art. 245, to read as follows:
"Art. 245. Ineligibility of managerial employees to join any labor
organization; right of supervisory employees. Managerial employees are not
eligible to join, assist or form any labor organization. Supervisory employees
shall not be eligible for membership in a labor organization of the rank-and-
file employees but may join, assist, or form separate labor organizations of
their own."
As will be noted, the second sentence of Art. 245 embodies an amendment
disqualifying supervisory employees from membership in a labor
organization of the rank-and-file employees. It does not include security
guards in the disqualification.
The implementing rules of RA 6715, therefore, insofar as they disqualify
security guards from joining a rank and file organization are null and void,
for being not germane to the object and purposes of EO 111 and RA 6715
upon which such rules purportedly derive statutory moorings. In Shell
Philippines, Inc. vs. Central Bank, G.R. No. 51353, June 27, 1988, 162
SCRA 628, We stated:
The rule-making power must be confined to details for regulating the mode
or proceeding to carry into effect the law as it has been enacted. The power
cannot be extended to amending or expanding the statutory requirements or
to embrace matters not covered by the statute. Rules that subvert the statute
cannot be sanctioned." (citing University of Sto. Tomas vs. Board of Tax
Appeals, 93 Phil. 376).
While therefore under the old rules, security guards were barred from joining
a labor organization of the rank and file, under RA 6715, they may now freely
join a labor organization of the rank and file or that of the supervisory union,
depending on their rank. By accommodating supervisory employees, the
Secretary of Labor must likewise apply the provisions of RA 6715 to security
guards by favorably allowing them free access to a labor organization,
whether rank and file or supervisory, in recognition of their constitutional
right to self-organization.

We are aware however of possible consequences in the implementation of

the law in allowing security personnel to join labor unions within the
company they serve. The law is apt to produce divided loyalties in the faithful
performance of their duties. Economic reasons would present the employees
concerned with the temptation to subordinate their duties to the allegiance
they owe the union of which they are members, aware as they are that it is
usually union action that obtains for them increased pecuniary benefits.

Thus, in the event of a strike declared by their union, security personnel may
neglect or outrightly abandon their duties, such as protection of property of
their employer and the persons of its officials and employees, the control of
access to the employer's premises, and the maintenance of order in the event
of emergencies and untoward incidents.

It is hoped that the corresponding amendatory and/or suppletory laws be

passed by Congress to avoid possible conflict of interest in security
personnel.

ACCORDINGLY, the petition is hereby DISMISSED. We AFFIRM with

modification the Resolution of the Secretary of Labor dated November 3,
1989 upholding an employee's right to self-organization. A certification
election is hereby ordered conducted among supervisory employees of
MERALCO, belonging to Pay Grades VII and above, using as guideliness an
employee's power to either recommend or execute management policies,
pursuant to Art. 212 (m), of the Labor Code, as amended by Sec. 4 of RA
6715, with respondents STEAM-PCWF and FLAMES as choices.

Employees of the Patrol Division, Treasury Security Services Section and

Secretaries may freely join either the labor organization of the rank and file
or that of the supervisory union depending on their employee rank.
Disqualified employees covered by Sec. 3, Art. I of the MEWA-CBA, shall
remain with the existing labor organization of the rank and file, pursuant to
the Secretary of Labor's directive:

"By the parties' own agreement, they find the bargaining unit, which includes
the positions enumerated in Section 3, Article I of their CBA, appropriate for
purposes of collective bargaining. The composition of the bargaining unit
should be left to the agreement of the parties, and unless there are legal
infirmities in such agreement, this Office will not substitute its judgment for
that of the parties. Consistent with the history of collective bargaining in the
company, the membership of said group of employees in the existing rank-
and-file unit should continue, for it will enhance stability in that unit already
well established. However, we cannot approve of the condition set in Section
3, Article I of the CBA that the employees covered are automatically
disqualified from becoming union members. The condition unduly restricts
the exercise of the right to self organization by the employees in question. It
is contrary to law and public policy and, therefore, should be considered to
have not been written into the contract. Accordingly, the option to join or not
to join the union should be left entirely to the employees themselves." (p.
229, Rollo)

The Temporary Restraining Order (TRO) issued on February 26, 1990 is

hereby LIFTED. Costs against petitioner.

SO ORDERED.
UNITED PEPSI-COLA SUPERVISORY UNION (UPSU) vs.
LAGUESMA
G.R. No. 122226 | 1998-03-25
MENDOZA, J:
Petitioner is a union of supervisory employees. It appears that on March 20,
1995 the union filed a petition for certification election on behalf of the route
managers at Pepsi-Cola Products Philippines, Inc. However, its petition was
denied by the med-arbiter and, on appeal, by the Secretary of Labor and
Employment, on the ground that the route managers are managerial
employees and, therefore, ineligible for union membership under the first
sentence of Art. 245 of the Labor Code, which provides:
Ineligibility of managerial employees to join any labor organization; right of
supervisory employees. - Managerial employees are not eligible to join, assist
or form any labor organization. Supervisory employees shall not be eligible
for membership in a labor organization of the rank-and-file employees but
may join, assist or form separate labor organizations of their own.
Petitioner brought this suit challenging the validity of the order dated August
31, 1995, as reiterated in the order dated September 22, 1995, of the Secretary
of Labor and Employment. Its petition was dismissed by the Third Division
for lack of showing that respondent committed grave abuse of discretion. But
petitioner filed a motion for reconsideration, pressing for resolution its
contention that the first sentence of Art. 245 of the Labor Code, so far as it
declares managerial employees to be ineligible to form, assist or join unions,
contravenes Art. III, Sec 8 of the Constitution which provides:
The right of the people, including those employed in the public and private
sectors, to form unions, associations, or societies for purposes not contrary
to law shall not be abridged.
For this reason, the petition was referred to the Court en banc.
The Issues in this Case
Two questions are presented by the petition: (1) whether the route managers
at Pepsi-Cola Products Philippines, Inc. are managerial employees and (2)
whether Art. 245, insofar as it prohibits managerial employees from forming,
joining or assisting labor unions, violates Art. III, Section 8 of the
Constitution.
In resolving these issues it would be useful to begin by defining who are
"managerial employees" and considering the types of "managerial
employees."
Types of Managerial Employees
The term "manager" generally refers to "anyone who is responsible for
subordinates and other organizational resources." 1 As a class, managers
constitute three levels of a pyramid:
Top management
Middle Management
First-Line Management (also called Supervisor)
====================
Operatives or Operating Employees
FIRST-LINE MANAGERS - The lowest level in an organization at which
individuals are responsible for the work of others is called first-line or first-
level management. First-line managers direct operating employees only; they
do not supervise other managers. Examples of first-line managers are the
"foreman" or production supervisor in a manufacturing plant, the technical
supervisor in a research department, and the clerical supervisor in a large
office. First-level managers are often called supervisors.
MIDDLE MANAGERS - The term middle management can refer to more
than one level in an organization. Middle managers direct the activities of
other managers and sometimes also those of operating employees. Middle
managers' principal responsibilities are to direct the activities that implement
their organizations' policies and to balance the demands of their superiors
with the capacities of their subordinates. A plant manager in an electronics
firm is an example of a middle manager.
TOP MANAGERS - Composed of a comparatively small group of
executives, top management is responsible for the overall management of the
organization. It establishes operating policies and guides the organization's
interactions with its environment. Typical titles of top managers are "chief
executive officer," "president," and "senior vice-president." Actual titles vary
from one organization to another and are not always a reliable guide to
membership in the highest management classification. 2
As can be seen from this description, a distinction exists between those who
have the authority to devise, implement and control strategic and operational
policies (top and middle managers) and those whose task is simply to ensure
that such policies are carried out by the rank-and-file employees of an
organization (first-level managers/supervisors). What distinguishes them
from the rank-and-file employees is that they act in the interest of the
employer in supervising such rank-and-file employees.
"Managerial employees" may therefore be said to fall into two distinct
categories: the "managers" per se, who compose the former group described
above, and the "supervisors" who form the latter group. Whether they belong
to the first or the second category, managers, vis-a-vis employers, are,
likewise, employees. 3
The first question is whether route managers are managerial employees or
supervisors.
Previous Administrative Determinations of
the Question Whether Route Managers
are Managerial Employees
It appears that this question was the subject of two previous determinations
by the Secretary of Labor and Employment, in accordance with which this
case was decided by the med-arbiter.
In Case No. OS-MA-10-318-91, entitled Worker's Alliance Trade Union
(WATU) v. Pepsi-Cola Products Philippines, Inc., decided on November 13,
1991, the Secretary of Labor found:
We examined carefully the pertinent job descriptions of the subject
employees and other documentary evidence on record vis-a-vis paragraph
(m), Article 212 of the Labor Code, as amended, and we find that only those
employees occupying the position of route manager and accounting manager
are managerial employees. The rest i.e. quality control manager,
yard/transport manager and warehouse operations manager are supervisory
employees.
To qualify as managerial employee, there must be a clear showing of the
exercise of managerial attributes under paragraph (m), Article 212 of the
Labor Code as amended. Designations or titles of positions are not
controlling. In the instant case, nothing on record will support the claim that
the quality control manager, yard/transport manager and warehouse
operations manager are vested with said attributes. The warehouse operations
manager, for example, merely assists the plant finance manager in planning,
organizing, directing and controlling all activities relative to development
and implementation of an effective management control information system
at the sale offices. The exercise of authority of the quality control manager,
on the other hand, needs the concurrence of the manufacturing manager.
As to the route managers and accounting manager, we are convinced that
they are managerial employees. Their job descriptions clearly reveal so.
On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92,
entitled In Re: Petition for Direct Certification and/or Certification Election-
Route Managers/Supervisory Employees of Pepsi-Cola Products Phils. Inc.,
as follows:
The issue brought before us is not of first impression. At one time, we had
the occasion to rule upon the status of route manager in the same company
vis a vis the issue as to whether or not it is supervisory employee or a
managerial employee. In the case of Workers Alliance Trade Unions NATU)
vs. Pepsi Cola Products, Phils., Inc. (OS-MA-A-10-318-91), 15 November
1991, we ruled that a route manager is a managerial employee within the
context of the definition of the law, and hence, ineligible to join, form or
assist a union. We have once more passed upon the logic of our Decision
aforecited in the light of the issues raised in the instant appeal, as well as the
available documentary evidence on hand, and have come to the view that
there is no cogent reason to depart from our earlier holding. Route Managers
are, by the very nature of their functions and the authority they wield over
their subordinates, managerial employees. The prescription found in Art. 245
of the Labor Code, as amended therefore, clearly applies to them. 4
Citing our ruling in Nasipit Lumber Co. v. National Labor Relations
Commission, 5 however, petitioner argues that these previous administrative
determinations do not have the effect of res judicata in this case, because
"labor relations proceedings" are "non-litigious and summary in nature
without regard to legal technicalities." 6 Nasipit Lumber Co. involved a
clearance to dismiss an employee issued by the Department of Labor. The
question was whether in a subsequent proceeding for illegal dismissal, the
clearance was res judicata. In holding it was not, this Court made it clear that
it was referring to labor relations proceedings of a non-adversary character,
thus:
The requirement of a clearance to terminate employment was a creation of
the Department of labor to carry out the Labor Code provisions on security
of tenure and termination of employment. The proceeding subsequent to the
filing of an application for clearance to terminate employment was outlined
in Book V, Rule XIV of the Rules and Regulations Implementing the Labor
Code. The fact that said rule allowed a procedure for the approval of the
clearance with or without the opposition of the employee concerned (Secs. 7
& 8), demonstrates the non-litigious and summary nature of the proceeding.
The clearance requirement was therefore necessary only as an expeditious
shield against arbitrary dismissal without the knowledge and supervision of
the Department of Labor. Hence, a duly approved clearance implied that the
dismissal was legal or for cause (Sec. 2). 7
But the doctrine of res judicata certainly applies to adversary administrative
proceedings. As early as 1956, in Brillantes v. Castro, 8 we sustained the
dismissal of an action by a trial court on the basis of a prior administrative
determination of the same case by the Wage Administration Service,
applying the principle of res judicata. Recently, in Abad v. NLRC 9 we
applied the related doctrine of stare decisis in holding that the prior
determination that certain jobs at the Atlantic Gulf and Pacific Co. were
project employments was binding in another case involving another group of
employees of the same company. Indeed, in Nasipit Lumber Co., this Court
clarified toward the end of its opinion that "the doctrine of res judicata applies
. . . to judicial or quasi judicial proceedings and not to the exercise of
administrative powers." 10 Now proceedings for certification election, such
as those involved in Case No. OS-M-A-10-318-91 and Case No. OS-A-3-71-
92, are quasi judicial in nature and, therefore, decisions rendered in such
proceedings can attain finality. 11
Thus, we have in this case an expert's view that the employees concerned are
managerial employees within the purview of Art. 212 which provides:
(m) "managerial employee" is one who is vested with powers or prerogatives
to lay down and execute management policies and/or to hire, transfer,
suspend, lay off, recall, discharge, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment. All employees not falling within any of the above
definitions are considered rank-and-file employees for purposes of this Book.
At the very least, the principle of finality of administrative determination
compels respect for the finding of the Secretary of Labor that route managers
are managerial employees as defined by law in the absence of anything to
show that such determination is without substantial evidence to support it.
Nonetheless, the Court, concerned that employees who are otherwise
supervisors may wittingly or unwittingly be classified as managerial
personnel and thus denied the right of self- organization, has decided to
review the record of this case.
DOLE's Finding that Route Managers are
Managerial Employees Supported by
Substantial Evidence in the Record
The Court now finds that the job evaluation made by the Secretary of Labor
is indeed supported by substantial evidence. The nature of the job of route
managers is given in a four-page pamphlet, prepared by the company, called
"Route Manager Position Description," the pertinent parts of which read:
A. BASIC PURPOSE
A Manager achieves objectives through others.
As a Route Manager, your purpose is to meet the sales plan; and you achieve
this objective through the skillful MANAGEMENT OF YOUR JOB AND
THE MANAGEMENT OF YOUR PEOPLE.
These then are your functions as Pepsi-Cola Route Manager. Within these
functions - managing your job and managing your people - you are
accountable to your District Manager for the execution and completion of
various tasks and activities which will make it possible for you to achieve
your sales objectives.
B. PRINCIPAL ACCOUNTABILITIES
1.0 MANAGING YOUR JOB
The Route Manager is accountable for the following:
1.1 SALES DEVELOPMENT
1.1.1 Achieve the sales plan.
1.1.2 Achieve all distribution and new account objectives.
1.1.3 Develop new business opportunities thru personal contacts with
dealers.
1.1.4 Inspect and ensure that all merchandizing [sic] objectives are achieved
in all outlets.
1.1.5 maintain and improve productivity of all cooling equipment and kiosks.
1.1.6 Execute and control all authorized promotions.
1.1.7 Develop and maintain dealer goodwill.
1.1.8 Ensure all accounts comply with company suggested retail pricing.
1.1.9 Study from time to time individual route coverage and productivity for
possible adjustments to maximize utilization of resources.
1.2 Administration
1.2.1 Ensure the proper loading of route trucks before check-out and the
proper sorting of bottles before check-in.
1.2.2 Ensure the upkeep of all route sales reports and all other related reports
and forms required on an accurate and timely basis.
1.2.3 Ensure proper implementation of the various company policies and
procedures incl. but not limited to shakedown; route shortage; progressive
discipline; sorting; spoilages; credit/collection; accident; attendance.
1.2.4 Ensure collection of receivables and delinquent accounts.
2.0 MANAGING YOUR PEOPLE
The Route Manager is accountable for the following:
2.1 Route Sales Team Development
2.1.1 Conduct route rides to train, evaluate and develop all assigned route
salesmen and helpers at least 3 days a week, to be supported by required route
ride documents/reports & back check/spot check at least 2 days a week to be
supported by required documents/reports.
2 1.2 Conduct sales meetings and morning huddles. Training should focus on
the enhancement of effective sales and merchandizing [sic] techniques of the
salesmen and helpers. Conduct group training at least 1 hour each week on a
designated day and of specific topic.
2.2 Code of Conduct
2.2.1 Maintain the company's reputation through strict adherence to PCPPI's
code of conduct and the universal standards of unquestioned business ethics.
12
Earlier in this opinion, reference was made to the distinction between
managers per se (top managers and middle managers) and supervisors (first-
line managers). That distinction is evident in the work of the route managers
which sets them apart from supervisors in general. Unlike supervisors who
basically merely direct operating employees in line with set tasks assigned to
them, route managers are responsible for the success of the company's main
line of business through management of their respective sales teams. Such
management necessarily involves the planning, direction, operation and
evaluation of their individual teams and areas which the work of supervisors
does not entail.
The route managers cannot thus possibly be classified as mere supervisors
because their work does not only involve, but goes far beyond, the simple
direction or supervision of operating employees to accomplish objectives set
by those above them. They are not mere functionaries with simple oversight
functions but business administrators in their own right. An idea of the role
of route managers as managers per se can be gotten from a memo sent by the
director of metro sales operations of respondent company to one of the route
managers. It reads: 13
03 April 1995
To : CESAR T . REOLADA
From : REGGIE M. SANTOS
Subj : SALARY INCREASE
Effective 01 April 1995, your basic monthly salary of P11,710 will be
increased to P12,881 or an increase of 10%. This represents the added
managerial responsibilities you will assume due to the recent restructuring
and streamlining of Metro Sales Operations brought about by the continuous
losses for the last nine (9) months.
Let me remind you that for our operations to be profitable, we have to sustain
the intensity and momentum that your group and yourself have shown last
March. You just have to deliver the desired volume targets, better negotiated
concessions, rationalized sustaining deals, eliminate or reduced overdues,
improved collections, more cash accounts, controlled operating expenses,
etc. Also, based on the agreed set targets, your monthly performance will be
closely monitored.
You have proven in the past that your capable of achieving your targets thru
better planning, managing your group as a fighting team, and thru aggressive
selling. I am looking forward to your success and I expect that you just have
to exert your doubly best in turning around our operations from a losing to a
profitable one!
Happy Selling!!
(Sgd.) R.M. SANTOS
The plasticized card given to route managers, quoted in the separate opinion
of Justice Vitug, although entitled "RM's Job Description," is only a
summary of performance standards. It does not show whether route managers
are managers per se or supervisors. Obviously, these performance standards
have to be related to the specific tasks given to route managers in the four
page "Route Manager Position Description," and, when this is done, the
managerial nature of their jobs is fully revealed. Indeed, if any, the card
indicates the great latitude and discretion given to route managers - from
servicing and enhancing company goodwill to supervising and auditing
accounts, from trade (new business) development to the discipline, training
and monitoring of performance of their respective sales teams, and so forth,
- if they are to fulfill the company's expectations in the "key result areas."
Article 212(m) says that "supervisory employees are those who, in the
interest of the employer, effectively recommend such managerial actions if
the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment." Thus, their only power is to
recommend. Certainly, the route managers in this case more than merely
recommend effective management action. They perform operational, human
resource, financial and marketing functions for the company, all of which
involve the laying down of operating policies for themselves and their teams.
For example, with respect to marketing, route managers, in accordance with
B.1.1.1 to B.1.1.9 of the Route Managers Job Description, are charged,
among other things, with expanding the dealership base of their respective
sales areas, maintaining the goodwill of current dealers, and distributing the
company's various promotional items as they see fit. It is difficult to see how
supervisors can be given such responsibility when this involves not just the
routine supervision of operating employees but the protection and expansion
of the company's business vis-a-vis its competitors.
While route managers do not appear to have the power to hire and fire people
(the evidence shows that they only "recommended" or "endorsed" the taking
of disciplinary action against certain employees), this is because this is a
function of the Human Resources or Personnel Department of the company.
14 And neither should it be presumed that just because they are given set
benchmarks to observe, they are ipso facto supervisors. Adequate control
methods (as embodied in such concepts as "Management by Objectives
[MBO]" and "performance appraisals") which require a delineation of the
functions and responsibilities of managers by means of ready reference cards
as here, have long been recognized in management as effective tools for
keeping businesses competitive.
This brings us to the second question, whether the first sentence of Art. 245
of the Labor Code, prohibiting managerial employees from forming,
assisting or joining any labor organization, is constitutional in light of Art.
III, §8 of the Constitution which provides:
The right of the people, including those employed in the public and private
sectors, to form unions, associations, or societies for purposes not contrary
to law shall not be abridged.
As already stated, whether they belong to the first category (managers per se)
or the second category (supervisors), managers are employees. Nonetheless,
in the United States, as Justice Puno's separate opinion notes, supervisors
have no right to form unions. They are excluded from the definition of the
term "employee" in §2(3) of the Labor-Management Relations Act of
1947. 15 In the Philippines, the question whether managerial employees have
a right of self-organization has arisen with respect to first-level managers or
supervisors, as shown by a review of the course of labor legislation in this
country.
Right of Self-Organization of Managerial
Employees under Pre-Labor Code Laws
Before the promulgation of the Labor Code in 1974, the field of labor
relations was governed by the Industrial Peace Act (R.A. No. 875).
In accordance with the general definition above, this law defined
"supervisor" as follows:
SEC. 2 . . .
(k) "Supervisor" means any person having authority in the interest of an
employer, to hire, transfer, suspend, lay-off, recall, discharge, assign,
recommend, or discipline other employees, or responsibly to direct them, and
to adjust their grievances, or effectively to recommend such acts, if, in
connection with the foregoing, the exercise of such authority is not of a
merely routinary or clerical nature but requires the use of independent
judgment. 16
The right of supervisors to form their own organizations was affirmed:
SEC. 3. Employees' Right to Self-Organization. - Employees shall have the
right to self-organization and to form, join or assist labor organizations of
their own choosing for the purpose of collective bargaining through
representatives of their own choosing and to engage in concerted activities
for the purpose of collective bargaining and other mutual aid and protection.
Individuals employed as supervisors shall not be eligible for membership in
a labor organization of employees under their supervision but may form
separate organizations of their own. 17
For its part, the Supreme Court upheld in several of its decisions the right of
supervisors to organize for purposes of labor relations. 18
Although it had a definition of the term "supervisor," the Industrial Peace Act
did not define the term "manager." But, using the commonly-understood
concept of "manager," as above stated, it is apparent that the law used the
term "supervisors" to refer to the sub-group of "managerial employees"
known as front-line managers. The other sub-group of "managerial
employees," known as managers per se, was not covered.
However, in Caltex Filipino Managers and Supervisors Association v. Court
of Industrial Relations, 19 the right of all managerial employees to self-
organization was upheld as a general proposition, thus:
It would be going too far to dismiss summarily the point raised by respondent
Company - that of the alleged identity of interest between the managerial
staff and the employing firm. That should ordinarily be the case, especially
so where the dispute is between management and the rank and file. It does
not necessarily follow though that what binds the managerial staff to the
corporation forecloses the possibility of conflict between them. There could
be a real difference between what the welfare of such group requires and the
concessions the firm is willing to grant. Their needs might not be attended to
then in the absence of any organization of their own. Nor is this to indulge in
empty theorizing. The record of respondent Company, even the very case
cited by it, is proof enough of their uneasy and troubled relationship.
Certainly the impression is difficult to erase that an alien firm failed to
manifest sympathy for the claims of its Filipino executives. To predicate
under such circumstances that agreement inevitably marks their relationship, Credit Supervisor A
ignoring that discord would not be unusual, is to fly in the face of reality.
Asst. Stores Supvr. A
. . . The basic question is whether the managerial personnel can organize.
What respondent Company failed to take into account is that the right to self- Ref. Supervisory Draftsman
organization is not merely a statutory creation. It is fortified by our
Constitution. All are free to exercise such right unless their purpose is Refinery Shift Supvr. B
contrary to law. Certainly it would be to attach unorthodoxy to, not to say an
emasculation of, the concept of law if managers as such were precluded from Asst. Supvr. A - Operations (Refinery)
organizing. Having done so and having been duly registered, as did occur in
this case, their union is entitled to all the rights under Republic Act No. 875. Refinery Shift Supvr. B
Considering what is denominated as unfair labor practice under Section 4 of
such Act and the facts set forth in our decision, there can be only one answer Asst. Lab. Supvr. A (Refinery)
to the objection raised that no unfair labor practice could be committed by
respondent Company insofar as managerial personnel is concerned. It is, as St. Process Engineer B (Refinery)
is quite obvious, in the negative. 20
Asst. Supvr. A - Maintenance (Refinery)
Actually, the case involved front-line managers or supervisors only, as the
plantilla of employees, quoted in the main opinion, 21 clearly indicates: Asst. Supvr. B - Maintenance (Refinery)

CAFIMSA members holding the following Supervisory Payroll Position Supervisory Accountant (Refinery)
Title are Recognized by the Company
Communications Supervisor (Refinery)
Payroll Position Title
Finally, also deemed included are all other employees excluded from the rank
Assistant to Mgr. - National Acct. Sales and file unions but not classified as managerial or otherwise excludable by
law or applicable judicial precedents.
Jr. Sales Engineer
Right of Self-Organization of Managerial
Retail Development Asst. Employees under the Labor Code

Staff Asst. - 0 Marketing Thus, the dictum in the Caltex case which allowed at least for the theoretical
unionization of top and middle managers by assimilating them with the
Sales Supervisor supervisory group under the broad phrase "managerial personnel," provided
the lynchpin for later laws denying the right of self-organization not only to
Supervisory Assistant top and middle management employees but to front line managers or
supervisors as well. Following the Caltex case, the Labor Code, promulgated
Jr. Supervisory Assistant in 1974 under martial law, dropped the distinction between the first and
second sub-groups of managerial employees. Instead of treating the terms
Credit Assistant "supervisor" and "'manager" separately, the law lumped them together and
called them "managerial employees," as follows:
Lab. Supvr. - Pandacan
ART. 212. Definitions . . .
Jr. Sales Engineer B
(k) "Managerial Employee" is one who is vested with powers or prerogatives
Operations Assistant B to lay down and execute management policies and/or to hire, transfer,
suspend, lay off, recall, discharge, assign or discipline employees, or to
Field Engineer effectively recommend such managerial actions. All employees not falling
within this definition are considered rank and file employees for purposes of
Sr. Opers. Supvr. - MIA A/S this Book. 22

Purchasing Assistant The definition shows that it is actually a combination of the commonly
understood definitions of both groups of managerial employees,
Jr. Construction Engineer grammatically joined by the phrase "and/or."

St. Sales Supervisor This general definition was perhaps legally necessary at that time for two
reasons. First, the 1974 Code denied supervisors their right to self-organize
Deport Supervisor A as theretofore guaranteed to them by the Industrial Peace Act. Second, it
stood the dictum in the Caltex case on its head by prohibiting all types of
Terminal Accountant B managers from forming unions. The explicit general prohibition was
contained in the then Art. 246 of the Labor Code.
Merchandiser
The practical effect of this synthesis of legal concepts was made apparent in
Dist. Sales Prom. Supvr. the Omnibus Rules Implementing the Labor Code which the Department of
Labor promulgated on January 19, 1975. Book V, Rule II, §11 of the Rules
Instr. - Merchandising provided:

Asst. Dist. Accountant B Supervisory unions and unions of security guards to cease operation. - All
existing supervisory unions and unions of security guards shall, upon the
Sr. Opers. Supervisor effectivity of the Code, cease to operate as such and their registration
certificates shall be deemed automatically cancelled. However, existing
Jr. Sales Engineer A collective agreements with such unions, the life of which extends beyond the
date of effectivity of the Code, shall be respected until their expiry date
Asst. Bulk Ter. Supt. insofar as the economic benefits granted therein are concerned.

Sr. Opers. Supvr. Members of supervisory unions who do not fall within the definition of
managerial employees shall become eligible to join or assist the rank and file
labor organization, and if none exists, to form or assist in the forming of such
rank and file organization. The determination of who are managerial
employees and who are not shall be the subject of negotiation between
representatives of the supervisory union and the employer. If no agreement
is reached between the parties, either or both of them may bring the issue to
the nearest Regional Office for determination.
The Department of Labor continued to use the term "supervisory unions"
despite the demise of the legal definition of "supervisor" apparently because
these were the unions of front line managers which were then allowed as a
result of the statutory grant of the right of self-organization under the
Industrial Peace Act. Had the Department of Labor seen fit to similarly ban
unions of top and middle managers which may have been formed following
the dictum in Caltex, it obviously would have done so. Yet it did not,
apparently because no such unions of top and middle managers really then
existed.
Real Intent of the 1986 Constitutional Commission
This was the law as it stood at the time the Constitutional Commission
considered the draft of Art. III, §8. Commissioner Lerum sought to amend
the draft of what was later to become Art. III, §8 of the present
Constitution:
MR. LERUM. My amendment is on Section 7, page 2, line 19, which is to
insert between the words "people" and "to" the following: WHETHER
EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS. In
other words, the section will now read as follows: "The right of the people
WHETHER EMPLOYED BY THE STATE OR PRIVATE
ESTABLISHMENTS to form associations, unions, or societies for purposes
not contrary to law shall not be abridged." 23
Explaining his proposed amendment, he stated:
MR. LERUM. Under the 1935 Bill of Rights, the right to form associations
is granted to all persons whether or not they are employed in the government.
Under that provision, we allow unions in the government, in government-
owned and controlled corporations, and in other industries in the private
sector, such as the Philippine Government Employees' Association, unions
in the GSIS, the SSS, the DBP and other government-owned and controlled
corporations. Also, we have unions of supervisory employees and of security
guards. But what is tragic about this is that after the 1973 Constitution was
approved and in spite of an express recognition of the right to organize in
P.D. No. 442, known as the Labor Code, the right of government workers,
supervisory employees and security guards to form unions was abolished.
And we have been fighting against this abolition. In every tripartite
conference attended by the government, management and workers, we have
always been insisting on the return of these rights. However, both the
government and employers opposed our proposal, so nothing came out of
this until this week when we approved a provision which states:
Notwithstanding any provision of this article, the right to self-organization
shall not be denied to government employees.
We are afraid that without any corresponding provision covering the private
sector, the security guards, the supervisory employees or majority employees
[sic] will still be excluded, and that is the purpose of this amendment.
I will be very glad to accept any kind of wording as long as it will amount to
absolute recognition of private sector employees, without exception, to
organize.
THE PRESIDENT. What does the Committee say?
FR. BERNAS. Certainly, the sense is very acceptable, but the point raised by
Commissioner Rodrigo is well-taken. Perhaps, we can lengthen this a little
bit more to read: "The right of the people WHETHER UNEMPLOYED OR
EMPLOYED BY STATE OR PRIVATE ESTABLISHMENTS."
I want to avoid also the possibility of having this interpreted as applicable
only to the employed.
MR. DE LOS REYES. Will the proponent accept an amendment to the
amendment, Madam President?
MR. LERUM. Yes, as long as it will carry the idea that the right of the
employees in the private sector is recognized. 24
Lerum thus anchored his proposal on the fact that (1) government employees,
supervisory employees, and security guards, who had the right to organize
under the Industrial Peace Act, had been denied this right by the Labor Code,
and (2) there was a need to reinstate the right of these employees. In
consonance with his objective to reinstate the right of government, security,
and supervisory employees to organize, Lerum then made his proposal:
MR. LERUM. Mr. Presiding Officer, after a consultation with several
Members of this Commission, my amendment will now read as follows: "The
right of the people INCLUDING THOSE EMPLOYED IN THE PUBLIC
AND PRIVATE SECTORS to form associations, unions, or societies for
purposes not contrary to law shall not be abridged. In proposing that
amendment I ask to make of record that I want the following provisions of
the Labor Code to be automatically abolished, which read:
ART. 245. Security guards and other personnel employed for the protection
and security of the person, properties and premises of the employers shall not
be eligible for membership in a labor organization.
ART. 246. Managerial employees are not eligible to join, assist, and form
any labor organization.
THE PRESIDING OFFICER (Mr. Bengzon). What does the Committee say?
FR. BERNAS. The Committee accepts.
THE PRESIDING OFFICER. (Mr. Bengzon) The Committee has accepted
the amendment, as amended.
Is there any objection? (Silence) The Chair hears none; the amendment, as
amended, is approved. 25
The question is what Commissioner Lerum meant in seeking to
"automatically abolish" the then Art. 246 of the Labor Code. Did he simply
want "any kind of wording as long as it will amount to absolute recognition
of private sector employees, without exception, to organize"? 26 Or, did he
instead intend to have his words taken in the context of the cause which
moved him to propose the amendment in the first place, namely, the denial
of the right of supervisory employees to organize, because he said, "We are
afraid that without any corresponding provision covering the private sector,
security guards, supervisory employees or majority [of] employees will still
be excluded, and that is the purpose of this amendment"? 27
It would seem that Commissioner Lerum simply meant to restore the right of
supervisory employees to organize. For even though he spoke of the need to
"abolish" Art. 246 of the Labor Code which, as already stated, prohibited
"managerial employees" in general from forming unions, the fact was that in
explaining his proposal, he repeatedly referred to "supervisory employees"
whose right under the Industrial Peace Act to organize had been taken away
by Art. 246. It is noteworthy that Commissioner Lerum never referred to the
then definition of "managerial employees" in Art. 212(m) of the Labor Code
which put together, under the broad phrase "managerial employees," top and
middle managers and supervisors. Instead, his repeated use of the term
"supervisory employees," when such term then was no longer in the statute
books, suggests a frame of mind that remained grounded in the language of
the Industrial Peace Act.
Nor did Lerum ever refer to the dictum in Caltex recognizing the right of all
managerial employees to organize, despite the fact that the Industrial Peace
Act did not expressly provide for the right of top and middle managers to
organize. If Lerum was aware of the Caltex dictum, then his insistence on the
use of the term "supervisory employees" could only mean that he was
excluding other managerial employees from his proposal. If, on the other
hand, he was not aware of the Caltex statement sustaining the right to
organize to top and middle managers, then the more should his repeated use
of the term "supervisory employees" be taken at face value, as it had been
defined in the then Industrial Peace Act.
At all events, that the rest of the Commissioners understood his proposal to
refer solely to supervisors and not to other managerial employees is clear
from the following account of Commissioner Joaquin G. Bernas, who writes:
In presenting the modification on the 1935 and 1973 texts, Commissioner
Eulogio R. Lerum explained that the modification included three categories
of workers: (1) government employees, (2) supervisory employees, and (3)
security guards. Lerum made of record the explicit intent to repeal provisions
of P.D. 442, the Labor Code. The provisions referred to were:
ART. 245. Security guards and other personnel employed for the protection
and security of the person, properties and premises of the employers shall not
be eligible for membership in a labor organization.
classification as such is not seriously disputed by PEO-FFW; the five (5)
previous CBAs between PIDI and PEO-FFW explicitly considered them as
confidential employees. By the very nature of their functions, they assist and
act in a confidential capacity to, or have access to confidential matters of,
persons who exercise managerial functions in the field of labor relations. As
such, the rationale behind the ineligibility of managerial employees to form,
assist or joint a labor union equally applies to them.

ART. 246. Managerial employees are not eligible to join, assist, and form In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court
any labor organization. 28 elaborated on this rationale, thus:

Implications of the Lerum Proposal
In sum, Lerum's proposal to amend Art. III, §8 of the draft Constitution by
including labor unions in the guarantee of organizational right should be
taken in the context of statements that his aim was the removal of the
statutory ban against security guards and supervisory employees joining
labor organizations. The approval by the Constitutional Commission of his
proposal can only mean, therefore, that the Commission intended the
absolute right to organize of government workers, supervisory employees,
and security guards to be constitutionally guaranteed. By implication, no
similar absolute constitutional right to organize for labor purposes should be
deemed to have been granted to top-level and middle managers. As to them
the right of self-organization may be regulated and even abridged
conformably to Art. III, §8.
Constitutionality of Art. 245
Finally, the question is whether the present ban against managerial
employees, as embodied in Art. 245 (which superseded Art. 246) of the Labor
Code, is valid. This provision reads:
". . . The rationale for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with a Union, the
latter might not be assured of their loyalty to the Union in view of evident
conflict of interests. The Union can also become company-dominated with
the presence of managerial employees in Union membership." 32
To be sure, the Court in Philips Industrial was dealing with the right of
confidential employees to organize. But the same reason for denying them
the right to organize justifies even more the ban on managerial employees
from forming unions. After all, those who qualify as top or middle managers
are executives who receive from their employers information that not only is
confidential but also is not generally available to the public, or to their
competitors, or to other employees. It is hardly necessary to point out that to
say that the first sentence of Art. 245 is unconstitutional would be to
contradict the decision in that case.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.

ART. 245. Ineligibility of managerial employees to join any labor

organization; right of supervisory employees. - Managerial employees are
not eligible to join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in a labor organization of the
rank-and-file employees but may join, assist or form separate labor
organizations of their own. 29

This provision is the result of the amendment of the Labor Code in 1989 by
R.A. No. 6715, otherwise known as the Herrera-Veloso Law. Unlike the
Industrial Peace Act or the provisions of the Labor Code which it superseded,
R.A. No. 6715 provides separate definitions of the terms "managerial" and
"supervisory employees," as follows:

ART. 212. Definitions. . . .

(m) "managerial employee" is one who is vested with powers or prerogatives

to lay down and execute management policies and/or to hire transfer,
suspend, lay off, recall, discharge, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment. All employees not falling within any of the above
definitions are considered rank-and-file employees for purposes of this Book.

Although the definition of "supervisory employees" seems to have been

unduly restricted to the last phrase of the definition in the Industrial Peace
Act, the legal significance given to the phrase "effectively recommends"
remains the same. In fact, the distinction between top and middle managers,
who set management policy, and front-line supervisors, who are merely
responsible for ensuring that such policies are carried out by the rank and
file, is articulated in the present definition. 30 When read in relation to this
definition in Art. 212(m), it will be seen that Art. 245 faithfully carries out
the intent of the Constitutional Commission in framing Art. III, §8 of the
fundamental law.

Nor is the guarantee of organizational right in Art. III, §8 infringed by a

ban against managerial employees forming a union. The right guaranteed in
Art. III, §8 is subject to the condition that its exercise should be for
purposes "not contrary to law." In the case of Art. 245, there is a rational
basis for prohibiting managerial employees from forming or joining labor
organizations. As Justice Davide, Jr., himself a constitutional commissioner,
said in his ponencia in Philips Industrial Development, Inc. v. NLRC: 31

In the first place, all these employees, with the exception of the service
engineers and the sales force personnel, are confidential employees. Their
A. D. GOTHONG MANUFACTURING CORPORATION
EMPLOYEES UNION-ALU vs. CONFESOR
G.R. No. 113638 | 1999-11-16
GONZAGA-REYES, J.:
Petitioner A. D. Gothong Manufacturing Corporation Employees Union-
ALU seeks to reverse and set aside the decision of the Secretary of Labor
promulgated on September 30, 1993 affirming in toto the Resolution of
Mediator-Arbiter, Achilles V. Manit declaring Romulo Plaza and Paul
Michael Yap as rank- and-file employees of A. D. Gothong Manufacturing
Corporation.
On May 12, 1993, petitioner A. D. Gothong Manufacturing Corporation
Employees Union-ALU ("Union") filed a petition for certification election in
its bid to represent the unorganized regular rank-and-file employees of
respondent A. D. Gothong Manufacturing Corporation ("Company")
excluding its office staff and personnel. Respondent Company opposed the
petition as it excluded office personnel who are rank and file employees. In
the inclusion-exclusion proceedings, the parties agreed to the inclusion of
Romulo Plaza and Paul Michael Yap in the list of eligible voters on condition
that their votes are considered challenged on the ground that they were
supervisory employees.
The certification election was conducted as scheduled and yielded the
following results:
YES - - - - - - - - - - - - - - - 20
NO - - - - - - - - - - - - - - - -19
Spoiled - - - - - - - - - - - - - - 0
Challenged - - -- - - - - - - - - _2
Total votes cast - - - - - - - - - 41
Both Plaza and Yap argued that they are rank-and-file employees. Plaza
claimed that he was a mere salesman based in Cebu, and Yap argued that he
is a mere expediter whose job includes the facilitation of the processing of
the bills of lading of all intended company shipments.
Petitioner Union maintains that both Plaza and Yap are supervisors who are
disqualified to join the proposed bargaining unit for rank-and-file employees.
In support of its position paper, the petitioner Union submitted the following:
1. Joint affidavit of Ricardo Ca¤ete, et al. which alleges that Michael
Yap is a supervisory employee of A. D. Gothong Manufacturing Corporation
and can effectively recommend for their suspension/dismissal.
2. Affidavit of Pedro Diez which alleges that the affiant is a supervisor in the
production department of A. D. Gothong Manufacturing Corporation; that
the affiant knows the challenged voters because they are also supervisory
employees of the same corporation; that the challenged voters used to attend
the quarterly meeting of the staff employees of A. D. Gothong Manufacturing
Corporation;
3. Photocopy of the memorandum dated January 4, 1991 regarding the
compulsory attendance of department heads/supervisors to the regular
quarterly meeting of all regular workers of A. D. Gothong Manufacturing
Corporation on January 13, 1991. Appearing therein are the names
ROMULO PLAZA and MICHAEL YAP;
4. A not-so-legible photocopy of a memorandum dated March 1, 1989
wherein the name "ROMY PLAZA" is mentioned as the acting OIC of GT
Marketing in Davao; and
5. Photocopy of the minutes of the regular quarterly staff meeting on August
13, 1989 at Mandaue City wherein Michael Yap is mentioned as a shipping
assistant and a newly hired member of the staff.1 [Rollo, p. 35.]
The Med-Arbiter declared that the challenged voters Yap and Plaza are rank-
and-file employees.
Petitioner Union appealed to the Secretary of Labor insisting that Yap and
Plaza are supervisor and manager respectively of the corporation and are
prohibited from joining the proposed bargaining unit of rank-and-file
employees. In an attempt to controvert the arguments of petitioner,
respondent Company stressed that Pacita Gothong is the company's corporate
secretary and not Baby L. Siador, who signed the minutes of the meeting
submitted in evidence. Respondent also argued that Romulo Plaza could not
qualify as a manager of the Davao Branch the opening of which branch never
materialized.
Respondent Secretary of Labor affirmed the finding of the Med-Arbiter.
Motion for Reconsideration of the above resolution having been denied,
petitioner Union appeals to this Court by petition for review on certiorari
alleging the following grounds:
I. THAT THE SECRETARY OF LABOR AND EMPLOYMENT
CLEARLY COMMITTED MISAPPREHENSION OF FACTS/EVIDENCE
AND IF IT WERE NOT FOR SUCH MISAPPREHENSION IT WOULD
HAVE ARRIVED AT DIFFERENT CONCLUSION FAVORABLE TO
PETITIONER.
II. THAT THE SECRETARY OF LABOR AND EMPLOYMENT ACTED
WITH GRAVE ABUSE OF DISCRETION AND CONTRARY TO LAW
IN AFFIRMING IN TOTO THE DECISION OF HONORABLE
ACHILLES V. MANIT, DEPARTMENT OF LABOR AND
EMPLOYMENT, REGIONAL OFFICE No. 7, CEBU CITY IN DENYING
PETITIONER'S MOTION FOR RECONSIDERATION.2 [Rollo, pp. 8-9.]
We find no merit in the instant petition.
The Labor Code recognizes two (2) principal groups of employees, namely,
the managerial and the rank and file groups. Article 212 (m) of the Code
provides:
"(m) 'Managerial employee' is one who is vested with powers or prerogatives
to lay down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment. All employees not falling within any of the above
definitions are considered rank-and-file employees for purposes of this
Book."
Under Rule I, Section 2 (c), Book III of the Implementing Rules of the Labor
Code, to be a member of managerial staff, the following elements must
concur or co-exist, to wit: (1) that his primary duty consists of the
performance of work directly related to management policies; (2) that he
customarily and regularly exercises discretion and independent judgment in
the performance of his functions; (3) that he regularly and directly assists in
the management of the establishment; and (4) that he does not devote more
than twenty percent of his time to work other than those described above.
In the case of Franklin Baker Company of the Philippines vs. Trajano3 [157
SCRA 416.], this Court stated:
"The test of 'supervisory' or 'managerial status' depends on whether a person
possess authority to act in the interest of his employer in the matter specified
in Article 212 (k) of the Labor Code and Section 1 (m) of its Implementing
Rules and whether such authority is not merely routinary or clerical in nature,
but requires the use of independent judgment. Thus, where such
recommendatory powers as in the case at bar, are subject to evaluation,
review and final action by the department heads and other higher executives
of the company, the same, although present, are not exercise of independent
judgment as required by law.4 [See also Engineering Equipment, Inc. vs.
NLRC, 133 SCRA 752; National Warehousing Corp. vs. CIR, 7 SCRA 602
[1963]; National Waterworks and Sewerage Authority vs. NWSA
Consolidated Unions, 11 SCRA 766.]
It has also been established that in the determination of whether or not certain
employees are managerial employees, this Court accords due respect and
therefore sustains the findings of fact made by quasi-judicial agencies which
are supported by substantial evidence considering their expertise in their
respective fields.5 [Philippine Airline Employees Ass. (PALEA) vs. Ferrer-
Calleja, 162 SCRA 426; Lacorte vs. Inciong, G. R. No. 52034, September
27, 1988; Arica vs. NLRC, G. R. No. 78210, February 28, 1989; A. M. Oreta
& Co. Inc. vs. NLRC, G. R. No. 74004, August 10, 1989.]
The petition has failed to show reversible error in the findings of the Med-
Arbiter and the Secretary of the Department of Labor.
In ruling against petitioner Union, the Med-Arbiter ruled that the petitioner
Union failed to present concrete and substantial evidence to establish the fact
that challenged voters are either managerial or supervising employees; the
Med-Arbiter evaluated the evidence as follows:

"The said joint affidavit of Ricardo Ca¤ete, et al. and that of Pedro Diez
merely tagged the challenged voters as supervisors, but nothing is mentioned
about their respective duties, powers and prerogatives as employees which
would have indicated that they are indeed supervisory employees. There is
no statement about an instance where the challenged voters effectively
recommended such managerial action which required the use of independent
judgment.
The aforementioned documents have not been properly identified which
renders them inadmissible in evidence. But, granting that they are the exact
replica of a genuine and authentic original copy, there is nothing in them
which specifically and precisely tells that the challenged voters can exercise
the powers and prerogatives to effectively recommended such managerial
actions which require the use of independent judgment.6 [Rollo, p. 35.]
In upholding the above findings, the respondent Secretary of Labor
rationalized:
"Based on the foregoing, Romulo Plaza and Paul Michael Yap can not
qualify as managerial and supervisory employees, respectively, because there
is nothing in the documentary evidence offered by herein petitioner-appellant
showing that they are actually conferred or actually exercising the said
managerial/supervisory attributes.
In the case of Romulo Plaza, we note that indeed there is nothing in the
minutes of the staff meeting held on 05 March 1993, particularly on the report
of the Sales Department, indicating that said appellee had been exercising
managerial prerogatives by hiring workers and issuing a check for the
payment of rentals of a warehouse, relative to the company branch in Davao
City. The imputation on the exercise of the said prerogative is misleading if
not malicious because a plain reading of that portion of the report shows in
clear and simple language that one who made the said hiring and payment
was no other than Mr. John Chua, the Sales Manager. The only instance when
the name of Romy Plaza was mentioned in the said report was in reference
to his designation as an OIC of the Davao City Branch while all the aspect of
the creation of the said branch is awaiting final approval by the Company
president and general manager (p. 197, last paragraph, records). The setting
up of said branch however, did not materialize, as evidenced by the
certification issued by the Revenue District Office and Office of the Mayor
in Davao City (pp. 198-199, records).
that the plan to open a branch in Davao City did not materialize.8 [Annexes
D & E, Comments to petitioner's Petition for Review on Certiorari.]
The reliance of petitioner on the affidavit of Jose Loseo, Personnel Manager,
that Plaza and Yap were hired by him as department head and supervisor of
the respondent Company cannot be sustained in light of the affidavit of said
Loseo dated September 28, 1993, attesting that he was "forced to sign" the
earlier memorandum on the job assignment of Yap and Plaza. This affidavit
is sought to be discarded by respondent Company for being perjurious and
ill-motivated.9 [Rejoinder to petitioner Appellant's Reply; p. 247, Rollo.]
Petitioner Union however reiterates that Loseo's affidavit is corroborated by
the other public documents indicating that Plaza and Yap are not rank-and-
file employees.10 [Memorandum for petitioner; p. 371, Rollo.]
The issue raised herein is basically one of fact: whether in the light of the
evidence submitted by both parties, Plaza and Yap are managerial employees
or rank-and-file employees.
This Court is not a trier of facts. As earlier stated, it is not the function of this
Court to examine and evaluate the probative value of all evidence presented
to the concerned tribunal which formed the basis of its impugned decision or
resolution. Following established precedents, it is inappropriate to review
that factual findings of the Med-Arbiter regarding the issue whether Romulo
Plaza and Paul Michael Yap are or are not rank-and-file employees
considering that these are matters within their technical expertise.11 [Trade
Unions of the Philippines vs. Laguesma, 236 SCRA 586.] They are binding
on this Court as we are satisfied that they are supported by substantial
evidence, and we find no capricious exercise of judgment warranting reversal
by certiorari.
WHEREFORE, the petition is denied for lack of merit.
No pronouncement as to costs.
SO ORDERED.

Likewise, evidence pinpointing that Paul Michael Yap is a supervisory

employee is altogether lacking. The fact that he was designated as shipping
assistant/expediter is of no moment, because titles or nomenclatures attached
to the position is not controlling.

Finally, the job descriptions extant on records vividly exhibit no trace of the
performance of managerial or supervisory functions (pp. 124-126,
records)".7 [Rollo, pp. 29-31.]

In this petition, petitioner Union claims that the documentary evidence was
"misapprehended" by public respondent. Petitioner Union reiterates that: (1)
in minutes of the staff meeting of respondent Company on August 13, 1989,
duly signed by the President Albino Gothong and attested by Jose F. Loseo
presiding officer/VP and Gertrudo Lao, Assistant General Manager, Paul
Michael Yap was listed as one of the staff; (2) in the regular quarterly
meeting on January 4, 1991, the names of Yap and Plaza are listed under the
heading Department Heads/Supervisors duly signed by President/General
Manager Albino Gothong and Asst. General Manager Gertrudo Lao; and (3)
in the staff meeting of March 5, 1993, Plaza was assigned as officer-in-charge
of the company's branch in Davao.

We find no cogent reason to disturb the finding of the Med-Arbiter and the
Secretary of Labor that the copies of the minutes presented in evidence do
not prove that Yap and Plaza were managerial or supervisory employees. We
have examined the documentary evidence, and nowhere is there a statement
therein about any instance where the challenged voters effectively
recommended any managerial action which would require the use of
independent judgment. The last piece of evidence was not discussed by the
Med-Arbiter; however a perusal thereof would show that while one J. Chua
of the Sales Department reported that "Romy Plaza was in Davao right now
acting as OIC," the same document states that the Davao operations still had
to be finalized. On the other hand, the claim of respondent Company that
Plaza is the head of the Davao branch is belied by the certification of the City
Treasurer of Davao and of the Bureau of Internal Revenue of Mandaue City
SAN MIGUEL CORPORATION (MANDAUE PACKAGING
PRODUCTS PLANTS) vs. MANDAUE PACKING PRODUCTS
PLANTS-SAN PACKAGING PRODUCTS –SAN MIGUEL
CORPORATION MONTHLIES RANK-AND-FILE UNION – FFW
(MPPP-SMPP-SMAMRFU-FFW)
G.R. No. 152356. August 16, 2005
TINGA, J.:
The central question in this Petition for Review is on what date did
respondent Mandaue Packing Products Plants-San Miguel Packaging
Products–San Miguel Corporation Monthlies Rank-And-File Union–FFW
acquire legal personality in accordance with the Implementing Rules of the
Labor Code. The matter is crucial since respondent filed a petition for
certification election at a date when, it is argued, it had yet to acquire the
requisite legal personality. The Department of Labor and Employment
(DOLE) and the Court of Appeals both ruled that respondent had acquired
legal personality on the same day it filed the petition for certification election.
The procedure employed by the respondent did not strictly conform with the
relevant provisions of law. But rather than insist on an overly literal reading
of the law that senselessly suffocates the constitutionally guaranteed right to
self-organization, we uphold the assailed decisions and the liberal spirit that
animates them.
Antecedent Facts
The present petition assailed the Decision dated 7 June 2001 rendered by the
Court of Appeals Eighth Division1 which in turn affirmed a Decision dated
22 Feburary 1999 by the DOLE Undersecretary for Labor Relations,
Rosalinda Dimapilis-Baldoz, ordering the immediate conduct of a
certification election among the petitioner’s rank-and-file employees, as
prayed for by respondent. The following facts are culled from the records.
On 15 June 1998, respondent, identifying itself as an affiliate of Federation
of Free Workers (FFW), filed a petition for certification election with the
DOLE Regional Office No. VII. In the petition, respondent stated that it
sought to be certified and to represent the permanent rank-and-file monthly
paid employees of the petitioner.2 The following documents were attached
to the petition: (1) a Charter Certificate issued by FFW on 5 June 1998
certifying that respondent as of that date was duly certified as a local or
chapter of FFW; (2) a copy of the constitution of respondent prepared by its
Secretary, Noel T. Bathan and attested by its President, Wilfred V. Sagun;
(3) a list of respondent’s officers and their respective addresses, again
prepared by Bathan and attested by Sagun; (4) a certification signifying that
respondent had just been organized and no amount had yet been collected
from its members, signed by respondent’s treasurer Chita D. Rodriguez and
attested by Sagun; and (5) a list of all the rank-and-file monthly paid
employees of the Mandaue Packaging Products Plants and Mandaue Glass
Plant prepared by Bathan and attested by Sagun.3
The petition was assigned to Mediator-Arbiter Achilles V. Manit of the
DOLE Regional Office No. VII, and docketed as Case No. R0700-9806-RU-
013.4
On 27 July 1998, petitioner filed a motion to dismiss the petition for
certification election on the sole ground that herein respondent is not listed
or included in the roster of legitimate labor organizations based on the
certification issued by the Officer-In-Charge, Regional Director of the DOLE
Regional Office No. VII, Atty. Jesus B. Gabor, on 24 July 1998.
On 29 July 1998, respondent submitted to the Bureau of Labor Relations the
same documents earlier attached to its petition for certification. The
accompanying letter, signed by respondent’s president Sagun, stated that
such documents were submitted in compliance with the requirements for the
creation of a local/chapter pursuant to the Labor Code and its Implementing
Rules; and it was hoped that the submissions would facilitate the listing of
respondent under the roster of legitimate labor organizations.5 On 3 August
1998, the Chief of Labor Relations Division of DOLE Regional Office No.
VII issued a Certificate of Creation of Local/Chapter No. ITD. I-ARFBT-
058/98, certifying that from 30 July 1998, respondent has acquired legal
personality as a labor organization/worker’s association, it having submitted
all the required documents.6
Opting not to file a comment on the Motion to Dismiss,7 respondent instead
filed a Position Paper wherein it asserted that it had complied with all the
necessary requirements for the conduct of a certification election, and that
the ground relied upon in the Motion to Dismiss was a mere technicality.8
In turn, petitioner filed a Comment, wherein it reiterated that respondent was
not a legitimate labor organization at the time of the filing of the petition.
Petitioner also propounded that contrary to respondent’s objectives of
establishing an organization representing rank-and-file employees, two of
respondent’s officers, namely Vice-President Emannuel L. Rosell and
Secretary Bathan, were actually supervisory employees. In support of this
allegation, petitioner attached various documents evidencing the designation
of these two officers in supervisory roles, as well as their exercise of various
supervisory functions.9 Petitioner cited Article 245 of the Labor Code, which
provides that supervisory employees shall not be eligible for membership in
a labor organization of the rank-and-file employees.10
On 20 August 1998, petitioner filed a petition to cancel the union registration
of respondent. However, this petition was denied, and such denial was
subsequently affirmed by the Court of Appeals in a decision that has since
become final.11
In the meantime, on 15 September 1998, Med-Arbiter Manit issued an Order
dismissing respondent’s petition for certification election. The sole ground
relied upon for the dismissal was the Med-Arbiter’s Opinion that as of the
date of filing of the petition on 15 June 1998, respondent did not have the
legal personality to file the said petition for certification election.12 No
discussion was adduced on petitioner’s claims that some of respondent’s
officers were actually supervisory employees.
Respondent promptly appealed the 15 September 1998 Order to the DOLE.
On 22 February 1999, DOLE Undersecretary Rosalinda Dimapilis-Baldoz
rendered a Decision reversing the Order. Undersecretary Baldoz concluded
that respondent acquired legal personality as early as 15 June 1998, the date
it submitted the required documents, citing Section 3, Rule VI of the New
Rules Implementing the Labor Code (Implementing Rules) which deems that
a local/chapter acquires legal personality from the date of filing of the
complete documentary requirements as mandated in the Implementing Rules.
The DOLE also ruled that the contention that two of respondent’s officers
were actually supervisors can be threshed out in the pre-election conferences
where the list of qualified voters is to be determined. The dispositive portion
of the DOLE Decision stated:
WHEREFORE, the appeal is GRANTED. The order dated 15 September
1999 of the Med-Arbiter is REVERSED and SET ASIDE. Accordingly, let
the records of the case be remanded to the office of origin for the immediate
conduct of certification election, subject to the usual pre-election conference,
among the monthly-paid rank-and-file employees of the Mandaue Packaging
Products Plant San Miguel Corporation, with the following choices:
1. MANDAUE PACKAGING PRODUCT PLANT SAN MIGUEL
PACKAGING PRODUCTS SAN MIGUEL CORPORATION
MONTHLIES RANK AND FILE UNION–FFW (MPPP-SMPP-
SMCMRFUFFW),
2. NO UNION.
Pursuant to Rule XI, Section 11.1 of the New Implementing Rules, the
company is hereby directed to submit to the office of origin the certified list
of current employees in the bargaining unit, along with the payrolls covering
the members of the bargaining unit for the last three months prior to the
issuance of this decision.
SO DECIDED.13
These two conclusions of the DOLE were affirmed in the assailed Decision
of the Court of Appeals. It is now our task to review whether these
conclusions are warranted under law and jurisprudence. First, we shall
discuss the aspect of respondent’s legal personality in filing the petition for
certification election.
First Issue: On the Acquisition of
Legal Personality by Respondent
Statutory Provisions for Registration Of
Local/Chapter of Federation or National Union
Before we proceed to evaluate the particular facts of this case, it would be
useful to review the statutory paradigm that governs the establishment and
acquisition of legal personality by a local/chapter of a labor organization. The
applicable rules have undergone significant amendments in the last decade,
thus a recapitulation of the framework is in order.
The Labor Code defines a labor organization as any union or association of
employees which exists in whole or in part for the purpose of collective
bargaining or of dealing with employers concerning terms and conditions of
employment,14 and a "legitimate labor organization" as any labor
organization duly registered with the DOLE, including any branch or local
thereof.15 Only legitimate labor organizations may file a petition for
certification election.16
Article 234 of the Labor Code enumerates the requirements for registration
of an applicant labor organization, association, or group of unions or workers
in order that such entity could acquire legal personality and entitlement to the
rights and privileges granted by law to legitimate labor organizations. These
include a registration fee of fifty pesos (₱50.00); a list of the names of the
members and officers, and copies of the constitution and by-laws of the
applicant union.17
However, the Labor Code itself does not lay down the procedure for the
registration of a local or chapter of a labor organization. Such has been
traditionally provided instead in the Implementing Rules, particularly in
Book V thereof. However, in the last decade or so, significant amendments
have been introduced to Book V, first by Department Order No. 9 which took
effect on 21 June 1997, and again by Department Order No. 40 dated 17
February 2003. The differences in the procedures laid down in these various
versions are significant. However, since the instant petition for certification
was filed in 1998, the Implementing Rules, as amended by Department Order
No. 9, should govern the resolution of this petition.18
Preliminarily, we should note that a less stringent procedure obtains in the
registration of a local or chapter than that of a labor organization.
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 union's bargaining powers respecting terms and
conditions of labor.19 This policy has remained consistent despite the
succeeding amendments to Book V of the Omnibus Implementing Rules, as
contained in Department Orders Nos. 9 and 40.
The case of Progressive Development Corp. v. Secretary of Labor,20
applying Section 3, Rule II, Book V of the Implementing Rules, in force
before 1997, ruled that "a local or chapter therefore becomes a legitimate
labor organization only upon submission of the following to the BLR: (1) a
charter certificate, within thirty (30) days from its issuance by the labor
federation or national union; and (2) The constitution and by-laws, a
statement of the set of officers, and the books of accounts all of which are
certified under oath by the secretary or treasurer, as the case may be, of such
local or chapter, and attested to by its president."21 The submission by the
local/chapter of duly certified books of accounts as a prerequisite for
registration of the local/chapter was dropped in Department Order No. 9,22
a development noted by the Court in Pagpalain Haulers v. Hon. Trajano,23
wherein it was held that the previous doctrines requiring the submission of
books of accounts as a prerequisite for the registration of a local/chapter "are
already passé and therefore, no longer applicable."24
Department Order No. 40, now in effect, has eased the requirements by which
a local/chapter may acquire legal personality. Interestingly, Department
Order No. 40 no longer uses the term "local/chapter," utilizing instead
"chartered local," which is defined as a "labor organization in the private
sector operating at the enterprise level that acquired legal personality through
the issuance of a charter certificate by a duly registered federation or national
union, and reported to the Regional Office."25 Clearly under the present
rules, the first step to be undertaken in the creation of a chartered local is the
issuance of a charter certificate by the duly registered federation or national
union. Said federation or national union is then obligated to report to the
Regional Office the creation of such chartered local, attaching thereto the
charter certificate it had earlier issued.26
But as stated earlier, it is Department Order No. 9 that governs in this case.
Section 1, Rule VI thereof prescribes the documentary requirements for the
creation of a local/chapter. It states:
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;
(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 Treasurer of the local/chapter and attested by its President.
In contrast, an independent union seeking registration is further required
under Dept. Order No. 90 to submit the number and names of the members,
and annual financial reports.27
Section 3, Rule VI of Department Order No. 9 provides when the
local/chapter acquires legal personality.
Section 3. Acquisition of legal personality by local chapter. – A local/chapter
constituted in accordance with Section 1 of this Rule shall acquire legal
personality from the date of filing of the complete documents enumerated
therein. Upon compliance with all the documentary requirements, the
Regional Office or Bureau shall issue in favor of the local/chapter a
certificate indicating that it is included in the roster of legitimate labor
organizations.
It is evident based on this rule that the local/chapter acquires legal personality
from the date of the filing of the complete documentary requirements, and
not from the issuance of a certification to such effect by the Regional Office
or Bureau. On the other hand, a labor organization is deemed to have acquired
legal personality only on the date of issuance of its certificate of
registration,28 which takes place only after the Bureau of Labor Relations or
its Regional Offices has undertaken an evaluation process lasting up until
thirty (30) days, within which period it approves or denies the application.29
In contrast, no such period of evaluation is provided in Department Order
No. 9 for the application of a local/chapter, and more importantly, under it
such local/chapter is deemed to acquire legal personality "from the date of
filing" of the documents enumerated under Section 1, Rule VI, Book V.
Apart from promoting a policy of affiliation of local unions with national
unions,30 there is a practical reason for sanctioning a less onerous procedure
for the registration of a local/chapter, as compared to the national union. The
local/chapter relies in part on the legal personality of the federation or
national union, which in turn, had already undergone evaluation and approval
from the Bureau of Legal Relations or Regional Office. In fact, a federation
or national union is required, upon registration, to establish proof of
affiliation of at least ten (10) locals or chapters which are duly recognized as
the collective bargaining agent in the establishment or industry in which they
operate; and the names and addresses of the companies where the locals or
chapters operate and the list of all the members in each of the companies.31
Once the national union or federation acquires legal personality upon the
issuance of its certificate or registration,32 its legal personality cannot be
subject to collateral attack.33
The fact that the local/chapter acquires legal personality from the moment
the complete documentary requirements are submitted seems to imply that
the duty of the Bureau or Regional Office to register the local/chapter is
merely ministerial. However, in Progressive Development Corporation v.
Laguesma,34 the Court, in ruling against a petition for certification filed by
a chapter, held that the mere submission of the documentary requirements
does not render ministerial the function of the Bureau of Labor Relations in
according due recognition to the labor organization.35 Still, that case was
decided before the enactment of Department Order No. 9, including the
aforestated Section 3. Should we consider the said 1997 amendments as
having obviated our characterization in Progressive of the Bureau’s duty as
non-ministerial?
Notwithstanding the amendments, it still is good policy to maintain that per
Department Order No. 9, the duty of the Bureau of Labor Relations to
recognize the local/chapter upon the submission of the documentary
requirements is not ministerial, insofar as the Bureau is obliged to adjudge
the authenticity of the documents required to be submitted. For example, the
Bureau is not mandated to accept just any purported charter certificate matter
how spurious it is in appearance. It is empowered to ascertain whether the
submitted charter certificate is genuine, and if finding that said certificate is
fake, deny recognition to the local/chapter.
However, in ascertaining whether or not to recognize and register the
local/chapter, the Bureau or Regional Office should not look beyond the
authenticity and due execution of the documentary requirements for the
creation of the local/chapter as enumerated under Section 1, Rule VI, Book
V of Department Order No. 9. Since the proper submission of these
documentary requirements is all that is necessary to recognize a
local/chapter, it is beyond the province of the Bureau or Regional Offices to
resort to other grounds as basis for denying legal recognition of the
local/chapter. For example, Department Order No. 9 does not require the
local/chapter to submit the names of its members as a condition precedent to
its registration.36 It therefore would be improper to deny legal recognition to
a local/chapter owing to questions pertaining to its individual members since
the local/chapter is not even obliged to submit the names of its individual
members prior to registration.
Certainly, when a local/chapter applies for registration, matters raised against
the personality of the federation or national union itself should not be acted
upon by the Bureau or Regional Office, owing to the preclusion of collateral
attack. Instead, the proper matter for evaluation by the Bureau or Regional
Office should be limited to whether the local/chapter is indeed a duly created
affiliate of the national union or federation.
Parenthetically, under the present Implementing Rules as amended by
Department Order No. 40, it appears that the local/chapter (or now,
"chartered local") acquires legal personality upon the issuance of the charter
certificate by the duly registered federation or national union.37 This might
signify that the creation of the chartered local is within the sole discretion of
the federation or national union and thus beyond the review or interference
of the Bureau of Labor Relations or its Regional Offices. However,
Department Order No. 40 also requires that the federation or national union
report the creation of the chartered local to the Regional Office.
Acquisition by Respondent of Legal Personality
We now proceed to determine if and when the respondent acquired legal
personality under the procedure laid down by the rules then in effect,
Department Order No. 9, that is.
At the onset, the arguments raised by petitioner on this point are plainly
erroneous. Petitioner cites the case of Toyota Motor Philippines v. Toyota
Motor Philippines Corporation Labor Union,38 and the purported holding
therein that "[if] it is true that at the time of the filing of the petition, the said
registration certificate has not been approved yet, then, petitioner lacks the
legal personality to file the petition."39 However, an examination of the case
actually reveals that the cited portion was lifted from one of the antecedent
rulings of the Med-Arbiter in that case which had not even been affirmed or
reinstated by the Court on review.40 Moreover, such pronouncement made
prior to the enactment of Department Order No. 9 squarely contradicts
Section 3, Rule VI thereof, which provides that legal personality of the
local/chapter is vested upon the submission of the complete documentary
requirements.
It is also worth noting that petitioner union in Toyota was an independent
labor union, and not a local/chapter, and under Department Order No. 9,
independent labor unions, unlike local/chapters, acquire legal personality
only upon issuance of the certificate of registration by the Bureau or Regional
Office. Still, petitioner cites in its favor Section 5, Rule V of Dept. Order No.
9, which states that "the labor organization or workers’ association shall be
deemed registered and vested with legal personality on the date of issuance
of its certificate of registration." Again, the citation is obviously misplaced,
as respondent herein is a local/chapter, the acquisition of its legal personality
being governed instead by Section 3, Rule VI.
It is thus very clear that the issuance of the certificate of registration by the
Bureau or Regional Office is not the operative act that vests legal personality
upon a local/chapter under Department Order No. 9. Such legal personality
is acquired from the filing of the complete documentary requirements
enumerated in Section 1, Rule VI. Admittedly, the manner by which
respondent was deemed to have acquired legal personality by the DOLE and
the Court of Appeals was not in strict conformity with the provisions of
Department Order No. 9. Nonetheless, are the deviations significant enough
for the Court to achieve a different conclusion from that made by the DOLE
and the Court of Appeals?
In regular order, it is the federation or national union, already in possession
of legal personality, which initiates the creation of the local/chapter. It issues
a charter certificate indicating the creation or establishment of the
local/chapter. It then submits this charter certificate, along with the names of
the local/chapter’s officers, constitution and by-laws to the Regional Office
or Bureau. It is the submission of these documents, certified under oath by
the Secretary or Treasurer of the local/chapter and attested by the President,
which vests legal personality in the local/chapter, which is then free to file
on its own a petition for certification election.
In this case, the federation in question, the FFW, did not submit any of these
documentary requirements to the Regional Office or Bureau. It did however
issue a charter certificate to the putative local/chapter (herein respondent).
Respondent then submitted the charter certificate along with the other
documentary requirements to the Regional Office, but not for the specific
purpose of creating the local/chapter, but for filing the petition for
certification election.
It could be properly said that at the exact moment respondent was filing the
petition for certification, it did not yet possess any legal personality, since the
requisites for acquisition of legal personality under Section 3, Rule VI of
Department Order No. 9 had not yet been complied with. It could also be
discerned that the intention of the Labor Code and its Implementing Rules
that only those labor organizations that have acquired legal personality are
capacitated to file petitions for certification elections. Such is the general
rule.
Yet there are peculiar circumstances in this case that allow the Court to rule
that respondent acquired the requisite legal personality at the same time it
filed the petition for certification election. In doing so, the Court
acknowledges that the strict letter of the procedural rule was not complied
with. However, labor laws are generally construed liberally in favor of labor,
especially if doing so affirms the constitutionally guaranteed right to self-
organization.
True enough, there was no attempt made by the national federation, or the
local/chapter for that matter, to submit the enumerated documentary
requirements to the Regional Office or Bureau for the specific purpose of
creating the local/chapter. However, these same documents were submitted
by the local/chapter to the Regional Office as attachments to its petition for
certification election. Under Section 3, Rule VI of Department Order No. 9,
it is the submission of these same documents to the Regional Office or
Bureau that operates to vest legal personality on the local/chapter.
Thus, in order to ascertain when respondent acquired legal personality, we
only need to determine on what date the Regional Office or Bureau received
the complete documentary requirements enumerated under Section 1, Rule
VI of Department Order No. 9. There is no doubt that on 15 June 1998, or
the date respondent filed its petition for certification election, attached
thereto were respondent’s constitution, the names and addresses of its
officers, and the charter certificate issued by the national union FFW. The
first two of these documents were duly certified under oath by respondent’s
secretary Bathan and attested to by president Sagun.41
It may be noted though that respondent never submitted a separate by-laws,
nor does it appear that respondent ever intended to prepare a set thereof.
Section 1(c), Rule VI, Book V of Department Order No. 9 provides that the
submission of both a constitution and a set of by-laws is required, or at least
an indication that the local/chapter is adopting the constitution and by-laws
of the federation or national union. A literal reading of the provision might
indicate that the failure to submit a specific set of by-laws is fatal to the
recognition of the local/chapter. A more critical analysis of this requirement
though is in order, especially as it should apply to this petition.
By-laws has traditionally been defined as regulations, ordinances, rules or
laws adopted by an association or corporation or the like for its internal
governance, including rules for routine matters such as calling meetings and
the like.42 The importance of by-laws to a labor organization cannot be
gainsaid. Without such provisions governing the internal governance of the
organization, such as rules on meetings and quorum requirements, there
would be no apparent basis on how the union could operate. Without a set of
by-laws which provides how the local/chapter arrives at its decisions or
otherwise wields its attributes of legal personality, then every action of the
local/chapter may be put into legal controversy.
However, if those key by-law provisions on matters such as quorum
requirements, meetings, or on the internal governance of the local/chapter are
themselves already provided for in the constitution, then it would be feasible
to overlook the requirement for by-laws. Indeed in such an event, to insist on
the submission of a separate document denominated as "By-Laws" would be
an undue technicality, as well as a redundancy.
An examination of respondent’s constitution reveals it sufficiently
comprehensive in establishing the necessary rules for its operation. Article
IV establishes the requisites for membership in the local/chapter. Articles V
and VI name the various officers and what their respective functions are. The
procedure for election of these officers, including the necessary vote
requirements, is provided for in Article IX, while Article XV delineates the
procedure for the impeachment of these officers. Article VII establishes the
standing committees of the local/chapter and how their members are
appointed. Article VIII lays down the rules for meetings of the union,
including the notice and quorum requirements thereof. Article X enumerates
with particularity the rules for union dues, special assessments, fines, and
other payments. Article XII provides the general rule for quorum in meetings
of the Board of Directors and of the members of the local/chapter, and cites
the applicability of the Robert’s Rules of Order43 in its meetings. And
finally, Article XVI governs and institutes the requisites for the amendment
of the constitution.
Indeed, it is difficult to see in this case what a set of by-laws separate from
the constitution for respondent could provide that is not already provided for
by the Constitution. These premises considered, there is clearly no need for
a separate set of by-laws to be submitted by respondent.
The Court likewise sees no impediment in deeming respondent as having
acquired legal personality as of 15 June 1998, the fact that it was the
local/chapter itself, and not the FFW, which submitted the documents
required under Section 1, Rule VI of Department Order No. 9. The evident
rationale why the rule states that it is the federation or national union that
submits said documents to the Bureau or Regional Office is that the creation
of the local/chapter is the sole prerogative of the federation or national union,
and not of any other entity. Certainly, a putative local/chapter cannot, without
the imprimatur of the federation or national union, claim affiliation with the
larger unit or source its legal personality therefrom.
In the ordinary course, it should have been FFW, and not respondent, which
should have submitted the subject documents to the Regional Office.
Nonetheless, there is no good reason to deny legal personality or defer its
conferral to the local/chapter if it is evident at the onset that the federation or
national union itself has already through its own means established the
local/chapter. In this case, such is evidenced by the Charter Certificate dated
9 June 1998, issued by FFW, and attached to the petition for certification
election. The Charter Certificate expressly states that respondent has been
issued the said certificate "to operate as a local or chapter of the [FFW]". The
Charter Certificate expressly acknowledges FFW’s intent to establish
respondent as of 9 June 1998.44 This being the case, we consider it
permissible for respondent to have submitted the required documents itself
to the Regional Office, and proper that respondent’s legal personality be
deemed existent as of 15 June 1998, the date the complete documents were
submitted.
Second Issue: On the Alleged Presence
Of Supervisory Employees as
Officers of the Respondent
The second issue hinges on a point of some controversy and frequent
discussion in recent years. Petitioner claims error in the common
pronouncement in the assailed decisions that the matter concerning the two
officers who are allegedly supervisory employees may be threshed out during
pre-election conferences. Petitioner cites the cases of Toyota Motors and
Progressive Development Corporation-Pizza Hut v. Ledesma45 wherein the
Court ruled that the question of prohibited membership of both supervisory
and rank-and-file employees in the same union must be inquired into anterior
to the granting of an order allowing a certification election; and that a union
composed of both of these kinds of employees does not possess the requisite
personality to file for recognition as a legitimate labor organization. It should
be noted though that in the more recent case of Tagaytay Highlands
International Golf Club v. Tagaytay Highlands Employees Union,46 the
Court, notwithstanding Toyota and Progressive, ruled that after a certificate
of registration is issued to a union, its legal personality cannot be subject to
collateral attack, but questioned only in an independent petition for
cancellation.47
There is no need to apply any of the above cases at present because the
question raised by petitioner on this point is already settled law, as a result of
the denial of the independent petition for cancellation filed by petitioner
against respondent on 20 August 1998. The ground relied upon therein was
the alleged fraud, misrepresentation and false statement in describing itself
as a union of rank and file employees when in fact, two of its officers,
Emmanuel Rosell and Noel Bathan, were occupying supervisory
positions.48 Said petition was denied by the Regional Director, this action
was affirmed by the DOLE, the Court of Appeals, and the Supreme Court.49
The denial made by the Court of Appeals and the Supreme Court may have
been based on procedural grounds,50 but the prior decisions of the Regional
Director and the DOLE ruled squarely on the same issue now raised by the
petitioner. We quote from the Resolution of the DOLE dated 29 December
1998:
. . . . [The] substantive issue that is now before us is whether or not the
inclusion of the two alleged supervisory employees in appellee union’s
membership amounts to fraud, misrepresentation, or false statement within
the meaning of Article 239(a) and (c) of the Labor Code.
We rule in the negative.
Under the law, a managerial employee is "one who is vested with powers or
prerogatives to lay down and execute management policies and/or to hire,
transfer, suspend, layoff, recall, discharge, assign or discipline employees."
A supervisory employee is "one who, in the interest of the employer,
effectively recommends managerial actions if the exercise of such
recommendatory authority is not merely routinary or clerical in nature but
requires the use of independent judgment.’" Finally, "all employees not
falling within the definition of managerial or supervisory employee are
considered rank-and-file employees". It is also well-settled that the actual
functions of an employee, not merely his job title, are determinative in
classifying such employee as managerial, supervisory or rank and file.
In the case of Emmanuel Rossell, appellant’s evidence shows that he
undertakes the filling out of evaluation reports on the performance of
mechanics, which in turn are used as basis for reclassification. Given a ready
and standard form to accomplish, coupled with the nature of the evaluation,
it would appear that his functions are more routinary than recommendatory
and hardly leave room for independent judgment. In the case of Noel Bathan,
appellant’s evidence does not show his job title although it shows that his
recommendations on disciplinary actions appear to have carried some weight
on higher management. On this limited point, he may qualify as a supervisory
employee within the meaning of the law. This may, however, be outweighed
by his other functions which are not specified in the evidence.
Assuming that Bathan is a supervisory employee, this does not prove the
existence of fraud, false statement or misrepresentation. Because good faith
is presumed in all representations, an essential element of fraud, false
statement and misrepresentation in order for these to be actionable is intent
to mislead by the party making the representation. In this case, there is no
proof to show that Bathan, or appellee union for that matter, intended to
mislead anyone. If this was appellee union’s intention, it would have
refrained from using a more precise description of the organization instead
of declaring that the organization is composed of ‘rank and file monthlies’.
Hence, the charge of fraud, false statement or misrepresentation cannot be
sustained.
Appellant’s reliance on the Toyota case must be tempered by the peculiar
circumstances of the case. Even assuming that Bathan, or Rossel for that
matter, are supervisory employees, the Toyota case cannot certainly be given
an interpretation that emasculates the right to self-organization and the
promotion of free trade unionism. We take administrative notice of the
realities in union organizing, during which the organizers must take their
chances, oftentimes unaware of the fine distinctions between managerial,
supervisory and rank and file employees. The grounds for cancellation of
union registration are not meant to be applied automatically, but indeed with
utmost discretion. Where a remedy short of cancellation is available, that
remedy should be preferred. In this case, no party will be prejudiced if Bathan
were to be excluded from membership in the union. The vacancy he will thus
create can then be easily filled up through the succession provision of
appellee union’s constitution and by-laws. What is important is that there is
an unmistakeable intent of the members of appellee union to exercise their
right to organize. We cannot impose rigorous restraints on such right if we
are to give meaning to the protection to labor and social justice clauses of the
Constitution.51
The above-cited pronouncement by Bureau of Labor Relations Director
Benedicto Ernesto R. Bitonio, Jr. in BLR-A-C-41-11-11-98 was affirmed by
the Court of Appeals and the Supreme Court. Hence, its pronouncement
affirming, notwithstanding the questions on the employment status of Rossell
and Bathan, the legitimacy of the respondent, stands as a final ruling beyond
the ambit of review, thus warranting the Court’s respect. There may be a
difference between this case, which involves a petition for certification
election, and the other case, which concerns a petition for cancellation.
However, petitioner opposes the petition for certification election on the
ground of the illegitimacy of respondent, owing to the alleged supervisory
nature of the duties of Rossell and Bathan. That matter has already been
settled in the final disposition of the petition for cancellation, and thus cannot
be unsettled by reason of this present petition.

Effect of Respondent’s Manifestation

Of Subsequent Developments

A final note. In its Memorandum, petitioner alleges that the bargaining unit
that respondent sought to represent is no longer the same because of the
dynamic nature of petitioner’s business, a lot of changes having occurred in
the work environment, and that four of respondent’s officers are no longer
connected with petitioner.52 Assuming that these manifestations are true,
they have no effect on the Court’s ruling that a certification election should
be immediately conducted with respondent as one of the available choices.
Petitioner’s bare manifestations adduce no reason why the certification
election should not be conducted forthwith. If there are matters that have
arisen since the filing of the petition that serve to delay or cancel the election,
these can be threshed out during the pre-election conferences. Neither is the
fact that some of respondent’s officers have since resigned from petitioner of
any moment. The local/chapter retains a separate legal personality from that
of its officers or members that remains viable notwithstanding any turnover
in its officers or members.

WHEREFORE, the Petition is DENIED. Costs against petitioner.

SO ORDERED.
SAN MIGUEL FOODS, INC. vs. LAGUESMA
G.R. No. 116172 October 10, 1996
HERMOSISIMA, JR., J.:p
This is a petition for certiorari under Rule 65 to review and set aside two
Resolutions of Mediator-Arbiter Achilles V. Manit, dated January 5, 1994
and April 6, 1994, and the affirmation Order on appeal of the public
respondent, Undersecretary Bienvenido E. Laguesma of the Department of
Labor and Employment. The petition below was entitled: "In Re: Petition for
Direct Certification as the Sole and Exclusive Bargaining Agent of All
Monthly Paid Employees of SMFI-Cebu B-Meg Feeds Plant," docketed as
OS-MA-A-3-51-94 (R0700-9309-RU-036).
The essential facts are not disputed.
On September 24, 1993, a petition for certification election among the
monthly-paid employees of the San Miguel Food, Inc.-Cebu B-Meg Feeds
Plant was filed by private respondent labor federation Ilaw at Buklod ng
Mangagawa (IBM, for brevity) before Med-Arbiter Achilles V. Manit,
alleging, inter alia, that it is a legitimate labor organization duly registered
with the Department of Labor and Employment (DOLE) under Registration
Certificate No. 5369-IP. SMFI-Cebu B-Meg Feeds Plant (SMFI, for brevity),
herein petitioner, is a business entity duly organized and existing under the
laws of the Philippines which employs roughly seventy-five (75) monthly
paid employees, almost all of whom support the present petition. It was
submitted in said petition that there has been no certification election
conducted in SMFI to determine the sole and exclusive bargaining agent
thereat for the past two years and that the proposed bargaining unit, which is
SMFI's monthly paid employees, is an unorganized one. It was also stated
therein that petitioner IBM (herein private respondent) has already complied
with the mandatory requirements for the creation of its local or affiliate in
SMFI's establishment.
On October 25, 1993, herein petitioner SMFI filed a Motion to Dismiss the
aforementioned petition dated September 24, 1993 on the ground that a
similar petition remains pending between the same parties for the same cause
of action before Med-Arbiter Achilles V. Manit.
SMFI was referring to an evidently earlier petition, docketed as CE CASE
NO R0700-9304-RU-016, filed on April 28, 1993 before the office of Med-
Arbiter Manit. Indeed, both petitions involved the same parties, cause of
action and relief being prayed for, which is the issuance of an order by the
Med-Arbiter allowing the conduct for a certification election in SMFI's
establishment. The contention is that the judgment that may be rendered in
the first petition would be determinative of the outcome of the second
petition, date September 24, 1993.
On December 2, 1993, private respondent IBM filed its Opposition to SMFI's
Motion to Dismiss contending, among others, that the case referred to by
SMFI had already been resolved by Med-Arbiter Manit in his Resolution and
Order dated July 26, 19931 and September 2, 1993,2 respectively, wherein
IBM's first petition for certification election was denied mainly due to IBM's
failure to comply with certain mandatory requirements of the law. This denial
was affirmed by the Med-Arbiter in another Order dated November 12,
19933 wherein the Resolutions dated July 26, 1993 and September 2, 1993
were made to stand. Thus, IBM argues that there having been no similar
petition pending before Med-Arbiter Manit, another petition for certification
election may be refiled as soon as the said requirements are met. These
requirements were finally satisfied before the second petition for certification
election was brought on September 24, 1993.
On January 5, 1994, Med-Arbiter Manit, this time, granted the second
petition for certification election of private respondent IBM in this wise:
Let, therefore, a certification election be conducted among the monthly paid
rank and file employees of SMFI-CEBU B-MEG FEEDS PLANT at Lo-oc,
Mandaue City. The choices shall be: YES-for IBM AT SMFI-CEBU B-
MEG; and NO — for No Union.
The parties are hereby notified of the pre-election conference which will take
place on January 17, 1994 at 3:00 o'clock in the afternoon to set the date and
time of the election and to thresh out the mechanics thereof. On said date and
time the respondent is directed to submit the payroll of its monthly paid rank
and file employees for the month of June 1993 which shall be the basis for
the list of the eligible voters. The petitioner is directed to be ready to submit
a list of the monthly paid rank and file employees of SMFI-CEBU B-MEG
FEEDS PLANT when the respondent fails to submit the required payroll.
SO ORDERED.4
Petitioner SMFI appealed the foregoing Order to the Secretary of Labor and
Employment alleging that the Med-Arbiter erred in directing the conduct of
certification election considering that the local or chapter of IBM at SMFI is
still not a legitimate labor organization with a right to be certified as the
exclusive bargaining agent in petitioner's establishment based on two
grounds: (1) the authenticity and due execution of the Charter Certificate
submitted by IBM in favor of its local at SMFI cannot yet be ascertained as
it is still not known who is the legitimate and authorized representative of the
IBM Federation who may validly issue said Charter Certificate; and (2) a
group of workers or a local union shall acquire legal personality only upon
the issuance of a Certificate of Registration by the Bureau of Labor Relations
under Article 234 of the Labor Code, which IBM at SMFI did not possess.
In a resolution dated April 6, 1994, public respondent Undersecretary
Bienvenido Laguesma, by authority of the Secretary of Labor and
Employment, denied petitioner's appeal, viz.:
WHEREFORE, the appeal is hereby denied for lack of merit and the Order
of the Med-Arbiter is hereby affirmed.
Let the records of this case be forwarded to the Regional Office of origin for
the immediate conduct of certification election subject to the usual pre-
election conference.
SO RESOLVED.5
Thereafter, a Motion for Reconsideration was filed which was also denied by
the public respondent in his Order dated May 24, 1994.6
Hence, the instant petition interposing the following justifications:
1) THE HONORABLE UNDERSECRETARY BIENVENIDO E.
LAGUESMA GRAVELY ABUSED HIS DISCRETION WHEN HE
ARBITRARILY RULED THAT "A LOCAL OR CHAPTER OF A LABOR
FEDERATION, LIKE RESPONDENT IBM, NEED NOT OBTAIN A
CERTIFICATE OF REGISTRATION FROM THE BUREAU OF LABOR
RELATIONS TO ACQUIRE LEGAL PERSONALITY," WHEN ARTICLE
234 OF THE LABOR CODE OF THE PHILIPPINES AND SECTION 3 OF
RULE II OF BOOK V OF THE RULES IMPLEMENTING THE LABOR
CODE, AS AMENDED, CLEARLY PROVIDES THAT A GROUP OF
WORKERS OR A LOCAL UNION SHALL ACQUIRE LEGAL
PERSONALITY ONLY UPON THE ISSUANCE OF THE CERTIFICATE
OF REGISTRATION BY THE BUREAU OF LABOR RELATIONS. AND,
2) THE HONORABLE UNDERSECRETARY BIENVENIDO E.
LAGUESMA GRAVELY ABUSED HIS DISCRETION WHEN HE
PREMATURELY AND ARBITRARILY RULED THAT RESPONDENT
IBM IS A LEGITIMATE LABOR ORGANIZATION WHEN THE
AUTHENTICITY AND DUE EXECUTION OF THE CHARTER
CERTIFICATE SUBMITTED BY RESPONDENT IBM CANNOT YET
BE ASCERTAINED BECAUSE IT IS STILL NOT KNOWN WHO ARE
THE LEGITIMATE OFFICERS OF THE IBM FEDERATION WHO MAY
VALIDLY ISSUE SAID CHARTER CERTIFICATE AS THE CASE
FILED TO RESOLVE THE ISSUE ON WHO ARE THE LEGITIMATE
OFFICERS OF THE IBM FEDERATION IS STILL PENDING
RESOLUTION BEFORE THIS HONORABLE SUPREME COURT.7
The petition has no merit.
Petitioner asserts that IBM at SMFI is not a legitimate labor organization
notwithstanding the fact that it is a local or chapter of the IBM Federation.
This is so because under Article 234 of the Labor Code, any labor
organization shall acquire legal personality only upon the issuance of the
Certificate of Registration by the Bureau of Labor Relations.
We do not agree.
I
Article 212(h) of the Labor Code defines a legitimate labor organization as
"any labor organization duly registered with the Department of Labor and
Employment, and includes any branch or local thereof ."
It is important to determine whether or not a particular labor organization is
legitimate since legitimate labor organizations have exclusive rights under
the law which cannot be exercised by non-legitimate unions, one of which is
the right to be certified as the exclusive representative of all the employees
in an appropriate collective bargaining unit for purposes of collective
bargaining. These rights are found under Article 242 of the Labor Code, to
wit:
Art. 242. Rights of legitimate labor organizations. — A legitimate labor
organization shall have the right:
(a) To act as the representative of its members for the purpose of collective
bargaining;
(b) To be certified as the exclusive representative of all the employees in an
appropriate collective bargaining unit for purpose of collective bargaining;
(c) To be furnished by the employer, upon written request, with his annual
audited financial statement, including the balance sheet and the profit and
loss statement, within thirty (30) calendar days from the date of receipt of the
request, after the union has been duly recognized by the employer or certified
as the sole and exclusive bargaining representative of the employees in the
bargaining unit, or within sixty (60) calendar days before the expiration of
the existing collective bargaining agreement, or during the collective
bargaining negotiation;
(d) To own property, real or personal, for the use and benefit of the labor
organization and its members;
(e) To sue and be sued in its registered name; and
(f) To undertake all other activities designed to benefit the organization and
its members, including cooperative, housing welfare and other projects not
contrary to law.
xxx xxx xxx
The pertinent question, therefore, must be asked: When does a labor
organization acquire legitimacy?
Ordinarily, a labor organizations attains the status of legitimacy only upon
the issuance in its name of a Certificate of Registration by the Bureau of
Labor Relations pursuant to Articles 234 and 235 of the Labor Code, viz.:
Art. 234. Requirements of registration. — Any applicant labor organization,
association or group of unions or workers shall acquire legal personality and
shall be entitled to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration based on the
following requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meetings and the list of
the workers who participated in such meetings;
(c) The names of all its members comprising at least twenty percent (20%)
of all the employees in the bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years, copies
of its annual financial reports; and
(e) Four (4) copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who
participated in it.
Art. 235. Action on application. — The Bureau shall act on all applications
for registration within thirty (30) days from filing.
All requisite documents and papers shall be certified under oath by the
secretary or the treasurer of the organization, as the case may be, and attested
to by its president.
The foregoing procedure is not the only way by which a labor union may
become legitimate, however. When an unregistered union becomes a branch,
local or chapter of a federation, some of the aforementioned requirements for
registration are no longer required.8 Section 3, Rule II, Book V of the
Implementing Rules of the Labor Code governs the procedure for union
affiliation, the relevant portions of which provide:
Sec. 3. Union Affiliation: Direct Membership with National Union. — An
affiliate of a labor federation or national union may be a local or chapter
thereof or an independently registered union.
(a) The labor federation or national union concerned shall issue a charter
certificate indicating the creation or establishment of a local or chapter, copy
of which shall be submitted to the Bureau of Labor Relations within thirty
(30) days from issuance of such charter certificate.
(b) An independently registered union shall be considered an affiliate of a
labor federation or national union after submission to the Bureau of the
contract or agreement of affiliation within thirty (30) days after its execution.
xxx xxx xxx
(e) The local or chapter of a labor federation or national union shall have and
maintain a constitution and by-laws, set of officers and books of accounts.
For reporting purposes, the procedure governing the reporting of
independently registered unions, federations or national unions shall be
observed.
Paragraph (a) refers to a local or chapter of a federation which did not
undergo the rudiments of registration while paragraph (b) refers to an
independently registered union which affiliated with a federation. Implicit in
the foregoing differentiation is the fact that a local or chapter need not be
independently registered. By force of law (in this case, Article 212 [h]), such
local or chapter becomes a legitimate labor organization upon compliance
with the aforementioned provisions of Section 39 (a) and (e), without having
to be issued a Certificate of Registration in its favor by the BLR.
The cases of Lopez Sugar Corporation v. Secretary of Labor and
Employment,10 Phoenix Iron and Steel Corporation v. Secretary of Labor
and Employment 11 and Protection Technology, Inc. v. Secretary,
Department of Labor and Employment,12 all going back to our landmark
holding in Progressive Development Corporation v. Secretary, Department
of Labor and
Employment,13 unequivocably laid down the rule, thus:
A local or chapter therefore becomes a legitimate labor organization only
upon submission of the following to the BLR:
1) A charter certificate, within 30 days from its issuance by the labor
federation or national union, and
2) The constitution and by-laws, a statement on the set of officers, and the
books of accounts all of which are certified under oath by the secretary or
treasurer, as the case may be, of such local or chapter, and attested to by its
president.
Absent compliance with these mandatory requirements, the local or chapter
does not become a legitimate labor organization.
Corollarily, the satisfaction of all these requirements by the local or chapter
shall vest upon it the status of legitimacy with all its concomitant statutory
privileges, one of which is the right to be certified as the exclusive
representative of all the employees in an appropriate bargaining unit.
In the case at bench, public respondent Bienvenido E. Laguesma, in affirming
the finding of the Med-Arbiter that IBM at SMFI is a legitimate labor
organization,14 made the following material pronouncement amply
supported by the records;
[t]he resolution of the issue raised by the respondent on whether or not
petitioner is a legitimate labor organization will depend on the documents
submitted by the petitioner in the second petition.
A close scrutiny of the records shows that at the time of the filing of the
subject petition on 24 September 1993 by the petitioner Ilaw at Buklod ng
Manggagawa, for and in behalf of its local affiliate IBM at SMFI-CEBU B-
MEG, the latter has been clothed with the status and/or character of a
legitimate labor organization. This is so, because on 19 July 1993, petitioner
submitted to the Bureau of Labor Relations (BLR), this Department, the
following documents: charter certificate, constitution and by-laws, names
and addresses of the union officers and certification of the union's secretary
on the non-availability of the union's Books of Accounts. Said documents
(expect the charter certificate) are certified under oath and attested to by the
local union's secretary and President, respectively.15
Petitioner SMFI does not dispute the fact that IBM at SMFI has complied
with the second set or requirements, i.e., constitution, by-laws, et. al. What
is controverted is the non-compliance with the requirement as to the charter
certificate which must be submitted to the BLR within thirty (30) days from
its issuance by the labor federation. While the presence of a charter certificate
is conceded, petitioner maintains that the validity and authenticity of the
same cannot yet be ascertained as its is still not known who is the legitimate
and authorized representative of the IBM Federation who may validly issue
said charter certificate in favor of its local, IBM at SMFI. According to
petitioner, there are two (2) contending sets of officers of the IBM Federation
at the time the charter certificate was issued in favor of IBM at SMFI, the
faction of Mr. Severino O. Meron and that of Mr. Edilberto B. Galvez.
On this point, public respondent, in upholding the legitimate status of IBM
at SMFI, backed up by the Solicitor General, had this to say:
The contention of the respondent that unless and until the issue on who is the
legitimate national president, of the Ilaw at Buklod ng Mangagawa is
resolved, the petitioner cannot claim that is has a valid charter certificate
necessary for it to acquire legal personality is untenable. We wish to stress
that the resolution of the said issue will not in any way affect the validity of
the charter certificate issued by the IBM in favor of the local union. It must
be borne in mind that the said charter certificate was issued by the IBM in its
capacity as a labor organization, a juridical entity which has a separate and
distinct legal personality from its members. When as in this case, there is no
showing that the Federation acting as a separate entity is questioning the
legality of the issuance of the said charter certificate, the legality of the
issuance of the same in favor of the local union is presumed. This,
notwithstanding the alleged controversy on the leadership of the
federation.16
We agree with this position of the public respondent and the Solicitor
General. In addition, private respondent's Comment to this petition indicates
that in the election of officers held to determine the representatives of IBM,
the faction of Mr. Meron lost to the group of Mr. Edilberto Galvez, and the
latter was acknowledged as the duly elected IBM National President.17 Thus,
the authority of Mr. Galvez to sign the charter certificate of IBM at SMFI, as
President of the IBM Federation,18 can no longer be successfully questioned.
A punctilious examination of the records presents no evidence to the contrary
and petitioner, instead of squarely refuting this point, skirted the issue by
insisting that the mere presence of two contending factions in the IBM
prevents the issuance of a valid and authentic charter certificate in favor of
IBM at SMFI. This averment of petitioner simply does not deserve any merit.
II
In any case, this Court notes that it is petitioner, the employer, which has
offered the most tenacious resistance to the holding of a certification election
among its monthly-paid rank-and-file employees. This must not be so, for
the choice of a collective bargaining agent is the sole concern of the
employees.19 The only exception to this rule is where the employer has to
file the petition for certification election pursuant to Article 25820 of the
Labor Code because it was requested to bargain collectively,21 which
exception finds no application in the case before us. Its role in a certification
election has aptly been described in Trade Unions of the Philippines and
Allied Services (TUPAS) v. Trajano,22 as that of a mere by-stander. It has
no legal standing in a certification election as it cannot oppose the petition or
appeal the Med-Arbiter's orders related thereto. An employer that involves
itself in a certification election lends suspicion to the fact it wants to create a
company union.23 This Court should be the last agency to lend support to
such an attempt at interference with a purely internal affair of labor.24
While employers may rightfully be notified or informed of petitions of such
nature, they should not, however, be considered parties thereto with the
concomitant right to oppose it. Sound policy dictates that they should
maintain a strictly hands-off policy.25
It bears stressing that no obstacle must be placed to the holding of
certification elections,26 for it is a statutory policy that should not be
circumvented.27 The certification election is the most democratic and
expeditious method by which the laborers can freely determine the union that
shall act as their representative in their dealings with the establishment where
they are working.28 It is the appropriate means whereby controversies and
disputes on representation may be laid to rest, by the unequivocal vote of the
employees themselves. 29 Indeed, it is the keystone of industrial
democracy.30
Petitioner next asseverates that the Charter Certificate submitted by the
private respondent was defective in that it was not certified under oath and
attested to by the organization's secretary and President.
Petitioner is grasping at straws. Under our ruling in the Progressive
Development Corporation31 case, what is required to be certified under oath
by the secretary or treasurer and attested to by the local's president are the
"constitution and by-laws, a statement on the set of officers, and the books of
accounts" of the organization. The charter certificate issued by the mother
union need not be certified under oath by the secretary or treasurer and
attested to by the local's president.
IV
Petitioner, in its Reply to public respondent's Comment, nevertheless calls
the attention of this court to the fact that, contrary to the assertion of private
respondent IBM that it is a legitimate labor federation and therefore has the
capacity and authority to create a local or chapter at SMFI, the Chief of the
Labor Organizations Division of the Bureau of Labor Relations — Manila
had allegedly issued a certification last January 17, 1995 to the effect that
private respondent is not a legitimate labor federation.32
This is a factual issue which petitioner should have raised before the Med-
Arbiter so as to allow the private respondent ample opportunity to present
evidence to the contrary. This Court is definitely not the proper venue to
consider this matter for it is not a trier of facts. It is noteworthy that petitioner
did not challenge the legal personality of the federation in the proceedings
before the Med-Arbiter. Nor was this issue raised in petitioner's appeal to the
Office of the Secretary of Labor and Employment. This matter is being raised
for the first time in this petition. An issue which was neither alleged in the
pleadings nor raised during the proceedings below cannot be ventilated for
the first time before this Court. It would be offensive to the basic rule of fair
play, justice and due process.33 Certiorari is a remedy narrow in its scope
and inflexible in character. It is not a general utility tool in the legal
workshop.34 Factual issues are not a proper subject for certiorari, as the
power of the Supreme Court to review labor cases is limited to the issue of
jurisdiction and grave abuse of discretion.35 It is simply unthinkable for the
public respondent Undersecretary of Labor to have committed grave abuse
of discretion in this regard when the issue as to the legal personality of the
private respondent IBM Federation was never interposed in the appeal before
said forum.
V
Finally, the certification election sought to be stopped by petitioner is, as of
now, fait accompli. The monthly paid rank-and-file employees of SMFI have
already articulated their choice as to who their collective bargaining agent
should be. In the certification election held on August 20, 1994,36 the SMFI
workers chose IBM at SMFI to be their sole and exclusive bargaining agent.
This democratic decision deserve utmost respect. Again, it bears stressing
that labor legislation seeks in the main to protect the interest of the members
of the working class. It should never be used to subvert their will.3 7
WHEREFORE, the petition is DENIED. Costs again petitioner.
SO ORDERED.
ACEDERA vs. INTERNATIONAL CONTAINER TERMINAL
SERVICES, INC. (ICTSI)
G.R. No. 146073 January 13, 2003
CARPIO-MORALES, J.:
For consideration is the petition for review on certiorari assailing the decision
of the Court of Appeals affirming that of the National Labor Relations
Commission (NLRC) which affirmed the decision of the Labor Arbiter
denying herein petitioners-appellants’ Complaint-in-Intervention with
Motion for Intervention.
The antecedent facts are as follows:
Petitioners-appellants Jerry Acedera, et al. are employees of herein private
respondent International Container Terminal Services, Inc. (ICTSI) and are
officers/members of Associated Port Checkers & Workers Union-
International Container Terminal Services, Inc. Local Chapter (APCWU-
ICTSI), a labor organization duly registered as a local affiliate of the
Associated Port Checkers & Workers Union (APCWU).
When ICTSI started its operations in 1988, it determined the rate of pay of
its employees by using 304 days, the number of days of work of the
employees in a year, as divisor.2
On September 28, 1990, ICTSI entered into its first Collective Bargaining
Agreement (CBA) with APCWU with a term of five years effective until
September 28, 1995.3 The CBA was renegotiated and thereafter renewed
through a second CBA that took effect on September 29, 1995, effective for
another five years.4 Both CBAs contained an identically-worded provision
on hours and days of work reading:
Article IX
Regular Hours of Work and Days of Labor
Section 1. The regular working days in a week shall be five (5) days on any
day from Monday to Sunday, as may be scheduled by the COMPANY, upon
seven (7) days prior notice unless any of this day is declared a special
holiday.5 (Italics omitted)
In accordance with the above-quoted provision of the CBA, the employees’
work week was reduced to five days or a total of 250 days a year. ICTSI,
however, continued using the 304-day divisor in computing the wages of the
employees.6
On November 10, 1990, the Regional Tripartite Wage and Productivity
Board (RTWPB) in the National Capital Region decreed a P17.00 daily wage
increase for all workers and employees receiving P125.00 per day or lower
in the National Capital Region.7 The then president of APCWU, together
with some union members, thus requested the ICTSI’s Human Resource
Department/Personnel Manager to compute the actual monthly increase in
the employees’ wages by multiplying the RTWPB mandated increase by 365
days and dividing the product by 12 months.8
Heeding the proposal and following the implementation of the new wage
order, ICTSI stopped using 304 days as divisor and started using 365 days in
determining the daily wage of its employees and other consequential
compensation, even if the employees’ work week consisted of only five days
as agreed upon in the CBA.9
In early 1997, ICTSI went on a retrenchment program and laid off its on-call
employees.10 This prompted the APCWU-ICTSI to file a notice of strike
which included as cause of action not only the retrenchment of the employees
but also ICTSI’s use of 365 days as divisor in the computation of wages.11
The dispute respecting the retrenchment was resolved by a compromise
settlement12 while that respecting the computation of wages was referred to
the Labor Arbiter.13
On February 26, 1997, APCWU, on behalf of its members and other
employees similarly situated, filed with the Labor Arbiter a complaint against
ICTSI which was dismissed for APCWU’s failure to file its position paper.14
Upon the demand of herein petitioners-appellants, APCWU filed a motion to
revive the case which was granted. APCWU thereupon filed its position
paper on August 22, 1997.15
On December 8, 1997, petitioners-appellants filed with the Labor Arbiter a
Complaint-in-Intervention with Motion to Intervene.16 In the petition at bar,
they justified their move to intervene in this wise:
[S]hould the union succeed in prosecuting the case and in getting a favorable
reward it is actually they that would benefit from the decision. On the other
hand, should the union fail to prove its case, or to prosecute the case
diligently, the individual workers or members of the union would suffer great
and immeasurable loss. … [t]hey wanted to insure by their intervention that
the case would thereafter be prosecuted with all due diligence and would not
again be dismissed for lack of interest to prosecute on the part of the union.17
The Labor Arbiter rendered a decision, the dispositive portion of which
reads:
WHEREFORE, decision is hereby rendered declaring that the correct divisor
in computing the daily wage and other labor standard benefits of the
employees of respondent ICTSI who are members of complainant Union as
well as the other employees similarly situated is two hundred fifty (250) days
such that said respondent is hereby ordered to pay the employees concerned
the differentials representing the underpayment of said salaries and other
benefits reckoned three (3) years back from February 26, 1997, the date of
filing of this complaint or computed from February 27 1994 until paid, but
for purposes of appeal, the salary differentials are temporarily computed for
one year in the amount of Four Hundred Sixty Eight Thousand Forty Pesos
(P468,040.00).18
In the same decision, the Labor Arbiter denied petitioners-appellants’
Complaint-in-Intervention with Motion for Intervention upon a finding that
they are already well represented by APCWU.19
On appeal, the NLRC reversed the decision of the Labor Arbiter and
dismissed APCWU’s complaint for lack of merit.20 The denial of
petitioners-appellants’ intervention was, however, affirmed.21
Unsatisfied with the decision of the NLRC, APCWU filed a petition for
certiorari with the Court of Appeals while petitioners-appellants filed theirs
with this Court which referred the petition22 to the Court of Appeals.
The Court of Appeals dismissed APCWU’s petition on the following
grounds: failure to allege when its motion for reconsideration of the NLRC
decision was filed, failure to attach the necessary appendices to the petition,
and failure to file its motion for extension to file its petition within the
reglementary period.23
As for petitioners-appellants’ petition for certiorari, it was dismissed by the
Court of Appeals in this wise:
It is clear from the records that herein petitioners, claiming to be employees
of respondent ICTSI, are already well represented by its employees union,
APCWU, in the petition before this Court (CA-G.R. SP. No. 53266) although
the same has been dismissed. The present petition is, therefore a superfluity
that deserves to be dismissed. Furthermore, only Acedera signed the
Certificate of non-forum shopping. On this score alone, this petition should
likewise be dismissed. We find that the same has no merit considering that
herein petitioners have not presented any meritorious argument that would
justify the reversal of the Decision of the NLRC.
Article IX of the CBA provides:
Regular Hours of Work and Days of Labor
"Section 1. The regular working days in a week shall be five (5) days on any
day from Monday to Sunday, as may be scheduled by the COMPANY, upon
seven (7) days prior notice unless any of this day is declared a special
holiday."
This provision categorically states the required number of working days an
employee is expected to work for a week. It does not, however, indicate the
manner in which an employee’s salary is to be computed. In fact, nothing in
the CBA makes any referral to any divisor which should be the basis for
determining the salary. The NLRC, therefore, correctly ruled that" xxx the
absence of any express or specific provision in the CBA that 250 days should
be used as divisor altogether makes the position of the Union untenable."
xxx
Considering that herein petitioners themselves requested that 365 days be
used as the divisor in computing their wage increase and later did not raise
or object to the same during the negotiations of the new CBA, they are clearly
estopped to now complain of such computation only because they no longer
benefit from it. Indeed, the 365 divisor for the past seven (7) years has already
become practice and law between the company and its employees.24
(Emphasis supplied)
xxx
Hence, the present petition of petitioners-appellants who fault the Court of
Appeals as follows:
I convincing evidence of fraud or collusion or lack of good faith independently
. . . in rejecting the CBA of the parties as the source of the divisor to determine
the workers’ daily rate totally disregarded the applicable landmark decisions
of the Honorable Supreme Court on the matter.
II
. . . [IN] disregard[ING] applicable decisions of this Honorable Court when
it ruled that the petitioners-appellants are already in estoppel.
III
similarly situated," the title of the case filed by it at the Labor Arbiter’s Office
so expressly states.
While a party acting in a representative capacity, such as a union, may be
permitted to intervene in a case, ordinarily, a person whose interests are
already represented will not be permitted to do the same28 except when there
is a suggestion of fraud or collusion or that the representative will not act in
good faith for the protection of all interests represented by him.29
Petitioners-appellants cite the dismissal of the case filed by ICTSI, first by
the Labor Arbiter, and later by the Court of Appeals.30 The dismissal of the
case does not, however, by itself show the existence of fraud or collusion or
a lack of good faith on the part of APCWU. There must be clear and
of the dismissal. This, petitioners-appellants failed to proffer.
Petitioners-appellants likewise express their fear that APCWU would not
prosecute the case diligently because of its "sweetheart relationship" with
ICTSI.31 There is nothing on record, however, to support this alleged
relationship which allegation surfaces as a mere afterthought because it was
never raised early on. It was raised only in petitioners-appellants’ reply to
ICTSI’s comment in the petition at bar, the last pleading submitted to this
Court, which was filed on June 20, 2001 or more than 42 months after
petitioners-appellants filed their Complaint-in-Intervention with Motion to
Intervene with the Labor Arbiter.

. . . in ruling that the petitioners-appellants have no legal right to intervene in To reiterate, for a member of a class to be permitted to intervene in a
and pursue this case and that their intervention is a superfluity. representative action, fraud or collusion or lack of good faith on the part of
the representative must be proven. It must be based on facts borne on record.
IV Mere assertions, as what petitioners-appellants proffer, do not suffice.

. . . in holding, although merely as an obiter dictum, that only petitioner Jerry The foregoing discussion leaves it unnecessary to discuss the other assigned
Acedera signed the certificate of non-forum shopping.25 errors.

The third assigned error respecting petitioners-appellants’ right to intervene WHEREFORE, the present petition is hereby denied.
shall first be passed upon, it being determinative of their right to raise the
other assigned errors. SO ORDERED.

Petitioners-appellants anchor their right to intervene on Rule 19 of the 1997

Rules of Civil Procedure, Section 1 of which reads:

Section 1. Who may intervene.- A person who has legal interest in the matter
in litigation, or in the success of either of the parties, or an interest against
both, or is so situated to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an officer thereof
may, with leave of court, be allowed to intervene in the action. The court
shall consider whether or not the intervention will unduly delay or prejudice
the adjudication of the rights of the original parties, and whether or not the
intervenor’s right may be fully protected in a separate proceeding.

They stress that they have complied with the requisites for intervention
because (1) they are the ones who stand to gain or lose by the direct legal
operation and effect of any judgment that may be rendered in this case, (2)
no undue delay or prejudice would result from their intervention since their
Complaint-in-Intervention with Motion for Intervention was filed while the
Labor Arbiter was still hearing the case and before any decision thereon was
rendered, and (3) it was not possible for them to file a separate case as they
would be guilty of forum shopping because the only forum available for them
was the Labor Arbiter.26

Petitioners-appellants, however, failed to consider, in addition to the rule on

intervention, the rule on representation, thusly:

Sec. 3. Representatives as parties.- Where the action is allowed to be

prosecuted or defended by a representative or someone acting in a fiduciary
capacity, the beneficiary shall be included in the title of the case and shall be
deemed to be the real party in interest. A representative may be a trustee of
an express trust, a guardian, an executor or administrator, or a party
authorized by law or these Rules. . . 27 (Emphasis supplied)

A labor union is one such party authorized to represent its members under
Article 242(a) of the Labor Code which provides that a union may act as the
representative of its members for the purpose of collective bargaining. This
authority includes the power to represent its members for the purpose of
enforcing the provisions of the CBA. That APCWU acted in a representative
capacity "for and in behalf of its Union members and other employees
BAPTISTA vs. VILLANUEVA
G.R. No. 194709 July 31, 2013
MENDOZA, J.:
This Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of
Civil Procedure filed by Minette Baptista, Bannie Edsel San Miguel and Ma.
Fe Dayon (petitioners) assails the March 9, 2010 Decision2 and the
December 1, 2010 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP
No. 105027, which affirmed the March 31, 2008 Decision4 of the National
Labor Relations Commission (NLRC) dismissing the complaint for Unfair
Labor Practice (ULP) filed against the named respondents.
The Facts
Petitioners were former union members of Radio Philippines Network
Employees Union (RPNEU), a legitimate labor organization and the sole and
exclusive bargaining agent of the rank and file employees of Radio
Philippines Network (RPN), a government-sequestered corporation involved
in commercial radio and television broadcasting affairs, while the
respondents were the union’s elected officers and members.
On April 26, 2005, on suspicion of union mismanagement, petitioners,
together with some other union members, filed a complaint for impeachment
of their union president, Reynato Siozon, before the executive board of RPN,
which was eventually abandoned. They later re-lodged the impeachment
complaint, this time, against all the union officers and members of RPNEU
before the Department of Labor and Employment (DOLE). They likewise
filed various petitions for audit covering the period from 2000 to 2004.5
Thereafter, two (2) written complaints, dated May 26, 2005 and May 27,
2005, were filed against petitioners and several others for alleged violation
of the union’s Constitution and By-Laws.6 Months later, on September 19,
2005, a different group of union members filed a third complaint against
petitioners and 12 others,7 before the Chairman of RPNEU’s Committee on
Grievance and Investigation (the Committee) citing as grounds the
"commission of an act which violates RPNEU Constitution and By-Laws,
specifically, Article IX, Section 2.2 for joining or forming a union outside
the sixty (60) days period and Article IX, Section 2.5 for urging or advocating
that a member start an action in any court of justice or external investigative
body against the Union or its officer without first exhausting all internal
remedies open to him or available in accordance with the CBL."8 These
complaints were, later on, consolidated.9
Thereafter, petitioners received a memorandum notice from Jeric Salinas,
Chairman of the Committee, requesting them to answer the complaint and
attend a hearing scheduled on October 3, 2005.10 Petitioners and their group,
through an exchange of communications with the Committee, denied the
charges imputed against them and contested the procedure adopted by the
Committee in its investigation. On November 9, 2005, the Committee
submitted their recommendation of expulsion from the union to RPNEU’s
Board of Directors.11 On December 21, 2005, the RPNEU’s Board of
Directors affirmed the recommendation of expulsion of petitioners and the
12 others from union membership in a Board Resolution No. 018-2005.12
Through a Memorandum,13 dated December 27, 2005, petitioners were
served an expulsion notice from the union, which was set to take effect on
December 29, 2005. On January 2, 2006, petitioners with the 12 others wrote
to RPNEU’s President and Board of Directors that their expulsion from the
union was an ultra vires act because the Committee failed to observe the basic
elements of due process because they were not given the chance to physically
confront and examine their complainants.14
In a letter, dated January 24, 2006, RPNEU’s officers informed their
company of the expulsion of petitioners and the 12 others from the union and
requested the management to serve them notices of termination from
employment in compliance with their CBA’s union security clause.15 On
February 17, 2006, RPN HRD Manager, Lourdes Angeles, informed
petitioners and the 12 others of the termination of their employment effective
March 20, 2006, enforcing Article II, Section 216 also known as the union
security clause of their current CBA.17
Aggrieved, petitioners filed three (3) separate complaints for ULP against the
respondents, which were later consolidated,18 questioning legality of their
expulsion from the union and their subsequent termination from
employment.
In a decision,19 dated April 30, 2007, the Labor Arbiter (LA) ruled in favor
of the petitioners and adjudged the respondents guilty of ULP pursuant to
Article 249 (a) and (b) of the Labor Code. The LA clarified that only the
union officers of RPNEU could be held responsible for ULP, so they
exonerated six (6) of the original defendants who were mere union members.
The LA also ordered the reinstatement of petitioners as bonafide members of
RPNEU. The decretal portion reads:
WHEREFORE, premises above considered, a decision is being issued
declaring union officers Ruth Bayquen, Ruby Castañeda, Alfred Landas,
Roce Garces, Board of Directors Federico Muñoz, Janette Roldan, Rosario
Villanueva, Menandro Samson, Salvador Diwa and Eugene Cruz guilty of
unfair labor practice for violating Article 249, paragraph A and B of the
Labor Code. Respondents are also ordered to cease and desist from further
committing unfair labor practice and order the reinstatement of the
complainants as bonafide members of the union.
The other claims are hereby denied for lack of factual and legal basis.
SO ORDERED.20
Undaunted, the respondents appealed the LA decision to the NLRC.
In its Decision,21 dated March 31, 2008, the NLRC vacated and set aside the
LA decision and dismissed the complaint for ULP for lack of merit. The
NLRC found that petitioners filed a suit calling for the impeachment of the
officers and members of the Executive Board of RPNEU without first
resorting to internal remedies available under its own Constitution and By-
Laws. The NLRC likewise decreed that the LA’s order of reinstatement was
improper because the legality of the membership expulsion was not raised in
the proceedings and, hence, beyond the jurisdiction of the LA.22 The fallo
of the NLRC decision reads:
WHEREFORE, the partial appeal filed by the respondents is GRANTED.
The decision, dated 30 April 2007 is VACATED and SET ASIDE. The
complaint is dismissed for lack of merit.
SO ORDERED.23
Petitioners filed for a motion for reconsideration, but the NLRC denied it in
its Resolution,24 dated May 30, 2008.
The CA, in its March 9, 2010 Decision, sustained the NLRC decision. The
CA stated that the termination of employment by virtue of a union security
clause was recognized in our jurisdiction. It explained that the said practice
fortified the union and averted disunity in the bargaining unit within the
duration of the CBA. The CA declared that petitioners were accorded due
process before they were removed from office. In fact, petitioners were given
the opportunity to explain their case and they actually availed of said
opportunity by submitting letters containing their arguments.25
Petitioners moved for reconsideration, but the CA likewise denied the same
in its December 1, 2010 Resolution,26 The CA expounded:
Anent petitioners’ charge of ULP against respondents, the records are barren
of proof to sustain such charge. What remains apparent is that petitioners
were expelled from the union due to their violation of Section 2.5 of Article
IX of the CBL which punishes the act of "urging or advocating that a member
start an action in any court of justice or external investigative body against
the Union or any of its officer, without first exhausting all internal remedies
open to him or available in accordance with the Constitution and By-Laws
of Union." As petitioners’ expulsion was pursuant to the union’s CBL, We
absolve respondents of the charges of ULP absent any substantial evidence
to sustain it.
The importance of a union’s constitution and bylaws cannot be
overemphasized. They embody a covenant between a union and its members
and constitute the fundamental law governing the member’s rights and
obligations. As such, the union’s constitution and bylaws should be upheld,
as long as they are not contrary to law, good morals or public policy. In
Diamonon v. Department of Labor and Employment, the High Court
affirmed the validity and importance of the provision in the CBL of
exhaustion of administrative remedies, viz:
When the Constitution and by-laws of both unions dictated the remedy for
intra-union dispute, such as petitioner’s complaint against private
respondents for unauthorized or illegal disbursement of union funds, this
should be resorted to before recourse can be made to the appropriate
administrative or judicial body, not only to give the grievance machinery or
appeals’ body of the union the opportunity to decide the matter by itself, but
also to prevent unnecessary and premature resort to administrative or judicial
bodies. Thus, a party with an administrative remedy must not merely initiate
the prescribed administrative procedure to obtain relief, but also pursue it to
its appropriate conclusion before seeking judicial intervention.27
Thus, petitioners advance the following
GROUNDS/ARGUMENTS IN SUPPORT OF THE PETITION
1. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS
MISERABLY FAILED TO APPRECIATE THE REAL ISSUE IN THIS
CASE.
2. WITH DUE RESPECT, THE DECISION AND RESOLUTION
ARRIVED AT BY THE HONORABLE COURT OF APPEALS ARE NOT
IN ACCORD WITH LAW AND APPLICABLE JURISPRUDENCE,
THEREBY GRAVELY ABUSING ITS DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF JURISDICTION.28
Petitioners submit that the respondents committed ULP under Article 289 (a)
and (b) of the Labor Code.29 They insist that they were denied substantive
and procedural due process of law when they were expelled from the
RPNEU.
The petition is bereft of merit.
The primary concept of ULP is embodied in Article 247 of the Labor Code,
which provides:
Article 247. Concept of unfair labor practice and procedure for prosecution
thereof.––Unfair labor practices violate the constitutional right of workers
and employees to self-organization, are inimical to the legitimate interests of
both labor and management, including their right to bargain collectively and
otherwise deal with each other in an atmosphere of freedom and mutual
respect, disrupt industrial peace and hinder the promotion of healthy and
stable labor-management relations.
In essence, ULP relates to the commission of acts that transgress the workers’
right to organize. As specified in Articles 248 and 249 of the Labor Code, the
prohibited acts must necessarily relate to the workers' right to self-
organization and to the observance of a CBA.30 Absent the said vital
elements, the acts complained, although seemingly unjust, would not
constitute ULP.31
In the case at bench, petitioners claim that the respondents, as union officers,
are guilty of ULP for violating paragraphs (a) and (b) of Article 249 of the
Labor Code, to wit:
ART. 249. UNFAIR LABOR PRACTICES OF LABOR
ORGANIZATIONS.- It shall be unfair labor practice for a labor
organization, its officers, agents or representatives:
(a) To restrain or coerce employees in the exercise of their rights to self-
organization. However, a labor organization shall have the right to prescribe
its own rules with respect to the acquisition or retention of membership:
(b) To cause or attempt to cause an employer to discriminate against an
employee, including discrimination against an employee with respect to
whom membership in such organization has been denied or to terminate an
employee on any ground other than the usual terms and conditions under
which membership or continuation of membership is made available to other
members;
Petitioners posit that the procedure that should have been followed by the
respondents in resolving the charges against them was Article XVII,
Settlement of Internal Disputes of their Constitution and By-Laws,
specifically, Section 232 thereof, requiring members to put their grievance in
writing to be submitted to their union president, who shall strive to have the
parties settle their differences amicably. Petitioners maintain that any form
of grievance would be referred only to the committee upon failure of the
parties to settle amicably.33
The Court is not persuaded.
Based on RPNEU’s Constitution and By-Laws, the charges against
petitioners were not mere internal squabbles, but violations that demand
proper investigation because, if proven, would constitute grounds for their
expulsion from the union. As such, Article X, Investigation Procedures and
Appeal Process of RPNEU’s Constitution and By-Laws, which reads –
SECTION 1. Charge against any member or officer of the Union shall be
submitted to the Board of Directors (BOD) in writing, which shall refer the
same, if necessary, to the committee on Grievance and Investigation. The
Committee shall hear any charge and subsequently, forward its finding and
recommendation to the BOD. The BOD has the power to approve or nullify
the recommendation of the Committee on Grievance and Investigation based
on the merit of the appeal.
was correctly applied under the circumstances.
Besides, any supposed procedural flaw in the proceedings before the
Committee was deemed cured when petitioners were given the opportunity
to be heard. Due process, as a constitutional precept, is satisfied when a
person was notified of the charge against him and was given an opportunity
to explain or defend himself. In administrative proceedings, the filing of
charges and giving reasonable opportunity for the person so charged to
answer the accusations against him constitute the minimum requirements of
due process.34 The essence of due process is simply to be heard, or as applied
to administrative proceedings, an opportunity to explain one’s side, or an
opportunity to seek a reconsideration of the action or ruling complained of.35
It cannot be denied that petitioners were properly notified of the charges filed
against them and were equally afforded the opportunity to present their side.
Next, petitioners point out that they were not given the opportunity to
personally face and confront their accusers, which were violative of their
right to examine the complainants and the supposed charges against them.36
Petitioners’ contention is without merit. Mere absence of a one-onone
confrontation between the petitioners and their complainants does not
automatically affect the validity of the proceedings before the Committee.
Not all cases necessitate a trial-type hearing.37 As in this case, what is
indispensable is that a party be given the right to explain one’s side, which
was adequately afforded to the petitioners.
It is well-settled that workers’ and employers’ organizations shall have the
right to draw up their constitutions and rules to elect their representatives in
full freedom, to organize their administration and activities and to formulate
their programs.38 In this case, RPNEU’s Constitution and By-Laws
expressly mandate that before a party is allowed to seek the intervention of
the court, it is a pre-condition that he should have availed of all the internal
remedies within the organization. Petitioners were found to have violated the
provisions of the union’s Constitution and By-Laws when they filed petitions
for impeachment against their union officers and for audit before the DOLE
without first exhausting all internal remedies available within their
organization. This act is a ground for expulsion from union membership.
Thus, petitioners’ expulsion from the union was not a deliberate attempt to
curtail or restrict their right to organize, but was triggered by the commission
of an act, expressly sanctioned by Section 2.5 of Article IX of the union’s
Constitution and By-Laws.1âwphi1
For a charge of ULP against a labor organization to prosper, the onus
probandi rests upon the party alleging it to prove or substantiate such claims
by the requisite quantum of evidence.39 In labor cases, as in other
administrative proceedings, substantial evidence or such relevant evidence
as a reasonable mind might accept as sufficient to support a conclusion is
required.40 Moreover, it is indubitable that all the prohibited acts constituting
unfair labor practice should materially relate to the workers' right to self-
organization.41
Unfortunately, petitioners failed to discharge the burden required to prove
the charge of ULP against the respondents. Aside from their self-serving
allegations, petitioners were not able to establish how they were restrained
or coerced by their union in a way that curtailed their right to self-
organization. The records likewise failed to sufficiently show that the
respondents unduly persuaded management into discriminating against
petitioners. other than to bring to its attention their expulsion from the union,
which in turn, resulted in the implementation of their CBA' s union security
clause. As earlier stated, petitioners had the burden of adducing substantial
evidence to support its allegations of ULP,42 which burden they failed to
discharge. In fact, both the NLRC and the CA found that petitioners were
unable to prove their charge of ULP against the respondents.
It is axiomatic that absent any clear showing of abuse, arbitrariness or
capriciousness, the findings of fact by the NLRC, especially when affirmed
by the CA, as in this case, are binding and conclusive upon the Court.43
Having found none, the Court finds no cogent reason to deviate from the
challenged decision.

WHEREFORE, the petition is DENIED. The March 9, 2010 Decision and

the December 1, 2010 Resolution of the Court of Appeals in CA-G.R. SP No.
105027 are AFFIRMED.

SO ORDERED.
THE HERITAGE HOTEL MANILA vs. PINAG-ISANG GALING AT
LAKAS NG MGA MANGGAGAWA SA HERITAGE MANILA
(PIGLAS-HERITAGE)
G.R. No. 177024 October 30, 2009
ABAD, J.:
This case is about a company’s objections to the registration of its rank and
file union for non-compliance with the requirements of its registration.
The Facts and the Case
Sometime in 2000, certain rank and file employees of petitioner Heritage
Hotel Manila (petitioner company) formed the "Heritage Hotel Employees
Union" (the HHE union). The Department of Labor and Employment-
National Capital Region (DOLE-NCR) later issued a certificate of
registration1 to this union.
Subsequently, the HHE union filed a petition for certification election2 that
petitioner company opposed. The company alleged that the HHE union
misrepresented itself to be an independent union, when it was, in truth, a local
chapter of the National Union of Workers in Hotel and Restaurant and Allied
Industries (NUWHRAIN). The company claimed that the HHE union
intentionally omitted disclosure of its affiliation with NUWHRAIN because
the company’s supervisors union was already affiliated with it.3 Thus, the
company also filed a petition for the cancellation of the HHE union’s
registration certificate.4
Meanwhile, the Med-Arbiter granted the HHE union’s petition for
certification election.5 Petitioner company appealed the decision to the
Secretary of Labor but the latter denied the appeal.6 The Secretary also
denied petitioner’s motion for reconsideration, prompting the company to file
a petition for certiorari7 with the Court of Appeals.
On October 12, 2001 the Court of Appeals issued a writ of injunction against
the holding of the HHE union’s certification election, effective until the
petition for cancellation of that union’s registration shall have been resolved
with finality.8 The decision of the Court of Appeals became final when the
HHE union withdrew the petition for review that it filed with this Court.9
On December 10, 2003 certain rank and file employees of petitioner
company held a meeting and formed another union, the respondent Pinag-
Isang Galing at Lakas ng mga Manggagawa sa Heritage Manila (the PIGLAS
union). This union applied for registration with the DOLE-NCR10 and got
its registration certificate on February 9, 2004. Two months later, the
members of the first union, the HHE union, adopted a resolution for its
dissolution. The HHE union then filed a petition for cancellation of its union
registration.11
On September 4, 2004 respondent PIGLAS union filed a petition for
certification election12 that petitioner company also opposed, alleging that
the new union’s officers and members were also those who comprised the
old union. According to the company, the employees involved formed the
PIGLAS union to circumvent the Court of Appeals’ injunction against the
holding of the certification election sought by the former union. Despite the
company’s opposition, however, the Med-Arbiter granted the petition for
certification election.13
On December 6, 2004 petitioner company filed a petition to cancel the union
registration of respondent PIGLAS union.14 The company claimed that the
documents submitted with the union’s application for registration bore the
following false information:
(a) The List of Members showed that the PIGLAS union had 100 union
members;15
(b) The Organizational Minutes said that 90 employees attended the meeting
on December 10, 2003;16
(c) The Attendance Sheet of the meeting of December 10, 2003 bore the
signature of 127 members who ratified the union’s Constitution and By-
Laws;17 and
(d) The Signature Sheet bore 128 signatures of those who attended that
meeting.18
Petitioner company alleged that the misrepresentation was evidenced by the
discrepancy in the number of union members appearing in the application
and the list as well as in the number of signatories to the attendance and
signature sheets. The minutes reported that only 90 employees attended the
meeting. The company further alleged that 33 members of respondent
PIGLAS union were members of the defunct HHE union. This, according to
the company, violated the policy against dual unionism and showed that the
new union was merely an alter ego of the old.
On February 22, 2005 the DOLE-NCR denied the company’s petition to
cancel respondent PIGLAS union’s registration for the reason that the
discrepancies in the number of members stated in the application’s
supporting documents were not material and did not constitute
misrepresentation. As for the charge of dual unionism, the same is not a
ground for canceling registration. It merely exposed a union member to a
possible charge of disloyalty, an internal matter. Here, the members of the
former union simply exercised their right to self-organization and to the
freedom of association when they subsequently joined the PIGLAS union.19
On appeal, the Bureau of Labor Relation (BLR) affirmed the ruling of the
DOLE-NCR. It reasoned that respondent PIGLAS union’s organization
meeting lasted for 12 hours. It was possible for the number of attendees to
have increased from 90 to 128 as the meeting progressed. Besides, with a
total of 250 employees in the bargaining unit, the union needed only 50
members to comply with the 20 percent membership requirement. Thus, the
union could not be accused of misrepresentation since it did not pad its
membership to secure registration.
As for the issue of dual unionism, it has become moot and academic, said the
BLR, because of the dissolution of the old union and the cancellation of its
certificate of registration.20
Petitioner company filed a petition for certiorari with the Court of Appeals,21
assailing the order of the BLR. But the latter court dismissed the petition, not
being accompanied by material documents and portions of the record.22 The
company filed a motion for reconsideration, attaching parts of the record that
were deemed indispensable but the court denied it for lack of merit.23 Hence,
the company filed this petition for review under Rule 45.
Issues Presented
The petition presents the following issues:
1. Whether or not the Court of Appeals erred in dismissing the petition for
certiorari before it for failure of petitioner company to attach certain material
portions of the record;
2. Whether or not the union made fatal misrepresentation in its application
for union registration; and
3. Whether or not "dual unionism" is a ground for canceling a union’s
registration.
The Rulings of the Court
First. While the Court of Appeals correctly dismissed the company’s petition
initially for failure to attach material portions of the record, the court should
have bended back a little when petitioner company subsequently attached
those missing materials to its motion for reconsideration. As a general rule,
petitions for certiorari that lack copies of essential pleadings and portions of
the record may be dismissed but this rule has not been regarded as absolute.
The omission may be cured.24
The Court of Appeals has three courses of action when the annexes to the
petition are insufficient. It may dismiss the petition,25 require the submission
of the relevant documents, or order the filing of an amended petition with the
required pleadings or documents. A petition lacking in essential pleadings or
portions of the record may still be given due course, or reinstated if earlier
dismissed, upon subsequent submission of the necessary documents or to
serve the higher interest of justice.26
Second. Since a remand of the case to the Court of Appeals for a
determination of the substantive issues will only result in more delays and
since these issues have been amply argued by the opposing sides in the
various pleadings and documents they submitted to this Court, the case may
now be resolved on the merits.
Did respondent PIGLAS union commit fraud and misrepresentation in its
application for union registration? We agree with the DOLE-NCR and the
BLR that it did not. Except for the evident discrepancies as to the number of
union members involved as these appeared on the documents that supported
the union’s application for registration, petitioner company has no other
evidence of the alleged misrepresentation. But those discrepancies alone
cannot be taken as an indication that respondent misrepresented the
information contained in these documents.

The charge that a labor organization committed fraud and misrepresentation

in securing its registration is a serious charge and deserves close scrutiny. It
is serious because once such charge is proved, the labor union acquires none
of the rights accorded to registered organizations. Consequently, charges of
this nature should be clearly established by evidence and the surrounding
circumstances.27

Here, the discrepancies in the number of union members or employees stated

in the various supporting documents that respondent PIGLAS union
submitted to labor authorities can be explained. While it appears in the
minutes of the December 10, 2003 organizational meeting that only 90
employees responded to the roll call at the beginning, it cannot be assumed
that such number could not grow to 128 as reflected on the signature sheet
for attendance. The meeting lasted 12 hours from 11:00 a.m. to 11:00 p.m.
There is no evidence that the meeting hall was locked up to exclude late
attendees.1 a vv p h i 1

There is also nothing essentially mysterious or irregular about the fact that
only 127 members ratified the union’s constitution and by-laws when 128
signed the attendance sheet. It cannot be assumed that all those who attended
approved of the constitution and by-laws. Any member had the right to hold
out and refrain from ratifying those documents or to simply ignore the
process.

At any rate, the Labor Code28 and its implementing rules29 do not require
that the number of members appearing on the documents in question should
completely dovetail. For as long as the documents and signatures are shown
to be genuine and regular and the constitution and by-laws democratically
ratified, the union is deemed to have complied with registration requirements.

Petitioner company claims that respondent PIGLAS union was required to

submit the names of all its members comprising at least 20 percent of the
employees in the bargaining unit. Yet the list it submitted named only 100
members notwithstanding that the signature and attendance sheets reflected
a membership of 127 or 128 employees. This omission, said the company,
amounted to material misrepresentation that warranted the cancellation of the
union’s registration.

But, as the labor authorities held, this discrepancy is immaterial. A

comparison of the documents shows that, except for six members, the names
found in the subject list are also in the attendance and signature sheets.
Notably, the bargaining unit that respondent PIGLAS union sought to
represent consisted of 250 employees. Only 20 percent of this number or 50
employees were required to unionize. Here, the union more than complied
with such requirement.

Labor laws are liberally construed in favor of labor especially if doing so

would affirm its constitutionally guaranteed right to self-organization.30
Here, the PIGLAS union’s supporting documents reveal the unmistakable
yearning of petitioner company’s rank and file employees to organize. This
yearning should not be frustrated by inconsequential technicalities.

Third. The fact that some of respondent PIGLAS union’s members were also
members of the old rank and file union, the HHE union, is not a ground for
canceling the new union’s registration. The right of any person to join an
organization also includes the right to leave that organization and join
another one. Besides, HHE union is dead. It had ceased to exist and its
certificate of registration had already been cancelled. Thus, petitioner’s
arguments on this point may also be now regarded as moot and academic.

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision
of the Bureau of Labor Relations in BLR-A-26-3-05 dated May 26, 2006.

SO ORDERED.
THE HERITAGE HOTEL MANILA vs. NATIONAL UNION OF
WORKERS IN THE HOTEL, RESTAURANT AND ALLIED
INDUSTRIES-HERITAGE HOTEL MANILA SUPERVISORS
CHAPTER (NUWHRAIN-HHMSC)
G.R. No. 178296 January 12, 2011
NACHURA, J.:
Before the Court is a petition for review on certiorari of the Decision1 of the
Court of Appeals (CA) dated May 30, 2005 and Resolution dated June 4,
2007. The assailed Decision affirmed the dismissal of a petition for
cancellation of union registration filed by petitioner, Grand Plaza Hotel
Corporation, owner of Heritage Hotel Manila, against respondent, National
Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage
Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), a labor
organization of the supervisory employees of Heritage Hotel Manila.
The case stemmed from the following antecedents:
On October 11, 1995, respondent filed with the Department of Labor and
Employment-National Capital Region (DOLE-NCR) a petition for
certification election.2 The Med-Arbiter granted the petition on February 14,
1996 and ordered the holding of a certification election.3 On appeal, the
DOLE Secretary, in a Resolution dated August 15, 1996, affirmed the Med-
Arbiter’s order and remanded the case to the Med-Arbiter for the holding of
a preelection conference on February 26, 1997. Petitioner filed a motion for
reconsideration, but it was denied on September 23, 1996.
The preelection conference was not held as initially scheduled; it was held a
year later, or on February 20, 1998. Petitioner moved to archive or to dismiss
the petition due to alleged repeated non-appearance of respondent. The latter
agreed to suspend proceedings until further notice. The preelection
conference resumed on January 29, 2000.
Subsequently, petitioner discovered that respondent had failed to submit to
the Bureau of Labor Relations (BLR) its annual financial report for several
years and the list of its members since it filed its registration papers in 1995.
Consequently, on May 19, 2000, petitioner filed a Petition for Cancellation
of Registration of respondent, on the ground of the non-submission of the
said documents. Petitioner prayed that respondent’s Certificate of Creation
of Local/Chapter be cancelled and its name be deleted from the list of
legitimate labor organizations. It further requested the suspension of the
certification election proceedings.4
On June 1, 2000, petitioner reiterated its request by filing a Motion to Dismiss
or Suspend the [Certification Election] Proceedings,5 arguing that the
dismissal or suspension of the proceedings is warranted, considering that the
legitimacy of respondent is seriously being challenged in the petition for
cancellation of registration. Petitioner maintained that the resolution of the
issue of whether respondent is a legitimate labor organization is crucial to the
issue of whether it may exercise rights of a legitimate labor organization,
which include the right to be certified as the bargaining agent of the covered
employees.
Nevertheless, the certification election pushed through on June 23, 2000.
Respondent emerged as the winner.6
On June 28, 2000, petitioner filed a Protest with Motion to Defer
Certification of Election Results and Winner,7 stating that the certification
election held on June 23, 2000 was an exercise in futility because, once
respondent’s registration is cancelled, it would no longer be entitled to be
certified as the exclusive bargaining agent of the supervisory employees.
Petitioner also claimed that some of respondent’s members were not
qualified to join the union because they were either confidential employees
or managerial employees. It then prayed that the certification of the election
results and winner be deferred until the petition for cancellation shall have
been resolved, and that respondent’s members who held confidential or
managerial positions be excluded from the supervisors’ bargaining unit.
Meanwhile, respondent filed its Answer8 to the petition for the cancellation
of its registration. It averred that the petition was filed primarily to delay the
conduct of the certification election, the respondent’s certification as the
exclusive bargaining representative of the supervisory employees, and the
commencement of bargaining negotiations. Respondent prayed for the
dismissal of the petition for the following reasons: (a) petitioner is estopped
from questioning respondent’s status as a legitimate labor organization as it
had already recognized respondent as such during the preelection
conferences; (b) petitioner is not the party-in-interest, as the union members
are the ones who would be disadvantaged by the non-submission of financial
reports; (c) it has already complied with the reportorial requirements, having
submitted its financial statements for 1996, 1997, 1998, and 1999, its updated
list of officers, and its list of members for the years 1995, 1996, 1997, 1998,
and 1999; (d) the petition is already moot and academic, considering that the
certification election had already been held, and the members had manifested
their will to be represented by respondent.
Citing National Union of Bank Employees v. Minister of Labor, et al.9 and
Samahan ng Manggagawa sa Pacific Plastic v. Hon. Laguesma,10 the Med-
Arbiter held that the pendency of a petition for cancellation of registration is
not a bar to the holding of a certification election. Thus, in an Order11 dated
January 26, 2001, the Med-Arbiter dismissed petitioner’s protest, and
certified respondent as the sole and exclusive bargaining agent of all
supervisory employees.
Petitioner subsequently appealed the said Order to the DOLE Secretary.12
The appeal was later dismissed by DOLE Secretary Patricia A. Sto. Tomas
(DOLE Secretary Sto. Tomas) in the Resolution of August 21, 2002.13
Petitioner moved for reconsideration, but the motion was also denied.14
In the meantime, Regional Director Alex E. Maraan (Regional Director
Maraan) of DOLE-NCR finally resolved the petition for cancellation of
registration. While finding that respondent had indeed failed to file financial
reports and the list of its members for several years, he, nonetheless, denied
the petition, ratiocinating that freedom of association and the employees’
right to self-organization are more substantive considerations. He took into
account the fact that respondent won the certification election and that it had
already been certified as the exclusive bargaining agent of the supervisory
employees. In view of the foregoing, Regional Director Maraan—while
emphasizing that the non-compliance with the law is not viewed with favor—
considered the belated submission of the annual financial reports and the list
of members as sufficient compliance thereof and considered them as having
been submitted on time. The dispositive portion of the decision15 dated
December 29, 2001 reads:
WHEREFORE, premises considered, the instant petition to delist the
National Union of Workers in the Hotel, Restaurant and Allied Industries-
Heritage Hotel Manila Supervisors Chapter from the roll of legitimate labor
organizations is hereby DENIED.
SO ORDERED.16
Aggrieved, petitioner appealed the decision to the BLR.17 BLR Director
Hans Leo Cacdac inhibited himself from the case because he had been a
former counsel of respondent.
In view of Director Cacdac’s inhibition, DOLE Secretary Sto. Tomas took
cognizance of the appeal. In a resolution18 dated February 21, 2003, she
dismissed the appeal, holding that the constitutionally guaranteed freedom of
association and right of workers to self-organization outweighed
respondent’s noncompliance with the statutory requirements to maintain its
status as a legitimate labor organization.
Petitioner filed a motion for reconsideration,19 but the motion was likewise
denied in a resolution20 dated May 30, 2003. DOLE Secretary Sto. Tomas
admitted that it was the BLR which had jurisdiction over the appeal, but she
pointed out that the BLR Director had voluntarily inhibited himself from the
case because he used to appear as counsel for respondent. In order to maintain
the integrity of the decision and of the BLR, she therefore accepted the
motion to inhibit and took cognizance of the appeal.
Petitioner filed a petition for certiorari with the CA, raising the issue of
whether the DOLE Secretary acted with grave abuse of discretion in taking
cognizance of the appeal and affirming the dismissal of its petition for
cancellation of respondent’s registration.
In a Decision dated May 30, 2005, the CA denied the petition. The CA opined
that the DOLE Secretary may legally assume jurisdiction over an appeal from
the decision of the Regional Director in the event that the Director of the
BLR inhibits himself from the case. According to the CA, in the absence of
the BLR Director, there is no person more competent to resolve the appeal
than the DOLE Secretary. The CA brushed aside the allegation of bias and
partiality on the part of the DOLE Secretary, considering that such allegation
was not supported by any evidence.
The CA also found that the DOLE Secretary did not commit grave abuse of
discretion when she affirmed the dismissal of the petition for cancellation of
respondent’s registration as a labor organization. Echoing the DOLE
Secretary, the CA held that the requirements of registration of labor
organizations are an exercise of the overriding police power of the State,
designed for the protection of workers against potential abuse by the union
that recruits them. These requirements, the CA opined, should not be
exploited to work against the workers’ constitutionally protected right to self-
organization.
Petitioner filed a motion for reconsideration, invoking this Court’s ruling in
Abbott Labs. Phils., Inc. v. Abbott Labs. Employees Union,21 which
categorically declared that the DOLE Secretary has no authority to review
the decision of the Regional Director in a petition for cancellation of union
registration, and Section 4,22 Rule VIII, Book V of the Omnibus Rules
Implementing the Labor Code.
In its Resolution23 dated June 4, 2007, the CA denied petitioner’s motion,
stating that the BLR Director’s inhibition from the case was a peculiarity not
present in the Abbott case, and that such inhibition justified the assumption
of jurisdiction by the DOLE Secretary.
In this petition, petitioner argues that:
I.
The Court of Appeals seriously erred in ruling that the Labor Secretary
properly assumed jurisdiction over Petitioner’s appeal of the Regional
Director’s Decision in the Cancellation Petition x x x.
A. Jurisdiction is conferred only by law. The Labor Secretary had no
jurisdiction to review the decision of the Regional Director in a petition for
cancellation. Such jurisdiction is conferred by law to the BLR.
B. The unilateral inhibition by the BLR Director cannot justify the Labor
Secretary’s exercise of jurisdiction over the Appeal.
C. The Labor Secretary’s assumption of jurisdiction over the Appeal without
notice violated Petitioner’s right to due process.
II.
The Court of Appeals gravely erred in affirming the dismissal of the
Cancellation Petition despite the mandatory and unequivocal provisions of
the Labor Code and its Implementing Rules.24
The petition has no merit.
Jurisdiction to review the decision of the Regional Director lies with the
BLR. This is clearly provided in the Implementing Rules of the Labor Code
and enunciated by the Court in Abbott. But as pointed out by the CA, the
present case involves a peculiar circumstance that was not present or covered
by the ruling in Abbott. In this case, the BLR Director inhibited himself from
the case because he was a former counsel of respondent. Who, then, shall
resolve the case in his place?
In Abbott, the appeal from the Regional Director’s decision was directly filed
with the Office of the DOLE Secretary, and we ruled that the latter has no
appellate jurisdiction. In the instant case, the appeal was filed by petitioner
with the BLR, which, undisputedly, acquired jurisdiction over the case. Once
jurisdiction is acquired by the court, it remains with it until the full
termination of the case.25
Thus, jurisdiction remained with the BLR despite the BLR Director’s
inhibition. When the DOLE Secretary resolved the appeal, she merely
stepped into the shoes of the BLR Director and performed a function that the
latter could not himself perform. She did so pursuant to her power of
supervision and control over the BLR.26
Expounding on the extent of the power of control, the Court, in Araneta, et
al. v. Hon. M. Gatmaitan, et al.,27 pronounced that, if a certain power or
authority is vested by law upon the Department Secretary, then such power
or authority may be exercised directly by the President, who exercises
supervision and control over the departments. This principle was
incorporated in the Administrative Code of 1987, which defines "supervision
and control" as including the authority to act directly whenever a specific
function is entrusted by law or regulation to a subordinate.28 Applying the
foregoing to the present case, it is clear that the DOLE Secretary, as the
person exercising the power of supervision and control over the BLR, has the
authority to directly exercise the quasi-judicial function entrusted by law to
the BLR Director.
It is true that the power of control and supervision does not give the
Department Secretary unbridled authority to take over the functions of his or
her subordinate. Such authority is subject to certain guidelines which are
stated in Book IV, Chapter 8, Section 39(1)(a) of the Administrative Code of
1987.29 However, in the present case, the DOLE Secretary’s act of taking
over the function of the BLR Director was warranted and necessitated by the
latter’s inhibition from the case and the objective to "maintain the integrity
of the decision, as well as the Bureau itself."30
Petitioner insists that the BLR Director’s subordinates should have resolved
the appeal, citing the provision under the Administrative Code of 1987 which
states, "in case of the absence or disability of the head of a bureau or office,
his duties shall be performed by the assistant head."31 The provision clearly
does not apply considering that the BLR Director was neither absent nor
suffering from any disability; he remained as head of the BLR. Thus, to dispel
any suspicion of bias, the DOLE Secretary opted to resolve the appeal
herself.
Petitioner was not denied the right to due process when it was not notified in
advance of the BLR Director’s inhibition and the DOLE Secretary’s
assumption of the case. Well-settled is the rule that the essence of due process
is simply an opportunity to be heard, or, as applied to administrative
proceedings, an opportunity to explain one’s side or an opportunity to seek a
reconsideration of the action or ruling complained of.32 Petitioner had the
opportunity to question the BLR Director’s inhibition and the DOLE
Secretary’s taking cognizance of the case when it filed a motion for
reconsideration of the latter’s decision. It would be well to state that a critical
component of due process is a hearing before an impartial and disinterested
tribunal, for all the elements of due process, like notice and hearing, would
be meaningless if the ultimate decision would come from a partial and biased
judge.33 It was precisely to ensure a fair trial that moved the BLR Director
to inhibit himself from the case and the DOLE Secretary to take over his
function.
Petitioner also insists that respondent’s registration as a legitimate labor
union should be cancelled. Petitioner posits that once it is determined that a
ground enumerated in Article 239 of the Labor Code is present, cancellation
of registration should follow; it becomes the ministerial duty of the Regional
Director to cancel the registration of the labor organization, hence, the use of
the word "shall." Petitioner points out that the Regional Director has admitted
in its decision that respondent failed to submit the required documents for a
number of years; therefore, cancellation of its registration should have
followed as a matter of course.
We are not persuaded.
Articles 238 and 239 of the Labor Code read:
ART. 238. CANCELLATION OF REGISTRATION; APPEAL
The certificate of registration of any legitimate labor organization, whether
national or local, shall be canceled by the Bureau if it has reason to believe,
after due hearing, that the said labor organization no longer meets one or
more of the requirements herein prescribed.34
ART. 239. GROUNDS FOR CANCELLATION OF UNION
REGISTRATION.
The following shall constitute grounds for cancellation of union registration:
xxxx
(d) Failure to submit the annual financial report to the Bureau within thirty
(30) days after the closing of every fiscal year and misrepresentation, false
entries or fraud in the preparation of the financial report itself;
xxxx
(i) Failure to submit list of individual members to the Bureau once a year or
whenever required by the Bureau.35
These provisions give the Regional Director ample discretion in dealing with
a petition for cancellation of a union’s registration, particularly, determining
whether the union still meets the requirements prescribed by law. It is
sufficient to give the Regional Director license to treat the late filing of
required documents as sufficient compliance with the requirements of the
law. After all, the law requires the labor organization to submit the annual
financial report and list of members in order to verify if it is still viable and
financially sustainable as an organization so as to protect the employer and
employees from fraudulent or fly-by-night unions. With the submission of
the required documents by respondent, the purpose of the law has been
achieved, though belatedly.
We cannot ascribe abuse of discretion to the Regional Director and the DOLE
Secretary in denying the petition for cancellation of respondent’s registration.
The union members and, in fact, all the employees belonging to the
appropriate bargaining unit should not be deprived of a bargaining agent,
merely because of the negligence of the union officers who were responsible
for the submission of the documents to the BLR.
Labor authorities should, indeed, act with circumspection in treating petitions
for cancellation of union registration, lest they be accused of interfering with
union activities. In resolving the petition, consideration must be taken of the
fundamental rights guaranteed by Article XIII, Section 3 of the Constitution,
i.e., the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities. Labor authorities should bear
in mind that registration confers upon a union the status of legitimacy and
the concomitant right and privileges granted by law to a legitimate labor
organization, particularly the right to participate in or ask for certification
election in a bargaining unit.36 Thus, the cancellation of a certificate of
registration is the equivalent of snuffing out the life of a labor organization.
For without such registration, it loses - as a rule - its rights under the Labor
Code.37
It is worth mentioning that the Labor Code’s provisions on cancellation of
union registration and on reportorial requirements have been recently
amended by Republic Act (R.A.) No. 9481, An Act Strengthening the
Workers’ Constitutional Right to Self-Organization, Amending for the
Purpose Presidential Decree No. 442, As Amended, Otherwise Known as the
Labor Code of the Philippines, which lapsed into law on May 25, 2007 and
became effective on June 14, 2007. The amendment sought to strengthen the
workers’ right to self-organization and enhance the Philippines’ compliance
with its international obligations as embodied in the International Labour
Organization (ILO) Convention No. 87,38 pertaining to the non-dissolution
of workers’ organizations by administrative authority.39 Thus, R.A. No.
9481 amended Article 239 to read:
ART. 239. Grounds for Cancellation of Union Registration.—The following
may constitute grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification, and the list of members who took part in
the ratification;
(b) Misrepresentation, false statements or fraud in connection with the
election of officers, minutes of the election of officers, and the list of voters;
(c) Voluntary dissolution by the members.
R.A. No. 9481 also inserted in the Labor Code Article 242-A, which
provides:
ART. 242-A. Reportorial Requirements.—The following are documents
required to be submitted to the Bureau by the legitimate labor organization
concerned:
(a) Its constitution and by-laws, or amendments thereto, the minutes of
ratification, and the list of members who took part in the ratification of the
constitution and by-laws within thirty (30) days from adoption or ratification
of the constitution and by-laws or amendments thereto;
(b) Its list of officers, minutes of the election of officers, and list of voters
within thirty (30) days from election;
(c) Its annual financial report within thirty (30) days after the close of every
fiscal year; and
(d) Its list of members at least once a year or whenever required by the
Bureau.
Failure to comply with the above requirements shall not be a ground for
cancellation of union registration but shall subject the erring officers or
members to suspension, expulsion from membership, or any appropriate
penalty.
ILO Convention No. 87, which we have ratified in 1953, provides that
"workers’ and employers’ organizations shall not be liable to be dissolved or
suspended by administrative authority." The ILO has expressed the opinion
that the cancellation of union registration by the registrar of labor unions,
which in our case is the BLR, is tantamount to dissolution of the organization
by administrative authority when such measure would give rise to the loss of
legal personality of the union or loss of advantages necessary for it to carry
out its activities, which is true in our jurisdiction. Although the ILO has
allowed such measure to be taken, provided that judicial safeguards are in
place, i.e., the right to appeal to a judicial body, it has nonetheless reminded
its members that dissolution of a union, and cancellation of registration for
that matter, involve serious consequences for occupational representation. It
has, therefore, deemed it preferable if such actions were to be taken only as
a last resort and after exhausting other possibilities with less serious effects
on the organization.40
The aforesaid amendments and the ILO’s opinion on this matter serve to
fortify our ruling in this case. We therefore quote with approval the DOLE
Secretary’s rationale for denying the petition, thus:
It is undisputed that appellee failed to submit its annual financial reports and
list of individual members in accordance with Article 239 of the Labor Code.
However, the existence of this ground should not necessarily lead to the
cancellation of union registration. Article 239 recognizes the regulatory
authority of the State to exact compliance with reporting requirements. Yet
there is more at stake in this case than merely monitoring union activities and
requiring periodic documentation thereof.
The more substantive considerations involve the constitutionally guaranteed
freedom of association and right of workers to self-organization. Also
involved is the public policy to promote free trade unionism and collective
bargaining as instruments of industrial peace and democracy.1avvphi1 An
overly stringent interpretation of the statute governing cancellation of union
registration without regard to surrounding circumstances cannot be allowed.
Otherwise, it would lead to an unconstitutional application of the statute and
emasculation of public policy objectives. Worse, it can render nugatory the
protection to labor and social justice clauses that pervades the Constitution
and the Labor Code.
Moreover, submission of the required documents is the duty of the officers
of the union. It would be unreasonable for this Office to order the cancellation
of the union and penalize the entire union membership on the basis of the
negligence of its officers. In National Union of Bank Employees vs. Minister
of Labor, L-53406, 14 December 1981, 110 SCRA 296, the Supreme Court
ruled:
As aptly ruled by respondent Bureau of Labor Relations Director Noriel:
"The rights of workers to self-organization finds general and specific
constitutional guarantees. x x x Such constitutional guarantees should not be
lightly taken much less nullified. A healthy respect for the freedom of
association demands that acts imputable to officers or members be not easily
visited with capital punishments against the association itself."
At any rate, we note that on 19 May 2000, appellee had submitted its financial
statement for the years 1996-1999. With this submission, appellee has
substantially complied with its duty to submit its financial report for the said
period. To rule differently would be to preclude the union, after having failed
to meet its periodic obligations promptly, from taking appropriate measures
to correct its omissions. For the record, we do not view with favor appellee’s
late submission. Punctuality on the part of the union and its officers could
have prevented this petition.41
WHEREFORE, premises considered, the Court of Appeals Decision dated
May 30, 2005 and Resolution dated June 4, 2007 are AFFIRMED.
SO ORDERED.
TAKATA (PHILIPPINES) CORPORATION vs. BUREAU OF LABOR
RELATIONS
G.R. No. 196276 June 4, 2014
PERALTA, J.:
Before us is a petition for review on certiorari filed by petitioner TAKATA
Philippines Corporation assailing the Decision1 dated December 22, 2010
and the Resolution2 dated March 28, 2011 of the Court of Appeals in CA-
G.R. SP No. 112406.
On July 7, 2009, petitioner filed with the Department of Labor and
Employment (DOLE) Regional Office a Petition3 for Cancellation of the
Certificate of Union Registration of Respondent Samahang Lakas
Manggagawa ng Takata (SALAMA1) on the ground that the latter is guilty
of misrepresentation, false statement and fraud with respect to the number of
those who participated in the organizational meeting, the adoption and
ratification of its Constitution and By-Laws, and in the election of its officers.
It contended that in the May 1, 2009 organizational meeting of respondent,
only 68 attendees signed the attendance sheet, and which number comprised
only 17% of the total number of the 396 regular rank- and-file employees
which respondent sought to represent, and hence, respondent failed to
comply with the 20% minimum membership requirement. Petitioner insisted
that the document "Pangalan ng mga Kasapi ng Unyon" bore no signatures
of the alleged 119 union members; and that employees were not given
sufficient information on the documents they signed; that the document
"Sama-Samang Pahayag ng Pagsapi" was not submitted at the time of the
filing of respondent's application for union registration; that the 119 union
members were actually only 117; and, that the total number of petitioner's
employees as of May 1, 2009 was 470, and not 396 as respondent claimed.4
Respondent denied the charge and claimed that the 119 union members were
more than the 20% requirement for union registration. The document "Sama-
Samang Pahayag ng Pagsapi sa Unyon" which it presented in its petition for
certification election5 supported their claim of 119 members. Respondent
also contended that petitioner was estopped from assailing its legal
personality as it agreed to a certification election and actively participated in
the pre-election conference of the certification election proceedings.6
Respondent argued that the union members were informed of the contents of
the documents they signed and that the 68 attendees to the organizational
meeting constituted more than 50% of the total union membership, hence, a
quo rumexisted for the conduct of the said meeting.7
On August 27, 2009, DOLE Regional Director, Atty. Ricardo S. Martinez,
Sr., issued a Decision8 granting the petition for cancellation of respondent's
certificate of registration, the dispositive portion of which reads:
WHEREFORE, from the foregoing considerations, the petition is hereby
GRANTED. Accordingly, the respondent Union Certificate of Registration
No. RO400A-2009-05-01-UR-LAG, dated May 19, 2009 is hereby
REVOCKED (sic) and /or CANCELLED pursuant to paragraph (a) & (b),
Section 3, Rule XIV of Department Order No. 40-03 and the Samahang
Lakas ng Manggagawa ng TAKATA (SALAMAT) is hereby delisted from
the roll of legitimate labor organization of this office.9
In revoking respondent's certificate of registration, the Regional Director
found that the 68 employees who attended the organizational meeting was
obviously less than 20% of the total number of 396 regular rank-and-file
employees which respondent sought to represent, hence, short of the union
registration requirement; that the attendance sheet which contained the
signatures and names of the union members totalling to 68 contradicted the
list of names stated in the document denominated as "Pangalan ng mga
Kasaping Unyon." The document "Sama-Samang Pahayag ng Pagsapi" was
not attached to the application for registration as it was only submitted in the
petition for certification election filed by respondent at a later date. The
Regional Director also found that the proceedings in the cancellation of
registration and certification elections are two different and entirely separate
and independent proceedings which were not dependent on each other.
Dissatisfied, respondent, through Bukluran ng Manggagawang Pilipino
(BMP) Paralegal Officer, Domingo P. Mole, filed a Notice and
Memorandum of Appeal10 with the Bureau of Labor Relations (BLR).
However, on September 28,2009, respondent, through its counsels, Attys.
Napoleon C. Banzuela, Jr. and Jehn Louie W. Velandrez, filed an Appeal
Memorandum with Formal Entry of Appearance11 to the Office of the
DOLE Secretary, which the latter eventually referred to the BLR. Petitioner
filed an Opposition to the Appeals12 praying for their dismissal on the
ground of forum shopping as respondent filed two separate appeals in two
separate venues; and for failing to avail of the correct remedy within the
period; and that the certificate of registration was tainted with fraud,
misrepresentation and falsification.
In its Answer,13 respondent claimed that there was no forum shopping as
BMP's Paralegal Officer was no longer authorized to file an appeal on behalf
of respondent as the latter's link with BMP was already terminated and only
the Union President was authorized to file the appeal; and that it complied
with Department Order No. 40-03.
On December 9, 2009, after considering respondent's Appeal Memorandum
with Formal Entry of Appearance and petitioner's Answer, the BLR rendered
its Decision14 reversing the Order of the Regional Director, the decretal
portion of which reads:
WHEREFORE, the appeal is hereby GRANTED. The Decision of Regional
Director Ricardo S. Martinez, Sr., dated 27 August 2009, is hereby
REVERSEDand SET ASIDE.
Accordingly, Samahang Lakas Manggagawa ng TAKATA (SALAMAT)
shall remain in the roster of labor organizations.15
In reversing, the BLR found that petitioner failed to prove that respondent
deliberately and maliciously misrepresented the number of rank-and-file
employees. It pointed out petitioner's basis for the alleged noncompliance
with the minimum membership requirement for registration was the
attendance of 68 members to the May 1, 2009 organizational meeting
supposedly comprising only 17% of the total 396 regular rank-and-file
employees. However, the BLR found that the list of employees who
participated in the organizational meeting was a separate and distinct
requirement from the list of the names of members comprising at least 20%
of the employees in the bargaining unit; and that there was no requirement
for signatures opposite the names of the union members; and there was no
evidence showing that the employees assailed their inclusion in the list of
union members.
Petitioner filed a motion for reconsideration, which was denied by the BLR
in a Resolution16 dated January 8, 2010.
Undaunted, petitioner went to the CA via a petition for certiorari under Rule
65.
After the submission of the parties' respective pleadings, the case was
submitted for decision.
On December 22, 2010, the CA rendered its assailed decision which denied
the petition and affirmed the decision of the BLR. Petitioner's motion for
reconsideration was denied in a Resolution dated March 29, 2011.
Hence this petition for review filed by petitioner raising the following issues,
to wit:
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE AND
SERIOUS ERROR IN AFFIRMING THE DECISION OF PUBLIC
RESPONDENT BLR AND NOT FINDING ANY VIOLATION BY
SAMAHANG LAKAS MANGGAGAWA SA TAKATA (SALAMAT) OF
THE RULE ON FORUM SHOPPING IN THE FILING OF TWO
VERIFIED APPEALS FOR AND ITS BEHALF. BOTH OF THE
APPEALS SHOULD HAVE BEEN DISMISSED OUTRIGHT BY PUBLIC
RESPONDENT BLR, ON GROUND OF FORUM SHOPPING.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
FINDING THAT THE APPLICATION FOR REGISTRATION OF
SAMAHANG LAKAS MANGGAGAWA SA TAKATA (SALAMAT)
WAS COMPLIANT WITH THE LAW. CONSIDERING THE
CIRCUMSTANCES OBTAINING IN THE REGISTRATION OF
SALAMAT, IT IS CLEAR THAT THE SAME IS TAINTED WITH
FRAUD, MISREPRESENTATION AND FALSIFICATION. SALAMAT
DID NOT POSSESS THE REQUIREDNUMBER OF MEMBERS AT THE
TIME OF FILING OF ITS APPLICATION FOR REGISTRATION,
HENCE, IT SHOULD BE HELD GUILTY OF MISREPRESENTATION,
AND FALSE STATEMENTS AND FRAUD IN CONNECTION
THEREWITH.17
Anent the first issue, petitioner contends that respondent had filed two
separate appeals with two different representations at two different venues,
in violation of the rule on multiplicity of suits and forum shopping, and
instead of dismissing both appeals, the appeal erroneously filed before the
Labor Secretary was the one held validly filed, entertained and even granted;
that it is not within the discretion of BLR to choose which between the two
appeals should be entertained, as it is the fact of the filing of the two appeals
that is being prohibited and not who among the representatives therein
possessed the authority.
We are not persuaded.
We find no error committed by the CA in finding that respondent committed
no forum shopping. As the CA correctly concluded, to wit:
It is undisputed that BMP Paralegal Officer Domingo P. Mole was no longer
authorized to file an appeal on behalf of union SALAMAT and that BMP
was duly informed that its services was already terminated. SALAMAT even
submitted before the BLR its "Resolusyon Blg. 01-2009" terminating the
services of BMP and revoking the representation of Mr. Domingo Mole in
any of the pending cases being handled by him on behalf of the union. So,
considering that BMP Paralegal Officer Domingo P. Mole was no longer
authorized to file an appeal when it filed the Notice and Memorandum of
Appeal to DOLE Regional Office No. IV-A, the same can no longer be
treated as an appeal filed by union SALAMAT. Hence, there is no forum
shopping to speak of in this case as only the Appeal Memorandum with
Formal Entry of Appearance filed by Atty. Napoleon C. Banzuela, Jr. and
Atty. Jehn Louie W. Velandrez is sanctioned by SALAMAT.18
Since Mole's appeal filed with the BLR was not specifically authorized by
respondent, such appeal is considered to have not been filed at all. It has been
held that "if a complaint is filed for and in behalf of the plaintiff who is not
authorized to do so, the complaint is not deemed filed.
An unauthorized complaint does not produce any legal effect."19
Respondent through its authorized representative filed its Appeal
Memorandum with Formal Entry of Appearance before the Labor Secretary,
and not with the BLR. As the appeal emanated from the petition for
cancellation of certificate of registration filed with the Regional Office, the
decision canceling the registration is appealable to the BLR, and not with the
Labor Secretary. However, since the Labor Secretary motu propio referred
the appeal with the BLR, the latter can now act on it. Considering that Mole's
appeal with the BLR was not deemed filed, respondent’s appeal, through
Banzuela and Associates, which the Labor Secretary referred to the BLR was
the only existing appeal with the BLR for resolution. There is, therefore, no
merit to petitioner's claim that BLR chose the appeal of Banzuela and
Associates over Mole's appeal.
The case of Abbott Laboratories Philippines, Inc. v. Abbott Laboratories
Employees Union20 cited by petitioner is not at all applicable in this case as
the issue therein is the authority of the Labor Secretary to review the decision
of the Bureau of Labor Relations rendered in the exercise of its appellate
jurisdiction over decision of the Regional Director in cases involving
cancellations of certificate of registration of labor unions. We found no grave
abuse of discretion committed by the Secretary of Labor in not acting on
therein petitioner's appeal. The decision of the Bureau of Labor Relations on
cases brought before it on appeal from the Regional Director are final and
executory. Hence, the remedy of the aggrieved party is to seasonably avail
of the special civil action of certiorari under Rule 65 and the Rules of Court.
In this case, after the Labor Secretary motu propio referred respondent's
appeal filed with it to the BLR which rendered its decision reversing the
Regional Director, petitioner went directly to the CA via a petition for
certiorari under Rule 65.
As to the second issue, petitioner seeks the cancellation of respondent's
registration on grounds offraud and misrepresentation bearing on the
minimum requirement of the law as to its membership, considering the big
disparity in numbers, between the organizational meeting and the list of
members, and so misleading the BLR that it obtained the minimum required
number of employees for purposes of organization and registration.
We find no merit in the arguments.
Art. 234 of the Labor Code provides:
ART. 234. Requirements of Registration. - A federation, national union or
industry or trade union center or an independent union shall acquire legal
personality and shall be entitled to the rights and privileges granted by law to
legitimate labor organizations upon issuance of the certificate of registration
based on the following requirements:
(a) Fifty pesos (₱50.00)registration fee;
(b) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meetings and the list of
the workers who participated in such meetings;
(c) In case the applicant is an independent union, the names of all its members
comprising at least twenty percent (20%) of all the employees in the
bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years, copies
of its annual financial reports; and
(e) Four copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who
participated in it."
And after the issuance of the certificate of registration, the labor
organization's registration could be assailed directly through cancellation of
registration proceedings in accordance with Articles 238 and 239 of the
Labor Code. And the cancellation of union certificate of registration and the
grounds thereof are as follows:
ART. 238. Cancellation of Registration. - The certificate of registration of
any legitimate labor organization, whether national or local, may be
cancelled by the Bureau, after due hearing, only on the grounds specified in
Article 239 hereof.
ART. 239. Grounds for Cancellation of Union Registration. - The following
may constitute grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification, and the list of members who took part in
the ratification;
(b) Misrepresentation, false statements or fraud in connection with the
election of officers, minutes of the election of officers, and the list of voters;
(c) Voluntary dissolution by the members.
Petitioner's charge that respondent committed misrepresentation and fraud in
securing its certificate of registration is a serious charge and must be carefully
evaluated. Allegations thereof should be compounded with supporting
circumstances and evidence.21 We find no evidence on record to support
petitioner's accusation.
Petitioner's allegation of misrepresentation and fraud is based on its claim
that during the organizational meeting on May 1, 2009, only 68 employees
attended, while respondent claimed that it has 119 members as shown in the
document denominated as "Pangalan ng mga Kasapi ng Unyon;" hence,
respondent misrepresented on the 20% requirement of the law as to its
membership.
We do not agree.
It does not appear in Article 234 (b) of the Labor Code that the attendees in
the organizational meeting must comprise 20% of the employees in the
bargaining unit. In fact, even the Implementing Rules and Regulations of the
Labor Code does not so provide. It is only under Article 234 (c) that requires
the names of all its members comprising at least twenty percent (20%) of all
the employees in the bargaining unit where it seeks to operate. Clearly, the
20% minimum requirement pertains to the employees’ membership in the
union and not to the list of workers who participated in the organizational
meeting. Indeed, Article 234 (b) and (c) provide for separate requirements,
which must be submitted for the union's registration, and which respondent
did submit. Here, the total number of employees in the bargaining unit was
396, and 20% of which was about 79. Respondent submitted a document
entitled "Pangalan ng Mga Kasapi ng Unyon" showing the names of 119
employees as union members, thus respondent sufficiently complied even
beyond the 20% minimum membership requirement. Respondent also
submitted the attendance sheet of the organizational meeting which
contained the names and signatures of the 68 union members who attended
the meeting. Considering that there are 119 union members which are more
than 20% of all the employees of the bargaining unit, and since the law does
not provide for the required number of members to attend the organizational
meeting, the 68 attendees which comprised at least the majority of the 119
union members would already constitute a quorum for the meeting to proceed
and to validly ratify the Constitution and By-laws of the union. There is,
therefore, no basis for petitioner to contend that grounds exist for the
cancellation of respondent's union registration. For fraud and
misrepresentation to be grounds for cancellation of union registration under
Article 239 of the Labor Code, the nature of the fraud and misrepresentation
must be grave and compelling enough to vitiate the consent of a majority of
union members.22

Petitioner's claim that the alleged union members signed documents without
adequate information is not persuasive. The one who alleges a fact has the
burden of proving it and a mere allegation is not evidence.23 In fact, we note
that not one of those listed in the document denominated as "Pangalan ng
Mga Kasaping Unyon" had come forward to deny their membership with
respondent. Notably, it had not been rebutted that the same union members
had signed the document entitled "Sama-Samang Pahayag ng Pagsapi," thus,
strengtheningtheir desire to be members of the respondent union.

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

As to petitioner's argument that the total number of its employees as of May

1, 2009 was 470, and not396 as respondent claimed, still the 117 union
members comprised more than the 20% membership requirement for
respondent's registration.

In Mariwasa Siam Ceramics v. Secretary of the Department of Labor and

Employment,24 we said:

For the purpose of de-certifying a union such as respondent, it must be shown

that there was misrepresentation, false statement or fraud in connection with
the adoption or ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification; or, in connection with the election of
officers, the minutes of the election of officers, the list of voters, or failure to
submit these documents together with the list of the newly elected-appointed
officers and their postal addresses to the BLR.

The bare fact that two signatures appeared twice on the list of those who
participated in the organizational meeting would not, to our mind, provide a
valid reason to cancel respondent’s certificate of registration. The
cancellation of a union’s registration doubtless has an impairing dimension
on the right of labor to self-organization. For fraud and misrepresentation to
be grounds for cancellation of union registration under the Labor Code, the
nature of the fraud and misrepresentation must be grave and compelling
enough to vitiate the consent of a majority of union members.1âwphi1

In this case, we agree with the BLR and the CA that respondent could not
have possibly committed misrepresentation, fraud, or false statements. The
alleged failure of respondent to indicate with mathematical precision the total
number of employees in the bargaining unit is of no moment, especially as it
was able to comply with the 20% minimum membership requirement. Even
if the total number of rank-and-file employees of petitioner is 528, while
respondent declared that it should only be 455, it still cannot be denied that
the latter would have more than complied with the registration
requirement.25

WHEREFORE, premises considered, the petition for review is DENIED.

The Decision dated December 22, 2010 and the Resolution dated March 28,
2011 of the Court of Appeals, in CA-G.R. SP No. 112406, are AFFIRMED.

SO ORDERED.
DE OCAMPO MEMORIAL SCHOOLS, INC. vs. BIGKIS
MANGGAGAWA SA DE OCAMPO MEMORIAL SCHOOL, INC.
G.R. No. 192648 March 15, 2017
JARDELEZA, J.:
This is a Petition for Review on Certiorari1 assailing the Court of Appeals
(CA) Decision2 dated July 15, 2009 and the Resolution3 dated June 21, 2010
(assailed Decision). The assailed Decision affirmed the Decision4 dated
December 29, 2004 of the Bureau of Labor Relations (BLR), Department of
Labor and Employment (DOLE) in Case No. BLR-A-C-75-8- 24-04, In Re:
Petition for Cancellation of Union Registration of Bigkis Manggagawa sa De
Ocampo Memorial School, Inc., - Lakas Union Registration Number (NCR-
12-CC-002-2003).
I The record shows that, as BMDOMSI had indicated, the bargaining unit as
De Ocampo Memorial Schools, Inc. (De Ocampo) is a domestic corporation
duly-organized and existing under the laws of the Philippines. It has two main
divisions, namely: De Ocampo Memorial Medical Center (DOMMC), its
hospital entity, and the De Ocampo Memorial Colleges (DOMC), its school
entity.5
On September 26, 2003, Union Registration No. NCR-UR-9-3858- 2002 was
issued in favor of Bigkis Manggagawa sa De Ocampo Memorial Medical
Center - LAKAS (BMDOMMC).6
Later, on December 5, 2003, Bigkis Manggagawa sa De Ocampo Memorial
School, Inc. (BMDOMSI) was issued a Union Registration/Certificate of
Creation of Local Chapter No. NCR-l 2-CC-002- 2003 and declared a
legitimate labor organization.7
On March 4, 2004, De Ocampo filed a Petition for Cancellation of Ce1iificate
of Registration8 with the Department of Labor and Employment - National
Capital Region (DOLE-NCR). It sought to cancel the Certificate of
Registration of BMDOMSI on the following grounds: 1) misrepresentation,
false statement and fraud in connection with its creation and registration as a
labor union as it shared the same set of officers and members with
BMDOMMC; 2) mixed membership of rank-and-file and
managerial/supervisory employees; and 3) inappropriate bargaining unit.9
On April 13, 2004, De Ocampo filed a Supplemental Petition,10 informing
the DOLE-NCR of the cancellation of the Certificate of Registration of
BMDOMMC in Case No. NCR-OD-0307-009-LRD. It attached a copy of
the Decision11 of the DOLE-NCR dated March 3, 2004, which cancelled and
struck off Union Registration No. NCR-UR-9-3858- 2002 from the registry
of legitimate labor organizations for being an inappropriate bargaining
unit.12
On May 18, 2004, BMDOMSI filed its Comment-Opposition to Petition for
Cancellation of Certificate of Registration and Supplemental Petition,13
denying De Ocampo's allegations and claiming that the latter only wants to
impede the formation of the union.
In a Decision14 dated July 26, 2004, Acting Regional Director Ciriaco A.
Lagunzad III of the DOLE-NCR ruled that BMDOMSI committed
misrepresentation by making it appear that the bargaining unit is composed
of faculty and technical employees. In fact, all the union officers and most of
the members are from the General Services Division.15 Furthermore, the
members of the union do not share commonality of interest, as it is composed
of academic and non-academic personnel.16 The nature of work of the
employees of the General Services Division, while falling within the
category of non-academic personnel, differs from that of the other
nonacademic employees composed of clerks, messengers, etc., since they
also serve the hospital component of De Ocampo.17
BMDOMSI then filed an appeal to the BLR alleging that the union members
are all employees of De Ocampo and that the bargaining unit it sees to
represent is appropriate.18
In a Decision19 dated December 29, 2004, the BLR reversed the Regional
Director's finding of misrepresentation, false statement or fraud in
BMDOMSI's application for registration. According to the BLR, De Ocampo
failed to adduce proof to support its allegation of mixed membership within
respondent union.20 Further, and contrary to De Ocampo's claim, records
show that BMDOMSI stated in its application that its members are composed
of rank-and-file employees falling under either faculty or technical
occupational classifications.21 The BLR also held that the existence of an
inappropriate bargaining unit would not necessarily result in the cancellation
of union registration, and the inclusion of a disqualified employee in a union
is not a ground for cancellation.22 Even if BMDOMSI shared the same set
of officers and members of BMDOMMC, the latter had already been delisted
on March 3, 2004 and there is no prohibition against organizing another
union.23
De Ocampo filed a Petition for Certiorari24 with the CA seeking to annul
and set aside the BLR Decision as well as the Resolution25 dated January
24, 2005 denying its motion for reconsideration.
The CA affirmed the Decision of the BLR. It ruled that there was no
misrepresentation, false statement or fraud in the application for registration.
described is composed of rank-and-file employees with occupational
classifications under technical and faculty.26 The CA found that there could
be no misrepresentation as the members appearing in the minutes of the
general membership meeting, and the list of members who attended the
meeting and ratified the union constitution and by-laws, are in truth
employees of the school, though some service the hospital.27 The CA also
ruled that, other than De Ocampo's bare allegations, there was no proof of
intent to defraud or mislead on the part of BMDOMSI. Hence, the charge of
fraud, false statement or misrepresentation cannot be sustained.28
However, the CA observed that the members of the union, who are from
academic, non-academic, and general services, do not perform work of the
same nature, receive the same wages and compensation, nor share a common
stake in concerted activities.29 While these factors dictate the separation of
the categories of employees for purposes of collective bargaining,30 the CA
reasoned that such lack of mutuality and commonality of interest of the union
members is not among the grounds for cancellation of union registration
under Article 239 of the Labor Code.31
De Ocampo filed a motion for reconsideration which was denied in the
assailed Resolution dated June 21, 2010. Hence, this petition.
De Ocampo maintains that BMDOMSI committed misrepresentation and
fraud in connection with its application, creation and registration. It
intentionally suppressed the fact that at the time of its application, there was
another union known as BMDOMMC, with whom they shared the same set
of officers and members.32 It was also made to appear that BMDOMMC is
a labor union representing a separate bargaining unit whose personality,
affairs and composition are unknown to BMDOMSI.33 Lastly, BMDOMSI
suppressed the fact that its members have no mutuality or commonality of
interest as they belong to different work classifications, nature and
designations.34
II
We deny the petition.
Article 247, previously Aiiicle 239 of the Labor Code35 provides:
Art. 247. Grounds for Cancellation of Union Registration. - The following
may constitute grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification, and the list of members who took part in
the ratification;
(b) Misrepresentation, false statements or fraud in connection with the
election of officers, minutes of the election of officers, and the list of voters;
(c) Voluntary dissolution by the members.
For fraud and misrepresentation to constitute grounds for cancellation of
union registration under the Labor Code, the nature of the fraud and
misrepresentation must be grave and compelling enough to vitiate the
consent of a majority of union members.36
De Ocampo insists that "by conveniently disregarding" BMDOMMC's
existence during the filing of its application, despite having the same set of
officers and members,37 BMDOMSI "had misrepresented facts, made false
statements and committed fraud in its application for union registration for
alleging facts therein which they [know] or ought to have known to be SO ORDERED.
false."38

We agree with the BLR and the CA that BMDOMSI did not commit fraud
or misrepresentation in its application for registration.1âwphi1 In the form
"Report of Creation of Local Chapter"39 filed by BMDOMSI, the applicant
indicated in the portion "Description of the Bargaining Unit" that it is
composed of "Rank and File" and under the "Occupational Classification," it
marked "Technical" and "Faculty."

Further, the members appearing in the Minutes of the General Membership

and the List of Workers or Members who attended the organizational meeting
and adopted/ratified the Constitution and By-Laws are, as represented,
employees of the school and the General Services Division, though some of
the latter employees service the hospital.40

Moreover, there is nothing in the form "Report of Creation of Local Chapter"

that requires the applicant to disclose the existence of another union, much
less the names of the officers of such other union. Thus, we cannot see how
BMDOMSI made the alleged misrepresentation or false statements in its
application.

De Ocampo likewise claims that BMDOMSI committed fraud and

misrepresentation when it suppressed the fact that there exists "no mutuality
and/or communality of interest"41 of its members. This, De Ocampo asserts,
is a ground for the cancellation of its registration.

We disagree.

While the CA may have ruled that there is no mutuality or commonality of

interests among the members of BMDOMSI, this is not enough reason to
cancel its registration. The only grounds on which the cancellation of a
union's registration may be sought are those found in Article 247 of the Labor
Code. In Tagaytay Highlands International Golf Club Incorporated v.
Tagaytay Highlands Employees Union-PTGW0,42 we ruled that "[t]he
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 [247] x x x of the Labor Code."43 Thus, for purposes of de-
certifying a union, it is not enough to establish that the rank-and-file union
includes ineligible employees in its membership. Pursuant to paragraphs (a)
and (b) of Article 247 of the Labor Code, it must be shown that there was
misrepresentation, false statement or fraud in connection with: (1) the
adoption or ratification of the constitution and by-laws or amendments
thereto; (2) the minutes of ratification; (3) the election of officers; (4) the
minutes of the election of officers; and (5) the list of voters.44 Failure to
submit these documents together with the list of the newly elected-appointed
officers and their postal addresses to the BLR may also constitute grounds
for cancellation, lack of mutuality of interests, however, is not among said
grounds.45

The BLR and the CA's finding that the members of BMDOMSI are rank-
and-file employees is supported by substantial evidence and is binding on
this Court.46 On the other hand, other than the allegation that BMDOMSI
has the same set of officers with BMDOMMC and the allegation of mixed
membership of rank-and-file and managerial or supervisory employees, De
Ocampo has cited no other evidence of the alleged fraud and
misrepresentation.

A final word. A party seeking the cancellation of a union's certificate of

registration must bear in mind that:

x x x [A] direct challenge to the legitimacy of a labor organization based on

fraud and misrepresentation in securing its certificate of registration is a
serious allegation which deserves careful scrutiny. Allegations thereof
should be compounded with supporting circumstances and evidence. The
records of the case are devoid of such evidence. Furthermore, this Court is
not a trier of facts, and this doctrine applies with greater force in labor cases.
Findings of fact of administrative agencies and quasi-judicial bodies, such as
the BLR, which have acquired expertise because their jurisdiction is confined
to specific matters, are generally accorded not only great respect but even
finality.47

WHEREFORE, the petition is hereby DENIED for lack of merit. The

Decision of the Court of Appeals in CA-G.R. SP No. 89162 dated July 15,
2009 is AFFIRMED.
ASIAN INSTITUTE OF MANAGEMENT vs. ASIAN INSTITUTE OF
MANAGEMENT FACULTY ASSOCIATION
G.R. No. 207971 January 23, 2017
DEL CASTILLO, J.:
This Petition for Review on Certiorari1assails the January 8, 2013 Decision2
of the Court of Appeals (CA) which dismissed the Petition for Certiorari3in
CA-G.R. SP No. 114122, and its subsequent June 27, 2013 Resolution 4
denying herein petitioner's Motion for Reconsideration. 5
Factual Antecedents
Petitioner Asian Institute of Management (AIM) is a duly registered non-
stock, non-profit educational institution. Respondent Asian Institute of
Management Faculty Association (AFA) is a labor organization composed
of members of the AIM faculty, duly registered under Certificate of
Registration No. NCR-UR-12-4076-2004.
On May 16, 2007, respondent filed a petition for certification election6
seeking to represent a bargaining unit in AIM consisting of forty (40) faculty
members. The case was docketed as DOLE Case No. NCR-OD-M-0705-007.
Petitioner opposed the petition, claiming that respondent's members are
neither rank-and-file nor supervisory, but rather, managerial employees.7
On July 11, 2007, petitioner filed a petition for cancellation of respondent's
certificate of registration8 - docketed as DOLE Case No. NCROD-0707-001-
LRD - on the grounds of misrepresentation in registration and that respondent
is composed of managerial employees who are prohibited from organizing as
a union.
On August 30, 2007, the Med-Arbiter in DOLE Case No. NCR-OD-M-0705-
007 issued an Order9 denying the petition for certification election on the
ground that AIM' s faculty members are managerial employees. This Order
was appealed by respondent before the Secretary of the Department of Labor
and Employment (DOLE), 10 who reversed foe same via a February 20, 2009
Decision 11 and May 4, 2009 Resolution, 12 decreeing thus:
WHEREFORE, the appeal filed by the Asian Institute of Management
Faculty Association (AIMFA) is GRANTED. The Order dated 30 August
2007 of DOLE-NCR Mediator-Arbiter Michael T. Parado is hereby
REVERSED and SET ASIDE.
Accordingly, let the entire records of the case be remanded to DOLEN CR
for the conduct of a certification election among the faculty members of the
Asian Institute of Management (AIM), with the following choices:
1. ASIAN INSTITUTE OF MANAGEMENT FACULTY ASSOCIATION
(AIMFA); and
2. No Union.
SO ORDERED.13
Meanwhile, in DOLE Case No. NCR-OD-0707-001-LRD, an Order14 dated
February 16, 2009 was issued by DOLE-NCR Regional Director Raymundo
G. Agravante granting AIM's petition for cancellation of respondent's
certificate of registration and ordering its delisting from the roster of
legitimate labor organizations. 1bis Order was appealed by respondent before
the Bureau labor Relations15 (BLR), which, in a December 29, 2009
Decision,16 reversed the same and ordered respondent's retention in the
roster of legitimate labor organizations. The BLR held that the grounds relied
upon in the petition for cancellation are not among the grounds authorized
under Article 239 of the Labor Code, 17 and that respondent's members are
not managerial employees. Petitioner moved to reconsider, but was rebuffed
in a March 18, 2010 Resolution. 18
CA-G.R. SP No.109487 and G.R. No.197089
Petitioner filed a Petition for Certiorari before the CA, questioning the DOLE
Secretary's February 20, 2009 Decision and May 4, 2009 Resolution relative
to DOLE Case No. NCR-OD-M-0705-007, or respondent's petition for
certification election. Docketed as CA-G.R. SP No. 109487, the petition is
based on the arguments that 1) the bargaining unit within AIM sought to be
represented is composed of managerial employees who are not eligible to
join, assist, or form any labor organization, and 2) respondent is not a
legitimate labor organization that may conduct a certification election.
On October 22, 2010, the CA rendered its Decision19 containing the
following pronouncement:
AIM insists that the members of its tenure-track faculty are managerial
employees, and therefore, ineligible to join, assist or form a labor
organization. It ascribes grave abuse of discretion on SOLE20 for its rash
conclusion that the members of said tenure-track faculty are not managerial
employees solely because the faculty's actions are still subject to evaluation,
review or final approval by the board of trustees ("BOT'). AIM argues that
the BOT does not manage the day-to-day affairs, nor the making and
implementing of policies of the Institute, as such functions are vested with
the tenure-track faculty.
We agree.
Article 212(m) of the Labor Code defines managerial employees as:
'ART. 212. Definitions. – x x x
(m) 'Managerial employee' is one who is vested with powers or prerogatives
to lay down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment. All employees not falling within any of the above
definitions are considered rank-and-file employees for purposes of this
Book.'
There are, therefore, two (2) kinds of managerial employees under Art.
212(m) of the Labor Code. Those who 'lay down x x x management policies',
such as the Board of Trustees, and those who 'execute management policies
and/or hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees'.
xxxx
On its face, the SOLE's opinion is already erroneous because in claiming that
the 'test of 'supervisory' or 'managerial status' depends on whether a person
possesses authority to act in the interest of his employer in the matter
specified in Article 212(m) of the Labor Code and Section l(m) of its
Implementing Rules', he obviously was referring to the old definition of a
managerial employee. Such is evident in his use of 'supervisory or managerial
status', and reference to 'Section l(m) of its Implementing Rules'. For
presently, as aforequoted in Article 212(m) of the Labor Code and as
amended by Republic Act 6715 which took effect on March 21, 1989, a
managerial employee is already different from a supervisory employee. x x
x
xxxx
In further opining that a managerial employee is one whose 'authority is not
merely routinary or clerical in nature but requires the use of independent
judgment', a description which fits now a supervisory employee under
Section l(t), Rule I, Book V of the Omnibus Rules Implementing the Labor
Code, it then follows that the SOLE was not aware of the change in the law
and thus gravely abused its discretion amounting to lack of jurisdiction in
concluding that AIM's 'tenure-track' faculty are not managerial employees.
SOLE further committed grave abuse of discretion when it concluded that
said tenure-track faculty members are not managerial employees on the basis
of a 'footnote' in AIM's Policy Manual, which provides that 'the policy[-]
making authority of the faculty members is merely recommendatory in nature
considering that the faculty standards they formulate are still subject to
evaluation, review or final approval by the [AIM]'s Board of Trustees'. x x x
xxxx
Clearly, AIM's tenure-track faculty do not merely recommend faculty
standards.1âwphi1 They 'determine all faculty standards', and are thus
managerial employees. The standards' being subjected to the approval of the
Board of Trustees would not make AIM's tenure-track faculty non-
managerial because as earlier mentioned, managerial employees are now of
two categories: (1) those who 'lay down policies', such as the members of the
Board of Trustees, and (2) those who 'execute management policies (etc.)’,
such as AIM's tenure-track faculty.
xxxx
It was also grave abuse of discretion on the part of the SOLE when he opined
that AIM' s tenure-track faculty members are not managerial employees,
relying on an impression that they were subjected to rigid observance of
regular hours of work as professors. x x x
xxxx
More importantly, it behooves the SOLE to deny AFA's appeal in light of the
February 16, 2009 Order of Regional Director Agravante delisting AFA from
the roster of legitimate labor organizations. For, only legitimate labor
organizations are given the right to be certified as sole and exclusive
bargaining agent in an establishment.
xxxx
Here, the SOLE committed grave abuse of discretion by giving due course to
AFA's petition for certification election, despite the fact that: (1) AFA's
members are managerial employees; and (2) AFA is not a legitimate labor
organization. 'These facts rendered AFA ineligible, and without any right to
file a petition for certification election, the object of which is to determine
the sole and exclusive bargaining representative of qualified AIM employees.
WHEREFORE, the instant petition is GRANTED. The assailed Decision
dated February 20, 2009 and Resolution dated May 4, 2009 are hereby
REVERSED and SET ASIDE. The Order dated August 30, 2007 of
Mediator-Arbiter Parado is hereby REINSTATED.
SO ORDERED.21 (Emphasis in the original)
Respondent sought reconsideration, but was denied. It thus instituted a
Petition for Review on Certiorari before this Court on July 4, 2011. The
Petition, docketed as G.R. No. 197089, remains pending to date.
The Assailed Ruling of the Court of Appeals
Meanwhile, relative to DOLE Case No. NCR-OD-0707-001-LRD or
petitioner AIM's petition for cancellation of respondent's certificate of
registration, petitioner filed on May 24, 20 l 0 a Petition for
Certiorari22before the CA, questioning the BLR's December 29, 2009
decision and March 18, 2010 resolution. The petition, docketed as CA-G.R.
SP No. 114122, alleged that the BLR committed grave abuse of discretion in
granting respondent's appeal and affirming its certificate of registration
notwithstanding that its members are managerial employees who may not
join, assist, or form a labor union or organization.
On January 8, 2013, the CA rendered the assailed Decision, stating as
follows:
The petition lacks merit
xxxx
It is therefore incumbent upon the Institute to prove that the BLR committed
grave abuse of discretion in issuing the questioned Decision.1âwphi1
Towards this end, AIM must lay the basis by showing that any of the grounds
provided under Article 239 of the Labor Code, exists, to wit:
Article 239. Grounds for cancellation of union registration. - The following
may constitute grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification, and the list of members who took part in
the ratification;
(b) Misrepresentation, false statements or fraud in connection with the
election of officers, minutes of the election of officers, and the list of voters;
(c) Voluntary dissolution by the members.
Article 238 of the Labor Code provides that the enumeration of the grounds
for cancellation of union registration, is exclusive; in other words, no other
grow1ds for cancellation is acceptable, except for the three (3) grounds stated
in Article 239. The scope of the grounds for cancellation has been explained-
For the purpose of de-certifying a union such as respondent, it must be shown
that there was misrepresentation, false statement or fraud in connection with
the adoption or ratification of the constitution and by-laws or amendments
thereto; the minutes of ratification; or, in connection with the election of
officers, the minutes of the election of officers, the list of voters, or failure to
submit these documents together with the list of the newly elected-appointed
officers and their postal addresses to the BLR.
The bare fact that two signatures appeared twice on the list of those who
participated in the organizational meeting would not, to our mind, provide a
valid reason to cancel respondent's certificate of registration. The
cancellation of a union's registration doubtless has an impairing dimension
on the right of labor to self-organization. For fraud and misrepresentation to
be grounds for cancellation of union registration under the Labor Code, the
nature of the fraud andmisrepresentation must be grave and compelling
enough to
vitiate the consent of a majority of union members.23
In this regard, it has also been held that:
Another factor which militates against the veracity of the allegations in the
Sinumpaang Petisyon is the lack of particularities on how, when and where
respondent union perpetrated the alleged fraud on each member. Such details
are crucial for, in the proceedings for cancellation of union registration on
the ground of fraud or misrepresentation, what needs to be established is that
the specific act or omission of the union deprived the complaining
employees-members of their right to choose.24
A cursory reading of the Petition shows that AIM did NOT allege any
specific act of fraud or misrepresentation committed by AFA. What is clear
is that the Institute seeks the cancellation of the registration of AFA based on
Article 245 of the Labor Code on the ineligibility of managerial employees
to form or join labor unions. Unfortunately for the petitioner, even assuming
that there is a violation of Article 245, such violation will not result in the
cancellation of the certificate of registration of a labor organization.
It should be stressed that a Decision had already been issued by the DOLE in
the Certification Election case; and the Decision ordered the conduct of a
certification election among the faculty members of the Institute, basing its
directive on the finding that the members of AFA were not managerial
employees and are therefore eligible to form, assist and join a labor union.
As a matter of fact, the certification election had already been held on
October 16, 2009, albeit the results have not yet been resolved as
inclusion/exclusion proceedings are still pending before the DOLE. The
remedy available to the Institute is not the instant Petition, but to question the
status of the individual union members of the AFA in the inclusion/exclusion
proceedings pursuant to Article 245-A of the Labor Code, which reads:
Article 245-A. Effect of inclusion as members of employees outside the
bargaining unit. - The inclusion as union members of employees outside the
bargaining unit shall not be a ground for the cancellation of the registration
of the union. Said employees are automatically deemed removed from the
list of membership of said union.
Petitioner insists that Article 245-A is not applicable to this case as all AF A
members are managerial employees. We are not persuaded.
The determination of whether any or all of the members of AFA should be
considered as managerial employees is better left to the DOLE because,
It has also been established that in the determination of whether or not certain
employees are managerial employees, this Court accords due respect and
therefore sustains the findings of fact made by quasi-judicial agencies which
are supported by substantial evidence considering their expertise in their
respective fields.25
From the discussion, it is manifestly clear that the petitioner foiled to prove
that the BLR committed grave abuse of discretion; consequently, the Petition
must fail.
WHEREFORE, the Petition is hereby DENIED. The Decision and
Resolution of public respondent Bureau of Labor Relations in BLR-A-C-19-
3-6-09 (NCR-OD-0707-001) are hereby AFFIRMED.
SO ORDERED.26 (Emphasis in the original)
Petitioner filed its Motion for Reconsideration, which was denied by the CA
via its June 27, 2013 Resolution. Hence, the instant Petition.
In a November 10, 2014 Resolution,27 the Court resolved to give due course
to the Petition.
Issue
Petitioner claims that the CA seriously erred in affirming the dispositions of
the BLR and thus validating the respondent's certificate of registration
notwithstanding the fact that its members are all managerial employees who
are disqualified from joining, assisting, or forming a labor organization.
final and conclusive in the second if that same point or question was in issue
and adjudicated in the first suit. x x x Identity of cause of action is not
required, but merely identity of issues.31 (Citation omitted)
WHEREFORE, considering that the outcome of this case depends on the
resolution of the issue relative to the nature of respondent's membership
pending in G.R. No. 197089, this case is ordered CONSOLIDATED with
G.R. No. 197089.
SO ORDERED.

Petitioner's Arguments

Praying that the assailed CA dispositions be set aside and that the DOLE-
NCR Regional Director's February 16, 2009 Order granting AIM's petition
for cancellation of respondent's certificate of registration and ordering its
delisting from the roster of legitimate labor organizations be reinstated
instead, petitioner maintains in its Petition and Reply28 that respondent's
members are all managerial employees; that the CA erred in declaring that
even if respondent's members are all managerial employees, this alone is not
a ground for cancellation of its certificate of registration; that precisely, the
finding in DOLE Case No. NCR-ODM- 0705-007, which the CA affirmed
in CA-G.R. SP No. 109487, is that respondent's members are managerial
employees; that respondent's declaration that its members are eligible to join,
assist, or form a labor organization is an act of misrepresentation, given the
finding in CA-G.R. SP No. 109487 that they are managerial employees; and
that the grounds for cancellation of union registration enumerated in Article
239 of the Labor Code are not exclusive.

Respondent's Arguments

In its Comment,29 respondent maintains that the CA was right to treat

petitioner’s case for cancellation of its union registration with
circumspection; that petitioner's ground for filing the petition for cancellation
is not recognized under Article 239; that petitioner's accusation of
misrepresentation is unsubstantiated, and is being raised for the first time at
this stage; that its members are not managerial employees; and that
petitioner's opposition to respondent's attempts at self-organization
constitutes harassment, oppression, and violates the latter's rights under the
Labor Code and the Constitution.

Our Ruling

In Holy Child Catholic School v. Hon. Sto. Tomas,30this Court declared that
"[i]n case of alleged inclusion of disqualified employees in a union, the
proper procedure for an employer like petitioner is to directly file a petition
for cancellation of the union's certificate of registration due to
misrepresentation, false statement or fraud under the circumstances
enumerated in Article 239 of the Labor Code, as amended."

On the basis of the ruling in the above-cited case, it can be said that petitioner
was correct in filing a petition for cancellation of respondent's certificate of
registration. Petitioner's sole ground for seeking cancellation of respondent's
certificate of registration - that its members are managerial employees and
for this reason, its registration is thus a patent nullity for being an absolute
violation of Article 245 of the Labor Code which declares that managerial
employees are ineligible to join any labor organization --- is, in a sense, an
accusation that respondent is guilty of misrepresentation for registering under
the claim that its members are not managerial employees.

However, the issue of whether respondent's members are managerial

employees is still pending resolution by way of petition for review on
certiorari in G.R. No. 197089, which is the culmination of all proceedings in
DOLE Case No. NCR-OD-M-0705-007 -- where the issue relative to the
nature of respondent's membership was first raised by petitioner itself and is
there fiercely contested. The resolution of this issue cannot be pre-empted;
until it is determined with finality in G.R. No. l 97089, the petition for
cancellation of respondent's certificate of registration on the grounds alleged
by petitioner cannot be resolved. As a matter of courtesy and in order to avoid
conflicting decisions, We must await the resolution of the petition in G.R.
No. 197089.

x x x If a particular point or question is in issue in the second action, and the

judgment will depend on the determination of that particular point or
question, a former judgment between the same parties or their privies will be
UST FACULTY UNION (USTFU) vs. BITONIO JR.
G.R. No. 131235 November 16, 1999
PANGANIBAN, J.:
There is a right way to do the right thing at the right time for the right reasons,
1 and in the present case, in the right forum by the right parties. While
grievances against union leaders constitute legitimate complaints deserving
appropriate redress, action thereon should be made in the proper forum at the
proper time and after observance of proper procedures. Similarly, the election
of union officers should be conducted in accordance with the provisions of
the union's constitution and bylaws, as well as the Philippine Constitution
and the Labor Code. Specifically, while all legitimate faculty members of the
University of Santo Tomas (UST) belonging to a collective bargaining unit
may take part in a duly convened certification election, only bona fide
members of the UST Faculty Union (USTFU) may participate and vote in a
legally called election for union officers. Mob hysteria, however well-
intentioned, is not a substitute for the rule of law.
The Case
The Petition for Certiorari before us assails the August 15, 1997 Resolution
2 of Director Benedicto Ernesto R. Bitonio Jr. of the Bureau of Labor
Relations (BLR) in BLR Case No. A-8-49-97, which affirmed the February
11, 1997 Decision of Med-Arbiter Tomas F. Falconitin. The med-arbiters
Decision disposed as follows:
WHEREFORE, premises considered, judgment is hereby rendered declaring
the election of USTFU officers conducted on October 4, 1996 and its election
results as null and void ab initio.
Accordingly, respondents Gil Gamilla, et al are hereby ordered to cease and
desist from acting and performing the duties and functions of the legitimate
officers of [the] University of Santo Tomas Faculty Union (USTFU) pursuant
to [the] union's constitution and by-laws (CBL).
The Temporary Restraining Order (TRO) issued by this Office on December
11, 1996 in connection with the instant petition, is hereby made and declared
permanent. 3
Likewise challenged is the October 30, 1997 Resolution 4 of Director
Bitonio, which denied petitioners' Motion for Reconsideration.
The Facts
The factual antecedents of the case are summarized in the assailed Resolution
as follows:
Petitioners-appellees [herein Private Respondents] Marino, et. al. (appellees)
are duly elected officers of the UST Faculty Union (USTFU). The union has
a subsisting five-year Collective Bargaining Agreement with its employer,
the University of Santo Tomas (UST). The CBA was registered with the
Industrial Relations Division, DOLE-NCR, on 20 February 1995. It is set to
expire on 31 May 1998.
On 21 September 1996, appellee Collantes, in her capacity as Secretary
General of USTFU, posted a notice addressed to all USTFU members
announcing a general assembly to be held on 05 October 1996. Among
others, the general assembly was called to elect USTFU's next set of officers.
Through the notice, the members were also informed of the constitution of a
Committee on Elections (COMELEC) to oversee the elections. (Annex "B",
petition)
On 01 October 1996, some of herein appellants filed a separate petition with
the Med-Arbiter, DOLE-NCR, directed against herein appellees and the
members of the COMELEC. Docketed as Case No. NCR-OD-M-9610-001,
the petition alleged that the COMELEC was not constituted in accordance
with USTFU's constitution and by-laws (CBL) and that no rules had been
issued to govern the conduct of the 05 October 1996 election.
On 02 October 1996, the secretary general of UST, upon the request of the
various UST faculty club presidents (See paragraph VI, Respondents'
Comment and Motion to Dismiss), issued notices allowing all faculty
members to hold a convocation on 04 October 1996 (See Annex "C" Petition;
Annexes "4" to "10", Appeal). Denominated as [a] general faculty assembly,
the convocation was supposed to discuss the "state of the unratified UST-
USTFU CBA" and "status and election of USTFU officers" (Annex "11",
Appeal)
On 04 October 1996, the med-arbiter in Case No. NCR-OD-M-9610-001
issued a temporary restraining order against herein appellees enjoining them
from conducting the election scheduled on 05 October 1996.
Also on 04 October 1996, and as earlier announced by the UST secretary
general, the general faculty assembly was held as scheduled. The general
assembly was attended by members of the USTFU and, as admitted by the
appellants, also by "non-USTFU members [who] are members in good
standing of the UST Academic Community Collective Bargaining Unit" (See
paragraph XI, Respondents' Comment and Motion to Dismiss). On this
occasion, appellants were elected as USTFU's new set of officers by
acclamation and clapping of hands (See paragraphs 40 to 50, Annex "12",
Appeal).
The election of the appellants came about upon a motion of one Atty. Lopez,
admittedly not a member of USTFU, that the USTFU CBL and "the rules of
the election be suspended and that the election be held [on] that day" (See —
paragraph 39, Idem.)
On 11 October 1996, appellees filed the instant petition seeking injunctive
reliefs and the nullification of the results of the 04 October 1996 election.
Appellees alleged that the holding of the same violated the temporary
restraining order issued in Case No. NCR-OD-M-9610-001. Accusing
appellants of usurpation, appellees characterized the election as spurious for
being violative of USTFU's CBL, specifically because the general assembly
resulting in the election of appellants was not called by the Board of Officers
of the USTFU; there was no compliance with the ten-day notice rule required
by Section 1, Article VIII of the CBL; the supposed elections were conducted
without a COMELEC being constituted by the Board of Officers in
accordance with Section 1, Article IX of the CBL; the elections were not by
secret balloting as required by Section 1, Article V and Section 6, Article IX
of the CBL, and, the general assembly was convened by faculty members
some of whom were not members of USTFU, so much so that non-USTFU
members were allowed to vote in violation of Section 1, Article V of the
CBL.
On 24 October 1996, appellees filed another urgent ex-parte motion for a
temporary restraining order, this time alleging that appellants had served the
former a notice to vacate the union office. For their part, appellants moved to
dismiss the original petition and the subsequent motion on jurisdictional
grounds. Both the petition and the motion were captioned to be for
"Prohibition, Injunction with Prayer for Preliminary Injunction and
Temporary Restraining Order." According to the appellants, the med-arbiter
has no jurisdiction over petitions for prohibition, "including the ancillary
remedies of restraining order and/or preliminary injunction, which are merely
incidental to the main petition for PROHIBITION" (Paragraph XVIII3,
Respondents' Comment and Motion to Dismiss). Appellants also averred that
they now constituted the new set of union officers having been elected in
accordance with law after the term of office of appellees had expired. They
further maintained that appellees' scheduling of the 5 October 1996 elections
was illegal because no rules and regulations governing the elections were
promulgated as required by USTFU's CBL and that one of the members of
the COMELEC was not a registered member of USTFU. Appellants likewise
noted that the elections called by the appellees should have been postponed
to allow the promulgation of rules and regulations and to "insure a free, clean,
honest and orderly elections and to afford at the same time the greater
majority of the general membership to participate" (See paragraph V, Idem).
Finally, appellants contended that the holding of the general faculty assembly
on 04 October 1996 was under the control of the Council of College/Faculty
Club Presidents in cooperation with the USTFU Reformist Alliance and that
they received the Temporary Restraining Order issued in Case No. NCR-OD-
M-9610-001 only on 07 October 1996 and were not aware of the same on 04
October 1996.
On 03 December 1996, appellants and UST allegedly entered into another
CBA covering the period from 01 June 1996 to 31 May 2001 (Annex 11,
appellants' Rejoinder to the Reply and Opposition).
Consequently, appellees again moved for the issuance of a temporary
restraining order to prevent appellants from making further representations
that [they] had entered into a new agreement with UST. Appellees also
reiterated their earlier stand that appellants were usurping the former's duties
and functions and should be stopped from continuing such acts.
On 11 December 1996, over appellants' insistence that the issue of
jurisdiction should first be resolved, the med-arbiter issued a temporary
restraining order directing the respondents to cease and desist from
performing any and all acts pertaining to the duties and functions of the
officers and directors of USTFU.
In the meantime, appellants claimed that the new CBA was purportedly
ratified by an overwhelming majority of UST's academic community on 12
December 1996 (Annexes 1 to 10, Idem). For this reason, appellants moved
for the dismissal of what it denominated as appellees' petition for prohibition
on the ground that this had become moot and academic. 5
Petitioners appealed the med-arbiter's Decision to the labor secretary, 6 who
transmitted the records of the case to the Bureau of Labor Relations which,
under Department Order No. 9, was authorized to resolve appeals of intra-
union cases, consistent with the last paragraph of Article 241 of the Labor
Code. 7
The Assailed Ruling
Agreeing with the med-arbiter that the USTFU officers' purported election
held on October 4, 1994 was void for having been conducted in violation of
the union's Constitution and Bylaws (CBL), Public Respondent Bitonio
rejected petitioners' contention that it was a legitimate exercise of their right
to self-organization. He ruled that the CBL, which constituted the covenant
between the union and its members, could not be suspended during the
October 4, 1996 general assembly of all faculty members, since that
assembly had not been convened or authorized by the USTFU.
Director Bitonio likewise held that the October 4, 1996 election could not be
legitimized by the recognition of the newly "elected" set of officers by UST
or by the alleged ratification of the new CBA by the general membership of
the USTFU. Ruled Respondent Bitonio:
This submission is flawed. The issue at hand is not collective bargaining
representation but union leadership, a matter that should concern only the
members of USTFU. As pointed out by the appellees, the privilege of
determining who the union officers will be belongs exclusively to the
members of the union. Said privilege is exercised in an election proceeding
in accordance with the union's CBL and applicable law.
To accept appellants' claim to legitimacy on the foregoing grounds is to
invest in appellants the position, duties, responsibilities, rights and privileges
of USTFU officers without the benefit of a lawful electoral exercise as
defined in USTFU's CBL and Article 241(c) of the Labor Code. Not to
mention the fact that labor laws prohibit the employer from interfering with
the employees in the latter' exercise of their right to self-organization. To
allow appellants to become USTFU officers on the strength of management's
recognition of them is to concede to the employer the power of determining
who should be USTFU's leaders. This is a clear case of interference in the
exercise by USTFU members of their right to self-organization. 8
Hence, this Petition. 9
The Issues
The main issue in this case is whether the public respondent committed grave
abuse of discretion in refusing to recognize the officers "elected" during the
October 4, 1996 general assembly. Specifically, petitioners in their
Memorandum urge the Court to resolve the following questions: 10
(1) Whether the Collective Bargaining Unit of all the faculty members in that
General Faculty Assembly had the right in that General Faculty Assembly to
suspend the provisions of the Constitution and By-Laws of the USTFU
regarding the elections of officers of the union[.]
(2) Whether the suspension of the provisions of the Constitution and By-
Laws of the USTFU in that General Faculty Assembly is valid pursuant to
the constitutional right of the Collective Bargaining Unit to engage in
"peaceful concerted activities" for the purpose of ousting the corrupt regime
of the private respondents[.]
(3) Whether the overwhelming ratification of the Collective Bargaining
Agreement executed by the petitioners in behalf of the USTFU with the
University of Santo Tomas has rendered moot and academic the issue as to
the validity of the suspension of the Constitution and By-Laws and the
elections of October 4, 1996 in the General Faculty Assembly[.]
The Court’s Ruling
The petition is not meritorious. Petitioners fail to convince this Court that
Director Bitonio gravely abused his discretion in affirming the med-arbiter
and in refusing to recognize the binding effect of the October 4, 1996 general
assembly called by the UST administration.
First Issue:
Right to Self-Organization
and Union Membership
At the outset, the Court stresses that National Federation of Labor (NFL) v.
Laguesma 11 has held that challenges against rulings of the labor secretary
and those acting on his behalf, like the director of labor relations, shall be
acted upon by the Court of Appeals, which has concurrent jurisdiction with
this Court over petitions for certiorari. However, inasmuch as the memoranda
in the instant case have been filed prior to the promulgation and finality of
our Decision in NFL, we deem it proper to resolve the present controversy
directly, instead of remanding it to the Court of Appeals. Having disposed of
the foregoing procedural matter, we now tackle the issues in the present case
seriatim.
Self-organization is a fundamental right guaranteed by the Philippine
Constitution and the Labor Code. Employees have the right to form, join or
assist labor organizations for the purpose of collective bargaining or for their
mutual aid and protection. 12 Whether employed for a definite period or not,
any employee shall be considered as such, beginning on his first day of
service, for purposes of membership in a labor union. 13
Corollary to this right is the prerogative not to join, affiliate with or assist a
labor union. 14 Therefore, to become a union member, an employee must, as
a rule, not only signify the intent to become one, but also take some positive
steps to realize that intent. The procedure for union membership is usually
embodied in the union's constitution and bylaws. 15 An employee who
becomes a union member acquires the rights and the concomitant obligations
that go with this new status and becomes bound by the union's rules and
regulations.
When a man joins a labor union (or almost any other democratically
controlled group), necessarily a portion of his individual freedom is
surrendered for the benefit of all members. He accepts the will of the majority
of the members in order that he may derive the advantages to be gained from
the concerted action of all. Just as the enactments of the legislature bind all
of us, to the constitution and by-laws of the union (unless contrary to good
morals or public policy, or otherwise illegal), which are duly enacted through
democratic processes, bind all of the members. If a member of a union
dislikes the provisions of the by-laws, he may seek to have them amended or
may withdraw from the union; otherwise, he must abide by them. It is not the
function of courts to decide the wisdom or propriety of legitimate by-laws of
a trade union.
On joining a labor union, the constitution and by-laws become a part of the
member's contract of membership under which he agrees to become bound
by the constitution and governing rules of the union so far as it is not
inconsistent with controlling principles of law. The constitution and by-laws
of an unincorporated trade union express the terms of a contract, which define
the privileges and rights secured to, and duties assumed by, those who have
become members. The agreement of a member on joining a union to abide
by its laws and comply with the will of the lawfully constituted majority does
not require a member to submit to the determination of the union any question
involving his personal rights. 16
Petitioners claim that the numerous anomalies allegedly committed by the
private respondents during the latter's incumbency impelled the October 4,
1996 election of the new set of USTFU officers. They assert that such
exercise was pursuant to their right to self-organization.
Petitioners' frustration over the performance of private respondents, as well
as their fears of a "fraudulent" election to be held under the latter's
supervision, could not justify the method they chose to impose their will on
the union. Director Bitonio aptly elucidated: 17
The constitutional right to self-organization is better understood in the
context of ILO Convention No. 87 (Freedom of Association and Protection
of Right to Organize), to which the Philippines is signatory. Article 3 of the
Convention provides that workers' organizations shall have the right to draw
up their constitution and rules and to elect their representatives in full
freedom, free from any interference from public authorities. The freedom
conferred by the provision is expansive; the responsibility imposed on union
members to respect the constitution and rules they themselves draw up
equally so. The point to be stressed is that the union's CBL is the fundamental
law that governs the relationship between and among the members of the
union. It is where the rights, duties and obligations, powers, functions and
authority of the officers as well as the members are defined. It is the organic
law that determines the validity of acts done by any officer or member of the
union. Without respect for the CBL, a union as a democratic institution
degenerates into nothing more than a group of individuals governed by mob
rule.
Union Election vs.
Certification Election
A union election is held pursuant to the union's constitution and bylaws, and
the right to vote in it is enjoyed only by union members. A union election
should be distinguished from a certification election, which is the process of
determining, through secret ballot, the sole and exclusive bargaining agent of
the employees in the appropriate bargaining unit, for purposes of collective
bargaining. 18 Specifically, the purpose of a certification election is to
ascertain whether or not a majority of the employees wish to be represented
by a labor organization and, in the affirmative case, by which particular labor
organization. 19
In a certification election, all employees belonging to the appropriate
bargaining unit can vote. 20 Therefore, a union member who likewise
belongs to the appropriate bargaining unit is entitled to vote in said election.
However, the reverse is not always true; an employee belonging to the
appropriate bargaining unit but who is not a member of the union cannot vote
in the union election, unless otherwise authorized by the constitution and
bylaws of the union. Verily, union affairs and elections cannot be decided in
a non-union activity.
In both elections, there are procedures to be followed. Thus, the October 4,
1996 election cannot properly be called a union election, because the
procedure laid down in the USTFU's CBL for the election of officers was not
followed. It could not have been a certification election either, because
representation was not the issue, and the proper procedure for such election
was not followed. The participation of non-union members in the election
aggravated its irregularity.
Second Issue:
USTFU's Constitution and
By Laws Violated
The importance of a union's constitution and bylaws cannot be
overemphasized. They embody a covenant between a union and its members
and constitute the fundamental law governing the members' rights and
obligations. 21 As such, the union's constitution and bylaws should be
upheld, as long as they are not contrary to law, good morals or public policy.
We agree with the finding of Director Bitonio and Med-Arbiter Falconitin
that the October 4, 1996 election was tainted with irregularities because of
the following reasons.
First, the October 4, 1996 assembly was not called by the USTFU. It was
merely a convocation of faculty clubs, as indicated in the memorandum sent
to all faculty members by Fr. Rodel Aligan, OP, the secretary general of the
University of Santo Tomas. 22 It was not convened in accordance with the
provision on general membership meetings as found in the USTFU's CBL,
which reads:
ARTICLE VIII-MEETINGS OF THE UNION
Sec. 1. The Union shall hold regular general membership meetings at least
once every three (3) months. Notices of the meeting shall be sent out by the
Secretary-General at least ten (10) days prior to such meetings by posting in
conspicuous places, preferably inside Company premises, said notices. The
date, time and place for the meetings shall be determined by the Board of
Officers. 23
Unquestionably, the assembly was not a union meeting. It was in fact a
gathering that was called and participated in by management and non-union
members. By no legal fiat was such assembly transformed into a union
activity by the participation of some union members.
Second, there was no commission on elections to oversee the election, as
mandated by Sections 1 and 2 of Article IX of the USTFU's CBL, which
provide:
ARTICLE IX - UNION ELECTION
Sec. 1. There shall be a Committee on Election (COMELEC) to be created
by the Board of Officers at least thirty (30) days before any regular or special
election. The functions of the COMELEC include the following:
a) Adopt and promulgate rules and regulations that will ensure a free, clean,
honest and orderly election, whether regular or special;
b) Pass upon qualifications of candidates;
c) Rule on any question or protest regarding the conduct of the election
subject to the procedure that may be promulgated by the Board of Officers;
and
d) Proclaim duly elected officers.
Sec. 2. The COMELEC shall be composed of a chairman and two members
all of whom shall be appointed by the Board of Officers.
xxx xxx xxx 24
Third, the purported election was not done by secret balloting, in violation of
Section 6, Article IX of the USTFU's CBL, as well as Article 241 (c) of the
Labor Code.
The foregoing infirmities considered, we cannot attribute grave abuse of
discretion to Director Bitonio's finding and conclusion. In Rodriguez v.
Director, Bureau of Labor Relations, 25 we invalidated the local union
elections held at the wrong date without prior notice to members and
conducted without regard for duly prescribed ground rules. We held that the
proceedings were rendered void by the lack of due process — undue haste,
lack of adequate safeguards to ensure integrity of the voting, and the absence
of the notice of the dates of balloting.
Third Issue:
Suspension of USTFU's CBL
Petitioners contend that the October 4, 1996 assembly "suspended" the
union's CBL. They aver that the suspension and the election that followed
were in accordance with their "constituent and residual powers as members
of the collective bargaining unit to choose their representatives for purposes
of collective bargaining." Again they cite the numerous anomalies allegedly
committed by the private respondents as USTFU officers. This argument
does not persuade.
First, as has been discussed, the general faculty assembly was not the proper
forum to conduct the election of USTFU officers. Not all who attended the
assembly were members of the union; some, apparently, were even
disqualified from becoming union members, since they represented
management. Thus, Director Bitonio correctly observed:
Further, appellants cannot be heard to say that the CBL was effectively
suspended during the 04 October 1996 general assembly. A union CBL is a
covenant between the union and its members and among members (Johnson
and Johnson Labor Union-FFW, et al. v. Director of Labor Relations, 170
SCRA 469). Where ILO Convention No. 87 speaks of a union's full freedom
to draw up its constitution and rules, it includes freedom from interference
by persons who are not members of the union. The democratic principle that
governance is a matter for the governed to decide upon applies to the labor
movement which, by law and constitutional mandate, must be assiduously
insulated against intrusions coming from both the employer and complete
strangers if the "protection to labor clause" of the constitution is to be
guaranteed. By appellant's own evidence, the general faculty assembly of 04
October 1996 was not a meeting of USTFU. It was attended by members and
non-members alike, and therefore was not a forum appropriate for transacting
union matters. The person who moved for the suspension of USTFU's CBL
was not a member of USTFU. Allowing a non-union member to initiate the
suspension of a union's CBL, and non-union members to participate in a
union election on the premise that the union's CBL had been suspended in
the meantime, is incompatible with the freedom of association and protection
of the right to organize.

If there are members of the so-called "academic community collective

bargaining unit" who are not USTFU members but who would nevertheless
want to have a hand in USTFU's affairs, the appropriate procedure would
have been for them to become members of USTFU first. The procedure for
membership is very clearly spelled out in Article IV of USTFU's CBL.
Having become members, they could then draw guidance from Ang
Malayang Manggagawa Ng Ang Tibay v. Ang Tibay, 103 Phil. 669. Therein
the Supreme Court held that "if a member of the union dislikes the provisions
of the by-laws he may seek to have them amended or may withdraw from the
union; otherwise he must abide by them." Under Article XVII of USTFU's
CBL, there is also a specific provision for constitutional amendments. What
is clear therefore is that USTFU's CBL provides for orderly procedures and
remedies which appellants could have easily availed [themselves] of instead
of resorting to an exercise of their so-called "residual power". 26

Second, the grievances of the petitioners could have been brought up and
resolved in accordance with the procedure laid down by the union's CBL 27
and by the Labor Code. 28 They contend that their sense of desperation and
helplessness led to the October 4, 1996 election. However, we cannot agree
with the method they used to rectify years of inaction on their part and
thereby ease bottled-up frustrations, as such method was in total disregard of
the USTFU's CBL and of due process. The end never justifies the means.

We agree with the solicitor general's observation that "the act of suspending
the constitution when the questioned election was held is an implied
admission that the election held on that date [October 4, 1996] could not be
considered valid under the existing USTFU constitution . . .." 29

The ratification of the new CBA executed between the petitioners and the
University of Santo Tomas management did not validate the void October 4,
1996 election. Ratified were the terms of the new CBA, not the issue of union
leadership — a matter that should be decided only by union members in the
proper forum at the proper time and after observance of proper procedures.

Epilogue

In dismissing this Petition, we are not passing upon the merits of the
mismanagement allegations imputed by the petitioners to the private
respondents; these are not at issue in the present case. Petitioners can bring
their grievances and resolve their differences with private respondents in
timely and appropriate proceedings. Courts will not tolerate the unfair
treatment of union members by their own leaders. When the latter abuse and
violate the rights of the former, they shall be dealt with accordingly in the
proper forum after the observance of due process.

WHEREFORE, the Petition is hereby DISMISSED and the assailed

Resolutions AFFIRMED. Costs against petitioners.

SO ORDERED.
UNIVERSITY OF SANTO TOMAS vs. SAMAHANG
MANGGAGAWA NG UST (SM-UST)
G.R. No. 169940 September 14, 2009
YNARES-SANTIAGO, J.:
Assailed in this petition for review on certiorari is the January 31, 2005
Decision1 of the Court of Appeals in CA-G.R. SP No. 72965, which affirmed
the May 31, 2002 Order of the Secretary of the Department of Labor and
Employment (DOLE) directing the parties to execute a Collective Bargaining
Agreement incorporating the terms in said Order with modification that the
signing bonus is increased to P18,000.00. Also assailed is the September 23,
2005 Resolution2 denying the motion for reconsideration.
Respondent Samahang Manggagawa ng U.S.T. (SM-UST) was the
authorized bargaining agent of the non-academic/non-teaching rank-and-file
daily- and monthly-paid employees (numbering about 619) of petitioner, the
Pontifical and Royal University of Santo Tomas, The Catholic University of
the Philippines (or UST), a private university in the City of Manila run by
the Order of Preachers. In October 2001, during formal negotiations for a
new collective bargaining agreement (CBA) for the academic year 2001
through 2006, petitioner submitted its "2001-2006 CBA Proposals" which,
among others, contained the following economic provisions:
A. ACADEMIC YEAR 2001-2002
1. Salary increase of P800.00 per month
2. Signing bonus of P10,000.00
3. Additional Christmas bonus of P2,000.00
B. ACADEMIC YEAR 2002-2003
1. Salary increase of P1,500.00 per month
2. Additional Christmas bonus of P2,000.00
3. P6,000,000.00 for salary restructuring
C. ACADEMIC YEAR 2003-2004
1. Salary increase of P1,700.00 per month
2. Additional Christmas bonus of P2,000.00
In November 2001, the parties agreed in principle on all non-economic
provisions of the proposed CBA, except those pertaining to Agency Contract
or contractualization (Art. III, Sec. 3 of the proposed CBA), Union Leave of
the SM-UST President (No. 4 of the Addendum to the proposed CBA), and
hiring preference.
In December 2001, petitioner submitted its final offer on the economic
provisions, thus:
A. ACADEMIC YEAR 2001-2002
1. Salary increase of P1,000.00 per month
2. Signing bonus of P10,000.00
3. Additional Christmas bonus of P2,000.00
B. ACADEMIC YEAR 2002-2003
1. Salary increase of P1,700.00 per month
2. Additional Christmas bonus of P2,000.00
3. P6,190,000.00 to be distributed in the form of salary restructuring
C. ACADEMIC YEAR 2003-2004
1. Salary increase of P2,000.00 per month
2. Additional Christmas bonus of P2,000.00
On the other hand, respondent reduced its demands for the first year from
P8,000.00 monthly salary increase per employee to P7,000.00, and from
P75,000.00 signing bonus to P60,000.00 for each employee, but petitioner
insisted on its final offer. As a result, respondent declared a deadlock and
filed a notice of strike with the National Conciliation and Mediation Board -
National Capital Region (NCMB-NCR).
Conciliation and mediation proved to be futile, such that in January 2002,
majority of respondent’s members voted to stage a strike. However, the
DOLE Secretary timely assumed jurisdiction over the dispute, and the parties
were summoned and heard on their respective claims, and were required to
submit their respective position papers.
On May 31, 2002, the DOLE Secretary issued an Order,3 the pertinent
portions of which read, as follows:
x x x In arguing on the reasonableness of its demands, it cites the income of
the school from tuition fee increases and the allocation of this amount to the
faculty and non-teaching employees of the School x x x. According to the
Union, the School’s estimate of the tuition fee increase for the school year
2003-2004 at P76,410,000.00 is erroneous. The Union argues that the total
income of the School from tuition fee increases for school year 2003-2004 is
P101,000,000.00 more or less, or a net of P98,252,187.36, after deducting
adjustments for additional charges, allowances and discounts. This is based
on the computation of the School’s Assistant Chief Accountant x x x.
xxxx
The Union feels that the members of the bargaining unit are the least favored.
On the wage increases alone, the Union points out that a comparison of the
average monthly salary of the non-academic personnel from school year
1995-1996 up to school year 1999-2000 shows a declining relative
percentage. For this period, the bargaining unit enjoyed an average monthly
salary increase of 14.234%, the lowest being 8.9% in school year 1998-1999
and the highest being 15.38% in school year 1995-1996. The School’s offer
for this CBA cycle translates to an increase of only 8.23%, specified as
follows: (1) 5.69% increase in school year 2000-2001 (P1,000.00); (2) 9.15%
increase in school year 2001-2002 (P1,700.00); and (3) 9.86% increase in
2002-2003 (P2,000.00).
The Union also submits a comparative chart of the allocation to non-
academic personnel of the 70% increase in tuition fees from school year
1996-1997 to 1999-2000 x x x. The average percentage allocation to non-
academic personnel during this period is 32.8% of the total 70% of total
tuition fee increases, the lowest being 20.83% for the school year 1999-2000
and the highest being 43.11% of the total allocation in 1997-1998. Using
P101,036,330.37 as the estimated increase in tuition fee, 70% of this amount,
net of adjustment, is P68,775,831.15 x x x. The Union argues that it is entitled
to at least the average percentage of allocation to it for the past four (4) school
years which is at 32.85%, or P22,592,860.53 of the total allocation of
P68,775,831.15.
It maintains, however, that it is entitled to more than the average percentage
of its allocation of the total 70% because it is School practice to allocate more
than 70% of the total tuition fee increases for the salaries and benefits of
School employees. Comparing the employees’ share in the tuition fee
increases from school year 1996-1997 to 1999-2000, the School allocated an
average percentage of 76.75% for the benefits and salaries of its personnel,
or from a low of 72% in 1998-1999 to a high of 84.4% in 1996-1997 x x x.
If the average is applied this year, the Union argues that the available amount
is P75,407,786.29. Because of this practice, the Union maintains that the
School is already estopped from arguing that the allocation for employee
wages and benefits should not exceed 70% of tuition fee increases.
Aside from this amount, the Union maintains that it is entitled to an additional
P15,475,000.00, sourced from other income, for the signing bonus or one-
time grant of P25,000.00 per member x x x. The Union alleges that it is
school practice to appropriate other funds for the wages and benefits of its
employees. For the school year 1996-1997, the School used funds from other
sources to fund the P2,000,000.00 hospitalization fund and 50% of the
signing bonus for the academic personnel; in 1997-1998 and 1998-1999, it
used additional funds for the P1,000,000.00 hospitalization fund of the
academic personnel; and in 1999-2000, it used other funds to finance the one-
time grant of P10,000.00 each to the non-academic personnel and additional
P4,000,000.00 for the hospitalization fund of the academic employees or a
total of P17,592,500.00 for the past four (4) academic years x x x.
The School cannot claim that the funds are insufficient to cover the expenses
for the CBA because for the fiscal year 2000-2001 alone, the accumulated
excess of revenues over expenses at the end of the year totaled
P148,881,678.00 x x x. The Statement of Revenues and Expenses from
School Operations collated from the audited Financial Statements of the
School for the school years 1996-1997 up to 2000-2001 shows that except
for school years 1996-1997 and 2000-2001, the School posted a net income
from school operations. Its average annual net income from school
operations alone is P7,956,187.00 and the net loss in 2000-2001 was a result
of the revaluation of the Main Building as part of the assets from its fully
depreciated value so that a new depreciation cost was reported and charged
to general expenses.
From the foregoing arguments, the Union demands that an amount should be
allocated to it annually to finance its demands as follows:
1st Year – P38,067,860.00 distributed as follows: P22,592,860.53 (share
from tuition fee increases) for the economic benefits with sliding effect on
the succeeding years; plus P15,475,000.00 for the one-time signing bonus of
P25,000.00 for each employee sourced from other funds.
2nd Year – P33,568,970.00 to apply to its demand for salary increase,
Christmas bonus, rice subsidy and clothing/uniform allowance.
3rd Year – P46,653,295.37 to apply to its demand for salary increase,
Christmas bonus, medicine allowance, mid-year bonus allowance and meal
allowance.
Based on the Union’s computation, its demands will cost the School a total
of P133,765,125.37 for the entire three (3) year period.
xxxx
Given all the foregoing, we cannot follow the Union’s formula and in effect
disregard the School’s two other bargaining units; to do so is a distortion of
economic reality that will not bring about long term industrial peace. We
cannot simply adopt the School’s proposal in light of the parties’ bargaining
history, particularly the pattern of increases in the last cycle. Considering all
these, we believe the following to be a fair and reasonable resolution of the
wage issue.
1st Year – P1,000.00/month
2nd Year – P2,000.00/month
3rd Year – P2,200.00/month
These increases, at a three-year total of P68,337,600, are less than the three
(3)-year increases in the last CBA cycle to accommodate the School’s proven
lack of capacity to afford a higher increase, but are still substantial enough to
accommodate the workers’ needs while taking into account the symmetry
that must be maintained with the wages of the other bargaining units. On a
straight line aggregate of P5,200.00, the non-academic personnel will receive
P498.48 less than an Instructor I (member of the faculty union) who received
an aggregate of P5,698.48, thus maintaining the gap between the teaching
and non-teaching personnel. The salary difference will as well be maintained
over the three (3)-year period of the CBA. An RFI employee (member of the
union’s bargaining unit) will receive a monthly salary of P21,695.95 while
an Instructor I (faculty union member) will have a salary of P22,948.00;
while an RF5-5/A (member of the union’s bargaining unit) will receive a
salary of P23,462.97 compared to an Asst. Prof. 1 (faculty) who will receive
P29,250.96. From a total cost of salary increases for the first year at
P7,428,000, these costs will escalate to P22,284,000 in the second year, and
to P38,625,000 at the third year. Given these figures, the amounts available
for distribution and the member of groups sharing these amounts, these
increases are by no means minimal.
Signing Bonus
A review of the past bargaining history of the parties shows that the School
as a matter of course grants a signing bonus. This ranged from P8,000.00
during the first three (3) years of the last CBA to P10,000.00 during the
remaining two (2) years of the re-negotiated term. In this instance, the
School’s offer of P10,000.00 signing bonus is already reasonable considering
that the School could have taken the position that no signing bonus is due on
compulsory arbitration in line with the ruling in Meralco v. Quisumbing et
al., G.R. No. 127598, 27 January 1999.
Christmas Bonus
We note that the members of the bargaining unit receive a P6,500.00
Christmas bonus. Considering this current level, we believe that the School’s
offer of P2,000.00 for each of the next three (3) years of the CBA is already
reasonable. Under this grant, the workers’ Christmas bonus will stand at a
total of P12,500 at the end of the third year.
Hospitalization Benefit
We believe that the current practice is already reasonable and should be
maintained.
Meal Allowance
The Union failed to show any justification for its demand on this item, hence
its demand on the increase of meal allowance is denied.
Rice Allowance
We believe an additional 2 sacks of rice on top of the existing 6 sacks of rice
is reasonable and is hereby granted, effective on the second year.
Medical Allowance
In the absence of any clear justification for an improvement of this benefit,
we find the existing practice to be already reasonable and should be
maintained.
Uniform/Clothing
The Union has not established why the School should grant the benefit; hence
this demand is denied.
Mid-year Bonus
The P3,000.00 bonus is already fair and should be maintained.
Hazard Pay
There is no basis to increase this benefit, the current level being fair and
reasonable.
Educational Benefit
The existing provision is already generous and should be maintained.
Retirement Plan
We are convinced that the 100% of basic salary per year of service is already
reasonable and should be maintained.
Hiring Preference
Based on the Minutes of Meeting on 18 October 2001 and 8 November 2001,
the parties agreed to retain the existing provision; hence, our ruling on this
matter is no longer called for.
Contractualization
The Union’s proposed amendments are legal prohibitions which need not be
incorporated in the CBA. The Union has alternative remedies if it desires to
assail the School’s contracts with agencies.
Full-time Union Leave of Union President
The Union failed to provide convincing reasons why this demand should be
favorably granted; hence, the same is denied.
Other Demands
All other demands not included in the defined deadlock issues are deemed
abandoned, except for existing benefits which the School shall continue to
grant at their current levels consistent with the principle of non-diminution
of benefits.
WHEREFORE, premises considered, the parties are hereby directed to Academic 1,452 employees awarded P45 million
execute within ten (10) days from receipt of this Order a Collective Non-academic 619 employees awarded P15.475 million
Bargaining Agreement incorporating the terms and conditions of this Order Academic &
as well as other agreements made in the course of negotiations and on Administrative 219 employees awarded P8 million
conciliation.4
Total awarded P68,475,000.00
Respondent filed a motion for reconsideration but it was denied by the The difference between P68,775,831 (70% of incremental tuition fee
Secretary of Labor. Thus, respondent filed an original petition for certiorari proceeds) and P68,475,000 (total actual allocation or award to the two
with the Court of Appeals, claiming that the awards made by the DOLE bargaining units and the school officials) is P300,831.00, which is only
Secretary are not supported by the evidence on record and are contrary to law .437% of the 70% mandatory allocation (P68,775,831.00).
and jurisprudence.
The Supreme Court in the case of Cebu Institute of Medicine v. Cebu
On January 31, 2005, the appellate court rendered the assailed Decision, the Institute of Medicine Employees’ Union National Federation of Labor held
dispositive portion of which reads, as follows: that SSS, Medicare and Pag-Ibig employer’s share may be charged against
the "seventy percent (70%) incremental tuition fee increase (sic)" as they are,
WHEREFORE, premises considered, the petition is partially GRANTED. after all, for the benefit of the University’s teaching and non-teaching
The assailed Order of May 31, 2002 of Secretary Patricia Sto. Tomas is personnel. The High Court further ruled that "the private educational
hereby AFFIRMED with the modification that the P10,000.00 signing bonus institution concerned has the discretion on the disposition of the seventy
awarded is increased to P18,000.00. percent (70%) incremental tuition fee increase (sic). It enjoys the privilege of
determining how much increase in salaries to grant and the kind and amount
SO ORDERED.5 of allowances and other benefits to give. The only precondition is that
seventy percent (70%) of the incremental tuition fee increase (sic) goes to the
In arriving at the foregoing disposition, the appellate court noted that: payment of salaries, wages, allowances and other benefits of teaching and
non-teaching personnel."a1f
Based on UST Chief Accountant Antonio J. Dayag’s Certification, the tuition
fee increment for the SY 2001-2002 amounted to P101,036,330.37. From In the (sic) light of the foregoing jurisprudence, the University, in order to
this amount, the tuition fee adjustment amounting to P2,785,143.00 was comply with R.A. 6728, must fully allocate the 70% of the tuition fee
deducted leaving a net tuition fee increment of P98,251,189.36. increases to salaries, wages, allowances and other benefits of the teaching
and non-teaching personnel. The amount of P300,831.00 must therefore be
Pursuant to Section 5 (2) RA 6728, seventy percent (70%) of P98,251,187.36 allocated either as salary increment or fringe benefits of the non-teaching
or P68,775,831.15 is the amount UST has to allocate for salaries, wages, personnel.
allowances and other benefits of its 2,290 employees, categorized as follows:
619 non-teaching personnel represented by herein petitioner SM-UST; 1,452 We noted that UST’s non-teaching employees enjoy several fringe benefits.
faculty members represented by UST-Faculty Union (UST-FU) and 219
academic/administrative officials. The last group of employees is excluded We listed them down and estimated their costs for AY 2001-2002:
from the coverage of the two bargaining units.
1. P3,000.00 mid-year bonus P1,857,000.00
Public respondent, taking into consideration the bargaining history of the 2. 6 sacks of rice/employee
parties, the needs of the members of Union in relation to the capability of its @ P1,000.00/sack 3,714,000.00
employer, UST, to grant its demands, the impact of the award on the UST- 3. Hospitalization benefit 2,476,000.00
Faculty Union members (UST-FU), and how the present salary and benefits 4. Meal allowance
of the non-academic personnel compare with the compensation of the (P600/month/employee) 4,456,800.00
employees of other learning institutions, arrived at the following "fair and 5. Hazard pay (P200/month for
reasonable" resolution to the wage issue: 198 entitled employees)
8,430,780.00
1st year – P1,000.00/month 6. Medicine Allowance
(P1,000/month/employee) 7,428,000.00 20,407,000.00
2nd year – P2,000.00/month 7. SSS (P910.00 employer’s
share per employee) 6,759,480.00
3rd year – P2,000.00/month 8. Pag-Ibig (2% of the basic pay) 742,800.00
9. Phil Health (P125.00/employee) 928,500.00
Based on public respondent’s arbitral award for the first year (AY 2001- Total P28,837,780.00
2002), We determine the allocation that SM-UST would get from the 70% of =============
the tuition fee increment for AY 2001-2002 by approximating UST’s The allocation for salary increases, 13th month pay, signing bonus and
expense on the increment of salaries/wages, allowances and benefits of the Christmas bonus for UST’s teaching and non-teaching employees, as well as
non-teaching personnel: the school officials, amount to P68.475 million. This represents almost 70%
of the UST incremental tuition fee proceeds for AY 2001-2002. Considering
1. Increment on Salaries/Wages the fringe benefits being extended to UST employees, it is safe to assume that
+ 13th month pay the funds for such benefits need to be sourced from the University’s other
(P1,000 x 13 months x 619 employees) P 8,047,000.00 revenues. We looked into UST’s financial statements to determine its
2. Signing Bonus financial standing. The financial statements duly audited by independent and
(P10,000/employee) 6,190,000.00 credible external auditors constitute the normal method of proof of profit and
3. P2,000 Christmas Bonus 1,238,000.00 loss performance of a company. We examined UST audited financial
Total statements from 1997 to 2001 and found that the University’s "other
P15,475,000.00 incomes" come from parking fees, rent income and interest income. It,
============= likewise, derives income from school operations:
The amount of P15,475,000.00 represents 22.50% of the allocated
P68,775,831.00 (70% of the tuition fee increment for AY 2001-2002). UST
has allocated P45 million or 65.43% of the P68,775,831 to UST-Faculty 1999 2000 2001
Union. Income from
Operations P19,874,937.00 (24,222,602) (40,905,598)
Is the distribution equitable? If the share from the allocated P68,775,831.00 Other Income 85,995,039.00 77,335,032.00
for each bargaining unit would be based on the union’s membership, then the 78,358,303
distribution appears fair and reasonable: Excess of Revenues Over
Expenses Before
xxxx Income Tax 96,869,976.00 53,112,480.00
(29,726,651)
Provision for
Income Tax 2,122,518.00 2,602,305.00
Excess of Revenues
Over Expenses 94,747,458.00 50,510,175.00
(32,115,272)
ACCUMULATED
EXCESS OF
REVENUES OVER
EXPENSES AT
END OF YEAR P180,996,950.00 P130,486,775.00
P148,881,678
Thus, if We charge the employees’ other benefits from the accumulated
excess of revenues, We will come up with the following:
Accumulated Excess of Revenues
Over Expenses (2001) P148,881,678.00
Less:
Other Benefits of Non-Teaching Personnel 28,837,780.00
Balance
P120,043,898.00
Even if the other benefits of the faculty members were to be charged from
the remaining balance of the Accumulated Excess of Revenues Over
Expenses, there would still be sufficient amount to fund the other benefits of
the non-teaching personnel.
xxxx
However, while We subscribe to UST’s position on "salary distortion", Our
earlier findings support the petitioner’s contention that the UST has
substantial accumulated income and thus, We deem it proper to award an
increase, not in salary, to prevent any salary distortion, but in signing bonus.
The arbitral award of P10,000 signing bonus per employee awarded by public
respondent is hereby increased to P18,000.00.
We are well aware of the need for the University to maintain a sound and
viable financial condition in the light of the decreasing number of its
enrollees and the increasing costs of construction of buildings and
modernization of equipment, libraries, laboratories and other similar
facilities. To balance this concern of the University with the need of its non-
academic employees, the additional award, which We deem reasonable, and
to be funded from the University’s accumulated income, is thus limited to
the increase in signing bonus.6
Petitioner filed a motion for reconsideration, which the appellate court denied
in its September 23, 2005 Resolution. Hence, the instant petition which raises
the following issues:
I.
THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE
ERROR OF SUBSTANCE WHEN IT RULED THAT THE MEMBERS OF
PRIVATE RESPONDENT DID NOT VOLUNTARILY AND
KNOWINGLY ACCEPT THE ARBITRAL AWARD OF THE
SECRETARY OF DOLE.
II.
THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE
ERROR OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF
DISCRETION WHEN IT INCREASED THE SIGNING BONUS
AWARDED BY THE SECRETARY OF DOLE TO EACH OF THE
MEMBERS OF PRIVATE RESPONDENT FROM P10,000.00 TO
P18,000.00.
III.
THE HONORABLE COURT OF APPEALS HAS COMPLETELY
IGNORED THE CLEAR MANDATE AND INTENTION OF R.A. 6728
OTHERWISE KNOWN AS THE GOVERNMENT ASSISTANCE TO
STUDENTS AND TEACHERS IN PRIVATE EDUCATION ACT.
IV.
THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE
ERROR OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF
DISCRETION WHEN IT RULED THAT THE FRINGE BENEFITS
BEING ENJOYED BY THE ACADEMIC AND NON-ACADEMIC
EMPLOYEES OF PETITIONER WERE SOURCED OUT FROM ITS
OTHER INCOME.
V.
THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE
ERROR OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF
DISCRETION WHEN IT IGNORED THE TIME HONORED
PRINCIPLES GOVERNING PETITION FOR CERTIORARI
INVOLVING LABOR CASES.7
Petitioner alleges that, as of December 11, 2002, 526 regular non-academic
employees – out of a total of 619 respondent’s members – have decided to
unconditionally abide by the May 31, 2002 Order of the DOLE Secretary.8
A letter signed by the 526 non-academic employees allegedly reads:
December 3, 2002
TO: REV. FR. TAMERLANE R. LANA, O.P.
Rector
REV. FR. JUAN V. PONCE, O.P.
Vice-Rector
KAMI NA NAKALAGDA SA IBABA AY NAGPAPAABOT NG AMING
TAHASANG PAGTANGGAP SA AWARD NG SECRETARY OF
LABOR SA AMING (CBA) DEADLOCK CASE.
SANA PO AY MA-RELEASE ANG AMING MGA WAGE
ADJUSTMENTS AT IBA PANG BENEPISYO BAGO MAG DECEMBER
15, 2002.
x x x x9
Petitioner claims that it began paying the wage adjustment and other benefits
pursuant to the May 31, 2002 Order of the DOLE Secretary; and that to date,
572 out of the 619 members of respondent have been paid. It now argues that
by their acceptance of the award and the resulting payments made to them,
the said union members have ratified its offer and thus rendered moot the
case before the Court of Appeals (CA-G.R. SP No. 72965).
Petitioner also argues that the Court of Appeals erred in ordering it to source
part of its judgment award from the school’s other income, claiming that
Republic Act 672810 does not compel or require schools to allocate more
than 70% of the incremental tuition fee increase for the salaries and benefits
of its employees. Citing an authority in education law, it stresses that –
Clearly, only 70% may be used for the "payment of salaries, wages,
allowances and other benefits of teaching and non-teaching personnel," since
20% "shall go to the improvement or modernization of buildings, equipment,
libraries, laboratories, gymnasia and similar facilities and the payment of
other costs of operation."
A school does not exist solely for the benefit of its teachers and non-teaching
personnel. A school is principally established to deliver quality education at
all levels, as the Constitution requires. Therefore, any tuition fee increase
authorized by either the DepEd Secretary, the CHED or the Director General
of the TESDA for private schools should not solely benefit the teaching and
non-teaching personnel but should rather be used for the welfare of the entire
school community, particularly the students. The students are entitled as a
matter of right to the improvement and modernization of the school
"buildings, equipment," as this is fundamental to the maintenance or
improvement of the quality of education they receive.
Thus, if schools use any part of the 20% reserved for the upgrading of school
facilities to supplement the salaries of their academic and non-academic
personnel, they would not only be violating the students’ constitutional right
to quality education through "improvement and modernization" but also
committing a serious infraction of the mandatory provisions of RA 6728.
The law is silent, however, on the remaining ten percent of the tuition fee
increase. The DepEd has referred to it as the "return of investment" for
proprietary schools and the "free portion" for non-stock, non-profit
educational institutions. This ten percent (10%) is the only portion of the
tuition fee increase which schools may use as they wish.11
Petitioner thus concedes liability only up to P300,831.00, which is the To put matters in their proper context, we must first simplify the facts.
remaining balance of the undistributed amount of P68,775,831.00, which
represents 70% of the incremental tuition fee proceeds for the period in Although the parties were negotiating on the CBA for academic years 2001
question. through 2006 (2001-2006 CBA Proposals), we are here concerned only with
the economic provisions for the academic year (AY) 2001-2002, specifically
Petitioner contends further that the appellate court’s award of additional the appellate court’s increased award of signing bonus, from P10,000.00 as
signing bonus (from P10,000.00 to P18,000.00) is contrary to the nature and originally granted by the DOLE Secretary, to P18,000.00; the parties do not
principle behind the grant of such benefit, which is one given as a matter of appear to question any other disposition made by the DOLE Secretary.
discretion and cannot be demanded by right,12 a consideration paid for the
goodwill that existed in the negotiations, which culminate in the signing of a Thus, it has been determined that from the tuition fees for the academic year
CBA.13 Petitioner claims that since this condition is absent in the parties’ in question, petitioner earned an increment of P101,036,330.37. Under R.A.
case, it was erroneous to have rewarded respondent with an increased signing 6728, 70% of that amount – or the net18 amount of P68,775,831.15 – should
bonus. be allotted for payment of salaries, wages, allowances and other benefits of
teaching and non-teaching personnel except administrators who are principal
Finally, petitioner endorses the original award of the DOLE Secretary, stockholders of the school.
calling her disposition of the case "fair and equitable"14 and deserving of our
attention, in light of the principle that – Of this amount (P68,775,831.15), an aggregate of P15,475,000.00 (or 22.5
%) was allocated to the university’s non-teaching or non-academic
The conclusions reached by public respondent (Secretary of Labor) in the personnel, by way of the following:
discharge of her statutory duty as compulsory arbitrator, demand the high
respect of this Court. The study and settlement of these disputes fall within Increment on Salaries/Wages
public respondent's distinct administrative expertise. She is especially trained plus 13th month pay
for this delicate task, and she has within her cognizance such data and (P1,000 x 13 months x 619
information as will assist her in striking the equitable balance between the non-academic personnel) P 8,047,000.00
needs of management, labor, and the public. Unless there is clear showing of Signing Bonus
grave abuse of discretion, this Court cannot and will not interfere with the (P10,000 per employee) 6,190,000.00
labor expertise of public respondent x x x.15 P2,000 Christmas Bonus 1,238,000.00
TOTAL
On the other hand, respondent seeks to sustain the appellate court’s 15,475,000.00
disposition, echoing its ruling that even though majority of the non-teaching On the other hand, the amount of P45 million (or 65.43% of P68,775,831.15)
employees agreed to petitioner’s offer and accepted payment thereupon, they was allocated to the teaching personnel.
are not precluded from receiving additional benefits that the courts may
award later on, bearing in mind that – After distribution of the respective shares of the teaching and non-teaching
personnel, there remained a balance of P300,831.00 from the
the employer and the employee do not stand on the same footing. Considering P68,775,831.15.
the country’s prevailing economic conditions, the employee oftentimes finds
himself in no position to resist money proffered, thus, his case becomes one In addition to the salary increase, signing and Christmas bonuses, the Court
of adherence and not of choice. This being the case, they are deemed not to of Appeals extended to respondent’s members the following fringe benefits
have waived any of their rights.16 for AY 2001-2002, which benefits petitioner has been giving its non-teaching
employees in the past, and which are included in the DOLE Secretary’s
As regards petitioner’s assertion that the funds to cover for the cost of the award – an award which petitioner prays for this Court to affirm in toto:
other benefits awarded by the DOLE Secretary may not be sourced from its
other income pursuant to R.A. 6728 as these benefits should only be paid out 1. P3,000.00 mid-year bonus P1,857,000.00
from the 70% tuition fee increment, respondent argues that R.A. 6728 – 2. 6 sacks of rice/employee
@ P1,000/sack 3,714,000.00
does not provide that the increase or improvement of the salaries and fringe 3. Hospitalization benefit 2,476,000.00
benefits of the employees should be exclusively funded from the income of 4. Meal allowance
the University which is derived from the increase in tuition fees. In fact, the (P600/month/employee) 4,456,800.00
statute has no application with respect to the manner of disposition of the 5. Hazard pay (P200/month for
other incomes (as distinguished from income derived from tuition fee 198 entitled employees) 8,430,780.00
increases) of the University, nor does it preclude or exempt the latter from 6. Medicine Allowance
using its other income or part thereof to fund the cost of increases or (P1,000/month/employee) 7,428,000.00 20,407,000.00
improvements in the salaries and benefits of its employees. x x x 7. SSS (P910.00 employer’s
share per employee) 6,759,480.00
15. Contrary to the assertion of Petitioner, it is very clear that the funds used 8. Pag-Ibig (2% of the basic pay) 742,800.00
by the University to cover the cost of other fringe benefits (under the existing 9. Philhealth (P125.00/employee) 928,500.00
CBA) granted to the non-academic employees for AY 2001-2002 in the
amount of P28,837,780.00 as observed by the Court of Appeals, came from
the other income of the University and not from the share of the said Total P28,837,780.00
employees in the income derived from the tuition fee increases during the Clearly, these fringe benefits would have to be obtained from sources other
same period. Logically, the grant of the said fringe benefits could not have than the incremental tuition fee proceeds (P68,775,831.15), since only
come from the amount of P15,475,000.00 which was already allocated by the P15,475,000.00 thereof was set aside for the non-teaching personnel; the rest
University to cover the total cost of the increases in the salaries, grant of was allocated to the teaching personnel.
signing bonus, and increase in the Christmas bonus to the non-academic
employees for AY 2001-2002.17 The appellate court, moreover, granted an increase in the signing bonus, that
is, from the DOLE Secretary’s award of P10,000.00, to P18,000.00. This,
On the appellate court’s award of additional signing bonus, respondent exactly, is the parties’ point of contention.
argues that since no strike or any untoward incident occurred, goodwill
between the parties remained, which entitles respondent’s members to Going now to the question of whether respondent’s members’ individual
receive their signing bonus. Besides, respondent asserts that since petitioner acceptance of the award and the resulting payments made by petitioner
did not appeal the DOLE Secretary’s award, it may not now argue against its operate as a ratification of the DOLE Secretary’s award which renders CA-
grant, the issue remaining being the propriety of the awarded amount; that is, G.R. SP No. 72965 moot, we find that such do not operate as a ratification of
whether or not it was proper for the appellate court to have raised it from the DOLE Secretary’s award; nor a waiver of their right to receive further
P10,000.00 to P18,000.00. benefits, or what they may be entitled to under the law. The appellate court
correctly ruled that the respondent’s members were merely constrained to
We resolve to PARTIALLY GRANT the petition. accept payment at the time. Christmas was then just around the corner, and
the union members were in no position to resist the temptation to accept
much-needed cash for use during the most auspicious occasion of the year.
Time and again, we have held that necessitous men are not, truly speaking,
free men; but to answer a present emergency, will submit to any terms that
the crafty may impose upon them.19

Besides, as individual components of a union possessed of a distinct and

separate corporate personality, respondent’s members should realize that in
joining the organization, they have surrendered a portion of their individual
freedom for the benefit of all the other members; they submit to the will of
the majority of the members in order that they may derive the advantages to
be gained from the concerted action of all.20 Since the will of the members
is personified by its board of directors or trustees, the decisions it makes
should accordingly bind them. Precisely, a labor union exists in whole or in
part for the purpose of collective bargaining or of dealing with employers
concerning terms and conditions of employment.21 What the individual
employee may not do alone, as for example obtain more favorable terms and
conditions of work, the labor organization, through persuasive and coercive
power gained as a group, can accomplish better.1avvphi1

Regarding petitioner’s assertion that it was unlawful for the Court of Appeals
to have required it to source the award of fringe benefits (in the amount of
P28,837,780.00) from the school’s other income, since R.A. 6728 does not
compel or require schools to allocate more than 70% of the incremental
tuition fee increase for the salaries and benefits of its employees, we find it
unnecessary to rule on this matter. These fringe benefits are included in the
DOLE Secretary’s award – an award which petitioner seeks to affirm in toto;
this being so, it cannot now argue otherwise. Since it abides by the DOLE
Secretary’s award, which it finds "fair and equitable," it must raise the said
amount through sources other than incremental tuition fee proceeds.

Finally, we come to the appellate court’s award of additional signing bonus,

which we find to be unwarranted under the circumstances. A signing bonus
is a grant motivated by the goodwill generated when a CBA is successfully
negotiated and signed between the employer and the union.22 In the instant
case, no CBA was successfully negotiated by the parties. It is only because
petitioner prays for this Court to affirm in toto the DOLE Secretary’s May
31, 2002 Order that we shall allow an award of signing bonus. There would
have been no other basis to grant it if petitioner had not so prayed. We shall
take it as a manifestation of petitioner’s liberality, which we cannot now
allow it to withdraw. A bonus is a gratuity or act of liberality of the giver;23
when petitioner filed the instant petition seeking the affirmance of the DOLE
Secretary’s Order in its entirety, assailing only the increased amount of the
signing bonus awarded, it is considered to have unqualifiedly agreed to grant
the original award to the respondent union’s members.

WHEREFORE, the petition is PARTIALLY GRANTED. The signing bonus

of EIGHTEEN THOUSAND PESOS (P18,000.00) per member of
respondent Samahang Manggagawa ng U.S.T. as awarded by the Court of
Appeals is REDUCED to TEN THOUSAND PESOS (P10,000.00). All other
findings and dispositions made by the Court of Appeals in its January 31,
2005 Decision and September 23, 2005 Resolution in CA-G.R. SP No. 72965
are AFFIRMED.

SO ORDERED.
HEIRS OF TEODOLO M. CRUZ vs. COURT OF INDUSTRIAL
RELATIONS
G.R. No. L-23331-32 December 27, 1969
TEEHANKEE, J.:
These cases are separate appeals filed by respective petitioners from
respondent Court's Orders of November 8, 1963 and March 9, 1964
approving by a split 3 to 1 vote the settlement for P100,000.00 of the
estimated P423,756.74 — judgment liability of respondent firm in favor of
the claimants-members of the Santiago labor Union, executed on November
8, 1963 between respondent firm and the labor union as represented by a
majority of its board of directors. The appeals are jointly resolved in this
decision.
Petitioners in Cases L-23331-32 are the retained lawyers of the Santiago
Labor Union who question respondent Court's approval of respondent firm's
settlement of the union members' judgment claims with the union board of
directors, without their knowledge and consent, notwithstanding their duly
recorded attorneys' lien, and over the objection of a board member that the
union board had no authority to compromise or quit-claim the judgment
rights of the union members.1
Petitioners in Cases L-23361-62 are forty-nine (49) claimants-members of
the Santiago Labor Union who assail respondent Court's approval of the
questioned settlement, without their authority as the real parties in interest,
and who denounce the settlement as unconscionable and having been entered
into by the majority of the union board "under circumstances of fraud, deceit,
mispresentation and/or concealment, especially where a member of the Court
has actively used his official and personal influence to effect the settlement
which is manifestly unjust to laborers who by reason of their financial
disadvantages in a conflict with their employers need all the aid of the Court
for their protection, consonant with law, justice and equity."2
The factual background goes as far back as June 21, 1952, when the Santiago
Labor Union, composed of workers of the Santiago Rice Mill, a business
enterprise engaged in the buying and milling of palay at Santiago, Isabela,
and owned operated by King Hong Co., filed before the respondent Court of
Industrial Relations Cases Nos. 709-V and V-1 hereof, a petition for overtime
pay, premium pay for night, Sunday and holiday work, and for reinstatement
of workers illegally laid off. As of then, the total sum claimed by the workers,
as itemized in their amended petition of September 2, 1952 — P100,816.36
for overtime pay, P19,350.00 for premium pay and P3,360.00 for differential
pay under the Minimum Wage Law — amounted to P123,526.36.3
As recorded in this Court's decision of August 31, 1962 in Santiago Rice
Mill, et al. vs. Santiago Labor Union,4 which affirmed the Court of Industrial
Relations judgment in favor of the workers, "on September 19, 1958, after a
protracted hearing during which scores of witnesses and voluminous exhibits
were presented, the court, thru Judge Emiliano G. Tabigne, rendered decision
dismissing the petition of the union for lack of merit and want of jurisdiction;
but, upon a motion for reconsideration, the Court of Industrial en banc, by a
split decision of 3-2 vote, issued a resolution reversing the decision of the
trial judge. The dispositive part of said resolution reads:
"WHEREFORE, the respondents are hereby ordered to pay the overtime
claim of both male and female claimants herein computed at their basic pay
for each period in question; the legal premium for night, Sunday and holiday
work or services rendered by the male claimants herein computed also on the
proven basic wage or salary at the time in question; to pay the overtime claim
of their drivers computed on their respective monthly salaries; to pay the
differentials due each of the women claimants on their wages from August
4, 1951 at the rate of P2.00 daily and P3.000 daily from August 4, 1952; and
to reinstate the claimants both male and female, who have testified and
proved their having been illegally laid-off, with the right of respondents to
deduct from the back wages due each claimant any amount earned during the
period of the illegal dismissal."
The worker's decade of travail was not yet to be at an end, however, despite
this Court's affirmance of the judgment for the workers. After the remand of
the records for enforcement by respondent Court, and the corresponding
examination of books, said Court's Chief Examiner filed his Partial Report
of December 14, 1962, wherein the judgment award in favor of the workers
was determined and computed, as follows:
(a) For back wages from January 1, 1953 to April 30, 1962 of all the 35
employees and laborers (26 workers, 6 laborers and 3 drivers) who testified
in court, per dispositive part of the judgment, "before deducting the amounts
earned during the period of the back wages by each claimant and before
deduction of amounts corresponding to the back wages of claimants who died
before April 30, 1962" at P6,380.00 for each of the 32 workers and
P28,000.00 for each of the 3 drivers
P288,160.00
(b) For overtime and premium pay from January 1, 1948 to December 31,
1952 of some 104 workers, in varying amounts.5
125,216.74
(c) For minimum wage differentials of P2.00 daily from September 10, 1951
to December 31, 1951 of 60 women workers
10,380.00
TOTAL
P423,756.74
Petitioners claim, furthermore, that "in this computation, however, the filed
examiners did not include the claims of seventy (70) other laborers whose
total claims (for back wages), at the rate of P6,300.00 each, would be
P441,000.00. Therefore, the correct grand total amount due the laborers
would be P864,756.74."6
The Chief Examiner's Report showed respondent firm's total assets as at
October 31, 1962 to be P191.151.08 (cash account of P148,411.20, fixed
assets of buildings, machinery & equipment, corn mill, etc. with a book value
of P40,073.75 and deferred charges of P2,666.14), and its net worth to be in
the same amount of P191,151.08, (capital stock paid up of P232,000.00 less
deficit of P40,848.92). the Report further stated that in January, 1962 and on
August 9, 1962, respondent firm sold its trucks, jeep and one car, with a net
book value of P2,628.71 for P27,000.00 or a net gain of P24,371.29.
Petitioners claim that the book value of respondent firm's fixed assets is only
one-sixth of their actual market value of P240.442.50, and that its total
leviable assets therefore amounted to close to P390,000.00, without taking
into account the huge income potential of its rice mill operations. Respondent
firm disputes such a figure as "completely gratuitous and without basis in
fact."7
A general opposition to the Chief Examiner's Report was filed by respondent
firm. Judge Emiliano G. Tabigne, as the trial judge, supra, ordered a hearing
thereon on December 22, 1962, as a condition precedent to execution of the
judgment. Such Report was submitted for resolution and approval at the
hearing of December 22, 1962, but the records before us fail to show that the
trial judge ever acted on or approved the Report.
Before and after the submittal of the Chief Examiner's Report of December
14, 1962, the union pressed for execution of the final judgment in favor of its
claimants-members. It filed, furthermore, on December 20, 1962, an Urgent
Motion for Preliminary Attachment, in view of the disposition by respondent
firm of its trucks and automotive equipment and by virtue of the fact admitted
by respondent firm that it had stopped operations preparatory to liquidation,
by reason of the alien nationality of most of its stockholders, under the
provisions of Republic Act No. 3018 nationalizing the rice and corn industry.
In another motion of December 4, 1962, the union had asked that the Court
at least order respondent firm to put up a bond of P500,000.00 to answer for
the payment of the judgment or to deposit said amount in Court.
Petitioners assert that these motions were left hanging until the union filed a
mandamus petition with this Court,8 after which the trial judge issued and
released on April 15, 1963 his Order dated March 30, 1963. In this Order, the
trial Judge, recognizing that "petitioner (union) and its members concerned
should be extended the necessary protection of their rights" ordered
respondent firm, within 10 days from its finality, to deposit in Court the sum
of one hundred thousand (P100,000.00) pesos and to file a surety bond of
equal amount, "to guarantee the payment of whatever amount (a) due
petitioner (union) and its members concerned after this Court shall have
finally decided the obligation of herein respondents under the judgment."
This Order was affirmed by respondent court en banc, in its Resolution
denying respondent firm's motion for reconsideration thereof.
Respondent sought a review by this Court of the said Order and Resolution
requiring it to deposit P100,000.00 and to file a surety bond of equal amount
to guarantee payment of its judgment obligation in Santiago Rice Mill et al.
vs. Santiago Labor Union, etc., docketed as Cases G.R. Nos. L-21758-59 of
this Court. this Court, in its Resolution of September 20, 1963, dismissed for
lack of merit respondent's petition for review, and the dismissal became final
on October 24, 1963.
Earlier, June 25, 1963, pursuant to the request of the parties, who had advised
the trial judge that they would meet at the premises of respondent firm at
Santiago, Isabela, to take up direct negotiations for the possible settlement of
the judgment, a team of employees of the Court had been sent to help in the
negotiations. the transcript of the negotiations records that respondent had
then offered the Union the maximum amount of P110,000.00 in full
settlement of its obligations to the members-claimants of the Union under the
judgment, but that the union rejected the offer and counter-offered the
minimum amount of P200,000.00.
The Union meanwhile filed to no avail a series of urgent motions on May 8,
July 1, August 29 and September 6, 1963 for approval of the Chief
Examiner's Partial Report of December 14, 1962 and for enforcement,
through a writ of execution or contempt proceedings, of the Order of March
30, 1963 requiring firm to deposit a total of P200,000 in cash and bond to
guarantee payment of the judgment. Upon the finality of this Court's
Resolution dismissing respondent's petition for a review of said Order of
March 30, 1963, the union again filed on October 29, 1963 still another
Urgent Motion, advising the trial judge of this Court's action rejecting
respondent's appeal and invoking the Court's ministerial duty of enforcing its
said Order — in vain again, as shall presently be seen.
The trial judge took no action on this latest Urgent Motion of the Union,
wherein it emphasized that respondent, with this Court's action rejecting its
appeal, no longer had any excuse for refusing its appeal, no longer had any
excuse for refusing to comply with the deposit Order. Instead, an
unscheduled conference was called and held on October 31, 1963 in the
chambers of the trial judge, and attended by representatives of respondent
firm, including their counsels of record, on one hand and Segundino S.
Maylem, president of the union and eight directors of the union, on the other.
Four of these nine union representatives, including the union president
himself, had no claims of rewards whatever under the judgment. Said union
officials were not assisted by counsel, as petitioner Mary Concepcion,
counsel of record of the union, was not present, not having been notified of
the conference.
At this conference of October 31, 1963, respondent firm made again the same
offer to settle and quitclaim the judgment in favor of the union members for
the same amount of P110,000.00, which offer had already been rejected by
the union at the earlier conference held on June 25, 1963 at Santiago, Isabela,
supra. But this time, as appears from the transcript of the conference,
respondent and the directors of the union decided to settle the case amicably
with the payment by the firm of the same amount of P110,000.00 which was
deposited with the Court's disbursing officer "immediately upon the signing
of the settlement which will be prepared by the respondent firm through its
counsel." The complete transcript of the conference, as reproduced by
respondent in its brief, follows:
COURT:
The parties have solicited the intervention of the court for the settlement of
this case. They have decided to settle it amicably with the condition that the
management will pay ONE HUNDRED TEN THOUSAND PESOS
(P110,000.00) cash, and that the said amount will be deposited with the
Disbursing Officer of the Court immediately upon the signing of the
settlement which will be prepared by the respondent firm through its counsel.
Now, Mr. Maylem, make your manifestation on record.
MR. MAYLEM:
As per unanimous decision of the present members of the board composing
of nine, the three are not members of the board, present before this Honorable
Court to date, (sic) they have agreed to accept the proffer of ONE
HUNDRED TEN THOUSAND PESOS (P110,000.00) as full settlement of
their claims in Cases Nos. 709-V and 709-V (1).
ATTY. GARCIA:
In behalf of the respondent and the management of the said respondent and
also in behalf of Mr. Pino, who is the attorney-in-fact of the respondent
corporation, with full power to enter into this settlement, we wish to manifest
and uniform this Honorable Court that the acceptance of the proffer of
P110,000.00 in full settlement of the claims of petitioners is with the full
agreement of the said respondent. We are disposed to deposit the amount of
P110,000.00 on or about Friday, November 8, 1963, and said deposit to be
made with the Disbursing Officer of this Court and said deposit to be in
certified checks of a local bank and which is actually equivalent to cash. In
line further with the suggestion of the Honorable Judge, we ware willing to
assume the payment of the deposit fee upon our depositing the said amount
of P110,000.00. There is a previous understanding which was not made of
record as to the fact that to enable the members of the board of directors of
the petitioner union to come back to Manila next week to enable them to sign
the settlement papers, we have agreed to advance the sum of TWO
HUNDRED PESOS (P200.00) to the petitioner for the account of said
settlement and which will be used by the said petitioners in their travelling
expenses between Manila and Santiago, going and coming.
COURT:
Noted.
MR. MAYLEM:
We request the Court that Mrs. Mary Concepcion should be presented during
the signing of the agreement on or about November 8, 1963, at 2:30 P.M.
COURT:
NOTED.9
As against the official transcript of the proceedings of the conference above
reproduced, petitioner Natividad Magalpo, a director of the union, together
with petitioners Lydia Bulos and Paciencia Batoon, both union members-
claimants, filed on November 5, 1963, through their present counsel, who
duly entered their appearance, their verified "Manifestation and Objection
with Ex-Parte Urgent Motion", relating what transpired at the conference,
charging the union president, Maylem, with bad faith in that he never
previously advised the union representatives that the conference of October
31, 1963 was to discuss a compromise settlement nor that this court's
resolution dismissing respondent's appeal from the trial judge's Order dated
March 30, 1963 requiring respondent to deposit P200,000.00 in cash and
surety bond had already become final, and asking the trial judge to shelve the
proposed settlement until respondent firm shall have complied with the said
deposit order. The pertinent portions of said Objection and Urgent Motion
read:
3. That during the conference, the matter of amicably settling the case was
discussed; petitioners representatives pressed for at least P150,000.00 as a
fair amount and the representatives of the respondents were insisting on their
offer of a definite sum of P110,000.00;
4. That in the course of the conference, no mention at all was made of the
entry of judgment in G.R. Nos. L-21758-59, Supreme Court of the
Philippines, entitled "Santiago Rice Mill, et al. vs. Santiago Labor Union,
etc." on October 24, 1963, thereby becoming final and executory; that the
aforesaid entry of judgment reads as follows:
"After a consideration of the allegation of the petition filed in cases
L-21758 and L-21759 (Santiago rice Mill, etc. vs. Santiago Labor Union, et
al.) for review of the order and resolution of the Court of Industrial Relations
referred to therein, the COURT RESOLVED to dismiss the petition for lack
of merit."
5. That by the terms of the afore-cited entry of judgment, the Respondent's,
in effect, are ordered to deposit the sum of P100,000 in cash, Philippine
Currency and similar amount P100,000 in surety bond, pursuant to the order
of this Honorable court of March 30, 1963, which was affirmed in the
abovecited Supreme Court resolutions;
6. That as a consequence of the ignorance of the Board of Directors of
Petitioner of this entry, then present, they tentatively agreed to the offer of
P110,000.00 of Respondents, until November 8, 1963 when the final
conference before this Honorable Court will be held;
7. That movants consented to come to Manila on the understanding that the
conference was to be held with the Attorney-in-fact of the petitioner, the
"CREAM, INC.," formerly, Credit Research and Intelligence, its exclusive
authorized representative for the evaluation, adjustment and liquidation of its
claim against Respondent, that they were very much taken back in having
been taken to the Court of Industrial Relations on October 31, 1963 by the
President of the Petitioner, Mr. Segundino S. Maylem; that even while they
were already inside the building, they were informed that the purpose was to
talk about a compromise settlements with respondent's representatives; as a
result of these circumstances, your movants although present, were not able
to register their objections to the proceedings; that immediately after the
aforesaid conference, the herein movants came to know of the entry of
judgment in the Supreme Court, infra; (sic)
8. That the herein Movant's register and manifest their objections to the
proceeding held and to the tentative agreement manifested by the Board of
Directors of the Santiago Labor Union then present, on the following
grounds:
a) That the Board of Directors did not have any express authority of the
members of the Santiago Labor Union to enter into any compromise for the
sum of P110,000.00; on the contrary, the latest authority granted its Attorney-
in-fact, the "CREAM, INC." was for the sum of P150,000.00 which authority
was given only, very recently:
b) That the proceedings on October 31, 1963 was tainted by apparent bad
faith on the part of the President of the Petitioner, Mr. Segundino s. Maylem,
in that there never was a time before the conference when he intimated or
otherwise made known to the movants, that a conference would be held
before Judge Emiliano Tabigne. The only reason for the trip to Manila was
the conference with "CREAM, Inc." officials;
c) That the effect of the entry of judgment in G.R. Nos.
L-21758-59, infra, was not explained to the members of the Board of
Petitioner at any time, much less made known, although it was later
ascertained that President Segundino s. Maylem all the time, BEFORE THE
CONFERENCE, knew of the existence of the order; what was emphasized
was the claim of the Respondents that they are unable to pay more than
P110,000.00; (emphasis supplied.)
d) That the amount of P110,000.00 is unconscionable, considering that the
total claims of the members of the Petitioner, is more than P400,000, not to
mention that all the time the negotiations were being made the Supreme
Court's final order makes mandatory Respondent's deposit of P100,000, cas
in Philippine Currency and P100,000 in surety bond.
9. That Movant's vehemently disagree to any settlement as tentatively agreed
upon, for, in effect, they will only get fourteen percent, (14%) approximately,
or one-seventh of the amounts as computed by the Chief Examiner of this
Honorable Court;
xxx xxx xxx
WHEREFORE, it is respectfully prayed that:
a) Respondent be required to deposit the sum of P100,000.00 in cash,
Philippine Currency, and P100,000.00 in surety bond, pursuant to the entry
of judgment in G.R. Nos. L-21758-59;
b) That these movants be afforded opportunity by this Honorable Court to be
heard regarding the surety bond to be submitted by the Respondent, before
approval thereof;
c) The tentative settlement be shelved;
d) The further action on any settlement or compromise be held in abeyance
to await compliance by the Respondent of the entry of judgment in G.R. Nos.
L-21758-59;
e) Hearings on the Report of the Chief Examiner be resumed immediately
and without interruption in view of the provisions of Republic Act 3108, until
final termination as soon as possible long before December 31, 1963,10
There petitioners further filed on the same date, November 4, 1963 an urgent
Ex parte Motion for the issuance of a writ of execution for the enforcement
of the deposit order against respondent firm, and asked the trial judge to act
on their two urgent motions upon receipt thereof.
Both urgent motions were totally ignored by both the trial judge as well as
by the respondent firm, despite due notice on the latter. The request of the
union president, Maylem, at the October 31, 1963 conference that the trial
judge have the union counsel present during the proposed signing of the
settlement agreement set for November 8, 1963, as expressly noted by the
trial judge, was likewise ignored. Notwithstanding that notice of the
conference set for November 8, 1963 at 2:30 p.m. was served on November
5, 1963 on the union counsel, petitioner Mary Concepcion, the scheduled
conference was never held.
Unexplained, Maylem, the union president and nine other members of the
union's board of directors (out of 13 board members) even before the
scheduled hour of the conference of November 8, 1963 at 2:30 p.m. had
earlier executed a "Settlement" on said date, without the knowledge, advice,
and conformity of the union counsel, with respondent firm's attorney-in- fact,
who was duly assisted by respondent's two counsels, who likewise executed
the "Settlement." In this "Settlement", the said union officials claiming to act
"with the authorization of the Board of Directors and its members, "in
consideration of the sum of P110,000.00, or one-fourth of the estimated
P423,756.74-judgment liability of respondent firm, as computed in the
respondent Court's Chief Examiner's Partial Report of December 14, 1962,
"waived and quitclaimed . . . any and all claims it (the union) may have
against the respondent as well as the claim of each and every one of the
members of the said petitioner union against the respondent firm." The union
further "warranted" in said "Settlement" "that aside from the petitioner
(union) itself and the members thereof, there are no other persons who have
any interest over the judgment debt and that if it should happen that other
persons shall make a claim against the respondent and/or said judgment debt,
that the respondent, nevertheless, shall no longer be liable therefor."11
The "Settlement" was immediately submitted to the trial judge who forthwith
on the same day, November 8, 1963, issued his Order, approving the same,
and entered into respondent Court's records at 1:45 p.m. of the same day, as
follows:
Considering that the bases of the above quoted settlement is well founded
and justified and not contrary to law, morals and/or public policy, approval
of the same is, therefore, in order.
WHEREFORE, the Court hereby approves the settlement of the parties in
these cases; and shall as between the parties to the same be deemed to be a
decision and/or award in these matters therein treated in the aforesaid
settlement; and upon acknowledgment of the sum of money in the said
settlement, these cases shall be deemed closed and terminated.
Petitioners-lawyers Mary Concepcion, et al. upon learning of the
"Settlement" and respondent's deposit with the Court of the sum of
P110,000.00 in pursuance thereof filed in the afternoon of November 8, 1963
a motion for withdrawal of the sum of P33,000.00 equivalent to their 30%
contingent fee, without prejudice to such action as they may take for
enforcing their lien to its full extent. The trial judge granted such motion in
its Order of November 9, 1963. In due course, said petitioners moved for
reconsideration and setting aside of the trial judge's Order of November 8,
1963 approving the "Settlement" and prayed respondent Court en banc to
reinstate the judgment against respondent and to enforce the deposit order
dated March 30, 1963.
Petitioners Magalpo, Bulos and Batoon, likewise moved respondent Court en
banc to reconsider and set aside the trial judge's approval of the "Settlement",
in disregard of their objection and pending motions of November 5, 1963 to
shelve the proposed settlement and to enforce the deposit Order. On
December 26, 1963, they were joined in their plea for reconsideration by
forty-seven other union members-claimants, Co-petitioners at bar.
Respondent, on the other hand, filed its opposition to the motions for
reconsideration, questioning the personality and interest of petitioners-
movants Magalpo and her 2 other co-movants and asserting that they were
bound by the "Settlement" entered into by their union's board of directors. It
alleged that it had deposited with respondent Court the sum of P110,000.00
stipulated in the "Settlement" on the same day of its approval by the trial
judge. It filed with respondent Court on November 21, 1963 a letter of
ratification dated November 10, 1963 addressed to the trial judge and
purportedly signed by some 79 union members-claimants confirming and
accepting the settlement executed by the union board. Petitioners in their
brief list 21 of these signatures as questionable, asserting that they are at
variance with other corresponding signatures in the Payroll dated November
8, 1963 submitted to respondent Court on November 21, 1963, such that
"either one or the other signature is a forgery." Respondent counters that there
is "absolutely no truth to the claim" and that the signers of the ratification
letter "have all received their individual shares of the P110,000.00 settlement
paid by respondent company and this in itself is a ratification on their part of
said settlement." Nothing appears in the record, however, as to whether and
in what manner the respondent Court determined the authenticity of the
signatures. Respondent further filed on December 18, 1963 a motion for
reconsideration of the trial judge's Order approving payment of P33,000.00
to the petitioners-attorneys by way of attorneys' fees.
On August 1, 1964, and August 4, 1964, after petitioners had filed on
November 29, December 2 and 17, 1963 and January 16, 1964 various urgent
motions to set for hearing and for resolution, they were served with copies of
respondent Court's en banc Resolution dated March 9, 1964, penned by the
trial judge, "finding no sufficient justifications to set aside, disturb or modify
the Order issued in these cases on November 8 and 9, 1963" and denying all
three motions for reconsideration. Judges Amando C. Bugayong and
Ansberto F. Paredes concurred under date of July 29, 1964 with the
Resolution, while Judge Arsenio Martinez took no part. No statement of the
material allegations of, and issues raised in, the pertinent pleadings set out in
detail hereinabove nor reasons for the conclusion of insufficient justification
reached by the majority resolution are given therein.
Then Presiding Judge Jose S. Bautista dissented. "Taking into account the
precipitate approval of settlement over the objection of some union members
concerned and without hearing them, on the strength simply of the
manifestation of the petitioner's Board of Directors that it had authority to
compromise when previously said union members concerned had already
manifested in Annex "E" (Exhibit "G", at bar) that there was no such
authority," he voted "that the case be restored to the status quo as of October
30, 1963, but the payment already made to the union members be considered
as partial payments on account, subject to final liquidation and adjustment;
that an order of execution of the judgment in cases Nos. G.R. L-21758 and
L-21759 of the Supreme Court be issued (upholding the Order of March 30,
1963 for deposit of P200,000.00 in cash and surety bond) be issued and that
the Hearing Officer shall resume the hearing of the Examiner's Report.
Hence, the appeals of petitioners.
The Santiago Labor Union, impleaded as party respondent in Cases L-23361-
62, filed its Answer on September 24, 1964, "putting its weight behind the
prayers of the petitioners." The Answer reveals that the union members,
feeling betrayed, had disauthorized and removed from office Maylem, the
union president and his board of directors who had executed the "Settlement"
with respondent firm and disclaimed the documents of ratification that they
had signed at the behest of Maylem. The union averred in its Answer that:
a) The real parties in interest in Cases 709-V and 709 V(1), CIR, are the
members of respondent Labor Union;
b) The records of the respondent labor union do not show any grant by the
members to the former incumbency of any previous authority to negotiate
the claim or subsequent ratification of the settlement for P110,000.00 for it
is unthinkable and ridiculous for the real parties in interest to give away
gratuitously what had been awarded to them in a final judgment, for a much
lesser amount than that of the award;
c) The members are unanimous in the assertion that the documents they
signed at the behest of former President Segundino S. Maylem were
represented and understood to be but an authority to collect a part of the court
award to the members;
d) That the records of the respondent labor union disclose that the members
of the union have unanimously acted, in their individual capacities to proceed
with the prosecution and collection of whatever sums they might yet be
entitled to collect, in order to show unequivocally that the negotiation made
by former President Segundino S. Maylem and his board of directors was
unauthorized, and to spotlight the betrayal of the members of the Union by
said Segundino S. Maylem and his board of directors of the former union
incumbency;
6. That fundamentally, there is no contentious issue between the petitioners
and respondent labor union; if at all, the only distinction is between the
personality of the real parties in interest, the union members who have
initiated and instituted this petition as against the limited and formal
personality of the respondent labor union to represent them when so
authorized by their collective will."12
The core question is whether this Court can give its sanction to respondent
Court's majority resolution upholding the trial judge's approval of the union
board's settlement for P110,000.00 of the estimated P423,766.74-judgment
liability of respondent firm in favor of the individual union members, over
the timely opposition formally filed by three members (later joined by forty-
seven other members) expressly calling attention to the union board's bad
faith in the premises and lack of any express authority to enter into the
settlement, and without giving the union the opportunity of being heard and
assisted by counsel and notwithstanding the fact that respondent firm, which
had sufficient cash and fixed assets, was under legal compulsion by virtue of
respondent court's own final order to deposit P100,000.00 in cash and another
P100,000.00 in surety bond to guarantee payment of the union members'
judgment claims?
The question answers itself. The precipitate approval of the purported
settlement under the circumstances goes against the grain of fundamental
considerations of justice, equity and due process.
1. To begin with, petitioners were not accorded due process of law, when, for
reasons unexplained in the record, the conference set for November 8, 1963
at 2:30 p.m. to take up formally the proposed settlement was cancelled and
never held. (supra, pp. 8-9) Notice thereof had been served on the union
counsel, in accordance with the express request of the union president, as
expressly noted by the trial judge. Yet, such notice was deliberately
disregarded and the union was deprived of the assistance of its counsel.13
Instead, the settlement as unilaterally drafted by respondent's counsel (supra,
p. 7) was executed ahead of the scheduled hour of the conference that turned
out to be a non-conference, by the union president with nine other members
of the union's board of directors, without the knowledge, advice and
conformity of the union counsel, while respondent was duly assisted by its
two counsels. By 1:45 p.m. of the same day, the settlement had been
approved by the trial judge as "not contrary to law, morals and public policy."
Similarly, petitioners Magalpo, a board member herself and her co-
petitioners Bulos and Batoon were not accorded an opportunity for a fair
hearing on their grave charges against the union leadership and their urgent
motions to shelve the proposed settlement and to enforce the final order of
respondent court requiring respondent firm to deposit P200,000.00 in cash
and surety bond for satisfaction of the union members' judgment, as said
motions were totally ignored by the trial judge and not touched upon at all in
his Order rashly approving the settlement.
2. The lack of due deliberation and caution in the trial judge's instant approval
of the settlement is seen from the stipulations therein that the union thereby
waived and quitclaimed any and all claims which it may have against the
respondent, as well as the claim of each and every one of the members of the
union against respondent, when precisely the authority of the union board
members to enter into any such compromise or settlement was under express
challenge by petitioner Magalpo, a board member herself in her Objection
and Urgent Motion to shelve the settlement filed on November 5, 1963,
which the trial judge completely disregarded. Petitioner Magalpo further
made serious charges that Maylem, the union president, had misled the board
members into attending the unscheduled conference held on October 31,
1963 before the trial judge, and had deliberately concealed from them the
fact of entry on October 24, 1963 of the Order of this Court in G.R. Nos. L-
21758-59 upholding the P200,000.00 deposit Order of respondent court and
the effect thereof of making mandatory upon the trial judge, in accordance
with the terms of his own order, the issuance of a writ for execution or
enforcement to compel respondent to so deposit P100,000.00 in cash and an
equal amount in surety bond to guarantee satisfaction of the union members'
judgment against respondent. In point of facts, the union's own Urgent
Motion of October 29, 1963, emphasizing that respondent no longer had any
excuse for not complying with the deposit order, as well as petitioner
Magalpo, et al.'s Urgent ex parte motion of November 4, 1963 to the same
effect were pending before the trial judge, unresolved and unacted upon.
Petitioners Magalpo, et al. had reason therefore, to assail the proposed
settlement for P110,000.00 as unconscionable, when at the very least the
union members could be assured of P200,000.00 under the deposit order to
satisfy their judgment credit, while the report of respondent court's examiner
showed that respondent firm had sufficient assets, (supra, p. 5), and
considering that their partial judgment credit, as estimated by respondent
court's examiner, amounted to more than P400,000.00.
3. The trial judge's rush approval of the settlement disregarded the grave
adverse consequences thereof to the union members. The settlement, as
prepared by respondent's counsel, provided for a union warranty that aside
from the union itself and the members thereof, "there are no other persons
who have any interests over the judgment debt and that if it should happen
that other persons shall make a claim against the respondent and/or said
judgment debt, that the respondent, nevertheless, shall no longer be liable
therefor." Such warranty was against the very facts of record, which showed
that as early as June 21, 1963, petitioners-counsels in Cases L-23331-32 had
duly recorded their attorneys' lien of "30 % of whatever amount may finally
be awarded in favor of the petitioner." Thus, technically, since the award in
favor of the union members amounted to more than P400,000.00, the
settlement for P110,000.00 would conceivably just about cover the 30%
attorneys' fees payable to the petitioners-counsels under the contract, if they
were so minded to enforce it and bad faith on the union's part were shown,
with the union members left holding an empty bag.14 Such onerous terms of
the settlement could not then properly be approved by the trial judge as "not
contrary to law, morals and public policy."
4. All these underscore the failure of due process when petitioners were
deprived of the formal conference on the proposed settlement scheduled for
November 8, 1963 and of their right to be assisted by the union counsel as
expressly requested, so that a fair hearing could be accorded petitioners and
an opportunity afforded them to air their serious charges of bad faith and lack
of authority against the union leadership. Certainly, all these serious
questions and charges made by petitioners could have been threshed out and
verified, if the formal conference scheduled for November 8, 1963 had been
held with the presence of union counsel, considering that the latter likewise
had a right to be heard, since they had duly made of record their attorneys'
lien upon the judgment.15 Respondent, in its brief, asserts that it vividly
remembers that the trial judge repeatedly made mention of the P200,000.00
deposit order during the unscheduled conference of October 31, 1963 and
"even explained the matter to the members of the board in their native
dialect." But the transcript of the conference reproduced above (supra, pp. 7-
9) does not bear out this assertion. The transcript is obviously deficient and
does not reflect the actual discussions and proceedings. This is to be
deplored, for in a matter of such great importance, especially where the union
officials were unassisted by counsel in an unscheduled conference, care
should be taken by the trial judge that the proceedings are faithfully recorded.
Thus, although the transcript again fails to make any mention of it,
respondent, in its brief, in effect provides support for petitioners' plaint
against the unscheduled conference and precipitate approval of the settlement
behind the back of union counsel, when it states that "the presiding judge
tried to help the parties reach a settlement by stressing to the union that there
was no sense in demanding more than P110,000.00 from the respondent if
that was all it could afford, and that any more delay in the execution of its
award to the union members might lead to their getting much less than the
P110,000.00 already being offered by respondents," and "while it is true that
the presiding judge took an active part in helping the parties reach such
settlement, it was only in line with the policy of the law encouraging
settlement of cases even after final judgment."16 The obvious fallacy of this
untenable posture assumed by the trial judge, of course, is that with this Court
having upheld his P200,000.00 deposit order, it made every sense to enforce
execution of said order, which it was practically his ministerial duty to do so,
to assure the union members of recovery of their judgment credit at the very
least to the extent of P200,000.00, as the trial judge had expressly recognized
therein that "petitioner (union) and its members concerned should be
extended the necessary protection of their rights." Any further delay in the
execution of the judgment award in favor of the union members could readily
be obviated, if the trial judge would but expedite the hearings for approval of
the Court examiner's Report which had been filed and left pending since
December 14, 1962. As correctly contended by petitioners, he could have
placed the union members, unassisted as they were by counsel, on an equal
footing in negotiating with respondent by a mere stroke of his pen by ordering
the enforcement of his final P200,000.00 deposit order, as to which there no
longer existed any obstacle. We find the forcing through of the settlement,
under such circumstances, arbitrary, unfair and unconscionable.
5. Another vital reason for striking down the settlement is the lack of any
express or specific authority of the president and majority of the union board
of directors to execute the same and scale down the estimated P423,756.74-
judgment liability of respondent firm in favor of the individual union
members to P110,000.00. On the contrary, petitioner board member Magalpo
timely challenged the authority of the union board to execute any such
settlement, expressly informing the trial judge that the union had specifically
appointed an entity in Manila, the "CREAM, Inc.", formerly Credit Research
and Intelligence, as its attorney-in-fact and "exclusive authorized
representative for the evaluation, adjustment and liquidation of its claim
against respondent." Forty-seven other union members-claimants joined
petitioner Magalpo in their denunciation of the union board's unauthorized
action, and in their plea for reconsideration with respondent court. Forty-nine
union members-claimants entitled to the bulk of the judgment award have
filed this appeal from the adverse rulings of the Court below. These union
members have repudiated the former union president, Maylem and his board
of directors, for having betrayed the union members, and the new union
leadership, in its Answer filed with the Court, has joined petitioners in their
prayer for redress, categorically asserting that the union records do not show
any grant by the members to the former union board under Maylem to
"negotiate the claim or subsequent ratification of the settlement for
P110,000.00" which is "unthinkable and ridiculous." (supra, p. 15) Under
such circumstances, the letter of ratification of the settlement purportedly
signed by some 79 members, many of whose signatures thereon are
denounced as forgeries and which ratification was not authenticated in the
proceedings below and has been expressly disowned by petitioners herein,
cannot be given any legal significance or effect.
6. When it is further taken into consideration that the judgment award, as
affirmed by this Court's decision of August 31, 1962,17 was for the payment
of overtime, premium and differential pay to the individual union members
as claimants and for the reinstatement of the individual union members who
testified and proved their having been illegally laid-off, which represent a
personal material interest directly in favor of the individual union members,
as against the lack of material interest on the part of the union as such, the
union's lack of authority to execute the settlement, in the absence of express
or specific authorization by the union members, becomes patent. The
authority of the union as such, to execute a settlement of the judgment award
in favor of the individual union members, cannot be presumed but must be
expressly granted.
7. Recently, in the analogous case of La Campana Food Products, Inc. etc.
Employees Ass'n vs. Court of Industrial Relations, et al.,18 this Court ruled
upon the merits of the union's appeal, and set aside the Industrial Court's
questioned orders which would reopen its previous judgment finding the
employer guilty of unfair labor practice and ordering the reinstatement of,
and payment of back wages from December 4, 1963 to, twenty-one (21)
union members. In handing down its decision, this Court disregarded the
petitioner union's motion to dismiss the appeal, filed through new counsel
while the case was pending decision, alleging that the union's legislative
council had adopted a resolution relieving the former union counsel of his
services and authorizing the dismissal of the case, on the premise that such
dismissal "would serve the best interests of both parties who are now in the
process of formulating a collective bargaining agreement in their earnest
desire to establish industrial peace and promote the economic well-being of
all the parties concerned." For this Court ruled that the union's loss of interest
in the case was no ground for dismissing the case, since "the labor union as
a body in reality has not so great a material interest in the controversy as
would prejudice it in the event of dismissal. It is the twenty-one (21)
members for whose benefit the ULP case was prosecuted who stand to take
tremendous losses" and suffer injustice. Upholding the individual union
members in their stand of vindicating their rights acquired under the final
judgment as against the union's legislative council's resolution to dismiss the
case, this Court, speaking through Mr. Justice Sanchez, thus held: —
We now come to the motion to dismiss filed in this Court on March 10, 1969
by new counsel for petitioner. In that motion, we read the averment that the
petitioning union, "after careful and serious consideration of their Petition,
taken in the light of recent developments affecting their relationship with the
respondent-company, have decided that they have lost interest in the further
prosecution of their claims"; that the union's legislative council, on February
5, 1969, adopted a resolution authorizing the new counsel to file a motion
dismissing this case; that the former counsel who directed this case before
this Court, Atty. Eulogio R. Lerum, had been relieved of his services in a
letter of the union dated January 13, 1969; and that "the dismissal of this
instant case would serve the best interests of both parties who are now in the
process of formulating a collective bargaining agreement in their earnest
desire to establish industrial peace and promote the economic well-being of
all parties concerned." This drew a reply from Atty. Eulogio R. Lerum that
"while he admits that he had received termination notice from the alleged
officers of the abovenamed union, he had not been disauthorized by the
complainants who had retained him to appear in their behalf" and that "said
complainants are against the dismissal of their case for the reason that they
want to vindicate their rights and it is against public policy to settle an unfair
labor practice by amicable settlement (Sec. 5 [a], Rep. Act 875)."
While it may be true that the labor union itself has lost interest in the case,
we do not believe that such should give ground for the dismissal of this case.
The labor union as a body in reality has not so great a material interest in the
controversy as would prejudice it in the event of dismissal. It is the twenty-
one (21) members for whose benefit the ULP case was prosecuted who stand
to take tremendous losses. Nor is the argument that union and employer are
now in the process of formulating a collective bargaining agreement of any
consequence. That would not be affected by the decision we now render as
an aftermath of the ULP case. Unless of course such a dismissal is a quid pro
quo before the parties could sit around the bargaining table. Which surely
enough is not to the 'best interests' of the laborers.
And, as we examine the record, we observe none of the members of the
legislative council who adopted the resolution relied upon in the motion to
dismiss is personally affected by the decision rendered by the CIR in Case
3985-ULP. That decision, it will be recalled, directs private respondents
herein not only to reinstate the twenty-one (21) union members without loss
of seniority and other benefits and privileges but also to pay their respective
backwages from December 4, 1963, date of filing of the charge, basis of the
complaint, until actual reinstatement. It is easy enough to perceive the
injustice which may be visited upon these twenty-one (21) union members if
the petition herein were to be dismissed. For then, a new trial will be had,
with the consequent trouble, expense, anxiety and another long delay before
they could enjoy the fruits of their victory which they have legally and
definitely won only after a long and protracted legal battle. At any rate, it is
better on balance that we foreclose a flanking movement which could destroy
rather than uphold the rights — to reinstatement and monetary award — of
individual laborers acquired under the final judgment.
8. Just as this Court has stricken down unjust exploitation of laborers by
oppressive employers, so will it strike down their unfair treatment by their
own unworthy leaders. The Constitution enjoins the State to afford protection
to labor.19 Fair dealing is equally demanded of unions as well as of
employers in their dealings with employees. The union has been evolved as
an organization of collective strength for the protection of labor against the
unjust exactions of capital, but equally important is the requirement of fair
dealing between the union and its members, which is fiduciary in nature, and
arises out of two factors: "one is the degree of dependence of the individual
employee on the union organization; the other, a corollary of the first, is the
comprehensive power vested in the union with respect to the individual."20
The union may be considered but the agent of its members for the purpose of
securing for them fair and just wages and good working conditions and is
subject to the obligation of giving the members as its principals all
information relevant to union and labor matters entrusted to it. As already
discussed above, the union leadership in the case at bar was recreant in its
duty towards the union members in apparently having failed to disclose to
the union members the full situation of their judgment credit against
respondent, to wit, that they were in the advantageous position of being able
to require enforcement of the respondent court's P200,000.00-deposit order,
and in presuming that it had authority to waive and quitclaim the estimated
P423,756.74-judgment credit of the union members for the unconscionable
amount of P110,000.00, which had already been previously rejected by the
workers. Respondent firm could not claim that it dealt in good faith with the
union officials, for it hastily executed the purported settlement
notwithstanding the serious charges of bad faith against the union leadership,
and the non-holding of the scheduled conference where the union leaders, at
their express request, could be duly assisted by union counsel. It is
noteworthy that respondent never filed with the court below any denial or
responsive pleading traversing the factual allegations in petitioner Magalpo's
Manifestation and Objection charging that at the unscheduled conference of
October 31, 1963, the proposed settlement was in effect railroaded with the
fact of the finality of the P200,000.00-deposit order not having been
disclosed to the union representatives. Such failure on the part of respondent
constitutes an implied admission of the material averments. Respondent's
justification now that it did not file any responsive pleading or denial because
Magalpo and her co-petitioners had no personality to file their pleadings as
they were not parties to the cases in the lower court is of no avail, for they
were actually the awardees and beneficiaries under the judgment against
respondent and the union was but their agent. Deplorable also is the failure
of the trial judge to defer precipitate action on approval of the settlement until
the union could be afforded the opportunity of a hearing thereon duly assisted
by counsel, and failure later of the majority of respondent court in the
reconsideration proceedings, as well, to look seriously into the grave charges
of bad faith and deception against the union officials and their lack of
authority to execute the settlement. All of these charges were just swept under
the rug, and summarily dismissed, without even being mentioned, in the
unreasoned en banc Resolution, finding arbitrarily as against the facts herein
collated by this Court from the pertinent pleadings and annexes furnished it,
"no sufficient justification to set aside, disturb or modify" the questioned
approval of the settlement. .
9. The cases of Jesalva, et al. vs. Bautista,21 and Diomela, et al. vs. Court of
Industrial Relations,22 cited by respondent, clearly have no application in the
present case. In Jesalva, seventeen cases in different stages of hearing or
execution before the Industrial Court were settled by a compromise
agreement, and this Court held that the three petitioners who questioned the
settlement were "bound by the actions of the Union, that is to say, a majority
of the members of the union." There was no question there that the union had
acted with the authority of the union membership. No deceit or concealment
or misrepresentation tainted the settlement. Neither was the amount of the
settlement denounced as unconscionable. The employer there, Premiere
Productions, Inc., agreed to pay the amount of P200,000.00 which appeared
to be a reasonable settlement as against the judgment credit of the union
workers, and further agreed to lease to the union its equipment and facilities
for the Union to produce two moving pictures, apparently to cover the other
wage claims of the union workers which were still pending trial and
resolution. In Diomela, the labor-management disputes were settled amicably
with the unfair labor practice charge against the employer, Squibb and Sons,
(Phil.) being withdrawn, upon motion signed by the union president and the
three employees against whom the acts of unfair labor practice charged in the
complaint had been allegedly committed, to which motion the Court's
prosecutor gave his conformity, and with the employer, which had secured a
permanent writ of injunction restraining the strikers who had apparently
declared an illegal strike, against the commission of acts of violence, threats
and intimidation, agreeing to pay three months separation pay to each striking
employee. There was no question, therefore, of the authority of the union
president to withdraw the unfair labor practice charge, as the three employees
directly affected had co-signed the withdrawal motion with him. The
subsequent move of Diomela and 23 co-petitioners to disauthorize the union
and its counsel of record, was by their own pleading overruled by the
majority of the union membership. The other acts of unfair labor practice
sought to be filed by Diomela and his companions were there ruled out as
splitting a cause of action and harassing the employer with subsequent
charges, based upon acts committed during the same period of time and
which should have been included in the charges first preferred. What should
be borne in mind is that the interests of the individual worker can be better
protected on the whole by a strong union aware of its moral and legal
obligations to represent the rank and file faithfully and secure for them the
best wages and working terms and conditions in the process of collective
bargaining. As has been aptly pointed out, the will of the majority must
prevail over that of the minority in the process, for "under the philosophy of
collective responsibility, an employer who bargains in good faith should be
entitled to rely upon the promises and agreements of the union
representatives with whom he must deal under the compulsion of law and
contract. The collective bargaining process should be carried on between
parties who can mutually respect and rely upon the authority of each
other."23 Where, however, collective bargaining process is not involved, and
what is at stake are back wages already earned by the individual workers by
way of overtime, premium and differential pay, and final judgment has been
rendered in their favor, the present case, the real parties in interest with direct
material interest, as against the union which has only served as a vehicle for
collective action to enforce their just claims, are the individual workers
themselves.24 Authority of the union to waive or quitclaim all or part of the
judgment award in favor of the individual workers cannot be lightly
presumed but must be expressly granted, and the employer, as judgment
debtor, must deal in all good faith with the union as the agent of the individual
workers. The Court in turn should certainly verify and assure itself of the fact
and extent of the authority of the union leadership to execute any compromise
or settlement of the judgment on behalf of the individual workers who are
the real judgment creditors.
We therefore sustain the minority opinion of then Presiding Judge Bautista
of respondent Court that the settlement was precipitately approved without
verification of the union board's authority to execute the compromise
settlement, and find that there was no such authority. The said settlement is
therefore set aside and the cases below are restored to the status quo, as of
October 30, 1963, with the payments already made to the union members to
be considered as partial payments on account, subject to final liquidation and
adjustment. It is directed that an order for the enforcement of the
P200,000.00-deposit order dated March 30, 1963 issued in the cases below,
and upheld in Cases G.R. Nos. L-21758-59 of this Court dismissing the
respondent's petition for review, be forthwith issued, and that hearings on the
Chief Examiner's Report of December 14, 1962 be resumed immediately and
without interruption so that the amounts due under the judgment to the
individual union members may be finally determined without further delay.
It is unfortunate that pending these proceedings, no application for
preliminary injunction restraining respondent firm from disposing of its
assets was made, since as stated above, (supra, p. 5) respondent had stopped
operations in 1962 preparatory to liquidation, by virtue of the provisions of
Republic Act No. 3018 nationalizing the rice and corn industry. The
respondent firm's stockholders are, however, charged with notice of the
firm's liability by virtue of the pendency of these appeals, and should any
liquidating dividends have been distributed and paid to them in the meantime,
they shall stand liable for the satisfaction of the union workers' judgment
against respondent to the extent of such dividends respectively paid to and
received by them. Similarly, any outstanding unpaid subscriptions or
balances of subscriptions to the firm's capital stock, estimated at
P20,000.00,25 shall be subject to garnishment and execution in satisfaction
of the judgment. As to the contingent 30% attorneys' fees of petitioners-
lawyers, the Court deems it proper at this stage, to direct in the exercise of its
authority to control the amount of such fees, that petitioners-lawyers may
collect their stipulated contingent 30% attorneys' fees to the extent that
additional amounts may be realized on the union workers' judgment up to the
sum of P150,000.00, including the initial payment of P110,000.00, (on which
they have already collected their corresponding fee), such that any further
amounts collected beyond said sum of P150,000.00 shall no longer be subject
to said contingent fee.

WHEREFORE, the respondent Court's Orders of November 8, 1963 and

March 9, 1964 are hereby declared null and void and set aside. The
respondent court is directed to proceed immediately with the execution of the
judgment rendered by it against respondent firm in Cases Nos. 709-V and V-
1 as affirmed by this Court's decision of August 31,
1962,26 in accordance with the directives set forth in the next preceding
paragraph, which is incorporated by reference as an integral portion of the
dispositive part of this decision. With costs against private respondent in both
cases herein decided.
SALUNGA vs. COURT OF INDUSTRIAL RELATIONS
G.R. No. L-22456 September 27, 1967
CONCEPCION, C.J.:
Appeal by petitioner Francisco Salunga from a resolution of the Court of
Industrial Relations, sitting en banc, dismissing unfair labor practice charges
against the National Brewery and Allied Industries Labor Union of the
Philippines (PAFLU) — hereinafter referred to as the Union — John de
Castillo, Cipriano Cid, San Miguel Brewery, Inc. — hereinafter referred to
as the Company — and Miguel Noel.
Petitioner had, since 1948, been an employee of the Company, which, on
October 2, 1959, entered with the Union, of which respondent John de
Castillo is the president, into a collective bargaining agreement, effective up
to June 30, 1962. Section 3 thereof reads:
The company agrees to require as a condition of employment of those
workers covered by this agreement who either are members of the UNION
on the date of the signing of this agreement, or may join the UNION during
the effectivity of this agreement, that they shall not voluntarily resign from
the UNION earlier than thirty (30) days before the expiry date of this
agreement as provided in Article XIII hereof, provided, however, that
nothing herein contained shall be construed to require the company to
enforce any sanction whatsoever against any employee or worker who fails
to retain his membership in the UNION as hereinbefore stated, for any cause
other than voluntary resignation or non-payment of regular union dues on the
part of said employee or worker. (Exh. 4-A-Union.) .
Petitioner was a member of the Union since 1953. For reasons later to be
stated, on August 18, 1961, he tendered his resignation from the Union,
which accepted it on August 26, 1961, and transmitted it to the Company on
August 29, 1961, with a request for the immediate implementation of said
section 3. The Company having informed him that his aforementioned
resignation would result in the termination of his employment, in view of
said section, petitioner wrote to the Union, on August 31, 1961, a letter
withdrawing or revoking his resignation and advising the Union to continue
deducting his monthly union dues. He, moreover, furnished a copy of this
communication to the Company. The latter, in turn, notified the Union of the
receipt of said copy and that "in view thereof, we shall not take any action on
this case and shall consider Mr. Francisco Salunga still a member of your
union and continue deducting his union dues." On September 8, 1961, the
Union told the Company that petitioner's membership could not be reinstated
and insisted on his separation from the service, conformably with the
stipulation above-quoted. The Company replied, on September 12, 1961,
stating:
. . . We asked Mr. Salunga if he realized that by resigning from the Union he
would in effect be forfeiting his position in the company. When he answered
in the negative, we showed him a copy of our Collective Bargaining
Agreement and called his attention to Sec. 3, Art. II thereof. He then told us
that he did not realize that he would be losing his job if he were to resign
from the Union. We did not at any time ask or urge him to withdraw his
resignation; neither are we now asking or insisting that you readmit him into
your membership. We thought that informing him of the consequences of his
resignation from the Union, was the only humane thing to do under the
circumstances.
Nevertheless, if notwithstanding our foregoing clarification you still consider
him as having actually resigned from your organization, and you insist that
we dismiss him from the service in accordance with Sec. 3, Article II of our
agreement, we will have no alternative but to do so. (Exh. E)
In a letter to the Company, dated September 20, 1961, the Union reiterated
its request for implementation of said section 3, for which reason, on
September 22, 1961, the Company notified petitioner that, in view of said
letter and the aforementioned section, "we regret we have to terminate your
employment for cause. You are, therefore, hereby notified of your dismissal
from the service effective as of the close of business hours, September 30,
1961."
Meanwhile, petitioner had sought the intervention of PAFLU's National
President, respondent Cipriano Cid, to which the Union was affiliated, for a
review of the latter's action. The PAFLU gave due course to petitioner's
request for review and asked the Company, on September 29, 1961, to defer
his dismissal, for at least two (2) weeks, so that its (PAFLU's) Executive
Board could act on his appeal. On October 6, 1961, respondent Cid advised
petitioner that the PAFLU had found no ground to review the action taken by
the Union and that, on the expiration of the 15-day grace granted to him by
the Company, the decision thereof to terminate his services would take effect.
Thereupon, or on October 11, 1961, petitioner notified the PAFLU that he
was appealing to its supreme authority — the PAFLU National Convention
— and requested that action on his case be deferred until such time as the
Convention shall have acted on his appeal. A letter of the same date and tenor
was sent, also, by the petitioner to the Union. Furthermore, he asked the
Company to maintain the status quo, in the meantime. This notwithstanding,
at the close of the business hours, on October 15, 1961, petitioner was
discharged from the employment of the Company, through its assistant-
secretary and vice-president, herein respondent Miguel Noel.
At petitioner's behest, on or about December 7, 1961, a prosecutor of the
Court of Industrial Relations commenced, therefore, the present proceedings,
for unfair labor practice, against the Union, its president, respondent John de
Castillo, respondent Cipriano Cid, as PAFLU president, the Company, and
its aforementioned Vice-President Miguel Noel. In due course, thereafter, the
trial Judge rendered a decision the dispositive part of which reads:
IN VIEW OF ALL THE FOREGOING, the San Miguel Brewery, Inc. and
Miguel Noel and National Brewery & Allied Industrial Labor Union of the
Philippines (PAFLU), John de Castillo, and Cipriano Cid, are hereby
declared guilty of unfair labor practices as charged, and ordered to cease and
desist from further committing such unfair labor practice acts complained of;
and as affirmative reliefs:
(a) The National Brewery & Allied Industries Labor Union of the Philippines
(PAFLU), John de Castillo and Cipriano Cid, their officers and agents, are
hereby directed to readmit and to continue the membership of Francisco
Salunga in the membership rolls of the union after paying all union dues,
with all the rights and privileges being enjoyed by bonafide members;
(b) The San Miguel Brewery, Inc., and Miguel Noel, their officers and agents
are hereby directed to immediately reinstate Francisco Salunga to his former
or substantially equivalent position with one-half back wages, without
prejudice, however, to his seniority and/or other rights and privileges; and
(c) Respondents Union and Company, their respective officers and agents,
are likewise directed to post two copies of this decision in conspicuous places
in their respective offices or plants for a period of one month, furnishing this
Court with certificate of compliance after the expiration of said period.
On motion for reconsideration of the respondents, this decision was reversed
by the Court of Industrial Relations — sitting en banc with two (2) judges
concurring in the result and the trial judge dissenting — which dismissed the
case. Hence, this appeal by the petitioner.
The appeal is well taken, for, although petitioner had resigned from the Union
and the latter had accepted the resignation, the former had, soon later — upon
learning that his withdrawal from the Union would result in his separation
from the Company, owing to the closed-shop provision above referred to —
revoked or withdrawn said resignation, and the Union refused to consent
thereto without any just cause therefor. The Union had not only acted
arbitrarily in not allowing petitioner to continue his membership. The trial
Judge found said refusal of the Union officers to be due to his critical attitude
towards certain measures taken or sanctioned by them. As set forth in the
decision of the trial Judge:
. . . Prior to August, 1961, he had been criticizing and objecting to what he
believed were illegal or irregular disbursements of union funds, i.e., allowing
Florencio Tirad, a union official, to receive six months advanced salaries
when Tirad went to the United States, which objection he openly manifested
in a meeting of the board of directors and stewards, but instead of receiving
favorable response, he (Salunga) was twitted and felt insulted by the laughter
of those present that he would be the next man to be sent to America; second,
granting Ricardo Garcia, union secretary, two months advanced salaries
when preparing for the bar examinations, which objection he broached to
union officer Efren Meneses; third, the union's additional monthly expense
for the salary of a counsel when the PAFLU, their mother union is well
staffed with a number of lawyers who could attend to and handle their cases
and other legal matters, and to which mother union the NABAILUP has been
paying a monthly assessment of more than P1,000.00; and fourth, giving
salary to Charles Mitschek who was dismissed by the company but denying
the same privilege to other similarly situated member-employees. Salunga
was later removed by the union from his position as steward without his
knowledge. It also appears that the power of attorney executed in his favor
by co-worker Alejandro Miranda for the collection of Miranda's indebtedness
of P60.00 to him (the latter has certain amount in possession of the Union)
was not honored by the union.1awphîl.nèt
xxx xxx xxx
The record is clear that feeling dejected by the inaction of the union officials
on his grievances and objections to what he believed were illegal
disbursements of union funds, coupled with the fact that he was later removed
from his position as a union steward without his knowledge, as well as the
fact that the union did not honor the power of attorney executed in his favor
by Alejandro Miranda, a co-worker, for the collection of Miranda's
indebtedness of P60.00 to him, he submitted his letter of resignation from the
union on August 18, 1961. It must be stated here that no evidence was
adduced by the respondent union to overcome complainant's testimonies
about his objections to the disbursements of union funds but only tried to
elicit from him, on cross examination, that the funds of the union are only
disbursed upon authority of the Executive Board of the union. . . .
It should be noted that the Court of Industrial Relations en banc did not
reverse these findings of fact or even question the accuracy thereof. What is
more, the officers of the Union have, in effect, confirmed the fact that their
refusal to allow the withdrawal of petitioner's resignation had been due to his
aforementioned criticisms. Indeed said officers tried to justify themselves by
characterizing said criticisms as acts of disloyalty to the Union, which, of
course, is not true, not only because the criticism assailed, not the Union, but
certain acts of its officers, and, indirectly, the officers themselves, but also
because the constitution and by-laws of the Union explicitly recognize the
right of its members to give their views on "all transactions made by the
Union." As a consequence, the resolution appealed from cannot be affirmed
without, in effect, nullifying said right which, independently of the
constitution and by-laws of the Union, is part and parcel of the freedom of
speech guaranteed in the Constitution of our Republic, as a condition sine
qua non to the sound growth and development of labor organizations and
democratic institutions.
Although, generally, a state may not compel ordinary voluntary associations
to admit thereto any given individual, because membership therein may be
accorded or withheld as a matter of privilege,1 the rule is qualified in respect
of labor unions holding a monopoly in the supply of labor, either in a given
locality, or as regards a particular employer with which it has a closed-shop
agreement.2 The reason is that
. . . The closed shop and the union shop cause the admission requirements of
trade union to become affected with the public interest. Likewise, a closed
shop, a union shop, or maintenance of membership clauses cause the
administration of discipline by unions to be affected with the public interest.3
Consequently, it is well settled that such unions are not entitled to arbitrarily
exclude qualified applicants for membership, and a closed-shop provision
would not justify the employer in discharging, or a union in insisting upon
the discharge of, an employee whom the union thus refuses to admit to
membership, without any reasonable ground therefor.4 Needless to say, if
said unions may be compelled to admit new members, who have the requisite
qualifications, with more reason may the law and the courts exercise the
coercive power when the employee involved is a long standing union
member, who, owing to provocations of union officers, was impelled to
tender his resignation, which he forthwith withdrew or revoked. Surely, he
may, at least, invoke the rights of those who seek admission for the first time,
and can not arbitrarily he denied readmission.
We cannot agree, however, with the finding of the trial Judge to the effect
that the Company was guilty of unfair labor practice. The Company was
reluctant — if not unwilling — to discharge the petitioner. When the Union
first informed the Company of petitioner's resignation and urged
implementation of section 3 of the bargaining contract, the Company advised
petitioner of the provision thereof, thereby intimating that he had to withdraw
his resignation in order to keep his employment. Besides, the Company
notified the Union that it (the Company) would not take any action on the
case and would consider the petitioner, "still a member" of the Union. When
the latter, thereafter, insisted on petitioner's discharge, the Company still
demurred and explained it was not taking sides and that its stand was
prompted merely by "humane" considerations, springing from the belief that
petitioner had resigned from the Union without realizing its effect upon his
employment. And, as the Union reiterated its demand, the Company notified
petitioner that it had no other alternative but to terminate his employment,
and dismissed him from the service, although with "regret".
Under these circumstances, the Company was not "unfair" to the petitioner.
On the contrary, it did not merely show a commendable understanding of and
sympathy for his plight. It even tried to help him, although to such extent
only as was consistent with its obligation to refrain from interfering in purely
internal affairs of the Union. At the same time, the Company could not safely
inquire into the motives of the Union officers, in refusing to allow the
petitioner to withdraw his resignation. Inasmuch as the true motives were not
manifest, without such inquiry, and petitioner had concededly tendered his
resignation of his own free will, the arbitrary nature of the decision of said
officers was not such as to be apparent and to justify the company in
regarding said decision unreasonable. Upon the other hand, the Company can
not be blamed for assuming the contrary, for petitioner had appealed to the
National Officers of the PAFLU and the latter had sustained the Union. The
Company was justified in presuming that the PAFLU had inquired into all
relevant circumstances, including the motives of the Union Officers.
In finding, this notwithstanding, that the Company is guilty of unfair labor
practice, the trial Judge seemed to have been unduly influenced by the fact
that the former had dismissed the petitioner despite his announced intention
to appeal from the decision of the Union and that of the Officers of PAFLU
to its "Supreme authority", namely, the PAFLU's "National Convention". In
other words, said Judge felt that the Company should have waited for the
action of the national convention before issuing the notice of dismissal.
There is no evidence, however, that petitioner had really brought this matter
to said "Convention". Much less is there any proof that the latter had
sustained him and reversed the PAFLU officers and the Union. Thus, the
record does not show that petitioner was prejudiced by the Company's failure
to maintain the status quo, after the Union had been sustained by said officers.
In fact, petitioner did not even try to establish that he had submitted to the
Company — as he has not introduced in the lower court — satisfactory proof
that an appeal had really been taken by him to the aforementioned
Convention. In short, it was error to hold the Company guilty of unfair labor
practice.
Just the same, having been denied readmission into the Union and having
been dismissed from the service owing to an unfair labor practice on the part
of the Union, petitioner is entitled to reinstatement as member of the Union
and to his former or substantially equivalent position in the Company,
without prejudice to his seniority and/or rights and privileges, and with back
pay, which back pay shall be borne exclusively by the Union. In the exercise
of its sound judgment and discretion, the lower court may, however, take
such measures as it may deem best, including the power to authorize the
Company to make deductions, for petitioner's benefit, from the sums due to
the Union, by way of check off or otherwise, with a view to executing this
decision, and, at the same time, effectuating the purposes of the Industrial
Peace Act.
With this modification, the aforementioned decision of the trial Judge is
hereby affirmed in all other respects, and the appealed resolution of the Court
of Industrial Relations en banc is reversed, with costs against respondents,
except the Company.
VILLAR vs. INCIONG
G.R. No. L-50283-84 April 20, 1983
GUERRERO, J.:
Petition for review by certiorari to set aside the Order dated February 15,
1979 of respondent Deputy Minister Amado G. Inciong affirming the
Decision of the OIC of Regional Office No. 4 dated October 14, 1978 which
jointly resolved RO4-Case No. T-IV-3549-T and RO4-Case No. RD 4-4088-
77-T.
The facts are as follows:
Petitioners were members of the Amigo Employees Union-PAFLU, a duly
registered labor organization which, at the time of the present dispute, was
the existing bargaining agent of the employees in private respondent Amigo
Manufacturing, Inc. (hereinafter referred to as Company). The Company and
the Amigo Employees Union-PAFLU had a collective bargaining agreement
governing their labor relations, which agreement was then about to expire on
February 28, 1977. Within the last sixty (60) days of the CBA, events
transpired giving rise to the present dispute.
On January 5, 1977, upon written authority of at least 30% of the employees
in the company, including the petitioners, the Federation of Unions of Rizal
(hereinafter referred to as FUR) filed a petition for certification election with
the Med-Arbiter's Office, Regional Office No. 4 of the Ministry of Labor and
Employment. The petition was, however, opposed by the Philippine
Association of Free Labor Unions (hereinafter referred to as PAFLU) with
whom, as stated earlier, the Amigo Employees Union was at that time
affiliated. PAFLU's opposition cited the "Code of Ethics" governing inter-
federation disputes among and between members of the Trade Unions
Congress of the Philippines (hereinafter referred to as TUCP). Consequently,
the Med-Arbiter indorsed the case to TUCP for appropriate action but before
any such action could be taken thereon, the petitioners disauthorized FUR
from continuing the petition for certification election for which reason FUR
withdrew the petition.
On February 7, 1977, the same employees who had signed the petition filed
by FUR signed a joint resolution reading in toto as follows:
Sama-Samang Kapasiyahan
1. TUMIWALAG bilang kasaping Unyon ng Philippine Association of Free
Labor Unions (PAFLU) at kaalinsabay nito, inaalisan namin ang PAFLU ng
kapangyarihan na katawanin kami sa anumang pakikipagkasundo (CBA) sa
Pangasiwaan ng aming pinapasukan at kung sila man ay nagkasundo o
magkakasundo sa kabila ng pagtitiwalag na ito, ang nasabing kasunduan ay
hindi namin pinagtitibay at tahasang aming itinatakwil/tinatanggihan;
2. BINABAWI namin ang aming pahintulot sa Federation of Unions of Rizal
(FUR) na katawanin kami sa Petition for Certification Election (RO4-MED
Case No. 743-77) at/o sa sama-samang pakikipagkasundo sa aming patrons;
3. PANATILIHIN na nagsasarili (independent) ang aming samahan, AMIGO
EMPLOYEES' UNION, alinsunod sa Artikulo 240 ng Labor Code;
4. MAGHAIN KAAGAD ang aming Unyong nagsasarili, sa pamumuno ng
aming pangsamantalang Opisyal na kinatawan, si Ginang DOLORES
VILLAR, ng Petition for Certification Election sa Department of Labor, para
kilalanin ang aming Unyong nagsasarili bilang Tanging kinatawan ng mga
manggagawa sa sama-samang pakikipagkasundo (CBA);
5. BIGYAN ng kopya nito ang bawa't kinauukulan at ang mga kapasiyahang
ito ay magkakabisa sa oras na matanggap ng mga kinauukulan ang kani-
kanilang sipi nito.1
Immediately thereafter or on February 9, 1977, petitioner Dolores Villar,
representing herself to be the authorized representative of the Amigo
Employees Union, filed a petition for certification election in the Company
before Regional Office No. 4, with the Amigo Employees Union as the
petitioner. The Amigo Employees Union-PAFLU intervened and moved for
the dismissal of the petition for certification election filed by Dolores Villar,
citing as grounds therefor, viz: (a) the petition lacked the mandatory requisite
of at least 30% of the employees in the bargaining unit; (2) Dolores Villar
had no legal personality to sign the petition since she was not an officer of
the union nor is there factual or legal basis for her claim that she was the
authorized representative of the local union; (3) there was a pending case for
the same subject matter filed by the same individuals; (4) the petition was
barred by the new CBA concluded on February 15, 1977; (5) there was no
valid disaffiliation from PAFLU; and (6) the supporting signatures were
procured through false pretenses.
Finding that the petition involved the same parties and causes of action as the
case previously indorsed to the TUCP, the Med-Arbiter dismiss the petition
filed by herein petitioner Villar, which dismissal is still pending appeal
before the Bureau of Labor Relations.
In the meantime, on February 14, 1977, the Amigo Employees Union-
PAFLU called a special meeting of its general membership. A Resolution
was thereby unanimously approved which called for the investigation by the
PAFLU national president, pursuant to the constitution and by-laws of the
Federation, of all of the petitioners and one Felipe Manlapao, for
"continuously maligning, libelling and slandering not only the incumbent
officers but even the union itself and the federation;" spreading 'false
propaganda' that the union officers were 'merely appointees of the
management', and for causing divisiveness in the union.
Pursuant to the Resolution approved by the Amigo Employees Union-
PAFLU, the PAFLU, through its national President, formed a Trial
Committee to investigate the local union's charges against the petitioners for
acts of disloyalty inimical to the interest of the local union, as well as
directing the Trial Committee to subpoena the complainants (Amigo
Employees Union-PAFLU) and the respondents (herein petitioners) for
investigation, to conduct the said investigation and to submit its findings and
recommendations for appropriate action.
And on the same date of February 15, 1977, the Amigo Employees Union-
PAFLU and the Company concluded a new CBA which, besides granting
additional benefits to the workers, also reincorporated the same provisions of
the existing CBA, including the union security clause reading, to wit:
ARTICLE III
UNION SECURITY WITH RESPECT TO PRESENT MEMBERS
All members of the UNION as of the signing of this Agreement shall remain
members thereof in good standing. Therefore, any members who shall resign,
be expelled, or shall in any manner cease to be a member of the UNION,
shall be dismissed from his employment upon written request of the UNION
to the Company. 2
Subsequently, petitioners were summoned to appear before the PAFLU Trial
Committee for the aforestated investigation of the charges filed against them
by the Amigo Employees Union-PAFLU. Petitioners, however, did not
attend but requested for a "Bill of Particulars" of the charges, which charges
were stated by the Chairman of the committee as follows:
1. Disaffiliating from PAFLU and affiliating with the Federation of Unions
of Rizal (FUR).
2. Filling petition for certification election with the Bureau of Labor
Relations and docketed as Case No. R04-MED-830-77 and authorizing a
certain Dolores Villar as your authorized representative without the official
sanction of the mother Federation- PAFLU.
3. Maligning, libelling and slandering the incumbent officers of the union as
well as of the PAFLU Federation.
4. By spreading false propaganda among members of the Amigo Employees
Union-PAFLU that the incumbent union officers are 'merely appointees' of
the management.
5. By sowing divisiveness instead of togetherness among members of the
Amigo Employees Union-PAFLU.
6. By conduct unbecoming as members of the Amigo Employees Union-
PAFLU which is highly prejudicial to the union as well as to the PAFLU
Federation.
All these charges were formalized in a resolution of the incumbent officers
of the Amigo Employees Union-PAFLU dated February 14, 1977. 3
Not recognizing PAFLU's jurisdiction over their case, petitioners again
refused to participate in the investigation rescheduled and conducted on
March 9, 1979. Instead, petitioners merely appeared to file their Answer to
the charges and moved for a dismissal.

Petitioners contend in their Answer that neither the disaffiliation of the
Amigo Employees Union from PAFLU nor the act of filing the petition for
certification election constitute disloyalty as these are in the exercise of their
constitutional right to self-organization. They further contended that PAFLU
was without jurisdiction to investigate their case since the charges, being
intra-union problems within the Amigo Employees Union-PAFLU, should
be conducted pursuant to the provisions of Article XI, Sections 2, 3, 4 and 5
of the local union's constitution and by-laws.
The complainants, all of whom were the then incumbent officers of the
Amigo Employees Union-PAFLU, however, appeared and adduced their
evidence supporting the charges against herein petitioners.
Based on the findings and recommendations of the PAFLU trial committee,
the PAFLU President, on March 15, 1977, rendered a decision finding the
petitioners guilty of the charges and disposing in the last paragraph thereof,
to wit,
Excepting Felipe Manlapao, the expulsion from the AMIGO EMPLOYEES
UNION of all the other nine (9) respondents, Dionisio Ramos, Recitation
Bernus, Dolores Villar, Romeo Dequito, Rolando de Guzman, Anselma
Andan, Rita Llagas, Benigno Mamaradlo and Orlando Acosta is hereby
ordered, and as a consequence the Management of the employer, AMIGO
MANUFACTURING, INC. is hereby requested to terminate them from their
employment in conformity with the security clause in the collective
bargaining agreement. Further, the Trial Committee is directed to investigate
Felipe Manlapao when he shall have reported back for duty. 4
Petitioners appealed the Decision to the PAFLU, citing the same grounds as
before, and in addition thereto, argued that the PAFLU decision cannot
legally invoke a CBA which was unratified, not certified, and entered into
without authority from the union general membership, in asking the
Company to terminate them from their employment. The appeal was,
likewise, denied by PAFLU in a Resolution dated March 28, 1977.
After denying petitioner's appeal, PAFLU on March 28, 1977 sent a letter to
the Company stating, to wit,
We are furnishing you a copy of our Resolution on the Appeal of the
respondent in Administrative Case No. 2, Series of 1977, Amigo Employees
Union-PAFLU vs. Dionisio Ramos, et al.
In view of the denial of their appeal and the Decision of March 15, 1977
having become final and executory we would appreciate full cooperation on
your part by implementing the provision of our CBA on security clause by
terminating the respondents concerned from their employment.5
This was followed by another letter from PAFLU to the Company dated April
25, 1977, reiterating the demand to terminate the employment of the
petitioners pursuant to the security clause of the CBA, with a statement
absolving the Company from any liability or damage that may arise from
petitioner's termination.
Acting on PAFLU's demand, the Company informed PAFLU that it will first
secure the necessary clearances to terminate petitioners. By letter dated April
28, 1977, PAFLU requested the Company to put petitioners under preventive
suspension pending the application for said clearances to terminate the
petitioners, upon a declaration that petitioners' continued stay within the
work premises will "result in the threat to the life and limb of the other
employees of the company."6
Hence, on April 29, 1977, the Company filed the request for clearance to
terminate the petitioners before the Department of Labor, Regional Office
No. 4. The application, docketed as RO4-Case No. 7-IV-3549-T, stated as
cause therefor, "Demand by the Union Pursuant to the Union Security
Clause," and further, as effectivity date, "Termination-upon issuance of
clearance; Suspension-upon receipt of notice of workers concerned." 7
Petitioners were then informed by memorandum dated April 29, 1977 that
the Company has applied for clearance to terminate them upon demand of
PAFLU, and that each of them were placed under preventive suspension
pending the resolution of the said applications. The security guard was,
likewise, notified to refuse petitioners entry into the work premises. 8
In an earlier development, on April 25, 1977, or five days before petitioners
were placed under preventive suspension, they filed a complaint with
application for preliminary injunction before the same Regional Office No.
4, docketed as RO4-Case No. RD-4-4088-77-T, praying that after due notice
and hearing, "(1) A preliminary injunction be issued forthwith to restrain the
respondents from doing the act herein complained of, namely: the dismissal
of the individual complainants from their employment; (2) After due hearing
on the merits of the case, an Order be entered denying and/or setting aside
the Decision dated March 15, 1977 and the Resolution dated March 28, 1977,
issued by respondent Onofre P. Guevara, National President of respondent
PAFLU; (3) The Appeal of the individual complainants to the General
Membership of the complainant AMIGO EMPLOYEES UNION, dated
March 22, 1977, pursuant to Sections 2, 3, 4 & 5, Article XI in relation of
Section 1, Article XII of the Union Constitution and By-Laws, be given due
course; and (4) Thereafter, the said preliminary injunction be made
permanent, with costs, and with such further orders/reliefs that are just and
equitable in the premises."9
In these two cases filed before the Regional Office No. 4, the parties adopted
their previous positions when they were still arguing before the PAFLU trial
committee.
On October 14, 1977, Vicente Leogardo, Jr., Officer-in-Charge of Regional
Office No. 4, rendered a decision jointly resolving said two cases, the
dispositive portion of which states, to wit,
IN VIEW OF THE FOREGOING, judgment is hereby rendered granting the
application of the Amigo Manufacturing, Inc., for clearance to terminate the
employment of Dolores D. Villar, Dionisio Ramos, Benigno Mamaraldo,
Orlando Acosta, Recitacion Bernus, Anselma Andan, Rolando de Guzman,
and Rita Llagas. The application of oppositors, under RO4-Case No. RD-4-
4088-77, for a preliminary injunction to restrain the Amigo Manufacturing,
Inc. from terminating their employment and from placing them under
preventive suspension, is hereby DISMISSED. 10
Not satisfied with the decision, petitioners appealed to the Office of the
Secretary of Labor. By Order dated February 15, 1979, the respondent
Amado G. Inciong, Deputy Minister of Labor, dismissed their appeal for lack
of merit. 11
Hence, the instant petition for review, raising the following issues:
A. Is it not error in both constitutional and statutory law by the respondent
Minister when he affirmed the decision of the RO4-Officer-in-Charge
allowing the preventive suspension and subsequent dismissal of petitioners
by reason of the exercise of their right to freedom of association?
B. Is it not error in law by the respondent Minister when he upheld the
decision of the RO4 OIC which sustained the availment of the respondent
PAFLU's constitution over that of the local union constitution in the
settlement of intra-union dispute?
C. Is it not error in law amounting to grave abuse of discretion by the Minister
in affirming the conclusion made by the RO4 OIC, upholding the legal
applicability of the security clause of a CBA over alleged offenses committed
earlier than its conclusion, and within the 60-day freedom period of an old
CBA? 12
The main thrust of the petition is the alleged illegality of the dismiss of the
petitioners by private respondent Company upon demand of PAFLU which
invoked the security clause of the collective bargaining agreement between
the Company and the local union, Amigo Employees Union-PAFLU.
Petitioners contend that the respondent Deputy Minister acted in grave abuse
of discretion when he affirmed the decision granting the clearance to
terminate the petitioners and dismissed petitioners' complaint, and in support
thereof, allege that their constitutional right to self-organization had been
impaired. Petitioner's contention lacks merit.
It is true that disaffiliation from a labor union is not open to legal objection.
It is implicit in the freedom of association ordained by the Constitution. 13
But this Court has laid down the ruling that a closed shop is a valid form of
union security, and such provision in a collective bargaining agreement is not
a restriction of the right of freedom of association guaranteed by the
Constitution. 14
In the case at bar, it appears as an undisputed fact that on February 15, 1977,
the Company and the Amigo Employees Union-PAFLU entered into a
Collective Bargaining Agreement with a union security clause provided for
in Article XII thereof which is a reiteration of the same clause in the old CBA.
The quoted stipulation for closed-shop is clear and unequivocal and it leaves
no room for doubt that the employer is bound, under the collective bargaining
agreement, to dismiss the employees, herein petitioners, for non- union
membership. Petitioners became non-union members upon their expulsion
from the general membership of the Amigo Employees Union-PAFLU on
March 15, 1977 pursuant to the Decision of the PAFLU national president.
We reject petitioners' theory that their expulsion was not valid upon the
grounds adverted to earlier in this Decision. That PAFLU had the authority
to investigate petitioners on the charges filed by their co-employees in the
local union and after finding them guilty as charged, to expel them from the
roll of membership of the Amigo Employees Union-PAFLU is clear under
the constitution of the PAFLU to which the local union was affiliated. And
pursuant to the security clause of the new CBA, reiterating the same clause
in the old CBA, PAFLU was justified in applying said security clause. We
find no abuse of discretion on the part of the OIC of Regional Office No. 4
in upholding the validity of the expulsion and on the part of the respondent
Deputy Minister of Labor in sustaining the same. We agree with the OIC's
decision, pertinent portion of which reads:
Stripped of non-essentials, the basic and fundamental issue in this case tapers
down to the determination of WHETHER OR NOT PAFLU HAD THE
AUTHORITY TO INVESTIGATE OPPOSITORS AND, THEREAFTER,
EXPEL THEM FROM THE ROLL OF MEMBERSHIP OF THE AMIGO
EMPLOYEES UNION-PAFLU.
Recognized and salutary is the principle that when a labor union affiliates
with a mother union, it becomes bound by the laws and regulations of the
parent organization. Thus, the Honorable Secretary of Labor, in the case of
Amador Bolivar, et al. vs. PAFLU, et al., NLRC Case No. LR-133 & MC-
476, promulgated on December 3, 1973, declared-
When a labor union affiliates with a parent organization or mother union, or
accepts a charter from a superior body, it becomes subject to the laws of the
superior body under whose authority the local union functions. The
constitution, by-laws and rules of the parent body, together with the charter
it issues pursuant thereto to the subordinate union, constitute an enforceable
contract between the parent body and the subordinate union, and between the
members of the subordinate union inter se. (Citing Labor Unions, Dangel and
Shriber, pp. 279-280).
It is undisputable that oppositors were members of the Amigo Employees
Union at the time that said union affiliated with PAFLU; hence, under the
afore-quoted principle, oppositors are bound by the laws and regulations of
PAFLU.
Likewise, it is undeniable that in the investigation of the charges against
them, oppositors were accorded 'due process', because in this jurisdiction, the
doctrine is deeply entrenched that the term 'due process' simply means that
the parties were given the opportunity to be heard. In the instant case, ample
and unmistakable evidence exists to show that the oppositors were afforded
the opportunity to present their evidence, but they themselves disdained or
spurned the said opportunity given to them.
PAFLU, therefore, correctly and legally acted when, pursuant to its
Constitution and By-Laws, it conducted and proceeded with the investigation
of the charges against the oppositors and found them guilty of acts prejudicial
and inimical to the interests of the Amigo Employees Union- PAFLU, to wit:
that of falsely and maliciously slandering the officers of the union; spreading
false propaganda among the members of the Amigo Employees Union-
PAFLU; calling the incumbent officers as mere appointees and robots of
management; calling the union company-dominated or assisted union;
committing acts unbecoming of the members of the union and destructive of
the union and its members.
Inherent in every labor union, or any organization for that matter, is the right
of self-preservation. When members of a labor union, therefore, sow the
seeds of dissension and strife within the union; when they seek the
disintegration and destruction of the very union to which they belong, they
thereby forfeit their rights to remain as members of the union which they seek
to destroy. Prudence and equity, as well as the dictates of law and justice,
therefore, compelling mandate the adoption by the labor union of such
corrective and remedial measures in keeping with its laws and regulations,
for its preservation and continued existence; lest by its folly and inaction, the
labor union crumble and fall.
Correctly and legally, therefore, the PAFLU acted when, after proper
investigation and finding of guilt, it decided to remove the oppositors from
the list of members of the Amigo Employees Union-PAFLU, and thereafter,
recommended to the Amigo Manufacturing, Inc.; the termination of the
employment of the oppositors. 15
We see no reason to disturb the same.
The contention of petitioners that the charges against them being intra-union
problems, should have been investigated in accordance with the constitution
and by-laws of the Amigo Employees Union-PAFLU and not of the PAFLU,
is not impressed with merit. It is true that under the Implementing Rules and
Regulations of the Labor Code, in case of intra-union disputes, redress must
first be sought within the organization itself in accordance with its
constitution and by-laws. However, it has been held that this requirement is
not absolute but yields to exception under varying circumstances. Thus, in
Kapisanan ng mga Manggagawa sa MRR vs. Hernandez, 20 SCRA 109, We
held:
In the case at bar, noteworthy is the fact that the complaint was filed against
the union and its incumbent officers, some of whom were members of the
board of directors. The constitution and by-laws of the union provide that
charges for any violations thereof shall be filed before the said board. But as
explained by the lower court, if the complainants had done so the board of
directors would in effect be acting as respondent investigator and judge at the
same time. To follow the procedure indicated would be a farce under the
circumstances, where exhaustion of remedies within the union itself would
practically amount to a denial of justice or would be illusory or vain, it will
not be insisted upon, particularly where property rights of the members are
involved, as a condition to the right to invoke the aid of a court.
The facts of the instant petition stand on all fours with the aforecited case that
the principle therein enunciated applies here as well. In the case at bar, the
petitioners were charged by the officers of the Amigo Employees Union-
PAFLU themselves who were also members of the Board of Directors of the
Amigo Employees Union-PAFLU. Thus, were the petitioners to be charged
and investigated according to the local union's constitution, they would have
been tried by a trial committee of three (3) elected from among the members
of the Board who are themselves the accusers. (Section 2, Article 11,
Constitution of the Local Union). Petitioners would be in a far worse position
had this procedure been followed. Nonetheless, petitioners admit in their
petition that two (2) of the six (6) charges, i.e. disaffiliation and filing a
petition for certification election, are not intra-union matters and, therefore,
are cognizable by PAFLU.
Petitioners insist that their disaffiliation from PAFLU and filing a petition for
certification election are not acts of disloyalty but an exercise of their right
to self-organization. They contend that these acts were done within the 60-
day freedom period when questions of representation may freely be raised.
Under the peculiar facts of the case, We find petitioners' insistence untenable.
In the first place, had petitioners merely disaffiliated from the. Amigo
Employees Union-PAFLU, there could be no legal objections thereto for it
was their right to do so. But what petitioners did by the very clear terms of
their "Sama-Samang Kapasiyahan" was to disaffiliate the Amigo Employees
Union-PAFLU from PAFLU, an act which they could not have done with
any effective consequence because they constituted the minority in the
Amigo Employees Union-PAFLU.
Extant from the records is the fact that petitioners numbering ten (10), were
among the ninety-six (96) who signed the "Sama-Samang Kapasiyahan"
whereas there are two hundred thirty four (234) union members in the Amigo
Employees Union-PAFLU. Hence, petitioners constituted a small minority
for which reason they could not have successfully disaffiliated the local
union from PAFLU. Since only 96 wanted disaffiliation, it can be inferred
that the majority wanted the union to remain an affiliate of PAFLU and this
is not denied or disputed by petitioners. The action of the majority must,
therefore, prevail over that of the minority members. 16
Neither is there merit to petitioners' contention that they had the right to
present representation issues within the 60-day freedom period. It is true, as
contended by petitioners, that under Article 257 of the Labor Code and
Section 3, Rule 2, Book 2 of its Implementing Rules, questions of exclusive
bargaining representation are entertainable within the sixty (60) days prior to
the expiry date of an existing CBA, and that they did file a petition for
certification election within that period. But the petition was filed in the name
of the Amigo Employees Union which had not disaffiliated from PAFLU,
the mother union. Petitioners being a mere minority of the local union may
not bind the majority members of the local union.

Moreover, the Amigo Employees Union, as an independent union, is not duly
registered as such with the Bureau of Labor Relations. The appealed decision
of OIC Leogardo of Regional Office No. 4 states as a fact that there is no
record in the Bureau of Labor Relations that the Amigo Employees Union
(Independent) is registered, and this is not disputed by petitioners,
notwithstanding their allegation that the Amigo Employees Union is a duly
registered labor organization bearing Ministry of Labor Registration
Certification No. 5290-IP dated March 27, 1967. But the independent union
organized after the "Sama-Samang Kapasiyahan" executed February 7, 1977
could not have been registered earlier, much less March 27, 1967 under
Registration Certificate No. 5290-IP. As such unregistered union, it acquires
no legal personality and is not entitled to the rights and privileges granted by
law to legitimate labor organizations upon issuance of the certificate of
registration. Article 234 of the New Labor Code specifically provides:
Art. 234. Requirements of Registration.—Any applicant labor organization,
association, or group of unions or workers shall acquire legal personality and
shall be entitled to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration. ....
In Phil. Association of Free Labor Unions vs. Sec. of Labor, 27 SCRA 40,
We had occasion to interpret Section 23 of R.A. No. 875 (Industrial Peace
Act) requiring of labor unions registration by the Department of Labor in
order to qualify as "legitimate labor organization," and We said:
The theory to the effect that Section 23 of Republic Act No. 875 unduly
curtails the freedom of assembly and association guaranteed in the Bill of
Rights is devoid of factual basis. The registration prescribed in paragraph (b)
of said section 17 is not a limitation to the right of assembly or association,
which may be exercised with or without said registration. The latter is merely
a condition sine qua non for the acquisition of legal personality by labor
organizations, associations or unions and the possession of the 'rights and
privileges granted by law to legitimate labor organizations.' The Constitution
does not guarantee these rights and privileges, much less said personality,
which are mere statutory creations, for the possession and exercise of which
registration is required to protect both labor and the public against abuses,
fraud, or impostors who pose as organizers, although not truly accredited
agents of the union they purport to represent. Such requirement is a valid
exercise of the police power, because the activities in which labor
organizations, associations and union or workers are engaged affect public
interest, which should be protected.
Simply put, the Amigo Employees Union (Independent) Which petitioners
claim to represent, not being a legitimate labor organization, may not validly
present representation issues. Therefore, the act of petitioners cannot be
considered a legitimate exercise of their right to self-organization. Hence,
We affirm and reiterate the rationale explained in Phil Association of Free
Labor Unions vs. Sec. of Labor case, supra, in order to protect legitimate
labor and at the same time maintain discipline and responsibility within its
ranks.
The contention of petitioners that the new CBA concluded between Amigo
Employees Union-PAFLU and the Company on February 15, 1977
containing the union security clause cannot be invoked as against the
petitioners for offenses committed earlier than its conclusion, deserves scant
consideration. We find it to be the fact that the union security clause provided
in the new CBA merely reproduced the union security clause provided in the
old CBA about to expire. And since petitioners were expelled from Amigo
Employees Union-PAFLU on March 28, 1982 upon denial of their Motion
for Reconsideration of the decision expelling them, the CBA of February 15,
1977 was already applicable to their case. The "closed-shop provision" in the
CBA provides:
All members of the UNION as of the signing of this Agreement shall remain
members thereof in good standing. Therefore, any members who shall resign,
be expelled, or shall in any manner cease to be a member of the UNION,
shall be dismissed from his employment upon written request of the UNION
to the Company. (Art. III)
A closed-shop is a valid form of union security, and a provision therefor in a
collective bargaining agreement is not a restriction of the right of freedom of
association guaranteed by the Constitution. (Manalang, et al. vs. Artex
Development Co., Inc., et al., L-20432, October 30, 1967, 21 SCRA 561).
Where in a closed-shop agreement it is stipulated that union members who
cease to be in good standing shall immediately be dismissed, such dismissal
does not constitute an unfair labor practice exclusively cognizable by the
Court of Industrial Relations. (Seno vs. Mendoza, 21 SCRA 1124).
Finally, We reject petitioners' contention that respondent Minister committed
error in law amounting to grave abuse of discretion when he affirmed the
conclusion made by the RO4 OIC, upholding the legal applicability of the
security clause of a CBA over alleged offenses committed earlier than its
conclusion and within the 60-day freedom period of an old CBA. In the first
place, as We stated earlier, the security clause of the new CBA is a
reproduction or reiteration of the same clause in the old CBA. While
petitioners were charged for alleged commission of acts of disloyalty
inimical to the interests of the Amigo Employees Union-PAFLU in the
Resolution of February 14, 1977 of the Amigo Employees Union- PAFLU
and on February 15, 1977 PAFLU and the Company entered into and
concluded a new collective bargaining agreement, petitioners may not escape
the effects of the security clause under either the old CBA or the new CBA
by claiming that the old CBA had expired and that the new CBA cannot be
given retroactive enforcement. To do so would be to create a gap during
which no agreement would govern, from the time the old contract expired to
the time a new agreement shall have been entered into with the union. As this
Court said in Seno vs. Mendoza, 21 SCRA 1124, "without any agreement to
govern the relations between labor and management in the interim, the
situation would well be productive of confusion and result in breaches of the
law by either party. "
The case of Seno vs. Mendoza, 21 SCRA 1124 mentioned previously needs
further citation of the facts and the opinion of the Court, speaking through
Justice Makalintal who later became Chief Justice, and We quote:
It appears that petitioners other than Januario T. Seno who is their counsel,
were members of the United Seamen's Union of the Philippines. Pursuant to
a letter-request of the Union stating that they 'had ceased to be members in
good standing' and citing a closed shop clause in its bargaining agreement
with respondent Carlos A. Go Thong & Co., the latter dismissed said
petitioners. Through counsel, petitioners requested that they be reinstated to
their former positions and paid their backwages, otherwise they would picket
respondents' offices and vessels. The request was denied on the ground that
the dismissal was unavoidable under the terms of the collective bargaining
agreement. ...
We, therefore, hold and rule that petitioners, although entitled to disaffiliate
from their union and form a new organization of their own, must, however,
suffer the consequences of their separation from the union under the security
clause of the CBA.
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Order appealed
from affirming the joint decision of the OIC of Regional Office No. 4 in RO4-
Case No. T-IV-3549-T and RO4 Case No. RD-4-4088-77-T granting
clearance to terminate petitioners as well as dismissing their complaint with
application for preliminary injunction, is hereby AFFIRMED. No costs.
SO ORDERED.
UNITED POLYRESINS, INC. vs. PINUELA
G.R. No. 209555 July 31, 2017
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails the December 11, 2012
Decision2 and October 10, 2013 Resolution3 of the Court of Appeals (CA)
in CA-G.R: SP No. 115402 which set aside the June 11, 2011 Decision4 of
the National Labor Relations Commission (NLRC) in NLRC-LAC Case No.
06- 001577-09.
Factual Antecedents
Petitioner United Polyresins, Inc. (UPI) is a registered domestic corporation
doing business in San Pedro, Laguna, while petitioners Ernesto Uy Soon, Jr.
and Julito Uy Soon are its corporate officers.
Respondent Marcelino Pinuela was employed by UPI in 1987. He became a
member of the labor union, Polyresins Rank and File Association (PORFA),
and was elected President thereof in May, 2005 and slated to serve until the
end of 2007.
The collective bargaining agreement (CBA) then existing between UPI and
PORFA provided that:
Section 3. The Company shall grant to the Union the amount of Three
Hundred Thousand Pesos (₱300,000.00) free of interest as the union's capital
for establishing a cooperative to meet the needs of its members. Said loan
shall fall due and become payable at the same date that this Bargaining
Agreement expires, to wit - December 31, 2007. In the event of non-payment,
all officers and members will be personally accountable. In case of additional
funds, they can make a written request [addressed] to the President of the
company.5
The CBA likewise contained a union security clause which provided that
employees who cease to be PORFA members in good standing by reason of
resignation or expulsion shall not be retained in the employ of UPI.
Upon his assumption as union President, respondent wrote the former union
President, Geoffrey Cielo (Cielo), to turn over the records, papers, documents
and financial statements of the union. Cielo surrendered the union's bank
account documents, among others, which indicated that the union had an
available ₱78,723.60 cash balance. Cielo likewise submitted a Financial
Report indicating that the union had ₱208,623.60 in cash and ₱l59,500.00 in
receivables.
Finding that the bank documents and Cielo's report did not match, and Cielo
unable to explain the discrepancies, the union's Executive Committee, which
was headed by respondent, resolved to hire a certified public accountant to
conduct an audit of the union's finances. In a December 1, 2005 report, the
accountant concluded that the union's finances, income, and disbursements
for the years 2003 and 2004 were not properly documented, recorded, and
reported. He recommended that the union officers "take a seminar on basic
bookkeeping and accounting;"6 that the union adopt and/or install the
necessary accounting and internal control systems; that the union prepare the
proper financial statements; and that the officers take corrective measures in
financial management as an integral part of sound management.7
Meanwhile, during respondent's term as PORF A President, it appeared that
UPI automatically deducted from the respective salaries of PORFA members
amounts representing union membership dues and loan payments. These
amounts, which totalled ₱2,402,533.43, were then regularly turned over by
UPI to PORFA in the form of fifty eight (58) crossed checks, made payable
to PORFA.8 These amounts were then deposited and credited to PORFA's
account.9
On December 8, 2007, or several days before the ₱300,000.00 loan by UPI
to PORFA became due, petitioners, respondent, and the other union officers
met to discuss the proposed new CBA. Thereat, petitioners told respondent
that until the ₱300,000.00 is returned, the former shall not discuss the
proposed CBA. Respondent explained that the union did not have the
finances and had only ₱78,723.60, which was the original amount turned
over by Cielo to respondent when the latter assumed office as union
President. Petitioners then told respondent and the other union officers that
if the amount is not returned, the same will be deducted from the salaries of
the union members.10
On January 7, 2008, respondent filed a complaint before the National
Conciliation and Mediation Board (NCMB), claiming that petitioners refused
to bargain collectively. During the scheduled conferences before the NCMB,
petitioners raised the issue of non-payment of the ₱300,000.00 owing to UPI
and insisted on its payment; they also threatened to deduct the amount of
₱l,500.00 from the respective salaries of the union members.11
Because of the recurring threat of failed CBA negotiations and salary
deductions as means of recovering the ₱300,000.00 loaned to the union,
union members began to demand the holding of a special election of union
officers. They likewise accused respondent and the other union officers of
mismanagement, unduly hanging on to their positions, and lack of
accountability.12
Thus, in March 2008, special elections were held, and a new union President
and set of officers were elected.13
On March 29, 2008, the union's new set of officers conducted an
investigation into the fact that the union had little or no funds remaining in
its bank account. Respondent attended the investigation, and admitted that
the union had no more funds as they were "utilized in the prosecution of cases
during his incumbency."14 He likewise failed to make a formal turnover of
documents to the new President. Respondent was required to surrender union
documents in his possession on the next scheduled meeting.15
On April 8, 2008, another inquiry was held where respondent was present.
The investigation centered on respondent's continued failure to account for
the union's bank accounts, documents, and deposits made during his
incumbency, and his failure to formally turn over union's papers to the new
officers. After the meeting, respondent and the new officers proceeded to the
bank, where they discovered that the PORFA account had already been
closed.16
On April 10, 2008, the new set of union officers issued a Resolution17
expelling respondent from PORF A for being guilty of the following
violations:
1. No annual financial statement.
2. No listings or ledger of union member's [sic] emergency loans.
3. Unposted cheques on the Union's passbook collected from umon members
[sic] monthly dues.
4. Our union checking account at Security Bank were [sic] Zero
balance/closed account.
5. No receipts/cash disbursement presented for the union operational [sic]
expenses.
6. Unable to return the ₱300,000.00 lent by the management free of interest.
(Art. XXVII, Section 3 of our CBA).
7. Unable to explain and present documents to support where the agency fees
and union dues collected from legitimate union members were used.18
The officers held that these violations constituted an infringement of the
union's Constitution, particularly Article XV, Section 1, paragraphs (e) and
(f) thereof, which specifically prohibit the misappropriation of union funds
and property and give ground for the impeachment and recall of union
officers.19
In an April 11, 2008 letter20 to petitioners, PORF A communicated
respondent's expulsion from the union.
On April 14, 2008, petitioners issued a letter of termination21 to respondent,
to take effect immediately.
Ruling of the Labor Arbiter
Respondent filed a complaint against petitioners before the Labor Arbiter for
illegal dismissal, with monetary claims and damages, which was docketed as
NLRC Case No. RAB-IV-08-27303-08-L. He claimed that his dismissal was
effected in bad faith and without due process and was thus illegal. Petitioners
countered that respondent's dismissal is valid under the union security clause
of the CBA; that his failure to return the ₱300,000.00 loan to the union due
to mismanagement/misappropriation constitutes just cause for his expulsion
from the union, as well as dismissal from employment; that he was accorded
substantive and procedural due process; that the herein individual petitioners
may not be held liable for respondent's claims; and that accordingly, the case
should be dismissed.
On April 20, 2009, the Labor Arbiter issued a Decision22 dismissing
respondent's complaint on the finding that respondent was not illegally
terminated, thus:
While complainant, as then Union President, denies any misappropriation of
union funds, it is undisputed that he failed to account for the missing union
funds and to return the ₱300,000.00 which the respondent company had lent
for the union's assistance upon the expiration of the CBA dated December
31, 2007.
More importantly, in the investigation conducted by the newly elected
officers of the union, it was uncovered that union funds were in fact
personally used by the former officers of PORF A which includes
complainant.
Thus, the union passed a resolution expelling complainant from the PORFA
union and the corresponding letter was sent to the respondent company
informing the latter of complainant's expulsion coupled with a
recommendation that complainant be terminated from employment pursuant
to the union security clause of the CBA.
Given the foregoing, we rule that complainant was validly dismissed since
the respondent company merely did its obligation under the CBA by
terminating the services of complainant who ceased to be a member in good
standing of the PORF A union by reason of expulsion.
WHEREFORE, premises considered, judgment is hereby rendered
DISMISSING the instant complaint for lack of merit.
SO ORDERED.23
Ruling of the National Labor Relations Commission
Respondent appealed before the NLRC, which initially overturned the Labor
Arbiter in a December 8, 2009 Decision,24 which decreed as follows:
WHEREFORE, the assailed Decision is hereby SET ASIDE and a NEW one
is entered declaring the complainant-appellant's dismissal to be illegal.
Respondents Union [sic] and respondent company are hereby declared
jointly and severally liable to pay complainant his full backwages from the
date he was dismissed until date instant [sic] and to pay his separation pay
equivalent to one month salary per year of service computed as follows:
BACKWAGES
04/14/08 - 10/14/09
₱396 x 26 days x 18 mos.
₱l0,296.00 x 18 days = ₱l85,328.00
SEPARATION PAY
₱396.00 x 26 x 22yrs.
₱l0,296 x 22yrs. = ₱226,512.00
13th Month Pay
₱185,328.00 I 12 = ₱15,444.00
Grand Total ₱427,284.00
SO ORDERED.25
However, on motion for reconsideration, the NLRC issued its June 11, 2011
Decision, which held as follows:
What cannot escape from [sic] our attention and consideration are the
following: (1) there was an obligation x x x to return the amount of
₱300,000.00 to the respondent upon termination of the CBA on December
31, 2007, (2) complainant, as the President of the Union at the time the loan
was due and demandable, failed to account for said funds, and under the same
provision, was to be held personally accountable, (3) Pinuela actually
participated x x x in the whole process of determining accountability over the
union funds, (4) denied knowledge over and receipt of the missing funds,
despite his being among those charged with its custody and safe-keep, as the
Union President.
It is also to be noted that the complainant as union president, could not
explain nor comment on the fact that their union's bank account is already a
closed account. Even if We assume and in fact complainant admitted that he
had custody of ₱78,723.60 as union funds as of June 3, 2005, still he could
not account the whereabouts of the said money. As a signatory to the said
account, complainant cannot be considered as entirely faultless since he was
grossly negligent in the custody of the funds. There is substantial basis in
complainant's dismissal thus, the award of backwages and 13th month pay
should be deleted. However, even if We find complainant's dismissal to be
valid, there is equally no evidence showing that he pocketed the missing
funds of the union. In this regard since he had rendered a considerable
number of years in the service (21 years) complainant may be awarded
separation pay at the rate of 'ii month salary for every year of service (396 x
13 x 21 years) from the inception of his employment till his dismissal in the
interest of justice and compassion since his infraction did not involve serious
misconduct.
Further, We also hold that while complainant's dismissal was valid pursuant
to the enforcement of the Union Security Clause, respondents however did
not comply with the requisite procedural due process. As held in the case of
Agabon vs. NLRC, x x x the Supreme Court held that where the dismissal is
for a cause recognized by the prevailing jurisprudence, the absence of the
statutory due process should not nullify the dismissal or render it illegal x x
x. Accordingly, for violating complainant's statutory rights, respondents
should indemnify him the amount of ₱30,000.00 as nominal damages in
addition to his separation pay.
WHEREFORE, premises considered, respondents-appellees' Motion for
Reconsideration is GRANTED, a new Decision is rendered finding
complainant's dismissal as valid. Respondents-appellees are however
ordered to pay complainant the amounts of ₱108,108.00 and ₱30,000.00 as
separation pay and nominal damages.
All other claims whether monetary or otherwise are hereby DISMISSED.
SO ORDERED.26
Ruling of the Court of Appeals
In a Petition for Certiorari27 before the CA and docketed as CA-G.R. SP No.
115402, respondent sought to reverse the above NLRC Decision and
reinstate its December 8, 2009 Decision, arguing that the Commission
gravely erred in concluding that he was personally accountable for the
missing funds, the closing of PORFA's bank account, and that he was grossly
negligent in the custody of the union funds. In their Comment,28 petitioners
countered that respondent's dismissal was attended by due process; that he is
guilty of the infractions for which he was dismissed; and that his guilt had
been proved by substantial evidence.
On December 11, 2012, the CA issued the assailed Decision containing the
following pronouncement:
Petitioner insists that he is innocent of the charges against him made by the
PORF A (the union), particularly the embezzlement of the union funds. He
vehemently denied misappropriation of the same and that the PORFA Union
officers conspired with the Respondents in removing him as a member in
good standing of the said union and his subsequent dismissal as employee
pursuant to the CBA's union security clause.
Respondents on the other hand, denied the Petitioner's allegation of
conspiracy and that in fact, there was a series of conferences conducted
jointly by the management and the union on the matter of lost union funds
and that the Petitioner was made aware of the charges against him before he
was terminated. They claim that the management participated in the
investigations and that it was shown that even if the Petitioner as president
of the union did not misappropriate the funds nevertheless he committed
omission/gross negligence for which reason he was expelled therefrom. The
Respondents also claim that Petitioner was accorded procedural due process
during the investigations.
It is basic in labor jurisprudence that the burden of proof rests upon
management to show that the dismissal of its worker was based on a just
cause. When an employer exercises its power to terminate an employee by
enforcing the union security clause, it needs to determine and prove the
following: (1) the union security clause is applicable; (2) the union is
requesting for the enforcement of the union security provision in the CBA;
and (3) there is sufficient evidence to support the decision of the union to
expel the employee from the union.
The dispute before Us does not raise any issue with respect to the first two
requisites; the issue being whether there was sufficient evidence to support
Petitioner's expulsion from PORFA. In arriving at any conclusion thereto, the
Petitioner must first be accorded due process of law.x x x
xxxx
On both questions of whether there exist[s] sufficient evidence to support
Petitioner's expulsion from the union (substantive due process), and whether
Petitioner was properly informed of the accusation against him and his
dismissal from employment (procedural due process), We answer in the
negative.
An examination of the submitted evidence before the Labor Arbiter show
[sic] that the same are not enough to prove the alleged charges of
misappropriation against the Petitioner and neither was he properly informed
thereof.
xxxx
On the other hand, the Petitioner have [sic] shown adequate explanation
about the funds of the union that came to his possession. The Memorandum
of Ramon M. Martinez, a Certified Public Accountant, show [sic] that he
made an audit of the funds of the union during the previous administration
and that the actual funds the union had was merely ₱34,344.25 when
Petitioner took over. This amount was not even shown to have been
misappropriated by the Petitioner.
Compounding this want of substantive evidence is the lack of procedural due
process that Petitioner was entitled to. As [has] been previously discussed,
the Petitioner was not given the proper first notice. Thereafter, despite such
lack of first notice, on the mere letter of the union that he was expelled
therefrom because of alleged causes, the Petitioner was dismissed from
employment by the Respondents in the termination letter dated 14 April 2008
on the sole basis of union security clause. Such action cannot be
countenanced. In the same Inguillo case, the Supreme Court also ruled:
'Thus, as held in that case, 'the right of an employee to be informed of the
charges against him and to reasonable opportunity to present his side in a
controversy with either the company or his own Union is not wiped away by
a Union Security Clause or a Union Shop Clause in a collective bargaining
agreement. An employee is entitled to be protected not only from a company
which disregards his rights but also from his own Union, the leadership of
which could yield to the temptation of swift and arbitrary expulsion from
membership and mere dismissal from his job.'
In sum, the NLRC gravely abused its discretion in reconsidering its earlier
Decision which is more in accord with the evidence on record.
WHEREFORE, the petition is hereby GRANTED. The assailed Decision
dated 11 June 201029 is hereby SET ASIDE. The Decision dated 8 December
2009 is REINSTATED with the MODIFICATION that the backwages shall
be recomputed from the date of Petitioner's dismissal to the finality of this
Decision.
SO ORDERED.30 (Citations omitted)
Petitioners filed a Motion for Reconsideration,31 which was denied by the
CA in its October 10, 2013 Resolution.1âwphi1 Hence, the instant Petition.
Issues
In a June 22, 2015 Resolution,32 the Court resolved to give due course to the
Petition, which contains the following assignment of errors:
I.
THE APPELLATE COURT ERRED IN RULING THAT THE CHARGES
OF MISAPPROPRIATION AGAINST THE RESPONDENT WERE
INSUFFICIENT (SUBSTANTIVE DUE PROCESS)
II.
THE APPELLATE COURT ERRED IN RULING THAT THE
RESPONDENT WAS NOT PROPERLY INFORMED OF THE CHARGES
AGAINST HIM (PROCEDURAL DUE PROCESS).
III.
THE APPELLATE COURT ERRED IN RULING THAT THE
RESPONDENT IS ENTITLED TO SEPARATION PAY, BACKWAGES
FROM DISMISSAL TO THE FINALITY OF ITS DECISION, AND 13TH
MONTH PAY.33
Petitioners' Arguments
Praying that the assailed CA dispositions be set aside and that respondent's
case be dismissed instead, petitioners maintain in their Petition and Reply34
that substantive and procedural due process were observed in respondent's
case; that respondent was apprised of the charges against him and given the
opportunity to refute them; that the evidence points to the conclusion that he
misappropriated the union's funds and was unable to explain the dissipation
thereof; that for what he has done, respondent violated Article XV, Section
1, paragraphs (e) and (f) of the union's Constitution; that respondent's
dismissal on the basis of the union security clause in the CBA was thus valid,
based on substantial proof, and in accord with the pronouncement in Carino
v. National Labor Relations Commission,35 where the dismissal of an
employee was upheld on the basis of the union security and expulsion clauses
contained in the CBA; and that since his dismissal is valid, then he is not
entitled to his monetary claims.
Respondent's Arguments
In his Comment,36 respondent maintains that the CA did not err in finding
that the evidence against him was insufficient; that the CA was correct in
ruling that his right to procedural due process was violated when he was not
properly informed of the charges against him; and that for these reasons, he
was illegally dismissed and thus entitled to his monetary claims.
Our Ruling
The Court denies the Petition.
Respondent's expulsion from PORFA is grounded on Article XV, Section 1,
paragraphs (e) and (f) of the union's Constitution, which provides:
ARTICLE-XV
IMPEACHMENT AND RECALL
Section 1. Any of the following shall be ground for the impeachment or recall
of the union officers.
a. Committing or causing the commission directly or indirectly of acts against
the interest and welfare of the union;
b. Malicious attack against the union, its officers or against a fellow union
officer or member;
c. Failure to comply with the obligation to tum over and return to union
treasurer within three (3) days unexpanded [sic] sum of money received from
the money funds to answer for an authorized union purpose;
d. Gross misconduct unbecoming of a union officer;
e. Misappropriation of union funds and property. This is without prejudice to
the filing of an appropriate criminal or civil action against the responsible
officer/(s) by any interested party;
f. Willful violation of any provision of the constitution or rules, regulations,
measures, resolution(s) and decision of the union.37 (Emphasis supplied)
However, these provisions refer to impeachment and recall of union officers,
and not expulsion from union membership. This is made clear by Section
2(e) of the same Article XV, which provides that "(t)he union officers
impeached shall 'IPSO FACTO' to [sic] be considered resigned or ousted
from office and shall no longer be elected nor appointed to any position in
the union." In short, any officer found guilty of violating these provisions
shall simply be removed, impeached or recalled, from office, but not expelled
or stripped of union membership.
It was therefore error on the part of PORFA and petitioners to terminate
respondent's employment based on Article XV, Section 1, paragraphs (e) and
(f) of the union's Constitution. Such a ground does not constitute just cause
for termination.
A review of the PORFA Constitution itself reveals that the only provision
authorizing removal from the union is found in Article X, Section 6, that is,
on the ground of failure to pay union dues, special assessments, fines, and
other mandatory charges.38 On the other hand, grounds for disqualification
from membership may be found in Article IV, which states that-

Section 3. The following are not eligible neither [sic] for membership nor to
election or appointment to any position in the union:

a. Subversive or persons who profess subversive ideas.

b. Persons who have been convicted of crime involving moral turpitude.

c. Persons who are not employees of the company.39

These provisions do not apply in respondent's case. Although he was

eventually charged with estafa,40 a crime involving moral turpitude,41 still,
he has not been convicted of the crime. For this reason, he may not be
disqualified as union member.

Thus, for what he is charged with, respondent may not be penalized with
expulsion from the union, since this is not authorized and provided for under
PORFA's Constitution.

Contrary to petitioners' claim, Carino v. National Labor Relations

Commission is not applicable here. In that case, the employee was terminated
on the basis of existing suspension and expulsion provisions contained in the
CBA and rules on discipline found in the union's Constitution. There are no
such provisions in PORFA's Constitution; neither has it been shown that
there are similar stipulations in the parties' CBA.

The matter of respondent's alleged failure to return petitioners' ₱300,000.00

which was lent to PORFA is immaterial as well. It may not be used as a
ground to terminate respondent's employment; under the Labor Code, such a
contribution by petitioners to PORFA is illegal and constitutes unfair labor
practice.

ART. 248. Unfair labor practices of employers. - It shall be unlawful for an

employer to commit any of the following unfair labor practice:

xxxx

(d) To initiate, dominate, assist or otherwise interfere with the formation or

administration of any labor organization, including the giving of financial or
other support to it or its organizers or supporters;42 (Emphasis supplied)

This could be an opportune time for the union to consider amending its
Constitution in order to provide for specific rules on the discipline of its
members, not just its officers. After all, it is given the right under the Labor
Code, "to prescribe its own rules with respect to the acquisition or retention
of membership."43 But it may not insist on expelling respondent from PORF
A and assist in his dismissal from UPI without just cause, since it is an unfair
labor practice for a labor organization to "cause or attempt to cause an
employer to discriminate against an employee, including discrimination
against an employee with respect to whom membership in such organization
has been denied or to terminate an employee on any ground other than the
usual terms and conditions under which membership or continuation of
membership is made available to other members."44

On account of the foregoing disquisition, the other issues raised by the parties
need not be discussed.

WHEREFORE, for the foregoing reasons, the Petition is hereby DENIED.

The December 11, 2012 Decision and October 10, 2013 Resolution of the
Court of Appeals in CA-G.R. SP No. 115402 are AFFIRMED.

SO ORDERED.
TANCINCO vs. FERRER-CALLEJA
G.R. No. 78131 January 20, 1988
GANCAYCO, J.:
This special civil action for certiorari seeks to annul the Resolution of
February 12, 1987 and the Decision of December 10, 1986 of the Bureau of
Labor Relations * in BLR Case No. A922186, setting aside the order of July
25, 1986 which decreed the inclusion and counting of the 56 segregated votes
for the determination of the results of the election of officers of Imperial
Textile Mills Inc. Monthly Employees Association (ITM-MEA).
Private respondents are the prime organizers of ITM-MEA. While said
respondents were preparing to file a petition for direct certification of the
Union as the sole and exclusive bargaining agent of ITM's bargaining unit,
the union's Vice-President, Carlos Dalmacio was promoted to the position of
Department Head, thereby disqualifying him for union membership. Said
incident, among others led to a strike spearheaded by Lacanilao group,
respondents herein. Another group however, led by herein petitioners staged
a strike inside the company premises. After four (4) days the strike was
settled. On May 10, 1986 an agreement was entered into by the
representatives of the management, Lacanilao group and the Tancinco group
the relevant terms of which are as follows:
"1. That all monthly-paid employees shall be United under one union, the
ITM Monthly Employees Association (ITM-MEA), to be affiliated with
ANGLO;
2. That the management of ITM recognizes ANGLO as the sole and exclusive
bargaining agent of all the monthly-paid employees;
3. That an election of union officers shall be held on 26 May l986, from 8:00
a.m. to 5:00 p.m.;
4. That the last day of filing of candidacy shall be on l9 May l986 at 4:00
p.m.;
5. That a final pre-election conference to finalize the list of qualified voters
shall be held on 19 May 1986, at 5:00 p.m.;" 1
On May 19, 1986, a pre-election conference was held, but the parties failed
to agree on the list of voters. During the May 21, 1986 pre-election
conference attended by MOLE officers, ANGLO through its National
Secretary, a certain Mr. Cornelio A. Sy made a unilateral ruling excluding
some 56 employees consisting of the Manila office employees, members of
Iglesia ni Kristo, non-time card employees, drivers of Mrs. Salazar and the
cooperative employees of Mrs. Salazar. Prior to the holding of the election
of union officers petitioners, 2 through a letter addressed to the Election
Supervisor, MOLE San Fernando Pampanga, protested said ruling but no
action was taken. On May 26, 1986, the election of officers was conducted
under the supervision of MOLE wherein the 56 employees in question
participated but whose votes were segregated without being counted.
Lacanilao's group won. Lacanilao garnered 119 votes with a margin of three
(3) votes over Tancinco prompting petitioners to make a protest. Thereafter,
petitioners filed a formal protest with the Ministry of Labor Regional Office
in San Fernando, Pampanga 3 claiming that the determination of the
qualification of the 56 votes is beyond the competence of ANGLO. Private
respondents maintain the contrary on the premise that definition of union's
membership is solely within their jurisdiction.
On the basis of the position papers submitted by the parties MOLE's Med
Arbiter 4 issued an order dated July 25, 1986 directing the opening and
counting of the segregated votes. 5 From the said order private respondents
appealed to the Bureau of Labor Relations (BLR) justifying the
disenfranchisement of the 56 votes. Private respondents categorized the
challenged voters into four groups namely, the Manila Employees, that they
are personal employees of Mr. Lee; the Iglesia ni Kristo, that allowing them
to vote will be anomalous since it is their policy not to participate in any form
of union activities; the non-time card employees, that they are managerial
employees; and the employees of the cooperative as non-ITM employees. 6
On December 10, 1986, BLR rendered a decision 7 holding the exclusion of
the 56 employees as arbitrary, whimsical, and wanting in legal basis 8 but set
aside the challenged order of July 26, 1986 on the ground that 51 ** of 56
challenged voters were not yet union members at the time of the election per
April 24, 1986 list submitted before the Bureau. 9 The decision directed
among others the proclamation of Lacanilao's group as the duly elected
officers and for ITM-MEA to absorb in the bargaining unit the challenged
voters unless proven to be managerial employees. 10 Petitioners' motion for
reconsideration was likewise denied.
Dissatisfied with the turn of events narrated above petitioners elevated the
case to this Court by way of the instant petition for certiorari under Rule 65
of the Rules of Court. Petitioners allege that public respondent director of
Labor Relations committed grave abuse of discretion in ordering the Med-
Arbiter to disregard the 56 segregated votes and proclaim private respondents
as the duly elected officers of ITM-MEA whereas said respondent ruled that
the grounds relied upon by ANGLO for the exclusion of voters are arbitrary,
whimsical and without legal basis.
The petition is impressed with merit. The record of the case shows that public
respondent categorically declared as arbitrary, whimsical and without legal
basis the grounds 11 relied upon by ANGLO in disenfranchising the 56
voters in question. However, despite said finding public respondent ruled to
set aside the Resolution of July 25, 1986 of the Med-Arbiter based on its own
findings 12 that 51 of the 56 disenfranchised voters were not yet union
members at the time of the election of union officers on May 26, 1986 on the
ground that their names do not appear in the records of the Union submitted
to the Labor Organization Division of the Bureau of Labor on April 24, 1986.
The finding does not have a leg to stand on. Submission of the employees
names with the BLR as qualified members of the union is not a condition
sine qua non to enable said members to vote in the election of union's officers.
It finds no support in fact and in law. Per public respondent's findings, the
April 24, 1986 list consists of 158 union members only 13 wherein 51 of the
56 challenged voters' names do not appear. Adopting however a rough
estimate of a total number of union members who cast their votes of some
333 14 and excluding therefrom the 56 challenged votes, if the list is to be
the basis as to who the union members are then public respondent should
have also disqualified some 175 of the 333 voters. It is true that under article
242(c) of the Labor Code, as amended, only members of the union can
participate in the election of union officers. The question however of
eligibility to vote may be determined through the use of the applicable payroll
period and employee's status during the applicable payroll period. The
payroll of the month next preceding the labor dispute in case of regular
employees 15 and the payroll period at or near the peak of operations in case
of employees in seasonal industries. 16
In the case before Us, considering that none of the parties insisted on the use
of the payroll period-list as voting list and considering further that the 51
remaining employees were correctly ruled to be qualified for membership,
their act of joining the election by casting their votes on May 26, 1986 after
the May 10, 1986 agreement is a clear manifestation of their intention to join
the union. They must therefore be considered ipso facto members thereof
Said employees having exercised their right to unionism by joining ITM-
MEA their decision is paramount. Their names could not have been included
in the list of employee submitted on April 24, 1986 to the Bureau of Labor
for the agreement to join the union was entered into only on May 10, 1986.
Indeed the election was supervised by the Department of Labor where said
56 members were allowed to vote. Private respondents never challenged their
right to vote then.
The Solicitor General in his manifestation agreed with petitioners that public
respondent committed a grave abuse of discretion in deciding the issue on
the basis of the records of membership of the union as of April 24, 1986 when
this issue was not put forward in the appeal.
It is however the position of private respondents that since a collective
bargaining agreement (CBA) has been concluded between the local union
and ITM management the determination of the legal question raised herein
may not serve the purpose which the union envisions and may destroy the
cordial relations existing between the management and the union.
We do not agree. Existence of a CBA and cordial relationship developed
between the union and the management should not be a justification to
frustrate the decision of the union members as to who should properly
represent them in the bargaining unit. Neither may the inclusion and counting
of the 56 segregated votes serve to disturb the existing relationship with
management as feared by herein private respondents. Respondents
themselves pointed out that petitioners joined the negotiating panel in the
recently concluded CBA. This fact alone is conclusive against herein
petitioners and hence will estop them later if ever, from questioning the CBA
which petitioners concurred with. Furthermore, the inclusion and counting of
the 56 segregated votes would not necessarily mean success in favor of herein
petitioners as feared by private respondents herein. Otherwise, could this be
the very reason behind their fears why they made it a point to nullify said
votes?

WHEREFORE, premises considered, the petition for certiorari is

GRANTED. The temporary restraining order issued by this Court on May
13, 1987 is hereby made permanent. The questioned Resolution of February
12, 1987 and the Decision of December 10, 1986 are hereby set aside for
being null and void and the Order of July 25, 1986 of the Mediator Arbiter is
hereby declared immediately executory.

Cost against private respondents.

SO ORDERED.
KAPISANAN NG MANGGAGAWANG PINAGYAKAP (KMP) vs.
TRAJANO
G.R. No. L-62306 January 21, 1985
RELOVA, J.:
Petitioners seek to annul the resolution and order, dated August 13 and
October 19, 1982, respectively, of public respondent Director Cresenciano
B. Trajano of the Bureau of Labor Relations, Ministry of Labor and
Employment, in BLR Case No. A-0100-82 (RO4-A-LRD-M-9-35-81),
entitled: "Catalino Silvestre, et al., vs. Kapisanan ng Manggagawang
Pinagyakap (KMP) Labor Union and its Officers" affirming Med-Arbiter
Antonio D. Cabibihan's order dated April 28, 1982, directing the said Union
to hold and conduct, pursuant to its constitution and by-laws and under the
supervision of the Bureau of Labor Relations, a general membership meeting,
to vote for or against the expulsion or suspension of the herein petitioner
union officers.
Records show that on June 30, 1981 a written request for accounts
examination of the financial status of the Kapisanan ng Manggagawang
Pinagyakap (KMP) Labor Union (Union for brevity), the existing labor union
at Franklin Baker Company in San Pablo City, was filed by private
respondent Catalino Silvestre and thirteen (13) other employees, who are also
members of the said Union. Acting on said request, Union Account Examiner
Florencio R. Vicedo of the Ministry of Labor and Employment conducted
the necessary investigation and, thereafter, submitted a report, with the
following findings:
A. Disallowed expenditures — P1,278.00, as reflected in the following
breakdown:
1. January 9, 1980 — Excess claim for refund P1.00
2. March 13, 1980 — Payment for sound system P90.00
3. March 12, 1980 — Picture taking, entrance fee in Manila Zoo with Atty.
Delos Santos P75.00
4. March 24, 1980 — Payment for sound System P90.00
5. July 16, 1980 — Jeep hired P264.00
6. August 30, 1980 — Partial payment of traveling expenses disallowed
P68.00
7. October 30, 1980 — Representation expenses P180.00
8. May 31, 1981 — Payment for long distance call P10.00
9. May 31, 1981— Payment for legal expenses P500.00
TOTAL............................................................. P1,278.00
B. Respondent union officers failed to keep, maintain and submit for
verification the records of union accounts for the years 1977, and 1978, 1979,
or purposely suppressed the same;
C. Respondent union officers failed to maintain segregated disbursement
receipts in accordance with the five (5) segregated union funds (general fund,
educational funds, mutual aid fund, burial assistance fund and union building
fund) for which they maintained a distinct and separate bank accounts for
each.
D. The Union's constitution and by-laws is not ratified by the general
membership hence, illegal. (pp. 27-28, Rollo)
Based on the foregoing revelations, private respondents filed with the
Regional Office No. IV-A, Quezon City, Ministry of Labor and Employment,
a petition docketed as R04-ALRD-M- 9-35-81, for the expulsion of the union
officers on the ground that they committed gross violation of the Labor Code,
specifically paragraphs (a), (b), (g), (h), (j) and (k) of Article 242; and, the
constitution and by-laws of the Union, particularly the provisions of Sections
6 and 7 thereof.
In their Answer, the union officers denied the imputation and argued that the
disallowed expenditures were made in good faith; that the same conduced to
the benefit of the members; and, that they are willing to reimburse the same
from their own personal funds. They likewise asserted that they should not
be held accountable for the non-production of the books of accounts of the
Union for the years 1977, 1978 and 1979 because they were not the officers
then and not one of the former officers of the Union had turned over to them
the records in question. Further, they averred that the non-ratification of the
constitution and by-laws of the Union and the non-segregation of the Union
funds occurred before they became officers and that they have already been
correcting the same.
On April 28, 1982, Med-Arbiter Antonio D. Cabibihan ordered the holding
of a referendum, to be conducted under the supervision of the Bureau of
Labor Relations, to decide on the issue of whether to expel or suspend the
union officers from their respective positions.
Petitioners appealed the said order of Med-Arbiter Cabibihan to herein public
respondent Director Trajano of the Bureau of Labor Relations, Ministry of
Labor, Manila, claiming that the same is not in accordance with the facts
contained in the records and is contrary to law. They pointed out that the
disallowed expenditures of P1,278.00 were made in good faith and not used
for the personal benefit of herein union officers but, instead, contributed to
the benefit of the members. On the alleged failure to maintain and submitted
the books of accounts for the years 1977, 1978 and 1979, they argued that
they were elected in 1980 only and, therefore, they could not be made
responsible for the omissions of their predecessors who failed to turn over
union records for the questioned period. Anent their alleged failure to
maintain segregated disbursement receipts in accordance with the five (5)
segregated funds, petitioners maintained that the same did not result to any
loss of funds and such error in procedure had already been corrected. They
also demonstrated that there would be a general election on October 4, 1982,
at which time, both the election and the desired referendum could be
undertaken to determine the membership at minimum expense. They prayed
that the resolution on the issue be held in abeyance.
Private respondents, on the other hand, claimed that the Med-Arbiter erred in
calling a referendum to decide the issue. They reiterated that the appropriate
action should be the expulsion of the herein union officers.
On August 13, 1982, public respondent Director Trajano dismissed both
appeals of petitioners and private respondents and affirmed in toto the order
of Med-Arbiter Cabibihan.
Petitioners filed a Motion for Reconsideration of the Resolution of August
13, 1982 of Public respondent Director Trajano, reiterating their arguments
in their appeal and further clarifying that what the Union Account Officer
Florencio R. Vicedo found was that the amount of P1,278.00 was not
supported by official receipts and therefore should not be allowed as
disbursement from the union funds; and that he did not say that the amount
was converted by them for their own personal benefit. They, likewise,
informed public respondent Director Trajano that in the general election held
on October 4, 1982, all of them, except petitioners Ambrocio dela Cruz and
Eliseo Celerio, who ran for the positions of Vice-President and member of
the Board of Directors, respectively, were elected by the overwhelming
majority of the members, while private respondents Catalino Silvestre and
Cesar Alfaro who also ran for the position of Auditor, lost. Thereafter, they
moved for the dismissal of the appeal for having been rendered moot and
academic by their re-election.
On October 19, 1982, public respondent Director Trajano issued the second
questioned order denying petitioners' Motion for Reconsideration.
Hence, this petition which We find meritorious for the following reasons:
1. If herein union officers (also petitioners) were guilty of the alleged acts
imputed against them, said public respondent pursuant to Article 242 of the
New Labor Code and in the light of Our ruling in Duyag vs. Inciong, 98
SCRA 522, should have meted out the appropriate penalty on them, i.e., to
expel them from the Union, as prayed for, and not call for a referendum to
decide the issue;
2. The alleged falsification and misrepresentation of herein union officers
were not supported by substantial evidence. The fact that they disbursed the
amount of P1,278.00 from Union funds and later on was disallowed for
failure to attach supporting papers thereon did not of itself constitute
falsification and/or misrepresentation. The expenditures appeared to have
been made in good faith and the amount spent for the purpose mentioned in
the report, if concurred in or accepted by the members, are reasonable; and
3. The repudiation of both private respondents to the highly sensitive position
of auditor at the October 4, 1982 election, is a convincing manifestation and
demonstration of the union membership's faith in the herein officers'
leadership on one hand and a clear condonation of an act they had allegedly
committed.

By and large, the holding of the referendum in question has become moot
and academic. This is in line with Our ruling in Pascual vs. Provincial Board
of Nueva Ecija, 106 Phil. 471, which We quote:

The Court should never remove a public officer for acts done prior to his
present term of office. To do otherwise would be to deprive the people of
their right to elect their officers. When the people have elected a man to
office, it must be assumed that they did this with knowledge of his life and
character, and that they disregarded or forgave Ms faults or misconduct, if he
had been guilty of any. It is not for the court, by reason of such faults or
misconduct to practically overrule the will of the people.

ACCORDINGLY, the resolution and order, dated August 13 and October 19,
1982, respectively, of public respondent Director Cresenciano B. Trajano of
the Bureau of Labor Relations, Ministry of Labor, Manila in BLR Case No.
A-0100-82 (RO4-A-LRD-M-9-35-81) are SET ASIDE and, the petition for
expulsion of herein union officers in R04-A-LRD-M-9-35-81 is hereby
DISMISSED for having been rendered moot and academic by the election of
herein union officers in the general membership meeting/election held on
October 4, 1982.

SO ORDERED.
MONTAÑO vs. VERCELES
G.R. No. 168583 July 26, 2010
DEL CASTILLO, J.:
The Federation/Union’s Constitution and By-Laws govern the relationship
between and among its members. They are akin to ordinary contracts in that
their provisions have obligatory force upon the federation/ union and its
member. What has been expressly stipulated therein shall be strictly binding
on both.
By this Petition for Review on Certiorari,1 petitioner Atty. Allan S. Montaño
(Atty. Montaño) assails the Decision2 dated May 28, 2004 and Resolution3
dated June 28, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 71731,
which declared as null and void his election as the National Vice-President
of Federation of Free Workers (FFW), thereby reversing the May 8, 2002
Decision4 of the Bureau of Labor Relations (BLR) in BLR-O-TR-66-7-13-
01.
Factual Antecedents
Atty. Montaño worked as legal assistant of FFW Legal Center on October 1,
1994.5 Subsequently, he joined the union of rank-and-file employees, the
FFW Staff Association, and eventually became the employees’ union
president in July 1997. In November 1998, he was likewise designated
officer-in-charge of FFW Legal Center.6
During the 21st National Convention and Election of National Officers of
FFW, Atty. Montaño was nominated for the position of National Vice-
President. In a letter dated May 25, 2001,7 however, the Commission on
Election (FFW COMELEC), informed him that he is not qualified for the
position as his candidacy violates the 1998 FFW Constitution and By-Laws,
particularly Section 76 of Article XIX8 and Section 25 (a) of Article VIII,9
both in Chapter II thereof. Atty. Montaño thus filed an Urgent Motion for
Reconsideration10 praying that his name be included in the official list of
candidates.
Election ensued on May 26-27, 2001 in the National Convention held at
Subic International Hotel, Olongapo City. Despite the pending motion for
reconsideration with the FFW COMELEC, and strong opposition and protest
of respondent Atty. Ernesto C. Verceles (Atty. Verceles), a delegate to the
convention and president of University of the East Employees’ Association
(UEEA-FFW) which is an affiliate union of FFW, the convention delegates
allowed Atty. Montaño’s candidacy. He emerged victorious and was
proclaimed as the National Vice-President.
On May 28, 2001, through a letter11 to the Chairman of FFW COMELEC,
Atty. Verceles reiterated his protest over Atty. Montaño’s candidacy which
he manifested during the plenary session before the holding of the election
in the Convention. On June 18, 2001, Atty. Verceles sent a follow-up letter12
to the President of FFW requesting for immediate action on his protest.
Proceedings before the Bureau of Labor Relations
On July 13, 2001, Atty. Verceles, as President of UEEA-FFW and officer of
the Governing Board of FFW, filed before the BLR a petition13 for the
nullification of the election of Atty. Montaño as FFW National Vice-
President. He alleged that, as already ruled by the FFW COMELEC, Atty.
Montaño is not qualified to run for the position because Section 76 of Article
XIX of the FFW Constitution and By-Laws prohibits federation employees
from sitting in its Governing Board. Claiming that Atty. Montaño’s
premature assumption of duties and formal induction as vice-president will
cause serious damage, Atty. Verceles likewise prayed for injunctive relief.14
Atty. Montaño filed his Comment with Motion to Dismiss15 on the grounds
that the Regional Director of the Department of Labor and Employment
(DOLE) and not the BLR has jurisdiction over the case; that the filing of the
petition was premature due to the pending and unresolved protest before the
FFW COMELEC; and that, Atty. Verceles has no legal standing to initiate
the petition not being the real party in interest.
Meanwhile, on July 16, 2001, the FFW COMELEC sent a letter to FFW
National President, Bro. Ramon J. Jabar, in reference to the election protest
filed before it by Atty. Verceles. In this correspondence, which was used by
Atty. Verceles as an additional annex to his petition before the BLR, the FFW
COMELEC intimated its firm stand that Atty. Montaño’s candidacy
contravenes the FFW’s Constitution, by stating:
At the time Atty. Verceles lodged his opposition in the floor before the
holding of the election, we, the Comelec unanimously made the decision that
Atty. Montaño and others are disqualified and barred from running for any
position in the election of the Federation, in view of pertinent provisions of
the FFW Constitution.
Our decision which we repeated several times as final was however further
deliberated upon by the body, which then gave the go signal for Atty.
Montaño’s candidacy notwithstanding our decision barring him from
running and despite the fact that several delegates took the floor [stating] that
the convention body is not a constitutional convention body and as such
could not qualify to amend the FFW’s present constitution to allow Atty.
Montaño to run.
We would like to reiterate what we stated during the plenary session that our
decision was final in view of the cited pertinent provisions of the FFW
Constitution and we submit that the decision of the convention body in
allowing Atty. Montaño’s candidacy is not valid in view of the fact that it
runs counter to the FFW Constitution and the body at that time was not acting
as a Constitutional Convention body empowered to amend the FFW
Constitution on the spot.
Our having conducted the election does not depart from the fact that we did
not change our decision disqualifying candidates such as Atty. Allan S.
Montaño, and others from running. The National Convention as a co-equal
constitutional body of the Comelec was not given the license nor the
authority to violate the Constitution. It therefore, cannot reverse the final
decision of the Comelec with regard to the candidacy of Atty. Allan Montaño
and other disqualified candidates.16
The BLR, in its Order dated August 20, 2001,17 did not give due course to
Atty. Montaño’s Motion to Dismiss but ordered the latter to submit his
answer to the petition pursuant to the rules. The parties thereafter submitted
their respective pleadings and position papers.
On May 8, 2002, the BLR rendered a Decision18 dismissing the petition for
lack of merit. While it upheld its jurisdiction over the intra-union dispute case
and affirmed, as well, Atty. Verceles’ legal personality to institute the action
as president of an affiliate union of FFW, the BLR ruled that there were no
grounds to hold Atty. Montaño unqualified to run for National Vice-
President of FFW. It held that the applicable provision in the FFW
Constitution and By-Laws to determine whether one is qualified to run for
office is not Section 76 of Article XIX19 but Section 26 of Article VIII20
thereof. The BLR opined that there was sufficient compliance with the
requirements laid down by this applicable provision and, besides, the
convention delegates unanimously decided that Atty. Montaño was qualified
to run for the position of National Vice-President.
Atty. Verceles filed a Motion for Reconsideration but it was denied by the
BLR.
Proceedings before the Court of Appeals
Atty. Verceles thus elevated the matter to the CA via a petition for
certiorari,21 arguing that the Convention had no authority under the FFW
Constitution and By-Laws to overrule and set aside the FFW COMELEC’s
Decision rendered pursuant to the latter’s power to screen candidates.
On May 28, 2004, the CA set aside the BLR’s Decision. While it agreed that
jurisdiction was properly lodged with the BLR, that Atty. Verceles has legal
standing to institute the petition, and that the applicable provision of FFW
Constitution and By-Laws is Section 26 of Article VIII and not Section 76 of
Article XIX, the CA however ruled that Atty. Montaño did not possess the
qualification requirement under paragraph (d) of Section 26 that candidates
must be an officer or member of a legitimate labor organization. According
to the CA, since Atty. Montaño, as legal assistant employed by FFW, is
considered as confidential employee, consequently, he is ineligible to join
FFW Staff Association, the rank-and-file union of FFW. The CA, thus,
granted the petition and nullified the election of Atty. Montaño as FFW
National Vice-President.
Atty. Montaño moved for reconsideration claiming that the CA seriously
erred in granting Atty. Verceles’ petition on the ground that FFW Staff
Association, of which he is an officer and member, is not a legitimate labor
organization. He asserted that the legitimacy of the union was never raised
as an issue. Besides, the declaration of the CA that FFW Staff Association is
not a legitimate labor organization amounts to a collateral attack upon its
legal personality, which is proscribed by law. Atty. Montaño also reiterated
his allegations of lack of jurisdiction and lack of cause of action due to a
pending protest. In addition, he claimed violation of the mandatory
requirement on certification against forum shopping and mootness of the case
due to the appointment of Atty. Verceles as Commissioner of the National
Labor Relations Commission (NLRC), thereby divesting himself of interest
in any matters relating to his affiliation with FFW.
Believing that it will be prejudiced by the CA Decision since its legal
existence was put at stake, the FFW Staff Association, through its president,
Danilo A. Laserna, sought intervention.
On June 28, 2005, the CA issued a Resolution22 denying both Atty.
Montaño’s motion for reconsideration23 and FFW Staff Association’s
motion for intervention/clarification.24
Issues
Hence, this petition anchored on the following grounds:
I.
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION, IN RENDERING THE ASSAILED DECISION, IN
THAT:
A.) THE SOLE GROUND USED AND/OR INVOKED IN GRANTING
THE PETITION A QUO WAS NOT EVEN RAISED AND/OR INVOKED
BY PETITIONER;
B.) THE DECLARATION THAT "FFW STAFF ASSOCIATION IS NOT
A LEGITIMATE LABOR ORGANIZATION", WITHOUT GIVING SAID
ORGANIZATION A ‘DAY IN COURT’ AMOUNTS TO A
COLLATERAL ATTACK PROSCRIBED UNDER THE LAW; AND
C.) THE COURT OF APPEALS FAILED AND/OR REFUSED TO PASS
UPON OTHER LEGAL ISSUES WHICH HAD BEEN TIMELY RAISED,
SPECIFICALLY ON THE PREMATURITY OF THE COMPLAINT AND
THE LACK OF CERTIFICATION AGAINST FORUM SHOPPING OF
THE PETITION A QUO.
II.
THE COURT OF APPEALS ERRED IN UPHOLDING THE EXERCISE
OF JURISDICTION BY HEREIN RESPONDENT BUREAU AND IN
NOT ORDERING THE DISMISSAL OF THE CASE, DESPITE EXPRESS
PROVISION OF LAW GRANTING SAID JURISDICTION OVER CASES
INVOLVING PROTESTS AND PETITIONS FOR ANNULMENT OF
RESULTS OF ELECTIONS TO THE REGIONAL DIRECTORS OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT.
III.
IN THE ALTERNATIVE, THE COURT OF APPEALS LIKEWISE
ERRED IN NOT ORDERING THE DISMISSAL OF THE PETITION A
QUO, IN THAT:
A.) THE FILING OF THE PETITION FOR NULLIFICATION OF THE
RESULT OF ELECTION IS PREMATURE, IN VIEW OF PENDENCY OF
HEREIN RESPONDENT ATTY. VERCELES’ PROTEST BEFORE THE
COMMISSION ON ELECTION OF THE FEDERATION OF FREE
WORKERS (FFW COMELEC) AT THE TIME OF THE FILING OF THE
SAID PETITION, HENCE, HE HAS NO CAUSE OF ACTION; AND
B.) HEREIN RESPONDENT ATTY. VERCELES HAS VIOLATED
SECTION 5, RULE 7 OF THE 1997 RULES ON CIVIL PROCEDURE, AS
HIS PETITION A QUO HAS NO CERTIFICATION AGAINST FORUM
SHOPPING, WHICH IS A MANDATORY REQUIREMENT. IT IS ALSO
IN UTTER DISREGARD AND IN GROSS VIOLATION OF SUPREME
COURT CIRCULAR NO. 04-94.
IV.
FINALLY, ASSUMING ARGUENDO THAT HEREIN RESPONDENT
BUREAU ACTED WITH JURISDICTION OVER THE CASE; AND
ASSUMING FURTHER THAT HEREIN RESPONDENT ATTY.
VERCELES HAS A CAUSE OF ACTION, DESPITE THE PENDENCY
OF HIS PROTEST BEFORE FFW’S COMELEC AT THE TIME HE
FILED HIS PETITION A QUO; AND ASSUMING FINALLY, THAT
HEREIN RESPONDENT ATTY. VERCELES BE EXCUSED IN
DISREGARDING THE MANDATORY REQUIREMENT ON
CERTIFICATION AGAINST FORUM SHOPPING WHICH WAS
TIMELY OBJECTED TO, THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR
EXCESS OF JURISDICTION, IN NOT ORDERING THE DISMISSAL OF
THE CASE FOR HAVING BEEN RENDERED MOOT AND ACADEMIC
BY A SUPERVENING EVENT –THAT WAS, WHEN HEREIN
RESPONDENT ATTY. VERCELES SOUGHT APPOINTMENT AND
WAS APPOINTED AS COMMISSIONER OF THE NATIONAL LABOR
RELATIONS COMMISSION (NLRC), THUS, DIVESTING HIMSELF
WITH ANY INTEREST WITH MATTERS RELATING TO HIS FORMER
MEMBERSHIP AND AFFILIATION WITH THE FEDERATION OF
FREE WORKERS (FFW), HENCE, HE IS NO LONGER A REAL PARTY
IN INTEREST, AS HE DOES NOT STAND TO BE INJURED OR
BENEFITED BY THE JUDGMENT IN THE INSTANT CASE.25
Atty. Montaño contends that the CA gravely erred in upholding the
jurisdiction of the BLR; in not declaring as premature the petition in view of
the pending protest before FFW COMELEC; in not finding that the petition
violated the rule on non-forum shopping; in not dismissing the case for being
moot in view of the appointment of Atty. Verceles as NLRC Commissioner;
and in granting the petition to annul his election as FFW National Vice-
President on the ground that FFW Staff Association is not a legitimate labor
organization.
Our Ruling
The petition is devoid of merit.
The BLR has jurisdiction over intra-union disputes involving a federation.
We find no merit in petitioner’s claim that under Section 6 of Rule
XV26 in relation to Section 1 of Rule XIV27 of Book V of the Omnibus
Rules Implementing the Labor Code, it is the Regional Director of the DOLE
and not the BLR who has jurisdiction over election protests.
Section 226 of the Labor Code28 clearly provides that the BLR and the
Regional Directors of DOLE have concurrent jurisdiction over inter-union
and intra-union disputes. Such disputes include the conduct or nullification
of election of union and workers’ association officers.29 There is, thus, no
doubt as to the BLR’s jurisdiction over the instant dispute involving member-
unions of a federation arising from disagreement over the provisions of the
federation’s constitution and by-laws.
We agree with BLR’s observation that:
Rule XVI lays down the decentralized intra-union dispute settlement
mechanism. Section 1 states that any complaint in this regard ‘shall be filed
in the Regional Office where the union is domiciled.’ The concept of
domicile in labor relations regulation is equivalent to the place where the
union seeks to operate or has established a geographical presence for
purposes of collective bargaining or for dealing with employers concerning
terms and conditions of employment.
The matter of venue becomes problematic when the intra-union dispute
involves a federation, because the geographical presence of a federation may
encompass more than one administrative region. Pursuant to its authority
under Article 226, this Bureau exercises original jurisdiction over intra-union
disputes involving federations. It is well-settled that FFW, having local
unions all over the country, operates in more than one administrative region.
Therefore, this Bureau maintains original and exclusive jurisdiction over
disputes arising from any violation of or disagreement over any provision of
its constitution and by-laws.30
The petition to annul Atty. Montaño’s election as VP was not prematurely
filed.
There is likewise no merit to petitioner’s argument that the petition should
have been immediately dismissed due to a pending and unresolved protest
before the FFW COMELEC pursuant to Section 6, Rule XV, Book V of the
Omnibus Rules Implementing the Labor Code.31
It is true that under the Implementing Rules, redress must first be sought
within the organization itself in accordance with its constitution and by-laws.
However, this requirement is not absolute but yields to exception under
varying circumstances.32 In the case at bench, Atty. Verceles made his
protest over Atty. Montaño’s candidacy during the plenary session before the
holding of the election proceedings. The FFW COMELEC, notwithstanding
its reservation and despite objections from certain convention delegates,
allowed Atty. Montaño’s candidacy and proclaimed him winner for the
position. Under the rules, the committee on election shall endeavor to settle
or resolve all protests during or immediately after the close of election
proceedings and any protest left unresolved shall be resolved by the
committee within five days after the close of the election proceedings.33 A
day or two after the election, Atty. Verceles made his written/formal protest
over Atty. Montaño’s candidacy/proclamation with the FFW COMELEC.
He exhausted the remedies under the constitution and by-laws to have his
protest acted upon by the proper forum and even asked for a formal hearing
on the matter. Still, the FFW COMELEC failed to timely act thereon. Thus,
Atty. Verceles had no other recourse but to take the next available remedy to
protect the interest of the union he represents as well as the whole federation,
especially so that Atty. Montaño, immediately after being proclaimed,
already assumed and started to perform the duties of the position.
Consequently, Atty. Verceles properly sought redress from the BLR so that
the right to due process will not be violated. To insist on the contrary is to
render the exhaustion of remedies within the union as illusory and vain.34
The allegation regarding certification against forum shopping was belatedly
raised.
Atty. Montaño accuses Atty. Verceles of violating the rules on forum
shopping. We note however that this issue was only raised for the first time
in Atty. Montaño’s motion for reconsideration of the Decision of the CA,
hence, the same deserves no merit. It is settled that new issues cannot be
raised for the first time on appeal or on motion for reconsideration.35 While
this allegation is related to the ground of forum shopping alleged by Atty.
Montaño at the early stage of the proceedings, the latter, as a ground for the
dismissal of actions, is separate and distinct from the failure to submit a
proper certificate against forum shopping.36
There is necessity to resolve the case despite the issues having become moot.
unqualified for the position for failing to meet the requirements set forth
therein.
We find that both the BLR and CA erred in their findings.
To begin with, FFW COMELEC is vested with authority and power, under
the FFW Constitution and By-Laws, to screen candidates and determine their
qualifications and eligibility to run in the election and to adopt and
promulgate rules concerning the conduct of elections.39 Under the Rules
Implementing the Labor Code, the Committee shall have the power to
prescribe rules on the qualification and eligibility of candidates and such
other rules as may facilitate the orderly conduct of elections.40 The
Committee is also regarded as the final arbiter of all election protests.41 From
the foregoing, FFW COMELEC, undeniably, has sufficient authority to
adopt its own interpretation of the explicit provisions of the federation’s
constitution and by-laws and unless it is shown to have committed grave
abuse of discretion, its decision and ruling will not be interfered with. The
FFW Constitution and By-laws are clear that no member of the Governing
Board shall at the same time perform functions of the rank-and-file staff. The
BLR erred in disregarding this clear provision. The FFW COMELEC’s
ruling which considered Atty. Montaño’s candidacy in violation of the FFW
Constitution is therefore correct.
We, thus, concur with the CA that Atty. Montaño is not qualified to run for
the position but not for failure to meet the requirement specified under
Section 26 (d) of Article VIII of FFW Constitution and By-Laws. We note
that the CA’s declaration of the illegitimate status of FFW Staff Association
is proscribed by law, owing to the preclusion of collateral attack.42 We
nonetheless resolve to affirm the CA’s finding that Atty. Montaño is
disqualified to run for the position of National Vice-President in view of the
proscription in the FFW Constitution and By-Laws on federation employees
from sitting in its Governing Board. Accordingly, the election of Atty.
Montaño as FFW Vice-President is null and void.
WHEREFORE, the petition is DENIED. The assailed May 28, 2004
Decision of the Court of Appeals in CA-G.R. SP No. 71731 nullifying the
election of Atty. Allan S. Montaño as FFW National Vice-President and the
June 28, 2005 Resolution denying the Motion for Reconsideration are
AFFIRMED.

During the pendency of this case, the challenged term of office held and SO ORDERED.
served by Atty. Montaño expired in 2006, thereby rendering the issues of the
case moot. In addition, Atty. Verceles’ appointment in 2003 as NLRC
Commissioner rendered the case moot as such supervening event divested
him of any interest in and affiliation with the federation in accordance with
Article 213 of the Labor Code. However, in a number of cases,37 we still
delved into the merits notwithstanding supervening events that would
ordinarily render the case moot, if the issues are capable of repetition, yet
evading review, as in this case.

As manifested by Atty. Verceles, Atty. Montaño ran and won as FFW

National President after his challenged term as FFW National Vice-President
had expired. It must be stated at this juncture that the legitimacy of Atty.
Montaño’s leadership as National President is beyond our jurisdiction and is
not in issue in the instant case. The only issue for our resolution is petitioner’s
qualification to run as FFW National Vice-President during the May 26-27,
2001 elections. We find it necessary and imperative to resolve this issue not
only to prevent further repetition but also to clear any doubtful interpretation
and application of the provisions of FFW Constitution & By-laws in order to
ensure credible future elections in the interest and welfare of affiliate unions
of FFW.

Atty. Montaño is not qualified to run as FFW National Vice-President in

view of the prohibition established in Section 76, Article XIX of the 1998
FFW Constitution and By-Laws.1awph!1

Section 76, Article XIX of the FFW Constitution and By-laws provides that
no member of the Governing Board shall at the same time be an employee in
the staff of the federation. There is no dispute that Atty. Montaño, at the time
of his nomination and election for the position in the Governing Board, is the
head of FFW Legal Center and the President of FFW Staff Association. Even
after he was elected, albeit challenged, he continued to perform his functions
as staff member of FFW and no evidence was presented to show that he
tendered his resignation.38 On this basis, the FFW COMELEC disqualified
Atty. Montaño. The BLR, however, overturned FFW COMELEC’s ruling
and held that the applicable provision is Section 26 of Article VIII. The CA
subsequently affirmed this ruling of the BLR but held Atty. Montaño
HALILI vs. COURT OF INDUSTRIAL RELATIONS
G.R. No. L-24864 April 30, l985
MAKASIAR, J.:
Before Us for resolution is the urgent motion to cite Atty. Benjamin C.
Pineda, Ricardo Capuno and Manila Bank (Cubao Branch) in contempt for
the alleged continued failure of aforenamed parties to comply with the
temporary mandatory restraining order issued by this Court on September 1,
1983 and with the resolution dated September 13, 1983 which again directed
Atty. Pineda and union administrator Capuno to comply with the aforesaid
mandatory restraining order and which ordered the Manila Bank to transfer
the funds allocated for the workers to the NLRC (p. 376, L-24864, rec.; p.
301, L027773 rec.).
The issuance of the temporary mandatory restraining order stemmed from
the questioned orders of September 23, 1982 and February 9, 1983 issued by
Labor Arbiter Raymundo Valenzuela in Case No. 1099-V before the NLRC
which orders respectively allowed the sale of the property awarded to satisfy
or answer for the claims of the union members in these four cases and
authorized the distribution of the proceeds of the purchase.
For a better appreciation of the aforesaid motion for contempt, We must
recall certain prefatory facts which the Solicitor General has so aptly summed
up. Thus:
The above-entitled cases involve disputes regarding claims for overtime of
more than five hundred bus drivers and conductors of Halili Transit.
Litigation initially commenced with the filing of a complaint for overtime
with the defunct Court of Industrial Relations on August 20, 1958 docketed
as CIR Case No. 1099-V. The disputes were eventually settled when the
contending parties reached an Agreement on December 23, 1974, the
pertinent portions of which are as follows:
WHEREAS, in the face of this strong urging on the part of the Supreme Court
Justices upon the parties to put an immediate end to this case by amicable
settlement, the parties repeatedly came to conference, conscientiously
explored all avenues of settlement, and finally arrived at the tentative
agreement (tentative because of the condition that the same be sanctioned by
the court in the estate case) whereby the Administratrix would transfer to the
employees title to that tract of land, covered by TCT No. 36389, containing
an area of approximately 33,952 square meters, situated in the Barrio of San
Bartolome, Municipality of Caloocan, Province of Rizal, and pay in addition
the cash amount of P25,000.00 in full and final satisfaction of all the claims
and causes of action of all of the employees against the estate of Fortunato F.
Halili subject of CIR Case No. 1099-V.
xxx xxx xxx
NOW, THEREFORE, for and in consideration of the foregoing and of the
covenants, stipulations and undertakings hereinafter contained, the parties
have agreed as follows:
l. The UNION, its officers and members-claimants relative to CIR Case No.
1099-V, shall withdraw and dismiss with prejudice Case No. 1099-V filed
by the UNION in behalf of its members-claimants before the Court of
Industrial Relations and all its incidents thereto.
2. The ESTATE shall deliver or cause to be delivered, to the UNION the
following:
(a) Deed of Transfer of a parcel of land situated in Barrio San Bartolome,
Caloocan City, containing an area of THIRTY-THREE THOUSAND NINE
HUNDRED FIFTY-TWO (33,952) Square Meters, more or less, and covered
by Transfer Certificate of Title No. 35389 of the Registry of Deeds of Rizal,
to be made, upon authority and approval granted by the Court of First of
Rizal, Branch IV, at Quezon City, in Proc. No. Q-10852 in the name of the
Halili Bus Drivers & Conductors Union (PTGWO), free from any and all
liens encumbrances, and any and all claims whatsoever.
(b) Negotiable Check for TWENTY-FIVE THOUSAND (P25,000.00)
PESOS in the name of Domingo D. Cabading, President of the UNION.
3. The transfer of the above-described parcel of land and receipt of the
amount of P25,000.00 constitute the full and final satisfaction of the claims
and award in said CIR Case No. 1099-V, as well as any and all attorney's
liens in said case, for and in consideration of which the UNION members-
claimants in CIR Case No. 1099-V by these present now and forever release
and quitclaim Halili Enterprises, Halili Transit, Fortunato F. Halili his estate,
heirs and successors by reason of CIR Case No. 1099-V, it being their
intention that they be absolutely, completely and finally absolved and
released from any and all liability in said case, including attorneys' liens the
transfer of the property and payment of the amount hereinabove stated
constituting for all intents and purposes a full, final and complete settlement
and satisfaction of the award in CIR Case No. 1099-V and all incidents
thereto.
4. The UNION and its undersigned officers hereby warrant that the UNION
is a duly registered labor organization and that in a special meeting called for
the purpose they were duly authorized on December 22, 1974, by all the
members- claimants in CIR Case No. 1099-V to sign this Memorandum of
Agreement with Release and Quitclaim which was unanimously approved
and ratified by said members-claimants as evidenced by a Resolution dated
December 22, 1974, a copy of which is attached hereto and made a part
hereof as Annex "B", and hereby jointly and severally hold the estate and
heirs of Fortunato F. Halili free and harness from, and undertake to indemnify
them for, any and all liability for any claims by members of the UNION, their
heirs, assigns and agents relating to CIR Case No. 1099-V or attorneys' liens
in connection therewith (69 SCRA 509-510).
On January 6, 1975, pursuant to the Agreement, the administratrix of the
estate of Fortunato F, Halili executed a Deed of Conveyance of Real
Property, transferring the aforementioned parcel of land to the Halili Bus and
Conductors Union (PTGWO) in trust for the members of the union claimants.
The parcel of land was eventually registered in the name of the Union on
February 14, 1975. Hence, on February 10, 1976, the contending parties
moved for the dismissal of G.R. No. L-30110 and G.R. No. L-38655, which
this Honorable Court granted on February 27, 1976 (69 SCRA 505). The two
other cases, G.R. No. L-24864 and G.R. No. L- 27773, were previously
disposed of on February 26, 1968 and December 28, 1970, respectively (22
SCRA 785. and 36 SCRA 522).
On August 9, 1982, the Union, through Atty. Benjamin C. Pineda, filed an
urgent motion with the Ministry of Labor and Employment (MOLE)
requesting for authority to sell and dispose of the property. The motion was
granted in an order dated September 23, 1982. A prospective buyer, the
Manila Memorial Park Cemetery, inc. expressed its misgivings on the
authority of the Union to sell the property in view of sec. 66 of PD 1529
which requires no less than an order from a court of competent jurisdiction
as authority to sell property in trust. So, Atty. Pineda filed a motion with the
Supreme Court on December 1, 1982 requesting for authority to sell the
property, This Honorable Court, however, merely noted the motion in a
resolution dated December 8, 1982.
Nevertheless, Atty. Pineda, without authority from the Supreme Court but
relying on the earlier authority given him by the Ministry of Labor, filed
another urgent motion with the latter, praying that the Union be authorized
to sell the lot to the Manila Memorial Park Cemetery, Inc. and to make
arrangements with it such that payment will be advanced for the real estate
taxes inclusive of penalties, attorney's lien which is equivalent to a thirty-five
percent (35%) of the total purchase price, and home developer's fee of
P69,000.00. Apparently, the prospective purchaser had decided to withdraw
its objection regarding the Union's authority to sell. In an Order dated
February 9, 1983, Labor Arbiter Raymundo R. Valenzuela granted the
motion. So, the sale was finally consummated on June 7, 1983, resulting in
the execution of an escrow agreement on June 8, 1983 wherein the purchase
price was deposited under escrow with the Manila Bank-Cubao Branch. The
Bank then released the amounts due the claimants in accordance with the
escrow agreement" (pp. 352- 356, L-24864 rec.).
The dispositive portion in L-24864 is re-stated hereunder:
WHEREFORE, the appealed order and resolution en banc are hereby
affirmed and the Court of Industrial Relations is hereby enjoined to make a
judicial determination of the union membership of the claimants, while the
Examining Division of said court shall proceed with its computation of the
compensable hours of work rendered by, and the corresponding
compensation payable to, the drivers and conductors admitted by both parties
to be union members since October 1, 1956 and those contended by the union
to be such members but disputed by the employer. No costs. So ordered (p.
186, L-24864 rec.).
When Atty. Jose C. Espinas (herein movant and alleged original counsel for
the Union) learned of the sale and apportionment of the proceeds from past
Union president Amado Lopez, he requested Labor Arbiter Raymundo
Valenzuela to allow him to look into the records of Case No. 1099-V. The
latter, however, told him that the records of the aforecited case were missing.
Thereupon, Atty. Espinas requested Director Pascual Reyes of the NLRC to
locate the records (p. 356, L24864 rec.).
Hence, Atty. Espinas filed the urgent motion with prayer for a temporary
mandatory restraining order on August 26, 1983 and the supplement thereto
on August 29, 1983 (pp. 215, 227, L-24864 rec.).
On August 30, 1983, the records of Case No. 1099-V were finally found and
Atty. Espinas was dully informed of the development,
The above two motions question the legality of the orders dated September
23, 1982 and February 9, 1983 issued by Labor Arbiter Raymundo
Valenzuela in Case No. 1099-V before the NLRC which authorized the sale
of the awarded property and the distribution of the proceeds from such
purchase.
Movants Union and counsel Espinas upon filing of the motions urgently pray
of thisourt to:
1. Require Atty. Benjamin C. Pineda to deposit with the NLRC the amount
of P712,992.00 paid to him or deposited to his account at Manila Bank,
Cubao Branch,allegedly representing 35% attorney's fees on the sale of
33,952 square meters of the lot registered in the name of the Union;
2. Require the Halili Drivers and Conductors Union through Domingo
Cabading or any of his representatives to deposit with the NIRC the 6%
alleged union expenses paid to them or similarly deposited to their account;
3. Implead with leave of court this Manila Bank Cubao Branch to require the
said bank to prevent further withdrawals of amount deposited in the name of
Atty. Pineda and/or the Halili Drivers and Conductors Union or any of its
officers and to turn over any remaining deposits to the NLRC for proper
disposition;
4. Should Atty. Pineda and the Union officers have already withdrawn the
deposits or parts thereof, require them to post a bond in the equivalent
amounts of 35% (attorney's fee), 6% (union expenses), and 5% (broker's fee)
respectively of the total proceeds of the sale of the property, solidarity (p.
219, L-24864 rec.; p. 160, L-27773 rec.).
Likewise, and after due consideration of the merits, movants prayed that—
1. the order of Arbiter Valenzuela dated February 9, 983 be nullified insofar
as it allows Atty. Pineda 35% attorney's fees;
2. the NLRC be directed to locate the records of Case No. 1099-V or
reconstitute the same and thereafter to equitably dispose 20% as fees to all
lawyers who participated in the proceedings and any excess amounts to be
again distributed to the workers; and
3. these cases be remanded to the NLRC with instructions as above-stated
and that the proper penalty be imposed on those involved and who have acted
fraudulently and illegally (p. 220, L-24864 rec.; p. 165, L-27773 rec.).
The succeeding pleadings and developments which are common to all these
cases are now presented chronologically.
On August 29, 1983, Atty. Espinas, for himself and members of the
respondent Union, filed a supplement to urgent motion stating that the
prayers in the urgent motion of August 26, 1983 are reiterated and praying
for the nullification of Arbiter Valenzuela's order not only on the award of
attorney's fees but also on the allowance of payment of "union obligations"
not previously authorized nor approved by the NLRC (p. 227, L-24864, rec.;
p. 176, L-27773 rec.).
In its resolution dated September 1, 1983, this Court impleaded the Manila
Bank, Cubao Branch as party respondent and directed the issuance of a
temporary mandatory restraining order (p. 234, L-24864 rec. & p. 187, L-
27773 rec.). This Court correspondingly issued a temporary mandatory
restraining order on the same date which enjoined Atty. Benjamin C. Pineda
or his agents or any person acting in his stead to deposit with the NLRC the
amount of P712,992.00 paid to him or deposited in his account at Manila
Bank, Cubao Branch allegedly representing 35% attorney's fees on the sale
of 33,952 square meters of the lot registered in the name of Halili Drivers
and Conductors Union; directed the Union thru Domingo Cabading or his
agents to deposit with the NLRC 6% alleged union expenses paid to the
Union or similarly deposited to its account; and ordered the NLRC and
Manila Bank, Cubao Branch, or their agents or persons in their stead not to
allow withdrawals of amounts deposited in the name of Atty. Benjamin C.
Pineda and/or the Union or any of its officers (P. 235, L-24864; p. 188, L-
27773 rec.).
On September 6, 1983, respondent Union, thru Atty. Pineda, filed its
comment, in compliance with the resolution of September 1, 1983, on the
urgent motion and the supplement thereto both filed by counsel Espinas,
alleging therein that the subject matter sought to be enjoined or mandated by
the restraining order ceased to exist rendering the same moot and academic,
and thus praying for the dismissal of the said motion and the supplement
thereto (p. 237, L-24864 rec.; p. 191, L-27773 rec.).
On September 7, 1983, Atty. Pedro Lopez, an original associate of Atty.
Espinas, filed his motion for leave to intervene, with the submission that the
lawyers involved should only divide 20% fees as per the workers' contract
and the rest refunded by Atty. Pineda and the alleged "union officers" for
redistribution to the members (p. 265, L-24864, rec.; p. 219. L-27773 rec.).
Atty. Espinas, in behalf of the workers, filed a manifestation and motion to
require Atty, Pineda and the union to comply with the temporary mandatory
restraining order on September 9, 1983, with prayer that the Manila Bank be
ordered to transfer the funds allocated for the workers to the NLRC, which
should be instructed to pay the workers upon proper Identification (without
prejudice to additional shares) or to mail such amounts by money order or
manager's check to the workers' addresses as furnished to the NLRC (p. 274,
L-24864, rec.; p. 231, L-27773 rec.).
On September 12, 1983, petitioner filed a manifestation in compliance with
the resolution of September 2, 1983 stating, among other things, that its
liability had been completely extinguished with the approval of the
Memorandum of Agreement with Release and Quitclaim in L-38655 and L-
30110; that said agreement operated as an absolute and complete release of
petitioner from any liability to the Union; and that petitioner had not been
given any notice of any proceedings respecting cases subsequent to the
promulgation of the decisions aforestated (p. 281, L-24864, rec.; p. 237, L-
27773 rec.).
Counsel Espinas (for the workers involved) filed his reply to comments of
respondent Union on September 14, 1983 praying for this Court to:
1. nullify the order of February 9, 1983 issued by Arbiter Raymundo
Valenzuela in CIR Case No. 1099-V and others connected therewith
regarding the distribution of proceeds of the sale of the land belonging to the
members-claimants for lack of due process and for being contrary to law;
2. nullify the 35% attorney's fees of Atty. Benjamin Pineda as illegal and
unconscionable and in disregard of other lawyers in the case;
3. require reimbursement to the members-from the Union P101,856.00
allocated without their consent as Union expenses; P101,856 unreceipted
brokers' fees less P4,020.40 expenses for the transfer of title; to refund the 1
% of the net proceeds, P9,596.18, for named claimants; and to secure a refund
of P308,000.00 from the P712,992.00 fees of Atty. Pineda (the excess of 20%
fees for all lawyers);
4. subject the balance of P404,992.00 of the remainder of Atty. Pineda's 35%
fees for distribution among the three lawyers as may be determined by the
NLRC; and
5. should this Court so decides, fix the fees (p. 285, L- 24864 rec.; p. 240, L-
27773 rec.).
On September 13, 1983, the Solicitor General filed his comment on the
urgent motion and the supplement thereto dated August 25, 1983 and August
29, 1983, respectively with the recommendations that (1) the orders of
Arbiter Valenzuela dated September 23, 1982 and February 9, 1983 be
nullified for having been issued without due process; (2) the case must be
remanded to the NLRC for further proceedings; and (3) the temporary
restraining order issued by this Court on September 1, 1983 be maintained,
pending final resolution by the NLRC (p. 351, L-24864 rec.).
The Solicitor General, on October 6, 1983, filed his manifestation and motion
in lieu of comment on the motion of Atty. Pedro Lopez for leave to intervene
in L-24864 and L-27773 (p. 360, L-24864 rec.; p. 289, L-27773 rec.).
On October 6, 1983, counsel Espinas filed his comment on the intervention
of Atty. Pedro Lopez wherein he offers no objection to the latter's
intervention and states that said counsel is also entitled to attorney's fees in
accordance with his participation (p. 364, L-24864 rec.; p. 292, L-27773
rec.).
Atty. Pineda filed his comment and manifestation on October 7, 1983, in
compliance with the resolution of September 13, 1983, alleging therein that
as per Retainer's Contract dated January 1, 1967, he handled Case No. 1099-
V before the Court of Industrial Relations alone. On the mandatory
restraining order, Atty. Pineda claims that as of October 4, 1983, he had a
balance of P2,022.70 in his account with the Manila Bank (p. 370, L-24864
rec.; p. 295, L-27773 rec.).
In its resolution dated October 18, 1983, this Court (1) set, aside as null and
void the orders of September 23, 1982 and February 9, 1983 of Arbiter
Raymundo R. Valenzuela; (2) allowed the intervention of Atty. Pedro Lopez;
(3) directed the Manila Bank (Cubao Branch), Atty. Benjamin Pineda, and
the Halili Drivers and Conductors Union through Domingo Cabading or any
of his representatives, to comply with the temporary mandatory restraining
order issued on September 1, 1983 and the resolution dated September 13,
1983, within ten [10] days from receipt thereof; and (4) remanded these cases
to the NLRC for further proceedings (p. 374, L-24864 rec.; p. 299, L-27773
rec.).
The day before or on October 17, 1983, Sergio de Pedro, as representative of
the workers and assisted by Atty. Espinas, thus fided the urgent motion to
cite Atty. Pineda, Ricardo Capuilo and Manila Bank (Cubao Branch) in
contempt, alleging therein that after two letters dated October 6 and October
l4, l983 to the NLRC which inquired as to whether or not compliant, with the
restraining order had been made, the Commission certified that as of October
14, 1983, no deposits had been effected by the parties so (directed (p. 376,
L-24864 rec.; p. 301, L-27773 rec.).
In its manifestation and motion filed on November 2, 1983, respondent
Manila Banking Corporation (Rustan-Cubao Branch), in compliance with
this Court's resolution of September 13, 1983, stated that it transmitted or
paid to the NLRC the amount of P417,380.64 under Cashier's Check No.
34084190 for the account of the Union and P2,022.70 under Cashier's Check
No. 34084191 for the account of Atty. Pineda and thus prayed therein that
the aforesaid transmittals be deemed as sufficient compliance with the
aforecited resolution and that the urgent motion to cite respondents in
contempt dated October 17, 1983 be considered moot and academic (p. 390,
L-24864 rec.).
On November 8, 1983, respondent Atty. Pineda filed his manifestation and
motion in lieu of comment in compliance with this Court's resolution of
October 20, 1983, stating that he and respondent Union thereby adopt the
aforecited manifestation and motion of respondent Manila Banking
Corporation and thus prayed that since they have complied with this Court's
resolution of September 13, 1983, the urgent motion to cite them for
contempt be considered moot and academic (p. 394, L-24864 rec.; p. 310, L-
27773 rec.).
On November 10, 1983, respondent Manila Banking Corporation filed
another manifestation and motion in lieu of commence, by way of
compliance with the Court's resolution of October 20, 1983 with prayer that
its previous manifestation and motion dated October 28, 1983 and filed on
November 2, 1983 be considered as sufficient compliance with the resolution
of September 13, 1983 which would render the urgent motion to cite
respondents in contempt moot and academic (p. 396, L-24864 rec. p. 312, L-
27773 rec.).
On the foregoing manifestations and motions, representative Sergio de
Pedro, with the assistance of Atty. Espinas, filed a comment on November
16,1983 wherein he alleged that out of the P2,037,120.00 purchase price,
only Pl,940,127.29 was deposited with the Manila Bank; that Atty. Pineda
has yet to return the balance of P710,969,30; and that the Union has still to
account for P111,452.18 (p. 399, L- 24864 rec.; p. 315, L-27773 rec.).
December 14, 1983, respondent Union filed its reply to Mr. de Pedro's above
unsigned comment therein stating among other things that the alleged
missing amount of P96.992.71 was used for the payment of outstanding real
estate taxes on real property of said Union covered by TCT No. 205755 and
that the amount of P2,022.70 only was remitted by Manila Bank to the NLRC
for the account of Atty. Pineda (p. 323, L-27773 rec.)
On December 20, 1983, Mr. de Pedro and Atty. Espinas, for the workers
involved, filed their rejoinder to the comment of Atty. Pineda and Mr.
Capuno reiterating therein their plea to declare Atty. Pineda and Mr. Capuno
in contempt of court and to mete out the proper penalty (p. 328, L-27773
rec.).
The Manila Banking Corporation filed its compliance with the Court
resolution of November 22, 1983 on February 3, 1984, praying that its report
to the NLRC on the amount of withdrawals be considered as sufficient
compliance with the said resolution (p. 343, L-27773 rec.).
Atty. Espinas filed his comment and motion on March 15, 1984, stating
among other things that as per report of the Manila Bank to the NLRC, Atty.
Pineda has not yet complied with the said order. He thus moved that Atty.
Pineda be required to post a bond on the undeposited balance in the amounts
of P710,969.30 and that Mr. Capuno be also required to post a bond before
the NLRC on the undeposited balance of P52,236.04 during the pendency of
the motion for contempt (p. 373, L-27773 rec.).
On April 4, 1984, Mr. Sergio de Pedro filed his reply to the aforesaid
comment of the Union administrator and Atty. Pineda stating therein that
there are still questions to be resolved on the merits before the NLRC and
hence, prays that Arbiter Antonio Tirona be required to continue hearing the
merits of the case pending in the said Commission (p. 377, L-27773 rec.).
Before We resolve the motion for contempt, certain crucial facts which have
surfaced and which precipitated Our issuance of the resolution of October
18, 1983 declaring the two questioned orders of Arbiter Valenzuela as null
and void, must be retraced.
Then Union President Amado Lopez, in a letter dated August 21, 1958,
informed J.C. Espinas and Associates that the general membership of the said
Union had authorized a 20% contingent fee for the law firm based on
whatever amount would be awarded the Union (p. 267, L-24864 rec.).
Atty. Jose C. Espinas, the original counsel, established the award of 897
workers' claim in the main cases before the defunct CIR and the Supreme
Court. In L-24864, the Notice of Judgment of this Court dated February 26,
1968 was served on Messrs. J.C. Espinas & Associates (p. 188, L-24864
rec.). In L-27773, the Notice of Judgment dated December 29, 1970 was sent
to Atty. B.C. Pineda & Associates under same address-716 Puyat Bldg., Suit
404 at Escolta, Manila (p. 147, L-27773 rec.) Note that this is the same
address of Atty. J.C. Espinas & Associates.
When Atty. 'Pineda appeared for the Union in these cases, still an associate
of the law firm, his appearance carried the firm name B.C. Pineda and
Associates," giving the impression that he was the principal lawyer in these
cases.
Atty. Pineda joined the law firm of Atty. Espinas in 1965 when these cases
were pending resolution. He always held office in the firm's place at Puyat
Building, Escolta until 1974, except in 1966 to 1967 when he transferred to
the Lakas ng Manggagawa Offices. During this one-year stint at the latter
office, Atty. Pineda continued handling the case with the arrangement that he
would report the developments to the Espinas firm. When he rejoined the law
firm in 1968, he continued working on these cases and using the Puyat
Building office as his address in the pleadings.
When Atty. Pineda rejoined the Espinas firm in 1968, he did not reveal to his
partners (he was made the most senior partner) that he had a retainer's
contract entered into on January 1, 1967 which allegedly took effect in 1966.
He stayed with the law firm until 1974 and still did not divulge the 1967
retainer's contract. Only the officers of the Union knew of the contract.
The alleged retainer's contract between Atty. Pineda and the Union appears
anomalous and even illegal as well as unethical considering that-
1. The contract was executed only between Atty. Pineda and the officers of
the Union chosen by about 125 members only. It was not a contract with the
general membership, Only 14% of the total membership of 897 was
represented. This violates Article 242 (d) of the Labor Code which provides:
The members shall determine by secret ballot, after due deliberation, any
question of major policy affecting the entire membership of the organization,
unless the nature of the organization or force majeure renders such secret
ballot impractical, in which case the board of directors of the organization
may make the decision in behalf of the general membership (emphasis
supplied).
2. The contingent fee of 30% for those who were still working with Halili
Transit and the 45% fee for those who were no longer working worked to the
prejudice of the latter group who should and were entitled to more benefits.
Thus, too, when the alleged retainer's contract was executed in 1967, the
Halili Transit had already stopped operations in Metro Manila. By then, Atty.
Pineda knew that all the workers would be out of work which would mean
that the 45% contingent fee would apply to all.
3. The contract which retroactively took effect on January 1, 1966, was
executed when Atty. Espinas was still handling the appeal of Halili Transit
in the main case before the Supreme Court. Atty. Pineda would have but did
not substitute himself in place of Atty. Espinas or the law firm on the basis
of such contract.
4. When Atty. Pineda filed his motion for approval of his attorney's lien with
Arbiter Valenzuela on February 8, 1983, he did not attach the retainer's
contract.
5. The retainer's contract was not even notarized (p. 248, L-24864 rec.).
The Manila Memorial Park Cemetery, Inc., as the prospective buyer, initially
expresses its misgivings over the authority of the Union to sell subject
property conformably with Section 66 of P.D. No. 1529, which requires an
order from a court of competent jurisdiction authorizing the sale of a property
in trust. The pertinent portion of Section 66 provides:
No instruments which transfers or mortgages or in any way deals with
registered land in trust shall be registered, unless the enabling power thereto
is expressly conferred in the trust instrument, or unless a final judgment or
order of a court of competent jurisdiction has construed the instrument in
favor of the power, in which case a certified copy of such judgment or order
may be registered.
The decision of aforenamed purchaser to stop questioning the Union's
authority to sell and the expeditious manner by which Arbiter Valenzuela
granted Atty. Pineda's motion for such authority to sell the property make the
entire transaction dubious and irregular.
Thus, without notice to the other lawyers and parties, Atty. Pineda
commenced the proceeds before the NLRC with the filing of a motion and
manifestation on August 9, 1982 with Arbiter Valenzuela of the NLRC
Office of the Labor Ministry wherein he asked for authority to sell the
property. On September 23, 1983 or just over a month, Arbiter Valenzuela
approved the motion per order of the same date. Notably, only Atty. Pineda
and the lawyers of the purchaser were informed of such order.
On February 4, 1983, again without notice to Atty. Espinas and Atty. Lopez,
Atty. Pineda filed a motion with Arbiter Valenzuela wherein he asked for
authority to distribute the proceeds of the sale of the property. This
distribution would include his attorney's fee which was allegedly the subject
of a retainer contract entered into between him and the alleged Union
officers, On February 9, 1983, or barely five days from the day the motion
was filed, Arbiter Valenzuela, without informing the other lawyers and
relying exclusively on the unverified motion of Atty. Pineda (the records of
the case were not on hand), approved the said motion which authorized the
appointment.
This Court, as earlier stated, nullified said orders dated September 23, 1982
and February 9, 1983 of Labor Arbiter Valenzuela as violative of the due
process clause. It is a settled rule that in administrative proceedings, or cases
coming before administrative tribunals exercising quasi-judicial powers, due
process requires not only notice and hearing, but also the consideration by
the administrative tribunal of the evidence presented; the existence of
evidence to support the decision; its substantiality a decision based thereon
or at least contained in the record and disclosed to the parties; such decision
by the administrative tribunal resting on its own independent consideration
of the law and facts of the controversy; and such decision acquainting the
parties with the various issued involved and the reasons therefore (Ang Tibay
vs. Court, 69 Phil. 635, cited on p. 84, Philippine Constitutional Law,
Fernando, 1984 ed.)
Significantly Atty. Pineda's act of filing a motion with this Court on
December 1, 1982 praying for authority to sell was by itself an admission on
his part that he did not possess the authority to sell the property and that this
Court was the proper body which had the power to grant such authority. He
could not and did not even wait for such valid authority but instead previously
obtained the same from the labor arbiter whom he knew was not empowered
to so authorize. Under Article 224 (a) of the Labor Code, only final decisions
or awards of the NLRC, the Labor Arbiter, or compulsory or voluntary
arbitrators may be implemented or may be the subject of implementing
orders by aforenamed body or officers.
When Atty. Espinas discovered the sale of the property, he went to Arbiter
Valenzuela to look into the transaction who told him that the records of CIR
Case No. 1099-V were missing. It took director Pascual Reyes of the NLRC
to locate the records.
The 45% attorney's lien on the award of those union members who were no
longer working and the 30% lien on the benefits of those who were still
working as provided for in the alleged retainer's contract are very exorbitant
and unconscionable in view of Section 11, Rule VIII of Book III which
explicitly provides:
Sec. 11. Attorney's fees—Attorney's fees on any judicial or administrative
proceedings for the recovery of wages shall not exceed 10% of the amount
awarded. The fees may be deducted from the total amount due the winning
party.
The amount of P101,856.00 which Atty. Pineda donated to the Union and
which actually corresponds to 5% of the total 35% attorney's fees taken from
the proceeds (p. 263, L-24864, rec.) appears improper since it amounts to a
rebate or commission. This amount was subsequently treated as union
miscellaneous operating expenses without the consent of the general
membership.
Thus, in the case of Amalgamated Laborers' Association vs. Court of
Industrial Relations (L-23467, 22 SCRA 1267 [March 27, 1968]), We
declared:
We strike down the alleged oral agreement that the union president should
share in the attorney's fees. Canon 34 of Legal Ethics condemns this
arrangement in terms clear and explicit. It says: 'No division of fees for legal
services is proper, except with another lawyer, based upon a division of
service or responsibility.' The union president is not the attorney for the
laborers. He may seek compensation only as such president. An agreement
whereby a union president is allowed to share in attorney's fees is immoral.
Such a contract we emphatically reject. It cannot be justified.
A contingent fee contract specifying the percentage of recovery an attorney
is to receive in a suit 'should be reasonable under all the circumstances of the
case, including the risk and uncertainty of the compensation, but should
always be subject to the supervision of a court, as to its reasonableness.
(emphasis supplied).
A deeper scrutiny of the pleadings in L-24864 notably indicates a fraudulent
or deceitful pattern in the actuations of Atty. Pineda. Thus, in his motion for
execution of judgment filed on September 18, 1965 in this case, he signed
for and in behalf of "J.C. Espinas & Associates" (p. 323, rec.). In his
manifestation dated December 10, 1968, he signed as "B.C. Pineda," lone
counsel for petitioner (p. 327, rec.); and yet, he carried the address of Espinas
& Associates at 716 G. Puyat Building, Escolta.
However, in the October 29, 1968 resolution of this Court, a copy thereof
was served on "Messrs. J.C. Espinas, B.C Pineda, J.J. dela Rosa &
Associates" at Puyat Building, Escolta (p. 324, rec.). In the notice of
judgment dated December 29, 1970, this Court addressed the said pleading
to "Attys. B.C. Pineda & Associates with the same Puyat Building address
(p. 325, rec.). Notably also, then Union President Amado Lopez addressed
his letter dated August 21, 1958 to J.C. Espinas & Associates" wherein he
informed the latter that the general membership of the Union had authorized
them a 20%, contingent fee on whatever award would be given the workers
(p. 267, rec.).
The Manila Banking Corporation (Cubao Branch) has manifested that it
turned over to the NLRC the amount of P417,380.64 for the Union's account,
which appears to be the balance of P950,021.76 corresponding to the net
proceeds for distribution to the workers after deducting P525,480.40, the
total payments to claimants. The amount of P417,380.64 appears lacking,
since accurately computed, the balance should be P424,541,36.
However, the Union has yet to account for P101,856.00, the 5% donation or
share from Atty. Pineda's attorney's fee of 35%.
For the account of Atty. Pineda, the Manila Banking Corporation has
remitted to the NLRC the amount of P2,022.70 only. This means that Atty.
Pineda is still accountable for the amount of P710,969.30. He is directed to
return the amount of P712,992.00 representing the 35% attorney's fees he
unlawfully received.
In view of Our resolution of October 18, 1983, which set aside as null and
void the questioned orders dated September 23, 1982 and February 9, 1983
issued by Arbiter Raymundo Valenzuela, the sale of the Union property and
the distribution of the proceeds therefrom had been effected without authority
and, therefore, illegal Consequently. Atty. Pineda and Arbiter Valenzuela
become liable for their unauthorized acts,
Atty. Pineda should be cited for indirect contempt under paragraphs (b), (c)
and (d) of Section 3, Rule 71 of the Revised Rules of Court, The said
paragraphs read thus:
Sec. 3. indirect contempts to be punished after charge and hearing.—
xxx xxx xxx
(b) Disobedience of or resistance to a lawful writ, process, order, judgment,
or company court, or injunction granted by a court or judge, including the act
of a person who, after being dispossessed or ejected from any real property
by the judgment or process of any court of competent jurisdiction, enters or
attempts or induces another to enter into or upon such real property, for the
purpose of executing acts of ownership or possession, or in any manner
disturbs the possession given to the person adjudged to be entitled thereto;
(c) Any abuse of or any interference with the process or proceedings of a
court not constituting direct contempt under section 1 of this rule;
(d) Any improper conduct tending, directly or indirectly to impede, obstruct,
or degrade the administration of justice.
Contempt of court is a defiance of the authority, justice or dignity of the
court; such conduct as tends to bring the authority and administration of the
law into disrespect or to interfere with or prejudice parties litigant or their
witnesses during litigation (12 Am. jur. 389, cited in 14 SCRA 813).
Contempt of court is defined as a disobedience to the court by acting in
opposition to its authority, justice and dignity. It signifies not only a willful
disregard or disobedience of the court's orders, but such conduct as tends to
bring the authority of 'the court and the administration of law into disrepute
or in some manner to impede the due administration of justice (17 C.J.S. 4).
This Court has thus repeatedly declared that the power to punish for contempt
is inherent in all courts and is essential to the preservation of order in judicial
proceedings and to the enforcement of judgments, orders, and mandates of
the court, and consequently, to the due administration of justice (Slade
Perkins vs. Director of Prisons, 58 Phil. 271; In re Kelly, 35 Phil. 944;
Commissioner of Immigration vs. Cloribel, 20 SCRA 1241; Montalban vs.
Canonoy, 38 SCRA 1).
In the matter of exercising the power to punish contempts, this Court
enunciated in the Slade Perkins case that "the exercise of the power to punish
contempts has a twofold aspect, namely (1) the proper punishment of the
guilty party for his disrespect to the court or its order; and (2) to compel his
performance of some act or duty required of him by the court which he
refuses to perform. Due to this twofold aspect of the exercise of the power to
punish them, contempts are classified as civil or criminal. A civil contempt
is the failure to do something ordered to be done by a court or a judge for the
benefit of the opposing party therein; and a criminal contempt, is conduct
directed against the authority and dignity of a court or of a judge, as in
unlawfully assailing or discrediting the authority or dignity of the court or
judge, or in doing a duly forbidden act. Where the punishment imposed,
whether against a party to a suit or a stranger, is wholly or primarily to protect
or vindicate the dignity and power of the court, either by fine payable to the
government or by imprisonment, or both, it is deemed a judgment in a
criminal case. Where the punishment is by fine directed to be paid to a party
in the nature of damages for the wrong inflicted, or by imprisonment as a
coercive measure to enforce the performance of some act for the benefit of
the party or in aid of the final judgment or decree rendered in his behalf, the
contempt judgment will, if made before final decree, be treated as in the
nature of an interlocutory order, or, if made after final decree, as remedial in
nature, and may be reviewed only on appeal from the final decree, or in such
other mode as is appropriate to the review of judgments in civil cases. ... The
question of whether the contempt committed is civil or criminal, does not
affect the jurisdiction or the power of a court to punish the same. ... (58 Phil.
271, 272).
For civil contempt, Section 7, Rule 71 of the Revised Rules of Court
explicitly provides:
Sec. 7, Rule 71. Imprisonment until order obeyed. When the contempt
consists in the omission to do an act which is yet in the power of the accused
to perform, he may be imprisoned by order of a superior court until he
performs it.
Thus, in the case of Harden vs. Director of Prisons (L-2349, 81 Phil. 741
[Oct. 22, 1948]), where petitioner was confined in prison for contempt of
court, this Court, in denying the petition and resolving the question of
petitioner's indefinite confinement, had the occasion to apply and clarify the
aforequoted provision in the following tenor:
The penalty complained of is neither cruel unjust nor excessive. In Ex-parte
Kemmler 136 U.S. 436, the United States Supreme Court said that
'punishments are cruel when they involve torture or a lingering death, but the
punishment of death is not cruel, within the meaning of that word as used in
the constitution. It implies there something inhuman and barbarous,
something more than the extinguishment of life.
The punishment meted out to the petitioner is not excessive. It is suitable and
adapted to its objective; and it accords with section 7, Rule 64 of the Rules
of Court which provides that "when the contempt consists in the omission to
do an act which is yet in the power of the accused to perform, he may be
imprisoned by order of a superior court until he performs it."
If the term of imprisonment in this case is indefinite and might last through
the natural life of the petitioner, yet by the terms of the sentence the way is
left open for him to avoid serving any part of it by complying with the orders
of the court, and in this manner put an end to his incarceration. In these
circumstances, the judgment cannot be said to be excessive or unjust. (Davis
vs. Murphy [1947], 188 P., 229- 231.) As stated in a more recent case (De
Wees [1948], 210 S.W., 2d, 145-147), 'to order that one be imprisoned for an
indefinite period in a civil contempt is purely a remedial measure. Its purpose
is to coerce the contemner to do an act within his or her power to perform.
He must have the means by which he may purge himself of the contempt .
The latter decision cites Staley vs. South Jersey Realty Co., 83 N.J. Eq., 300,
90 A., 1042, 1043, in which the theory is expressed in this language:
In a "civil contempt" the proceeding is remedial, it is a step in the case the
object of which is to coerce one party for the benefit of the other party to do
or to refrain from doing some act specified in the order of the court. Hence,
if imprisonment be ordered, it is remedial in purpose and coercive in
character, and to that end must relate to something to be done by the
defendant by the doing of which he may discharge himself. As quaintly
expressed, the imprisoned man carries the keys to his prison in his own
pocket (pp. 747-748).
Likewise. American courts had long enunciated these rulings:
The commitment of one found in contempt of a court order only until the
contemnor shall have purged himself of such contempt by complying with
the order is a decisive characteristic of civil contempt. Maggio v. Zeitz, 333
US 56, 92 L. ed. 476, 68 S Ct 401.
Civil or quasi-criminal contempt is contemplated by a statute providing that
if any person refused to obey or perform any rule, order, or judgment of court,
such court shall have power to fine and imprison such person until the rule,
order, or judgment shall be complied with. Evans v. Evans, 193 Miss 468, 9
So 2d. 641. (17 Am. Jur. 2d.)
The reason for the inherent power of courts to punish for contempt is that
respect of the courts guarantees the stability of the judicial institution.
Without such guarantee said institution would be resting on a very shaky
foundation (Salcedo vs. Hernandez, 61 Phil. 724; Cornejo vs. Tan, 85 Phil.
722),
Likewise, Atty. Pineda should be subject to disbarment proceedings under
Section 27 of Rule 138 of the Revised Rules of Court which provides:

Sec. 27. Attorneys removed or suspended by Supreme Court on what
grounds.—A member of the bar may be removed or suspended from his
office as attorney by the Supreme Court for any deceit, malpractice, or other
gross misconduct in such office, grossly immoral conduct, or by reason of
his conviction of a crime involving moral turpitude, or for any violation of
the oath which he is required to take before admission to practice, or for a
willful disobedience of any lawful order of a superior court, or for corrupt or
willfully appearing as an attorney for a party to a case without authority so
to do. The practice of soliciting cases at law for the purpose of gain, either
personally or through paid agents or brokers, constitutes malpractice.
The Court may suspend or disbar a lawyer for any conduct on his part
showing his unfitness for the confidence and trust which characterize the
attorney and client relations, and the practice of law before the courts, or
showing such a lack of personal honesty or of good moral character as to
render him unworthy of public confidence (7 C.J.S. 733).
It is a well-settled rule that the statutory grounds for disbarment or suspension
are not to be taken as a limitation on the general power of the courts in this
respect. The inherent powers of the court over its officers cannot be restricted
(In re Pelaez, 44 Phil. 567).
Finally, Atty. Pineda could be prosecuted for betrayal of trust by an attorney
under Article 209 of the Revised Penal Code. Said article provides:
2. The alleged 5% donation of Atty. Pineda to the Union taken from the 35%
attorneys' fees was given to and received by then President Domingo
Cabading alone, who thereafter left for the United States.
3. The 1% allocated for unknown claimants or those not previously listed in
the amount of P9,596.18 can easily be accounted for by the Union before the
NLRC.
In the same motion, Mr. Capuno clarifies that with regard to attorneys' fees,
Atty. Pineda made the Union officers believe that he would be the one to pay
the fees of Attys. Espinas and Lopez for which reason, the 35% increased
fees was approved by the Union's board in good faith. The Union likewise
confirms that Atty. Pineda came into the picture only when he was assigned
by Atty. Espinas in, 1965 to execute the CIR decision which, thru Atty.
Espinas handling, was upheld by this Court in L-24864 in 1968. The Union
officers were aware that Atty. Espinas was the principal counsel even after
Atty. Pineda's assignment. They also knew of the original contract for 20%
attorney's fees which was increased to 35% by Atty. Pineda upon the
arrangement that with the increase, he would answer for the payment of
Attys. Espinas and Lopez' fees and for necessary representation expenses (p.
450, L-24864 rec.).
Acting on the aforesaid motion, this Court in its resolution of August 28,
1964, dropped the Union and its officers from the within contempt charge (p.
455, L-24864 rec.).

Art. 209. Betrayal of must by an attorney or solicitor. Revelation of secrets.—
In addition of the proper administrative action , the penalty of prision
correccional in its minimum period, or a fine ranging from 200 to 1,000
pesos, or both shall be imposed upon any attorney-at-law or solicitor
(procurador judicial) who, by any malicious breach of professional duty or
inexcusable negligence or ignorance, shall prejudice his client, or reveal any
of the secrets of the latter learned by him in his professional capacity
(emphasis supplied).
The aforequoted criminal sanction for unprofessional conduct of an attorney
is without prejudice to proper administrative action, such as disbarment or
suspension of attorneys (p. 503, Criminal Law Annotated, Padilla, 1972 Ed.).
Labor Arbiter Raymundo Valenzuela should be made to answer for having
acted without or beyond his authority in proper administrative charges. He
could also be prosecuted before the Tanodbayan under the provisions of the
Anti-Graft Law. Independently of his liabilities as a government officer, he
could be the subject of disbarment proceedings under Section 27, Rule 138
of the Revised Rules of Court.
WHEREFORE, ATTY. BENJAMIN PINEDA IS HEREBY FOUND
GUILTY OF INDIRECT CONTEMPT OF COURT FOR WHICH HE IS
HEREBY SENTENCED TO IMPRISONMENT IN THE MANILA CITY
JAIL UNTIL THE ORDERS OF THIS COURT DATED SEPTEMBER 1
AND SEPTEMBER 13, 1983 ARE COMPLIED WITH.
ATTY. BENJAMIN PINEDA IS ALSO DIRECTED TO SHOW CAUSE
WHY HE SHOULD NOT BE DISBARRED UNDER RULE 138 OF THE
REVISED RULES OF COURT.
LET COPIES OF THIS RESOLUTION AND THE RESOLUTION OF
OCTOBER 18, 1983 BE FURNISHED THE MINISTRY OF LABOR AND
THE TANODBAYAN FOR APPROPRIATE ACTION.
SO ORDERED.

Atty. Benjamin Pineda could also be held liable under Section 4(b) of R.A.
No. 3019 (Anti-Graft and Corrupt Practices Act) which makes it unlawful for
any person knowingly to induce or cause any public official to commit any
of the offenses defined in Section 3 of said act. Section 3 enumerates the
corrupt practices which public officers may be prosecuted for. Atty. Pineda
knowingly induced or caused Labor Arbiter Valenzuela to issue the
questioned orders without or beyond the latter's authority and to which orders
the former was not entitled, considering that he was not the sole and proper
representative.

The Manila Banking Corporation (Cubao Branch) per manifestation and

motion dated October 28, 1983 and reiterated on November 10, 1983, had
transmitted to the NLRC the remaining balance of P417,380.64 and
P2,022.70 for the account of the Union and Atty. Pineda, respectively. This
turnover of the aforecited amounts is a sufficient compliance with Our
restraining order and resolution of September 13, 1983 and hence, the Manila
Banking Corporation can no longer be liable for contempt of court.

Very recently, on August 23, 1984, respondent Union, thru Acting

Administrator Ricardo Capuno, filed its motion to drop Halili Bus Drivers
and Conductors Union from the contempt charge in view of these reasons:

1. The Manila Bank has already turned over to the NLRC the amount of
P59,716.14 which represents the remaining balance of 5% earmarked for
Union expenses incurred in the case aside from the amounts deposited in
escrow for the workers. The amount of P42,140.00 was spent legitimately by
the Union for administration purposes relative to the subject property. The
Union asserts that it is ready and willing to account for all expenses and
withdrawals from the bank before the NLRC.
PACIFIC BANKING CORPORATION vs. CLAVE
G.R. No. L-56965 | 1984-03-07
AQUINO, J.:
This case is about the legality of deducting from the monetary benefits
awarded in a collective bargaining agreement the attorney's fees of the lawyer
who assisted the union president in negotiating the agreement. It also
involves the jurisdiction of the Office of the President of the Philippines to
order such deduction.
Since January, 1979, there had been negotiations between the Pacific
Banking Corporation and the Pacific Banking Corporation Employees
Organization (PABECO) for a collective bargaining agreement for 1979 to
1981. Because of a deadlock, the Minister of Labor assumed jurisdiction over
the controversy. On July 10, 1979, the Deputy Minister rendered a decision
directing the parties to execute a CBA in accordance with the terms and
conditions set forth in his decision (pp. 16-01, Rollo).
The union was represented in the negotiations by its president, Paula S. Paug,
allegedly assisted as consultant by Jose P. Umali, Jr., the president of the
National Union of Bank Employees (NUBE) with which it was formerly
affiliated (p. 209, Rollo). Lawyer Juanito M. Saavedra's earliest recorded
participation in the case was on July 15 and 27, 1979 when he filed a motion
for reconsideration and a supplemental motion. No action was taken on said
motions (p. 121, Rollo).
The parties appealed to the Office of the President of the Philippines. The
CBA negotiations were resumed. The union president took part in the second
phase of the negotiations. Saavedra filed a memorandum. He claimed he
exerted much effort to expedite the decision. The Office of the President
issued on March 18, 1980 a resolution directing the parties to execute a CBA
containing the terms and conditions of employment embodied in the
resolution.
The CBA was ultimately finalized on June 3, 1980. Monetary benefits of
more than fourteen million pesos were involved in the three-year CBA,
according to the bank's counsel.
Even before the formalization of the CBA on June 3, 1980, Saavedra on
March 24, 1980 filed in the case his notice of attorney 's lien. On May 20,
1980, the bank's vice-president in a reply to the letter of the union president
stated that he had serious doubts about paying the attorney's fees (pp. 144-
145, Rollo).
The union officials requested the bank to withhold around P345,000 out of
the total benefits as ten percent attorney's fees of Saavedra. At first, the bank
interposed no objection to the request in the interest of harmonious labor-
management relations (p. 145, Rollo). In theory, the actual ten percent
attorney's fees may amount to more than one million pesos (p. 281, Rollo).
For nearly a year, the Office of the President in four resolutions wrestled with
the propriety of Saavedra's ten percent attorney's fees. In a resolution dated
May 29, 1980, Presidential Executive Assistant Jacobo C. Clave refused to
intervene in the matter. He ruled that the payment of attorney's fees was a
question that should be settled by the union and its lawyer themselves (p. 24,
Rollo).
Then, he "clarified" that ruling in a second resolution wherein he directed
that the attorney's fees may be deducted from the total benefits and paid to
Saavedra in accordance with the following provisions of the Labor Code:
"Art. 111. Attorney's fees. - (a) In cases of unlawful withholding of wages
the culpable party may be assessed attorney's fees equivalent to ten percent
of the amount of wages recovered.
"(b) It shall be unlawful for any person to demand or accept, in any judicial
or administrative proceedings for the recovery of wages, attorney's fees
which exceed ten percent of the amount of wages recovered."
Article 161 is implemented in Rule VIII, Book III of the Implementing Rules
and Regulations as follows:
"Sec. 11. Attorney's fees. - Attorney's fees in any judicial or administrative
proceedings for the recovery of wages shall not exceed 10% of the amount
awarded. The fees may be deducted from the total amount due the winning
party."
Presidential Executive Assistant Clave should have noticed that article 111
refers to a proceeding for the recovery of wages and not to CBA negotiations.
The two are different or distinct proceedings. Not satisfied with the
clarificatory resolution, Clave issued a third resolution wherein he held that
it is the legal obligation of the bank to turn over to the union treasurer ten
percent of the award as Saavedra's fees.
Finally, in a fourth resolution dated April 13, 1981 Deputy Presidential
Executive Assistant Joaquin T. Venus, Jr. ordered the bank to pay the union
treasurer the said attorney's fees less the amounts corresponding to the
protesting employees. He held that the following article 222 of the Labor
Code, as amended by Presidential Decree No. 1691, effective May 1, 1980
(before the formalization of the CBA award) had no retroactive effect to the
case:
"ART. 222. Appearances and Fees. - . . . (b) No attorney's fees, negotiation
fees or similar charges of any kind arising from any collective bargaining
negotiations or conclusion of the collective agreement shall be imposed on
any individual member of the contracting union: Provided, however, that
attorney's fees may be charged against union funds in an amount to be agreed
upon by the parties. Any contract, agreement or arrangement of any sort to
the contrary shall be null and void." (271, PD 442; 220, PD 626; 222, PD
1691).
The bank assailed in this Court the said resolutions by means of certiorari.
On February 5, 1982, the NUBE and thirteen employees of the bank,
members of the PABECO, (p. 202, Rollo) intervened in this case and prayed
that the said resolutions be declared void and that said sum of P345,000 be
paid directly to the employees or union members (p. 214, Rollo).
We hold that, under the circumstances, the Office of the President had no
jurisdiction to make an adjudication on Saavedra's attorney's fees. The case
was appealed with respect to the CBA terms and conditions, not with respect
to attorney's fees. Although the fees were a mere incident, nevertheless, the
jurisdiction to fix the same and to order the payment thereof was outside the
pale of Clave's appellate jurisdiction. He was right in adopting a hands-off
attitude in his first resolution and holding that the payment of the fees was a
question between the lawyer and the union.
Moreover, the case is covered squarely by the mandatory and explicit
prescription of article 222 which is another guarantee intended to protect the
employee against unwarranted practices that would diminish his
compensation without his knowledge and consent. (See National Power
Corporation Supervisors' Union vs. National Power Corporation, L-28805,
August 10, 1981, 106 SCRA 556). Other provisions of the Labor Code
animated by the same intention are the following:
"ART. 242. Rights and conditions of membership in a labor organization. -
The following are the rights and conditions of membership in a labor
organization:
"(n) No special assessment or other extraordinary fees may be levied upon
the members of a labor organization unless authorized by a written resolution
of a majority of all the members at a general membership meeting duly called
for the purpose. The secretary of the organization shall record the minutes of
the meeting including the list of all members present, the votes cast, the
purpose of the special assessment or fees and the recipient of such assessment
or fees. The record shall be attested to by the president;.
"(o) Other than for mandatory activities under the Code, no special
assessment, attorney's fees, negotiation fees or any other extraordinary fees
may be checked off from any amount due an employee without an individual
written authorization duly signed by the employee. The authorization should
specifically state the amount, purpose and beneficiary of the deduction; and.
. . . (288, PD 442; 291, PD 570-A; 240, PD 626; 241, PD 850).
There is no doubt that lawyer Saavedra is entitled to the payment of his fees
but article 222 ordains that union funds should be used for that purpose. The
amount of P345,000 does not constitute union funds. It is money of the
employees. The union, not the employees, is obligated to Saavedra.
WHEREFORE, the petition is granted. The resolutions dated August 12 and
December 15, 1980 and April 13, 1981 are reversed and set aside. The
questioned amount of about P345,000, with its increments, if any, should be
paid by the bank directly to its employees. No costs.
SO ORDERED
KAISAHAN AT KAPATIRAN NG MGA MANGGAGAWA AT
KAWANI SA MWC-EAST ZONE UNION vs. MANILA WATER
COMPANY, INC.
G.R. No. 174179 | 2011-11-16
BRION, J.:
We resolve the petition for review on certiorari1 filed by the petitioners,
Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone
Union (Union) and Eduardo Borela, assailing the decision2 and the
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 83654.4
The Factual Antecedents
The background facts are not disputed and are summarized below.
The Union is the duly-recognized bargaining agent of the rank-and-file
employees of the respondent Manila Water Company, Inc. (Company) while
Borela is the Union President.5 On February 21, 1997, the Metropolitan
Waterworks and Sewerage System (MWSS) entered into a Concession
Agreement (Agreement) with the Company to privatize the operations of the
MWSS.6 Article 6.1.3 of the Agreement provides that "the Concessionaire
shall grant [its] employees benefits no less favorable than those granted to
MWSS employees at the time of [their] separation from MWSS."7 Among
the benefits enjoyed by the employees of the MWSS were the amelioration
allowance (AA) and the cost-of-living allowance (COLA) granted in August
1979, pursuant to Letter of Implementation No. 97 issued by the Office of
the President.8
The payment of the AA and the COLA was discontinued pursuant to
Republic Act No. 6758, otherwise known as the "Salary Standardization
Law," which integrated the allowances into the standardized salary.9
Nonetheless, in 2001, the Union demanded from the Company the payment
of the AA and the COLA during the renegotiation of the parties' Collective
Bargaining Agreement (CBA).10 The Company initially turned down this
demand, however, it subsequently agreed to an amendment of the CBA on
the matter, which provides:
The Company shall implement the payment of the Amelioration Allowance
and Cost of Living [A]llowance retroactive August 1, 1997 should the
MWSS decide to pay its employees and all its former employees or upon
award of a favorable order by the MWSS Regulatory Office or upon receipt
of [a] final court judgment.11
Thereafter, the Company integrated the AA into the monthly payroll of all its
employees beginning August 1, 2002, payment of the AA and the COLA
after an appropriation was made and approved by the MWSS Board of
Trustees. The Company, however, did not subsequently include the COLA
since the Commission on Audit disapproved its payment because the
Company had no funds to cover this benefit.12
As a result, the Union and Borela filed on April 15, 2003 a complaint against
the Company for payment of the AA, COLA, moral and exemplary damages,
legal interest, and attorney's fees before the National Labor Relations
Commission (NLRC).13
The Compulsory Arbitration Rulings
In his decision of August 20, 2003, Labor Arbiter Aliman D. Mangandog
(LA) ruled in favor of the petitioners and ordered the payment of their AA
and COLA, six percent (6%) interest of the total amount awarded, and ten
percent (10%) attorney's fees.14
On appeal by the Company, the NLRC affirmed with modification the LA's
decision.15 It set aside the award of the COLA benefits because the claim
was not proven and established, but ordered the Company to pay the
petitioners their accrued AA of about P107,300,000.00 in lump sum and to
continue paying the AA starting August 1, 2002. It also upheld the award of
10% attorney's fees to the petitioners.
In its Motion for Partial Reconsideration of the NLRC's December 19, 2003
decision, the Company pointed out that the award of ten percent (10%)
attorney's fees to the petitioners is already provided for in their December 19,
2003 Memorandum of Agreement (MOA) which mandated that attorney's
fees shall be deducted from the AA and CBA receivables.16 This
compromise agreement, concluded between the parties in connection with a
notice of strike filed by the Union in 2003,17 provides among others that:18
31. Attorney's fees â€" 10% to be deducted from AA and CBA
receivables.
32. All other issues are considered withdrawn.19
In their Opposition, the petitioners argued that the MOA only covered the
payment of their share in the contracted attorney's fees, but did not include
the attorney's fees awarded by the NLRC. To support their claim, the
petitioners submitted Borela's affidavit which relevantly stated:
2. On December 19, 2003, in settlement of the notice of Strike for CBA
Deadlock, Manila Water Company, Inc. and the Union entered into an
Agreement settling the deadlock issued (sic) of the CBA negotiation
including [the] payment of the AA and the mode of payment thereof.
3. Considering that the AA payment was included in the Agreement, the
Union representation deemed it wise, for practical reason, to authorize the
company to immediately deduct from the benefits that will be received by
the member/employees the 10% attorney's fees in conformity with our
contract with our counsel.
4. The 10% attorney's fees paid by the members/employees is separate and
distinct from the obligation of the company to pay the 10% awarded
attorney's fees which we also gave to our counsel as part of our contingent
fee agreement.
5. There was no agreement that we are going to shoulder the entire attorney's
fees as this would cost us 20% of the amount we would recover. There was
also no agreement that the 10% attorney's fees in the MOA represents the
entire attorney's cost because the said payment represents only our
compliance of our share in the attorney's fees in conformity with our contract.
Likewise, we did not waive the awarded 10% attorney's fees because the
same belongs to our counsel and not to us and beyond our authority.20
(emphasis ours)
The NLRC subsequently denied both parties' Motions for Partial
Reconsideration,21 prompting the Company to elevate the case to the CA via
a petition for certiorari under Rule 65 of the Rules of Court. It charged the
NLRC of grave abuse of discretion in sustaining the award of attorney's fees
on the grounds that: (1) it is contrary to the MOA22 concerning the payment
of attorney's fees; (2) there was no finding of unlawful withholding of wages
or bad faith on the part of the Company; and (3) the attorney's fees awarded
are unconscionable.
The CA Decision
In its Decision promulgated on March 6, 2006,23 the CA modified the
assailed NLRC rulings by deleting "[t]he order for respondent MWCI to pay
attorney's fees equivalent to 10% of the total judgment awards." The CA
recognized the binding effect of the MOA between the Company and the
Union; it stressed that any further award of attorney's fees is unfounded
considering that it did not find anything in the Agreement that is contrary to
law, morals, good customs, public policy or public order.
In resolving the issue, the CA cited our ruling in Traders Royal Bank
Employees Union-Independent v. NLRC,24 where we distinguished between
the two commonly accepted concepts of attorney's fees â€" the ordinary
and the extraordinary. We held in that case that under its ordinary concept,
attorney's fees are the reasonable compensation paid to a lawyer by his client
for legal services rendered. On the other hand, we ruled that in its
extraordinary concept, attorney's fees represent an indemnity for damages
ordered by the court to be paid by the losing party in a litigation based on
what the law provides; it is payable to the client not to the lawyer, unless
there is an agreement to the contrary.
The CA noted that the fees at issue in this case fall under the extraordinary
concept â€" the NLRC having ordered the Company, as losing party, to
pay the Union and its members ten percent (10%) attorney's fees. It found the
award without basis under Article 111 of the Labor Code which provides that
attorney's fees equivalent to ten percent (10%) of the amount of wages
recovered may be assessed only in cases of unlawful withholding of wages.
The CA ruled that the facts of the case do not indicate any unlawful
withholding of wages or bad faith attributable to the Company. It also held
that the additional grant of 10% attorney's fees violates Article 111 of the
Labor Code considering that the MOA between the parties already ensured
the payment of 10% attorney's fees, deductible from the AA and CBA
receivables of the Union's members. The CA thus adjudged the NLRC
decision awarding attorney's fees to have been rendered with grave abuse of
discretion.
The Union and Borela moved for reconsideration, but the CA denied the
motion in its resolution of August 15, 2006.25 Hence, the present petition.
The Petition

The petitioners seek a reversal of the CA rulings on the sole ground that the
appellate court committed a reversible error in reviewing the factual findings
of the NLRC and in substituting its own findings â€" an action that is not
allowed under Rule 65 of the Rules of Court. They question the CA's re-
evaluation of the evidence, particularly the MOA, and its conclusion that
there was no unlawful withholding of wages or bad faith attributable to the
Company, thereby contradicting the factual findings of the NLRC. They also
submit that a petition for certiorari under Rule 65 is confined only to issues
of jurisdiction or grave abuse of discretion, and does not include the review
of the NLRC's evaluation of the evidence and its factual findings.26
The petitioners argue that in the present case, all the parties' arguments and
evidence relating to the award of attorney's fees were carefully studied and
weighed by the NLRC. As a result, the NLRC gave credence to Borela's
affidavit claiming that the attorney's fees paid by the Union's members are
separate and distinct from the attorney's fees awarded by the NLRC. The
petitioners stress that whether the NLRC is correct in giving credence to
Borela's affidavit is a question that the CA cannot act upon in a petition for
certiorari unless grave abuse of discretion can be shown.27
The Case for the Company
In its Memorandum filed on September 7, 2007,28 the Company argues that
the correctness of the NLRC's interpretation of the provision of the MOA,
the reasonableness of the attorney's fees in question, and the application or
interpretation of a provision of the Labor Code on the matter are questions of
law which the CA validly inquired into in the certiorari proceedings. It argues
that the CA correctly ruled that the NLRC acted with grave abuse of
discretion when it affirmed the LA's award of attorney's fees despite the
absence of a finding of any unlawful withholding of wages or bad faith on
the part of the Company. It finally contends that the Union's demand, together
with the NLRC award, is unconscionable as it represents 20% of the amount
due or about P21.4 million.
Issues
The core issues posed for our resolution are: (1) whether the CA can review
the factual findings of the NLRC in a Rule 65 petition; and (2) whether the
NLRC gravely abused its discretion in awarding ten percent (10%) attorney's
fees to the petitioners.
The Court's Ruling
We find the petition and its arguments meritorious.
On the CA's Review of the NLRC's Factual Findings
We agree with the petitioners that as a rule, the CA cannot undertake a re-
assessment of the evidence presented in the case in certiorari proceedings
under Rule 65 of the Rules of Court.29 However, the rule admits of
exceptions. In Mercado v. AMA Computer College-Parañaque City, Inc.,30
we held that the CA may examine the factual findings of the NLRC to
determine whether or not its conclusions are supported by substantial
evidence, whose absence justifies a finding of grave abuse of discretion. We
ruled:
We agree with the petitioners that, as a rule in certiorari proceedings under
Rule 65 of the Rules of Court, the CA does not assess and weigh each piece
of evidence introduced in the case. The CA only examines the factual
findings of the NLRC to determine whether or not the conclusions are
supported by substantial evidence whose absence points to grave abuse of
discretion amounting to lack or excess of jurisdiction. In the recent case of
Protacio v. Laya Mananghaya & Co., we emphasized that:
As a general rule, in certiorari proceedings under Rule 65 of the Rules of
Court, the appellate court does not assess and weigh the sufficiency of
evidence upon which the Labor Arbiter and the NLRC based their
conclusion. The query in this proceeding is limited to the determination of
whether or not the NLRC acted without or in excess of its jurisdiction or with
grave abuse of discretion in rendering its decision. However, as an exception,
the appellate court may examine and measure the factual findings of the
NLRC if the same are not supported by substantial evidence. The Court has
not hesitated to affirm the appellate court's reversals of the decisions of labor
tribunals if they are not supported by substantial evidence. 31 (italics and
emphasis supplied; citation omitted)
As discussed below, our review of the records and of the CA decision shows
that the CA erred in ruling that the NLRC gravely abused its discretion in
awarding the petitioners ten percent (10%) attorney's fees without basis in
fact and in law. Corollary to the above-cited rule is the basic approach in the
Rule 45 review of Rule 65 decisions of the CA in labor cases which we
articulated in Montoya v. Transmed Manila Corporation32 as a guide and
reminder to the CA. We laid down that:
In a Rule 45 review, we consider the correctness of the assailed CA decision,
in contrast with the review for jurisdictional error that we undertake under
Rule 65. Furthermore, Rule 45 limits us to the review of questions of law
raised against the assailed CA decision. In ruling for legal correctness, we
have to view the CA decision in the same context that the petition for
certiorari it ruled upon was presented to it; we have to examine the CA
decision from the prism of whether it correctly determined the presence or
absence of grave abuse of discretion in the NLRC decision before it, not on
the basis of whether the NLRC decision on the merits of the case was correct.
In other words, we have to be keenly aware that the CA undertook a Rule 65
review, not a review on appeal, of the NLRC decision challenged before it.
This is the approach that should be basic in a Rule 45 review of a CA ruling
in a labor case. In question form, the question to ask is: Did the CA correctly
determine whether the NLRC committed grave abuse of discretion in ruling
on the case?33 (italics and emphases supplied)
In the present case, we are therefore tasked to determine whether the CA
correctly ruled that the NLRC committed grave abuse of discretion in
awarding 10% attorney's fees to the petitioners.
On the Award of Attorney's Fees
Article 111 of the Labor Code, as amended, governs the grant of attorney's
fees in labor cases:
Art. 111. Attorney's fees.- (a) In cases of unlawful withholding of wages, the
culpable party may be assessed attorney's fees equivalent to ten percent of
the amount of wages recovered.
(b) It shall be unlawful for any person to demand or accept, in any judicial or
administrative proceedings for the recovery of wages, attorney's fees which
exceed ten percent of the amount of wages recovered.
Section 8, Rule VIII, Book III of its Implementing Rules also provides, viz.:
Section 8. Attorney's fees. â€" Attorney's fees in any judicial or
administrative proceedings for the recovery of wages shall not exceed 10%
of the amount awarded. The fees may be deducted from the total amount due
the winning party.
We explained in PCL Shipping Philippines, Inc. v. National Labor Relations
Commission34 that there are two commonly accepted concepts of attorney's
fees â€" the ordinary and extraordinary. In its ordinary concept, an
attorney's fee is the reasonable compensation paid to a lawyer by his client
for the legal services the former renders; compensation is paid for the cost
and/or results of legal services per agreement or as may be assessed. In its
extraordinary concept, attorney's fees are deemed indemnity for damages
ordered by the court to be paid by the losing party to the winning party. The
instances when these may be awarded are enumerated in Article 2208 of the
Civil Code, specifically in its paragraph 7 on actions for recovery of wages,
and is payable not to the lawyer but to the client, unless the client and his
lawyer have agreed that the award shall accrue to the lawyer as additional or
part of compensation.35

We also held in PCL Shipping that Article 111 of the Labor Code, as
amended, contemplates the extraordinary concept of attorney's fees and that
Article 111 is an exception to the declared policy of strict construction in the
award of attorney's fees. Although an express finding of facts and law is still
necessary to prove the merit of the award, there need not be any showing that
the employer acted maliciously or in bad faith when it withheld the wages.
In carrying out and interpreting the Labor Code's provisions and
implementing regulations, the employee's welfare should be the primary and
paramount consideration. This kind of interpretation gives meaning and
substance to the liberal and compassionate spirit of the law as embodied in
Article 4 of the Labor Code (which provides that "[a]ll doubts in the
implementation and interpretation of the provisions of [the Labor Code],
including its implementing rules and regulations, shall be resolved in favor
of labor") and Article 1702 of the Civil Code (which provides that "[i]n case
of doubt, all labor legislation and all labor contracts shall be construed in
favor of the safety and decent living for the laborer").36
We similarly so ruled in RTG Construction, Inc. v. Facto37 and in Ortiz v.
San Miguel Corporation.38 In RTG Construction, we specifically stated:
Settled is the rule that in actions for recovery of wages, or where an employee
was forced to litigate and, thus, incur expenses to protect his rights and
interests, a monetary award by way of attorney's fees is justifiable under
Article 111 of the Labor Code; Section 8, Rule VIII, Book III of its
Implementing Rules; and paragraph 7, Article 2208 of the Civil Code. The
award of attorney's fees is proper, and there need not be any showing that the
employer acted maliciously or in bad faith when it withheld the wages. There
need only be a showing that the lawful wages were not paid accordingly.39
(emphasis ours)
In PCL Shipping, we found the award of attorney's fees due and appropriate
since the respondent therein incurred legal expenses after he was forced to
file an action for recovery of his lawful wages and other benefits to protect
his rights.40 From this perspective and the above precedents, we conclude
that the CA erred in ruling that a finding of the employer's malice or bad faith
in withholding wages must precede an award of attorney's fees under Article
111 of the Labor Code. To reiterate, a plain showing that the lawful wages
were not paid without justification is sufficient.
In the present case, we find it undisputed that the union members are entitled
to their AA benefits and that these benefits were not paid by the Company.
That the Company had no funds is not a defense as this was not an
insuperable cause that was cited and properly invoked. As a consequence,
the union members represented by the Union were compelled to litigate and
incur legal expenses. On these bases, we find no difficulty in upholding the
NLRC's award of ten percent (10%) attorney's fees.
The more significant issue in this case is the effect of the MOA provision that
attorney's fees shall be deducted from the AA and CBA receivables. In this
regard, the CA held that the additional grant of 10% attorney's fees by the
NLRC violates Article 111 of the Labor Code, considering that the MOA
between the parties already ensured the payment of 10% attorney's fees
deductible from the AA and CBA receivables of the Union's members. In
addition, the Company also argues that the Union's demand, together with
the NLRC award, is unconscionable as it represents 20% of the amount due
or about P21.4 million.
In Traders Royal Bank Employees Union-Independent v. NLRC,41 we
expounded on the concept of attorney's fees in the context of Article 111 of
the Labor Code, as follows:
In the first place, the fees mentioned here are the extraordinary attorney's fees
recoverable as indemnity for damages sustained by and payable to the
prevailing part[y]. In the second place, the ten percent (10%) attorney's fees
provided for in Article 111 of the Labor Code and Section 11, Rule VIII,
Book III of the Implementing Rules is the maximum of the award that may
thus be granted. Article 111 thus fixes only the limit on the amount of
attorney's fees the victorious party may recover in any judicial or
administrative proceedings and it does not even prevent the NLRC from
fixing an amount lower than the ten percent (10%) ceiling prescribed by the
article when circumstances warrant it.42 (emphases ours; citation omitted)
In the present case, the ten percent (10%) attorney's fees awarded by the
NLRC on the basis of Article 111 of the Labor Code accrue to the Union's
members as indemnity for damages and not to the Union's counsel as
compensation for his legal services, unless, they agreed that the award shall
be given to their counsel as additional or part of his compensation; in this
case the Union bound itself to pay 10% attorney's fees to its counsel under
the MOA and also gave up the attorney's fees awarded to the Union's
members in favor of their counsel. This is supported by Borela's affidavit
which stated that "[t]he 10% attorney's fees paid by the members/employees
is separate and distinct from the obligation of the company to pay the 10%
awarded attorney's fees which we also gave to our counsel as part of our
contingent fee agreement."43 The limit to this agreement is that the
indemnity for damages imposed by the NLRC on the losing party (i.e., the
Company) cannot exceed ten percent (10%).
Properly viewed from this perspective, the award cannot be taken to mean an
additional grant of attorney's fees, in violation of the ten percent (10%) limit
under Article 111 of the Labor Code since it rests on an entirely different
legal obligation than the one contracted under the MOA. Simply stated, the
attorney's fees contracted under the MOA do not refer to the amount of
attorney's fees awarded by the NLRC; the MOA provision on attorney's fees
does not have any bearing at all to the attorney's fees awarded by the NLRC
under Article 111 of the Labor Code. Based on these considerations, it is
clear that the CA erred in ruling that the LA's award of attorney's fees violated
the maximum limit of ten percent (10%) fixed by Article 111 of the Labor
Code.1á¢wphi1
Under this interpretation, the Company's argument that the attorney's fees are
unconscionable as they represent 20% of the amount due or about P21.4
million is more apparent than real. Since the attorney's fees awarded by the
LA pertained to the Union's members as indemnity for damages, it was
totally within their right to waive the amount and give it to their counsel as
part of their contingent fee agreement. Beyond the limit fixed by Article 111
of the Labor Code, such as between the lawyer and the client, the attorney's
fees may exceed ten percent (10%) on the basis of quantum meruit, as in the
present case.44
WHEREFORE, premises considered, the petition is hereby GRANTED. The
assailed decision dated March 6, 2006 and the resolution dated August 15,
2006 of the Court of Appeals in CA-G.R. SP No. 83654 are REVERSED and
SET ASIDE. The Labor Arbiter's award of attorney's fees equivalent to ten
percent (10%) of the total judgment award is hereby REINSTATED.
No pronouncement as to costs.
SO ORDERED.
GABRIEL vs. THE HONORABLE SECRETARY OF LABOR AND
EMPLOYMENT
G.R. No. 115949 | 2000-03-16
QUISUMBING, J.:
Before us is a special civil action for certiorari seeking to reverse partially
the Order1 [Rollo, pp. 22-24.] of public respondent dated June 3, 1994, in
Case No. OS-MA-A-8-170-92, which ruled that the workers through their
union should be made to shoulder the expenses incurred for the professional
services of a lawyer in connection with the collective bargaining negotiations
and that the reimbursement for the deductions from the workers should be
charged to the union's general fund or account.
The records show the following factual antecedents:
Petitioners comprise the Executive Board of the SolidBank Union, the duly
recognized collective bargaining agent for the rank and file employees of
Solid Bank Corporation. Private respondents are members of said union.
Sometime in October 1991, the union's Executive Board decided to retain
anew the service of Atty. Ignacio P. Lacsina (now deceased) as union counsel
in connection with the negotiations for a new Collective Bargaining
Agreement (CBA). Accordingly, on October 19, 1991, the board called a
general membership meeting for the purpose. At the said meeting, the
majority of all union members approved and signed a resolution confirming
the decision of the executive board to engage the services of Atty. Lacsina as
union counsel.
As approved, the resolution provided that ten percent (10%) of the total
economic benefits that may be secured through the negotiations be given to
Atty. Lacsina as attorney's fees. It also contained an authorization for
SolidBank Corporation to check-off said attorney's fees from the first lump
sum payment of benefits to the employees under the new CBA and to turn
over said amount to Atty. Lacsina and/or his duly authorized representative.2
[Id. at 25.]
The new CBA was signed on February 21, 1992. The bank then, on request
of the union, made payroll deductions for attorney's fees from the CBA
benefits paid to the union members in accordance with the abovementioned
resolution.
On October 2, 1992, private respondents instituted a complaint against the
petitioners and the union counsel before the Department of Labor and
Employment (DOLE) for illegal deduction of attorney's fees as well as for
quantification of the benefits in the 1992 CBA.3 [Id. at 26-29.] Petitioners,
in response, moved for the dismissal of the complaint citing litis pendentia,
forum shopping and failure to state a cause of action as their grounds.4 [Id.
at 30-36.]
On April 22, 1993, Med-Arbiter Paterno Adap of the DOLE- NCR issued the
following Order:
"WHEREFORE, premises considered, the Respondents Union Officers and
Counsel are hereby directed to immediately return or refund to the
Complainants the illegally deducted amount of attorney's fees from the
package of benefits due herein complainants under the aforesaid new CBA.
"Furthermore, Complainants are directed to pay five percent (5%) of the total
amount to be refunded or returned by the Respondent Union Officers and
Counsel to them in favor of Atty. Armando D. Morales, as attorney's fees, in
accordance with Section II, Rule VIII of Book II (sic) of the Omnibus Rules
Implementing the Labor Code."5 [Id. at 11, 201.]
On appeal, the Secretary of Labor rendered a Resolution6 [Id. at 201-209.]
dated December 27, 1993, stating:
"WHEREFORE, the appeal of respondents Evangeline Gabriel, et. al., is
hereby partially granted and the Order of the Med-Arbiter dated 22 April
1993 is hereby modified as follows: (1) that the ordered refund shall be
limited to those union members who have not signified their conformity to
the check-off of attorney's fees; and (2) the directive on the payment of 5%
attorney's fees should be deleted for lack of basis.
SO ORDERED."7 [Id. at 209.]
On Motion for Reconsideration, public respondent affirmed the said Order
with modification that the union's counsel be dropped as a party litigant and
that the workers through their union should be made to shoulder the expenses
incurred for the attorney's services. Accordingly, the reimbursement should
be charged to the union's general fund/account.8 [Id. at 22-24.]
Hence, the present petition seeking to partially annul the above-cited order
of the public respondent for being allegedly tainted with grave abuse of
discretion amounting to lack of jurisdiction.
The sole issue for consideration is, did the public respondent act with grave
abuse of discretion in issuing the challenged order?
Petitioners argue that the General Membership Resolution authorizing the
bank to check-off attorney's fee from the first lump sum payment of the
benefits to the employees under the new CBA satisfies the legal requirements
for such assessment.9 [Id. at 18-19.] Private respondents, on the other hand,
claim that the check-off provision in question is illegal because it was never
submitted for approval at a general membership meeting called for the
purpose and that it failed to meet the formalities mandated by the Labor
Code.10 [Id. at 496-499.]
In check-off, the employer, on agreement with the Union, or on prior
authorization from employees, deducts union dues or agency fees from the
latter's wages and remits them directly to the union.11 [Holy Cross of Davao
College, Inc. vs. Joaquin, 263 SCRA 358-359 (1996).] It assures continuous
funding for the labor organization. As this Court has acknowledged, the
system of check-off is primarily for the benefit of the union and only
indirectly for the individual employees.12 [Ibid.]
The pertinent legal provisions on check-offs are found in Article 222 (b) and
Article 241 (o) of the Labor Code.
Article 222 (b) states:
"No attorney's fees, negotiation fees or similar charges of any kind arising
from any collective bargaining negotiations or conclusions of the collective
agreement shall be imposed on any individual member of the contracting
union: Provided, however, that attorney's fees may be charged against union
funds in an amount to be agreed upon by the parties. Any contract, agreement
or arrangement of any sort to the contrary shall be null and void."
Article 241 (o) provides:
"Other than for mandatory activities under the Code, no special assessment,
attorney's fees, negotiation fees or any other extraordinary fees may be
checked off from any amount due to an employee without an individual
written authorization duly signed by the employee. The authorization should
specifically state the amount, purpose and beneficiary of the deduction."
Article 241 has three (3) requisites for the validity of the special assessment
for union's incidental expenses, attorney's fees and representation expenses.
These are: 1) authorization by a written resolution of the majority of all the
members at the general membership meeting called for the purpose; (2)
secretary's record of the minutes of the meeting; and (3) individual written
authorization for check off duly signed by the employees concerned.
Clearly, attorney's fees may not be deducted or checked off from any amount
due to an employee without his written consent.
After a thorough review of the records, we find that the General Membership
Resolution of October 19, 1991 of the SolidBank Union did not satisfy the
requirements laid down by law and jurisprudence for the validity of the ten
percent (10%) special assessment for union's incidental expenses, attorney's
fees and representation expenses. There were no individual written check off
authorizations by the employees concerned and so the assessment cannot be
legally deducted by their employer.
Even as early as February 1990, in the case of Palacol vs. Ferrer-Calleja13
[182 SCRA 710-711 (1990).] we said that the express consent of employees
is required, and this consent must be obtained in accordance with the steps
outlined by law, which must be followed to the letter. No shortcuts are
allowed. In Stellar Industrial Services, Inc. vs. NLRC14 [252 SCRA 323, 325
(1996).] we reiterated that a written individual authorization duly signed by
the employee concerned is a condition sine qua non for such deduction.
These pronouncements are also in accord with the recent ruling of this Court
in the case of ABS-CBN Supervisors Employees Union Members vs. ABS-
CBN Broadcasting Corporation, et. al.,15 [G.R. No. 106518, March 11,
1999, p. 15.15 which provides:

"Premises studiedly considered, we are of the irresistible conclusion and, so

find that the ruling in BPIEU-ALU vs. NLRC that (1) the prohibition against
attorney's fees in Article 222, paragraph (b) of the Labor Code applies only
when the payment of attorney's fees is effected through forced contributions
from the workers; and (2) that no deduction must be take from the workers
who did not sign the check-off authorization, applies to the case under
consideration."

We likewise ruled in Bank of the Philippine Island Employees Union-

Association Labor Union (BPIEU-ALU) vs. NLRC,16 [171 SCRA 556, 569
(1989).]

"- the afore-cited provision (Article 222 (b) of the Labor Code) as prohibiting
the payment of attorney's fees only when it is effected through forced
contributions from workers from their own funds as distinguished from the
union funds. The purpose of the provision is to prevent imposition on the
workers of the duty to individually contribute their respective shares in the
fee to be paid the attorney for his services on behalf of the union in its
negotiations with management. The obligation to pay the attorney's fees
belongs to the union and cannot be shunted to the workers as their direct
responsibility. Neither the lawyer nor the union itself may require the
individual worker to assume the obligation to pay attorney's fees from their
own pockets. So categorical is this intent that the law makes it clear that any
agreement to the contrary shall be null and void ab initio."

From all the foregoing, we are of the considered view that public respondent
did not act with grave abuse of discretion in ruling that the workers through
their union should be made to shoulder the expenses incurred for the services
of a lawyer. And accordingly the reimbursement should be charged to the
union's general fund or account. No deduction can be made from the salaries
of the concerned employees other than those mandated by law.

WHEREFORE, the petition is DENIED. The assailed Order dated June 3,

1994, of respondent Secretary of Labor signed by Undersecretary Bienvenido
E. Laguesma is AFFIRMED. No pronouncement as to costs.

SO ORDERED.
MARIÑO, JR. VS. GAMILLA
G.R. No. 149763 | 2009-07-07
CHICO-NAZARIO, J.:
Assailed in this Petition for Review on Certiorari,[1] under Rule 45 of the
Rules of Court, are (1) the Decision[2] dated 16 March 2001 of the Court of
Appeals in CA-G.R. SP No. 60657, dismissing petitioners' Petition for
Certiorari under Rule 65 of the Rules of Court; and (2) the Resolution[3]
dated 30 August 2001 of the appellate court in the same case denying
petitioners' Motion for Reconsideration.
I involved shall be taken from the P42 Million (sic) economic package.
FACTS
The Petition at bar arose from the following factual and procedural
antecedents.
(1) Case No. NCR-OD-M-9412-022
At the time when the numerous controversies in the instant case first came
about, petitioners Atty. Eduardo J. Mariño, Jr., Ma. Melvyn P. Alamis,
Norma P. Collantes, and Fernando Pedrosa were among the executive
officers and directors (collectively called the Mariño Group) of the
University of Sto. Tomas Faculty Union (USTFU), a labor union duly
organized and registered under the laws of the Republic of the Philippines
and the bargaining representative of the faculty members of the University
of Santo Tomas (UST).[4]
Respondents Gil Y. Gamilla, Rene Luis Tadle, Norma S. Calaguas, Ma.
Lourdes C. Medina, Edna B. Sanchez, Remedios Garcia, Mafel Ysrael, Zaida
Gamilla, and Aurora Domingo were UST professors and USTFU members.
The 1986 Collective Bargaining Agreement (CBA) between UST and
USTFU expired on 31 May 1988. Thereafter, bargaining negotiations ensued
between UST and the Mariño Group, which represented USTFU. As the
parties were not able to reach an agreement despite their earnest efforts, a
bargaining deadlock was declared and USTFU filed a notice of strike.
Subsequently, then Secretary of the Department of Labor and Employment
(DOLE) Franklin Drilon assumed jurisdiction over the dispute, which was
docketed as NCMB-NCR-NS-02-117-89. The DOLE Secretary issued an
Order on 19 October 1990, laying the terms and conditions for a new CBA
between the UST and USTFU. In accordance with said Order, the UST and
USTFU entered into a CBA in 1991, which was to be effective for the period
of 1 June 1988 to 31 May 1993 (hereinafter 1988-1993 CBA). In keeping
with Article 253-A[5] of the Labor Code, as amended, the economic
provisions of the 1988-1993 CBA were subject to renegotiation for the fourth
and fifth years.
Accordingly, on 10 September 1992, UST and USTFU executed a
Memorandum of Agreement (MOA),[6] whereby UST faculty members
belonging to the collective bargaining unit were granted additional economic
benefits for the fourth and fifth years of the 1988-1993 CBA, specifically,
the period from 1 June 1992 up to 31 May 1993. The relevant portions of the
MOA read:
MEMORANDUM OF AGREEMENT
xxxx
1.0. The University hereby grants additional benefits to Faculty Members
belonging to the collective bargaining unit as defined in Article I, Section 1
of the Collective Bargaining Agreement entered into between the parties
herein over and above the benefits now enjoyed by the said faculty members,
which additional benefits shall amount in the aggregate to P42,000,000.00[.]
2.0. Under this Agreement the University shall grant salary increases, to wit:
2.1. THIRTY (P30.00) PESOS per lecture unit per month to covered faculty
members retroactive to June 1, 1991;
2.2. Additional THIRTY (P30.00) PESOS per lecture unit per month on top
of the salary increase granted in [paragraph] 2.1 hereof to the said faculty
members effective June 1, 1992;
2.3. In the case of a covered faculty member whose compensation is
computed on a basis other than lecture unit per month, he shall receive salary
increases that are equivalent to those provided in paragraphs 2.1 and 2.2
hereof, with the amount of salary increases being arrived at by using the usual
method of computing the said faculty member's basic pay;
3.0. The UNIVERSITY shall likewise restore to the faculty members the
amounts corresponding to the deductions in salary that were taken from the
pay checks in the second half of June, 1989 and in the first half of July, 1989,
provided that said deductions in salary relate to the union activities that were
held in the aforestated payroll periods, and provided further that the amounts
4.0. A portion of the P42,000,000.00 economic package amounting to
P2,000,000.00 shall be used to satisfy all obligations that remained
outstanding and unpaid in the May 17, 1986 Collective Bargaining
Agreement.
5.0. Any unspent balance of the aggregate of P42,000,000.00 as of October
15, 1992, shall, within two weeks, be remitted to the Union[:]
5.1. The unspent balance mentioned in paragraph 5.0 inclusive of earnings
but exclusive of check-offs, shall be used for the salary increases herein
granted up to May 31, 1993, for increases in hospitalization, educational and
retirement benefits, and for other economic benefits.
6.0. The benefits herein granted constitute the entire and complete package
of economic benefits granted by the UNIVERSITY to the covered faculty
members for the balance of the term of the existing collective bargaining
agreement.
7.0. It is clearly understood and agreed upon that the aggregate sum of P42
million is chargeable against the share of the faculty members in the
incremental proceeds of tuition fees collected and still to be collected;
Provided, however, that he (sic) commitment of the UNIVERSITY to pay
the aggregate sum of P42 million shall subsist even if the said amount
exceeds the proportionate share that may accrue to the faculty members in
the tuition fee increases that the UNIVERSITY may be authorized to collect
in School-Year 1992-1993, and, Provided, finally, that the covered faculty
members shall still be entitled to their proportionate share in any
undistributed portion of the incremental proceeds of the tuition fee increases
in School-Year 1992-1993, and incremental proceeds are, by law and
pertinent Department of Education Culture and Sports (DECS) regulations,
required to be allotted for the payment of salaries, wages, allowances and
other benefits of teaching and non-teaching personnel for the UNIVERSITY.
8.0. With this Agreement, the parties confirm that[:]
8.1. the University has complied with the requirements of the law relative to
the release and distribution of the incremental proceeds of tuition fee
increases as these incremental proceeds pertain to the faculty share in the
tuition fee increase collected during the School-Year 1991-1992; and,
8.2. the economic benefits herein granted constitute the full and complete
financial obligation of the UNIVERSITY to the members of its faculty for
the period June 1, 1991 to May 31, 1993, pursuant to the provisions of the
existing Collective Bargaining Agreement.
9.0. Subject to the provisions of law, and without reducing the amounts of
salary increases granted under paragraphs 2.0, 2.1, 2.2 and 2.3[,] the UNION
shall have the right to a pro-rata lump sum check-off of all sums of money
due and payable to it from the package of economic benefits granted under
this Agreement, provided that there is an authorization of a majority of the
members of the UNION and provided, further, that the P42 million economic
package herein granted shall not in any way be exceeded.
10.0. This Agreement shall be effective for a period of two (2) years, starting
June 1, 1991 and ending on May 31, 1993, provided, however, that if for any
reason no new collective bargaining agreement is entered into at the
expiration date hereof, this Agreement, together with the March 18, 1991
Collective Bargaining Agreement, shall remain in full force and effect until
such time as a new collective bargaining agreement shall have been executed
by the parties.
xxxx
UNIVERSITY OF SANTO TOMAS
UST FACULTY UNION
BY:
BY:
(signed)
(signed)
FR. TERESO M. CAMPILLO, JR., O.P.
ATTY. EDUARDO J. MARINO, JR.
Treasurer
President
Attested by[:]
(signed)
REV. FR. ROLANDO DELA ROSA, O.P. (Emphasis ours.)
On 12 September 1992, the majority of USTFU members signed individual
instruments of ratification,[7] which purportedly signified their consent to
the economic benefits granted under the MOA. Said instruments uniformly
recited:
RATIFICATION OF THE UST-USTFU MEMORANDUM OF
AGREEMENT DATED SEPTEMBER 10, 1992 GRANTING A
PACKAGE OF THE P42 MILLION FACULTY BENEFITS WITH
PROVISION FOR CHECK-OFF.
September 12, 1992
Date
TO WHOM IT MAY CONCERN:
I, the undersigned UST faculty member, aware that the law requires
ratification and that without ratification by majority of all faculty members
belonging to the collective bargaining unit, the Memorandum of Agreement
between the University of Santo Tomas and the UST Faculty Union (or
USTFU) dated September 10, 1992 may be questioned and all the faculty
benefits granted therein may be cancelled, do hereby ratify the said
agreement.
Under the Agreement, the University shall pay P42 million over a period of
two (2) years from June 1, 1991 up to May 31, 1992.
In consideration of the efforts of the UST Faculty Union as the faculty
members' sole and exclusive collective bargaining representative in
obtaining the said P42 million package of economic benefits, a check-off of
ten percent thereof covering union dues, and special assessment for Labor
Education Fund and attorney's fees from USTFU members and agency fee
from non-members for the period of the Agreement is hereby authorized to
be made in one lump sum effective immediately, provided that two per cent
(sic) shall be for [the] administration of the Agreement and the balance of
eight per cent (sic) shall be for attorney's fees to be donated, as pledged by
the USTFU lawyer to the Philippine Foundation for the Advancement of the
Teaching Profession, Inc. whose principal purpose is the advancement of the
teaching profession and teacher's welfare, and provided further that the
deductions shall not be taken from my individual monthly salary but from
the total package of P42 million due under the Agreement.
_________________________
Signature of Faculty Member (Emphasis ours.)
USTFU, through its President, petitioner Atty. Mariño, wrote a letter[8] dated
1 October 1992 to the UST Treasurer requesting the release to the union of
the sum of P4.2 million, which was 10% of the P42 million economic benefits
package granted by the MOA to faculty members belonging to the collective
bargaining unit. The P4.2 million was sought by USTFU in consideration of
its efforts in obtaining the said P42 million economic benefits package. UST
remitted the sum of P4.2 million to USTFU on 9 October 1992.[9]
After deducting from the P42 million economic benefits package the P4.2
million check-off to USTFU, the amounts owed to UST, and the salary
increases and bonuses of the covered faculty members, a net amount of
P6,389,145.04 remained. The remaining amount was distributed to the
faculty members on 18 November 1994.
On 15 December 1994, respondents[10] filed with the Med-Arbiter, DOLE-
National Capital Region (NCR), a Complaint for the expulsion of the Mariño
Group as USTFU officers and directors, which was docketed as Case No.
NCR-OD-M-9412-022.[11] Respondents alleged in their Complaint that the
Mariño Group violated the rights and conditions of membership in USTFU,
particularly by: 1) investing the unspent balance of the P42 million economic
benefits package given by UST without prior approval of the general
membership; 2) simultaneously holding electionsviva voce; 3) ratifying the
CBA involving the P42 million economic benefits package; and 4) approving
the attorney's/agency fees worth P4.2 million in the form of check-off.
Respondents prayed that the Mariño Group be declared jointly and severally
liable for refunding all collected attorney's/agency fees from individual
members of USTFU and the collective bargaining unit; and that, after due
hearing, the Mariño group be expelled as USTFU officers and directors.
(2) Case No. NCR-OD-M-9510-028
On 16 December 1994, UST and USTFU, represented by the Mariño Group,
entered into a new CBA, effective 1 June 1993 to 31 May 1998 (1993-1998
CBA). This new CBA was registered with the DOLE on 20 February 1995.
Respondents[12] filed with the Med-Arbiter, DOLE-NCR, on 18 October
1995, another Complaint against the Mariño Group for violation of the rights
and conditions of union membership, which was docketed as Case No. NCR-
OD-M-9510-028.[13] The Complaint primarily sought to invalidate certain
provisions of the 1993-1998 CBA negotiated by the Mariño Group for
USTFU and the registration of said CBA with the DOLE.
(3) Case No. NCR-OD-M-9610-001
On 24 September 1996, petitioner Norma Collantes, as USTFU Secretary-
General, posted notices in some faculty rooms at UST, informing the union
members of a general assembly to be held on 5 October 1996. Part of the
agenda for said date was the election of new USTFU officers. The following
day, 25 September 1996, respondents wrote a letter[14] to the USTFU
Committee on Elections, urging the latter to re-schedule the elections to
ensure a free, clean, honest, and orderly election and to afford the union
members the time to prepare themselves for the same. The USTFU
Committee on Elections failed to act positively on respondents' letter, and
neither did they adopt and promulgate the rules and regulations for the
conduct of the scheduled election.
Thus, on 1 October 1996, respondents[15] filed with the Med-Arbiter,
DOLE-NCR, an Urgent Ex-PartePetition/Complaint, which was docketed as
Case No. NCR-OD-M-9610-001.[16] Respondents alleged in their
Petition/Complaint that the general membership meeting called by the
USTFU Board of Directors on 5 October 1996, the agenda of which included
the election of union officers, was in violation of the provisions of the
Constitution and By-Laws of USTFU. Respondents prayed that the DOLE
supervise the conduct of the USTFU elections, and that they be awarded
attorney's fees.
On 4 October 1996, the Med-Arbiter DOLE-NCR, issued a Temporary
Restraining Order (TRO) enjoining the holding of the USTFU elections
scheduled the next day.
(4) Case No. NCR-OD-M-9610-016
Also on 4 October 1996, the UST Secretary General headed a general faculty
assembly attended by USTFU members, as well as USTFU non-members,
but who were members of the collective bargaining unit. During said
assembly, respondents were among the elected officers of USTFU
(collectively referred to as the Gamilla Group). Petitioners filed with the
Med-Arbiter, DOLE-NCR, a Petition seeking injunctive reliefs and the
nullification of the results of the 4 October 1994 election. The Petition was
docketed as Case No. NCR-OD-M-9610-016.
In a Decision dated 11 February 1997 in Case No. NCR-OD-M-9610-016,
the Med-Arbiter DOLE-NCR, nullified the election of the Gamilla Group as
USTFU officers on 4 October 1996 for having been conducted in violation
of the Constitution and By-Laws of the union. This ruling of the Med-Arbiter
was affirmed on appeal by the Bureau of Labor Relations (BLR) in a
Resolution issued on 15 August 1997. Respondents were, thus, prompted to
file a Petition forCertiorari before this Court, docketed as G.R. No. 131235.
While G.R. No. 131235 was pending, the term of office of the Gamilla Group
as USTFU officers expired on 4 October 1999. The Gamilla Group then
scheduled the next election of USTFU officers on 14 January 2000.
On 16 November 1999, the Court promulgated its Decision in G.R. No.
131235, affirming the BLR Resolution dated 15 August 1997 which ruled
that the purported election of USTFU officers held on 4 October 1996 was
void for violating the Constitution and By-Laws of the union.[17]
(5) Case No. NCR-OD-M-9611-009
On 15 November 1996, respondents[18] filed before the Med-Arbiter,
DOLE-NCR, a fourth Complaint/Petition against the Mariño Group, as well
as the Philippine Foundation for the Advancement of the Teaching
Profession, Inc., Security Bank Corporation, and Bank of the Philippine
Islands, which was docketed as Case No. NCR-OD-M-9611-
009.[19]Respondents claimed in their latest Complaint/Petition that they
were the legitimate USTFU officers, having been elected on 4 October 1996.
They prayed for an order directing the Mariño Group to cease and desist from
using the name of USTFU and from performing acts for and on behalf of the
USTFU and the rest of the members of the collective bargaining unit.
DOLE Department Order No. 9 took effect on 21 June 1997, amending the
Rules Implementing Book V of the Labor Code, as amended. Thereunder,
jurisdiction over the complaints for any violation of the union constitution
and by-laws and the conditions of union membership was vested in the
Regional Director of the DOLE.[20] Pursuant to said Department Order, all
four Petitions/Complaints filed by respondents against the Mariño Group,
particularly, Case No. NCR-OD-M-9412-022, Case No. NCR-OD-M-9510-
028, Case No. NCR-OD-M-9610-001, and Case No. NCR-OD-M-9611-009
were consolidated and indorsed to the Office of the Regional Director of the
DOLE-NCR.
On 27 May 1999, the DOLE-NCR Regional Director rendered a
Decision[21] in the consolidated cases in respondents' favor.
In Case No. NCR-OD-M-9412-022 and Case No. NCR-OD-M-9510-028,
the DOLE-NCR Regional Director adjudged the Mariño Group, as the
executive officers of USTFU, guilty of violating the provisions of the
USTFU Constitution and By-laws by failing to collect union dues and to
conduct a general assembly every three months. The DOLE-NCR Regional
Director also ruled that the Mariño Group violated Article 241(c)[22] and
(l)[23] of the Labor Code when they did not submit a list of union officers to
the DOLE; when they did not submit/provide DOLE and the USTFU
members with copies of the audited financial statements of the union; and
when they invested in a bank, without prior consent of USTFU members, the
sum of P9,766,570.01, which formed part of the P42 million economic
benefits package.
Additionally, the DOLE-NCR Regional Director declared that the check-off
of P4.2 million collected by the Mariño Group, as negotiation fees, was
invalid. According to the MOA executed on 10 September 1992 by UST and
USTFU, the P42 million economic benefits package was chargeable against
the share of the faculty members in the incremental proceeds of tuition fees
collected and still to be collected. Under Republic Act No. 6728,[24] 70% of
the tuition fee increases should be allotted to academic and non-academic
personnel. Given that the records were silent as to how much of the P42
million economic benefits package was obtained through negotiations and
how much was from the statutory allotment of 70% of the tuition fee
increases, the DOLE-NCR Regional Director held that the entire amount was
within the statutory allotment, which could not be the subject of negotiation
and, thus, could not be burdened by negotiation fees.
The DOLE-NCR Regional Director further found that the principal subject
of Case No. NCR-OD-M-9610-001 (i.e., violation by the Mariño Group of
the provisions on election of officers in the Labor Code and the USTFU
Constitution and By-Laws) had been superseded by the central event in Case
No. NCR-OD-M-9611-009 (i.e., the subsequent election of another set of
USTFU officers consisting of the Gamilla Group). While there were two sets
of USTFU officers vying for legitimacy, the eventual ruling of the DOLE-
NCR Regional Director, for the expulsion of the Mariño Group from their
positions as USTFU officers, practically extinguished Case No. NCR-OD-
M-9611-009.
The decretal portion of the 27 May 1999 Decision of the DOLE-NCR
Regional Director reads:
WHEREFORE, premises considered, judgment is hereby rendered:
a) Expelling [the Mariño Group] from their positions as officers of USTFU,
and hereby order them under pain of contempt, to cease and desist from
performing acts as such officers;
b) Ordering [the Mariño Group] to jointly and severally refund to USTFU
the amount of P4.2 M checked-off as attorney's fees from the P42 M
economic package;
c) Ordering [the Mariño Group] to account for:
c.1. P2.0 M paid to USTFU in satisfaction of the remaining obligation of the
University under the 1986 CBA;
c.2. P7.0 M as consideration of the Compromise Agreement entered into by
USTFU involving certain labor cases;
c.3. Interest/earnings of the P9,766,570.01 balance of the P42 M
invested/deposited by [the Mariño Group] with the PCI Capital Corporation.
d) Ordering conduct of election of Union officers under the supervision of
this Department.[25]
Petitioners interposed an appeal[26] before the BLR, which was docketed as
BLR-A-TR-52-25-10-99.
In the meantime, the election of USTFU officers was held as scheduled on
14 January 2000,[27] in which the Gamilla Group claimed victory.[28] On 3
March 2000, the Gamilla group, as the new USTFU officers, entered into a
Memorandum of Agreement[29] with the UST, which provided for the
economic benefits to be granted to the faculty members of the UST for the
years 1999-2001. Said Agreement was ratified by the USTFU members on 9
March 2000.
On the same day, 9 March 2000, the BLR promulgated its Decision[30] in
BLR-A-TR-52-25-10-99, the fallo of which provides:
WHEREFORE, the appeal is GRANTED IN PART. Accordingly, the
decision appealed from is hereby MODIFIED to the effect that appellant
USTFU officers are hereby ordered to return to the general membership the
amount of P4.2 million they have collected by way of attorney's fees.
Let the entire records of this case be remanded to the Regional Office of
origin for the immediate conduct of election of officers of USTFU. The
election shall be held under the control and supervision of the Regional
Office, in accordance with Section 1 (b), Rule XV of Department Order No.
9, unless the parties mutually agree to a different procedure consistent with
ensuring integrity and fairness in the electoral exercise.
The BLR found no basis for the order of the DOLE-NCR Regional Director
to the Mariño Group to account for the amounts of P2 million and P7 million
supposedly paid by UST to USTFU. The BLR clarified that UST paid
USTFU a lump sum of P7 million. The P2 million of this lump sum was the
payment by UST of its outstanding obligations to USTFU under the 1986
CBA. This amount was subsequently donated by USTFU members to the
Philippine Foundation for the Advancement of the Teaching Profession, Inc.
The remaining P5 million of the lump sum was the consideration for the
settlement of an illegal dismissal case between UST and the Mariño Group.
Hence, the P5 million legally belonged to the Mariño Group, and there was
no need to make it account for the same. As to the interest earnings of the
sum of P9,766,570.01 that was invested by the Mariño Group in a bank, the
BLR ruled that the same was included in the amount of P6,389,145.04 that
was distributed to the faculty members on 18 November 1994.
The BLR, however, agreed in the finding of the DOLE-NCR Regional
Director that the P42 million economic benefits package was sourced from
the faculty members' share in the tuition fee increases under Republic Act
No. 6728. Under said law, 70% of tuition fee increases shall go to the
payment of salaries, wages, allowances, and other benefits of teaching and
non-teaching personnel. As was held in the decision[31] and subsequent
resolution[32] of the Supreme Court in Cebu Institute of Technology v. Ople,
the law has already provided for the minimum percentage of tuition fee
increases to be allotted for teachers and other school personnel. This
allotment is mandatory and cannot be diminished, although it may be
increased by collective bargaining. It follows that only the amount beyond
that mandated by law shall be subject to negotiation fees and attorney's fees
for the simple reason that it was only this amount that the school employees
had to bargain for.
The BLR further reasoned that the P4.2 million collected by the Mariño
Group was in the nature of attorney's fees or negotiation fees and, therefore,
fell under the general prohibition against such fees in Article 222(b)[33] of
the Labor Code, as amended. Also, the exception to charging against union
funds was not applicable because the P42 million economic benefits package
under the 10 September 1992 MOA was not union fund, as the same was
intended not for the union coffers, but for the members of the entire
bargaining unit. The fact that the P4.2 million check-off was approved by the
majority of USTFU members was immaterial in view of the clear command
of Article 222(b) that any contract, agreement, or arrangement of any sort,
contrary to the prohibition contained therein, shall be null and void.
Lastly, as to the alleged failure of the Mariño Group to perform some of its
duties, the BLR held that the change of USTFU officers can best be decided,
not by outright expulsion, but by the general membership through the actual
conduct of elections.
Petitioners' Motion for Partial Reconsideration[34] of the foregoing Decision
was denied by the BLR in a Resolution[35]dated 13 June 2000.
Aggrieved once again, petitioners filed with the Court of Appeals a Petition
for Certiorari[36] under Rule 65 of the Rules of Court, which was docketed
as CA-G.R. SP No. 60657. In a Resolution dated 26 September 2000, the
Court of Appeals directed respondents to file their Comment; and, in order
not to render moot and academic the issues in the Petition, enjoined
respondents and all those acting for and on their behalf from enforcing,
implementing, and effecting the BLR Decision dated 9 March 2000.
On 16 March 2001, the Court of Appeals rendered its Decision in CA-G.R.
SP No. 60657, favoring respondents.
According to the Court of Appeals, the BLR did not commit grave abuse of
discretion, amounting to lack or excess of jurisdiction, in ruling that the P42
million economic benefits package was merely the share of the faculty
members in the tuition fee increases pursuant to Republic Act No. 6728. The
appellate court explained:
It is too plain to see that the 60% of the proceeds is to be allocated specifically
for increase in salaries or wages of the members of the faculty and all other
employees of the school concerned. Under Section 5(2) of Republic Act
6728, the amount had been increased to 70% of the tuition fee increases
which was specifically allocated to the payment of salaries, wages,
allowances and other benefits of teaching and non-teaching personnel of the
school[,] except administrators who are principal stockholders of the school
and to cover increases as provided for in the collective bargaining agreements
existing or in force at the time the law became effective[.]
xxxx
It is too plain to see, too, that under the "Memorandum of Agreement"
between UST and the Union, x x x, the P42,000,000.00 economic package
granted by the UST to the Union was in compliance with the mandates of the
law and pertinent Department of Education, Culture and Sports regulation
(sic) required to be allotted following the payment of salaries, wages,
allowances and other benefits of teaching and non-teaching personnel of the
University[.]
xxxx
Whether or not UST implemented the mandate of Republic Act 6728
voluntarily or through the efforts and prodding of the Union does not and
cannot change or alter a whit the nature of the economic package or the
purpose or purposes of the allocation of the said amount. For, if we
acquiesced to and sustained Petitioners' stance, we will thereby be leaving
the compliance by the private educational institutions of the mandate of
Republic Act 6728 at the will, mercy, whims and caprices of the Union and
the private educational institution. This cannot and should not come to pass.
With our foregoing findings and disquisitions, We thus agree with the [BLR]
that the aforesaid amount of P42,000,000.00 should not answer for any
attorney's fees claimed by the Petitioners. x x x.
xxxx
Moreover, [Section 5 of Rule X of] the CBL of the Union provides that:
Section 5. Special assessments or other extraordinary fees such as for
payment of attorney's fees shall be made only upon such a resolution duly
ratified by the general membership by secret balloting. x x x.
Also, Article 241(n)[37] of the Labor Code, as amended, provides that no
special assessment shall be levied upon the members of the union unless
authorized by a written resolution of a majority of all the members at a
general membership meeting duly called for the purpose[.]
xxxx
In "ABS-CBN Supervisors-Employees Union Members versus ABS-CBN
Broadcasting Corporation, 304 SCRA 489", our Supreme Court declared that
Article 241(n) of the Labor Code, as amended, speaks of three (3) requisites,
to wit: (1) authorization by a written resolution of the majority of all members
at the general membership meeting called for the purpose; (2) secretary's
record of the minutes of the meeting; and (3) individual written authorization
for check-off duly signed by the employee concerned.
Contrary to the provisions of Articles 222(b) and 241(n) of the Labor Code,
as amended, and Section 5, Rule X of [the] CBL of the Union, no resolution
ratified by the general membership of [the] USTFU through secret balloting
which embodied the award of attorney's fees was submitted. Instead, the
Petitioners submitted copies of the form for the ratification of the MOA and
the check-off for attorney's fees.
xxxx
The aforementioned "ratification with check-off" form embodied the: (a)
ratification of the MOA; (b) check-off of union dues; and (c) check-off of a
special assessment, i.e., attorney's fees and labor education fund. x x x.
Patently, the CBL was not complied with.
Worse, the check-off for union dues and attorney's fees were included in the
ratification of the MOA. The members were thus placed in a situation where,
upon ratification of the MOA, not only the check-off of union dues and
special assessment for labor education fund but also the payment of attorney's
fees were (sic) authorized.[38]
In like manner, the Court of Appeals found no grave abuse of discretion,
amounting to lack or excess of jurisdiction, on the part of the BLR in ordering
the conduct of elections under the control and supervision of the DOLE-
NCR. Said the appellate court:
We agree with the Petitioners that the elections of officers of the Union,
before the Decision of the [BLR], had been unfettered by any intervention of
the DOLE. However, We agree with the Decision of the [BLR] for two (2)
specific reasons, namely: (a) the parties are given an opportunity to first agree
on a different procedure to ensure the integrity and fairness of the electoral
exercise, before the DOLE, may supervise the election[.]
xxxx
Under Article IX of the CBL, the Board of Officers of the Union shall create
a Committee on Elections, Comelec for brevity, composed of a chairman and
two (2) members appointed by the Board of Officers[.]
xxxx
It, however, appears that the term of office of the Petitioners had already
expired in September of 1996. In fact, an election of officers was scheduled
on October 6, 1996. However, on October 4, 1996, [respondents] and the
members of the faculty of UST, both union member and non-union member,
elected [respondents] as the new officers of the USTFU. The same was,
however, (sic) nullified by the Supreme Court, on November 16, 1999.
However, as the term of office of the [respondents] had expired, on October
4, 1999, there is nothing to nullify anymore. By virtue of an election, held on
January 14, 2000, the [respondents] were elected as the new officers of the
Union, which election was not contested by the Petitioners or any other group
in the union.
xxxx
We are thus faced with a situation where one set of officers claim to be the
legitimate and incumbent officers of the Union, pursuant to the CBL of the
Union, and another set of officers who claim to have been elected by the
members of the faculty of the Union thru an election alleged to have been
supervised by the DOLE which situation partakes of and is akin to the nature
of an intra-union dispute[.] x x x.
Undeniably, the CBL gives the Board of Officers the right to create and
appoint members of the Comelec. However, the CBL has no application to a
situation where there are two (2) sets of officers, one set claiming to be the
legitimate incumbent officers holding over to their positions who have not
exercised their powers and functions therefor and another claiming to have
been elected in an election supervised by the DOLE and, at the same time,
exercising the powers and functions appended to their positions. In such a
case, the BLR, which has jurisdiction over the intra-union dispute, can
validly order the immediate conduct of election of officers, otherwise,
internecine disputes and blame-throwing will derail an orderly and fair
election. Indeed, Section 1(b), [Rule XV], Book V of the Implementing Rules
and Regulations of the Labor Code, as amended, by Department Order No.
09, Series of 1997,[39] provides that, in the absence of any agreement among
the members or any provision in the constitution and by-laws of the labor
organization, in an election ordered by the Regional Director, the chairman
of the committee shall be a representative of the Labor Relations Division of
the Regional Office[.][40]
Ultimately, the Court of Appeals decreed:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is denied due
course and is hereby DISMISSED.[41]
Petitioners moved for reconsideration[42] of the Decision dated 16 March
2001 of the Court of Appeals, but it was denied by the said court in its
Resolution[43] dated 30 August 2001.
Petitioners elevated the case to this Court via the instant Petition, invoking
the following assignment of errors:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED SERIOUS ERROR AND GRAVELY ABUSED ITS
DISCRETION WHEN IT UPHELD THE APPLICATION BY THE
HONORABLE DIRECTOR OF THE BUREAU OF LABOR RELATIONS
OF THE PROVISIONS OF REPUBLIC ACT NO. 6728 TO THE P42
MILLION CBA PACKAGE OF ECONOMIC BENEFITS OBTAINED BY
THE UST FACULTY UNION FROM THE UNIVERSITY OF SANTO
TOMAS.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED SERIOUS ERROR AND GRAVELY ABUSED ITS
DISCRETION WHEN IT DISALLOWED THE LUMP-SUM CHECK-OFF
AMOUNTING TO P4.2 MILLION BY RULING THAT THE P42
MILLION CBA ECONOMIC PACKAGE OBTAINED BY THE UST
FACULTY UNION WAS MERELY AN ALLOCATION OF THE
SEVENTY PER CENT (70%) OF THE TUITION INCREASES
AUTHORIZED BY LAW AND THE DEPARTMENT OF EDUCATION,
CULTURE AND SPORTS.
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED SERIOUS ERROR AND GRAVELY ABUSED ITS
DISCRETION WHEN IT DISREGARDED THE PROVISIONS ON
ELECTION OF UNION OFFICERS IN THE CONSTITUTION AND BY-
LAWS OF THE UST FACULTY UNION AND INSTEAD UPHELD THE
DIRECTIVE OF THE HONORABLE DIRECTOR OF THE BUREAU OF
LABOR RELATIONS TO CONDUCT THE ELECTION OF UNION
OFFICERS UNDER THE CONTROL AND SUPERVISION OF THE
REGIONAL DIRECTOR FOR THE NATIONAL CAPITAL REGION OF
THE DEPARTMENT OF LABOR AND EMPLOYMENT.
Essentially, in order to arrive at a final disposition of the instant case, this
Court is tasked to determine the following: (1) the nature of the P42 million
economic benefits package granted by UST to USTFU; (2) the legality of the
10% check-off collected by the Mariño Group from the P42 million
economic benefits package; and (3) the validity of the BLR order for USTFU
to conduct election of union officers under the control and supervision of the
DOLE-NCR Regional Director.
II
RULING
(1) The P42 million economic benefits package
Petitioners argue that the P42 million economic benefits package granted to
the covered faculty members were additional benefits, which resulted from a
long and arduous process of negotiations between the Mariño Group and
UST. The BLR and the Court of Appeals were in error for considering the
said amount as purely sourced from the allocation by UST of 70% percent of
the incremental proceeds of tuition fee increases, in accordance with
Republic Act No. 6728. Said law was improperly applied as a general law
that decrees the allocation by all private schools of 70% of their tuition fee
increases to the payment of salaries, wages, allowances and other benefits of
their teaching & non-teaching personnel. It is clear from the title of the law
itself that it only covers government assistance to students and teachers in
private education. Section 5 of Republic Act No. 6728 unequivocally limits
the scope of the law to tuition fee supplements and subsidies extended by the
Government to students in private high schools. Thus, the petitioners
maintain that Republic Act No. 6728 has no application to the MOA executed
on 10 September 1992 between UST and USTFU, through the efforts of the
Mariño Group.
The Court disagrees with petitioners' stance.
The provisions of Republic Act No. 6728 were not arbitrarily applied by the
DOLE-NCR Regional Director, the BLR, or the Court of Appeals to the P42
million economic benefits package granted by UST to USTFU, considering
that the parties themselves stipulated in Section 7 of the MOA they signed
on 10 September 1992 that:
7.0. It is clearly understood and agreed upon that the aggregate sum of P42
million is chargeable against the share of the faculty members in the
incremental proceeds of tuition fees collected and still to be collected[;]
Provided, however, that he (sic) commitment of the UNIVERSITY to pay
the aggregate sum of P42 million shall subsist even if the said amount
exceeds the proportionate share that may accrue to the faculty members in
the tuition fee increases that the UNIVERSITY may be authorized to collect
in School-Year 1992-1993, and, Provided, finally, that the covered faculty
members shall still be entitled to their proportionate share in any
undistributed portion of the incremental proceeds of the tuition fee increases
in School-Year 1992-1993, and which incremental proceeds are, by law and
pertinent Department of Education Culture and Sports (DECS) regulations,
required to be allotted for the payment of salaries, wages, allowances and
other benefits of teaching and non-teaching personnel for the
UNIVERSITY.[44] (Emphases supplied.)
The "law" in the aforequoted Section 7 of the MOA can only refer to
Republic Act No. 6728, otherwise known as the "Government Assistance to
Students and Teachers in Private Education Act." Republic Act No. 6728 was
enacted in view of the declared policy of the State, in conformity with the
mandate of the Constitution, to promote and make quality education
accessible to all Filipino citizens, as well as the recognition of the State of
the complementary roles of public and private educational institutions in the
educational system and the invaluable contribution that the private schools
have made and will make to education.[45] The said statute primarily grants
various forms of financial aid to private educational institutions such as
tuition fee supplements, assistance funds, and scholarship grants.[46]
One such form of financial aid is provided under Section 5 of Republic Act
No. 6728, which states:
SEC. 5. Tuition Fee Supplement for Student in Private High School. -
(1) Financial assistance for tuition for students in private high schools shall
be provided by the government through a voucher system in the following
manner:
(a) For students enrolled in schools charging less than one thousand five
hundred pesos (P1,500) per year in tuition and other fees during school year
1988-89 or such amount in subsequent years as may be determined from time
to time by the State Assistance Council: The Government shall provide them
with a voucher equal to two hundred ninety pesos P290.00: Provided, That
the student pays in the 1989-1990 school year, tuition and other fees equal to
the tuition and other fees paid during the preceding academic year: Provided,
further, That the Government shall reimburse the vouchers from the schools
concerned within sixty (60) days from the close of the registration period:
Provided, furthermore, That the student's family resides in the same city or
province in which the high school is located unless the student has been
enrolled in that school during the previous academic year.
(b) For students enrolled in schools charging above one thousand five
hundred pesos (P1,500) per year in tuition and other fees during the school
year 1988-1989 or such amount in subsequent years as may be determined
from time to time by the State Assistance Council, no assistance for tuition
fees shall be granted by the Government:Provided, however, That the schools
concerned may raise their tuition fee subject to Section 10 hereof.
(2) Assistance under paragraph (1), subparagraphs (a) and (b) shall be
granted and tuition fees under subparagraph (c) may be increased, on the
condition that seventy percent (70%) of the amount subsidized, allotted for
tuition fee or of the tuition fee increases shall go to the payment of salaries,
wages, allowances and other benefits of teaching and non-teaching personnel
except administrators who are principal stockholders of the school, and may
be used to cover increases as provided for in the collective bargaining
agreements existing or in force at the time when this Act is approved and
made effective:Provided, That government subsidies are not used directly for
salaries of teachers of nonsecular subjects. At least twenty percent (20%)
shall go to the improvement or modernization of buildings, equipment,
libraries, laboratories, gymnasia and similar facilities and to the payment of
other costs of operation. For this purpose, schools shall maintain a separate
record of accounts for all assistance received from the government, any
tuition fee increase, and the detailed disposition and use thereof, which
record shall be made available for periodic inspection as may be determined
by the State Assistance Council, during business hours, by the faculty, the
non-teaching personnel, students of the school concerned, and Department
of Education, Culture and Sports and other concerned government agencies.
(Emphases ours.)
Although Section 5 of Republic Act No. 6728 does speak of government
assistance to students in private high schools, it is not limited to the same.
Contrary to petitioners' puerile claim, Section 5 likewise grants an
unmistakable authority to private high schools to increase their tuition fees,
subject to the condition that seventy (70%) percent of the tuition fee increases
shall go to the payment of the salaries, wages, allowances, and other benefits
of their teaching and non-teaching personnel. The said allocation may also
be used to cover increases in the salaries, wages, allowances, and other
benefits of school employees as provided for in the CBAs existing or in force
at the time when Republic Act No. 6728 was approved and made effective.
Contrary to petitioners' argument, the right of private schools to increase their
tuition fee -- with their corresponding obligation to allocate 70% of said
increase to the payment of the salaries, wages, allowances, and other benefits
of their employees -- is not limited to private high schools. Section 9[47] of
Republic Act No. 6728, on "Further Assistance to Students in Private
Colleges and Universities," is crystal clear in providing that:
d) Government assistance and tuition increases as described in this Section
shall be governed by the same conditions as provided under Section 5 (2).
Indeed, a private educational institution under Republic Act No. 6728 still
has the discretion on the disposition of 70% of the tuition fee increase. It
enjoys the privilege of determining how much increase in salaries to grant
and the kind and amount of allowances and other benefits to give. The only
precondition is that 70% percent of the incremental tuition fee increase goes
to the payment of salaries, wages, allowances and other benefits of teaching
and non-teaching personnel.[48]
In this case, UST and USTFU stipulated in their 10 September 1992 MOA
that the P42 million economic benefits package granted by UST to the
members of the collective bargaining unit represented by USTFU, was
chargeable against the 70% allotment from the proceeds of the tuition fee
increases collected and still to be collected by UST. As observed by the
DOLE-NCR Regional Director, and affirmed by both the BLR and the Court
of Appeals, there is no showing that any portion of the P42 million economic
benefits package was derived from sources other than the 70% allotment
from tuition fee increases of UST.
Given the lack of evidence to the contrary, it can be conclusively presumed
that the entire P42 million economic benefits package extended to USTFU
came from the 70% allotment from tuition fee increases of UST. Preceding
from this presumption, any deduction from the P42 million economic
benefits package, such as the P4.2 million claimed by the Mariño Group as
attorney's/agency fees, should not be allowed, because it would ultimately
result in the reduction of the statutorily mandated 70% allotment from the
tuition fee increases of UST.
The other reasons for disallowing the P4.2 million attorney's/agency fees
collected by the Mariño Group from the P42 million economic benefits
package are discussed in the immediately succeeding paragraphs.
(2) The P4.2 Million Check-off
Petitioners contend that the P4.2 million check-off, from the P42 million
economic benefits package, was lawfully made since the requirements of
Article 222(b) of the Labor Code, as amended, were complied with by the
Mariño Group. The individual paychecks of the covered faculty employees
were not reduced and the P4.2 million deducted from the P42 million
economic benefits package became union funds, which were then used to pay
attorney's fees, negotiation fees, and similar charges arising from the CBA.
In addition, the P4.2 million constituted a special assessment upon the
USTFU members, the requirements for which were properly observed. The
special assessment was authorized in writing by the general membership of
USTFU during a meeting in which it was included as an item in the agenda.
Petitioners fault the Court of Appeals for disregarding the authorization of
the special assessment by USTFU members. There is no law that prohibits
the insertion of a written authorization for the special assessment in the same
instrument for the ratification of the 10 September 1992 MOA. Neither is
there a law prescribing a particular form that needs to be accomplished for
the authorization of the special assessment. The faculty members who signed
the ratification of the MOA, which included the authorization for the special
assessment, have high educational attainment, and there is ample reason to
believe that they affixed their signatures thereto with full comprehension of
what they were doing.
Again, the Court is not persuaded.
The pertinent legal provisions on a check-off are found in Articles 222(b)
and 241(n) and (o) of the Labor Code, as amended.
Article 222(b) states:
(b) No attorney's fees, negotiation fees or similar charges of any kind arising
from any collective bargaining negotiations or conclusion of the collective
agreement shall be imposed on any individual member of the contracting
union: Provided, however, that attorney's fees may be charged against unions
funds in an amount to be agreed upon by the parties. Any contract, agreement
or arrangement of any sort to the contrary shall be null and void.
Article 241(n) reads:
(n) No special assessment or other extraordinary fees may be levied upon the
members of a labor organization unless authorized by a written resolution of
a majority of all the members at a general membership meeting duly called
for the purpose. The secretary of the organization shall record the minutes of
the meeting including the list of all members present, the votes cast, the
purpose of the special assessment or fees and the recipient of such assessment
or fees. The record shall be attested to by the president.
And Article 241(o) provides:
(o) Other than for mandatory activities under the Code, no special
assessments, attorney's fees, negotiation fees or any other extraordinary fees
may be checked off from any amount due to an employee without an
individual written authorization duly signed by the employee. The
authorization should specifically state the amount, purpose and beneficiary
of the deduction.
Article 222(b) of the Labor Code, as amended, prohibits the payment of
attorney's fees only when it is effected through forced contributions from the
employees from their own funds as distinguished from union funds.[49]
Hence, the general rule is that attorney's fees, negotiation fees, and other
similar charges may only be collected from union funds, not from the
amounts that pertain to individual union members. As an exception to the
general rule, special assessments or other extraordinary fees may be levied
upon or checked off from any amount due an employee for as long as there
is proper authorization by the employee.

A check-off is a process or device whereby the employer, on agreement with
the Union, recognized as the proper bargaining representative, or on prior
authorization from the employees, deducts union dues or agency fees from
the latter's wages and remits them directly to the Union. Its desirability in a
labor organization is quite evident. The Union is assured thereby of
continuous funding. As this Court has acknowledged, the system of check-
off is primarily for the benefit of the Union and, only indirectly, for the
individual employees.[50]
The Court finds that, in the instant case, the P42 million economic benefits
package granted by UST did not constitute union funds from whence the P4.2
million could have been validly deducted as attorney's fees. The P42 million
economic benefits package was not intended for the USTFU coffers, but for
all the members of the bargaining unit USTFU represented, whether
members or non-members of the union. A close reading of the terms of the
MOA reveals that after the satisfaction of the outstanding obligations of UST
under the 1986 CBA, the balance of the P42 million was to be distributed to
the covered faculty members of the collective bargaining unit in the form of
salary increases, returns on paycheck deductions; and increases in
hospitalization, educational, and retirement benefits, and other economic
benefits. The deduction of the P4.2 million, as alleged attorney's/agency fees,
from the P42 million economic benefits package effectively decreased the
share from said package accruing to each member of the collective
bargaining unit.
Petitioners' line of argument - that the amount of P4.2 million became union
funds after its deduction from the P42 million economic benefits package
and, thus, could already be used to pay attorney's fees, negotiation fees, or
similar charges from the CBA - is absurd. Petitioners' reasoning is evidently
flawed since the attorney's fees may only be paid from union funds; yet the
amount to be used in paying for the same does not become union funds until
it is actually deducted as attorney's fees from the benefits awarded to the
employees. It is just a roundabout argument. What the law requires is that the
funds be already deemed union funds even before the attorney's fees are
deducted or paid therefrom; it does not become union funds after the
deduction or payment. To rule otherwise will also render the general
prohibition stated in Article 222(b) nugatory, because all that the union needs
to do is to deduct from the total benefits awarded to the employees the
amount intended for attorney's fees and, thus, "convert" the latter to union
funds, which could then be used to pay for the said attorney's fees.
The Court further determines that the requisites for a valid levy and check-
off of special assessments, laid down by Article 241(n) and (o), respectively,
of the Labor Code, as amended, have not been complied with in the case at
bar. To recall, these requisites are: (1) an authorization by a written resolution
of the majority of all the union members at the general membership meeting
duly called for the purpose; (2) secretary's record of the minutes of the
meeting; and (3) individual written authorization for check-off duly signed
by the employee concerned.[51]
Additionally, Section 5, Rule X of the USTFU Constitution and By-Laws
mandates that:
Section 5. Special assessments or other extraordinary fees such as for
payment of attorney's fees shall be made only upon a resolution duly ratified
by the general membership by secret balloting.
In an attempt to comply with the foregoing requirements, the Mariño Group
caused the majority of the general membership of USTFU to individually
sign a document, which embodied the ratification of the MOA between UST
and USTFU, dated 10 September 1992, as well as the authorization for the
check-off of P4.2 million, from the P42 million economic benefits package,
as payment for attorney's fees. As held by the Court of Appeals, however, the
said documents constitute unsatisfactory compliance with the requisites set
forth in the Labor Code, as amended, and in the USTFU Constitution and
By-Laws, even though individually signed by a majority of USTFU
members.
The inclusion of the authorization for a check-off of union dues and special
assessments for the Labor Education Fund and attorney's fees, in the same
document for the ratification of the 10 September 1992 MOA granting the
P42 million economic benefits package, necessarily vitiated the consent of
USTFU members. For sure, it is fairly reasonable to assume that no
individual member of USTFU would casually turn down the substantial and
lucrative award of P42 million in economic benefits under the MOA.
However, there was no way for any individual union member to separate his
or her consent to the ratification of the MOA from his or her authorization of
the check-off of union dues and special assessments. As it were, the
ratification of the MOA carried with it the automatic authorization of the
check-off of union dues and special assessments in favor of the union. Such
a situation militated against the legitimacy of the authorization for the P4.2
million check-off by a majority of USTFU membership. Although the law
does not prescribe a particular form for the written authorization for the levy
or check-off of special assessments, the authorization must, at the very least,
embody the genuine consent of the union member.
The failure of the Mariño Group to strictly comply with the requirements set
forth by the Labor Code, as amended, and the USTFU Constitution and By-
Laws, invalidates the questioned special assessment. Substantial compliance
is not enough in view of the fact that the special assessment will diminish the
compensation of the union members. Their express consent is required, and
this consent must be obtained in accordance with the steps outlined by law,
which must be followed to the letter. No shortcuts are allowed.[52]
Viewed in this light, the Court does not hesitate to declare as illegal the
check-off of P4.2 million, from the P42 million economic benefits package,
for union dues and special assessments for the Labor Education Fund and
attorney's fees. Said amount rightfully belongs to and should be returned by
petitioners to the intended beneficiaries thereof, i.e., members of the
collective bargaining unit, whether or not members of USTFU. This directive
is without prejudice to the right of petitioners to seek reimbursement from
the other USTFU officers and directors, who were part of the Mariño Group,
and who were equally responsible for the illegal check-off of the aforesaid
amount.
(3) Election of new officers
Having been overtaken by subsequent events, the Court need no longer pass
upon the issue of the validity of the order of BLR for USTFU to conduct its
long overdue election of union officers, under the control and supervision of
the DOLE-NCR Regional Director.
The BLR issued such an order since USTFU then had two groups, namely,
the Mariño Group and the Gamilla Group, each claiming to be the legitimate
officers of USTFU.
The DOLE-NCR Regional Director, in his Decision dated 27 May 1999,
decreed that the Mariño Group be expelled from their positions as USTFU
officers. But then, the BLR, in its Decision promulgated on 9 March 2000,
declared that the change of officers could best be decided, not by expulsion,
but by the general membership of the union through the conduct of election,
under the control and supervision of the DOLE-NCR Regional Director. In
its assailed Decision dated 16 March 2001, the Court of Appeals agreed with
the BLR judgment in its ruling that the conduct of an election, under the
control and supervision of the DOLE-NCR Regional Director, is necessary
to settle the question of who, as between the officers of the Mariño Group
and of the Gamilla Group, are the legitimate officers of the USTFU.
The Court points out, however, that neither the Decision of the BLR nor of
the Court of Appeals took into account the fact that an election of USTFU
officers was already conducted on 14 January 2000, which was won by the
Gamilla Group. There is nothing in the records to show that the said election
was contested or made the subject of litigation. The Gamilla Group had
exercised their powers as USTFU officers during their elected term. Since
the term of union officers under the USTFU Constitution and By-Laws was
only for three years, then the term of the Gamilla Group already expired in
2003. It is already beyond the jurisdiction of this Court, in the present
Petition, to still look into the subsequent elections of union officers held after
2003.
The election of the Gamilla Group as union officers in 2000 should have
already been recognized by the BLR and the Court of Appeals. The order for
USTFU to conduct another election was only a superfluity. The issue of who
between the officers of the Mariño Group and of the Gamilla Group are the
legitimate USTFU officers has been rendered moot by the succeeding events
in the case.
WHEREFORE, premises considered, the Petition for Review under Rule 45
of the Rules of Court is hereby DENIED. The Decision dated 16 March 2001
and the Resolution dated 30 August 2001 of the Court of Appeals in CA-
G.R. SP No. 60657, are hereby AFFIRMED WITH MODIFICATIONS.
Petitioners are hereby ORDERED to reimburse, jointly and severally, to the
faculty members of the University of Sto. Tomas, belonging to the collective
bargaining unit, the amount of P4.2 million checked-off as union dues and
special assessments for the Labor Education Fund and attorney's fees, with
legal interest of 6% per annum from 15 December 1994, until the finality of
this decision. The order for the conduct of election for the officers of the
University of Sto. Tomas Faculty Union, under the control and supervision
of the Regional Director of the Department of Labor and Employment-
National Capital Region, is hereby DELETED. No costs.

SO ORDERED.
VENGCO vs. TRAJANO
G.R. No. 74453 | 1989-05-05
MEDIALDEA, J.:
This is a petition for certiorari which seeks to annul: (1) the Order of
respondent Director of the Bureau of Labor Relations dated May 23, 1983 in
BLR Case No. A-0179-82 entitled "Ambrocio Vengco, et al. vs. Emmanuel
Timbungco" setting aside the decision dated December 29, 1982; and (2) the
Order dated April 2, 1986 denying the motion for reconsideration of the
Order dated May 23, 1983.
The antecedent facts are as follows:
Sometime in the latter part of 1981, the Management of the Anglo-American
Tobacco Corporation and the Kapisanan ng Manggagawa sa Anglo-
American Tobacco Corporation. (FOI-TAF) entered into a compromise
agreement whereby the company will pay to the union members the sum of
P150,000.00 for their claims arising from the unpaid emergency cost of
living allowance (ECOLA) and other benefits which were the subject of their
compliant before the Ministry of Labor. Respondent Emmanuel Timbungco
(Timbungco, for short) who is the union president received the money which
was paid in installments. Thereafter, he distributed the amount among the
union members. Petitioners Ambrocio Vengco, Ramon Moises, Rafael
Wagas and 80 others (Vengco, et al., for short) who are union members noted
that Timbungco was not authorized by the union workers to get the money;
and that ten percent (10%) of the P150,000.00 had been deducted to pay for
attorney's fees without their written authorization in violation of Article
242(o) of the Labor Code. So, they demanded from Timbungco an
accounting of how the P150,000.00 was distributed to the members.
Timbungco did not give in to their demand. Thus Vengco, et al. filed a
complaint with the Ministry of Labor praying for: "(1) the expulsion of
Emmanuel Timbungco as president of the union for violation of (the) union
constitution and by-laws and the rights and conditions of union members
under the Labor Code; (2) an order to require Timbungco to render an
accounting of how the P150,000.00 was distributed; and (3) an order to
require private respondent to publish in the bulletin board the list of the
members and the corresponding amount they each received from the
P150,000.00." (Memorandum for Petitioners, p. 150, Rollo).
In his answer with counterclaim, Timbungco alleged among others, that he
was authorized by a resolution signed by the majority of the union members
to receive and distribute the P150,000.00 among the workers; that the
computation of the benefits was based on the payroll of the company; that
the ten percent (10%) attorney's fees was in relation to the claim of the local
union for payment of emergency cost of living allowance before the Ministry
of Labor which is totally distinct and separate from the negotiation of the
CBA; and that the ten percent (10%) deduction was in accordance with
Section II, Rule No. VIII, Book No. III of the Rules and Regulations
implementing the Labor Code and therefore, no authorization from the union
members is required.
On July 19, 1982, Med-Arbiter Willie B. Rodriguez issued an Order
dismissing the complaint for lack of merit. (p. 33, Rollo)
Vengco, et al. appealed the aforesaid order to the Bureau of Labor Relations.
On December 29, 1982, respondent Director of the Bureau of Labor
Relations Cresenciano B. Trajano (Trajano, for short) rendered a decision,
the dispositive portion of which states:
"Wherefore, premises considered, the instant appeal is hereby granted and
the Med-Arbiter's Order dated 19 July 1982 hereby set aside. Accordingly,
respondent Emmanuel Timbungco is hereby ordered to render a full
accounting of the One Hundred Fifty Thousand Pesos (P150,000.00) he
received from the management of Anglo-American Tobacco Corporation in
behalf of the members of the Kapisanan ng mga Manggagawa sa Associated
Anglo-American Tobacco Corporation (FOITAF) and to publish in the
union's bulletin board the list of all recipient union members and the
respective amounts they have received, within ten (10) days from receipt
hereof. Further, respondent is hereby expelled as president of the Kapisanan
ng Manggagawa sa Anglo American Tobacco Corporation (FOITAF).
Lastly, the counterclaim interposed by the respondent's counsel, Atty.
Benjamin Sebastian is hereby ordered dismissed.
So decided." (p. 50, Rollo.)
Timbungco filed a motion for reconsideration of the above-quoted decision
while Vengco, et al. filed their opposition to the said motion.
On May 23, 1983, Officer-in-Charge Victoriano R. Calaycay issued an Order
which held, thus:
"Wherefore, premises considered, our resolution dated 29 December 1982 is
hereby set aside. However, an audit examination of the Books of Account of
Kapisanan ng Manggagawa sa Associated Anglo-American Tobacco
Corporation (FOITAF) is hereby ordered.
SO RESOLVED." (p. 62, Rollo)
Vengco, et al, sought reconsideration of the aforementioned order. They
contended that the examination of the books of accounts of the union is
irrelevant considering that the issue involved in the case does not consist of
union funds but back pay received by the union members from the company.
Likewise, they pointed out that Timbungco did not give the money to the
union treasurer and consequently, the amount was not entered in the records
of the union.
On April 2, 1986, Trajano issued an order which affirmed the resolution of
May 23, 1983 and denied the motion for reconsideration for lack of merit. (p.
58, Rollo)
Hence, the present recourse by Vengco, et al.
The issues raised in this case are as follows:
(1) Whether or not Timbungco is guilty of illegally deducting 10% attorneys'
fees from petitioners' backwages; and
(2) Whether or not Trajano gravely abused his discretion amounting to lack
of jurisdiction in ordering examination of union books instead of affirming
his previous Order expelling Timbungco from the union and ordering him to
render an accounting of P150,000.00 received by him. (p. 151, Rollo)
In the resolution of June 4, 1986, We required the respondents to comment
on the petition.
In his comment, Timbungco reiterates the defenses he raised in his answer to
the complaint filed against him before the Med-Arbiter. In addition, he
claims that he already filed an accounting report on the P150,000.00 with the
Bureau of Labor Relations which enumerated the names of the workers and
the corresponding amounts they received with their respective signatures
opposite their names, the sub-total of the amount of benefits received per
department and the grand total of the amount distributed duly certified by the
Union Treasurer and Secretary and duly noted by Timbungco as Union
President. (p. 73, Rollo)
The Solicitor General, in his comment, agrees with Vengco, et al. and
recommends that the petition be given due course. (p. 100, Rollo)
Timbungco filed a reply to the aforesaid comment of the Solicitor General
which restates the arguments raised in his comment. (p. 121, Rollo)
The petition is meritorious.
Article 241(o) of the Labor Code provides:
"ART. 241. Rights and conditions of membership in a labor organization.
The following are the rights and conditions of membership in a labor
organization.
xxx xxx xxx
"(o) Other than for mandatory activities under the Code, no special
assessment, attorney's fees, negotiation fees or any other extraordinary fees
may be checked off from any amount due an employee without an individual
written authorization duly signed by an employee. The authorization should
specifically state the amount, purpose and beneficiary of the deduction.
xxx xxx xxx
It is very clear from the above-quoted provision that attorney's fees may not
be deducted or checked off from any amount due to an employee without his
written consent except for mandatory activities under the Code. A mandatory
activity has been defined as a judicial process of settling dispute laid down
by the law. (Carlos P. Galvadores, et al. vs. Cresenciano B. Trajano, Director
of the Bureau of Labor Relations, et al., G.R. No. L-70067, September 15,
1986, 144 SCRA 138). In the instant case, the amicable settlement entered
into by the management and the union can not be considered as a mandatory
activity under the Code. It is true that the union filed a claim for emergency
cost of living allowance and other benefits before the Ministry of Labor. But
this case never reached its conclusion in view of the parties' agreement. It is
not also shown from the records that Atty. Benjamin Sebastian was
instrumental in forging the said agreement on behalf of the union members.
Timbungco maintains that the "Kapasiyahan" gave him the authority to make
the deduction. This contention is unfounded. Contrary to his claim, the
undated "Kapasiyahan" or resolution did not confer upon him the power to
deduct 10% of the P150,000.00 despite the alleged approval of the majority
of the union workers. A reading of the said resolution (p. 75, Rollo) yields
the same conclusion arrived at by Trajano who declared it defective. We
quote with approval Trajano's findings on this point:
In view of the foregoing, We hold that the Orders dated May 23, 1983 and
April 2, 1986 were issued with grave abuse of discretion. The herein
controversy involves the propriety of the 10% deduction from the fringe
benefits of the union workers which they received from the management in
settlement of their claims. Such issue does not touch on union dues or funds.
Besides, the sum of P150,000.00 was not entered into the records of the
Union since, as earlier stated, the money was not turned over by Timbungco
to the Union Treasurer. Consequently, the said Orders have no basis.
ACCORDINGLY, the petition is granted. The assailed Orders dated May 23,
1983 of Officer-in-Charge Victoriano R. Calaycay of the Bureau of Labor
Relations, and April 2, 1986 of respondent Director Cresenciano B. Trajano
of the same Bureau are REVERSED and SET ASIDE and the latter's decision
dated December 29, 1982 is hereby reinstated. No costs.
SO ORDERED.

"Further, a cursory examination of the alleged resolution shows that it is quite

defective. Not only that it is not dated but also that, with the exception of the
first page, the remaining pages were not captioned and did not state the very
purpose for which it was prepared. Thus, the alleged signatories were not
properly apprised thereof. There is, therefore, truth in complainant's
contention that they never authorized, more so, they had no knowledge of the
deduction of 10% attorney's fees until it was actually effected. Consequently,
the deduction was not valid." (p. 45, Rollo)

Moreover, the law is explicit. It requires the individual written authorization

of each employee concerned, to make the deduction of attorney's fees valid.

Likewise, We find that the other "Kapasiyahan" dated September 18, 1981
submitted by Timbungco belied his claim that he was authorized by the union
workers to receive the sum of P150,000.00 on their behalf. The pertinent
portion of the said "Kapasiyahan" provides:

"3. Na sa dahilang hindi bigla ang pagbabayad sa nasabing "CLAIM" bukod

pa sa marami kaming naghati-hati sa nasabing halaga ipinapasiya naming na
kusang-loob na kunin ang aming bahagi sa aming kapisanan sa unang linggo
ng Disyembre, 1981 at ito'y ipinaalam namin sa Pangulo ng Kapisanan na si
Ginoong Emmanuel Timbungco." (p. 47, Rollo)

The above-quoted statement merely indicated the intention of the workers to

get their claim on the first week of December, 1981 and to inform Timbungco
of their intention. Clearly, this statement can not be construed to confer upon
Timbungco the authority to receive the fringe benefits for the workers.
Absent such authority, Timbungco should not have kept the money to himself
but should have turned it over to the Union Treasurer. He, therefore,
exceeded his authority as President of the Union.

Moreover, Book III, Rule VIII, Section II of the Implementing Rules cited
by Timbungco which dispenses with the required written authorization from
the employees concerned does not apply in this case. This provision
envisions a situation where there is a judicial or administrative proceedings
for recovery of wages. Upon termination of the proceedings, the law allows
a deduction for attorney's fees of 10% from the total amount due to a winning
party. In the herein case, the fringe benefits received by the union members
consist of back payments of their unpaid emergency cost of living allowances
which are totally distinct from their wages. Allowances are benefits over and
above the basic salaries of the employees (University of Pangasinan Faculty
Union vs. University of Pangasinan, G.R. No. L-63122, February 20, 1984,
127 SCRA 691). We have held that such allowances are excluded from the
concept of salaries or wages (Cebu Institute of Technology (CIT) vs. Ople,
G.R. No. L-58870, December 18, 1987, 156 SCRA 629). In addition, the
payment of the fringe benefits were effected through an amicable settlement
and not in an administrative proceeding.

The submission by Timbungco of an accounting report on the distribution of

P150,000.00 is of no moment in the face of our findings that the deduction
of 10% for attorney's fees is illegal and void for failure to comply with the
requirements of the law.

Considering the aforestated violations of Timbungco, there can be no

question that he should bear the consequences of his acts. We find that the
penalty of expulsion from the union presidency imposed upon Timbungco is
justified.
GALVADORES vs. TRAJANO
G.R. No. 70067 September 15, 1986
MELENCIO-HERRERA, J.:
Petitioner employees of the Philippine Long Distance Telephone Company
(PLDT) and members of respondent Free Telephone Workers Union, now
the Manggagawa ng Komunikasyon sa Pilipinas (simply referred to
hereinafter as the Union), question the legality of the check-off for attorney's
fees amounting to P1M, more or less, of respondent Atty. Jose C. Espinas
(hereinafter referred to as "Respondent Counsel") from the monetary benefits
awarded to PLDT employees in a deadlocked collective bargaining
agreement negotiations between the PLDT and the Union.
The case stemmed from the following facts:
Respondent Counsel has been the legal counsel of respondent Union since
1964. For his services, he was hired on a case to case contingent fee basis.
On September 7, 1983, he received a letter from the Union President reading:
The Free Telephone Workers Union once again request you to appear as
counsel in the on going labor dispute at PLDT. In consideration of your
services therein, the union binds itself to compensate you for your fees and
expenses therein on a contingent basis. The amount shall be 10% of any
improvement, with retroactive effect, of the PLDT's last offer to the deadlock
in CBA negotiations which we know will result in a compulsory arbitration.
A supporting board resolution will later confirm the letter. 1
PLDT's "last offer" referred to on the wage increases was: P230 for the first
year of the proposed CBA; P100 for the second year; and P90 for the third
year. 2
On September 9, 1983, the Minister of Labor and Employment assumed
jurisdiction over all unresolved issues in the bargaining deadlock between
PLDT and the Union and proceeded to resolve the same by compulsory
arbitration.
On October 23, 1983, the Minister of Labor awarded across-the-board wage
increases of P 330/month effective November 9, 1982; P155/month effective
November 9, 1983, and P155/month effective November 9, 1984, in addition
to the Christmas bonus of 1/2 month pay per employee effective December,
1983, and other fringe benefits. As will be noted, there were improvements
obtained from PLDT's "last offer."
On October 29, 1983, the Executive Board of the Union passed a resolution
requesting PLDT to deduct P115.00 per employee for the legal services
extended to the Union by respondent Counsel.
On November 2, 1983, petitioners initially numbering 600 and finally 5,258,
filed a letter-complaint before the MOLE through their authorized
representative, petitioner Carlos Galvadores assailing the imposition of
P130.00 (later corrected to P155.00) per employee as attorney's fees of
respondents counsel. Annexed to the complaint were the written statements
of the employee authorizing Galvadores to act for and in their behalf.
Petitioners took the position that the attorney's fees of respondent counsel
were not only unreasonable but also violative of Article 242(o) of the Labor
Code; and that he deductions cannot given legal effect by a mere Board
resolution but needs the ratification by the general membership of the Union.
Respondents Union and Counsel, on the other hand, proferred the argument
that the attorney s fees being exacted pertained to his services during
compulsory arbitration proceedings and cannot be considered as negotiation
fees or attorney's fees within the context of Article 242(o) of the Labor Code
and that contrary to petitioners' claim that Respondent Counsel surfaced only
as lawyer of the Union when the employees themselves engaged in mass
action to force a solution to the deadlock in their negotiations, he appeared
continuously from September 8, 1983 until the decision in the case was
rendered on October 23, 1983. Petitioners proposed a solution offering to pay
P10.00 per employee, but Respondent Counsel refused.
In the meantime, on November 4, 1983, PLDT filed notice that assessment
had been withheld from the differential pay due petitioners but that the same
would not be turned over to the Union without prior MOLE authority so as
not to involve management in the intra-union disagreement.
February 13, 1984, the Minister of Labor referred the dispute to the Bureau
of Labor Relations for being intra-union nature. Several hearings were held
by that Bureau.
On March 22, 1984, the Union filed a Manifestation to the effect that about
6,067 members of the Union ratified the October 29, 1983 resolution of the
legislative council in a plebiscite called for that purpose. On the basis thereof,
Counsel moved for the payment of his legal fees under the September 7, 1983
contract.
Petitioners questioned the plebiscite on the ground that Question No. 2,
which reads:
Question No. 2. Do you approve of the use of P1 million (P500,000.00 to be
withdrawn from PECCI and another P500,000.00 from IBAA) from our CBA
negotiation fund together with the attorney's fees (P1 million) that was
collected and to be loaned to the MKP/FTWU as our counterpart of the seed
money to start the housing program as agreed by the PLDT management and
our union panel and included in the award of the MOLE?
was misleading and deceptive as it assumed that there was no dispute
regarding the deduction of attorney's fees from the monetary benefits
awarded to PLDT employees.
On February 18, 1985, respondent Director of the Bureau of Labor Relations
dismissed petitioners' complaint for lack of merit reasoning that "the outcome
of the plebiscite negates any further question on the right of the union counsel
to collect the amount of P115 from each of the employees involved."
It is this Decision that is assailed by petitioners principally on the ground that
the individual written authorization of an the employees must first be
obtained before any assessment can be made against the monetary benefits
awarded to them pursuant to Article 242(o) of the Labor Code; and that
assuming that Respondent Counsel is entitled to attorney's fees, the same
should be taken from Union funds.
In their Comment, respondents Union and Counsel argue that compulsory
arbitration is a "mandatory activity" and an exception to Article 242(o) of the
Labor Code, and that the Union members approved the questioned deduction
in the plebiscite of January, 1984, under the condition that P lM of the same
would be made available for the Union's housing project.
In his Comment, the Solicitor General agrees with petitioners that the issue
presented is squarely covered by Article 222(b) of the Labor Code, as
amended by P.D. No. 1691 so that attorney's fees, if legally payable, can only
be charged against Union funds.
The Court resolved to give due course.
Article 222(b) of the Labor Code provides:
Article 222. Appearance and Fees.
xxx xxx xxx
(b) No attorney's fees, negotiation fees or similar charges of any kind arising
from any collective bargaining negotiations or conclusion of the collective
bargaining agreement shall be imposed on any individual member of the
contracting union; Provided, however, that attorney's fees may be charged
against union funds in an amount to be agreed upon by the parties. Any
contract, agreement or arrangement of any sort to the contrary shall be null
and void.
While Article 242 of the same Code reads:
Art. 242. Rights and conditions of membership in a labor organization. The
following are the rights and conditions of membership in a labor
organization:
xxx xxx xxx
(o) Other than for mandatory activities under the Code, no special
assessment, attorney's fees, negotiation fees or any other extraordinary fees
may be checked off "from any amount due an employee without individual
written authorization duly signed by the employee. The authorization should
specifically state the amount, purpose and beneficiary of the deduction.
The Omnibus Rules Implementing the Labor Code also provide that
deductions from wages of the employees may only be made by the employer
in cases authorized by law, including deductions for insurance premiums
advanced by the employer on behalf of the employees as well as union dues
where the right to check-off is authorized in writing by the individual
employee himself. 3

The provisions are clear. No check-offs from any amounts due employees
may be effected without individual written authorizations duly signed by the
employee specifically stating the amount, purpose and beneficiary of the
deduction. The required individual authorizations in this case are wanting. In
fact, petitioner employees are vigorously objecting. The question asked in
the plebiscite, besides not being explicit, assumed that there was no dispute
relative to attorney's fees.

Contrary to respondent Union's and Counsel's stand, the benefits awarded to

PLDT employees still formed part of the collective bargaining negotiations
although placed already under compulsory arbitration. This is not the
"mandatory activity" under the Code which dispenses with individual written
authorizations for check-offs, notwithstanding its "compulsory" nature. It is
a judicial process of settling disputes laid down by law. Besides, Article
222(b) does not except a CBA, later placed under compulsory arbitration,
from the ambit of its prohibition. The cardinal principle should be borne in
mind that employees are protected by law from unwarranted practices that
diminish their compensation without their knowledge and consent. 4

ACCORDINGLY, the assailed Decision of February 18, 1985 rendered by

respondent Director of the Bureau of Labor Relations, is hereby SET ASIDE.
The attorney's fees herein involved may be charged against Union funds
pursuant to Article 222(b) of the Labor Code, as may be agreed upon between
them.

SO ORDERED.
CONTINENTAL CEMENT CORPORATION LABOR UNION (NLU)
vs. CONTINENTAL CEMENT CORPORATION
G.R. No. 51544 | 1990-08-30
GANCAYCO, J.:
This petition addresses the question of dismissal from the service of the
officers and the suspension of some members of petitioner union by the
public respondent and the National Labor Relations Commission (NLRC).
On April 21, 1975, the NLRC issued an arbitration award in NLRC Cases
No. 2406 and No. 3053 resolving certain demands of the petitioner respecting
the working terms and conditions that should be observed in the
establishment of private respondent. However, due to disagreement on the
interpretation of the provisions of the award concerning vacation, sick leaves
and standardization of wages, compliance therewith was delayed. In order to
compel private respondent to immediately implement the award, petitioner
staged a strike on October 25, 1975. It was, however, lifted after the private
respondent agreed to pay the disputed employees' leaves during the period
July 1, 1974 to June 30, 1975 in three installments, that is, 50% on December
20, 1975, 25% on February 25, 1976 and 25% on March 15, 1976.
Meanwhile, private respondent sought clarification from the labor arbiter on
whether a group of 91 workers who were unable to complete 300 days of
work within a 12-month period was entitled to proportionate payment of
vacation and sick leave benefits. On March 19, 1976, the labor arbiter ruled
that the award required private respondent to make proportionate payments
in favor of the workers in question. This ruling was appealed by private
respondent but
on April 7, 1976 petitioner filed a notice of strike against private respondent
for its refusal to make the proportionate payments mentioned. Petitioner
carried out its threatened strike on May 16, 1976. The strike was settled on
May 22, 1976 with private respondent agreeing inter alia, to pay the 91
workers concerned P25,000.00 for "humanitarian reasons." Private
respondent, however, reserved the right to seek clarification of its obligations
under the NLRC award. Payment was made on May 25, 1976.
The obligation of private respondent to pay the employees their vacation and
sick leaves for the period July 1, 1975 to June 30, 1976 developed into a new
issue between the parties. Prior to the payment becoming due, private
respondent negotiated with petitioner for a staggered form of payment as
before due to its financial difficulties and planned shutdown of the plant in
July. Petitioner at first insisted that its members be paid full; however, it
subsequently agreed to installment payments but gave warning on July 11,
1976, a Sunday, to the private respondent that payment of 50% of the benefits
should be made not later than July 12, 1976 and the remaining 50%., not later
than the end of the month. Private respondent requested an extension up to
July 13, 1976 within which to consider the counter-proposal but this was
rejected by petitioner.
Petitioner staged a strike in the early of July 12, 1976, picketing the entrance
of the premises of private respondent. Among the officers and members of
petitioner who were identified on the picket line were Rosauro Ancheta,
Lauro Bartolome, Abundio Cruz, Edwin Hugo, Manuel Sobrenilla, Antonio
Mendoza, Alfredo Urtula, Lorenzo Hormadal, Nicolas Sobrenilla, Dioscoro
Sergio, Velasco Reyes, Fortunato Mendoza, Floro Villano, Lauro Francisco,
Salva Nelson, Antonio Cruz, Augusto Lopez and Francisco Sarmiento. Other
workers at the roadblocks were not positively identified.
On July 13, 1976, the Minister of Labor issued an order thru the Director of
the Bureau of Labor Relations, directing the striking workers to resume work
under the terms and conditions prevailing prior to the work stoppage. 1 The
order was served on the parties in the afternoon of the same date.
Nevertheless, on July 14, 1976, only 11 out of the total work force of about
120 workers in one shift reported for work and were admitted by the
company.
On July 15, 1976, petitioner filed a motion for reconsideration of the return-
to-work order or its suspension pending compliance by private respondent
with the 1975 NLRC award in favor of petitioner. Picketing was resumed
despite the presence of military personnel who were called to assist in the
implementation of the return-to-work order.
On July 23, 1976, the Minister of Labor certified the dispute between the
parties to the NLRC for compulsory arbitration in NLRC Certified Case No.
039. Under the Labor Code, this certification had the effect of automatically
enjoining any strike by the Union or lockout by the private respondent.
Nonetheless, some 110 striking workers did not return to work.
Consequently, on July 26, 1976, private respondent filed with the
Department of Labor reports on the dismissal of those who failed to comply
with the return-to-work order with copies of the reports furnished workers
affected.
On July 29, 1976, the president of petitioner and 7 other officers requested
admission to work but were informed that their employment had been
terminated by the company.
After due hearing, on March 10, 1977, the NLRC rendered judgment, the
dispositive portion of which reads as follows:
"WHEREFORE, this Commission hereby orders:
1. That the Union officers, together with its Board of Directors, namely:
Rosauro Ancheta, Lauro Bartolome, Alejandro Bernabe, Ireneo Bernabe,
Romulo Buluran, Fortunato Mendoza, Rodolfo L. Santiago, Guillermo
Roque, Dioscoro Sergio, Manuel Sobrenilla, Sergio Panel, Antonio
Mendoza; Isaias Mendoza, Abundio Cruz, Edwin Hugo and Aquilino
Sarmiento, be considered, as they are hereby considered, separated from the
service of the Company, and from their positions as officers of the Union, as
of 12 July 1976;
2. That the Union members who participated in the strike be considered, as
they are hereby considered, under suspension, by way of penalty, for the
duration of their absence from work in the Company as a consequence of
their strike;
3. That the Union members referred to in the immediately preceding
paragraph return to their work in the Company, and that the latter take them
back, at the same terms and conditions of employment obtaining before 12
July 1976, within five (5) days from receipt of this Decision;
4. That the Company pay within ten (10) days from receipt of this Decision
the vacation and sick leave benefits of qualified employees for the period
from 1 July 1975 to 30 June 1976, as well as the 13th month pay and
increased minimum wages, unless the Company has been duly exempted
from the payment of the same;
5. That the Company comply immediately and fully with the terms and
conditions of the Award of Voluntary Arbitrator Francisco Fuentes dated 12
September 1974 (NLRC Case Nos. 2406 and 3053);
6. That the Union and Company incorporate in their collective bargaining
agreement all includible terms and conditions in the Award referred to in
paragraph 5 of this dispositive part; and
7. That, it appearing that the Union is officially affiliated with the National
Labor Union (NLU) and since the officers of the Union are, by virtue hereof,
no longer holding their positions as such, the NLU temporarily handle the
affairs of the Union, in a trusteeship capacity, until the Union shall have
reorganized in accordance with its Constitution and By-Laws, or in the
absence of applicable internal rules, in accordance with the will of the
majority of its members, but not more than three (3) months from the
promulgation of this Decision." 2
On July 22, 1977, the petitioner appealed the above decision of the NLRC to
the Minister of Labor but the latter affirmed it on March 6, 1979. 3 A motion
for reconsideration filed by the Union was denied by the Minister of Labor
on August 1, 1979. 4
Hence, this special civil action for certiorari, wherein the issues raised are (1)
whether or not the strike staged by petitioner on June 12, 1976 until its lifting
was illegal; and (2) in the affirmative, whether or not the penalties meted out
by the NLRC to the Union officers and the members are warranted by the
circumstances and the law.
Presidential Decree No. 823, as amended, provides:
"Sec. 1. It is the policy of the State to encourage trade unionism and free
collective bargaining within the framework of compulsory and voluntary
arbitration. Therefore, all forms of strikes, picketing and lockouts are hereby
strictly prohibited in vital industries . . . ."
Letter of Instruction No. 368 of the President provides:

"For the guidance of workers and employers, some of whom have been led
into filing notices of strikes and lockouts even in vital industries, you are
hereby instructed to consider the following as vital industries and companies
or firms under PD 823 as amended:
xxx xxx xxx
2. Companies or firms engaged in the manufacture or processing of the
following essential commodities:
xxx xxx xxx
B. Cement."
Private respondent was engaged in the manufacture of cement which is no
doubt a vital industry in which a strike or lockout is prohibited under the
foregoing aforestated decree. And even assuming that private respondent was
not engaged in a vital industry, the strike that was staged by petitioner was
nonetheless illegal. It was not in connection with any unresolved economic
issue in collective bargaining which is the only ground for which a lawful
strike can be held.
Section 7 of the Rules and Regulations implementing Presidential Decree
No. 823, as amended, provides:
"Section 7. Requirements for strikes and lockouts. Strikes and lockouts may
be declared only upon compliance with the following requirements:
(a) Ground for strike A strike may be declared by a legitimate labor
organization which is the recognized bargaining agent of the appropriate
bargaining unit in connection with unresolved economic issues in collective
bargaining in non-vital industries.
(b) Ground for lockout A lockout may be declared only by an employer in
connection with unresolved economic issues in collective bargaining in non-
vital industries.
xxx xxx xxx
(d) Unauthorized strikes or lockouts Notices of strikes or lockouts involving
industries, establishments or issues not covered or authorized under
paragraphs (a) and (b) shall be dismissed, and the party filing the notice of
strike or lockout shall be advised thereof."
The issue between the petitioner and the private respondent at the time of the
strike concerned merely the implementation of an arbitration award of the
NLRC. The petitioner had a remedy by applying for a writ of execution to
enforce that award. Its resort to a strike was without lawful basis.
Moreover, under Section 1 of Presidential Decree No. 823, there is a
requirement of notice, as follows:
"However, any legitimate labor union may strike and any employer may
lockout in establishments not covered by General Order No. 5 only on
grounds of unresolved economic issues in collective bargaining, in which
case the union or the employer shall file a notice with the Bureau of Labor
Relations at least 30 days before the intended strike or lockout. . . ."
Petitioner claims that it filed a notice of strike on April 7, 1976. That notice
was in connection with a dispute that had been settled by the Memorandum
Agreement between the parties dated May 22, 1976. A notice of strike is
intended to enable the Bureau of Labor Relations to try to settle the dispute
amicably. The strike on July 12, 1976 denied the Bureau this opportunity.
Petitioner invokes the right to strike as a measure of self-defense as it had
been driven to the wall by the unjust refusal of private respondent to comply
with the NLRC award.
The non-compliance by the private respondent with the said award did not
threaten the existence of petitioner or that of its members. The dispute did
not concern the right of the Union to organize nor the employees' right to
work. It merely involved the non-payment of the vacation and sick leaves of
the employees for the past years' services.
Furthermore, petitioner could have applied with the Bureau of Labor
Relations for a writ of execution to enforce the award that was already final
and executory.
As to the second issue, petitioner assails as too harsh the suspension meted
out by the NLRC to its members.
The strikers in question did not only violate the no-strike policy of the state
in regard to vital industries; instead, they repeatedly defied the orders of the
Director of Labor Relations and the Minister of Labor for them to return to
work. Their dismissal was recommended by the labor arbiter. However, out
of compassion, the NLRC and the Minister of Labor only suspended them.
Petitioner then contends that the separation from work of the officers of the
union is quite severe. The officers had the duty to guide their members to
respect the law. Instead, they urged them to violate the law and defy the duly
constituted authorities. Their responsibility is greater than that of the
members. Their dismissal from the service is a just penalty for their unlawful
acts.
It is within the power of the NLRC to order the removal of the officers of
petitioner. This is provided for in the labor law.
"Art. 242. 5 Rights and conditions of membership in a labor organization.
The following are the rights and conditions of membership in a labor
organization:
xxx xxx xxx
(p) It shall be the duty of any labor organization and its officers to inform its
members on provisions of the constitution and by-laws, collective bargaining
agreement, the prevailing labor relations system and all their rights and
obligations under existing labor laws. For this purpose, registered labor
organizations may assess reasonable dues to finance labor relations seminars
and other labor education activities.
Any violation of the above rights and conditions of membership shall be a
ground for cancellation of union registration or expulsion of an officer from
office, which ever is appropriate. At least 30 per cent of all the members of
a union or any member or members specifically concerned may report such
violation to the Bureau. The Bureau shall have the power to hear and decide
any reported violation and to mete out the appropriate penalty."
The officers of petitioner misinformed the members and led them into staging
an illegal strike. If the NLRC is to attain the objective of the Labor Code to
ensure a stable but dynamic and just industrial peace 6 the removal of
undesirable labor leaders must be effected.
WHEREFORE, the petition is DISMISSED as it has not been shown that the
public respondent committed any grave abuse of discretion in rendering the
orders dated March 6, 1979 and August 1, 1979 affirming the decision of the
NLRC dated March 10, 1977.
SO ORDERED.
DUYAG vs. INCIONG
G.R. No. L-47775 | 1980-07-05
AQUINO, J.:
This case is about the removal of private respondents as union officers due
to alleged irregularities and anomalies in the administration of the affairs of
the union.
On January 14, 1977, the five petitioners, who are arrastre checkers of E.
Razon, Inc. in the South Harbor, Port Area, Manila as well as bona fide
members of the Associated Port Checkers and Workers Union, filed with
Regional Office No. 4 of the Department of Labor a complaint containing
several charges against the four private respondents, who, respectively, are
the president (for more than twenty years), treasurer, vice-president and
auditor of the union.
The record reveals the following facts, some of which are admitted or not
denied by the private respondents, while the other facts are supported by
substantial evidence which is summarized in the decisions of the med-arbiter
and the
Director of Labor Relations:
Unauthorized increases in union dues. - For arrastre checkers, the monthly
union dues amount to ten pesos, as fixed in section 2(b), article VI of the
union's constitution and by laws approved on September 5, 1969.
The monthly union dues were increased by two pesos in the resolution of
September 1, 1970 and by five pesos in the resolution of March 14, 1972.
However, those two resolutions are void because they were not approved by
three-fourths of all the members of the board of directors, as required in
article VII of the union's constitution and by-laws, dealing with amendments.
For March, April and May, 1973, the respondents without the benefit of any
board resolution caused to be collected an additional one peso, thus
increasing the union dues to eighteen pesos.
For April and May, 1975, the respondents caused to be collected monthly
union dues amounting to nineteen pesos or another increase of one peso.
And for the first semester of 1976, a deduction of eight pesos and fifty
centavos was made from the mid-year bonus without any board resolution
authorizing such deduction. In prior years, no deduction for union dues was
made from the mid-year bonus.
The med-arbiter concluded that the increases in union dues and the deduction
from the mid-year bonus are void because the same were collected in
contravention of the constitution and by-laws.
Moreover, their collection was not covered by any check-off authorization
nor evidenced by any receipt and was in contravention of the Labor Code.
The amounts collected were not duly accounted for. The Labor Code
provides:
"ART. 242. Rights and conditions of membership in a labor organization. -
The following are the rights and conditions of membership in a labor
organization:
xxx - x - xxx
"(g) No officer, agent or member of a labor organization shall collect any
fees, dues, or other contributions in its behalf or make any disbursement of
its money or funds unless he is duly authorized pursuant to its constitution
and by-laws;"
"(h) Every payment of fees, dues or other contributions by a member shall be
evidenced by a receipt signed by the officer or agent making the collection
and entered into the record of the organization to be kept and maintained for
the purpose;
xxx - x - xxx
"(n) No special assessment or other extraordinary fees may be levied upon
the members of a labor organization unless authorized by a written resolution
of a majority of all the members at a general membership meeting duly called
for the purpose. The secretary of the organization shall record the minutes of
the meeting including the list of all members present, the votes cast, the
purpose of the special assessment or fees and the recipient of such
assessments or fees. The record shall be attested to by the president;
"(o) Other than for mandatory activities under the Code, no special
assessments, attorney's fees, negotiation fees or any other extraordinary fees
may be checked off from any amount due to an employee without an
individual written authorization duly signed by the employee. The
authorization should specifically state the amount, purpose and beneficiary
of the deduction; and.
Xxx - xxx - xxx
The foregoing legal provisions apply squarely to the unauthorized deductions
from the wages of the arrastre checkers.
For such unauthorized collection of union dues, the responsibility of
respondent Ricardo R. Manalad, as union president, is not denied.
Withholding of union members' share in the profits amounting to P18,640.09.
- E. Razon, Inc., the arrastre operator, paid to the union on December 18,
1973 the sum of P25,684.61 as its share of the profits (profit-share) for the
period from May to October, 1973. Instead of distributing the whole amount
to the union members, the respondents paid to them only P19,974 and
retained the balance of P5,710.61 which had not been accounted for.
The Labor Arbiter found that other amounts were withheld by the
respondents from the union's profit-shares for subsequent periods. The total
amount withheld is P18,640.09 or P18,570.63, as shown in page 8 of private
respondents' memorandum.
With specific reference to the profit-share amounting to P22,559.50 paid by
E. Razon, Inc. for the period from November, 1973 to February, 1974, the
respondents deposited the amount in the account of the union's Cooperative
Credit Union of which respondent Manalad was also the president. Later, the
respondents withdrew the said amount, distributed among the union members
the sum of P20,848 and withheld the balance of P1,711.50, which respondent
Manalad and the union treasurer, respondent Honorato K. Leaño,
appropriated as follows:
Manalad - Filipinas Bank and Trust Com-pany,
Manila Hilton Branch Check No. 352966 dated March 22, 1975, drawn to
cash P1,000.00
Leaño - Filipinas Bank and Trust Company,
Manila Hilton Branch Check No. 352967 dated March 22, 1975, drawn to
cash 559.50
Leaño - Filipinas Bank and Trust Company,
Manila Hilton Branch Check No. 352968 dated March 22, 1975, drawn to
cash 152.00
--------------
TOTAL P 1,711.50
The med-arbiter found that the modus operandi resorted to by the
respondents with respect to the profit-share amounting to P22,559.50 was
followed by them as to the deductions from the profit-shares for the other
periods.
He surmised that the union officers must have deducted a considerable
amount from the profit-shares because they started that practice in 1966 when
E. Razon, Inc. and Guacods Marine Terminals, Inc. commenced the profit-
share program.
However, during the pendency of the case in this Court, the private
respondents submitted a resolution dated November 25, 1977 wherein more
than ninety percent of the union members allegedly ratified the deductions
from the mid-year bonus and profit-shares and authorized future deductions
(pp. 921 and 1615-6, Rollo).
Although the said resolution rendered this aspect of the case moot, it cannot
obliterate the violations of the constitution and by-laws and the Labor Code
already committed by respondents Manalad and Leaño. The deduction of
union dues from the mid-year bonus and the withholding of part of the profit-
shares were illegal and improper at the time they were made.
Disbursements exceeding P500 which were not authorized by the board of
directors. - Section 4(d), article IV of the union's constitution and by-laws
provides that the board of directors may "authorize and approve all
disbursements from union fund where the amount involved is more than
P500 and without that authorization or approval in due form, no such
disbursements will be allowed by the Treasurer".
Respondent Manalad made the following disbursements of union funds in an
amount exceeding P500 without the requisite authorization of the board of
directors:
Evidence Date Amount Disbursed
Annex S March 26, 1969 P1,400.00
Annex T June 1, 1970 1,000.00
Annexes U to W July 13, August 6
and Sept. 24, 1971 3,111.40
Annexes Y, X, Z March 5 and 30
and Z-1 and AA April 10, May 18,
to CC Aug. 30, Sept. 20
and Dec. 31, 1973 7,028.00
Annex DD Dec. 6, 1974 1,000.00
Annex R June 12, 1976 900.00
Respondents Manalad and Leaño, also without prior board authorization,
withdrew on twenty-three occasions union funds in the aggregate sum of
P43,026.80 deposited in Savings Account No. 5953 of the Manila Hilton
Branch of the Filipinas Bank and Trust Company (Annexes GG to GG-22).
The sum of P3.500 was paid to respondent Amparo pursuant to a resolution
dated July 12, 1971 which was approved by only six members of the board
of directors, instead of fourteen members, as required in the constitution and
by-laws of the union.
Maladministration of welfare fund. - Respondent Manalad allowed the
application of the funds of the union's Welfare Plan to the following
extraneous purposes:
1. On March 31, and April 6 and 14, 1973, the sum of P5,000 was taken from
the Pacific Memorial Plan collections and loaned to the union's Cooperative
Credit Union, Inc.
2. On October 7, 1973, the sum of P1,500 was loaned to the same cooperative
for organizational expenses.
3. On August 7, 1971, the sum of P200 was taken from the welfare fund for
advance representation expenses of Manalad.
4. On December 18, 1971, the sum of P1,600 was taken from the welfare
fund to cover cash advances to Marcelino Melegrito to be repaid upon the
release of his credit union loan on March 8, 1973.
According to the complainants, those disbursements were not authorized by
the board of directors.
Respondents Manalad, Amparo and Puerto approved the payment of
retirement benefits amounting to (1) P3,500 to Miguel de Leon on June 21,
1976; (2) P7,000 to Eduardo Topacio on July 30, 1976 and (3) P7,000 to
Roberto Victoria on August 4, 1976.
According to the complainants, the three employees did not deserve
retirement benefits because they had been dismissed for prolonged absences
and they had ceased to be members of the Welfare Plan.
Membership in another union. - Respondents Manalad, Amparo and Puerto
are also officers of the Philippine Technical Clerical Commercial Employees
Association, another labor union.
Their membership in the latter union is manifestly violative of section 9,
article III of the constitution and by-laws of the arrastre checkers' union
which provides that an elected officer shall be deemed disqualified if he
becomes a member of another organization.
In this connection, the complainants presented evidence to prove that because
of that interlocking stewardship of the arrastre checkers' union and the other
union, the respondents improperly channeled to the latter funds of the arrastre
checkers' union.
Thus, on December 17, 1975 and March 29, June 9 and August 31, 1976,
Manalad approved payments by the arrastre checkers' union to the other
union of the sums of P1,000, P250 and P1,250.
Conflict of interest on the part of Manalad. - Respondent Manalad organized
a family corporation known as the Comet Integrated Stevedoring Services,
Inc. whose rank-and-file employees are also members of the arrastre
checkers' union. Thus, Manalad has functioned in the dual capacity of labor
leader and employer, not to mention the fact that he is also an officer of
another labor union, PTCCEA.
As head of the arrastre checkers' union, he issued customs passes for the
checkers of his family-owned stevedoring firm to facilitate their rendition of
services to some shipping companies.
The complainants contend that such a situation has involved Manalad in a
conflict of interest: if he favors his stevedoring firm, he is bound to jeopardize
the interests of the arrastre checkers' union of which he is the president.
Under these facts, the med-arbiter in his decision of August 29, 1977 ordered
the removal of the private respondents as officers of the union and directed
them to reimburse to the members thereof the amounts illegally collected
from them.
The private respondents appealed to the Director of Labor Relations who in
his decision of November 9, 1977 reversed the decision of the med-arbiter.
The Director held that resort to intra-union remedies is not necessary and that
the five complainants have the right and personality to institute the
proceeding for the removal of the respondents, to recover the amounts
illegally collected or withheld from them and to question illegal
disbursements and expenditure of union funds.
However, the Director ruled that the power to remove the union officers rests
in the members and that the Bureau of Labor Relations generally has nothing
to do with the tenure of union officers which "is a political question".
The Director further ruled that his office has jurisdiction to look into the
charge of illegal disbursements of union funds. He directed the Labor
Organization Division of the Bureau to examine the books of account and
financial records of the union and to submit a report on such examination.
The motions for reconsideration filed by the parties were denied by the
Undersecretary of Labor in his resolution of January 25, 1978 (he was then
Acting Director of Labor Relations). He ruled that the expulsion of union
officers is the prerogative of the members of the union.
That decision of the Director is assailed in these special civil actions of
certiorari and prohibition filed on February 10, 1978. The petitioners pray
that the four union officers be expelled.
The case has been simplified by the admission of the private respondents in
page 13 of their memorandum that the Bureau of Labor Relations has
unquestionably the power to remove erring union officers under the last
paragraph of Article 242 of the Labor Code.
That paragraph provides that any violation of the rights and conditions of
union membership, as enumerated in paragraphs (a) to (p) of Article 242,
"shall be a ground for cancellation of union registration or expulsion of
officer from office, whichever is appropriate. At least thirty percent (30%) of
all the members of a union or any member or members specially concerned
may report such violation to the Bureau (of Labor Relations). The Bureau
shall have the power to hear and decide any reported violation to mete the
appropriate penalty".
Nevertheless, the private respondents qualify their admission with the
opinion that the Bureau of Labor Relations should remove the guilty union
officers only when the members could not do so under the union's
constitution and by-laws and that the removal should be subject to review by
the Minister of Labor.
The Office of the Solicitor General, as amicus curiae, has taken the
unqualified stand that the Bureau is empowered to expel from the union any
officer found guilty of violating any of the rights and conditions of union
membership specified in article 242.
In this appeal, the Director of Labor Relations maintains his view that the
power of removal belongs to the union members, since the power to choose
the officers belongs to them, and that the med-arbiter and the Director should
simply assist the union members in enforcing its constitution and by-laws.

We hold that the Labor Arbiter did not err in removing the respondents as
union officers. The membership of Manalad and Puerto in another union is a
sufficient ground for their removal under the constitution and by-laws of the
union. In Manalad's case, his organization of a family-owned corporation
competing with the union headed by him renders it untenable that he should
remain as union president.

We hold further that Manalad, Puerto and Leaño violated the rights and
conditions of membership in the union within the meaning of article 242.
Hence, on that ground their expulsion from office is also justified.

The petitioners are entitled to the refund of the union dues illegally collected
from them. The union should make the proper refund.

The Director of Labor Relations erred in holding that, as a matter of policy,

the tenure of union officers, being a "political question", is, generally, a
matter outside his Bureau's jurisdiction and should be passed upon by the
union members themselves.

After hearing and even without submitting the matter to the union members,
erring union officials may be removed by the Director of Labor Relations as
clearly provided in article 242.

The Director should apply the law and not make policy considerations prevail
over its clear intent and meaning "The majority of the laws need no
interpretation or construction. They require only application, and if there
were more application and less construction, there would be more stability in
the law, and more people would know what the law is." (Lizarraga Hermanos
vs. Yap Tico, 24 Phil. 504, 513).

The labor officials should not hesitate to enforce strictly the law and
regulations governing trade unions even if that course of action would curtail
the so-called union autonomy and freedom from government interference.

For the protection of union members and in order that the affairs of the union
may be administered honestly, labor officials should be vigilant and watchful
in monitoring and checking the administration of union affairs.

Laxity, permissiveness, neglect and apathy in supervising and regulating the

activities of union officials would result in corruption and oppression.
Internal safeguards within the union can easily be ignored or swept aside by
abusive, arrogant and unscrupulous union officials to the prejudice of the
members.

It is necessary and desirable that the Bureau of Labor Relations and the
Ministry of Labor should exercise close and constant supervision over labor
unions, particularly the handling of their funds, so as to forestall abuses and
venalities.

Hence, the Director acted correctly in ordering an examination of the books

and records of the union. The examination should include a verification of
the charge that the petty loans extended by the union to its members were
usurious and that the fee for the issuance of checks is unwarranted since the
loans were made in cash.

WHEREFORE, (1) that portion of the decision of the med-arbiter, removing

respondents Manalad, Leaño and Puerto as union officers, is affirmed.
(Respondent Amparo is no longer an officer of the union.)

(2) We also affirm that portion of the decision of the Director of Labor
Relations, directing the Bureau's Labor Organization Division to examine the
books of accounts and records of the Associated Port Checkers and Workers
Union and to submit a report on such examination within a reasonable time.

(3) We declare that the five petitioners are entitled to a refund of the union
dues illegally collected from them. The Director of Labor Relations is
ordered to require the union to make the refund within twenty days from
notice to his counsel of the entry of judgment in this case.
Costs against the private respondents.

SO ORDERED.
PHILIPPINE SKYLANDERS, INC. vs. NATIONAL LABOR
RELATIONS COMMISSION
G.R. No. 127374 | 2002-01-31
BELLOSILLO, J.:
This is a petition for certiorari[1] seeking to set aside the 31 July 1996
Decision[2] of the National Labor Relations Commission affirming the 30
June 1995 Decision of the Labor Arbiter holding petitioners Philippine
Skylanders, Inc., Mariles C. Romulo[3] and Francisco Dakila as well as the
elected officers of the Philippine Skylanders Employees and Workers
Association-PAFLU[4] guilty of unfair labor practice and ordering them to
pay private respondent Philippine Association of Free Labor Union (PAFLU)
September[5] P150,000.00 as damages. Petitioners likewise seek the reversal
of the 31 October 1996 Resolution of the NLRC denying their Motion for
Reconsideration.
In November 1993 the Philippine Skylanders Employees Association
(PSEA), a local labor union affiliated with the Philippine Association of Free
Labor Unions (PAFLU) September (PAFLU), won in the certification
election conducted among the rank and file employees of Philippine
Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders Employees
Association-WATU (PSEA-WATU) immediately protested the result of the
election before the Secretary of Labor.
Several months later, pending settlement of the controversy, PSEA sent
PAFLU a notice of disaffiliation citing as reason PAFLU's supposed
deliberate and habitual dereliction of duty toward its members. Attached to
the notice was a copy of the resolution adopted and signed by the officers
and members of PSEA authorizing their local union to disaffiliate from its
mother federation.
PSEA subsequently affiliated itself with the National Congress of Workers
(NCW), changed its name to Philippine Skylanders Employees Association
- National Congress of Workers (PSEA-NCW), and to maintain continuity
within the organization, allowed the former officers of PSEA-PAFLU to
continue occupying their positions as elected officers in the newly-forged
PSEA-NCW.
On 17 March 1994 PSEA-NCW entered into a collective bargaining
agreement with PSI which was immediately registered with the Department
of Labor and Employment.
Meanwhile, apparently oblivious to PSEA's shift of allegiance, PAFLU
Secretary General Serafin Ayroso wrote Mariles C. Romulo requesting a
copy of PSI's audited financial statement. Ayroso explained that with the
dismissal of PSEA-WATU's election protest the time was ripe for the parties
to enter into a collective bargaining agreement.
On 30 July 1994 PSI through its personnel manager Francisco Dakila denied
the request citing as reason PSEA's disaffiliation from PAFLU and its
subsequent affiliation with NCW.
Agitated by PSI's recognition of PSEA-NCW, PAFLU through Serafin
Ayroso filed a complaint for unfair labor practice against PSI, its president
Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged
that aside from PSI's refusal to bargain collectively with its workers, the
company through its president and personnel manager, was also liable for
interfering with its employees' union activities.[6]
Two (2) days later or on 6 October 1994 Ayroso filed another complaint in
behalf of PAFLU for unfair labor practice against Francisco Dakila. Through
Ayroso PAFLU claimed that Dakila was present in PSEA's organizational
meeting thereby confirming his illicit participation in union activities.
Ayroso added that the members of the local union had unwittingly fallen into
the manipulative machinations of PSI and were lured into endorsing a
collective bargaining agreement which was detrimental to their interests.[7]
The two (2) complaints were thereafter consolidated.
On 1 February 1995 PAFLU amended its complaint by including the elected
officers of PSEA-PAFLU as additional party respondents. PAFLU averred
that the local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito
Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix,
Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa Mortel, Teofilo
Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia Riosa, were
equally guilty of unfair labor practice since they brazenly allowed themselves
to be manipulated and influenced by petitioner Francisco Dakila.[8]
PSI, its president Mariles C. Romulo, and its personnel manager Dakila
moved for the dismissal of the complaint on the ground that the issue of
disaffiliation was an inter-union conflict which lay beyond the jurisdiction of
the Labor Arbiter. On the other hand, PSEA-NCW took the cudgels for its
officers who were being sued in their capacities as former officers of PSEA-
PAFLU and asserted that since PSEA was no longer affiliated with PAFLU,
Ayroso or PAFLU for that matter had no personality to file the instant
complaint. In support of this assertion, PSEA-NCW submitted in evidence a
Katunayan signed by 111 out of 120 rank and file employees of PSI
disauthorizing Ayroso or PAFLU from instituting any action in their
behalf.[9]
In a Decision rendered on 30 June 1995 the Labor Arbiter declared PSEA's
disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their
respective officers guilty of unfair labor practice. The Decision explained
that despite PSEA-PAFLU's status as the sole and exclusive bargaining agent
of PSI's rank and file employees, the company knowingly sanctioned and
confederated with Dakila in actively assisting a rival union. This, according
to the Labor Arbiter, was a classic case of interference for which PSI could
be held responsible. As PSEA-NCW's personality was not accorded
recognition, its collective bargaining agreement with PSI was struck down
for being invalid. Ayroso's legal personality to file the complaint was
sustained on the ratiocination that under the Labor Code no petition
questioning the majority status of the incumbent bargaining agent shall be
entertained outside of the sixty (60)-day period immediately before the
expiry date of such five (5)-year term of the collective bargaining agreement
that the parties may enter into. Accordingly, judgment was rendered ordering
PSI, PSEA-PAFLU and their officers to pay PAFLU P150,000.00 in
damages.[10]
PSI, PSEA and their respective officers appealed to the National Labor
Relations Commission (NLRC). But the NLRC upheld the Decision of the
Labor Arbiter and conjectured that since an election protest questioning
PSEA-PAFLU's certification as the sole and exclusive bargaining agent was
pending resolution before the Secretary of Labor, PSEA could not validly
separate from PAFLU, join another national federation and subsequently
enter into a collective bargaining agreement with its employer-company.[11]
Petitioners separately moved for reconsideration but both motions were
denied. Hence, these petitions for certiorari filed by PSI and PSEA-NCW
together with their respective officers pleading for a reversal of the NLRC's
Decision which they claimed to have been rendered in excess of jurisdiction.
In due time, both petitions were consolidated.
In these petitions, petitioner PSEA together with its officers argued that by
virtue of their disaffiliation PAFLU as a mere agent had no authority to
represent them before any proceedings. They further asserted that being an
independent labor union PSEA may freely serve the interest of all its
members and readily disaffiliate from its mother federation when
circumstances so warrant. This right, they averred, was consistent with the
constitutional guarantee of freedom of association.[12]
For their part, petitioners PSI, Romulo and Dakila alleged that their decision
to bargain collectively with PSEA-NCW was actuated, to a large extent, by
PAFLU's behavior. Having heard no objections or protestations from
PAFLU relative to PSEA's disaffiliation, they reckoned that PSEA's
subsequent association with NSW was done bona fide.[13]
The Solicitor General filed a Manifestation in Lieu of Comment
recommending that both petitions be granted. In his Manifestation, the
Solicitor General argued against the Labor Arbiter's assumption of
jurisdiction citing the following as reasons: first, there was no employer-
employee relationship between complainant Ayroso and PSI over which the
Labor Arbiter could rightfully assert his jurisdiction; second, since the case
involved a dispute between PAFLU as mother federation and PSEA as local
union, the controversy fell within the jurisdiction of the Bureau of Labor
Relations; and lastly, the relationship of principal-agent between PAFLU and
PSEA had been severed by the local union through the lawful exercise of its
right of disaffiliation.[14]
Stripped of non-essentials, the fundamental issue tapers down to the
legitimacy of PSEA's disaffiliation. To be more precise, may PSEA, which
is an independent and separate local union, validly disaffiliate from PAFLU
pending the settlement of an election protest questioning its status as the sole
and exclusive bargaining agent of PSI's rank and file employees?
At the outset, let it be noted that the issue of disaffiliation is an inter-union
conflict the jurisdiction of which properly lies with the Bureau of Labor
Relations (BLR) and not with the Labor Arbiter.[15] Nonetheless, with due
recognition of this fact, we deem it proper to settle the controversy at this
instance since to remand the case to the BLR would only mean intolerable
delay for the parties.
respondent Philippine Association of Free Labor Unions (PAFLU)
September (now UNIFIED PAFLU) as well as the Resolution of 31 October
1996 denying reconsideration is REVERSED and SET ASIDE. No costs.
SO ORDERED.

The right of a local union to disaffiliate from its mother federation is not a
novel thesis unillumined by case law. In the landmark case of Liberty Cotton
Mills Workers Union vs. Liberty Cotton Mills, Inc.[16] we upheld the right
of local unions to separate from their mother federation on the ground that as
separate and voluntary associations, local unions do not owe their creation
and existence to the national federation to which they are affiliated but,
instead, to the will of their members. The sole essence of affiliation is to
increase, by collective action, the common bargaining power of local unions
for the effective enhancement and protection of their interests. Admittedly,
there are times when without succor and support local unions may find it
hard, unaided by other support groups, to secure justice for themselves.

Yet the local unions remain the basic units of association, free to serve their
own interests subject to the restraints imposed by the constitution and by-
laws of the national federation, and free also to renounce the affiliation upon
the terms laid down in the agreement which brought such affiliation into
existence.

Such dictum has been punctiliously followed since then.[17]

Upon an application of the aforecited principle to the issue at hand, the

impropriety of the questioned Decisions becomes clearly apparent. There is
nothing shown in the records nor is it claimed by PAFLU that the local union
was expressly forbidden to disaffiliate from the federation nor were there any
conditions imposed for a valid breakaway. As such, the pendency of an
election protest involving both the mother federation and the local union did
not constitute a bar to a valid disaffiliation. Neither was it disputed by
PAFLU that 111 signatories out of the 120 members of the local union, or an
equivalent of 92.5% of the total union membership supported the claim of
disaffiliation and had in fact disauthorized PAFLU from instituting any
complaint in their behalf. Surely, this is not a case where one (1) or two (2)
members of the local union decided to disaffiliate from the mother federation,
but it is a case where almost all local union members decided to disaffiliate.

It was entirely reasonable then for PSI to enter into a collective bargaining
agreement with PSEA-NCW. As PSEA had validly severed itself from
PAFLU, there would be no restrictions which could validly hinder it from
subsequently affiliating with NCW and entering into a collective bargaining
agreement in behalf of its members.

There is a further consideration that likewise argues for the granting of the
petitions. It stands unchallenged that PAFLU instituted the complaint for
unfair labor practice against the wishes of workers whose interests it was
supposedly protecting. The mere act of disaffiliation did not divest PSEA of
its own personality; neither did it give PAFLU the license to act
independently of the local union. Recreant to its mission, PAFLU cannot
simply ignore the demands of the local chapter and decide for its welfare.
PAFLU might have forgotten that as an agent it could only act in
representation of and in accordance with the interests of the local union. The
complaint then for unfair labor practice lodged by PAFLU against PSI, PSEA
and their respective officers, having been filed by a party which has no legal
personality to institute the complaint, should have been dismissed at the first
instance for failure to state a cause of action.

Policy considerations dictate that in weighing the claims of a local union as

against those of a national federation, those of the former must be preferred.
Parenthetically though, the desires of the mother federation to protect its
locals are not altogether to be shunned. It will however be to err greatly
against the Constitution if the desires of the federation would be favored over
those of its members. That, at any rate, is the policy of the law. For if it were
otherwise, instead of protection, there would be disregard and neglect of the
lowly workingmen.

WHEREFORE, the petitions of Philippine Skylanders, Inc. and of Philippine

Skylanders and Workers Association-NCW, together with their respective
officers, are GRANTED. The Decision of the National Labor Relations
Commission of 31 July 1996 affirming the Decision of the Labor Arbiter of
30 June 1995 holding petitioners Philippine Skylanders and Workers
Association-NCW, Philippine Skylanders, Inc. and their respective officers,
guilty of unfair labor practice and ordering them to pay damages to private
ERGONOMIC SYSTEMS PHILIPPINES, INC. VS. ENAJE
G.R. No. 195163 | 2017-12-13
MARTIRES, J.:
This is a petition for review on certiorari assailing the Decision,[1] dated 21
September 2010, and Resolution,[2] dated 14 January 2011, of the Court of
Appeals (CA), in CA-G.R. SP No. 102802, which affirmed with modification
the decision,[3] dated 31 October 2007, and resolution,[4] dated 21
December 2007, of the National Labor Relations Commission (NLRC) in
NLRC NCR No. RAB IV-01-16813-03-L. The NLRC, in turn, affirmed the
decision,[5] dated 31 January 2005, of Labor Arbiter Generoso V. Santos
(LA) in NLRC NCR No. RAB IV-01-16813-03-L, a case for illegal dismissal
and unfair labor practice.
THE FACTS
Respondents were union officers and members of Ergonomic System
Employees Union-Workers Alliance Trade Unions (local union). On 29
October 1999, the local union entered into a Collective Bargaining
Agreement (CBA)[6]with petitioner Ergonomic Systems Philippines, Inc.
(ESPI),[7] which was valid for five (5) years or until October 2004. The local
union, which was affiliated with Workers Alliance Trade Unions-Trade
Union Congress of the Philippines (Federation), was not independently
registered. Thus, on 15 November 2001, before the CBA expired, the union
officers secured the independent registration of the local union with the
Regional Office of the Department of Labor and Employment (DOLE). Later
on, the union officers were charged before the Federation and investigated
for attending and participating in other union's seminars and activities using
union leaves without the knowledge and consent of the Federation and ESPI
as well as in initiating and conspiring in the disaffiliation before the freedom
period.[8]
On 10 January 2002, the Federation rendered a decision[9] finding
respondents-union officers Emerito C. Enaje, Benedicto P. Abello, Alex M.
Malaylay, Francisco G. Encabo, Jr., Rico Samson, Rowena Betitio, Felipe N.
Custosa, Jaime A. Juatan, Leovino Mulintapang, Nelson L. Onte, Emiliano
P. Rone, and Rolieto Llamado guilty of disloyalty. They were penalized with
immediate expulsion from the Federation.[10]
On 11 January 2002, the Federation furnished ESPI with a copy of its
decision against respondents-union officers and recommended the
termination of their employment by invoking Sections 2 and 3, Article 2 of
the CBA.[11]
ESPI notified respondents-union officers of the Federation's demand and
gave them 48 hours to explain. Except for Nelson Onte, Emiliano Rone, and
Rico Samson, the rest of the officers refused to receive the notices.
Thereafter, on 20 February 2002, respondents-union officers were issued
letters of termination, which they again refused to receive. On 26 February
2002, ESPI submitted to the DOLE a list of the dismissed employees. On the
same day, the local union filed a notice of strike with the National
Conciliation and Mediation Board (NCMB).[12]
From 21 February to 23 February 2002, the local union staged a series of
noise barrage and "slow down" activities. Meanwhile, on 22 February 2002,
40 union members identified as: Amorpio Adriano, Jimmy Alcantara,
Bernardo Antoni, Herminito Bedrijo, Romeo Belarmino, Yolanda Canopin,
Almelito Cuabo, Ricardo Del Pilar, Elmer Desquitado, Winefredo
Desquitado, Demetrio Diaz, Erick Ecraela, Quintero Enriquez, Crisanto
Fernandez, Rommel Flores, Nelson Frias, Pedrito Geron, Dominador
Guimaldo, Ambrosio Henarez, Terencio Henares, Albert Lachica, Alberto
Lorenzo, Joel Malaylay, Susan Malbas, Rolando Manaril, Teddy Montible,
Fernando Ofaldo, Ronie Olivay, Raul Pagolong, Lorenzo Raniego, Amado
Samson-Ty, Roel Soriano, Jonathan Sualibio, Esteban Sumicao, Joseph
Tabaday, Epifanio Tabarez, Regie Toting, Reynaldo Toting, Norman
Valenzuela and Rolando Yonson refused to submit their Daily Production
Reports (DPRs).
On 26 February 2002, 28 union members namely Dioscoro Balajadia, Nerry
Balinas, Noel Balmeo, Arnaldo Castro, Geroncio Dela Cueva, Alberto
Gapasin, Julius Genova, Loreto Gracilla, Roberto Ingiente, Jr., Roque Joven,
Paterno Linogo, Isagani Masangka, Angelito Montilla, Pecifico Nigparanon,
Salvador Nobe, Manuel Oavenga, Reynaldo Ortiz, Romeo Quintana, Jemard
Remotin, Reynaldo Roblesa, Samuel Rosales, Roberto Santos, Ronaldo
Santos, Rocky Talolong, Emilio Tonga, Bernardo Valdez, Dante Velasco and
Rene Vicente abandoned their work and held a picket line outside the
premises of ESPI.
Then, from 26 February 2002 to 2 March 2002, 10 union members, namely
Jaime Bentuco, Marina Cacao, Carlito Dela Cerna, Christopher Masagca,
Christopher Palomares, Rolando Patotoy, Aser Pesado, Jr., Leonilo Ricafort,
Felix Sanchez and Francis Santua did not report for work without official
leave. The union members were required to submit their explanation why
they should not be sanctioned for their refusal to submit DPRs and
abandonment of work, but they either refused to receive the notices or
received them under protest. Further, they did not submit their explanation
as required. Subsequently, for refusal to submit DPRs and for abandonment,
respondents-union members were issued letters of termination.[13] On 27
January 2003, the respondents filed a complaint for illegal dismissal and
unfair labor practice against ESPI, Phillip C. Ng, and Ma. Lourminda O. Ng
(petitioners).[14]
The Labor Arbiter's Ruling
In a decision, dated 31 January 2005, the LA held that the local union was
the real party in interest and the Federation was merely an agent in the CBA;
thus, the union officers and members who caused the implied disaffiliation
did not violate the union security clause. Consequently, their dismissal was
unwarranted. Nevertheless, the LA ruled that since ESPI effected the
dismissal in response to the Federation's demand which appeared to be
justified by a reading of the union security clause, it would be unjust to hold
ESPI liable for the normal consequences of illegal dismissal.
The LA further opined that there was no ground for the dismissal of the union
members because the refusal to submit DPRs and failure to report for work
were meant to protest the dismissal of their officers, not to sever employer-
employee relationship. He added that neither ESPI nor the respondents were
at fault for they were merely protecting their respective interests. In sum, the
LA ordered all the respondents to return to work but without back wages.
The fallo reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering
the complainants to report back to their former jobs within ten (10) days from
receipt of this Decision and the respondent company is in turn directed to
accept them back but without back wages. In the event however, that this is
no longer possible, the respondent company is ordered to pay the
complainants their separation pay computed at one-half (1/2) month salary
for every year of service, a fraction of at least six (6) months to be considered
as one (1) whole year. The respondent is likewise ordered to pay
complainants attorney's fees equivalent to ten (10%) percent of the total
thereof as attorney's fees.
All other claims are dismissed for lack of merit.
SO ORDERED.[15]
Unconvinced, petitioners and respondents appealed before the NLRC.
The NLRC Ruling
In a decision, dated 31 October 2007, the NLRC affirmed the ruling of the
LA. It adjudged that the dismissal of the union officers was effected only in
response to the demand of the Federation and to comply with the union
security clause under the CBA. The NLRC concluded that since there was no
disloyalty to the union, but only disaffiliation from the Federation which was
a mere agent in the CBA, the cause for the respondents' dismissal was non-
existent. It disposed the case in this wise:
WHEREFORE, premises considered, the appeals separately filed by
complainants and respondents from the Decision of Labor Arbiter Generoso
V. Santos dated January 31, 2005 are both DISMISSED for lack of merit.
The appeal filed by complainants from the Order dated January 4, 2007 is
likewise DISMISSED for lack of merit.
The assailed Orders are hereby AFFIRMED.
SO ORDERED.[16]
Undeterred, petitioners and respondents moved for reconsideration. Their
motions, however, were denied by the NLRC in a resolution, dated 21
December 2007.
The CA Ruling

In its decision, dated 21 September 2010, the CA affirmed with modification
the NLRC ruling. It held that ESPI and the respondents acted in good faith
when the former dismissed the latter and when the latter, in tum, staged a
strike without complying with the legal requirements. The CA, however,
pronounced that the concept of separation pay as an alternative to
reinstatement holds true only in cases wherein there is illegal dismissal, a fact
which does not exist in this case. The dispositive portion reads:
WHEREFORE, the instant petition is PARTIALLY GRANTED. The
Decision of the Labor Arbiter, as sustained by the National Labor Relations
Commission, reverting the employer-employee position of the parties to the
status quo ante is AFFIRMED, with MODIFICATION, in that the provision
on the award of separation pay in lieu of reinstatement is deleted.
SO ORDERED.[17]
Aggrieved, petitioners and respondents moved for reconsideration but the
same was denied by the CA in a resolution, dated 14 January 2011.
Hence, this petition.
ISSUES
I. WHETHER THE FEDERATION MAY INVOKE THE UNION
SECURITY CLAUSE IN DEMANDING THE RESPONDENTS'
DISMISSAL;
II. WHETHER THE STRIKE CONDUCTED BY THE RESPONDENTS
COMPLIED WITH THE LEGAL REQUIREMENTS;
III.WHETHER THE RESPONDENTS' DISMISSAL FROM
EMPLOYMENT WAS VALID.
The petitioners argue that the respondents failed to comply with two (2) of
the procedural requirements for a valid strike, i.e., taking of a strike vote and
observance of the seven-day period after submission of the strike vote report;
that mere participation of union officers in the illegal strike is a ground for
termination of employment; that the union members committed illegal acts
during the strike which warranted their dismissal, i.e., obstruction of the free
ingress to and egress from ESPI's premises and commission of acts of
violence, coercion or intimidation; that the respondents are not entitled to
reinstatement or separation pay because they were validly dismissed from
employment; that the union members who unjustly refused to submit their
DPRs and abandoned their work were rightfully terminated because their acts
constituted serious misconduct or willful disobedience of lawful orders; and
that reinstatement is no longer possible because the industrial building owned
by Ergo Contracts Philippines, Inc. was totally destroyed by fire on 6
February 2005.[18]
In their comment,[19] the respondents counter that they were not legally
terminated because the grounds relied upon by the petitioners were non-
existent; that as ruled by the NLRC, they merely disaffiliated from the
Federation but they were not disloyal to the local union; that reinstatement is
not physically impossible because it was the industrial building owned by
Ergo Contracts Philippines, Inc. that was gutted down by fire, not that of
ESPI; that even if the manufacturing plant of ESPI was indeed destroyed by
fire, the petitioners have other offices around the country where the
respondents may be reinstated; and that having failed to comply with the
order to reinstate them and having ceased operations, the petitioners must be
ordered to pay their separation pay.
In their reply,[20] the petitioners aver that the respondents violated the union
security clause under the CBA; that their termination was effected in
response to the Federation's demand to dismiss them; that they did not
comply with the requisites of a valid strike; that they refused to submit their
DPRs and abandoned their work; and that the award of separation pay had
no basis because the respondents had been legally dismissed from their
employment.
THE COURT'S RULING
Only the local union may invoke the union security clause in the CBA.
The controversy between ESPI and the respondents originated from the
Federation's act of expelling the union officers and demanding their dismissal
from ESPI. Thus, to arrive at a proper resolution of this case, one question to
be answered is whether the Federation may invoke the union security clause
in the CBA.
"Union security is a generic term, which is applied to and comprehends
'closed shop,' 'union shop,' 'maintenance of membership,' or any other form
of agreement which imposes upon employees the obligation to acquire or
retain union membership as a condition affecting employment. There is
union shop when all new regular employees are required to join the union
within a certain period as a condition for their continued employment. There
is maintenance of membership shop when employees, who are union
members as of the effective date of the agreement, or who thereafter become
members, must maintain union membership as a condition for continued
employment until they are promoted or transferred out of the bargaining unit,
or the agreement is terminated. A closed shop, on the other hand, may be
defined as an enterprise in which, by agreement between the employer and
his employees or their representatives, no person may be employed in any or
certain agreed departments of the enterprise unless he or she is, becomes,
and, for the duration of the agreement, remains a member in good standing
of a union entirely comprised of or of which the employees in interest are a
part."[21]
Before an employer terminates an employee pursuant to the union security
clause, it needs to determine and prove that: (1) the union security clause is
applicable; (2) the union is requesting the enforcement of the union security
provision in the CBA; and (3) there is sufficient evidence to support the
decision of the union to expel the employee from the union.[22]
In this case, the primordial requisite, i.e., the union is requesting the
enforcement of the union security provision in the CBA, is clearly lacking.
Under the Labor Code, a chartered local union acquires legal personality
through the charter certificate issued by a duly registered federation or
national union and reported to the Regional Office.[23] "A local union does
not owe its existence to the federation with which it is affiliated. It is a
separate and distinct voluntary association owing its creation to the will of
its members. Mere affiliation does not divest the local union of its own
personality, neither does it give the mother federation the license to act
independently of the local union. It only gives rise to a contract of agency,
where the former acts in representation of the latter. Hence, local unions are
considered principals while the federation is deemed to be merely their
agent."[24]
The union security clause in the CBA between ESPI and the local union
provides:
SECTION 1. Union Shop. All regular, permanent employees covered by this
Agreement who are members of the UNION as of the date of effectivity of
this Agreement as well as any employees who shall subsequently become
members of the UNION during the lifetime of this Agreement or any
extension, thereof, shall as a condition of continued employment, maintain
their membership in the UNION during the term of this Agreement or any
extension thereof.
xxxx
SECTION 3. The COMPANY shall terminate the services of any concerned
employee when so requested by the UNION for any of the following reasons:
a. Voluntary Resignation from the Union during the term of this Agreement
or any extension thereof;
b. Non-payment of membership fee, regular monthly dues, mutual aid benefit
and other assessments submitted by the UNION to the COMPANY;
c. Violation of the UNION Constitution and Bylaws. The UNION shall
furnish the COMPANY a copy of their Constitution and Bylaws and any
amendment thereafter.
d. Joining of another Union whose interest is adverse to the UNION,
AWATU, during the lifetime of this Agreement.
e. Other acts which are inimical to the interests of the UNION and
AWATU.[25]
There is no doubt that the union referred to in the foregoing provisions is the
Ergonomic Systems Employees Union or the local union as provided in
Article I of the CBA.[26] A perusal of the CBA shows that the local union,
not the Federation, was recognized as the sole and exclusive collective
bargaining agent for all its workers and employees in all matters concerning
wages, hours of work, and other terms and conditions of employment.
Consequently, only the union may invoke the union security clause in case
any of its members commits a violation thereof. Even assuming that the union
officers were disloyal to the Federation and committed acts inimical to its
interest, such circumstance did not give the Federation the prerogative to
demand the union officers' dismissal pursuant to the union security clause
which, in the first place, only the union may rightfully invoke. Certainly, it
does not give the Federation the privilege to act independently of the local
union. At most, what the Federation could do is to refuse to recognize the
local union as its affiliate and revoke the charter certificate it issued to the
latter. In fact, even if the local union itself disaffiliated from the Federation,
the latter still has no right to demand the dismissal from employment of the
union officers and members because concomitant to the union's prerogative
to affiliate with a federation is its right to disaffiliate therefrom which the
Court explained in Philippine Skylanders, Inc. v. NLRC,[27] viz:
The right of a local union to disaffiliate from its mother federation is not a
novel thesis unillumined by case law. In the landmark case of Liberty Cotton
Mills Workers Union vs. Liberty Cotton Mills, Inc., we upheld the right of
local unions to separate from their mother federation on the ground that as
separate and voluntary associations, local unions do not owe their creation
and existence to the national federation to which they are affiliated but,
instead, to the will of their members. The sole essence of affiliation is to
increase, by collective action, the common bargaining power of local unions
for the effective enhancement and protection of their interests. Admittedly,
there are times when without succor and support local unions may find it
hard, unaided by other support groups, to secure justice for themselves.
Yet the local unions remain the basic units of association, free to serve their
own interests subject to the restraints imposed by the constitution and bylaws
of the national federation, and free also to renounce the affiliation upon the
terms laid down in the agreement which brought such affiliation into
existence.[28]
In sum, the Federation could not demand the dismissal from employment of
the union officers on the basis of the union security clause found in the CBA
between ESPI and the local union.
A strike is deemed illegal for failure to take a strike vote and to submit a
report thereon to the NCMB.
A strike is the most powerful weapon of workers in their struggle with
management in the course of setting their terms and conditions of
employment. As such, it either breathes life to or destroys the union and its
members.[29]
Procedurally, for a strike to be valid, it must comply with Article 278[30] of
the Labor Code, which requires that: (a) a notice of strike be filed with the
NCMB 30 days before the intended date thereof, or 15 days in case of unfair
labor practice; (b) a strike vote be approved by a majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in a
meeting called for that purpose; and (c) a notice be given to the NCMB of
the results of the voting at least seven days before the intended strike. These
requirements are mandatory, and the union's failure to comply renders the
strike illegal.[31]
The union filed a notice of strike on 20 February 2002.[32] The strike
commenced on 21 February 2002.[33] The strike vote was taken on 2 April
2002[34] and the report thereon was submitted to the NCMB on 4 April
2002.[35] Indeed, the first requisite or the cooling-off period need not be
observed when the ground relied upon for the conduct of strike is union-
-busting.[36] Nevertheless, the second and third requirements are still
mandatory. In this case, it is apparent that the union conducted a strike
without seeking a strike vote and without submitting a report thereon to the
DOLE. Thus, the strike which commenced on 21 February 2002 was illegal.
Liabilities of union officers and members
Article 279(a)[37] of the Labor Code provides:
Art. 279. Prohibited activities. - (a) x x x
xxxx
Any 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 a strike may be declared to have lost his employment
status: Provided, That mere participation of a worker in a lawful strike shall
not constitute sufficient ground for termination of his employment, even if a
replacement had been hired by the employer during such lawful strike.
In the determination of the consequences of illegal strikes, the law makes a
distinction between union members and union officers. The services of an
ordinary union member cannot be terminated for mere participation in an
illegal strike; proof must be adduced showing that he or she committed illegal
acts during the strike. A union officer, on the other hand, may be dismissed,
not only when he actually commits an illegal act during a strike, but also if
he knowingly participates in an illegal strike.[38]
In the present case, respondents-union officers stand to be dismissed as they
conducted a strike despite knowledge that a strike vote had not yet been
approved by majority of the union and the corresponding strike vote report
had not been submitted to the NCMB.
With respect to respondents-union members, the petitioners merely alleged
that they committed illegal acts during the strike such as obstruction of
ingress to and egress from the premises of ESPI and execution of acts of
violence and intimidation. There is, however, a dearth of evidence to prove
such claims. Hence, there is no basis to dismiss respondents-union members
from employment on the ground that they committed illegal acts during the
strike.
Dismissed respondents-union members are not entitled to back wages.
While it is true that the award of back wages is a legal consequence of a
finding of illegal dismissal, in G & S Transport Corporation v. Infante,[39]
the Court pronounced that the dismissed workers are entitled only to
reinstatement considering that they did not render work for the employer
during the strike, viz:
With respect to back wages, the principle of a "fair day's wage for a fair day's
labor" remains as the basic factor in determining the award thereof. 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, suspended or dismissed or otherwise illegally prevented from
working. While it was found that respondents expressed their intention to
report back to work, the latter exception cannot apply in this case. In
Philippine Marine Officers' Guild v. Compañia Maritima, as affirmed in
Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees
Union, the Court stressed that for this exception to apply, it is required that
the strike be legal, a situation that does not obtain in the case at bar.[40]
(emphases supplied)
Thus, in the case at bar, respondents-union members' reinstatement without
back wages suffices for the appropriate relief. Fairness and justice dictate that
back wages be denied the employees who participated in the illegal concerted
activities to the great detriment of the employer.[41]
Nevertheless, separation pay is made an alternative relief in lieu of
reinstatement in certain circumstances, like: (a) when reinstatement can no
longer be effected in view of the passage of a long period of time or because
of the realities of the situation; (b) reinstatement is inimical to the employer's
interest; (c) reinstatement is no longer feasible; (d) reinstatement does not
serve the best interests of the parties involved; (e) the employer is prejudiced
by the workers' continued employment; (f) facts that make execution unjust
or inequitable have supervened; or (g) strained relations between the
employer and employee.[42]
Given the lapse of considerable time from the occurrence of the strike, the
Court rules that the award of separation pay of one (1) month salary for each
year of service, in lieu of reinstatement, is in order. This relief strikes a
balance between the respondents-union members who may not have known
that they were participating in an illegal strike but who, nevertheless, have
rendered service to the company for years prior to the illegal strike which
caused a rift in their relations, and the employer who definitely suffered
losses on account of respondents-union members' failure to report to work
during the illegal strike.
WHEREFORE, the petition is PARTIALLY GRANTED. The 21 September
2010 Decision and 14 January 2011 Resolution of the Court of Appeals in
CA-G.R. SP No. 102802 are AFFIRMED with MODIFICATION in that
petitioners are hereby ORDERED to pay each of the above-named individual
respondents, except union officers who are hereby declared validly
dismissed, separation pay equivalent to one (1) month salary for every year
of service. Whatever sums already received from petitioners under any
release, waiver or quitclaim shall be deducted from the total separation pay
due to each of them.

SO ORDERED.
COASTAL SUBIC BAY TERMINAL, INC. VS. DEPARTMENT OF
LABOR and EMPLOYMENT
G.R. No. 157117 | 2006-11-20
QUISUMBING, J.:
For review on certiorari is the Court of Appeals' Decision[1] dated August
31, 2001, in CA-G.R. SP No. 54128 and the Resolution[2] dated February 5,
2003, denying petitioner's motion for reconsideration. The Court of Appeals
had affirmed the Decision[3] dated March 15, 1999 of the Secretary of the
Department of Labor and Employment (DOLE) reversing the Mediator
Arbiter's dismissal of private respondents' petitions for certification election.
The facts are as follows:
On July 8, 1998, private respondents Coastal Subic Bay Terminal, Inc. Rank-
and-File Union (CSBTI-RFU) and Coastal Subic Bay Terminal, Inc.
Supervisory Union (CSBTI-SU) filed separate petitions for certification
election before Med-Arbiter Eladio de Jesus of the Regional Office No. III.
The rank-and-file union insists that it is a legitimate labor organization
having been issued a charter certificate by the Associated Labor Union
(ALU), and the supervisory union by the Associated Professional,
Supervisory, Office and Technical Employees Union (APSOTEU). Private
respondents also alleged that the establishment in which they sought to
operate was unorganized.
Petitioner Coastal Subic Bay Terminal, Inc. (CSBTI) opposed both petitions
for certification election alleging that the rank-and-file union and supervisory
union were not legitimate labor organizations, and that the proposed
bargaining units were not particularly described.
Without ruling on the legitimacy of the respondent unions, the Med-Arbiter
dismissed, without prejudice to refiling, both petitions which had been
consolidated. The Med-Arbiter held that the ALU and APSOTEU are one
and the same federation having a common set of officers. Thus, the
supervisory and the rank-and-file unions were in effect affiliated with only
one federation.[4]
The Med-Arbiter ruled as follows:
Viewed in the light of all the foregoing, this Office finds the simultaneous
filing of the instant petitions to be invalid and unwarranted. Consequently,
this Office has no recourse but to dismiss both petitions without prejudice to
the refiling of either.
WHEREFORE, PREMISES CONSIDERED, let the instant petitions be, as
they are hereby DISMISSED.
SO ORDERED.[5]
Both parties appealed to the Secretary of Labor and Employment, who
reversed the decision of the Med-Arbiter. The Secretary thru Undersecretary
R. Baldoz, ruled that CSBTI-SU and CSBTI-RFU have separate legal
personalities to file their separate petitions for certification election. The
Secretary held that APSOTEU is a legitimate labor organization because it
was properly registered pursuant to the 1989 Revised Rules and Regulations
implementing Republic Act No. 6715, the rule applicable at the time of its
registration. It further ruled that ALU and APSOTEU are separate and
distinct labor unions having separate certificates of registration from the
DOLE. They also have different sets of locals. The Secretary declared
CSBTI-RFU and CSBTI-SU as legitimate labor organizations having been
chartered respectively by ALU and APSOTEU after submitting all the
requirements with the Bureau of Labor Relations (BLR). Accordingly, the
Secretary ordered the holding of separate certification election, viz:
WHEREFORE, the decision of the Med-Arbiter, Regional Office No. III is
hereby REVERSED. Let separate certification elections be conducted
immediately among the appropriate employees of CSBTI, after the usual pre-
election conference, with the following choices:
I. For all rank and file employees of CSBTI:
1. COASTAL SUBIC BAY TERMINAL, INC. RANK-AND-FILE UNION-
ALU-TUCP; and
2. NO UNION.
II. For all supervisory employees of CSBTI:
1. COASTAL SUBIC BAY TERMINAL, INC. SUPERVISORY
EMPLOYEES UNION-APSOTEU; and
2. NO UNION.
The latest payroll of the employer, including its payrolls for the last three
months immediately preceding the issuance of this decision, shall be the basis
for determining the qualified list of voters.
SO DECIDED.[6]
The motion for reconsideration was also denied.[7]
On appeal, the Court of Appeals affirmed the decision of the Secretary.[8] It
held that there was no grave abuse of discretion on the part of the Secretary;
its findings are supported by evidence on record; and thus should be accorded
with respect and finality.[9]
The motion for reconsideration was likewise denied.[10] Hence, the instant
petition by the company anchored on the following grounds:
I
THE HONORABLE COURT OF APPEALS ERRED IN RELYING ON
THE "1989 REVISED RULES AND REGULATIONS IMPLEMENTING
RA 6715" AS BASIS TO RECOGNIZE PRIVATE RESPONDENT
APSOTEU'S REGISTRATION BY THE DOLE REGIONAL DIRECTOR.
II
THE HONORABLE COURT OF APPEALS ERRED WHEN IT
AFFIRMED PUBLIC RESPONDENT'S APPLICATION OF THE
PRINCIPLE OF STARE DECISIS TO HASTILY DISPOSE OF THE
LEGAL PERSONALITY ISSUE OF APSOTEU.
III
THE HONORABLE COURT OF APPEALS DID NOT DECIDE IN
ACCORD WITH LAW AND JURISPRUDENCE WHEN IT AFFIRMED
PUBLIC RESPONDENT'S APPLICATION OF THE "UNION
AUTONOMY" THEORY.
IV
IN AFFIRMING PUBLIC RESPONDENT'S FINDING THAT PRIVATE
RESPONDENTS ARE "SEPARATE FEDERATIONS," THE
HONORABLE COURT OF APPEALS:
(1) IGNORED JURISPRUDENCE RECOGNIZING THE BINDING
NATURE OF A MED-ARBITER'S FACTUAL FINDINGS; AND
(2) DISREGARDED EVIDENCE ON RECORD OF "ILLEGAL
COMMINGLING."[11]
Plainly, the issues are (1) Can the supervisory and the rank-and-file unions
file separate petitions for certification election?; (2) Was the Secretary's
decision based on stare decisis correct?; and (3) Were private respondents
engaged in commingling?
The issue on the status of the supervisory union CSBTI-SU depends on the
status of APSOTEU, its mother federation.
Petitioner argues that APSOTEU improperly secured its registration from the
DOLE Regional Director and not from the BLR; that it is the BLR that is
authorized to process applications and issue certificates of registration in
accordance with our ruling in Phil. Association of Free Labor Unions v.
Secretary of Labor;[12] that the certificates of registration issued by the
DOLE Regional Director pursuant to the rules are questionable, and possibly
even void ab initio for being ultra vires; and that the Court of Appeals erred
when it ruled that the law applicable at the time of APSOTEU's registration
was the 1989 Revised Implementing Rules and Regulations of Rep. Act No.
6715.
Petitioner insists that APSOTEU lacks legal personality, and its chartered
affiliate CSBTI-SU cannot attain the status of a legitimate labor organization
to file a petition for certification election. It relies on Villar v. Inciong,[13]
where we held therein that Amigo Employees Union was not a duly
registered independent union absent any record of its registration with the
Bureau.
Pertinent is Article 235[14] of the Labor Code which provides that
applications for registration shall be acted upon by the Bureau. "Bureau" as
defined under the Labor Code means the BLR and/or the Labor Relations
Division in the Regional Offices of the Department of Labor.[15] Further,
Section 2, Rule II, Book V of the 1989 Revised Implementing Rules of the
Labor Code (Implementing Rules) provides that:
Section 2. Where to file application; procedure - Any national labor
organization or labor federation or local union may file an application for
registration with the Bureau or the Regional Office where the applicant's
principal offices is located. The Bureau or the Regional Office shall
immediately process and approve or deny the application. In case of
approval, the Bureau or the Regional Office shall issue the registration
certificate within thirty (30) calendar days from receipt of the application,
together with all the requirements for registration as hereinafter provided.
[16]
The Implementing Rules specifically Section 1, Rule III of Book V, as
amended by Department Order No. 9, thus:
SECTION 1. Where to file applications. - The application for registration of
any federation, national or industry union or trade union center shall be filed
with the Bureau. Where the application is filed with the Regional Office, the
same shall be immediately forwarded to the Bureau within forty-eight (48)
hours from filing thereof, together with all the documents supporting the
registration.
The applications for registration of an independent union shall be filed with
and acted upon by the Regional Office where the applicant's principal office
is located ....
xxxx
The DOLE issued Department Order No. 40-03, which took effect on March
15, 2003, further amending Book V of the above implementing rules. The
new implementing rules explicitly provide that applications for registration
of labor organizations shall be filed either with the Regional Office or with
the BLR.[17]
Even after the amendments, the rules did not divest the Regional Office and
the BLR of their jurisdiction over applications for registration by labor
organizations. The amendments to the implementing rules merely specified
that when the application was filed with the Regional Office, the application
would be acted upon by the BLR.
The records in this case showed that APSOTEU was registered on March 1,
1991. Accordingly, the law applicable at that time was Section 2, Rule II,
Book V of the Implementing Rules, and not Department Order No. 9 which
took effect only on June 21, 1997. Thus, considering further that APSOTEU's
principal office is located in Diliman, Quezon City, and its registration was
filed with the NCR Regional Office, the certificate of registration is valid.
The petitioner misapplied Villar v. Inciong.[18] In said case, there was no
record in the BLR that Amigo Employees Union was registered.[19]
Did the Court of Appeals err in its application of stare decisis when it upheld
the Secretary's ruling that APSOTEU is a legitimate labor organization and
its personality cannot be assailed unless in an independent action for
cancellation of registration certificate?[20]
We think not.
Section 5, Rule V, Book V of the Implementing Rules states:
Section 5. Effect of registration - The labor organization or workers'
association shall be deemed registered and vested with legal personality on
the date of issuance of its certificate of registration. Such legal personality
cannot thereafter be subject to collateral attack, but maybe questioned only
in an independent petition for cancellation in accordance with these
Rules.[21]
Thus, APSOTEU is a legitimate labor organization and has authority to issue
charter to its affiliates.[22] It may issue a local charter certificate to CSBTI-
SU and correspondingly, CSBTI-SU is legitimate.
Are ALU, a rank-and-file union and APSOTEU, a supervisory union one and
the same because of the commonalities between them? Are they
commingled?
The petitioner contends that applying by analogy, the doctrine of piercing the
veil of corporate fiction, APSOTEU and ALU are the same federation.
Private respondents disagree.
First, as earlier discoursed, once a labor union attains the status of a legitimate
labor organization, it continues as such until its certificate of registration is
cancelled or revoked in an independent action for cancellation.[23] In
addition, the legal personality of a labor organization cannot be collaterally
attacked.[24] Thus, when the personality of the labor organization is
questioned in the same manner the veil of corporate fiction is pierced, the
action partakes the nature of a collateral attack. Hence, in the absence of any
independent action for cancellation of registration against either APSOTEU
or ALU, and unless and until their registrations are cancelled, each continues
to possess a separate legal personality. The CSBTI-RFU and CSBTI-SU are
therefore affiliated with distinct and separate federations, despite the
commonalities of APSOTEU and ALU.
Under the rules implementing the Labor Code, a chartered local union
acquires legal personality through the charter certificate issued by a duly
registered federation or national union, and reported to the Regional Office
in accordance with the rules implementing the Labor Code.[25] A local union
does not owe its existence to the federation with which it is affiliated. It is a
separate and distinct voluntary association owing its creation to the will of
its members. Mere affiliation does not divest the local union of its own
personality, neither does it give the mother federation the license to act
independently of the local union. It only gives rise to a contract of agency,
where the former acts in representation of the latter.[26] Hence, local unions
are considered principals while the federation is deemed to be merely their
agent.[27] As such principals, the unions are entitled to exercise the rights
and privileges of a legitimate labor organization, including the right to seek
certification as the sole and exclusive bargaining agent in the appropriate
employer unit.
A word of caution though, under Article 245 of the Labor Code,[28]
supervisory employees are not eligible for membership in a labor union of
rank-and-file employees. The supervisory employees are allowed to form
their own union but they are not allowed to join the rank-and-file union
because of potential conflicts of interest.[29] Further, to avoid a situation
where supervisors would merge with the rank-and-file or where the
supervisors' labor union would represent conflicting interests, a local
supervisors' union should not be allowed to affiliate with the national
federation of unions of rank-and-file employees where that federation
actively participates in the union activity within the company.[30] Thus, the
limitation is not confined to a case of supervisors wanting to join a rank-and-
file union. The prohibition extends to a supervisors' local union applying for
membership in a national federation the members of which include local
unions of rank-and-file employees.[31] In De La Salle University Medical
Center and College of Medicine v. Laguesma, we reiterated the rule that for
the prohibition to apply, it is not enough that the supervisory union and the
rank-and-file union are affiliated with a single federation. In addition, the
supervisors must have direct authority over the rank-and-file employees.[32]
In the instant case, the national federations that exist as separate entities to
which the rank-and-file and supervisory unions are separately affiliated with,
do have a common set of officers. In addition, APSOTEU, the supervisory
federation, actively participates in the CSBTI-SU while ALU, the rank-and-
file federation, actively participates in the CSBTI-RFU, giving occasion to
possible conflicts of interest among the common officers of the federation of
rank-and-file and the federation of supervisory unions. For as long as they
are affiliated with the APSOTEU and ALU, the supervisory and rank-and-
file unions both do not meet the criteria to attain the status of legitimate labor
organizations, and thus could not separately petition for certification
elections.
The purpose of affiliation of the local unions into a common enterprise is to
increase the collective bargaining power in respect of the terms and
conditions of labor.[33] When there is commingling of officers of a rank-
and-file union with a supervisory union, the constitutional policy on labor is
circumvented. Labor organizations should ensure the freedom of employees
to organize themselves for the purpose of leveling the bargaining process but
also to ensure the freedom of workingmen and to keep open the corridor of
opportunity to enable them to do it for themselves.

WHEREFORE, the petition is GRANTED. The Court of Appeals' Decision

dated August 31, 2001, in CA-G.R. SP No. 54128 and the Resolution dated
February 5, 2003 are SET ASIDE. The decision of the Med-Arbiter is hereby
AFFIRMED.

SO ORDERED.
SAN MIGUEL CORPORATION EMPLOYEES UNION-PHILIPPINE
TRANSPORT AND GENERAL WORKERS ORGANIZATION
(SMCEU-PTGWO) VS. SAN MIGUEL PACKAGING PRODUCTS
EMPLOYEES UNION-PAMBANSANG DIWA NG
MANGGAGAWANG PILIPINO (SMPEOPLEEU-PDMP)
G.R. No. 171153 | 2007-09-12
CHICO-NAZARIO, J.:
In this Petition for Review on Certiorari under Rule 45 of the Revised Rules
of Court, petitioner SAN MIGUEL CORPORATION EMPLOYEES
UNION-PHILIPPINE TRANSPORT AND GENERAL WORKERS
ORGANIZATION (SMCEU-PTGWO) prays that this Court reverse and set
aside the (a) Decision[2] dated 9 March 2005 of the Court of Appeals in CA-
G.R. SP No. 66200, affirming the Decision[3] dated 19 February 2001 of the
Bureau of Labor Relations (BLR) of the Department of Labor and
Employment (DOLE) which upheld the Certificate of Registration of
respondent SAN MIGUEL PACKAGING PRODUCTS EMPLOYEES
UNION-PAMBANSANG DIWA NG MANGGAGAWANG PILIPINO
(SMPPEU-PDMP); and (b) the Resolution[4] dated 16 January 2006 of the
Court of Appeals in the same case, denying petitioner's Motion for
Reconsideration of the aforementioned Decision.
The following are the antecedent facts:
Petitioner is the incumbent bargaining agent for the bargaining unit
comprised of the regular monthly-paid rank and file employees of the three
divisions of San Miguel Corporation (SMC), namely, the San Miguel
Corporate Staff Unit (SMCSU), San Miguel Brewing Philippines (SMBP),
and the San Miguel Packaging Products (SMPP), in all offices and plants of
SMC, including the Metal Closure and Lithography Plant in Laguna. It had
been the certified bargaining agent for 20 years - from 1987 to 1997.
Respondent is registered as a chapter of Pambansang Diwa ng
Manggagawang Pilipino (PDMP). PDMP issued Charter Certificate No. 112
to respondent on 15 June 1999.[5] In compliance with registration
requirements, respondent submitted the requisite documents to the BLR for
the purpose of acquiring legal personality.[6] Upon submission of its charter
certificate and other documents, respondent was issued Certificate of
Creation of Local or Chapter PDMP-01 by the BLR on 6 July 1999.[7]
Thereafter, respondent filed with the Med-Arbiter of the DOLE Regional
Officer in the National Capital Region (DOLE-NCR), three separate petitions
for certification election to represent SMPP, SMCSU, and SMBP.[8] All
three petitions were dismissed, on the ground that the separate petitions
fragmented a single bargaining unit.[9]
On 17 August 1999, petitioner filed with the DOLE-NCR a petition seeking
the cancellation of respondent's registration and its dropping from the rolls
of legitimate labor organizations. In its petition, petitioner accused
respondent of committing fraud and falsification, and non-compliance with
registration requirements in obtaining its certificate of registration. It raised
allegations that respondent violated Articles 239(a), (b) and (c)[10] and
234(c)[11] of the Labor Code. Moreover, petitioner claimed that PDMP is
not a legitimate labor organization, but a trade union center, hence, it cannot
directly create a local or chapter. The petition was docketed as Case No.
NCR-OD-9908-007-IRD.[12]
On 14 July 2000, DOLE-NCR Regional Director Maximo B. Lim issued an
Order dismissing the allegations of fraud and misrepresentation, and
irregularity in the submission of documents by respondent. Regional Director
Lim further ruled that respondent is allowed to directly create a local or
chapter. However, he found that respondent did not comply with the 20%
membership requirement and, thus, ordered the cancellation of its certificate
of registration and removal from the rolls of legitimate labor
organizations.[13] Respondent appealed to the BLR. In a Decision dated 19
February 2001, it declared:
As a chartered local union, appellant is not required to submit the number of
employees and names of all its members comprising at least 20% of the
employees in the bargaining unit where it seeks to operate. Thus, the
revocation of its registration based on non-compliance with the 20%
membership requirement does not have any basis in the rules.
Further, although PDMP is considered as a trade union center, it is a holder
of Registration Certificate No. FED-11558-LC issued by the BLR on 14
February 1991, which bestowed upon it the status of a legitimate labor
organization with all the rights and privileges to act as representative of its
members for purposes of collective bargaining agreement. On this basis,
PDMP can charter or create a local, in accordance with the provisions of
Department Order No. 9.
WHEREFORE, the appeal is hereby GRANTED. Accordingly, the decision
of the Regional Director dated July 14, 2000, canceling the registration of
appellant San Miguel Packaging Products Employees Union-Pambansang
Diwa ng Manggagawang Pilipino (SMPPEU-PDMP) is REVERSED and
SET ASIDE. Appellant shall hereby remain in the roster of legitimate labor
organizations.[14]
While the BLR agreed with the findings of the DOLE Regional Director
dismissing the allegations of fraud and misrepresentation, and in upholding
that PDMP can directly create a local or a chapter, it reversed the Regional
Director's ruling that the 20% membership is a requirement for respondent to
attain legal personality as a labor organization. Petitioner thereafter filed a
Motion for Reconsideration with the BLR. In a Resolution rendered on 19
June 2001 in BLR-A-C-64-05-9-00 (NCR-OD-9908-007-IRD), the BLR
denied the Motion for Reconsideration and affirmed its Decision dated 19
February 2001.[15]
Invoking the power of the appellate court to review decisions of quasi-
judicial agencies, petitioner filed with the Court of Appeals a Petition for
Certiorari under Rule 65 of the 1997 Rules of Civil Procedure docketed as
CA-G.R. SP No. 66200. The Court of Appeals, in a Decision dated 9 March
2005, dismissed the petition and affirmed the Decision of the BLR, ruling as
follows:
In Department Order No. 9, a registered federation or national union may
directly create a local by submitting to the BLR copies of the charter
certificate, the local's constitution and by-laws, the principal office address
of the local, and the names of its officers and their addresses. Upon
complying with the documentary requirements, the local shall be issued a
certificate and included in the roster of legitimate labor organizations. The
[herein respondent] is an affiliate of a registered federation PDMP, having
been issued a charter certificate. Under the rules we have reviewed, there is
no need for SMPPEU to show a membership of 20% of the employees of the
bargaining unit in order to be recognized as a legitimate labor union.
xxxx
In view of the foregoing, the assailed decision and resolution of the BLR are
AFFIRMED, and the petition is DISMISSED.[16]
Subsequently, in a Resolution dated 16 January 2006, the Court of Appeals
denied petitioner's Motion for Reconsideration of the aforementioned
Decision.
Hence, this Petition for Certiorari under Rule 45 of the Revised Rules of
Court where petitioner raises the sole issue of:
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR IN RULING THAT PRIVATE
RESPONDENT IS NOT REQUIRED TO SUBMIT THE NUMBER OF
EMPLOYEES AND NAMES OF ALL ITS MEMBERS COMPRISING AT
LEAST 20% OF THE EMPLOYEES IN THE BARGAINING UNIT
WHERE IT SEEKS TO OPERATE.
The present petition questions the legal personality of respondent as a
legitimate labor organization.
Petitioner posits that respondent is required to submit a list of members
comprising at least 20% of the employees in the bargaining unit before it may
acquire legitimacy, citing Article 234(c) of the Labor Code which stipulates
that any applicant labor organization, association or group of unions or
workers shall acquire legal personality and shall be entitled to the rights and
privileges granted by law to legitimate labor organizations upon issuance of
the certificate of registration based on the following requirements:
a. Fifty pesos (P50.00) registration fee;
b. The names of its officers, their addresses, the principal address of the labor
organization, the minutes of the organizational meetings and the list of the
workers who participated in such meetings;
c. The names of all its members comprising at least twenty percent (20%) of
all the employees in the bargaining unit where it seeks to operate;
d. If the applicant union has been in existence for one or more years, copies
of its annual financial reports; and
e. Four (4) copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification and the list of the members who
participated in it.[17]
Petitioner also insists that the 20% requirement for registration of respondent
must be based not on the number of employees of a single division, but in all
three divisions of the company in all the offices and plants of SMC since they
are all part of one bargaining unit. Petitioner refers to Section 1, Article 1 of
the Collective Bargaining Agreement (CBA),[18] quoted hereunder:
ARTICLE 1
SCOPE
Section 1. Appropriate Bargaining Unit. The appropriate bargaining unit
covered by this Agreement consists of all regular rank and file employees
paid on the basis of fixed salary per month and employed by the COMPANY
in its Corporate Staff Units (CSU), San Miguel Brewing Products (SMBP)
and San Miguel Packaging Products (SMPP) and in different operations
existing in the City of Manila and suburbs, including Metal Closure and
Lithography Plant located at Canlubang, Laguna subject to the provisions of
Article XV of this Agreement provided however, that if during the term of
this Agreement, a plant within the territory covered by this Agreement is
transferred outside but within a radius of fifty (50) kilometers from the Rizal
Monument, Rizal Park, Metro Manila, the employees in the transferred plant
shall remain in the bargaining unit covered by this Agreement. (Emphasis
supplied.)
Petitioner thus maintains that respondent, in any case, failed to meet this 20%
membership requirement since it based its membership on the number of
employees of a single division only, namely, the SMPP.
There is merit in petitioner's contentions.
A legitimate labor organization[19] is defined as "any labor organization
duly registered with the Department of Labor and Employment, and includes
any branch or local thereof."[20] The mandate of the Labor Code is to ensure
strict compliance with the requirements on registration because a legitimate
labor organization is entitled to specific rights under the Labor Code,[21] and
are involved in activities directly affecting matters of public interest.
Registration requirements are intended to afford a measure of protection to
unsuspecting employees who may be lured into joining unscrupulous or fly-
by-night unions whose sole purpose is to control union funds or use the labor
organization for illegitimate ends.[22] Legitimate labor organizations have
exclusive rights under the law which cannot be exercised by non-legitimate
unions, one of which is the right to be certified as the exclusive
representative[23] of all the employees in an appropriate collective
bargaining unit for purposes of collective bargaining.[24] The acquisition of
rights by any union or labor organization, particularly the right to file a
petition for certification election, first and foremost, depends on whether or
not the labor organization has attained the status of a legitimate labor
organization.[25]
A perusal of the records reveals that respondent is registered with the BLR
as a "local" or "chapter" of PDMP and was issued Charter Certificate No.
112 on 15 June 1999. Hence, respondent was directly chartered by PDMP.
The procedure for registration of a local or chapter of a labor organization is
provided in Book V of the Implementing Rules of the Labor Code, as
amended by Department Order No. 9 which took effect on 21 June 1997, and
again by Department Order No. 40 dated 17 February 2003. The
Implementing Rules as amended by D.O. No. 9 should govern the resolution
of the petition at bar since respondent's petition for certification election was
filed with the BLR in 1999; and that of petitioner on 17 August 1999.[26]
The applicable Implementing Rules enunciates a two-fold procedure for the
creation of a chapter or a local. The first involves the affiliation of an
independent union with a federation or national union or industry union. The
second, finding application in the instant petition, involves the direct creation
of a local or a chapter through the process of chartering.[27]
A duly registered federation or national union may directly create a local or
chapter by submitting to the DOLE Regional Office or to the BLR two 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.[28]
The Implementing Rules stipulate that a local or chapter may be directly
created by a federation or national union. A duly constituted local or chapter
created in accordance with the foregoing shall acquire legal personality from
the date of filing of the complete documents with the BLR.[29] The issuance
of the certificate of registration by the BLR or the DOLE Regional Office is
not the operative act that vests legal personality upon a local or a chapter
under Department Order No. 9. Such legal personality is acquired from the
filing of the complete documentary requirements enumerated in Section 1,
Rule VI.[30]
Petitioner insists that Section 3 of the Implementing Rules, as amended by
Department Order No. 9, violated Article 234 of the Labor Code when it
provided for less stringent requirements for the creation of a chapter or local.
This Court disagrees.
Article 234 of the Labor Code provides that an independent labor
organization acquires legitimacy only upon its registration with the BLR:
Any applicant labor organization, association or group of unions or workers
shall acquire legal personality and shall be entitled to the rights and privileges
granted by law to legitimate labor organizations upon issuance of the
certificate of registration based on the following requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meetings and the list of
the workers who participated in such meetings;
(c) The names of all its members comprising at least twenty percent (20%)
of all the employees in the bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years, copies
of its annual financial reports; and
(e) Four (4) copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who
participated in it. (Italics supplied.)
It is emphasized that the foregoing pertains to the registration of an
independent labor organization, association or group of unions or workers.
However, the creation of a branch, local or chapter is treated differently. This
Court, in the landmark case of Progressive Development Corporation v.
Secretary, Department of Labor and Employment,[31] declared that when an
unregistered union becomes a branch, local or chapter, some of the
aforementioned requirements for registration are no longer necessary or
compulsory. Whereas an applicant for registration of an independent union
is mandated to submit, among other things, the number of employees and
names of all its members comprising at least 20% of the employees in the
bargaining unit where it seeks to operate, as provided under Article 234 of
the Labor Code and Section 2 of Rule III, Book V of the Implementing Rules,
the same is no longer required of a branch, local or chapter.[32] The intent
of the law in imposing less 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
union's bargaining powers respecting terms and conditions of labor.[33]
Subsequently, in Pagpalain Haulers, Inc. v. Trajano[34] where the validity of
Department Order No. 9 was directly put in issue, this Court was unequivocal
in finding that there is no inconsistency between the Labor Code and
Department Order No. 9.
As to petitioner's claims that respondent obtained its Certificate of
Registration through fraud and misrepresentation, this Court finds that the
imputations are not impressed with merit. In the instant case, proof to declare
that respondent committed fraud and misrepresentation remains wanting.
This Court had, indeed, on several occasions, pronounced that registration
based on false and fraudulent statements and documents confer no legitimacy
upon a labor organization irregularly recognized, which, at best, holds on to
a mere scrap of paper. Under such circumstances, the labor organization, not
being a legitimate labor organization, acquires no rights.[35]
This Court emphasizes, however, that a direct challenge to the legitimacy of
a labor organization based on fraud and misrepresentation in securing its
certificate of registration is a serious allegation which deserves careful
scrutiny. Allegations thereof should be compounded with supporting
circumstances and evidence. The records of the case are devoid of such
evidence. Furthermore, this Court is not a trier of facts, and this doctrine
applies with greater force in labor cases. Findings of fact of administrative
agencies and quasi-judicial bodies, such as the BLR, which have acquired
expertise because their jurisdiction is confined to specific matters, are
generally accorded not only great respect but even finality.[36]
Still, petitioner postulates that respondent was not validly and legitimately
created, for PDMP cannot create a local or chapter as it is not a legitimate
labor organization, it being a trade union center.
Petitioner's argument creates a predicament as it hinges on the legitimacy of
PDMP as a labor organization. Firstly, this line of reasoning attempts to
predicate that a trade union center is not a legitimate labor organization. In
the process, the legitimacy of PDMP is being impugned, albeit indirectly.
Secondly, the same contention premises that a trade union center cannot
directly create a local or chapter through the process of chartering.
Anent the foregoing, as has been held in a long line of cases, the legal
personality of a legitimate labor organization, such as PDMP, cannot be
subject to a collateral attack. The law is very clear on this matter. Article 212
(h) of the Labor Code, as amended, defines a legitimate labor
organization[37] as "any labor organization duly registered with the DOLE,
and includes any branch or local thereof."[38] On the other hand, a trade
union center is any group of registered national unions or federations
organized for the mutual aid and protection of its members; for assisting such
members in collective bargaining; or for participating in the formulation of
social and employment policies, standards, and programs, and is duly
registered with the DOLE in accordance with Rule III, Section 2 of the
Implementing Rules.[39]
The Implementing Rules stipulate that a labor organization shall be deemed
registered and vested with legal personality on the date of issuance of its
certificate of registration. Once a certificate of registration is issued to a
union, its legal personality cannot be subject to collateral attack.[40] It may
be questioned only in an independent petition for cancellation in accordance
with Section 5 of Rule V, Book V of the Implementing Rules. The
aforementioned provision is enunciated in the following:
Sec. 5. Effect of registration. The labor organization or workers' association
shall be deemed registered and vested with legal personality on the date of
issuance of its certificate of registration. Such legal personality cannot
thereafter be subject to collateral attack, but may be questioned only in an
independent petition for cancellation in accordance with these Rules.
PDMP was registered as a trade union center and issued Registration
Certificate No. FED-11558-LC by the BLR on 14 February 1991. Until the
certificate of registration of PDMP is cancelled, its legal personality as a
legitimate labor organization subsists. Once a union acquires legitimate
status as a labor organization, it continues to be recognized as such until its
certificate of registration is cancelled or revoked in an independent action for
cancellation.[41] It bears to emphasize that what is being directly challenged
is the personality of respondent as a legitimate labor organization and not that
of PDMP. This being a collateral attack, this Court is without jurisdiction to
entertain questions indirectly impugning the legitimacy of PDMP.
Corollarily, PDMP is granted all the rights and privileges appurtenant to a
legitimate labor organization,[42] and continues to be recognized as such
until its certificate of registration is successfully impugned and thereafter
cancelled or revoked in an independent action for cancellation.
We now proceed to the contention that PDMP cannot directly create a local
or a chapter, it being a trade union center.
This Court reverses the finding of the appellate court and BLR on this
ground, and rules that PDMP cannot directly create a local or chapter.
After an exhaustive study of the governing labor law provisions, both
statutory and regulatory,[43] we find no legal justification to support the
conclusion that a trade union center is allowed to directly create a local or
chapter through chartering. Apropos, we take this occasion to reiterate the
first and fundamental duty of this Court, which is to apply the law. The
solemn power and duty of the Court to interpret and apply the law does not
include the power to correct by reading into the law what is not written
therein.[44]
Presidential Decree No. 442, better known as the Labor Code, was enacted
in 1972. Being a legislation on social justice,[45] the provisions of the Labor
Code and the Implementing Rules have been subject to several amendments,
and they continue to evolve, considering that labor plays a major role as a
socio-economic force. The Labor Code was first amended by Republic Act
No. 6715, and recently, by Republic Act No. 9481. Incidentally, the term
trade union center was never mentioned under Presidential Decree No. 442,
even as it was amended by Republic Act No. 6715. The term trade union
center was first adopted in the Implementing Rules, under Department Order
No. 9.
Culling from its definition as provided by Department Order No. 9, a trade
union center is any group of registered national unions or federations
organized for the mutual aid and protection of its members; for assisting such
members in collective bargaining; or for participating in the formulation of
social and employment policies, standards, and programs, and is duly
registered with the DOLE in accordance with Rule III, Section 2 of the
Implementing Rules.[46] The same rule provides that the application for
registration of an industry or trade union center shall be supported by the
following:
(a) The list of its member organizations and their respective presidents and,
in the case of an industry union, the industry where the union seeks to
operate;
(b) The resolution of membership of each member organization, approved by
the Board of Directors of such union;
(c) The name and principal address of the applicant, the names of its officers
and their addresses, the minutes of its organizational meeting/s, and the list
of member organizations and their representatives who attended such
meeting/s; and
(d) A copy of its constitution and by-laws and minutes of its ratification by a
majority of the presidents of the member organizations, provided that where
the ratification was done simultaneously with the organizational meeting, it
shall be sufficient that the fact of ratification be included in the minutes of
the organizational meeting.[47]
Evidently, while a "national union" or "federation" is a labor organization
with at least ten locals or chapters or affiliates, each of which must be a duly
certified or recognized collective bargaining agent;[48] a trade union center,
on the other hand, is composed of a group of registered national unions or
federations.[49]

The Implementing Rules, as amended by Department Order No. 9, provide
that "a duly registered federation or national union" may directly create a
local or chapter. The provision reads:
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.[50]
Department Order No. 9 mentions two labor organizations either of which is
allowed to directly create a local or chapter through chartering - a duly
registered federation or a national union. Department Order No. 9 defines a
"chartered local" as a labor organization in the private sector operating at the
enterprise level that acquired legal personality through a charter certificate,
issued by a duly registered federation or national union and reported to the
Regional Office in accordance with Rule III, Section 2-E of these Rules.[51]
Republic Act No. 9481 or "An Act Strengthening the Workers' Constitutional
Right to Self-Organization, Amending for the Purpose Presidential Decree
No. 442, As Amended, Otherwise Known as the Labor Code of the
Philippines" lapsed[52] into law on 25 May 2007 and became effective on
14 June 2007.[53] This law further amends the Labor Code provisions on
Labor Relations.
Pertinent amendments read as follows:
SECTION 1. Article 234 of Presidential Decree No. 442, as amended,
otherwise known as the Labor Code of the Philippines, is hereby further
amended to read as follows:
ART. 234. Requirements of Registration. - A federation, national union or
industry or trade union center or an independent union shall acquire legal
personality and shall be entitled to the rights and privileges granted by law to
legitimate labor organizations upon issuance of the certificate of registration
based on the following requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meetings and the list of
the workers who participated in such meetings;
(c) In case the applicant is an independent union, the names of all itsmembers
comprising at least twenty percent (20%) of all the employees in the
bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years, copies
of its annual financial reports; and
(e) Four copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who
participated in it.
SECTION 2. A new provision is hereby inserted into the Labor Code as
Article 234-A to read as follows:
ART. 234-A. Chartering and Creation of a Local Chapter. - A duly registered
federation or national union may directly create a local chapter by issuing a
charter certificate indicating the establishment of the local chapter. The
chapter shall acquire legal personality only for purposes of filing a petition
for certification election from the date it was issued a charter certificate.
The chapter shall be entitled to all other rights and privileges of a legitimate
labor organization only upon the submission of the following documents in
addition to its charter certificate:
(a) The names of the chapter's officers, their addresses, and the principal
office of the chapter; and
(b) The chapter's constitution and by-laws: Provided, That where the
chapter's constitution and by-laws are the same as that of the federation or
the national union, this fact shall be indicated accordingly.
The additional supporting requirements shall be certified under oath by the
secretary or treasurer of the chapter and attested by its president. (Emphasis
ours.)
Article 234 now includes the term trade union center, but interestingly, the
provision indicating the procedure for chartering or creating a local or
chapter, namely Article 234-A, still makes no mention of a "trade union
center."
Also worth emphasizing is that even in the most recent amendment of the
implementing rules,[54] there was no mention of a trade union center as
being among the labor organizations allowed to charter.
This Court deems it proper to apply the Latin maxim expressio unius est
exclusio alterius. Under this maxim of statutory interpretation, the expression
of one thing is the exclusion of another. When certain persons or things are
specified in a law, contract, or will, an intention to exclude all others from its
operation may be inferred. If a statute specifies one exception to a general
rule or assumes to specify the effects of a certain provision, other exceptions
or effects are excluded.[55] Where the terms are expressly limited to certain
matters, it may not, by interpretation or construction, be extended to other
matters.[56] Such is the case here. If its intent were otherwise, the law could
have so easily and conveniently included "trade union centers" in identifying
the labor organizations allowed to charter a chapter or local. Anything that is
not included in the enumeration is excluded therefrom, and a meaning that
does not appear nor is intended or reflected in the very language of the statute
cannot be placed therein.[57] The rule is restrictive in the sense that it
proceeds from the premise that the legislating body would not have made
specific enumerations in a statute if it had the intention not to restrict its
meaning and confine its terms to those expressly mentioned.[58] Expressium
facit cessare tacitum.[59] What is expressed puts an end to what is implied.
Casus omissus pro omisso habendus est. A person, object or thing omitted
must have been omitted intentionally.
Therefore, since under the pertinent status and applicable implementing
rules, the power granted to labor organizations to directly create a chapter or
local through chartering is given to a federation or national union, then a trade
union center is without authority to charter directly.
The ruling of this Court in the instant case is not a departure from the policy
of the law to foster the free and voluntary organization of a strong and united
labor movement,[60] and thus assure the rights of workers to self-
organization.[61] The mandate of the Labor Code in ensuring strict
compliance with the procedural requirements for registration is not without
reason. It has been observed that the formation of a local or chapter becomes
a handy tool for the circumvention of union registration requirements. Absent
the institution of safeguards, it becomes a convenient device for a small group
of employees to foist a not-so-desirable federation or union on unsuspecting
co-workers and pare the need for wholehearted voluntariness, which is basic
to free unionism.[62] As a legitimate labor organization is entitled to specific
rights under the Labor Code and involved in activities directly affecting
public interest, it is necessary that the law afford utmost protection to the
parties affected.[63] However, as this Court has enunciated in Progressive
Development Corporation v. Secretary of Department of Labor and
Employment, it is not this Court's function to augment the requirements
prescribed by law. Our only recourse, as previously discussed, is to exact
strict compliance with what the law provides as requisites for local or chapter
formation.[64]
In sum, although PDMP as a trade union center is a legitimate labor
organization, it has no power to directly create a local or chapter. Thus,
SMPPEU-PDMP cannot be created under the more lenient requirements for
chartering, but must have complied with the more stringent rules for creation
and registration of an independent union, including the 20% membership
requirement.

WHEREFORE, the instant Petition is GRANTED. The Decision dated 09

March 2005 of the Court of Appeals in CA-GR SP No. 66200 is REVERSED
and SET ASIDE. The Certificate of Registration of San Miguel Packaging
Products Employees Union-Pambansang Diwa ng Manggagawang Pilipino
is ORDERED CANCELLED, and SMPPEU-PDMP DROPPED from the
rolls of legitimate labor organizations.

Costs against petitioner.

SO ORDERED.
FILIPINO PIPE AND FOUNDRY CORPORATION vs. NATIONAL
LABOR RELATIONS COMMISSION
G.R. No. 115180 | 1999-11-16
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court
seeking to annul and set aside the Decision1 [Annex "A", Rollo, pp. 36-49.]
of the National Labor Relations Commission,2 [Composed of
Commissioners: Rogelio I. Rayala (Ponente); Edna Bonto-Perez (Presiding
Commissioner; and Domingo Zapanta.] dated September 29, 1993, in NLRC
NCR CA No. 003806-92, which reversed the Decision3 [Annex "S", Rollo,
pp. 176-184.] of the Labor Arbiter,4 [Benigno C. Villarente, Jr.] dated
August 31, 1992, in NLRC Case No. 4-1309-86, disposing thus:
'WHEREFORE, premises considered, the appeal of complainant corporation
is hereby dismissed for lack of merit; the appeal of Atty. Lerum and NLU is
hereby granted, and the Decision dated August 31, 1992 is hereby annulled
and set side, and a new judgment is hereby entered declaring the complaint
below dismissed for lack of merit insofar as respondent NLU and Atty.
Lerum are concerned.
SO ORDERED."5 [Annex "A", Rollo, p. 48.]
The antecedent facts can be culled as follows:
On February 10, 1986, respondent National Labor Union-Trade Union
Congress of the Philippines (NLU-TUCP), a national federation of labor
unions, filed with the then Ministry of Labor and Employment, in behalf of
its local chapter, the Filipino Pipe Workers Union-National Labor Union
(FPWU-NLU, hereinafter referred to as Union), a notice of strike signed by
its national president, Atty. Eulogio R. Lerum, against the petitioner, Filipino
Pipe and Foundry Corporation, alleging as grounds therefor union busting
and non-implementation of the Collective Bargaining Agreement.6 [Rollo,
p. 64.]
The initial conciliation conference was set on February 24, 1986 but due to
lack of notice thereof to petitioner company, as well as the failure of FPWU-
NLU to furnish the latter a copy of the notice of strike, the initial conciliation
conference was re-set to March 3, 1986.
In the early morning of March 3, 1986, however, without waiting for the
outcome of the conciliation conference scheduled on said date, the FPWU-
NLU staged the strike in question which lasted until June 13, 1986, when a
return to work agreement was reached by the union and petitioner company.7
[Rollo, p. 178.]
On April 8, 1986, petitioner company interposed before the Arbitration
Branch of the then Ministry of Labor and Employment, a petition to declare
the strike illegal with prayer for damages against FPWU-NLU, NLU-TUCP
and its national president, Atty. Eulogio Lerum.
On December 23, 1988, petitioner company moved for the partial dismissal
of the Complaint against forty-three (43) officers and members of FPWU-
NLU, but maintained the action against the NLU-TUCP and Atty. Eulogio
Lerum.8 [Rollo, p. 39.]
On August 31, 1992, the Labor Arbiter came out with a decision for petitioner
company, ruling as follows:
"WHEREFORE, judgment is hereby rendered declaring that the strike staged
by respondents from March 3, 1986 to June 13, 1986 was ILLEGAL.
Accordingly and in conformity with the Return-to-Work Agreement,
respondent National Labor Union-TUCP is hereby directed to pay the
complainant company the following:
a) Actual damages in the form of loss of revenue during the duration of the
strike which lasted for 100 days or in the amount of ONE MILLION PESOS
(P1,000,000.00);
b) Damages to the good business standing and commercial credit of the
company in the amount of THREE HUNDRED FIFTY THOUSAND
PESOS (P350,000.00); and
c) Exemplary damages to deter others similarly inclined from committing
similar acts and to serve as an example for the public good, in the amount of
TWO HUNDRED FIFTY THOUSAND PESOS (P250,000.00).
Further, respondent NLU is hereby directed to pay the attorney's fees
equivalent to 10% of the actual damages, or the amount of ONE HUNDRED
THOUSAND PESOS (P100, 000.00).
For lack of showing that respondent Lerum acted in his personal capacity, he
is hereby ABSOLVED from any liability.
Pursuant to the Agreement, the complaint against all the other individual
respondents are hereby DISMISSED.
SO ORDERED."9 [Annex "S", Rollo, pp. 183-184.]
Therefrom, both parties appealed to the NLRC which on September 29, 1993,
rendered the assailed decision. Dissatisfied therewith, the petitioner company
found its way to this Court via the present petition; theorizing that:
I
PUBLIC RESPONDENT NATIONAL LABOR RELATIONS
COMMISSION ERRED IN LAW, CAPRICIOUSLY AND
WHIMSICALLY DISREGARDED THE EVIDENCE SUBMITTED IN
THE CASE AND GRAVELY ABUSED ITS DISCRETION AMOUNTING
TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD
THAT PRIVATE RESPONDENTS NATIONAL LABOR UNION (NLU)-
TUCP AND ATTY. EULOGIO LERUM ARE NOT PRIMARILY
RESPONSIBLE AND, THEREFORE, NOT LIABLE FOR DAMAGES
SUFFERED BY PETITIONER ON ACCOUNT OF THE ILLEGAL
STRIKE THEY HAD DIRECTLY AIDED, ASSISTED, ABETTED AND
PARTICIPATED IN.
II
PUBLIC RESPONDENT NATIONAL LABOR RELATIONS
COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING
TO LACK AND/OR EXCESS OF JURISDICTION AND ACTED
CAPRICIOUSLY AND WHIMSICALLY IN TOTAL DISREGARD OF
THE EVIDENCE PRESENTED IN THE CASE WHEN IT HELD THAT
PRIVATE RESPONDENTS MERELY ASSISTED THE LOCAL
CHAPTER AND ITS MEMBERS IN STAGING A STRIKE AGAINST
PETITIONER AND THAT SUCH ASSISTANCE WAS NOT THE CAUSE
NOR WAS IT AN INDESPENSABLE ELEMENT OF THE STRIKE.
III
PUBLIC RESPONDENT NATIONAL LABOR RELATIONS
COMMISSION GRAVELY ERRED IN LAW AND GRAVELY ABUSED
ITS DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION WHEN IT CONCLUDED THAT PETITIONER LOST
ITS CAUSE OF ACTION AGAINST PRIVATE RESPONDENTS AFTER
THE LOCAL UNION HIRED A NEW COUNSEL AND PETITIONER
MOVED FOR PARTIAL DISMISSAL OF ITS COMPLAINT AGAINST
THE STRIKING WORKERS INASMUCH AS PRIVATE
RESPONDENTS ARE MERE THIRD PARTIES.10 [Petition, Rollo, p. 11.]
Rule XXII, Book V, of the Rules Implementing the Labor Code, provides:
"Section 1. Grounds for strike and lockout. - A strike or lockout may be
declared in cases of bargaining deadlocks and unfair labor practices.
Violations of collective bargaining agreements, except flagrant and/or
malicious refusal to comply with its economic provisions, shall not be
considered unfair labor practice and shall not be strikeable. No strike or
lockout may be declared on grounds involving inter-union and intra-union
disputes or on issues brought to voluntary or compulsory arbitration."
xxx.....xxx.....xxx
"Section 3. - Notice of strike or lockout.- In cases of bargaining deadlocks, a
notice of strike or lockout shall be filed with the regional branch of the Board
at least thirty (30) days before the intended date thereof, a copy of said notice
having been served on the other party concerned. x x x"
xxx.....xxx.....xxx
"Section 6. Conciliation. - Upon receipt of the notice, the regional branch of
the Board shall exert all efforts at mediation and conciliation to enable the
parties to settle the dispute amicably. The regional branch of the Board may,
upon consultation, recommend to the parties to submit the dispute to
voluntary arbitration.
During the proceedings, the parties shall not do any act which may disrupt or
impede the early settlement of the dispute. They are obliged as part of the
duty to bargain collectively in good faith, to participate fully and promptly in
the conciliation meetings called by the regional branch of the board. The
regional branch of the Board shall have the power to issue subpoenas
requiring the attendance of the parties to the meetings. xxx"
Applying the aforecited provision of law in point to the case under
consideration, the Court is of the finding and conclusion that the strike staged
by FPWU-NLU was illegal for want of any legal basis. Contrary to the
grounds advanced by the union in the notice of strike, it turned out during the
March 3, 1986 conciliation conference that the purpose of the strike was to
pressure the petitioner company to:
1) include in the salary of the strikers the P3.00 wage increase11 [Based on
Wage Order Nos. 2 and 3 (See Filipino Pipe Workers Union (NLU) vs.
Batario, Jr., 163, SCRA 789, p. 797)] effective March 1, 1986.
2) compute their backwages covering the period from December 1, 1980 to
February 28, 1986, including vacation leave and sick leave.
A thorough sifting of the pertinent records discloses that the alleged union
busting was not substantiated and the supposed non-implementation of the
collective bargaining agreement was groundless because the demands of
FPWU-NLU, at the time the notice of strike was filed and at the time the
union actually struck, were the subject of a pending application for a writ of
execution filed by the union in Case No. AB-7933-80 (NCR-CA-8-674-80),
which application was granted on April 4, 1986 by the Labor Arbiter.12
[Filipino Pipe Workers Union (NLU) vs. Batario, Jr., 163, SCRA 789, p.
792.] Verily, the strike staged by FPWU-NLU was baseless since it was still
pre-mature then for the union to insist on the implementation of the adverted
provision of the collective bargaining agreement, which was the subject of a
pending writ of execution.
Then too, the failure of the union to serve petitioner company a copy of the
notice of strike is a clear violation of Section 3 of the aforestated Rules. The
constitutional precepts of due process mandate that the other party be notified
of the adverse action of the opposing party. So also, the same Section
provides for a mandatory thirty (30) day cooling-off period which the union
ignored when it struck on March 3, 1986, before the 30th day from the time
the notice of strike was filed on February 10, 1986.
What is more, the same strike blatantly disregarded the prohibition on the
doing of any act which may impede or disrupt the conciliation proceedings,
when the union staged the strike in the early morning of March 3, 1986, the
very same day the conciliation conference was scheduled by the former
Ministry of Labor.
In light of the foregoing, it is beyond cavil that subject strike staged by the
union was illegal.
Anent the responsibility for the damages allegedly sustained by petitioner
company on account of the illegal strike, the latter theorized that the liability
therefor should be borne by NLU-TUCP and its national president, Atty.
Eulogio Lerum, for having directly participated in aiding and abetting the
illegal strike. It is argued that FPWU-NLU is a mere agent of respondent
NLU-TUCP, because FPWU-NLU, which was formed by respondent NLU-
TUCP is not registered as a local unit or chapter but directly affiliated with
the latter and therefore, could not have acted on its own. Otherwise stated,
petitioner is of the view that FPWU-NLU, a local union, cannot act as the
principal of respondent NLU-TUCP, a mother federation, because it is not a
legitimate labor organization.13 [Petition, Rollo, pp. 19-20.] In support of
this stance, petitioner cited the following letter of Atty. Lerum to the
company, to wit:
"NATIONAL LABOR UNION
An Affiliate of the Trade Union of the Philippines
3199 Ramon Magsaysay Blvd., Manila, Philippines
Tel. 61-42-65
March 29, 1983
Dear Sirs:
Please be informed that we have formed a local union in your company and
the officers thereof are the following:
President .....-.....Virgilio Bernal
Vice-Pres......-.....Ramon Alborte
Secretary.....-.....Ernesto Ballesteros
Treasure.....-.....Arsenio Agustin
Auditor.....-.....Genaro Gabule
Board Members:
1. Eduardo Cenina..........4. Felimon Simborio
2. Dante Canete.............5. Joseph Olazo
3. Reynaldo Adelante .....6. Virgilio Elnar
Shop Stewards:
1. Pablito Fajardo
2. Ruperto Manlangit
3. Ruben Bongaos
We have given them full authority to deal with you on all matters covered by
our authority as sole collective bargaining representative of your rank and
file workers.
Very truly yours,
(Sgd)
EULOGIO R. LERUM
National President"14
[Rollo, p. 246.]
In Progressive Development Corporation vs. Secretary, Department of Labor
and Employment,15 [G. R. No. 96425, February 4, 1992, 205 SCRA 802,]
the Court explained the nature of the relationship between a mother
union/federation and a local union, thus:
"At this juncture, it is important to clarify the relationship between the mother
union and the local union. In the case of Liberty Cotton Mills Workers Union
v. Liberty Cotton Mills, Inc., 66 SCRA 512 [1975], the Court held that the
mother union, acting for and in behalf of its affiliate, had the status of an
agent while the local union remained the basic unit of the association, free to
serve the common interest of all its members subject only to the restraints
imposed by the constitution and by-laws of the association. x x x"16 [Id., pp.
814-815.]
The same is true even if the local union is not a legitimate labor organization.
Conformably, in the abovecited case the Court ruled that the mother
federation was a mere agent and the local chapter/union was the principal,
notwithstanding the failure of the local union to comply with the procedural
requirements that would make it a legitimate labor organization.
Evidently, in the case under scrutiny, whether or not FPWU, the local
chapter, complied with the procedural requirements that would make it a
legitimate labor organization is immaterial. It would not affect its status as
the principal and basic unit of the association. The requirement laid down in
the Progressive Development case, that the local union must be a legitimate
labor organization, pertains to the conditions before a union may file a
petition for certification election and to be certified as sole and exclusive
bargaining agent. In the present case, there is no dispute that FPWU-NLU is
the sole and exclusive bargaining representative of the rank and file
employees of petitioner company. The union's status as a legitimate labor
organization is therefore of no moment in the resolution of the controversy
here. As the local union, it is considered as the principal; the entity which
staged the illegal strike and the one responsible for the resulting damages
allegedly sustained by petitioner company.
Furthermore, the petitioner company is now estopped from reneging on the
recognition it extended to the FPUW-NLU as the bargaining representative
of its rank and file workers, by belatedly attacking its status which petitioner
company had voluntarily recognized. It should be noted that even as early as
1981, when the collective bargaining agreement sought to be implemented
by the union was entered into, the latter was already the bargaining
representative of the employees concerned. It is not, therefore, true that it was
respondent NLU-TUCP which formed FPWU. At most, the entry into the
picture of the private respondent on March 23, 1983, merely affirmed the
status of FPWU as the recognized bargaining representative of the rank and
file employees of petitioner company.
Evidently, direct and primary responsibility for the damages allegedly caused
by the illegal strike sued upon fall on the local union FPWU, being the
principal, and not on respondent NLU-TUCP, a mere agent of FPWU-NLU
which assisted the latter in filing the notice of strike. Being just an agent, the
notice of strike filed by Atty. Eulogio Lerum, the national president of NLU-
TUCP, is deemed to have been filed by its principal, the FPWU-NLU.
Having thus dismissed the claim for damages against the principal, FPWU-
NLU, the action for damages against its agent, respondent NLU-TUCP, and
Atty. Lerum, has no more leg to stand on and should also be dismissed.

Premises studiedly considered, the Court is of the ineluctable conclusion, and

so holds, that the National Labor Relations Commission did not act with
grave abuse of discretion in reversing the Decision of the Labor Arbiter in
NLRC CASE No. 4-1309-86.

WHEREFORE, for lack of merit, the Petition is DISMISSED, and the

Decision of the National Labor Relations Commission in NLRC NCR CA
No. 003806-92 AFFIRMED. No pronouncement as to costs.

SO ORDERED.
SUGBUANON RURAL BANK, INC. vs. LAGUESMA
G.R. No. 116194 | 2000-02-02
QUISUMBING, J.:
In this special civil action for certiorari and prohibition, petitioner seeks the
annulment of the April 27, 1994 Resolution of the Department of Labor and
Employment, affirming the order of the Med-Arbiter, dated December 9,
1993, which denied petitioner's motion to dismiss respondent union's petition
for certification election. Esmmis
Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a duly-
registered banking institution with principal office in Cebu City and a branch
in Mandaue City. Private respondent SRBI-Association of Professional,
Supervisory, Office, and Technical Employees Union (APSOTEU) is a
legitimate labor organization affiliated with the Trade Unions Congress of
the Philippines (TUCP).
On October 8, 1993, the DOLE Regional Office in Cebu City granted
Certificate of Registration No. R0700-9310-UR-0064 to APSOTEU- TUCP,
hereafter referred to as the union.
On October 26, 1993, the union filed a petition for certification election of
the supervisory employees of SRBI. It alleged, among others, that: (1)
APSOTEU-TUCP was a labor organization duly-registered with the Labor
Department; (2) SRBI employed 5 or more supervisory employees; (3) a
majority of these employees supported the petition; (4) there was no existing
collective bargaining agreement (CBA) between any union and SRBI; and
(5) no certification election had been held in SRBI during the past 12 months
prior to the petition.
On October 28, 1993, the Med-Arbiter gave due course to the petition. The
pre-certification election conference between SRBI and APSOTEU- TUCP
was set for November 15, 1993.
On November 12, 1993, SRBI filed a motion to dismiss the union's petition.
It sought to prevent the holding of a certification election on two grounds:
First, that the members of APSOTEU-TUCP were in fact managerial or
confidential employees. Thus, following the doctrine in Philips Industrial
Development Corporation v. National Labor Relations Commission,1 [210
SCRA 339 (1992)] they were disqualified from forming, joining, or assisting
any labor organization. Petitioner attached the job descriptions of the
employees concerned to its motion. Second, the Association of Labor
Unions-Trade Unions Congress of the Philippines or ALU-TUCP was
representing the union. Since ALU- TUCP also sought to represent the rank-
and-file employees of SRBI, there was a violation of the principle of
separation of unions enunciated in Atlas Lithographic Services, Inc. v.
Laguesma.2 [205 SCRA 12 (1992)]
The union filed its opposition to the motion to dismiss on December 1, 1993.
It argued that its members were not managerial employees but merely
supervisory employees. The members attached their affidavits describing the
nature of their respective duties. The union pointed out that Article 245 of
the Labor Code expressly allowed supervisory employees to form, join, or
assist their own unions.
On December 9, 1993, the Med-Arbiter denied petitioner's motion to dismiss.
He scheduled the inclusion-exclusion proceedings in preparation for the
certification election on December 16, 1993.
SRBI appealed the Med-Arbiter's decision to the Secretary of Labor and
Employment. The appeal was denied for lack of merit. The certification
election was ordered.
On June 16, 1994, the Med-Arbiter scheduled the holding of the certification
election for June 29, 1994. His order identified the following SRBI personnel
as the voting supervisory employees in the election: the Cashier of the Main
office, the Cashier of the Mandaue Branch, the Accountant of the Mandaue
Branch, and the Acting Chief of the Loans Department.
On June 17, 1994, SRBI filed with the Med-Arbiter an urgent motion to
suspend proceedings The Med-Arbiter denied the same on June 21, 1994.
SRBI then filed a motion for reconsideration. Two days later, the Med-
Arbiter cancelled the certification election scheduled for June 29, 1994 in
order to address the motion for reconsideration.
The Med-Arbiter later denied petitioner's motion for reconsideration. SRBI
appealed the order of denial to the DOLE Secretary on December 16, 1993.
On December 22, 1993, petitioner proceeded to file a petition with the DOLE
Regional Office seeking the cancellation of the respondent union's
registration. It averred that the APSOTEU-TUCP members were actually
managerial employees who were prohibited by law from joining or
organizing unions.
On April 22, 1994, respondent DOLE Undersecretary denied SRBI's appeal
for lack of merit. He ruled that APSOTEU- TUCP was a legitimate labor
organization. As such, it was fully entitled to all the rights and privileges
granted by law to a legitimate labor organization, including the right to file a
petition for certification election. He also held that until and unless a final
order is issued canceling APSOTEU- TUCP's registration certificate, it had
the legal right to represent its members for collective bargaining purposes.
Furthermore, the question of whether the APSOTEU- TUCP members
should be considered as managerial or confidential employees should not be
addressed in the proceedings involving a petition for certification election
but best threshed out in other appropriate proceedings.
On May 25, 1994, SRBI moved for reconsideration of the Undersecretary's
decision which was denied on July 7, 1994. The Med- Arbiter scheduled the
holding of certification elections on August 12, 1994.
Hence the instant petition grounded on the following assignments of error:
I
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH
GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED:
A. IN HOLDING THAT ART. 257 OF THE LABOR CODE REQUIRES
THE MED-ARBITER TO CONDUCT A CERTIFICATION ELECTION IN
ANY UNORGANIZED ESTABLISHMENT EVEN WHEN THE
PETITIONING UNION DOES NOT POSSESS THE QUALIFICATION
FOR AN APPROPRIATE BARGAINING AGENT; AND
B. IN REFUSING TO ASSUME JURISDICTION OVER THE
PETITIONER'S APPEAL AND TO DISMISS THE RESPONDENT
UNION'S PETITION FOR CERTIFICATION ELECTION.
II
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH
GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED IN
DENYING THE PETITIONER'S APPEAL DESPITE THE FACT THAT:
A. THE ALLEGED MEMBERS OF RESPONDENT UNION ARE
MANAGERIAL EMPLOYEES WHO ARE LEGALLY DISQUALIFIED
FROM JOINING ANY LABOR ORGANIZATION.
B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF
RESPONDENT UNION ARE OCCUPYING HIGHLY CONFIDENTIAL
POSITIONS IN PETITIONER AND, THUS, THE LEGAL
DISQUALIFICATION OF MANAGERIAL EMPLOYEES EQUALLY
APPLY TO THEM. Msesm
III
IN ANY EVENT, THE CONCLUSIONS REACHED IN THE SUBJECT
RESOLUTIONS ARE CONTRARY TO LAW AND ARE
DIAMETRICALLY OPPOSED TO RESPONDENT UNION'S
RECORDED ADMISSIONS AND REPRESENTATIONS.
Considering petitioner's assigned errors, we find two core issues for
immediate resolution:
(1) Whether or not the members of the respondent union are managerial
employees and/or highly-placed confidential employees, hence prohibited by
law from joining labor organizations and engaging in union activities?
(2) Whether or not the Med-Arbiter may validly order the holding of a
certification election upon the filing of a petition for certification election by
a registered union, despite the petitioner's appeal pending before the DOLE
Secretary against the issuance of the union's registration?
The other issues based on the assigned errors could be resolved easily after
the core issues are settled.
Respecting the first issue, Article 212 (m) of the Labor Code defines the
terms "managerial employee" and "supervisory employees" as follows:
"Art. 212. Definitions-
xxx
(m) 'Managerial employee' is one who is vested with powers or prerogatives
to lay down and execute management policies and/or hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees. Supervisory
employees are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use of independent
judgment. All employees not falling within any of the above definitions are
considered rank-and-file employees for purposes of this Book (Italic
supplied)."
Petitioner submitted detailed job descriptions to support its contention that
the union members are managerial employees and/or confidential employees
proscribed from engaging in labor activities.3 [Records, pp. 80-82.]
Petitioner vehemently argues that the functions and responsibilities of the
employees involved constitute the "very core of the bank's business, lending
of money to clients and borrowers, evaluating their capacity to pay,
approving the loan and its amount, scheduling the terms of repayment, and
endorsing delinquent accounts to counsel for collection."4 [Id. at 16.] Hence,
they must be deemed managerial employees. Petitioner cites Tabacalera
Insurance Co. v. National Labor Relations Commission,5 [152 SCRA 667
(1987)] and Panday v. National Labor Relations Commission,6 [209 SCRA
122 (1992)] to sustain its submission. In Tabacalera, we sustained the
classification of a credit and collection supervisor by management as a
managerial/supervisory personnel. But in that case, the credit and collection
supervisor "had the power to recommend the hiring and appointment of his
subordinates, as well as the power to recommend any promotion and/or
increase."7 [152 SCRA 667, 674 (1987)] For this reason he was deemed to
be a managerial employee. In the present case, however, petitioner failed to
show that the employees in question were vested with similar powers. At best
they only had recommendatory powers subject to evaluation, review, and
final decision by the bank's management. The job description forms
submitted by petitioner clearly show that the union members in question may
not transfer, suspend, lay-off, recall, discharge, assign, or discipline
employees. Moreover, the forms also do not show that the Cashiers,
Accountants, and Acting Chiefs of the loans Department formulate and
execute management policies which are normally expected of management
officers.
Petitioner's reliance on Panday is equally misplaced. There, we held that a
branch accountant is a managerial employee because the said employee had
managerial powers, similar to the supervisor in Tabacalera. Their powers
included recommending the hiring and appointment of his subordinates, as
the power to recommend any promotion and/or increase.8 [Supra; 209 SCRA
122, 126 (1992)]
Here, we find that that the Cashiers, Accountant, and Acting Chief of the
Loans Department of the petitioner did not possess managerial powers and
duties. We are, therefore, constrained to conclude that they are not
managerial employees.
Now may the said bank personnel be deemed confidential employees?
Confidential employees are those who (1) assist or act in a confidential
capacity, in regard (2) to persons who formulate, determine, and effectuate
management policies [specifically in the field of labor relations].9 [San
Miguel Corp. Supervisors and Exempt Employees Union v. Laguesma, 277
SCRA 370, 374 (1997) citing Westinghouse Electric Corp. v. NLRB (CAS)
398 F2d. 689; Ladish Co., 178 NLRB 90 (1969), B.F. Goodrich Co., 115
NLRB 722.] The two criteria are cumulative, and both must be met if an
employee is to be considered a confidential employee-that is, the confidential
relationship must exist between the employee and his superior officer; and
that officer must handle the prescribed responsibilities relating to labor
relations.10 [Supra.]
Article 245 of the Labor Code11 [ART 245. Ineligibility of managerial
employees to join any labor organization; right of supervisory employees. -
Managerial employees are not eligible to join, assist or form any labor
organization. Supervisory employees shall not be eligible for membership in
a labor organization of the rank-and-file employees but may join, assist or
form separate labor organizations of their own.] does not directly, prohibit
confidential employees from engaging in union activities. However, under
the doctrine of necessary implication, the disqualification of managerial
employees equally applies to confidential employees.12 [Golden Farms, Inc.
v. Ferrer-Calleja, 175 SCRA 471, 477 (1989); Bulletin Publishing Co. Inc.
vs. Hon. Augusto Sanchez, etc., 144 SCRA 628, 634 (1986)] The
confidential-employee rule justifies exclusion of confidential employees
because in the normal course of their duties they become aware of
management policies relating to labor relations.13 [San Miguel Corp.
Supervisors and Exempt Employees Union v. Laguesma, supra, 375.] It must
be stressed, however, that when the employee does not have access to
confidential labor relations information, there is no legal prohibition against
confidential employees from forming, assisting, or joining a union.14 [Id. at
376; National Association of Trade Unions-Republic Planters Bank
Supervisor Chapter v. Torres, 239 SCRA 546, 560 (1994)]
Petitioner contends that it has only 5 officers running its day-to-day affairs.
They assist in confidential capacities and have complete access to the bank's
confidential data. They form the core of the bank's management team.
Petitioner explains that:
"...Specifically: (1) the Head or the Loans Department initially approves the
loan applications before they are passed on to the Board for confirmation. As
such, no loan application is even considered by the Board and approved by
petitioner without his stamp of approval based upon his interview of the
applicant and determination of his (applicant's) credit standing and financial
capacity. The same holds true with respect to renewals or restructuring of
loan accounts. He himself determines what account should be collected,
whether extrajudicially or judicially, and settles the problem or complaints
of borrowers regarding their accounts;
"(2) the Cashier is one of the approving officers and authorized signatories
of petitioner. He approves the opening of accounts, withdrawals and
encashment, and acceptance of check deposits, He deals with other banks
and, in the absence of the regular Manager, manages the entire office or
branch and approves disbursements of funds for expenses; and
"(3) the Accountant, who heads the Accounting Department, is also one of
the authorized signatories of petitioner and, in the absence of the Manager or
Cashier, acts as substitute approving officer and assumes the management of
the entire office. She handles the financial reports and reviews the
debit/credit tickets submitted by the other departments."15 [Rollo, pp. 13-
14.]
Petitioner's explanation, however, does not state who among the employees
has access to information specifically relating to its labor relations policies.
Even Cashier Patricia Maluya, who serves as the secretary of the bank's
Board of Directors may not be so classified. True, the board of directors is
responsible for corporate policies, the exercise of corporate powers, and the
general management of the business and affairs of the corporation. As
secretary of the bank's governing body, Patricia Maluya serves the bank's
management, but could not be deemed to have access to confidential
information specifically relating to SRBI's labor relations policies, absent a
clear showing on this matter. Thus, while petitioner's explanation confirms
the regular duties of the concerned employees, it shows nothing about any
duties specifically connected to labor relations.
As to the second issue. One of the rights of a legitimate labor organization
under Article 242(b) of the Labor Code is the right to be certified as the
exclusive representative of all employees in an appropriate bargaining unit
for purposes of collective bargaining. Having complied with the
requirements of Art. 234, it is our view that respondent union is a legitimate
labor union. Article 257 of the Labor Code mandates that a certification
election shall automatically be conducted by the Med-Arbiter upon the filing
of a petition by a legitimate labor organization.16 [Emphasis supplied.
Furusawa Rubber Philippines Inc. v. Secretary of Labor and Employment,
282 SCRA 635, 641 (1997); California Manufacturing Corp. v. Laguesma,
209 SCRA 606, 610-611 (1992)] Nothing is said therein that prohibits such
automatic conduct of the certification election if the management appeals on
the issue of the validity of the union's registration. On this score, petitioner's
appeal was correctly dismissed.
Petitioner argues that giving due course to respondent union's petition for
certification election would violate the separation of unions doctrine.17
[Atlas Lithographic Services, Inc. v. Bienvenido Laguesma, et al, 205 SCRA
12 (1992)] Note that the petition was filed by APSOTEU- TUCP, a legitimate
labor organization. It was not, filed by ALU. Nor was it filed by TUCP,
which is a national labor federation of with which respondent union is
affiliated. Petitioner says that respondent union is a mere alter ego of ALU.
The records show nothing to this effect. What the records instead reveal is
that respondent union was initially assisted by ALU during its preliminary
stages of organization. A local union maintains its separate personality
despite affiliation with a larger national federation.18 [Pambansang
Kapatiran Ng Mga Anak Pawis sa Formey Plastic National Workers
Brotherhood v. Secretary of Labor, 253 SCRA 96, 103 (1995)] Petitioner
alleges that ALU seeks to represent both respondent union and the rank-and-
file union. Again, we find nothing in the records to support this bare
assertion.

The law frowns on a union where the membership is composed of both

supervisors and rank-and-file employees, for fear that conflicts of interest
may arise in the areas of discipline, collective bargaining, and strikes.19
[Philippine Phosphate Corporation v. Torres, 231 SCRA 335, 342 (1994)]
However, in the present case, none of the members of the respondent union
came from the rank-and-file employees of the bank.

Taking into account the circumstances in this case, it is our view that
respondent Undersecretary committed no reversible error nor grave abuse of
discretion when he found the order of the Med-Arbiter scheduling a
certification election in order. The list of employees eligible to vote in said
certification election was also found in order, for none was specifically
disqualified from membership.

WHEREFORE, the instant petition is hereby DISMISSED. No

pronouncement as to costs.

SO ORDERED.
HOLY CHILD CATHOLIC SCHOOL vs. HON. PATRICIA STO.
TOMAS
G.R. No. 179146 | 2013-07-23
PERALTA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the Rules
of Civil Procedure are the April 18, 2007 Decision 1 and July 31, 2007
Resolution2 of the Court of Appeals in CA-G.R. SP No. 76175, which
affirmed the December 27, 2002 Decision3 and February 13, 2003
Resolution4 of the Secretary of the Department of Labor and Employment
(SOLE) that set aside the August 10, 2002 Decision5 of the Med-Arbiter
denying private respondent’s petition for certification election.
The factual antecedents are as follows:
On May 31, 2002, a petition for certification election was filed by private
respondent Pinag-Isang Tinig at Lakas ng Anakpawis – Holy Child Catholic
School Teachers and Employees Labor Union (HCCS-TELUPIGLAS),
alleging that: PIGLAS is a legitimate labor organization duly registered with
the Department of Labor and Employment (DOLE) representing HCCS-
TELU-PIGLAS; HCCS is a private educational institution duly registered
and operating under Philippine laws; there are approximately one hundred
twenty (120) teachers and employees comprising the proposed appropriate
bargaining unit; and HCCS is unorganized, there is no collective bargaining
agreement or a duly certified bargaining agent or a labor organization
certified as the sole and exclusive bargaining agent of the proposed
bargaining unit within one year prior to the filing of the petition.6 Among the
documents attached to the petition were the certificate of affiliation with
Pinag-Isang Tinig at Lakas ng Anakpawis Kristiyanong Alyansa ng
Makabayang Obrero (PIGLAS-KAMAO) issued by the Bureau of Labor
Relations (BLR), charter certificate issued by PIGLASKAMAO, and
certificate of registration of HCCS-TELU as a legitimate labor organization
issued by the DOLE.7
In its Comment8 and Position Paper,9 petitioner HCCS consistently noted
that it is a parochial school with a total of 156 employees as of June 28, 2002,
broken down as follows: ninety-eight (98) teaching personnel, twenty-five
(25) non-teaching academic employees, and thirty-three (33) non-teaching
non-academic workers. It averred that of the employees who signed to
support the petition, fourteen (14) already resigned and six (6) signed twice.
Petitioner raised that members of private respondent do not belong to the
same class; it is not only a mixture of managerial, supervisory, and rank-and-
file employees – as three (3) are vice-principals, one (1) is a department
head/supervisor, and eleven (11) are coordinators – but also a combination
of teaching and non-teaching personnel – as twenty-seven (27) are non-
teaching personnel. It insisted that, for not being in accord with Article 24510
of the Labor Code, private respondent is an illegitimate labor organization
lacking in personality to file a petition for certification election, as held in
Toyota Motor Philippines Corporation v. Toyota Motor Philippines
Corporation Labor Union;11 and an inappropriate bargaining unit for want
of community or mutuality of interest, as ruled in Dunlop Slazenger (Phils.),
Inc. v. Secretary of Labor and Employment12 and De La Salle University
Medical Center and College of Medicine v. Laguesma.13
Private respondent, however, countered that petitioner failed to substantiate
its claim that some of the employees included in the petition for certification
election holds managerial and supervisory positions.14 Assuming it to be
true, it argued that Section 11 (II),15 Rule XI of DOLE Department Order
(D.O.) No. 9, Series of 1997, provided for specific instances in which a
petition filed by a legitimate organization shall be dismissed by the Med-
Arbiter and that “mixture of employees” is not one of those enumerated.
Private respondent pointed out that questions pertaining to qualifications of
employees may be threshed out in the inclusionexclusion proceedings prior
to the conduct of the certification election, pursuant to Section 2,16 Rule XII
of D.O. No. 9. Lastly, similar to the ruling in In Re: Globe Machine and
Stamping Company,17 it contended that the will of petitioner’s employees
should be respected as they had manifested their desire to be represented by
only one bargaining unit. To back up the formation of a single employer unit,
private respondent asserted that even if the teachers may receive additional
pay for an advisory class and for holding additional loads, petitioner’s
academic and non-academic personnel have similar working conditions. It
cited Laguna College v. Court of Industrial Relations,18 as well as the case
of a union in West Negros College in Bacolod City, which allegedly
represented both academic and non-academic employees.
On August 10, 2002, Med-Arbiter Agatha Ann L. Daquigan denied the
petition for certification election on the ground that the unit which private
respondent sought to represent is inappropriate. She resolved:
A certification election proceeding directly involves two (2) issues namely:
(a) the proper composition and constituency of the bargaining unit; and (b)
the validity of majority representation claims. It is therefore incumbent upon
the Med-Arbiter to rule on the appropriateness of the bargaining unit once its
composition and constituency is questioned.
Section 1 (q), Rule I, Book V of the Omnibus Rules defines a “bargaining
unit” as a group of employees sharing mutual interests within a given
employer unit comprised of all or less than all of the entire body of employees
in the employer unit or any specific occupational or geographical grouping
within such employer unit. This definition has provided the “community or
mutuality of interest” test as the standard in determining the constituency of
a collective bargaining unit. This is so because the basic test of an asserted
bargaining unit’s acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the exercise of their
collective bargaining rights. The application of this test may either result in
the formation of an employer unit or in the fragmentation of an employer
unit.
In the case at bar, the employees of [petitioner], may, as already suggested,
quite easily be categorized into (2) general classes[:] one, the teaching staff;
and two, the non-teaching-staff. Not much reflection is needed to perceive
that the community or mutuality of interest is wanting between the teaching
and the non-teaching staff. It would seem obvious that the teaching staff
would find very little in common with the nonteaching staff as regards
responsibilities and function, working conditions, compensation rates, social
life and interests, skills and intellectual pursuits, etc. These are plain and
patent realities which cannot be ignored. These dictate the separation of these
two categories of employees for purposes of collective bargaining.
(University of the Philippines vs. Ferrer-Calleja, 211 SCRA 451)19
Private respondent appealed before the SOLE, who, on December 27, 2002,
ruled against the dismissal of the petition and directed the conduct of two
separate certification elections for the teaching and the non-teaching
personnel, thus:
We agree with the Med-Arbiter that there are differences in the nature of
work, hours and conditions of work and salary determination between the
teaching and non-teaching personnel of [petitioner]. These differences were
pointed out by [petitioner] in its position paper. We do not, however, agree
with the Med-Arbiter that these differences are substantial enough to warrant
the dismissal of the petition. First, as pointed out by [private respondent],
“inappropriateness of the bargaining unit sought to be represented is not a
ground for the dismissal of the petition[.”] In fact, in the cited case of
University of the Philippines v. Ferrer-Calleja, supra, the Supreme Court did
not order the dismissal of the petition but ordered the conduct of a
certification election, limiting the same among the non-academic personnel
of the University of the Philippines.
It will be recalled that in the U.P. case, there were two contending unions,
the Organization of Non-Academic Personnel of U.P. (ONAPUP) and All
U.P. Workers Union composed of both academic and nonacademic personnel
of U.P. ONAPUP sought the conduct of certification election among the
rank-and-file non-academic personnel only while the all U.P. Workers Union
sought the conduct of certification election among all of U.P.’s rank-and-file
employees covering academic and nonacademic personnel. While the
Supreme Court ordered a separate bargaining unit for the U.P. academic
personnel, the Court, however, did not order them to organize a separate labor
organization among themselves. The All U.P. Workers Union was not
directed to divest itself of its academic personnel members and in fact, we
take administrative notice that the All U.P. Workers Union continue to exist
with a combined membership of U.P. academic and non-academic personnel
although separate bargaining agreements is sought for the two bargaining
units. Corollary, [private respondent] can continue to exist as a legitimate
labor organization with the combined teaching and non-teaching personnel
in its membership and representing both classes of employees in separate
bargaining negotiations and agreements.
WHEREFORE, the Decision of the Med-Arbiter dated 10 August 2002 is
hereby REVERSED and SET ASIDE. In lieu thereof, a new order is hereby
issued directing the conduct of two certification elections, one among the
non-teaching personnel of Holy Child Catholic School, and the other, among
the teaching personnel of the same school, subject to the usual pre-election
conferences and inclusion-exclusion proceedings, with the following
choices:
A. Certification Election Among [Petitioner]’s Teaching Personnel:
1. Holy Child Catholic School Teachers and Employees Labor Union; and
2. No Union.
B. Certification Election Among [Petitioner]’s Non-Teaching Personnel:
1. Holy Child Catholic School Teachers and Employees Labor Union; and
2. No Union.
[Petitioner] is hereby directed to submit to the Regional Office of origin
within ten (10) days from receipt of this Decision, a certified separate list of
its teaching and non-teaching personnel or when necessary a separate copy
of their payroll for the last three (3) months prior to the issuance of this
Decision.20
Petitioner filed a motion for reconsideration21 which, per Resolution dated
February 13, 2003, was denied. Consequently, petitioner filed before the CA
a Petition for Certiorari with Prayer for Temporary Restraining Order and
Preliminary Injunction.22 The CA resolved to defer action on the prayer for
TRO pending the filing of private respondent’s Comment.23 Later, private
respondent and petitioner filed their Comment24 and Reply,25 respectively.
On July 23, 2003, petitioner filed a motion for immediate issuance of a TRO,
alleging that Hon. Helen F. Dacanay of the Industrial Relations Division of
the DOLE was set to implement the SOLE Decision when it received a
summons and was directed to submit a certified list of teaching and non-
teaching personnel for the last three months prior to the issuance of the
assailed Decision.26 Acting thereon, on August 5, 2003, the CA issued the
TRO and ordered private respondent to show cause why the writ of
preliminary injunction should not be granted.27 Subsequently, a
Manifestation and Motion28 was filed by private respondent, stating that it
repleads by reference the arguments raised in its Comment and that it prays
for the immediate lifting of the TRO and the denial of the preliminary
injunction. The CA, however, denied the manifestation and motion on
November 21, 200329 and, upon motion of petitioner,30 granted the
preliminary injunction on April 21, 2005.31 Thereafter, both parties filed
their respective Memorandum.32
On April 18, 2007, the CA eventually dismissed the petition. As to the
purported commingling of managerial, supervisory, and rank-and-file
employees in private respondent’s membership, it held that the Toyota ruling
is inapplicable because the vice-principals, department head, and
coordinators are neither supervisory nor managerial employees. It reasoned:
x x x While it may be true that they wield power over other subordinate
employees of the petitioner, it must be stressed[,] however[,] that their
functions are not confined with policy-determining such as hiring, firing, and
disciplining of employees, salaries, teaching/working hours, other monetary
and non-monetary benefits, and other terms and conditions of employment.
Further, while they may formulate policies or guidelines, nonetheless, such
is merely recommendatory in nature, and still subject to review and
evaluation by the higher executives, i.e., the principals or executive officers
of the petitioner. It cannot also be denied that in institutions like the
petitioner, company policies have already been preformulated by the higher
executives and all that the mentioned employees have to do is carry out these
company policies and standards. Such being the case, it is crystal clear that
there is no improper [commingling] of members in the private respondent
union as to preclude its petition for certification of (sic) election.33
Anent the alleged mixture of teaching and non-teaching personnel, the CA
agreed with petitioner that the nature of the former’s work does not coincide
with that of the latter. Nevertheless, it ruled that the SOLE did not commit
grave abuse of discretion in not dismissing the petition for certification
election, since it directed the conduct of two separate certification elections
based on Our ruling in University of the Philippines v. Ferrer-Calleja.34
A motion for reconsideration35 was filed by petitioner, but the CA denied
the same;36 hence, this petition assigning the alleged errors as follows:
I.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
THE RULING IN THE CASE OF TOYOTA MOTOR PHILIPPINES
CORPORATION VS. TOYOTA MOTOR PHILIPPINES CORPORATION
LABOR UNION (268 SCRA 573) DOES NOT APPLY IN THE CASE AT
BAR DESPITE THE [COMMINGLING] OF BOTH SUPERVISORY OR
MANAGERIAL AND RANK-AND-FILE EMPLOYEES IN THE
RESPONDENT UNION;
II
THE HONORABLE COURT OF APPEALS ERRED IN ITS
CONFLICTING RULING ALLOWING THE CONDUCT OF
CERTIFICATION ELECTION BY UPHOLDING THAT THE
RESPONDENT UNION REPRESENTED A BARGAINING UNIT
DESPITE ITS OWN FINDINGS THAT THERE IS NO MUTUALITY OF
INTEREST BETWEEN THE MEMBERS OF RESPONDENT UNION
APPLYING THE TEST LAID DOWN IN THE CASE OF UNIVERSITY
OF THE PHILIPPINES VS. FERRER-CALLEJA (211 SCRA 451).37
We deny.
Petitioner claims that the CA contradicted the very definition of managerial
and supervisory employees under existing law and jurisprudence when it did
not classify the vice-principals, department head, and coordinators as
managerial or supervisory employees merely because the policies and
guidelines they formulate are still subject to the review and evaluation of the
principal or executive officers of petitioner. It points out that the duties of the
vice-principals, department head, and coordinators include the evaluation
and assessment of the effectiveness and capability of the teachers under
them; that such evaluation and assessment is independently made without the
participation of the higher Administration of petitioner; that the fact that their
recommendation undergoes the approval of the higher Administration does
not take away the independent nature of their judgment; and that it would be
difficult for the vice-principals, department head, and coordinators to
objectively assess and evaluate the performances of teachers under them if
they would be allowed to be members of the same labor union.
On the other hand, aside from reiterating its previous submissions, private
respondent cites Sections 9 and 1238 of Republic Act (R.A.) No.
9481 to buttress its contention that petitioner has no standing to oppose the
petition for certification election. On the basis of the statutory provisions, it
reasons that an employer is not a party-in-interest in a certification election;
thus, petitioner does not have the requisite right to protect even by way of
restraining order or injunction.
First off, We cannot agree with private respondent’s invocation of R.A. No.
9481. Said law took effect only on June 14, 2007; hence, its applicability is
limited to labor representation cases filed on or after said date.39 Instead, the
law and rules in force at the time private respondent filed its petition for
certification election on May 31, 2002 are R.A. No. 6715, which amended
Book V of Presidential Decree (P.D.) No. 442 (the Labor Code), as amended,
and the Rules and Regulations Implementing R.A. No. 6715, as amended by
D.O. No. 9, which was dated May 1, 1997 but took effect on June 21, 1997.40
However, note must be taken that even without the express provision of
Section 12 of RA No. 9481, the “Bystander Rule” is already well entrenched
in this jurisdiction. It has been consistently held in a number of cases that a
certification election is the sole concern of the workers, except when the
employer itself has to file the petition pursuant to Article 259 of the Labor
Code, as amended, but even after such filing its role in the certification
process ceases and becomes merely a bystander.41 The employer clearly
lacks the personality to dispute the election and has no right to interfere at all
therein.42 This is so since any uncalled-for concern on the part of the
employer may give rise to the suspicion that it is batting for a company
union.43 Indeed, the demand of the law and policy for an employer to take a
strict, hands-off stance in certification elections is based on the rationale that
the employees’ bargaining representative should be chosen free from any
extraneous influence of the management; that, to be effective, the bargaining
representative must owe its loyalty to the employees alone and to no other.44
Now, going back to petitioner’s contention, the issue of whether a petition
for certification election is dismissible on the ground that the labor
organization’s membership allegedly consists of supervisory and rank-
andfile employees is actually not a novel one. In the 2008 case of Republic
v. Kawashima Textile Mfg., Philippines, Inc.,45 wherein the
employercompany moved to dismiss the petition for certification election on
the ground inter alia that the union membership is a mixture of rank-and-file
and supervisory employees, this Court had conscientiously discussed the
applicability of Toyota and Dunlop in the context of R.A. No. 6715 and D.O.
No. 9, viz.:
It was in R.A. No. 875, under Section 3, that such questioned mingling was
first prohibited, to wit:
Sec. 3. Employees' right to self-organization. - Employees shall have the right
to self-organization and to form, join or assist labor organizations of their
own choosing for the purpose of collective bargaining through
representatives of their own choosing and to engage in concerted activities
for the purpose of collective bargaining and other mutual aid or protection.
Individuals employed as supervisors shall not be eligible for membership in
a labor organization of employees under their supervision but may form
separate organizations of their own. (Emphasis supplied)
Nothing in R.A. No. 875, however, tells of how the questioned mingling can
affect the legitimacy of the labor organization. Under Section 15, the only
instance when a labor organization loses its legitimacy is when it violates its
duty to bargain collectively; but there is no word on whether such mingling
would also result in loss of legitimacy. Thus, when the issue of whether the
membership of two supervisory employees impairs the legitimacy of a rank-
and-file labor organization came before the Court En Banc in Lopez v.
Chronicle Publication Employees Association, the majority pronounced:
It may be observed that nothing is said of the effect of such ineligibility upon
the union itself or on the status of the other qualified members thereof should
such prohibition be disregarded. Considering that the law is specific where it
intends to divest a legitimate labor union of any of the rights and privileges
granted to it by law, the absence of any provision on the effect of the
disqualification of one of its organizers upon the legality of the union, may
be construed to confine the effect of such ineligibility only upon the
membership of the supervisor. In other words, the invalidity of membership
of one of the organizers does not make the union illegal, where the
requirements of the law for the organization thereof are, nevertheless,
satisfied and met. (Emphasis supplied)
Then the Labor Code was enacted in 1974 without reproducing Sec. 3 of R.A.
No. 875. The provision in the Labor Code closest to Sec. 3 is Article 290,
which is deafeningly silent on the prohibition against supervisory employees
mingling with rank-and-file employees in one labor organization. Even the
Omnibus Rules Implementing Book V of the Labor Code (Omnibus Rules)
merely provides in Section 11, Rule II, thus:
Sec. 11. Supervisory unions and unions of security guards to cease operation.
- All existing supervisory unions and unions of security guards shall, upon
the effectivity of the Code, cease to operate as such and their registration
certificates shall be deemed automatically cancelled. However, existing
collective agreements with such unions, the life of which extends beyond the
date of effectivity of the Code shall be respected until their expiry date insofar
as the economic benefits granted therein are concerned.
Members of supervisory unions who do not fall within the definition of
managerial employees shall become eligible to join or assist the rank and file
organization. The determination of who are managerial employees and who
are not shall be the subject of negotiation between representatives of
supervisory union and the employer. If no agreement s reached between the
parties, either or both of them may bring the issue to the nearest Regional
Office for determination. (Emphasis supplied)
The obvious repeal of the last clause of Sec. 3, R.A. No. 875 prompted the
Court to declare in Bulletin v. Sanchez that supervisory employees who do
not fall under the category of managerial employees may join or assist in the
formation of a labor organization for rank-and-file employees, but they may
not form their own labor organization.
While amending certain provisions of Book V of the Labor Code, E.O. No.
111 and its implementing rules continued to recognize the right of
supervisory employees, who do not fall under the category of managerial
employees, to join a rank- and-file labor organization.
Effective 1989, R.A. No. 6715 restored the prohibition against the questioned
mingling in one labor organization, viz.:
Sec. 18. Article 245 of the same Code, as amended, is hereby further
amended to read as follows:
Art. 245. Ineligibility of managerial employees to join any labor
organization; right of supervisory employees. Managerial employees are not
eligible to join, assist or form any labor organization. Supervisory employees
shall not be eligible for membership in a labor organization of the rank-and-
file employees but may join, assist or form separate labor organizations of
their own (Emphasis supplied)
Unfortunately, just like R.A. No. 875, R.A. No. 6715 omitted specifying the
exact effect any violation of the prohibition 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:
xxxx
(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.
xxxx
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
xxxx
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:
Sec. 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 bylaws 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-PTGWO 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. 46
When a similar issue confronted this Court close to three years later, the
above ruling was substantially quoted in Samahang Manggagawa sa Charter
Chemical Solidarity of Unions in the Philippines for Empowerment and
Reforms (SMCC-Super) v. Charter Chemical and Coating Corporation. 47
In unequivocal terms, We reiterated that the alleged 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. 48
Indeed, Toyota and Dunlop no longer hold true under the law and rules
governing the instant case. 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 and Regulations Implementing
R.A. No. 6715 (1989 Amended Omnibus Rules) was applied. In contrast,
D.O. No. 9 is applicable in the petition for certification election of private
respondent as it was filed on May 31, 2002.
Following the doctrine laid down in Kawashima and SMCC-Super, it must
be stressed that petitioner cannot collaterally attack the legitimacy of private
respondent by praying for the dismissal of the petition for certification
election:
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. 49
Further, the determination of whether union membership comprises
managerial and/or supervisory employees is a factual issue that is best left
for resolution in the inclusion-exclusion proceedings, which has not yet
happened in this case so still premature to pass upon. We could only
emphasize the rule that factual findings of labor officials, who are deemed to
have acquired expertise in matters within their jurisdiction, are generally
accorded not only with respect but even finality by the courts when supported
by substantial evidence. 50 Also, the jurisdiction of this Court in cases
brought before it from the CA via Rule 45 is generally limited to reviewing
errors of law or jurisdiction. The findings of fact of the CA are conclusive
and binding. Except in certain recognized instances, 51 We do not entertain
factual issues as it is not Our function to analyze or weigh evidence all over
again; the evaluation of facts is best left to the lower courts and administrative
agencies/quasi-judicial bodies which are better equipped for the task. 52
Turning now to the second and last issue, petitioner argues that, in view of
the improper mixture of teaching and non-teaching personnel in private
respondent due to the absence of mutuality of interest among its members,
the petition for certification election should have been dismissed on the
ground that private respondent is not qualified to file such petition for its
failure to qualify as a legitimate labor organization, the basic qualification of
which is the representation of an appropriate bargaining unit.
We disagree.
The concepts of a union and of a legitimate labor organization are different
from, but related to, the concept of a bargaining unit:
Article 212(g) of the Labor Code defines a labor organization as "any union
or association of employees which exists in whole or in part for the purpose
of collective bargaining or of dealing with employers concerning terms and
conditions of employment." Upon compliance with all the documentary
requirements, the Regional Office or Bureau shall issue in favor of the
applicant labor organization a certificate indicating that it is included in the
roster of legitimate labor organizations. Any applicant labor organization
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. 53
In case of alleged inclusion of disqualified employees in a union, the proper
procedure for an employer like petitioner is to directly file a petition for
cancellation of the union’s certificate of registration due to
misrepresentation, false statement or fraud under the circumstances
enumerated in Article 239 of the Labor Code, as amended.54 To reiterate,
private respondent, having been validly issued a certificate of registration,
should be considered as having acquired juridical personality which may not
be attacked collaterally.
On the other hand, a bargaining unit has been defined as a "group of
employees of a given employer, comprised of all or less than all of the entire
body of employees, which the collective interests of all the employees,
consistent with equity to the employer, indicated to be best suited to serve
reciprocal rights and duties of the parties under the collective bargaining
provisions of the law."55 In determining the proper collective bargaining unit
and what unit would be appropriate to be the collective bargaining agency,
the Court, in the seminal case of Democratic Labor Association v. Cebu
Stevedoring Company, Inc., 56 mentioned several factors that should be
considered, to wit: (1) will of employees (Globe Doctrine); (2) affinity and
unity of employees' interest, such as substantial similarity of work and duties,
or similarity of compensation and working conditions; (3) prior collective
bargaining history; and (4) employment status, such as temporary, seasonal
and probationary employees. We stressed, however, that the test of the
grouping is community or mutuality of interest, because “the basic test of an
asserted bargaining unit's acceptability is whether or not it is fundamentally
the combination which will best assure to all employees the exercise of their
collective bargaining rights." 57
As the SOLE correctly observed, petitioner failed to comprehend the full
import of Our ruling in U.P. It suffices to quote with approval the apt
disposition of the SOLE when she denied petitioner’s motion for
reconsideration:
[Petitioner] likewise claimed that we erred in interpreting the decision of the
Supreme Court in U.P. v. Ferrer-Calleja, supra. According to [petitioner], the
Supreme Court stated that the non-academic rank-and-file employees of the
University of the Philippines shall constitute a bargaining unit to the
exclusion of the academic employees of the institution. Hence, [petitioner]
argues, it sought the creation of separate bargaining units, namely: (1)
[petitioner]’s teaching personnel to the exclusion of non-teaching personnel;
and (2) [petitioner]’s non-teaching personnel to the exclusion of teaching
personnel.
[Petitioner] appears to have confused the concepts of membership in a
bargaining unit and membership in a union. In emphasizing the phrase “to
the exclusion of academic employees” stated in U.P. v. Ferrer-Calleja,
[petitioner] believed that the petitioning union could not admit academic
employees of the university to its membership. But such was not the intention
of the Supreme Court.
A bargaining unit is a group of employees sought to be represented by a
petitioning union. Such employees need not be members of a union seeking
the conduct of a certification election. A union certified as an exclusive
bargaining agent represents not only its members but also other employees
who are not union members. As pointed out in our assailed Decision, there
were two contending unions in the U.P. case, namely[,] the Organization of
Non-Academic Personnel of U.P. (ONAPUP) and the All U.P. Worker’s
Union composed of both U.P. academic and non-academic personnel.
ONAPUP sought the conduct of a certification election among the rank-and-
file non-academic personnel only, while the All U.P. Workers Union
intended to cover all U.P. rank-and-file employees, involving both academic
and non-academic personnel.
The Supreme Court ordered the “non-academic rank-and-file employees of
U.P. to constitute a bargaining unit to the exclusion of the academic
employees of the institution”, but did not order them to organize a separate
labor organization. In the U.P. case, the Supreme Court did not dismiss the
petition and affirmed the order for the conduct of a certification election
among the non-academic personnel of U.P., without
prejudice to the right of the academic personnel to constitute a separate
bargaining unit for themselves and for the All U.P. Workers Union to
institute a petition for certification election.
In the same manner, the teaching and non-teaching personnel of [petitioner]
school must form separate bargaining units. Thus, the order for the conduct
of two separate certification elections, one involving teaching personnel and
the other involving non-teaching personnel. It should be stressed that in the
subject petition, [private respondent] union sought the conduct of a
certification election among all the rank-and-file personnel of [petitioner]
school. Since the decision of the Supreme Court in the U.P. case prohibits us
from commingling teaching and non-teaching personnel in one bargaining
unit, they have to be separated into two separate bargaining units with two
separate certification elections to determine whether the employees in the
respective bargaining units desired to be represented by [private respondent].
In the U.P. case, only one certification election among the non-academic
personnel was ordered, because ONAPUP sought to represent that bargaining
unit only. No petition for certification election among the academic
personnel was instituted by All U.P. Workers Union in the said case; thus,
no certification election pertaining to its intended bargaining unit was
ordered by the Court. 58
Indeed, the purpose of a certification election is precisely to ascertain the
majority of the employees’ choice of an appropriate bargaining unit – to be
or not to be represented by a labor organization and, if in the affirmative case,
by which one. 59
At this point, it is not amiss to stress once more that, as a rule, only questions
of law may be raised in a Rule 45 petition. In Montoya v. Transmed Manila
Corporation, 60 the Court discussed the particular parameters of a Rule 45
appeal from the CA’s Rule 65 decision on a labor case, as follows:
x x x In a Rule 45 review, we consider the correctness of the assailed CA
decision, in contrast with the review for jurisdictional error that we undertake
under Rule 65. Furthermore, Rule 45 limits us to the review of questions of
law raised against the assailed CA decision. In ruling for legal correctness,
we have to view the CA decision in the same context that the petition for
certiorari it ruled upon was presented to it; we have to examine the CA
decision from the prism of whether it correctly determined the presence or
absence of grave abuse of discretion in the NLRC decision before it, not on
the basis of whether the NLRC decision on the merits of the case was correct.
In other words, we have to be keenly aware that the CA undertook a Rule 65
review, not a review on appeal, of the NLRC decision challenged before it.
This is the approach that should be basic in a Rule 45 review of a CA ruling
in a labor case. In question form, the question to ask is: Did the CA correctly
determine whether the NLRC committed grave abuse of discretion in ruling
on the case? 61
Our review is, therefore, limited to the determination of whether the CA
correctly resolved the presence or absence of grave abuse of discretion in the
decision of the SOLE, not on the basis of whether the latter's decision on the
merits of the case was strictly correct. Whether the CA committed grave
abuse of discretion is not what is ruled upon but whether it correctly
determined the existence or want of grave abuse of discretion on the part of
the SOLE.
WHEREFORE, the petition is DENIED. The April 18, 2007 Decision and
July 31, 2007, Resolution of the Court of Appeals in CA-G.R. SP No. 76175,
which affirmed the December 27, 2002 Decision of the Secretary of the
Department of Labor and Employment that set aside the August 10, 2002
Decision of the Med-Arbiter denying private respondent's petition for
certification election are hereby AFFIRMED.
SO ORDERED.
DE LA SALLE UNIVERSITY MEDICAL CENTER AND COLLEGE
OF MEDICINE vs. LAGUESMA
G.R. No. 102084 | 1998-08-12
MENDOZA, J:
Petitioner De La Salle University Medical Center and College of Medicine
(DLSUMCCM) is a hospital and medical school at Dasmariñas, Cavite.
Private respondent Federation of Free Workers-De La Salle University
Medical Center and College of Medicine Supervisory Union Chapter (FFW-
DLSUMCCMSUC), on the other hand, is a labor organization composed of
the supervisory employees of petitioner DLSUMCCM.
On April 17, 1991, the Federation of Free Workers (FFW), a national
federation of labor unions, issued a certificate to private respondent FFW-
DLSUMCCMSUC recognizing it as a local chapter. On the same day, it filed
on behalf of private respondent FFW-DLSUMCCMSUC a petition for
certification election among the supervisory employees of petitioner
DLSUMCCM. Its petition was opposed by petitioner DLSUMCCM on the
grounds that several employees who signed the petition for certification
election were managerial employees and that the FFW-DLSUMCCMSUC
was composed of both supervisory and rank-and-file employees in the
company. 1
In its reply dated May 22, 1991, private respondent FFW-DLSUMCCMSUC
denied petitioner's allegations. It contended that -
2. Herein petition seeks for the holding of a certification election among the
supervisory employees of herein respondent. It does not intend to include
managerial employees.
xxx xxx xxx
6. It is not true that supervisory employees are joining the rank-and-file
employees' union. While it is true that both regular rank-and-file employees
and supervisory employees of herein respondent have affiliated with FFW,
yet there are two separate unions organized by FFW. The supervisory
employees have a separate charter certificate issued by FFW. 2
On July 5, 1991, respondent Rolando S. de la Cruz, med-arbiter of the
Department of Labor and Employment Regional Office No. IV, issued an
order granting respondent union's petition for certification election. He said:
. . . [petitioner] . . . claims that based on the job descriptions which will be
presented at the hearing, the covered employees who are considered
managers occupy the positions of purchasing officers, personnel officers,
property officers, cashiers, heads of various sections and the like.
[Petitioner] also argues that assuming that some of the employees concerned
are not managerial but mere supervisory employees, the Federation of Free
Workers (FFW) cannot extend a charter certificate to this group of employees
without violating the express provision of Article 245 which provides that
"supervisory employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form
separate labor organizations of their own" because the FFW had similarly
issued a charter certificate to its rank-and-file employees.
xxx xxx xxx
In its position paper, [petitioner] stated that most, if not all, of the employees
listed in . . . the petition are considered managerial employees, thereby
admitting that it has supervisory employees who are undoubtedly qualified
to join or form a labor organization of their own. The record likewise shows
that [petitioner] promised to present the job descriptions of the concerned
employees during the hearing but failed to do so. Thus, this office has no
basis in determining at this point in time who among them are considered
managerial or supervisory employees. At any rate, there is now no question
that [petitioner] has in its employ supervisory employees who are qualified
to join or form a labor union. Consequently, this office is left with no
alternative but to order the holding of certification election pursuant to
Article 257 of the Labor Code, as amended, which mandates the holding of
certification election if a petition is filed by a legitimate labor organization
involving an unorganized establishment, as in the case of herein respondent.
As to the allegation of [petitioner] that the act of the supervisory employees
in affiliating with FFW to whom the rank-and-file employees are also
affiliated is violative of Article 245 of the Labor Code, suffice it to state that
the two groups are considered separate bargaining units and local chapters of
FFW. They are, for all intents and purposes, separate with each other and
their affiliation with FFW would not make them members of the same labor
union. This must be the case because it is settled that the locals are considered
the basic unit or principal with the labor federation assuming the role of an
agent. The mere fact, therefore, that they are represented by or under the same
agent is of no moment. They are still considered separate with each other. 3
On July 30, 1991, petitioner DLSUMCCM appealed to the Secretary of
Labor and Employment, citing substantially the same arguments it had raised
before the med-arbiter. However, its appeal was dismissed. In his resolution,
dated August 30, 1991, respondent Undersecretary of Labor and
Employment Bienvenido E. Laguesma found the evidence presented by
petitioner DLSUMCCM concerning the alleged managerial status of several
employees to be insufficient, He also held that, following the ruling of this
Court in Adamson & Adamson, Inc. v. CIR, 4 unions formed independently
by supervisory and rank-and-file employees of a company may legally
affiliate with the same national federation.
Petitioner moved for a reconsideration but its motion was denied. In his order
dated September 19, 1991, respondent Laguesma stated:
We reviewed the records once more, and find that the issues and arguments
adduced by movant have been squarely passed upon in the Resolution sought
to be reconsidered. Accordingly, we find no legal justification to alter, much
less set aside, the aforesaid resolution. Perforce, the motion for
reconsideration must fail.
WHEREFORE, the instant motion for reconsideration is hereby denied for
lack of merit and the resolution of this office dated 30 August 1991
STANDS.
No further motions of a similar nature shall hereinafter be entertained. 5
Hence, this petition for certiorari.
Petitioner DLSUMCCM contends that respondent Laguesma gravely abused
his discretion. While it does not anymore insist that several of those who
joined the petition for certification election are holding managerial positions
in the company, petitioner nonetheless pursues the question whether unions
formed independently by supervisory and rank-and-file employees of a
company may validly affiliate with the same national federation. With
respect to this question, it argues:
THE PUBLIC RESPONDENT, HONORABLE BIENVENIDO E.
LAGUESMA, UNDERSECRETARY OF LABOR AND EMPLOYMENT,
IN A CAPRICIOUS, ARBITRARY AND WHIMSICAL EXERCISE OF
POWER ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO ACTING WITHOUT OR IN EXCESS OF
JURISDICTION WHEN HE DENIED THE PETITIONER'S APPEAL
AND ORDERED THE HOLDING OF A CERTIFICATION ELECTION
AMONG THE MEMBERS OF THE SUPERVISORY UNION
EMPLOYED IN PETITIONER'S COMPANY DESPITE THE FACT THAT
SAID SUPERVISORY UNION WAS AFFILIATED WITH THE
FEDERATION OF FREE WORKERS TO WHICH THE RANK-AND-
FILE EMPLOYEES OF THE SAME COMPANY ARE LIKEWISE
AFFILIATED, CONTRARY TO THE EXPRESS PROVISIONS OF
ARTICLE 245 OF THE LABOR CODE, AS AMENDED. 6
The contention has no merit.
Supervisory employees have the right to self-organization as do other classes
of employees save only managerial ones. The Constitution states that "the
right of the people, including those employed in the public and private
sectors, to form unions, associations or societies for purposes not contrary to
law, shall not be abridged." 7 As we recently held in United Pepsi-Cola
Supervisory Union v. Laguesma, 8 the framers of the Constitution intended,
by this provision, to restore the right of supervisory employees to self-
organization which had been withdrawn from them during the period of
martial law. Thus:
Commissioner Lerum sought to amend the draft of what was later to become
Art. III, § 8 of the present Constitution:
xxx xxx xxx
MR. LERUM . . . Also, we have unions of supervisory employees and of
security guards. But what is tragic about this is that after the 1973
Constitution was approved and in spite of an express recognition of the right
to organize in P.D. No. 442, known as the Labor Code, the right of
government workers, supervisory employees and security guards to form
unions was abolished.
xxx xxx xxx
We are afraid that without any corresponding provision covering the private
sector, the security guards, the supervisory employees . . . will still be
excluded and that is the purpose of this amendment.
xxx xxx xxx
In sum, Lerum's proposal to amend Art. III, § 8 of the draft Constitution
by including labor unions in the guarantee of organizational right should be
taken in the context of statements that his aim was the removal of the
statutory ban against security guards and supervisory employees joining
labor organizations. The approval by the Constitutional Commission of his
proposal can only mean, therefore, that the Commission intended the
absolute right to organize of government workers, supervisory employees,
and security guards to be constitutionally guaranteed. 9
Conformably with the constitutional mandate, Art. 245 of the Labor Code
now provides for the right of supervisory employees to self-organization,
subject to the limitation that they cannot join an organization of rank-and-file
employees:
Supervisory employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form
separate labor organizations of their own.
The reason for the segregation of supervisory and rank-and-file employees
of a company with respect to the exercise of the right to self-organization is
the difference in their interests. Supervisory employees are more closely
identified with the employer than with the rank-and-file employees. If
supervisory and rank-and-file employees in a company are allowed to form
a single union, the conflicting interests of these groups impair their
relationship and adversely affect discipline, collective bargaining, and
strikes. 10 These consequences can obtain not only in cases where
supervisory and rank-and-file employees in the same company belong to a
single union but also where unions formed independently by supervisory and
rank-and-file employees of a company are allowed to affiliate with the same
national federation. Consequently, this Court has held in Atlas Lithographic
Services Inc. v. Laguesma 11 that -
To avoid a situation where supervisors would merge with the rank-and-file
or where the supervisors' labor organization would represent conflicting
interests, then a local supervisors' union should not be allowed to affiliate
with a national federation of unions of rank-and-file employees where that
federation actively participates in union activities in the company.
As we explained in that case, however, such a situation would obtain only
where two conditions concur: First, the rank-and-file employees are directly
under the authority of supervisory employees. 12 Second, the national
federation is actively involved in union activities in the company. 13 Indeed,
it is the presence of these two conditions which distinguished Atlas
Lithographic Services, Inc. v. Laguesma from Adamson & Adamson, Inc. v.
CIR 14 where a different conclusion was reached.
The affiliation of two local unions in a company with the same national
federation is not by itself a negation of their independence since in relation
to the employer, the local unions are considered as the principals, while the
federation is deemed to be merely their agent. This conclusion is in accord
with the policy that any limitation on the exercise by employees of the right
to self-organization guaranteed in the Constitution must be construed strictly.
Workers should be allowed the practice of this freedom to the extent
recognized in the fundamental law. As held in Liberty Cotton Mills Workers
Union v. Liberty Cotton Mills, Inc.: 15
The locals are separate and distinct units primarily designed to secure and
maintain an equality of bargaining power between the employer and their
employee members in the economic struggle for the fruits of the joint
productive effort of labor and capital; and the association of locals into the
national union . . . was in furtherance of the same end. These associations are
consensual entities capable of entering into such legal relations with their
members. The essential purpose was the affiliation of the local unions into a
common enterprise to increase by collective action the common bargaining
power in respect of the terms and conditions of labor. Yet the locals remained
the basic units of association, free to serve their own and the common interest
of all, . . . and free also to renounce the affiliation for mutual welfare upon
the terms laid down in the agreement which brought it to existence. 16
The questions in this case, therefore, are whether the rank-and-file employees
of petitioner DLSUMCCM who compose a labor union are directly under the
supervisory employees whose own union is affiliated with the same national
federation (Federation of Free Workers) and whether such national
federation is actively involved in union activities in the company so as to
make the two unions in the same company, in reality, just one union.
Although private respondent FFW-DLSUMCCMSUC and another union
composed of rank-and-file employees of petitioner DLSUMCCM are indeed
affiliated with the same national federation, the FFW, petitioner
DLSUMCCM has not presented any evidence showing that the rank-and-file
employees composing the other union are directly under the authority of the
supervisory employees. As held in Adamson & Adamson, Inc. v. CIR, 17 the
fact that the two groups of workers are employed by the same company and
the fact that they are affiliated with a common national federation are not
sufficient to justify the conclusion that their organizations are actually just
one. Their immediate professional relationship must be established. To
borrow the language of Adamson & Adamson, Inc. v. CIR: 18
We find without merit the contention of petitioner that if affiliation will be
allowed, only one union will in fact represent both supervisors and rank-and-
file employees of the petitioner; that there would be an indirect affiliation of
supervisors and rank-and-file employees with one labor organization; that
there would be a merging of the two bargaining units; and that the respondent
union will lose its independence because it becomes an alter ego of the
federation. 19
Mention has already been made of the fact that the petition for certification
election in this case was filed by the FFW on behalf of the local union. This
circumstance, while showing active involvement by the FFW in union
activities at the company, is by itself insufficient to justify a finding of
violation of Art. 245 since there is no proof that the supervisors who compose
the local union have direct authority over the rank-and-file employees
composing the other local union which is also affiliated with the FFW. This
fact differentiates the case from Atlas Lithographic Services, Inc. v.
Laguesma, 20 in which, in addition to the fact that the petition for
certification election had been filed by the national federation, it was shown
that the rank-and-file employees were directly under the supervisors
organized by the same federation.
It follows that respondent labor officials did not gravely abuse their
discretion.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
PHILIPPINE LABOR ALLIANCE COUNCIL (PLAC) vs. BUREAU
OF LABOR RELATIONS
G.R. No. L-41288 | 1977-01-31
FERNANDO, J:
It would be to frustrate the hopes that inspired the present Labor Code 1 to
minimize judicial participation in the solution of employer-employee
disputes resort to the courts would remain unabated. Nevertheless, in view of
the certiorari jurisdiction of this Tribunal, 2 a grave abuse of discretion may
be alleged as a grievance thus calling for remedial action. So petitioner
Philippine Labor Alliance Council did hope to achieve in this certiorari and
prohibition proceeding against respondent Bureau of Labor Relations. 3 It
would indict an order 4 for a certification election by respondent Bureau as
tainted by a jurisdictional infirmity in view of what is contended to be an
existing duly certified collective bargaining contract between it and private
respondent Orion Manila, Inc., the employer. It would thus ignore the
withdrawal in the same order of such certification based on a finding that
there was a failure on the part of the majority of the employees in the
bargaining unit to ratify the collective contract, renewed nine months before
the termination of the previous agreement. Apparently, the difficulty
confronting it was due to the disaffiliation of many of its members. The order
complained of recognized that there was such a sentiment on the part of
sizable number of employees in the collective bargaining unit, thus making
patent the desirability of conducting a certification election. That was the
method to determine the exclusive bargaining representative followed even
under the previous labor legislation. 5 It would thus appear rather obvious
that the attempt to impute arbitrariness to respondent Bureau cannot be
attended with success. The petition must be dismissed.
It was a detailed narration of facts set forth in the petition, starting with the
allegation that there was a renewal of the collective bargaining agreement
with a union shop clause on March 9, 1974 between petitioner union and
respondent company to last for another period of three (3) years
incorporating therein new economic benefits to expire on December 31,
1977. 6 The claim was that at that time it was the only bargaining agent of
the respondent company unchallenged by any labor organization. 7 Then
came the assertion that on May 27 1974, with due notice to all the members
of the petitioner union, and with more than 1,500 of them present, such
collective bargaining agreement was ratified by a unanimous vote. 8 It was
then so certified by the former National Labor Relations Commission on June
4, 1974. 9 It was further alleged that at the time of such certification, there
was no pending request for union recognition by any other labor organization
with management. 10 Thereafter, on June 20, 1974, respondent Federation of
Free Workers, setting forth that its members represent more than 60% out of
1,500 members, more or less, rank-and-file employees of respondent
company, sought a certification election. 11 Petitioner union, as could be
expected, opposed such a move as in its view the collective bargaining
agreement entered into with the respondent company had been certified. 12
It was sustained, the Secretary of Labor to whom an appeal was taken
concurring with the former National Labor Relations Commission affirming
the dismissal of such petition for certification, on the ground of the existence
of a certified collective bargaining agreement. 13 That did not end the
dispute, as respondent Federation on January 15, 1975, filed a complaint with
the respondent Bureau of Labor Relations, the present Labor Code having
become effective, alleging that some employees, numbering 848 in all, in a
resolution attached to the complaint disaffiliated from petitioner union and
affiliated with it, characterizing the certified agreement as having been
entered into allegedly to thwart such disaffiliation and seeking a declaration
of the nullity thereof. 14 After both petitioner union and respondent
Federation of Free Workers had filed their pleadings, 15 the Med-Arbiter, on
March 20, 1975, dismissed the complaint. 16 There was a motion for
reconsideration, then an opposition. 17 On April 8, 1975, respondent Bureau
of Labor Relations issued an order setting aside the certification of the
collective bargaining agreement and ordering a certification election within
20 days from receipt of the order, upon the following declaration: "In the
instant case, it is not disputed that the collective bargaining agreement
certified by the National Labor Relations Commission was not ratified by the
majority of the employees within the bargaining unit. This is defective. It is
blatant non-observance of the basic requirement necessary to certification. .
. . With respect to the complaint of the confirmation of disaffiliation of the
members of respondent Philippine Labor Alliance Council, the same should
be resolved in the most expedient and simple method of determining the
exclusive bargaining representative the holding of a certification election."
18 There was a motion for reconsideration as well as a verified urgent petition
filed with the Secretary of Labor by respondent Company, but the order was
affirmed on July 31, 1975, the motion to consider being denied. 19
From the very petition with its annexes, it is undisputed that there was a
finding in the challenged order by respondent Bureau of Labor Relations of
the non-ratification by the majority of the employees of the certified
collective bargaining agreement, thus calling for its decertification. It is also
noteworthy that in the comment of respondent labor union, considered as its
answer, the allegation that there was such a ratification was specifically
denied. It cannot be taken as having proven. There is nothing in the
exhaustive memorandum of petitioner either that would justify the
imputation that respondent Bureau, in ordering decertification of the
collective bargaining agreement with petitioner to be followed by a
certification election, committed a transgression of the present Labor Code,
much less one of such grievous character as to taint its actuation with a
jurisdictional infirmity. It is quite apparent therefore that with due
recognition of the ability and scholarship evident in the pleadings of Attorney
Fortunato Gupit, Jr. for the petitioner, the attempt to invoke our certiorari
jurisdiction cannot succeed. 20 So it was noted at the outset.
1.It is indisputable that the present controversy would not have arisen if there
were no mass disaffiliation from petitioning union. Such a phenomenon is
nothing new in the Philippine labor movement. 21 Nor is it open to any legal
objection. It is implicit in the freedom of association explicitly ordained by
the Constitution. 22 There is then the incontrovertible right of any individual
to join an organization of his choice. That option belongs to him. A
workingman is not to be denied that liberty. 23 He may be, as a matter of
fact, more in need of it if the institution of collective bargaining as an aspect
of industrial democracy is to succeed. No obstacle that may possible thwart
the desirable objective of militancy in labor's struggle for better terms and
conditions is then to be placed on his way. Once the fact of disaffiliation has
been demonstrated beyond doubt, as in this case, a certification election is
the most expeditious way of determining which labor organization is to be
the exclusive bargaining representative. It is as simple as that. There is
relevance to this excerpt from a recent decision, Philippine Association of
Free Labor Unions v. Bureau of Labor Relations: 24 "Petitioner thus appears
to be woefully lacking in awareness of the significance of a certification
election for the collective bargaining process. It is the fairest and most
effective way of determining which labor organization can truly represent the
working force. It is a fundamental postulate that the will of the majority, if
given expression in an honest election with freedom on the part of the voters
to make their choice, is controlling. No better device can assure the institution
of industrial democracy with the two parties to a business enterprise,
management and labor, establishing a regime of self-rule. As was pointed out
by Chief Justice Castro in Rivera v. San Miguel Brewery Corporation, Inc.,
'a collective bargaining agreement is the law of the plant.' To the same effect
is this explicit pronouncement in Mactan Workers Union v. Aboitiz: 'The
terms and conditions of a collective bargaining contract constitute the law
between the parties.' What could be aptly stressed then, as was done in
Compania Maritima v. Compania Maritima Labor Union, is 'the primacy to
which the decision reached by the employees themselves is entitled.' Further,
it was therein stated: 'That is in the soundest tradition of industrial
democracy. For collective bargaining implies that instead of a unilateral
imposition by management, the terms and conditions of employment should
be the subject of negotiation between it and labor. Thus the two parties
indispensable to the economy are supposed to take care of their respective
interests. Moreover, the very notion of industrial self-rule negates the
assumption that what is good for either party should be left to the will of the
other. On the contrary, there is an awareness that labor can be trusted to
promote its welfare through the bargaining process. To it then must be left
the choice of its agent for such purpose.' To paraphrase an observation of the
recently-retired Chief Justice Makalintal in Seno v. Mendoza, it is essential
that there be an agreement to govern the relations between labor marked by
confusion, with resulting breaches of the law by either party. There is, it
would appear, a decidedly unsympathetic approach to the institution of
collective bargaining at war with what has so often and so consistently
decided by this Tribunal." 25
2.A different conclusion could have been reached had there been no
decertification. The contract-bar rule could then be invoked by petitioner. It
is, as pointed out by Justice Fernandez in Confederation of Citizens Labor
Unions v. National Labor Relations Commission, 26 "a principle in labor law
that a collective bargaining agreement of reasonable duration is, in the
interest of the stability of industrial relations, a bar to certification elections."
27 Even then, as was pointed out in the just-cited Philippine Association of
Free Labor Unions decision, it "is not to be applied with rigidity. . . . The
element of flexibility in its operation cannot be ignored." 28 In this
controversy, however, such a principle is not applicable. The collective
bargaining agreement entered into by petitioner with management on March
9, 1974 was decertified in the challenged order of April 8, 1975. 29 The
power to decertify by respondent Bureau is not disputed. It was the exercise
thereof that is now assailed. If done arbitrarily, there is valid ground for
complaint. The due process clause is a guarantee against any actuation of that
sort. It stands for fairness and justice. That standard was not ignored. It
suffices to read the petition to disprove any allegation of such failing, whether
in its procedural or substantive aspect. Petitioner was heard by respondent
Bureau before the order of decertification was issued on April 8, 1975. The
denial of its motion for reconsideration came also after it had an opportunity
to present its side. Procedural due process was thus observed. Nor was there
any denial of substantive due process in the sense of such decertification
being an act of arbitrariness and caprice.

In the order of April 8, 1975, it was specifically pointed out: "In the instant
case, it is not disputed that the collective bargaining agreement certified by
the National Labor Relations Commission was not ratified by the majority of
the employees within the bargaining unit. This is defective. It is blatant non-
observance of the basic requirement necessary to certification. To allow it to
remain uncorrected would allow circumvention of what the law specifically
ordained. We cannot countenance irregularities of the highest order to exist
in our very own eyes to be perpetuated. With respect to the complaint of the
confirmation of disaffiliation of the members of respondent Philippine Labor
Alliance Council, the same should be resolved in the most expedient and
simple method of determining the exclusive bargaining representative the
holding of a certification election." 30 In the order denying the motion for
reconsideration dated July 31, 1975, it was first noted: "On January 20, 1975,
FFW and 848 Orion employees filed with the Bureau a petition for the
annulment of the 1974 collective bargaining agreement and for the
confirmation of the disaffiliation of the 848 employees from PLAC and their
affiliation with FFW. The petition alleged among other, that the new
agreement was concluded about ten months before the expiry date of the old
purposely to defeat the right of the covered employees to choose their
bargaining representative at the proper time appointed by law. It appears,
indeed, that there was no urgency for the premature renegotiations
considering that the new agreement provides for a 50-centavo salary increase
effective yet on January 1, 1976." 31 Then, there was further clarification of
the decision reached as to the holding of a certification election being the
appropriate mode of solving the dispute: "With the decertification of the
collective agreement, the representation issue comes back to the fore.
Petitioner wants this resolved by ruling on the affiliation and disaffiliation of
the union. The Bureau holds, however, that certification election can better
resolve the issue. Parenthetically, it should be stated that a certification
election can still be held even if the collective agreement were certified,
considering the peculiar facts of the case. Good policy and equity demand
that when an agreement is renegotiated before the appointed 60-day period,
its certification must still give way to any representation issue that may be
raised within 60-day period so that the right of employees to choose a
bargaining unit agent and the right of unions to be chosen shall be preserved."
32

3.There is, finally, another insuperable obstacle to the success of this petition.
There is no need for a citation of authorities to show how well-settled and
firmly-rooted is the doctrine of the well-nigh conclusive respect for the
findings of facts of administrative tribunals, leaving to the judiciary, in the
ultimate analysis, this Tribunal, to set forth the correct legal norm applicable
to the controversy. With specific reference to the agencies at present dealing
with labor relations, there is this excerpt from Justice Aquino's opinion in
Antipolo Highway Lines, Inc. v. Inciong: 33 "A dispassionate scrutiny of the
proceedings in the NLRC does not sustain petitioners' view that they were
denied due process and that the NLRC committed a grave abuse of discretion.
(See Maglasang v. Ople, L-38813, April 29, 1975 per Justice Fernando). We
found no justification for setting aside the factual findings of the NLRC,
which like those of any other administrative agency, are generally binding on
the courts (Timbancaya v. Vicente, 62 O.G. 9424, 9 SCRA 852)." 34

WHEREFORE, this petition for certiorari and prohibition is dismissed. The

restraining order issued by this Court in its resolution of September 8, 1975
is hereby lifted. No costs.
MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M.
GREENFIELD (MSMG-UWP) vs. RAMOS
G.R. No. 113907 | 2000-02-28
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court
to annul the decision of the National Labor Relations Commission in an
unfair labor practice case instituted by a local union against its employer
company and the officers of its national federation.
The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield,
Inc., (B) (MSMG), hereinafter referred to as the "local union", is an affiliate
of the private respondent, United Lumber and General Workers of the
Philippines (ULGWP), referred to as the "federation". The collective
bargaining agreement between MSMG and M. Greenfield, Inc. names the
parties as follows:
"This agreement made and entered into by and between:
M. GREENFIELD, INC. (B) a corporation duly organized in accordance
with the laws of the Republic of the Philippines with office address at Km.
14, Merville Road, Parañaque, Metro Manila, represented in this act by its
General manager, Mr. Carlos T. Javelosa, hereinafter referred to as the
Company;
-and-
MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M.
GREENFIELD (B) (MSMG)/UNITED LUMBER AND GENERAL
WORKERS OF THE PHILIPPINES (ULGWP), a legitimate labor
organization with address at Suite 404, Trinity Building, T.M. Kalaw Street,
Manila, represented in this act by a Negotiating Committee headed by its
National President, Mr. Godofredo Paceno, Sr., referred to in this Agreement
as the UNION."1 [Rollo, p. 29]
The CBA includes, among others, the following pertinent provisions:
Article II-Union Security
Section 1. Coverage and Scope. All employees who are covered by this
Agreement and presently members of the UNION shall remain members of
the UNION for the duration of this Agreement as a condition precedent to
continued employment with the COMPANY.
xxxxxx
xxxxxx
Section 4. Dismissal. Any such employee mentioned in Section 2 hereof, who
fails to maintain his membership in the UNION for non-payment of UNION
dues, for resignation and for violation of UNION's Constitution and By-Laws
and any new employee as defined in Section 2 of this Article shall upon
written notice of such failure to join or to maintain membership in the
UNION and upon written recommendation to the COMPANY by the
UNION, be dismissed from the employment by the COMPANY; provided,
however, that the UNION shall hold the COMPANY free and blameless from
any and all liabilities that may arise should the dismissed employee question,
in any manner, his dismissal; provided, further that the matter of the
employee's dismissal under this Article may be submitted as a grievance
under Article XIII and, provided, finally, that no such written
recommendation shall be made upon the COMPANY nor shall COMPANY
be compelled to act upon any such recommendation within the period of sixty
(60) days prior to the expiry date of this Agreement conformably to law."
Article IX
Section 4. Program Fund - The Company shall provide the amount of P10,
000.00 a month for a continuing labor education program which shall be
remitted to the Federation x x x."2 [Ibid, p. 30-31, p. 823-824]
On September 12, 1986, a local union election was held under the auspices
of the ULGWP wherein the herein petitioner, Beda Magdalena Villanueva,
and the other union officers were proclaimed as winners. Minutes of the said
election were duly filed with the Bureau of Labor Relations on September
29, 1986.
On March 21, 1987, a Petition for Impeachment was filed with the national
federation ULGWP by the defeated candidates in the aforementioned
election.
On June 16, 1987, the federation conducted an audit of the local union funds.
The investigation did not yield any unfavorable result and the local union
officers were cleared of the charges of anomaly in the custody, handling and
disposition of the union funds.
The 14 defeated candidates filed a Petition for Impeachment/Expulsion of
the local union officers with the DOLE NCR on November 5, 1987, docketed
as NCR-OD-M-11-780-87. However, the same was dismissed on March 2,
1988, by Med-Arbiter Renato Parungo for failure to substantiate the charges
and to present evidence in support of the allegations.
On April 17, 1988, the local union held a general membership meeting at the
Caruncho Complex in Pasig. Several union members failed to attend the
meeting, prompting the Executive Board to create a committee tasked to
investigate the non-attendance of several union members in the said
assembly, pursuant to Sections 4 and 5, Article V of the Constitution and By-
Laws of the union, which read:
"Seksyon 4. Ang mga kinukusang hindi pagdalo o hindi paglahok sa lahat ng
hakbangin ng unyon ng sinumang kasapi o pinuno ay maaaring maging sanhi
ng pagtitiwalag o pagpapataw ng multa ng hindi hihigit sa P50.00 sa bawat
araw na nagkulang.
Seksyon 5. Ang sinumang dadalo na aalis ng hindi pa natatapos ang pulong
ay ituturing na pagliban at maparusahan ito ng alinsunod sa Article V,
Seksyong 4 ng Saligang Batas na ito. Sino mang kasapi o pisyales na mahuli
and dating sa takdang oras ng di lalampas sa isang oras ay magmumulta ng
P25.00 at babawasin sa sahod sa pamamagitan ng salary deduction at higit sa
isang oras ng pagdating ng huli ay ituturing na pagliban.3 [Rollo, p. 34]
On June 27, 1988, the local union wrote respondent company a letter
requesting it to deduct the union fines from the wages/salaries of those union
members who failed to attend the general membership meeting. A portion of
the said letter stated:
"xxx xxx xxx
In connection with Section 4 Article II of our existing Collective Bargaining
Agreement, please deduct the amount of P50.00 from each of the union
members named in said annexes on the payroll of July 2-8, 1988 as fine for
their failure to attend said general membership meeting."4 [Rollo, p.35]
In a Memorandum dated July 3, 1988, the Secretary General of the national
federation, Godofredo Paceño, Jr. disapproved the resolution of the local
union imposing the P50.00 fine. The union officers protested such action by
the Federation in a Reply dated July 4, 1988.
On July 11, 1988, the Federation wrote respondent company a letter advising
the latter not to deduct the fifty-peso fine from the salaries of the union
members requesting that:
" x x x any and all future representations by MSMG affecting a number of
members be first cleared from the federation before corresponding action by
the Company."5 [Ibid., p.40]
The following day, respondent company sent a reply to petitioner union's
request in a letter, stating that it cannot deduct fines from the employees'
salary without going against certain laws. The company suggested that the
union refer the matter to the proper government office for resolution in order
to avoid placing the company in the middle of the issue.
The imposition of P50.00 fine became the subject of bitter disagreement
between the Federation and the local union culminating in the latter's
declaration of general autonomy from the former through Resolution No. 10
passed by the local executive board and ratified by the general membership
on July 16, 1988.
In retaliation, the national federation asked respondent company to stop the
remittance of the local union's share in the education funds effective August
1988. This was objected to by the local union which demanded that the
education fund be remitted to it in full.
The company was thus constrained to file a Complaint for Interpleader with
a Petition for Declaratory Relief with the Med-Arbitration Branch of the
Department of Labor and Employment, docketed as Case No. OD-M-8-435-
88. This was resolved on October 28, 1988, by Med-Arbiter Anastacio Bactin
in an Order, disposing thus:
"WHEREFORE, premises considered, it is hereby ordered:
1. That the United Lumber and General Workers of the Philippines
(ULGWP) through its local union officers shall administer the collective
bargaining agreement (CBA).
2. That petitioner company shall remit the P10,000.00 monthly labor
education program fund to the ULGWP subject to the condition that it shall
use the said amount for its intended purpose.
3. That the Treasurer of the MSMG shall be authorized to collect from the
356 union members the amount of P50.00 as penalty for their failure to attend
the general membership assembly on April 17, 1988.
However, if the MSMG Officers could present the individual written
authorizations of the 356 union members, then the company is obliged to
deduct from the salaries of the 356 union members the P50.00 fine."6 [Rollo,
p.47]
On appeal, Director Pura-Ferrer Calleja issued a Resolution dated February
7, 1989, which modified in part the earlier disposition, to wit:
"WHEREFORE, premises considered, the appealed portion is hereby
modified to the extent that the company should remit the amount of five
thousand pesos (P5,000.00) of the P10,000.00 monthly labor education
program fund to ULGWP and the other P5,000.00 to MSMG, both unions to
use the same for its intended purpose."7 [Ibid, p. 48]
Meanwhile, on September 2, 1988, several local unions (Top Form, M.
Greenfield, Grosby, Triumph International, General Milling, and Vander
Hons chapters) filed a Petition for Audit and Examination of the federation
and education funds of ULGWP which was granted by Med-Arbiter Rasidali
Abdullah on December 25, 1988 in an Order which directed the audit and
examination of the books of account of ULGWP.
On September 30, 1988, the officials of ULGWP called a Special National
Executive Board Meeting at Nasipit, Agusan del Norte where a Resolution
was passed placing the MSMG under trusteeship and appointing respondent
Cesar Clarete as administrator.
On October 27, 1988, the said administrator wrote the respondent company
informing the latter of its designation of a certain Alfredo Kalingking as local
union president and "disauthorizing" the incumbent union officers from
representing the employees. This action by the national federation was
protested by the petitioners in a letter to respondent company dated
November 11, 1988.
On November 13, 1988, the petitioner union officers received identical letters
from the administrator requiring them to explain within 72 hours why they
should not be removed from their office and expelled from union
membership.
On November 26, 1988, petitioners replied:
(a) Questioning the validity of the alleged National Executive Board
Resolution placing their union under trusteeship;
(b) Justifying the action of their union in declaring a general autonomy from
ULGWP due to the latter's inability to give proper educational,
organizational and legal services to its affiliates and the pendency of the audit
of the federation funds;
(c) Advising that their union did not commit any act of disloyalty as it has
remained an affiliate of ULGWP;
(d) Giving ULGWP a period of five (5) days to cease and desist from further
committing acts of coercion, intimidation and harrassment.8 [Rollo, p. 1522-
1523.]
However, as early as November 21, 1988, the officers were expelled from
the ULGWP. The termination letter read:
"Effective today, November 21, 1988, you are hereby expelled from
UNITED LUMBER AND GENERAL WORKERS OF THE PHILIPPINES
(ULGWP) for committing acts of disloyalty and/or acts inimical to the
interest and violative to the Constitution and by-laws of your federation.
You failed and/or refused to offer an explanation inspite of the time granted
to you.
Since you are no longer a member of good standing, ULGWP is constrained
to recommend for your termination from your employment, and provided in
Article II Section 4, known as UNION SECURITY, in the Collective
Bargaining agreement."9 [Ibid., 1523-1524]
On the same day, the federation advised respondent company of the
expulsion of the 30 union officers and demanded their separation from
employment pursuant to the Union Security Clause in their collective
bargaining agreement. This demand was reiterated twice, through letters
dated February 21 and March 4, 1989, respectively, to respondent company.
Thereafter, the Federation filed a Notice of Strike with the National
Conciliation and Mediation Board to compel the company to effect the
immediate termination of the expelled union officers.
On March 7, 1989, under the pressure of a threatened strike, respondent
company terminated the 30 union officers from employment, serving them
identical copies of the termination letter reproduced below:
We received a demand letter dated 21 November 1988 from the United
Lumber and General Workers of the Philippines (ULGWP) demanding for
your dismissal from employment pursuant to the provisions of Article II,
Section 4 of the existing Collective Bargaining Agreement (CBA). In the said
demand letter, ULGWP informed us that as of November 21, 1988, you were
expelled from the said federation "for committing acts of disloyalty and/or
acts inimical to the interest of ULGWP and violative to its Constitution and
By-laws particularly Article V, Section 6, 9, and 12, Article XIII, Section 8."
In subsequent letters dated 21 February and 4 March 1989, the ULGWP
reiterated its demand for your dismissal, pointing out that notwithstanding
your expulsion from the federation, you have continued in your employment
with the company in violation of Sec. 1 and 4 of Article II of our CBA, and
of existing provisions of law.
In view thereof, we are left with no alternative but to comply with the
provisions of the Union Security Clause of our CBA. Accordingly, we hereby
serve notice upon you that we are dismissing you from your employment
with M. Greenfield, Inc., pursuant to Sections 1 and 4, Article II of the CBA
effective immediately."10 [Rollo, p. 58-59.]
On that same day, the expelled union officers assigned in the first shift were
physically or bodily brought out of the company premises by the company's
security guards. Likewise, those assigned to the second shift were not
allowed to report for work. This provoked some of the members of the local
union to demonstrate their protest for the dismissal of the said union officers.
Some union members left their work posts and walked out of the company
premises.
On the other hand, the Federation, having achieved its objective, withdrew
the Notice of Strike filed with the NCMB.
On March 8, 1989, the petitioners filed a Notice of Strike with the NCMB,
DOLE, Manila, docketed as Case No. NCMB-NCR-NS-03-216-89, alleging
the following grounds for the strike:
(a) Discrimination
(b) Interference in union activities
(c) Mass dismissal of union officers and shop stewards
(d) Threats, coercion and intimidation
(e) Union busting
The following day, March 9, 1989, a strike vote referendum was conducted
and out of 2, 103 union members who cast their votes, 2,086 members voted
to declare a strike.

On March 10, 1989, the thirty (30) dismissed union officers filed an urgent
petition, docketed as Case No. NCMB-NCR-NS-03-216-89, with the Offfice
of the Secretary of the Department of Labor and Employment praying for the
suspension of the effects of their termination from employment. However,
the petition was dismissed by then Secretary Franklin Drilon on April 11,
1989, the pertinent portion of which stated as follows:
"At this point in time, it is clear that the dispute at M. Greenfield is purely an
intra-union matter. No mass lay-off is evident as the terminations have been
limited to those allegedly leading the secessionist group leaving MSMG-
ULGWP to form a union under the KMU. xxx
xxx xxx xxx
WHEREFORE, finding no sufficient jurisdiction to warrant the exercise of
our extraordinary authority under Article 277 (b) of the Labor Code, as
amended, the instant Petition is hereby DISMISSED for lack of merit.
SO ORDERED."11 [Rollo, p. 937.]
On March 13 and 14, 1989, a total of 78 union shop stewards were placed
under preventive suspension by respondent company. This prompted the
union members to again stage a walk-out and resulted in the official
declaration of strike at around 3:30 in the afternoon of March 14, 1989. The
strike was attended with violence, force and intimidation on both sides
resulting to physical injuries to several employees, both striking and non-
striking, and damage to company properties.
The employees who participated in the strike and allegedly figured in the
violent incident were placed under preventive suspension by respondent
company. The company also sent return-to-work notices to the home
addresses of the striking employees thrice successively, on March 27, April
8 and April 31, 1989, respectively. However, respondent company admitted
that only 261 employees were eventually accepted back to work. Those who
did not respond to the return-to-work notice were sent termination letters
dated May 17, 1989, reproduced below:
M. Greenfield Inc., (B)
Km. 14, Merville Rd., Parañaque, M.M.
May 17, 1989
xxx
On March 14, 1989, without justifiable cause and without due notice, you
left your work assignment at the prejudice of the Company's operations. On
March 27, April 11, and April 21, 1989, we sent you notices to report to the
Company. Inspite of your receipt of said notices, we have not heard from you
up to this date.
Accordingly, for your failure to report, it is construed that you have
effectively abandoned your employment and the Company is, therefore,
constrained to dismiss you for said cause.
Very truly yours,
M. GREENFIELD, INC., (B)
By:
WENZEL STEPHEN LIGOT
Asst. HRD Manager"12 [Rollo, p. 837.]
On August 7, 1989, the petitioners filed a verified complaint with the
Arbitration Branch, National Capital Region, DOLE, Manila, docketed as
Case No. NCR-00-09-04199-89, charging private respondents of unfair labor
practice which consists of union busting, illegal dismissal, illegal suspension,
interference in union activities, discrimination, threats, intimidation,
coercion, violence, and oppresion.
After the filing of the complaint, the lease contracts on the respondent
company's office and factory at Merville Subdivision, Parañaque expired and
were not renewed. Upon demand of the owners of the premises, the company
was compelled to vacate its office and factory.
Thereafter, the company transferred its administration and account/client
servicing department at AFP-RSBS Industrial Park in Taguig, Metro Manila.
For failure to find a suitable place in Metro Manila for relocation of its
factory and manufacturing operations, the company was constrained to move
the said departments to Tacloban, Leyte. Hence, on April 16, 1990,
respondent company accordingly notified its employees of a temporary
shutdown. in operations. Employees who were interested in relocating to
Tacloban were advised to enlist on or before April 23, 1990.
The complaint for unfair labor practice was assigned to Labor Arbiter
Manuel Asuncion but was thereafter reassigned to Labor Arbiter Cresencio
Ramos when respondents moved to inhibit him from acting on the case.
On December 15, 1992, finding the termination to be valid in compliance
with the union security clause of the collective bargaining agreement, Labor
Arbiter Cresencio Ramos dismissed the complaint.
Petitioners then appealed to the NLRC. During its pendency, Commissioner
Romeo Putong retired from the service, leaving only two commissioners,
Commissioner Vicente Veloso III and Hon. Chairman Bartolome Carale in
the First Division. When Commissioner Veloso inhibited himself from the
case, Commissioner Joaquin Tanodra of the Third Division was temporarily
designated to sit in the First Division for the proper disposition of the case.
The First Division affirmed the Labor Arbiter's disposition. With the denial
of their motion for reconsideration on January 28, 1994, petitioners elevated
the case to this Court, attributing grave abuse of discretion to public
respondent NLRC in:
I. UPHOLDING THE DISMISSAL OF THE UNION OFFICERS BY
RESPONDENT COMPANY AS VALID;
II. HOLDING THAT THE STRIKE STAGED BYTHE PETITIONERS AS
ILLEGAL;
III. HOLDING THAT THE PETITIONER EMPLOYEES WERE DEEMED
TO HAVE ABANDONED THEIR WORK AND HENCE, VALIDLY
DISMISSED BY RESPONDENT COMPANY; AND
IV. NOT FINDING RESPONDENT COMPANY AND RESPONDENT
FEDERATION OFFICERS GUILTY OF ACTS OF UNFAIR LABOR
PRACTICE.
Notwithstanding the several issues raised by the petitioners and respondents
in the voluminous pleadings presented before the NLRC and this Court, they
revolve around and proceed from the issue of whether or not respondent
company was justified in dismissing petitioner employees merely upon the
labor federation's demand for the enforcement of the union security clause
embodied in their collective bargaining agreement.
Before delving into the main issue, the procedural flaw pointed out by the
petitioners should first be resolved.
Petitioners contend that the decision rendered by the First Division of the
NLRC is not valid because Commissioner Tanodra, who is from the Third
Division, did not have any lawful authority to sit, much less write the
ponencia, on a case pending before the First Division. It is claimed that a
commissioner from one division of the NLRC cannot be assigned or
temporarily designated to another division because each division is assigned
a particular territorial jurisdiction. Thus, the decision rendered did not have
any legal effect at all for being irregularly issued.
Petitioners' argument is misplaced. Article 213 of the Labor Code in
enumerating the powers of the Chairman of the National Labor Relations
Commission provides that:
"The concurrence of two (2) Commissioners of a division shall be necessary
for the pronouncement of a judgment or resolution. Whenever the required
membership in a division is not complete and the concurrence of two (2)
commissioners to arrive at a judgment or resolution cannot be obtained, the
Chairman shall designate such number of additional Commissioners from the
other divisions as may be necessary."
It must be remembered that during the pendency of the case in the First
Division of the NLRC, one of the three commissioners, Commissioner
Romeo Putong, retired, leaving Chairman Bartolome Carale and
Commissioner Vicente Veloso III. Subsequently, Commissioner Veloso
inhibited himself from the case because the counsel for the petitioners was
his former classmate in law school. The First Division was thus left with only
one commissioner. Since the law requires the concurrence of two
commisioners to arrive at a judgment or resolution, the Commission was
constrained to temporarily designate a commissioner from another division
to complete the First Division. There is nothing irregular at all in such a
temporary designation for the law empowers the Chairman to make
temporary assignments whenever the required concurrence is not met. The
law does not say that a commissioner from the first division cannot be
temporarily assigned to the second or third division to fill the gap or vice
versa. The territorial divisions do not confer exclusive jurisdiction to each
division and are merely designed for administrative efficiency.
Going into the merits of the case, the court finds that the Complaint for unfair
labor practice filed by the petitioners against respondent company which
charges union busting, illegal dismissal, illegal suspension, interference in
union activities, discrimination, threats, intimidation, coercion, violence, and
oppression actually proceeds from one main issue which is the termination
of several employees by respondent company upon the demand of the labor
federation pursuant to the union security clause embodied in their collective
bargaining agreement.
Petitioners contend that their dismissal from work was effected in an
arbitrary, hasty, capricious and illegal manner because it was undertaken by
the respondent company without any prior administrative investigation; that,
had respondent company conducted prior independent investigation it would
have found that their expulsion from the union was unlawful similarly for
lack of prior administrative investigation; that the federation cannot
recommend the dismissal of the union officers because it was not a principal
party to the collective bargaining agreement between the company and the
union; that public respondents acted with grave abuse of discretion when they
declared petitioners' dismissals as valid and the union strike as illegal and in
not declaring that respondents were guilty of unfair labor practice.
Private respondents, on the other hand, maintain that the thirty dismissed
employees who were former officers of the federation have no cause of action
against the company, the termination of their employment having been made
upon the demand of the federation pursuant to the union security clause of
the CBA; the expelled officers of the local union were accorded due process
of law prior to their expulsion from their federation; that the strike conducted
by the petitioners was illegal for noncompliance with the requirements; that
the employees who participated in the illegal strike and in the commission of
violence thereof were validly terminated from work; that petitioners were
deemed to have abandoned their employment when they did not respond to
the three return to work notices sent to them; that petitioner labor union has
no legal personality to file and prosecute the case for and on behalf of the
individual employees as the right to do so is personal to the latter; and that,
the officers of respondent company cannot be liable because as mere
corporate officers, they acted within the scope of their authority.
Public respondent, through the Labor Arbiter, ruled that the dismissed union
officers were validly and legally terminated because the dismissal was
effected in compliance with the union security clause of the CBA which is
the law between the parties. And this was affimed by the Commission on
appeal. Moreover, the Labor Arbiter declared that notwithstanding the lack
of a prior administrative investigation by respondent company, under the
union security clause provision in the CBA, the company cannot look into
the legality or illegality of the recommendation to dismiss by the union nd
the obligation to dismiss is ministerial on the part of the company.13
[Decicion of the Labor Arbiter, p. 16 (p. 197 of Rollo)]
This ruling of the NLRC is erroneous. Although this Court has ruled that
union security clauses embodied in the collective bargaining agreement may
be validly enforced and that dismissals pursuant thereto may likewise be
valid, this does not erode the fundamental requirement of due process. The
reason behind the enforcement of union security clauses which is the sanctity
and inviolability of contracts14 [Tanduay Distillery Labor Union vvs.
NLRC, 149 SCRA 470 citing Victoria's Milling Co., Inc. vs. Victoria's-
Manapla Workers' Organization, 9 SCRA 154] cannot override one's right to
due process.
In the case of Cariño vs. National Labor Relations Commission,15 [G. R. No.
91086, 8 May 1990, 185 SCRA 177.] this Court pronounced that while the
company, under a maintenance of membership provision of the collective
bargaining agreement, is bound to dismiss any employee expelled by the
union for disloyalty upon its written request, this undertaking should not be
done hastily and summarily. The company acts in bad faith in dismissing a
worker without giving him the benefit of a hearing.
"The power to dismiss is a normal prerogative of the employer. However,
this is not without limitation. The employer is bound to exercise caution in
terminating the services of his employees especially so when it is made upon
the request of a labor union pursuant to the Collective Bargaining Agreement,
xxx. Dismissals must not be arbitrary and capricious. Due process must be
observed in dismissing an employee because it affects not only his position
but also his means of livelihood. Employers should respect and protect the
rights of their employees, which include the right to labor."
In the case under scrutiny, petitioner union officers were expelled by the
federation for allegedly commiting acts of disloyalty and/or inimical to the
interest of ULGWP and in violation of its Constitution and By-laws. Upon
demand of the federation, the company terminated the petitioners without
conducting a separate and independent investigation. Respondent company
did not inquire into the cause of the expulsion and whether or not the
federation had sufficient grounds to effect the same. Relying merely upon the
federation's allegations, respondent company terminated petitioners from
employment when a separate inquiry could have revealed if the federation
had acted arbitrarily and capriciously in expelling the union officers.
Respondent company's allegation that petitioners were accorded due process
is belied by the termination letters received by the petitioners which state that
the dismissal shall be immediately effective.
As held in the aforecited case of Cariño, "the right of an employee to be
informed of the charges against him and to reasonable opportunity to present
his side in a controversy with either the company or his own union is not
wiped away by a union security clause or a union shop clause in a collective
bargaining agreement. An employee is entitled to be protected not only from
a company which disregards his rights but also from his own union the
leadership of which could yield to the temptation of swift and arbitrary
expulsion from membership and mere dismissal from his job."
While respondent company may validly dismiss the employees expelled by
the union for disloyalty under the union security clause of the collective
bargaining agreement upon the recommendation by the union, this dismissal
should not be done hastily and summarily thereby eroding the employees'
right to due process, self-organization and security of tenure. The
enforcement of union security clauses is authorized by law provided such
enforcement is not characterized by arbitrariness, and always with due
process.16 [Sanyo Philippines Workers Union-PSSLU vs. Canizares, 211
SCRA 361] Even on the assumption that the federation had valid grounds to
expell the union officers, due process requires that these union officers be
accorded a separate hearing by respondent company.
In its decision, public respondent also declared that if complainants (herein
petitioners) have any recourse in law, their right of action is against the
federation and not against the company or its officers, relying on the findings
of the Labor Secretary that the issue of expulsion of petitioner union officers
by the federation is a purely intra-union matter.
Again, such a contention is untenable. While it is true that the issue of
expulsion of the local union officers is originally between the local union and
the federation, hence, intra-union in character, the issue was later on
converted into a termination dispute when the company dismissed the
petitioners from work without the benefit of a separate notice and hearing.
As a matter of fact, the records reveal that the the termination was effective
on the same day that the the termination notice was served on the petitioners.
In the case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills,
Inc.17 [90 SCRA 391], the Court held the company liable for the payment of
backwages for having acted in bad faith in effecting the dismissal of the
employees.
"xxx Bad faith on the part of the respondent company may be gleaned from
the fact that the petitioner workers were dismissed hastily and summarily. At
best, it was guilty of a tortious act, for which it must assume solidary liability,
since it apparently chose to summarily dismiss the workers at the union's
instance secure in the union's contractual undertaking that the union would
hold it 'free from any liability' arising from such dismissal."
Thus, notwithstanding the fact that the dismissal was at the instance of the
federation and that it undertook to hold the company free from any liability
resulting from such a dismissal, the company may still be held liable if it was
remiss in its duty to accord the would-be dismissed employees their right to
be heard on the matter.
Anent petitioners contention that the federation was not a principal party to
the collective bargaining agreement between the company and the union,
suffice it to say that the matter was already ruled upon in the Interpleader
case filed by respondent company. Med-Arbiter Anastacio Bactin thus ruled:
After a careful examination of the facts and evidences presented by the
parties, this Officer hereby renders its decision as follows:
1.) It appears on record that in the Collective Bargaining Agreement (CBA)
which took effect on July 1, 1986, the contracting parties are M. Greenfield,
Inc. (B) and Malayang Samahan ng Mga Manggagawa sa M. Greenfield, Inc.
(B) (MSMG)/United Lumber and General Workers of the Philippines
(ULGWP). However, MSMG was not yet a registered labor organization at
the time of the signing of the CBA. Hence, the union referred to in the CBA
is the ULGWP."18 [Rollo, p. 199]
Likewise on appeal, Director Pura Ferrer-Calleja put the issue to rest as
follows:
It is undisputed that ULGWP is the certified sole and exclusive collective
bargaining agent of all the regular rank-and-file workers of the company, M.
Greenfield, Inc. (pages 31-32 of the records).
It has been established also that the company and ULGWP signed a 3-year
collective bargaining agreement effective July 1, 1986 up to June 30, 1989.19
[Ibid.]
Although the issue of whether or not the federation had reasonable grounds
to expel the petitioner union officers is properly within the original and
exclusive jurisdiction of the Bureau of Labor Relations, being an intra-union
conflict, this Court deems it justifiable that such issue be nonetheless ruled
upon, as the Labor Arbiter did, for to remand the same to the Bureau of Labor
Relations would be to intolerably delay the case.
The Labor Arbiter found that petitioner union officers were justifiably
expelled from the federation for committing acts of disloyalty when it
"undertook to disaffiliate from the federation by charging ULGWP with
failure to provide any legal, educational or organizational support to the
local. x x x and declared autonomy, wherein they prohibit the federation from
interfering in any internal and external affairs of the local union."20 [Rollo,
p. 200]
It is well-settled that findings of facts of the NLRC are entitled to great
respect and are generally binding on this Court, but it is equally well-settled
that the Court will not uphold erroneous conclusions of the NLRC as when
the Court finds insufficient or insubstantial evidence on record to support
those factual findings. The same holds true when it is perceived that far too
much is concluded, inferred or deduced from the bare or incomplete facts
appearing of record.21 [Bontia vs. NLRC, 255 SCRA 167]
In its decision, the Labor Arbiter declared that the act of disaffiliation and
declaration of autonomy by the local union was part of its "plan to take over
the respondent federation." This is purely conjecture and speculation on the
part of public respondent, totally unsupported by the evidence.
A local union has the right to disaffiliate from its mother union or declare its
autonomy. A local union, being a separate and voluntary association, is free
to serve the interests of all its members including the freedom to disaffiliate
or declare its autonomy from the federation to which it belongs when
circumstances warrant, in accordance with the constitutional guarantee of
freedom of association.22 [Volkschel vs. Bureau of Labor Relations, 137
SCRA 42]
The purpose of affiliation by a local union with a mother union or a federation
"xxx is to increase by collective action the bargaining power in respect of the
terms and conditions of labor. Yet the locals remained the basic units of
association, free to serve their own and the common interest of all, subject to
the restraints imposed by the Constitution and By-Laws of the Association,
and free also to renounce the affiliation for mutual welfare upon the terms
laid down in the agreement which brought it into existence."23 [Tropical Hut
Employees' Union-CGW vs. Tropical Hut Food Market Inc., 181 SCRA 173;
Adamson, Inc. vs. CIR, 127 SCRA 268; Liberty Cotton Mills Worker Union
vs. Liberty Cotton Mills, Inc., 66 SCRA 512]
Thus, a local union which has affiliated itself with a federation is free to sever
such affiliation anytime and such disaffiliation cannot be considered
disloyalty. In the absence of specific provisions in the federation's
constitution prohibiting disaffiliation or the declaration of autonomy of a
local union, a local may dissociate with its parent union.24 [Ferrer vs.
National Labor Relations Commission, 224 SCRA 410; People's Industrial
and Commercial Employees and Workers Organization (FFW) vs. People's
Industrial and Commercial Corp., 112 SCRA 440]
The evidence on hand does not show that there is such a provision in
ULGWP's constitution. Respondents' reliance upon Article V, Section 6, of
the federation's constitution is not right because said section, in fact, bolsters
the petitioner union's claim of its right to declare autonomy:
Section 6. The autonomy of a local union affiliated with ULGWP shall be
respected insofar as it pertains to its internal affairs, except as provided
elsewhere in this Constitution.
There is no disloyalty to speak of, neither is there any violation of the
federation's constitution because there is nothing in the said constitution
which specifically prohibits disaffiliation or declaration of autonomy. Hence,
there cannot be any valid dismissal because Article II, Section 4 of the union
security clause in the CBA limits the dismissal to only three (3) grounds, to
wit: failure to maintain membership in the union (1) for non-payment of
union dues, (2) for resignation; and (3) for violation of the union's
Constitution and By-Laws.
To support the finding of disloyalty, the Labor Arbiter gave weight to the fact
that on February 26, 1989, the petitioners declared as vacant all the
responsible positions of ULGWP, filled these vacancies through an election
and filed a petition for the registration of UWP as a national federation. It
should be pointed out, however, that these occurred after the federation had
already expelled the union officers. The expulsion was effective November
21, 1988. Therefore, the act of establishing a different federation, entirely
separate from the federation which expelled them, is but a normal retaliatory
reaction to their expulsion.
With regard to the issue of the legality or illegality of the strike, the Labor
Arbiter held that the strike was illegal for the following reasons: (1) it was
based on an intra-union dispute which cannot properly be the subject of a
strike, the right to strike being limited to cases of bargaining deadlocks and
unfair labor practice (2) it was made in violation of the "no strike, no lock-
out" clause in the CBA, and (3) it was attended with violence, force and
intimidation upon the persons of the company officials, other employees
reporting for work and third persons having legitimate business with the
company, resulting to serious physical injuries to several employees and
damage to company property.
On the submission that the strike was illegal for being grounded on a non-
strikeable issue, that is, the intra-union conflict between the federation and
the local union, it bears reiterating that when respondent company dismissed
the union officers, the issue was transformed into a termination dispute and
brought respondent company into the picture. Petitioners believed in good
faith that in dismissing them upon request by the federation, respondent
company was guilty of unfair labor pratice in that it violated the petitioner's
right to self-organization. The strike was staged to protest respondent
company's act of dismissing the union officers. Even if the allegations of
unfair labor practice are subsequently found out to be untrue, the presumption
of legality of the strike prevails.25 [Master Iron Labor Union vs. National
Labor Relation s Commission , 219 SCRA 47.]
Another reason why the Labor Arbiter declared the strike illegal is due to the
existence of a no strike no lockout provision in the CBA. Again, such a ruling
is erroneous. A no strike, no lock out provision can only be invoked when
the strike is economic in nature, i.e. to force wage or other concessions from
the employer which he is not required by law to grant.26 [Panay Electric
Company Inc. vs. NLRC, 248 SCRA 688; Peoples' Industrial and
Commercial Employees and Workers Organization (FFW) vs. PIC Corp.,
112 SCRA 440; Consolidated Labor Association of the Philippines vs.
Marsman and Co., Inc., 11 SCRA 589; Master Iron Labor Union vs. NLRC,
219 SCRA 47; Phil. Metal Foundries Inc. vs. CIR, 90 SCRA 135;] Such a
provision cannot be used to assail the legality of a strike which is grounded
on unfair labor practice, as was the honest belief of herein petitioners. Again,
whether or not there was indeed unfair labor practice does not affect the
strike.
On the allegation of violence committed in the course of the strike, it must
be remembered that the Labor Arbiter and the Commission found that "the
parties are agreed that there were violent incidents x x x resulting to injuries
to both sides, the union and management."27 [Decision of the Labor Arbiter,
Rollo, p. 203] The evidence on record show that the violence cannot be
attributed to the striking employees alone for the company itself employed
hired men to pacify the strikers. With violence committed on both sides, the
management and the employees, such violence cannot be a ground for
declaring the strike as illegal.
With respect to the dismissal of individual petitioners, the Labor Arbiter
declared that their refusal to heed respondent's recall to work notice is a clear
indication that they were no longer interested in continuing their employment
and is deemed abandonment. It is admitted that three return to work notices
were sent by respondent company to the striking employees on March 27,
April 11, and April 21, 1989 and that 261 employees who responded to the
notice were admittted back to work.
However, jurisprudence holds that for abandonment of work to exist, it is
essential (1) that the employee must have failed to report for work or must
have been absent without valid or justifiable reason; and (2) that there must
have been a clear intention to sever the employer-employee relationship
manifested by some overt acts.28 [Philippine Advertising Counselors, Inc.
vs. National Labor Relations Commission, 263 SCRA 395; Balayan Colleges
vs. National Labor Relations Commission, 255 SCRA 1.] Deliberate and
unjustified refusal on the part of the employee to go back to his work post
amd resume his employment must be established. Absence must be
accompanied by overt acts unerringly pointing to the fact that the employee
simply does not want to work anymore.29 [Nueva Ecija I Electric
Cooperative, Inc. vs. Minister of Labor, 184 SCRA 25, 30.] And the burden
of proof to show that there was unjustified refusal to go back to work rests
on the employer.
In the present case, respondents failed to prove that there was a clear intention
on the part of the striking employees to sever their employer-employee
relationship. Although admittedly the company sent three return to work
notices to them, it has not been substantially proven that these notices were
actually sent and received by the employees. As a matter of fact, some
employees deny that they ever received such notices. Others alleged that they
were refused entry to the company premises by the security guards and were
advised to secure a clearance from ULGWP and to sign a waiver. Some
employees who responded to the notice were allegedly told to wait for further
notice from respondent company as there was lack of work.
the sanction imposed for such violation enunciated in Wenphil Corporation
vs. NLRC32 [170 SCRA 69 (1989)] has become an ineffective deterrent.
Thus, the Court recently promulgated a decision to reinforce and make more
effective the requirement of notice and hearing, a procedure that must be
observed before termination of employment can be legally effected.
In Ruben Serrano vs. NLRC and Isetann Department Store (G.R. No.
117040, January 27, 2000), the Court ruled that an employee who is
dismissed, whether or not for just or authorized cause but without prior notice
of his termination, is entitled to full backwages from the time he was
terminated until the decision in his case becomes final, when the dismissal
was for cause; and in case the dismissal was without just or valid cause, the
backwages shall be computed from the time of his dismissal until his actual
reinstatement. In the case at bar, where the requirement of notice and hearing
was not complied with, the aforecited doctrine laid down in the Serrano case
applies.
WHEREFORE, the Petition is GRANTED; the decision of the National
Labor Relations Commission in case No. NCR-00-09-04199-89 is
REVERSED and SET ASIDE; and the respondent company is hereby
ordered to immediately reinstate the petitioners to their respective positions.
Should reinstatement be not feasible, respondent company shall pay
separation pay of one month salary for every year of service. Since petitioners
were terminated without the requisite written notice at least 30 days prior to
their termination, following the recent ruling in the case of Ruben Serrano
vs. National Labor Relations Commission and Isetann Department Store, the
respondent company is hereby ordered to pay full backwages to petitioner-
employees while the Federation is also ordered to pay full backwages to
petitioner-union officers who were dismissed upon its instigation. Since the
dismissal of petitioners was without cause, backwages shall be computed
from the time the herein petitioner employees and union officers were
dismissed until their actual reinstatement. Should reinstatement be not
feasible, their backwages shall be computed from the time petitioners were
terminated until the finality of this decision. Costs against the respondent
company.
SO ORDERED.

Furthermore, this Court has ruled that an employee who took steps to protest
his lay-off cannot be said to have abandoned his work.30 [Bontia vs. National
Labor Relations Commission, 255 SCRA 167; Batangas Laguna Tayabas
Bus Company vs. NLRC, 212 SCRA 792; Jackson Building Condominium
Corporation vs. NLRC, 246 SCRA 329] The filing of a complaint for illegal
dismissal is inconsistent with the allegation of abandonment. In the case
under consideration, the petitioners did, in fact, file a complaint when they
were refused reinstatement by respondent company.

Anent public respondent's finding that there was no unfair labor practice on
the part of respondent company and federation officers, the Court sustains
the same. As earlier discussed, union security clauses in collective bargaining
agreements, if freely and voluntarily entered into, are valid and binding.
Corrolarily, dismissals pursuant to union security clauses are valid and legal
subject only to the requirement of due process, that is, notice and hearing
prior to dismissal. Thus, the dismissal of an employee by the company
pursuant to a labor union's demand in accordance with a union security
agreement does not constitute unfair labor practice.31 [Tanduay Distillery
Labor Union vs. NLRC, 149 SCRA 470;Seno vs. Mendoza, 21 SCRA 1124.]

However, the dismissal was invalidated in this case because of respondent

company's failure to accord petitioners with due process, that is, notice and
hearing prior to their termination. Also, said dismissal was invalidated
because the reason relied upon by respondent Federation was not valid.
Nonetheless, the dismissal still does not constitute unfair labor practice.

Lastly, the Court is of the opinion, and so holds, that respondent company
officials cannot be held personally liable for damages on account of the
employees' dismissal because the employer corporation has a personality
separate and distinct from its officers who merely acted as its agents.

It has come to the attention of this Court that the 30-day prior notice
requirement for the dismissal of employees has been repeatedly violated and
NATIONAL UNION OF BANK EMPLOYEES (NUBE) VS.
PHILNABANK EMPLOYEES ASSOCIATION (PEMA)
G.R. No. 174287 | 2013-08-12
PERALTA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure are the May 22, 2006 Decision 1 and August 17,
2006 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP No. 84606,
which reversed the May 27, 2004 Decision 3 of the Secretary of Labor and
Employment acting as voluntary arbitrator, the dispositive portion of which
states:
WHEREFORE, in light of the foregoing findings, the Bank is hereby
ORDERED to release all union dues withheld and to continue remitting to
NUBE-PNB chapter the members’ obligations under the CBA, LESS the
amount corresponding to the number of non—union members including
those who participated in the unsuccessful withdrawal of membership from
their mother union.
The parties are enjoined to faithfully comply with the above-mentioned
resolution.
With respect to the URGENT MOTION FOR INTERVENTION filed by
PEMA, the same is hereby denied without prejudice to the rights of its
members to bring an action to protect such rights if deemed necessary at the
opportune time.
SO ORDERED. 4
We state the facts.
Respondent Philippine National Bank (PNB) used to be a govemment-owned
and controlled banking institution established under Public Act 2612, as
amended by Executive Order No. 80 dated December 3, 1986 (otherwise
known as The 1986 Revised Charter of the Philippine National Bank). Its
rank-and-file employees, being government personnel, were represented for
collective negotiation by the Philnabank Employees Association (PEMA), a
public sector union.
In 1996, the Securities and Exchange Commission approved PNB’s new
Articles of Incorporation and By-laws and its changed status as a private
corporation. PEMA affiliated with petitioner National Union of Bank
Employees (NUBE), which is a labor federation composed of unions in the
banking industry, adopting the name NUBE-PNB Employees Chapter
(NUBE-PEC).
Later, NUBE-PEC was certified as the sole and exclusive bargaining agent
of the PNB rank-and-file employees. A collective bargaining agreement
(CBA) was subsequently signed between NUBE-PEC and PNB covering the
period of January 1, 1997 to December 31, 2001.
Pursuant to Article V on Check-off and Agency Fees of the CBA, PNB shall
deduct the monthly membership fee and other assessments imposed by the
union from the salary of each union member, and agency fee (equivalent to
the monthly membership dues) from the salary of the rank-and-file
employees within the bargaining unit who are not union members. Moreover,
during the effectivity of the CBA, NUBE, being the Federation union, agreed
that PNB shall remit 1215.00 of the £65.00 union dues per month collected
by PNB from every employee, and that PNB shall directly credit the amount
to NUBE’s current account with PNB. 5
Following the expiration of the CBA, the Philnabank Employees
Association-FFW (PEMA-FFW) filed on January 2, 2002 a petition for
certification election among the rank-and-file employees of PNB. The
petition sought the conduct of a certification election to be participated in by
PEMA-FFW and NUBE-PEC.
While the petition for certification election was still pending, two significant
events transpired — the independent union registration of NUBE-PEC and
its disaffiliation with NUBE.
With a legal personality derived only from a charter issued by NUBE,
NUBE-PEC, under the leadership of Mariano Soria, decided to apply for a
separate registration with the Department of Labor and Employment
(DOLE). On March 25, 2002, it was registered as an independent labor
organization under Registration Certificate No. NCR-UR-3-3790-2002.
Thereafter, on June 20, 2003, the Board of Directors of NUBE-PEC adopted
a Resolution6 disaffiliating itself from NUBE. Cited as reasons were as
follows:
XXXX
WHEREAS, in the long period of time that the Union has been affiliated with
NUBE, the latter has miserably failed to extend and provide satisfactory
services and support to the former in the form of legal services, training
assistance, educational seminars, and the like;
WHEREAS, this failure by NUBE to provide adequate essential services and
support to union members have caused the latter to be resentful to NUBE and
to demand for the Union’s disaffiliation from the former[;]
WHEREAS, just recently, NUBE displayed its lack of regard for the interests
and aspirations of the union members by blocking the latter’s desire for the
early commencement of CBA negotiations with the PNB management[;]
WHEREAS, this strained relationship between NUBE and the Union is no
longer conducive to a fruitful partnership between them and could even
threaten industrial peace between the Union and the management of PNB.
WHEREAS, under the circumstances, the current officers of the Union have
no choice but to listen to the clamor of the overwhelming majority of union
members for the Union to disaffiliate from NUBE. 7
The duly notarized Resolution was signed by Edgardo B. Serrana (President),
Rico B. Roma (Vice-President), Rachel C. Latorre (Secretary), Valeriana S.
Garcia (Director/Acting Treasurer), Ruben C. Medrano (Director), and Verlo
C. Magtibay (Director). It is claimed that said Resolution was
overwhelmingly ratified by about eighty-one percent (81%) of the total union
membership.
On June 25, 2003, NUBE-PEC filed a Manifestation and Motion 8 before the
Med-Arbitration Unit of DOLE, praying that, in View of its independent
registration as a labor union and disaffiliation from NUBE, its name as
appearing in the official ballots of the certification election be changed to
“Philnabank Employees Association (PEMA)” or, in the alternative, both
parties be allowed to use the name “PEMA” but with PEMA-FFW and
NUBE-PEC be denominated as “PEMA-Bustria Group” and “PEMA-
Serrana Group,” respectively.
On the same date, PEMA sent a letter to the PNB management informing its
disaffiliation from NUBE and requesting to stop, effective immediately, the
check-off of the £15.00 due for NUBE. 9
Acting thereon, on July 4, 2003, PNB informed NUBE of PEMA’s letter and
its decision to continue the deduction of the P15.00 fees, but stop its
remittance to NUBE effective July 2003. PNB also notified NUBE that the
amounts collected would be held in a trust account pending the resolution of
the issue on PEMA’s disaffiliation. 10
On July 11, 2003, NUBE replied that: it remains as the exclusive bargaining
representative of the PNB rank-and-file employees; by signing the
Resolution (on disaffiliation), the chapter officers have abandoned NUBE-
PEC and joined another union; in abandoning NUBE-PEC, the chapter
officers have abdicated their respective positions and resigned as such; in
joining another union, the chapter officers committed an act of disloyalty to
NUBE-PEC and the general membership; the circumstances clearly show
that there is an emergency in NUBE-PEC necessitating its placement under
temporary trusteeship; and that PNB should cease and desist from dealing
with Serrana, Roma, Latorre, Garcia, Medrano, and Magtibay, who are
expelled from NUBE-PEC. 11 With regard to the issue of non-remittance of
the union dues, NUBE enjoined PNB to comply with the union check-off
provision of the CBA; otherwise, it would elevate the matter to the grievance
machinery in accordance with the CBA.
Despite NUBE’s response, PNB stood firm on its decision. Alleging unfair
labor practice (ULP) for non-implementation of the grievance machinery and
procedure, NUBE brought the matter to the National Conciliation and
Mediation Board (NCMB) for preventive mediation. 12 In time, PNB and
NUBE agreed to refer the case to the Office of the DOLE Secretary for
voluntary arbitration. They executed a Submission Agreement on October
28, 2003. 13
Meantime, the DOLE denied PEMA’s motion to change its name in the
official ballots. The certification election was finally held on October 17,
2003. The election yielded the following results:
Number of eligible voters 3,742
Number of valid votes cast 2,993
Number of spoiled ballots 72
Total 3,065
Philnabank Employees Association-FFW 289
National Union of Bank Employees (NUBE)-
Philippine National Bank (PNB) Chapter 2,683
No Union 21
Total 2,993 14
On April 28, 2004, PEMA filed before the voluntary arbitrator an Urgent
Motion for Intervention, 15 alleging that it stands to be substantially affected
by whatever judgment that may be issued, because one of the issues for
resolution is the validity of its disaffiliation from NUBE. It further claimed
that its presence is necessary so that a complete relief may be accorded to the
parties. Only NUBE opposed the motion, arguing that PEMA has no legal
personality to intervene, as it is not a party to the existing CBA; and that
NUBE is the exclusive bargaining representative of the PNB rank-and-file
employees and, in dealing with a union other than NUBE, PNB is violating
the duty to bargain collectively, which is another form of ULP. 16
Barely a month after, DOLE Acting Secretary Manuel G. Imson denied
PEMA’s motion for intervention and ordered PNB to release all union dues
withheld and to continue remitting the same to NUBE. The May 27, 2004
Decision opined:
Before we delve into the merits of the present dispute, it behooves [Us] to
discuss in passing the propriety of the MOTION FOR INTERVENTION
filed by the Philnabank Employees Association (PEMA) on April 28, 2004,
the alleged [break-away] group of NUBE-PNB Chapter.
A cursory reading of the motion reveals a denial thereof is not prejudicial to
the individual rights of its members. They are protected by law.
Coming now to the main issues of the case, suffice it to say that after an
evaluative review of the record of the case, taking into consideration the
arguments and evidence adduced by both parties, We find that indeed no
effective disaffiliation took place.
It is well settled that [l]abor unions may disaffiliate from their mother
federations to form a local or independent union only during the 60-day
freedom period immediately preceding the expiration of the CBA. [Tanduay
Distillery Labor Union v. National Labor Relations Commission, et al.]
However, such disaffiliation must be effected by a majority of the members
in the bargaining unit. (Volkschel Labor Union v. Bureau of Labor
Relations).
Applying the foregoing jurisprudence to the case at bar, it is difficult to
believe that a justified disaffiliation took place. While the record apparently
shows that attempts at disaffiliation occurred sometime in June of 2003 x x
x the latest result of a certification election dated 17 October 2003 mooted
such disaffiliation.
Further, even if for the sake of argument an attempt at disaffiliation occurred,
the record is bereft of substantial evidence to support a finding of effective
disaffiliation. There might have been a mass withdrawal of the union
members from the NUBE-PNB Chapter. The record shows, however, that
only 289 out of 3,742 members shifted their allegiance from the mother
union. Hence, they constituted a small minority for which reason they could
not have successfully severed the local union’s affiliation with NUBE.
Thus, since only a minority of the members wanted disaffiliation as shown
by the certification election, it can be inferred that the majority of the
members wanted the union to remain an affiliate of the NUBE. [Villar, et al.
v. Inciong, et al.]. There being no justified disaffiliation that took place, the
bargaining agent’s right under the provision of the CBA on Check—Off is
unaffected and still remained with the old NUBE-PNB Chapter. x x x
While it is true that the obligation of an employee to pay union dues is co—
te1minus with his affiliation [Philippine Federation of Petroleum Workers v.
CIR], it is equally tenable that when it is shown, as in this case, that the
withdrawal from the mother union is not supported by majority of the
members, the disaffiliation is unjustified and the disaffiliated minority group
has no authority to represent the employees of the bargaining unit. This is the
import of the principle laid down in [Volkschel Labor Union v. Bureau of
Labor Relations supra] and the inverse application of the Supreme Court
decision in [Philippine Federation of Petroleum Workers v. CIR] regarding
entitlement to the check-off provision of the CBA.
As a necessary consequence to our finding that no valid disaffiliation took
place, the right of NUBE to represent its local chapter at the PNB, less those
employees who are no longer members of the latter, is beyond reproach.
However, the Bank cannot be faulted for not releasing union dues to NUBE
at the time when representation status issue was still being threshed out by
proper governmental authority. Prudence dictates the discontinuance of
remittance of union dues to NUBE under such circumstances was a
legitimate exercise of management discretion apparently in order to protect
the Bank’s business interest. The suspension of the check-off provision of
the CBA, at the instance of the latter made in good faith, under the present
circumstances cannot give rise to a right of action. For having been exercised
without malice much less evil motive and for not causing actual loss to the
National Union of Bank Employees (NUBE), the same act of management
[cannot] be penalized. 17
Aggrieved, PEMA filed before the CA a petition under Rule 43 of the Rules
on Civil Procedure with prayer for the issuance of a temporary restraining
order (TRO) or writ of preliminary injunction (WPI). On November 2, 2004,
the CA denied the application for WPL 18 PEMA’s motion for
reconsideration was also denied on February 24, 2005, noting PNB’s
manifestation that it would submit to the judgment of the CA as to which
party it should remit the funds collected from the employees. 19
On June 21, 2005, however, petitioner again filed an Urgent Motion for the
Issuance of a TRO against the June 10, 2005 Resolution of DOLE Acting
Secretary Imson, which ordered PNB to properly issue a check directly
payable to the order of NUBE covering the withheld funds from the trust
account. 20 Considering the different factual milieu, the CA resolved to grant
the motion. 21
Subsequent to the parties’ submission of memoranda, the CA promulgated
its May 22, 2006 Decision, declaring the validity of PEMA’s disaffiliation
from NUBE and directing PNB to return to the employees concerned the
amounts deducted and held in trust for NUBE starting July 2003 and to stop
further deductions in favor of NUBE. 22
As to the impropriety of denying PEMA’s motion for intervention, the CA
noted:
x x x Among the rights of the [PEMA] as an affiliate of a federation is to
disaffiliate from it. Any case in which this is an issue is then one in which
the union has a significant legal interest and as to which it must be heard,
irrespective of any residual rights of the members after a decision that might
deny a disaffiliation. It is a non—sequitur to make the intervention of the
union in this case dependent on the question of whether its members can
pursue their own agenda under the same constraints. 23
On the validity of PEMA’s disaffiliation, the CA ratiocinated:
The power and freedom of a local union to disaffiliate from its mother union
or federation is axiomatic. As Volkschel vs. Bureau of Labor Relations [137
SCRA 42] recognizes, a local union is, after all, a separate and voluntary
association that under the constitutional guarantee of freedom of expression
is free to serve the interests of its members. Such right and freedom
invariably include the right to disaffiliate or declare its autonomy from the
federation or mother union to which it belongs, subject to reasonable
restrictions in the law or the federation’s constitution. [Malayang Samahan
ng mga Manggagawa sa M. Greenfield vs. Ramos, 326 SCRA 428]
Without any restrictive covenant between the parties, [Volkschel Labor
Union vs. Bureau of Labor Relations, supra, at 48,] it is instructive to look
into the state of the law on a union’s right to disaffiliate. The voluntary
arbitrator alludes to a provision in PD 1391 allowing disaffiliation only
within a 60-day period preceding the expiration of the CBA. In Alliance of
Nationalist and Genuine Labor Organization vs. Samahan ng mga
Manggagawang Nagkakaisa sa Manila Bay Spinning Mills, etc. [258 SCRA
371], however, the rule was not held to be iron-clad. Volkschel was cited to
support a more flexible view that the right may be allowed as the
circumstances warrant. In Associated Workers Union—PTGWO vs.
National Labor Relations Commission [188 SCRA 123], the right to
disaffiliate was upheld before the onset of the freedom period when it became
apparent that there was a shift of allegiance on the part of the majority of the
union members.
XXXX
As the records show, a majority, indeed a vast majority, of the members of
the local union ratified the action of the board to disaffiliate. Our count of the
members who approved the board action is, 2,638. If we divide this by the
number of eligible voters as per the certification election which is 3,742, the
quotient is 70.5%, representing the proportion of the members in favor of
disaffiliation. The [PEMA] says that the action was ratified by 81%. Either
way, the groundswell of support for the measure was overwhelming.
The respondent NUBE has developed the ingenious theory that if the
disaffiliation was approved by a majority of the members, it was neutered by
the subsequent certification election in which NUBE-PNB Chapter was
voted the sole and exclusive bargaining agent. It is argued that the effects of
this change must be upheld as the latest expression of the will of the
employees in the bargaining unit. The truth of the matter is that the names of
PEMA and NUBE—PNB Chapter are names of only one entity, the two sides
of the same coin. We have seen how NUBE-PNB Employees Chapter
evolved into PEMA and competed with Philnabank Employees Association-
FFW for supremacy in the certification election. To realize that it was PEMA
which entered into the contest, we need only to remind ourselves that PEMA
was the one which filed a motion in the certification election case to have its
name PEMA put in the official ballot. DOLE insisted, however, in putting
the name NUBE—PNB Chapter in the ballots unaware of the implications of
this seemingly innocuous act. 24
NUBE filed a motion for reconsideration, but it was denied; 25 hence, this
petition raising the following issues for resolution:
I. The Secretary of Labor acted without error and without grave abuse of
discretion in not giving due course to the urgent motion for intervention filed
by PEMA.
II. The Secretary of Labor acted without grave abuse of discretion and
without serious error in ruling that PEMA’s alleged disaffiliation was invalid.
III. The Secretary of Labor did not commit serious error in ordering the
release of the disputed union fees/dues to NUBE-PNB Chapter.
IV. There is no substantial basis for the issuance of a preliminary injunction
or temporary restraining order.
V. Under the Rules of Court, the appeal/petition of PEMA should have been
dismissed.
VI. PEMA and NUBE are not one and the same, and the denial by the
Secretary of Labor of the motion for intervention was proper.
VII. NUBE-PNB Chapter, not PEMA, has been fighting for PNB rank-and—
file interests and rights since PNB’s privatization, which is further proof that
NUBE-PNB Chapter and PEMA are not one and the same.
VIII. The alleged disaffiliation was not valid as proper procedure was not
followed.
IX. NUBE is entitled to check-off. 26
Stripped of the non-essential, the issue ultimately boils down on whether
PEMA validly disaffiliated itself from NUBE, the resolution of which, in
turn, inevitably affects the latter’s right to collect the union dues held in trust
by PNB.
We deny the petition.
Whether there was a valid disaffiliation is a factual issue. 27 It is elementary
that a question of fact is not appropriate for a petition for review on certiorari
under Rule 45 of the Rules of Court. The parties may raise only questions of
law because the Supreme Court is not a trier of facts. As a general rule, We
are not duty-bound to analyze again and weigh the evidence introduced in
and considered by the tribunals below. When supported by substantial
evidence, the findings of fact of the CA are conclusive and binding on the
parties and are not reviewable by this Court, except: (1) When the conclusion
is a finding grounded entirely on speculation, surmises and conjectures; (2)
When the inference made is manifestly mistaken, absurd or impossible; (3)
Where there is a grave abuse of discretion; (4) When the judgment is based
on a misapprehension of facts; (5) When the findings of fact are conflicting;
(6) When the CA, in making its findings, went beyond the issues of the case
and the same is contrary to the admissions of both parties; (7) When the
findings are contrary to those of the trial court; (8) When the findings of fact
are conclusions without citation of specific evidence on which they are
based; (9) When the facts set forth in the petition as well as in the petitioner’s
main and reply briefs are not disputed by the respondents; and (10) When the
findings of fact of the CA are premised on the supposed absence of evidence
and contradicted by the evidence on record. 28 The Court finds no cogent
reason to apply these recognized exceptions.
Even a second look at the records reveals that the arguments raised in the
petition are bereft of merit.
The right of the local union to exercise the right to disaffiliate from its mother
union is well settled in this jurisdiction. In MSMG- U WP v. Hon. Ramos,
29 We held:
A local union has the right to disaffiliate from its mother union or declare its
autonomy. A local union, being a separate and voluntary association, is free
to serve the interests of all its members including the freedom to disaffiliate
or declare its autonomy from the federation which it belongs when
circumstances warrant, in accordance with the constitutional guarantee of
freedom of association.
The purpose of affiliation by a local union with a mother union [or] a
federation
"x x x is to increase by collective action the bargaining power in respect of
the terms and conditions of labor. Yet the locals remained the basic units of
association, free to serve their own and the common interest of all, subject to
the restraints imposed by the Constitution and By-Laws of the Association,
and free also to renounce the affiliation for mutual welfare upon the terms
laid down in the agreement which brought it into existence."
Thus, a local union which has affiliated itself with a federation is free to sever
such affiliation anytime and such disaffiliation cannot be considered
disloyalty. In the absence of specific provisions in the federation's
constitution prohibiting disaffiliation or the declaration of autonomy of a
local union, a local may dissociate with its parent union. 30
Likewise, Philippine Skylanders, Inc. v. National Labor Relations
Commission 31 restated:
The right of a local union to disaffiliate from its mother federation is not a
novel thesis unillumined by case law. In the landmark case of Liberty Cotton
Mills Workers Union vs. Liberty Cotton Mills, Inc., we upheld the right of
local unions to separate from their mother federation on the ground that as
separate and voluntary associations, local unions do not owe their creation
and existence to the national federation to which they are affiliated but,
instead, to the will of their members. The sole essence of affiliation is to
increase, by collective action, the common bargaining power of local unions
for the effective enhancement and protection of their interests. Admittedly,
there are times when without succor and support local unions may find it
hard, unaided by other support groups, to secure justice for themselves.
Yet the local unions remain the basic units of association, free to serve their
own interests subject to the restraints imposed by the constitution and by—
laws of the national federation, and free also to renounce the affiliation upon
the terms laid down in the agreement which brought such affiliation into
existence.
Such dictum has been punctiliously followed since then. 32
And again, in Coastal Subic Bay Terminal, Inc. v. Department of Labor and
Employment — Office of the Secretary, 33 this Court opined:
Under the rules implementing the Labor Code, a chartered local union
acquires legal personality through the charter certificate issued by a duly
registered federation or national union, and reported to the Regional Office
in accordance with the rules implementing the Labor Code. A local union
does not owe its existence to the federation with which it is affiliated. It is a
separate and distinct voluntary association owing its creation to the will of
its members. Mere affiliation does not divest the local union of its own
personality, neither does it give the mother federation the license to act
independently of the local union. It only gives rise to a contract of agency,
where the former acts in representation of the latter. Hence, local unions are
considered principals while the federation is deemed to be merely their agent.
As such principals, the unions are entitled to exercise the rights and privileges
of a legitimate labor organization, including the right to seek certification as
the sole and exclusive bargaining agent in the appropriate employer unit. 34
Finally, the recent case of Cirtek Employees Labor Union-Federation of Free
Workers v. Cirtek Electronics, Inc 35 ruled:
x x x [A] local union may disaffiliate at any time from its mother federation,
absent any showing that the same is prohibited under its constitution or rule.
Such, however, does not result in it losing its legal personality altogether.
Verily, Anglo—KMU v. Samahan Ng Mga Manggagawang Nagkakaisa Sa
Manila Bar Spinning Mills At J.P. Coats enlightens:
A local labor union is a separate and distinct unit primarily designed to secure
and maintain an equality of bargaining power between the employer and their
employee—members. A local union does not owe its existence to the
federation with which it is affiliated. It is a separate and distinct voluntary
association owing its creation to the will of its members. The mere act of
affiliation does not divest the local union of its own personality, neither does
it give the mother federation the license to act independently of the local
union. It only gives rise to a contract of agency where the former acts in
representation of the latter. 36
Consequently, by PEMA’s valid disaffiliation from NUBE, the vinculum that
previously bound the two entities was completely severed. As NUBE was
divested of any and all power to act in representation of PEMA, any act
performed by the former that affects the interests and affairs of the latter,
including the supposed expulsion of Serrana et al., is rendered without force
and effect.
Also, in effect, NUBE loses it right to collect all union dues held in its trust
by PNB. The moment that PEMA separated from and left NUBE and exists
as an independent labor organization with a certificate of registration, the
former is no longer obliged to pay dues and assessments to the latter;
naturally, there would be no longer any reason or occasion for PNB to
continue making deductions. 42 As we said in Volkschel Labor Union v.
Bureau of Labor Relations: 43
x x x In other words, ALUMETAL [NUBE in this case] is entitled to receive
the dues from respondent companies as long as petitioner union is affiliated
with it and respondent companies are authorized by their employees
(members of petitioner union) to deduct union dues. Without said affiliation,
the employer has no link to the mother union. The obligation of an employee
to pay union dues is coterminous with his affiliation or membership. "The
employees‘ check-off authorization. even if declared irrevocable, is good
only as long as they remain members of the union concerned." A contract
between an employer and the parent organization as bargaining agent for the
employees is terminated by the disaffiliation of the local of which the
employees are members. x x x 44

These and many more have consistently reiterated the earlier view that the
right of the local members to withdraw from the federation and to form a new
local union depends upon the provisions of the union's constitution, by-laws
and charter and, in the absence of enforceable provisions in the federation's
constitution preventing disaffiliation of a local union, a local may sever its
relationship with its parent. 37 In the case at bar, there is nothing shown in
the records nor is it claimed by NUBE that PEMA was expressly forbidden
to disaffiliate from the federation nor were there any conditions imposed for
a valid breakaway. This being so, PEMA is not precluded to disaffiliate from
NUBE after acquiring the status of an independent labor organization duly
registered before the DOLE.
On the other hand, it was entirely reasonable for PNB to enter into a CBA
with PEMA as represented by Serrana et al. Since PEMA had validly
separated itself from NUBE, there would be no restrictions which could
validly hinder it from collectively bargaining with PNB.
WHEREFORE, the foregoing considered, the instant Petition is DENIED.
The May 22, 2006 Decision and August 17, 2006 Resolution of the Court of
Appeals in CA-G.R. SP No. 84606, which reversed the May 27, 2004
Decision of the Secretary of Labor and Employment, are AFFIRMED.
SO ORDERED.

Also, there is no merit on NUBE’s contention that PEMA’s disaffiliation is

invalid for non-observance of the procedure that union members should make
such determination through secret ballot and after due deliberation,
conformably with Article 241 (d) of the Labor Code, as amended. 38
Conspicuously, other than citing the opinion of a “recognized labor law
authority,” NUBE failed to quote a specific provision of the law or rule
mandating that a local union’s disaffiliation from a federation must comply
with Article 241 (d) in order to be valid and effective.

Granting, for argument’s sake, that Article 241 (d) is applicable, still, We
uphold PEMA’s disaffiliation from NUBE. First, non-compliance with the
procedure on disaffiliation, being premised on purely technical grounds
cannot rise above the employees’ fundamental right to self-organization and
to form and join labor organizations of their own choosing for the purpose of
collective bargaining. 39 Second, the Article nonetheless provides that when
the nature of the organization renders such secret ballot impractical, the union
officers may make the decision in behalf of the general membership. In this
case, NUBE did not even dare to contest PEMA’s representation that “PNB
employees, from where [PEMA] [derives] its membership, are scattered from
Aparri to Jolo, marming more than 300 branches in various towns and cities
of the country,” hence, “[to] gather the general membership of the union in a
general membership to vote through secret balloting is virtually impossible.”
40 It is understandable, therefore, why PEMA’s board of directors merely
opted to submit for ratification of the majority their resolution to disaffiliate
from NUBE. Third, and most importantly, NUBE did not dispute the
existence of the persons or their due execution of the document showing their
unequivocal support for the disaffiliation of PEMA from NUBE. Note must
be taken of the fact that the list of PEMA members (identifying themselves
as “PEMA-Serrana Group" 41) who agreed with the board resolution was
attached as Annex “H” of PEMA’s petition before the CA and covered pages
115 to 440 of the CA rollo. While fully displaying the employees’ printed
name, identification number, branch, position, and signature, the list was left
unchallenged by NUBE. No evidence was presented that the union members’
ratification was obtained by mistake or through fraud, force or intimidation.
Surely, this is not a case where one or two members of the local union
decided to disaffiliate from the mother federation, but one where more than
a majority of the local union members decided to disaffiliate.
ALLIANCE OF NATIONALIST AND GENUINE LABOR
ORGANIZATION (ANGLO-KMU) vs. SAMAHAN NG MGA
MANGGAGAWANG NAGKAKAISA SA MANILA BAY SPINNING
MILLS AT J.P. COATS (SAMANA BAY)
G.R. No. 118562 | 1996-07-05
FRANCISCO, J.:
Petitioner Alliance of Nationalist and Genuine Labor Organization (ANGLO
for brevity) is a duly registered labor organization while respondent union
Samahan Ng Mga Manggagawang Nagkakaisa sa Manila Bay Spinning Mills
and J.P. Coats (SAMANA BAY for brevity) is its affiliate. In representation
of SAMANA BAY, ANGLO entered and concluded a Collective Bargaining
Agreement (CBA) with Manila Bay Spinning Mills and J.P. Coats Manila
Bay, Inc. (hereinafter referred to as the corporations) on November 1, 1991.
On December 4, 1993, the Executive Committee of SAMANA BAY decided
to disaffiliate from ANGLO in view of the latter's dereliction of its duty to
promote and advance the welfare of SAMANA BAY and the alleged cases
of corruption involving the federation officers. Said disaffiliation was
unanimously confirmed by the members of SAMANA BAY.
On April 4, 1994, a petition to stop remittance of federation dues to ANGLO
was filed by SAMANA BAY with the Bureau of Labor Relations on the
ground that the corporations, despite having been furnished copies of the
union resolution relating to said disaffiliation, refused to honor the same.
ANGLO counter-acted by unseating all officers and board members of
SAMANA BAY and appointing, in their stead, a new set of officers who
were duly recognized by the corporations.
In its position paper, ANGLO contended that the disaffiliation was void
considering that a collective bargaining agreement is still existing and the
freedom period has not yet set in. The Med-Arbiter resolved that the
disaffiliation was void but upheld the illegality of the ouster of the officers
of SAMANA BAY. Both parties filed their respective appeals with the
Department of Labor and Employment. In a resolution dated September 23,
1994, herein public respondent modified the order and ruled in favor of
respondent union, disposing as follows:
WHEREFORE, the appeal of respondent ANGLO is hereby denied for lack
of merit while the appeal of petitioners is hereby granted. Accordingly, the
order of the Med-Arbiter is modified by:
1) declaring the disaffiliation of petitioner union from respondent ANGLO
as valid;
2) directing respondent Manila Bay Spinning Mills, Inc. and J.P. Coats to
stop remitting to ANGLO federation dues and instead to remit the whole
amount of union dues to the treasurer of petitioner union; and
3) enjoining ANGLO-KMU from interfering in the affairs of petitioner
union.
SO ORDERED. 1
ANGLO filed a motion for reconsideration but the same was denied for lack
of merit. Hence, this petition for certiorari under Rule 65.
The petition calls upon us to resolve two issues, to wit:
1) whether the disaffiliation was valid; and
2) whether petitioner can validly oust individual private respondents from
their positions.
We rule for the respondents.
For clarity, we shall first consider the issue respecting the validity of the
disaffiliation.
Petitioner ANGLO wants to impress on us that the disaffiliation was invalid
for two reasons, namely: that the procedural requirements for a valid
disaffiliation were not followed; and that it was made in violation of P.D
1391.
Anent the first ground, we reiterate the rule that all employees enjoy the right
to self-organization and to form and join labor organizations of their own
choosing for the purpose of collective bargaining. This is a fundamental right
of labor and derives its existence from the Constitution. In interpreting the
protection to labor and social justice provisions of the Constitution and the
labor laws, rules or regulations, we have always adopted the liberal approach
which favors the exercise of labor rights. 2
This Court is not ready to bend this principle to yield to a mere procedural
defect, to wit: failure to observe certain procedural requirements for a valid
disaffiliation. Non-compliance with the procedure on disaffiliation, being
premised on purely technical grounds cannot rise above the fundamental
right of self-organization. 3
We quote, with approval, the findings of herein public respondent, that:
. . . the resolution of the general membership ratifying the disaffiliation action
initiated by the Board, substantially satisfies the procedural requirements for
disaffiliation. No doubt was raised on the support of the majority of the union
members on the decision todisaffiliate. 4
This, to our mind, is clearly supported by the evidence. ANGLO's alleged
acts inimical to the interests of respondent union have not been sufficiently
rebutted. It is clear under the facts that respondent union's members have
unanimously decided to disaffiliate from the mother federation and ANGLO
has nothing to offer in dispute other than the law prohibiting the disaffiliation
outside the freedom period.
In the same wise, We find no ground for ruling against the validity of the
disaffiliation in the light of recent jurisprudential rules.
Although P.D. 1391 provides:
Item No. 6. No petition for certification election, for intervention and
disaffiliation shall be entertained or given due course except within the 60-
day freedom period immediately preceeding the expiration of a collective
bargaining agreement,
said law is definitely not without exceptions. Settled is the rule that a local
union has the right to disaffiliate from its mother union when circumstances
warrant. 5 Generally, a labor union may disaffiliate from the mother union to
form a local or independent union only during the 60-day freedom period
immediately preceding the expiration of the CBA. However, even before the
onset of the freedom period, disaffiliation may be carried out when there is a
shift of allegiance on the part of the majority of the members of the union. 6
Coming now to the second issue, ANGLO contends that individual private
respondents were validly ousted as they have ceased to be officers of the
incumbent union (ANGLO-KMU) at the time of disaffiliation. In order to fill
the vacuum, it was deemed proper to appoint the individual replacements so
as not to put in disarray the organizational structure and to prevent chaos and
confusion among the general membership and within the company.
The contention is bereft of merit. A local labor union is a separate and distinct
unit primarily designed to secure and maintain an equality of bargaining
power between the employer and their employee-members. A local union
does not owe its existence to the federation with which it is affiliated. It is a
separate and distinct voluntary association owing its creation to the will of
its members. 7 The mere act of affiliation does not divest the local union of
its own personality, neither does it give the mother federation the license to
act independently of the local union. It only gives rise to a contract of agency
8 where the former acts in representation of the latter.
By SAMANA BAY's disaffiliation from ANGLO, the vinculum that
previously bound the two entities was completely severed. ANGLO was
divested of any and all power to act in representation of SAMANA BAY.
Thus, any act performed by ANGLO affecting the interests and affairs of
SAMANA BAY, including the ouster of herein individual private
respondent, is rendered without force and effect.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
VOLKSCHEL LABOR UNION vs. BUREAU OF LABOR
RELATIONS
G.R. No. L-45824 | 1985-06-19
CUEVAS, J.:
Petition for certiorari to review the Resolutions dated January 25, 1977 and
March 14, 1977 of the Bureau of Labor Relations.
On April 25, 1977, however, a Supplemental Petition was filed seeking the
issuance of -
(1) A preliminary mandatory injunction commanding respondents to return
to petitioner the union dues amounting to about P55,000.00 lawfully
pertaining to it but illegally levied upon, collected and handed over by
respondent Bureau, acting through the NLRC sheriff, to respondent
Associated Labor Union for Metalworkers, with the collusion of respondents
DMG, Inc., Karbayan, Inc. and RTC Machineries, Inc.;
(2) A preliminary restraining order prohibiting respondents from making
further delivery to respondent Associated Labor Union for Metalworkers of
Union dues collected or to be collected through check-off from the wages of
petitioner's members by respondents, DMG, Inc., Karbayan, Inc., RTC
Machineries, Inc., and People's Car, Inc., under or by virtue of the questioned
writ of execution issued by respondent Bureau, dated April 4, 1977.
Petitioner was once affiliated with the Associated Labor Union for Metal
Workers (ALUMETAL for short). On August 1, 1975, both unions, using the
name Volkschel Labor Union Associated Labor Union for Metal Workers,
jointly entered into a collective bargaining agreement with respondent
companies. One of the subjects dealt with is the payment of union dues which
is provided for in Section 3, Article I, of the CBA, which reads:
"Section 3. CHECK-OFF. - The COMPANY agrees to make payroll
deductions not oftener than twice a month of UNION membership dues and
such special assessments fees or fines as may be duly authorized by the
UNION, provided that the same is covered by the individual check-off
authorization of the UNION members. All said deductions shall be promptly
transmitted within five (5) days by the COMPANY to the UNION Treasurer.
The COMPANY shall prepare two (2) checks. One (1) check will be under
the name of the local union as their local fund including local special
assessment funds and the other check will be for the ALU Regional Office
regarding the remittance of the UNION dues deduction."
On March 10, 1976, a majority of petitioner's members decided to disaffiliate
from respondent federation in order to operate on its own as an independent
labor group pursuant to Article 241 (formerly Article 240) of the Labor Code
of the Philippines, the pertinent portion of which reads:
"Incumbent affiliates of existing federations or national unions may
disaffiliate only for the purpose of joining a federation or national union in
the industry or region in which it properly belongs or for the purpose of
operating as an independent labor group."
Accordingly, a resolution was adopted and signed by petitioner's members
revoking their check-off authorization in favor of ALUMETAL and notices
thereof were served on ALUMETAL and respondent companies.
Confronted with the predicament of whether or not to continue deducting
from employees' wages and remitting union dues to respondent ALUMETAL
which wrote respondent companies advising them to continue deducting
union dues and remitting them to said federation, respondent companies
sought the legal opinion of the respondent Bureau as regards the controversy
between the two unions. On November 11, 1976, Med-Arbiter George A.
Eduvalla of respondent Bureau rendered a Resolution which in effect found
the disaffiliation legal but at the same time gave the opinion that petitioner's
members should continue paying their dues to ALUMETAL in the concept
of agency fees. 1
From the said Resolution of the Med-Arbiter both petitioner and respondent
ALUMETAL appealed to the Director of respondent Bureau. Petitioner
contended that the Med-Arbiter's opinion to the effect that petitioner's
members remained obligated to pay dues to respondent ALUMETAL was
inconsistent with the dispositive finding that petitioner's disaffiliation from
ALUMETAL was valid. ALUMETAL, on the other hand, assailed the
Resolution in question asserting that the disaffiliation should have been
declared contrary to law.
On January 25, 1977, respondent Bureau, through its Acting Director,
Francisco L. Estrella, REVERSED the Med-Arbiter's Resolution, and
declared that the Bureau recognized "the continued affiliation of Volkschel
Labor Union with the Associated Labor Union for Metal Workers." 2
Petitioner appealed the Acting Director's Resolution to the Secretary of Labor
(now Minister of Labor and Employment) who, treating the appeal as a
Motion for Reconsideration, referred the same back to respondent Bureau.
On March 14, 1977, the Bureau denied the appeal for lack of merit.
Hence, the instant petition.
Meanwhile, on April 4, 1977, on motion of ALUMETAL, the then Acting
Secretary of Labor, Amado Gat Inciong, issued a writ of execution
commanding the Sheriff of the National Labor Relations Commission "to
enforce and execute the order of January 25, 1977, which has become final
and executory. 3 Pursuant thereto, the NLRC Sheriff enforced and
implemented the Order of January 25, 1977, as a result of which respondent
companies turned over and handed to respondent federation the union dues
and other assessments in accordance with the check-off provision of the
CBA.
From the pleadings filed and arguments of counsel, the following issues
present themselves for this Court's resolution.
I
Is petitioner union's disaffiliation from respondent federation valid?.
II
Do respondent companies have the right to effect union dues collections
despite revocation by the employees of the check-off authorization? and
III
Is respondent federation entitled to union dues payments from petitioner
union's members notwithstanding their disaffiliation from said federation?
We resolve the first issue in the affirmative.
The right of a local union to disaffiliate from its mother union is well-settled.
In previous cases, it has been repeatedly held that a local union, being a
separate and voluntary association, is free to serve the interest of all its
members including the freedom to disaffiliate when circumstances warrant.
4 This right is consistent with the Constitutional guarantee of freedom of
association (Article IV, Section 7, Philippine Constitution).
Petitioner contends that the disaffiliation was not due to any opportunists
motives on its part. Rather it was prompted by the federation's deliberate and
habitual dereliction of duties as mother federation towards petitioner union.
Employees' grievances were allegedly left unattended to by respondent
federation to the detriment of the employees' rights and interests.
In reversing the Med-Arbiter's resolution, respondent Bureau declared: the
Department of Labor is set on a task to restructure the labor movement to the
end that the workers will unite themselves along industry lines. Carried to its
complete fruition, only one union for every industry will remain to bargain
collectively for the workers. The clear policy therefore even now is to conjoin
workers and worker groups, not to dismember them. 5 This policy is
commendable. However, we must not lose sight of the constitutional mandate
of protecting labor and the workers' right to self-organization. In the
implementation and interpretation of the provisions of the Labor Code and
its implementing regulations, the workingman's welfare should be the
primordial and paramount consideration. In the case at bar, it would go
against the spirit of the labor law to restrict petitioner's right to self-
organization due to the existence of the CBA. We agree with the Med-
Arbiter's opinion that "A disaffiliation does not disturb the enforceability and
administration of a collective agreement; it does not occasion a change of
administrators of the contract nor even an amendment of the provisions
thereof." 6 But nowhere in the record does it appear that the contract entered
into by the petitioner and ALUMETAL prohibits the withdrawal of the
former from the latter.
This now brings us to the second issue. Under Section 3, Article I, of the
CBA, the obligation of the respondent companies to deduct and remit dues
to ALUMETAL is conditioned on the individual check-off authorization of
petitioner's members. In other words, ALUMETAL is entitled to receive the
dues from respondent companies as long as petitioner union is affiliated with
it and respondent companies are authorized by their employees (members of
petitioner union) to deduct union dues. Without said affiliation, the employer
has no link to the mother union. The obligation of an employee to pay union
dues is coterminous with his affiliation or membership. "The employees'
check-off authorization, even if declared irrevocable, is good only as long as
they remain members of the union concerned." 7 A contract between an
employer and the parent organization as bargaining agent for the employees
is terminated by the disaffiliation of the local of which the employees are
members. 8 Respondent companies therefore were wrong in continuing the
check-off in favor of respondent federation since they were duly notified of
the disaffiliation and of petitioner's members having already rescinded their
check-off authorization.

With the view we take on those two issues, we find no necessity in dwelling
further on the last issue. Suffice it to state that respondent federation is not
entitled to union dues payments from petitioner's members. "A local union
which has validly withdrawn from its affiliation with the parent association
and which continues to represent the employees of an employer is entitled to
the check-off dues under a collective bargaining contract." 9

WHEREFORE, the Resolutions of the Bureau of Labor Relations of January

25, 1977 and March 14, 1977 are REVERSED and SET ASIDE. Respondent
ALUMETAL is ordered to return to petitioner union all the union dues
enforced and collected through the NLRC Sheriff by virtue of the writ of
execution dated April 4, 1977 issued by respondent Bureau.

No costs.

SO ORDERED.
DEL MONTE PHILIPPINES, INC. VS. SALDIVAR
G.R. No. 158620 | 2006-10-11
Tinga, J.:
The main issue for resolution herein is whether there was sufficient cause for
the dismissal of a rank-and-file employee effectuated through the
enforcement of a closed-shop provision in the Collective Bargaining
Agreement (CBA) between the employer and the union.
The operative facts are uncomplicated.
The Associated Labor Union (ALU) is the exclusive bargaining agent of
plantation workers of petitioner Del Monte Philippines, Inc. (Del Monte) in
Bukidnon. Respondent Nena Timbal (Timbal), as a rank-and-file employee
of Del Monte plantation in Bukidnon, is also a member of ALU. Del Monte
and ALU entered into a Collective Bargaining Agreement (CBA) with an
effective term of five (5) years from 1 September 1988 to 31 August 1993.[1]
Timbal, along with four other employees (collectively, co-employees), were
charged by ALU for disloyalty to the union, particularly for encouraging
defections to a rival union, the National Federation of Labor (NFL). The
charge was contained in a Complaint dated 25 March 1993, which
specifically alleged, in relation to Timbal: "That on July 13, 1991 and the
period prior or after thereto, said Nena Timbal personally recruited other
bonafide members of the ALU to attend NFL seminars and has actually
attended these seminars together with the other ALU members."[2] The
matter was referred to a body within the ALU organization, ominously
named "Disloyalty Board."
The charge against Timbal was supported by an affidavit executed on 23
March 1993 by Gemma Artajo (Artajo), also an employee of Del Monte.
Artajo alleged that she was personally informed by Timbal on 13 July 1991
that a seminar was to be conducted by the NFL on the following day. When
Artajo demurred from attending, Timbal assured her that she would be given
honorarium in the amount of P500.00 if she were to attend the NFL meeting
and bring new recruits. Artajo admitted having attended the NFL meeting
together with her own recruits, including Paz Piquero (Piquero). Artajo stated
that after the meeting she was given P500.00 by Timbal.[3]
Timbal filed an Answer before the Disloyalty Board, denying the allegations
in the complaint and the averments in Artajo's Affidavit. She further alleged
that her husband, Modesto Timbal, had filed a complaint against Artajo for
collection of a sum of money on 17 March 1993, or just six (6) days before
Artajo executed her affidavit. She noted that the allegations against her were
purportedly committed nearly two (2) years earlier, and that Artajo's act was
motivated by hate and revenge owing to the filing of the aforementioned civil
action.[4]
Nevertheless, the ALU Disloyalty Board concluded that Timbal was guilty
of acts or conduct inimical to the interests of ALU, through a Resolution
dated 7 May 1993.[5] It found that the acts imputed to Timbal were partisan
activities, prohibited since the "freedom period" had not yet commenced as
of that time. Thus, the Disloyalty Board recommended the expulsion of
Timbal from membership in ALU, and likewise her dismissal from Del
Monte in accordance with the Union Security Clause in the existing CBA
between ALU and Del Monte. The Disloyalty Board also reached the same
conclusions as to the co-employees, expressed in separate resolutions also
recommending their expulsion from ALU.[6]
On 21 May 1993, the Regional Vice President of ALU adopted the
recommendations of the Disloyalty Board and expelled Timbal[7] and her
co-employees from ALU.[8] The ALU National President affirmed the
expulsion.[9] On 17 June 1993, Del Monte terminated Timbal and her co-
employees effective 19 June 1993, noting that the termination was "upon
demand of [ALU] pursuant to Sections 4 and 5 of Article III of the current
Collective Bargaining Agreement."[10]
Timbal and her co-employees filed separate complaints against Del Monte
and/or its Personnel Manager Warfredo C. Balandra and ALU with the
Regional Arbitration Branch (RAB) of the National Labor Relations
Commission (NLRC) for illegal dismissal, unfair labor practice and
damages.[11] The complaints were consolidated and heard before Labor
Arbiter Irving Pedilla. The Labor Arbiter affirmed that all five (5) were
illegally dismissed and ordered Del Monte to reinstate complainants,
including Timbal, to their former positions and to pay their full backwages
and other allowances, though the other claims and charges were dismissed
for want of basis.[12]
Only Del Monte interposed an appeal with the NLRC.[13] The NLRC
reversed the Labor Arbiter and ruled that all the complainants were validly
dismissed.[14] On review, the Court of Appeals ruled that only Timbal was
illegally dismissed.[15] At the same time, the appellate court found that Del
Monte had failed to observe procedural due process in dismissing the co-
employees, and thus ordered the company to pay P30,000.00 to each of the
co-employees as penalties. The co-employees sought to file a Petition for
Review[16] with this Court assailing the ruling of the Court of Appeals
affirming their dismissal, but the petition was denied because it was not
timely filed.[17]
On the other hand, Del Monte, through the instant petition, assails the Court
of Appeals decision insofar as it ruled that Timbal was illegally dismissed.
Notably, Del Monte does not assail in this petition the award of P30,000.00
to each of the co-employees, and the ruling of the Court of Appeals in that
regard should now be considered final.
The reason offered by the Court of Appeals in exculpating Timbal revolves
around the problematic relationship between her and Artajo, the complaining
witness against her. As explained by the appellate court:
However, the NLRC should have considered in a different light the situation
of petitioner Nena Timbal. Timbal asserted before the NLRC, and reiterates
in this petition, that the statements of Gemma Artajo, ALU's sole witness
against her, should not be given weight because Artajo had an ax[e] to grind
at the time when she made the adverse statements against her. Respondents
never disputed the claim of Timbal that in the two (2) collection suits initiated
by Timbal and her husband, Artajo testified for the defendant in the first case
and she was even the defendant in the second case which was won by Timbal.
We find it hard to believe that Timbal would so willingly render herself
vulnerable to expulsion from the Union by revealing to an estranged
colleague her desire to shift loyalty. The strained relationship between
Timbal and Artajo renders doubtful the charge against the former that she
attempted to recruit Artajo to join a rival union. Inasmuch as the respondents
failed to justify the termination of Timbal's employment, We hold that her
reinstatement to her former position in accordance with the September 27,
1996 decision of the Labor Arbiter is appropriate.[18]
The Labor Arbiter, in his favorable ruling to the dismissed employees, had
noted that "complainant Timbal['s] x x x accuser has an axe to grind against
her for an unpaid debt so that her testimony cannot be given credit."[19] The
NLRC, in reversing the Labor Arbiter, did not see it fit to mention the
circumstances of the apparent feud between Timbal and Artajo, except in the
course of narrating Timbal's allegations.
However, in the present petition, Del Monte utilizes a new line of argument
in justifying Timbal's dismissal. While it does not refute the
contemporaneous ill-will between Timbal and Artajo, it nonetheless alleges
that there was a second witness, Paz Piquero, who testified against Timbal
before the Disloyalty Board.[20] Piquero had allegedly corroborated Artajo's
allegations and positively identified Timbal as among those present during
the seminar of the NFL conducted on 14 July 1992 and as having given her
transportation money after the seminar was finished. Del Monte asserts that
Piquero was a disinterested witness against Timbal.[21]
Del Monte also submits two (2) other grounds for review. It argues that the
decision of the Labor Arbiter, which awarded Timbal full backwages and
other allowances, was inconsistent with jurisprudence which held that an
employer who acted in good faith in dismissing employees on the basis of a
closed-shop provision is not liable to pay full backwages.[22] Finally, Del
Monte asserts that it had, from the incipience of these proceedings
consistently prayed that in the event that it were found with finality that the
dismissal of Timbal and the others is illegal, ALU should be made liable to
Del Monte pursuant to the CBA. The Court of Appeals is faulted for failing
to rule upon such claim.
For her part, Timbal observes that Piquero's name was mentioned for the first
time in Del Monte's Motion for Partial Reconsideration of the decision of the
Court of Appeals.[23] She claims that both Piquero and Artajo were not in
good terms with her after she had won a civil suit for the collection of a sum
of money against their immediate superior, one Virgie Condeza.[24]
The legality of Timbal's dismissal is obviously the key issue in this case. We
are particularly called upon to determine whether at this late stage, the Court
may still give credence to the purported testimony of Piquero and justify
Timbal's dismissal based on such testimony.

It bears elaboration that Timbal's dismissal is not predicated on any of the
just or authorized causes for dismissal under Book Six, Title I of the Labor
Code,[25] but on the union security clause in the CBA between Del Monte
and ALU. Stipulations in the CBA authorizing the dismissal of employees
are of equal import as the statutory provisions on dismissal under the Labor
Code, since "[a] CBA is the law between the company and the union and
compliance therewith is mandated by the express policy to give protection to
labor."[26] The CBA, which covers all regular hourly paid employees at the
pineapple plantation in Bukidnon,[27] stipulates that all present and
subsequent employees shall be required to become a member of ALU as a
condition of continued employment. Sections 4 and 5, Article II of the CBA
further state:
ARTICLE II
Section 4. Loss of membership in the UNION shall not be a ground for
dismissal by the Company except where loss of membership is due to:
1. Voluntary resignation from [ALU] earlier than the expiry date of this
[CBA];
2. Non-payment of duly approved and ratified union dues and fees; and
3. Disloyalty to [ALU] in accordance with its Constitution and By-Laws as
duly registered with the Department of Labor and Employment.
Section 5. Upon request of [ALU], [Del Monte] shall dismiss from its service
in accordance with law, any member of the bargaining unit who loses his
membership in [ALU] pursuant to the provisions of the preceding section.
[ALU] assumes full responsibility for any such termination and hereby
agrees to hold [Del Monte] free from any liability by judgment of a
competent authority for claims arising out of dismissals made upon demand
of [ALU], and [the] latter shall reimburse the former of such sums as it shall
have paid therefor. Such reimbursement shall be deducted from union dues
and agency fees until duly paid.[28]
The CBA obviously adopts a closed-shop policy which mandates, as a
condition of employment, membership in the exclusive bargaining agent. A
"closed-shop" may be defined as an enterprise in which, by agreement
between the employer and his employees or their representatives, no person
may be employed in any or certain agreed departments of the enterprise
unless he or she is, becomes, and, for the duration of the agreement, remains
a member in good standing of a union entirely comprised of or of which the
employees in interest are a part.[29] A CBA provision for a closed-shop is a
valid form of union security and it is not a restriction on the right or freedom
of association guaranteed by the Constitution.[30]
Timbal's expulsion from ALU was premised on the ground of disloyalty to
the union, which under Section 4(3), Article II of the CBA, also stands as a
ground for her dismissal from Del Monte. Indeed, Section 5, Article II of the
CBA enjoins Del Monte to dismiss from employment those employees
expelled from ALU for disloyalty, albeit with the qualification "in
accordance with law."
Article 279 of the Labor Code ordains that "in cases of regular employment,
the employer shall not terminate the services of an employee except for a just
cause or when authorized by [Title I, Book Six of the Labor Code]."
Admittedly, the enforcement of a closed-shop or union security provision in
the CBA as a ground for termination finds no extension within any of the
provisions under Title I, Book Six of the Labor Code. Yet jurisprudence has
consistently recognized, thus: "It is State policy to promote unionism to
enable workers to negotiate with management on an even playing field and
with more persuasiveness than if they were to individually and separately
bargain with the employer. For this reason, the law has allowed stipulations
for 'union shop' and 'closed shop' as means of encouraging workers to join
and support the union of their choice in the protection of their rights and
interests vis-a-vis the employer."[31]
It might be suggested that since Timbal was expelled from ALU on the
ground of disloyalty, Del Monte had no choice but to implement the CBA
provisions and cause her dismissal. Similarly, it might be posited that any
tribunal reviewing such dismissal is precluded from looking beyond the
provisions of the CBA in ascertaining whether such dismissal was valid. Yet
deciding the problem from such a closed perspective would virtually
guarantee unmitigated discretion on the part of the union in terminating the
employment status of an individual employee. What the Constitution does
recognize is that all workers, whether union members or not, are "entitled to
security of tenure."[32] The guarantee of security of tenure itself is
implemented through legislation, which lays down the proper standards in
determining whether such right was violated.[33]
Agabon v. NLRC[34] did qualify that constitutional due process or security
of tenure did not shield from dismissal an employee found guilty of a just
cause for termination even if the employer failed to render the statutory
notice and hearing requirement. At the same time, it should be understood
that in the matter of determining whether cause exists for termination,
whether under Book Six, Title I of the Labor Code or under a valid CBA,
substantive due process must be observed as a means of ensuring that security
of tenure is not infringed.
Agabon observed that due process under the Labor Code comprised of two
aspects: "substantive, i.e., the valid and authorized causes of employment
termination under the Labor Code; and procedural, i.e., the manner of
dismissal."[35] No serious dispute arose in Agabon over the observance of
substantive due process in that case, or with the conclusion that the
petitioners therein were guilty of abandonment of work, one of the just causes
for dismissal under the Labor Code. The controversy in Agabon centered on
whether the failure to observe procedural due process, through the non-
observance of the two-notice rule, should lead to the invalidation of the
dismissals. The Court ruled, over the dissents of some Justices, that the
failure by the employer to observe procedural due process did not invalidate
the dismissals for just cause of the petitioners therein. However, Agabon did
not do away with the requirement of substantive due process, which is
essentially the existence of just cause provided by law for a valid dismissal.
Thus, Agabon cannot be invoked to validate a dismissal wherein substantive
due process, or the proper determination of just cause, was not observed.
Even if the dismissal of an employee is conditioned not on the grounds for
termination under the Labor Code, but pursuant to the provisions of a CBA,
it still is necessary to observe substantive due process in order to validate the
dismissal. As applied to the Labor Code, adherence to substantive due
process is a requisite for a valid determination that just or authorized causes
existed to justify the dismissal.[36] As applied to the dismissals grounded on
violations of the CBA, observance of substantial due process is indispensable
in establishing the presence of the cause or causes for dismissal as provided
for in the CBA.
Substantive due process, as it applies to all forms of dismissals, encompasses
the proper presentation and appreciation of evidence to establish that cause
under law exists for the dismissal of an employee. This holds true even if the
dismissal is predicated on particular causes for dismissal established not by
the Labor Code, but by the CBA. Further, in order that any CBA-mandated
dismissal may receive the warrant of the courts and labor tribunals, the causes
for dismissal as provided for in the CBA must satisfy to the evidentiary
threshold of the NLRC and the courts.
It is necessary to emphasize these principles since the immutable truth under
our constitutional and labor laws is that no employee can be dismissed
without cause. Agabon may have tempered the procedural due process
requirements if just cause for dismissal existed, but in no way did it eliminate
the existence of a legally prescribed cause as a requisite for any dismissal.
The fact that a CBA may provide for additional grounds for dismissal other
than those established under the Labor Code does not detract from the
necessity to duly establish the existence of such grounds before the dismissal
may be validated. And even if the employer or, in this case, the collective
bargaining agent, is satisfied that cause has been established to warrant the
dismissal, such satisfaction will be of no consequence if, upon legal
challenge, they are unable to establish before the NLRC or the courts the
presence of such causes.
In the matter at bar, the Labor Arbiter-the proximate trier of facts-and the
Court of Appeals both duly appreciated that the testimony of Artajo against
Timbal could not be given credence, especially in proving Timbal's
disloyalty to ALU. This is due to the prior animosity between the two
engendered by the pending civil complaint filed by Timbal's husband against
Artajo. Considering that the civil complaint was filed just six (6) days prior
to the execution of Artajo's affidavit against Timbal, it would be plainly
injudicious to presume that Artajo possessed an unbiased state of mind as she
executed that affidavit. Such circumstance was considered by the Labor
Arbiter, and especially the Court of Appeals, as they rendered a favorable
ruling to Timbal. The NLRC may have decided against Artajo, but in doing
so, it failed to provide any basis as to why Artajo's testimony should be
believed, instead of disbelieved. No credible disputation was offered by the
NLRC to the claim that Artajo was biased against Timbal; hence, we should
adjudge the findings of the Labor Arbiter and the Court of Appeals as more
cogent on that point.
Before this Court, Del Monte does not even present any serious argument
that Artajo's testimony against Timbal was free from prejudice. Instead, it
posits that Piquero's alleged testimony against Timbal before the Disloyalty
Board should be given credence, and that taken with Artajo's testimony,
should sufficiently establish the ground of disloyalty for which Timbal
should be dismissed.
The Court sees the danger to jurisprudence and the rights of workers in
acceding to Del Monte's position. The dismissal for cause of employees must
be justified by substantial evidence, as appreciated by an impartial trier of
facts. None of the trier of facts below-the Labor Arbiter, the NLRC and the
Court of Appeals-saw fit to accord credence to Piquero's testimony, even
assuming that such testimony was properly contained in the record. Even the
NLRC decision, which was adverse to Timbal, made no reference at all to
Piquero's alleged testimony.
Del Monte is able to point to only one instance wherein Piquero's name and
testimony appears on the record. It appears that among the several
attachments to the position paper submitted by the ALU before the NLRC-
RAB was a copy of the raw stenographic notes transcribed, apparently on 17
April 1993, during a hearing before the Disloyalty Board. The transcription
is not wholly legible, but there appears to be references therein to the name
"Paz Piquero," and her apparent testimony before the Disloyalty Board. We
are unable to reproduce with accuracy, based on the handwritten
stenographic notes, the contents of this seeming testimony of Piquero,
although Del Monte claims before this Court that Piquero had corroborated
Artajo's claims during such testimony, "positively identified [Timbal's]
presence in the NFL seminar on 14 July 1992," and "confirmed that Timbal
gave Artajo P500.00 for recruiting participants in the NFL seminar."[37]
There are evident problems on our part, at this late stage, in appreciating these
raw stenographic notes adverting to the purported testimony of Piquero,
especially as a means of definitively concluding that Timbal was guilty of
disloyalty. Certainly, these notes cannot be appreciated as entries in the
official record, which are presumed prima facie evidence of the facts therein
stated,[38] as such records can only be made by a public officer of the
Philippines or by a person in the performance of a duty specially enjoined by
law. These transcripts were not taken during a hearing conducted by any
public office in the Philippines, but they were committed in the course of an
internal disciplinary mechanism devised by a privately organized labor
union. Unless the authenticity of these notes is duly proven before, and
appreciated by the triers of fact, we cannot accord them any presumptive or
conclusive value.
Moreover, despite the fact that the apparent record of Piquero's testimony
was appended to ALU's position paper, the position paper itself does not
make any reference to such testimony, or even to Piquero's name for that
matter. The position paper observes that "[t]his testimony of [Artajo] was
directly corroborated by her actual attendance on July 14, 1992 at the agreed
[venue]," but no mention is made that such testimony was also "directly
corroborated" by Piquero. Then again, it was only Artajo, and not Piquero,
who executed an affidavit recounting the allegations against Timbal.
Indeed, we are inclined to agree with Timbal's observation in her Comment
on the present petition that from the time the complaint was filed with the
NLRC-RAB, Piquero's name and testimony were invoked for the first time
only in Del Monte's motion for reconsideration before the Court of Appeals.
Other than the handwritten reference made in the raw stenographic notes
attached to ALU's position paper before the NLRC-RAB, Piquero's name or
testimony was not mentioned either by ALU or Del Monte before any of the
pleadings filed before the NLRC-RAB, the NLRC, and even with those
submitted to the Court of Appeals prior to that court's decision.
In order for the Court to be able to appreciate Piquero's testimony as basis
for finding Timbal guilty of disloyalty, it is necessary that the fact of such
testimony must have been duly established before the NLRC-RAB, the
NLRC, or at the very least, even before the Court of Appeals. It is only after
the fact of such testimony has been established that the triers of fact can come
to any conclusion as to the veracity of the allegations in the testimony.
It should be mentioned that the Disloyalty Board, in its Resolution finding
Timbal guilty of disloyalty, did mention that Artajo's testimony "was
corroborated by Paz Piquero who positively identified and testified that Nena
Timbal was engaged in recruitment of ALU members at [Del Monte] to
attend NFL seminars."[39]
The Disloyalty Board may have appreciated Piquero's testimony in its own
finding that Timbal was guilty, yet the said board cannot be considered as a
wholly neutral or dispassionate tribunal since it was constituted by the very
organization that stood as the offended party in the disloyalty charge.
Without impugning the integrity of ALU and the mechanisms it has
employed for the internal discipline of its members, we nonetheless hold that
in order that the dismissal of an employee may be validated by this Court, it
is necessary that the grounds for dismissal are justified by substantial
evidence as duly appreciated by an impartial trier of facts.[40] The existence
of Piquero's testimony was appreciated only by the Disloyalty Board, but not
by any of the impartial tribunals which heard Timbal's case. The appreciation
of such testimony by the Disloyalty Board without any similar affirmation or
concurrence by the NLRC-RAB, the NLRC, or the Court of Appeals, cannot
satisfy the substantive due process requirement as a means of upholding
Timbal's dismissal.
All told, we see no error on the part of the Court of Appeals when it held that
Timbal was illegally dismissed.
We now turn to the second issue raised, whether the Labor Arbiter correctly
awarded full backwages to Timbal.
Del Monte cites a jurisprudential rule that an employer who acted in good
faith in dismissing employees on the basis of a closed- shop provision may
not be penalized even if the dismissal were illegal. Such a doctrine is
admittedly supported by the early case of National Labor Union v. Zip
Venetian Blind[41] and the later decision in 1989 of Soriano v. Atienza,[42]
wherein the Court affirmed the disallowance of backwages or "financial
assistance" in dismissals under the aforementioned circumstance.
However, the Court now recognizes that this doctrine is inconsistent with
Article 279 of the Labor Code, as amended by Republic Act No. 6715, which
took effect just five (5) days after Soriano was promulgated. It is now
provided in the Labor Code that "[a]n employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and
to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement." Thus, where reinstatement is adjudged, the award of
backwages and other benefits continues beyond the date of the labor arbiter's
decision ordering reinstatement and extends up to the time said order of
reinstatement is actually carried out.[43]
Rep. Act No. 6715 effectively mitigated previous jurisprudence which had
limited the extent to which illegally dismissed employees could claim for
backwages. We explained in Ferrer v. NLRC:[44]
With the passage of Republic Act No. 6715 which took effect on March 21,
1989, Article 279 of the Labor Code was amended to read as follows:
Security of Tenure. - In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.
and as implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure
of the National Labor Relations Commission, it would seem that the Mercury
Drug Rule (Mercury Drug Co., Inc. vs. Court of Industrial Relations, 56
SCRA 694 [1974]) which limited the award of back wages of illegally
dismissed workers to three (3) years "without deduction or qualification" to
obviate the need for further proceedings in the course of execution, is no
longer applicable.
A legally dismissed employee may now be paid his back wages, allowances,
and other benefits for the entire period he was out of work subject to the rule
enunciated before the Mercury Drug Rule, which is that the employer may,
however, deduct any amount which the employee may have earned during
the period of his illegal termination (East Asiatic Company, Ltd. vs. Court of
Industrial Relations, 40 SCRA 521 [1971]). Computation of full back wages
and presentation of proof as to income earned elsewhere by the illegally
dismissed employee after his termination and before actual reinstatement
should be ventilated in the execution proceedings before the Labor Arbiter
concordant with Section 3, Rule 8 of the 1990 New Rules of Procedure of
the National Labor Relations Commission.
Inasmuch as we have ascertained in the text of this discourse that the OFC
whimsically dismissed petitioners without proper hearing and has thus
opened OFC to a charge of unfair labor practice, it ineluctably follows that
petitioners can receive their back wages computed from the moment their
compensation was withheld after their dismissal in 1989 up to the date of
actual reinstatement. In such a scenario, the award of back wages can extend
beyond the 3-year period fixed by the Mercury Drug Rule depending, of
course, on when the employer will reinstate the employees.
It may appear that Article 279 of the Labor Code, as amended by Republic
Act No. 6715, has made the employer bear a heavier burden than that
pronounced in the Mercury Drug Rule, but perhaps Republic Act No. 6715
was enacted precisely for the employer to realize that the employee must be
immediately restored to his former position, and to impress the idea that
immediate reinstatement is tantamount to a cost-saving measure in terms of
overhead expense plus incremental productivity to the company which lies
in the hands of the employer.[45]
limited only to those arising from statutes or contracts other than a Collective
Bargaining Agreement. The Voluntary Arbitrator or Panel of Voluntary
Arbitrators will have original and exclusive jurisdiction over money claims
'arising from the interpretation or implementation of the Collective
Bargaining Agreement and, those arising from the interpretation or
enforcement of company personnel policies', under Article 261."[51]
Our conclusion that the Labor Arbiter in the instant case could not properly
pass judgment on the cross-claim is further strengthened by the fact that Del
Monte and ALU expressly recognized the jurisdiction of Voluntary
Arbitrators in the CBA. Section 2, Article XXXI of the CBA provides:
Section 2. In the event a dispute arises concerning the application of, or
interpretation of this Agreement which cannot be settled pursuant to the
[grievance procedure set forth in the] preceding Section, the dispute shall be
submitted to an arbitrator agreed to by [Del Monte] and [ALU].
Should the parties fail to agree on the arbitrator, the same shall be drawn by
lottery from a list of arbitrators furnished by the Bureau of Labor Relations
of the Department of Labor and Employment.
xxxx

The Labor Arbiter's ruling, which entitled Timbal to claim full backwages
and other allowances, "without qualifications and diminutions, computed
from the time [she was] illegally dismisse[d] up to the time [she] will be
actually reinstated," conforms to Article 279 of the Labor Code. Hence, the
Court of Appeals was correct in affirming the Labor Arbiter insofar as
Timbal was concerned.
Finally, we address the claim that the Court of Appeals erred when it did not
rule on Del Monte's claim for reimbursement against ALU. We do observe
that Section 5 of the CBA stipulated that "[ALU] assumes full responsibility
of any such termination [of any member of the bargaining unit who loses his
membership in ALU] and hereby agrees to hold [Del Monte] free from any
liability by judgment of a competent authority for claims arising out of
dismissals made upon demand of [ALU], and latter shall reimburse the
former of such sums as it shall have paid therefore."[46]
Thus, as the law indubitably precludes the Labor Arbiter from enforcing
money claims arising from the implementation of the CBA, the CBA herein
complementarily recognizes that it is the Voluntary Arbitrators which have
jurisdiction to hear the claim. The Labor Arbiter correctly refused to exercise
jurisdiction over Del Monte's cross-claim, and the Court of Appeals would
have no basis had it acted differently. At the same time, even as we affirm
the award of backwages against Del Monte, our ruling should not operate to
prejudice in any way whatever causes of action Del Monte may have against
ALU, in accordance with the CBA.
WHEREFORE, the instant petition is DENIED. The assailed Decision of the
Court of Appeals dated 26 August 2002 is AFFIRMED. Costs against
petitioner.
SO ORDERED.

This stipulation does present a cause of action in Del Monte's favor should it
be held financially liable for the dismissal of an employee by reason of
expulsion from ALU. Nothing in this decision should preclude the operation
of this provision in the CBA. At the same time, we are unable to agree with
Del Monte that the Court of Appeals, or this Court, can implement this
provision of the CBA and accordingly directly condemn ALU to answer for
the financial remuneration due Timbal.

Before the Labor Arbiter, Del Monte had presented its cross-claim against
ALU for reimbursement should it be made liable for illegal dismissal or
unfair labor practice, pursuant to the CBA. The Labor Arbiter had actually
passed upon this claim for reimbursement, stating that "[as] for the cross-
claims of respondent DMPI and Tabusuares against the respondent ALU-
TUCP, this Branch cannot validly entertain the same in the absence of
employer-employee relationship between the former and the latter."[47] We
have examined Article 217 of the Labor Code,[48] which sets forth the
original jurisdiction of the Labor Arbiters. Article 217(c) states:

Cases arising from the interpretation or implementation of collective

bargaining agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed of by the Labor
Arbiter by referring the same to the grievance machinery and voluntary
arbitration as may be provided in said agreements. [Emphasis supplied.]

In contrast, Article 261 of the Labor Code indubitably vests on the Voluntary
Arbitrator or panel of Voluntary Arbitrators the "original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining
Agreement."[49] Among those areas of conflict traditionally within the
jurisdiction of Voluntary Arbitrators are contract-interpretation and contract-
implementation,[50] the questions precisely involved in Del Monte's claim
seeking enforcement of the CBA provision mandating restitution by ALU
should the company be held financially liable for dismissals pursuant to the
union security clause.

In reconciling the grants of jurisdiction vested under Articles 261 and 217 of
the Labor Code, the Court has pronounced that "the original and exclusive
jurisdiction of the Labor Arbiter under Article 217(c) for money claims is
BANK OF THE PHILIPPINE ISLANDS vs. BPI EMPLOYEES
UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI
UNIBANK
G.R. No. 164301 | 2011-10-19
LEONARDO-DE CASTRO, J.:
In the present incident, petitioner Bank of the Philippine Islands (BPI) moves
for reconsideration[1] of our Decision dated August 10, 2010, holding that
former employees of the Far East Bank and Trust Company (FEBTC)
"absorbed" by BPI pursuant to the two banks' merger in 2000 were covered
by the Union Shop Clause in the then existing collective bargaining
agreement (CBA)[2] of BPI with respondent BPI Employees Union-Davao
Chapter-Federation of Unions in BPI Unibank (the Union).
To recall, the Union Shop Clause involved in this long standing controversy
provided, thus:
ARTICLE II
xxxx
Section 2. Union Shop - New employees falling within the bargaining unit
as defined in Article I of this Agreement, who may hereafter be regularly
employed by the Bank shall, within thirty (30) days after they become regular
employees, join the Union as a condition of their continued employment. It
is understood that membership in good standing in the Union is a condition
of their continued employment with the Bank.[3] (Emphases supplied.)
The bone of contention between the parties was whether or not the
"absorbed" FEBTC employees fell within the definition of "new employees"
under the Union Shop Clause, such that they may be required to join
respondent union and if they fail to do so, the Union may request BPI to
terminate their employment, as the Union in fact did in the present case.
Needless to state, BPI refused to accede to the Union's request. Although
BPI won the initial battle at the Voluntary Arbitrator level, BPI's position
was rejected by the Court of Appeals which ruled that the Voluntary
Arbitrator's interpretation of the Union Shop Clause was at war with the spirit
and rationale why the Labor Code allows the existence of such provision. On
review with this Court, we upheld the appellate court's ruling and disposed
of the case as follows:
WHEREFORE, the petition is hereby DENIED, and the Decision dated
September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the
thirty (30) day notice requirement imposed herein. Former FEBTC
employees who opt not to become union members but who qualify for
retirement shall receive their retirement benefits in accordance with law, the
applicable retirement plan, or the CBA, as the case may be.[4]
Notwithstanding our affirmation of the applicability of the Union Shop
Clause to former FEBTC employees, for reasons already extensively
discussed in the August 10, 2010 Decision, even now BPI continues to
protest the inclusion of said employees in the Union Shop Clause.
In seeking the reversal of our August 10, 2010 Decision, petitioner insists
that the parties to the CBA clearly intended to limit the application of the
Union Shop Clause only to new employees who were hired as non-regular
employees but later attained regular status at some point after hiring. FEBTC
employees cannot be considered new employees as BPI merely stepped into
the shoes of FEBTC as an employer purely as a consequence of the
merger.[5]
Petitioner likewise relies heavily on the dissenting opinions of our respected
colleagues, Associate Justices Antonio T. Carpio and Arturo D. Brion. From
both dissenting opinions, petitioner derives its contention that "the situation
of absorbed employees can be likened to old employees of BPI, insofar as
their full tenure with FEBTC was recognized by BPI and their salaries were
maintained and safeguarded from diminution" but such absorbed employees
"cannot and should not be treated in exactly the same way as old BPI
employees for there are substantial differences between them."[6] Although
petitioner admits that there are similarities between absorbed and new
employees, they insist there are marked differences between them as well.
Thus, adopting Justice Brion's stance, petitioner contends that the absorbed
FEBTC employees should be considered "a sui generis group of employees
whose classification will not be duplicated until BPI has another merger
where it would be the surviving corporation."[7] Apparently borrowing from
Justice Carpio, petitioner propounds that the Union Shop Clause should be
strictly construed since it purportedly curtails the right of the absorbed
employees to abstain from joining labor organizations.[8]
Pursuant to our directive, the Union filed its Comment[9] on the Motion for
Reconsideration. In opposition to petitioner's arguments, the Union, in turn,
adverts to our discussion in the August 10, 2010 Decision regarding the
voluntary nature of the merger between BPI and FEBTC, the lack of an
express stipulation in the Articles of Merger regarding the transfer of
employment contracts to the surviving corporation, and the consensual nature
of employment contracts as valid bases for the conclusion that former
FEBTC employees should be deemed new employees.[10] The Union
argues that the creation of employment relations between former FEBTC
employees and BPI (i.e., BPI's selection and engagement of former FEBTC
employees, its payment of their wages, power of dismissal and of control
over the employees' conduct) occurred after the merger, or to be more
precise, after the Securities and Exchange Commission's (SEC) approval of
the merger.[11] The Union likewise points out that BPI failed to offer any
counterargument to the Court's reasoning that:
The rationale for upholding the validity of union shop clauses in a CBA, even
if they impinge upon the individual employee's right or freedom of
association, is not to protect the union for the union's sake. Laws and
jurisprudence promote unionism and afford certain protections to the
certified bargaining agent in a unionized company because a strong and
effective union presumably benefits all employees in the bargaining unit
since such a union would be in a better position to demand improved benefits
and conditions of work from the employer. x x x.
x x x Nonetheless, settled jurisprudence has already swung the balance in
favor of unionism, in recognition that ultimately the individual employee will
be benefited by that policy. In the hierarchy of constitutional values, this
Court has repeatedly held that the right to abstain from joining a labor
organization is subordinate to the policy of encouraging unionism as an
instrument of social justice.[12]
While most of the arguments offered by BPI have already been thoroughly
addressed in the August 10, 2010 Decision, we find that a qualification of
our ruling is in order only with respect to the interpretation of the provisions
of the Articles of Merger and its implications on the former FEBTC
employees' security of tenure.
Taking a second look on this point, we have come to agree with Justice
Brion's view that it is more in keeping with the dictates of social justice and
the State policy of according full protection to labor to deem employment
contracts as automatically assumed by the surviving corporation in a merger,
even in the absence of an express stipulation in the articles of merger or the
merger plan. In his dissenting opinion, Justice Brion reasoned that:
To my mind, due consideration of Section 80 of the Corporation Code, the
constitutionally declared policies on work, labor and employment, and the
specific FEBTC-BPI situation -- i.e., a merger with complete "body and soul"
transfer of all that FEBTC embodied and possessed and where both
participating banks were willing (albeit by deed, not by their written
agreement) to provide for the affected human resources by recognizing
continuity of employment -- should point this Court to a declaration that in a
complete merger situation where there is total takeover by one corporation
over another and there is silence in the merger agreement on what the fate of
the human resource complement shall be, the latter should not be left in legal
limbo and should be properly provided for, by compelling the surviving
entity to absorb these employees. This is what Section 80 of the Corporation
Code commands, as the surviving corporation has the legal obligation to
assume all the obligations and liabilities of the merged constituent
corporation.
Not to be forgotten is that the affected employees managed, operated and
worked on the transferred assets and properties as their means of livelihood;
they constituted a basic component of their corporation during its existence.
In a merger and consolidation situation, they cannot be treated without
consideration of the applicable constitutional declarations and directives, or,
worse, be simply disregarded. If they are so treated, it is up to this Court to
read and interpret the law so that they are treated in accordance with the legal
requirements of mergers and consolidation, read in light of the social justice,
economic and social provisions of our Constitution. Hence, there is a need
for the surviving corporation to take responsibility for the affected employees
and to absorb them into its workforce where no appropriate provision for the
merged corporation's human resources component is made in the Merger
Plan.[13]
By upholding the automatic assumption of the non-surviving corporation's
existing employment contracts by the surviving corporation in a merger, the
Court strengthens judicial protection of the right to security of tenure of
employees affected by a merger and avoids confusion regarding the status of
their various benefits which were among the chief objections of our
dissenting colleagues. However, nothing in this Resolution shall impair the
right of an employer to terminate the employment of the absorbed employees
for a lawful or authorized cause or the right of such an employee to resign,
retire or otherwise sever his employment, whether before or after the merger,
subject to existing contractual obligations. In this manner, Justice Brion's
theory of automatic assumption may be reconciled with the majority's
concerns with the successor employer's prerogative to choose its employees
and the prohibition against involuntary servitude.
Notwithstanding this concession, we find no reason to reverse our previous
pronouncement that the absorbed FEBTC employees are covered by the
Union Shop Clause.
Even in our August 10, 2010 Decision, we already observed that the legal
fiction in the law on mergers (that the surviving corporation continues the
corporate existence of the non-surviving corporation) is mainly a tool to
adjudicate the rights and obligations between and among the merged
corporations and the persons that deal with them.[14] Such a legal fiction
cannot be unduly extended to an interpretation of a Union Shop Clause so as
to defeat its purpose under labor law. Hence, we stated in the Decision that:
In any event, it is of no moment that the former FEBTC employees retained
the regular status that they possessed while working for their former
employer upon their absorption by petitioner. This fact would not remove
them from the scope of the phrase "new employees" as contemplated in the
Union Shop Clause of the CBA, contrary to petitioner's insistence that the
term "new employees" only refers to those who are initially hired as non-
regular employees for possible regular employment.
The Union Shop Clause in the CBA simply states that "new employees" who
during the effectivity of the CBA "may be regularly employed" by the Bank
must join the union within thirty (30) days from their regularization. There is
nothing in the said clause that limits its application to only new employees
who possess non-regular status, meaning probationary status, at the start of
their employment. Petitioner likewise failed to point to any provision in the
CBA expressly excluding from the Union Shop Clause new employees who
are "absorbed" as regular employees from the beginning of their
employment. What is indubitable from the Union Shop Clause is that upon
the effectivity of the CBA, petitioner's new regular employees (regardless of
the manner by which they became employees of BPI) are required to join the
Union as a condition of their continued employment.[15]
Although by virtue of the merger BPI steps into the shoes of FEBTC as a
successor employer as if the former had been the employer of the latter's
employees from the beginning it must be emphasized that, in reality, the legal
consequences of the merger only occur at a specific date, i.e., upon its
effectivity which is the date of approval of the merger by the SEC. Thus, we
observed in the Decision that BPI and FEBTC stipulated in the Articles of
Merger that they will both continue their respective business operations until
the SEC issues the certificate of merger and in the event no such certificate
is issued, they shall hold each other blameless for the non-consummation of
the merger.[16]We likewise previously noted that BPI made its assignments
of the former FEBTC employees effective on April 10, 2000, or after the
SEC approved the merger.[17] In other words, the obligation of BPI to pay
the salaries and benefits of the former FEBTC employees and its right of
discipline and control over them only arose with the effectivity of the merger.
Concomitantly, the obligation of former FEBTC employees to render service
to BPI and their right to receive benefits from the latter also arose upon the
effectivity of the merger. What is material is that all of these legal
consequences of the merger took place during the life of an existing and valid
CBA between BPI and the Union wherein they have mutually consented to
include a Union Shop Clause.
From the plain, ordinary meaning of the terms of the Union Shop Clause, it
covers employees who (a) enter the employ of BPI during the term of the
CBA; (b) are part of the bargaining unit (defined in the CBA as comprised
of BPI's rank and file employees); and (c) become regular employees without
distinguishing as to the manner they acquire their regular status.
Consequently, the number of such employees may adversely affect the
majority status of the Union and even its existence itself, as already amply
explained in the Decision.
Indeed, there are differences between (a) new employees who are hired as
probationary or temporary but later regularized, and (b) new employees who,
by virtue of a merger, are absorbed from another company as regular and
permanent from the beginning of their employment with the surviving
corporation. It bears reiterating here that these differences are too
insubstantial to warrant the exclusion of the absorbed employees from the
application of the Union Shop Clause. In the Decision, we noted that:
Verily, we agree with the Court of Appeals that there are no substantial
differences between a newly hired non-regular employee who was
regularized weeks or months after his hiring and a new employee who was
absorbed from another bank as a regular employee pursuant to a merger, for
purposes of applying the Union Shop Clause. Both employees were
hired/employed only after the CBA was signed. At the time they are being
required to join the Union, they are both already regular rank and file
employees of BPI. They belong to the same bargaining unit being represented
by the Union. They both enjoy benefits that the Union was able to secure for
them under the CBA. When they both entered the employ of BPI, the CBA
and the Union Shop Clause therein were already in effect and neither of them
had the opportunity to express their preference for unionism or not. We see
no cogent reason why the Union Shop Clause should not be applied equally
to these two types of new employees, for they are undeniably similarly
situated.[18]
Again, it is worthwhile to highlight that a contrary interpretation of the Union
Shop Clause would dilute its efficacy and put the certified union that is
supposedly being protected thereby at the mercy of management. For if the
former FEBTC employees had no say in the merger of its former employer
with another bank, as petitioner BPI repeatedly decries on their behalf, the
Union likewise could not prevent BPI from proceeding with the merger
which undisputedly affected the number of employees in the bargaining unit
that the Union represents and may negatively impact on the Union's majority
status. In this instance, we should be guided by the principle that courts must
place a practical and realistic construction upon a CBA, giving due
consideration to the context in which it is negotiated and purpose which it is
intended to serve.[19]
We now come to the question: Does our affirmance of our ruling that former
FEBTC employees absorbed by BPI are covered by the Union Shop Clause
violate their right to security of tenure which we expressly upheld in this
Resolution? We answer in the negative.
In Rance v. National Labor Relations Commission,[20] we held that:
It is the policy of the state to assure the right of workers to "security of tenure"
(Article XIII, Sec. 3 of the New Constitution, Section 9, Article II of the 1973
Constitution). The guarantee is an act of social justice. When a person has no
property, his job may possibly be his only possession or means of livelihood.
Therefore, he should be protected against any arbitrary deprivation of his job.
Article 280 of the Labor Code has construed security of tenure as meaning
that "the employer shall not terminate the services of an employee except for
a just cause or when authorized by" the Code. x x x (Emphasis supplied.)
We have also previously held that the fundamental guarantee of security of
tenure and due process dictates that no worker shall be dismissed except for
a just and authorized cause provided by law and after due process is
observed.[21] Even as we now recognize the right to continuous, unbroken
employment of workers who are absorbed into a new company pursuant to a
merger, it is but logical that their employment may be terminated for any
causes provided for under the law or in jurisprudence without violating their
right to security of tenure. As Justice Carpio discussed in his dissenting
opinion, it is well-settled that termination of employment by virtue of a union
security clause embodied in a CBA is recognized in our jurisdiction.[22] In
Del Monte Philippines, Inc. v. Saldivar,[23] we explained the rationale for
this policy in this wise:
Article 279 of the Labor Code ordains that "in cases of regular employment,
the employer shall not terminate the services of an employee except for a just
cause or when authorized by [Title I, Book Six of the Labor Code]."
Admittedly, the enforcement of a closed-shop or union security provision in
the CBA as a ground for termination finds no extension within any of the
provisions under Title I, Book Six of the Labor Code. Yet jurisprudence has
consistently recognized, thus: "It is State policy to promote unionism to
enable workers to negotiate with management on an even playing field and
with more persuasiveness than if they were to individually and separately
bargain with the employer. For this reason, the law has allowed stipulations
for 'union shop' and 'closed shop' as means of encouraging workers to join
and support the union of their choice in the protection of their rights and
interests vis-a-vis the employer."[24] (Emphasis supplied.)

Although it is accepted that non-compliance with a union security clause is a

valid ground for an employee's dismissal, jurisprudence dictates that such a
dismissal must still be done in accordance with due process. This much we
decreed in General Milling Corporation v. Casio,[25] to wit:

The Court reiterated in Malayang Samahan ng mga Manggagawa sa M.

Greenfield v. Ramos that:

While respondent company may validly dismiss the employees expelled by

the union for disloyalty under the union security clause of the collective
bargaining agreement upon the recommendation by the union, this dismissal
should not be done hastily and summarily thereby eroding the employees'
right to due process, self-organization and security of tenure. The
enforcement of union security clauses is authorized by law provided such
enforcement is not characterized by arbitrariness, and always with due
process. Even on the assumption that the federation had valid grounds to
expel the union officers, due process requires that these union officers be
accorded a separate hearing by respondent company.

The twin requirements of notice and hearing constitute the essential elements
of procedural due process. The law requires the employer to furnish the
employee sought to be dismissed with two written notices before termination
of employment can be legally effected:

(1) a written notice apprising the employee of the particular acts or omissions
for which his dismissal is sought in order to afford him an opportunity to be
heard and to defend himself with the assistance of counsel, if he desires, and

(2) a subsequent notice informing the employee of the employer's decision

to dismiss him. This procedure is mandatory and its absence taints the
dismissal with illegality.

Irrefragably, GMC cannot dispense with the requirements of notice and

hearing before dismissing Casio, et al. even when said dismissal is pursuant
to the closed shop provision in the CBA. The rights of an employee to be
informed of the charges against him and to reasonable opportunity to present
his side in a controversy with either the company or his own union are not
wiped away by a union security clause or a union shop clause in a collective
bargaining agreement. x x x[26] (Emphases supplied.)

In light of the foregoing, we find it appropriate to state that, apart from the
fresh thirty (30)-day period from notice of finality of the Decision given to
the affected FEBTC employees to join the Union before the latter can request
petitioner to terminate the former's employment, petitioner must still accord
said employees the twin requirements of notice and hearing on the possibility
that they may have other justifications for not joining the Union. Similar to
our August 10, 2010 Decision, we reiterate that our ruling presupposes there
has been no material change in the situation of the parties in the interim.

WHEREFORE, the Motion for Reconsideration is DENIED. The Decision

dated August 10, 2010 is AFFIRMED, subject to the qualifications that:

(a) Petitioner is deemed to have assumed the employment contracts of the

Far East Bank and Trust Company (FEBTC) employees upon effectivity of
the merger without break in the continuity of their employment, even without
express stipulation in the Articles of Merger; and

(b) Aside from the thirty (30) days, counted from notice of finality of the
August 10, 2010 Decision, given to former FEBTC employees to join the
respondent, said employees shall be accorded full procedural due process
before their employment may be terminated.

SO ORDERED.
UNITED POLYRESINS, INC. VS. PINUELA
G.R. No. 209555 | 2017-07-31
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the December 11, 2012
Decision[2] and October 10, 2013 Resolution[3] of the Court of Appeals
(CA) in CA-G.R. SP No. 115402 which set aside the June 11, 2011
Decision[4]of the National Labor Relations Commission (NLRC) in NLRC-
LAC Case No. 06- 001577-09.
Factual Antecedents
Petitioner United Polyresins, Inc. (UPI) is a registered domestic corporation
doing business in San Pedro, Laguna, while petitioners Ernesto Uy Soon, Jr.
and Julito Uy Soon are its corporate officers.
Respondent Marcelino Pinuela was employed by UPI in 1987. He became a
member of the labor union, Polyresins Rank and File Association (PORFA),
and was elected President thereof in May, 2005 and slated to serve until the
end of 2007.
The collective bargaining agreement (CBA) then existing between UPI and
PORFA provided that:
Section 3. The Company shall grant to the Union the amount of Three
Hundred Thousand Pesos (P300,000.00) free of interest as the union's capital
for establishing a cooperative to meet the needs of its members. Said loan
shall fall due and become payable at the same date that this Bargaining
Agreement expires, to wit - December 31, 2007. In the event of non-payment,
all officers and members will be personally accountable. In case of additional
funds, they can make a written request [addressed] to the President of the
company.[5]
The CBA likewise contained a union security clause which provided that
employees who cease to be PORFA members in good standing by reason of
resignation or expulsion shall not be retained in the employ of UPI.
Upon his assumption as union President, respondent wrote the former union
President, Geoffrey Cielo (Cielo), to turn over the records, papers, documents
and financial statements of the union. Cielo surrendered the union's bank
account documents, among others, which indicated that the union had an
available P78,723.60 cash balance. Cielo likewise submitted a Financial
Report indicating that the union had P208,623.60 in cash and P159,500.00 in
receivables.
Finding that the bank documents and Cielo's report did not match, and Cielo
unable to explain the discrepancies, the union's Executive Committee, which
was headed by respondent, resolved to hire a certified public accountant to
conduct an audit of the union's finances. In a December 1, 2005 report, the
accountant concluded that the union's finances, income, and disbursements
for the years 2003 and 2004 were not properly documented, recorded, and
reported. He recommended that the union officers "take a seminar on basic
bookkeeping and accounting;"[6] that the union adopt and/or install the
necessary accounting and internal control systems; that the union prepare the
proper financial statements; and that the officers take corrective measures in
financial management as an integral part of sound management.[7]
Meanwhile, during respondent's term as PORFA President, it appeared that
UPI automatically deducted from the respective salaries of PORFA members
amounts representing union membership dues and loan payments. These
amounts, which totalled P2,402,533.43, were then regularly turned over by
UPI to PORFA in the form of fifty eight (58) crossed checks, made payable
to PORFA.[8] These amounts were then deposited and credited to PORFA's
account.[9]
On December 8, 2007, or several days before the P300,000.00 loan by UPI
to PORFA became due, petitioners, respondent, and the other union officers
met to discuss the proposed new CBA. Thereat, petitioners told respondent
that until the P300,000.00 is returned, the former shall not discuss the
proposed CBA. Respondent explained that the union did not have the
finances and had only P78,723.60, which was the original amount turned
over by Cielo to respondent when the latter assumed office as union
President. Petitioners then told respondent and the other union officers that
if the amount is not returned, the same will be deducted from the salaries of
the union members.[10]
On January 7, 2008, respondent filed a complaint before the National
Conciliation and Mediation Board (NCMB), claiming that petitioners refused
to bargain collectively. During the scheduled conferences before the NCMB,
petitioners raised the issue of non-payment of the P300,000.00 owing to UPI
and insisted on its payment; they also threatened to deduct the amount of
P1,500.00 from the respective salaries of the union members.[11]
Because of the recurring threat of failed CBA negotiations and salary
deductions as means of recovering the P300,000.00 loaned to the union,
union members began to demand the holding of a special election of union
officers. They likewise accused respondent and the other union officers of
mismanagement, unduly hanging on to their positions, and lack of
accountability.[12]
Thus, in March 2008, special elections were held, and a new union President
and set of officers were elected.[13]
On March 29, 2008, the union's new set of officers conducted an
investigation into the fact that the union had little or no funds remaining in
its bank account. Respondent attended the investigation, and admitted that
the union had no more funds as they were "utilized in the prosecution of cases
during his incumbency."[14] He likewise failed to make a formal turnover of
documents to the new President. Respondent was required to surrender union
documents in his possession on the next scheduled meeting.[15]
On April 8, 2008, another inquiry was held where respondent was present.
The investigation centered on respondent's continued failure to account for
the union's bank accounts, documents, and deposits made during his
incumbency, and his failure to formally turn over union's papers to the new
officers. After the meeting, respondent and the new officers proceeded to the
bank, where they discovered that the PORFA account had already been
closed.[16]
On April 10, 2008, the new set of union officers issued a Resolution[17]
expelling respondent from PORFA for being guilty of the following
violations:
1. No annual financial statement.
2. No listings or ledger of union member's [sic] emergency loans.
3. Unposted cheques on the Union's passbook collected from union members
[sic] monthly dues.
4. Our union checking account at Security Bank were [sic] Zero
balance/closed account.
5. No receipts/cash disbursement presented for the union operational [sic]
expenses.
6. Unable to return the P300,000.00 lent by the management free of interest.
(Art. XXVII, Section 3 of our CBA).
7. Unable to explain and present documents to support where the agency fees
and union dues collected from legitimate union members were used.[18]
The officers held that these violations constituted an infringement of the
union's Constitution, particularly Article XV, Section 1, paragraphs (e) and
(f) thereof, which specifically prohibit the misappropriation of union funds
and property and give ground for the impeachment and recall of union
officers.[19]
In an April 11, 2008 letter[20] to petitioners, PORFA communicated
respondent's expulsion from the union.
On April 14, 2008, petitioners issued a letter of termination[21] to
respondent, to take effect immediately.
Ruling of the Labor Arbiter
Respondent filed a complaint against petitioners before the Labor Arbiter for
illegal dismissal, with monetary claims and damages, which was docketed as
NLRC Case No. RAB-IV-08-27303-08-L. He claimed that his dismissal was
effected in bad faith and without due process and was thus illegal. Petitioners
countered that respondent's dismissal is valid under the union security clause
of the CBA; that his failure to return the P300,000.00 loan to the union due
to mismanagement/misappropriation constitutes just cause for his expulsion
from the union, as well as dismissal from employment; that he was accorded
substantive and procedural due process; that the herein individual petitioners
may not be held liable for respondent's claims; and that accordingly, the case
should be dismissed.
On April 20, 2009, the Labor Arbiter issued a Decision[22] dismissing
respondent's complaint on the finding that respondent was not illegally
terminated, thus:
While complainant, as then Union President, denies any misappropriation of
union funds, it is undisputed that he failed to account for the missing union
funds and to return the P300,000.00 which the respondent company had lent
for the union's assistance upon the expiration of the CBA dated December
31, 2007.
More importantly, in the investigation conducted by the newly elected
officers of the union, it was uncovered that union funds were in fact
personally used by the former officers of PORFA which includes
complainant.
Thus, the union passed a resolution expelling complainant from the PORFA
union and the corresponding letter was sent to the respondent company
informing the latter of complainant's expulsion coupled with a
recommendation that complainant be terminated from employment pursuant
to the union security clause of the CBA.
Given the foregoing, we rule that complainant was validly dismissed since
the respondent company merely did its obligation under the CBA by
terminating the services of complainant who ceased to be a member in good
standing of the PORFA union by reason of expulsion.
WHEREFORE, premises considered, judgment is hereby rendered
DISMISSING the instant complaint for lack of merit.
SO ORDERED.[23]
Ruling of the National Labor Relations Commission
Respondent appealed before the NLRC, which initially overturned the Labor
Arbiter in a December 8, 2009 Decision,[24] which decreed as follows:
WHEREFORE, the assailed Decision is hereby SET ASIDE and a NEW one
is entered declaring the complainant-appellant's dismissal to be illegal.
Respondents Union [sic] and respondent company are hereby declared
jointly and severally liable to pay complainant his full backwages from the
date he was dismissed until date instant [sic] and to pay his separation pay
equivalent to one month salary per year of service computed as follows:
BACKWAGES
04/14/08 - 10/14/09
P396 x 26 days x 18 mos.
P10,296.00 x 18 days
=
P185,328.00
SEPARATION PAY
P396.00 x 26 x 22yrs.
P10,296 x 22yrs.
= No. 115402, respondent sought to reverse the above NLRC Decision and
P226,512.00
13th Month Pay
P185,328.00 / 12
= been proved by substantial evidence.
P15,444.00
Grand Total
P427,284.00
SO ORDERED.[25]
However, on motion for reconsideration, the NLRC issued its June 11, 2011
Decision, which held as follows:
What cannot escape from [sic] our attention and consideration are the
following:
(1) there was an obligation x x x to return the amount of P300,000.00 to the
respondent upon termination of the CBA on December 31, 2007,
(2) complainant, as the President of the Union at the time the loan was due
and demandable, failed to account for said funds, and under the same
provision, was to be held personally accountable,
(3) Pinuela actually participated x x x in the whole process of determining
accountability over the union funds,
(4) denied knowledge over and receipt of the missing funds, despite his being
among those charged with its custody and safe-keep, as the Union President.
It is also to be noted that the complainant as union president, could not
explain nor comment on the fact that their union's bank account is already a
closed account. Even if We assume and in fact complainant admitted that he
had custody of P78,723.60 as union funds as of June 3, 2005, still he could
not account the whereabouts of the said money. As a signatory to the said
account, complainant cannot be considered as entirely faultless since he was
grossly negligent in the custody of the funds. There is substantial basis in
complainant's dismissal thus, the award of backwages and 13th month pay
should be deleted. However, even if We find complainant's dismissal to be
valid, there is equally no evidence showing that he pocketed the missing
funds of the union. In this regard since he had rendered a considerable
number of years in the service (21 years) complainant may be awarded
separation pay at the rate of 1/2 month salary for every year of service (396
x 13 x 21 years) from the inception of his employment till his dismissal in
the interest of justice and compassion since his infraction did not involve
serious misconduct.
Further, We also hold that while complainant's dismissal was valid pursuant
to the enforcement of the Union Security Clause, respondents however did
not comply with the requisite procedural due process. As held in the case of
Agabon vs. NLRC, x x x the Supreme Court held that where the dismissal is
for a cause recognized by the prevailing jurisprudence, the absence of the
statutory due process should not nullify the dismissal or render it illegal x x
x. Accordingly, for violating complainant's statutory rights, respondents
should indemnify him the amount of P30,000.00 as nominal damages in
addition to his separation pay.
WHEREFORE, premises considered, respondents-appellees' Motion for
Reconsideration is GRANTED, a new Decision is rendered finding
complainant's dismissal as valid. Respondents-appellees are however
ordered to pay complainant the amounts of P108,108.00 and P30,000.00 as
separation pay and nominal damages.
All other claims whether monetary or otherwise are hereby DISMISSED.
SO ORDERED.[26]
Ruling of the Court of Appeals
In a Petition for Certiorari[27] before the CA and docketed as CA-G.R. SP
reinstate its December 8, 2009 Decision, arguing that the Commission
gravely erred in concluding that he was personally accountable for the
missing funds, the closing of PORFA's bank account, and that he was grossly
negligent in the custody of the union funds. In their Comment,[28] petitioners
countered that respondent's dismissal was attended by due process; that he is
guilty of the infractions for which he was dismissed; and that his guilt had
On December 11, 2012, the CA issued the assailed Decision containing the
following pronouncement:
Petitioner insists that he is innocent of the charges against him made by the
PORFA (the union), particularly the embezzlement of the union funds. He
vehemently denied misappropriation of the same and that the PORFA Union
officers conspired with the Respondents in removing him as a member in
good standing of the said union and his subsequent dismissal as employee
pursuant to the CBA's union security clause.
Respondents on the other hand, denied the Petitioner's allegation of
conspiracy and that in fact, there was a series of conferences conducted
jointly by the management and the union on the matter of lost union funds
and that the Petitioner was made aware of the charges against him before he
was terminated. They claim that the management participated in the
investigations and that it was shown that even if the Petitioner as president
of the union did not misappropriate the funds nevertheless he committed
omission/gross negligence for which reason he was expelled therefrom. The
Respondents also claim that Petitioner was accorded procedural due process
during the investigations.
It is basic in labor jurisprudence that the burden of proof rests upon
management to show that the dismissal of its worker was based on a just
cause. When an employer exercises its power to terminate an employee by
enforcing the union security clause, it needs to determine and prove the
following:
(1) the union security clause is applicable;
(2) the union is requesting for the enforcement of the union security provision
in the CBA; and
(3) there is sufficient evidence to support the decision of the union to expel
the employee from the union.
The dispute before Us does not raise any issue with respect to the first two
requisites; the issue being whether there was sufficient evidence to support
Petitioner's expulsion from PORFA. In arriving at any conclusion thereto, the
Petitioner must first be accorded due process of law. x x x
xxxx
On both questions of whether there exist[s] sufficient evidence to support
Petitioner's expulsion from the union (substantive due process), and whether
Petitioner was properly informed of the accusation against him and his
dismissal from employment (procedural due process), We answer in the
negative.
An examination of the submitted evidence before the Labor Arbiter show
[sic] that the same are not enough to prove the alleged charges of
misappropriation against the Petitioner and neither was he properly informed
thereof.
xxxx
On the other hand, the Petitioner have [sic] shown adequate explanation
about the funds of the union that came to his possession. The Memorandum
of Ramon M. Martinez, a Certified Public Accountant, show [sic] that he
made an audit of the funds of the union during the previous administration
and that the actual funds the union had was merely P34,344.25 when
Petitioner took over. This amount was not even shown to have been
misappropriated by the Petitioner.
Compounding this want of substantive evidence is the lack of procedural due
process that Petitioner was entitled to. As [has] been previously discussed,
the Petitioner was not given the proper first notice. Thereafter, despite such
lack of first notice, on the mere letter of the union that he was expelled
therefrom because of alleged causes, the Petitioner was dismissed from
employment by the Respondents in the termination letter dated 14 April 2008
on the sole basis of union security clause. Such action cannot be
countenanced. In the same Inguillo case, the Supreme Court also ruled:
'Thus, as held in that case, 'the right of an employee to be informed of the
charges against him and to reasonable opportunity to present his side in a
controversy with either the company or his own Union is not wiped away by
a Union Security Clause or a Union Shop Clause in a collective bargaining
agreement. An employee is entitled to be protected not only from a company
which disregards his rights but also from his own Union, the leadership of
which could yield to the temptation of swift and arbitrary expulsion from
membership and mere dismissal from his job.'
In sum, the NLRC gravely abused its discretion in reconsidering its earlier
Decision which is more in accord with the evidence on record.
WHEREFORE, the petition is hereby GRANTED. The assailed Decision
dated 11 June 2010[29] is hereby SET ASIDE. The Decision dated 8
December 2009 is REINSTATED with the MODIFICATION that the
backwages shall be recomputed from the date of Petitioner's dismissal to the
finality of this Decision.
SO ORDERED.[30] (Citations omitted)
Petitioners filed a Motion for Reconsideration,[31] which was denied by the
CA in its October 10, 2013 Resolution. Hence, the instant Petition.
Issues
In a June 22, 2015 Resolution,[32] the Court resolved to give due course to
the Petition, which contains the following assignment of errors:
I.
THE APPELLATE COURT ERRED IN RULING THAT THE CHARGES
OF MISAPPROPRIATION AGAINST THE RESPONDENT WERE
INSUFFICIENT (SUBSTANTIVE DUE PROCESS)
II.
THE APPELLATE COURT ERRED IN RULING THAT THE
RESPONDENT WAS NOT PROPERLY INFORMED OF THE CHARGES
AGAINST HIM (PROCEDURAL DUE PROCESS).
III.
THE APPELLATE COURT ERRED IN RULING THAT THE
RESPONDENT IS ENTITLED TO SEPARATION PAY, BACKWAGES
FROM DISMISSAL TO THE FINALITY OF ITS DECISION, AND 13TH
MONTH PAY.[33]
Petitioners' Arguments
Praying that the assailed CA dispositions be set aside and that respondent's
case be dismissed instead, petitioners maintain in their Petition and
Reply[34] that substantive and procedural due process were observed in
respondent's case; that respondent was apprised of the charges against him
and given the opportunity to refute them; that the evidence points to the
conclusion that he misappropriated the union's funds and was unable to
explain the dissipation thereof; that for what he has done, respondent violated
Article XV, Section 1, paragraphs (e) and (f) of the union's Constitution; that
respondent's dismissal on the basis of the union security clause in the CBA
was thus valid, based on substantial proof, and in accord with the
pronouncement in Cariño v. National Labor Relations Commission,[35]
where the dismissal of an employee was upheld on the basis of the union
security and expulsion clauses contained in the CBA; and that since his
dismissal is valid, then he is not entitled to his monetary claims.
Respondent's Arguments
In his Comment,[36] respondent maintains that the CA did not err in finding
that the evidence against him was insufficient; that the CA was correct in
ruling that his right to procedural due process was violated when he was not
properly informed of the charges against him; and that for these reasons, he
was illegally dismissed and thus entitled to his monetary claims.
Our Ruling
The Court denies the Petition.
Respondent's expulsion from PORFA is grounded on Article XV, Section 1,
paragraphs (e) and (f) of the union's Constitution, which provides:
ARTICLE-XV
IMPEACHMENT AND RECALL
Section 1. Any of the following shall be ground for the impeachment or recall
of the union officers.
a.
Committing or causing the commission directly or indirectly of acts against
the interest and welfare of the union;
b.
Malicious attack against the union, its officers or against a fellow union
officer or member;
c.
Failure to comply with the obligation to turn over and return to union
treasurer within three (3) days unexpanded [sic] sum of money received from
the money funds to answer for an authorized union purpose;
d.
Gross misconduct unbecoming of a union officer;
e usual terms and conditions under which membership or continuation of
Misappropriation of union funds and property. This is without prejudice to membership is made available to other members."[44]
the filing of an appropriate criminal or civil action against the responsible
officer/(s) by any interested party; On account of the foregoing disquisition, the other issues raised by the parties
f. need not be discussed.
Willful violation of any provision of the constitution or rules, regulations,
measures, resolution(s) and decision of the union.[37] (Emphasis supplied) WHEREFORE, for the foregoing reasons, the Petition is hereby DENIED.
The December 11, 2012 Decision and October 10, 2013 Resolution of the
However, these provisions refer to impeachment and recall of union officers, Court of Appeals in CA-G.R. SP No. 115402 are AFFIRMED.
and not expulsion from union membership. This is made clear by Section
2(e) of SO ORDERED.
the same Article XV, which provides that "(t)he union officers impeached
shall 'IPSO FACTO' to [sic] be considered resigned or ousted from office and
shall no longer be elected nor appointed to any position in the union." In
short, any officer found guilty of violating these provisions shall simply be
removed, impeached or recalled, from office, but not expelled or stripped of
union membership.

It was therefore error on the part of PORFA and petitioners to terminate

respondent's employment based on Article XV, Section 1, paragraphs (e) and
(f) of the union's Constitution. Such a ground does not constitute just cause
for termination.

A review of the PORFA Constitution itself reveals that the only provision
authorizing removal from the union is found in Article X, Section 6, that is,
on the ground of failure to pay union dues, special assessments, fines, and
other mandatory charges.[38] On the other hand, grounds for disqualification
from membership may be found in Article IV, which states that-

Section 3. The following are not eligible neither [sic] for membership nor to
election or appointment to any position in the union:

a. Subversive or persons who profess subversive ideas.

b. Persons who have been convicted of crime involving moral turpitude.
c. Persons who are not employees of the company.[39]

These provisions do not apply in respondent's case. Although he was

eventually charged with estafa,[40] a crime involving moral turpitude,[41]
still, he has not been convicted of the crime. For this reason, he may not be
disqualified as union member.

Thus, for what he is charged with, respondent may not be penalized with
expulsion from the union, since this is not authorized and provided for under
PORFA's Constitution.

Contrary to petitioners' claim, Cariño v. National Labor Relations

Commission is not applicable here. In that case, the employee was terminated
on the basis of existing suspension and expulsion provisions contained in the
CBA and rules on discipline found in the union's Constitution. There are no
such provisions in PORFA's Constitution; neither has it been shown that
there are similar stipulations in the parties' CBA.

The matter of respondent's alleged failure to return petitioners' P300,000.00

which was lent to PORFA is immaterial as well. It may not be used as a
ground to terminate respondent's employment; under the Labor Code, such a
contribution by petitioners to PORFA is illegal and constitutes unfair labor
practice.

ART. 248. Unfair labor practices of employers. - It shall be unlawful for an

employer to commit any of the following unfair labor practice:

xxxx

(d) To initiate, dominate, assist or otherwise interfere with the formation or

administration of any labor organization, including the giving of financial or
other support to it or its organizers or supporters;[42] (Emphasis supplied)

This could be an opportune time for the union to consider amending its
Constitution in order to provide for specific rules on the discipline of its
members, not just its officers. After all, it is given the right under the Labor
Code, "to prescribe its own rules with respect to the acquisition or retention
of membership."[43] But it may not insist on expelling respondent from
PORFA and assist in his dismissal from UPI without just cause, since it is an
unfair labor practice for a labor organization to "cause or attempt to cause an
employer to discriminate against an employee, including discrimination
against an employee with respect to whom membership in such organization
has been denied or to terminate an employee on any ground other than the
DEL PILAR ACADEMY vs. DEL PILAR ACADEMY EMPLOYEES
UNION
G.R. No. 170112 | 2008-04-30
NACHURA, J.:
Before this Court is a petition for review on certiorari assailing the July 19,
2005 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP. No. 86868,
and its September 28, 2005 Resolution[2] denying the motion for
reconsideration.
Following are the factual antecedents.
Respondent Del Pilar Academy Employees Union (the UNION) is the
certified collective bargaining representative of teaching and non-teaching
personnel of petitioner Del Pilar Academy (DEL PILAR), an educational
institution operating in Imus, Cavite.
On September 15, 1994, the UNION and DEL PILAR entered into a
Collective Bargaining Agreement (CBA)[3] granting salary increase and
other benefits to the teaching and non-teaching staff. Among the salient
provisions of the CBA are:
ARTICLE V
SALARY INCREASE
SECTION 1. Basic Pay - the ACADEMY and the UNION agreed to maintain
the wage increase in absolute amount as programmed in the computation
prepared by the ACADEMY and dated 30 June 1994 initialed by the
members of the bargaining panel of both parties, taking into account
increases in tuition fees, if any.
SECTION 2. The teaching load of teachers shall only be Twenty-Three (23)
hours per week effective this school year and any excess thereon shall be
considered as overload with pay.
SECTION 3. Overloadpay (sic) will be based on the Teachers' Basic Monthly
Rate.
SECTION 4. The ACADEMY agrees to grant longevity pay as follows:
P100.00 for every 5 years of continuous service. The longevity shall be
integrated in the basic salary within three (3) years from the effectivity of this
agreement.
ARTICLE VI
VACATION LEAVE WITH PAY
SECTION 1. Every faculty member who has rendered at least six (6)
consecutive academic semester of service shall be entitled to the 11th month
and 12th month pay as summer vacation leave with pay. They may, however,
be required to report [and] undergo briefings or seminars in connection with
their teaching assignments for the ensuing school year.
SECTION 2. Non-teaching employees who shall have rendered at least one
(1) year of service shall be entitled to fifteen days leave with pay.
The UNION then assessed agency fees from non-union employees, and
requested DEL PILAR to deduct said assessment from the employees'
salaries and wages. DEL PILAR, however, refused to effect deductions
claiming that the non-union employees were not amenable to it.
In September 1997, the UNION negotiated for the renewal of the CBA. DEL
PILAR, however, refused to renew the same unless the provision regarding
entitlement to two (2) months summer vacation leave with pay will be
amended by limiting the same to teachers, who have rendered at least three
(3) consecutive academic years of satisfactory service. The UNION objected
to the proposal claiming diminution of benefits. DEL PILAR refused to sign
the CBA, resulting in a deadlock. The UNION requested DEL PILAR to
submit the case for voluntary arbitration, but the latter allegedly refused,
prompting the UNION to file a case for unfair labor practice with the Labor
Arbiter against DEL PILAR; Eduardo Espejo, its president; and Eliseo
Ocampo, Jr., chairman of the Board of Trustees.
Traversing the complaint, DEL PILAR denied committing unfair labor
practices against the UNION. It justified the non-deduction of the agency
fees by the absence of individual check off authorization from the non-union
employees. As regards the proposal to amend the provision on summer
vacation leave with pay, DEL PILAR alleged that the proposal cannot be
considered unfair for it was done to make the provision of the CBA
conformable to the DECS' Manual of Regulations for Private Schools.[4]
On October 2, 1998, Labor Arbiter Nieves V. De Castro rendered a Decision,
viz.:
Reviewing the records of this case and the law relative to the issues at hand,
we came to the conclusion that it was an error on [the] part of [DEL PILAR]
not to have collected agency fee due other workers who are non-union
members but are included in the bargaining unit being represented by [the
UNION]. True enough as was correctly quoted by [the UNION] Art. 248, to
wit:
Employees of an appropriate collective bargaining unit who are not members
of the recognized collective bargaining agency may be assessed a reasonable
fee equivalent to the dues and other fees paid by members of the recognized
collective bargaining agreement: Provided, that the individual authorization
required under Article [241], paragraph (o) of this Code shall not apply to the
non-members of the recognized collective bargaining agent.
As it is, [DEL PILAR's] unwarranted fear re-individual dues [without]
authorization for non-union members has no basis in fact or in law. For
receipt of CBA benefits brought about by the CBA negotiated with
[petitioners], they are duty bound to pay agency fees which may lawfully be
deducted sans individual check-off authorization. Being [recipients] of said
benefits, they should share and be made to pay the same considerations
imposed upon the union members. [DEL PILAR], therefore, was in error in
refusing to deduct corresponding agency fees which lawfully belongs to the
union.
Anent the proposal to decrease the coverage of the 11th and 12th month
vacation with pay, we do not believe that such was done in bad faith but
rather in an honest attempt to make perfect procession following the DECS'
Manuals. Moreso, it is of judicial notice that in the course of negotiation,
almost all provisions are up for grabs, amendments or change. This is
something normal in the course of a negotiation and does not necessarily
connote bad faith as each every one (sic) has the right to negotiate reward or
totally amend the provisions of the contract/agreement.
All told while there was error on [the] part of [DEL PILAR] for the first issue,
[it] came through in the second. But as it is, we do not believe that a finding
of unfair labor practice can be had considering the lack of evidence on record
that said acts were done to undermine the union or stifle the member's right
to self organization or that the [petitioners] were in bad faith. If at all, it's (sic)
error may have been the result of a mistaken notion that individual check-off
authorization is needed for it to be able to validly and legally deduct
assessment especially after individual[s] concerned registered their
objection. On the other hand, it is not error to negotiate for a better term in
the CBA. So long as [the] parties will agree. It must be noted that a CBA is
a contract between labor and management and is not simply a litany of
benefits for labor. Moreso, for unfair labor practice to prosper, there must be
a clear showing of acts aimed at stifling the worker's right to self-
organization. Mere allegations and mistake notions would not suffice.
ACCORDINGLY, premises considered, the charge of unfair labor practice
is hereby Dismissed for want of basis.
SO ORDERED.[5]
On appeal, the National Labor Relations Commission (NLRC) affirmed the
Arbiter's ruling. In gist, it upheld the UNION's right to agency fee, but did
not consider DEL PILAR's failure to deduct the same an unfair labor
practice.[6]
The UNION's motion for reconsideration having been denied,[7] it then went
to the CA via certiorari. On July 19, 2005, the CA rendered the assailed
decision, affirming with modification the resolutions of the NLRC. Like the
Arbiter and the NLRC, the CA upheld the UNION's right to collect agency
fees from non-union employees, but did not adjudge DEL PILAR liable for
unfair labor practice. However, it ordered DEL PILAR to deduct agency fees
from the salaries of non-union employees.
The dispositive portion of the CA Decision reads:
WHEREFORE, premises considered, the petition is PARTIALLY
GRANTED. The assailed resolution of the NLRC dated April 30, 2004 is
hereby MODIFIED. Private respondent Del Pilar Academy is ordered to
deduct the agency fees from non-union members who are recipients of the
collective bargaining agreement benefits. The agency fees shall be equivalent
to the dues and other fees paid by the union members.
summer vacation leave with pay for two (2) months for teaching staff who
have rendered six (6) consecutive semesters of service. For the non-teaching
personnel, the UNION worked for their entitlement to fifteen (15) days leave
with pay.[13] These provisions in the CBA surely benefited the non-union
employees, justifying the collection of, and the UNION's entitlement to,
agency fees.

SO ORDERED.[8] Accordingly, no requirement of written authorization from the non-union

DEL PILAR filed a motion for reconsideration of the decision, but the CA
denied the same on September 28, 2005.[9]
Before us, DEL PILAR impugns the CA Decision on the following grounds:
I. IN PROMULGATING THE CHALLENGED DECISION AND
RESOLUTION, THE HON. COURT OF APPEALS DISREGARDED THE
FACT THAT THE ANNUAL INCREASE IN THE SALARIES OF THE
EMPLOYEES WAS NOT A BENEFIT ARISING FROM A COLLECTIVE
BARGAINING AGREEMENT, BUT WAS MANDATED BY THE
DIRECTIVE OF A GOVERNMENTAL DEPARTMENT; and
II. CONSIDERING THE ANNUAL SALARY INCREASE OF NON-
UNION MEMBERS WAS NOT A BENEFIT ARISING FROM THE CBA,
THEIR INDIVIDUAL WRITTEN AUTHORIZATIONS ARE STILL
REQUIRED TO ALLOW PETITIONER ACADEMY TO LEGALLY
DEDUCT THE SAME FROM THEIR RESPECTIVE SALARY.[10]
employees is needed to effect a valid check off. Article 248(e) makes it
explicit that Article 241, paragraph (o),[14] requiring written authorization is
inapplicable to non-union members, especially in this case where the non-
union employees receive several benefits under the CBA.
As explained by this Court in Holy Cross of Davao College, Inc. v. Hon.
Joaquin[15] viz.:
The employee's acceptance of benefits resulting from a collective bargaining
agreement justifies the deduction of agency fees from his pay and the union's
entitlement thereto. In this aspect, the legal basis of the union's right to
agency fees is neither contractual nor statutory, but quasi-contractual,
deriving from the established principle that non-union employees may not
unjustly enrich themselves by benefiting from employment conditions
negotiated by the bargaining union.
By this jurisprudential yardstick, this Court finds that the CA did not err in
upholding the UNION's right to collect agency fees.

The issue here boils down to whether or not the UNION is entitled to collect WHEREFORE, the petition is DENIED. The Decision and Resolution of the
agency fees from non-union members, and if so, whether an individual Court of Appeals in CA-G.R. SP No. 86868, are AFFIRMED.
written authorization is necessary for a valid check off.
SO ORDERED.
The collection of agency fees in an amount equivalent to union dues and fees,
from employees who are not union members, is recognized by Article 248(e)
of the Labor Code, thus:

Employees of an appropriate collective bargaining unit who are not members

of the recognized collective bargaining agent may be assessed reasonable
fees equivalent to the dues and other fees paid by the recognized collective
bargaining agent, if such non-union members accept the benefits under the
collective bargaining agreement. Provided, That the individual authorization
required under Article 241, paragraph (o) of this Code shall not apply to the
non-members of recognized collective bargaining agent.

When so stipulated in a collective bargaining agreement or authorized in

writing by the employees concerned, the Labor Code and its Implementing
Rules recognize it to be the duty of the employer to deduct the sum equivalent
to the amount of union dues, as agency fees, from the employees' wages for
direct remittance to the union. The system is referred to as check off.[11] No
requirement of written authorization from the non-union employees is
necessary if the non-union employees accept the benefits resulting from the
CBA.[12]

DEL PILAR admitted its failure to deduct the agency fees from the salaries
of non-union employees, but justifies the non-deduction by the absence of
individual written authorization. It posits that Article 248(e) is inapplicable
considering that its employees derived no benefits from the CBA. The annual
salary increase of its employee is a benefit mandated by law, and not derived
from the CBA. According to DEL PILAR, the Department of Education,
Culture and Sports (DECS) required all educational institutions to allocate at
least 70% of tuition fee increases for the salaries and other benefits of
teaching and non-teaching personnel; that even prior to the execution of the
CBA in September 1994, DEL PILAR was already granting annual salary
increases to its employees. Besides, the non-union employees objected to the
deduction; hence, a written authorization is indispensable to effect a valid
check off. DEL PILAR urges this Court to reverse the CA ruling insofar as
it ordered the deduction of agency fees from the salaries of non-union
employees, arguing that such conclusion proceeds from a misplaced premise
that the salary increase arose from the CBA.

The argument cannot be sustained.

Contrary to what DEL PILAR wants to portray, the grant of annual salary
increase is not the only provision in the CBA that benefited the non-union
employees. The UNION negotiated for other benefits, namely, limitations on
teaching assignments to 23 hours per week, additional compensation for
overload units or teaching assignments in excess of the 23 hour per week
limit, and payment of longevity pay. It also negotiated for entitlement to