Cases

CASES ON LABOR RELATIONS
Knitjoy Manufacturing Incorporated v. Ferrer-Calleja; G.R. No. 81883; September 23, 1992 (214 SCRA 174) SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; ONE COMPANY-ONE UNION POLICY; EXCEPTION. The suggested bias of the Labor Code in favor of the one company-one union policy, anchored on the greater mutual benefits which the parties could derive, especially in the case of employees whose bargaining strength could undeniably be enhanced by their unity and solidarity but diminished by their disunity, division and dissension, is not without exceptions. The present Article 245 of the Labor Code expressly allows supervisory employees who are not performing managerial functions to join, assist or form their separate union but bars them from membership in a labor organization of the rank-and-file employees. Even Section 2(c), Rule V, Book V of the Implementing Rules and Regulations of the Labor Code, which seeks to implement the policy, also recognizes exceptions. The usual exception, of course, is where the employer unit has to give way to the other units like the craft unit, plant unit, or a subdivision thereof, the recognition of these exceptions takes into account the policy to assure employees of the fullest freedom in exercising their rights. Otherwise stated, the one company-one union policy must yield to the right of the employees to form unions or associations for purposes not contrary to law, to self-organization and to enter into collective bargaining negotiations, among others, which the Constitution guarantees. 2. CONSTITUTIONAL LAW; BILL OF RIGHTS; RIGHT TO FROM UNION OR ASSOCIATIONS; SCOPE. The right to form a union or association or to self-organization comprehends two (2) broad notions, to wit: (a) the liberty or freedom, i.e., the absence of restraint which guarantees that the employee may act for himself without being prevented by law, and (b) the power, by virtue of which an employee may, as he pleases, join or refrain from joining an association. (Victoriano v. Elizalde Rope Workers Union, 59 SCRA 54). 3. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; ONE COMPANY-ONE UNION POLICY; NOT APPLICABLE WHERE EXISTING UNION COVERED ONLY ONE CLASS OF EMPLOYEES; CASE AT BAR. in the bargaining history of KNITJOY, the CBA has been consistently limited to the regular rank-and-file employees paid on a daily or piece-rate basis. On the other hand, the rank-and-file employees paid on a monthly basis were never included within its scope. Respondent KMEUs membership is limited to the latter class of employees, KMEU does not seek to dislodge CFW as the exclusive bargaining representative for the former. The records further disclose that in the certification solicited by TUPAS and during the elections which followed thereafter, resulting in the certification of CFW as the exclusive bargaining representative, the monthly-paid employees were expressly excluded. Thus, the negotiations between CFW and KNITJOY following such a certification could only logically refer to the rank-and-file employees paid on a daily or piece-rate basis. Clearly therefore, KNITJOY and CFW recognize that insofar as the monthly-paid employees are concerned, the latters constituting a separate bargaining unit with the appropriate union as sole bargaining representative, can neither be prevented nor avoided without infringing on these employees rights to
JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

form a union and to enter into collective bargaining negotiations. Stated differently, KNITJOY and CFW recognize the fact that the existing bargaining unit in the former is not and has never been the employer unit. Given this historical and factual setting, KMEU had the unquestioned and undisputed right to seek certification as the exclusive bargaining representative for the monthly-paid rank-and-file employees; both KNITJOY and CFW cannot block the same on the basis of this Courts declaration in Bulletin Publishing Corp. v. Hon. Sanchez 15 and General Rubber and Footwear Corp. v. Bureau of Labor Relations (155 SCRA 283 [1987]) regarding the one-company-one union concept. 4. ID.; ID.; ID.; CERTIFICATION ELECTION; RESULTS THEREOF CONFINED ONLY TO THE GROUP IT REPRESENTS; CBA ENTERED DOES NOT BAR HOLDING OF ANOTHER CERTIFICATION ELECTION FOR THE OTHER GROUP; CASE AT BAR. Considering that (a) the TUPAS solicited certification election was strictly confined to the rank-and-file employees who are paid on a daily or piecerate basis, (b) the results of the election must also necessarily confine the certified unions representation to the group it represents and (c) the issue of the plight of the monthly-paid employees was still pending, KNITJOY and CFW clearly acted with palpable bad faith and malice in including within the scope of the new CBA these monthly-paid employees. Thus was effected a conspiracy to defeat and suppress the right of the KMEU and its members to bargain collectively and negotiate for themselves, to impose upon the latter a contract the negotiation for which they were not even given notice of, consulted or allowed to participate in, and to oust from the BLR the pending appeal on the certification issue. In the latter case, KNITJOY and CFW are guilty of contumacious conduct. It goes without saying then that the new CBA cannot validly include in its scope or coverage the monthly-paid rank-and-file employees of KNITJOY. It does not bar the holding of a certification election to determine their sole bargaining agent, and the negotiation for and the execution of a subsequent CBA between KNITJOY and the eventual winner in said election (Section 4, Rule V, Book V of the Rules Implementing the Labor Code).
DECISION
These petitions have a common origin and raise identical issues. They were ordered consolidated on 23 November 1988. In G.R. No. 81883, the 1 December 1987 Decision of respondent Director of the Bureau of Labor Relations in BLR Case No. A-10-315-87, which reversed the Order of Med-Arbiter-Designate Rolando S. dela Cruz dated 4 September 1987 and ordered the holding of a certification election among the regular rank-andfile monthly-paid employees of Knitjoy Manufacturing, Inc. (KNITJOY), is assailed by the latter. The Med-Arbiters order dismissed the petition of private respondent Knitjoy Monthly Employee s Union (KMEU) for such certification election and directed the parties "to work out (sic) towards the formation of a single union in the company." The antecedent material operative facts in these petitions are as follows: Petitioner KNITJOY had a collective bargaining agreement (CBA) with the Federation of Filipino Workers

(FFW). The bargaining unit covered only the regular rank-and-file employees of KNITJOY paid on a daily or piece-rate basis. It did not include regular rank-and-file office and production employees paid on a monthly basis. The CBA expired on 15 June 1987. Prior to its expiration, the FFW was split into two (2) factions the Johnny Tan and the Aranzamendez factions. The latter eventually became the Confederation of Filipino Workers (CFW), herein petitioner in G.R. No. 82111. Also prior to the expiration of the CBA, the Trade Union of the Philippines and Allied Services (TUPAS) filed a petition for the holding of a certification election among KNITJOYs regular rank-and-file employees paid on a daily and piece-rate basis. Excluded were the regular rank-and-file employees paid on a monthly basis. In the certification election conducted on 10 June 1987, CFW emerged as the winner; thereafter, negotiations for a new CBA between CFW and KNITJOY commenced.chanroblesvirtualawlibrary On 24 June 1987, during the pendency of the said negotiations, private respondent KMEU filed a petition for certification election among KNITJOYs regular rank-and-file monthly-paid employees with Regional Office No. IV of the Department of Labor and Employment (DOLE) which docketed the same as R-04OD-M-6-75-87. The Knitjoy Monthly Employees Association and Confederation of Citizens Labor Union (KMEA-CCLU), another union existing in the said company, and petitioner CFW intervened therein. The petition was dismissed in the Order of 4 September 1987 of Med-Arbiter Rolando S. de la Cruz, the dispositive portion of which reads: "WHEREFORE, premises considered, the petition is hereby Dismissed, but the parties are instructed to work out (sic) towards the formation of a single union in the company." 1 KMEU filed a motion to reconsider this order, which was treated as an appeal by the Bureau of Labor Relations (BLR). On 1 December 1987, public respondent Pura Ferrer-Calleja. Director of the BLR, handed down a Decision 2 reversing the order of Med-Arbiter de la Cruz. The dispositive portion of the Decision reads: "WHEREFORE, premises considered, the Appeal of Knitjoy Monthly Employees is hereby granted subject to the exclusion of the monthly paid employees who are deemed managerial. Let, therefore, the certification election proceed without delay, with the following as choices: 1. Knitjoy Monthly Employees Union (KMEU); and 2. No Union. The companys latest payroll shall be the basis in determining the list of eligible voters. SO ORDERED."

Respondent Director brushed aside KNITJOYs arguments that the monthly-paid employees have the same working incentives as their counterparts, the daily-paid workers; that the existing collective bargaining agent (CFW) is willing to include the monthly-paid employees, and that out of the 212 monthly-paid employees, 116 qualify as managerial employees while the rest who are holding confidential or technical positions should likewise be excluded. In finding for KMEU, said Director declared that: "As pointed out by the Supreme Court in the similar case of General Rubber and Footwear Corporation v. Bureau of Labor Relations, Et Al., G.R. No. 74262, it is perhaps unusual for management to have to deal with two (2) collective bargaining unions but there is no one to blame except management for creating the situation it is in. From the beginning of the existence of the CBA, management had sought to indiscriminately suppress the members of the petitioners right (sic) to self -organization. Respondents argument that the incumbent collective bargaining agent is willing to accommodate herein petitioner is of no moment since the option now rests upon the petitioner as to whether or not they desire to join the existing collective bargaining agent or remain as separate (sic) union." 3 KNITJOY and CFW separately moved to reconsider the said decision alleging, as principal underpinning therefor, the conclusion and signing between them, allegedly on 27 November 1987 before the rendition of the challenged decision of a CBA which includes in its coverage the monthly-paid rank-and-file employees. It is averred that said CBA has rendered the case moot and academic; moreover, to remove the monthly-paid employees from their present bargaining unit would lead to the fragmentation thereof, contrary to existing labor policies favoring larger units. In her Decision of 8 February 1988, respondent Director denied for lack of merit the motion for reconsideration on the principal ground that although the monthly-paid rank-and-file employees were allegedly included within the scope of the new CBA, they are not barred from forming a separate bargaining unit considering that: (a) since the petition for certification election was filed as early as 24 June 1987, there already existed a pending. representation issue when KNITJOY and CFW commenced negotiations for a new CBA; nevertheless, KMEU was not brought into the said negotiations and was therefore not a privy to the CBA; (b) members of KMEU did not participate in the ratification of the CBA; contrary to KNITJOY s claim that the same was unanimously ratified by the members of the bargaining unit, the CBA failed to mention even one monthly-paid employee who participated in the ratification process, and (c) while it is true that the policy of the DOLE is to favor a one company-one union scenario which finds basis in Section 2, Rule V, Book V of the Rules Implementing the Labor Code, there are, nonetheless, some exceptions thereto, as where the bargaining history requires the formation of another bargaining unit. Besides, such a policy must yield to an employees Constitutional right to form unions which includes the freedom to join a union of ones choice. 4 The new CBA, which KMEU claims to have been signed on 12 December 1987, and not on 27 November 1987 as both KNITJOY and CFW boldly assert, defines the bargaining unit covered as follows: "SECTION 2. The bargaining unit covered by this Agreement consists of all regular and permanent rankand-file employees of the COMPANY employed in its production plants and paid on a daily or piece-rate basis and regular, rank-and-file monthly paid office employees, excluding managerial, supervisory, casual,

temporary and probationary employees, and security guards." 5 Unfazed by their defeat before the BLR, KNITJOY and CFW separately filed the instant petitions. The former imputes upon respondent Director grave abuse of discretion in holding that (a) the scope of the bargaining unit agreed upon in the new CBA does not bind KMEU because it is not a party thereto, (b) the acceptance by all the members of KMEU of all benefits of the CBA did not constitute an overt act of ratification and (c) the CBA was concluded on 12 December 1987 and not on 27 November 1987. It further contends that respondent Director contumaciously violated the one company-one union policy of the Labor Code and disregarded the ruling of this Court in Bulletin Publishing Corp. v. Hon. Sanchez, 6 reiterated in part in General Rubber and Footwear Corp. v. Bureau of Labor Relations. 7 Upon the other hand, CFW contends that respondent Director committed grave abuse of discretion in (a) allowing the creation of a unit separate from the existing bargaining unit defined in the new CBA thus abetting the proliferation of unions, (b) disregarding the CBA provisions which consider the CFW as the sole and exclusive bargaining agent of all rank-and-file employees and (c) excluding CFW from the choices of unions to be voted upon. 8 On 24 August 1988, 9 this Court gave due course to the petition in G.R. No. 81883 after both the public and private respondents filed their separate comments and the petitioner filed its consolidated reply thereto. 10 On 23 November 1988, G.R. No. 82111 was consolidated with G.R. No. 81883 and the petitioner in the former was ordered to file a consolidated reply to the separate comments of both respondents. 11 The principal issues raised in these petitions are: 1. Whether or not petitioner KNITJOYs monthly-paid regular rank-and-file employees can constitute an appropriate bargaining unit separate and distinct from the existing unit composed of daily or piece-rate paid regular rank-and-file employees, and 2. Whether or not the inclusion in the coverage of the new CBA between KNITJOY and CFW of the monthly-paid rank-and-file employees bars the holding of a certification election among the said monthly paid employees. We decide for the respondents. 1. The suggested bias of the Labor Code in favor of the one company-one union policy, anchored on the greater mutual benefits which the parties could derive, especially in the case of employees whose bargaining strength could undeniably be enhanced by their unity and solidarity but diminished by their disunity, division and dissension, is not without exceptions. The present Article 245 of the Labor Code expressly allows supervisory employees who are not performing managerial functions to join, assist or form their separate union but bars them from membership in a labor organization of the rank-and-file employees. It reads:

"ARTICLE 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own." This provision obviously allows more than one union in a company. Even Section 2(c), Rule V, Book V of the Implementing Rules and Regulations of the Labor Code, which seeks to implement the policy, also recognizes exceptions. It reads: "SECTION 2. Who may file. Any legitimate labor organization or the employer, when requested to bargain collectively, may file the petition. The petition, when filed by a legitimate labor organization shall contain, among others: x x x
(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; . . . ." (Emphasis supplied) The usual exception, of course, is where the employer unit has to give way to the other units like the craft unit, plant unit, or a subdivision thereof, the recognition of these exceptions takes into account the policy to assure employees of the fullest freedom in exercising their rights. 12 Otherwise stated, the one company-one union policy must yield to the right of the employees to form unions or associations for purposes not contrary to law, to self-organization and to enter into collective bargaining negotiations, among others, which the Constitution guarantees. 13 The right to form a union or association or to self-organization comprehends two (2) broad notions, to wit: (a) the liberty or freedom, i.e., the absence of restraint which guarantees that the employee may act for himself without being prevented by law, and (b) the power, by virtue of which an employee may, as he pleases, join or refrain from joining an association. In Victoriano v. Elizalde Rope Workers Union, 14 this Court stated: ". . . Notwithstanding the different theories propounded by the different schools of jurisprudence regarding the nature and contents of a right, it can be safely said that whatever theory one subscribes to, a right comprehends at least two broad notions, namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an employee may act for himself without being prevented by law; and second, power, whereby an employee may, as he pleases, join or refrain from joining an association. It is, therefore, the employee who should decide for himself whether he should join or not an association, and should he choose to join, he himself makes up his mind as to which association he would join; and even after he has joined, he still retains the liberty and the power to leave and cancel his membership with said organization

at any time [Pagkakaisa Samahang Manggagawa ng San Miguel Brewery v. 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. v. PHILAME (KG) Employees Union, Et Al., L-19912, January 30, 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 o f 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." Furthermore, it is not denied that in the bargaining history of KNITJOY, the CBA has been consistently limited to the regular rank-and-file employees paid on a daily or piece-rate basis. On the other hand, the rank-and-file employees paid on a monthly basis were never included within its scope. Respondent KMEUs membership is limited to the latter class of employees, KMEU does not seek to dislodge CFW as the exclusive bargaining representative for the former. The records further disclose that in the certification solicited by TUPAS and during the elections which followed thereafter, resulting in the certification of CFW as the exclusive bargaining representative, the monthly-paid employees were expressly excluded. Thus, the negotiations between CFW and KNITJOY following such a certification could only logically refer to the rank-and-file employees paid on a daily or piece-rate basis. Clearly therefore, KNITJOY and CFW recognize that insofar as the monthly-paid employees are concerned, the latters constituting a separate bargaining unit with the appropriate union as sole bargaining representative, can neither be prevented nor avoided without infringing on these employees rights to form a union and to enter into collective bargaining negotiations. Stated differently, KNITJOY and CFW recognize the fact that the existing bargaining unit in the former is not and has never been the employer unit. Given this historical and factual setting, KMEU had the unquestioned and undisputed right to seek certification as the exclusive bargaining representative for the monthly-paid rank-and-file employees; both KNITJOY and CFW cannot block the same on the basis of this Courts declaration in Bulletin Publishing Corp. v. Hon. Sanchez 15 and General Rubber and Footwear Corp. v. Bureau of Labor Relations 16 regarding the one company-one union concept. Petitioners have obviously misread these cases. In the first, We stated that" [t]he crux of the dispute . . . is whether or not supervisors in petitioner company therein may, for purposes of collective bargaining, form a union separate and distinct from the existing union organized by the rank-and-file employees of the same company," 17 and ruled that the members of the Bulletin Supervisory Union, wholly composed of supervisors, are not qualified to form a union of their own under the law and rules then existing, considering that" [a] perusal of the job descriptions corresponding to the private respondents as outlined in the petition, clearly reveals the private respondents to be managers, purchasing officers, personnel officers, property officers, supervisors, cashiers, heads of various sections and the like. The nature of their duties gives rise to the irresistible conclusion that most of the herein private respondents are performing managerial functions;" 18 hence, under Article 246 19 of the Labor Code, they cannot form, join and assist labor organizations. It should be stressed that the statement therein that supervisors "who do not assume any managerial function may join or assist an existing rank-and-file union or if none exists, to join or assist in the formation of such rank-and-file organization" 20 is no longer legally feasible under existing laws. As earlier noted, the present Article 245 of the Labor Code allows supervisory employees who are not exercising managerial functions to join, assist or form separate labor organizations of their own but prohibits them from joining a labor organization composed of the rank-and-file employees.chanrobles lawlibrary : rednad

The second case on the other hand, demolishes the stand of KNITJOY and CFW for, as correctly contended by the respondents, it in fact recognizes an exception to the one company-one union concept. Thus: "Perhaps it is unusual for the petitioner to have to deal with two (2) collective bargaining unions but there is no one to blame except petitioner itself for creating the situation it is in. From the beginning of the existence in 1963 of a bargaining unit for the employees up to the present, petitioner had sought to indiscriminately suppress the members of the private respondents right (sic) to self -organization provided for by law. Petitioner, in justification of its action, maintained that the exclusion of the members of the private respondent from the bargaining union of the rank-and-file or from forming their own union was agreed upon by petitioner corporation with the previous bargaining representatives . . . Such posture has no leg to stand on. It has not been shown that private respondent was privy to this agreement. And even if it were so, it can never bind subsequent federations and unions particularly private respondentunion because it is a curtailment of the right to self-organization guaranteed by the labor laws. However, to prevent any difficulty and to avoid confusion to all concerned and, more importantly, to fulfill the policy of the New Labor Code as well as to be consistent with Our ruling in the Bulletin case, supra, the monthly-paid rank-and-file employees should be allowed to join the union of the daily-paid-rank-and-file employees of petitioner so that they can also avail of the CBA benefits or to form their own rank-and-file union, without prejudice to the certification election that has been ordered." 21 ( Emphasis supplied) 2. Regardless of the date when the new CBA was executed - whether on 27 November 1987 as contended by KNITJOY and CFW or 12 December 1967 as claimed by the respondents the fact remains that it was executed before the resolution of KMEUs petition for certification election among the monthly paid employees became final. This Court, however, sustains the respondents claim for indeed if it was executed by the parties on 27 November 1987, both KNITJOY and CFW would have immediately filed the appropriate pleading with the BLR informing it of such execution and moving for the dismissal of the appeal on the ground that it has been rendered moot and academic. Moreover, public respondents finding on this point is supported by substantial evidence, thus: "The parties could not have signed the said CBA on 27 November 1987, contrary to their allegation, because from 4:00 - 10:00 p.m. on the same day, 27 November 1987, the parties still attended a conciliation conference before Assistant Director Maximo L. Lim of the NCR (see Annex "F" of respondents Supplemental Motion for Reconsideration) and agreed in principle on nine (9) items or provisions to be included in said CBA. Said minutes do not state that these nine items are the remaining unresolved issues in the negotiation of the CBA." 22 It was only in their motion for the reconsideration of public respondents decision of 1 December 1987 that the existence of the new CBA was made known. Considering that (a) the TUPAS solicited certification election was strictly confined to the rank-and-file employees who are paid on a daily or piece-rate basis, (b) the results of the election must also necessarily confine the certified unions representation to the group it re presents and (c) the issue of the plight of the monthly-paid employees was still pending, KNITJOY and CFW clearly acted with palpable bad faith and malice in including within the scope of the new CBA these monthly-paid employees. Thus was effected a conspiracy to defeat and suppress the right of the KMEU and its members to bargain collectively and

negotiate for themselves, to impose upon the latter a contract the negotiation for which they were not even given notice of, consulted or allowed to participate in, and to oust from the BLR the pending appeal on the certification issue. In the latter case, KNITJOY and CFW are guilty of contumacious conduct. It goes without saying then that the new CBA cannot validly include in its scope or coverage the monthlypaid rank-and-file employees of KNITJOY. It does not bar the holding of a certification election to determine their sole bargaining agent, and the negotiation for and the execution of a subsequent CBA between KNITJOY and the eventual winner in said election. Section 4, Rule V, Book V of the Rules Implementing the Labor Code expressly provides: "SECTION 4. Effects of early agreements. The representation case shall not, however, be adversely affected by a collective bargaining agreement registered before or during the last 60 days of a subsisting agreement or during the pendency of the representation case." (Emphasis supplied) The public respondent then committed no abuse of discretion ordering a certification election among the monthly-paid rank-and-file employees, except managerial employees, of KNITJOY. The choice however, should not be, as correctly contended by CFW, limited to merely (a) KMEU and (b) no union. The records disclose that the intervenors in the petition for certification are the KMEA-CCLU and CFW. They should be included as among the choices in the certification election. WHEREFORE, the instant petitions are DISMISSED. However, the challenged decision of public respondent of 1 December 1987 is modified to include in the choices for the certification election petitioner Confederation of Filipino Workers (CFW) and the Knitjoy Monthly Employees Association and Confederation of Citizens Labor Unions (KMEU-CCLU). GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) vs. KAPISANAN NG MGA MANGGAGAWA SA GSIS; G.R. No. 170132, December 6, 2006 In this petition for review on certiorari under Rule 45 of the Rules of Court, the Government Service Insurance System (GSIS) and its President and General Manager Winston F. Garcia (Garcia, for short) assail and seek to nullify the Decision1 dated June 16, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 87220, as reiterated in its Resolution2 of October 18, 2005 denying Garcia's motion for reconsideration. The recourse is cast against the following setting: A four-day October 2004 concerted demonstration, rallies and en masse walkout waged/held in front of the GSIS main office in Roxas Boulevard, Pasay City, started it all. Forming a huge part of the October 4 to October 7, 2004 mass action participants were GSIS personnel, among them members of the herein respondent Kapisanan Ng Mga Manggagawa sa GSIS ("KMG" or the "Union"), a public sector union of GSIS rank-and-file employees. Contingents from other government agencies joined causes with the GSIS group. The mass action's target appeared to have been herein petitioner Garcia and his management style. While the Mayor of Pasay City allegedly issued a rally permit, the absence of the participating GSIS employees was not covered by a prior approved leave.3 On or about October 10, 2004, the manager of the GSIS Investigating Unit issued a memorandum directing 131 union and non-union members to show cause why they should not be charged

administratively for their participation in said rally. In reaction, KMG's counsel, Atty. Manuel Molina, sought reconsideration of said directive on the ground, among others, that the subject employees resumed work on October 8, 2004 in obedience to the return-to-work order thus issued. The plea for reconsideration was, however, effectively denied by the filing, on October 25, 2004, of administrative charges against some 110 KMG members for grave misconduct and conduct prejudicial to the best interest of the service.4 What happened next is summarized by the CA in its challenged decision of June 16, 2005, albeit the herein petitioners would except from some of the details of the appellate court's narration: Ignoring said formal charges, KMG, thru its President, Albert Velasco, commenced the instant suit on November 2, 2004, with the filing of the Petition for Prohibition at bench. On the ground that its members should not be made to explain why they supported their union's cause, petitioner [KMG] faulted respondent [Garcia] with blatant disregard of Civil Service Resolution No. 021316, otherwise known as the Guidelines for Prohibited Mass Action, Section 10 of which exhorts government agencies to "harness all means within their capacity to accord due regard and attention to employees' grievances and facilitate their speedy and amicable disposition through the use of grievance machinery or any other modes of settlement sanctioned by law and existing civil service rules." Two supplements to the foregoing petition were eventually filed by KMG. The first, apprised [the CA] of the supposed fact that its Speaker, Atty. Molina, had been placed under preventive suspension for 90 days and that the formal charges thus filed will not only deprive its members of the privileges and benefits due them but will also disqualify them from promotion, step increment adjustments and receipt of monetary benefits, including their 13th month pay and Christmas bonuses. The second, xxx manifested that, on December 17, 2004, respondent [Garcia] served a spate of additional formal charges against 230 of KMG's members for their participation in the aforesaid grievance demonstrations. In his December 14, 2004 comment to the foregoing petition, respondent [Garcia] averred that the case at bench was filed by an unauthorized representative in view of the fact that Albert Velasco had already been dropped from the GSIS rolls and, by said token, had ceased to be a member much less the President of KMG. Invoking the rule against forum shopping, respondent [Garcia] called [the CA's] attention to the supposed fact that the allegations in the subject petition merely duplicated those already set forth in two petitions for certiorari and prohibition earlier filed by Albert Velasco . Because said petitions are, in point of fact, pending before this court as CA-G.R. SP Nos. 86130 and 86365, respondent [Garcia] prayed for the dismissal of the petition at bench .5 (Words in bracket added.) It appears that pending resolution by the CA of the KMG petition for prohibition in this case, the GSIS management proceeded with the investigation of the administrative cases filed. As represented in a pleading before the CA, as of May 18, 2005, two hundred seven (207) out of the two hundred seventy eight (278) cases filed had been resolved, resulting in the exoneration of twenty (20) respondent-employees, the reprimand of one hundred eighty two (182) and the suspension for one month of five (5). 6 On June 16, 2005, the CA rendered the herein assailed decision7 holding that Garcia's "filing of administrative charges against 361 of [KMG's] members is tantamount to grave abuse of discretion which may be the proper subject of the writ of prohibition." Dispositively, the decision reads:
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WHEREFORE, premises considered, the petition [of KMG] is GRANTED and respondent [Winston F. Garcia] is hereby PERPETUALLY ENJOINED from implementing the issued formal charges and from issuing other formal charges arising from the same facts and events. SO ORDERED. (Emphasis in the original) Unable to accept the above ruling and the purported speculative factual and erroneous legal premises holding it together, petitioner Garcia sought reconsideration. In its equally assailed Resolution8 of October 18, 2005, however, the appellate court denied reconsideration of its decision. Hence, this recourse by the petitioners ascribing serious errors on the appellate court in granting the petition for prohibition absent an instance of grave abuse of authority on their part. We resolve to GRANT the petition. It should be stressed right off that the civil service encompasses all branches and agencies of the Government, including government-owned or controlled corporations (GOCCs) with original charters, like the GSIS,9 or those created by special law.10 As such, employees of covered GOCCs are part of the civil service system and are subject to circulars, rules and regulations issued by the Civil Service Commission (CSC) on discipline, attendance and general terms/conditions of employment, inclusive of matters involving self-organization, strikes, demonstrations and like concerted actions. In fact, policies established on public sector unionism and rules issued on mass action have been noted and cited by the Court in at least a case.11 Among these issuances is Executive Order (EO) No. 180, series of 1987, providing guidelines for the exercise of the right to organize of government employees. Relevant also is CSC Resolution No. 021316 which provides rules on prohibited concerted mass actions in the public sector. There is hardly any dispute about the formal charges against the 278 affected GSIS employees a mix of KMG union and non-union members - having arose from their having gone on unauthorized leave of absence (AWOL) for at least a day or two in the October 4 to 7, 2004 stretch to join the ranks of the demonstrators /rallyists at that time. As stated in each of the formal charges, the employee's act of attending, joining, participating and taking part in the strike/rally is a transgression of the rules on strike in the public sector. The question that immediately comes to the fore, therefore, is whether or not the mass action staged by or participated in by said GSIS employees partook of a strike or prohibited concerted mass action. If in the affirmative, then the denounced filing of the administrative charges would be prima facie tenable, inasmuch as engaging in mass actions resulting in work stoppage or service disruption constitutes, in the minimum, the punishable offense of acting prejudicial to the best interest of the service.12 If in the negative, then such filing would indeed smack of arbitrariness and justify the issuance of a corrective or preventive writ. Petitioners assert that the filing of the formal charges are but a natural consequence of the servicedisrupting rallies and demonstrations staged during office hours by the absenting GSIS employees, there being appropriate issuances outlawing such kinds of mass action. On the other hand, the CA, agreeing with the respondent's argument, assumed the view and held that the organized demonstrating employees did nothing more than air their grievances in the exercise of their "broader rights of free expression" 13 and are, therefore, not amenable to administrative sanctions. For perspective, following is what the CA said: Although the filing of administrative charges against [respondent KMG's] members is well within [petitioner Garcia's] official [disciplinary] prerogatives, [his] exercise of the power vested under
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Section 45 of Republic Act No. 8291 was tainted with arbitrariness and vindictiveness against which prohibition was sought by [respondent]. xxx the fact that the subject mass demonstrations were directed against [Garcia's] supposed mismanagement of the financial resources of the GSIS, by and of itself, renders the filing of administrative charges against [KMG's] member suspect. More significantly, we find the gravity of the offenses and the sheer number of persons charged administratively to be, at the very least, antithetical to the best interest of the service . It matters little that, instead of the 361 alleged by petitioner, only 278 charges were actually filed [and] in the meantime, disposed of and of the said number, 20 resulted to exoneration, 182 to reprimand and 5 to the imposition of a penalty of one month suspension. Irrespective of their outcome, the severe penalties prescribed for the offense with which petitioner's members were charged, to our mind, bespeak of bellicose and castigatory reaction . The fact that most of the employees [Garcia] administratively charged were eventually meted with what appears to be a virtual slap on the wrist even makes us wonder why respondent even bothered to file said charges at all. xxx. Alongside the consequences of the right of government employees to form, join or assist employees organization, we have already mentioned how the broader rights of free expression cast its long shadow over the case. xxx we find [petitioner Garcia's] assailed acts, on the whole, anathema to said right which has been aptly characterized as preferred, one which stands on a higher level than substantive economic and other liberties, the matrix of other important rights of our people. xxx.14 (Underscoring and words in bracket added; citations omitted.) While its decision and resolution do not explicitly say so, the CA equated the right to form associations with the right to engage in strike and similar activities available to workers in the private sector. In the concrete, the appellate court concluded that inasmuch as GSIS employees are not barred from forming, joining or assisting employees' organization, petitioner Garcia could not validly initiate charges against GSIS employees waging or joining rallies and demonstrations notwithstanding the service-disruptive effect of such mass action. Citing what Justice Isagani Cruz said in Manila Public School Teachers Association [MPSTA] v. Laguio, Jr.,15 the appellate court declared: It is already evident from the aforesaid provisions of Resolution No. 021316 that employees of the GSIS are not among those specifically barred from forming, joining or assisting employees organization such as [KMG]. If only for this ineluctable fact, the merit of the petition at bench is readily discernible.16 We are unable to lend concurrence to the above CA posture. For, let alone the fact that it ignores what the Court has uniformly held all along, the appellate court's position is contrary to what Section 4 in relation to Section 5 of CSC Resolution No. 02131617 provides. Besides, the appellate court's invocation of Justice Cruz's opinion inMPSTA is clearly off-tangent, the good Justice's opinion thereat being a dissent. It may be, as the appellate court urged that the freedom of expression and assembly and the right to petition the government for a redress of grievances stand on a level higher than economic and other liberties. Any suggestion, however, about these rights as including the right on the part of government personnel to strike ought to be, as it has been, trashed. We have made this abundantly clear in our past determinations. For instance, in Alliance of Government Workers v. Minister of Labor and Employment ,18 a case decided under the aegis of the 1973 Constitution, an en banc Court declared that it would be unfair to allow employees of government corporations to resort to concerted activity with the ever present threat of a strike to wring benefits from Government. Then came the 1987 Constitution expressly guaranteeing, for
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the first time, the right of government personnel to self-organization19 to complement the provision according workers the right to engage in "peaceful concerted activities, including the right to strike in accordance with law."20 It was against the backdrop of the aforesaid provisions of the 1987 Constitution that the Court resolvedBangalisan v. Court of Appeals.21 In it, we held, citing MPSTA v. Laguio, Jr.,22 that employees in the public service may not engage in strikes or in concerted and unauthorized stoppage of work; that the right of government employees to organize is limited to the formation of unions or associations, without including the right to strike. Jacinto v. Court of Appeals23 came next and there we explained: Specifically, the right of civil servants to organize themselves was positively recognized in Association of Court of Appeals Employees vs. Ferrer-Caleja. But, as in the exercise of the rights of free expression and of assembly, there are standards for allowable limitations such as the legitimacy of the purpose of the association, [and] the overriding considerations of national security . . . . As regards the right to strike, the Constitution itself qualifies its exercise with the provision "in accordance with law." This is a clear manifestation that the state may, by law, regulate the use of this right, or even deny certain sectors such right. Executive Order 180 which provides guidelines for the exercise of the right of government workers to organize, for instance, implicitly endorsed an earlier CSC circular which "enjoins under pain of administrative sanctions, all government officers and employees from staging strikes, demonstrations, mass leaves, walkouts and other forms of mass action which will result in temporary stoppage or disruption of public service" by stating that the Civil Service law and rules governing concerted activities and strikes in government service shall be observed. (Emphasis and words in bracket added; citations omitted) And in the fairly recent case of Gesite v. Court of Appeals,24 the Court defined the limits of the right of government employees to organize in the following wise: It is relevant to state at this point that the settled rule in this jurisdiction is that employees in the public service may not engage in strikes, mass leaves, walkouts, and other forms of mass action that will lead in the temporary stoppage or disruption of public service. The right of government employees to organize is limited to the formation of unions or associations only, without including the right to strike, adding that public employees going on disruptive unauthorized absences to join concerted mass actions may be held liable for conduct prejudicial to the best interest of the service. Significantly, 1986 Constitutional Commission member Eulogio Lerum, answering in the negative the poser of whether or not the right of government employees to self-organization also includes the right to strike, stated: When we proposed this amendment providing for self organization of government employees, it does not mean that because they have the right to organize, they have also the right to strike. That is a different matter. xxx25
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With the view we take of the events that transpired on October 4-7, 2004, what respondent's members launched or participated in during that time partook of a strike or, what contextually amounts to the same thing, a prohibited concerted activity. The phrase "prohibited concerted activity" refers to any collective activity undertaken by government employees, by themselves or through their employees' organization, with the intent of effecting work stoppage or service disruption in order to realize their demands or force concessions, economic or otherwise; it includes mass leaves, walkouts, pickets and acts of similar nature.26 Indeed, for four straight days, participating KMG members and other GSIS employees staged a walk out and waged or participated in a mass protest or demonstration right at the very doorstep of the GSIS main office building. The record of attendance27 for the period material shows that, on the first day of the protest, 851 employees, or forty eight per cent (48%) of the total number of employees in the main office (1,756) took to the streets during office hours, from 6 a.m. to 2 p.m., 28leaving the other employees to fend for themselves in an office where a host of transactions take place every business day. On the second day, 707 employees left their respective work stations, while 538 participated in the mass action on the third day. A smaller number, i.e., 306 employees, but by no means an insignificant few, joined the fourth day activity. To say that there was no work disruption or that the delivery of services remained at the usual level of efficiency at the GSIS main office during those four (4) days of massive walkouts and wholesale absences would be to understate things. And to place the erring employees beyond the reach of administrative accountability would be to trivialize the civil service rules, not to mention the compelling spirit of professionalism exacted of civil servants by the Code of Conduct and Ethical Standards for Public Officials and Employees. 29 The appellate court made specific reference to the "parliament of the streets," obviously to lend concurrence to respondent's pretension that the gathering of GSIS employees on October 4-7, 2004 was an "assembly of citizens" out only to air grievances, not a striking crowd. According to the respondent, a strike presupposes a mass action undertaken to press for some economic demands or secure additional material employment benefits. We are not convinced. In whatever name respondent desires to call the four-day mass action in October 2004, the stubborn fact remains that the erring employees, instead of exploring non-crippling activities during their free time, had taken a disruptive approach to attain whatever it was they were specifically after. As events evolved, they assembled in front of the GSIS main office building during office hours and staged rallies and protests, and even tried to convince others to join their cause, thus provoking work stoppage and service-delivery disruption, the very evil sought to be forestalled by the prohibition against strikes by government personnel.30 The Court can concede hypothetically that the protest rally and gathering in question did not involve some specific material demand. But then the absence of such economic-related demand, even if true, did not, under the premises, make such mass action less of a prohibited concerted activity. For, as articulated earlier, any collective activity undertaken by government employees with the intent of effecting work stoppage or service disruption in order to realize their demands or force concessions, economic or otherwise, is a prohibited concerted mass action31 and doubtless actionable administratively. Bangalisan even went further to say the following: "[i]n the absence of statute, public employees do not have the right to engage in concerted work stoppages for any purpose."
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To petitioner Garcia, as President and General Manager of GSIS, rests the authority and responsibility, under Section 45 of Republic Act No. 8291, the GSIS Act of 1997, to remove, suspend or otherwise discipline GSIS personnel for cause.32 At bottom then, petitioner Garcia, by filing or causing the filing of administrative charges against the absenting participants of the October 4-7, 2004 mass action, merely performed a duty expected of him and enjoined by law. Regardless of the mood petitioner Garcia was in when he signed the charge sheet, his act can easily be sustained as legally correct and doubtless within his jurisdiction. It bears to reiterate at this point that the GSIS employees concerned were proceeded against - and eventually either exonerated, reprimanded or meted a one-month suspension, as the case may be - not for the exercise of their right to assemble peacefully and to petition for redress of grievance, but for engaging in what appeared to be a prohibited concerted activity. Respondent no less admitted that its members and other GSIS employees might have disrupted public service.33 To be sure, arbitrariness and whimsical exercise of power or, in fine, grave abuse of discretion on the part of petitioner Garcia cannot be simplistically inferred from the sheer number of those charged as well as the gravity or the dire consequences of the charge of grave misconduct and conduct prejudicial to the best interest of the service, as the appellate court made it to appear. The principle of accountability demands that every erring government employee be made answerable for any malfeasance or misfeasance committed. And lest it be overlooked, the mere filing of formal administrative case, regardless of the gravity of the offense charged, does not overcome the presumptive innocence of the persons complained of nor does it shift the burden of evidence to prove guilt of an administrative offense from the complainant. Moreover, the Court invites attention to its holding in MPSTA v. Laguio, Jr., a case involving over 800 public school teachers who took part in mass actions for which the then Secretary of Education filed administrative complaints on assorted charges, such as gross misconduct. Of those charged, 650 were dismissed and 195 suspended for at least six (6) months The Court, however, did not consider the element of number of respondents thereat and/or the dire consequences of the charge/s as fatally vitiating or beclouding the bona fides of the Secretary of Education's challenged action. Then as now, the Court finds the filing of charges against a large number of persons and/or the likelihood that they will be suspended or, worse, dismissed from the service for the offense as indicating a strong and clear case of grave abuse of authority to justify the issuance of a writ of prohibition. The appellate court faulted petitioner Garcia for not first taping existing grievance machinery and other modes of settlement agreed upon in the GSIS-KMG Collective Negotiations Agreement (CAN) before going full steam ahead with his formal charges.34 The Court can plausibly accord cogency to the CA's angle on grievance procedure but for the fact that it conveniently disregarded what appears to be the more relevant provision of the CNA. We refer to Article VI which reads: The GSIS Management and the KMG have mutually agreed to promote the principle of shared responsibility on all matters and decisions affecting the rights, benefits and interests of all GSIS employees . Accordingly, the parties also mutually agree that the KMG shall not declare a strike nor stage any concerted action which will disrupt public service and the GSIS management shall not lockout employees who are members of the KMG during the term of this agreement. GSIS Management shall also respect the rights of the employees to air their sentiments through
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peaceful concerted activities during allowable hours, subject to reasonable office rules ....35 (Underscoring added) If the finger of blame, therefore, is to be pointed at someone for non-exhaustion of less confrontational remedies, it should be at the respondent union for spearheading a concerted mass action without resorting to available settlement mechanism. As it were, it was KMG, under Atty. Alberto Velasco, which opened fire first. That none of the parties bothered to avail of the grievance procedures under the GSISKMG CNA should not be taken against the GSIS. At best, both GSIS management and the Union should be considered as in pari delicto. With the foregoing disquisitions, the Court finds it unnecessary to discuss at length the legal standing of Alberto Velasco to represent the herein respondent union and to initiate the underlying petition for prohibition. Suffice it to state that Velasco, per Joint Resolution No. 04-10-01 approved on October 5, 2004 by the KMG Joint Executive-Legislative Assembly, had ceased to be member, let alone president, of the KMG, having previously been dropped from the rolls of GSIS employees.36 While the dropping from the rolls is alleged to have been the subject of a CA-issued temporary restraining order (TRO), the injunction came after Atty. Velasco had in fact been separated from the service and it appears that the TRO had already expired. As a final consideration, the Court notes or reiterates the following relevant incidents surrounding the disposition of the case below: 1. The CA had invoked as part of its ratio decidendi a dissenting opinion in MPSTA, even going to the extent of describing as "instructive and timely" a portion, when the majority opinion thereat, which the appellate court ignored, is the controlling jurisprudence. 2. The CA gave prominence to dispositions and rattled off holdings 37 of the Court, which appropriately apply only to strikes in the private industry labor sector, and utilized the same as springboard to justify an inference of grave abuse of discretion. On the other hand, it only gave perfunctory treatment if not totally ignored jurisprudence that squarely dealt with strikes in the public sector, as if the right to strike given to unions in private corporations/entities is necessarily applicable to civil service employees. 3. As couched, the assailed CA decision perpetually bars respondent Garcia and necessarily whoever succeeds him as GSIS President not only from implementing the formal charges against GSIS employees who participated in the October 4 - 7, 2004 mass action but also from issuing other formal charges arising from the same events. The injunction was predicated on a finding that grave abuse of discretion attended the exercise of petitioner Garcia's disciplinary power vested him under Section 45 of RA 8291.38 At bottom then, the assailed decision struck down as a nullity, owing to the alleged attendant arbitrariness, not only acts that have already been done, but those yet to be done. In net effect, any formal charge arising from the October 4-7, 2004 incident is, under any and all circumstances, prejudged as necessarily tainted with arbitrariness to be slain at sight. The absurdities and ironies easily deducible from the foregoing situations are not lost on the Court. We close with the observation that the assailed decision and resolution, if allowed to remain undisturbed, would likely pave the way to the legitimization of mass actions undertaken by civil servants, regardless of their deleterious effects on the interest of the public they have sworn to serve with loyalty and efficiency.
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Worse still, it would permit the emergence of a system where public sector workers are, as the petitioners aptly put it, "immune from the minimum reckoning for acts that [under settled jurisprudence] are concededly unlawful." This aberration would be intolerable. WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE and the writ of prohibition issued by that court is NULLIFIED. UNITED PEPSI-COLA SUPERVISORY UNION (UPSU) vs. HON. BIENVENIDO E. LAGUESMA; G.R. No. 122226 March 25, 1998 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 rankand-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, 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, 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
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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
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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
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supervisory employee or a managerial employee. In the case of Workers Alliance Trade Unions (WATU) 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, inBrillantes 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-10-31891 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
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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.
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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 2.1.2 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
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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.
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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, effectivelyrecommend 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:
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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 selforganization 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.
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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, ignoring that discord would not be unusual, is to fly in the face of reality. . . . The basic question is whether the managerial personnel can organize. What respondent Company failed to take into account is that the right to self-organization is not merely a statutory creation. It is fortified by our Constitution. All are free to exercise such right unless their purpose is 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 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. 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 to the objection raised that no unfair labor practice could be committed by respondent Company insofar as managerial personnel is concerned. It is, as is quite obvious, in the negative. 20 Actually, the case involved front-line managers or supervisors only, as the plantilla of employees, quoted in the main opinion, 21 clearly indicates: CAFIMSA members holding the following Supervisory Payroll Position Title are Recognized by the Company Payroll Position Title Assistant to Mgr. National Acct. Sales Jr. Sales Engineer Retail Development Asst. Staff Asst. 0 Marketing Sales Supervisor Supervisory Assistant
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Jr. Supervisory Assistant Credit Assistant Lab. Supvr. Pandacan Jr. Sales Engineer B Operations Assistant B Field Engineer Sr. Opers. Supvr. MIA A/S Purchasing Assistant Jr. Construction Engineer Sr. Sales Supervisor Deport Supervisor A Terminal Accountant B Merchandiser Dist. Sales Prom. Supvr. Instr. Merchandising Asst. Dist. Accountant B Sr. Opers. Supervisor Jr. Sales Engineer A Asst. Bulk Ter. Supt. Sr. Opers. Supvr. Credit Supervisor A Asst. Stores Supvr. A Ref. Supervisory Draftsman Refinery Shift Supvr. B
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Asst. Supvr. A Operations (Refinery) Refinery Shift Supvr. B Asst. Lab. Supvr. A (Refinery) St. Process Engineer B (Refinery) Asst. Supvr. A Maintenance (Refinery) Asst. Supvr. B Maintenance (Refinery) Supervisory Accountant (Refinery) Communications Supervisor (Refinery) Finally, also deemed included are all other employees excluded from the rank and file unions but not classified as managerial or otherwise excludable by law or applicable judicial precedents. Right of Self-Organization of Managerial Employees under the Labor Code 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 supervisory group under the broad phrase "managerial personnel," provided the lynchpin for later laws denying the right of self-organization not only to top and middle management employees but to front line managers or supervisors as well. Following the Caltex case, the Labor Code, promulgated in 1974 under martial law, dropped the distinction between the first and second sub-groups of managerial employees. Instead of treating the terms "supervisor" and "manager" separately, the law lumped them together and called them "managerial employees," as follows: Art. 212. Definitions . . . . (k) "Managerial Employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial actions. All employees not falling within this definition are considered rank and file employees for purposes of this Book. 22 The definition shows that it is actually a combination of the commonly understood definitions of both groups of managerial employees, grammatically joined by the phrase "and/or." This general definition was perhaps legally necessary at that time for two reasons. First, the 1974 Code denied supervisors their right to self-organize 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 managers from forming unions. The explicit general prohibition was contained in the then Art. 246 of the Labor Code.
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The practical effect of this synthesis of legal concepts was made apparent in 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 provided: 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 canceled. 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 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.
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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.
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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
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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. Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization. 28 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: 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.
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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 inPhilips 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 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. In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court elaborated on this rationale, thus: . . . The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial employees in Union membership. 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. Separate Opinions DAVIDE, JR., J., concurring and dissenting; I concur with the majority that the "route managers" of private respondent Pepsi-Cola Products Philippines, Inc. are managerial employees. However, I respectfully submit that contrary to the
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majority's holding, Article 245 of the Labor Code is unconstitutional, as it abridges Section 8, Article III of the Constitution. Section 8, Article III of the 1987 Constitution was taken from Section 7, Article IV of the 1973 Constitution which, in turn, was lifted from Section 6, Article III of the 1935 Constitution. Section 7 of the 1973 Constitution provided as follows: Sec. 7. The right to form associations or societies for purpose not contrary to law shall not be abridged. This Section was adopted in Section 7 of Proposed Resolution No. 486 of the 1986 Constitutional Commission, entitled Resolution to Incorporate in the New Constitution an Article on the Bill of Rights, 1 submitted by the Committee on Citizenship, Bill of Rights, Political Rights and Obligations, and Human Rights, with a modification, however, consisting of the insertion of the word union between the words "associations" and "societies." Thus the proposed Section 7 provided as follows: Sec. 7. The right of the people to form associations, unions, or societies for purposes not contrary to law shall not be abridged (emphasis supplied). Commissioner Joaquin G. Bernas, in his sponsorship speech on the proposed Article on the Bill of Rights, expounded on the nature of the proposed provision, in this wise: Section 7 preserves the old provision not because it is strictly needed but because its removal might be subject to misinterpretation. It reads: xxx xxx xxx It strictly does not prepare the old provision because it adds the word UNION, and in the explanation we received from Commissioner Lerum, the term envisions not just unions in private corporations but also in the government. This preserves our link with the Malolos Constitution as far as the right to form associations or societies for purposes not contrary to law is concerned. 2 During the period of individual amendments, Commissioner Lerum introduced an amendment to the proposed section consisting of the insertion of the clause "WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS, which, after consulting other Commissioners, he modified his proposed amendment to read: "INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS." At that time, the section read: Sec. 7. 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. Pertinently to this dispute Commissioner Lerum's intention that the amendment "automatically abolish" Articles 245 and 246 of the Labor Code. The Committee accepted the amendment, and there having been no objection from the floor, the Lerum amendment was approved, thus: MR. LERUM: . . . 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:
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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. 3 The Committee on Style then recommended that commas be placed after the words people and sectors, while Commissioner Lerum likewise moved to place the word unions before the word associations. 4 Section 7, which was subsequently renumbered as Section 8 as presently appearing in the text ratified in the plebiscite of 2 February 1987, then read as follows: 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. It is then indubitably clear from the foregoing that the intent of the Constitutional Commission was to abrogate the law prohibiting managerial employees from joining, assisting, or forming unions or labor organizations. In this regard, there is absolutely no need to decipher the intent of the framers of the 1987 Constitution vis-a-vis Article 245 (originally 246) of the Labor Code, there being no ambiguity or vagueness in the wording of the present Section 8, Article III of the 1987 Constitution. The provision is clear and written in simple language; neither were there any confusing debates thereon. More importantly, the purpose of Commissioner Lerum's amendments was unequivocal: he did not merely intend an implied repeal, but an express repeal of the offending article of the Labor Code. The approval of the amendments left no doubt whatsoever, as faithfully disclosed in the Records of the Constitutional Commission, that all employees meaning rank-and-file, supervisory and managerial whether from the public or the private sectors, have the right to form unions for purposes not contrary to law. The Labor Code referred to by Commissioner Lerum was P.D. No. 442, promulgated on 1 May 1974. With the repeal of Article 239 by Executive Order No. 111 issued on 24 December 1986, 5 Article 246 (as mentioned by Commissioner Lerum) became Article 245. Thereafter, R.A. No. 6715 6 amended the new Article 245 (originally Article 246) to read, as follows: Sec. 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
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organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. 7 With the abrogation of the former Article 246 of the Labor Code, 8 and the constitutional prohibition against any law prohibiting managerial employees from joining, assisting or forming unions or labor organizations, the first sentence then of the present Article 245 of the Labor Code must be struck down as unconstitutional. 9 However, due to an obvious conflict of interest being closely identified with the interests of management in view of the inherent nature of their functions, duties and responsibilities managerial employees may only be eligible to join, assist or form unions or labor organizations of their own rank, and not those of the supervisory employees nor the rank-and-file employees. In the instant case, the petitioner's name United Pepsi-Cola Supervisory Union (UPSU) indubitably attests that it is a union of supervisory employees. In light of the earlier discussion, the route managers who aremanagerial employees, cannot join or assist UPSU. Accordingly, the Med-Arbiter and public respondent Laguesma committed no error in denying the petition for direct certification or for certification election. I thus vote to GRANT, IN PART, the instant petition. That portion of the challenged resolution of public respondent holding that since the route managers of private respondent Pepsi-Cola Products Philippines, Inc., are managerial employees, they are "not eligible to assist, join or form a union or any other organization" should be SET ASIDE for being violative of Section 8 of Article III of the Constitution, while that portion thereof denying petitioner's appeal from the Med-Arbiter's decision dismissing the petition for direct certification or for a certification election should be AFFIRMED. PUNO, J., separate concurring; With due respect, it is my submission that Article 245 of the Labor Code was not repealed by section 8, Article III of the 1987 Constitution for reasons discussed below. A. Types of Employees. For purposes of applying the law on labor relations, the Labor Code in Article 212 (m) defines three (3) categories of employees. They are managerial, supervisory and rank-and-file, thus: Art. 212 (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 recommended 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 rankand-file employees for purposes of this Book. The test of "managerial" or "supervisory" status depends on whether a person possesses authority to act in the interest of his employer and whether such authority is not routinary or clerical in nature but requires the use of independent judgment. 1 The rank-and-file employee performs work that is routinary and clerical in nature. The distinction between these employees is significant because supervisory and rank-and-file employees may form, join or assist labor organizations. Managerial employees cannot.
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B. The Exclusion of Managerial Employees: Its Historical Roots in the United States. The National Labor Relations Act (NLRA), also known as the Wagner Act, enacted by the U.S. Congress in 1935, was the first law that regulated labor relations in the United States and embodied its national labor policy. 2 The purpose of the NLRA was to eliminate obstructions to the free flow of commerce through the practice of collective bargaining. The NLRA also sought to protect the workers' full freedoms of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid and protection. 3 The NLRA established the right of employees to organize, required employers to bargain with employees collectively through employee-elected representatives, gave employees the right to engage in concerted activities for collective bargaining purposes or other mutual aid or protection, and created the National Labor Relations Board (NLRB) as the regulatory agency in labor-management matters. 4 The NLRA was amended in 1947 by the Labor Management Relations Act (LMRA), also known as the Taft-Hartley Act. This Act sought to lessen industrial disputes and placed employers in a more nearly equal position with unions in bargaining and labor relations procedures. 5 The NLRA did not make any special provision for "managerial employees." 6 The privileges and benefits of the Act were conferred on "employees." Labor organizations thus clamored for the inclusion of supervisory personnel in the coverage of the Act on the ground that supervisors were also employees. Although traditionally, supervisors were regarded as part of management, the NLRB was constrained to recognize supervisors as employees under the coverage of the law. Supervisors were then granted collective bargaining rights. 7 Nonetheless, the NLRB refused to consider managers as covered by the law. 8 The LMRA took away the collective bargaining rights of supervisors. The sponsors of the amendment feared that their unionization would break down industrial discipline as it would blur the traditional distinction between management and labor. They felt it necessary to deny supervisory personnel the right of collective bargaining to preserve their loyalty to the interests of their employers. 9 Several amendments were later made on the NLRA but the exclusion of managers and supervisors from its coverage was preserved. Until now managers and supervisors are excluded from the law. 10 Their exclusion hinges on the theory that the employer is entitled to the full loyalty of those whom it chooses for positions of responsibility, entailing action on the employers' behalf. A supervisor's and manager's ability to control the work of others would be compromised by his sharing of employee status with them. 11 C. Historical Development in the Philippines. Labor-management relations in the Philippines were first regulated under the Industrial Peace Act 12 which took effect in 1953. Hailed as the Magna Carta of Labor, it was modelled after the NLRA and LMRA of the United States. 13 Most of the basic principles of the NLRA have been carried over to the Industrial Peace Act and the Labor Code. 14 This is significant because we have ruled that where our labor statutes are based on statutes in foreign jurisdiction, the decisions of the high courts in those jurisdictions construing and interpreting the Act are given persuasive effects in the application of Philippine law. 15
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The Industrial Peace Act did not carry any provision prohibiting managerial employees from joining labor organizations. Section 3 of said law merely provided: Sec. 3. Employees' Right to Self-Organization. Employees shall have the right to selforganization 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. Significantly, the Industrial Peace Act did not define a manager or managerial employee. It defined a "supervisor" but not a "manager." Thus: 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. In 1972, we interpreted Section 3 of the Industrial Peace Act to give supervisors the right to join and form labor organizations of their own. 16 Soon we grappled with the right of managers to organize. In a case involving Caltex managers, we recognized their right to organize, viz: 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 records 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. 17 The Industrial Peace Act was repealed in 1975 by P.D. 442, the Labor Code of the Philippines. The Labor Code changed existing jurisprudence when it prohibited supervisory and managerial employees from joining labor organizations. Supervisory unions were no longer recognized nor allowed to exist and operate as such. 18 We affirmed this statutory change in Bulletin Publishing Corp. v. Sanchez. 19 Similarly, Article 246 of the Labor Code expressly prohibited managerial employees from forming, assisting and joining labor organizations, to wit: Art. 246. Ineligibility of managerial employees to join any labor organization. Managerial employees are not eligible to join, assist or form any labor organization.
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In the same Bulletin case, the Court applied Article 246 and held that managerial employees are the very type of employees who, by the nature of their positions and functions, have been decreed disqualified from bargaining with management. This prohibition is based on the rationale that if managerial employees were to belong or be affiliated with a union, the union might not be assured of their loyalty in view of evident conflict of interest or that the union can be company-dominated with the presence of managerial employees in the union membership. 20 In the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representative, and to see to it that its interests are well protected. The employer is not assured of such protection if these employees themselves become union members. 21 The prohibition on managerial employees to join, assist or form labor organizations was retained in the Labor Code despite substantial amendments made in 1989 by R.A. 6715, the Herrera-Veloso Law. R.A. 6715 was passed after the effectivity of the 1987 Constitution and this law did not abrogate, much less amend the prohibition on managerial employees to join labor organizations. The express prohibition in Article 246 remained. However, as an addendum to this same Article, R.A. 6715 restored to supervisory employees the right to join labor organizations of their own. 22 Article 246 now reads: Art. 246. 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. Article 246 became Article 245 after then Article 244 was repealed by E.O. 111. Article 246 is presently Article 245 of the Labor Code. Indeed, Article 245 of the Labor Code prohibiting managerial employees from joining labor organizations has a social and historical significance in our labor relations law. This significance should be considered in deciphering the intent of the framers of the 1987 Constitution vis-a-vis the said Article. With due respect, I do not subscribe to the view that section 8, Article III of the Constitution abrogated Article 245 of the Labor Code. A textual analysis of section 8, Article III of the Constitution will not justify this conclusion. With due respect, the resort by Mr. Justice Davide to the deliberations of the Constitutional Commission does not suffice. It is generally recognized that debates and other proceedings in a constitutional convention are of limited value and are an unsafe guide to the intent of the people. 23 Judge Cooley has stated that: When the inquiry is directed to ascertaining the mischief designed to be remedied, or the purpose sought to be accomplished by a particular provision, it may be proper to examine the proceedings of the convention which framed the instrument. Where the proceedings clearly point out the purpose of the provision, the aid will be valuable and satisfactory; but where the question is one of abstract meaning, it will be difficult to derive from this source much reliable assistance in interpretation. Every member of such a convention acts upon such motives and reasons as influence him personally, and the motions and debates do not necessarily indicate the purpose of a majority of a convention in adopting a particular clause. It is quite possible for a particular clause to appear so clear and unambiguous to the members of the convention as to require neither discussion nor illustration; and the few remarks made concerning it in the convention might have a plain tendency to lead directly away from the meaning in the minds of the majority. It is equally possible for a part of the members to accept a clause in one sense and
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a part in another. And even if we were certain we had attained to the meaning of the convention, it is by no means to be allowed a controlling force, especially if that meaning appears not to be the one which the words would most naturally and obviously convey. For as the constitution does not derive its force from the convention which framed, but from the people who ratified it, the intent to be arrived at is that of the people, and it is not to be supposed that they have looked for any dark and abstruse meaning in the words employed, but rather that they have accepted them in the sense most obvious to the common understanding, and ratified the instrument in the belief that was the sense designed to be conveyed. 24 It is for this reason that proceedings of constitutional conventions are less conclusive of the proper construction of the instrument than are legislative proceedings of the proper construction of the statute. 25 In the statutes, it is the intent of the legislature that is being sought, while in constitutions, it is the intent of the people that is being ascertained through the discussions and deliberations of their representatives. 26 The proper interpretation of constitutional provisions depends more on how it was understood by the people adopting it than in the framers' understanding thereof. 27 Thus, debates and proceedings of the constitutional convention are never of binding force. They may be valuable but are not necessarily decisive. 28 They may shed a useful light upon the purpose sought to be accomplished or upon the meaning attached to the words employed. And the courts are free to avail themselves of any light that may be derived from such sources, but they are not bound to adopt it as the sole ground of their decision. 29 Clearly then, a statute cannot be declared void on the sole ground that it is repugnant to a supposed intent or spirit declared in constitutional convention proceedings. D. Freedom of Association The right of association flows from freedom of expression. 30 Like the right of expression, the exercise of the right of association is not absolute. It is subject to certain limitations. Article 243 of the Labor Code reiterates the right of association of people in the labor sector. Article 243 provides: Art. 243. Coverage of 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 selforganization 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 243 guarantees the right to self-organization and association to "all persons." This seemingly allinclusive coverage of "all persons," however, actually admits of exceptions. Article 244 31 of the Labor Code mandates that all employees in the civil service, i.e, those not employed in government corporations established under the Corporation Code, may only form associations but may not collectively bargain on terms and conditions fixed by law. An employee of a cooperative who is a member and co-owner thereof cannot invoke the right of collective bargaining and negotiation vis-a-
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vis the cooperative. 32 An owner cannot bargain with himself or his co-owners. 33 Employees in foreign embassies or consulates or in foreign international organizations granted international immunities are also excluded from the right to form labor organizations. 34 International organizations are organized mainly as a means for conducting general international business in which the member-states have an interest and the immunities granted them shield their affairs from political pressure or control by the host country and assure the unimpeded performance of their functions. 35 Confidential employees have also been denied the right to form labor-organizations. Confidential employees do not constitute a distinct category for purposes of organizational right. Confidentiality may attach to a managerial or non-managerial position. We have, however, excluded confidential employees from joining labor organizations following the rationale behind the disqualification of managerial employees in Article 245. In the case of National Association of Trade Unions-Republic Planters' Bank Supervisors Chapter v. Torres, 36 we held: 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 interests 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 Article 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. 37 E. The disqualification extends only to labor organizations. It must be noted that Article 245 of the Labor Code deprives managerial employees of their right to join "labor organizations." A labor organization is defined under the Labor Code as: Art. 212 (g). "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with the employer concerning terms and conditions of employment. A labor organization has two broad rights: (1) to bargain collectively and (2) to deal with the employer concerning terms and conditions of employment. To bargain collectively is a right given to a labor organization once it registers itself with the Department of Labor and Employment (DOLE). Dealing with the employer, on the other hand, is a generic description of interaction between employer and employees concerning grievances, wages, work hours and other terms and conditions of employment, even if the employees' group is not registered with the DOLE. 38 Any labor organization which may or may not be a union may deal with the employer. This explains why a workers' Organization does not always have to be a labor union and why employer-employee collective interactions are not always collective bargaining. 39
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In the instant case, it may be argued that managerial employees' labor organization will merely "deal with the employer concerning terms and conditions of employment" especially when top management is composed of aliens, following the circumstances in the Caltex case. Although the labor organization may exist wholly for the purpose of dealing with the employer concerning terms and conditions of employment, there is no prohibition in the Labor Code for it to become a legitimate labor organization and engage in collective bargaining. Once a labor organization registers with the DOLE and becomes legitimate, it is entitled to the rights accorded under Articles 242 and 263 (b) of the Labor Code. And these include the right to strike and picket. Notably, however, Article 245 does not absolutely disqualify managerial employees from exercising their right of association. What it prohibits is merely the right to join labor organizations. Managerial employees may form associations or organizations so long as they are not labor organizations. The freedom of association guaranteed under the Constitution remains and has not been totally abrogated by Article 245. To declare Article 245 of the Labor Code unconstitutional cuts deep into our existing industrial life and will open the floodgates to unionization at all levels of the industrial hierarchy. Such a ruling will wreak havoc on the existing set-up between management and labor. If all managerial employees will be allowed to unionize, then all who are in the payroll of the company, starting from the president, vicepresident, general managers and everyone, with the exception of the directors, may go on strike or picket the employer. 40 Company officers will join forces with the supervisors and rank-and-file. Management and labor will become a solid phalanx with bargaining rights that could be enforced against the owner of the company. 41 The basic opposing forces in the industry will not be management and labor but the operating group on the one hand and the stockholder and bondholder group on the other. The industrial problem defined in the Labor Code comes down to a contest over a fair division of the gross receipts of industry between these two groups. 42 And this will certainly bring ill-effects on our economy. The framers of the Constitution could not have intended a major upheaval of our labor and socioeconomic systems. Their intent cannot be made to override substantial policy considerations and create absurd or impossible situations. 43 A constitution must be viewed as a continuously operative charter of government. It must not be interpreted as demanding the impossible or the impracticable; or as effecting the unreasonable or absurd.44 Courts should always endeavour to give such interpretation that would make the constitutional provision and the statute consistent with reason, justice and the public interest. 45 I vote to dismiss the petition. VITUG, J., separate concurring and dissenting; The pivotal issues raised in the case at bar, aptly stated by the Office of the Solicitor General, are: (1) Whether or not public respondent, Undersecretary of the Department of Labor and Employment ("DOLE") Bienvenido E. Laguesma, gravely abused his discretion in categorizing the members of petitioner union to be managerial employees and thus ineligible to form or join labor organizations; and
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(2) Whether or not the provision of Article 245 of the Labor Code, disqualifying managerial employees from joining, assisting or forming any labor organization, violates Section 8, Article III, of the 1987 Constitution, which expresses that "(t)he right of the people, including those employed in public and private sectors to form unions, associations or societies for purposes not contrary to law shall not be abridged." The case originated from a petition for direct certification or certification election among route managers/supervisory employees of Pepsi-Cola Products Phils., Inc. ("Pepsi"), filed by the United PepsiCola Supervisory Union ("Union"), claiming to be a legitimate labor organization duly registered with the Department of Labor and Employment under Registration Certificate No. NCR-UR-3-1421-95. Pepsi opposed the petition on the thesis that the case was no more than a mere duplication of a previous petition for direct certification 1 filed by the same route managers through the Pepsi-Cola Employees Association (PCEA-Supervisory) which petition had already been denied by Undersecretary Laguesma. The holding reiterated a prior decision in Workers Alliance Trade Unions ("WATU") vs. Pepsi-Cola Products Phils., Inc., 2 that route managers were managerial employees. In its decision, dated 05 May 1995, Med-Arbiter Brigida C. Fadrigon dismissed for lack of merit the petition of the Union, stating that the issue on the proper classification and status of route managers had already been ruled with finality in the previous decisions, aforementioned, rendered by DOLE. The union appealed the decision. In his resolution of 31 August 1995, Undersecretary Laguesma dismissed the appeal, saying that there was no compelling reason to abandon the ruling in the two old cases theretofore decided by DOLE. In his order of 22 September 1995, Undersecretary Laguesma denied the Union's motion for reconsideration. The Union went to this Court, via a petition for certiorari, assailing the cancellation of its certificate of registration. The Court, after considering the petition and the comments thereon filed by both public and private respondents, as well as the consolidated reply of petitioner, dismissed the case in its resolution of 08 July 1996 on the premise that no grave abuse of discretion had been committed by public respondent. Undaunted, the Union moved, with leave, for the reconsideration of the dismissal of its petition by the Court En Banc. In its resolution of 16 June 1997, the case was referred to the Court En Banc en consulta with the movant's invocation of unconstitutionality of Article 245 of the Labor Code vis-avis Section 8, Article III, of the 1987 Constitution. There is merit, in my view, in petitioner's motion for reconsideration but not on constitutional grounds. There are, in the hierarchy of management, those who fall below the level of key officers of an enterprise whose terms and conditions of employment can well be, indeed are not infrequently, provided for in collective bargaining agreements. To this group belong the supervisory employees. The "managerial employees," upon the other hand, and relating the matter particularly to the Labor Code, are those "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" as distinguished from the supervisory employees whose duties in these areas are so designed as to verily be implementary to the policies or rules and regulations already outstanding and priorly taken up and passed upon by management. The managerial level is the source, as well as prescribes the compliance, of broad mandates which, in the field of labor relations, are to be carried out through the next rank of employees charged with actually seeing to the specific personnel action required. In fine, the real authority, such as in hiring or firing of employees, comes from management and exercised by means of instructions, given
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in general terms, by the "managerial employees;" the supervisory employees, although ostensibly holding that power, in truth, however, only act in obedience to the directives handed down to them. The latter unit, unlike the former, cannot be considered the alter ego of the owner of enterprise. The duties and responsibilities of the members of petitioner union, shown by their "job description" below PCPPI RM's JOB DESCRIPTION A. GENERAL/OVERALL OBJECTIVE OF THIS POSITION To contribute to the growth and profitability of PCPPI via well-selected, trained and motivated Route Sales Team who sell, collect and merchandise, following the Pepsi Way, and consistent with Company policies and procedures as well as the corporate vision of Customer Satisfaction. B. SPECIFIC JOB DESCRIPTION: KEY RESULT AREAS STANDARD OR PERFORMANCE SALES VOLUME *100% Vs. NRC Target _____% NTG DISTRIBUTION * Product Availability 70% Pepsi 80% Seven-Up 40% Mirinda 65% Mt. Dew 5% Out of Stock ACCOUNTS RECEIVABLE 65% Current (Incl. Legal & Col.) MANAGEMENT 80:20 Cash to Credit Ratio DSO assigned Std. to Division by the District ASSET MANAGEMENT 30 cases for ice-coolers
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80 cases for electric coolers BLOWAGA on Division Vehicles 60 cases on Rolling/Permanent Kiosks TRADE DEVELOPMENT 100% Buying Customers Based on master list that bought once 5 months payback on concessions 4 CED's/Rte. EXPENSE MANAGEMENT a). 5% Absentism rate Excl. VL b). 280 cases/route/day c). 15% cost-to-sales ratio ROUTE MANAGEMENT 3 Days on RR/Wk Days on BC-SC- Financial & Co. Assets Days on TD 75% Load Factor 18 Productive Calls CUSTOMER SATISFACTION Customer Complaint attended to within the next working day HUMAN RESOURCE 5% Absentism Excl. VL MANAGEMENT (approved) 3 Documented RR/ Week using SLM's Training Log ADMINISTRATIVE Complete, timely and accurate MANAGEMENT reports.
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PCPPI RM's BASIC DAILY ACTIVITIES A. AT THE SALES OFFICE 1. PRACTICES BLOWAGA ON SERVICE VEHICLE (AT HOME) 2. REPORTS FOR WORK ON OR BEFORE 6:15 A.M. 3. REPORTS IN CLEAN AND NEAT UNIFORM (GOOD GROOMING) 4. DAILY BRIEFING WITH THE DM 5. CONDUCTS SKILLS ENHANCEMENT OR HUDDLES WITH RST's a). ATTENDANCE/GROOMING b). OPERATIONAL DIRECTIONS & PRIORITIES c). ANNOUNCEMENT 6. RM's PRESENCE DURING CHECK-OUT a). SLM PRACTICES BLOWAGA ON ROUTE TRUCK b). PRIVATE COUNSELING WITH RST (AM & PM IF NECESSARY) c). PROPER HANDLING OF SELLING/MDSG. MATERIALS d). YESTERDAY's FINAL SETTLEMENT REVIEW 7. UPDATE REPORTS, MONITORS, DOCUMENTS & TELEPHONE CONMATION 8. ATTENDS TO PRODUCT COMPLAINTS (GFM) 9. CONDUCTS ADMINISTRATIVE INVESTIGATION OR ATTENDS DM's MEETING (on Saturdays) B. FIELD WORK ROUTE RIDE 1. CHECKS SLMS. TRAINING LOG (PROGRESS & DEV'T.) 2. SALESMAN's CPC
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3. ROUTE COVERAGE EVALUATION 4. LOAD FACTOR 5. SALESMAN's ROUTING SYSTEM EVALUATION BC/SC 1. FINANCIAL & ASSET VERIFICATION, CONFIRMATION & AUDIT 2. BACKCHECKS FIRST 5 CUSTOMERS SERVED FOR THE DAY a). MERCHANDISING b). SERVICING c). RM's TERRITORY FAMILIARITY d). KEY ACCOUNTS GOODWILL TRADE DEVELOPMENT 1. PREPARATION PRIOR TO CALL 2. ACTUAL CALL 3. POST CALL ANALYSIS (HOW DID I FARE? WHY? WHAT ACTIONS TO TAKE) 4. FOLLOW-UP ACTION C. AT CLOSE OF DAY 1. MAINTAINS & UPDATES CORRECT & ACCURATE RECORDS & REPORTS 2. RM-SLM DEBRIEFING 3. SLR DISCUSSION (BASED ON A.M. SLR) 4. COORDINATES WITH DM ON PLANS & PROGRAMS 5. PREPARATIONS FOR NEXT DAY's ACTIVITIES 3 convey no more than those that are aptly consigned to the "supervisory" group by the relatively small unit of "managerial" employees. Certain portions of a pamphlet, the so-called "Route Manager Position Description" referred to by Mr. Justice Vicente Mendoza, in his ponencia, hereunder reproduced for easy reference, thus
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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 merchandising 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.
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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 include 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 merchandising 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.
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offer nothing at all that can approximate the authority and functions of those who actually and genuinely hold the reins of management. I submit, with due respect, that the members of petitioning union, not really being "managerial employees" in the true sense of the term, are not disqualified from forming or joining labor organizations under Article 245 of the Labor Code. I shall now briefly touch base on the constitutional question raised by the parties on Article 245 of the Labor Code. The Constitution acknowledges "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 . . . ." 4 Perforce, petitioner claims, that part of Article 245 5 of the Labor Code which states: "Managerial employees are not eligible to join, assist or form any labor organization," being in direct collision with the Constitutional provision, must now be declared abrogated in the law. Frankly, I do not see such a "direct collision." The Constitution did not obviously grant a limitless right "to form unions, associations or societies" for it has clearly seen it fit to subject its exercise to possible legislative judgment such as may be appropriate or, to put it in the language of the Constitution itself, to "purposes not contrary to law." Freedom of association, like freedom of expression, truly occupies a choice position in the hierarchy of constitutional values. Even while the Constitution itself recognizes the State's prerogative to qualify this right, heretofore discussed, any limitation, nevertheless, must still be predicated on the existence of a substantive evil sought to be addressed. 6 Indeed, in the exercise of police power, the State may, by law, prescribe proscriptions, provided reasonable and legitimate of course, against even the most basic rights of individuals. The restriction embodied in Article 245 of the Labor Code is not without proper rationale. Concededly, the prohibition to form labor organizations on the part of managerial employees narrows down their freedom of association. The very nature of managerial functions, however, should preclude those who exercise them from taking a position adverse to the interest they are bound to serve and protect. The mere opportunity to undermine that interest can validly be restrained. To say that the right of managerial employees to form a "labor organization" within the context and ambit of the Labor Code should be deemed totally separable from the right to bargain collectively is not justified by related provisions of the Code. For instance Art. 212. Definitions. 7 . . . (g) "Labor organization" means 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. xxx xxx xxx (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,
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effectively recommend such managerial actions if the exercise of such authority is not merely routinely 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. Art. 263. . . . (b) Workers shall have the right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and protection. The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. The maxim "ut res magis quam pereat" requires not merely that a statute should be given such a consequence as to be deemed whole but that each of its express provisions equally should be given the intended effect. I find it hard to believe that the fundamental law could have envisioned the use by managerial employees of coercive means against their own employers over matters entrusted by the latter to the former. Whenever trust and confidence is a major aspect of any relationship, a conflict of interest on the part of the person to whom that trust and confidence is reposed must be avoided and when, unfortunately, it does still arise its containment can rightly be decreed. Article 245 of the Labor Code indeed aligns itself to the Corporation Code, the basic law on by far the most commonly used business vehicle the corporation which prescribes the tenure of office, as well as the duties and functions, including terms of employment (governed in most part by the Articles of Incorporation, the By-laws of the Corporation, or resolutions of the Board of Directors), of corporate officers for both the statutory officers,i.e., the president, the treasurer and the corporate secretary, and the non-statutory officers, i.e., those who occupy positions created by the corporate by-laws who are deemed essential for effective management of the enterprise. I cannot imagine these officers as being legally and morally capable of associating themselves into a labor organization and asserting collective bargaining rights against the very entity in whose behalf they act and are supposed to act. I submit, accordingly, that, firstly, the members of petitioner union or the so-called route managers, being no more than supervisory employees, can lawfully organize themselves into a labor union within the meaning of the Labor Code, and that, secondly, the questioned provision of Article 245 of the Labor Code has not been revoked by the 1987 Constitution. WHEREFORE, I vote, given all the foregoing, for the reversal of the resolution of 31 August 1995, and the order of 22 September 1995, of public respondent. REPUBLIC OF THE PHILIPPINES vs. KAWASHIMA TEXTILE MFG., PHILIPPINES, INC.; G.R. No. 160352 July 23, 2008 The Republic of the Philippines assails by way of Petition for Review on Certiorari under Rule 45 of the Rules of Court, the December 13, 2002 Decision1 of the Court of Appeals (CA), which reversed the August 18, 2000 Decision2 of the Department of Labor and Employment (DOLE), and reinstated the May 17, 2000 Order3 of Med-Arbiter Anastacio L. Bactin, dismissing the petition of Kawashima Free Workers Union-PTGWO Local Chapter No. 803 (KFWU) for the conduct of a certification election in Kawashima
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Textile Mfg. Phils., Inc. (respondent); and the October 7, 2003 CA Resolution4 which denied the motion for reconsideration. The relevant facts are of record. On January 24, 2000, KFWU filed with DOLE Regional Office No. IV, a Petition for Certification Election to be conducted in the bargaining unit composed of 145 rank-and-file employees of respondent.5 Attached to its petition are a Certificate of Creation of Local/Chapter6 issued on January 19, 2000 by DOLE Regional Office No. IV, stating that it [KFWU] submitted to said office a Charter Certificate issued to it by the national federation Phil. Transport & General Workers Organization (PTGWO), and a Report of Creation of Local/Chapter.7 Respondent filed a Motion to Dismiss8 the petition on the ground that KFWU did not acquire any legal personality because its membership of mixed rank-and-file and supervisory employees violated Article 245 of the Labor Code, and its failure to submit its books of account contravened the ruling of the Court in Progressive Development Corporation v. Secretary, Department of Labor and Employment. 9 In an Order dated May 17, 2000, Med-Arbiter Bactin found KFWUs legal personality defective and dismissed its petition for certification election, thus: We scrutinize the facts and evidences presented by the parties and arrived at a decision that at least two (2) members of [KFWU], namely: Dany I. Fernandez and Jesus R. Quinto, Jr. are supervisory employees, having a number of personnel under them. Being supervisory employees, they are prohibited under Article 245 of the Labor Code, as amended, to join the union of the rank and file employees. Dany I. Fernandez and Jesus R. Quinto, Jr., Chief Engineers of the Maintenance and Manufacturing Department, respectively, act as foremen to the line engineers, mechanics and other non-skilled workers and responsible [for] the preparation and organization of maintenance shop fabrication and schedules, inventory and control of materials and supplies and tasked to implement training plans on line engineers and evaluate the performance of their subordinates. The above-stated actual functions of Dany I. Fernandez and Jesus R. Quinto, Jr. are clear manifestation that they are supervisory employees. xxxx Since petitioners members are mixture of rank and file and supervisory emplo yees, petitioner union, at this point [in] time, has not attained the status of a legitimate labor organization. Petitioner should first exclude the supervisory employees from it membership before it can attain the status of a legitimate labor organization. The above judgment is supported by the decision of the Supreme Court in the Toyota Case 10 wherein the High Tribunal ruled: "As respondent unions 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." (Underscoring omitted.) xxxx
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Furthermore, the commingling of rank and file and supervisory employees in one (1) bargaining unit cannot be cured in the exclusion-inclusion proceedings [at] the pre-election conference. The above ruling is supported by the Decision of the Supreme Court in Dunlop Slazenger (Phils.), Inc. vs. Honorable Secretary of Labor and Employment, et al., G.R. No. 131248 dated December 11, 1998 11 x x x. xxxx WHEREFORE, premises considered, the petition for certification election is hereby dismissed for lack of requisite legal status of petitioner to file this instant petition. SO ORDERED.12 (Emphasis supplied) On the basis of the aforecited decision, respondent filed with DOLE Regional Office No. IV a Petition for Cancellation of Charter/Union Registration of KFWU, 13 the final outcome of which, unfortunately, cannot be ascertained from the records. Meanwhile, KFWU appealed14 to the DOLE which issued a Decision on August 18, 2000, the dispositive portion of which reads: WHEREFORE, the appeal is GRANTED. The Order dated 17 May 2000 of the Med-Arbiter is REVERSED and SET ASIDE. Accordingly, let the entire 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 rankand-file employees of Kawashima Textile Manufacturing Philippines, Inc. with the following choices: 1. Kawashima Free Workers Union-PTGWO Local Chapter No. 803; and 2. No union. Pursuant to Rule XI, Section 11.1 of the New Implementing Rules, the employer is hereby directed to submit to the office of origin the certified list of current employees in the bargaining unit for the last three months prior to the issuance of this decision. SO DECIDED.15 The DOLE held that Med-Arbiter Bactin's reliance on the decisions of the Court in Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union 16 and Dunlop Slazenger, Inc. v. Secretary of Labor and Employment17 was misplaced, for while Article 245 declares supervisory employees ineligible for membership in a labor organization for rank-and-file employees, the provision did not state the effect of such prohibited membership on the legitimacy of the labor organization and its right to file for certification election. Neither was such mixed membership a ground for cancellation of its registration. Section 11, Paragraph II, Rule XI of Department Order No. 9 "provides for the dismissal of a petition for certification election based on lack of legal personality of a labor organization only on the following grounds: (1) [KFWU] is not listed by the Regional Office or the Bureau of Labor Relations in its registry of legitimate labor organizations; or (2) [KFWU's] legal personality has been revoked or canceled with finality."18 The DOLE noted that neither ground existed; on the contrary, KFWU's legal personality was well-established, for it held a certificate of creation and had been listed in the registry of legitimate labor organizations.
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As to the failure of KFWU to file its books of account, the DOLE held that such omission was not a ground for revocation of union registration or dismissal of petition for certification election, for under Section 1, Rule VI of Department Order No. 9, a local or chapter like KFWU was no longer required to file its books of account.19 Respondent filed a Motion for Reconsideration20 but the DOLE denied the same in its September 28, 2000 Resolution.21 However, on appeal by respondent, the CA rendered the December 13, 2002 Decision assailed herein, reversing the August 18, 2000 DOLE Decision, thus: Since respondent union clearly consists of both rank and file and supervisory employees, it cannot qualify as a legitimate labor organization imbued with the requisite personality to file a petition for certification election. This infirmity in union membership cannot be corrected in the inclusion-exclusion proceedings during the pre-election conference. Finally, contrary to the pronouncement of public respondent, the application of the doctrine enunciated in Toyota Motor Philippines Corporation vs. Toyota Motor Philippines Corporation Labor Union was not construed in a way that effectively denies the fundamental right of respondent union to organize and seek bargaining representation x x x. For ignoring jurisprudential precepts on the matter, the Court finds that the Undersecretary of Labor, acting under the authority of the Secretary of Labor, acted with grave abuse of discretion amounting to lack or excess of jurisdiction. WHEREFORE, premises considered, the Petition is hereby GRANTED. The Decision dated 18 August 2000 of the Undersecretary of Labor, acting under the authority of the Secretary, is hereby REVERSED and SET ASIDE. The Order dated 17 May 2000 of the Med-Arbiter dismissing the petition for certification election filed by Kawashima Free Workers Union-PTGWO Local Chapter No. 803 is REINSTATED. SO ORDERED.22 (Emphasis supplied) KFWU filed a Motion for Reconsideration 23 but the CA denied it. The Republic of the Philippines (petitioner) filed the present petition to seek closure on two issues: First, whether a mixed membership of rank-and-file and supervisory employees in a union is a ground for the dismissal of a petition for certification election in view of the amendment brought about by D.O. 9, series of 1997, which deleted the phraseology in the old rule that "[t]he appropriate bargaining unit of the rank-and-file employee shall not include the supervisory employees and/or security guards;" and Second, whether the legitimacy of a duly registered labor organization can be collaterally attacked in a petition for a certification election through a motion to dismiss filed by an employer such as Kawashima Textile Manufacturing Phils., Inc.24 The petition is imbued with merit.
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The key to the closure that petitioner seeks could have been Republic Act (R.A.) No. 9481. 25 Sections 8 and 9 thereof provide: Section 8. Article 245 of the Labor Code is hereby 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 the collective bargaining unit of the rankand-file employees but may join, assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank and file union and the supervisors' union operating within the same establishment may join the same federation or national union." Section 9. A new provision, Article 245-A is inserted into the Labor Code to read as follows: "Art. 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 ." (Emphasis supplied) Moreover, under Section 4, a pending petition for cancellation of registration will not hinder a legitimate labor organization from initiating a certification election, viz: Sec. 4. A new provision is hereby inserted into the Labor Code as Article 238-A to read as follows: "Art. 238-A. Effect of a Petition for Cancellation of Registration. - A petition for cancellation of union registration shall not suspend the proceedings for certification election nor shall it prevent the filing of a petition for certification election . In case of cancellation, nothing herein shall restrict the right of the union to seek just and equitable remedies in the appropriate courts." (Emphasis supplied) Furthermore, under Section 12 of R.A. No. 9481, employers have no personality to interfere with or thwart a petition for certification election filed by a legitimate labor organization, to wit: Sec. 12. A new provision, Article 258-A is hereby inserted into the Labor Code to read as follows: "Art. 258-A. Employer as Bystander. - In all cases, whether the petition for certification election is filed by an employer or a legitimate labor organization, the employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election. The employer's participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature; and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition ." (Emphasis supplied) However, R.A. No. 9481 took effect only on June 14, 2007;26 hence, it applies only to labor representation cases filed on or after said date.27 As the petition for certification election subject matter of the present petition was filed by KFWU on January 24, 2000, 28 R.A. No. 9481 cannot apply to it. There
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may have been curative labor legislations29 that were given retrospective effect,30 but not the aforecited provisions of R.A. No. 9481, for otherwise, substantive rights and interests already vested would be impaired in the process.31 Instead, the law and rules in force at the time of the filing by KFWU of the petition for certification election on January 24, 2000 are R.A. No. 6715,32 amending Book V of Presidential Decree (P.D.) No. 442 (Labor Code),33as amended, and the Rules and Regulations Implementing R.A. No. 6715, 34 as amended by Department Order No. 9, series of 1997.35 It is within the parameters of R.A. No. 6715 and the Implementing Rules that the Court will now resolve the two issues raised by petitioner. If there is one constant precept in our labor laws be it Commonwealth Act No. 213 (1936),36 R.A. No. 875 (1953),37 P.D. No. 442 (1974), Executive Order (E.O.) No. 111 (1986)38 or R.A. No. 6715 (1989) - it is that only a legitimate labor organization may exercise the right to be certified as the exclusive representative of all the employees in an appropriate collective bargaining unit for purposes of collective bargaining.39 What has varied over the years has been the degree of enforcement of this precept, as reflected in the shifting scope of administrative and judicial scrutiny of the composition of a labor organization before it is allowed to exercise the right of representation. One area of contention has been the composition of the membership of a labor organization, specifically whether there is a mingling of supervisory and rank-and-file employees and how such questioned mingling affects its legitimacy. It was in R.A. No. 875, under Section 3, that such questioned mingling was first prohibited, 40 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, 41 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.42 (Emphasis supplied)
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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 290,43 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 Code44 (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 ma 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. Sanchez45 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 rules46continued 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.47 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
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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, 48 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. 49 (Emphasis supplied) In Dunlop,50 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.51
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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. 52 In Pagpalain Haulers, Inc. v. Trajano,53 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/chapters officers, their addresses, and the principal office of the local/chapter; and (c) the local/ chapters constitution and by -laws; provided that where the local/chapters constitution and by -laws is the same as that of the federation or national union, this fact shall be indicated accordingly. All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President. which does not require that, for its creation and registration, a local or chapter submit a list of its members. Then came Tagaytay Highlands Intl. Golf Club, Inc. v. Tagaytay Highlands Employees Union PGTWO54 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.55Thus, 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.56
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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,57 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.58 More to the point is Air Philippines Corporation v. Bureau of Labor Relations, 59 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:60 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. 61lavvphil 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. Consequently, the Court reverses the ruling of the CA and reinstates that of the DOLE granting the petition for certification election of KFWU. Now to the second issue of whether an employer like respondent may collaterally attack the legitimacy of a labor organization by filing a motion to dismiss the latters petition for certification election. Except when it is requested to bargain collectively,62 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.63 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;64 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.65 The employer's only right in the proceeding is to be notified or informed thereof.66 The amendments to the Labor Code and its implementing rules have buttressed that policy even more. WHEREFORE, the petition is GRANTED. The December 13, 2002 Decision and October 7, 2003 Resolution of the Court of Appeals and the May 17, 2000 Order of Med-Arbiter Anastacio L. Bactin are REVERSED and SET ASIDE,while the August 18, 2000 Decision and September 28, 2000 Resolution of the Department of Labor and Employment are REINSTATED. SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION vs. HONORABLE BIENVENIDO E. LAGUESMA; G.R. No. 110399 August 15, 1997 This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to reverse and set aside the Order of public respondent, Undersecretary of the Department of Labor and Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-91 1 entitled "In Re: Petition for Certification Election Among the Supervisory and Exempt Employees of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernando and Otis, San Miguel Corporation
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Supervisors and Exempt Union, Petitioner." The Order excluded the employees under supervisory levels 3 and 4 and the so-called exempt employees from the proposed bargaining unit and ruled out their participation in the certification election. The antecedent facts are undisputed: On October 5, 1990, petitioner union filed before the Department of Labor and Employment (DOLE) a Petition for Direct Certification or Certification Election among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis. On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification election among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis as one bargaining unit. On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal, pointing out, among others, the Med-Arbiter's error in grouping together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in including supervisory levels 3 and above whose positions are confidential in nature. On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent company's Appeal and ordered the remand of the case to the Med-Arbiter of origin for determination of the true classification of each of the employees sought to be included in the appropriate bargaining unit. Upon petitioner-union's motion dated August 7, 1991, Undersecretary Laguesma granted the reconsideration prayed for on September 3, 1991 and directed the conduct of separate certification elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San Fernando and Otis. On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for Reconsideration with Motion to suspend proceedings. On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the doctrine enunciated in Philips Industrial Development, Inc . v. NLRC 2 case. Said Order reads in part: . . . Confidential employees, like managerial employees, are not allowed to form, join or assist a labor union for purposes of collective bargaining. In this case, S3 and S4 Supervisors and the so-called exempt employees are admittedly confidential employees and therefore, they are not allowed to form, join or assist a labor union for purposes of collective bargaining following the above court's ruling. Consequently, they are not allowed to participate in the certification election. WHEREFORE, the Motion is hereby granted and the Decision of this Office dated 03 September 1991 is hereby modified to the extent that employees under supervisory levels 3 and 4 (S3 and S4) and the so-called exempt employees are not allowed to join the proposed bargaining unit and are therefore excluded from those who could participate in the certification election. 3 Hence this petition. For resolution in this case are the following issues:
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1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are considered confidential employees, hence ineligible from joining a union. 2. If they are not confidential employees, do the employees of the three plants constitute an appropriate single bargaining unit. On the first issue, this Court rules that said employees do not fall within the term "confidential employees" who may be prohibited from joining a union. There is no question that the said employees, supervisors and the exempt employees, are not vested with the powers and prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are, therefore, not qualified to be classified as managerial employees who, under Article 245 4 of the Labor Code, are not eligible to join, assist or form any labor organization. In the very same provision, they are not allowed membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. The only question that need be addressed is whether these employees are properly classified as confidential employees or not. Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. 5 The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. 6 The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the ''confidential employee rule." The broad rationale behind this rule is that employees should not be placed in a position involving a potential conflict of interests . 7 "Management should not be required to handle labor relations matters through employees who are represented by the union with which the company is required to deal and who in the normal performance of their duties may obtain advance information of the company's position with regard to contract negotiations, the disposition of grievances, or other labor relations matters." 8 There have been precedents in this regards, thus in Bulletin Publishing Company v. Hon. Augusto Sanchez, 9 the Court held that "if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interest. The Union can also become company-dominated with the presence of managerial employees in Union membership." The same rationale was applied to confidential employees in " Golden Farms, Inc. v. Ferrer-Calleja" 10 and in the more recent case of "Philips Industrial Development, Inc. v. NLRC" 11 which held that confidential employees, by the very nature of their functions, assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. Therefore, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union was held equally applicable to them. 12 An important element of the "confidential employee rule" is the employee's need to use labor relations information. Thus, in determining the confidentiality of certain employees, a key question frequently considered is the employee's necessary access to confidential labor relations information. 13 It is the contention of respondent corporation that Supervisor employees 3 and 4 and the exempt employees come within the meaning of the term "confidential employees" primarily because they answered in the affirmative when asked "Do you handle confidential data or documents?" in the Position Questionnaires submitted by the Union. 14In the same questionnaire, however, it was also stated that the confidential information handled by questioned employees relate to product formulation, product standards and product specification which by no means relate to "labor relations." 15
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Granting arguendo that an employee has access to confidential labor relations information but such is merely incidental to his duties and knowledge thereof is not necessary in the performance of such duties, said access does not render the employee a confidential employee. 16 "If access to confidential labor relations information is to be a factor in the determination of an employee's confidential status, such information must relate to the employer's labor relations policies. Thus, an employee of a labor union, or of a management association, must have access to confidential labor relations information with respect to his employer, the union, or the association, to be regarded a confidential employee, and knowledge of labor relations information pertaining to the companies with which the union deals, or which the association represents, will not cause an employee to be excluded from the bargaining unit representing employees of the union or association." 17 "Access to information which is regarded by the employer to be confidential from the business standpoint, such as financial information 18 or technical trade secrets, will not render an employee a confidential employee." 19 Herein listed are the functions of supervisors 3 and higher: 1. To undertake decisions to discontinue/temporarily stop shift operations when situations require. 2. To effectively oversee the quality control function at the processing lines in the storage of chicken and other products. 3. To administer efficient system of evaluation of products in the outlets. 4. To be directly responsible for the recall, holding and rejection of direct manufacturing materials. 5. To recommend and initiate actions in the maintenance of sanitation and hygiene throughout the plant. 20 It is evident that whatever confidential data the questioned employees may handle will have to relate to their functions. From the foregoing functions, it can be gleaned that the confidential information said employees have access to concern the employer's internal business operations. As held in Westinghouse Electric Corporation v.National Labor Relations Board, 21 "an employee may not be excluded from appropriate bargaining unit merely because he has access to confidential information concerning employer's internal business operations and which is not related to the field of labor relations." It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State to guarantee to "all" workers the right to self-organization. Hence, confidential employees who may be excluded from bargaining unit must be strictly defined so as not to needlessly deprive many employees of their right to bargain collectively through representatives of their choosing. 22 In the case at bar, supervisors 3 and above may not be considered confidential employees merely because they handle "confidential data" as such must first be strictly classified as pertaining to labor relations for them to fall under said restrictions. The information they handle are properly classifiable as technical and internal business operations data which, to our mind, has no relevance to negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial. Since the employees are not classifiable under the confidential type, this Court rules that they may appropriately form a bargaining unit for purposes of collective bargaining. Furthermore, even assuming that they are confidential employees, jurisprudence has established that there is no legal prohibition against confidential employees who are not performing managerial functions to form and join a union. 23 In this connection, the issue of whether the employees of San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit needs to be threshed out.
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It is the contention of the petitioner union that the creation of three (3) separate bargaining units, one each for Cabuyao, Otis and San Fernando as ruled by the respondent Undersecretary, is contrary to the one-company, one-union policy. It adds that Supervisors level 1 to 4 and exempt employees of the three plants have a similarity or a community of interests. This Court finds the contention of the petitioner meritorious. An appropriate bargaining unit may be defined as "a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." 24 A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining. 25 It is readily seen that the employees in the instant case have "community or mutuality of interests," which is the standard in determining the proper constituency of a collective bargaining unit. 26 It is undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This means that, although they belong to three different plants, they perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities. In light of these considerations, the Solicitor General has opined that separate bargaining units in the three different plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining leverage. Any concerted activity held against the private respondent for a labor grievance in one bargaining unit will, in all probability, not create much impact on the operations of the private respondent. The two other plants still in operation can well step up their production and make up for the slack caused by the bargaining unit engaged in the concerted activity. This situation will clearly frustrate the provisions of the Labor Code and the mandate of the Constitution. 27 The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in UP v.Calleja-Ferrer where all non-academic rank and file employee of the University of the Philippines in Diliman, Quezon City, Padre Faura, Manila, Los Baos, Laguna and the Visayas were allowed to participate in a certification election. We rule that the distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs. Neither are there regional differences that are likely to impede the operations of a single bargaining representative. WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the MedArbiter on December 19, 1990 is REINSTATED under which a certification election among the supervisors (level 1 to 4) and exempt employees of the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit is ordered conducted. SUGBUANON RURAL BANK, INC. vs. HON. UNDERSECRETARY BIENVENIDO E. LAGUESMA; G.R. No. 116194 February 2, 2000 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.
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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).1wphi1.nt 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 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 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 inclusionexclusion 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 MedArbiter 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.
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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 cancelling APSOTEUTUCP'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. III
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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 (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 (Emphasis 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 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 Hence, they must be deemed managerial employees. Petitioner cites Tabacalera Insurance Co. v. National Labor Relations Commission,5 and Panday v. National Labor Relations Commission,6 to sustain its submission. InTabacalera, 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 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.
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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 Tabaculera. Their powers included recommending the hiring and appointment of his subordinates, as well as the power to recommend any promotion and/or increase.8 Here, we find 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 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 Art. 245 of the Labor Code11 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 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 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 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 of 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 problems 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 Petitioner's explanation, however, does not state who among the employees has access to information specifically relating to its labor to 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
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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 shallautomatically be conducted by the Med-Arbiter upon the filing of a petition by a legitimate labor organization.16Nothing 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 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 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 However, in the present case, none of the members of the respondent union came from the rankand-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 union membership.1wphi1.nt WHEREFORE, the instant petition is hereby DISMISSED. No pronouncement as to costs. MANILA ELECTRIC COMPANY vs. THE HON. SECRETARY OF LABOR AND EMPLOYMENT; G.R. No. 91902 May 20, 1991 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:
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On November 22, 1988, the Staff and Technical Employees Association of MERALCO (hereafter "STEAMPCWF") 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 Sec. 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. Sec. 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
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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 xxx xxx xxx (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
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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) xxx xxx xxx (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 STEAMPCWF, 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:
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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 I-VI. 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 MedArbiter, 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 exist 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)
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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.
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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. . . .
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(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 to 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; . . . xxx xxx xxx (emphasis ours) 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:
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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; xxx xxx xxx (emphasis ours) 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
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organization of the rank-and-file employees but may join, assist, or form separate labor organizations of their own. (emphasis ours) As will be noted, the second sentence of Art. 245 embodies an amendment disqualifying supervisory employeesfrom 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.
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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 story 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 establish. 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. CENTRAL NEGROS ELECTRIC COOPERATIVE, INC. (CENECO) vs. HONORABLE SECRETARY; G.R. No. 94045 September 13, 1991 In this special civil action for certiorari, petitioner Central Negros Electric Cooperative, Inc. (CENECO) seeks to annul the order 1 issued by then Acting Secretary of Labor Bienvenido E. Laguesma on June 6, 1990, declaring the projected certification election unnecessary and directing petitioner CENECO to continue recognizing private respondent CENECO Union of Rational Employees (CURE) as the sole and exclusive bargaining representative of all the rank-and-file employees of petitioner's electric cooperative for purposes of collective bargaining. It appears from the records that on August 15, 1987, CENECO entered into a collective bargaining agreement with CURE, a labor union representing its rank-and-file employees, providing for a term of three years retroactive to April 1, 1987 and extending up to March 31, 1990. On December 28, 1989, CURE wrote CENECO proposing that negotiations be conducted for a new collective bargaining agreement (CBA). On January 18, 1990, CENECO denied CURE's request on the ground that, under applicable decisions of the Supreme Court, employees who at the same time are members of an electric cooperative are not entitled to form or join a union. 2 Prior to the submission of the proposal for CBA renegotiation, CURE members, in a general assembly held on December 9, 1989, approved Resolution No. 35 whereby it was agreed that 'tall union members shall withdraw, retract, or recall the union members' membership from Central Negros Electric Cooperative, Inc. in order to avail (of) the full benefits under the existing Collective Bargaining Agreement entered into by and between CENECO and CURE, and the supposed benefits that our union may avail (of)
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under the renewed CBA. 3 This was ratified by 259 of the 362 union members. CENECO and the Department of Labor and Employment, Bacolod District, were furnished copies of this resolution. However, the withdrawal from membership was denied by CENECO on February 27, 1990 under Resolution No. 90 "for the reason that the basis of withdrawal is not among the grounds covered by Board Resolution No. 5023, dated November 22, 1989 and that said request is contrary to Board Resolution No. 5033 dated December 13, 1989, ..." 4 By reason of CENECO's refusal to renegotiate a new CBA, CURE filed a petition for direct recognition or for certification election, supported by 282 or 72% of the 388 rank-and-file employees in the bargaining unit of CENECO. CENECO filed a motion to dismiss on the ground that there are legal constraints to the filing of the certification election, citing the ruling laid down by this Court in Batangas I Electric Cooperative Labor Union vs. Romeo A. Young, 5 (BATANGAS case) to the effect that "employees who at the same time are members of an electric cooperative are not entitled to form or join unions for purposes of collective bargaining agreement, for certainly an owner cannot bargain with himself or his co-owners." Med-Arbiter Felizardo T. Serapio issued an order, 6 granting the petition for certification election which, in effect, was a denial of CENECO's motion to dismiss, and directing the holding of a certification election between CURE and No Union. CENECO appealed to the Department of Labor and Employment which issued the questioned order modifying the aforestated order of the med-arbiter by directly certifying CURE as the exclusive bargaining representative of the rank-and-file employees of CURE. Hence, this petition. Petitioner CENECO argues that respondent Secretary committed a grave abuse of discretion in not applying to the present case the doctrine enunciated in the BATANGAS case that employees of an electric cooperative who at the same time are members of the electric cooperative are prohibited from forming or joining labor unions for purposes of a collective bargaining agreement. While CENECO recognizes the employees' right to self-organization, it avers that this is not absolute. Thus, it opines that employees of an electric cooperative who at the same time are members thereof are not allowed to form or join labor unions for purposes of collective bargaining. However, petitioner does not hesitate to admit that the prohibition does not extend to employees of an electric cooperative who are not members of the cooperative. The issue, therefore, actually involves a determination of whether or not the employees of CENECO who withdrew their membership from the cooperative are entitled to form or join CURE for purposes of the negotiations for a collective bargaining agreement proposed by the latter. As culled from the records, it is the submission of CENECO that the withdrawal from membership in the cooperative and, as a consequence, the employees' acquisition of membership in the union cannot be allowed for the following reasons: 1. It was made as a subterfuge or to subvert the ruling in the BATANGAS case:
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2. To allow the withdrawal of the members of CENECO from the cooperative without justifiable reason would greatly affect the objectives and goals of petitioner as an electric cooperative; 3. The Secretary of Labor, as well as the Med-Arbiter, has no jurisdiction over the issue of the withdrawal from membership which is vested in the National Electrification Administration (NEA) which has direct control and supervision over the operations of electric cooperatives; and 4. Assuming that the Secretary has jurisdiction, CURE failed to exhaust administrative remedies by not referring the matter of membership withdrawal to the NEA. The petition is destitute of merit; certiorari will not lie. We first rule on the alleged procedural infirmities affecting the instant case. CENECO avers that the medarbiter has no jurisdiction to rule on the issue of withdrawal from membership of its employees in the cooperative which, it claims, is properly vested in the NEA which has control and supervision over all electric cooperatives. From a perusal of petitioner's motion to dismiss filed with the med-arbiter, it becomes readily apparent that the sole basis for petitioner's motion is the illegality of the employees' membership in respondent union despite the fact that they allegedly are still members of the cooperative. Petitioner itself adopted the aforesaid argument in seeking the dismissal of the petition for certification election filed with the medarbiter, and the finding made by the latter was merely in answer to the arguments advanced by petitioner. Hence, petitioner is deemed to have submitted the issue of membership withdrawal from the cooperative to the jurisdiction of the med-arbiter and it is now estopped from questioning that same jurisdiction which it invoked in its motion to dismiss after obtaining an adverse ruling thereon. Under Article 256 of the Labor Code, to have a valid certification election at least a majority of all eligible voters in the unit must have cast their votes. It is apparent that incidental to the power of the med-arbiter to hear and decide representation cases is the power to determine who the eligible voters are. In so doing, it is axiomatic that the med-arbiter should determine the legality of the employees' membership in the union. In the case at bar, it obviously becomes necessary to consider first the propriety of the employees' membership withdrawal from the cooperative before a certification election can be had. Lastly, it is petitioner herein who is actually questioning the propriety of the withdrawal of its members from the cooperative. Petitioner could have brought the matter before the NEA if it wanted to and. if such remedy had really been available, and there is nothing to prevent it from doing so. It would be absurd to fault the employees for the neglect or laxity of petitioner in protecting its own interests. The argument of CENECO that the withdrawal was merely to subvert the ruling of this Court in the BATANGAS case is without merit. The case referred to merely declared that employees who are at the same time members of the cooperative cannot join labor unions for purposes of collective bargaining. However, nowhere in said case is it stated that member-employees are prohibited from withdrawing their membership in the cooperative in order to join a labor union. As discussed by the Solicitor General, Article I, Section 9 of the Articles of Incorporation and By- Laws of CENECO provides that "any member may withdraw from membership upon compliance with such
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uniform terms and conditions as the Board may prescribe." The same section provides that upon withdrawal, the member is merely required to surrender his membership certificate and he is to be refunded his membership fee less any obligation that he has with the cooperative. There appears to be no other condition or requirement imposed upon a withdrawing member. Hence, there is no just cause for petitioner's denial of the withdrawal from membership of its employees who are also members of the union. 7 The alleged board resolutions relied upon by petitioner in denying the withdrawal of the members concerned were never presented nor their contents disclosed either before the med-arbiter or the Secretary of Labor if only to prove the ratiocination for said denial. Furthermore, CENECO never averred non-compliance with the terms and conditions for withdrawal, if any. It appears that the Articles of Incorporation of CENECO do not provide any ground for withdrawal from membership which accordingly gives rise to the presumption that the same may be done at any time and for whatever reason. In addition, membership in the cooperative is on a voluntary basis. Hence, withdrawal therefrom cannot be restricted unnecessarily. The right to join an organization necessarily includes the equivalent right not to join the same. The right of the employees to self-organization is a compelling reason why their withdrawal from the cooperative must be allowed. As pointed out by CURE, the resignation of the member- employees is an expression of their preference for union membership over that of membership in the cooperative. The avowed policy of the State to afford fall protection to labor and to promote the primacy of free collective bargaining mandates that the employees' right to form and join unions for purposes of collective bargaining be accorded the highest consideration. Membership in an electric cooperative which merely vests in the member a right to vote during the annual meeting becomes too trivial and insubstantial vis-a-vis the primordial and more important constitutional right of an employee to join a union of his choice. Besides, the 390 employees of CENECO, some of whom have never been members of the cooperative, represent a very small percentage of the cooperative's total membership of 44,000. It is inconceivable how the withdrawal of a negligible number of members could adversely affect the business concerns and operations of CENECO. We rule, however, that the direct certification ordered by respondent Secretary is not proper. By virtue of Executive Order No. 111, which became effective on March 4, 1987, the direct certification originally allowed under Article 257 of the Labor Code has apparently been discontinued as a method of selecting the exclusive bargaining agent of the workers. This amendment affirms the superiority of the certification election over the direct certification which is no longer available now under the change in said provision. 8 We have said that where a union has filed a petition for certification election, the mere fact that no opposition is made does not warrant a direct certification. 9 In said case which has similar features to that at bar, wherein the respondent Minister directly certified the union, we held that: ... As pointed out by petitioner in its petition, what the respondent Minister achieved in rendering the assailed orders was to make a mockery of the procedure provided under the law for representation cases because: ... (c) By directly certifying a Union without sufficient proof of majority representation, he has in effect arrogated unto himself the right, vested naturally in the employee's to choose their collective bargaining representative. (d) He has in effect imposed upon the petitioner the obligation to negotiate with a union whose majority representation is under serious question. This is highly irregular because while the Union enjoys the blessing of the Minister, it does not
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enjoy the blessing of the employees. Petitioner is therefore under threat of being held liable for refusing to negotiate with a union whose right to bargaining status has not been legally established. While there may be some factual variances, the rationale therein is applicable to the present case in the sense that it is not alone sufficient that a union has the support of the majority. What is equally important is that everyone be given a democratic space in the bargaining unit concerned. The most effective way of determining which labor organization can truly represent the working force is by certification election. 10 WHEREFORE, the questioned order for the direct certification of respondent CURE as the bargaining representative of the employees of petitioner CENECO is hereby ANNULLED and SET ASIDE. The medarbiter is hereby ordered to conduct a certification election among the rank-andfile employees of CENECO with CURE and No Union as the choices therein. INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION vs. HON. PURA CALLEJA; G.R. No. 85750 September 28, 1990 Consolidated on 11 December 1989, these two cases involve the validity of the claim of immunity by the International Catholic Migration Commission (ICMC) and the International Rice Research Institute, Inc. (IRRI) from the application of Philippine labor laws. I Facts and Issues A. G.R. No. 85750 the International Catholic Migration Commission (ICMC) Case . As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South Vietnam's communist rule confronted the international community. In response to this crisis, on 23 February 1981, an Agreement was forged between the Philippine Government and the United Nations High Commissioner for Refugees whereby an operating center for processing Indo-Chinese refugees for eventual resettlement to other countries was to be established in Bataan (Annex "A", Rollo, pp. 22-32). ICMC was one of those accredited by the Philippine Government to operate the refugee processing center in Morong, Bataan. It was incorporated in New York, USA, at the request of the Holy See, as a non-profit agency involved in international humanitarian and voluntary work. It is duly registered with the United Nations Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category II. As an international organization rendering voluntary and humanitarian services in the Philippines, its activities are parallel to those of the International Committee for Migration (ICM) and the International Committee of the Red Cross (ICRC) [DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol. 1]. On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then Ministry of Labor and Employment a Petition for Certification Election among the rank and file members employed by ICMC The latter opposed the petition on the ground that it is an international organization registered with the United Nations and, hence, enjoys diplomatic immunity.
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On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the petition for lack of jurisdiction. On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed the MedArbiter's Decision and ordered the immediate conduct of a certification election. At that time, ICMC's request for recognition as a specialized agency was still pending with the Department of Foreign Affairs (DEFORAF). Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF, granted ICMC the status of a specialized agency with corresponding diplomatic privileges and immunities, as evidenced by a Memorandum of Agreement between the Government and ICMC (Annex "E", Petition, Rollo, pp. 41-43), infra. ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election invoking the immunity expressly granted but the same was denied by respondent BLR Director who, again, ordered the immediate conduct of a pre-election conference. ICMC's two Motions for Reconsideration were denied despite an opinion rendered by DEFORAF on 17 October 1988 that said BLR Order violated ICMC's diplomatic immunity. Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary Injunction assailing the BLR Order. On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding of the certification election. On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia of the Court of Appeals, filed a Motion for Intervention alleging that, as the highest executive department with the competence and authority to act on matters involving diplomatic immunity and privileges, and tasked with the conduct of Philippine diplomatic and consular relations with foreign governments and UN organizations, it has a legal interest in the outcome of this case. Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention. On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the submittal of memoranda by the parties, which has been complied with. As initially stated, the issue is whether or not the grant of diplomatic privileges and immunites to ICMC extends to immunity from the application of Philippine labor laws. ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement with the Philippine Government giving it the status of a specialized agency, ( infra); (2) the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 91 on 17 May 1949 (the Philippine Instrument of Ratification was signed by the President on 30 August 1949 and deposited with the UN on 20 March 1950) infra; and (3) Article II, Section 2 of the 1987 Constitution, which declares that the Philippines adopts the generally accepted principles of international law as part of the law of the land.
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Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and seeks an affirmance of the DEFORAF determination that the BLR Order for a certification election among the ICMC employees is violative of the diplomatic immunity of said organization. Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites State policy and Philippine labor laws to justify its assailed Order, particularly, Article II, Section 18 and Article III, Section 8 of the 1987 Constitution, infra; and Articles 243 and 246 of the Labor Code, as amended, ibid. In addition, she contends that a certification election is not a litigation but a mere investigation of a nonadversary, fact-finding character. It is not a suit against ICMC its property, funds or assets, but is the sole concern of the workers themselves. B. G.R. No. 89331 (The International Rice Research Institute [IRRI] Case). Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December 1989, resolved to consolidate G.R. No. 89331 pending before it with G.R. No. 85750, the lower-numbered case pending with the Second Division, upon manifestation by the Solicitor General that both cases involve similar issues. The facts disclose that on 9 December 1959, the Philippine Government and the Ford and Rockefeller Foundations signed a Memorandum of Understanding establishing the International Rice Research Institute (IRRI) at Los Baos, Laguna. It was intended to be an autonomous, philanthropic, tax-free, nonprofit, non-stock organization designed to carry out the principal objective of conducting "basic research on the rice plant, on all phases of rice production, management, distribution and utilization with a view to attaining nutritive and economic advantage or benefit for the people of Asia and other major rice-growing areas through improvement in quality and quantity of rice." Initially, IRRI was organized and registered with the Securities and Exchange Commission as a private corporation subject to all laws and regulations. However, by virtue of Pres. Decree No. 1620, promulgated on 19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities of an international organization. The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labor organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for short) in respondent IRRI. On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV, Regional Office of the Department of Labor and Employment (DOLE). IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an international organization and granting it immunity from all civil, criminal and administrative proceedings under Philippine laws. On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres. Decree No. 1620 and dismissed the Petition for Direct Certification. On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-Arbiter's Order and authorized the calling of a certification election among the rank-and-file employees of IRRI. Said Director relied on Article 243 of the Labor Code, as amended, infra and Article XIII, Section 3 of the
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1987 Constitution, 1and held that "the immunities and privileges granted to IRRI do not include exemption from coverage of our Labor Laws." Reconsideration sought by IRRI was denied. On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR Director's Order, dismissed the Petition for Certification Election, and held that the grant of specialized agency status by the Philippine Government to the IRRI bars DOLE from assuming and exercising jurisdiction over IRRI Said Resolution reads in part as follows: Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives, privileges and immunities of an international organization is clear and explicit. It provides in categorical terms that: Art. 3 The Institute shall enjoy immunity from any penal, civil and administrative proceedings, except insofar as immunity has been expressly waived by the DirectorGeneral of the Institution or his authorized representative. Verily, unless and until the Institute expressly waives its immunity, no summons, subpoena, orders, decisions or proceedings ordered by any court or administrative or quasi-judicial agency are enforceable as against the Institute. In the case at bar there was no such waiver made by the Director-General of the Institute. Indeed, the Institute, at the very first opportunity already vehemently questioned the jurisdiction of this Department by filing an ex-parte motion to dismiss the case. Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion by respondent Secretary of Labor in upholding IRRI's diplomatic immunity. The Third Division, to which the case was originally assigned, required the respondents to comment on the petition. In a Manifestation filed on 4 August 1990, the Secretary of Labor declared that it was "not adopting as his own" the decision of the BLR Director in the ICMC Case as well as the Comment of the Solicitor General sustaining said Director. The last pleading was filed by IRRI on 14 August 1990. Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he be excused from filing a comment "it appearing that in the earlier case of International Catholic Migration Commission v. Hon. Pura Calleja, G.R. No. 85750. the Office of the Solicitor General had sustained the stand of Director Calleja on the very same issue now before it, which position has been superseded by respondent Secretary of Labor in G.R. No. 89331," the present case. The Court acceded to the Solicitor General's prayer. The Court is now asked to rule upon whether or not the Secretary of Labor committed grave abuse of discretion in dismissing the Petition for Certification Election filed by Kapisanan. Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status, privileges, prerogatives and immunities of an international organization, invoked by the Secretary of Labor, is unconstitutional in so far as it deprives the Filipino workers of their fundamental and constitutional right to form trade unions for the purpose of collective bargaining as enshrined in the 1987 Constitution. A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for entertaining IRRI'S appeal from the Order of the Director of the Bureau of Labor Relations directing the holding of a
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certification election. Kapisanan contends that pursuant to Sections 7, 8, 9 and 10 of Rule V 2 of the Omnibus Rules Implementing the Labor Code, the Order of the BLR Director had become final and unappeable and that, therefore, the Secretary of Labor had no more jurisdiction over the said appeal. On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of Rep. Act. No. 6715, which took effect on 21 March 1989, providing for the direct filing of appeal from the Med-Arbiter to the Office of the Secretary of Labor and Employment instead of to the Director of the Bureau of Labor Relations in cases involving certification election orders. III Findings in Both Cases. There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI. Article II of the Memorandum of Agreement between the Philippine Government and ICMC provides that ICMC shall have a status "similar to that of a specialized agency." Article III, Sections 4 and 5 of the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 19 on 17 May 1949, explicitly provides: Art. III, Section 4. The specialized agencies, their property and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of legal process except insofar as in any particular case they have expressly waived their immunity. It is, however, understood that no waiver of immunity shall extend to any measure of execution. Sec. 5. The premises of the specialized agencies shall be inviolable. The property and assets of the specialized agencies, wherever located and by whomsoever held shall be immune from search, requisition, confiscation, expropriation and any other form of interference, whether by executive, administrative, judicial or legislative action. (Emphasis supplied). IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is explicit in its grant of immunity, thus: Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any penal, civil and administrative proceedings, except insofar as that immunity has been expressly waived by the Director-General of the Institute or his authorized representatives. Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC'S invocation of immunity when in a Memorandum, dated 17 October 1988, it expressed the view that "the Order of the Director of the Bureau of Labor Relations dated 21 September 1988 for the conduct of Certification Election within ICMC violates the diplomatic immunity of the organization." Similarly, in respect of IRRI, the DEFORAF speaking through The Acting Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to the Secretary of Labor, maintained that "IRRI enjoys immunity from the jurisdiction of DOLE in this particular instance."
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The foregoing opinions constitute a categorical recognition by the Executive Branch of the Government that ICMC and IRRI enjoy immunities accorded to international organizations, which determination has been held to be a political question conclusive upon the Courts in order not to embarrass a political department of Government. It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a political question and courts should refuse to look beyond a determination by the executive branch of the government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the government as in the case at bar, it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the government . . . or other officer acting under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction . . . as to embarrass the executive arm of the government in conducting foreign relations, it is accepted doctrine that in such cases the judicial department of (this) government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction. 3 A brief look into the nature of international organizations and specialized agencies is in order. The term "international organization" is generally used to describe an organization set up by agreement between two or more states. 4 Under contemporary international law, such organizations are endowed with some degree of international legal personality 5 such that they are capable of exercising specific rights, duties and powers. 6 They are organized mainly as a means for conducting general international business in which the member states have an interest. 7 The United Nations, for instance, is an international organization dedicated to the propagation of world peace. "Specialized agencies" are international organizations having functions in particular fields. The term appears in Articles 57 8 and 63 9 of the Charter of the United Nations: The Charter, while it invests the United Nations with the general task of promoting progress and international cooperation in economic, social, health, cultural, educational and related matters, contemplates that these tasks will be mainly fulfilled not by organs of the United Nations itself but by autonomous international organizations established by inter-governmental agreements outside the United Nations. There are now many such international agencies having functions in many different fields, e.g. in posts, telecommunications, railways, canals, rivers, sea transport, civil aviation, meteorology, atomic energy, finance, trade, education and culture, health and refugees. Some are virtually world-wide in their membership, some are regional or otherwise limited in their membership. The Charter provides that those agencies which have "wide international responsibilities" are to be brought into relationship with the United Nations by agreements entered into between them and the Economic and Social Council, are then to be known as "specialized agencies." 10 The rapid growth of international organizations under contemporary international law has paved the way for the development of the concept of international immunities. It is now usual for the constitutions of international organizations to contain provisions conferring certain immunities on the organizations themselves, representatives of their member states and persons acting on behalf of the organizations. A series of conventions,
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agreements and protocols defining the immunities of various international organizations in relation to their members generally are now widely in force; . . . 11 There are basically three propositions underlying the grant of international immunities to international organizations. These principles, contained in the ILO Memorandum are stated thus: 1) international institutions should have a status which protects them against control or interference by any one government in the performance of functions for the effective discharge of which they are responsible to democratically constituted international bodies in which all the nations concerned are represented; 2) no country should derive any national financial advantage by levying fiscal charges on common international funds; and 3) the international organization should, as a collectivity of States members, be accorded the facilities for the conduct of its official business customarily extended to each other by its individual member States. 12 The theory behind all three propositions is said to be essentially institutional in character. "It is not concerned with the status, dignity or privileges of individuals, but with the elements of functional independence necessary to free international institutions from national control and to enable them to discharge their responsibilities impartially on behalf of all their members. 13The raison d'etre for these immunities is the assurance of unimpeded performance of their functions by the agencies concerned. The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their international character and respective purposes. The objective is to avoid the danger of partiality and interference by the host country in their internal workings. The exercise of jurisdiction by the Department of Labor in these instances would defeat the very purpose of immunity, which is to shield the affairs of international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice of member States of the organization, and to ensure the unhampered performance of their functions. ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights, which are guaranteed by Article II, Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3 (supra), of the 1987 Constitution; and implemented by Articles 243 and 246 of the Labor Code, 16 relied on by the BLR Director and by Kapisanan. For, ICMC employees are not without recourse whenever there are disputes to be settled. Section 31 of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations 17 provides that "each specialized agency shall make provision for appropriate modes of settlement of: (a) disputes arising out of contracts or other disputes of private character to which the specialized agency is a party." Moreover, pursuant to Article IV of the Memorandum of Agreement between ICMC the the Philippine Government, whenever there is any abuse of privilege by ICMC, the Government is free to withdraw the privileges and immunities accorded. Thus: Art. IV. Cooperation with Government Authorities. 1. The Commission shall cooperate at all times with the appropriate authorities of the Government to ensure the observance of Philippine laws, rules and regulations, facilitate the proper administration of justice and prevent the occurrences of any abuse of the privileges and immunities granted its officials and alien employees in Article III of this Agreement to the Commission. 2. In the event that the Government determines that there has been an abuse of the privileges and immunities granted under this Agreement, consultations shall be held between the Government and the Commission to determine whether any such abuse has
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occurred and, if so, the Government shall withdraw the privileges and immunities granted the Commission and its officials. Neither are the employees of IRRI without remedy in case of dispute with management as, in fact, there had been organized a forum for better management-employee relationship as evidenced by the formation of the Council of IRRI Employees and Management (CIEM) wherein "both management and employees were and still are represented for purposes of maintaining mutual and beneficial cooperation between IRRI and its employees." The existence of this Union factually and tellingly belies the argument that Pres. Decree No. 1620, which grants to IRRI the status, privileges and immunities of an international organization, deprives its employees of the right to self-organization. The immunity granted being "from every form of legal process except in so far as in any particular case they have expressly waived their immunity," it is inaccurate to state that a certification election is beyond the scope of that immunity for the reason that it is not a suit against ICMC. A certification election cannot be viewed as an independent or isolated process. It could tugger off a series of events in the collective bargaining process together with related incidents and/or concerted activities, which could inevitably involve ICMC in the "legal process," which includes "any penal, civil and administrative proceedings." The eventuality of Court litigation is neither remote and from which international organizations are precisely shielded to safeguard them from the disruption of their functions. Clauses on jurisdictional immunity are said to be standard provisions in the constitutions of international Organizations. "The immunity covers the organization concerned, its property and its assets. It is equally applicable to proceedings in personam and proceedings in rem." 18 We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo), wherein TUPAS calls attention to the case entitled "International Catholic Migration Commission v. NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims that, having taken cognizance of that dispute (on the issue of payment of salary for the unexpired portion of a six-month probationary employment), the Court is now estopped from passing upon the question of DOLE jurisdiction petition over ICMC. We find no merit to said submission. Not only did the facts of said controversy occur between 1983-1985, or before the grant to ICMC on 15 July 1988 of the status of a specialized agency with corresponding immunities, but also because ICMC in that case did not invoke its immunity and, therefore, may be deemed to have waived it, assuming that during that period (1983-1985) it was tacitly recognized as enjoying such immunity. Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the BLR Director, dated 15 February 1989, had not become final because of a Motion for Reconsideration filed by IRRI Said Motion was acted upon only on 30 March 1989 when Rep. Act No. 6715, which provides for direct appeals from the Orders of the Med-Arbiter to the Secretary of Labor in certification election cases either from the order or the results of the election itself, was already in effect, specifically since 21 March 1989. Hence, no grave abuse of discretion may be imputed to respondent Secretary of Labor in his assumption of appellate jurisdiction, contrary to Kapisanan's allegations. The pertinent portion of that law provides: Art. 259. Any party to an election may appeal the order or results of the election as determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the ground that the rules and regulations or parts thereof established by the Secretary of
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Labor and Employment for the conduct of the election have been violated. Such appeal shall be decided within 15 calendar days (Emphasis supplied). En passant, the Court is gratified to note that the heretofore antagonistic positions assumed by two departments of the executive branch of government have been rectified and the resultant embarrassment to the Philippine Government in the eyes of the international community now, hopefully, effaced. WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order of the Bureau of Labor Relations for certification election is SET ASIDE, and the Temporary Restraining Order earlier issued is made PERMANENT. In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of discretion having been committed by the Secretary of Labor and Employment in dismissing the Petition for Certification Election. No pronouncement as to costs. NATIONAL UNION OF WORKERS IN HOTELS, RESTAURANTS AND ALLIED INDUSTRIES- MANILA PAVILION HOTEL CHAPTER vs. SECRETARY OF LABOR AND EMPLOYMENT; G.R. No. 181531 July 31, 2009 National Union of Workers in Hotels, Restaurants and Allied Industries Manila Pavilion Hotel Chapter (NUWHRAIN-MPHC), herein petitioner, seeks the reversal of the Court of Appeals November 8, 2007 Decision1and of the Secretary of Labor and Employments January 25, 2008 Resolution 2 in OS-A-9-52-05 which affirmed the Med-Arbiters Resolutions dated January 22, 20073 and March 22, 2007.4 A certification election was conducted on June 16, 2006 among the rank-and-file employees of respondent Holiday Inn Manila Pavilion Hotel (the Hotel) with the following results: EMPLOYEES IN VOTERS LIST = 353 TOTAL VOTES CAST = NUWHRAIN-MPHC = HIMPHLU = NO UNION = SPOILED = SEGREGATED = 346 151 169 1 3 22
In view of the significant number of segregated votes, contending unions, petitioner, NUHWHRAINMPHC, and respondent Holiday Inn Manila Pavillion Hotel Labor Union (HIMPHLU), referred the case back to Med-Arbiter Ma. Simonette Calabocal to decide which among those votes would be opened and tallied. Eleven (11) votes were initially segregated because they were cast by dismissed employees, albeit the legality of their dismissal was still pending before the Court of Appeals. Six other votes were segregated because the employees who cast them were already occupying supervisory positions at the time of the election. Still five other votes were segregated on the ground that they were cast
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by probationary employees and, pursuant to the existing Collective Bargaining Agreement (CBA), such employees cannot vote. It bears noting early on, however, that the vote of one Jose Gatbonton (Gatbonton), a probationary employee, was counted. By Order of August 22, 2006, Med-Arbiter Calabocal ruled for the opening of 17 out of the 22 segregated votes, specially those cast by the 11 dismissed employees and those cast by the six supposedly supervisory employees of the Hotel. Petitioner, which garnered 151 votes, appealed to the Secretary of Labor and Employment (SOLE), arguing that the votes of the probationary employees should have been opened considering that probationary employee Gatbontons vote was tallied. And petitioner averred that respondent HIMPHLU, which garnered 169 votes, should not be immediately certified as the bargaining agent, as the opening of the 17 segregated ballots would push the number of valid votes cast to 338 (151 + 169 + 1 + 17), hence, the 169 votes which HIMPHLU garnered would be one vote short of the majority which would then become 169. By the assailed Resolution of January 22, 2007, the Secretary of Labor and Employment (SOLE), through then Acting Secretary Luzviminda Padilla, affirmed the Med-Arbiters Order. It held that pursuant to Section 5, Rule IX of the Omnibus Rules Implementing the Labor Code on exclusion and inclusion of voters in a certification election, the probationary employees cannot vote, as at the time the Med-Arbiter issued on August 9, 2005 the Order granting the petition for the conduct of the certification election, the six probationary employees were not yet hired, hence, they could not vote. The SOLE further held that, with respect to the votes cast by the 11 dismissed employees, they could be considered since their dismissal was still pending appeal. As to the votes cast by the six alleged supervisory employees, the SOLE held that their votes should be counted since their promotion took effect months after the issuance of the above-said August 9, 2005 Order of the Med-Arbiter, hence, they were still considered as rank-and-file. Respecting Gatbontons vote, the SOLE ruled that the same could be the basis to include the votes of the other probationary employees, as the records show that during the pre-election conferences, there was no disagreement as to his inclusion in the voters list, and neither was it timely challenged when he voted on election day, hence, the Election Officer could not then segregate his vote. The SOLE further ruled that even if the 17 votes of the dismissed and supervisory employees were to be counted and presumed to be in favor of petitioner, still, the same would not suffice to overturn the 169 votes garnered by HIMPHLU. In fine, the SOLE concluded that the certification of HIMPHLU as the exclusive bargaining agent was proper. Petitioners motion for reconsideration having been denied by the SOLE by Resolution of March 22, 2007, it appealed to the Court of Appeals. By the assailed Decision promulgated on November 8, 2007, the appellate court affirmed the ruling of the SOLE. It held that, contrary to petitioners assertion, the ruling in Airtime Specialist, Inc. v. Ferrer Calleja5 stating that in a certification election, all rank-and-file employees in the appropriate bargaining
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unit, whether probationary or permanent, are entitled to vote, is inapplicable to the case at bar. For, the appellate court continued, the six probationary employees were not yet employed by the Hotel at the time the August 9, 2005 Order granting the certification election was issued. It thus held that Airtime Specialist applies only to situations wherein the probationary employees were already employed as of the date of filing of the petition for certification election. Respecting Gatbontons vote, the appellate court upheld the SOLEs finding that since it was not properly challenged, its inclusion could no longer be questioned, nor could it be made the basis to include the votes of the six probationary employees. The appellate court brushed aside petitioners contention that the opening of the 17 segregated votes would materially affect the results of the election as there would be the likelihood of a run-off election in the event none of the contending unions receive a majority of the valid votes cast. It held that the "majority" contemplated in deciding which of the unions in a certification election is the winner refers to the majority of valid votes cast, not the simple majority of votes cast, hence, the SOLE was correct in ruling that even if the 17 votes were in favor of petitioner, it would still be insufficient to overturn the results of the certification election. Petitioners motion for reconsideration having been denied by Resolution of January 25, 2008, the present recourse was filed. Petitioners contentions may be summarized as follows: 1. Inclusion of Jose Gatbontons vote but excluding the vote of the six other probationary employees violated the principle of equal protection and is not in accord with the ruling in Airtime Specialists, Inc. v. Ferrer-Calleja; 2. The time of reckoning for purposes of determining when the probationary employees can be allowed to vote is not August 9, 2005 the date of issuance by Med-Arbiter Calabocal of the Order granting the conduct of certification elections, but March 10, 2006 the date the SOLE Order affirmed the Med-Arbiters Order. 3. Even if the votes of the six probationary employees were included, still, HIMPHLU could not be considered as having obtained a majority of the valid votes cast as the opening of the 17 ballots would increase the number of valid votes from 321 to 338, hence, for HIMPHLU to be certified as the exclusive bargaining agent, it should have garnered at least 170, not 169, votes. Petitioner justifies its not challenging Gatbontons vote because it was precisely its position that probationary employees should be allowed to vote. It thus avers that justice and equity dictate that since Gatbontons vote was counted, then the votes of the 6 other probationar y employees should likewise be included in the tally. Petitioner goes on to posit that the word "order" in Section 5, Rule 9 of Department Order No. 40-03 reading "[A]ll employees who are members of the appropriate bargaining unit sought to be represented by the petitioner at the time of the issuance of the order granting the conduct of certification election shall be allowed to vote" refers to an order which has already become final and executory, in this case the March 10, 2002 Order of the SOLE.
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Petitioner thus concludes that if March 10, 2006 is the reckoning date for the determination of the eligibility of workers, then all the segregated votes cast by the probationary employees should be opened and counted, they having already been working at the Hotel on such date. Respecting the certification of HIMPHLU as the exclusive bargaining agent, petitioner argues that the same was not proper for if the 17 votes would be counted as valid, then the total number of votes cast would have been 338, not 321, hence, the majority would be 170; as such, the votes garnered by HIMPHLU is one vote short of the majority for it to be certified as the exclusive bargaining agent. The relevant issues for resolution then are first, whether employees on probationary status at the time of the certification elections should be allowed to vote, and second, whether HIMPHLU was able to obtain the required majority for it to be certified as the exclusive bargaining agent. On the first issue, the Court rules in the affirmative. The inclusion of Gatbontons vote was proper not because it was not questioned but because probationary employees have the right to vote in a certification election. The votes of the six other probationary employees should thus also have been counted. As Airtime Specialists, Inc. v. Ferrer-Calleja holds: In a certification election, all rank and file employees in the appropriate bargaining unit, whether probationary or permanent 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 purposes 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." (Emphasis supplied) Rule II, Sec. 2 of Department Order No. 40-03, series of 2003, which amended Rule XI of the Omnibus Rules Implementing the Labor Code, provides: Rule II Section 2. Who may join labor unions and workers' associations. - All persons employed in commercial, industrial and agricultural enterprises, including employees of government owned or controlled corporations without original charters established under the Corporation Code, as well as employees of religious, charitable, medical or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join or assist labor unions for purposes of collective bargaining: provided, however, that supervisory employees shall not be eligible for membership in a labor union of the rank-and-file employees but may form, join or assist separate labor unions of their own. Managerial employees shall not be eligible to form, join or assist any labor unions for purposes of collective bargaining. Alien employees with valid working permits issued by the Department may exercise the right to self-organization and join or assist labor unions for purposes of collective bargaining if they are nationals of a country which grants the same or similar rights to Filipino workers, as certified by the Department of Foreign Affairs.
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For purposes of this section, any employee, whether employed for a definite period or not, shall beginning on the first day of his/her service, be eligible for membership in any labor organization. All other workers, including ambulant, intermittent and other workers, the self-employed, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection and other legitimate purposes except collective bargaining. (Emphasis supplied) The provision in the CBA disqualifying probationary employees from voting cannot override the Constitutionally-protected right of workers to self-organization, as well as the provisions of the Labor Code and its Implementing Rules on certification elections and jurisprudence thereon. A law is read into, and forms part of, a contract. Provisions in a contract are valid only if they are not contrary to law, morals, good customs, public order or public policy.6 Rule XI, Sec. 5 of D.O. 40-03, on which the SOLE and the appellate court rely to support their position that probationary employees hired after the issuance of the Order granting the petition for the conduct of certification election must be excluded, should not be read in isolation and must be harmonized with the other provisions of D.O. Rule XI, Sec. 5 of D.O. 40-03, viz: Rule XI xxxx Section 5. Qualification of voters; inclusion-exclusion. - All employees who are members of the appropriate bargaining unit sought to be represented by the petitioner at the time of the issuance of the order granting the conduct of a certification election shall be eligible to vote. An employee who has been dismissed from work but has contested the legality of the dismissal in a forum of appropriate jurisdiction at the time of the issuance of the order for the conduct of a certification election shall be considered a qualified voter, unless his/her dismissal was declared valid in a final judgment at the time of the conduct of the certification election. (Emphasis supplied) xxxx Section 13. Order/Decision on the petition. - Within ten (10) days from the date of the last hearing, the Med-Arbiter shall issue a formal order granting the petition or a decision denying the same. In organized establishments, however, no order or decision shall be issued by the Med-Arbiter during the freedom period. The order granting the conduct of a certification election shall state the following: (a) the name of the employer or establishment; (b) the description of the bargaining unit; (c) a statement that none of the grounds for dismissal enumerated in the succeeding paragraph exists;
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(d) the names of contending labor unions which shall appear as follows: petitioner union/s in the order in which their petitions were filed, forced intervenor, and no union; and (e) a directive upon the employer and the contending union(s) to submit within ten (10) days from receipt of the order, the certified list of employees in the bargaining unit, or where necessary, the payrolls covering the members of the bargaining unit for the last three (3) months prior to the issuance of the order. (Emphasis supplied) xxxx Section 21. Decision of the Secretary. - The Secretary shall have fifteen (15) days from receipt of the entire records of the petition within which to decide the appeal. The filing of the memorandum of appeal from the order or decision of the Med-Arbiter stays the holding of any certification election. The decision of the Secretary shall become final and executory after ten (10) days from receipt thereof by the parties. No motion for reconsideration of the decision shall be entertained. (Emphasis supplied) In light of the immediately-quoted provisions, and prescinding from the principle that all employees are, from the first day of their employment, eligible for membership in a labor organization, it is evident that the period ofreckoning in determining who shall be included in the list of eligible voters is, in cases where a timely appeal has been filed from the Order of the MedArbiter, the date when the Order of the Secretary of Labor and Employment, whether affirming or denying the appeal, becomes final and executory. The filing of an appeal to the SOLE from the Med-Arbiters Order stays its execution, in accordance with Sec. 21, and rationally, the Med-Arbiter cannot direct the employer to furnish him/her with the list of eligible voters pending the resolution of the appeal. During the pendency of the appeal, the employer may hire additional employees. To exclude the employees hired after the issuance of the Med-Arbiters Order but before the appeal has been resolved would violate the guarantee that every employee has the right to be part of a labor organization from the first day of their service. In the present case, records show that the probationary employees, including Gatbonton, were included in the list of employees in the bargaining unit submitted by the Hotel on May 25, 2006 in compliance with the directive of the Med-Arbiter after the appeal and subsequent motion for reconsideration have been denied by the SOLE, rendering the Med-Arbiters August 22, 2005 Order final and executory 10 days after the March 22, 2007 Resolution (denying the motion for reconsideration of the January 22 Order denying the appeal), and rightly so. Because, for purposes of self-organization, those employees are, in light of the discussion above, deemed eligible to vote. A certification election is the process of determining the sole and exclusive bargaining agent of the employees in an appropriate bargaining unit for purposes of collective bargaining. Collective bargaining, refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. 7
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The significance of an employees right to vote in a certification election cannot thus be overemphasized. For he has considerable interest in the determination of who shall represent him in negotiating the terms and conditions of his employment. Even if the Implementing Rules gives the SOLE 20 days to decide the appeal from the Order of the MedArbiter, experience shows that it sometimes takes months to be resolved. To rule then that only those employees hired as of the date of the issuance of the Med-Arbiters Order are qualified to vote would effectively disenfranchise employees hired during the pendency of the appeal. More importantly, reckoning the date of the issuance of the Med-Arbiters Order as the cut-off date would render inutile the remedy of appeal to the SOLE.1avvph!1 But while the Court rules that the votes of all the probationary employees should be included, under the particular circumstances of this case and the period of time which it took for the appeal to be decided, the votes of the six supervisory employees must be excluded because at the time the certification elections was conducted, they had ceased to be part of the rank and file, their promotion having taken effect two months before the election. As to whether HIMPHLU should be certified as the exclusive bargaining agent, the Court rules in the negative. It is well-settled that under the so-called "double majority rule," for there to be a valid certification election, majority of the bargaining unit must have voted AND the winning union must have garnered majority of the valid votes cast. Prescinding from the Courts ruling that all the probationary employees votes should be deemed valid votes while that of the supervisory employees should be excluded, it follows that the number of valid votes cast would increase from 321 to 337. Under Art. 256 of the Labor Code, the union obtaining the majority of the valid votes cast by the eligible voters shall be certified as the sole and exclusive bargaining agent of all the workers in the appropriate bargaining unit. This majority is 50% + 1. Hence, 50% of 337 is 168.5 + 1 or at least 170. HIMPHLU obtained 169 while petitioner received 151 votes. Clearly, HIMPHLU was not able to obtain a majority vote. The position of both the SOLE and the appellate court that the opening of the 17 segregated ballots will not materially affect the outcome of the certification election as for, so they contend, even if such member were all in favor of petitioner, still, HIMPHLU would win, is thus untenable. It bears reiteration that the true importance of ascertaining the number of valid votes cast is for it to serve as basis for computing the required majority, and not just to determine which union won the elections. The opening of the segregated but valid votes has thus become material. To be sure, the conduct of a certification election has a two-fold objective: to determine the appropriate bargaining unit and to ascertain the majority representation of the bargaining representative, if the employees desire to be represented at all by anyone. It is not simply the determination of who between two or more contending unions won, but whether it effectively ascertains the will of the members of the bargaining unit as to whether they want to be represented and which union they want to represent them. Having declared that no choice in the certification election conducted obtained the required majority, it follows that a run-off election must be held to determine which between HIMPHLU and petitioner should represent the rank-and-file employees. A run-off election refers to an election between the labor unions receiving the two (2) highest number of votes in a certification or consent election with three (3) or more choices, where such a certified or
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consent election results in none of the three (3) or more choices receiving the majority of the valid votes cast; provided that the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast.8 With 346 votes cast, 337 of which are now deemed valid and HIMPHLU having only garnered 169 and petitioner having obtained 151 and the choice "NO UNION" receiving 1 vote, then the holding of a run-off election between HIMPHLU and petitioner is in order. WHEREFORE, the petition is GRANTED. The Decision dated November 8, 2007 and Resolution dated January 25, 2008 of the Court of Appeals affirming the Resolutions dated January 22, 2007 and March 22, 2007, respectively, of the Secretary of Labor and Employment in OS-A-9-52-05 are ANNULLED and SET ASIDE. The Department of Labor and Employment-Bureau of Labor Relations is DIRECTED to cause the holding of a run-off election between petitioner, National Union of Workers in Hotels, Restaurants and Allied Industries-Manila Pavilion Hotel Chapter (NUWHRAIN-MPC), and respondent Holiday Inn Manila Pavilion Hotel Labor Union (HIMPHLU). HEIRS OF TEODOLO M. CRUZ vs. COURT OF INDUSTRIAL RELATIONS; G.R. No. L-2333132 December 27, 1969 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
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As recorded in this Court's decision of August 31, 1962 in Santiago Rice Mill, et al. vs. Santiago Labor Union,4which 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 (b) For overtime and premium pay from January 1, 1948 to December 31, 1952 of some 104 workers, in varying amounts.5 (c) For minimum wage differentials of P2.00 daily from September 10, 1951 to December 31, 1951 of 60 women workers TOTAL
P288,160.00
125,216.74
10,380.00 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
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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,8after 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 courten 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.
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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
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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:
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"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.)
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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 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 xxx xxx
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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
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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
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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
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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.15Respondent, 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
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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
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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
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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
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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
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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. BENJAMIN VICTORIANO vs. ELIZALDE ROPE WORKERS' UNION; G.R. No. L-25246 September 12, 1974 Appeal to this Court on purely questions of law from the decision of the Court of First Instance of Manila in its Civil Case No. 58894. The undisputed facts that spawned the instant case follow: Benjamin Victoriano (hereinafter referred to as Appellee), a member of the religious sect known as the "Iglesia ni Cristo", had been in the employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as Company) since 1958. As such employee, he was a member of the Elizalde Rope Workers' Union (hereinafter referred to as Union) which had with the Company a collective bargaining agreement containing a closed shop provision which reads as follows: Membership in the Union shall be required as a condition of employment for all permanent employees workers covered by this Agreement. The collective bargaining agreement expired on March 3, 1964 but was renewed the following day, March 4, 1964. Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment by Republic Act No. 3350, the employer was not precluded "from making an agreement with a labor organization to require as a condition of employment membership therein, if such labor organization is the representative of the employees." On June 18, 1961, however, Republic Act No. 3350 was enacted, introducing an amendment
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to paragraph (4) subsection (a) of section 4 of Republic Act No. 875, as follows: ... "but such agreement shall not cover members of any religious sects which prohibit affiliation of their members in any such labor organization". Being a member of a religious sect that prohibits the affiliation of its members with any labor organization, Appellee presented his resignation to appellant Union in 1962, and when no action was taken thereon, he reiterated his resignation on September 3, 1974. Thereupon, the Union wrote a formal letter to the Company asking the latter to separate Appellee from the service in view of the fact that he was resigning from the Union as a member. The management of the Company in turn notified Appellee and his counsel that unless the Appellee could achieve a satisfactory arrangement with the Union, the Company would be constrained to dismiss him from the service. This prompted Appellee to file an action for injunction, docketed as Civil Case No. 58894 in the Court of First Instance of Manila to enjoin the Company and the Union from dismissing Appellee. 1 In its answer, the Union invoked the "union security clause" of the collective bargaining agreement; assailed the constitutionality of Republic Act No. 3350; and contended that the Court had no jurisdiction over the case, pursuant to Republic Act No. 875, Sections 24 and 9 (d) and (e). 2 Upon the facts agreed upon by the parties during the pre-trial conference, the Court a quorendered its decision on August 26, 1965, the dispositive portion of which reads: IN VIEW OF THE FOREGOING, judgment is rendered enjoining the defendant Elizalde Rope Factory, Inc. from dismissing the plaintiff from his present employment and sentencing the defendant Elizalde Rope Workers' Union to pay the plaintiff P500 for attorney's fees and the costs of this action. 3 From this decision, the Union appealed directly to this Court on purely questions of law, assigning the following errors: I. That the lower court erred when it did not rule that Republic Act No. 3350 is unconstitutional. II. That the lower court erred when it sentenced appellant herein to pay plaintiff the sum of P500 as attorney's fees and the cost thereof. In support of the alleged unconstitutionality of Republic Act No. 3350, the Union contented, firstly, that the Act infringes on the fundamental right to form lawful associations; that "the very phraseology of said Republic Act 3350, that membership in a labor organization is banned to all those belonging to such religious sect prohibiting affiliation with any labor organization" 4 , "prohibits all the members of a given religious sect from joining any labor union if such sect prohibits affiliations of their members thereto" 5 ; and, consequently, deprives said members of their constitutional right to form or join lawful associations or organizations guaranteed by the Bill of Rights, and thus becomes obnoxious to Article III, Section 1 (6) of the 1935 Constitution. 6 Secondly, the Union contended that Republic Act No. 3350 is unconstitutional for impairing the obligation of contracts in that, while the Union is obliged to comply with its collective bargaining agreement containing a "closed shop provision," the Act relieves the employer from its reciprocal obligation of cooperating in the maintenance of union membership as a condition of employment; and that said Act, furthermore, impairs the Union's rights as it deprives the union of dues from members who, under the Act, are relieved from the obligation to continue as such members. 7
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Thirdly, the Union contended that Republic Act No. 3350 discriminatorily favors those religious sects which ban their members from joining labor unions, in violation of Article Ill, Section 1 (7) of the 1935 Constitution; and while said Act unduly protects certain religious sects, it leaves no rights or protection to labor organizations. 8 Fourthly, Republic Act No. 3350, asserted the Union, violates the constitutional provision that "no religious test shall be required for the exercise of a civil right," in that the laborer's exercise of his civil right to join associations for purposes not contrary to law has to be determined under the Act by his affiliation with a religious sect; that conversely, if a worker has to sever his religious connection with a sect that prohibits membership in a labor organization in order to be able to join a labor organization, said Act would violate religious freedom. 9 Fifthly, the Union contended that Republic Act No. 3350, violates the "equal protection of laws" clause of the Constitution, it being a discriminately legislation, inasmuch as by exempting from the operation of closed shop agreement the members of the "Iglesia ni Cristo", it has granted said members undue advantages over their fellow workers, for while the Act exempts them from union obligation and liability, it nevertheless entitles them at the same time to the enjoyment of all concessions, benefits and other emoluments that the union might secure from the employer. 10 Sixthly, the Union contended that Republic Act No. 3350 violates the constitutional provision regarding the promotion of social justice. 11 Appellant Union, furthermore, asserted that a "closed shop provision" in a collective bargaining agreement cannot be considered violative of religious freedom, as to call for the amendment introduced by Republic Act No. 3350; 12and that unless Republic Act No. 3350 is declared unconstitutional, trade unionism in this country would be wiped out as employers would prefer to hire or employ members of the Iglesia ni Cristo in order to do away with labor organizations. 13 Appellee, assailing appellant's arguments, contended that Republic Act No. 3350 does not violate the right to form lawful associations, for the right to join associations includes the right not to join or to resign from a labor organization, if one's conscience does not allow his membership therein, and the Act has given substance to such right by prohibiting the compulsion of workers to join labor organizations; 14 that said Act does not impair the obligation of contracts for said law formed part of, and was incorporated into, the terms of the closed shop agreement; 15 that the Act does not violate the establishment of religion clause or separation of Church and State, for Congress, in enacting said law, merely accommodated the religious needs of those workers whose religion prohibits its members from joining labor unions, and balanced the collective rights of organized labor with the constitutional right of an individual to freely exercise his chosen religion; that the constitutional right to the free exercise of one's religion has primacy and preference over union security measures which are merely contractual 16 ; that said Act does not violate the constitutional provision of equal protection, for the classification of workers under the Act depending on their religious tenets is based on substantial distinction, is germane to the purpose of the law, and applies to all the members of a given class; 17 that said Act, finally, does not violate the social justice policy of the Constitution, for said Act was enacted precisely to equalize employment opportunities for all citizens in the midst of the diversities of their religious beliefs." 18 I. Before We proceed to the discussion of the first assigned error, it is necessary to premise that there are some thoroughly established principles which must be followed in all cases where questions of constitutionality as obtains in the instant case are involved. All presumptions are indulged in favor of constitutionality; one who attacks a statute, alleging unconstitutionality must prove its invalidity beyond a
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reasonable doubt, that a law may work hardship does not render it unconstitutional; that if any reasonable basis may be conceived which supports the statute, it will be upheld, and the challenger must negate all possible bases; that the courts are not concerned with the wisdom, justice, policy, or expediency of a statute; and that a liberal interpretation of the constitution in favor of the constitutionality of legislation should be adopted. 19 1. Appellant Union's contention that Republic Act No. 3350 prohibits and bans the members of such religious sects that forbid affiliation of their members with labor unions from joining labor unions appears nowhere in the wording of Republic Act No. 3350; neither can the same be deduced by necessary implication therefrom. It is not surprising, therefore, that appellant, having thus misread the Act, committed the error of contending that said Act is obnoxious to the constitutional provision on freedom of association. Both the Constitution and Republic Act No. 875 recognize freedom of association. Section 1 (6) of Article III of the Constitution of 1935, as well as Section 7 of Article IV of the Constitution of 1973, provide that the right to form associations or societies for purposes not contrary to law shall not be abridged. Section 3 of Republic Act No. 875 provides that employees shall have the right to self-organization and to form, join of assist labor organizations of their own choosing for the purpose of collective bargaining and to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection. What the Constitution and the 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; and second, power, whereby an employee may, as he pleases, join or refrain from Joining an association. It is, therefore, the employee who should decide for himself whether he should join or not an association; and should he choose to join, he himself makes up his mind as to which association he would join; and even after he has joined, he still retains the liberty and the power to leave and cancel his membership with said organization at any time. 20 It is clear, therefore, that the right to join a union includes the right to abstain from joining any union. 21 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 refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn by operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of which the employer may employ only member of the collective bargaining union, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its amendment by Republic Act No. 3350, provides that although it would be an unfair labor practice for an employer "to discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization" the employer is, however, not precluded "from making an agreement with a labor organization to require as a condition of employment membership therein, if such labor organization is the representative of the employees". By virtue, therefore, of a closed shop agreement, before the enactment of Republic Act No. 3350, if any person, regardless of his religious beliefs, wishes to be employed or to keep his employment, he must become a member of the collective bargaining union. Hence, the right of said employee not to join the labor union is curtailed and withdrawn.
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To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350 introduced an exception, when it added to Section 4 (a) (4) of the Industrial Peace Act the following proviso: "but such agreement shall not cover members of any religious sects which prohibit affiliation of their members in any such labor organization". Republic Act No. 3350 merely excludes ipso jure from the application and coverage of the closed shop agreement the employees belonging to any religious sects which prohibit affiliation of their members with any labor organization. What the exception provides, therefore, is that members of said religious sects cannot be compelled or coerced to join labor unions even when said unions have closed shop agreements with the employers; that in spite of any closed shop agreement, members of said religious sects cannot be refused employment or dismissed from their jobs on the sole ground that they are not members of the collective bargaining union. It is clear, therefore, that the assailed Act, far from infringing the constitutional provision on freedom of association, upholds and reinforces it. It does not prohibit the members of said religious sects from affiliating with labor unions. It still leaves to said members the liberty and the power to affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of said religious sects prefer to sign up with the labor union, they can do so. If in deference and fealty to their religious faith, they refuse to sign up, they can do so; the law does not coerce them to join; neither does the law prohibit them from joining; and neither may the employer or labor union compel them to join. Republic Act No. 3350, therefore, does not violate the constitutional provision on freedom of association. 2. Appellant Union also contends that the Act is unconstitutional for impairing the obligation of its contract, specifically, the "union security clause" embodied in its Collective Bargaining Agreement with the Company, by virtue of which "membership in the union was required as a condition for employment for all permanent employees workers". This agreement was already in existence at the time Republic Act No. 3350 was enacted on June 18, 1961, and it cannot, therefore, be deemed to have been incorporated into the agreement. But by reason of this amendment, Appellee, as well as others similarly situated, could no longer be dismissed from his job even if he should cease to be a member, or disaffiliate from the Union, and the Company could continue employing him notwithstanding his disaffiliation from the Union. The Act, therefore, introduced a change into the express terms of the union security clause; the Company was partly absolved by law from the contractual obligation it had with the Union of employing only Union members in permanent positions, It cannot be denied, therefore, that there was indeed an impairment of said union security clause. According to Black, any statute which introduces a change into the express terms of the contract, or its legal construction, or its validity, or its discharge, or the remedy for its enforcement, impairs the contract. The extent of the change is not material. It is not a question of degree or manner or cause, but of encroaching in any respect on its obligation or dispensing with any part of its force. There is an impairment of the contract if either party is absolved by law from its performance. 22 Impairment has also been predicated on laws which, without destroying contracts, derogate from substantial contractual rights. 23 It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not absolute and unqualified. The prohibition is general, affording a broad outline and requiring construction to fill in the details. The prohibition is not to be read with literal exactness like a mathematical formula, for it prohibits unreasonable impairment only. 24 In spite of the constitutional prohibition, the State continues to possess authority to safeguard the vital interests of its people. Legislation appropriate to safeguarding said interests may modify or abrogate contracts already in effect. 25 For not only are existing laws read into contracts in order to fix the obligations as between the parties, but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. All contracts made with reference to any matter that is subject to regulation under the police power must be
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understood as made in reference to the possible exercise of that power. 26 Otherwise, important and valuable reforms may be precluded by the simple device of entering into contracts for the purpose of doing that which otherwise may be prohibited. The policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worthwhile a government which retains adequate authority to secure the peace and good order of society. The contract clause of the Constitution must, therefore, be not only in harmony with, but also in subordination to, in appropriate instances, the reserved power of the state to safeguard the vital interests of the people. It follows that not all legislations, which have the effect of impairing a contract, are obnoxious to the constitutional prohibition as to impairment, and a statute passed in the legitimate exercise of police power, although it incidentally destroys existing contract rights, must be upheld by the courts. This has special application to contracts regulating relations between capital and labor which are not merely contractual, and said labor contracts, for being impressed with public interest, must yield to the common good. 27 In several occasions this Court declared that the prohibition against impairing the obligations of contracts has no application to statutes relating to public subjects within the domain of the general legislative powers of the state involving public welfare. 28 Thus, this Court also held that the Blue Sunday Law was not an infringement of the obligation of a contract that required the employer to furnish work on Sundays to his employees, the law having been enacted to secure the well-being and happiness of the laboring class, and being, furthermore, a legitimate exercise of the police power. 29 In order to determine whether legislation unconstitutionally impairs contract obligations, no unchanging yardstick, applicable at all times and under all circumstances, by which the validity of each statute may be measured or determined, has been fashioned, but every case must be determined upon its own circumstances. Legislation impairing the obligation of contracts can be sustained when it is enacted for the promotion of the general good of the people, and when the means adopted to secure that end are reasonable. Both the end sought and the means adopted must be legitimate, i.e., within the scope of the reserved power of the state construed in harmony with the constitutional limitation of that power. 30 What then was the purpose sought to be achieved by Republic Act No. 3350? Its purpose was to insure freedom of belief and religion, and to promote the general welfare by preventing discrimination against those members of religious sects which prohibit their members from joining labor unions, confirming thereby their natural, statutory and constitutional right to work, the fruits of which work are usually the only means whereby they can maintain their own life and the life of their dependents. It cannot be gainsaid that said purpose is legitimate. The questioned Act also provides protection to members of said religious sects against two aggregates of group strength from which the individual needs protection. The individual employee, at various times in his working life, is confronted by two aggregates of power collective labor, directed by a union, and collective capital, directed by management. The union, an institution developed to organize labor into a collective force and thus protect the individual employee from the power of collective capital, is, paradoxically, both the champion of employee rights, and a new source of their frustration. Moreover, when the Union interacts with management, it produces yet a third aggregate of group strength from which the individual also needs protection the collective bargaining relationship. 31 The aforementioned purpose of the amendatory law is clearly seen in the Explanatory Note to House Bill No. 5859, which later became Republic Act No. 3350, as follows:
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It would be unthinkable indeed to refuse employing a person who, on account of his religious beliefs and convictions, cannot accept membership in a labor organization although he possesses all the qualifications for the job. This is tantamount to punishing such person for believing in a doctrine he has a right under the law to believe in. The law would not allow discrimination to flourish to the detriment of those whose religion discards membership in any labor organization. Likewise, the law would not commend the deprivation of their right to work and pursue a modest means of livelihood, without in any manner violating their religious faith and/or belief.32 It cannot be denied, furthermore, that the means adopted by the Act to achieve that purpose exempting the members of said religious sects from coverage of union security agreements is reasonable. It may not be amiss to point out here that the free exercise of religious profession or belief is superior to contract rights. In case of conflict, the latter must, therefore, yield to the former. The Supreme Court of the United States has also declared on several occasions that the rights in the First Amendment, which include freedom of religion, enjoy a preferred position in the constitutional system. 33 Religious freedom, although not unlimited, is a fundamental personal right and liberty, 34 and has a preferred position in the hierarchy of values. Contractual rights, therefore, must yield to freedom of religion. It is only where unavoidably necessary to prevent an immediate and grave danger to the security and welfare of the community that infringement of religious freedom may be justified, and only to the smallest extent necessary to avoid the danger. 3. In further support of its contention that Republic Act No. 3350 is unconstitutional, appellant Union averred that said Act discriminates in favor of members of said religious sects in violation of Section 1 (7) of Article Ill of the 1935 Constitution, and which is now Section 8 of Article IV of the 1973 Constitution, which provides: No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and the free exercise and enjoyment of religious profession and worship, without discrimination and preference, shall forever be allowed. No religious test shall be required for the exercise of civil or political rights. The constitutional provision into only prohibits legislation for the support of any religious tenets or the modes of worship of any sect, thus forestalling compulsion by law of the acceptance of any creed or the practice of any form of worship, 35 but also assures the free exercise of one's chosen form of religion within limits of utmost amplitude. It has been said that the religion clauses of the Constitution are all designed to protect the broadest possible liberty of conscience, to allow each man to believe as his conscience directs, to profess his beliefs, and to live as he believes he ought to live, consistent with the liberty of others and with the common good. 36 Any legislation whose effect or purpose is to impede the observance of one or all religions, or to discriminate invidiously between the religions, is invalid, even though the burden may be characterized as being only indirect. 37 But if the stage regulates conduct by enacting, within its power, a general law which has for its purpose and effect to advance the state's secular goals, the statute is valid despite its indirect burden on religious observance, unless the state can accomplish its purpose without imposing such burden. 38 In Aglipay v. Ruiz 39 , this Court had occasion to state that the government should not be precluded from pursuing valid objectives secular in character even if the incidental result would be favorable to a religion or sect. It has likewise been held that the statute, in order to withstand the strictures of constitutional prohibition, must have a secular legislative purpose and a primary effect that neither advances nor
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inhibits religion. 40 Assessed by these criteria, Republic Act No. 3350 cannot be said to violate the constitutional inhibition of the "no-establishment" (of religion) clause of the Constitution. The purpose of Republic Act No. 3350 is secular, worldly, and temporal, not spiritual or religious or holy and eternal. It was intended to serve the secular purpose of advancing the constitutional right to the free exercise of religion, by averting that certain persons be refused work, or be dismissed from work, or be dispossessed of their right to work and of being impeded to pursue a modest means of livelihood, by reason of union security agreements. To help its citizens to find gainful employment whereby they can make a living to support themselves and their families is a valid objective of the state. In fact, the state is enjoined, in the 1935 Constitution, to afford protection to labor, and regulate the relations between labor and capital and industry. 41 More so now in the 1973 Constitution where it is mandated that "the State shall afford protection to labor, promote full employment and equality in employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relation between workers and employers. 42 The primary effects of the exemption from closed shop agreements in favor of members of religious sects that prohibit their members from affiliating with a labor organization, is the protection of said employees against the aggregate force of the collective bargaining agreement, and relieving certain citizens of a burden on their religious beliefs; and by eliminating to a certain extent economic insecurity due to unemployment, which is a serious menace to the health, morals, and welfare of the people of the State, the Act also promotes the well-being of society. It is our view that the exemption from the effects of closed shop agreement does not directly advance, or diminish, the interests of any particular religion. Although the exemption may benefit those who are members of religious sects that prohibit their members from joining labor unions, the benefit upon the religious sects is merely incidental and indirect. The "establishment clause" (of religion) does not ban regulation on conduct whose reason or effect merely happens to coincide or harmonize with the tenets of some or all religions. 43 The free exercise clause of the Constitution has been interpreted to require that religious exercise be preferentially aided. 44 We believe that in enacting Republic Act No. 3350, Congress acted consistently with the spirit of the constitutional provision. It acted merely to relieve the exercise of religion, by certain persons, of a burden that is imposed by union security agreements. It was Congress itself that imposed that burden when it enacted the Industrial Peace Act (Republic Act 875), and, certainly, Congress, if it so deems advisable, could take away the same burden. It is certain that not every conscience can be accommodated by all the laws of the land; but when general laws conflict with scrupples of conscience, exemptions ought to be granted unless some "compelling state interest" intervenes.45 In the instant case, We see no such compelling state interest to withhold exemption. Appellant bewails that while Republic Act No. 3350 protects members of certain religious sects, it leaves no right to, and is silent as to the protection of, labor organizations. The purpose of Republic Act No. 3350 was not to grant rights to labor unions. The rights of labor unions are amply provided for in Republic Act No. 875 and the new Labor Code. As to the lamented silence of the Act regarding the rights and protection of labor unions, suffice it to say, first, that the validity of a statute is determined by its provisions, not by its silence 46 ; and, second, the fact that the law may work hardship does not render it unconstitutional. 47 It would not be amiss to state, regarding this matter, that to compel persons to join and remain members of a union to keep their jobs in violation of their religious scrupples, would hurt, rather than help, labor unions, Congress has seen it fit to exempt religious objectors lest their resistance spread to other workers, for religious objections have contagious potentialities more than political and philosophic objections.
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Furthermore, let it be noted that coerced unity and loyalty even to the country, and a fortiori to a labor union assuming that such unity and loyalty can be attained through coercion is not a goal that is constitutionally obtainable at the expense of religious liberty. 48 A desirable end cannot be promoted by prohibited means. 4. Appellants' fourth contention, that Republic Act No. 3350 violates the constitutional prohibition against requiring a religious test for the exercise of a civil right or a political right, is not well taken. The Act does not require as a qualification, or condition, for joining any lawful association membership in any particular religion or in any religious sect; neither does the Act require affiliation with a religious sect that prohibits its members from joining a labor union as a condition or qualification for withdrawing from a labor union. Joining or withdrawing from a labor union requires a positive act. Republic Act No. 3350 only exempts members with such religious affiliation from the coverage of closed shop agreements. So, under this Act, a religious objector is not required to do a positive act to exercise the right to join or to resign from the union. He is exempted ipso jure without need of any positive act on his part. A conscientious religious objector need not perform a positive act or exercise the right of resigning from the labor union he is exempted from the coverage of any closed shop agreement that a labor union may have entered into. How then can there be a religious test required for the exercise of a right when no right need be exercised? We have said that it was within the police power of the State to enact Republic Act No. 3350, and that its purpose was legal and in consonance with the Constitution. It is never an illegal evasion of a constitutional provision or prohibition to accomplish a desired result, which is lawful in itself, by discovering or following a legal way to do it. 49 5. Appellant avers as its fifth ground that Republic Act No. 3350 is a discriminatory legislation, inasmuch as it grants to the members of certain religious sects undue advantages over other workers, thus violating Section 1 of Article III of the 1935 Constitution which forbids the denial to any person of the equal protection of the laws. 50 The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid discrimination as to things that are different. 51 It does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it is to operate. The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law is not invalid because of simple inequality. 52 The very idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality. 53 All that is required of a valid classification is that it be reasonable, which means that the classification should be based on substantial distinctions which make for real differences; that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each member of the class. 54 This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. 55
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In the exercise of its power to make classifications for the purpose of enacting laws over matters within its jurisdiction, the state is recognized as enjoying a wide range of discretion. 56 It is not necessary that the classification be based on scientific or marked differences of things or in their relation. 57 Neither is it necessary that the classification be made with mathematical nicety. 58 Hence legislative classification may in many cases properly rest on narrow distinctions, 59 for the equal protection guaranty does not preclude the legislature from recognizing degrees of evil or harm, and legislation is addressed to evils as they may appear. We believe that Republic Act No. 3350 satisfies the aforementioned requirements. The Act classifies employees and workers, as to the effect and coverage of union shop security agreements, into those who by reason of their religious beliefs and convictions cannot sign up with a labor union, and those whose religion does not prohibit membership in labor unions. Tile classification rests on real or substantial, not merely imaginary or whimsical, distinctions. There is such real distinction in the beliefs, feelings and sentiments of employees. Employees do not believe in the same religious faith and different religions differ in their dogmas and cannons. Religious beliefs, manifestations and practices, though they are found in all places, and in all times, take so many varied forms as to be almost beyond imagination. There are many views that comprise the broad spectrum of religious beliefs among the people. There are diverse manners in which beliefs, equally paramount in the lives of their possessors, may be articulated. Today the country is far more heterogenous in religion than before, differences in religion do exist, and these differences are important and should not be ignored. Even from the phychological point of view, the classification is based on real and important differences. Religious beliefs are not mere beliefs, mere ideas existing only in the mind, for they carry with them practical consequences and are the motives of certain rules. of human conduct and the justification of certain acts. 60 Religious sentiment makes a man view things and events in their relation to his God. It gives to human life its distinctive character, its tone, its happiness or unhappiness its enjoyment or irksomeness. Usually, a strong and passionate desire is involved in a religious belief. To certain persons, no single factor of their experience is more important to them than their religion, or their not having any religion. Because of differences in religious belief and sentiments, a very poor person may consider himself better than the rich, and the man who even lacks the necessities of life may be more cheerful than the one who has all possible luxuries. Due to their religious beliefs people, like the martyrs, became resigned to the inevitable and accepted cheerfully even the most painful and excruciating pains. Because of differences in religious beliefs, the world has witnessed turmoil, civil strife, persecution, hatred, bloodshed and war, generated to a large extent by members of sects who were intolerant of other religious beliefs. The classification, introduced by Republic Act No. 3350, therefore, rests on substantial distinctions. The classification introduced by said Act is also germane to its purpose. The purpose of the law is precisely to avoid those who cannot, because of their religious belief, join labor unions, from being deprived of their right to work and from being dismissed from their work because of union shop security agreements. Republic Act No. 3350, furthermore, is not limited in its application to conditions existing at the time of its enactment. The law does not provide that it is to be effective for a certain period of time only. It is intended to apply for all times as long as the conditions to which the law is applicable exist. As long as there are closed shop agreements between an employer and a labor union, and there are employees who are prohibited by their religion from affiliating with labor unions, their exemption from the coverage of said agreements continues.
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Finally, the Act applies equally to all members of said religious sects; this is evident from its provision. The fact that the law grants a privilege to members of said religious sects cannot by itself render the Act unconstitutional, for as We have adverted to, the Act only restores to them their freedom of association which closed shop agreements have taken away, and puts them in the same plane as the other workers who are not prohibited by their religion from joining labor unions. The circumstance, that the other employees, because they are differently situated, are not granted the same privilege, does not render the law unconstitutional, for every classification allowed by the Constitution by its nature involves inequality. The mere fact that the legislative classification may result in actual inequality is not violative of the right to equal protection, for every classification of persons or things for regulation by law produces inequality in some degree, but the law is not thereby rendered invalid. A classification otherwise reasonable does not offend the constitution simply because in practice it results in some inequality. 61 Anent this matter, it has been said that whenever it is apparent from the scope of the law that its object is for the benefit of the public and the means by which the benefit is to be obtained are of public character, the law will be upheld even though incidental advantage may occur to individuals beyond those enjoyed by the general public. 62 6. Appellant's further contention that Republic Act No. 3350 violates the constitutional provision on social justice is also baseless. Social justice is intended to promote the welfare of all the people. 63 Republic Act No. 3350 promotes that welfare insofar as it looks after the welfare of those who, because of their religious belief, cannot join labor unions; the Act prevents their being deprived of work and of the means of livelihood. In determining whether any particular measure is for public advantage, it is not necessary that the entire state be directly benefited it is sufficient that a portion of the state be benefited thereby. Social justice also means the adoption by the Government of measures calculated to insure economic stability of all component elements of society, through the maintenance of a proper economic and social equilibrium in the inter-relations of the members of the community. 64 Republic Act No. 3350 insures economic stability to the members of a religious sect, like the Iglesia ni Cristo, who are also component elements of society, for it insures security in their employment, notwithstanding their failure to join a labor union having a closed shop agreement with the employer. The Act also advances the proper economic and social equilibrium between labor unions and employees who cannot join labor unions, for it exempts the latter from the compelling necessity of joining labor unions that have closed shop agreements and equalizes, in so far as opportunity to work is concerned, those whose religion prohibits membership in labor unions with those whose religion does not prohibit said membership. Social justice does not imply social equality, because social inequality will always exist as long as social relations depend on personal or subjective proclivities. Social justice does not require legal equality because legal equality, being a relative term, is necessarily premised on differentiations based on personal or natural conditions. 65 Social justice guarantees equality of opportunity 66 , and this is precisely what Republic Act No. 3350 proposes to accomplish it gives laborers, irrespective of their religious scrupples, equal opportunity for work. 7. As its last ground, appellant contends that the amendment introduced by Republic Act No. 3350 is not called for in other words, the Act is not proper, necessary or desirable. Anent this matter, it has been held that a statute which is not necessary is not, for that reason, unconstitutional; that in determining the constitutional validity of legislation, the courts are unconcerned with issues as to the necessity for the enactment of the legislation in question. 67 Courts do inquire into the wisdom of laws. 68 Moreover, legislatures, being chosen by the people, are presumed to understand and correctly appreciate the needs of the people, and it may change the laws accordingly. 69 The fear is entertained by appellant that unless the Act is declared unconstitutional, employers will prefer employing members of religious sects that prohibit their members from joining labor unions, and thus be a fatal blow to unionism. We do not agree.
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The threat to unionism will depend on the number of employees who are members of the religious sects that control the demands of the labor market. But there is really no occasion now to go further and anticipate problems We cannot judge with the material now before Us. At any rate, the validity of a statute is to be determined from its general purpose and its efficacy to accomplish the end desired, not from its effects on a particular case. 70 The essential basis for the exercise of power, and not a mere incidental result arising from its exertion, is the criterion by which the validity of a statute is to be measured. 71 II. We now pass on the second assignment of error, in support of which the Union argued that the decision of the trial court ordering the Union to pay P500 for attorney's fees directly contravenes Section 24 of Republic Act No. 875, for the instant action involves an industrial dispute wherein the Union was a party, and said Union merely acted in the exercise of its rights under the union shop provision of its existing collective bargaining contract with the Company; that said order also contravenes Article 2208 of the Civil Code; that, furthermore, Appellee was never actually dismissed by the defendant Company and did not therefore suffer any damage at all . 72 In refuting appellant Union's arguments, Appellee claimed that in the instant case there was really no industrial dispute involved in the attempt to compel Appellee to maintain its membership in the union under pain of dismissal, and that the Union, by its act, inflicted intentional harm on Appellee; that since Appellee was compelled to institute an action to protect his right to work, appellant could legally be ordered to pay attorney's fees under Articles 1704 and 2208 of the Civil Code. 73 The second paragraph of Section 24 of Republic Act No. 875 which is relied upon by appellant provides that: No suit, action or other proceedings shall be maintainable in any court against a labor organization or any officer or member thereof for any act done by or on behalf of such organization in furtherance of an industrial dispute to which it is a party, on the ground only that such act induces some other person to break a contract of employment or that it is in restraint of trade or interferes with the trade, business or employment of some other person or with the right of some other person to dispose of his capital or labor. (Emphasis supplied) That there was a labor dispute in the instant case cannot be disputed for appellant sought the discharge of respondent by virtue of the closed shop agreement and under Section 2 (j) of Republic Act No. 875 a question involving tenure of employment is included in the term "labor dispute". 74 The discharge or the act of seeking it is the labor dispute itself. It being the labor dispute itself, that very same act of the Union in asking the employer to dismiss Appellee cannot be "an act done ... in furtherance of an industrial dispute". The mere fact that appellant is a labor union does not necessarily mean that all its acts are in furtherance of an industrial dispute. 75 Appellant Union, therefore, cannot invoke in its favor Section 24 of Republic Act No. 875. This case is not intertwined with any unfair labor practice case existing at the time when Appellee filed his complaint before the lower court. Neither does Article 2208 of the Civil Code, invoked by the Union, serve as its shield. The article provides that attorney's fees and expenses of litigation may be awarded "when the defendant's act or omission has compelled the plaintiff ... to incur expenses to protect his interest"; and "in any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered". In the instant case, it cannot be gainsaid that appellant Union's act in demanding Appellee's dismissal caused Appellee to incur expenses to prevent his being dismissed from his job. Costs according to Section 1, Rule 142, of the Rules of Court, shall be allowed as a matter of course to the prevailing party.
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WHEREFORE, the instant appeal is dismissed, and the decision, dated August 26, 1965, of the Court of First Instance of Manila, in its Civil Case No. 58894, appealed from is affirmed, with costs against appellant Union. It is so ordered. Separate Opinions FERNANDO, J, concurring: The decision arrived at unanimously by this Court that Republic Act No. 3350 is free from the constitutional infirmities imputed to it was demonstrated in a manner wellnigh conclusive in the learned, scholarly, and comprehensive opinion so typical of the efforts of the ponente, Justice Zaldivar. Like the rest of my brethren, I concur fully. Considering moreover, the detailed attention paid to each and every objection raised as to its validity and the clarity and persuasiveness with which it was shown to be devoid of support in authoritative doctrines, it would appear that the last word has been written on this particular subject. Nonetheless, I deem it proper to submit this brief expression of my views on the transcendent character of religious freedom 1 and its primacy even as against the claims of protection to labor, 2 also one of the fundamental principles of the Constitution. 1. Religious freedom is identified with the liberty every individual possesses to worship or not a Supreme Being, and if a devotee of any sect, to act in accordance with its creed. Thus is constitutionally safeguarded, according to Justice Laurel, that "profession of faith to an active power that binds and elevates man to his Creator ...." 3 The choice of what a man wishes to believe in is his and his alone. That is a domain left untouched, where intrusion is not allowed, a citadel to which the law is denied entry, whatever be his thoughts or hopes. In that sphere, what he wills reigns supreme. The doctrine to which he pays fealty may for some be unsupported by evidence, devoid of rational foundation. No matter. There is no requirement as to its conformity to what has found acceptance. It suffices that for him such a concept holds undisputed sway. That is a recognition of man's freedom. That for him is one of the ways of selfrealization. It would be to disregard the dignity that attaches to every human being to deprive him of such an attribute. The "fixed star on our constitutional constellation," to borrow the felicitous phrase of Justice Jackson, is that no official, not excluding the highest, has it in his power to prescribe what shall be orthodox in matters of conscience or to mundane affairs, for that matter. Gerona v. Secretary of Education 4 speaks similarly. In the language of its ponente, Justice Montemayor: "The realm of belief and creed is infinite and limitless bounded only by one's imagination and thought. So is the freedom of belief, including religious belief, limitless and without bounds. One may believe in most anything, however strange, bizarre and unreasonable the same may appear to others, even heretical when weighed in the scales of orthodoxy or doctrinal standards." 5 There was this qualification though: "But between the freedom of belief and the exercise of said belief, there is quite a stretch of road to travel. If the exercise of said religious belief clashes with the established institutions of society and with the law, then the former must yield and give way to the latter. The Government steps in and either restrains said exercise or even prosecutes the one exercising it." 6 It was on that basis that the daily compulsory flag ceremony in accordance with a statute 7 was found free from the constitutional objection on the part of a religious sect, the Jehovah's Witnesses, whose members alleged that their participation would be offensive to their religious beliefs. In a case not dissimilar, West Virginia State Board of Education v. Barnette, 8 the American Supreme Court reached a contrary conclusion. Justice Jackson's eloquent opinion is, for this writer, highly persuasive. Thus: "The case is made difficult not because the principles of its decision are obscure but because the flag involved is our own. Nevertheless, we apply the limitations of the Constitution with no fear that freedom to be intellectually and spiritually diverse or even contrary will disintegrate the social organization. To believe that patriotism will not flourish if patriotic ceremonies
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are voluntary and spontaneous instead of a compulsory routine is to make an unflattering estimate of the appeal of our institutions to free minds. We can have intellectual individualism and the rich cultural diversities that we owe to exceptional minds only at the price of occasional eccentricity and abnormal attitudes. When they are so harmless to others or to the State as those we deal with here, the price is not too great. But freedom to differ is not limited to things that do not matter much. That would be a mere shadow of freedom. The test of its substance is the right to differ as to things that touch the heart of the existing order." 9 There is moreover this ringing affirmation by Chief Justice Hughes of the primacy of religious freedom in the forum of conscience even as against the command of the State itself: "Much has been said of the paramount duty to the state, a duty to be recognized, it is urged, even though it conflicts with convictions of duty to God. Undoubtedly that duty to the state exists within the domain of power, for government may enforce obedience to laws regardless of scruples. When one's belief collides with the power of the state, the latter is supreme within its sphere and submission or punishment follows. But, in the forum of conscience, duty to a moral power higher than the state has always been maintained. The reservation of that supreme obligation, as a matter of principle, would unquestionably be made by many of our conscientious and law-abiding citizens. The essence of religion is belief in a relation to God involving duties superior to those arising from any human relation." 10 The American Chief Justice spoke in dissent, it is true, but with him in agreement were three of the foremost jurists who ever sat in that Tribunal, Justices Holmes, Brandeis, and Stone. 2. As I view Justice Zaldivar's opinion in that light, my concurrence, as set forth earlier, is wholehearted and entire. With such a cardinal postulate as the basis of our polity, it has a message that cannot be misread. Thus is intoned with a reverberating clang, to paraphrase Cardozo, a fundamental principle that drowns all weaker sounds. The labored effort to cast doubt on the validity of the statutory provision in question is far from persuasive. It is attended by futility. It is not for this Court, as I conceive of the judicial function, to restrict the scope of a preferred freedom. 3. There is, however, the question of whether such an exception possesses an implication that lessens the effectiveness of state efforts to protect labor, likewise, as noted, constitutionally ordained. Such a view, on the surface, may not be lacking in plausibility, but upon closer analysis, it cannot stand scrutiny. Thought must be given to the freedom of association, likewise an aspect of intellectual liberty. For the late Professor Howe a constitutionalist and in his lifetime the biographer of the great Holmes, it even partakes of the political theory of pluralistic sovereignty. So great is the respect for the autonomy accorded voluntary societies. 11 Such a right implies at the very least that one can determine for himself whether or not he should join or refrain from joining a labor organization, an institutional device for promoting the welfare of the working man. A closed shop, on the other hand, is inherently coercive. That is why, as is unmistakably reflected in our decisions, the latest of which is Guijarno v. Court of Industrial Relations, 12 it is far from being a favorite of the law. For a statutory provision then to further curtail its operation, is precisely to follow the dictates of sound public policy. The exhaustive and well-researched opinion of Justice Zaldivar thus is in the mainstream of constitutional tradition. That, for me, is the channel to follow. ELISEO FLORA VS. VICENTE OXIMANA, G.R. NO . L-19745, January 31, 1964 Vicente Oximana is the president of the Benguet-Balatoc Workers Union (BBWU) having been elected to said position on June 20, 1960, pursuant to the provisions of constitution and by-laws of said union. Since 1948, when the union was organized, Oximana has been elected continuously as such president and has
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performed the duties and functions of said office without interruption in accordance with the provisions of said constitution and by-laws. In 1926, Oximana was convicted of the crime of abusos deshonestos for which he was sentenced to 3 years 6 months and 25 days imprisonment which he served until December 4, 1930. As a consequence, a complaint was lodged against him before the Court of Industrial Relations on February 2, 1961 by a prosecutor of said court seeking as president of the union on the strength of the previous of Section 17(e) of Republic Act 875. In this complaint, the union was made party respondent because of complainant's desire to restrain Oximana from performing the duties and functions of his office as president and to have a new election held for the purpose of electing a new qualified president. In answer to the complaint, respondents alleged that it fails to state cause of action for it does not show that it bears the sanction of at least 10% of the entire membership of the union of which Oximana was president, and that assuming that it does and Oximana was convicted of the offense which involves moral turpitude, the same is not however one of the offenses contemplated by Section 17(e) of Republic Act 875. In any event, respondents contend that the aforesaid legal provision, being penal in character, does not apply to Oximana for he has been an official of good standing long before the effectivity of Republic Act 875. When the case was called for hearing, the parties submitted a stipulation of facts wherein, among other things, it was agreed that on April 1, 1961 the President of the Philippines granted Oximana full, absolute and plenary pardon for the crime he had committed in 1926, thereby restoring him to the full enjoyment of his civil and political rights, one of which is the holding of the position now disputed by complainants. On November 29, 1961, Judge Amado C. Bugayong, who heard the case, issued an order dismissing the complaint for lack of merit. He said that were it not for the absolute pardon granted to Oximana he would have been disqualified. But said pardon has erased all the ill effects of his conviction and had restored to him all his rights and privileges as a citizen as if he had not committed the crime at all. One of such rights is to hold an office in any labor organization as the one now being held by respondent Oximana. This Order was affirmed by the court en banc. Hence, the present petition for review.1wph1.t Section 17(e) of Republic Act 875 provides as follows: No person who has been convicted of a crime involving moral turpitude shall be eligible for election to any office in a legitimate labor organization or for appointment to any position involving the collection, custody, management, control or disbursement of its funds, and any such person shall be disqualified from continuing to hold any office or such position in the organization. If the case of respondent Oximana should be considered in the light of what is provided for in the section abovequoted there would be no doubt that he would be disqualified from holding the position of president which is now being disputed by complainants for the crime for which he was convicted in 1926 is one which involves moral turpitude because the purpose of the law is indeed to disqualify one who, because of gross misconduct, has rendered himself unfit to hold any office in a legitimate labor organization. But here the situation of respondent Oximana has changed since his conviction. It appears that since the time of his conviction in 1926 up to the time the complaint for disqualification was lodged against him in 1961, a long period of time has passed, and, in the meantime, he may have reformed himself and become new and repentant man. In fact, when he organized the Benguet-Balatoc Workers' Union in 1948, he became its president and had been reelected as such continuously up to the present time without any indication that through his actuation as such official he has ever committed any misconduct or act unbecoming his office that may disqualify him to continue deserving the confidence of the union and its members. It is perhaps for this reason that on April 1, 1961 the President of the Philippines grant him full, absolute and plenary pardon which restored to him the full enjoyment of his civil and political rights one of which is the right to hold any office in any legitimate labor organization. We believe that the effect of this pardon is as
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the President of the Philippines has stated, the restoration in full of Oximana's civil and political rights, the effect of which is to blot out any evil consequences of the crime he has committed. Authorities abound supporting this view. Thus, it has been held that "A full and complete pardon, granted after conviction, removes all penalties and legal disabilities, and restores the defendant to all his civil rights." Continuing, the court went on to say that "pardon completely destroys the effect of the judgment ... (and) 'obliterates, in legal contemplation, the offense itself; and hence its effect is to make the offender a new man'" (Stephens v. State of ex rel. Goldsberry, 11 Okl. 262, 239 P. 450). In a similar vein, this Court, thru Mr. Justice Laurel, stated that "an absolute pardon not only blots out the crime committed but removes all disabilities resulting from the conviction; and that when granted after the term of imprisonment has expired, absolute pardon removes all that is left of the consequences of the conviction;" (Pelobello v. Palatino, 72 Phil. 441). And in an earlier case, this Court, thru the same Justice also stated: ... An absolute pardon not only blots out the crime committed, but removes all disabilities resulting from the conviction. In the present case, the disability is the result of conviction without which there would be no basis for disqualification from voting. Imprisonment is not the only punishment which the law imposes upon those who violate its command. There are accessory and resultant disabilities, and the pardoning power likewise extends to such disabilities. When granted after the term of imprisonment has expired, absolute pardon removes all that is left of the consequences of conviction. In the present case, while the pardon, extended to respondent Santos is conditional in the sense that "he will be eligible for appointment only to positions which are clerical or manual in nature involving no money or property responsibility," it is absolute insofar as it "restores the respondent to full civil and political rights." (Cristobal v. Labrador, et al., 71 Phil. 34, 38). We are, therefore, persuaded to affirm the view expressed by the court a quo in its order of November 29, 1961. WHEREFORE, the order appealed from is affirmed. EDUARDO TANCINCO vs. DIRECTOR PURA FERRER-CALLEJA, G.R. No. 78131 January 20, 1988 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;
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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 basis8 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 ITMMEA whereas said respondent ruled that the grounds relied upon by ANGLO for the exclusion of voters are arbitrary, whimsical and without legal basis.
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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
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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. RICARDO R. MANALAD vs. DIRECTOR CRESENCIANO B. TRAJANO; G.R. No. 72772-73 June 28, 1989 The parties herein are employees of United Dockhandlers, Inc. They are members of rival groups in the Associated Port Checkers and Workers' Union (APCWU for short) in said company, the petitioners' faction being led by petitioner Ricardo R. Manalad, with respondent Pablo B. Babula heading the group of private respondents. From their submissions, it appears that sometime in 1982, the petitioners were disqualified from running as candidates in the election of APCWU officers by the Med-Arbiter, which election had theretofore been scheduled for November 17, 1981 but was enjoined and ordered reset. 1 However, on appeal, said order was set aside by the Director of the Bureau of Labor Relations on October 31, 1984. Thereafter, the election of officers and board members of the union was held on November 26, 1984, with the candidates of the petitioners, that is, Manalad, Leano and Puerto, winning over those of the private respondents, who were Babula, Mijares and Navarro, for the positions of president, treasurer and auditor, respectively. As a consequence, the latter group filed a petition for review with this Court assailing the aforesaid order of October 31, 1984 of the Bureau of Labor Relations which had declared the aforesaid petitioners eligible to run for said union offices. 2 This case, entitled "Associated Port Checkers and Workers Union, et al. vs. Ricardo R. Manalad, et al." was docketed as G.R. Nos. 69684-85. On July 3, 1985, the Court promulgated a resolution therein, which was immediately executory, as follows: 1. To DISMISS the petition for lack of merit and to DENY all pending motions incident thereto; 2. (a) To DECLARE VACANT all the offices of the Associated Port Checkers and Workers Union, and (b) to ORDER that the petitioners headed by Pablo B. Babula who has held over as acting president since 1981, and all other persons acting as officers of the said union, to cease acting as such upon receipt of this resolution, and to turn over immediately the management of the union affairs to respondent Director of the Bureau of Labor Relations, who shall act as caretaker until after a new set of union officers shall have been elected and duly qualified as provided in the next succeeding paragraph, and accordingly, (c) to GRANT the motion to transfer the union funds to said respondent Director of the Bureau of Labor Relations as such caretaker, which funds may not be disbursed by him except for urgent union purposes and for necessary expenses of the election and which funds shall be turned over
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by him to the new set of union officers to be duly elected and qualified, as herein provided; and 3. To ORDER the holding of a special election of union officers under the supervision of the National Capital Region Labor Office not later than Saturday, July 20, 1985, which shall be governed by the union's 1978 Constitution and By-Laws as amended in 1981 (disregarding all subsequent amendments) and the outcome of which shall be immediately certified as to the president and officers of the union who shall forthwith assume and discharge the functions of the respective offices to which they shall have been thus elected. 3 Pursuant thereto, the Director of the Bureau of Labor Relations issued an order on July 10, 1985 to the effect that he was taking over the management of the affairs of said union, ordering private respondents Babula and all other persons to cease acting as officers of the union, and requiring them to turn over the union funds to said director. 4Subsequently, the Court's aforesaid resolution of July 3, 1985 was modified on July 17, 1985 by providing that the special election scheduled on July 20, 1985 shall be held under the personal supervision of respondent Director Trajano, with the assistance of his staff, under the usual rules and applying suppletorily the union's 1978 constitution and by-laws. 5 Meanwhile, on July 13, 1985, a motion was filed by the petitioners with this Court in G.R. No. 69684-85 asking that the private respondents be cited in contempt and for their disqualification from running in the projected special election due to their alleged refusal to comply with the resolution above quoted. 6 The petitioner also wrote a letter to the Director on July 18, 1985 objecting to the candidacy of private respondents. 7 Nevertheless, the scheduled special election was held resulting in the victory of the candidates of the private respondents. Petitioner then filed a motion with the Court for the annulment of the special election, repeating their allegation that there was non-compliance with the Court's resolution of July 3, 1985 by private respondents. 8 On July 26, 1985, respondent Director issued a resolution proclaiming private respondents as the winners in the special election and duly elected officers of APCWU, with the following observation: "The submission that Mr. Babula failed to completely turn over management of the union to the undersigned is within the competence and authority of the Supreme Court to pass upon considering that the mandate for such a turn-over came from the Court. 9 Petitioners filed with respondent director a motion for reconsideration on August 2, 1985 seeking he reversal of said resolution of July 26, 1985. This motion having been denied, petitioner filed a second motion for reconsideration on August 28, 1985 but the same was likewise denied on October 14, 1985. 10 In the meantime, this Court in a resolution dated September 1, 1985 denied the motion of the petitioner to annul the special election of July 20, 1985, but without prejudice to the filing of a proper petition with the Bureau of Labor Relations. 11 The instant petition was thereafter filed, principally praying:
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1. That the questioned Resolution dated July 26, 1985 (Annex 'A'), Order dated August 19, 1985 (Annex 'B'), and Order dated October 4, 1986 (Annex 'C') of public respondent Cresenciano B. Trajano, Director of Bureau of Labor Relations be reversed and set aside; 2. That respondents Pablo B. Babula and his group be disqualified for not complying with the Resolution dated July 3, 1985 (Annex 'D') of this Honorable Court and the votes cast in their favor in the July 20, 1985 election be invalidated and the candidates who received the next highest number of votes in said election be declared the winner thereof; 3. Or in the alternative, that the election held in (sic) July 20, 1985 be annulled and a new election be called three weeks after respondents Pablo Babula, et al. have complied with the conditions imposed by the Resolution dated July 3, 1985 of this Honorable Court and an audit has been made of the different funds of the Union for the year 1985; 12 xxx xxx xxx We gave due course to this petition on April 9, 1986 but petitioners' motion for a writ of preliminary injunction was denied. 13 In an urgent motion, dated November 18, 1987, petitioners prayed that "in the event that they win the present case this Honorable Court upholds the November 24, (sic) 1984 election, the three-year term of office of petitioners should commence only after the finality of the resolution/decision to be rendered in the case at bar; that a restraining order be issued enjoining the holding of the new election of union officers until the final disposition of the instant case so as not to render the issue raised herein moot and academic." 14 We denied this motion on May 25, 1988 for lack of merit, considering that "(w)hen this Court, through its First Division called for the holding of special elections of union officers in G.R. Nos. 69684-85, there was an implied nullification of the refusal of the November 26, 1984 elections. This being the case, and petitioners having participated in the special elections held on July 20, 1985, they cannot now claim a right to the positions under consideration on the basis of said voided November 26, 1984 elections. 15 Meanwhile, the three-year term of the private respondents under the disputed July 20, 1985 elections expired on July 20, 1988, hence We resolved to require the petitioners to show cause why these cases should not be dismissed for being moot and academic. 16 Responding thereto, petitioners reiterated their position stated in their urgent motion, dated November 27, 1987, that they be declared the winners is said election with their terms of three (3) years to commence from the time they assume office in execution of a final and executory resolution this Court. 17 On November 17, 1988, petitioners filed a motion to restrain the holding of a new election of officers of the union scheduled on November 28, 1988. However, before any action could be taken on said motion the election was held as scheduled, hence the petitioner filed a motion, dated December 1, 1988, to annul said election. After a careful consideration of the facts of this case, We are of the considered view that the expiration of the terms of office of the union officers and the election of officers on November 28, 1988 have rendered the issues raised by petitioners in this case moot and academic. It is pointless and unrealistic to insist on annulling an election of officers whose terms had already expired. We would have thereby a judgment on a matter which cannot have any practical legal effect upon a controversy, even if existing, 18 and which, in
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the nature of things, cannot be enforced. We must consequently abide by our consistent ruling that where certain events or circumstances have taken place during the pendency of the case which would render the case moot and academic, the petition should be dismissed. 19 Moreover, it is the better part of conventional or pragmatic solutions in cases of this nature, absent overriding considerations to the contrary, to respect the will of the majority of the workers who voted in the November 28, 1988 elections. Although decreed under a different setting, it is apropos to recall in this case Our ruling that where 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 his faults or misconduct, if he had been guilty of any. 20 We agree with the petitioners that disobedience to a resolution of this Court should not be left unpunished. However, before the alleged disobedient party may be cited for contempt, the allegations against him should be clearly established. The contentions of petitioners, even disregarding some evidential deficiencies, do not adequately establish the basis for contempt. On the contrary, respondents have satisfactorily answered the averments thereon. At this juncture, it would further be appropriate to remind petitioners that even if the disqualification of private respondents could be justified, the candidates of petitioners certainly cannot be declared as the winners in the disputed election. The mere fact that they obtained the second highest number of votes does not mean that they will thereby be considered as the elected officers if the true winners are disqualified. ACCORDINGLY, this case is DISMISSED for being moot and academic. DEL PILAR ACADEMY vs. DEL PILAR ACADEMY EMPLOYEES UNION; G.R. No. 170112 , April 30, 2008 Before this Court is a petition for review on certiorari assailing the July 19, 2005 Decision1 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)3granting 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.
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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.
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As it is, [DEL PILARs] unwarranted fear re-individual dues [without] authorization for nonunion 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 11 th 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 members right to self organization or that the [petitioners] were in bad fa ith. If at all, its (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 workers 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 Arbiters ruling. In gist, it upheld the UNIONs right to agency fee, but did not consider DEL PILARs failure to deduct the same an unfair labor practice.6 The UNIONs 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 UNIONs 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. SO ORDERED.8 DEL PILAR filed a motion for reconsideration of the decision, but the CA denied the same on September 28, 2005.9
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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 The issue here boils down to whether or not the UNION is entitled to collect agency fees from non-union members, and if so, whether an individual written authorization is necessary for a valid check off. 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 nonteaching 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 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
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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 UNIONs entitlement to, agency fees. Accordingly, no requirement of written authorization from the non-union 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 quasicontractual, 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 UNIONs right to collect agency fees. WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CAG.R. SP No. 86868, are AFFIRMED. EVANGELINE J. GABRIEL vs. THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT; G.R. No. 115949, March 16, 2000 Before us is a special civil action for certiorari seeking to reverse partially the Order1 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
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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 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 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 On appeal, the Secretary of Labor rendered a Resolution6 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 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 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 legal benefits to the employees under the new CBA satisfies the legal requirements for such assessment.9 Private respondents, on the other hand, claim that the checkoff 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 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 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
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The pertinent legal provisions on check-offs are found in Article 222 (b) and Article 241 (o) of the Labor Code. Art. 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 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. (Emphasis ours) Art. 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 . (Emphasis ours). Art. 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-Calleja 13 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. NLRC 14 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 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. (Emphasis ours.) We likewise ruled in Bank of the Philippine Islands Employees Union-Association Labor Union (BPIEUALU) vs. NLRC, 16
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. . . 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. (Emphasis ours.)1wphi1 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. HOLY CROSS OF DAVAO COLLEGE, INC. vs. HON. JEROME JOAQUIN; G.R. No. 110007 October 18, 1996 A collective bargaining agreement, effective from June 1, 1986 to May 31, 1989 was entered into between petitioner Holy Cross of Davao College, Inc. (hereafter Holy Cross), an educational institution, and the affiliate labor organization representing its employees, respondent Holy Cross of Davao College UnionKAMAPI (hereafter KAMAPI). Shortly before the expiration of the agreement, KAMAPI President, Jose Lagahit, wrote Holy Cross under date of April 12, 1989 expressing his union's desire to renew the agreement, withal seeking its extension for two months, or until July 31, 1989, on the ground that the teachers were still on summer vacation and union activities necessary or incident to the negotiation of a new agreement could not yet be conducted. 1 Holy Cross President Emilio P. Palma-Gil replied that he had no objection to the extension sought, it being allowable under the collective bargaining agreement. 2 On July 24, 1989, Jose Lagahit convoked a meeting of the KAMAPI membership for the purpose of electing a new set of union officers, at which Rodolfo Gallera won election as president. To the surprise of many, and with resultant dissension among the membership, Gallera forthwith initiated discussions for the union's disaffiliation from the KAMAPI Federation. Gallera's group subsequently formed a separate organization known as the Holy Cross of Davao College Teachers Union, and elected its own officers. For its part, the existing union, KAMAPI, sent to the School its proposals for a new collective bargaining contract; this it did on July 31, 1989, the expiry date of the two-month extension it had sought. 3 Holy Cross thereafter stopped deducting from the salaries and wages of its teachers and employees the corresponding union dues and special assessments (payable by union members), and agency fees (payable by non-members), in accordance with the check-off clause of the CBA, 4 prompting KAMAPI, on September 1, 1989, to demand an explanation. In the meantime, there ensued between the two unions a full-blown action on the basic issue of representation, which was to last for some two years. It began with the filing by the new union (headed by Gallera) of a petition for certification election in the Office of the Med-Arbiter. 5 KAMAPI responded by filing a motion asking the Med-Arbiter to dismiss the petition. On August 31, 1989, KAMAPI also advised Holy Cross of the election of a new set officers who would also comprise its negotiating panel. 6
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The Med-Arbiter denied KAMAPI's motion to dismiss, and ordered the holding of a certification election. On appeal, however, the Secretary of Labor reversed the Med-Arbiter's ruling and ordered the dismissal of the petition for certification election, which action was eventually sustained by this Court in appropriate proceedings. After its success in the certification election case KAMAPI presented, on April 11, 1991, revised bargaining proposals to Holy Cross; 7 and on July 11, 1991, it sent a letter to the School asking for its counterproposals. The School replied, that it did not know if the Supreme Court had in fact affirmed the Labor Secretary's decision in favor of KAMAPI as the exclusive bargaining representative of the School employees, whereupon KAMAPI's counsel furnished it with a copy of the Court's resolution to that effect; and on September 7, 1991, KAMAPI again wrote to Holy Cross asking for its counter-proposals as regards the terms of a new CBA. In response, Holy Cross declared that it would take no action towards a new CBA without a "definitive ruling" on the proper interpretation of Article I of the old CBA which should have expired on May 31, 1989 (but, as above stated, had been extended for two months at the KAMAPI's request). Said Article provides inter alia for the automatic extension of the CBA for another period of three (3) years counted from its expiration, if the parties fail to agree on a renewal, modification or amendment thereof. It appears, in fact, that the opinion of the DOLE Regional Director on the meaning and import of said Article I had earlier been sought by the College president, Emilio Palma Gil. 8 KAMAPI then sent another letter to Holy Cross, this time accusing it of unfair labor practice for refusing to bargain despite the former's repeated demands; and on the following day, it filed a notice of strike with the National Mediation and Conciliation Board. 9 KAMAPI and Holy Cross were ordered to appear before Conciliator-Mediator Agapito J. Adipen on October 2, 1991. Several conciliation meetings were thereafter held between them, and when these failed to bring about any amicable settlement, the parties agreed to submit the case to voluntary arbitration. 10 Both parties being of the view that the dispute did indeed revolve around the interpretation of 1 and 2 of Article I of the CBA, they submitted position papers explicitly dealing with the following issues presented by them for resolution to the voluntary arbitrator: a. Whether or not the CBA which expired on May 31, 1989 was automatically renewed and did not serve merely as a holdover CBA; and b. Whether or not there was refusal to negotiate on the part of the Holy Cross of Davao College. On both issues, Voluntary Arbitrator Jerome C. Joaquin found in favor of KAMAPI. Respecting the matter of the automatic renewal of the bargaining agreement, the Voluntary Arbitrator ruled that the request for extension filed by KAMAPI constituted seasonable notice of its intention to renew, modify or amend the agreement, which it could not however pursue because of the absence of the teachers who were then on summer vacation. 11 He rejected the contention of Holy Cross that KAMAPI had unreasonably delayed (until July 31, 1989) the submission of bargaining proposals, opining that the delay was partly attributable to the School's prolonged inaction on KAMAPI's request for extension of the CBA. He also ruled that Holy Cross was estopped from claiming automatic renewal of the CBA because it ceased to implement the check-off provision embodied in the CBA, declaring said School's argument that a "definitive ruling" by the DOLE on the correct interpretation of the automatic-extension clause of the old CBA was a condition precedent to negotiations for a new CBA to be a mere afterthought set up to justify its refusal to bargain with KAMAPI after the latter had proven that it was the legally-empowered bargaining agent of the school employees. In the dispositive portion of his award, the Voluntary Arbitrator ordered Holy Cross to:
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1. sit down, negotiate and conclude (an agreement) with the Holy Cross of Davao College Faculty Union-KAMAPI, which, by Resolution of the Supreme Court, remains the collective bargaining agent of the permanent and regular teachers of said educational institution; (and) 2. pay to the Union the amount equivalent to the uncollected union dues from August 1989 up to the time respondent shall have concluded a new CBA with the Union, it appearing that respondent stopped complying with the CBA's check-off provisions as of said date. 12 The Voluntary Arbitrator also requested the Fiscal Examiner of the NLRC, Region XI, Davao City, to make the proper computation of the union dues to be paid by management to the complainant union. Dissatisfied, Holy Cross filed the petition at bar, challenging the Voluntary Arbitrator's decision on the following grounds, viz.: 13 1. That the voluntary arbitrator erred and acted in grave abuse of discretion amounting to lack or excess of jurisdiction in ordering petitioner to pay the union the uncollected union dues to private respondent which was not even an issue submitted for voluntary arbitration, resulting in serious violation of due process. 2. That the voluntary arbitrator erred in considering that petitioner refused to negotiate with (the) Union, contrary to the records and evidence presented in the case. The Voluntary Arbitrator's conclusion that petitioner Holy Cross had, in light of the evidence on record, failed to negotiate with KAMAPI, adjudged as the collective bargaining agent of the school's permanent and regular teachers is a conclusion of fact that the Court will not review, the inquiry at bar being limited to the issue of whether or not said Voluntary Arbitrator had acted without or in excess of his jurisdiction, or with grave abuse of discretion; nor does the Court see its way clear, after analyzing the record, to pronouncing that reasoned conclusion to have been made so whimsically, capriciously, oppressively, or unjustifiably in other words, attended by grave abuse of discretion amounting to lack or excess of jurisdiction as to call for extension of the Court's correcting hand through the extraordinary writ of certiorari. Said finding should therefore be, and is hereby, sustained. Now, concerning its alleged failure to observe the check-off provisions of the collective bargaining agreement, Holy Cross contends that this was not one of the issues raised in the arbitration proceedings; that said issue was therefore extraneous and improper; and that even assuming the contrary, it (Holy Cross) had not in truth violated the CBA. Holy Cross asserts that it could not comply with the check-off provision because contrary to established practice prior to August, 1989, KAMAPI failed to submit to the college comptroller every 8th day of the month, a list of employees from whom union dues and the corresponding agency fees were to be deducted; further, that there was an uncertainty as to the recognized bargaining agent with whom it would deal a matter settled only upon its receipt of a copy of this Court's Resolution on July 18, 1991 and in any case, the Voluntary Arbitrator's order for it to pay to the union the uncollected employees' dues or agency fees would amount to the union's unjust enrichment. 14 KAMAPI maintains, on the other hand, that the check-off issue was raised in the position paper it submitted in the voluntary arbitration proceedings; and that in any case, the issue was intimately connected with those submitted for resolution and necessary for complete adjudication of the rights and obligations of the parties; 15 and that said position paper had alleged the manifest bad faith of
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management in not providing information as to who were regular employees, thereby precluding determination of teachers eligible for union membership. Disregarding the objection of failure to seasonably set up the check-off question the factual premises thereof not being indisputable, and technical objections of this sort being generally inconsequential in quasi-judicial proceedings the issues here ultimately boil down to whether or not an employer is liable to pay to the union of its employees, the amounts it failed to deduct from their salaries as union dues (with respect to union members) or agency fees (as regards those not union members) in accordance with the check-off provisions of the collective bargaining contract (CBA) which it claims to have been automatically extended. A check-off is a process or device whereby the employer, on agreement with the union recognized as the proper bargaining representative, or on prior authorization from its employees, deducts union dues or agency fees from the latter's wages and remits them directly to the union. 16 Its desirability to a labor organization is quite evident; by it, it is assured of continuous funding. Indeed, this Court has acknowledged that the system of check-off is primarily for the benefit of the union and, only indirectly, of the individual laborers. 17 When 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 sums equivalent to the amount of union dues from the employees' wages for direct remittance to the union, in order to facilitate the collection of funds vital to the role of the union as representative of employees in a bargaining unit if not, indeed, to its very existence. And it may be mentioned in this connection that the right to union dues deducted pursuant to a check-off, pertains to the local union which continues to represent the employees under the terms of a CBA, and not to the parent association from which it has disaffiliated. 18 The legal basis of check-off is thus found in statute or in contract. 19 Statutory limitations on check-offs generally require written authorization from each employee to deduct wages; however, a resolution approved and adopted by a majority to the union members at a general meeting will suffice when the right to check-off has been recognized by the employer, including collection of reasonable assessments in connection with mandatory activities of the union, or other special assessments and extraordinary fees. 20 Authorization to effect a check-off of union dues is co-terminous with the union affiliation or membership of employees. 21 On the other hand, the collection of agency fees in an amount equivalent to union dues and fees, from employees who are not union members, is recognized by Article 248 (e) of the Labor Code. No requirement of written authorization from the non-union employee is imposed. The 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. 22 No provision of law makes the employer directly liable for the payment to the labor organization of union dues and assessments that the former fails to deduct from its employees' salaries and wages pursuant to a check-off stipulation. The employer's failure to make the requisite deductions may constitute a violation of a contractual commitment for which it may incur liability for unfair labor practice. 23 But it does not by that omission, incur liability to the union for the aggregate of dues or assessments uncollected from the union members, or agency fees for non-union employees. Check-offs in truth impose an extra burden on the employer in the form of additional administrative and bookkeeping costs. It is a burden assumed by management at the instance of the union and for its benefit, in order to facilitate the collection of dues necessary for the latter's life and sustenance. But the obligation to pay union dues and agency fees obviously devolves not upon the employer, but the individual employee. It is a personal obligation not demandable from the employer upon default or refusal of the employee to consent to a check-off. The only obligation of the employer under a check-off is to effect the deductions and remit the collections to the union. The principle of unjust enrichment necessarily
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precludes recovery of union dues or agency fees from the employer, these being, to repeat, obligations pertaining to the individual worker in favor of the bargaining union. Where the employer fails or refuses to implement a check-off agreement, logic and prudence dictate that the union itself undertake the collection of union dues and assessments from its members (and agency fees from non-union employees); this, of course, without prejudice to suing the employer for unfair labor practice. There was thus no basis for the Voluntary Arbitrator to require Holy Cross to assume liability for the union dues and assessments, and agency fees that it had failed to deduct from its employees' salaries on the proffered plea that contrary to established practice, KAMAPI had failed to submit to the college comptroller every 8th day of the month, a list of employees from whose pay union dues and the corresponding agency fees were to be deducted. WHEREFORE, the requirement imposed on petitioner Holy Cross by the challenged decision of the Voluntary Arbitrator, to pay respondent KAMAPI the amount equivalent to the uncollected union dues and agency fees from August 1989 up to the time a new collective bargaining agreement is concluded, is NULLIFIED and SET ASIDE; but in all other respects, the decision of the Voluntary Arbitrator is hereby AFFIRMED. ERNESTO C. VERCELES vs. BUREAU OF LABOR RELATIONS-DEPARTMENT OF LABOR AND EMPLOYMENT; G.R. No. 152322 February 15, 2005 Before Us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, assailing the Decision1 and Resolution2 rendered by the Court of Appeals, dated 24 October 2001 and 15 February 2002, respectively. The Facts Private respondents Rodel E. Dalupan, Efren J. De Ocampo, Proceso Totto, Jr., Elizabeth Alarca, and Elvira S. Manalo are members of the University of the East Employees Association (UEEA). On 15 September 1997, they each received a Memorandum from the UEEA charging them with spreading false rumors and creating disinformation among the members of the said association. They were given seventytwo hours from receipt of the Memorandum to submit their Answer.3 The acts of the respondents allegedly fall under General Assembly Resolution No. 4, Series of 1979, to wit: 1. Circulating false rumors about the progress of the negotiations for collective bargaining; 2. Creating distrust or loss of trust and confidence of members in the Association; 3. Creating dissension among the members; 4. Circulating false rumors about the work of the Association or sabotaging the same; 5. Withholding from the Association and/or members material information as to their rightful entitlement to benefits and/or money claims; 6. Acting as a spy against the Association or divulging confidential matters to persons not entitled thereto; 7. Such other offenses, which may injure or disrupt the functions of the Association. 4 Through a collective reply dated 19 September 1997, private respondents denied the allegations. Thereafter, on 23 September 1997, they sent a letter dated 22 September 1997 to the Chairman and
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Members of UEEAs Disciplinary Committee, informing them that the Memorandum of 15 September 1997 was vague and without legal basis, therefore, no intelligent answer may be made by them. They likewise stated that any sanction that will be imposed by the committee would be violative of their right to due process.5 The Disciplinary Committee issued another Memorandum, dated 24 September 1997, giving the respondents another seventy-two hours from receipt within which to properly reply, explaining that the collective reply letter and supplemental answer which were earlier submitted were not responsive to the first Memorandum. Their failure would be construed as an admission of the truthfulness and veracity of the charges.6 On 01 October 1997, the respondents issued a denial for the second time, and inquired from the Disciplinary Committee as to whether they were being formally charged.7 On 09 October 1997, Ernesto Verceles, in his capacity as president of the association, through a Memorandum, informed Rodel Dalupan, et al., that their membership in the association has been suspended and shall take effect immediately upon receipt thereof. Verceles said he was acting upon the disciplinary committees finding of a prima facie case against them.8 Respondent Ricardo Uy also received a similar memorandum on 03 November 1997.9 On 01 December 1997, a complaint10 for illegal suspension, willful and unlawful violation of UEEA constitution and by-laws, refusal to render financial and other reports, deliberate refusal to call general and special meetings, illegal holdover of terms and damages was filed by the respondents against herein petitioners Ernesto C. Verceles, Diosdado F. Trinidad, Salvador G. Blancia, Rosemarie De Lumban, Felicitas Ramos, Miguel Teao, Jaime Bautista and Fidel Acero before the Department of Labor and Employment, National Capital Region (DOLE-NCR). A few days after the filing of the complaint, i.e., on 10 December 1997, a resolution11 was passed by UEEA which reads as follows: RESOLUTION WHEREAS, the Association has gone thru a most arduous, difficult, and trying times in working to obtain the best terms and conditions of employment for its members, specifically for the period 1992 to 1996; WHEREAS, said difficulties are in the form of near strikes, cases with the Department of Labor and Employment and its agencies, as well as with the Supreme Court; WHEREAS, the general membership (has) shown exceptional patience and perseverance and generally (had) demonstrated full trust and confidence in the Association officers and accordingly approved the manner and/or actions undertaken in pursuing said difficult task of arriving at a most beneficial agreement for the general membership; NOW, THEREFORE, be it resolved as it is hereby resolved that: ... b) the general membership reiterate its loyalty to the Association and commends the Association officers for their effort expended in working for the benefit of the whole membership. APPROVED. Manila. 10 December 1997.
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On 22 November 1999, a decision12 was rendered by Regional Director Maximo B. Lim, adverse to petitioners, the dispositive portion of which reads: WHEREFORE, premises considered, respondent[s] [are] hereby ordered: 1. to immediately lift suspension imposed upon the complainants; 2. to hold a general membership meeting wherein they (respondents) make open and available the unions/associations books of accounts and other documents pertaining to the union funds [and] thereby explain the financial status of the union; 3. to regularly conduct special and general membership meetings in accordance with the unions constitution and by-laws; 4. to immediately hold/conduct an election of officers in accordance with the unions constitution and by-laws. Accordingly, the claims of complainants for damages [are] hereby ordered dismissed for lack of jurisdiction. However, within ten (10) days upon receipt of this Order, the complainants are hereby directed to submit a written report whether or not the respondents had complied with this Order. The petitioners appealed to the Bureau of Labor Relations of the Department of Labor and Employment (BLR-DOLE). During the pendency of this appeal, or on 07 April 2000, an election of officers was held by the UEEA. The appeal, however, was dismissed for lack of merit in a Resolution13 dated 22 September 2000, the decretal portion of which reads: WHEREFORE, the appeal is hereby DISMISSED for lack of merit and the decision dated 22 (November) 1999 of Regional Director Maximo B. Lim, DOLE-NCR, is AFFIRMED. Meanwhile, Resolution No. 8, Series of 2000, was passed by the UEEA, wherein the members allegedly reiterated their support and approval of the acts and collateral actions of the officers. 14 A Motion for Reconsideration15 was filed by the petitioners with the BLR-DOLE, but was denied in a Resolution16dated 15 January 2001. A special civil action for certiorari17 was thereafter filed before the Court of Appeals citing grave abuse of discretion amounting to lack or excess of jurisdiction. In a Resolution 18 dated 22 February 2001, the Court of Appeals dismissed the petition outright for failure to comply with the provisions of Section 1, Rule 65 in relation to Section 3, Rule 46 of the 1997 Rules of Civil Procedure. A Motion for Reconsideration19 was filed which was granted in a Resolution20 dated 24 April 2001, thus, reinstating the petition.1awphi1.nt On 24 October 2001, the Court of Appeals rendered a Decision21 dismissing the petition, the dispositive portion of which reads: WHEREFORE, premises considered, the instant petition is DENIED DUE COURSE and DISMISSED for lack of merit. No pronouncement as to costs. A Motion for Reconsideration22 was thereafter filed by the petitioners. In a Resolution23 dated 15 February 2002, the Court of Appeals modified its earlier decision. The decretal portion of which states:
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WHEREFORE, the questioned decision of this court is MODIFIED. The 22 September 2000 and 15 January 2001 resolutions of the BLR insofar as they affirmed the part of the 22 November 1999 decision of the Regional Director of DOLE-NCR ordering the immediate holding of election are HEREBY ANNULLED AND SET ASIDE. All the other aspects of the assailed Resolutions are AFFIRMED. Not satisfied, the petitioners filed a petition for review on certiorari24 before this Court. The Issues The petitioners raise the following issues: 1. WHETHER OR NOT THERE IS REVERSIBLE ERROR IN THE COURT OF APPEALS UPHOLDING THE DOLE-NCR AND BLR-DOLE DECISIONS BASED ONLY ON THE COMPLAINT AND ANSWER; 2. WHETHER OR NOT IT IS REVERSIBLE ERROR FOR THE COURT OF APPEALS TO HOLD THE ELECTION OF APRIL 7, 2000 AS INVALID AND A NULLITY; 3. WHETHER OR NOT IT IS REVERSIBLE ERROR TO UPHOLD BLR-DOLES FINDING THAT THE SUSPENSION WAS ILLEGAL; and 4. WHETHER OR NOT THE ALLEGED NON-HOLDING OF MEETINGS AND ALLEGED NONSUBMISSION OF REPORTS ARE MOOT AND ACADEMIC, AND WHETHER THE DECISION TO HOLD MEETINGS AND SUBMIT REPORTS CONTRADICT AND OVERRIDE THE SOVEREIGN WILL OF THE MAJORITY.25 The Courts Rulings We shall discuss the issues in seriatim. First Issue: was the court a quo correct in upholding the DOLE-NCR and BLR-DOLE decisions based only on the complaint and answer? Petitioners contend that the complaint filed by the private respondents in DOLE-NCR was a mere recital of bare, self serving and unsubstantiated allegations. Both parties did not submit position papers, and the DOLE-NCR resolved the case based only on the complaint and answer. Also, by failing to submit a reply to the answer, private respondents, in effect admitted the petitioners controversion of the charges. 26 They further argue that the private respondents did not exhaust administrative remedies and that the requirement of support by at least 30% of the members of the association pursuant to Section 1, Rule XIV, Article I, Department Order No. 9 of DOLE, was not complied with.27 Private respondents, on the other hand, assert that the records show that despite their failure to submit their position papers, they nonetheless moved that the case be resolved by DOLE-NCR based on the complaint, answer and available exhibits or annexes integrated with the aforesaid pleadings. 28 The principle of non-exhaustion of administrative remedies that would warrant the dismissal of the case should not operate against them because they were deprived of their right to due process when they were indefinitely suspended without the benefit of a formal charge which is sufficient in form and substance.29 The respondents also point out that the thirty percent (30%) support requirement pursuant to Section 1, Rule XIV, Article I, Department Order No. 9, is not applicable to them because their complaint was primordially predicated on their suspension while the rest of the causes of action were mere collateral consequences of the principal cause of action.30
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It is worthy to note that the BLR-DOLE, in its Resolution dated 22 September 2000, underscored the negligence of herein petitioners not only in the submission of their pleadings but also in attending the hearings called for the purpose.31 Even the Court of Appeals, in its decision, made this observation, thus: It is apparent, however, that petitioners were to blame for their predicament. They repeatedly failed to appear in a series of conferences scheduled by the DOLE-NCR, asked for resetting of hearings, and requested for extension of time to file its answer. Hence, when they again did not attend a hearing on a date they themselves asked for, private respondents (complainants therein) moved for the submission of the case based on their complaint, position paper and annexes attached thereto. When DOLE-NCR directed the parties to submit their respective position papers, petitioners again moved for extension of time to file the same. When another notice was given to the parties to comply with the directive, petitioners prayed for another extension of time. (Private respondents, however, reiterated their earlier motion to have the case resolved based on available pleadings.) After six (6) months or so, petitioners finally filed not their position paper but their answer.32 The Court of Appeals was justified in upholding the DOLE-NCR and BLR-DOLE decisions based on the complaint and answer. We cannot accept petitioners line of reasoning that since no positio n papers were submitted, no decision may be made by the adjudicating body. As ruled by Regional Director Maximo B. Lim in his decision, the complaint and the answer thereto were adopted as the parties position papers. Thereafter, the case shall be deemed submitted for resolution.33 Labor laws mandate the speedy disposition of cases, with the least attention to technicalities but without sacrificing the fundamental requisites of due process.34 The essence of due process is simply an opportunity to be heard.35In this case, it cannot be said that there was a denial of due process on the part of the petitioners because they were given all the chances to refute the allegations of the private respondents, and the delay in the proceedings before the DOLE-NCR was clearly attributable to them. The argument that there was failure to exhaust administrative remedies cannot be sustained. One of the instances when the rule of exhaustion of administrative remedies may be disregarded is when there is a violation of due process.36 In this case, the respondents have chronicled from the very beginning that they were indefinitely suspended without the benefit of a formal charge sufficient in form and substance. Therefore, the rule on exhaustion of administrative remedies cannot squarely apply to them. On the matter concerning the 30% support requirement needed to report violations of rights and conditions of union membership, as found in the last paragraph of Article 241 of the Labor Code, 37 we likewise cannot sanction the petitioners. We have already made our pronouncement in the case of Rodriguez v. Director, Bureau of Labor Relations 38 that the 30% requirement is not mandatory. In this case, the Court, speaking through Chief Justice Andres R. Narvasa,39 held in part: The respondent Directors ruling, however, that the assent of 30% of the union membership, mentioned in Article 242 of the Labor Code, was mandatory and essential to the filing of a complaint for any violation of rights and conditions of membership in a labor organization (such as the arbitrary and oppressive increase of union dues here complained of), cannot be affirmed and will be reversed. The very article relied upon militates against the proposition. It states that a report of a violation of rights and conditions of membership in a labor organization maybe made by "(a)t least thirty percent (30%) of all the members of a union or any member or members specially concerned." The use of the permissive "may" in the provision at once negates the notion that the assent of 30% of all the members is mandatory. More decisive is the fact that the provision expressly declares that the report may be made, alternatively by "any member or members specially concerned." And further confirmation that the assent of 30% of the union members is not a factor in the acquisition of jurisdiction by the Bureau of Labor Relations is furnished by Article 226 of the same Labor Code, which grants original and exclusive jurisdiction to the Bureau, and the Labor Relations Division in the Regional Offices of the Department of Labor, over "all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor management relations," making no reference whatsoever to any such 30%-support requirement. Indeed,
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the officials mentioned are given the power to act "on all inter-union and intra-union conflicts (1) " upon request of either or both parties" as well as (2) "at their own initiative." Second Issue: was the election held on 07 April 2000 valid or a nullity? This issue arose from the fact that the original decision of the DOLE-NCR dated 22 November 1999, ordered petitioners, among other things, to "immediately hold/conduct an election of officers . . ." Petitioners, it must be recalled, appealed from the DOLE-NCR decision to the BLR-DOLE. During the pendency of the appeal, however, an election of officers was held on 07 April 2000. Subsequently, the BLR-DOLE affirmed the decision of the DOLE-NCR, but with the pronouncement that ". . . the supposed election conducted on (07) April 2000 is null and void and cannot produce legal effects adverse to appellants."40 The petitioners contend that since the election was held on 07 April 2000, and the original complaint before the DOLE-NCR was filed on 01 December 1997, the former could not have been the subject of the complaint. There was, according to petitioners, reversible error in the BLR-DOLEs adding to the DOLENCRs decision, the nullification of the 07 April 2000 election. The BLRDOLE should have limited itself to affirming, modifying or setting aside and canceling the provisions of the dispositive portion of the DOLE-NCRs decision which was subject of the appeal. The election was held because the term of the petitioners (extended for five years under Republic Act No. 671541 ) expired on 07 April 2000. As amended by Republic Act 6715, paragraph (c) of Article 241 of the Labor Code now reads: (c) The members shall directly elect their officers in the local union, as well as their national officers in the national union or federation to which they or their local union is affiliated, by secret ballots at intervals of five (5) years. It just so happened that the holding of the election coincided with the DOLE-NCR decision.42 The private respondents, in answer to this, point out that the 07 April 2000 election, as appearing in the 22 September 2000 Resolution of the BLR-DOLE, was set aside not on the flimsy reason that there was no complaint to invalidate it, but due to the appeal of the petitioners questioning the BLR-DOLEs order. The appeal effectively suspended the effect of the DOLE-NCR Regional Directors order for the immediate holding of election of officers in accordance with the unions constitution and by -laws.43 On this matter, the Court of Appeals made the following observation: Consequently, the Regional Director of DOLE-NCR erred in ordering the immediate holding of election of officers of UEEA, and the Bureau of Labor Relations (BLR)-Department of Labor and Employment, insofar as it affirmed this particular order, committed an act amounting to grave abuse of discretion. Nonetheless, despite of this finding, the election of UEEA officers on 7 April 2000 cannot acquire a semblance of legality. First, it was conducted pursuant to the aforesaid (erroneous) order of the Regional Director as manifested by the petitioners. Second, it was purposely done to pre-empt the resolution of the case by the BLR and to deprive private respondents their substantial right to participate in the election. Third, petitioners cannot be allowed to take an inconsistent position to later on claim that the election of 7 April 2000 was held because it was already due while previously declaring that it was made in line with the order of the Regional Director, for this would go against the principle of fair play. Thus, while the BLR was wrong in affirming the order of the Regional Director for the immediate holding of election, it was right in nullifying the 7 April 2000 UEEA election of officers. It was simply improper for the petitioners to implement the said order which was then one of the subjects of their appeal in the BLR. To hold otherwise would be to dispossess the BLR of its inherent power to control the conduct of the proceedings of cases pending before it for resolution.44
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Based on the prevailing facts of this case, we affirm the foregoing findings of the court a quo. We cannot hold the election of 07 April 2000 valid as this would make us condone an iniquitous act. Said election was perceptibly done to hinder any resolution or decision that would be made by BLR-DOLE. The Regional Director indeed ordered the immediate holding of an election in its Order dated 22 November 1999. The records show that the petitioners questioned this order of the Regional Director before the BLR-DOLE by way of appeal,45 and yet, they conducted the election, allegedly because it was due under Republic Act No. 6715. Why this was done by the petitioners escapes us. But as rightfully observed by the BLR-DOLE: . . . Indeed, it is obvious that the general membership meeting and election of officers was done purposely to pre-empt our resolution of this case and, more importantly, the participation of appellees in the election. This cannot be tolerated.46 Third Issue: was the indefinite suspension of the private respondents illegal? We rule in the affirmative. The petitioners posit the theory that the records do not support the findings of the BLR-DOLE that no investigation was conducted making the suspension illegal because of lack of due process. It is best to remind the petitioners that this Court, as we have held in a long line of decisions, is not a trier of facts.47 The instant case is a petition for review on certiorari48 where only questions of law may be raised. The exceptions49 to this rule find no application here. This being the case, the findings of fact of the DOLE-NCR and the BLR-DOLE as affirmed by the Court of Appeals to the effect that no investigation was conducted, shall not be disturbed. As properly held by the court a quo: Petitioners have failed to show that the findings of facts and conclusions of law of both the DOLE-NCR and BLR-DOLE were arrived at with grave abuse of discretion or without substantial evidence. A careful review of the pleadings before Us reveals that the decision and resolutions of the concerned agencies were correctly anchored in law and on substantial evidence. 50 Fourth Issue: is the non-holding of meetings and non-submission of reports by the petitioners moot and academic, and whether the decision to hold meetings and submit reports contradict and override the sovereign will of the majority? We do not believe so. This issue was precipitated by the Court of Appeals decision affirming the order of DOLE Regional Director Maximo B. Lim for the petitioners to hold a general membership meeting wherein they make open and available the unions/associations books of acc ounts and other documents pertaining to the union funds, and to regularly conduct special and general membership meetings in accordance with the unions constitution and by -laws.51 It is to be recalled that the private respondents, when they filed a complaint before the DOLE-NCR also complained of petitioners refusal to render financial and other reports, and deliberate refusal to call general and special meetings. Petitioners do not hide the fact that they belatedly submitted their financial reports and the minutes of their meetings to the DOLE. The issue of belatedly submitting these reports, according to the petitioners, had been rendered moot and academic by their eventual compliance. Besides, this has been the practice of the association.52 Moreover, the petitioners likewise maintain that the passage of General Assembly Resolution No. 10 dated 10 December 1997 and Resolution No. 8, Series of 2000, following the application of the principle that the sovereign majority rules, cured any liability that may have been brought about by their belated actions.531awphi1.nt
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As found by the Court of Appeals, the financial statements for the years 1995 up to 1997 were submitted to DOLE-NCR only on 06 February 1998 while that for the year 1998 was submitted only on 16 March 1999.54 The last associations meeting was conducted on 21 April 1995, and the copy of the minutes thereon was submitted to BLR-DOLE only on 24 February 1998. The passage of General Assembly Resolution No. 10 dated 10 December 1997 and Resolution No. 8, Series of 2000,55 which supposedly cured the lapses committed by the associations officers and reiterated the approval of the general membership of the acts and collateral actions of the associations officers cannot redeem the petitioners from their predicament. The obligation to hold meetings and render financial reports is mandated by UEEAs constitution and by-laws. This fact was never denied by the petitioners. Their eventual compliance, as what happened in this case, shall not release them from the obligation to accomplish these things in the future. Prompt compliance in rendering financial reports together with the holding of regular meetings with the submission of the minutes thereon with the BLR-DOLE and DOLE-NCR shall negate any suspicion of dishonesty on the part of UEEAs officers. This is not only true with UEEA, but likewise with other unions/associations, as this matter is imbued with public interest. Undeniably, transparency in the official undertakings of union officers will bolster genuine trade unionism in the country. WHEREFORE, in view of all the foregoing, the Decision and Resolution of the Court of Appeals subjects of the instant case, are affirmed. Costs against the petitioners. PHILIPPINE ASSOCIATION OF LABOR UNIONS (PAFLU) vs. THE SECRETARY OF LABOR; G.R. No. L-22228 February 27, 1969 Petitioners pray for writs of certiorari and prohibition to restrain respondents, the Secretary of Labor, the Director of Labor Relations and the Registrar of Labor Organizations, from enforcing an order of cancellation of the registration certificate of the Social Security System Employees Association hereinafter referred to as the SSSEA which is affiliated to the Philippine Association of Free Labor Unions hereinafter referred to as PAFLU as well as to annul all proceedings in connection with said cancellation and to prohibit respondents from enforcing Section 23 of Republic Act No. 875. Petitioners, likewise, pray for a writ of preliminary injunction pending the final determination of this case. In their answer, respondents traversed some allegations of fact and the legal conclusions made in the petition. No writ of preliminary injunction pendente lite has been issued. It appears that on September 25, 1963, the Registration of Labor Organizations hereinafter referred to as the Registrar issued a notice of hearing, on October 17, 1963, of the matter of cancellation of the registration of the SSSEA, because of: 1. Failure to furnish the Bureau of Labor Relations with copies of the reports on the finances of that union duly verified by affidavits which its treasurer or treasurers rendered to said union and its members covering the periods from September 24, 1960 to September 23, 1961 and September 24, 1961 to September 23, 1962, inclusive, within sixty days of the 2 respective latter dates, which are the end of its fiscal year; and 2. Failure to submit to this office the names, postal addresses and non-subversive affidavits of the officers of that union within sixty days of their election in October (1st Sunday), 1961 and 1963, in conformity with Article IV (1) of its constitution and by-laws. in violation of Section 23 of Republic Act No. 875. Counsel for the SSSEA moved to postpone the hearing to October 21, 1963, and to submit then a memorandum, as well as the documents specified in the notice. The motion was granted, but, nobody appeared for the SSSEA on the date last mentioned. The next day, October 22, 1963, Manuel Villagracia, Assistant Secretary of the SSSEA filed with the Office of the Registrar, a letter dated October 21, 1963, enclosing the following:
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1. Joint non-subversive affidavit of the officers of the SSS Employees' Association-PAFLU; 2. List of newly-elected officers of the Association in its general elections held on April 29, 1963; and 3. Copy of the amended constitution and by-laws of the Association. Holding 1. That the joint non-subversive affidavit and the list of officers mentioned in the letter of Mr. Manuel Villagracia were not the documents referred to in the notice of hearing and made the subject matter of the present proceeding; and 2. That there is no iota of evidence on records to show and/or warrant the dismissal of the present proceeding. on October 23, 1963, the Registrar rendered a decision cancelling the SSSEA's Registration Certificate No. 1-IP169, issued on September 30, 1960. Soon later, or on October 28, 1963, Alfredo Fajardo, president of the SSSEA moved for a reconsideration of said decision and prayed for time, up to November 15, within which to submit the requisite papers and data. An opposition thereto having been filed by one Paulino Escueta, a member of the SSSEA, upon the ground that the latter had never submitted any financial statement to its members, said motion was heard on November 27, 1963. Subsequently, or on December 4, 1963, the Registrar issued an order declaring that the SSSEA had "failed to submit the following requirements to wit: 1. Non-subversive affidavits of Messrs. Teodoro Sison, Alfonso Atienza, Rodolfo Zalameda, Raymundo Sabino and Napoleon Pefianco who were elected along with others on January 30, 1962. 2. Names, postal addresses and non-subversive affidavits of all the officers who were supposedly elected on October (1st Sunday), of its constitution and by-laws. and granting the SSSEA 15 days from notice to comply with said requirements, as well as meanwhile holding in abeyance the resolution of its motion for reconsideration. Pending such resolution, or on December 16, the PAFLU, the SSSEA, Alfredo Fajardo "and all the officers and members" of the SSSEA commenced the present action, for the purpose stated at the beginning of this decision, upon the ground that Section 23 of Republic Act No. 875 violates their freedom of assembly and association, and is inconsistent with the Universal Declaration of Human Rights; that it unduly delegates judicial power to an administrative agency; that said Section 23 should be deemed repealed by ILO-Convention No. 87; that respondents have acted without or in excess of jurisdiction and with grave abuse of discretion in promulgating, on November 19, 1963, its decision dated October 22, 1963, beyond the 30-day period provided in Section 23(c) of Republic Act No. 875; that "there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law"; that the decision complained of had not been approved by the Secretary of Labor; and that the cancellation of the SSSEA's certificate of registration would cause irreparable injury. 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 1 is not a limitation to the right of assembly or association, which may be exercised with orwithout said registration. 2 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
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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 of workers are engaged affect public interest, which should be protected. 3 Furthermore, the obligation to submit financial statements, as a condition for the non-cancellation of a certificate of registration, is a reasonable regulation for the benefit of the members of the organization, considering that the same generally solicits funds or membership, as well as oftentimes collects, on behalf of its members, huge amounts of money due to them or to the organization. 4 For the same reasons, said Section 23 does not impinge upon the right of organization guaranteed in the Declaration of Human Rights, or run counter to Articles 2, 4, 7 and Section 2 of Article 8 of the ILOConvention No. 87, which provide that "workers and employers, ... shall have the right to establish and ... join organizations of their own choosing, without previous authorization"; that "workers and employers organizations shall not be liable to be dissolved or suspended by administrative authority"; that "the acquisition of legal personality by workers' and employers' organizations, ... shall not be made subject to conditions of such a character as to restrict the application of the provisions" above mentioned; and that "the guarantees provided for in" said Convention shall not be impaired by the law of the land. In B.S.P. v. Araos, 5 we held that there is no incompatibility between Republic Act No. 875 and the Universal Declaration of Human Rights. Upon the other hand, the cancellation of the SSSEA's registration certificate would not entail a dissolution of said association or its suspension. The existence of the SSSEA would not be affected by said cancellation, although its juridical personality and its statutory rights and privileges as distinguished from those conferred by the Constitution would be suspended thereby. To be registered, pursuant to Section 23(b) of Republic Act No. 875, a labor organization, association or union of workers must file with the Department of Labor the following documents: (1) A copy of the constitution and by-laws of the organization together with a list of all officers of the association, their addresses and the address of the principal office of the organization; (2) A sworn statement of all the officers of the said organization, association or union to the effect that they are not members of the Communist Party and that they are not members of any organization which teaches the overthrow of the Government by force or by any illegal or unconstitutional method; and (3) If the applicant organization has been in existence for one or more years, a copy of its last annual financial report. Moreover, paragraph (d) of said-Section ordains that: The registration and permit of a legitimate labor organization shall be cancelled by the Department of Labor, if the Department has reason to believe that the labor organization no longer meets one or more of the requirements of paragraph (b) above; or fails to file with the Department Labor either its financial reportwithin the sixty days of the end of its fiscal year or the names of its new officers along with their non-subversive affidavits as outlined in paragraph (b) above within sixty days of their election; however, the Department of Labor shall not order the cancellation of the registration and permit without due notice and hearing, as provided under paragraph (c) above and the affected labor organization shall have the same right of appeal to the courts as previously provided.6 The determination of the question whether the requirements of paragraph (b) have been met, or whether or not the requisite financial report or non-subversive affidavits have been filed within the period above stated, is not judicial power. Indeed, all officers of the government, including those in the executive
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department, are supposed, to act on the basis of facts, as they see the same. This is specially true as regards administrative agencies given by law the power to investigate and render decisions concerning details related to the execution of laws the enforcement of which is entrusted thereto. Hence, speaking for this Court, Mr. Justice Reyes (J.B.L.) had occassion to say: The objections of the appellees to the constitutionality of Republic Act No. 2056, not only as an undue delegation of judicial power to the Secretary of Public Works but also for being unreasonable and arbitrary, are not tenable. It will be noted that the Act (R.A. 2056) merely empowers the Secretary to remove unauthorized obstructions or encroachments upon public streams, constructions that no private person was anyway entitled to make because the bed of navigable streams is public property, and ownership thereof is not acquirable by adverse possession (Palanca vs. Commonwealth, 69 Phil., 449). It is true that the exercise of the Secretary's power under the Act necessarily involves thedetermination of some question of fact, such as the existence of the stream and its previous navigable character; but these functions, whether judicial or quasi-judicial, are merely incidental to the exercise of the power granted by law to clear navigable streams of unauthorized obstructions or encroachments, andauthorities are clear that they are validly conferable upon executive officials provided the party affected is given opportunity to be heard, as is expressly required by Republic Act No. 2056, section 2.7 It should be noted also, that, admittedly, the SSSEA had not filed the non-subversive affidavits of some of its officers "Messrs. Sison, Tolentino, Atienza, Zalameda, Sabino and Pefianca" although said organization avers that these persons "were either resigned or out on leave as directors or officers of the union", without specifying who had resigned and who were on leave. This averment is, moreover, controverted by respondents herein. Again, the 30-day period invoked by the petitioners is inapplicable to the decision complained of. Said period is prescribed in paragraph (c) 8 of Section 23, which refers to the proceedings for the "registration" of labor organizations, associations or unions not to the "cancellation" of said registration, which is governed by the abovequoted paragraph (d) of the same section. Independently of the foregoing, we have repeatedly held that legal provisions prescribing the period within which a decision should be rendered are directory, not mandatory in nature in the sense that, a judgment promulgated after the expiration of said period is not null and void, although the officer who failed to comply with law may be dealt with administratively, in consequence of his delay 9 unless the intention to the contrary is manifest. Such, however, is not the import of said paragraph (c). In the language of Black: When a statute specifies the time at or within which an act is to be done by a public officer or body, it is generally held to be directory only as to the time, and not mandatory, unless time is of the essence of the thing to be done, or the language of the statute contains negative words, or shows that the designation of the time was intended as a limitation of power, authority or right. 10 Then, again, there is no law requiring the approval, by the Secretary of Labor, of the decision of the Registrar decreeing the cancellation of a registration certificate. In fact, the language of paragraph (d) of Section 23, suggests that, once the conditions therein specified are present, the office concerned "shall" have no choice but to issue the order of cancellation. Moreover, in the case at bar, there is nothing, as yet, for the Secretary of Labor to approve or disapprove, since petitioners, motion for reconsideration of the Registrar's decision of October 23, 1963, is still pending resolution. In fact, this circumstance shows, not only that the present action is premature, 11but, also, that petitioners have failed to exhaust the administrative remedies available to them. 12 Indeed, they could ask the Secretary of Labor to disapprove the Registrar's decision or object to its execution or enforcement, in the absence of approval of the former, if the same were necessary, on which we need not and do not express any opinion.
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IN VIEW OF THE FOREGOING, the petition herein should be, as it is hereby dismissed, and the writs prayed for denied, with costs against the petitioners. It is so ordered. CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS vs. CIRTEK ELECTRONICS, INC.; G.R. No. 190515 June 6, 2011 This resolves the motion for reconsideration and supplemental motion for reconsideration filed by respondent, Cirtek Electronics, Inc., of the Courts Decision dated November 15, 2010. Respondent-movant avers that petitioner, in filing the petition for certiorari under Rule 65, availed of the wrong remedy, hence, the Court should have dismissed the petition outright. It goes on to aver that the Court erred in resolving a factual issue whether the August 24, 2005 Memorandum of Agreement (MOA) was validly entered into , which is not the office of a petition for certiorari. Respondent-movant further avers that the MOA1 signed by the remaining officers of petitioner Union and allegedly ratified by its members should have been given credence by the Court. Furthermore, respondent-movant maintains that the Secretary of Labor cannot insist on a ruling beyond the compromise agreement entered into by the parties; and that, as early as February 5, 2010, petitioner Union had already filed with the Department of Labor and Employment (DOLE) a resolution of disaffiliation from the Federation of Free Workers resulting in the latters lack of personality to represent the workers in the present case. The motion is bereft of merit. Respondent indeed availed of the wrong remedy of certiorari under Rule 65. Due, however, to the nature of the case, one involving workers wages and benefits, and the fact that whether the petition was filed under Rule 65 or appeal by certiorari under Rule 45 it was filed within 15 days (the reglementary period under Rule 45) from petitioners receipt of the resolution of the Court of Appeals Resolution denying its motion for reconsideration, the Court resolved to give it due course. As Almelor v. RTC of Las Pias, et al. 2 restates: Generally, an appeal taken either to the Supreme Court or the CA by the wrong or inappropriate mode shall be dismissed. This is to prevent the party from benefiting from ones neglect and mistakes. However, like most rules, it carries certain exceptions . After all, the ultimate purpose of all rules of procedures is to achieve substantial justice as expeditiously as possible. (emphasis and underscoring supplied) Respecting the attribution of error to the Court in ruling on a question of fact, it bears recalling that a QUESTION OF FACT arises when the doubt or difference arises as to the truth or falsehood of alleged facts,3 while a QUESTION OF LAW exists when the doubt or difference arises as to what the law is on a certain set of facts. The present case presents the primordial issue of whether the Secretary of Labor is empowered to give arbitral awards in the exercise of his authority to assume jurisdiction over labor disputes. Ineluctably, the issue involves a determination and application of existing law, the provisions of the Labor Code, and prevailing jurisprudence. Intertwined with the issue, however, is the question of validity of the MOA and its ratification which, as movant correctly points out, is a question of fact and one which is not appropriate for a petition for review on certiorari under Rule 45. The rule, however, is not without exceptions, viz: This rule provides that the parties may raise only questions of law, because the Supreme Court is not a trier of facts. Generally, we are not duty-bound to analyze again and weigh the evidence introduced in and
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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, unless the case falls under any of the followingrecognized exceptions: (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 Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (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 petitioners' main and reply briefs are not disputed by the respondents; and (10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record. (emphasis and underscoring supplied) In the present case, the findings of the Secretary of Labor and the appellate court on whether the MOA is valid and binding are conflicting, the former giving scant consideration thereon, and the latter affording it more weight. As found by the Secretary of Labor, the MOA came about as a result of the constitution, at respondents behest, of the Labor-Management Council (LMC) which, he reminded the parties, should not be used as an avenue for bargaining but for the purpose of affording workers to participate in policy and decisionmaking. Hence, the agreements embodied in the MOA were not the proper subject of the LMC deliberation or procedure but of CBA negotiations and, therefore, deserving little weight. The appellate court, held, however, that the Secretary did not have the authority to give an arbitral award higher than what was stated in the MOA. The conflicting views drew the Court to re-evaluate the facts as borne by the records, an exception to the rule that only questions of law may be dealt with in an appeal by certiorari under Rule 45. As discussed in the Decision under reconsideration, the then Acting Secretary of Labor Manuel G. Imson acted well within his jurisdiction in ruling that the wage increases to be given are P10 per day effective January 1, 2004 and P15 per day effective January 1, 2005, pursuant to his power to assume jurisdiction under Art. 263 (g)4 of the Labor Code. While an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties because it requires the interference and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction, the award can be considered as an approximation of a collective bargaining agreement which would otherwise have been entered into by the parties. Hence, it has the force and effect of a valid contract obligation between the parties.5
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In determining arbitral awards then, aside from the MOA, courts considered other factors and documents including, as in this case, the financial documents6 submitted by respondent as well as its previous bargaining history and financial outlook and improvements as stated in its own website. 7 The appellate courts ruling that giving credence to the "Pahayag" and the minutes of the meeting which were not verified and notarized would violate the rule on parol evidence is erroneous. The parol evidence rule, like other rules on evidence, should not be strictly applied in labor cases. Interphil Laboratories Employees Union-FFW v. Interphil Laboratories, Inc. 8 teaches: [R]eliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling. Rules of procedure and evidence are not applied in a very rigid and technical sense in labor cases. Hence, the Labor Arbiter is not precluded from accepting and evaluating evidence other than, and even contrary to, what is stated in the CBA. (emphasis and underscoring supplied) On the contention that the MOA should have been given credence because it was validly entered into by the parties, the Court notes that even those who signed it expressed reservations thereto. A CBA (assuming in this case that the MOA can be treated as one) is a contract imbued with public interest. It must thus be given a liberal, practical and realistic, rather than a narrow and technical construction, with due consideration to the context in which it is negotiated and the purpose for which it is intended. 9 As for the contention that the alleged disaffiliation of the Union from the FFW during the pendency of the case resulted in the FFW losing its personality to represent the Union, the same does not affect the Courts upholding of the authority of the Secretary of Labor to impose arbitral awards higher than what was supposedly agreed upon in the MOA. Contrary to respondents assertion, the "unavoidable issue of disaffiliation" bears no significant legal repercussions to warrant the reversal of the Courts D ecision. En passant, whether there was a valid disaffiliation is a factual issue. Besides, the alleged disaffiliation of the Union from the FFW was by virtue of a Resolution signed on February 23, 2010 and submitted to the DOLE Laguna Field Office on March 5, 2010 two months after the present petition was filed on December 22, 2009, hence, it did not affect FFW and its Legal Centers standing to file the petition nor this Courts jurisdiction to resolve the same. At all events, the issue of disaffiliation is an intra-union dispute which must be resolved in a different forum in an action at the instance of either or both the FFW and the Union or a rival labor organization, not the employer. An intra-union dispute refers to any conflict between and among union members, including grievances arising from any violation of the rights and conditions of membership, violation of or disagreement over any provision of the unions constitution and by -laws, or disputes arising from chartering or disaffiliation of the union. Sections 1 and 2, Rule XI of Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union disputes, viz: RULE XI INTER/INTRA-UNION DISPUTES AND OTHER RELATED LABOR RELATIONS DISPUTES Section 1. Coverage. - Inter/intra-union disputes shall include: (a) cancellation of registration of a labor organization filed by its members or by another labor organization; (b) conduct of election of union and workers association officers/nullification of election of union and workers association officers;
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(c) audit/accounts examination of union or workers association funds; (d) deregistration of collective bargaining agreements; (e) validity/invalidity of union affiliation or disaffiliation; (f) validity/invalidity of acceptance/non-acceptance for union membership; (g) validity/invalidity of impeachment/expulsion of union and workers association officers and members; (h) validity/invalidity of voluntary recognition; (i) opposition to application for union and CBA registration; (j) violations of or disagreements over any provision in a union or workers association constitution and by-laws; (k) disagreements over chartering or registration of labor organizations and collective bargaining agreements; (l) violations of the rights and conditions of union or workers association membership; (m) violations of the rights of legitimate labor organizations, except interpretation of collective bargaining agreements; (n) such other disputes or conflicts involving the rights to self-organization, union membership and collective bargaining (1) between and among legitimate labor organizations; (2) between and among members of a union or workers association. Section 2. Coverage. Other related labor relations disputes shall include any conflict between a labor union and the employer or any individual, entity or group that is not a labor organization or workers association. This includes: (1) cancellation of registration of unions and workers associations; and (2) a petition for interpleader.10(emphasis supplied) Indeed, as respondent-movant itself argues, 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 Bay Spinning Mills At J.P. Coats 11 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. (emphasis and underscoring supplied)1avvphi1
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Whether then, as respondent claims, FFW "went against the will and wishes of its principal" (the member-employees) by pursuing the case despite the signing of the MOA, is not for the Court, nor for respondent to determine, but for the Union and FFW to resolve on their own pursuant to their principalagent relationship. WHEREFORE, the motion for reconsideration of this Courts Decision of November 15, 2010 is DENIED. PHILIPPINE SKYLANDERS, INC. vs. NATIONAL LABOR RELATIONS COMMISSION; G.R. No. 127374 January 31, 2002 This is a petition for certiorari1 seeking to set aside the 31 July 1996 Decision2 of the National Labor Relations Commission affirming the 30 June 1995 Decision of the Labor Arbiter holding petitioners Philippine Skylanders, Inc., Mariles C. Romulo3 and Francisco Dakila as well as the elected officers of the Philippine Skylanders Employees and Workers Association-PAFLU4 guilty of unfair labor practice and ordering them to pay private respondent Philippine Association of Free Labor Union (PAFLU) September5 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
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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, PSEAPAFLU 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 employercompany.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
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The Solicitor General filed a Manifestation in Lieu of Comment recommending that both petitions be granted. In hisManifestation, 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. 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.16we 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
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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 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. TROPICAL HUT EMPLOYEES' UNION-CGW vs. TROPICAL HUT FOOD MARKET, INC. G.R. No. L-43495-99 January 20, 1990 This is a petition for certiorari under Rule 65 seeking to set aside the decisions of the public respondents Secretary of Labor and National Labor Relations Commission which reversed the Arbitrators rulings in favor of petitioners herein. The following factual background of this case appears from the record: On January 2, 1968, the rank and file workers of the Tropical Hut Food Market Incorporated, referred to herein as respondent company, organized a local union called the Tropical Hut Employees Union, known for short as the THEU, elected their officers, adopted their constitution and by-laws and immediately sought affiliation with the National Association of Trade Unions (NATU). On January 3, 1968, the NATU accepted the THEU application for affiliation. Following such affiliation with NATU, Registration Certificate No. 5544-IP was issued by the Department of Labor in the name of the Tropical Hut Employees Union NATU. It appears, however, that NATU itself as a labor federation, was not registered with the Department of Labor. After several negotiations were conducted between THEU-NATU, represented by its local president and the national officers of the NATU, particularly Ignacio Lacsina, President, Pacifico Rosal, Executive VicePresident and Marcelino Lontok, Jr., Vice President, and respondent Tropical Hut Food Market, Incorporated, thru its President and General Manager, Cesar Azcona, Sr., a Collective Bargaining Agreement was concluded between the parties on April 1, 1968, the term of which expired on March 31, 1971. Said agreement' contained these clear and unequivocal terms: This Agreement made and entered into this __________ day of ___________, 1968, by and between: The Tropical Hut Food Market, Inc., a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with principal office at Quezon City, represented in this Act by its President, Cesar B. Azcona (hereinafter referred to as the Company)
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and The Tropical Hut Employees Union NATU, a legitimate labor organization duly organized and existing in accordance with the laws of the Republic of the Philippines, and affiliated with the National Association of Trade Unions, with offices at San Luis Terraces, Ermita, Manila, and represented in this Act by its undersigned officers (hereinafter referred to as the UNION) Witnesseth: xxx xxx xxx Article I Coverage and Effectivity Sec. 1. The COMPANY recognizes the UNION 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. xxx xxx xxx Article III Union Membership and Union Check-off Sec. 1 . . . Employees who are already members of the UNION at the time of the signing of this Agreement or who become so thereafter shall be required to maintain their membership therein as a condition of continued employment. xxx xxx xxx Sec. 3Any employee who is expelled from the UNION for joining another federation or forming another union, or who fails or refuses to maintain his membership therein as required, . . . shall, upon written request of the UNION be discharged by the COMPANY. (Rollo, pp. 667-670) And attached to the Agreement as Appendix "A" is a check-off Authorization Form, the terms of which are as follows: We, the undersigned, hereby designate the NATIONAL Association of Trade Unions, of which the TROPICAL HUT EMPLOYEES UNION is an affiliate as sole collective bargaining agent in all matters relating to salary rates, hours of work and other terms and conditions of employment in the Tropical Hut Food Market, Inc. and we hereby authorize the said company to deduct the amount of Four (P 4.00) Pesos each every month as our monthly dues and to deliver the amount to the Treasurer of the Union or his duly authorized representatives. (Rollo, pp. 680-684) On May 21, 1971, respondent company and THEU-NATU entered into a new Collective Bargaining Agreement which ended on March 31, 1974. This new CBA incorporated the previous union-shop security clause and the attached check-off authorization form.
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Sometime in July, 1973, Arturo Dilag, incumbent President of THEU-NATU, was appointed by the respondent company as Assistant Unit Manager. On July 24, 1973, he wrote the general membership of his union that for reason of his present position, he was resigning as President of the THEU-NATU effective that date. As a consequence thereof, his Vice-President, Jose Encinas, assumed and discharged the duties of the presidency of the THEU-NATU. On December 19,1973, NATU received a letter dated December 15, 1973, jointly signed by the incumbent officers of the local union informing the NATU that THEU was disaffiliating from the NATU federation. On December 20, 1973, the Secretary of the THEU, Nemesio Barro, made an announcement in an open letter to the general membership of the THEU, concerning the latter's disaffiliation from the NATU and its affiliation with the Confederation of General Workers (CGW). The letter was passed around among the members of the THEU-NATU, to which around one hundred and thirty-seven (137) signatures appeared as having given their consent to and acknowledgment of the decision to disaffiliate the THEU from the NATU. On January 1, 1974, the general membership of the so-called THEU-CGW held its annual election of officers, with Jose Encinas elected as President. On January 3, 1974, Encinas, in his capacity as THEUCGW President, informed the respondent company of the result of the elections. On January 9, 1974, Pacifico Rosal, President of the Confederation of General Workers (CGW), wrote a letter in behalf of complainant THEU-CGW to the respondent company demanding the remittance of the union dues collected by the Tropical Hut Food Mart, Incorporated to the THEU-CGW, but this was refused by the respondent company. On January 11, 1974, the NATU thru its Vice-President Marcelino Lontok, Jr., wrote Vidal Mantos, requiring the latter to assume immediately the position of President of the THEU-NATU in place of Jose Encinas, but the position was declined by Mantos. On the same day, Lontok, Jr., informed Encinas in a letter, concerning the request made by the NATU federation to the respondent company to dismiss him (Encinas) in view of his violation of Section 3 of Article III of the Collective Bargaining Agreement. Encinas was also advised in the letter that NATU was returning the letter of disaffiliation on the ground that: 1. Under the restructuring program NOT of the Bureau of Labor but of the Philippine National Trade Union Center in conjunction with the NATU and other established national labor centers, retail clerks and employees such as our members in the Tropical Hut pertain to Industry II which by consensus, has been assigned already to the jurisdiction of the NATU; 2. The right to disaffiliate belongs to the union membership who on the basis of verified reports received by have not even been consulted by you regarding the matter; 3. Assuming that the disaffiliation decision was properly reached; your letter nevertheless is unacceptable in view of Article V, Section 1, of the NATU Constitution which provides that "withdrawal from the organization shall he valid provided three (3) months notice of intention to withdraw is served upon the National Executive Council." (p. 281, Rollo) In view of NATU's request, the respondent company, on the same day, which was January 11, 1974, suspended Encinas pending the application for clearance with the Department of Labor to dismiss him. On January 12, 1974, members of the THEU-CGW passed a resolution protesting the suspension of Encinas and reiterated their ratification and approval of their union's disaffiliation from NATU and their affiliation with the Confederation of General Workers (CGW). It was Encinas' suspension that caused the filing of NLRC Case No. LR-2511 on January 11, 1974 against private respondents herein, charging them of unfair labor practice. On January 15,1974, upon the request of NATU, respondent company applied for clearance with the Secretary of Labor to dismiss the other officers and members of THEU-CGW. The company also
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suspended them effective that day. NLRC Case No. LR-2521 was filed by THEU-CGW and individual complainants against private respondents for unfair labor practices. On January 19, 1974, Lontok, acting as temporary chairman, presided over the election of officers of the remaining THEU-NATU in an emergency meeting pending the holding of a special election to be called at a later date. In the alleged election, Arturo Dilag was elected acting THEU-NATU President together with the other union officers. On February 14, 1974, these temporary officers were considered as having been elected as regular officers for the year 1974. On January 30, 1974, petitioner THEU-CGW wrote a letter to Juan Ponce Enrile, Secretary of National Defense, complaining of the unfair labor practices committed by respondent company against its members and requesting assistance on the matter. The aforementioned letter contained the signatures of one hundred forty-three (143) members. On February 24,1974, the secretary of THEU-NATU, notified the entire rank and file employees of the company that they will be given forty-eight (48) hours upon receipt of the notice within which to answer and affirm their membership with THEU-NATU. When the petitioner employees failed to reply, Arturo Dilag advised them thru letters dated February 26, March 2 and 5, 1974, that the THEU-NATU shall enforce the union security clause set forth in the CBA, and that he had requested respondent company to dismiss them. Respondent company, thereafter, wrote the petitioner employees demanding the latter's comment on Dilag's charges before action was taken thereon. However, no comment or reply was received from petitioners. In view of this, Estelita Que, President/General Manager of respondent company, upon Dilag's request, suspended twenty four (24) workers on March 5, 1974, another thirty seven (37) on March 8, 1974 and two (2) more on March 11, 1974, pending approval by the Secretary of Labor of the application for their dismissal. As a consequence thereof, NLRC Case Nos. LR-2971, LR-3015 and an unnumbered case were filed by petitioners against Tropical Hut Food Market, Incorporated, Estelita Que, Hernando Sarmiento and Arturo Dilag. It is significant to note that the joint letter petition signed by sixty-seven (67) employees was filed with the Secretary of Labor, the NLRC Chairman and Director of Labor Relations to cancel the words NATU after the name of Tropical Hut Employee Union under Registration Certificate No. 5544 IP. Another letter signed by one hundred forty-six (146) members of THEU-CGW was sent to the President of the Philippines informing him of the unfair labor practices committed by private respondents against THEUCGW members. After hearing the parties in NLRC Cases Nos. 2511 and 2521 jointly filed with the Labor Arbiter, Arbitrator Daniel Lucas issued an order dated March 21, 1974, holding that the issues raised by the parties became moot and academic with the issuance of NLRC Order dated February 25, 1974 in NLRC Case No. LR2670, which directed the holding of a certification election among the rank and file workers of the respondent company between the THEU-NATU and THEU-CGW. He also ordered: a) the reinstatement of all complainants; b) for the respondent company to cease and desist from committing further acts of dismissals without previous order from the NLRC and for the complainant Tropical Hut Employees UNION-CGW to file representation cases on a case to case basis during the freedom period provided for by the existing CBA between the parties (pp. 91-93, Rollo). With regard to NLRC Case Nos. LR-2971, LR-3015, and the unnumbered case, Arbitrator Cleto T. Villatuya rendered a decision dated October 14, 1974, the dispositive portion of which states: Premises considered, a DECISION is hereby rendered ordering respondent company to reinstate immediately the sixty three (63) complainants to their former positions with
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back wages from the time they were illegally suspended up to their actual reinstatement without loss of seniority and other employment rights and privileges, and ordering the respondents to desist from further committing acts of unfair labor practice. The respondent company's application for clearance filed with the Secretary of Labor to terminate the subject complainants' services effective March 20 and 23, 1974, should be denied. SO ORDERED. (pp. 147-148, Rollo) From the orders rendered above by Abitrator Daniel Lucas in NLRC Cases No. LR-2511 and LR-2521 and by Arbitrator Cleto Villatuya in NLRC Cases Nos. LR-2971, LR-3015, and the unnumbered case, all parties thereto, namely, petitioners herein, respondent company, NATU and Dilag appealed to the National Labor Relations Commission. In a decision rendered on August 1, 1975, the National Labor Relations Commission found the private respondents' appeals meritorious, and stated, inter alia: WHEREFORE, in view of the foregoing premises, the Order of Arbitrator Lucas in NLRC CASE NOS. LR-2511, 2521 and the decision of Arbitrator Villatuya in NLRC CASE NOS. LR-2971, 3015 and the unnumbered Case are hereby REVERSED. Accordingly, the individual complainants are deemed to have lost their status as employees of the respondent company. However, considering that the individual complainants are not presumed to be familiar with nor to have anticipated the legal mesh they would find themselves in, after their "disaffiliation" from National Association of Trade Unions and the THEU-NATU, much less the legal consequences of the said action which we presume they have taken in all good faith; considering, further, that the thrust of the new orientation in labor relations is not towards the punishment of acts violative of contractual relations but rather towards fair adjustments of the resulting complications; and considering, finally, the consequent economic hardships that would be visited on the individual complainants, if the law were to be strictly enforced against them, this Commission is constrained to be magnanimous in this instant, notwithstanding its obligation to give full force and effect to the majesty of the law, and hereby orders the respondent company, under pain of being cited for contempt for failure to do so, to give the individual complainants a second chance by reemploying them upon their voluntary reaffirmation of membership and loyalty to the Tropical Hut Employees Union-NATU and the National Association of Trade Unions in the event it hires additional personnel. SO ORDERED. (pp. 312-313, Rollo) The petitioner employees appealed the decision of the respondent National Labor Relations Commission to the Secretary of Labor. On February 23, 1976, the Secretary of Labor rendered a decision affirming the findings of the Commission, which provided inter alia: We find, after a careful review of the record, no sufficient justification to alter the decision appealed from except that portion of the dispositive part which states: . . . this Commission . . . hereby orders respondent company under pain of being cited for contempt for failure to do so, to give the individual complainants a second chance by reemploying them upon their voluntary reaffirmation of membership and loyalty to the Tropical Hut Employees UNION-NATU and the National Association of Trade Union in the event it hires additional personnel.
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Compliance by respondent of the above undertaking is not immediately feasible considering that the same is based on an uncertain event, i.e., reemployment of individual complainants "in the event that management hires additional personnel," after they shall have reaffirmed their loyalty to THEU-NATU, which is unlikely. In lieu of the foregoing, and to give complainants positive relief pursuant to Section 9, Implementing Instruction No. 1. dated November 9, 1972, respondent is hereby ordered to grant to all the individual complainants financial assistance equivalent to one (1) month salary for every year of service. WHEREFORE, with the modification as above indicated, the Decision of the National Labor Relations Commission is hereby affirmed. SO ORDERED.(pp. 317-318, Rollo) From the various pleadings filed and arguments adduced by petitioners and respondents, the following issues appear to be those presented for resolution in this petition to wit: 1) whether or not the petitioners failed to exhaust administrative remedies when they immediately elevated the case to this Court without an appeal having been made to the Office of the President; 2) whether or not the disaffiliation of the local union from the national federation was valid; and 3) whether or not the dismissal of petitioner employees resulting from their unions disaffiliation for the mother federation was illegal and constituted unfair labor practice on the part of respondent company and federation. We find the petition highly meritorious. The applicable law then is the Labor Code, PD 442, as amended by PD 643 on January 21, 1975, which states: Art. 222. Appeal . . . xxx xxx xxx Decisions of the Secretary of Labor may be appealed to the President of the Philippines subject to such conditions or limitations as the President may direct. (Emphasis ours) The remedy of appeal from the Secretary of Labor to the Office of the President is not a mandatory requirement before resort to courts can be had, but an optional relief provided by law to parties seeking expeditious disposition of their labor disputes. Failure to avail of such relief shall not in any way served as an impediment to judicial intervention. And where the issue is lack of power or arbitrary or improvident exercise thereof, decisions of the Secretary of Labor may be questioned in a certiorari proceeding without prior appeal to the President (Arrastre Security Association TUPAS v. Ople, No. L-45344, February 20, 1984, 127 SCRA 580). Since the instant petition raises the same issue of grave abuse of discretion of the Secretary of Labor amounting to lack of or in excess of jurisdiction in deciding the controversy, this Court can properly take cognizance of and resolve the issues raised herein. This brings Us to the question of the legality of the dismissal meted to petitioner employees. In the celebrated case of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, L-33187, September 4, 1975, 66 SCRA 512, We held that the validity of the dismissals pursuant to the union security clause in the collective bargaining agreement hinges on the validity of the disaffiliation of the local union from the federation. The right of a local union to disaffiliate from its mother federation is well-settled. 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. This right is consistent with the constitutional guarantee of
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freedom of association (Volkschel Labor Union v. Bureau of Labor Relations, No. L-45824, June 19, 1985, 137 SCRA 42). 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 and to engage in concerted activities for their mutual aid or protection. This is a fundamental right of labor that derives its existence from the Constitution. In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws or rules or regulations, We have always adopted the liberal approach which favors the exercise of labor rights. Relevant on this point is the basic principle We have repeatedly in affirmed in many rulings: . . . 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 the locals into the national union (PAFLU) was in furtherance of the same end. These associations are consensual entities capable of entering into such legal relations with their member. 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, 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. (Adamson & Adamson, Inc. v. CIR, No. L-35120, January 31, 1984, 127 SCRA 268; Elisco-Elirol Labor Union (NAFLU) v. Noriel, No. L-41955, December 29, 1977, 80 SCRA 681; Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., supra). The inclusion of the word NATU after the name of the local union THEU in the registration with the Department of Labor is merely to stress that the THEU is NATU's affiliate at the time of the registration. It does not mean that the said local union cannot stand on its own. Neither can it be interpreted to mean that it cannot pursue its own interests independently of the federation. A local union owes its creation and continued existence to the will of its members and not to the federation to which it belongs. When the local union withdrew from the old federation to join a new federation, it was merely exercising its primary right to labor organization for the effective enhancement and protection of common interests. 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 (People's Industrial and Commercial Employees and Workers Organization (FFW) v. People's Industrial and Commercial Corporation, No. 37687, March 15, 1982, 112 SCRA 440). There is nothing in the constitution of the NATU or in the constitution of the THEU-NATU that the THEU was expressly forbidden to disaffiliate from the federation (pp. 62, 281, Rollo), The alleged noncompliance of the local union with the provision in the NATU Constitution requiring the service of three months notice of intention to withdraw did not produce the effect of nullifying the disaffiliation for the following grounds: firstly, NATU was not even a legitimate labor organization, it appearing that it was not registered at that time with the Department of Labor, and therefore did not possess and acquire, in the first place, the legal personality to enforce its constitution and laws, much less the right and privilege under the Labor Code to organize and affiliate chapters or locals within its group, and secondly, the act of non-compliance with the procedure on withdrawal is premised on purely technical grounds which cannot rise above the fundamental right of self-organization. Respondent Secretary of Labor, in affirming the decision of the respondent Commission, concluded that the supposed decision to disaffiliate was not the subject of a free and open discussion and decision on the part of the THEU-NATU general membership (p. 305, Rollo). This, however, is contradicted by the
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evidence on record. Moreover, We are inclined to believe Arbitrator Villatuya's findings to the contrary, as follows: . . . . However, the complainants refute this allegation by submitting the following: a) Letter dated December 20, 1.973 signed by 142 members (Exhs. "B to B-5") resolution dated January 12, 1974, signed by 140 members (Exhs. "H to H-6") letter dated February 26, 1974 to the Department of Labor signed by 165 members (Exhs. "I to I-10"); d) letter dated January 30, 1974 to the Secretary of the National Defense signed by 144 members (Exhs. "0 to 0-5") and; e) letter dated March 6, 1974 signed by 146 members addressed to the President of the Philippines (Exhs. "HH to HH-5"), to show that in several instances, the members of the THEU-NATU have acknowledged their disaffiliation from NATU. The letters of the complainants also indicate that an overwhelming majority have freely and voluntarily signed their union's disaffiliation from NATU, otherwise, if there was really deception employed in securing their signatures as claimed by NATU/ Dilag, it could not be possible to get their signatures in five different documents. (p. 144, Rollo) We are aware of the time-honored doctrine that the findings of the NLRC and the Secretary of Labor are binding on this Court if supported by substantial evidence. However, in the same way that the findings of facts unsupported by substantial and credible evidence do not bind this Court, neither will We uphold erroneous conclusions of the NLRC and the Secretary of Labor when We find that the latter committed grave abuse of discretion in reversing the decision of the labor arbiter (San Miguel Corporation v. NLRC, L-50321, March 13, 1984, 128 SCRA 180). In the instant case, the factual findings of the arbitrator were correct against that of public respondents. Further, there is no merit in the contention of the respondents that the act of disaffiliation violated the union security clause of the CBA and that their dismissal as a consequence thereof is valid. A perusal of the collective bargaining agreements shows that the THEU-NATU, and not the NATU 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 (pp. 667706, Rollo). Although NATU was designated as the sole bargaining agent in the check-off authorization form attached to the CBA, this simply means it was acting only for and in behalf of its affiliate. The NATU possessed the status of an agent while the local union remained the basic principal union which entered into contract with the respondent company. When the THEU disaffiliated from its mother federation, the former did not lose its legal personality as the bargaining union under the CBA. Moreover, the union security clause embodied in the agreements cannot be used to justify the dismissals meted to petitioners since it is not applicable to the circumstances obtaining in this case. The CBA imposes dismissal only in case an employee is expelled from the union for joining another federation or for forming another union or who fails or refuses to maintain membership therein. The case at bar does not involve the withdrawal of merely some employees from the union but of the whole THEU itself from its federation. Clearly, since there is no violation of the union security provision in the CBA, there was no sufficient ground to terminate the employment of petitioners. Public respondents considered the existence of Arturo Dilag's group as the remaining true and valid union. We, however, are inclined to agree instead with the Arbitrator's findings when he declared: . . . . Much more, the so-called THEU-NATU under Dilag's group which assumes to be the original THEU-NATU has a very doubtful and questionable existence not to mention that the alleged president is performing supervisory functions and not qualified to be a bona fide member of the rank and file union. (p. 146, Rollo) Records show that Arturo Dilag had resigned in the past as President of THEU-NATU because of his promotion to a managerial or supervisory position as Assistant Unit Manager of respondent Company. Petitioner Jose Encinas replaced Dilag as President and continued to hold such position at the time of the disaffiliation of the union from the federation. It is therefore improper and contrary to law for Dilag to reassume the leadership of the remaining group which was alleged to be the true union since he belonged
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to the managerial personnel who could not be expected to work for the betterment of the rank and file employees. Besides, managers and supervisors are prohibited from joining a rank and file union (Binalbagan Isabela Sugar Co., Inc. (BISCOM) v. Philippine Association of Free Labor Unions (PAFLU), et al., L-18782, August 29, 1963, 8 SCRA 700). Correspondingly, if a manager or supervisor organizes or joins a rank and file union, he will be required to resign therefrom (Magalit, et al. v. Court of Industrial Relations, et al., L-20448, May 25, 1965,14 SCRA 72). Public respondents further submit that several employees who disaffiliate their union from the NATU subsequently retracted and reaffirmed their membership with the THEU-NATU. In the decision which was affirmed by respondent Secretary of Labor, the respondent Commission stated that: . . . out of the alleged one hundred and seventy-one (171) members of the THEU-CGW whose signatures appeared in the "Analysis of Various Documents Signed by Majority Members of the THEU-CGW, (Annex "T", Complainants), which incidentally was relied upon by Arbitrator Villatuya in holding that complainant THEU-CGW commanded the majority of employees in respondent company, ninety-three (93) of the alleged signatories reaffirmed their membership with the THEU-NATU and renounced whatever connection they may have had with other labor unions, (meaning the complainant THEU-CGW) either through resolution or membership application forms they have unwittingly signed." (p. 306, Rollo) Granting arguendo, that the fact of retraction is true, the evidence on record shows that the letters of retraction were executed on various dates beginning January 11, 1974 to March 8, 1974 (pp. 278280, Rollo). This shows that the retractions were made more or less after the suspension pending dismissal on January 11, 1974 of Jose Encinas, formerly THEU-NATU President, who became THEUCGW President, and the suspension pending their dismissal of the other elected officers and members of the THEU-CGW on January 15, 1974. It is also clear that some of the retractions occurred after the suspension of the first set of workers numbering about twenty-four (24) on March 5, 1974. There is no use in saying that the retractions obliterated the act of disaffiliation as there are doubts that they were freely and voluntarily done especially during such time when their own union officers and co-workers were already suspended pending their dismissal. Finally, with regard to the process by which the workers were suspended or dismissed, this Court finds that it was hastily and summarily done without the necessary due process. The respondent company sent a letter to petitioners herein, advising them of NATU/Dilag's recommendation of their dismissal and at the same time giving them forty-eight (48) hours within which to comment (p. 637, Rollo). When petitioners failed to do so, respondent company immediately suspended them and thereafter effected their dismissal. This is certainly not in fulfillment of the mandate of due process, which is to afford the employee to be dismissed an opportunity to be heard. The prerogative of the employer to dismiss or lay-off an employee should be done without abuse of discretion or arbitrainess, for what is at stake is not only the employee's name or position but also his means of livelihood. Thus, the discharge of an employee from his employment is null and void where the employee was not formally investigated and given the opportunity to refute the alleged findings made by the company (De Leon v. NLRC, L-52056, October 30, 1980, 100 SCRA 691). Likewise, an employer can be adjudged guilty of unfair labor practice for having dismissed its employees in line with a closed shop provision if they were not given a proper hearing (Binalbagan-Isabela Sugar Co., Inc.,(BISCOM) v. Philippine Association of Free Labor Unions (PAFLU) et al., L-18782, August 29, 1963, 8 SCRA 700). In view of the fact that the dispute revolved around the mother federation and its local, with the company suspending and dismissing the workers at the instance of the mother federation then, the company's liability should be limited to the immediate reinstatement of the workers. And since their dismissals were effected without previous hearing and at the instance of NATU, this federation should be held liable to the petitioners for the payment of their backwages, as what We have ruled in the Liberty Cotton Mills Case (supra).
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ACCORDINGLY, the petition is hereby GRANTED and the assailed decision of respondent Secretary of Labor is REVERSED and SET ASIDE, and the respondent company is hereby ordered to immediately reinstate all the petitioner employees within thirty (30) days from notice of this decision. If reinstatement is no longer feasible, the respondent company is ordered to pay petitioners separation pay equivalent to one (1) month pay for every year of service. The respondent NATU federation is directed to pay petitioners the amount of three (3) years backwages without deduction or qualification. This decision shall be immediately executory upon promulgation and notice to the parties. ELISCO-ELIROL LABOR UNION (NAFLU) vs. CARMELO NORIEL; G.R. No. L-41955 December 29, 1977 The Court sets aside respondent director's appealed resolution and rules in accordance with the prevailing law and settled jurisprudence that the petitioner union consisting of the members-employees of respondent corporation is the principal party to the collective bargaining agreement (rather than the respondent mother union which is merely its agent) and is therefore entitled to be recognized as the sole and exclusive bargaining representative entitled to administer and enforce the collective bargaining agreement with the employer corporation. The undisputed antecedent facts which gave rise to the present petition are stated in the petition as follows: 2. That sometime on February 1974, petitioner-Elisco Elirol Labor Union (NAFLU), negotiated and executed a collective bargaining agreement with respondent-Elizalde Steel Consolidated, Inc.1 3. That upon verification by individual petitioners at the Registration division, Bureau of Labor Relations, Department of Labor, the Elisco-Elirol Labor Union (NAFLU), the contracting party in said collective bargaining agreement, was not then registered and therefore not entitled to the benefits and privileges embodied in said collective bargaining agreement; thus on March 3, 1975, the member of petitioner-appellant union in a general membership meeting decided in a resolution to register their union to protect and preserve the integrity and inviolability of the collective bargaining agreement between the Elisco-Elirol Labor Union (NAFLU) and the Elizalde Steel Consolidated, Inc. 4. That said resolution of the members of petitioner-appellant union was passed upon by the officers and members of the Board of Directors on May 20, 1975, at a special meeting called for the purpose, resolution No. 6, s. 1975 was approved requesting the Acting Directors, Registration Division, Bureau of Labor Relations, to register the union EliscoElirol Labor Union (NAFLU). 5. That by virtue of resolution No. 6, Petitioner-appellant union applied for registration with the Bureau of Labor Relations, hence on May 28, 1975, Certificate of Registration No. 8511-IP was issued by said Office. 6. That with the issuance of the certificate of registration petitioner-appellant acquired a personality separate and distinct from any other labor union. 7. That steps were taken by petitioner-appellant to enforce the collective bargaining agreement as the principal party to the same representing the workers covered by such agreement immediately after the issuance of the certificate of registration. 8. That on June 10, 1975, at a special meeting called for the purpose, the general membership of petitioner union decided that their mother union, the National Federation of Labor Unions, can no longer safeguard the rights of its members insofar as working
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conditions and other terms of employment are concerned and that the interest and welfare of petitioner can be served best if it will stay independent and disaffiliated from said mother union, hence, the general membership adopted a resolution to disaffiliate from the National Federation of Labor Unions. 9. That on June 11, 1975, petitioner, acting through its President Hilario Riza informed respondents of said disaffiliation by means of a letter, and subsequently requested respondents to recognize petitioner as the sole and exclusive bargaining representative of the employees thereof. 10. That respondent without any justifiable reason refused and continues to refuse to recognize petitioner as the sole and exclusive bargaining representative of its employees, and, now actually dismissed the petitioner union's officers and board members. 2 In this connection, a complaint for unfair labor practice was filed by petitioners against respondents for the latter's refusal to bargain collectively with petitioner, which complaint is presently docketed as Case No. LR-RO4-6-1662. 11. That by virtue of said refusal of respondent company to recognize petitioner as the sole and exclusive bargaining representative of the employees, petitioners filed a petition before the Bureau of Labor Relations, Department of Labor on July 2, 1975, with Case No. LR-861 against respondents Elizalde Steel Consolidated, Inc. and the National Federation of Labor Unions be ordered to stop from presenting itself as the collective bargaining agent and pursuant thereto, a writ of preliminary mandatory and prohibitory injunction be issued. 12. That on August 19, 1975. the Bureau of Labor Relations, through Med-Arbiter Reynaldo B. Carta, before whom the case was beard, issued an Order dismissing the petition for lack of merit. On appeal to respondent Director of the Bureau of Labor Relations, said respondent issued his Resolution of October 30, 1975 affirming the dismissal of petitioner-union's petition as follows: On February, 1974 the members of the petitioner union who were then yet affiliated with the National Association of Free Labor Union negotiated and executed with the respondent company a collective bargaining agreement with expiry date in November, 1976. On May 28, 1975, after the same members, by valid resolution of the Board of directors and approved by the general membership, have formed themselves into an i t organization and applied for registration as a union, a certificate of registration was issued by the Department of Labor. And on June 10, 1975 again by a valid resolution the same members disaffiliated with the NAFLU. The issue for resolution is Which of the two unions should be recognized as the sole and exclusive bargaining representative of the employees and ultimately recognized to administer and supervise the enforcement of the collective bargaining agreement. Petitioner-union contends that it having the necessary interest and being the real party must be the sole union to be recognized and given authority to bargain with the company.
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Setting aside jurisprudence and the collective bargaining agreement of the parties, the appellant is correct. For to grant to the former mother union (NAFLU) the authority to administer and enforce their collective bargaining agreement without presumably any members in the bargaining unit is quite absurd. But to transfer also the authority to the newly formed union although the members of the same were the same members who composed then the local chapter of the mother union is also in violation of the CBA particularly article IV which is the union security clause, wherein it is a condition for a continued employment in the company to maintain membership in the Union. Theoreticallytherefore, when the employees disaffiliated from the mother union and formed themselves into a new union, their status as employees was also terminated. As such they could not therefore absolutely and legally claim that they still comprise the majority of the bargaining unit. Secondly, to vest, upon the new union the authority to bargain is in violation of the whole CBA, under the theory that when the mother union (NAFLU) entered and executed the same in its separate and distinct personality aside from the people composing the same. In fine, the CBA then was executed by and between the company and the (NAFLU) with the latter as an entity having its own capacity and personality different from the members composing the same. Lastly, to preserve and avoid unstability and disorder in the labor movement as correctly ruled by the med-arbiter, the status quo should be preserved, there being no compelling reason to alter the same.3 Hence, the petition at bar. We find the petition to be clearly meritorious and reverse the appealed resolution. 1. Respondent director correctly perceived in his Resolution that "to grant to the former mother union (NAFLU) the authority to administer and enforce their collective bargaining agreement without presumably any members in the bargaining unit is quite absurd" but fell unto the grave error of holding that "When the employees disaffiliated from the mother union and formed themselves into a new union, their status as employees was also terminated." His error was in not perceiving that the employees and members of the local union did not form a new union but merely registered the local union as was their right. Petitioner Elisco-Elirol Labor UnionNAFLU, consisting of employees and members of the local union was the principal party to the agreement. NAFLU as the "mother union" in participation in the execution of the bargaining agreement with respondent company acted merely as agent of the local union, which remained the basic unit of the association existing principally and freely to serve the common interest of all its members, including the freedom to disaffiliated when the circumstances so warranted as in the present case. 2. Contrary to respondent director's misimpression, our jurisprudence fully supports 'petitioner's stand. In Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.4 , the Court expressly cited and affirmed the basic principle that "(T)he 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 the locals into the national union (as PAFLU) 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 affirmation 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, 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."
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Corollarily, the "substitutionary" doctrine likewise fully supports petitioner's stand. Petitioner union to whom the employees owe their allegiance has from the beginning expressly avowed that it "does not intend to change and/or amend the provisions of the present collective bargaining agreement but only to be given the chance to enforce the same since there is a shift of allegiance in the majority of the employees at respondent company." As was stressed by the Court in Benguet Consolidated Inc. vs. BCI Employees & W Union-PAFLU5 ... This principle, formulated by the NLRB as its initial compromise solution to the problem facing it when there occurs a shift in employees' union allegiance after the execution of a bargaining contract with their employer, merely states that even during the effectivity of a collective bargaining agreement executed between employer and employees thru their agent, the employees can change said agent but the contract continues to bind then up to its expiration date. They may bargain however for the shortening of said expiration date. In formulating the "substitutionary" doctrine, the only consideration involved as the employees' interest in the existing bargaining agreement. The agent's interest never entered the picture. In fact, the justification for said doctrine was: ... that the majority of the employees, as an entity under the statute, is the true party in interest to the contract, holding rights through the agency of the union representative. Thus, any exclusive interest claimed by the agent is defeasible at the will of the principal. 3. It need only be mentioned finally that the Secretary of Labor in his decision of April 23, 1976 and order of January 10, 1977 denying reconsideration in the sister unfair labor practice case and ordering respondent corporation to immediately lift the suspension and reinstate the complainant officers and board members of petitioner union6 has likewise adhered to the foregoing basic principles and settled jurisprudence in contrast to respondent director (as well as therein respondent NLRC which similarly adhered to the archaic and illogical view that the officers and board members of petitioner local union committed an "act of disloyalty" in disaffiliating from the mother union when practically all its members had so voted to disaffiliate and the mother union [as mere agent] no longer had any local union or members to represent), ruling that "(G)ranting arguendo that the disaffiliation from the NAFLU is a legal cause for expulsion and dismissal, it could not detract from the fact that only 13 individual complainants out of almost 700 members who disaffiliated, were singled out for expulsion and recommended for dismissal. The actuation of NAFLU conclusively constitute discrimination. Since the suspension of the complainants was effected at the instance of NAFLU, it should be held liable to the payment of back wages." The Presidential Assistant for Legal Affairs Ronaldo B. Zamora has likewise dismissed as untenable in a similar case respondents' views that "such maintenance of membership" clause be distorted as "intended for the security of the union rather than the security of tenure for the workers", ruling that "(W)hat is paramount, as it is expressly and explicitly emphasize in an exacting language under the New Constitution, is the security of tenure of the workers, not the security of the union. To impress, therefore, such "maintenance of membership" which is intended for the security of the union rather than the security of tenure of the workers as a bar to employees' changing their affiliation is not only to infringe on the constitutional right of freedom of association, but also to trample upon the constitutional right of workers to security of tenure and to render meaningless whatever "adequate social services" the State may establish or maintain in the field of employment "to guarantee the enjoyment by the people of a decent standard of living."7 It is expected that with this decision, any suspension or lay-off of the complainants officers and board members or employees of petitioner union arising from the respondents' misconception of the clearly applicable principles and jurisprudence upholding the primacy of the employees and their freely chosen local union as the true party in interest to the collective bargaining agreement will be forthwith rectified and set aside.
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ACCORDINGLY, the petition is granted and the appealed resolution is set aside and petitioner local union is declared to be the sole and exclusive bargaining representative of the employees of respondent corporation entitled to administer and enforce any subsisting collective bargaining agreement with said employer corporation. This decision shall be immediately executory upon its promulgation. S.S. VENTURES INTERNATIONAL, INC. vs. S.S. VENTURES LABOR UNION (SSVLU); G.R. No. 161690 July 23, 2008 Petitioner S.S. Ventures International, Inc. (Ventures), a PEZA-registered export firm with principal place of business at Phase I-PEZA-Bataan Export Zone, Mariveles, Bataan, is in the business of manufacturing sports shoes. Respondent S.S. Ventures Labor Union (Union), on the other hand, is a labor organization registered with the Department of Labor and Employment (DOLE) under Certificate of Registration No. RO300-00-02-UR-0003. On March 21, 2000, the Union filed with DOLE-Region III a petition for certification election in behalf of the rank-and-file employees of Ventures. Five hundred forty two (542) signatures, 82 of which belong to ______________________ * Additional member as per Special Order No. 509 dated July 1, 2008. terminated Ventures employees, appeared on the basic documents supporting the petition. On August 21, 2000, Ventures filed a Petition1 to cancel the Unions certificate of registration invoking the grounds set forth in Article 239(a) of the Labor Code.2 Docketed as Case No. RO300-0008-CP-002 of the same DOLE regional office, the petition alleged the following: (1) The Union deliberately and maliciously included the names of more or less 82 former employees no longer connected with Ventures in its list of members who attended the organizational meeting and in the adoption/ratification of its constitution and by-laws held on January 9, 2000 in Mariveles, Bataan; and the Union forged the signatures of these 82 former employees to make it appear they took part in the organizational meeting and adoption and ratification of the constitution; (2) The Union maliciously twice entered the signatures of three persons namely: Mara Santos, Raymond Balangbang, and Karen Agunos; (3) No organizational meeting and ratification actually took place; and (4) The Unions application for registration was not supported by at least 20% of th e rank-and-file employees of Ventures, or 418 of the total 2,197-employee complement. Since more or less 82 of the 5003signatures were forged or invalid, then the remaining valid signatures would only be 418, which is very much short of the 439 minimum (2197 total employees x 20% = 439.4) required by the Labor Code.4 In its Answer with Motion to Dismiss,5 the Union denied committing the imputed acts of fraud or forgery and alleged that: (1) the organizational meeting actually took place on January 9, 2000 at the Shoe City basketball court in Mariveles; (2) the 82 employees adverted to in Ventures petition were qualified Union members for, although they have been ordered dismissed, the one-year prescriptive period to question their dismissal had not yet lapsed; (3) it had complied with the 20%-member registration requirement since it had 542 members; and (4) the "double" signatures were inadvertent human error. In its supplemental reply memorandum6 filed on March 20, 2001, with attachments, Ventures cited other instances of fraud and misrepresentation, claiming that the "affidavits" executed by 82 alleged Union members show that they were deceived into signing paper minutes or were harassed to signing their
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attendance in the organizational meeting. Ventures added that some employees signed the "affidavits" denying having attended such meeting. In a Decision dated April 6, 2001, Regional Director Ana C. Dione of DOLE-Region III found for Ventures, the dispositive portion of which reads: Viewed in the light of all the foregoing, this office hereby grants the petition. WHEREFORE, this office resolved to CANCEL Certificate of Registration No. [RO300-00-02-UR-0003] dated 28 February 2000 of respondent S.S. Ventures Labor Union-Independent. So Ordered.7 Aggrieved, the Union interposed a motion for reconsideration, a recourse which appeared to have been forwarded to the Bureau of Labor Relations (BLR). Although it would later find this motion to have been belatedly filed, the BLR, over the objection of Ventures which filed a Motion to Expunge, gave it due course and treated it as an appeal. Despite Ventures motion to expunge the appeal,8 the BLR Director rendered on October 11, 2002 a decision9 in BLR-A-C-60-6-11-01, granting the Unions appeal and reversing the decision of Dione. The fallo of the BLRs decision reads: WHEREFORE, the appeal is hereby GRANTED. The Decision of Director Ana C. Dione dated 6 April 2001 is hereby REVERSED and SET ASIDE. S.S. Ventures Labor Union-Independent shall remain in the roster of legitimate labor organizations. SO ORDERED.10 Ventures sought reconsideration of the above decision but was denied by the BLR. Ventures then went to the Court of Appeals (CA) on a petition for certiorari under Rule 65, the recourse docketed as CA-G.R. SP No. 74749. On October 20, 2003, the CA rendered a Decision,11 dismissing Ventures petition. Ventures motion for reconsideration met a similar fate.12 Hence, this petition for review under Rule 45, petitioner Ventures raising the following grounds: I. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN DISREGARDING THE SUBSTANTIAL AND OVERWHELMING EVIDENCE ADDUCED BY THE PETITIONER SHOWING THAT RESPONDENT UNION PERPETRATED FRAUD, FORGERY, MISREPRESENTATION AND MISSTATEMENTS IN CONNECTION WITH THE ADOPTION AND RATIFICATION OF ITS CONSTITUTION AND BY-LAWS, AND IN THE PREPARATION OF THE LIST OF MEMBERS WHO TOOK PART IN THE ALLEGED ORGANIZATIONAL MEETING BY HOLDING THAT: A. THE 87 AFFIDAVITS OF ALLEGED UNION MEMBERS HAVE NO EVIDENTIARY WEIGHT. B. THE INCLUSION OF THE 82 EMPLOYEES IN THE LIST OF ATTENDEES TO THE JANUARY 9, 2000 MEETING IS AN INTERNAL MATTER WITHIN THE AMBIT OF THE WORKERS
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RIGHT TO SELF-ORGANIZATION AND OUTSIDE THE SPHERE OF INFLUENCE (OF) THIS OFFICE (PUBLIC RESPONDENT IN THIS CASE) AND THE PETITIONER. II. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN IGNORING AND DISREGARDING THE BLATANT PROCEDURAL LAPSES OF THE RESPONDENT UNION IN THE FILING OF ITS MOTION FOR RECONSIDERATION AND APPEAL. A. BY GIVING DUE COURSE TO THE MOTION FOR RECONSIDERATION FILED BY THE RESPONDENT UNION DESPITE THE FACT THAT IT WAS FILED BEYOND THE REGLEMENTARY PERIOD. B. BY ADMITTING THE APPEAL FILED BY ATTY. ERNESTO R. ARELLANO AND HOLDING THAT THE SAME DOES NOT CONSTITUTE FORUM SHOPPING UNDER SUPREME COURT CIRCULAR NO. 28-91. III. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN INVOKING THE CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION AND ILO CONVENTION NO. 87 TO JUSTIFY THE MASSIVE FRAUD, MISREPRESENTATION, MISSTATEMENTS AND FORGERY COMMITTED BY THE RESPONDENT UNION.13 The petition lacks merit. The right to form, join, or assist a union is specifically protected by Art. XIII, Section 3 14 of the Constitution and such right, according to Art. III, Sec. 8 of the Constitution and Art. 246 of the Labor Code, shall not be abridged. Once registered with the DOLE, a union is considered a legitimate labor organization endowed with the right and privileges granted by law to such organization. While a certificate of registration confers a union with legitimacy with the concomitant right to participate in or ask for certification election in a bargaining unit, the registration may be canceled or the union may be decertified as the bargaining unit, in which case the union is divested of the status of a legitimate labor organization.15 Among the grounds for cancellation is the commission of any of the acts enumerated in Art. 239(a)16 of the Labor Code, such as fraud and misrepresentation in connection with the adoption or ratification of the unions constitution and like documents. The Court, has in previous cases, said that to decertify a union, it is not enough to show that the union includes ineligible employees in its membership. It must also be shown that there was misrepresentation, false statement, or fraud in connection with the application for registration and the supporting documents, such as the adoption or ratification of the constitution and by-laws or amendments thereto and the minutes of ratification of the constitution or bylaws, among other documents.17 Essentially, Ventures faults both the BLR and the CA in finding that there was no fraud or misrepresentation on the part of the Union sufficient to justify cancellation of its registration. In this regard, Ventures makes much of, first, the separate hand-written statements of 82 employees who, in gist, alleged that they were unwilling or harassed signatories to the attendance sheet of the organizational meeting.
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We are not persuaded. As aptly noted by both the BLR and CA, these mostly undated written statements submitted by Ventures on March 20, 2001, or seven months after it filed its petition for cancellation of registration, partake of the nature of withdrawal of union members hip executed after the Unions filing of a petition for certification election on March 21, 2000. We have in precedent cases 18 said that the employees withdrawal from a labor union made before the filing of the petition for certification election is presumed voluntary, while withdrawal after the filing of such petition is considered to be involuntary and does not affect the same. Now then, if a withdrawal from union membership done after a petition for certification election has been filed does not vitiate such petition, is it not but logical to assume that such withdrawal cannot work to nullify the registration of the union? Upon this light, the Court is inclined to agree with the CA that the BLR did not abuse its discretion nor gravely err when it concluded that the affidavits of retraction of the 82 members had no evidentiary weight. It cannot be over-emphasized that the registration or the recognition of a labor union after it has submitted the corresponding papers is not ministerial on the part of the BLR. Far from it. After a labor organization has filed the necessary registration documents, it becomes mandatory for the BLR to check if the requirements under Art. 23419 of the Labor Code have been sedulously complied with.20 If the unions application is infected by falsification and like serious irregularities, especially those appearing on the face of the application and its attachments, a union should be denied recognition as a legitimate labor organization. Prescinding from these considerations, the issuance to the Union of Certificate of Registration No. RO300-00-02-UR-0003 necessarily implies that its application for registration and the supporting documents thereof are prima facie free from any vitiating irregularities. Second, Ventures draws attention to the inclusion of 82 individuals to the list of participants in the January 9, 2000 organizational meeting. Ventures submits that the 82, being no longer connected with the company, should not have been counted as attendees in the meeting and the ratification proceedings immediately afterwards. The assailed inclusion of the said 82 individuals to the meeting and proceedings adverted to is not really fatal to the Unions cause for, as determined by the BLR, the allegations of falsification of signatures or misrepresentation with respect to these individuals are without basis. 21 The Court need not delve into the question of whether these 82 dismissed individuals were still Union members qualified to vote and affix their signature on its application for registration and supporting documents. Suffice it to say that, as aptly observed by the CA, the procedure for acquiring or losing union membership and the determination of who are qualified or disqualified to be members are matters internal to the union and flow from its right to self-organization. To our mind, the relevancy of the 82 individuals active participation in the Unions organiz ational meeting and the signing ceremonies thereafter comes in only for purposes of determining whether or not the Union, even without the 82, would still meet what Art. 234(c) of the Labor Code requires to be submitted, to wit: Art. 234. Requirements of Registration.Any applicant labor organization x x x 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: xxxx (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. The BLR, based on its official records, answered the poser in the affirmative. Wrote the BLR:
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It is imperative to look into the records of respondent union with this Bureau pursuant to our role as a central registry of union and CBA records under Article 231 of the Labor Code and Rule XVII of the rules implementing Book V of the Labor Code, as amended x x x. In its union records on file with this Bureau, respondent union submitted the names of [542] members x x x. This number easily complied with the 20% requirement, be it 1,928 or 2,202 employees in the establishment. Even subtracting the 82 employees from 542 leaves 460 union members, still within 440 or 20% of the maximum total of 2,202 rank-and-file employees. Whatever misgivings the petitioner may have with regard to the 82 dismissed employees is better addressed in the inclusion-exclusion proceedings during a pre-election conference x x x. The issue surrounding the involvement of the 82 employees is a matter of membership or voter eligibility. It is not a ground to cancel union registration. (Emphasis added.) The bare fact that three signatures twice appeared on the list of those who participated in the organizational meeting would not, to our mind, provide a valid reason to cancel Certificate of Registration No. RO300-00-02-UR-0003. As the Union tenably explained without rebuttal from Ventures, the double entries are no more than "normal human error," effected without malice. Even the labor arbiter who found for Ventures sided with the Union in its explanation on the absence of malice. 22 The cancellation of a unions registration doubtless has an impairing dimension on the right of labor to self-organization. Accordingly, we can accord concurrence to the following apt observation of the BLR: "[F]or 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."231avvphi1 In its Comment, the Union points out that for almost seven (7) years following the filing of its petition, no certification election has yet been conducted among the rank-and-file employees. If this be the case, the delay has gone far enough and can no longer be allowed to continue. The CA is right when it said that Ventures should not interfere in the certification election by actively and persistently opposing the certification election of the Union. A certification election is exclusively the concern of employees and the employer lacks the legal personality to challenge it.24 In fact, jurisprudence frowns on the employers interference in a certification election for such interference unduly creates the impression that it intends to establish a company union.25 Ventures allegations on forum shopping and the procedural lapse supposedly committed by the BLR in allowing a belatedly filed motion for reconsideration need not detain us long. Suffice it to state that this Court has consistently ruled that the application of technical rules of procedure in labor cases may be relaxed to serve the demands of substantial justice.26 So it must be in this case. WHEREFORE, the petition is DENIED. The Decision and Resolution dated October 20, 2003 and January 19, 2004, respectively, of the CA are AFFIRMED. S.S. Ventures Labor Union shall remain in the roster of legitimate labor organizations, unless it has in the meantime lost its legitimacy for causes set forth in the Labor Code. Costs against petitioner. ME-SHURN CORPORATION AND SAMMY CHOU vs. ME-SHURN WORKERS UNION-FSM AND ROSALINA* CRUZ; G.R. No. 156292 January 11, 2005 To justify the closure of a business and the termination of the services of the concerned employees, the law requires the employer to prove that it suffered substantial actual losses. The cessation of a companys operations shortly after the organization of a labor union, as well as the resumption of business barely a month after, gives credence to the employees claim that t he closure was meant to discourage union membership and to interfere in union activities. These acts constitute unfair labor practices.
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The Case Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to annul the November 29, 2002 Decision2 of the Court of Appeals (CA) in CA-GR SP No. 69675, the decretal portion of which reads: "UPON THE VIEW WE TAKE OF THIS CASE, THUS, the judgment must be, as it hereby is, AFFIRMED, and the present petition DISMISSED for lack of merit. Costs shall be taxed against petitioners."3 The affirmed November 29, 2001 Decision4 of the National Labor Relations Commission (NLRC), Third Division, disposed as follows: "WHEREFORE, the decision appealed from is hereby SET ASIDE, and respondent Me-Shurn Corp. is hereby ordered to pay the complainants who appeared in the proceedings conducted by the Labor Arbiter their full backwages from the date their wages were withheld from them to the date of the finality of this decision."5 The Facts On June 7, 1998, the regular rank and file employees of Me-Shurn Corporation organized Me-Shurn Workers Union-FSM, an affiliate of the February Six Movement (FSM).6 Respondent union had a pending application for registration with the Bureau of Labor Relations (BLR) through a letter dated June 11, 1998.7 Ten days later, or on June 17, 1998, petitioner corporation started placing on forced leave all the rank and file employees who were members of the unions bargaining unit.8 On June 23, 1998, respondent union filed a Petition for Certification Election with the Med-Arbitration Unit of the Department of Labor and Employment (DOLE), Regional Office No. 3. 9 Instead of filing an answer to the Petition, the corporation filed on July 27, 1998, a comment stating that it would temporarily lay off employees and cease operations, on account of its alleged inability to meet the export quota required by the Board of Investment. 10 While the Petition was pending, 184 union members allegedly submitted a retraction/withdrawal thereof on July 14, 1998. As a consequence, the med-arbiter dismissed the Petition. On May 7, 1999, Department of Labor and Employment (DOLE) Undersecretary Rosalinda Dimapilis-Baldoz granted the unions appeal and ordered the holding of a certification election among the rank and file employees of the corporation.11 Meanwhile, on August 4, 1998, respondent union filed a Notice of Strike against petitioner corporation on the ground of unfair labor practice (illegal lockout and union busting). This matter was docketed as Case No. NCMB-RO3-BEZ-NZ-08-42-98.12 On August 31, 1998, Chou Fang Kuen (alias Sammy Chou, the other petitioner herein) and Raquel Lamayra (the Filipino administrative manager of the corporation) imposed a precondition for the resumption of operation and the rehiring of laid off workers. He allegedly required the remaining union officers to sign an Agreement containing a guarantee that upon their return to work, no union or labor organization would be organized. Instead, the union officers were to serve as mediators between labor and management.13 After the signing of the Agreement, the operations of the corporation resumed in September 1998.14
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On November 5, 1998, the union reorganized and elected a new set of officers. Respondent Rosalina Cruz was elected president.15 Thereafter, it filed two Complaints docketed as NLRC Case Nos. RAB-III-11-958698 and RAB-III-09-0322-99. These cases were consolidated and assigned to Labor Arbiter Henry Isorena for compulsory arbitration. Respondents charged petitioner corporation with unfair labor practice, illegal dismissal, underpayment of wages and deficiency in separation pay, for which they prayed for damages and attorneys fees. The corporation countered that because of economic reversals, it was compelled to close and cease its operations to prevent serious business losses; that under Article 283 of the Labor Code, it had the right to do so; that in August 1998, it had paid its 342 laid off employees separation pay and benefits in the total amount ofP1,682,863.88; and that by virtue of these payments, the cases had already become moot and academic. It also averred that its resumption of operations in September 1998 had been announced and posted at the Bataan Export Processing Zone, and that some of the former employees had reapplied. Petitioner corporation questioned the legality of the representation of respondent union. Allegedly, it was not the latter, but the Me-Shurn Independent Employees Union -- with Christopher Malit as president -that was recognized as the existing exclusive bargaining agent of the rank and file employees and as the one that had concluded a Collective Bargaining Agreement (CBA) with the corporation on May 19, 1999.16 Hence, the corporation asserted that Undersecretary Dimapilis-Baldozs Decision ordering the holding of a certification election had become moot and academic. On the other hand, respondents contested the legality of the formation of the Me-Shurn Independent Employees Union and petitioners recognition of it as the exclusive bargaining agent of the employees. Respondents argued that the pendency of the representation issue before the DOLE had barred the alleged recognition of the aforementioned union. Labor Arbiter Isorena dismissed the Complaints for lack of merit. He ruled that (1) actual and expected losses justified the closure of petitioner corporation and its dismissal of its employees; (2) the voluntary acceptance of separation pay by the workers precluded them from questioning the validity of their dismissal; and (3) the claim for separation pay lacked factual basis.171a\^/phi1.net On appeal, the NLRC reversed the Decision of Labor Arbiter Isorena. Finding petitioners guilty of unfair labor practice, the Commission ruled that the closure of the corporation shortly after respondent union had been organized, as well as the dismissal of the employees, had been effected under false pretenses. The true reason therefor was allegedly to bar the formation of the union. Accordingly, the NLRC held that the illegally dismissed employees were entitled to back wages.18 After the denial of their Motion for Reconsideration,19 petitioners elevated the cases to the CA via a Petition for Certiorari under Rule 65.20 They maintained that the NLRC had committed grave abuse of discretion and serious errors of fact and law in reversing the Decision of the labor arbiter and in finding that the corporations cessation of operations in August 1998 had been tainted with unfair labor p ractice. Petitioners added that respondent unions personality to represent the affected employees had already been repudiated by the workers themselves in the certification election conducted by the DOLE. Pursuant to the Decision of Undersecretary Dimapilis-Baldoz in Case No. RO3 00 9806 RU 001, a certification election was held on September 7, 2000, at the premises of petitioner corporation under the supervision of the DOLE. The election had the following results: "Me Shurn Workers Union-FSM 1 No Union 135 Spoiled 2
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Challenged 52 Total Votes Cast 190"21 Ruling of the Court of Appeals The CA dismissed the Petition because of the failure of petitioners to submit sufficient proof of business losses. It found that they had wanted merely to abort or frustrate the formation of respondent union. The burden of proving that the dismissal of the employees was for a valid or authorized cause rested on the employer. The appellate court further affirmed the unions legal personality to represent the employees. It held that (1) registration was not a prerequisite to the right of a labor organization to litigate; and (2) the cases may be treated as representative suits, with respondent union acting for the benefit of all its members. Hence, this Petition.22 Issues In their Supplemental Memorandum, petitioners submit the following issues for our consideration: "(1) Whether the dismissal of the employees of petitioner Meshurn Corporation is for an authorized cause, and (2) Whether respondents can maintain a suit against petitioners."23 The Courts Ruling The Petition lacks merit. First Issue: Validity of the Dismissal The reason invoked by petitioners to justify the cessation of corporate operations was alleged business losses. Yet, other than generally referring to the financial crisis in 1998 and to their supposed difficulty in obtaining an export quota, interestingly, they never presented any report on the financial operations of the corporation during the period before its shutdown. Neither did they submit any credible evidence to substantiate their allegation of business losses. Basic is the rule in termination cases that the employer bears the burden of showing that the dismissal was for a just or authorized cause. Otherwise, the dismissal is deemed unjustified. Apropos this responsibility, petitioner corporation should have presented clear and convincing evidence 24 of imminent economic or business reversals as a form of affirmative defense in the proceedings before the labor arbiter or, under justifiable circumstances, even on appeal with the NLRC. However, as previously stated, in all the proceedings before the two quasi-judicial bodies and even before the CA, no evidence was submitted to show the corporations alleged business losses. It is only now that petitioners have belatedly submitted the corporations income tax returns from 1996 to 1999 as proof of alleged continued losses during those years.1awphi1.nt
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Again, elementary is the principle barring a party from introducing fresh defenses and facts at the appellate stage.25 This Court has ruled that matters regarding the financial condition of a company -those that justify the closing of its business and show the losses in its operations -- are questions of fact that must be proven below.26Petitioners must bear the consequence of their neglect. Indeed, their unexplained failure to present convincing evidence of losses at the early stages of the case clearly belies the credibility of their present claim.27 Obviously, on the basis of the evidence -- or the lack thereof -- the appellate court cannot be faulted for ruling that the NLRC did not gravely abuse its discretion in finding that the closure of petitioner corporation was not due to alleged financial losses. At any rate, even if we admit these additional pieces of evidence, the circumstances surrounding the cessation of operations of the corporation reveal the doubtful character of its supposed financial reason. First, the claim of petitioners that they were compelled to close down the company to prevent further losses is belied by their resumption of operations barely a month after the corporation supposedly folded up. Moreover, petitioners attribute their loss mainly to their failure to obtain an export quota from the Garments and Textile Export Board (GTEB). Yet, as pointed out by respondents, the corporation resumed its business without first obtaining an export quota from the GTEB. Besides, these export quotas pertain only to business with companies in the United States and do not preclude the corporation from exporting its products to other countries. In other words, the business that petitioner corporation engaged in did not depend entirely on exports to the United States. If it were true that these export quotas constituted the determining and immediate cause of the closure of the corporation, then why did it reopen for business barely a month after the alleged cessation of its operations? Second, the Statements of Income and Deficit for the years 1996 and 1997 show that at the beginning of 1996, the corporation had a deficit of P2,474,505. Yet, the closure was effected only after more than a year from such year-end deficit; that is, in the middle of 1998, shortly after the formation of the union. On the other hand, the Statement of Income and Deficit for the year 1998 does not reflect the extent of the losses that petitioner corporation allegedly suffered in the months prior to its closure in July/August 1998. This document is not an adequate and competent proof of the alleged losses, considering that it resumed operations in the succeeding month of September. Upon careful study of the evidence, it is clear that the corporation was more profitable in 1997 than in 1996. By the end of 1997, it had a net income of P1,816,397. If petitioners were seriously desirous of averting losses, why did the corporation not close in 1996 or earlier, when it began incurring deficits? They have not satisfactorily explained why the workers dismissal was effected only after the formation of respondent union in September 1998. We also take note of the allegation that after several years of attempting to organize a union, the employees finally succeeded on June 7, 1998. Ten days later, without any valid notice, all of them were placed on forced leave, allegedly because of lack of quota. All these considerations give credence to their claim that the closure of the corporation was a mere subterfuge, "a systematic approach intended to dampen the enthusiasm of the union members." 28
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Third, as a condition for the rehiring of the employees, the union officers were made to sign an agreement that they would not form any union upon their return to work. This move was contrary to law. Fourth, notwithstanding the Petition for Certification Election filed by respondents and despite knowledge of the pendency thereof, petitioners recognized a newly formed union and hastily signed with it an alleged Collective Bargaining Agreement. Their preference for the new union was at the expense of respondent union. Moncada Bijon Factory v. CIR29 held that an employer could be held guilty of discrimination, even if the preferred union was not company-dominated. Fifth, petitioners were not able to prove their allegation that s ome of the employees contracts had expired even before the cessation of operations. We find this claim inconsistent with their position that all 342 employees of the corporation were paid their separation pay plus accrued benefits in August 1998. Sixth, proper written notices of the closure were not sent to the DOLE and the employees at least one month before the effectivity date of the termination, as required under the Labor Code. Notice to the DOLE is mandatory to enable the proper authorities to ascertain whether the closure and/or dismissals were being done in good faith and not just as a pretext for evading compliance with the employers just obligations to the affected employees. 30 This requirement is intended to protect the workers right to security of tenure. The absence of such requirement taints the dismissal. All these factors strongly give credence to the contention of respondents that the real reason behind the shutdown of the corporation was the formation of their union. Note that, to constitute an unfair labor practice, the dismissal need not entirely and exclusively be motivated by the unions activities or affiliations. It is enough that the discrimination was a contributing factor.31 If the basic inspiration for the act of the employer is derived from the affiliation or activities of the union, the former s assignment of another reason, no matter how seemingly valid, is unavailing.32 Concededly, the determination to cease operations is a management prerogative that the State does not usually interfere in. Indeed, no business can be required to continue operating at a loss, simply to maintain the workers in employment. That would be a taking of property without due process of law.l^vvphi1.net But where it is manifest that the closure is motivated not by a desire to avoid further losses, but to discourage the workers from organizing themselves into a union for more effective negotiations with management, the State is bound to intervene.33 Second Issue: Legal Personality of Respondent Union Neither are we prepared to believe petitioners argument that respondent union was not legitimate. It should be pointed out that on June 29, 1998, it filed a Petition for Certification Election. While this Petition was initially dismissed by the med-arbiter on the basis of a supposed retraction, note that the appeal was granted and that Undersecretary Dimapilis-Baldoz ordered the holding of a certification election. The DOLE would not have entertained the Petition if the union were not a legitimate labor organization within the meaning of the Labor Code. Under this Code, in an unorganized establishment, only a legitimate union may file a petition for certification election.34 Hence, while it is not clear from the record whether respondent union is a legitimate organization, we are not readily inclined to believe otherwise, especially in the light of the pro-labor policies enshrined in the Constitution and the Labor Code.35
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Verily, the union has the requisite personality to sue in its own name in order to challenge the unfair labor practice committed by petitioners against it and its members.36 "It would be an unwarranted impairment of the right to self-organization through formation of labor associations if thereafter such collective entities would be barred from instituting action in their representative capacity." 37 Finally, in view of the discriminatory acts committed by petitioners against respondent union prior to the holding of the certification election on September 27, 2000 -- acts that included their immediate grant of exclusive recognition to another union as a bargaining agent despite the pending Petition for certification election -- the results of that election cannot be said to constitute a repudiation by the affected employees of the unions right to represent them in the present case. CATALINO ALGIRE vs. REGALADO DE MESA; G.R. No. 97622 October 19, 1994 This petition for certiorari seeks to nullify and set aside the decision dated January 31, 1991 of the Secretary of Labor which reversed on appeal the Order dated December 20, 1990 issued by Med-arbiter Rolando S. dela Cruz declaring petitioners as the duly-elected officers of the Universal Robina Textile Monthly Salaried Employees union (URTMSEU) as well as the order dated March 5, 1991 denying petitioner Catalino Algire's motion for reconsideration. The case arose out of the election of the rightful officers to represent the union in the Collective Bargaining Agreement (CBA) with the management of Universal Robina Textile at its plant in Km. 50, Bo. San Cristobal, Calamba, Laguna. Universal Robina Textile Monthly Salaried Employees Union, (URTMSEU), through private respondent Regalado de Mesa, filed on September 4, 1990 a petition for the holding of an election of union officers with the Arbitration Branch of the Department of Labor and Employment (DOLE). Acting thereon, DOLE's med-arbiter Rolando S. de la Cruz issued an Order dated October 19, 1990 directing that such an election be held. In the pre-election conference, it was agreed that the election by secret ballot be conducted on November 15, 1990 between petitioners (Catalino Algire, et al.) and private respondents (Regalado de Mesa, et al.) under the supervision of DOLE through its duly appointed representation officer. The official ballot contained the following pertinent instructions: Nais kong pakatawan sa grupo ni: LINO ALGIRE REGALADO and DE MESA his officers and his officers 1. Mark Check (/) or cross (x) inside the box specified above who among the two contending parties you desire to be represented for the purpose of collecting bargaining. 2. This is a secret ballot. Don't write any other markings. 1 The result of the election were as follows: Lino Algire group 133 Regalado de Mesa 133 Spoiled 6
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Total votes cast 272 On November 19, 1990, Catalino Algire filed a Petition and/or Motion (RO 400-9009-AU-002), which DOLE's Med Arbitration unit treated as a protest, to the effect that one of the ballots wherein one voter placed two checks inside the box opposite the phrase "Lino Algire and his officers," hereinafter referred to as the "questioned ballot," should not have been declared spoiled, as the same was a valid vote in their favor. The group argued that the two checks made even clearer the intention of the voter to exercise his political franchise in favor of Algire's group. During the schedules hearing thereof, both parties agreed to open the envelope containing the spoiled ballots and it was found out that, indeed, one ballot contained two (2) checks in the box opposite petitioner Algire's name and his officers. On December 20, 1990, med-arbiter de la Cruz issued an order declaring the questioned ballot valid, thereby counting the same in Algire's favor and accordingly certified petitioner's group as the union's elected officers. 2 Regalado de Mesa, et al. appealed from the decision of the med-arbiter to the Secretary of Labor in Case No. OS-A-1-37-91 (RO 400-9009-AU-002). On January 31, 1991, the latter's office granted the appeal and reversed the aforesaid Order. In its stead, it entered a new one ordering "the calling of another election of officers of the Universal Robina Textile Monthly Salaried Employees Union (URTMSEU), with the same choices as in the election of 15 November, 1990, after the usual pre-election conference." 3 Director Maximo B. Lim of the Industrial Relations Division, Regional Office No. IV of the DOLE set the hearing for another pre-election conference on March 22, 1991, reset to April 2, 1991, and finally reset to April 5, 1991. Catalino Algire's group filed a motion for reconsideration of the Order. It was denied for lack of merit and the decision sought to be reconsidered was sustained. Algire, et al. filed this petition on the following issues: (1) the Secretary of Labor erred in applying Sections 1 and 8 (6), Rule VI, Book V of the Rules and Regulations implementing the Labor Code to the herein case, considering that the case is an intra-union activity, which act constitutes a grave abuse in the exercise of authority amounting to lack of jurisdiction. (2) the assailed decision and order are not supported by law and evidence. with an ex-parte motion for issuance of a temporary restraining order, alleging that the assailed decision of the office of the Secretary of Labor as public respondent is by nature immediately executory and the holding of an election at any time after April 5, 1991, would render the petition moot and academic unless restrained by this Court. On April 5, 1991, we issued a temporary restraining order enjoining the holding of another election of union officers pursuant to the January 31, 1991 decision. 4 There is no merit in the petition.
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The contention of the petitioner is that a representation officer (referring to a person duly authorized to conduct and supervise certification elections in accordance with Rule VI of the Implementing Rules and Regulations of the Labor Code) can validly rule only on on-the-spot questions arising from the conduct of the elections, but the determination of the validity of the questioned ballot is not within his competence. Therefore, any ruling made by the representation officer concerning the validity of the ballot is deemed an absolute nullity because such is the allegation it was done without or in excess of his functions amounting to lack of jurisdiction. To resolve the issue of union representation at the Universal Robina Textile plant, what was agreed to be held at the company's premises and which became the root of this controversy, was a consent election, not a certification election. It is unmistakable that the election held on November 15, 1990 was a consent election and not a certification election. It was an agreed one, the purpose being merely to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit. It is a separate and distinct process and has nothing to do with the import and effort of a certification election. 5 The ruling of DOLE's representative in that election that the questioned ballot is spoiled is not based on any legal provision or rule justifying or requiring such action by such officer but simply in pursuance of the intent of the parties, expressed in the written instructions contained in the ballot, which is to prohibit unauthorized markings thereon other than a check or a cross, obviously intended to identify the votes in order to preserve the sanctity of the ballot, which is in fact the objective of the contending parties. If indeed petitioner's group had any opposition to the representation officer's ruling that the questioned ballot was spoiled, it should have done so seasonably during the canvass of votes. Its failure or inaction to assail such ballot's validity shall be deemed a waiver of any defect or irregularity arising from said election. Moreover, petitioners even question at this stage the clear instruction to mark a check or cross opposite the same of the candidate's group, arguing that such instruction was not clear, as two checks "may be interpreted that a voter may vote for Lino Algire but not with (sic) his officers or vice-versa," 6 notwithstanding the fact that a pre-election conference had already been held where no such question was raised. In any event, the choice by the majority of employees of the union officers that should best represent them in the forthcoming collective bargaining negotiations should be achieved through the democratic process of an election, the proper forum where the true will of the majority may not be circumvented but clearly defined. The workers must be allowed to freely express their choice once and for all in a determination where anything is open to their sound judgment and the possibility of fraud and misrepresentation is minimized, if not eliminated, without any unnecessary delay and/or maneuvering. WHEREFORE, the petition is DENIED and the challenged decision is hereby AFFIRMED. WARREN MANUFACTURING WORKERS UNION (WMWU) vs. THE BUREAU OF LABOR RELATIONS; G.R. No. 76185 March 30, 1988 This is a petition for review on certiorari with prayer for a preliminary injunction and/or the issuance of a restraining order seeking to set aside: (1) Order of the Med-Arbiter dated August 18,1986, the dispositive portion of which reads: WHEREFORE, premises considered, a certification election is hereby ordered conducted to determine the exclusive bargaining representative of all the rank and file employees of Warren Manufacturing Corporation, within 20 days from receipt of this Order, with the following choices:
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1. Philippine Agricultural, Commercial and Industry Workers Union (PACIWU); 2. Warren Mfg. Workers Union; 3. Samahan ng Manggagawa sa Warren Mfg. Corporation petitionANGLO; and 4. No Union. The representation Officer is hereby directed to call the parties to a pre- election conference to thresh out the mechanics for the conduct of the actual election. SO ORDERED. (Rollo, p. 15). and (2) the Resolution dated October 7, 1986 of the Officer-in-Charge of the Bureau of Labor dismissing the appeals of Warren Manufacturing Corporation and herein petitioner (Annex "B", Rollo, pp. 16-18). This certification case had its inception in an intra-union rivalry between the petitioner and the respondent Philippine Agricultural, Commercial and Industrial Workers Union (PACIWU for short) since 1985. The undisputed facts of this case as found by the Med-Arbiter of the Bureau of Labor Relations are as follows: On June 13,1985, PACIWU filed a petition for certification election, alleging compliance with the jurisdictional requirements. On July 7, 1985, respondent thru counsel filed a motion to dismiss the petition on the ground that there exist a C.BA between the respondent and the Warren Mfg. Union which took effect upon its signing on July 16, 1985 and to expire on July 31, 1986. While the petition was under hearing, PACIWU filed a Notice of Strike and on conciliation meeting, a Return-to-Work Agreement was signed on July 25,1985, stipulating, among others, as follows: To resolve the issue of union representation at Warren Mfg- Corp. parties have agreed to the holding of a consent election among the rank and file on August 25, 1985 at the premises of the company to be supervised by MOLE. ... It is cleanly understood that the certified union in the said projected election shall respect and administer the existing CBA at the company until its expiry date on July 31, 1986. On 12 August 1985, an Order was issued by this Office, directing that a consent election be held among the rank and file workers of the company, with the following contending unions: 1. Philippine Agricultural, Commercial and Industrial Workers Union (PACIWU) 2. Warren Mfg. Workers Union;
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3. No Union. On August 25, 1985, said consent election was held, and yielded the following results: PACIWU----------------------------94 WMWU----------------------------193 Feeling aggrieved, however, PACIWU filed an Election Protest. In December, 1985 a Notice of Strike was again filed by the union this time with the Valenzuela branch office of this Ministry, and after conciliation, the parties finally agreed, among others, to wit: In consideration of this payment, ... individual complaints and PACIWU hereby agree and covenant that the following labor complaints/disputes are considered amicably settled and withdrawn/dismissed, to wit: ... On the basis of a Joint Motion to Dismiss filed by the parties, the Election Protest filed by the PACIWU was ordered dismissed. (Rollo, pp. 12-13). On June 5, 1986, the PACIWU filed a petition for certification election followed by the filing of a petition for the same purposes by the Samahan ng Manggagawa sa Warren Manufacturing Corporation-Alliance of Nationalist and Genuine Labor Organizations (Anglo for short) which petitions were both opposed by Warren Manufacturing Corporation on the grounds that neither petition has 30% support; that both are barred by the one-year no certification election law and the existence of a duly ratified CBA. The therein respondent, therefore, prayed that the petitions for certification election be dismissed. (Rollo, pp. 11-12). As above stated, the Med-Arbiter of the National Capital Region, Ministry of Labor and Employment, ordered on August 8, 't 986 the holding of a certification election within twenty 20) days from receipt to determine the exclusive bargaining representative of all the rank and file employees of the Warren se Manufacturing Corporation, with the above-mentioned choices. Both Warren Manufacturing Corporation and petitioner herein filed separate motions, treated as appeals by the Bureau of Labor Relations, which dismissed the same for lack of merit. Hence, this petition. This petition was filed solely by the Warren Manufacturing Workers Union, with the company itself opting not to appeal. The Second Division of this Court in the resolution of November 3, 1986 without giving due course to the petition, required the respondents to comment and issued the temporary, restraining order prayed for (Rollo, pp. 18-20). The comment of the respondent PACIWU was filed on November 27, 1986 ( Ibid., pp. 29-32). The public respondent through the Hon. Solicitor General filed its Comment to the petition on December 10, 1986 (Ibid., pp. 34-43) and private respondent ANGLO, filed its comment on December 16, 1986 ( Ibid., pp. 4551). The petitioner with leave of court filed its reply to comment entitled a rejoinder on January 6,1987 (Ibid., pp. 52-62). In the resolution of January 26, 1987, the petition was given due course and the parties were required to submit their respective memoranda (Ibid., p. 76).
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Memorandum for public respondent was filed on February 20,1987 ( Ibid., p. 82-88). Respondent PACIWU's memorandum was filed on March 18, 1987 ( Ibid., pp. 95-99). SMWMCANGLO'S Memorandum was filed on March 23,1987 (Ibid., pp. 100-1 09) and the petitioner's memorandum was filed on March 31,1987 (Ibid., pp. 110-120). In its memorandum, petitioner raised the following issues: A. The holding of a certification election at the bargaining unit is patently premature and illegal. B. The petition filed by private respondents do not have the statutory 30% support requirement. C. Petitioner was denied administrative due process when excluded from med-arbitration proceedings. The petition is devoid of merit. A. Petitioner's contention is anchored on the following grounds: Section 3, Rule V of the Implementing Rules and Regulations of the Labor Code provides, among others: ... however no certification election may be held within one (1) year from the date of the issuance of the declaration of a final certification result. and Article 257, Title VII, Book V of the Labor Code provides: No certification election issue shall be entertained by the Bureau in any Collective Bargaining Agreement existing between the employer and a legitimate labor organization. Otherwise stated, petitioner invoked the one-year no certification election rule and the principle of the Contract Bar Rule. This contention is untenable. The records show that petitioner admitted that what was held on August 25,1985 at the Company's premises and which became the root of this controversy, was a consent election and not a certification election (Emphasis supplied). As correctly distinguished by private respondent, a consent election is an agreed one, its purpose being merely to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit while a certification election is aimed at determining the sole and exclusive bargaining agent of all the employees in an appropriate bargaining unit for the purpose of collective bargaining. From the very nature of consent election, it is a separate and distinct process and has nothing to do with the import and effect of a certification election. Neither does it shorten the terms of an existing CBA nor entitle the participants thereof to immediately renegotiate an existing CBA although it does not preclude the workers from exercising their right to choose their sole and exclusive bargaining representative after the expiration of the sixty (60) day freedom period. In fact the Med-Arbiter in the Return to Work Agreement signed by the parties emphasized the following:
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To resolve the issue of union representation at Warren Mfg. Corp., parties have agreed to the holding of a consent election among the rank and file on August 25,1985 at the premises of the company to be supervised by the Ministry of Labor and Employment ..... It is clearly understood that the certified union in the said projected election shall respect and administer the existing CBA at the company until its expiry date on July 31, 1986. (Rollo, pp. 46, 48-49). It is, therefore, unmistakable that the election thus held on August 25, 1985 was not for the purpose of determining which labor union should be the bargaining representative in the negotiation for a collective contract, there being an existing collective bargaining agreement yet to expire on July 31, 1986; but only to determine which labor union shag administer the said existing contract. Accordingly, the following provisions of the New Labor Code apply: ART. 254. Duty to bargain collectively when there exists a collective bargaining agreement.When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. Corollary to the above, Article 257 of the New Labor Code expressly states that No certification election issue shall be entertained if a collective agreement which has been submitted in accordance with Article 231 of this Code exists between the employer and a legitimate labor organization except within sixty (60) days prior to the expiration of the life of such certified collective bargaining agreement." (Rollo, pp. 83-84) Thus, as stated by this Court in General Textiles Allied Workers Association v. the Director of the Bureau of labor Relations (84 SCRA 430 [19781) "there should be no obstacle to the right of the employees to petition for a certification election at the proper time. that is, within 60 days prior to the expiration of the three year period ... Finally, such premature agreement entered into by the petitioner and the Company on June 2, 1986 does not adversely affect the petition for certification election filed by respondent PACIWU (Rollo, p. 85). Section 4, Rule V, Book V of the Omnibus Rules Implementing the Labor Code clearly provides: Section 4. Effect of Early Agreement.There representation case shall not, however, be adversely affected by a collective agreement submitted before or during the last sixty days of a subsisting agreement or during the pendency of the representation case. Apart from the fact that the above Rule is clear and explicit, leaving no room for construction or interpretation, it is an elementary rule in administrative law that administrative regulations and policies enacted by administrative bodies to interpret the law which they are entrusted to enforce, have the force of law and are entitled to great respect (Espanol v. Philippine Veterans Administration, 137 SCRA 314 [1985)). As aforestated, the existing collective bargaining agreement was due to expire on July 31, 1 986. The MedArbiter found that a sufficient number of employees signified their consent to the filing of the petition and 107 employees authorized intervenor to file a motion for intervention. Otherwise stated, he found that the petition and intervention were supported by more than 30% of the members of the bargaining unit. In the light of these facts, Article 258 of the Labor Code makes it mandatory for the Bureau of Labor Relations to
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conduct a certification election (Samahang Manggagawa ng Pacific Mills, Inc. v. Noriel, et al., 134 SCRA 152 [1985]). In the case of Federation of Free Workers (Bisig ng Manggagawa sa UTEX v. Noriel etc., et al., 86 SCRA 132 [1978]), this Court was even more specific when it stated "No administrative agency can ignore the imperative tone of the above article. The language used is one of command. Once it has been verified that the petition for certification election has the support of at least 30% of the employees in the bargaining unit, it must be granted, The specific word used can yield no other meaning. It becomes under the circumstances, "mandatory"..." The finality of the findings of fact of the Med-Arbiter that the petition and intervention filed in the case at bar were supported by 30% of the members of the workers is clear and definite. WHEREFORE, the instant Petition is DISMISSED UST FACULTY UNION (USTFU) vs. Dir. BENEDICTO ERNESTO R. BITONIO JR; G.R. No. 131235 November 16, 1999 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:
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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 MedArbiter, 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-ODM-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
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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
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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 selforganization. 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 selforganization. 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 Courts Ruling
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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
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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, aunion 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
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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
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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 bylaws 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
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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. ORIENTAL TIN CAN LABOR UNION vs. HON. BIENVENIDO E. LAGUESMA G.R. No. 116751 August 28, 1998 Respondent (in G.R. No. 116751) and petitioner (in sister case G.R. No. 116779), Oriental Tin Can and Metal Sheet Manufacturing Company, Inc. (the company) is engaged in the manufacture of tin can containers and metal sheets. On March 3, 1994, it entered into a collective bargaining agreement (CBA) with petitioner Oriental Tin Can Labor Union (OTCLU) as the existing CBA was due to expire on April 15, 1994. Four days later, 248 of the company's rank-and-file employees authorized the Federation of Free Workers (FFW) to file a petition for certification election. 1 On March 10, 1994, however, this petition was repudiated via a written waiver 2 by 115 of the signatories who, along with other employees totalling 897, ratified the CBA on the same date. On March 18, 1994, armed with Charter Certificate No. IV-MEE-089, respondent Oriental Tin Can Workers Union Federation of Free Workers (OTCWU-FFW) filed a petition for certification election with the National Capital Region office of the Department of Labor and Employment (DOLE), pursuant to Article 256 of the Labor Code. Purporting to represent the regular rank-and-file employees of the company, the petition was accompanied by the "authentic signatures" of 25% of the employees/workers in the bargaining unit. The OTCLU filed a manifestation and motion on April 15, 1994, praying for the dismissal of the petition for certification election on the ground that it was not endorsed by at least 25% of the employees of the bargaining unit. Some of the employees who initially signed the petition had allegedly withdrawn in writing such support prior to the filing of the same. The OTCWU-FFW filed a reply to said manifestation and motion, claiming that the retraction of support for the petition was "not verified under oath" and, therefore, had no legal and binding effect. It further asserted that the petition had the required support of more than 25% of all the employees in the bargaining unit.
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For its part, the company filed a comment alleging inter alia that the new CBA was ratified by 897 out of the 1,020 rank-and-file employees within the bargaining unit. The OTCLU then filed a motion to dismiss and/or position paper reiterating its position that the petition did not comply with the 25% signature requirement and maintaining that the new CBA was a bar to a certification election. To said comment and motion to dismiss, the OTCWU-FFW filed a consolidated reply, alleging that "an employer has no legal personality to oppose a petition for certification election; that there are only 882 rank and file workers in the bargaining unit and not 1,020 which included supervisors and workers hired after the filing of the petition; that those who gave their support to the filing of the petition did not withdraw or retract the same before or after the petition was filed; the Collective Bargaining Agreement (CBA) between respondent company and Forced Intervenor (OTCLU) is a sweetheart contract and concluded within the freedom period; and that additional employees gave their support to the petition after the same was filed." 3 The company filed a rejoinder to said consolidated reply, asserting its objection to the petition for certification election because the case at bar "involves a collective bargaining agreement which was ratified by 897 employees including the 245 workers who had earlier given their consent to the filing of the petition; that the benefits provided for therein are being enjoyed by the workers themselves; that a certification election would impair the said contract; that the officers of (OTCWU-FFW) were among those who ratified the CBA; and (OTCWU-FFW) failed to name the supervisors and workers hired after the filing of the petition that were allegedly included in the list of rank and file employees." 4 In the meantime, on April 18, 1994, the DOLE issued a certificate of registration of the CBA pursuant to Article 231 of the Labor Code, as amended by Republic Act No. 6715. It showed that the CBA between the company and the OTCLU would have the force and effect of law between the parties that had complied with the requirements and standards for registration thereof. On June 1, 1994, the officers of the OTCWU-FFW walked out of their jobs, prompting the company to require them to explain in writing why no disciplinary action should be taken against them for walking out en masse. The following day, said union filed a notice of strike with the National Conciliation and Mediation Board (NCMB) grounded on the alleged dismissal of union members/officers. Two days later, the company directed said officers to report back to work within 48 hours, but none of them did. In an order dated June 7, 1994, Med-Arbiter Renato D. Parugo dismissed the petition for certification election for lack of merit. Noting that the petition was filed after the valid retractions were made, he concluded that by the withdrawal of support to the petition by 115 workers, the remaining 133 of the 1,020 employees were clearly less than the 25% subscription requirement. Thus, he opined: There is merit to the Company's contention that by subsequently ratifying the CBA, the employees in effect withdrew their previous support to the petition. Thus, when the petition was filed on March 18, 1994, it did not have the required consent of the employees within the bargaining unit. Another factor which militates against the petition is the fact that actually there are 1,020 rank and file workers in the bargaining unit. Twenty-five percent (25%) of this is 255, but admittedly only 248 union members had originally authorized the filing of the petition. The law expressly requires that a petition for certification election should be supported by the written consent of at least 25% of all the employees in the bargaining unit at the time of the filing thereof. In view of the circumstances obtaining in the case at bar, we are constrained to order the dismissal of the instant petition. Furthermore, it would be in the interest of industrial peace to deny the holding of a certification election among the rank and file workers of respondent Company during the effectivity of the new CBA it appearing that out of 1,020 rank and file employees, 897 have ratified the same and the benefits of which are currently being enjoyed by all covered employees of respondent Company. 5
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The OTCWU-FFW appealed this ruling to the Labor Secretary. On June 18, 1994, however, during the pendency of the appeal, said union staged a strike that prevented the free ingress and egress of nonstriking employees, delivery trucks and other vehicles to and from the company's premises. Upon complaint of the company, the National Labor Relations Commission (NLRC) issued a writ of preliminary injunction on July 19, 1994, on the ground that the strike caused the company to incur daily losses amounting to P3.6 million. Meanwhile, on July 15, 1994, Undersecretary Bienvenido E. Laguesma, acting on the appeal of the OTCWU-FFW, issued a resolution 6 holding that: An examination of the records of this case shows that the subject CBA was concluded during the 60-day freedom period of the old CBA which expired on 15 April 1994, and registered with the Regional Office of this Department on 18 April 1994 while the petition for certification election was filed on 18 March 1994. It is therefore, crystal clear that, the present petition was filed during the freedom period and no registered CBA in the respondent establishment could be invoked (to) pose as a bar to the holding of a certification election. In other words, when the said CBA was registered there was a pending representation case. Consequently, said CBA cannot bar the election being prayed for. This is the rule contained in Section 4, Rule V of the Rules and Regulations Implementing the Labor Code, as amended, which provides that: Sec. 4. Effects of early agreements. The representation case shall not, however, be adversely affected by a collective bargaining agreement registered before or during the last sixty (60) days of a subsisting agreement or during the pendency of the representation case. (Emphasis supplied) On the issue of whether the 25% support requirement for filing the petition for certification election had been met, Undersecretary Laguesma opined thus: The rule being followed in case of alleged retractions and withdrawals, as appellant correctly pointed out, is that the best forum for determining whether there was (sic) indeed retractions is the certification election itself wherein the workers can freely express their choice in a secret ballot. (Atlas Free Workers Union vs. Noriel, et al., 104 SCRA 565) The argument of (OTCLU) that since the withdrawal was made prior to the filing of the petition it should be presumed voluntary and therefore, has adversely affected the petition, lacks merit. The Supreme Court ruling cited in support of the argument (i.e. La Suede Cigar and Cigarette Factory, et al. vs. Director of the Bureau of Labor Relations, et al., 123 SCRA 679) is not squarely applicable in the present case. For while in the said case it was undisputably (sic) shown that 31 members have withdrawn their support to the petition, in the present case, the employees who supposedly withdrew from the union executed joint statements (Sama-samang Pahayag) declaring that the "WAIVER" document they signed has no force and effect considering that it was the product of duress, force and intimidation employed by the company after it learned of the petition for certification election, and reiterating their wish to be given the opportunity to choose the union of their choice. Said statements raised doubts on the voluntariness of the retractions, destroyed the presumption that retractions made before the filing of the petition are deemed voluntary and consequently brought the present case outside the mantle of the Atlas ruling He added that even if there were 1,020 rank-and-file employees in the bargaining unit, the signatures gathered sufficed to meet the 25% support requirement because the Sama-samang Pahayag invalidating the previous "Waiver," contained 359 signatures which, when added to the 165 signatures submitted by the OTCWU-FFW on May 27, 1994, brought the total to 524, much more than the required 25% of the alleged 1,020 rank-and-file employees. Moreover, in case of doubt, the DOLE tends to favor the conduct
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of certification election, for the rule on simultaneous submission of the consent signatures and the petition should be liberally interpreted. As such, "contracts where the identity of the authorized representative of the workers is in doubt must be rejected in favor of a more certain indication of the will of the workers. Any stability that does not establish the type of industrial peace contemplated by the law must be subordinated to the employees' freedom to choose their real representative." Accordingly, Undersecretary Laguesma disposed of the appeal as follows: WHEREFORE, the appeal of the petitioner is hereby granted and the Order of the MedArbiter is hereby set aside. In lieu thereof, a new order is hereby issued directing the conduct of a certification election among the regular rank and file employees of the Oriental Tin Can and Metal Sheet Manufacturing, with the following as choices: 1. Oriental Tin Can Workers Union Federation of Free Workers (OTCWU-FFW); 2. Oriental Tin Can Labor Union (OTCLU); 3. No Union. Let therefore, the entire 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. The payrolls three (3) months before the filing of the petition shall be the basis of the list of eligible voters. SO RESOLVED. Herein petitioners filed a motion for reconsideration of said resolution, but this was denied for lack of merit in the resolution dated August 22, 1994. From this resolution, the company and the OTCLU filed separate petitions forcertiorari before this Court. G. R. No. 116779 In assailing the resolution of July 15, 1994, the company raises in issue the following grounds to show that the Labor Secretary, through Undersecretary Laguesma, gravely abused his discretion in: (a) ordering the conduct of a certification election even though the employees who signed the petition therefor had withdrawn their support by ratifying the CBA and even though no certification election could be conducted without the written consent of at least 25% of all the employees in the bargaining unit, and (b) ruling, in effect, "that the provision of Article 256 of the Labor Code takes precedence over that of Article 253 of the same Code." The company concedes that, as an employer, it should "remain a bystander in the entire process of selection by the employees of their bargaining representative, since the exercise is indisputably an allemployee affair." Nonetheless, it justifies its "right to question the filing of the petition for certification election" by the situation "where, the small number of employees, the very ones who had earlier supported the petition for certification election, subsequently changed their mind, and ratified the CBA and thereafter reaped from its bounty." 7 Thus, in its desire to maintain industrial peace, the company deemed it necessary to challenge the propriety of holding a certification election. This argument is misleading. It is a well-established rule that certification elections are exclusively the concern of employees; hence, the employer lacks the legal personality to challenge the same. 8 In Golden Farms, Inc. v. Secretary of Labor, 9 the Court declared:
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. . . Law and policy demand that employers take a strict, hands-off stance in certification elections. The bargaining representative of employees should be chosen free from any extraneous influence of management. A labor bargaining representative, to be effective, must owe its loyalty to the employees alone and to no other. The only instance when an employer may concern itself with employee representation activities is when it has to file the petition for certification election because there is no existing CBA in the unit and it was requested to bargain collectively, pursuant to Article 258 of the Labor code. 10 After filing the petition, the role of the employer ceases and it becomes a mere bystander. 11 The company's interference in the certification election below by actively opposing the same is manifestly uncalled-for and unduly creates a suspicion that it intends to establish a company union. 12 On this score, it is clear that the perceived grave abuse of discretion on the part of the Labor Secretary is non-existent and G.R. No. 116779 should, consequently, be dismissed. This case will now proceed and decided on the merits of the issues raised in G.R. No. 116751. G.R. No. 116751 The OTCLU contends that the Labor Secretary acted without jurisdiction or with grave abuse of discretion: (a) in "imposing upon the employees the manner of choosing their collective bargaining representative by ordering a certification election notwithstanding the fact that the overwhelming majority of the employees have already decided to retain the petitioner (OCTLU) as their collective bargaining representative," and (b) in giving due course to the petition for certification election even though it lacked the required support of 25% of the employees. (a) The OTCLU maintains that the Labor Secretary improperly prescribed the mode of picking a collective bargaining agent upon the employees who effectively repudiated the "notion" of a certification election by ratifying the CBA entered into during the freedom period This contention is without merit as it runs counter to the policy of the State on the matter. Undersecretary Laguesma, by authority of the Secretary of the DOLE, was exercising the function of the Department to "(e)nforce social and labor legislation to protect the working class and regulate the relations between the worker and his employee" 13 when he issued the resolution being assailed in the instant petition. As will be shown shortly, he was merely applying the law applicable to the appeal raised before his office. The Labor Code imposes upon the employer and the representative of the employees the duty to bargain collectively. 14Since the question of right of representation as between competing labor organizations in a bargaining unit is imbued with public interest, 15 the law governs the choice of a collective bargaining representative which shall be the duly certified agent of the employees concerned. An official certification becomes necessary where the bargaining agent fails to present adequate and reasonable proof of its majority authorization and where the employer demands it, or when the employer honestly doubts the majority representation of several contending bargaining groups. 16 In fact, Article 255 of the Labor Code allows the majority of the employees in an appropriate collective bargaining unit to designate or select the labor organization which shall be their exclusive representative for the purpose of collective bargaining. The designation or selection of the bargaining representative without, however, going through the process set out by law for the conduct of a certification election applies only when representation is not in issue. There is no problem if a union is unanimously chosen by a majority of the employees as their bargaining representative, but a question of representation arising from the presence of more than one union in a bargaining unit aspiring to be the employees' representative, can only be resolved by holding a certification election under the supervision of the proper government authority. Thus:
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It bears stressing that no obstacle must be placed to the holding of certification elections, for it is a statutory policy that should not be circumvented. We have held that whenever there is doubt as to whether a particular union represents the majority of the rank-andfile employees, in the absence of a legal impediment, the holding of a certification election is the most democratic method of determining the employees' choice of their bargaining representative. It is the appropriate means whereby controversies and disputes on representation may be laid to rest, by the unequivocal vote of the employees themselves. Indeed, it is the keystone of industrial democracy. 17 Given these premises, the filing of a petition for certification election by one of the two unions in the bargaining unit is enough basis for the DOLE, through its authorized official, to implement the law by directing the conduct of a certification election. Art. 253-A of the Labor Code explicitly provides that the aspect of a union's representation of the rankand-file employees contained in the CBA shall be for a term of five (5) years and that "(n)o petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement." Accordingly, Section 3, Rule V, Book V of the Omnibus Rules Implementing the Labor Code provides that "(i)f a collective bargaining agreement has been duly registered in accordance with Article 231 of the Code, a petition for certification election or a motion for intervention can only be entertained within sixty (60) days prior to the expiry date of such agreement." It is uncontroverted that the petition for certification election in this case was filed on March 18, 1994, twenty-eight days before the expiration of the existing CBA on April 15, 1994, and well within the 60-day period provided for by the Code. The OTCLU, however, is concerned with the effect of the employees' ratification of the new CBA on the timely filing of the petition for certification election. Would such ratification nullify the petition? The law dictates a negative reply. The filing of a petition for certification election during the 60-day freedom period gives rise to a representation case that must be resolved even though a new CBA has been entered into within that period. This is clearly provided for in the aforequoted Section 4, Rule V, Book V of the Omnibus Rules Implementing the Labor Code. The reason behind this rule is obvious. A petition for certification election is not necessary where the employees are one in their choice of a representative in the bargaining process. Moreover, said provision of the Omnibus Rules manifests the intent of the legislative authority to allow, if not encourage, the contending unions in a bargaining unit to hold a certification election during the freedom period. Hence, the Court held in the case of Warren Manufacturing Workers Union (WMWU) v. Bureau of Labor Relations, 18 that the agreement prematurely signed by the union and the company during the freedom period does not affect the petition for certification election filed by another union. (b) As regards the 25% support requirement, we concur with public respondent's finding that said requisite has been met in this case. With regard to the finding that the "waiver" document executed by the employees "was the product of duress, force and intimidation employed by the company after it learned of the petition for certification election," 19 the following pronouncement of the Court is relevant: . . . Even doubts as to the required 30% being met warrant (the) holding of the certification election. In fact, once the required percentage requirement has been reached, the employees' withdrawal from union membership taking place after the filing of the petition for certification election will not affect the petition. On the contrary, the presumption arises that the withdrawal was not free but was procured through duress, coercion or for a valuable consideration. Hence, the subsequent disaffiliation of the six (6) employees from the union will not be counted against or deducted from the previous number who had signed up for certification . . . 20 (Citations omitted)
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The support requirement is a mere technicality which should be employed in determining the true will of the workers 21instead of frustrating the same. Thus, in Port Workers Union of the Philippines (PWUP) v. Laguesma, 22 this Court declared that: In line with this policy (that the holding of a certification election is a certain and definitive mode of arriving at the choice of the employees' bargaining representative), we feel that the administrative rule requiring the simultaneous submission of the 25% consent signatures upon the filing of the petition for certification election should not be strictly applied to frustrate the determination of the legitimate representative of the workers. Significantly, the requirement in the rule is not found in Article 256, the law it seeks to implement. This is all the more reason why the regulation should at best be given only a directory effect. Accordingly, we hold that the mere filing of a petition for certification election within the freedom period is sufficient basis for the issuance of an order for the holding of a certification election, subject to the submission of the consent signatures within a reasonable period from such filing. All doubts as to the number of employees actually supporting the holding of a certification election should, therefore, be resolved by going through such procedure. It is judicially settled that a certification election is the most effective and expeditious means of determining which labor organizations can truly represent the working force in the appropriate bargaining unit of the company. 23 If the OTCLU wanted to be retained as the rank-and-file employees' bargaining representative, it should have sought their vote, not engaged in legal sophistry. The selection by the majority of the employees of the union which would best represent them in the CBA negotiations should be achieved through the democratic process of an election. 24 The fear expressed by the OTCLU that granting the petition for certification election would be prejudicial to all the employees since the new CBA would run the risk of being nullified and the employees would be required to restitute whatever benefits they might have received under the new CBA, is to be dismissed as being baseless and highly speculative. The benefits that may be derived from the implementation of the CBA prematurely entered into between the OTCLU and the company shall, therefore, be in full force and effect until the appropriate bargaining representative is chosen and negotiations for a new collective bargaining agreement is thereafter concluded. 25 A struggle between contending labor unions must not jeopardize the implementation of a CBA that is advantageous to employees. WHEREFORE, both petitions for certiorari are hereby DISMISSED. This decision is immediately executory. Costs against petitioners. SAMAHAN NG MGA MANGGAGAWA SA SAMMA-LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI NG ALYANSA (SAMMA-LIKHA) vs. SAMMA CORPORATION G.R. No. 167141 March 13, 2009 This is a petition for review on certiorari1 of the August 31, 2004 decision2 and February 15, 2005 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 77156. Petitioner Samahan ng mga Manggagawa sa Samma Lakas sa Industriya ng Kapatirang Haligi ng Alyansa (SAMMA-LIKHA) filed a petition for certification election on July 24, 2001 in the Department of Labor and Employment (DOLE), Regional Office IV.4 It claimed that: (1) it was a local chapter of the LIKHA Federation, a legitimate labor organization registered with the DOLE; (2) it sought to represent all the rank-and-file employees of respondent Samma Corporation; (3) there was no other legitimate labor organization representing these rank-and-file employees; (4) respondent was not a party to any collective bargaining agreement and (5) no certification or consent election had been conducted within the employer unit for the last 12 months prior to the filing of the petition.
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Respondent moved for the dismissal of the petition arguing that (1) LIKHA Federation failed to establish its legal personality; (2) petitioner failed to prove its existence as a local chapter; (3) it failed to attach the certificate of non-forum shopping and (4) it had a prohibited mixture of supervisory and rank-and-file employees.5 In an order dated November 12, 2002, med-arbiter Arturo V. Cosuco ordered the dismissal of the petition on the following grounds: (1) lack of legal personality for failure to attach the certificate of registration purporting to show its legal personality; (2) prohibited mixture of rank-and-file and supervisory employees and (3) failure to submit a certificate of non-forum shopping.6 Petitioner moved for reconsideration on November 29, 2001. The Regional Director of DOLE Regional Office IV forwarded the case to the Secretary of Labor. Meanwhile, on December 14, 2002, respondent filed a petition for cancellation of petitioners union registration in the DOLE Regional Office IV.7 On January 17, 2003, Acting Secretary Manuel G. Imson, treating the motion for reconsideration as an appeal, rendered a decision reversing the order of the med-arbiter. He ruled that the legal personality of a union cannot be collaterally attacked but may only be questioned in an independent petition for cancellation of registration. Thus, he directed the holding of a certification election among the rank-andfile employees of respondent, subject to the usual pre-election conference and inclusion-exclusion proceedings.8 On January 23, 2003 or six days after the issuance of said decision, respondent filed its comment on the motion for reconsideration of petitioner, asserting that the order of the med-arbiter could only be reviewed by way of appeal and not by a motion for reconsideration pursuant to Department Order (D.O.) No. 9, series of 1997.9 On February 6, 2003, respondent filed its motion for reconsideration of the January 17, 2003 decision. In a resolution dated April 3, 2003, Secretary Patricia A. Sto. Tomas denied the motion. 10 Meanwhile, on April 14, 2003, Crispin D. Dannug, Jr., Officer-in-Charge/Regional Director of DOLE Regional Office IV, issued a resolution revoking the charter certificate of petitioner as local chapter of LIKHA Federation on the ground of prohibited mixture of supervisory and rank-and-file employees and non-compliance with the attestation clause under paragraph 2 of Article 235 of the Labor Code.11 On May 6, 2003, petitioner moved for the reconsideration of this resolution. 12 Respondent filed a petition for certiorari13 in the CA assailing the January 17, 2003 decision and April 3, 2003 resolution of the Secretary of Labor. In a decision dated August 31, 2004, the CA reversed the same.14 It denied reconsideration in a resolution dated February 15, 2005. It held that Administrative Circular No. 04-94 which required the filing of a certificate of non-forum shopping applied to petitions for certification election. It also ruled that the Secretary of Labor erred in granting the appeal despite the lack of proof of service on respondent. Lastly, it found that petitioner had no legal standing to file the petition for certification election because its members were a mixture of supervisory and rank-and-file employees.15 Hence, this petition. The issues for our resolution are the following: (1) whether a certificate for non-forum shopping is required in a petition for certification election; (2) whether petitioners motion for reconsideration which was treated as an appeal by the Secretary of Labor should not have been given due course for failure to attach proof of service on respondent and (3) whether petitioner had the legal personality to file the petition for certification election. Requirement of Certificate Of Non-Forum Shopping
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Is Not Required in a Petition For Certification Election In ruling against petitioner, the CA declared that under Administrative Circular No. 04-94,16 a certificate of non-forum shopping was required in a petition for certification election. The circular states: The complaint and other initiatory pleadings referred to and subject of this Circular are the original civil complaint, counterclaim, cross-claim, third (fourth, etc.) party complaint, or complaint-in-intervention, petition, or applicationwherein a party asserts his claim for relief . (Emphasis supplied) According to the CA, a petition for certification election asserts a claim, i.e., the conduct of a certification election. As a result, it is covered by the circular.17 We disagree. The requirement for a certificate of non-forum shopping refers to complaints, counter-claims, crossclaims, petitions or applications where contending parties litigate their respective positions regarding the claim for relief of the complainant, claimant, petitioner or applicant. A certification proceeding, even though initiated by a "petition," is not a litigation but an investigation of a non-adversarial and factfinding character.18 Such proceedings are not predicated upon an allegation of misconduct requiring relief, but, rather, are merely of an inquisitorial nature . The Board's functions are not judicial in nature, but are merely of an investigative character. The object of the proceedings is not the decision of any alleged commission of wrongs nor asserted deprivation of rights but is merely the determination of proper bargaining units and the ascertainment of the will and choice of the employees in respect of the selection of a bargaining representative. The determination of the proceedings does not entail the entry of remedial orders to redress rights, but culminates solely in an official designation of bargaining units and an affirmation of the employees' expressed choice of bargaining agent.19(Emphasis supplied) In Pena v. Aparicio,20 we ruled against the necessity of attaching a certification against forum shopping to a disbarment complaint. We looked into the rationale of the requirement and concluded that the evil sought to be avoided is not present in disbarment proceedings. [The] rationale for the requirement of a certification against forum shopping is to apprise the Court of the pendency of another action or claim involving the same issues in another court, tribunal or quasijudicial agency, and thereby precisely avoid the forum shopping situation. Filing multiple petitions or complaints constitutes abuse of court processes, which tends to degrade the administration of justice, wreaks havoc upon orderly judicial procedure, and adds to the congestion of the heavily burdened dockets of the courts. Furthermore, the rule proscribing forum shopping seeks to promote candor and transparency among lawyers and their clients in the pursuit of their cases before the courts to promote the orderly administration of justice, prevent undue inconvenience upon the other party, and save the precious time of the courts. It also aims to prevent the embarrassing situation of two or more courts or agencies rendering conflicting resolutions or decisions upon the same issue. It is in this light that we take a further look at the necessity of attaching a certification against forum shopping to a disbarment complaint. It would seem that the scenario sought to be avoided, i.e., the filing of multiple suits and the possibility of conflicting decisions, rarely happens in disbarment complaints considering that said proceedings are either "taken by the Supreme Court motu proprio, or by the Integrated Bar of the Philippines (IBP) upon the verified complaint of any person." Thus, if the complainant in a disbarment case fails to attach a certification against forum shopping, the pendency of another disciplinary action against the same respondent may still be ascertained with ease.21 (Emphasis supplied)
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The same situation holds true for a petition for certification election. Under the omnibus rules implementing the Labor Code as amended by D.O. No. 9,22 it is supposed to be filed in the Regional Office which has jurisdiction over the principal office of the employer or where the bargaining unit is principally situated.23 The rules further provide that where two or more petitions involving the same bargaining unit are filed in one Regional Office, the same shall be automatically consolidated.24 Hence, the filing of multiple suits and the possibility of conflicting decisions will rarely happen in this proceeding and, if it does, will be easy to discover. Notably, under the Labor Code and the rules pertaining to the form of the petition for certification election, there is no requirement for a certificate of non-forum shopping either in D.O. No. 9, series of 1997 or in D.O. No. 40-03, series of 2003 which replaced the former.25 Considering the nature of a petition for certification election and the rules governing it, we therefore hold that the requirement for a certificate of non-forum shopping is inapplicable to such a petition. Treatment of Motion for Reconsideration as an Appeal The CA ruled that petitioners motion for reconsideration, which was treated as an appeal by the Secretary of Labor, should not have been given due course for lack of proof of service in accordance with the implementing rules as amended by D.O. No. 9: Section 12. Appeal; finality of decision. The decision of the Med-Arbiter may be appealed to the Secretary for any violation of these Rules. Interloculory orders issued by the Med-Arbiter prior to the grant or denial of the petition, including order granting motions for intervention issued after an order calling for a certification election, shall not be appealable. However, any issue arising therefrom may be raised in the appeal on the decision granting or denying the petition. The appeal shall be under oath and shall consist of a memorandum of appeal specifically stating the grounds relied upon by the appellant with the supporting arguments and evidence. The appeal shall be deemed not filed unless accompanied by proof of service thereof to appellee .26 (Emphasis supplied) In accepting the appeal, the Secretary of Labor stated: [Petitioners] motion for reconsideration of the Med-Arbiters Order dated November 12, 2002 was verified under oath by [petitioners] president Gil Dispabiladeras before Notary Public Wilfredo A. Ruiz on 29 November 2002, and recorded in the Notarial Register under Document No. 186, Page No. 38, Book V, series of 2002. On page 7 of the said motion also appears the notation "copy of respondent to be delivered personally with the name and signature of one Rosita Simon, 11/29/02." The motion contained the grounds and arguments relied upon by [petitioner] for the reversal of the assailed Order. Hence, the motion for reconsideration has complied with the formal requisites of an appeal. The signature of Rosita Simon appearing on the last page of the motion can be considered as compliance with the required proof of service upon respondent . Rosita Simons employment status was a matter that should have been raised earlier by [respondent]. But [respondent] did not question the same and slept on its right to oppose or comment on [petitioners] motion for reconsideration. It cannot claim that it was unaware of the filing of the appeal by [petitioner], because a copy of the indorsement of the entire records of the petition to the Office of the Secretary "in view of the memorandum of appeal filed by Mr. Jesus B. Villamor" was served upon the employer and legal counsels Atty. Ismael De Guzman and Atty. Anatolio Sabillo at the Samma Corporation Office, Main Avenue, PEZA, Rosario, Cavite on December 5, 2002.27 (Emphasis supplied)
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The motion for reconsideration was properly treated as an appeal because it substantially complied with the formal requisites of the latter. The lack of proof of service was not fatal as respondent had actually received a copy of the motion. Consequently, it had the opportunity to oppose the same. Under these circumstances, we find that the demands of substantial justice and due process were satisfied. We stress that rules of procedure are interpreted liberally to secure a just, speedy and inexpensive disposition of every action. They should not be applied if their application serves no useful purpose or hinders the just and speedy disposition of cases. Specifically, technical rules and objections should not hamper the holding of a certification election wherein employees are to select their bargaining representative. A contrary rule will defeat the declared policy of the State1avvphi1.zw+ to promote the free and responsible exercise of the right to self-organization through the establishment of asimplified mechanism for the speedy registration of labor organizations and workers associations,determination of representation status, and resolution of intra and inter-union disputes.28 xxx (Emphasis supplied) Legal Personality of Petitioner Petitioner argues that the erroneous inclusion of one supervisory employee in the union of rank-and-file employees was not a ground to impugn its legitimacy as a legitimate labor organization which had the right to file a petition for certification election. We agree. LIKHA was granted legal personality as a federation under certificate of registration no. 92-1015-03211638-FED-LC. Subsequently, petitioner as its local chapter was issued its charter certificate no. 201.29 With certificates of registration issued in their favor, they are clothed with legal personality as legitimate labor organizations: 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 may be questioned only in an independent petition for cancellation in accordance with these Rules.30 -0Section 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 of Labor Relations shall issue in favor of the local/chapter a certificate indicating that it is included in the roster of legitimate labor organizations. 31 Such legal personality cannot thereafter be subject to collateral attack, but may be questioned only in an independent petition for cancellation of certificate of registration.32 Unless petitioners union registration is cancelled in independent proceedings, it shall continue to have all the rights of a legitimate labor organization, including the right to petition for certification election. Furthermore, the grounds for dismissal of a petition for certification election based on the lack of legal personality of a labor organization are the following: (a) petitioner is not listed by the Regional Office or the Bureau of Labor Relations in its registry of legitimate labor organizations or (b) its legal personality has been revoked or cancelled with finality in accordance with the rules.33 As mentioned, respondent filed a petition for cancellation of the registration of petitioner on December 14, 2002. In a resolution dated April 14, 2003, petitioners charter certificate was revoked by the DOLE.
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But on May 6, 2003, petitioner moved for the reconsideration of this resolution. Neither of the parties alleged that this resolution revoking petitioners charter certificate had attained finality. However, in this petition, petitioner prayed that its charter certificate be "reinstated in the roster of active legitimate labor [organizations]."34 This cannot be granted here. To repeat, the proceedings on a petition for cancellation of registration are independent of those of a petition for certification election. This case originated from the latter. If it is shown that petitioners legal personality had already been revoked or cancelled with finality in accordance with the rules, then it is no longer a legitimate labor organization with the right to petition for a certification election. A Final Note Respondent, as employer, had been the one opposing the holding of a certification election among its rank-and-file employees. This should not be the case. We have already declared that, in certification elections, the employer is a bystander; it has no right or material interest to assail the certification election.35 [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. The only exception to this rule is where the employer has to file the petition for certification election pursuant to Article 258 of the Labor Code because it was requested to bargain collectively, 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 , as that of a mere bystander. It has no legal standing in a certification election as it cannot oppose the petition or appeal the Med-Arbiter's orders related thereto. . .36 WHEREFORE, the petition is hereby GRANTED. Let the records of the case be remanded to the office of origin, the Regional Office IV of the Department of Labor and Employment, for determination of the status of petitioners legal personality. If petitioner is still a legitimate labor organization, then said office shall conduct a certification election subject to the usual pre-election conference. R. TRANSPORT CORPORATION vs. HON. BIENVIENIDO E. LAGUESMA G.R. No. 106830 November 16, 1993 This is a petition for certiorari under Rule 65 of the Rules of Court which seeks to set aside the Resolutions of the Undersecretary of the Department of Labor and Employment (DOLE) dated July 22, 1992, affirming the order of the Med-Arbiter calling for the conduct of the certification election, and August 25, 1992, denying petitioner's motion for reconsideration. On January 4, 1991, respondent Christian Labor Organization of the Philippines (CLOP), filed with the Med-Arbitration Unit of the DOLE a petition for certification election among the rank and file employees of the petitioner (NCR-OD-M-91-01-002). On April 8, 1991, Med-Arbiter A. Dizon dismissed the petition on the ground that the bargaining unit sought to be represented by respondent did not include all the eligible employees of petitioner but only the drivers, conductors and conductresses to the exclusion of the inspectors, inspectresses, dispatchers, mechanics and washerboys. On May 10, 1991, respondent. CLOP rectified its mistake and filed a second petition for certification election,which included all the rank and file employees of the company, who hold non-managerial. and non-supervisorial positions. Petitioner filed a motion to dismiss the second petition and contended that the dismissal of the first petition constituted res judicata. Petitioner argued that respondent CLOP should have interposed an
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appeal to the dismissal of the first petition and its failure to do so barred it from filing another petition for certification election. On July 3, 1991, Med-Arbiter R. Parungo rendered a decision, which ordered that a certification election among the regular rank and file workers of petitioner company be conducted (Rollo, pp. 87-91). On October 16, 1991, the Associated Labor Unions (ALU-TUCP) filed a motion for intervention (NCR ODM-91-01-002) and alleged that it has members in the proposed bargaining unit. Subsequently, the National Federation of Labor Unions (NAFLU) filed a separate petition for certification election (NCROD-M-91-10-058) and a motion to consolidate related cases to avoid confusion. Dissatisfied with the Decision dated July 3, 1991 rendered by Med-Arbiter R. Parungo, petitioner appealed to the DOLE Secretary, who, through Undersecretary Bienvenido E. Laguesma, affirmed the Med-Arbiter in its Resolution dated July 22, 1992 calling for the conduct of the certification election (Rollo, pp. 25-28). The Resolution, in pertinent part, reads as follows: xxx xxx xxx The defense of res judicata is not obtaining in the present petition for certification election. It is settled that for res judicata to apply there must be a final judgment on the merits on matters put in issue. In the instant case, it could not be said that there is a final judgment on the merits of the petition simply because the composition of the present proposed bargaining unit is different from that in the first petition. Moreover, there are now other parties involved, and therefore, it would not be correct to say that the parties in the said two cases are identical. xxx xxx xxx With regard however, to the question on propriety of consolidation, there is merit in the argument of respondent-appellant on the need to consolidate the separate petitions for certification election because they involve the same bargaining unit. Case No. NCR-ODM-91-10-058 should be consolidated with that of Case No. NCR- OD-M-91-05-062, where the petition of NAFLU should be treated as an intervention and resolved by the Med-Arbiter together with the intervention of ALU-TUCP. PREMISES CONSIDERED, the Order of the Med-Arbiter calling for the conduct of the certification election is hereby affirmed subject to the resolution of the Med-Arbiter of the motions for intervention aforementioned (Rollo, pp. 27-28; emphasis supplied). On July 31, 1992, petitioner filed a Motion for Reconsideration, again stressing the principle of res judicata. Petitioner further argued that the second petition for a certification election by respondent CLOP, NAFLU and ALU-TUCP were barred at least for a period of one year from the time the first petition of CLOP was dismissed pursuant to Section Rule V, Book V of the Omnibus Rules Implementing the Labor Code as amended. On August 25, 1991, Undersecretary Laguesma denied the motion for reconsideration (Rollo, pp. 32-34). On September 3, 1992, petitioner filed a Motion to Suspend Proceedings based on Prejudicial Questions as an Addendum to the Motion for Reconsideration filed on July 31, 1992. Petitioner argued that the present case must be indefinitely suspended until the following cases are resolved by the NLRC and the Supreme Court: a) NLRC-NCR Case No. 00-08-04708-91 entitled "R". Transport Corporation v. Jose S. Torregaza, et. al., wherein Labor Arbiter de Castro declared the strike staged by respondent CLOP illegal and ordered the strikers to pay petitioner the amount of P10,000.00 as exemplary damages; b) NLRCNCR Case No. 06-03415092 filed by respondent CLOP and its members for illegal dismissal; and NLRC-
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NCR Case No. 00-08-04389-92 filed by respondent CLOP in behalf of its affected members for illegal dismissal (Rollo, pp. 139-145). On September 29, 1992, Undersecretary Laguesma in a resolution denied the motion to suspend the conduct of the certification election. The pertinent portion of said resolution reads as follows: The pendency of NLRC-NCR Cases Nos. 00-08- 04708-91, 06-03415092 and 00-0804389-92 before the NLRC is not a valid ground for the suspension of the already stalled petition for certification election which must be resolved with dispatch. This must be so, because the employees subject of the pending cases before the NLRC legally remain as employees of respondent until the motion to declare them as having lost their employment status by reason of the illegal strike or their complaint for illegal dismissal is finally resolved. (Rollo, pp. 181-182; emphasis supplied) On October 14, 1992, petitioner filed a motion for reconsideration of the Resolution dated September 29, 1992 which was subsequently denied by Undersecretary Laguesma on October 29, 1992 ( Rollo, pp. 29-31). Petitioner filed a Comment and Objection to the Order dated October 29, 1992 with Urgent Motion to Dismiss the Petition for Certification Election. Without waiting for the resolution of the motion to dismiss, petitioner resorted to this Court by way of the instant special civil action. This petition is without merit. Before the principle of res judicata can be operative, the following requisites must be present: a) the former judgment or order must be final; b) it must be a judgment ororder on the merits; c) it must have been rendered by a court having jurisdiction over the subject-matter and the parties; and d) there must be, between the first and second actions, identity of parties (Nabus v. Court of Appeals, 193 SCRA 732 [1991]). In the case at bench, it cannot be said that the parties in the first and second actions were identical. The first action was dismissed by the Med-Arbiter because it excluded parties essential to the bargaining unit such as inspectors, inspectresses, dispatchers and washer boys. The second petition included all the employees who were excluded in the first petition. Therefore, the Med-Arbiter was correct when he gave due course to the second petition for certification election after respondent CLOP corrected its mistake. Likewise untenable is petitioner's contention that the second petition for certification election should have been filed after one year from the dismissal of the first petition certification election under Section 3, Rule V, Book V of the Omnibus Rules Implementing the Labor Code as amended. Said section provides as follows: When to file In the absence of collective bargaining agreement duly registered in accordance with Article 231 of the Code, a petition for certification election may be filed any time. However, no certification election may be held within one year from the date of the issuance of a final certification election result (Emphasis supplied). Apparently, petitioner misread the above-mentioned provision of law. The phrase "final certification election result" means that there was an actual conduct of election i.e. ballots were cast and there was a counting of votes. In this case, there was no certification election conducted precisely because the first petition was dismissed, on the ground of a defective petition which did not include all the employees who should be properly included in the collective bargaining unit. Devoid of merit is petitioner's contention that the employment status of the members of respondent CLOP who joined the strike must first be resolved before a certification election can be conducted.
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As held in the case of Philippine Fruits and Vegetables Industries, Inc. v. Torres, 211 SCRA 95 (1992): At any rate, it is now well-settled that employees who have been improperly laid-off but who have a present, unabandoned right to or expectation of re-employment, are eligible to vote in certification elections (Rothenberg on Labor Relations, p. 548). Thus, and to repeat, if the dismissal is under question, as in the case now at bar whereby a case of illegal dismissal and/or unfair labor practices was filed, the employees concerned could still qualify to vote in the elections. Therefore, the employees of petitioner who participated in the strike, legally remain as such, until either the motion to declare their employment status legally terminated or their complaint for illegal dismissal is resolved by the NLRC. It should be noted that it is the petitioner, the employer, which has offered the most tenacious resistance to the holding of a certification election. This must not be so for the choice of a collective bargaining agent is the sole concern of the employees. The employer has no right to interfere in the election and is merely regarded as a bystander (Divine Word University of Tacloban v. Secretary of Labor and Employment, 213 SCRA 759 [1992]). Finally, petitioner's Comment and Objection to the Order dated October 29, 1992 with Urgent Motion to Dismiss the Petition for Certification Election is still pending with the Undersecretary of Labor. The resort to judicial action by petitioner is premature. Hence, it is also guilty of forum-shopping in pursuing the same cause of action involving the same issue, parties and subject matter before two different fora. WHEREFORE, the Court Resolved to DISMISS the petition. ST. JAMES SCHOOL OF QUEZON CITY vs. SAMAHANG MANGGAGAWA SA ST. JAMES SCHOOL OF QUEZON CITY; G.R. No. 151326 November 23, 2005 The Case Before the Court is a petition for review1 assailing the 5 September 2001 Decision and 3 January 2002 Resolution of the Court of Appeals 2 in CA-G.R. SP No. 60197. The Court of Appeals sustained the Decision of the Department of Labor and Employment ("DOLE") directing the opening of the challenged ballots cast during the certification election. The Antecedent Facts The Samahang Manggagawa sa St. James School of Quezon City ("Samahang Manggagawa") filed a petition for certification election to determine the collective bargaining representative of the motor pool, construction and transportation employees of St. James School of Quezon City ("St. James"). On 26 June 1999, the certification election was held at the DOLE office in Intramuros, Manila. There were 149 eligible voters and 84 voters cast their votes. St. James filed a certification election protest challenging the 84 votes. St. James alleged that it had 179 rank and file employees, none of whom voted in the certification election. St. James argued that those who voted were not its regular employees but construction workers of an independent contractor, Architect Conrado Bacoy ("Architect Bacoy"). In an Order dated 6 January 2000,3 Med-Arbiter Tomas F. Falconitin ("Med-Arbiter Falconitin") ruled that at the time of the certification election, the 84 voters were no longer working at St. James. MedArbiter Falconitin supported his ruling using the roster of rank and file employees submitted by St. James, which did not include the names of the 84 voters. Med-Arbiter Falconitin also ruled that since the construction projects have ceased, some of the workers were no longer entitled to vote in the certification election. Finally, Med-Arbiter Falconitin ruled that even if the 84 workers were to be included in the 179 rank and file employees of St. James, the total number of voters would be 263. Thus, the 84 votes cast
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would not be sufficient to constitute a majority of all eligible voters to have a valid certification election. The dispositive portion of the Order reads: WHEREFORE, premises considered, the certification election protest is hereby given due course. Accordingly, judgment is hereby rendered, declaring the certification election for the rank and file employees of respondent/protestant St. James School of Quezon City conducted on June 26, 1999, a failure; and null and void ab initio. SO ORDERED.4 Samahang Manggagawa appealed to the Secretary of Labor. In its Decision5 dated 5 May 2000, the DOLE6reversed the ruling of Med-Arbiter Falconitin. The DOLE ruled that Samahang Manggagawa seeks to represent the non-academic personnel or the rank and file employees from the motor pool, construction and transportation departments, and not all the rank and file employees of St. James. According to the DOLE, Med-Arbiter Falconitin erred in including all the rank and file employees of St. James, whether teaching or non-teaching personnel, in the computation of the total number of employees. The DOLE ruled that the list submitted by St. James contained only the administrative, teaching and office personnel of the school. The dispositive portion of the Decision reads: WHEREFORE, the appeal is hereby GRANTED and the order dated 06 January 2000 of the Med-Arbiter is REVERSED and SET ASIDE. In lieu thereof, an order is hereby issued directing the Election Officer, Lilibeth Cagara, DOLE-National Capital Region to open and canvass the 84 challenged ballots within ten (10) days from receipt hereof, subject to usual notice and representation by the parties and thereafter to issue the corresponding certification of the results. SO DECIDED.7 St. James filed a motion for reconsideration. The DOLE8 denied the motion in its 19 June 2000 Resolution.9 St. James filed a special civil action before the Court of Appeals. In a Decision10 dated 5 September 2001, the Court of Appeals dismissed the petition and ruled that the DOLE did not commit grave abuse of discretion in reversing the ruling of Med-Arbiter Falconitin. In its 3 January 2002 Resolution,11 the Court of Appeals denied St. James motion for reconsideration. Hence, the petition before this Court. The Issues St. James questions the validity of the formation of the labor union and the validity of the certification election.12 The Ruling of the Court The petition has no merit. The Validity of the Formation of the Labor Union St. James argues that majority of the members of Samahang Manggagawa are not its employees but employees of Architect Bacoy, an independent contractor. St. James may no longer question the validity of the formation of the labor union.
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The records13 show that prior to the holding of the certification election, St. James filed a petition for cancellation of Samahang Manggagawas union registration. Among the grounds cited in the petition was the lack of employer-employee relationship between St. James and Samahang Manggagawas members. The Med-Arbiter recommended the cancellation of the union registration. DOLE Regional Director IV Romeo Young ("Director Young") adopted the Med-Arbiters recommendation and cancelled Samahang Manggagawas union registration. Samahang Manggagawa filed an appeal before the Bureau of Labor Relations ("BLR"). In its Decision14 dated 22 January 1998, the BLR15 reversed Director Youngs Decision. In its Resolution16 of 12 February 1998, the BLR denied St. James motion for reconsideration. St. James filed a special civil action before the Court of Appeals. The case was docketed as CA-G.R. SP No. 50918. In its 9 February 2001 Decision,17 the Court of Appeals dismissed St. James petition and affirmed the BLRs Decision. The Court of Appeals ruled that the construction workers are actually St. James regular employees in its motor pool, construction and transportation departments. The Court of Appeals also ruled that Architect Bacoy is a labor-only contractor and thus an agent of St. James, which is the real employer. St. James filed a petition for certiorari before this Court. The case was docketed as G.R. No. 149648. In a Resolution dated 10 October 2001, this Court denied the petition for St. James error in the choice or mode of appeal.18 The Courts 10 October 2001 Resolution closed any issue on the validity of the formation of the labor union. The Validity of the Certification Election Section 13, Rule XII, Book V of the Omnibus Rules Implementing the Labor Code ("Omnibus Rules") provides: Section 13. Proclamation and certification of results by election officer; when proper. Upon completion of the canvass there being a valid election, the election officer shall proclaim and certify as winner the union which obtained a majority of the valid votes cast under any of the following conditions: a) No protest had been filed or, even if one was filed, the same was not perfected within the five-day period for perfection of the protest; b) No challenge of eligibility issue was raised or even if one was raised, the resolution of the same will not materially change the result. For this purpose, the election officer shall immediately issue the corresponding certification, copy furnished all parties, which shall form part of the records of the case. The winning union shall have the rights, privileges and obligations of a duly certified collective bargaining representative from the time the certification is issued. The proclamation and certification so issued shall not be appealable. According to St. James, the certification election was conducted without quorum. St. James alleges that it has 179 rank and file employees in its Quezon City Campus. When the certification election was held, none of these qualified rank and file employees cast their votes because they were all on duty in the school premises. The 84 voters who cast their votes are employees of Architect Bacoy. St. James also alleges that it has 570 rank and file employees in all its campuses. Even if the 84 voters are its employees, the votes do not constitute a majority vote of its rank and file employees because the quorum should be based on its 570 rank and file employees. We cannot sustain the argument. St. James has five campuses the Philamlife and Scout Alcaraz, Quezon City campuses which are preschools; the Paraaque City and Calamba, Laguna campuses which offer elementary, secondary and college education; and the Tandang Sora, Quezon City campus which offers elementary and secondary education.19
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The members of Samahang Manggagawa are employees in the Tandang Sora campus. Under its constitution and by-laws, Samahang Manggagawa seeks to represent the motor pool, construction and transportation employees of the Tandang Sora campus.20 Thus, the computation of the quorum should be based on the rank and file motor pool, construction and transportation employees of the Tandang Sora campus and not on all the employees in St. James five campuses. Section 2, Rule XII, Book V of the Omnibus Rules provides: Section 2. Qualification of voters; inclusion-exclusion proceedings. All employees who are members of the appropriate bargaining unit sought to be represented by the petitioner at the time of the certification or consent election shall be qualified to vote. A dismissed employee whose dismissal is being contested in a pending case shall be allowed to vote in the election. In case of disagreement over the voters list or over the eligibility of voters, all contested voters shall be allowed to vote. However, their votes shall be segregated and sealed in individual envelopes in accordance with Section 9 of these Rules. The motor pool, construction and transportation employees of the Tandang Sora campus had 149 qualified voters at the time of the certification election. Hence, the 149 qualified voters should be used to determine the existence of a quorum. Since a majority or 84 out of the 149 qualified voters cast their votes, a quorum existed in the certification election. St. James further alleges that the names of the 84 voters are not on the list of its rank and file employees. On this score, we sustain the factual finding of the DOLE that the list submitted by St. James consists of its administrative, teaching and office personnel. These administrative, teaching and office personnel are not members of Samahang Manggagawa. They do not belong to the bargaining unit that Samahang Manggagawa seeks to represent. Hence, the list submitted by St. James may not be used as basis to determine the members of Samahang Manggagawa. WHEREFORE, we DENY the petition. We AFFIRM the 5 September 2001 Decision and the 3 January 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 60197. PHILIPPINE SCOUT VETERANS SECURITY AND INVESTIGATION AGENCY (PSVSIA) vs. THE HON. SECRETARY OF LABOR RUBEN D. TORRES G.R. No. 92357 July 21, 1993 The sole issue presented for resolution in this petition for certiorari with prayer for preliminary injunction is whether or not a single petition for certification election or for recognition as the sole and exclusive bargaining agent can validly or legally be filed by a labor union in three (3) corporations each of which has a separate and distinct legal personality instead of filing three (3) separate petitions. On April 6, 1989, private respondent labor union, PGA Brotherhood Association - Union of Filipino Workers (UFW), hereinafter referred to as "the Union " filed a petition for Direct Certification/Certification Election among the rank and file employees of Philippine Scout Veterans Security and Investigation Agency (PSVSIA), GVM Security and Investigations Agency, Inc. (GVM). and Abaquin Security and Detective Agency, Inc. (ASDA). These three agencies were collectively referred to by private respondent Union as the "PGA Security Agency," which is actually the first letters of the corporate names of the agencies. On April 11, 1989, summons was issued to the management of PSVSIA, GVM, ASDA (PGA Security Agency) at 82 E. Rodriquez Avenue, Quezon City. On April 11, 26, 1986, petitioners filed a single comment alleging therein that the said three security agencies have separate and distinct corporate personalities while PGA Security Agency is not a business or corporate entity and does not possess any personality whatsoever; the petition was unclear as to whether
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the rank-and-file employees mentioned therein refer to those of the three security agencies collectively and if so, the labor union cannot seek a certification election in three separate bargaining units in one petition; the labor union included in their organization "security supervisors," in violation of R.A. 6715; and though R.A. 6715 is already in effect, there were still no implementing rules therefor. On May 4, 1989, the security agencies filed a Consolidated Motion to Dismiss on the grounds that the 721 supporting signatures do not meet the 20% minimum requirement for certification election as the number of employees totals 2374 and that there are no implementing rules yet of R.A. 6715. On May 8, 1989, the Union filed an Omnibus Reply to Comment and Motion to Dismiss alleging that it is clear that it is seeking a certification election in the three agencies; that the apparent separate personalities of the three agencies were used merely to circumvent the prohibition in R.A. 5847, as amended by P.D. 11 and P.D. 100, that a security agency must not have more than 1,000 guards in its employ; that the three security agencies' administration, management and operations are so intertwined that they can be deemed to be a single entity; and that the security supervisors cannot be deemed part of management since they do not meet the definition of "supervisory employees" found in Articles 212(m), Labor Code, as amended by Section 4, R.A. No. 6715. On May 18, 1989, the security agencies filed a Rejoinder claiming that there is no violation of R.A. 5487, as amended by P.D. 11 and P.D. 100 since the three agencies were incorporated long before the decrees' issuance; that mere duplication of incorporators does not prove that the three security agencies are actually one single entity; and that security guard supervisors, most especially detachment commanders, fall within the definition of the term "supervisors." On July 6, 1989, Med-Arbiter Rasidali C. Abdullah issued an Order in favor of the labor union finding that PSVSIA, GVM and ASDA should be deemed as a single entity and bargaining unit for the purpose of union organizing and the holding of a certification election. The dispositive portion of the Order reads as follows: WHEREFORE, premises considered, let a certification election be conducted among the rank and file security guards of PSVSIA, GVM and ASDA within twenty (20) days from receipt hereof with the usual pre-election conference of the parties. The list of eligible voters shall be based on the security agencies' payroll three (3) months prior to the filing of this petition with the following choices: a) PGA Brotherhood Association-Union of Filipino Workers (UFW); and b) No union. SO ORDERED. 1 On July 21, 1989, the security agencies appealed the Med-Arbiter's Order to the Secretary of Labor and Employment claiming that said Order was issued with grave abuse of discretion when it ruled that the three security agencies could be considered as a single bargaining entity for purposes of the holding of a certification election. On December 15, 1989, the Labor Secretary Franklin M. Drilon denied the appeal for lack of merit while at the same time affirming the Med-Arbiter's Order of July 6, 1989. He also ordered the immediate conduct of a certification election. The dispositive portion of which reads as follows: WHEREFORE, premises considered, the Appeal of respondents Security agencies is hereby denied for lack of merit and the Order dated 6 July affirmed.
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Let therefore, the pertinent records of this case be immediately forwarded to the Regional Office for he immediate conduct of the certification election. SO ORDERED. 2 On January 5, 1990, the three security agencies filed a Motion for Reconsideration arguing that they were denied their rights to due process and that jurisdiction was not acquired over them by the labor authorities. On January 26, 1990, the succeeding Labor Secretary, Ruben D. Torres, likewise denied the Motion for Reconsideration for lack of merit and reiterated the directive that a certification election be conducted without further delay. On March 14, 1990, the instant petition was filed by the three security agencies, raising the following grounds: I SERIOUS ERRORS IN THE FINDINGS OF FACTS. II GRAVE ABUSE OF DISCRETION ON THE PART OF THE SECRETARY OF LABOR. 3 Petitioners insist that there are three (3) corporations in this petition, each of which has a separate and distinct corporate personality of its own with separate registrations with the Securities and Exchange Commission (SEC) and different Articles of Incorporation and By-Laws; with separate sets of corporate officers and directors; and no common business address except for GVM and ASDA which are located at 1957 Espaa corner Craig Streets, Sampaloc, Manila. Petitioners claim that the facts and circumstances of the case of La Campana Coffee Factory, Inc. v. Kaisahan Ng Mga Manggagawa sa La Campana 4 which public respondent claims to be on all fours with the instant case, are very distinct from the facts and circumstance obtaining in the case at bar. As to form of business organization, in the La Campana case, only one of two (2) businesses was a corporation i.e., the La Campana Coffee Factory, Inc. and the other, the La Campana Gaugau Packing, is a "nonentity," being merely a business name. In the case at bar, all three (3) agencies are incorporated. Moreover, the issue involved in the instant case is one of representation while in the La Campana case, the issue involved is the validity of a demand for wage increases and other labor standards benefits. Petitioners likewise contend that it was error to hold that the three companies should be treated as one in a single bargaining unit in one petition for certification elections resulting in a violation of the right to due process of each corporation as no notice of hearing and other legal processes were served on each of said corporations. Consequently, no jurisdiction was acquired on them by the Department of Labor and Employment. Petitioners' arguments deserve scant consideration. The facts and circumstances extant in the record indicate that the Med-Arbiter and Secretaries Drilon and Torres were not mistaken in holding that the three security companies are in reality a single business entity operating as a single company called the "PGA Security Group" or "PGA Security Services Group." Factual findings of labor officials are conclusive and binding on the Court when supported by substantial evidence. 5 The public repondent noted the following circumstances in the La Campana case similar to the case at bar, as indicative of the fact that the La Campana Coffee Factory and La Campana Gaugau Packing were in
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reality only one business with two trade names: (1) the two factories occupied the same address, wherein they had their principal place of business; (2) their signboards, advertisements, packages of starch, delivery truck and delivery forms all use one appellation, "La Campana Starch and Coffee Factory"; (3) the workers in either company received their pay from a single cashier, and (4) the workers in one company could easily transfer to the other company, and vice-versa. This Court held therein that the veil of corporate fiction of the coffee factory may be pierced to thwart the attempt to consider it part from the other business owned by the same family. Thus, the fact that one of the businesses is not incorporated was not the decisive factor that led the Court to consider the two factories as one. Moreover, we do not find any materiality in the fact that the La Campana case was instituted to demand wage increases and other labor standards benefits while this case was filed by the labor union to seek recognition as the sole bargaining agent in the establishment. If businesses operating under one management are treated as one for bargaining purposes, there is not much difference in treating such businesses also as one for the preliminary purpose of labor organizing. Indeed, the three agencies in the case at bar failed to rebut the fact that they are managed through the Utilities Management Corporation with all of their employees drawing their salaries and wages from said entity; that the agencies have common and interlocking incorporators and officers; and that the PSVSIA, GVM and ASDA employees have a single Mutual Benefit System and followed a single system of compulsory retirement. No explanation was also given by petitioners why the security guards of one agency could easily transfer from one agency to another and then back again by simply filling-up a common pro forma slip called "Request for Transfer". Records also shows that the PSVSIA, GVM and ASDA always hold joint yearly ceremonies such as the "PGA Annual Awards Ceremony". In emergencies, all PSVSIA Detachment Commanders were instructed in a memorandum dated November 10, 1988 to get in touch with the officers not only of PSVSIA but also of GVM and ASDA. All of these goes to show that the security agencies concerned do not exist and operate separately and distinctly from each other with different corporate directions and goals. On the contrary, all the cross-linking of the three agencies' command, control and communication systems indicate their unitary corporate personality. Accordingly, the veil of corporate fiction of the three agencies should be lifted for the purpose of allowing the employees of the three agencies to form a single labor union. As a single bargaining unit, the employees therein need not file three separate petitions for certification election. All of these could be covered in a single petition. Petitioners' claim of alleged defect in the petition for certification election which although addressed to the three security agencies merely alleged that there are only 1,000 employees when the total number of employees in said security agencies is about 2,374 (PSVSIA - 1252; GVM - 807; and ASDA - 315) thereby failing to comply with the legal requirement that at least twenty percent (20%) of the employees in the bargaining unit must support the petition, betrays lack of knowledge of the amendments introduced by R.A 6715 which became effective on March 21, 1989, prior to the filing of the petition for certification election on April 6, 1989. Under the amendments, there is no need for the labor union to prove that at least 20% of the security guards in the three agencies supported the petition. When a duly organized union files a petition for certification election, the Med-Arbiter has the duty to automatically conduct an election. He has no discretion on the matter. This is clearly the mandate of Article 257 of the Labor Code, as amended by Section 24 of R.A. 6715, which now reads: Art. 257. Petitions in unorganized establishments. In any establishment where there is no certified bargaining agent, a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a petition by a legitimate labor organization. The designation of the three agencies collectively as "PGA Security Agency" and the service of summons to the management thereof at 82 E. Rodriguez Avenue, Quezon City did not render the petition defective. Labor Secretary Franklin Drilon correctly noted the fact that the affidavits executed separately and under oath by the three managers of the three security agencies indicated their office address to be at PSVSIA Center II, E. Rodriguez Sr. Blvd., Quezon City. Besides, even if there was improper service of summons by the Med-Arbiter, the three (3) security agencies voluntarily submitted themselves to the jurisdiction of the
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labor authorities. The summons were clearly sent to and received by their lawyer who filed motions and pleadings on behalf of the three security agencies and who always appeared as their legal counsel. It puzzles this Court why petitioners, who claim to be separate entities, continue to be represented by one counsel even in this instant petition. Finally, except where the employer has to file a petition for certification election pursuant to Article 258 of the Labor Code because of a request to bargain collectively, it has nothing to do with a certification election which is the sole concern of the workers. Its role in a certification election has aptly been described in Trade Unions of the Philippines and Allied Services (TUPAS) v. Trajano, 6 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 that it wants to create a company union. This Court's disapprobation of management interference in certification elections is even more forceful inConsolidated Farms, Inc. v. Noriel, 7 where we held: On a matter that should be the exclusive concern of labor, the choice of a collective bargaining representative, the employer is definitely an intruder. His participation, to say the least, deserves no encouragement. This Court should be the last agency to lend support to such an attempt at interference with a purely internal affair of labor. Indeed, the three security agencies should not even be adverse parties in the certification election itself. We note with disapproval the title given to the petition for certification election of the Union by the MedArbiter and the Secretary of Labor naming the three security agencies as respondents. Such is clearly an error. While employers may rightfully be notified or informed of petitions of such nature, they should not, however, be considered parties thereto with concomitant right to oppose it. Sound policy dictates that they should maintain a strictly hands-off policy. WHEREFORE, finding no reversible error in the questioned decision of the Secretary of Labor, the instant petition for certiorari is hereby DISMISSED for utter lack of merit. DHL PHILIPPINES CORPORATION UNITED RANK AND FILE ASSOCIATIONFEDERATION OF FREE WORKERS (DHL-URFA-FFW) vs. BUKLOD NG MANGGAGAWA NG DHL PHILIPPINES CORPORATION; G.R. No. 152094 July 22, 2004 False statements made by union officers before and during a certification election -- that the union is independent and not affiliated with a national federation -- are material facts likely to influence the election results. This principle finds application in the present case in which the majority of the employees clearly wanted an independent union to represent them. Thus, after the members learned of the misrepresentation, and after a majority of them disaffiliated themselves from the union and formed another one, a new certification election should be held to enable them to express their true will. The late filing of the Petition for a new election can be excused under the peculiar facts of this case, considering that the employees concerned did not sleep on their rights, but promptly acted to protect their prerogatives. Petitioner should not be permitted to use legal technicalities to perpetrate the betrayal foisted by its officers upon the majority of the employees. Procedural technicalities should not be allowed to suppress the welfare of labor. The Case Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to annul the December 17, 1999 Decision2 and the January 30, 2002 Resolution3 of the Court of Appeals (CA) in CA-GR SP No. 53270. The assailed Decision disposed as follows:
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"WHEREFORE, the petition is hereby given due course. Accordingly, the decision of Rosalinda Dimapilis-[B]aldoz, Undersecretary of Labor, in behalf of [the] Secretary of Labor and Employment, is herebyANNULED and SET ASIDE and DECLARED to have NO EFFECT whatsoever. "Public respondent and its representatives are hereby enjoined to refrain and desist from implementing the said decision."4 The challenged Resolution denied petitioners Motion for Reconsideration. The Facts On November 25, 1997, a certification election was conducted among the regular rank and file employees in the main office and the regional branches of DHL Philippines Corporation. The contending choices were petitioner and "no union." On January 19, 1998, on the basis of the results of the certification election, with petitioner receiving 546 votes and "no union" garnering 348 votes, the election officer certified the former as the sole and exclusive bargaining agent of the rank and file employees of the corporation.5 Meanwhile, on December 19, 1997, Respondent Buklod ng Manggagawa ng DHL Philippines Corporation (BUKLOD) filed with the Industrial Relations Division of the Department of Labor and Employment (DOLE) a Petition for the nullification of the certification election. The officers of petitioner were charged with committing fraud and deceit in the election proceedings, particularly by misrepresenting to the voter-employees that it was an independent union, when it was in fact an affiliate of the Federation of Free Workers (FFW). This misrepresentation was supposedly the basis for their selection of petitioner in the certification election. Allegedly supporting this claim was the fact that those whom it had misled allegedly withdrew their membership from it and subsequently formed themselves into an independent union. The latter union, BUKLOD, was issued a Certificate of Registration by DOLE on December 23, 1997. On May 18, 1998, Med-Arbiter Tomas F. Falconitin nullified the November 25, 1997 certification election and ordered the holding of another one with the following contending choices: petitioner, respondent, and "no choice." Setting aside the Decision of Med-Arbiter Falconitin, DOLE Undersecretary Rosalinda Dimapilis-Baldoz held on appeal that the issue of representation had already been settled with finality in favor of petitioner, and that no petitions for certification election would be entertained within one year from the time the election officer had issued the Certification Order. Ruling of the Court of Appeals The CA held that the withdrawal of a great majority of the members of petitioner -- 704 out of 894 of them -- provided a compelling reason to conduct a certification election anew in order to determine, once and for all, which union reflected their choice. Under the circumstances, the issue of representation was not put to rest by the mere issuance of a Certification Order by the election officer. According to the appellate court, broader considerations should be accorded the disaffiliating memberemployees and a new election held to finally ascertain their will, consistent with the constitutional and labor law policy of according full protection to labors right to self -organization. The CA added that the best forum to determine the veracity of the withdrawal or retractio n of petitioners former members was another certification election.
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The appellate court also held that the election officers issuance of a Certification Order on January 19, 1998 was precipitate because, prior thereto, respondent had filed with the med-arbiter a Petition for nullification of the election. Furthermore, the Certification was not in accordance with Department Order No. 9 (DO 9), Series of 1997. The charges of fraud and deceit, lodged immediately after the election by petitioners former members against their officers, should have been treated as protests or issues of eligibility within the meaning of Section 13 of DO 9. Hence, this Petition.6 Issues In its Memorandum, petitioner submits the following issues for our consideration: "I Whether or not the Court of Appeals seriously erred and committed grave abuse of discretion amounting to lack and/or excess of jurisdiction when it annul[l]ed, set aside, and declared to have no effect whatsoever, the Decision of Undersecretary Rosalinda Dimapilis -Baldoz, which in effect, reinstated and affirmed the Decision of the Med-Arbiter, nullifying the result of the certification election as well as ordering the conduct of a new certification election at DHL Philippines Corporation, considering that: (A) The Court of Appeals, as well as the Med-Arbiter, ignored the undisputed fact that petitioner a quo (herein respondent) has not yet existed before, during and shortly after the conduct of certification election on November 25, 1997, and not yet even registered at the time of the filing of its Petition a quo on December 19, 1997, therefore, has no legal personality to institute an action. (B) The Court of Appeals, as well as the Med-Arbiter ignored and unjustifiably refused to apply Section 13, Rule XII of Department Order No. 9, there being no protest nor challenge raised before, during and even after five (5) days have lapsed from the conduct of the certification election on November 25, 1997, as the Petition a quo was only filed on December 19, 1997 a week before herein respondent was able to obtain its Certificate of Registration. (C) The Court of Appeals ignored and unjustifiably refused to apply Section 3, Rule V of Department Order No. 9, or commonly know[n] as the Certification -Year Rule, which means that no certification election should be entertained within one (1) year from the time the Election Officer issued the Certification Order. "II Whether or not the Court of Appeals seriously erred and committed grave abuse of discretion, amounting to lack and/or excess of jurisdiction in rendering the assailed Decision promulgated on December 17, 1999, as the same was rendered without the [Office of the] Solicitor General having filed its comment on the Petition a quo, despite having filed a Manifestation with Motion to the effect of not having received the Petition filed by petitioner a quo, which [h]as remained unacted upon; as well as the Resolution promulgated on January 30, 2002, which denied herein petitioners Motion for Reconsideration, which was rendered without the required comment thereon by the Petitioner a quo, thus, due process was violated. "III
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Whether or not the Court of Appeals seriously erred and committed grave abuse of discretion amounting to lack and/or excess of jurisdiction in holding that the resignation, withdrawal, retraction of the great majority of the former members of United DHL should be treated as disaffiliation from such union. "IV Whether or not, the Court of Appeals seriously erred and committed grave abuse of discretion amounting to lack and/or excess of jurisdiction in declaring that x x x while in the February 28, 1996 x x x decision of Med-Arbiter Tomas Falconitin provides for a certification election among two (2) specific choices: the private respondent (then as petitioner), and No Union as the contending choices, what was conducted on November 25, 1996 (sic) was a referendum on a choice of yes or no and not certification order of the Election Officer reflecting the results in the number of yes votes and no votes, without indicating the name of the contending choices. "V Whether or not the Court of Appeals placed both parties in Limbo, as the dispositive portion of the Decision or the fallo, which x x x actually constitutes the judgment or resolution of the court, failed to specify what should be done by the parties after the rendition of the said Decision and Resolution, thus, there can be no subject of execution." 7 In simpler terms, the issues being raised are as follows: 1) the validity of the CA Decision and Resolution; and 2) the validity of the certification election. The Courts Ruling The Petition lacks merit. First Issue: Validity of the CA Decision and Resolution Petitioner assails the validity of the CA Decision for having been rendered without receipt of the required comment of the Office of the Solicitor General (OSG) on respondents Petition; and the CA Resolution for having been issued without receipt of respondents comment on petitioners Motion for Reconsideration. This contention is untenable. The applicable provision is Section 8 of Rule 65 of the Rules of Court, which provides: "SECTION 8. Proceedings after comment is filed. -- After the comment or other pleadings required by the court are filed, or the time for the filing thereof has expired, the court may hear the case or require the parties to submit memoranda. If after such hearing or submission of memoranda or the expiration of the period for the filing thereof the court finds that the allegations of the petition are true, it shall render judgment for the relief prayed for or to which the petitioner is entitled. x x x". (Italics supplied) From the foregoing provision, it is clear that the Petition may be resolved, notwithstanding the failure of the adverse party to file a comment. Its failure to do so despite due notice is its own lookout. Indeed, when a respondent fails to file its comment within the given period, the court may decide the case on the basis of the records before it, specifically the petition and its attachments. 8
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Petitioner insists that the failure of the OSG to receive a copy of the Petition filed before the CA was the reason for the OSGs failure to file a Comment thereon. Be that as it may, as correctly pointed out by respondent, petitioner is not the proper party to invoke such failure. At any rate, it is the duty of petitioner to defend its position, as well as those that upheld it -- the tribunal, the board and the officer -- because it is the party that is ultimately interested in sustaining the correctness of the disposition or the validity of the proceedings.9 Petitioner further assails the validity of the CA Decision, on the ground that its dispositive portion or fallo failed to specify what should be done by the parties after its promulgation. All that the law requires is that the judgment must be definitive. That is, the rights of the parties must be stated with finality by the decision itself, which must thus specifically deny or grant the remedy sought by the action.10 For review by the CA was Undersecretary Dimapilis-Baldozs Resolution reversing the Decision of Med-Arbiter Falconitin. Parenthetically, the ultimate question presented before the appellate court was whether a new certification election should be conducted among the employees of DHL Philippines Corporation. As correctly pointed out by respondent, in reversing the undersecretarys Resolution, the CA necessarily reinstated the med-arbiters earlier Decision to conduct a new certification election. A judgment is not confined to what appears on the face of the decision; it encompasses matters necessarily included in or are necessary to such judgment.11 The Decision of Med-Arbiter Falconitin and Undersecretary Dimapilis-Baldoz should be read in the context of and in relation to the assailed Decision of the CA. The setting aside of the undersecretarys Resolution necessarily implies the holding of a new certification election by the med-arbiter upon receipt of the records of the case and the motion of the interested party. Second Issue: Validity of the Certification Election Under Section 13 of the Rules Implementing Book V (Labor Relations) of the Labor Code, 12 as amended, the election officers authority to certify the results of the election is limited to situations in which there has been no protest filed; or if there has been any, it has not been perfected or formalized within five days from the close of the election proceedings. Further, Section 14 of the same Rules provides that when a protest has been perfected, only the medarbiter can proclaim and certify the winner. Clearly, this rule is based on the election officers function, which is merely to conduct and supervise certification elections.13 It is the med-arbiter who is authorized to hear and decide representation cases.14 Consequently, the decision whether to certify the results of an election or to set them aside due to incidents occurring during the campaign is within the med-arbiters discretion. Petitioner argues that the CA gravely erred in rendering its assailed Decision, considering that no protest or challenge had been formalized within five days, or raised during the election proceedings and entered in the minutes thereof. Petitioner adds that respondent did not file any protest, either, against the alleged fraud and misrepresentation by the formers officers during the election. We disagree. When the med-arbiter admitted and gave due course to respondents Petition for nullification of the election proceedings, the election officer should have deferred issuing the Certification of the results thereof. Section 13 of the Implementing Rules cannot strictly be applied to the present case. Respondents contention is that a number of employees were lured by their officers into believing that petitioner was an independent union. Since the employees had long desired to have an independent union
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that would represent them in collective bargaining, they voted "yes" in favor of petitioner. Having been misled, a majority of them eventually disaffiliated themselves from it and formed an independent union, respondent herein, which thereafter protested the conduct of the election. Having been formed just after such exercise by the defrauded employees who were former members of petitioner, respondent could not have reasonably filed its protest within five days from the close of the election proceedings. Notably, after it had applied for registration with the Bureau of Labor Relations (BLR), respondent filed its Petition to nullify the certification election. Petitioner insistently opposed the Petition, as respondent had not yet been issued a certificate of registration at the time. Because such certificate was issued in favor of the latter four days after the filing of the Petition, on December 23, 1997, the misgivings of the former were brushed aside by the med-arbiter. Indeed, the fact that respondent was not yet a duly registered labor organization when the Petition was filed is of no moment, absent any fatal defect in its application for registration. The circumstances in the present case show that the employees did not sleep on their rights. Hence, their failure to follow strictly the procedural technicalities regarding the period for filing their protest should not be taken against them. Mere technicalities should not be allowed to prevail over the welfare of the workers.15 What is essential is that they be accorded an opportunity to determine freely and intelligently which labor organization shall act on their behalf.16 Having been denied this opportunity by the betrayal committed by petitioners officers in the present case, the employees were prevented from making an intelligent and independent choice. False Statements of Union Officers The making of false statements or misrepresentations that interfere with the free choice of the employees is a valid ground for protest. A certification election may be set aside for misstatements made during the campaign, where 1) a material fact has been misrepresented in the campaign; 2) an opportunity for reply has been lacking; and 3) the misrepresentation has had an impact on the free choice of the employees participating in the election.17 A misrepresentation is likely to have an impact on their free choice, if it comes from a party who has special knowledge or is in an authoritative position to know the true facts. This principle holds true, especially when the employees are unable to evaluate the truth or the falsity of the assertions.18 The fact that the officers of petitioner especially its president, misrepresented it to the voting employees as an independent union constituted a substantial misrepresentation of material facts of vital concern to those employees. The materiality of such misrepresentation is self-evident. The employees wanted an independent union to represent them in collective bargaining, free from outside interference. Thus, upon knowing that petitioner was in fact an affiliate of the FFW, the members disaffiliated from petitioner and organized themselves into an independent union. Additionally, the misrepresentation came from petitioners recognized representative, who was clearly in a position to hold himsel f out as a person who had special knowledge and was in an authoritative position to know the true facts. We are not easily persuaded by the argument of petitioner that the employees had sufficient time between the misrepresentation and the election to check the truth of its claims. They could hardly be expected to verify the accuracy of any statement regarding petitioner, made to them by its officers. No less than its president stated that it was an independent union. At the time, the employees had no reason to doubt him. We sustain the following findings of Med-Arbiter Falconitin: "x x x It must be noted at the outset that [respondent] has charged [petitioners] officers, agents and representative with fraud or deception in encouraging its members to form or join and vote for DHL Philippines Corporation United Rank-and-File Association which they represented as an independent labor union not affiliated with any labor federation or national union. Such serious
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allegations, supported with affidavits under oath executed by no less than seven hundred four (704) DHL Philippines Corporations employees nationwide, cannot just be ignored. "x x x xxx xxx
"Notwithstanding the fact that [petitioner] union was duly furnished copy of the petition and the affidavits as its attachments, it surprisingly failed to question, much less contest, the veracity of the allegations contained in such affidavits, more than just harping in general terms that the allegations are simply incredible and [interposing] vehement denial. Being unassailed and unrefuted, the allegations in the affidavits which are considered as x x x official documents must be given weight and consideration by this Office. Furthermore, with the failure of [petitioner] to rebut the affidavits, more than just denying the allegations, they give rise to the presumption that [petitioner] has admitted such allegations in the affidavit and with the admission, it is inescapable that indeed there was fraud or machination committed by the [petitioner] that seriously affected the validity and legitimacy of the certification election conducted on November 25, 1997 which gives rise to a ground to annul or void the said election, having been marred by fraud, deceptions and machinations."19 This finding of fact of a quasi-judicial agency of DOLE is persuasive upon the courts.20 Although petitioner won in the election, it is now clear that it does not represent the majority of the bargaining employees, owing to the affiliation of its members with respondent. The present uncertainty as to which union has their support to represent them for collective bargaining purposes is a salient factor that this Court has seriously considered. The bargaining agent must be truly representative of the employees.21 At the time of the filing by respondent of the Petition for nullification, allegiances and loyalties of the employees were like shifting sands that radically affected their choice of an appropriate bargaining representative. The polarization of a good number of them followed their discovery of the fraud committed by the officers of petitioner. At any rate, the claim that 704 of the employees are affiliated with respondent is not sufficiently rebutted by any evidence on record. 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, in the affirmative case, by which one.22 Once disaffiliation has been demonstrated beyond doubt, a certification election is the most expeditious way of determining which union should be the exclusive bargaining representative of the employees.23 WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. Costs against petitioner. TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INCORPORATED vs. TAGAYTAY HIGHLANDS EMPLOYEES UNION-PGTWO G.R. No. 142000 January 22, 2003 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.
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THIGCI, in its Comment1 filed on November 27, 1997, opposed THEUs 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 annexed2 to its Comment to the petition for certification election. And it therein incorporated the following tabulation3 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 13 6 2 53 14 6 3 1 4 16 2 Reasons for Disqualification Supervisors of THIGCI Resigned employees of THIGCI AWOL employees of THIGCI Rank-and-file employees of The Country Club at Tagaytay Highlands, Inc. Supervisors of The Country Club at Tagaytay Highlands, Inc. Resigned employees of The Country Club at Tagaytay Highlands, Inc. Terminated employees of The Country Club at Tagaytay Highlands, Inc. AWOL employees of The Country Club at Tagaytay Highlands, Inc. Signatures that cannot be deciphered Names in list that were erased 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.4Replying to THIGCIs 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
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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 respondents 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 (Emphasis supplied) Passing on THIGCIs 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-Arbiters Order and accordingly dismissed the petition for certificatio n 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 THEUs roster of membership; and that regarding th e 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. THIGCIs 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 THIGCIs 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 Courts 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.
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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 UNIONS 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 viceversa, 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 Toyota19 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. Ledesma20 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, dependson 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 petitioners 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 (Underscoring and emphasis supplied), 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
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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;
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(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 attorneys 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 petitioners 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 Courts following ruling is instructive: "[T]he best forum for determining whether there were indeed retractions from some of the laborers is in thecertification 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.
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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 employees function and not the nomenclature or titlegiven to the job which determines whether the employee has rank-and-file or managerial status or whether he is a supervisory employee. (Emphasis supplied).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. INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) vs. HON. LEONARDO A. QUISUMBING G.R. No. 128845 June 1, 2000 Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires are paid more than their colleagues in other schools is, of course, beside the point. The point is that employees should be given equal pay for work of equal value. That is a principle long honored in this jurisdiction. That is a principle that rests on fundamental notions of justice. That is the principle we uphold today. 1wphi1.nt Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents.1 To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their employment, except laws that have been or will be enacted for the protection of employees. Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: a. What is one's domicile? b. Where is one's home economy? c. To which country does one owe economic allegiance? d. Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that individual to the Philippines?2
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Should the answer to any of these queries point to the Philippines, the faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire. The School grants foreign-hires certain benefits not accorded local-hires.1avvphi1 These include housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The School explains: A foreign-hire would necessarily have to uproot himself from his home country, leave his family and friends, and take the risk of deviating from a promising career path all for the purpose of pursuing his profession as an educator, but this time in a foreign land. The new foreign hire is faced with economic realities: decent abode for oneself and/or for one's family, effective means of transportation, allowance for the education of one's children, adequate insurance against illness and death, and of course the primary benefit of a basic salary/retirement compensation. Because of a limited tenure, the foreign hire is confronted again with the same economic reality after his term: that he will eventually and inevitably return to his home country where he will have to confront the uncertainty of obtaining suitable employment after along period in a foreign land. The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international education.3 When negotiations for a new collective bargaining agreement were held on June 1995, petitioner International School Alliance of Educators, "a legitimate labor union and the collective bargaining representative of all faculty members"4 of the School, contested the difference in salary rates between foreign and local-hires. This issue, as well as the question of whether foreign-hires should be included in the appropriate bargaining unit, eventually caused a deadlock between the parties. On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation and Mediation Board to bring the parties to a compromise prompted the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and representation issues in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing subsequently denied petitioner's motion for reconsideration in an Order dated March 19, 1997. Petitioner now seeks relief in this Court. Petitioner claims that the point-of-hire classification employed by the School is discriminatory to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination. The School disputes these claims and gives a breakdown of its faculty members, numbering 38 in all, with nationalities other than Filipino, who have been hired locally and classified as local hires. 5 The Acting Secretary of Labor found that these non-Filipino local-hires received the same benefits as the Filipino local-hires. The compensation package given to local-hires has been shown to apply to all, regardless of race. Truth to tell, there are foreigners who have been hired locally and who are paid equally as Filipino local hires.6 The Acting secretary upheld the point-of-hire classification for the distinction in salary rates:
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The Principle "equal pay for equal work" does not find applications in the present case. The international character of the School requires the hiring of foreign personnel to deal with different nationalities and different cultures, among the student population. We also take cognizance of the existence of a system of salaries and benefits accorded to foreign hired personnel which system is universally recognized. We agree that certain amenities have to be provided to these people in order to entice them to render their services in the Philippines and in the process remain competitive in the international market. Furthermore, we took note of the fact that foreign hires have limited contract of employment unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and other benefits would also require parity in other terms and conditions of employment which include the employment which include the employment contract. A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary and professional compensation wherein the parties agree as follows: All members of the bargaining unit shall be compensated only in accordance with Appendix C hereof provided that the Superintendent of the School has the discretion to recruit and hire expatriate teachers from abroad, under terms and conditions that are consistent with accepted international practice. Appendix C of said CBA further provides: The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary schedule. The 25% differential is reflective of the agreed value of system displacement and contracted status of the OSRS as differentiated from the tenured status of Locally Recruited Staff (LRS). To our mind, these provisions demonstrate the parties' recognition of the difference in the status of two types of employees, hence, the difference in their salaries. The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an established principle of constitutional law that the guarantee of equal protection of the laws is not violated by legislation or private covenants based on reasonable classification. A classification is reasonable if it is based on substantial distinctions and apply to all members of the same class. Verily, there is a substantial distinction between foreign hires and local hires, the former enjoying only a limited tenure, having no amenities of their own in the Philippines and have to be given a good compensation package in order to attract them to join the teaching faculty of the School.7 We cannot agree. That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the policy against these evils. The Constitution 8 in the Article on Social Justice and Human Rights exhorts Congress to "give highest priority to the enactment of measures that protect and enhance the right of all people to human dignity, reduce social, economic, and political inequalities." The very broad Article 19 of the Civil Code requires every person, "in the exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his due, and observe honesty and good faith. International law, which springs from general principles of law,9 likewise proscribes discrimination. General principles of law include principles of equity, 10 i.e., the general principles of fairness and justice, based on the test of what is reasonable. 11 The Universal Declaration of Human Rights, 12 the International Covenant on Economic, Social, and Cultural Rights, 13 the International Convention on the Elimination of All Forms of Racial Discrimination, 14 the Convention against Discrimination in Education, 15 the
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Convention (No. 111) Concerning Discrimination in Respect of Employment and Occupation 16 all embody the general principle against discrimination, the very antithesis of fairness and justice. The Philippines, through its Constitution, has incorporated this principle as part of its national laws. In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and discrimination by the employer are all the more reprehensible. The Constitution 17 specifically provides that labor is entitled to "humane conditions of work." These conditions are not restricted to the physical workplace the factory, the office or the field but include as well the manner by which employers treat their employees. The Constitution 18 also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor Code 19 provides that the State shall "ensure equal work opportunities regardless of sex, race or creed." It would be an affront to both the spirit and letter of these provisions if the State, in spite of its primordial obligation to promote and ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms and conditions of employment. 20 Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for example, prohibits and penalizes 21 the payment of lesser compensation to a female employee as against a male employee for work of equal value. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages in order to encourage or discourage membership in any labor organization. Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work, which ensure, in particular: a. Remuneration which provides all workers, as a minimum, with: (i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work; xxx xxx xxx
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. 22 This rule applies to the School, its "international character" notwithstanding. The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-hires. 23 The Court finds this argument a little cavalier. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. This presumption is borne by logic and human experience. If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why the others receive more. That would be adding insult to injury. The employer has discriminated against that employee; it is for the employer to explain why the employee is treated unfairly. The employer in this case has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities, which they perform under similar working conditions.
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The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in salary rates without violating the principle of equal work for equal pay. "Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration paid at regular intervals for the rendering of services." In Songco v. National Labor Relations Commission, 24 we said that: "salary" means a recompense or consideration made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. (Emphasis supplied.) While we recognize the need of the School to attract foreign-hires, salaries should not be used as an enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and home leave travel allowances. The Constitution enjoins the State to "protect the rights of workers and promote their welfare," 25 "to afford labor full protection." 26 The State, therefore, has the right and duty to regulate the relations between labor and capital.27 These relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining agreements included, must yield to the common good. 28 Should such contracts contain stipulations that are contrary to public policy, courts will not hesitate to strike down these stipulations. In this case, we find the point-of-hire classification employed by respondent School to justify the distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no reasonable distinction between the services rendered by foreign-hires and local-hires. The practice of the School of according higher salaries to foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of this Court.1avvphi1 We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-hires. A bargaining unit is "a group of employees of a given employer, comprised of all or less than all of the entire body of employees, consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." 29 The factors in determining the appropriate collective bargaining unit are (1) the will of the employees (Globe Doctrine); (2) affinity and unity of the employees' interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. 30 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. 31 It does not appear that foreign-hires have indicated their intention to be grouped together with local-hires for purposes of collective bargaining. The collective bargaining history in the School also shows that these groups were always treated separately. Foreign-hires have limited tenure; local-hires enjoy security of tenure. Although foreign-hires perform similar functions under the same working conditions as the localhires, foreign-hires are accorded certain benefits not granted to local-hires. These benefits, such as housing, transportation, shipping costs, taxes, and home leave travel allowance, are reasonably related to their status as foreign-hires, and justify the exclusion of the former from the latter. To include foreignhires in a bargaining unit with local-hires would not assure either group the exercise of their respective collective bargaining rights.
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WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN PART. The Orders of the Secretary of Labor and Employment dated June 10, 1996 and March 19, 1997, are hereby REVERSED and SET ASIDE insofar as they uphold the practice of respondent School of according foreign-hires higher salaries than local-hires. ACOJE WORKERS' UNION vs. NATIONAL MINES AND ALLIED WORKERS' UNION (NAMAWU) G.R. No. L-18848 April 23, 1963 Appeal by certiorari from an Order of the Court of Industrial Relations certifying: the National Mines and Allied Workers' Union as the sole and exclusive bargaining agent of all the workers in the Acoje Mining Company at Santa Cruz, Zambales, excluding supervisors, confidential employees and security guards, for purposes of collective bargaining under Republic Act 875 as regards to wages, rates of pay, hours of work and other conditions of employment. Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. 1wph1.t Pursuant to an Order of the Court of Industrial Relations, dated May 19, 1961, and a Resolution thereof en banc, dated June 8, 1961, the Department of Labor, through the Bureau of Labor Relations, conducted on June 9, 1961, a "consent election" among the workers of the aforementioned Company, in which five (5) labor unions participated, namely, the Acoje United Workers' Union, the Acoje Labor Union (PELTA), the Acoje Labor Union (PLUM), respondent National Mines and Allied Workers' Union (NAMAWU), and petitioner Acoje Workers' Union. On June 21, 1961, the Department of Labor certified that the result of the election was as follows: No. of Valid Votes cast ................................... No. of Spoiled Ballots .................................... No. of Challenged Ballots ................................. 874 11 19
Total No. of Votes Cast ........................................... 904 No. of Votes Cast for: Acoje United Workers Union ................................ Acoje Labor Union-Pelta ................................... Acoje Labor Union-Plum .................................... National Mines & Allied Workers' Union ............. Acoje Workers' Union .................................. No Union desired ...................................... 8 11 5 560 278 12 874 Prior thereto or on June 12, 1961, petitioner Union which had been defeated by respondent Union by a margin of 282 votes had filed a motion to invalidate said election upon several grounds. After due
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hearing, the lower court issued, on July 21, 1961, the order appealed from holding that said motion was without merit, and certifying respondent Union as the sole and exclusive bargaining agent of all the workers of the Company. A reconsideration of said order having been denied by the Court en banc, petitioner interposed the present appeal by certiorari, and now maintains that the lower court should have invalidated the aforementioned election for the same was "the result of acts of terrorism, force, threat and intimidation employed by" agents of respondent Union. More specifically, petitioner alleges that, "if heard or given its day in Court" it could have proven that: a) not less than 310 workers of the Company were threatened the night immediately preceding the election by agents of respondent Union individually "to cast their vote for said Union ... or else;" b) the agents of respondent Union were even aided by the Municipal Mayor of Santa Cruz, Zambales, and his policemen, and, as a consequence, said Municipal Mayor was suspended from office; c) the acts performed by said agents of respondent Union "resulted into unlawful disorder, damaged belongings, and physical injuries suffered by the workers"; d) many workers were unable to vote for justified causes; and e) many workers, subject of unfair labor practice case actually pending in Court, were not allowed to vote, contrary to law. The last two (2) grounds are clearly untenable. It appears that on April 24, 1961, the labor unions concerned agreed, not only to the holding of the aforementioned election, but, also, to the use of the Company payroll of March 31, 1961, as the basis for determining who are qualified to vote subject to the approval of the lower court. On May 8, 1961, the Company presented its aforementioned payroll to said court and stated that the labor unions had been furnished copy thereof, at least three (3) days prior thereto. Said labor unions were given an opportunity to make their comments and observations on the list of workers contained in the payroll and to ask or suggest the inclusion or exclusion of names therein or therefrom. Petitioner's representative then stated that it would abide by whatever ruling the court may make on the matter of inclusion and exclusion of voters. Indeed, on May 19, 1961, the court issued the corresponding order for the holding of the election and in made its ruling on the question as to who were qualified to vote, and petitioner did not move for a reconsideration of said ruling, although two (2) other Labor Unions and that Company did so, and their motions for reconsideration were denied by the Court en banc. Hence, petitioner may no longer contest the accuracy of the aforementioned voters list. Pursuant thereto that Company had 1,019 workers, excluding department heads foremen, but including 48 security guards. Excluding the latter, there were, therefore, only 971 qualified voters. Of these, 904 had voted, so that only 67 qualified voters had to cast their votes. It is obvious, that this number plus the 19 ballots challenged in the election are insufficient to offset the plurality of 282 votes obtained by respondent Union. In connection with the duress claimed to have been used upon the voters, it should be observed that in its motion dated June 12, 1961, petitioner maintained that the election should be invalidated because of alleged: a) insufficiency of the notice of said election; b) failure to furnish the petitioner with a copy of the list of qualified voters; c) inclusion among those who voted of confidential employees, supervisors and security or police officers; d) failure of many workers to vote due to said insufficient notice "as well as the cases of violence that occurred on the eve of election". None of these grounds is now invoked by petitioner herein. Worthy of notice is the fact that petitioner did not claim that any voter had been coerced to vote for respondent Union. In fact, in its supplemental motion of June 22, 1961, petitioner made more specific allegations to bolster up its pretense "that the election held on June 9, 1961, is inconclusive because of the alleged "failure of more than 300 workers to vote which, as above indicated, is not a fact. It is true that the last ground out of the seven (7) relied upon in the aforementioned supplemental motion was to the effect that "there are many cases where the workers were threatened, coerced and intimidated to vote for the NAMAWU." But this general allegation, without anything to indicate the number of workers involved, without the supporting affidavit of any of them, and without an offer to introduce their testimony or the testimony of any of them was in the light of the attending circumstances clearly insufficient to warrant the invalidation of the aforementioned election.
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As regards the disorder that had allegedly characterized the election, the minutes thereof suffice to refute petitioner's pretense. We quote from said minutes: Balloting went on smoothly up to closing time at 7:00 p.m. There was spirit of comraderie among the representatives of the contesting unions throughout the proceedings. Peace and order was maintained by the 18th PC Company at Iba, Zambales, graced by the presence of the Provincial Commander in person. WHEREFORE, the order appealed from is hereby affirmed, with costs against the petitioner. YOKOHAMA TIRE PHILIPPINES, INC vs. YOKOHAMA EMPLOYEES UNION G.R. No. 159553 December 10, 2007 In this appeal, petitioner Yokohama Tire Philippines, Inc. (hereafter Yokohama, for brevity) assails the Decision1dated April 9, 2003 of the Court of Appeals in CA-G.R. SP No. 74273 and its Resolution2 dated August 15, 2003, denying the motion for reconsideration. The antecedent facts are as follows: On October 7, 1999, respondent Yokohama Employees Union (Union) filed a petition for certification election among the rank-and-file employees of Yokohama. Upon appeal from the Med-Arbiters order dismissing the petition, the Secretary of the Department of Labor and Employment (DOLE) ordered an election with (1) "Yokohama Employees Union" and (2) "No Union" as choices. 3 The election held on November 23, 2001 yielded the following result: YOKOHAMA EMPLOYEES UNION NO UNION SPOILED - 131 - 117 - 2 --------250 VOTES CHALLENGED BY [YOKOHAMA] - 78 VOTES CHALLENGED BY [UNION] - 73 --------- 151 - 401
4
TOTAL CHALLENGED VOTES TOTAL VOTES CAST
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Yokohama challenged 78 votes cast by dismissed employees. On the other hand, the Union challenged 68 votes cast by newly regularized rank-and-file employees and another five (5) votes by alleged supervisortrainees. Yokohama formalized its protest and raised as an issue the eligibility to vote of the 78 dismissed employees,5 while the Union submitted only a handwritten manifestation during the election. On January 21, 2002, the Med-Arbiter resolved the parties protests, decreeing as follows: WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered as follows: xxxx 2. The appreciation of the votes of the sixty-five (65) dismissed employees who contested their dismissal before the National Labor Relations Commission shall be suspended until the final disposition of their complaint for illegal dismissal. . . . 3. The votes of the sixty-eight (68) so-called "newly-regularized" rank-and-file employees shall be appreciated in the final tabulation. xxxx SO ORDERED.6 (Emphasis supplied.) On May 22, 2002, the DOLE Acting Secretary disposed of the appeals as follows: WHEREFORE, the partial appeal of [Yokohama] is DENIED and the appeal of [the union] is PARTIALLY GRANTED. Thus, the Order of the Med-Arbiter dated 21 January 2002 is hereby MODIFIED as follows: xxxx 2. The votes of dismissed employees who contested their dismissal before the National Labor Relations Commission (NLRC) shall be appreciated in the final tabulation of the certification election results. 3. The votes of the sixty-eight (68) newly regularized rank-and-file employees shall be excluded. xxxx SO RESOLVED.7 (Emphasis supplied.) The Court of Appeals affirmed in toto the decision of the DOLE Acting Secretary. 8 The appellate court held that the 78 employees who contested their dismissal were entitled to vote under Article 212 (f) 9 of the Labor Code and Section 2, Rule XII10 of the rules implementing Book V of the Labor Code. However, it disallowed the votes of the 68 newly regularized employees since they were not included in the voters list submitted during the July 12, 2001 pre-election conference. The appellate court also noted that Yokohamas insistence on their inclusion lends suspicion that it wanted to create a company union, and ruled that Yokohama had no right to intervene in the certification election. Finally, it ruled that the unions handwritten manifestation during the election was substantial compliance with the rule on protest. Yokohama appealed.
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On September 15, 2003, we issued a temporary restraining order against the implementation of the May 22, 2002 Decision of the DOLE Acting Secretary and the October 15, 2002 Resolution of the DOLE Secretary, denying Yokohamas motion for reconsideration.11 In a manifestation with motion to annul the DOLE Secretarys entry of judgment filed with this Court on October 16, 2003, Yokohama attached a Resolution12 dated April 25, 2003 of the Med-Arbiter. The resolution denied Yokohamas motion to suspend proceedings and cited the decision of the Court of Appeals. The resolution also certified that the Union obtained a majority of 208 votes in the certification election while "No Union" obtained 121 votes. Yokohama also attached an entry of judgment 13 issued by the DOLE stating that the April 25, 2003 Resolution of the Med-Arbiter was affirmed by the DOLE Secretarys Office on July 29, 2003 and became final on September 29, 2003. In a subsequent manifestation/motion with erratum filed on October 21, 2003, Yokohama deleted an allegation in its October 16, 2003 manifestation which was included "through inadvertence and clerical mishap." Said allegation reads: xxxx . . . Notably, the Resolution dated 29 July 2003 which affirmed the Resolution dated 25 April 2003 is still not final and executory considering the timely filing of a motion for its reconsideration on 15 August 2003 which until now has yet to be resolved .14 In this appeal, petitioner raises the following issues: I. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN DISALLOWING THE APPRECIATION OF THE VOTES OF SIXTY-EIGHT REGULAR RANK-AND-FILE. II. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE [DOLE SECRETARYS] DECLARATION THAT [THE UNIONS] MANIFESTATION ON THE DAY OF THE CERTIFICATION ELECTION WAS SUFFICIENT COMPLIANCE WITH THE RULE ON FORMALIZATION OF PROTESTS. III. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN ALLOWING THE APPRECIATION OF VOTES OF ALL OF ITS EMPLOYEES WHO WERE PREVIOUSLY DISMISSED FOR SERIOUS MISCONDUCT AND ABANDONMENT OF WORK WHICH ARE CAUSES UNRELATED TO THE CERTIFICATION ELECTION.15 We shall first resolve the last assigned issue: Was it proper to appreciate the votes of the dismissed employees? Petitioner argues that "the Court of Appeals erred in ruling that the votes of the dismissed employees should be appreciated." Petitioner posits that "employees who have quit or have been dismissed for just cause prior to the date of the certification election are excluded from participating in the certification election." Petitioner had questioned the eligibility to vote of the 78 dismissed employees.
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Respondent counters that Section 2, Rule XII16 of the rules implementing Book V of the Labor Code allows a dismissed employee to vote in the certification election if the case contesting the dismissal is still pending. Section 2, Rule XII, the rule in force during the November 23, 2001 certification election clearly, unequivocally and unambiguously allows dismissed employees to vote during the certification election if the case they filed contesting their dismissal is still pending at the time of the election. 17 Here, the votes of employees with illegal dismissal cases were challenged by petitioner although their cases were still pending at the time of the certification election on November 23, 2001. These cases were filed on June 27, 200118 and the appeal of the Labor Arbiters February 28, 2003 Decision was resolved by the NLRC only on August 29, 2003.19 Even the new rule20 has explicitly stated that without a final judgment declaring the legality of dismissal, dismissed employees are eligible or qualified voters. Thus, Rule IX Conduct of Certification Election Section 5. Qualification of voters; inclusion-exclusion. . . . An employee who has been dismissed from work but has contested the legality of the dismissal in a forum of appropriate jurisdiction at the time of the issuance of the order for the conduct of a certification election shall be considered a qualified voter, unless his/her dismissal was declared valid in a final judgment at the time of the conduct of the certification election.1avvphi1 xxxx Thus, we find no reversible error on the part of the DOLE Acting Secretary and the Court of Appeals in ordering the appreciation of the votes of the dismissed employees. Finally, we need not resolve the other issues for being moot. The 68 votes of the newly regularized rankand-file employees, even if counted in favor of "No Union," will not materially alter the result. There would still be 208 votes in favor of respondent and 189 21 votes in favor of "No Union." We also note that the certification election is already a fait accompli, and clearly petitioners rank -and-file employees had chosen respondent as their bargaining representative. WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated April 9, 2003 of the Court of Appeals in CA-G.R. SP No. 74273 and the Resolution dated August 15, 2003 are AFFIRMED. The temporary restraining order issued on September 15, 2003 is hereby DISSOLVED. No pronouncement as to costs. SAMAHAN NG MANGGAGAWA SA PACIFIC PLASTIC vs. HON. BIENVENIDO LAGUESMA G.R. No. 111245 January 31, 1997 This is a special civil action for certiorari to set aside the resolution, dated May 14, 1993, of respondent Undersecretary of Labor and the order of the Med-Arbiter of January 31, 1993, dismissing the election protest of petitioner Samahan ng Manggagawa sa Pacific Plastic (SAMAHAN) and upholding the election of respondent Malayang Nagkakaisang Manggagawa ng Pacific Plastic (MNMPP) as the sole and exclusive bargaining representative of the rank and file employees at the Pacific Plastic Corporation. The facts are as follows:
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Petitioner SAMAHAN and respondent MNMPP are labor unions of rank and file employees at the Pacific Plastic Corporation (PPC) in Valenzuela, Metro Manila. On August 24, 1990, MNMPP filed a Petition for Certification Election, alleging that there were more or less 130 rank and file employees at the PPC whom it was seeking to represent. 1 SAMAHAN countered by seeking the cancellation of MNMPP's union registration. As a result, MNMPP's petition to be certified as the bargaining agent was dismissed. MNMPP appealed to the Secretary of Labor who, on March 5, 1991, reversed the decision of the Med-Arbiter and ordered the holding of a certification election among the rank and file employees of the PPC. The PPC filed a Motion for Reconsideration but its motion was denied. Accordingly, the representation officer of the Secretary of Labor held a pre-election conference on May 6, 1991, during which the PPC was required to submit the list of its rank and file employees based on the company payroll three (3) months prior to the filing of the petition. As respondent company failed to submit the list, it was given a stern warning by the Department of Labor (DOLE) that should it fail to appear at the next conference on June 3, 1991, the list to be submitted by petitioner MNMPP would be used as basis for determining the eligible voters. 2 But the PPC again failed to appear at the conference, prompting the Department of Labor Industrial Relations Division (DOLE-IRD) to issue a final warning. 3 Petitioner SAMAHAN also failed to appear at the June 3, 1991 conference. On June 18, 1991, it moved to defer the conference, alleging that proceedings for the cancellation of union registration of MNMPP were still pending resolution before the Med-Arbiter which constitute a prejudicial question and that there existed a collective bargaining agreement between PPC and SAMAHAN which was a bar to the certification election. 4 MNMPP opposed the motion, contending that the cancellation case had already been finally decided by the DOLE and that the execution of the subject CBA during the pendency of the representation case did not bar the holding of a certification election. 5 On August 23, 1991, the DOLE-IRD summoned respondent company once more, reiterating its warning that should the company fail to submit the list of its rank and file employees, the list to be submitted by private respondent MNMPP and petitioner SAMAHAN would be adopted as the list of qualified voters and the company's right to the exclusion proceedings would be deemed waived. 6 But again PPC did not comply with the DOLE order. Meanwhile, on September 23, 1991, SAMAHAN and MNMPP agreed to hold the certification election on October 29, 1991 on the basis of the list of employees submitted by MNMPP, without prejudice to the submission by petitioner SAMAHAN of its own list on October 17, 1991. 7Thereafter, they agreed to postpone election to await the list of employees requested from the Social Security System. 8 On September 10, 1992, upon motion of MNMPP, the certification election was finally set for October 6, 1992. But SAMAHAN objected despite its agreement with MNMPP on September 23, 1991 to hold an election using the list furnished by the SSS. 9 It also objected to the participation of a third labor union, Kalipunan ng Manggagawang Pilipino (KAMAPI) which in the meantime had filed a motion for intervention. Thereafter, SAMAHAN filed a Manifestation/Motion that it was not participating in the certification election and asked that the certification election held on the same day be nullified for the following reasons: (1) it did not receive notice of the certification as required by law; (2) its opposition to KAMAPI's motion to intervene and it is opposition to setting the date of the certification election had not been resolved; (3) there were discrepancies in the list of voters submitted by the SSS; and (4) SAMAHAN's President moved to strike out his signature at the back of the official ballot. 10 The certification election was held on October 6, 1992. Over SAMAHAN's objection KAMAPI was allowed to participate. The following were results of the election: 11 No. of Eligible Voters 98 Malayang Nagkakaisang Manggagawa sa Pacific Plastic 56 Samahan ng Manggagawa sa Pacific Plastic 2 Kalipunan ng Manggagawang Pilipino 0
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No. Union 1 No. of Spoiled Ballots cast 3 Total no. of Votes Cast 62 On October 9, 1992, SAMAHAN protested the result of the certification election alleging the same grounds alleged by it in its Manifestation/Motion of October 6, 1992. On October 15, 1992, MNMPP opposed the petition raising the following arguments: (1) that the mere filing of a motion for intervention will not suspend the holding of a certification election under Rule V, 5 of the Omnibus Rules Implementing the Labor Code; (2) that the results of the election showed that intervenor was resoundingly repudiated by the employees; (3) that it failed to specify the alleged discrepancies in the list of employees furnished by the SSS; and (4) that matters not raised during the election are deemed waived pursuant to Rule V, 3 of the Omnibus Rules Implementing the Labor Code. 12 In his order dated January 31, 1993, the Med-Arbiter, Tomas F. Falconitin, dismissed the election protest of SAMAHAN and upheld the election of MNMPP as the sole and exclusive bargaining agent of all rank and file employees at the PCC. On March 12, 1993, SAMAHAN appealed to the Secretary of Labor. It argued that its opposition to KAMAPI's Motion for Intervention should first be resolved before a certification election could be held and that the contract-bar rule should be applied. In addition, it contended that the use of the SSS list was in violation of the Omnibus Rules Implementing the Labor Code which prescribe the use of the company payroll as basis for the voter's list. On May 14, 1993, Undersecretary Bienvenido Laguesma denied the appeal of SAMAHAN and affirmed the decision of the Med-Arbiter. SAMAHAN moved for a reconsideration, but its motion was denied on July 29, 1993. Hence, this petition for certiorari. Petitioner contends: 1. The certification election held on October 6, 1992 is null and void on the ground that only 62 out of 130 employees participated in the activity. 2. The SSS lists indicating 98 covered employees cannot be used as substitute for three (3) monthly payrolls (sic) required for the purpose of determining the qualified voters and the majority vote needed in an election. 3. Hon. Bienvenido Laguesma committed a serious error amounting to lack of jurisdiction in upholding the election of respondent officer's (sic) despite the absence of majority support which is 65 out of 130 admitted members in the bargaining unit. 4. Hon. Bienvenido Laguesma had abused his discretion in sustaining the med-arbiter despite the absence of any legal or factual support when he could otherwise declare failure of an election, thereby constituting his acts to have been done in excess of his authority amounting to lack of jurisdiction, and therefore his resolution and order issued pursuant thereof are considered to be null and void. 13 The petition has no merit. First. The certification election held on October 6, 1992 is valid Art. 256 of the labor Code provides that in order to have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The certification election results show that more than a majority, i.e, 62 out of a total of 98 eligible voters included in the list of employees obtained from the SSS, cast their votes. Hence, the legal requirement for a valid election was met. The bone of contention actually concerns the propriety of utilizing the list of employees furnished by the SSS as basis for determining the total number of eligible voters in the bargaining unit. Petitioner claims that, according to the Implementing Rules, the basis for the list of eligible voters should have been the
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payroll three (3) months preceding the filing of the petition for certification election and that if this was done the 62 votes cast would be short of the majority because, instead of only 98 employees, as shown in the SSS list, there were actually 130 as alleged in MNMPP's petition for certification election. The contention is without merit. As petitioner itself says, the figure 130 is based on the allegation that MNMPP made in its petition for certification election that it was supported by at least 25% of the members of the bargaining unit. 14 Such statement was a mere approximation of the size of the bargaining unit that the petitioning union seeks to represent and cannot be used against MNMPP for this reason. It should ideally be the payroll which should have been used for the purpose of the election. However, the unjustified refusal of a company to submit the payroll in its custody, despite efforts to make it produce it, compelled resort to the SSS list as the next best source of information. After all, the SSS list is a public record whose regularity is presumed. In Port Workers Union of the Philippines (PWUP) v. Undersecretary of Labor and Employment, 15 this Court underscored the policy of the Labor Code of encouraging the holding of a certification election as the definitive and certain way of ascertaining the choice of employees as to the labor organization in a collective bargaining unit. In Trade Unions of the Philippines and Allied Services World Federation of Trade Unions v . Laguesma, 16 we reiterated this policy thus: It bears stressing that no obstacle must be placed to the holding of certification elections, for it is a statutory policy that should not be circumvented. We have held that whenever there is doubt as to whether a particular union represents the majority of the rank and file employees, in the absence of a legal impediment, the holding of a certification election is the most democratic method of determining the employees' choice of their bargaining representative. It is the appropriate means whereby controversies and disputes on representation may be laid to rest, by the unequivocal vote of the employees themselves. Indeed, it is the keystone of industrial democracy. Insistence on the application of the Omnibus Implementing Rules could defeat this policy. Worse, it could facilitate fraud by employers who can easily suppress the payroll to prevent certification elections from being held. This Court has therefore consistently adhered to the principle announced in U.E. Automotive Employees v. Noriel 17that where it concerns the weight to be accorded to the wishes of the majority as expressed in an election conducted fairly and honestly, certain provisions that may be considered mandatory before the voting takes place become thereafter merely directory in order that the wishes of the electorate prevail. Considering all the arguments presented above, we find no substantial reason to nullify the certification election conducted on October 6, 1992 on the basis of a mere technicality which finds no justification considering the facts of the case nor upon close examination of the true intent of the law to remove all impediments to the conduct of certification elections. At all events petitioner must be deemed to have waived the objection based on this ground, considering that this objection was raised for the first time in petitioner's appeal from the decision of the Med-Arbiter dismissing petitioner's protest. 18 Even then, petitioner's objection to the use of the SSS list was not that this was contrary to the requirement of the Implementing Rules that the payroll three (3) months prior to the filing of the petition should be used but rather that the list contained some discrepancy 19 an allegation which petitioner failed to substantiate. At the latest, petitioner's objection to the use of the SSS should have been raised during the elections and formalized in its election protest. We agree with private respondent MNMPP in its Opposition to SAMAHAN's election protest dated October 15, 1992 that under the Implementing Rules, grounds of protests not raised before the close of the proceedings and duly formalized within five (5) days after the close of the election proceedings are deemed waived. 20 Second. Petitioner's contention in its Motion for Deferment of Pre-election Conference was that the CBA between it and the PPC signed during the pendency of the representation proceedings, rendered the certification election moot and academic. Rule V, Book V of the Omnibus Rules Implementing the Labor Code, 4 provides:
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The representation case shall not, however, be adversely affected by a collective bargaining agreement registered before or during last 60 days of a subsisting agreement or during the pendency of the representation case. This rule was applied in the case of ALU-TUCP v. Trajano 21 where we held that the representation case will not be adversely affected by a CBA registered before or during the freedom period or during the pendency of the representation case. In ALU v. Calleja, 22 we also held that a CBA, which was prematurely renewed, is not a bar to the holding of a certification election. Hence, the CBA entered into between petitioner and PPC during the pendency of the representation case and after the filing of the petition for certification election on August 24, 1990, cannot possibly prejudice the certification election nor render it moot. Third. With respect to petitioner's claim 23 that the proceedings for the cancellation of MNMPP's union registration was a prejudicial question, suffice it to say that as held in Association of Court of Appeals Employees vs. Calleja,24 a certification election can be conducted despite pendency of a petition to cancel the union registration certificate. For the fact is that at the time the respondent union filed its petition for certification, it still had the legal personality to perform such act absent an order directing its cancellation. WHEREFORE, the petition for certiorari is DENIED for lack of merit. KIOK LOY vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC) G.R. No. L-54334 January 22, 1986 Petition for certiorari to annul the decision 1 of the National Labor Relations Commission (NLRC) dated July 20, 1979 which found petitioner Sweden Ice Cream guilty of unfair labor practice for unjustified refusal to bargain, in violation of par. (g) of Article 249 2 of the New Labor Code, 3 and declared the draft proposal of the Union for a collective bargaining agreement as the governing collective bargaining agreement between the employees and the management. The pertinent background facts are as follows: In a certification election held on October 3, 1978, the Pambansang Kilusang Paggawa (Union for short), a legitimate late labor federation, won and was subsequently certified in a resolution dated November 29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining agent of the rank-and-file employees of Sweden Ice Cream Plant (Company for short). The Company's motion for reconsideration of the said resolution was denied on January 25, 1978. Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the Company with two copies of its proposed collective bargaining agreement. At the same time, it requested the Company for its counter proposals. Eliciting no response to the aforesaid request, the Union again wrote the Company reiterating its request for collective bargaining negotiations and for the Company to furnish them with its counter proposals. Both requests were ignored and remained unacted upon by the Company. Left with no other alternative in its attempt to bring the Company to the bargaining table, the Union, on February 14, 1979, filed a "Notice of Strike", with the Bureau of Labor Relations (BLR) on ground of unresolved economic issues in collective bargaining. 5 Conciliation proceedings then followed during the thirty-day statutory cooling-off period. But all attempts towards an amicable settlement failed, prompting the Bureau of Labor Relations to certify the case to the National Labor Relations Commission (NLRC) for compulsory arbitration pursuant to Presidential Decree No. 823, as amended. The labor arbiter, Andres Fidelino, to whom the case was assigned, set the initial hearing for April 29, 1979. For failure however, of the parties to submit their respective position papers as required, the said hearing was cancelled and reset to another date. Meanwhile, the Union submitted its
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position paper. The Company did not, and instead requested for a resetting which was granted. The Company was directed anew to submit its financial statements for the years 1976, 1977, and 1978. The case was further reset to May 11, 1979 due to the withdrawal of the Company's counsel of record, Atty. Rodolfo dela Cruz. On May 24, 1978, Atty. Fortunato Panganiban formally entered his appearance as counsel for the Company only to request for another postponement allegedly for the purpose of acquainting himself with the case. Meanwhile, the Company submitted its position paper on May 28, 1979. When the case was called for hearing on June 4, 1979 as scheduled, the Company's representative, Mr. Ching, who was supposed to be examined, failed to appear. Atty. Panganiban then requested for another postponement which the labor arbiter denied. He also ruled that the Company has waived its right to present further evidence and, therefore, considered the case submitted for resolution. On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National Labor Relations Commission. On July 20, 1979, the National Labor Relations Commission rendered its decision, the dispositive portion of which reads as follows: WHEREFORE, the respondent Sweden Ice Cream is hereby declared guilty of unjustified refusal to bargain, in violation of Section (g) Article 248 (now Article 249), of P.D. 442, as amended. Further, the draft proposal for a collective bargaining agreement (Exh. "E ") hereto attached and made an integral part of this decision, sent by the Union (Private respondent) to the respondent (petitioner herein) and which is hereby found to be reasonable under the premises, is hereby declared to be the collective agreement which should govern the relationship between the parties herein. SO ORDERED. (Emphasis supplied) Petitioner now comes before Us assailing the aforesaid decision contending that the National Labor Relations Commission acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction in rendering the challenged decision. On August 4, 1980, this Court dismissed the petition for lack of merit. Upon motion of the petitioner, however, the Resolution of dismissal was reconsidered and the petition was given due course in a Resolution dated April 1, 1981. Petitioner Company now maintains that its right to procedural due process has been violated when it was precluded from presenting further evidence in support of its stand and when its request for further postponement was denied. Petitioner further contends that the National Labor Relations Commission's finding of unfair labor practice for refusal to bargain is not supported by law and the evidence considering that it was only on May 24, 1979 when the Union furnished them with a copy of the proposed Collective Bargaining Agreement and it was only then that they came to know of the Union's demands; and finally, that the Collective Bargaining Agreement approved and adopted by the National Labor Relations Commission is unreasonable and lacks legal basis. The petition lacks merit. Consequently, its dismissal is in order. Collective bargaining which is defined as negotiations towards a collective agreement, 6 is one of the democratic frameworks under the New Labor Code, designed to stabilize the relation between labor and management and to create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the Union and is characterized as a legal obligation. So much so that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an employer to refuse "to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work, and all other terms and conditions of employment including proposals for adjusting any grievance or question arising under such an agreement and executing a contract incorporating such agreement, if requested by either party.
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While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty to initiate contract negotiation. 7 The mechanics of collective bargaining is set in motion only when the following jurisdictional preconditions are present, namely, (1) possession of the status of majority representation of the employees' representative in accordance with any of the means of selection or designation provided for by the Labor Code; (2) proof of majority representation; and (3) a demand to bargain under Article 251, par. (a) of the New Labor Code . ... all of which preconditions are undisputedly present in the instant case. From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no doubt that the Union has a valid cause to complain against its (Company's) attitude, the totality of which is indicative of the latter's disregard of, and failure to live up to, what is enjoined by the Labor Code to bargain in good faith. We are in total conformity with respondent NLRC's pronouncement that petitioner Company is GUILTY of unfair labor practice. It has been indubitably established that (1) respondent Union was a duly certified bargaining agent; (2) it made a definite request to bargain, accompanied with a copy of the proposed Collective Bargaining Agreement, to the Company not only once but twice which were left unanswered and unacted upon; and (3) the Company made no counter proposal whatsoever all of which conclusively indicate lack of a sincere desire to negotiate. 8 A Company's refusal to make counter proposal if considered in relation to the entire bargaining process, may indicate bad faith and this is specially true where the Union's request for a counter proposal is left unanswered. 9 Even during the period of compulsory arbitration before the NLRC, petitioner Company's approach and attitude-stalling the negotiation by a series of postponements, non-appearance at the hearing conducted, and undue delay in submitting its financial statements, lead to no other conclusion except that it is unwilling to negotiate and reach an agreement with the Union. Petitioner has not at any instance, evinced good faith or willingness to discuss freely and fully the claims and demands set forth by the Union much less justify its opposition thereto.10 The case at bar is not a case of first impression, for in the Herald Delivery Carriers Union (PAFLU) vs. Herald Publications 11the rule had been laid down that "unfair labor practice is committed when it is shown that the respondent employer, after having been served with a written bargaining proposal by the petitioning Union, did not even bother to submit an answer or reply to the said proposal This doctrine was reiterated anew in Bradman vs. Court of Industrial Relations 12 wherein it was further ruled that "while the law does not compel the parties to reach an agreement, it does contemplate that both parties will approach the negotiation with an open mind and make a reasonable effort to reach a common ground of agreement As a last-ditch attempt to effect a reversal of the decision sought to be reviewed, petitioner capitalizes on the issue of due process claiming, that it was denied the right to be heard and present its side when the Labor Arbiter denied the Company's motion for further postponement. Petitioner's aforesaid submittal failed to impress Us. Considering the various postponements granted in its behalf, the claimed denial of due process appeared totally bereft of any legal and factual support. As herein earlier stated, petitioner had not even honored respondent Union with any reply to the latter's successive letters, all geared towards bringing the Company to the bargaining table. It did not even bother to furnish or serve the Union with its counter proposal despite persistent requests made therefor. Certainly, the moves and overall behavior of petitioner-company were in total derogation of the policy enshrined in the New Labor Code which is aimed towards expediting settlement of economic disputes. Hence, this Court is not prepared to affix its imprimatur to such an illegal scheme and dubious maneuvers. Neither are WE persuaded by petitioner-company's stand that the Collective Bargaining Agreement which was approved and adopted by the NLRC is a total nullity for it lacks the company's consent, much less its argument that once the Collective Bargaining Agreement is implemented, the Company will face the prospect of closing down because it has to pay a staggering amount of economic benefits to the Union that
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will equal if not exceed its capital. Such a stand and the evidence in support thereof should have been presented before the Labor Arbiter which is the proper forum for the purpose. We agree with the pronouncement that it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the proposals of the other. But an erring party should not be tolerated and allowed with impunity to resort to schemes feigning negotiations by going through empty gestures. 13 More so, as in the instant case, where the intervention of the National Labor Relations Commission was properly sought for after conciliation efforts undertaken by the BLR failed. The instant case being a certified one, it must be resolved by the NLRC pursuant to the mandate of P.D. 873, as amended, which authorizes the said body to determine the reasonableness of the terms and conditions of employment embodied in any Collective Bargaining Agreement. To that extent, utmost deference to its findings of reasonableness of any Collective Bargaining Agreement as the governing agreement by the employees and management must be accorded due respect by this Court. WHEREFORE, the instant petition is DISMISSED. The temporary restraining order issued on August 27, 1980, is LIFTED and SET ASIDE. GENERAL MILLING CORPORATION vs HON. COURT OF APPEALS G.R. No. 146728 February 11, 2004 Before us is a petition for certiorari assailing the decision1 dated July 19, 2000, of the Court of Appeals in CA-G.R. SP No. 50383, which earlier reversed the decision2 dated January 30, 1998 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-0112-94. The antecedent facts are as follows: In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling Corporation (GMC) employed 190 workers. They were all members of private respondent General Milling Corporation Independent Labor Union (union, for brevity), a duly certified bargaining agent. On April 28, 1989, GMC and the union concluded a collective bargaining agreement (CBA) which included the issue of representation effective for a term of three years. The CBA was effective for three years retroactive to December 1, 1988. Hence, it would expire on November 30, 1991. On November 29, 1991, a day before the expiration of the CBA, the union sent GMC a proposed CBA, with a request that a counter-proposal be submitted within ten (10) days. As early as October 1991, however, GMC had received collective and individual letters from workers who stated that they had withdrawn from their union membership, on grounds of religious affiliation and personal differences. Believing that the union no longer had standing to negotiate a CBA, GMC did not send any counter-proposal. On December 16, 1991, GMC wrote a letter to the unions officers, Rito Mangubat and Victor Lastimoso. The letter stated that it felt there was no basis to negotiate with a union which no longer existed, but that management was nonetheless always willing to dialogue with them on matters of common concern and was open to suggestions on how the company may improve its operations. In answer, the union officers wrote a letter dated December 19, 1991 disclaiming any massive disaffiliation or resignation from the union and submitted a manifesto, signed by its members, stating that they had not withdrawn from the union. On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the ground of incompetence. The union protested and requested GMC to submit the matter to the grievance
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procedure provided in the CBA. GMC, however, advised the union to "refer to our letter dated December 16, 1991."3 Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration Division, Cebu City. The complaint alleged unfair labor practice on the part of GMC for: (1) refusal to bargain collectively; (2) interference with the right to self-organization; and (3) discrimination. The labor arbiter dismissed the case with the recommendation that a petition for certification election be held to determine if the union still enjoyed the support of the workers.lawphi1.nt The union appealed to the NLRC. On January 30, 1998, the NLRC set aside the labor arbiters decision. Citing Article 253 -A of the Labor Code, as amended by Rep. Act No. 6715,4 which fixed the terms of a collective bargaining agreement, the NLRC ordered GMC to abide by the CBA draft that the union proposed for a period of two (2) years beginning December 1, 1991, the date when the original CBA ended, to November 30, 1993. The NLRC also ordered GMC to pay the attorneys fees.5 In its decision, the NLRC pointed out that upon the effectivity of Rep. Act No. 6715, the duration of a CBA, insofar as the representation aspect is concerned, is five (5) years which, in the case of GMC-Independent Labor Union was from December 1, 1988 to November 30, 1993. All other provisions of the CBA are to be renegotiated not later than three (3) years after its execution. Thus, the NLRC held that respondent union remained as the exclusive bargaining agent with the right to renegotiate the economic provisions of the CBA. Consequently, it was unfair labor practice for GMC not to enter into negotiation with the union. The NLRC likewise held that the individual letters of withdrawal from the union submitted by 13 of its members from February to June 1993 confirmed the pressure exerted by GMC on its employees to resign from the union. Thus, the NLRC also found GMC guilty of unfair labor practice for interfering with the right of its employees to self-organization. With respect to the unions claim of discrimination, the NLRC found the claim uns upported by substantial evidence. On GMCs motion for reconsideration, the NLRC set aside its decision of January 30, 1998, through a resolution dated October 6, 1998. It found GMCs doubts as to the status of the union justified and the allegation of coercion exerted by GMC on the unions members to resign unfounded. Hence, the union filed a petition for certioraribefore the Court of Appeals. For failure of the union to attach the required copies of pleadings and other documents and material portions of the record to support the allegations in its petition, the CA dismissed the petition on February 9, 1999. The same petition was subsequently filed by the union, this time with the necessary documents. In its resolution dated April 26, 1999, the appellate court treated the refiled petition as a motion for reconsideration and gave the petition due course. On July 19, 2000, the appellate court rendered a decision the dispositive portion of which reads: WHEREFORE, the petition is hereby GRANTED. The NLRC Resolution of October 6, 1998 is hereby SET ASIDE, and its decision of January 30, 1998 is, except with respect to the award of attorneys fees which is hereby deleted, REINSTATED.6 A motion for reconsideration was seasonably filed by GMC, but in a resolution dated October 26, 2000, the CA denied it for lack of merit. Hence, the instant petition for certiorari alleging that: I
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THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL RULE THAT NO DECISION SHALL BE RENDERED BY ANY COURT WITHOUT EXPRESSING THEREIN CLEARLY AND DISTINCTLY THE FACTS AND THE LAW ON WHICH IT IS BASED. II THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IN THE ABSENCE OF ANY FINDING OF SUBSTANTIAL ERROR OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION. III THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT APPRECIATING THAT THE NLRC HAS NO JURISDICTION TO DETERMINE THE TERMS AND CONDITIONS OF A COLLECTIVE BARGAINING AGREEMENT.7 Thus, in the instant case, the principal issue for our determination is whether or not the Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction in (1) finding GMC guilty of unfair labor practice for violating the duty to bargain collectively and/or interfering with the right of its employees to self-organization, and (2) imposing upon GMC the draft CBA proposed by the union for two years to begin from the expiration of the original CBA.lawphi1.nt On the first issue, Article 253-A of the Labor Code, as amended by Rep. Act No. 6715, states: ART. 253-A. Terms of a collective bargaining agreement. Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution.... The law mandates that the representation provision of a CBA should last for five years. The relation between labor and management should be undisturbed until the last 60 days of the fifth year. Hence, it is indisputable that when the union requested for a renegotiation of the economic terms of the CBA on November 29, 1991, it was still the certified collective bargaining agent of the workers, because it was seeking said renegotiation within five (5) years from the date of effectivity of the CBA on December 1, 1988. The unions proposal was also submitted within the prescribed 3 -year period from the date of effectivity of the CBA, albeit just before the last day of said period. It was obvious that GMC had no valid reason to refuse to negotiate in good faith with the union. For refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA, the company committed an unfair labor practice under Article 248 of the Labor Code, which provides that: ART. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the following unfair labor practice: ... (g) To violate the duty to bargain collectively as prescribed by this Code; ...
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Article 252 of the Labor Code elucidates the meaning of the phrase "duty to bargain collectively," thus: ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement.... We have held that the crucial question whether or not a party has met his statutory duty to bargain in good faith typically turn$ on the facts of the individual case. 8 There is no per se test of good faith in bargaining.9Good faith or bad faith is an inference to be drawn from the facts.10 The effect of an employers or a unions actions individually is not the test of good -faith bargaining, but the impact of all such occasions or actions, considered as a whole. 11 Under Article 252 abovecited, both parties are required to perform their mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. The union lived up to this obligation when it presented proposals for a new CBA to GMC within three (3) years from the effectivity of the original CBA. But GMC failed in its duty under Article 252. What it did was to devise a flimsy excuse, by questioning the existence of the union and the status of its membership to prevent any negotiation. It bears stressing that the procedure in collective bargaining prescribed by the Code is mandatory because of the basic interest of the state in ensuring lasting industrial peace. Thus: ART. 250. Procedure in collective bargaining. The following procedures shall be observed in collective bargaining: (a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice. (Underscoring supplied.) GMCs failure to make a timely reply to the proposals presented by the union is indicative of its utter lack of interest in bargaining with the union. Its excuse that it felt the union no longer represented the workers, was mainly dilatory as it turned out to be utterly baseless. We hold that GMCs refusal to make a counter-proposal to the unions proposal for CBA negotiation is an indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively. 12 Failing to comply with the mandatory obligation to submit a reply to the unions proposals, GMC violated its duty to bargain collectively, making it liable for unfair labor practice. Perforce, the Court of Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in finding that GMC is, under the circumstances, guilty of unfair labor practice. Did GMC interfere with the employees right to self-organization? The CA found that the letters between February to June 1993 by 13 union members signifying their resignation from the union clearly indicated that GMC exerted pressure on its employees. The records show that GMC presented these letters to prove that the union no longer enjoyed the support of the workers. The fact that the resignations of the union members occurred during the pendency of the case before the labor arbiter sh ows GMCs desperate attempts to cast doubt on the legitimate status of the union. We agree with the CAs conclusion that the ill-timed letters of resignation from the union members indicate that GMC had interfered with the right of its employees to self-organization. Thus, we hold that the appellate court did not commit grave abuse of discretion in finding GMC guilty of unfair labor practice for interfering with the right of its employees to self-organization.
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Finally, did the CA gravely abuse its discretion when it imposed on GMC the draft CBA proposed by the union for two years commencing from the expiration of the original CBA? The Code provides: ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. .... It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period [prior to its expiration date] and/or until a new agreement is reached by the parties. (Underscoring supplied.) The provision mandates the parties to keep the status quo while they are still in the process of working out their respective proposal and counter proposal. The general rule is that when a CBA already exists, its provision shall continue to govern the relationship between the parties, until a new one is agreed upon. The rule necessarily presupposes that all other things are equal. That is, that neither party is guilty of bad faith. However, when one of the parties abuses this grace period by purposely delaying the bargaining process, a departure from the general rule is warranted. In Kiok Loy vs. NLRC,13 we found that petitioner therein, Sweden Ice Cream Plant, refused to submit any counter proposal to the CBA proposed by its emplo yees certified bargaining agent. We ruled that the former had thereby lost its right to bargain the terms and conditions of the CBA. Thus, we did not hesitate to impose on the erring company the CBA proposed by its employees union - lock, stock and barrel. Our findings in Kiok Loy are similar to the facts in the present case, to wit: petitioner Companys approach and attitude stalling the negotiation by a series of postponements, non-appearance at the hearing conducted, and undue delay in submitting its financial statements, lead to no other conclusion except that it is unwilling to negotiate and reach an agreement with the Union. Petitioner has not at any instance, evinced good faith or willingness to discuss freely and fully the claims and demands set forth by the Union much less justify its objection thereto.14 Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and Employment ,15 petitioner therein, Divine Word University of Tacloban, refused to perform its duty to bargain collectively. Thus, we upheld the unilateral imposition on the university of the CBA proposed by the Divine Word University Employees Union. We said further: That being the said case, the petitioner may not validly assert that its consent should be a primordial consideration in the bargaining process. By its acts, no less than its action which bespeak its insincerity, it has forfeited whatever rights it could have asserted as an employer. 16 Applying the principle in the foregoing cases to the instant case, it would be unfair to the union and its members if the terms and conditions contained in the old CBA would continue to be imposed on GMCs employees for the remaining two (2) years of the CBAs duration. We are not inclined to gratify GMC with an extended term of the old CBA after it resorted to delaying tactics to prevent negotiations. Since it was GMC which violated the duty to bargain collectively, based on Kiok Loy and Divine Word University of Tacloban, it had lost its statutory right to negotiate or renegotiate the terms and conditions of the draft CBA proposed by the union. We carefully note, however, that as strictly distinguished from the facts of this case, there was no preexisting CBA between the parties in Kiok Loy and Divine Word University of Tacloban. Nonetheless, we deem it proper to apply in this case the rationale of the doctrine in the said two cases. To rule otherwise would be to allow GMC to have its cake and eat it too.
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Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the proposals of the other. But an erring party should not be allowed to resort with impunity to schemes feigning negotiations by going through empty gestures. 17 Thus, by imposing on GMC the provisions of the draft CBA proposed by the union, in our view, the interests of equity and fair play were properly served and both parties regained equal footing, which was lost when GMC thwarted the negotiations for new economic terms of the CBA. The findings of fact by the CA, affirming those of the NLRC as to the reasonableness of the draft CBA proposed by the union should not be disturbed since they are supported by substantial evidence. On this score, we see no cogent reason to rule otherwise. Hence, we hold that the Court of Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it imposed on GMC, after it had committed unfair labor practice, the draft CBA proposed by the union for the remaining two (2) years of the duration of the original CBA. Fairness, equity, and social justice are best served in this case by sustaining the appellate courts decision on this issue. WHEREFORE, the petition is DISMISSED and the assailed decision dated July 19, 2000, and the resolution dated October 26, 2000, of the Court of Appeals in CA-G.R. SP No. 50383, are AFFIRMED. Costs against petitioner. SAN PEDRO HOSPITAL OF DIGOS, INC. vs. SECRETARY OF LABOR G.R. No. 104624 October 11, 1996 When is temporary suspension of business considered not done in good faith? Can the Secretary of Labor compel management to enter into a new collective bargaining agreement with the union while the business enterprise is undergoing a temporary suspension of operations? Can the Secretary grant backwages without deciding the legality of a strike? These questions are addressed by the Court in resolving this Petition for Certiorari, which seeks nullification of the Orders dated October 16, 1991 1 and January 31, 1992 2 of the Secretary of Labor and Employment 3 rendered in COLE Case No. NCMB-RBXI-NS-03-017-91 entitled "In Re: Labor Dispute at San Pedro Hospital of Digos". Said orders directed herein petitioner hospital to pay backwages for the period from June 21, 1991, to December 15, 1991 to returning workers who are members of the San Pedro Hospital Employees Union and to enter into a new collective bargaining agreement with the union. The Facts Petitioner San Pedro Hospital of Digos, Inc. is a charitable, non-stock, non-profit medical and educational training corporation. Petitioner had a three-year collective bargaining agreement (CBA) covering the period December 15, 1987 until December 15, 1990, 4 with herein private respondent, Nagkabiusang Mamumuo sa San Pedro Hospital of Digos National Federation of Labor (NAMASAP-NFL), the exclusive bargaining agent of the hospital's rank-and-file workers. On February 12, 1991, the parties formally commenced negotiations for the renewal of their CBA, and presented their respective proposals. The union's demands include wage increases and inclusion in the CBA of a provision for union shop. 5 Respondent union proposed a cumulative salary increase of sixty pesos per day for three years, broken down as follows: (a) thirty pesos per day for the first year; (b) twenty pesos per day for the second year; and (c) ten pesos per day for the third year. Petitioner, claiming it was incurring losses on account of a serious financial crisis, counter-offered an increase of two pesos per day for each of the three years of the new CBA, with a wage reopening clause. Petitioner also adamantly opposed the proposal for a union security clause.
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After the parties failed to reach agreement on the issues, the union during the meeting of February 19, 1991 declared a deadlock. On February 20, 1991, respondent union saturated petitioner's premises with streamers and picketed the hospital. The operations of the hospital having come to a grinding halt, the hospital management considered the union actions as tantamount to a strike. However, it was only on March 4, 1991 that respondent union filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB). On April 10, 11, and 18, 1991, the NCMB held conciliation conferences but failed to settle the deadlock, as the parties remained adamant in their positions. 6 On May 28, 1991, respondent union struck. Despite the NCMB's call for a conciliation conference, nurses and nurse aides who were members of the union abandoned their respective department and joined the picket line a week later. Doctors began leaving the hospital and the number of patients dwindled. The last patient was discharged on June 10, 1991. On June 12, 1991, a "Notice of Temporary Suspension of Operation" was issued by petitioner hospital and submitted to the local office of the NCMB on June 14, 1991. Similar notices were individually delivered to union members, but only fourteen out of the seventy-four rank-and-file employees/union members acknowledged receipt thereof. Petitioner also alleged that on June 13, 1991, the resident/consultant physicians abandoned the hospital because there were no more patients. 7 On the same day, June 13, 1991, then Secretary of Labor Nieves Confessor assumed jurisdiction over the labor dispute and issued an order 8 providing that: WHEREFORE, ABOVE PREMISES CONSIDERED, this Office hereby assumes jurisdiction over the entire labor dispute at the San Pedro Hospital of Digos. Accordingly, all striking workers are hereby directed to return to work within twenty-four (24) hours from receipt of copy of this Order and for the Hospital to accept all returning workers under the same terms and conditions of employment existing prior to the work stoppage. The parties are likewise directed to cease and desist from committing any act that may aggravate the prevailing precarious situation. To expedite the resolution of this dispute, the parties are directed to submit their respective position papers and evidence within ten (10) days from receipt of this Order. However, this order was received by petitioner only on June 20, 1991. In the meantime, it had already notified the DOLE via its letter dated June 13, 1991, which was received by the DOLE on June 14, 1991, that it would temporarily suspend operations for six (6) months effective June 15, 1991, or up to December 15, 1991. Petitioner thus refused the return of its striking workers on account of such suspension of operations. Several conferences were held by the NCMB Conciliator where petitioner stated that it would submit the necessary documents showing its serious financial condition "should the need be in earnest". 9 On June 24, 1991, respondent union through its legal counsel wrote the Executive Conciliator/Mediator of the NCMB in Davao City informing the latter that the union members were willing to return to their former work assignment at the hospital in compliance with the June 13, 1991 order of the Labor Secretary. On June 27, 1991, petitioner filed its position paper in which it maintained that the aforementioned order to accept all returning workers had become moot and academic in view of the suspension of its operations. Moreover, said order could not substitute for (and override) the decision of the petitioner
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hospital's Board of Trustees to suspend operations for six months, such decision being purely a management prerogative. 10 Respondent union filed its own position paper on July 13, 1991 alleging that its very existence was threatened because management was convincing new employees not to join respondent union; that the union shop provision was necessitated precisely because of management's actuations; that petitioner was not in serious financial condition; and that petitioner acted in bad faith and circumvented the return-towork order when it suspended operations. 11 On October 11, 1991, DOLE Secretary Ruben D. Torres went to Digos, Davao del Sur and met respondent union's officers and members in a restaurant; petitioner was not represented in that meeting. The Secretary also visited the hospital without notice to petitioner. Shortly thereafter, On October 16, 1991, Secretary Torres resolved the labor dispute and issued the questioned Order, wherein he ruled that the suspension of operations was not for a valid or justifiable cause but was actually for the purpose of defeating the workers' right to self-organization. But because the hospital had actually cease operations, he held that it would be unjust and a sheer abuse of discretion to compel the hospital to continue operations and accept the returning workers, as it would infringe on petitioner's inherent right to manage and conduct its own business affairs. He thus decided to grant, by way of penalty, backwages for the workers from June 21, 1991, the date they were refused admittance by petitioner, until December 15, 1991, the expiration of the temporary suspension of the hospital's operation. 12 Sec. Torres also enjoined petitioner to enter into a new CBA with respondent union and to adopt and incorporate therein a union shop provision because it was proven that petitioner had intervened in the workers' right to join or not to join a labor organization of their own choosing. 13 Petitioner was also directed to grant a wage increase of P3.00 each for the first three years of the new CBA. This last directive was prompted by the finding that petitioner's Financial Statements for the years 1989 and 1990 (copies of which, incidentally, were submitted not by petitioner but by respondent union) showed that although petitioner incurred a loss of some P200,000 in 1990, its Balance Sheet revealed that it had a Fund Balance (Retained Earnings) of P3,159,791.00 as of year-end 1990, and therefore, it was financially capable of granting an increase in its employees' wages. 14 This dispositive portion of Secretary Torres' Order reads: 15 WHEREFORE, judgment is hereby rendered: 1. Ordering the hospital to pay the wages of the returning workers who are members of the Union covering the period 21 June 1991 to 15 December 1991; and, 2. Ordering the parties to enter and formalize a new collective bargaining agreement (CBA) embodying therein the dispositions hereinabove set forth as well as the provisions of the old CBA not otherwise touched upon by this Order. On November 4, 1991, petitioner filed a Motion for Reconsideration of the abovequoted Order alleging that: (1) the Office of the Secretary of Labor had no jurisdiction to resolve the issue of the legality or illegality of the union's strike [since, in ordering the payment of backwages, he in effect ruled on the legality of the strike, which he was not authorized to do, jurisdiction therefor pertaining only to labor arbiters]; (2) the union members were not entitled to backwages because the temporary cessation of petitioner's operation suspended the employer-employee relationship between the union members and petitioner; and (3) petitioner could not be obligated to enter into a new CBA because said employeremployee relationship no longer existed.
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On December 15, 1991, petitioner formally ceased operations. Notices of its permanent closure were sent to NCMB and individual rank-and-file employees. On January 31, 1992, the Secretary denied the Monitor for Reconsideration, holding among other things that his Order of October 16, 1991 did not rule on the legality of the strike. Hence, his petition filed under Rule 65 of the Revised Rules of Court. The Issues Petitioner alleges that the Secretary of Labor gravely abused his discretion thus: 16 1. . . . when he issued the two orders, subject of this case, without affording the hospital the opportunity to present evidence on its behalf. 2. . . . in ordering the hospital to execute a new collective bargaining agreement with the union knowing fully well, as he himself conceded, that the hospital had actually ceased operations. 3. . . . in ordering the hospital to pay backwages to the members of the union; for in doing so, said public respondent to all intents and purposes ruled that the strike staged by the union was legal. The main question is whether the Secretary of Labor and Employment acted correctly in issuing the Orders of October 16, 1991 and January 31, 1992. The Court's Ruling First Issue: Petitioner Was Afforded Opportunity to Present Evidence Petitioner alleges that it was never given an opportunity to present its evidence, and that the Order of October 16, 1991 was influenced by the Secretary of Labor's meeting with the officers and members of respondent union when the former went to Digos, Davao del Sur on October 11, 1991. Admittedly, Secretary Torres did visit petitioner's premises without notice to see for himself the actual situation therein obtaining. However, the evidence on record clearly shows that, contrary to petitioner's allegation, it was afforded opportunity to present its evidence, and that the Secretary's visit and meeting were not the reasons for the ruling in favor of respondent union, nor did they affect said Order. One , the assumption order of Secretary Confessor inter alia directed the parties to submit their respective position papers and evidence to enable the Secretary to resolve the dispute. 17 Two, petitioner submitted its position paper where it questioned the authenticity of the said order claiming that it (petitioner) received only an uncertified photocopy, and informed the Secretary of its suspension of operations. 18 It did not bother to prove its serious financial condition and thereby justify its suspension of operations and its refusal to accede to the demanded wage increases. Respondent union, on the other hand, attached a copy of petitioner's financial statements to its position paper to show that petitioner was not in dire financial straits as it had a significant fund balance in 1990. Respondent union further alleged that petitioner could have afforded the wage increases since it had previously proposed an increase of P 2.00 every year for each year of the new CBA which it later reduced to just P2.00 for three years. Also attached were the affidavits of Armand Anthony Gallardo, staff nurse, and Evangeline Montues, pharmacist, to show that petitioner had been persuading the new regular workers not to join respondent union. 19 (In its Supplemental Position Paper, respondent union also alleged that when it struck, it complied fully with the law on strikes because a skeletal force was left to man the hospital and the gate was left open and not barricaded, and that it was petitioner that refused to admit patients and hired replacements for the
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strikers. It also alleged that the doctors did not withdraw from the hospital because it happened to be the best equipped in the locality. 20) Three, based on these pleadings and supporting papers, the Secretary noted that petitioner hospital did not discuss and support its claim of serious financial crisis on account of losses incurred, necessitating temporary suspension of operations. He thus found that the temporary suspension was to avoid compliance with the return-to-work order, and not due to the supposed financial hemorrhage. His October 16, 1991 Order stated as follows:21 In the case under consideration, the Hospital failed to meet the conditional requirements that would justify the temporary cessation of its operations. To be sure, the facts and circumstances attendant to this case do not warrant a finding that the temporary suspension of the hospital's operations was for a valid or justifiable cause, and not for the purpose of defeating the rights of the workers to self-organization. This conclusion finds support from the following undisputed facts: First, during the CBA negotiation and immediately prior to the closure, the Hospital never brought the issue of its alleged financial losses necessitating the temporary suspension of its operations; Secondly, the notice of temporary suspension dated 13 June 1991 filed by the Hospital made mention of its intention to submit the necessary documents of its alleged financial losses (Annex "A", Hospital's position paper). Until the present, however, the Hospital has not submitted these documents thereby creating serious doubts on the validity of the suspension of its operations. Be that as it may, a copy of the Financial Statements of the Hospital for the years 1989 and 1990, submitted by the Union, reveals that it (hospital) was not actually losing in its operation. While the Hospital may have incurred losses of P200,942.00 in 1990, its Balance Sheet reveals a Fund Balance (Retained Earnings) of P3,159,791.00 for the year 1990 (Annex "G-2" Union's Position Paper dated 4 July 1991); and Thirdly, the Union was not furnished a copy of the notice of temporary suspension. Worse still, the notice was filed on 14 June 1991 and was made effective the following day or on 15 June 1991, leaving the Union without sufficient time to adjust to the sudden and unexpected cessation of the hospital's operation, much less the opportunity to controvert the same. In the light of the undisputed facts narrated above, we are more inclined to sustain the view that the temporary suspension of the hospital's operations (was done) by the hospital, not because it is in financial crisis, but merely for the purpose of avoiding compliance with our Order dated 13 June 1991, directing it to accept all returning workers under the same terms and conditions of employment existing prior to the work stoppage. This being the case, we cannot give imprimatur to the actuation exhibited herein by the Hospital. For indeed, the Hospital had shown scant regard to the constitutional right of the members of the Union to self-organization and to negotiate for better terms and conditions of employment. The foregoing excerpt clearly shows that Secretary Torres' visit was not the turning point insofar as his Order was concerned. On the contrary, said Order is clearly based on substantial evidence or record. Petitioner also attacks Secretary Torres' conclusion that its temporary cessation of operations was not legitimate but for the purpose of circumventing the return-to-work order previously issued.
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We are not persuaded. Temporary suspension of operations is recognized as a valid exercise of management prerogative provided it is not carried out in order to circumvent the provisions of the Labor Code or to defeat the rights of the employees under the Code. 22 The determination to case or suspend operations is a prerogative of management that the State usually does not interfere with, as no business can be required to continue operating at a loss simply to maintain the workers in employment. Such an act would be tantamount to a taking of property without due process of law, which the employer has a right to resist. But where it is shown that the closure is motivated not by a desire to prevent further losses, but to discourage the workers from organizing themselves into a union for more effective negotiation with management, the State is bound to intervene. 23 The burden of proving that such a temporary suspension is bona fide falls upon the employer. In this instance, petitioner had to establish the fact of its precarious financial health, that its cessation of operation was really necessitated by its financial condition, and that said condition would probably be alleviated or improved, or its losses abated, by undertaking such suspension of operation. Petitioner could have at least party met the foregoing requirements by submitting its financial statements or records as proof of its financial crisis, since the purported financial hemorrhage would definitely have been reflected therein. Thus, petitioner's unexplained and continued failure to submit its financial statements could not but raise grave doubts as to the truth of the claimed financial crisis and the real purpose of the suspension of operations. It is not enough to merely raise this issue nor to discuss it only in passing. The precarious financial condition must be established by evidence, e.g., balance sheets and income statements, and the figures therein must be interpreted and discussed at length. Petitioner was recklessly pushing its luck when it believed that the Secretary could be convinced without first obtaining and examining petitioner's financial statements and the notes thereto. The fact that the conciliator never asked for them is no sufficient excuse for not presenting the same, as such was petitioner's duty. Neither is it acceptable for petitioner to allege that latest financial statement (for the year 1991) were still being prepared by its accountants and not yet ready for submission, since the financial statement for the prior years 1989 and 1990 would have sufficed. It is a hornbook rule that employers who contemplate terminating the services of their workers must base their decisions on more than just flimsy excuses, 24 considering that the dismissal of an employee from work involves not only the loss of his position but, what is more important, his means of livelihood. The same principle applies in temporary suspension of operations, as in this case, considering that it involves laying off employees for a period of six months. Petitioner, having wretchedly failed to justify by even the most rudimentary proof its temporary suspension of operations, must bear the consequences thereof. We thus hold that the Secretary of Labor and Employment did not act with grave abuse of discretion in finding the temporary suspension unjustified and illegal. Second Issue: New CBA Despite Temporary Suspension? Petitioner alleges that respondent Secretary acted in grave abuse of discretion when he ordered petitioner to enter into a new CBA despite his knowledge that it had actually ceased operations. As proof thereof, petitioner cites the portion of the assailed Order which reads that: It must be noted, however, that the hospital had actually ceased operations. It would thus be sheer abuse of discretion on our part to compel the hospital to continue its operations and admit the returning workers, . . . . We disagree. Clearly, the respondent Secretary was of the impression that petitioner would operate again after the lapse of the six-month suspension of operations on December 16, 1991, and so ordered the parties to enter into and formalize a new CBA to govern their relations upon resumption of operations. On the other hand, the aforequoted portion of the Order must be understood in the context of the Secretary's finding that the temporary suspension was only for circumventing the return-to-work order, but in spite of which he held that he could not order petitioner to continue operations as "this would infringe on its
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inherent right to manage and conduct its own business affairs"; he thus ordered instead the payment of backwages to the returning workers who were refused admittance by petitioner on June 21, 1991. And as above adverted to, he also ordered the parties to execute a new CBA to govern their relations upon the expiry of the period of suspension and the resumption of normal operations. Art. 286 of the Labor Code provides: "The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months . . . shall not terminate employment." Section 12, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code provides that the employeremployee relationship shall be deemed suspended in case of the suspension of operation referred to above, it being implicitly assumed that once operations are resumed, the employer-employee relationship is revived and restored. If a legitimate, valid and legal suspension of operation does not terminate but merely suspends the employee-employer relationship, with more reason will an invalid and illegal suspension of operations, as in this case, notaffect the employment relationship. The foregoing premises considered, it is clear that there is no basis for petitioner to claim that a new CBA should not be entered into or that collective bargaining should not be conducted during the effectivity of a temporary suspension of operations. In this instance, petitioner expressly represented that the suspension was to be for six months only. In the absence of any other information, the plain and natural presumption will be that petitioner would resume operations after six months, and therefore, it follows that a new CBA will be needed to govern the employment relations of the parties, the old one having already expired. Clearly then, under the circumstances, the respondent Secretary cannot be faulted nor considered to have gravely abused his discretion for ordering the parties to enter into a new CBA. Did the Secretary act in excess of jurisdiction in imposing the wage increase and union shop provision on the petitioner? We hold that he did not. While petitioner cannot be forced to abandon its suspension of operations even if said suspension be declared unjustified, illegal and invalid, neither can petitioner evade its obligation to bargain with the union, using the cessation of its business as reason therefor. For, as already indicated above, the employer-employee relationship was merely suspended (and not terminated) for the duration of the temporary suspension. Using the suspension as an excuse to evade the duty to bargain is further proof of its illegality. It shows abuse of this option and bad faith on the part of petitioner. And since it refused to bargain, without valid and sufficient cause, the Secretary in the exercise of his powers under Article 263(i) of the Labor Code to decide and resolve labor disputes, properly granted the wage increase and imposed the union shop provision. Considering that after the lapse of the six-month period on December 16, 1991, petitioner did not resume operations, it would border on the ridiculous to still try to enforce the October 16, 1991 Order and require the parties to negotiate the terms and conditions of employment. It goes without saying that the said Order directing the parties to enter into a new CBA is already moot and academic. We shall delve more into the complete cessation of business when discussing the fourth issue below. Third Issue: Grant of Backwages Is Not An Adjudication on the Legality of the Strike Petitioner charges the respondent Secretary with having gravely abused his discretion in ordering it to pay backwages to the union members because it is tantamount to ruling that the union's strike was legal jurisdiction over which question pertains to the labor arbiter. As support, petitioner cites Philippine Airlines, Inc. vs. Secretary of Labor and Employment, 25 where this Court ruled that: Under Art. 263 of the Labor Code, the Labor Secretary's authority to resolve a labor dispute within 30 days from the date of assumption of jurisdiction, encompasses only the
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issues in the dispute, not the legality or illegality of any strike that may have been resorted to in the meantime (Binamira vs. Ogan-Occena, 148 SCRA 677, 685 [1987]). xxx xxx xxx In ruling on the legality of the PALEA strike, the Secretary of Labor acted without or in excess of his jurisdiction. There is merit in PAL's contention that the Labor Secretary erred in declaring the strike valid and in prohibiting PAL from taking retaliatory or disciplinary action against the strikers for the damages suffered by the Airlines as a result of the illegal work stoppage. xxx xxx xxx The Labor Secretary exceeded his jurisdiction when he restrained PAL from taking disciplinary action against its guilty employees, for, under Art. 263 of the Labor Code, all that the Secretary may enjoin is the holding of the strike, but not the company's right to take action against union officers who participated in the illegal strike and committed illegal acts. The prohibition which the Secretary issued to PAL constitutes an unlawful deprivation of property and denial of due process for it prevents PAL from seeking redress for the huge property losses that if suffered as a result of the union's illegal mass action. We disagree. As pointed out by the Solicitor General, the said case is not in point because in this case the Secretary did not rule on the legality of the strike. Respondent union struck before the Secretary of Labor assumed jurisdiction over the dispute. Thus, at first glance, the grant of backwages was not only dependent on the legality of the temporary suspension of operations by petitioner but also on the legality of the strike of respondent union. However, it is undisputed that petitioner never questioned the legality of the strike. When Secretary Confessor assumed jurisdiction over the labor dispute, she ordered the immediate return to work of the striking employees in order to restore the conditions of employment prior to the strike. The legality of the strike was not in question as far as Secretary Torres was concerned, when he assumed the office, and was not within the ambit of the jurisdiction conferred upon him by law. His concern was the labor dispute, i.e., the deadlock and the temporary suspension of operations. Thus, he ruled only on these matters, and not, as claimed by petitioner, on the legality or illegality of the strike. On the other hand, the grant of backwages was due to the illegality of the temporary suspension, not the illegality of the strike. Under Article 263 (g) of the Labor Code, the Secretary is authorized to penalize an erring employer who refuses to accept returning employees by ordering such employer to pay backwages. This is within his jurisdiction and is warranted by his finding as to the invalidity of the temporary suspension. In fine, the respondent Secretary of Labor did not act with grave abuse of discretion in ordering petitioner to pay backwages because it is not an adjudication on the legality of the strike. Fourth Issue: Supervening Event Notwithstanding that respondent Secretary did not act with grave abuse of discretion in issuing the challenged Orders, we cannot ignore the supervening event which occurred after December 15, 1991, i.e., the subsequentpermanent cessation of petition of petitioner on account of losses.
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Business reverses or losses are recognized by law as a just cause for terminating employment. This Court held inColumbia Development Corporation vs. Minister of Labor and Employment 26 that: Precisely because reverses in a business venture are expected, the law recognizes the same as a just cause for terminating an employment [Art. 283(a) of the Labor Code] and in many instances, this Court has "affirmed the right of an employer to lay off or dismiss employees because of losses in the operation of its business, lack of work and considerable reduction in the volume of his business." [LVN Pictures and Workers Asso. vs. LVN Pictures, Inc., 35 SCRA 147 and the cases cited therein]. Since this ground can be abused by scheming employers feigning business losses to ease out employees, substantive and procedural requirements are imposed before it can be resorted to. The Labor Code provides that: Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the . . . cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. . . . Further, it is necessary that business reverses or losses be serious, actual and real. 27 The burden of establishing the truth as to these losses or reverses falls upon the employer. Petitioner finally submitted its financial statements for 1990 as an annex to its petition. 28 And attached to its Reply to Comment were its financial statements for 1991. 29 The Statements of Revenues and Expenses revealed that in 1989, petitioner had a net profit of P106,102.00, but this was due to other income of P202,772.00, which offset losses from operations of P96,670.00. 30 In the following years, operating losses could not be offset by other income. In 1990, petitioner sustained a net loss of P200,942.00 despite other income of P203,092.00. In 1991, net loss mounted to P3,180,268.00, 31 completely wiping out its entire Fund Balance (retained earnings) of P3,159,791.00 from the previous year, and leaving a negative figure of P20,477.00. This means that nothing was left of the entire capital of petitioner, which is why petitioner contends that it is not in any position to resume operations. Furthermore, petitioner's external auditors reported that the 1991 financial statement have not yet made any provisions for petitioner's liability resulting from this and other labor disputes. 32 In both 1989 and 1990, the hospital's cost and operating expenses exceeded gross revenues, signaling serious financial trouble. When petitioner suspended operation in the second half of 1991, its gross revenues covered only 56% of operating expenses. The decrease in expenses to about half the prior years' was still too small to offset the revenues foregone. It seems that the temporary suspension turned out to have been more costly rather than beneficial. Eventually, its financial troubles resulted in the demise of petitioner as a going concern. Petitioner's total assets in 1991 registered a drop of about P2.5 million from the previous year's P7.8 million, a staggering decline. 33 It had exhausted its Fund Balance completely. Considering that it had been operating mainly on the revenues it generated, the high risks of continuing operations were enough to make petitioner bail out. We should mention that this case is different from Union of Filipino Workers vs. National Labor Relations Commission 34 because in the case at bar, financial trouble is reflected in petitioner's financial statements since 1989 and the cessation of operations was total. The losses registered in 1989, 1990 and 1991 cannot be deemed "paltry." 35 Consider also the loss of doctors and patients prior to the temporary suspension. It is beyond cavil then that petitioner suffered serious and actual business reverse. In such a case, management has the
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final say as to whether it will continue to risk its capital in its business or not. This is properly its prerogative. Since there is basis for the permanent closure of the business, we cannot read into it any attempt to defeat the rights of its employees under the law, nor any oppressive and high-handed motives. Thus, despite the absence of grave abuse of discretion on the part of the respondent Secretary, this Court cannot impose upon petitioner the directive to enter into a new CBA with the union for the very simple reason that to do so would be to compel petitioner to continue its business when it had already decided to close shop, and that would be judicial tyranny on our part. Epilogue It will be noted that while the Court ruled as improper the temporary suspension of petitioner's operation, it nonetheless sustained its permanent closure thereafter. To resolve this seeming contradiction, we repeat: we found no arbitrariness in the ruling of the then Secretary of Labor finding the suspension of operations as unwarranted because petitioner failed to adduce evidence before the conciliator to show that the hospital's financial condition at that time justified such suspension. On the other hand, before us, by presenting its later financial statements, petitioner was able to prove conclusively a supervening event, i.e., that its financial health had deteriorated to such an extent as to justify the complete cessation of its operations, and its permanent closure. Ironically, it was petitioner's temporary suspension of operations that made inevitable and irreversible (as well as legally tenable) its subsequent permanent closure. The Court is grieved by the closure of the petitioner hospital, and what such closure meant, not only to petitioner, but to the public and especially patients and those in need of medical attention. It is even more sad that, by reason of such closure, petitioner's employees and staff, including doctors, nurses and other hospital workers, have had to be laid off. We would have wanted to see the parties amicably settle their differences and patch things up, in view of the crucial public service they rendered, particularly since, up to the time of its suspension of operation, the hospital was "the best equipped in the locality". However, all that is water under the bridge now, and there is really not much that this Court can do in the premises and at this time except to decide the instant case on the basis of the legal issues raised. WHEREFORE, the petition is partially GRANTED. The assailed Orders, insofar as they grant backwages form June 21, 1991 until December 15, 1991, are AFFIRMED. However, they are MODIFIED insofar as they directed the parties to enter into a new collective bargaining agreement, which directives are hereby SET ASIDE for being moot and academic. SUNDOWNER DEVELOPMENT CORPORATION vs. HON. FRANKLIN M. DRILON G.R. No. 82341 December 6, 1989 The principal issue in this case is whether or not the purchaser of the assets of an employer corporation can be considered a successor employer of the latter's employees. Private respondent Hotel Mabuhay, Inc. (Mabuhay for short,) leased the premises belonging to Santiago Syjuco, Inc. (Syjuco for short) located at 1430 A. Mabini St., Ermita, Manila. However, due to nonpayment of rentals, a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila. Mabuhay offered to amicably settle the case by surrendering the premises to Syjuco and to sell its assets and personal property to any interested party. Syjuco offered the said premises for lease to petitioner. The negotiation culminated with the execution of the lease agreement on April 16, 1987 to commence on May 1, 1987 and to expire on April 30,1992. 1 Mabuhay offered to sell its assets and personal properties in the premises to petitioner to which petitioner agreed. A deed of assignment of said assets and personal properties was executed by Mabuhay on April 29,1987 in favor of petitioner. 2
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On same date Syjuco formally turned over the possession of the leased premises to petitioner who actually took possession and occupied the same on May 1, 1987. On May 4, 1987, respondent National Union of Workers in Hotel, Restaurant and Allied Services (NUWHRAIN for short) picketed the leased premises, barricaded the entrance to the leased premises and denied petitioner's officers, employees and guests free access to and egress from said premises. Thus, petitioner wrote a letter-complaint to Syjuco. A complaint for damages with preliminary injunction and/or temporary restraining order was filed by petitioner on May 7, 1987 with the Regional Trial Court of Manila docketed as Civil Case No. 87-40436. On the same day, the Executive Judge of said court issued a restraining order against respondent NUWHRAIN and its officers and members as prayed for in the petition. Nevertheless, NUWHRAIN maintained their strike on the subject premises but filed an answer to the complaint. On May 14, 1987, an order was issued by public respondent Secretary of Labor assuming jurisdiction over the labor dispute pursuant to Article 263(g) of the Labor Code as amended and in the interim, requiring all striking employees to return to work and for respondent Mabuhay to accept all returning employees pending final determination of the issue of the absorption of the former employees of Mabuhay. The parties were also directed to submit their respective position papers within ten (10) days from receipt of the order. On May 25, 1987, Mabuhay submitted its position paper alleging among others that it had sold all its assets and personal properties to petitioner and that there was no sale or transfer of its shares whatsoever and that Mabuhay completely ceased operation effective April 28,1987 and surrendered the premises to petitioner so that there exists a legal and physical impossibility on its part to comply with the return to work order specifically on absorption. On June 26, 1987, petitioner in order to commence its operation, signed a tri-partite agreement so the workers may lift their strike, by and among petitioner, respondents NUWHRAIN and Mabuhay whereby the latter paid to respondent NUWHRAIN the sum of P 638,000.00 in addition to the first payment in the sum of P 386,447.11, for which reason respondent NUWHRAIN agreed to lift the picket . 3 Respondent NUWHRAIN on July 13, 1987 filed its position paper alleging connivance between Mabuhay and petitioner in selling the assets and closing the hotel to escape its obligations to the employees of Mabuhay and so it prays that petitioner accept the workforce of Mabuhay and pay backwages from April 15,1986 to April 28,1987, the day Mabuhay stopped operation. On the other hand, petitioner filed a "Partial Motion for Reconsideration and Position Paper," alleging that it was denied due process; that there were serious errors in the findings of fact which would cause grave and irreparable damage to its interest; as well as on questions of law. On January 20, 1988, the public respondent issued an order requiring petitioner to absorb the members of the union and to pay backwages from the time it started operations up to the date of the order. 4 Petitioner filed on January 27,1988 a motion for reconsideration of the aforesaid order alleging that the theory of implied acceptance and assumption of statutory wrong does not apply in the instant case; that the prevailing doctrine that there is no law requiring bona fide purchasers of the assets of an on-going concern to absorb in its employ the employees of the latter should be applied in this case; that the order for absorption of the employees of Mabuhay as well as the payment of their backwages is contrary to law. Respondent NUWHRAIN also filed a motion for clarification of the aforesaid order. On March 8, 1988, the public respondent denied said motion for reconsideration and motion for clarification for lack of merit.
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Hence, this petition for review by certiorari with prayer for preliminary injunction and/or temporary restraining order filed by petitioner in this Court. Petitioner presents seven issues for resolution which all revolve about the singular issue of whether or not under the circumstances of this case the petitioner may be compelled to absorb the employees of respondent Mabuhay. On March 23, 1988, this Court, without giving due course to the petition, required respondents to comment thereon within ten (10) days from notice and issued a temporary restraining order enjoining public respondent or his duly authorized representatives from executing and implementing the orders dated January 20, 1988 and March 8, 1988. The petition is impressed with merit. The rule is that unless expressly assumed, labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise, labor contracts being in personam, thus binding only between the parties .5 A labor contract merely creates an action in personally and does not create any real right which should be respected by third parties. This conclusion draws its force from the right of an employer to select his employees and to decide when to engage them as protected under our Constitution, and the same can only be restricted by law through the exercise of the police power. 6 As a general rule, there is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the employees of the latter. 7 However, although the purchaser of the assets or enterprise is not legally bound to absorb in its employ the employers of the seller of such assets or enterprise, the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. 8 In the case at bar, contrary to the claim of the public respondent that the transaction between petitioner and Mabuhay was attended with bad faith, the court finds no cogent basis for such contention. Thus, the absorption of the employees of Mabuhay may not be imposed on petitioner. It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees it was Syjuco who found petitioner and persuaded petitioner to lease said premises. Mabuhay had nothing to do with the negotiation and consummation of the lease contract between petitioner and Syjuco. It was only when Mabuhay offered to sell its assets and personal properties in the premises to petitioner that they came to deal with each other. It appears that petitioner agreed to purchase said assets of respondent Mabuhay to enable Mabuhay to pay its obligations to its striking employees and to Syjuco. Indeed, in the deed of assignment that was executed by Mabuhay in favor of petitioner on April 14, 1 987 for and in consideration of P2,500,000.00, it is specifically provided therein that the same is "purely for and in consideration of the sale/transfer and assignment of the personal properties and assets of Hotel Mabuhay, Inc. listed . . . " and "in no way involves any assumption or undertaking on the part of Second Party (petitioner) of any debts or liabilities whatsoever of Hotel Mabuhay, Inc." 9 The liabilities alluded to in this agreement should be interpreted to mean not only any monetary liability of Mabuhay but any other liability or obligation arising from the operation of its business including its liability to its employees. Moreover, in the tripartite agreement that was entered into by petitioner with respondents NUWHRAIN and Mabuhay, it is clearly stipulated as follows: 8. That, immediately after the execution of this Agreement, the FIRST PARTY shall give a list of its members to the THIRD PARTY that it desires to recommend for employment so that the latter can consider them for employment, with no commitment whatsoever on
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the part of the THIRD PARTY to hire them in the business that it will operate in the premises formerly occupied by the Hotel Mabuhay; 10 From the foregoing, it is clear that petitioner has no liability whatsoever to the employees of Mabuhay And its responsibility if at all, is only to consider them for re-employment in the operation of the business in the same premises. There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them. Moreover, the court does not subscribe to the theory of public respondent that petitioner should have informed NUWHRAIN of its lease of the premises and its purchase of the assets and personal properties of Mabuhay therein so that said employees could have taken steps to protect their interest. The court finds no such duty on the part of petitioner and its failure to notify said employees cannot be an indicium of bad faith. Much less is there any evidence that petitioner and respondent Mabuhay are joint tortfeasors as found by public respondent. While it is true that petitioner is using the leased property for the same type of business as that of respondent Mabuhay, there can be no continuity of the business operations of the predecessor employer by the successor employer as respondent Mabuhay had not retained control of the business. Petitioner is a corporation entirely different from Mabuhay. It has no controlling interest whatever in respondent Mabuhay. Petitioner and Mabuhay have no privity and are strangers to each other. What is obvious is that the petitioner, by purchasing the assets of respondent Mabuhay in the hotel premises, enabled Mabuhay to pay its obligations to its employees. There being no employer-employee relationship between the petitioner and the Mabuhay employees, the petition must fail. Petitioner can not be compelled to absorb the employees of Mabuhay and to pay them backwages. WHEREFORE, the petition is GRANTED and the questioned orders of public respondent Secretary of Labor and Employment dated January 20, 1988 and March 8, 1988 are reversed and set aside. The restraining order that this Court issued on March 20,1988 is hereby made permanent. No pronouncement as to costs. GERARDO F. RIVERA vs. HON. EDGARDO ESPIRITU G.R. No. 135547 : January 23, 2002 In this special civil action for certiorari and prohibition, petitioners charge public respondents with grave abuse of discretion amounting to lack or excess of jurisdiction for acts taken in regard to the enforcement of the agreement dated September 27, 1998, between Philippine Airlines (PAL) and its union, the PAL Employees Association (PALEA). The factual antecedents of this case are as follows: On June 5, 1998, PAL pilots affiliated with the Airline Pilots Association of the Philippines (ALPAP) went on a three-week strike, causing serious losses to the financially beleaguered flag carrier. As a result, PALs financial situation went from bad to worse. Faced with bankruptcy, PAL adopted a rehabilitation plan and downsized its labor force by more than one-third. On July 22, 1998, PALEA went on strike to protest the retrenchment measures adopted by the airline, which affected 1,899 union members. The strike ended four days later, when PAL and PALEA agreed to a more systematic reduction in PALs work force and the payment of separation benefits to all retrenched employees. On August 28, 1998, then President Joseph E. Estrada issued Administrative Order No. 16 creating an Inter-Agency Task Force (Task Force) to address the problems of the ailing flag carrier. The Task Force
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was composed of the Departments of Finance, Labor and Employment, Foreign Affairs, Transportation and Communication, and Tourism, together with the Securities and Exchange Commission (SEC). Public respondent Edgardo Espiritu, then the Secretary of Finance, was designated chairman of the Task Force. It was empowered to summon all parties concerned for conciliation, mediation (for) the purpose of arriving at a total and complete solution of the problem.[1Conciliation meetings were then held between PAL management and the three unions representing the airlines employees,[2 with the Task Force as mediator. On September 4, 1998, PAL management submitted to the Task Force an offer by private respondent Lucio Tan, Chairman and Chief Executive Officer of PAL, of a plan to transfer shares of stock to its employees. The pertinent portion of said plan reads: 1. From the issued shares of stock within the group of Mr. Lucio Tans holdings, the ownership of 60,000 fully paid shares of stock of Philippine Airlines with a par value of PHP5.00/share will be transferred in favor of each employee of Philippine Airlines in the active payroll as of September 15, 1998. Should any share-owning employee leave PAL, he/she has the option to keep the shares or sells (sic) his/her shares to his/her union or other employees currently employed by PAL. 2. The aggregate shares of stock transferred to PAL employees will allow them three (3) members to (sic) the PAL Board of Directors. We, thus, become partners in the boardroom and together, we shall address and find solutions to the wide range of problems besetting PAL. 3. In order for PAL to attain (a) degree of normalcy while we are tackling its problems, we would request for a suspension of the Collective Bargaining Agreements (CBAs) for 10 years.[3crlwvirtualibrry On September 10, 1998, the Board of Directors of PALEA voted to accept Tans offer and requested the Task Forces assistance in implementing the same. Union members, however, rejected Tans offer. Under intense pressure from PALEA members, the unions directors subsequently resolved to reject Tans offer. On September 17, 1998, PAL informed the Task Force that it was shutting down its operations effective September 23, 1998, preparatory to liquidating its assets and paying off its creditors. The airline claimed that given its labor problems, rehabilitation was no longer feasible, and hence, the airline had no alternative but to close shop. On September 18, 1998, PALEA sought the intervention of the Office of the President in immediately convening the parties, the PAL management, PALEA, ALPAP, and FASAP, including the SEC under the direction of the Inter-Agency Task Force, to prevent the imminent closure of PAL.[4crlwvirtualibrry On September 19, 1998, PALEA informed the Department of Labor and Employment (DOLE) that it had no objection to a referendum on the Tans offer. 2,799 out of 6,738 PALEA members cast their votes in the referendum under DOLE supervision held on September 21-22, 1998. Of the votes cast, 1,055 voted in favor of Tans offer while 1,371 rejected it. On September 23, 1998, PAL ceased its operations and sent notices of termination to its employees. Two days later, the PALEA board wrote President Estrada anew, seeking his intervention. PALEA offered a 10-year moratorium on strikes and similar actions and a waiver of some of the economic benefits in the existing CBA.[5 Tan, however, rejected this counter-offer. On September 27, 1998, the PALEA board again wrote the President proposing the following terms and conditions, subject to ratification by the general membership:
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1. Each PAL employee shall be granted 60,000 shares of stock with a par value of P5.00, from Mr. Lucio Tans shareholdings, with three (3) seats in the PAL Board and an additional seat from government shares as indicated by His Excellency; 2. Likewise, PALEA shall, as far as practicable, be granted adequate representation in committees or bodies which deal with matters affecting terms and conditions of employment; 3. To enhance and strengthen labor-management relations, the existing Labor-Management Coordinating Council shall be reorganized and revitalized, with adequate representation from both PAL management and PALEA; 4. To assure investors and creditors of industrial peace, PALEA agrees, subject to the ratification by the general membership, (to) the suspension of the PAL-PALEA CBA for a period of ten (10) years, provided the following safeguards are in place: a. PAL shall continue recognizing PALEA as the duly certified bargaining agent of the regular rank-and-file ground employees of the Company; b. The union shop/maintenance of membership provision under the PAL-PALEA CBA shall be respected. c. No salary deduction, with full medical benefits. 5. PAL shall grant the benefits under the 26 July 1998 Memorandum of Agreement forged by and between PAL and PALEA, to those employees who may opt to retire or be separated from the company. 6. PALEA members who have been retrenched but have not received separation benefits shall be granted priority in the hiring/rehiring of employees. 7. In the absence of applicable Company rule or regulation, the provisions of the Labor Code shall apply.[6crlwvirtualibrry Among the signatories to the letter were herein petitioners Rivera, Ramiso, and Aranas, as officers and/or members of the PALEA Board of Directors. PAL management accepted the PALEA proposal and the necessary referendum was scheduled. On October 2, 1998, 5,324 PALEA members cast their votes in a DOLE-supervised referendum. Of the votes cast, 61% were in favor of accepting the PAL-PALEA agreement, while 34% rejected it. On October 7, 1998, PAL resumed domestic operations. On the same date, seven officers and members of PALEA filed this instant petition to annul the September 27, 1998 agreement entered into between PAL and PALEA on the following grounds: I PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED THEIR JURISDICTION IN ACTIVELY PURSUING THE CONCLUSION OF THE PAL-PALEA AGREEMENT AS THE CONSTITUTIONAL RIGHTS TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING, BEING FOUNDED ON PUBLIC POLICY, MAY NOT BE WAIVED, NOR THE WAIVER, RATIFIED. II
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PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED THEIR JURISDICTION IN PRESIDING OVER THE CONCLUSION OF THE PAL-PALEA AGREEMENT UNDER THREAT OF ABUSIVE EXERCISE OF PALS MANAGEMENT PREROGATIVE TO CLOSE BUSINESS USED AS SUBTERFUGE FOR UNION-BUSTING. The issues now for our resolution are: (1) Is an original action for certiorari and prohibition the proper remedy to annul the PAL-PALEA agreement ofSeptember 27, 1998; (2) Is the PAL-PALEA agreement of September 27, 1998, stipulating the suspension of the PAL-PALEA CBA unconstitutional and contrary to public policy? Anent the first issue , petitioners aver that public respondents as functionaries of the Task Force, gravely abused their discretion and exceeded their jurisdiction when they actively pursued and presided over the PAL-PALEA agreement. Respondents, in turn, argue that the public respondents merely served as conciliators or mediators, consistent with the mandate of A.O. No. 16 and merely supervised the conduct of the October 3, 1998 referendum during which the PALEA members ratified the agreement. Thus, public respondents did not perform any judicial and quasi-judicial act pertaining to jurisdiction. Furthermore, respondents pray for the dismissal of the petition for violating the hierarchy of courts doctrine enunciated in People v. Cuaresma [7and Enrile v. Salazar .[8crlwvirtualibrry Petitioners allege grave abuse of discretion under Rule 65 of the 1997 Rules of Civil Procedure. The essential requisites for a petition for certiorari under Rule 65 are: (1) the writ is directed against a tribunal, a board, or an officer exercising judicial or quasi-judicial functions; (2) such tribunal, board, or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law.[9 For writs of prohibition, the requisites are: (1) the impugned act must be that of a tribunal, corporation, board, officer, or person, whether exercising judicial, quasi-judicial or ministerial functions; and (2) there is no plain, speedy, and adequate remedy in the ordinary course of law. [10crlwvirtualibrry The assailed agreement is clearly not the act of a tribunal, board, officer, or person exercising judicial, quasi-judicial, or ministerial functions. It is not the act of public respondents Finance Secretary Edgardo Espiritu and Labor Secretary Bienvenido Laguesma as functionaries of the Task Force. Neither is there a judgment, order, or resolution of either public respondents involved. Instead, what exists is a contract between a private firm and one of its labor unions, albeit entered into with the assistance of the Task Force. The first and second requisites for certiorari and prohibition are therefore not present in this case. Furthermore, there is available to petitioners a plain, speedy, and adequate remedy in the ordinary course of law. While the petition is denominated as one for certiorari and prohibition, its object is actually the nullification of the PAL-PALEA agreement. As such, petitioners proper remedy is an ordinary civil action for annulment of contract, an action which properly falls under the jurisdiction of the regional trial courts.[11 Neither certiorari nor prohibition is the remedy in the present case. Petitioners further assert that public respondents were partial towards PAL management. They allegedly pressured the PALEA leaders into accepting the agreement. Petitioners ask this Court to examine the circumstances that led to the signing of said agreement. This would involve review of the facts and factual issues raised in a special civil action for certiorari which is not the function of this Court.[12crlwvirtualibrry
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Nevertheless, considering the prayer of the parties principally we shall look into the substance of the petition, in the higher interest of justice[13 and in view of the public interest involved, inasmuch as what is at stake here is industrial peace in the nations premier airline and flag carrier, a national concern. On the second issue , petitioners contend that the controverted PAL-PALEA agreement is void because it abrogated the right of workers to self-organization[14 and their right to collective bargaining.[15 Petitioners claim that the agreement was not meant merely to suspend the existing PALPALEA CBA, which expires on September 30, 2000, but also to foreclose any renegotiation or any possibility to forge a new CBA for a decade or up to 2008. It violates the protection to labor policy[16 laid down by the Constitution. Article 253-A of the Labor Code reads: ART. 253-A. Terms of a Collective Bargaining Agreement . Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five-year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of the retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code. Under this provision, insofar as representation is concerned, a CBA has a term of five years, while the other provisions, except for representation, may be negotiated not later than three years after the execution.[17Petitioners submit that a 10-year CBA suspension is inordinately long, way beyond the maximum statutory life of a CBA, provided for in Article 253-A. By agreeing to a 10-year suspension, PALEA, in effect, abdicated the workers constitutional right to bargain for another CBA at the mandated time. We find the argument devoid of merit. A CBA is a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment, including proposals for adjusting any grievances or questions arising under such agreement.[18 The primary purpose of a CBA is the stabilization of labormanagement relations in order to create a climate of a sound and stable industrial peace.[19 In construing a CBA, the courts must be practical and realistic and give due consideration to the context in which it is negotiated and the purpose which it is intended to serve.[20crlwvirtualibrry The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe financial situation faced by the employer, with the peculiar and unique intention of not merely promoting industrial peace at PAL, but preventing the latters closure. We find no conflict between said agreement and Article 253-A of the Labor Code. Article 253-A has a two-fold purpose. One is to promote industrial stability and predictability. Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation, said agreement satisfies the first purpose of Article 253-A. The other is to assign specific timetables wherein negotiations become a matter of right and requirement. Nothing in Article 253-A, prohibits the parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same. In the instant case, it was PALEA, as the exclusive bargaining agent of PALs ground employees, that voluntarily entered into the CBA with PAL. It was also PALEA that voluntarily opted for the 10-year
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suspension of the CBA. Either case was the unions exercise of its right to collective bargaining. The right to free collective bargaining, after all, includes the right to suspend it. The acts of public respondents in sanctioning the 10-year suspension of the PAL-PALEA CBA did not contravene the protection to labor policy of the Constitution. The agreement afforded full protection to labor; promoted the shared responsibility between workers and employers; and the exercised voluntary modes in settling disputes, including conciliation to foster industrial peace."[21crlwvirtualibrry Petitioners further allege that the 10-year suspension of the CBA under the PAL-PALEA agreement virtually installed PALEA as a company union for said period, amounting to unfair labor practice, in violation of Article 253-A of the Labor Code mandating that an exclusive bargaining agent serves for five years only. The questioned proviso of the agreement reads: a. PAL shall continue recognizing PALEA as the duly certified-bargaining agent of the regular rank-and-file ground employees of the Company; Said proviso cannot be construed alone. In construing an instrument with several provisions, a construction must be adopted as will give effect to all. Under Article 1374 of the Civil Code,[22 contracts cannot be construed by parts, but clauses must be interpreted in relation to one another to give effect to the whole. The legal effect of a contract is not determined alone by any particular provision disconnected from all others, but from the whole read together.[23The aforesaid provision must be read within the context of the next clause, which provides: b. The union shop/maintenance of membership provision under the PAL-PALEA CBA shall be respected. The aforesaid provisions, taken together, clearly show the intent of the parties to maintain union security during the period of the suspension of the CBA. Its objective is to assure the continued existence of PALEA during the said period. We are unable to declare the objective of union security an unfair labor practice. 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--vis the employer.[24crlwvirtualibrry Petitioners contention that the agreement installs PALEA as a virtual company union is also untenable. Under Article 248 (d) of the Labor Code, a company union exists when the employer acts [t]o 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. The case records are bare of any showing of such acts by PAL. We also do not agree that the agreement violates the five-year representation limit mandated by Article 253-A. Under said article, the representation limit for the exclusive bargaining agent applies only when there is an extant CBA in full force and effect. In the instant case, the parties agreed to suspend the CBA and put in abeyance the limit on the representation period. In sum, we are of the view that the PAL-PALEA agreement dated September 27, 1998, is a valid exercise of the freedom to contract. Under the principle of inviolability of contracts guaranteed by the Constitution,[25 the contract must be upheld.
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WHEREFORE, there being no grave abuse of discretion shown, the instant petition is DISMISSED. No pronouncement as to costs. SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO vs. HON. MA. NIEVES D. CONFESOR; G.R. No. 111262 September 19, 1996 This is a petition for certiorari assailing the Order of the Secretary of Labor rendered on February 15, 1993 involving a labor dispute at San Miguel Corporation. The facts are as follows: On June 28, 1990, petitioner-union San Miguel Corporation Employees Union PTGWO entered into a Collective Bargaining Agreement (CBA) with private respondent San Miguel Corporation (SMC) to take effect upon the expiration of the previous CBA or on June 30, 1989. This CBA provided, among others, that: ARTICLE XIV DURATION OF AGREEMENT Sec. 1. This Agreement which shall be binding upon the parties hereto and their respective successors-in-interest, shall become effective and shall remain in force and effect until June 30, 1992. Sec. 2. In accordance with Article 253-A of the Labor Code as amended, the term of this Agreement insofar as the representation aspect is concerned, shall be for five (5) years from July 1, 1989 to June 30, 1994. Hence, the freedom period for purposes of such representation shall be sixty (60) days prior to June 30, 1994. Sec. 3. Sixty (60) days prior to June 30, 1992 either party may initiate negotiations of all provisions of this Agreement, except insofar as the representation aspect is concerned . If no agreement is reached in such negotiations, this Agreement shall nevertheless remain in force up to the time a subsequent agreement is reached by the parties. 1 In keeping with their vision and long term strategy for business expansion, SMC management informed its employees in a letter dated August 13, 1991 2 that the company which was composed of four operating divisions namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks, (4) Magnolia and Agri-business would undergo a restructuring. 3 Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off and became two separate and distinct corporations: Magnolia Corporation (Magnolia) and San Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in force and effect. After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and Article 253-A of the Labor Code. Negotiations started sometime in July, 1992 with the two parties submitting their respective proposals and counterproposals. During the negotiations, the petitioner-union insisted that the bargaining unit of SMC should still include the employees of the spun-off corporations: Magnolia and SMFI; and that the renegotiated terms of the CBA shall be effective only for the remaining period of two years or until June 30, 1994.
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SMC, on the other hand, contended that the members/employees who had moved to Magnolia and SMFI, automatically ceased to be part of the bargaining unit at the SMC. Furthermore, the CBA should be effective for three years in accordance with Art. 253-A of the Labor Code. Unable to agree on these issues with respect to the bargaining unit and duration of the CBA, petitionerunion declared a deadlock on September 29, 1990. On October 2, 1992, a Notice of Strike was filed against SMC. In order to avert a strike, SMC requested the National Conciliation and Mediation Board (NCMB) to conduct preventive mediation. No settlement was arrived at despite several meetings held between the parties. On November 3, 1992, a strike vote was conducted which resulted in a "yes vote" in favor of a strike. On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a petition with the Secretary of Labor praying that the latter assume jurisdiction over the labor dispute in a vital industry. As prayed for, the Secretary of Labor assumed jurisdiction over the labor dispute on November 10, 1992. 4Several conciliation meetings were held but still no agreement/settlement was arrived at by both parties. After the parties submitted their respective position papers, the Secretary of Labor issued the assailed Order on February 15, 1993 directing, among others, that the renegotiated terms of the CBA shall be effective for the period of three (3) years from June 30, 1992; and that such CBA shall cover only the employees of SMC and not of Magnolia and SMFI. Dissatisfied, petitioner-union now comes to this Court questioning this Order of the Secretary of Labor. Subsequently, on March 30, 1995, 5 petitioner-union filed a Motion for Issuance of a Temporary Restraining Order or Writ of Preliminary Injunction to enjoin the holding of the certification elections in the different companies, maintaining that the employees of Magnolia and SMFI fall within the bargaining unit of SMC. On March 29, 1995, the Court issued a resolution granting the temporary restraining order prayed for. 6 Meanwhile, an urgent motion for leave to intervene 7 in the case was filed by the Samahan ng Malayang Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-SMC-FFW) through its authorized representative, Elmer S. Armando, alleging that it is one of the contending parties adversely affected by the temporary restraining order. The Intervenor cited the case of Daniel S.L. Borbon v. Hon. Bienvenido B. Laguesma, 8 G.R. No. 101766, March 5, 1993, where the Court recognized the separation of the employees of Magnolia from the SMC bargaining unit. It then prayed for the lifting of the temporary restraining order. Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a petition for the withdrawal/dismissal of the petition considering that the temporary restraining order jeopardized the employees' right to conclude a new CBA. At the same time, he challenged the legal personality of Mr. Raymundo Hipolito, Jr. to represent the Union as its president when the latter was already officially dismissed from the company on October 4, 1994. Amidst all these pleadings, the following primordial issues arise:
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1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three years of for only two years; and 2) Whether or not the bargaining unit of SMC includes also the employees of the Magnolia and SMFI. Petitioner-union contends that the duration for the non-representation provisions of the CBA should be coterminous with the term of the bargaining agency which in effect shall be for the remaining two years of the current CBA, citing a previous decision of the Secretary of Labor on December 14, 1992 in the matter of the labor dispute at Philippine Refining Company. However, the Secretary of Labor, in her questioned Order of February 15, 1993 ruled that the renegotiated terms of the CBA at SMC should run for a period of three (3) years. We agree with the Secretary of Labor. Pertinent to the first issue is Art. 253-A of the Labor Code as amended which reads: Art. 253-A. Terms of a Collective Bargaining Agreement. Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years . No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code. (Emphasis supplied.) Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No. 6715 (the Herrera-Veloso Law) which took effect on March 21, 1989. This new provision states that the CBA has a term of five (5) years instead of three years, before the amendment of the law as far as the representation aspect is concerned. All other provisions of the CBA shall be negotiated not later than three (3) years after its execution. The "representation aspect" refers to the identity and majority status of the union that negotiated the CBA as the exclusive bargaining representative of the appropriate bargaining unit concerned. "All other provisions" simply refers to the rest of the CBA, economic as well as non-economic provisions, except representation. 10 As the Secretary of Labor herself observed in the instant case, the law is clear and definite on the duration of the CBA insofar as the representation aspect is concerned, but is quite ambiguous with the terms of the other provisions of the CBA. It is a cardinal principle of statutory construction that the Court must ascertain the legislative intent for the purpose of giving effect to any statute. The history of the times and state of the things existing when the act was framed or adopted must be followed and the conditions of the things at the time of the enactment of the law should be considered to determine the legislative intent. 11 We look into the discussions leading to the passage of the law: THE CHAIRMAN (REP. VELASCO): . . .the CBA, insofar as the economic provisions are concerned . . . THE CHAIRMAN (SEN. HERRERA): Maximum of three years?
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THE CHAIRMAN (SEN. VELOSO): Maximum of three years. THE CHAIRMAN (SEN. HERRERA): Present practice? THE CHAIRMAN (REP. VELOSO): In other words, after three years pwede nang magnegotiate in the CBA for the remaining two years. THE CHAIRMAN (REP. HERRERA): You can negotiate for one year, two years or three years but assuming three years which, I think, that's the likelihood. . . THE CHAIRMAN (REP. VELOSO): Yes. THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming there will be a change of agent, at least he has one year to administer and to adjust, to develop rapport with the management. Yan ang importante. You know, for us na nagne-negotiate, ang hazard talaga sa negotiation, when we negotiate with somebody na hindi natin kilala, then, we are governed by our biases na ito ay destroyer ng Labor; ang mga employer, ito bayaran ko lang ito okay na. 'Yan ang nangyayari, but let us give that allowance for the one year to let them know. Actually, ang thrust natin ay industrial peace, and there can be no industrial peace if you encourage union to fight each other. 'Yan ang problema. 12 xxx xxx xxx HON. ISIDRO: Madali iyan, kasi these two periods that are mentioned in the CBA seem to provide some doubts later on in the implementation. Sabi kasi rito, insofar as representation issue is concerned, seven years and lifetime. . . HON. CHAIRMAN HERRERA: Five years. HON. ISIDRO: Five years, all the others three years. HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and conditions, not later than three years. HON. ISIDRO: Not later than three years, so within three years you have to make a new CBA. HON. CHAIRMAN HERRERA: Yes. HON. ISIDRO: That is again for purposes of renewing the terms, three years na naman iyan then, seven years. . . HON. CHAIRMAN HERRERA: Not later than three years. HON. ISIDRO: Assuming that they usually follow the period three years nang three years, but under this law with respect to representation five years, ano? Now, after three years, nagkaroon ng bagong terms, tapos na iyong term, renewed na iyong terms, ang karapatan noon sa representation issue mayroon pang two years left.
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HON. CHAIRMAN HERRERA: One year na lang because six years nang lahat, three plus three. HON. ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang ang natatapos. So, another CBA was formed and this CBA mayroon na naman siyang bagong five years with respect to representation issue. HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and conditions for three years. HON. ISIDRO: Yes. HON. CHAIRMAN HERRERA: One the third year you can start negotiating to change the terms and conditions. HON. ISIDRO: Yes. HON. CHAIRMAN HERRERA: Assuming you will follow the practice . . . HON. ISIDRO: Oo. HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status now can be questioned, so baka puwedeng magkaroon ng certification election. If the incumbent union loses, then the new union administers the contract for one year to give him time to know his counterpart the employer, before he can negotiate for a new term. Iyan ang advantage. HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with respect to the terms and conditions and then, so you have to renew that in three years you renew for another three years, mayroon na naman another five years iyong ano . . . HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang. HON. CHAIRMAN HERRERA: Two years na lang sa representation. HON. ANIAG: So that if they changed the union, iyong last year . . . HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the contract. Then, voluntary arbitration na kayo and then mayroon ka nang probisyon "retroact on the date of the expiry date". Pagnatalo ang incumbent unyon, mag-aassume ang new union, administer the contract. As far as the term and condition, for one year, and that will give him time and the employer to know each other. HON. JABAR: Boy, let us be realistic. I think if a new union wins a certification election, it would not want to administer a CBA which has not been negotiated by the union itself. HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what is happening now in the country is that the term ng contract natin, duon din mage-expire ang representation. Iyon ang nangyari. That is where you have the gulo. Ganoon ang nangyari. So, ang nangyari diyan, pagmayroon certification election, expire ang contract, ano ang usual issue company union. I can you (sic) give you more what the incumbent union is giving. So ang mangyayari diyan, pagnegotiate mo hardline na agad. HON. CHAIRMAN VELOSO : Mon, for four years?
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HON. ISIDRO: Ang tingin ko lang dito, iyong distinction between the terms and the representation aspect why do we have to distinguish between three and five? What's wrong with having a uniform expiration period? HON. CHAIRMAN HERRERA: Five years. HON. ISIDRO: Puro three years. HON. CHAIRMAN HERRERA: That is what we are trying to avoid because ang reality diyan, Mart, pagpasok mo sa kumpanya, mag-ne-negotiate ka ng six months, that's the average, aabot pa minsan ng one year. Pagktapos ng negotiation mo, signing kayo. There will be an allowed period of one year. Third year na, uumpisahan naman ang organizations, papasok na ang ibang unyon because the reality in Trade Union committee, they organize, we organize. So, actually, you have only industrial peace for one year, effective industrial peace. That is what we are trying to change. Otherwise, we will continue to discourage the investors and the union will never grow because every other year it has to use its money for the certification election. Ang grabe pang practice diyan, mag-a-advance ang federation for three years union dues para panggastos lang sa certification election. That is what we are trying to avoid. HON. JABAR: Although there are unions which really get advances. HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang mangyayari. And I think our responsibility here is to create a legal framework to promote industrial peace and to develop responsible and fair labor movement. HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity . . . xxx xxx xxx HON CHAIRMAN VELOSO. (continuing) . . . in other words, the longer the period of effectivity of the CBA, the better for industrial peace. HON. CHAIRMAN HERRERA: representation status. HON. CHAIRMAN VELOSO: Only on HON. CHAIRMAN HERRERA: the representations. HON. CHAIRMAN VELOSO: But on the economic issues. HON. CHAIRMAN HERRERA: You have to review that. The parties will have to review that. HON. CHAIRMAN VELOSO: At least on second year. HON. CHAIRMAN HERRERA: Not later than 3 years, ang karamihan ng mga mag-negotiate when the companyis (interrupted) 13 From the aforesaid discussions, the legislators were more inclined to have the period of effectivity for three (3) years insofar as the economic as well as non-economic provisions are concerned, except representation.
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Obviously, the framers of the law wanted to maintain industrial peace and stability by having both management and labor work harmoniously together without any disturbance. Thus, no outside union can enter the establishment within five (5) years and challenge the status of the incumbent union as the exclusive bargaining agent. Likewise, the terms and conditions of employment (economic and noneconomic) can not be questioned by the employers or employees during the period of effectivity of the CBA. The CBA is a contract between the parties and the parties must respect the terms and conditions of the agreement. 14 Notably, the framers of the law did not give a fixed term as to the effectivity of the terms and conditions of employment. It can be gleaned from their discussions that it was left to the parties to fix the period. In the instant case, it is not difficult to determine the period of effectivity for the non-representation provisions of the CBA. Taking it from the history of their CBAs, SMC intended to have the terms of the CBA effective for three (3) years reckoned from the expiration of the old or previous CBA which was on June 30, 1989, as it provides: Sec. 1. This Agreement which shall be binding upon the parties hereto and their respective successors-in-interest, shall become effective and shall remain in force and effect until June 30, 1992. The argument that the PRC case is applicable is indeed misplaced. We quote with favor the Order of the Secretary of Labor in the light of SMC's peculiar situation as compared with PRC's company situation. It is true that in the Philippine Refining Company case (OS-AJ-0031-91) (sic), Labor Dispute at Philippine Refining Company), we ruled that the term of the renegotiated provisions of the CBA should coincide with the remaining term of the agency. In doing so, we placed premium on the fact that PRC has only two (2) unions and no other union had yet executed a renewed term of 3 years. Nonetheless, in ruling for a shortened term, we were guided by our considered perception that the said term would improve, rather than ruin, the general welfare of both the workers and the company. It is equally true that once the economic provisions of the CBA expire, the residual representative status of the union is effective for only 2 more years. However, if circumstances warrant that the contract duration which it is soliciting from the company for the benefit of the workers, shall be a little bit longer than its lifespan, then this Office cannot stand in the way of a more ideal situation. We must not lose sight of the fact that the primordial purpose of a collective contract is to promote industrial harmony and stability in the terms and conditions of employment. To our mind, this objective cannot be achieved without giving due consideration to the peculiarities and unique characteristics of the employer. In the case at bar, there is no dispute that the mother corporation (SMC) spun-off two of its divisions and thereby gave birth to two (2) other entities now known as Magnolia Corporation and San Miguel Foods, Inc. In order to effect a smooth transition, the companies concerned continued to recognize the existing unions as the bargaining agents of their respective bargaining units. In the meantime, the other unions in these companies eventually concluded their CBA negotiations on the remaining term and all of them agreed on a 3-year cycle. Notably, the following CBAs were forged incorporating a term of 3-years on the renegotiated provisions, to wit: 1. SMC daily-paid employees union (IBM) 2. SMFI monthly-paid employees and daily-paid employees at the Cabuyao Plant. There is a direct link between the voluntary recognition by the company of the continuing representative status of the unions after the aforementioned spin-offs and the stand of the company for a 3-year renegotiated cycle when the economic provisions of the existing CBAs expired, i.e., the maintain stability and avoid confusion when the umbilical cord of the two divisions were severed from their parent. These two cannot be considered independently of each other for they were intended to reinforce one another. Precisely, the company conceded to face the same union notwithstanding the spin-offs in order to preserve industrial peace during the
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infancy of the two corporations. If the union would insist on a shorter renegotiated term, then all the advantages gained by both parties in this regard, would have gone to naught. With this in mind, this office feels that it will betray its mandate should we order the parties to execute a 2year renegotiated term for then chaos and confusion, rather than tranquillity, would be the order of the day. Worse, there is a strong likelihood that such a ruling might spawn discontent and possible mass actions against the company coming from the other unions who had already agreed to a 3-year renegotiated terms. If this happens, the purpose of this Office's intervention into the parties' controversy would have been defeated. 15 The issue as to the term of the non-representation provisions of the CBA need not belabored especially when we take note of the Memorandum of the Secretary of Labor dated February 24, 1994 which was mentioned in the Resolution of Undersecretary Bienvenido Laguesma on January 16, 1995 in the certification election case involving the SMC employees. 16 In said memorandum, the Secretary of Labor had occasion to clarify the term of the renegotiated terms of the CBA vis-a-vis the term of the bargaining agent, to wit: As a matter of policy the parties are encourages (sic) to enter into a renegotiated CBA with a term which would coincide (sic) with the aforesaid five (5) year term of the bargaining representative. In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with a term of three (3) years or one which does not coincide with the said 5-year term, and said agreement is ratified by majority of the members in the bargaining unit, the subject contract is valid and legal and therefore, binds the contracting parties. The same will however not adversely affect the right of another union to challenge the majority status of the incumbent bargaining agent within sixty (60) days before the lapse of the original five (5) year term of the CBA. Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling that the effectivity of the renegotiated terms of the CBA shall be for three (3) years. With respect to the second issue, there is, likewise, no merit in petitioner-union's assertion that the employees of Magnolia and SMFI should still be considered part of the bargaining unit of SMC. Magnolia and SMFI were spun-off to operate as distinct companies on October 1, 1991. Management saw the need for these transformations in keeping with its vision and long term strategy as it explained in its letter addressed to the employees dated August 13, 1991: . . . As early as 1986, we announced the decentralization program and spoke of the need for structures that can react fast to competition, a changing environment, shorter product life cycles and shifts in consumer preference. We further stated in the 1987 Annual Report to Stockholders that San Miguel's businesses will be more autonomous and self sufficient so as to better acquire and master new technologies, cope with a labor force with different expertises and expectations, and master and satisfy the changing needs of our customers and end-consumers. As subsidiaries, Magnolia and FLD will gain better industry focus and flexibility, greater awareness of operating results, and speedier, more responsive decision making. xxx xxx xxx We only have to look at the experience of Coca-Cola Bottlers Philippines, Inc., since this company was organized about ten years ago, to see the benefits that arise from restructuring a division of San Miguel into a more competitive organization. As a stand-alone enterprise, CCBPI engineered a dramatic turnaround and has sustained its sales and market share leadership ever since. We are confident that history will repeat itself, and the transformation of Magnolia and FLD will be successful as that of CCBPI. 17
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Undeniably, the transformation of the companies was a management prerogative and business judgment which the courts can not look into unless it is contrary to law, public policy or morals. Neither can we impute any bad faith on the part of SMC so as to justify the application of the doctrine of piercing the corporate veil.18 Ever mindful of the employees' interests, management has assured the concerned employees that they will be absorbed by the new corporations without loss of tenure and retaining their present pay and benefits according to the existing CBAs. 19 They were advised that upon the expiration of the CBAs, new agreements will be negotiated between the management of the new corporations and the bargaining representatives of the employees concerned. As a result of the spin-offs: 1. Each of the companies are run by, supervised and controlled by different management teams including separate human resource/personnel managers. 2. Each Company enforces its own administrative and operational rules and policies and are not dependent on each other in their operations. 3. Each entity maintains separate financial statements and are audited separately from each other. 20 Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical personalities. Thus, they can not belong to a single bargaining unit as held in the case of Diatagon Labor Federation Local 110 of the ULGWP v. Ople. 21 We elucidate: The fact that their businesses are related and that the 236 employees of the Georgia Pacific International Corporation were originally employees of Lianga Bay Logging Co., Inc. is not a justification for disregarding their separate personalities. Hence, the 236 employees, who are now attached to Georgia Pacific International Corporation, should not be allowed to vote in the certification election at the Lianga Bay Logging Co., Inc. They should vote at a separate certification election to determine the collective bargaining representative of the employees of Georgia Pacific International Corporation. Petition-union's attempt to include the employees of Magnolia and SMFI in the SMC bargaining unit so as to have a bigger mass base of employees has, therefore, no more valid ground. Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or commonality of interests. The employees sought to be represented by the collective bargaining agent must have substantial mutual interests in terms of employment and working conditions as evinced by the type of work they performed. 22 Considering the spin-offs, the companies would consequently have their respective and distinctive concerns in terms of the nature of work, wages, hours of work and other conditions of employment. Interests of employees in the different companies perforce differ. SMC is engaged in the business of the beer manufacturing. Magnolia is involved in the manufacturing and processing of diary products 23 while SMFI is involved in the production of feeds and the processing of chicken. 24 The nature of their products and scales of business may require different skills which must necessarily be commensurated by different compensation packages. The different companies may have different volumes of work and different working conditions. For such reason, the employees of the different companies see the need to group themselves together and organize themselves into distinctive and different groups. It would then be best to have separate bargaining units for the different companies where the employees can bargain separately according to their needs and according to their own working conditions. We reiterate what we have explained in the case of University of the Philippines v. Ferrer-Calleja 25 that: [T]here are various factors which must be satisfied and considered in determining the proper constituency of a bargaining unit. No one particular factor is itself decisive of the determination. The weight accorded to any particular factor varies in accordance with the particular question or
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questions that may arise in a given case. What are these factors? Rothenberg mentions a good number, but the most pertinent to our case are: (1) will of the employees (Globe Doctrine); (2) affinity and unit of 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. . . . xxx xxx xxx An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in the 10th Annual Report of the National Labor Relations Board wherein it is emphasized that the factors which said board may consider and weigh in fixing appropriate units are: the history, extent and type of organization of employees; the history of their collective bargaining; the history, extent and type of organization of employees in other plants of the same employer, or other employers in the same industry; the skill, wages, work, and working conditions of the employees; the desires of the employees; the eligibility of the employees for membership in the union or unions involved; and the relationship between the unit or units proposed and the employer's organization, management, and operation . . . . . . In said report, it is likewise emphasized that the basic test in determining the appropriate bargaining unit is that a unit, to be appropriate, must affect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining (citing Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162). . . Finally, we take note of the fact that the separate interests of the employees of Magnolia and SMFI from those of SMC has been recognized in the case of Daniel Borbon v. Laguesma. 26 We quote: Even assuming in gratia argumenti that at the time of the election they were regular employees of San Miguel, nonetheless, these workers are no longer connected with San Miguel Corporation in any manner because Magnolia has ceased to be a division of San Miguel Corporation and has been formed into a separate corporation with a personality of its own (p. 305, Rollo). This development, which was brought to our attention by private respondents, necessarily renders moot and academic any further discourse on the propriety of the elections which petitioners impugn via the recourse (p. 319, Rollo). In view of all the foregoing, we do not find any grave abuse of discretion on the part of the Secretary of Labor in rendering the assailed Order. WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order issued on March 29, 1995 is lifted. LMG CHEMICALS CORPORATION vs. THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT G.R. No. 127422 April 17, 2001 Before us is a petition certiorari with prayer for a temporary restraining order and a writ of preliminary injunction under Rule 65 of the 1997 Rules of Civil Procedure, as amended, seeking to nullify the orders dated October 7, 1996 and December 17, 1996, issued by the then Secretary of Labor and Employment, Hon. Leonardo A. Quisumbing,1 in OS-AJ-05-10(1)-96, "IN RE: LABOR DISPUTE AT LMB CHEMICALS CORPORATION" The facts as culled from the records are: LMG Chemicals Corporation, (petitioner) is a domestic corporation engaged in the manufacture and sale of various kinds of chemical substances, including aluminum sulfate which is essential in purifying water, and technical grade sulfuric acid used in thermal power plants. Petitioner has three divisions, namely: the
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Organic Division, Inorganic Division and the Pinamucan Bulk Carriers. There are two unions within petitioner's Inorganic Division. One union represents the daily paid employees and the other union represents the monthly paid employees. Chemical Workers Union, respondent, is a duly registered labor organization acting as the collective bargaining agent of all the daily paid employees of petitioner's Inorganic Division. Sometime in December 1995, the petitioner and the respondent started negotiation for a new Collective Bargaining Agreement (CBA) as their old CBA was about to expire. They were able to agree on the political provisions of the new CBA, but no agreement was reached on the issue of wage increase. The economic issues were not also settled. The positions of the parties with respect to wage issue were: "Petitioner Company P40 per day on the first year P40 per day on the second year P40 per day on the third year Respondent Union P350 per day on the first 18 months, and P150 per day for the next 18 months" In the course of the negotiations, respondent union pruned down the originally proposed wage increase quoted above to P215 per day, broken down as follows: "P142 for the first 18 months P73 for the second 18 months" With the CBA negotiations at a deadlock, on March 6, 1996, respondent union filed a Notice of Strike with the National Conciliation and Mediation Board, National Capital Region. Despite several conferences and efforts of the designated conciliator-mediator, the parties failed to reach an amicable settlement. On April 16, 1996, respondent union staged a strike. IN an attempt to end the strike early, petitioner, on April 24, 1996, made an improved offer of P135 per day, spread over the period of three years, as follows: "P55 per day on the first year; P45 per day on the second year; P35 per day on the third year." On May 9, 1996, another conciliation meeting was held between the parties. In that meeting, petitioner reiterated its improved offer of P135 per day which was again rejected by the respondent union. On May 20, 1996, the Secretary of Labor and Employment, finding the instant labor dispute impressed with national interest, assumed jurisdiction over the same.
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In compliance with the directive of the Labor Secretary, the parties submitted their respective positive papers both dated June 21, 1996. In its position paper, petitioner made a turn-around, stating that it could no longer afford to grant its previous offer due to serious financial losses during the early months of 1996. It then made the following offer: Zero increase in the first year; P30 per day increase in the second year; and P20 per day increase in the third year. In its reply to petitioner's position paper, respondent union claimed it had a positive performance in terms of income during the covered period. On October 7, 1996, the Secretary of Labor and Employment issued the first assailed order, pertinent portions of which read: "xxx. In the light of the Company's last offer and the Union's last position, We decree that the Company's offer of P135 per day wage increase be further increased to P140 per (day), which shall be incorporated in the new CBA, as follows: P90 per day for the first 18 months, and P50 per day for the next 18 months. After all, the Company had granted its supervisory employees an increase of P4,500 per month or P166 per day, more or less, if the period reckoned is 27 working days. In regard to the division of the three-year period into two sub-periods of 18 months each, this office take cognizance of the same practice under the old CBA. 2. Other economic demands Considering the financial condition of the Company, all other economic demands except those provided in No. 3 below are rejected. The provisions in the old CBA as well as those contained in the Company's Employee's Primer of Benefits as of Aug. 1, 1994 shall be retained and incorporated in the new CBA. 3. Effectivity of the new CBA Article 253-A of the Labor Code, as amended, provides that when no new CBA is signed during a period of six months from the expiry date of the old CBA, the retroactivity period shall be according to the parties' agreement, Inasmuch as the parties could not agree on this issue and since this Office has assumed jurisdiction, then this matter now lies at the discretion of the Secretary of labor and Employment. Thus the new Collective Bargaining Agreement which the parties will sign pursuant to this Order shall retroact to January 1, 1996. x x x
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Forthwith, petitioner filed a motion for reconsideration but was denied by the Secretary in his order dated December 16, 1996. Petitioner now contends that in issuing the said orders, respondent Secretary gravely abused his discretion, thus: I "THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISREGARDING THE EVIDENCE OF PETITIONER'S FINANCIAL LOSSES AND IN GRANTING A P140.00 WAGE INCREASE TO THE RESPONDENT UNION. II THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DECREEING THAT THE NEW COLLECTIVE BARGAINING AGREEMENT TO BE SIGNED BY THE PARTIES SHALL RETROACT TO JANUARY 1, 1996." Anent the first ground, petitioner asserts that the decreed amount of P140 wage increase has no basis in fact and in law. Petitioner insists that public respondent Secretary whimsically presumed that the company can survive despite the losses being suffered by its Inorganic Division and its additional losses caused by the strike held by respondent union. Petitioner further contends that respondent Secretary disregarded its evidence showing that for the first part of 1996, its Inorganic Division suffered serious losses amounting to P15.651 million. Hence, by awarding wage increase without any basis, respondent Secretary gravely abused his discretion and violated petitioner's right to due process. We are not persuaded. As aptly stated by the Solicitor General in his comment on the petition dated July 1, 1996, respondent Secretary considered all the evidence and arguments adduced by both parties. In ordering the wage increase, the Secretary ratiocinated as follows: "xxx In the Company's Supplemental Comment, it says that it has three divisions, namely: the Organic Division, Inorganic Division and the Pinamucan Bulk Carriers. The Union in this instant dispute represent the daily wage earners in the Inorganic Division. The respective income of the three divisions is shown in Annex B to the Company's Supplemental Comment. The Organic Division posted an income of P369,754,000 in 1995. The Inorganic Division realized an income of P261,288,000 in the same period. The tail ender is the Pinamucan Bulk Carriers Division with annual income of P11,803,000 for the same period. Total Company income for the period was P642,845,000. It is a sound business practice that a Company's income from all sources are collated to determine its true financial condition. Regardless of whether one division or another losses or gains in its yearly operation is not material in reckoning a Company's financial status. In fact, the loss in one is usually offset by the gains in the others. It is not a good business practice to isolate the employees or workers of one division, which incurred an operating loss for a particular period. That will create demoralization among its ranks, which will ultimately affect productivity. The eventual loser will be the company.
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So, even if We believe the position of the company that its Inorganic Division lost last year and during the early months of this year, it would not be a good argument to deny them of any salary increase. When the Company made the offer of P135 per day for the three year period, it was presumed to have studied its financial condition properly, taking into consideration its past performance and projected income. In fact, the Company realized a net income of P10,806,678 for 1995 in all its operations, which could be one factor why it offered the wage increase package of P135 per day for the Union members.1wphi1.nt Besides, as a major player in the country's corporate field, reneging from a wage increase package it previously offered and later on withdrawing the same simply because this Office had already assumed jurisdiction over its labor dispute with the Union cannot be countenanced. It will be worse if the employer is allowed to withdraw its offer on the ground that the union staged a strike and consequently subsequently suffered business setbacks in its income projections. To sustain the Company's position is like hanging the proverbial sword of Damocles over the Union's right to concerted activities, ready to fall when the latter clamors for better terms and conditions of employment. But we cannot also sustain the Union's demand for an increase of P215 per day. If we add the overload factors such as the increase in SSS premiums, medicare and medicaid, and other multiplier costs, the Company will be saddled with additional labor cost, and its projected income for the CBS period may not be able to absorb the added cost without impairing its viability. xxx" Verily, petitioner's assertion that respondent Secretary failed to consider the evidence on record lacks merit. It was only the Inorganic Division of the petitioner corporation that was sustaining losses. Such incident does not justify the withholding of any salary increase as petitioner's income from all sources are collated for the determination of its true financial condition. As correctly stated by the Secretary, "the loss in one is usually offset by the gains in the others." Moreover, petitioner company granted its supervisory employees, during the pendency of the negotiations between the parties, a wage increase of P4,500 per month or P166 per day, more or less. Petitioner justified this by saying that the said increase was pursuant to its earlier agreement with the supervisions. Hence, the company had no choice but to abide by such agreement even if it was already sustaining losses as a result of the strike of the rank-and-file employees. Petitioner's actuation is actually a discrimination against respondent union members. If it could grant a wage increase to its supervisors, there is no valid reason why it should deny the same to respondent union members. Significantly, while petitioner asserts that it sustained losses in the first part of 1996, yet during the May 9, 1996 conciliation meeting, it made the offer of P135 daily wage to the said union members. This Court, therefore, holds that respondent Secretary did not gravely abuse his discretion in ordering the wage increase. Grave abuse of discretion implies whimsical and capricious exercise of power which, in the instant case, is not obtaining. On the second ground, petitioner contends that public respondent committed grave abuse of discretion when he ordered that the new CBA which the parties will sign shall retroact to January 1, 1996, citing the cases of Union of Filipro Employees vs. NLRC,2 and Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan Confesor.3 Invoking the provisions of Article 253-A of the Labor Code, petitioner insists that public respondent's discretion on the issue of the date of the effectivity of the new CBA is limited to either: (1) leaving the matter of the date of effectivity of the new CBA is limited to either: (1) leaving the matter of the date of
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effectivity of the new CBA to the agreement of the parties or (2) ordering that the terms of the new CBA be prospectively applied. It must be emphasized that respondent Secretary assumed jurisdiction over the dispute because it is impressed with national interest. As noted by the Secretary, "the petitioner corporation was then supplying the sulfate requirements of MWSS as well as the sulfuric acid of NAPOCOR, and consequently, the continuation of the strike would seriously affect the water supply of Metro Manila and the power supply of the Luzon Grid." Such authority of the Secretary to assume jurisdiction carries with it the power to determine the retroactivity of the parties' CBA. It is well settled in our jurisprudence that the authority of the Secretary of Labor 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. The power is plenary and discretionary in nature to enable him to effectively and efficiently dispose of the primary dispute.4 In St. Luke's Medical Center, Inc. vs. Torres5, a deadlock developed during the CBA negotiations between the management and the union. The Secretary of Labor assumed jurisdiction and ordered that their CBA shall retroact to the date of the expiration of the previous CBA. The management claimed that the Secretary of Labor gravely abused his discretion. This Court held: "xxx Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of the previous CBA, contrary to the position of the petitioner. Under the circumstances of the case, Art. 253-A cannot be properly applied to herein case. As correctly stated by public respondent in his assailed Order of April 12, 1991 'Anent the alleged lack of basis for retroactivity provisions awarded, We would stress that the provision of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of agreement by and between the parties, and not arbitral awards.' Therefore in the absence of the specific provision of law prohibiting retroactivity of the effectivity of the arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public respondent is deemed vested with plenary powers to determine the effectivity thereof." Finally, to deprive respondent Secretary of such power and discretion would run counter to the wellestablished rule that all doubts in the interpretation of labor laws should be resolved in favor of labor. In upholding the assailed orders of respondent Secretary, this Court is only giving meaning to this rule. Indeed, the Court should help labor authorities in providing workers immediate benefits, without being hampered by arbitration or litigation processes that prove to be not only nerve-wracking but financially burdensome in the long run. As we said in Maternity Children's Hospital vs. Secretary of Labor6: "Social Justice Legislation, to be truly meaningful and rewarding to our workers, must not be hampered in its application by long winded-arbitration and litigation. Rights must be asserted and benefits received with the least inconvenience. Labor laws are meant to promote, not to defeat, social justice." WHEREFORE, the instant petition is DENIED. The assailed orders of the Secretary of Labor dated October 7, 1996 and December 16, 1996 are AFFIRMED. Costs against petitioner.
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MANILA ELECTRIC COMPANY vs. Hon. SECRETARY OF LABOR LEONARDO QUISUMBING G.R. No. 127598 February 22, 2000 In the Decision promulgated on January 27, 1999, the Court disposed of the case as follows: WHEREFORE, the petition is granted and the orders of public respondent Secretary of Labor dated August 19, 1996 and December 28, 1996 are set aside to the extent set forth above. The parties are directed to execute a Collective Bargaining Agreement incorporating the terms and conditions contained in the unaffected portions of the Secretary of Labor's orders of August 19, 1996 and December 28, 1996, and the modifications set forth above. The retirement fund issue is remanded to the Secretary of Labor for reception of evidence and determination of the legal personality of the MERALCO retirement fund.1 The modifications of the public respondent's resolutions include the following: January 27, 1999 decision Wages X'mas bonus Retirees Loan to coops GHSIP, HMP and Housing loans Signing bonus Union leave High voltage/pole Collectors CBU Union security Contracting out All benefits Retroactivity - P1,900.00 for 1995-96 - modified to one month - remanded to the Secretary - denied - granted up to P60,000.00 - denied - 40 days (typo error) - not apply to those who are not exposed to the risk - no need for cash bond, no need to reduce quota and MAPL - exclude confidential employees - maintenance of membership - no need to consult union - existing terms and conditions - Dec. 28, 1996-Dec. 27, 199(9) include closed shop consult first all terms from Dec. 1, 1995 Secretary's resolution P2,200.00 2 months granted granted granted granted 30 days members of a team
Dissatisfied with the Decision, some alleged members of private respondent union (Union for brevity) filed a motion for intervention and a motion for reconsideration of the said Decision. A separate intervention was likewise made by the supervisor's union (FLAMES2) of petitioner corporation alleging that it has bona fide legal interest in the outcome of the case.3 The Court required the "proper parties" to file a comment to the three motions for reconsideration but the Solicitor-General asked that he be excused from filing the comment because the "petition filed in the instant case was granted" by the Court.4 Consequently, petitioner filed its own consolidated comment. An "Appeal Seeking Immediate Reconsideration" was also filed by the alleged newly elected president of the Union.5 Other subsequent pleadings were filed by the parties and intervenors.
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The issues raised in the motions for reconsideration had already been passed upon by the Court in the January 27, 1999 decision. No new arguments were presented for consideration of the Court. Nonetheless, certain matters will be considered herein, particularly those involving the amount of wages and the retroactivity of the Collective Bargaining Agreement (CBA) arbitral awards. Petitioner warns that if the wage increase of P2,200.00 per month as ordered by the Secretary is allowed, it would simply pass the cost covering such increase to the consumers through an increase in the rate of electricity. This is a non sequitur. The Court cannot be threatened with such a misleading argument. An increase in the prices of electric current needs the approval of the appropriate regulatory government agency and does not automatically result from a mere increase in the wages of petitioner's employees. Besides, this argument presupposes that petitioner is capable of meeting a wage increase. The All Asia Capital report upon which the Union relies to support its position regarding the wage issue cannot be an accurate basis and conclusive determinant of the rate of wage increase. Section 45 of Rule 130 Rules of Evidence provides: Commercial lists and the like. Evidence of statements of matters of interest to persons engaged in an occupation contained in a list, register, periodical, or other published compilation is admissible as tending to prove the truth of any relevant matter so stated if that compilation is published for use by persons engaged in that occupation and is generally used and relied upon by them therein. Under the afore-quoted rule, statement of matters contained in a periodical, may be admitted only "if that compilation is published for use by persons engaged in that occupation and is generally used and relied upon by them therein." As correctly held in our Decision dated January 27, 1999, the cited report is a mere newspaper account and not even a commercial list. At most, it is but an analysis or opinion which carries no persuasive weight for purposes of this case as no sufficient figures to support it were presented. Neither did anybody testify to its accuracy. It cannot be said that businessmen generally rely on news items such as this in their occupation. Besides, no evidence was presented that the publication was regularly prepared by a person in touch with the market and that it is generally regarded as trustworthy and reliable. Absent extrinsic proof of their accuracy, these reports are not admissible.6 In the same manner, newspapers containing stock quotations are not admissible in evidence when the source of the reports is available.7 With more reason, mere analyses or projections of such reports cannot be admitted. In particular, the source of the report in this case can be easily made available considering that the same is necessary for compliance with certain governmental requirements. Nonetheless, by petitioner's own allegations, its actual total net income for 1996 was P5.1 billion.8 An estimate by the All Asia financial analyst stated that petitioner's net operating income for the same year was about P5.7 billion, a figure which the Union relies on to support its claim. Assuming without admitting the truth thereof, the figure is higher than the P4.171 billion allegedly suggested by petitioner as its projected net operating income. The P5.7 billion which was the Secretary's basis for granting the P2,200.00 is higher than the actual net income of P5.1 billion admitted by petitioner. It would be proper then to increase this Court's award of P1,900.00 to P2,000.00 for the two years of the CBA award. For 1992, the agreed CBA wage increase for rank-and-file was P1,400.00 and was reduced to P1,350.00; for 1993; further reduced to P1,150.00 for 1994. For supervisory employees, the agreed wage increase for the years 1992-1994 are P1,742.50, P1,682.50 and P1,442.50, respectively. Based on the foregoing figures, the P2,000.00 increase for the two-year period awarded to the rank-and-file is much higher than the highest increase granted to supervisory employees.9 As mentioned in the January 27, 1999 Decision, the Court does "not seek to enumerate in this decision the factors that should affect wage determination" because collective bargaining disputes particularly those affecting the national interest and public service "requires due consideration and proper balancing of the interests of the parties to the dispute and of those who might be affected by the dispute."10 The Court takes judicial notice that the new amounts granted herein are significantly higher than the weighted average salary currently enjoyed by other rank-and-file employees within the community. It should be noted that the relations between labor and capital is impressed with public interest which must yield to the common good. 11 Neither party should act
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oppressively against the other or impair the interest or convenience of the public. 12 Besides, matters of salary increases are part of management prerogative.13 On the retroactivity of the CBA arbitral award, it is well to recall that this petition had its origin in the renegotiation of the parties' 1992-1997 CBA insofar as the last two-year period thereof is concerned. When the Secretary of Labor assumed jurisdiction and granted the arbitral awards, there was no question that these arbitral awards were to be given retroactive effect. However, the parties dispute the reckoning period when retroaction shall commence. Petitioner claims that the award should retroact only from such time that the Secretary of Labor rendered the award, invoking the 1995 decision in Pier 8 case 14 where the Court, citing Union of Filipino Employees v. NLRC,15said: The assailed resolution which incorporated the CBA to be signed by the parties was promulgated on June 5, 1989, the expiry date of the past CBA. Based on the provision of Section 253-A, its retroactivity should be agreed upon by the parties. But since no agreement to that effect was made, public respondent did not abuse its discretion in giving the said CBA a prospective effect. The action of the public respondent is within the ambit of its authority vested by existing law. On the other hand, the Union argues that the award should retroact to such time granted by the Secretary, citing the 1993 decision of St. Luke's.16 Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of the previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article 253-A cannot be properly applied to herein case. As correctly stated by public respondent in his assailed Order of April 12, 1991 dismissing petitioner's Motion for Reconsideration Anent the alleged lack of basis for the retroactivity provisions awarded; we would stress that the provision of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of agreements by and between the parties, and not arbitral awards . . . Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public respondent is deemed vested with plenary and discretionary powers to determine the effectivity thereof. In the 1997 case of Mindanao Terminal,17 the Court applied the St. Luke's doctrine and ruled that: In St. Luke's Medical Center v. Torres, a deadlock also developed during the CBA negotiations between management and the union. The Secretary of Labor assumed jurisdiction and ordered the retroaction of the CBA to the date of expiration of the previous CBA. As in this case, it was alleged that the Secretary of Labor gravely abused its discretion in making his award retroactive. In dismissing this contention this Court held: Therefore, in the absence of a specific provision of law prohibiting retroactive of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public respondent is deemed vested with plenary and discretionary powers to determine the effectivity thereof. The Court in the January 27, 1999 Decision, stated that the CBA shall be "effective for a period of 2 years counted from December 28, 1996 up to December 27, 1999." Parenthetically, this actually covers a threeyear period. Labor laws are silent as to when an arbitral award in a labor dispute where the Secretary had assumed jurisdiction by virtue of Article 263 (g) of the Labor Code shall retroact. In general, a CBA negotiated within six months after the expiration of the existing CBA retroacts to the day immediately following such date and if agreed thereafter, the effectivity depends on the agreement of the parties. 18 On the other hand, the law is silent as to the retroactivity of a CBA arbitral award or that granted not by virtue
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of the mutual agreement of the parties but by intervention of the government. Despite the silence of the law, the Court rules herein that CBA arbitral awards granted after six months from the expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or their union. Absent such an agreement as to retroactivity, the award shall retroact to the first day after the six-month period following the expiration of the last day of the CBA should there be one. In the absence of a CBA, the Secretary's determination of the date of retroactivity as part of his discretionary powers over arbitral awards shall control. It is true that an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties because it requires the interference and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction. However, the arbitral award can be considered as an approximation of a collective bargaining agreement which would otherwise have been entered into by the parties. 19 The terms or periods set forth in Article 253-A pertains explicitly to a CBA. But there is nothing that would prevent its application by analogy to an arbitral award by the Secretary considering the absence of an applicable law. Under Article 253-A: "(I)f any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof." In other words, the law contemplates retroactivity whether the agreement be entered into before or after the said six-month period. The agreement of the parties need not be categorically stated for their acts may be considered in determining the duration of retroactivity. In this connection, the Court considers the letter of petitioner's Chairman of the Board and its President addressed to their stockholders, which states that the CBA "for the rank-andfile employees covering the period December 1, 1995 to November 30, 1997 is still with the Supreme Court,"20 as indicative of petitioner's recognition that the CBA award covers the said period. Earlier, petitioner's negotiating panel transmitted to the Union a copy of its proposed CBA covering the same period inclusive.21 In addition, petitioner does not dispute the allegation that in the past CBA arbitral awards, the Secretary granted retroactivity commencing from the period immediately following the last day of the expired CBA. Thus, by petitioner's own actions, the Court sees no reason to retroact the subject CBA awards to a different date. The period is herein set at two (2) years from December 1, 1995 to November 30, 1997. On the allegation concerning the grant of loan to a cooperative, there is no merit in the union's claim that it is no different from housing loans granted by the employer. The award of loans for housing is justified because it pertains to a basic necessity of life. It is part of a privilege recognized by the employer and allowed by law. In contrast, providing seed money for the establishment of the employee's cooperative is a matter in which the employer has no business interest or legal obligation. Courts should not be utilized as a tool to compel any person to grant loans to another nor to force parties to undertake an obligation without justification. On the contrary, it is the government that has the obligation to render financial assistance to cooperatives and the Cooperative Code does not make it an obligation of the employer or any private individual.22 Anent the 40-day union leave, the Court finds that the same is a typographical error. In order to avoid any confusion, it is herein declared that the union leave is only thirty (30) days as granted by the Secretary of Labor and affirmed in the Decision of this Court. The added requirement of consultation imposed by the Secretary in cases of contracting out for six (6) months or more has been rejected by the Court. Suffice it to say that the employer is allowed to contract out services for six months or more. However, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of employees, and in treating the latter, the employer should see to it that its employees are at least properly informed of its decision or modes of action in order to attain a harmonious labor-management relationship and enlighten the workers concerning their rights.23 Hiring of workers is within the employer's inherent freedom to regulate and is a valid exercise of its management prerogative subject only to special laws and agreements on the matter and the fair standards of justice.24 The management cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. It has the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies. While there should be mutual consultation, eventually deference is to be paid to what
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management decides.25 Contracting out of services is an exercise of business judgment or management prerogative.26 Absent proof that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer.27 As mentioned in the January 27, 1999 Decision, the law already sufficiently regulates this matter.28 Jurisprudence also provides adequate limitations, such that the employer must be motivated by good faith and the contracting out should not be resorted to circumvent the law or must not have been the result of malicious or arbitrary actions. 29 These are matters that may be categorically determined only when an actual suit on the matter arises. WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED and the assailed Decision is MODIFIED as follows: (1) the arbitral award shall retroact from December 1, 1995 to November 30, 1997; and (2) the award of wage is increased from the original amount of One Thousand Nine Hundred Pesos (P1,900.00) to Two Thousand Pesos (P2,000.00) for the years 1995 and 1996. This Resolution is subject to the monetary advances granted by petitioner to its rank-and-file employees during the pendency of this case assuming such advances had actually been distributed to them. The assailed Decision is AFFIRMED in all other respects FVC LABOR UNION-PHILIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATION (FVCLU-PTGWO) vs. SAMA-SAMANG NAGKAKAISANG MANGGAGAWA SA FVC-SOLIDARITY OF INDEPENDENT AND GENERAL LABOR ORGANIZATIONS (SANAMA-FVC-SIGLO) G.R. No. 176249 November 27, 2009 We pass upon the petition for review on certiorari under Rule 45 of the Rules of Court 1 filed by FVC Labor UnionPhilippine Transport and General Workers Organization (FVCLU-PTGWO) to challenge the Court of Appeals (CA) decision of July 25, 2006 2 and its resolution rendered on January 15, 20073 in C.A. G.R. SP No. 83292.4 THE ANTECEDENTS The facts are undisputed and are summarized below. On December 22, 1997, the petitioner FVCLU-PTGWO the recognized bargaining agent of the rank-andfile employees of the FVC Philippines, Incorporated (company) signed a five-year collective bargaining agreement (CBA) with the company. The five-year CBA period was from February 1, 1998 to January 30, 2003.5 At the end of the 3rd year of the five-year term and pursuant to the CBA, FVCLU-PTGWO and the company entered into the renegotiation of the CBA and modified, among other provisions, the CBAs duration. Article XXV, Section 2 of the renegotiated CBA provides that "this re-negotiation agreement shall take effect beginning February 1, 2001 and until May 31, 2003" thus extending the original five-year period of the CBA by four (4) months. On January 21, 2003, nine (9) days before the January 30, 2003 expiration of the originally-agreed fiveyear CBA term (and four [4] months and nine [9] days away from the expiration of the amended CBA period), the respondent Sama-Samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independent and General Labor Organizations (SANAMA-SIGLO) filed before the Department of Labor and Employment (DOLE) a petition for certification election for the same rank-and-file unit covered by the FVCLU-PTGWO CBA. FVCLU-PTGWO moved to dismiss the petition on the ground that the certification election petition was filed outside the freedom period or outside of the sixty (60) days before the expiration of the CBA on May 31, 2003. Action on the Petition and Related Incidents On June 17, 2003, Med-Arbiter Arturo V. Cosuco dismissed the petition on the ground that it was filed outside the 60-day period counted from the May 31, 2003 expiry date of the amended CBA.6 SANAMASIGLO appealed the Med-Arbiters Order to the DOLE Secretary, contending that the filing of the petition on January 21, 2003 was within 60-days from the January 30, 2003 expiration of the original CBA term.
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DOLE Secretary Patricia A. Sto. Tomas sustained SANAMA-SIGLOs position, thereby setting aside the decision of the Med-Arbiter.7 She ordered the conduct of a certification election in the company. FVCLUPTGWO moved for the reconsideration of the Secretarys decision. On November 6, 2003, DOLE Acting Secretary Manuel G. Imson granted the motion; he set aside the August 6, 2003 DOLE decision and dismissed the petition as the Med-Arbiters Order of June 17, 2003 did.8 The Acting Secretary held that the amended CBA (which extended the representation aspect of the original CBA by four [4] months) had been ratified by members of the bargaining unit some of whom later organized themselves as SANAMA-SIGLO, the certification election applicant. Since these SANAMASIGLO members fully accepted and in fact received the benefits arising from the amendments, the Acting Secretary rationalized that they also accepted the extended term of the CBA and cannot now file a petition for certification election based on the original CBA expiration date. SANAMA-SIGLO moved for the reconsideration of the Acting Secretarys Order, but Secretary Sto. Tomas denied the motion in her Order of January 30, 2004.9 SANAMA-SIGLO sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court based on the grave abuse of discretion the Labor Secretary committed when she reversed her earlier decision calling for a certification election. SANAMA-SIGLO pointed out that the Secretarys new ruling is patently contrary to the express provision of the law and established jurisprudence. THE CA DECISION The CA found SANAMA-SIGLOs petition meritorious on the basis of the applicable law10 and the rules,11 as interpreted in the congressional debates. It set aside the challenged DOLE Secretary decisions and reinstated her earlier ruling calling for a certification election. The appellate court declared: It is clear from the foregoing that while the parties may renegotiate the other provisions (economic and non-economic) of the CBA, this should not affect the five-year representation aspect of the original CBA. If the duration of the renegotiated agreement does not coincide with but rather exceeds the original fiveyear term, the same will not adversely affect the right of another union to challenge the majority status of the incumbent bargaining agent within sixty (60) days before the lapse of the original five (5) year term of the CBA. In the event a new union wins in the certification election, such union is required to honor and administer the renegotiated CBA throughout the excess period. FVCLU-PTGWO moved to reconsider the CA decision but the CA denied the motion in its resolution of January 15, 2007.12 With this denial, FVCLU-PTGWO now comes before us to challenge the CA rulings.13 It argues that in light of the peculiar attendant circumstances of the case, the CA erred in strictly applying Section 11 (11b), Rule XI, Book V of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 9, s. 1997.14 Apparently, the "peculiar circumstances" the FVCLU-PTGWO referred to relate to the economic and other provisions of the February 1, 1998 to January 30, 2003 CBA that it renegotiated with the company. The renegotiated CBA changed the CBAs remaining term from February 1, 2001 to May 31, 2003. To FVCLU PTGWO, this extension of the CBA term also changed the unions exclusive bargaining representation status and effectively moved the reckoning point of the 60-day freedom period from January 30, 2003 to May 30, 2003. FVCLU-PTGWO thus moved to dismiss the petition for certification election filed on January 21, 2003 (9 days before the expiry date on January 30, 2003 of the original CBA) by SANAMASIGLO on the ground that the petition was filed outside the authorized 60-day freedom period. It also submits in its petition that the SANAMA-SIGLO is estopped from questioning the extension of the CBA term under the amendments because its members are the very same ones who approved the amendments, including the expiration date of the CBA, and who benefited from these amendments.
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Lastly, FVCLU-PTGWO posits that the representation petition had been rendered moot by a new CBA it entered into with the company covering the period June 1, 2003 to May 31, 2008. 151avvphi1 Required to comment by the Court16 and to show cause for its failure to comply, 17 SANAMA-SIGLO manifested on October 10, 2007 that: since the promulgation of the CA decision on July 25, 2006 or three years after the petition for certification election was filed, the local leaders of SANAMA-SIGLO had stopped reporting to the federation office or attending meetings of the council of local leaders; the SANAMA-SIGLO counsel, who is also the SIGLO national president, is no longer in the position to pursue the present case because the local union and its leadership, who are principals of SIGLO, had given up and abandoned their desire to contest the representative status of FVCLU-PTGWO; and a new CBA had already been signed by FVCLU-PTGWO and the company.18Under these circumstances, SANAMA-SIGLO contends that pursuing the case has become futile, and accordingly simply adopted the CA decision of July 25, 2006 as its position; its counsel likewise asked to be relieved from filing a comment in the case. We granted the request for relief and dispensed with the filing of a comment.19 THE COURTS RULING While SANAMA-SIGLO has manifested its abandonment of its challenge to the exclusive bargaining representation status of FVCLU-PTGWO, we deem it necessary in the exercise of our discretion to resolve the question of law raised since this exclusive representation status issue will inevitably recur in the future as workplace parties avail of opportunities to prolong workplace harmony by extending the term of CBAs already in place.20 The legal question before us centers on the effect of the amended or extended term of the CBA on the exclusive representation status of the collective bargaining agent and the right of another union to ask for certification as exclusive bargaining agent. The question arises because the law allows a challenge to the exclusive representation status of a collective bargaining agent through the filing of a certification election petition only within 60 days from the expiration of the five-year CBA. Article 253-A of the Labor Code covers this situation and it provides: Terms of a collective bargaining agreement. Any Collective Bargaining Agreement that the parties may enter into, shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty day period immediately before the date of expiry of such five-year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code. This Labor Code provision is implemented through Book V, Rule VIII of the Rules Implementing the Labor Code21which states: Sec. 14. Denial of the petition; grounds. The Med-Arbiter may dismiss the petition on any of the following grounds: xxxx
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(b) the petition was filed before or after the freedom period of a duly registered collective bargaining agreement;provided that the sixty-day period based on the original collective bargaining agreement shall not be affected by any amendment, extension or renewal of the collective bargaining agreement (underscoring supplied). xxxx The root of the controversy can be traced to a misunderstanding of the interaction between a unions exclusive bargaining representation status in a CBA and the term or effective period of the CBA. FVCLU-PTGWO has taken the view that its exclusive representation status should fully be in step with the term of the CBA and that this status can be challenged only within 60 days before the expiration of this term. Thus, when the term of the CBA was extended, its exclusive bargaining status was similarly extended so that the freedom period for the filing of a petition for certification election should be counted back from the expiration of the amended CBA term. We hold this FVCLU-PTGWO position to be correct, but only with respect to the original five-year term of the CBA which, by law, is also the effective period of the unions exclusive bargaining representation status. While the parties may agree to extend the CBAs original five-year term together with all other CBA provisions, any such amendment or term in excess of five years will not carry with it a change in the unions exclusive collective bargaining status. By express provision of the above -quoted Article 253-A, the exclusive bargaining status cannot go beyond five years and the representation status is a legal matter not for the workplace parties to agree upon. In other words, despite an agreement for a CBA with a life of more than five years, either as an original provision or by amendment, the bargaining unions exclusive bargaining status is effective only for five years and can be challenged within sixty (60) days prior to the expiration of the CBAs first five years. As we said in San Miguel Corp. Employees UnionPTGWO, et al. v. Confesor, San Miguel Corp., Magnolia Corp. and San Miguel Foods, Inc.,22where we cited the Memorandum of the Secretary of Labor and Employment dated February 24, 1994: In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with a term of three (3) years or one which does not coincide with the said five-year term and said agreement is ratified by majority of the members in the bargaining unit, the subject contract is valid and legal and therefore, binds the contracting parties. The same will however not adversely affect the right of another union to challenge the majority status of the incumbent bargaining agent within sixty (60) days before the lapse of the original five (5) year term of the CBA. In the present case, the CBA was originally signed for a period of five years, i.e., from February 1, 1998 to January 30, 2003, with a provision for the renegotiation of the CBAs other provisions at the end of the 3rd year of the five-year CBA term. Thus, prior to January 30, 2001 the workplace parties sat down for renegotiation but instead of confining themselves to the economic and non-economic CBA provisions, also extended the life of the CBA for another four months, i.e., from the original expiry date on January 30, 2003 to May 30, 2003. As discussed above, this negotiated extension of the CBA term has no legal effect on the FVCLU-PTGWOs exclusive bargaining representation status which remained effective only for five years ending on the original expiry date of January 30, 2003. Thus, sixty days prior to this date, or starting December 2, 2002, SANAMA-SIGLO could properly file a petition for certification election. Its petition, filed on January 21, 2003 or nine (9) days before the expiration of the CBA and of FVCLU-PTGWOs exclusive bargaining status, was seasonably filed. We thus find no error in the appellate courts ruling reinstating the DOLE order for the condu ct of a certification election. If this ruling cannot now be given effect, the only reason is SANAMA-SIGLOs own desistance; we cannot disregard its manifestation that the members of SANAMA themselves are no longer interested in contesting the exclusive collective bargaining agent status of FVCLU-PTGWO. This
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recognition is fully in accord with the Labor Codes intent to foster industrial peace and harmony in the workplace. WHEREFORE, premises considered, we AFFIRM the correctness of the challenged Decision and Resolution of the Court of Appeals and accordingly DISMISS the petition, but nevertheless DECLARE that no certification election, pursuant to the underlying petition for certification election filed with the Department of Labor and Employment, can be enforced as this petition has effectively been abandoned. BENGUET CONSOLIDATED, INC. vs. BCI EMPLOYEES and WORKERS UNION-PAFLU; G.R. No. L-24711 April 30, 1968 The contending parties in this case Benguet Consolidated, Inc., ("BENGUET") on the one hand, and on the other, BCI Employees & Workers Union ("UNION") and the Philippine Association of Free Labor Unions ("PAFLU") do not dispute the following factual settings established by the lower court. On June 23, 1959, the Benguet-Balatoc Workers Union ("BBWU"), for and in behalf of all BENGUET employees in its mines and milling establishment located at Balatoc, Antamok and Acupan, Municipality of Itogon, Mt. Province, entered into a Collective Bargaining Contract, Exh. "Z" ("CONTRACT") with BENGUET. Pursuant to its very terms, said CONTRACT became effective for a period of four and a half (4-) years, or from June 23, 1959 to December 23, 1963. It likewise embodied a No-Strike, No-Lockout clause. 1 About three years later, or on April 6, 1962, a certification election was conducted by the Department of Labor among all the rank and file employees of BENGUET in the same collective bargaining units. UNION obtained more than 50% of the total number of votes, defeating BBWU, and accordingly, the Court of Industrial Relations, on August 18, 1962, certified UNION as the sole and exclusive collective bargaining agent of all BENGUET employees as regards rates of pay, wages, hours of work and such other terms and conditions of employment allowed them by law or contract. Subsequently, separate meetings were conducted on November 22, 23 and 24, 1962 at Antamok, Balatoc and Acupan Mines respectively by UNION. The result thereof was the approval by UNION members of a resolution 2directing its president to file a notice of strike against BENGUET for: 1. [Refusal] to grant any amount as monthly living allowance for the workers; 2. Violation of Agreements reached in conciliation meetings among which is the taking down of investigation [sic] and statements of employees without the presence of union representative; 3. Refusal to dismiss erring executive after affidavits had been presented, thereby company showing [sic] bias and partiality to company personnel; 4. Discrimination against union members in the enforcement of disciplinary actions. The Notice of Strike 3 was filed on December 28, 1962. Three months later, in the evening of March 2, 1963, UNION members who were BENGUET employees in the mining camps at Acupan, Antamok and Balatoc, went on strike. Regarding the conduct of the strike, the trial court reports: 4 ... Picket lines were formed at strategic points within the premises of the plaintiff. The picketers, by means of threats and intimidation, and in some instances by the use of force and violence, prevented passage thru the picket lines by personnel of the plaintiff who were reporting for work. Human blocks were formed on points of entrance to working areas so that even vehicles could not pass thru, while the officers of the plaintiff were not allowed for sometime to leave the "staff" area.
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The strikers forming picket lines bore placards with the letters BBWU-PAFLU written thereon. As a general rule, the picketers were unruly, aggressive and uttered threatening remarks to staff members and non-strikers who desire to pass thru the picket lines. On some occasions, the picketers resorted to violence by pushing back the car wherein staff officers were riding who would like to enter the mine working area. The picketers lifted one side of the vehicle and were in the act of overturning it when they were prevented from doing so by the timely intervention of PC soldiers, who threw tear gas bombs to make the crowd disperse. Many of the picketers were apprehended by the PC soldiers and criminal charges for grave coercion were filed against them before the Court of First Instance of Baguio. Two of the strike leaders and twenty-two picketers, however, were found guilty of light coercion while nineteen other accused were acquitted. There was a complete stoppage of work during the strike in all the mines. After two weeks elapsed, repair and maintenance of the water pump was allowed by the strikers and some of the staff members were permitted to enter the mines, who inspected the premises in the company of PC soldiers to ascertain the extent of the damage to the equipment and losses of company property. xxx xxx xxx
On May 2, 1963, the parties agreed to end the raging dispute. Accordingly, BENGUET and UNION executed the AGREEMENT, Exh. 1. PAFLU placed its conformity thereto and said agreement was attested to by the Director of the Bureau of Labor Relations. About a year later or on January 29, 1964, a collective bargaining contract was finally executed between UNION-PAFLU and BENGUET. 5 Meanwhile, as a result, allegedly, of the strike staged by UNION and its members, BENGUET had to incur expenses for the rehabilitation of mine openings, repair of mechanical equipment, cost of pumping water out of the mines, value of explosives, tools and supplies lost and/or destroyed, and other miscellaneous expenses, all amounting to P1,911,363.83. So, BENGUET sued UNION, PAFLU and their respective Presidents to recover said amount in the Court of First Instance of Manila, on the sole premise that said defendants breached their undertaking in the existing CONTRACT not to strike during the effectivity thereof . In answer to BENGUET's complaint, defendants unions and their respective presidents put up the following defenses: (1) they were not bound by the CONTRACT which BBWU, the defeated union, had executed with BENGUET; (2) the strike was due, inter alia, to unfair labor practices of BENGUET; and (3) the strike was lawful and in the exercise of the legitimate rights of UNION-PAFLU under Republic Act 875. Issues having been joined, trial commenced. On February 23, 1965, the trial court rendered judgment dismissing the complaint on the ground that the CONTRACT, particularly the No-Strike clause, did not bind defendants. The latters' counterclaim was likewise denied. Failing to get a reconsideration of said decision, BENGUET interposed the present appeal. The several errors assigned by BENGUET basically ask three questions: (1) Did the Collective Bargaining Contract executed between BENGUET and BBWU on June 23, 1959 and effective until December 23, 1963 automatically bind UNION-PAFLU upon its certification, on August 18, 1962, as sole bargaining representative of all BENGUET employees? (2) Are defendants labor unions and their respective presidents liable for the illegal acts committed during the course of the strike and picketing by some union members? (3) Are defendants liable to pay the damages claimed by BENGUET?
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In support of an affirmative answer to the first question, BENGUET first invokes the so-called "Doctrine of Substitution" referred to in General Maritime Stevedores' Union v. South Sea Shipping Lines , L14689, July 26, 1960. There it was remarked: xxx xxx xxx
We also hold that where the bargaining contract is to run for more than two years, the principle of substitution may well be adopted and enforced by the CIR to the effect that after two years of the life of a bargaining agreement, a certification election may be allowed by the CIR; that if a bargaining agent other than the union or organization that executed the contract, is elected, said new agent would have to respect said contract , but that it may bargain with the management for the shortening of the life of the contract if it considers it too long, or refuse to renew the contract pursuant to an automatic renewal clause. (Emphasis supplied) xxx xxx xxx
The submission utterly fails to persuade Us. The above-quoted pronouncement was obiter dictum. The only issue in the General Maritime Stevedores' Union case was whether a collective bargaining agreement which had practically run for 5 years constituted a bar to certification proceedings. We held it did not and accordingly directed the court a quo to order certification elections. With that, nothing more was necessary for the disposition of the case. Moreover, the pronouncement adverted to was rather premature. The possible certification of a union different from that which signed the bargaining contract was a mere contingency then since the elections were still to be held. Clearly, the Court was not called upon to rule on possible effects of such proceedings on the bargaining agreement. 6 But worse, BENGUET's reliance upon the Principle of Substitution is totally misplaced. This principle, formulated by the NLRB 7 as its initial compromise solution to the problem facing it when there occurs a shift in employees' union allegiance after the execution of a bargaining contract with their employer, merely states that even during the effectivity of a collective bargaining agreement executed between employer and employees thru their agent, the employees can change said agent but the contract continues to bind them up to its expiration date. They may bargain however for the shortening of said expiration date. 8 In formulating the "substitutionary" doctrine, the only consideration involved was the employees' interest in the existing bargaining agreement. The agent's interest never entered the picture. In fact, the justification 9 for said doctrine was: ... that the majority of the employees , as an entity under the statute, is the true party in interest to the contract, holding rights through the agency of the union representative. Thus, any exclusive interest claimed by the agent is defeasible at the will of the principal.... (Emphasis supplied) Stated otherwise, the "substitutionary" doctrine only provides that the employees cannot revoke the validly executed collective bargaining contract with their employer by the simple expedient of changing their bargaining agent. And it is in the light of this that the phrase "said new agent would have to respect said contract" must be understood. It only means that the employees, thru their new bargaining agent, cannot renege on their collective bargaining contract, except of course to negotiate with management for the shortening thereof. The "substitutionary" doctrine, therefore, cannot be invoked to support the contention that a newly certified collective bargaining agent automatically assumes all the personal undertakings like the nostrike stipulation here in the collective bargaining agreement made by the deposed union. When BBWU bound itself and its officers not to strike, it could not have validly bound also all the other rival unions existing in the bargaining units in question. BBWU was the agent of the employees, not of the other
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unions which possess distinct personalities. To consider UNION contractually bound to the no-strike stipulation would therefore violate the legal maxim that res inter alios nec prodest nec nocet. 10 Of course, UNION, as the newly certified bargaining agent, could always voluntarily assume all the personal undertakings made by the displaced agent. But as the lower court found, there was no showing at all that, prior to the strike, 11 UNION formally adopted the existing CONTRACT as its own and assumed all the liability ties imposed by the same upon BBWU. BENGUET also alleges that UNION is now in estoppel to claim that it is not contractually bound by the CONTRACT for having filed on September 28, 1962, in Civil Case No. 1150 of the Court of First Instance of Baguio, entitled "Bobok Lumber Jack Ass'n. vs. Benguet Consolidated, Inc. and BCI Employees Workers Union-PAFLU" 12 a motion praying for the dissolution of the ex parte writ of preliminary injunction issued therein, wherein the following appears: In that case, the CIR transfered the contactual rights of the BBWU to the defendant union . One of such rights transferred was the right to the modified union-shop checked off union dues arrangement now under injunction. The collective bargaining contract mentioned in the plaintiff's complaint did not expire by the mere fact that the defendant union was certified as bargaining agent in place of the BBWU. The Court of Industrial Relations in the case above mentioned made it clear that the collective bargaining contract would be respected unless and until the parties act otherwise. In effect, the defendant union by act of subrogation took the place of the BBWU as the UNION referred to in the contract. (Emphasis supplied) There is no estoppel. UNION did not assert the above statement against BENGUET to force it to rely upon the same to effect the union check-off in its favor. UNION and BENGUET were together as co-defendants in said Civil Case No. 1150. Rather, the statement was directed against Bobok Lumber Jack Ass'n., plaintiff therein, to weaken its cause of action. Moreover, BENGUET did not rely upon said statement. What prompted Bobok Lumber Jack Ass'n. to file the complaint for declaratory relief was the fact that "... the defendants [UNION and BENGUET] are planning to agree to the continuation of a modified union shop in the three camps mentioned above without giving the employees concerned the opportunity to express their wishes on the matter ..." BENGUET even went further in its answer filed on October 18, 1962, by asserting that "... defendants have already agreed to the continuation of the modified union shop provision in the collective bargaining agreement...." 13 Neither can we accept BENGUET's contention that the inclusion of said aforequoted motion in the record on appeal filed in said Civil Case No. 1150, now on appeal before Us docketed as case No. L-24729, refutes UNION's allegation that it has subsequently abandoned its stand against Bobok Lumber Jack Ass'n., in said case. The mere appearance of such motion in the record on appeal is but a compliance with the procedural requirement of Rule 41, Sec. 6, of the Rules of Court, that all matters necessary for a proper understanding of the issues involved be included in the record on appeal. This therefore cannot be taken as a rebuttal of the UNION's explanation. There is nothing then, in law as well as in fact, to support plaintiff BENGUET's contention that defendants are contractually bound by the CONTRACT. And the stand taken by the trial court all the more becomes unassailable in the light of Art. 1704 of the Civil Code providing that: In the collective bargaining, the labor union or members of the board or committee signing the contract shall be liable for non-fulfillment thereof. (Emphasis supplied) There is no question, defendants were not signatories nor participants in the CONTRACT.
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Lastly, BENGUET contends, citing Clause II in connection with Clause XVIII of the CONTRACT, that since all the employees, as principals, continue being bound by the no-strike stipulation until the CONTRACT's expiration, UNION, as their agent, must necessarily be bound also pursuant to the Law on Agency. This is untenable. The way We understand it, everything binding on a duly authorized agent, acting as such, is binding on the principal; notvice-versa, unless there is a mutual agency, or unless the agent expressly binds himself to the party with whom he contracts. As the Civil Code decrees it: 14 The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. (Emphasis supplied)1wph1.t Here, it was the previous agent who expressly bound itself to the other party, BENGUET. UNION, the new agent, did not assume this undertaking of BBWU. In view of all the foregoing, We see no further necessity of delving further into the other less important points raised by BENGUET in connection with the first question. On the second question, it suffices to consider, in answer thereto, that the rule of vicarious liability has, since the passage of Republic Act 875, been expressly legislated out. 15 The standing rule now is that for a labor union and/or its officials and members to be liable, there must be clear proof of actual participation in, or authorization or ratification of the illegal acts. 16 While the lower court found that some strikers and picketers resorted to intimidation and actual violence, it also found that defendants presented uncontradicted evidence that before and during the strike, the strike leaders had time and again warned the strikers not to resort to violence but to conduct peaceful picketing only. 17 Assuming that the strikers did not heed these admonitions coming from their leaders, the failure of the union officials to go against the erring union members pursuant to the UNION and PAFLU constitutions and by-laws exposes, at the most, only a flaw or weakness in the defense which, however, cannot be the basis for plaintiff BENGUET to recover. Lastly, paragraph VI of the Answer 18 sufficiently traverses the material allegations in paragraph VI of the Complaint, 19 thus precluding a fatal admission on defendants' part. The purpose behind the rule requiring specific denial is obtained: defendants have set forth the matters relied upon in support of their denial. Paragraph VI of the Answer may not be a model pleading, but it suffices for purposes of the rule. Pleadings should, after all, be liberally construed. 20 Since defendants were not contractually bound by the no-strike clause in the CONTRACT, for the simple reason that they were not parties thereto, they could not be liable for breach of contract to plaintiff. The lower court therefore correctly absolved them from liability. WHEREFORE, the judgment of the lower court appealed from is hereby affirmed. No costs. So ordered. CAPITOL MEDICAL CENTER OF CONCERNED EMPLOYEES-UNIFIED FILIPINO SERVICE WORKERS vs. HON. BIENVENIDO E. LAGUESMA; G.R. No. 118915 February 4, 1997 This petition for certiorari and prohibition seeks to reserves and set aside the Order dated November 18, 1994 of public respondent Bienvenido E. Laguesma, Undersecretary of the Department of Labor and Employment in Case No. OS.-A-136-94 1 which dismissed the petition for certification election filed by petitioner for lack of merit and further directed private respondent hospital to negotiate a collective bargaining agreement with respondent union, Capitol Medical Center Employees Association-Alliance of Filipino Workers. The antecedent facts are undisputed.
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On February 17, 1992, Med-Arbiter Rasidali C. Abdullah issued an Order which granted respondent union's petition for certification election among the rank-and-file employees of the Capitol Medical Center. 2 Respondent CMC appealed the Order to the Office of the Secretary by questioning the legal status of respondent union's affiliation with the Alliance of Filipino Workers (AFW). To correct any supposed infirmity in its legal status, respondent union registered itself independently and withdrew the petition which had earlier been granted. Thereafter, it filed another petition for certification election. On May 29, 1992, Med-Arbiter Manases T. Cruz issued an order granting the petition for certification election. 3Respondent CMC again appealed to the Office of the Secretary which affirmed 4 the Order of the Med-Arbiter granting the certification election. On December 9, 1992, elections were finally held with respondent union garnering 204 votes, 168 in favor of no union and 8 spoiled ballots out of a total of 380 votes cast. Thereafter, on January 4, 1993, MedArbiter Cruz issued an Order certifying respondent union as the sole and exclusive bargaining representative of the rank and file employees at CMC. 5 Unsatisfied with the outcome of the elections, respondent CMC again appealed to the Office of the Secretary of Labor which appeal was denied on February 26, 1993. 6 A subsequent motion for reconsideration filed by respondent CMC was likewise denied on March 23, 1993. 7 Respondent CMC's basic contention was the supposed pendency of its petition for cancellation of respondent union's certificate of registration in Case No. NCR-OD-M-92211-028. In the said case, MedArbiter Paterno Adap issued an Order dated February 4, 1993 which declared respondent union's certificate of registration as null and void. 8 However, this order was reversed on appeal by the Officer-inCharge of the Bureau of Labor Relations in her Order issued on April 13, 1993. The said Order dismissed the motion for cancellation of the certificate of registration of respondent union and declared that it was not only a bona fide affiliate or local of a federation (AFW), but a duly registered union as well. Subsequently, this case reached this Court in Capitol Medical Center, Inc. v. Hon. Perlita Velasco, G.R. No. 110718, where we issued a Resolution dated December 13, 1993, dismissing the petition of CMC for failure to sufficiently show that public respondent committed grave abuse of discretion. 9The motion for reconsideration filed by CMC was likewise denied in our Resolution dated February 2, 1994. 10Thereafter, on March 23, 1994, we issued an entry of judgment certifying that the Resolution dated December 13, 1993 has become final and executory. 11 Respondent union, after being declared as the certified bargaining agent of the rank-and-file employees of respondent CMC by Med-Arbiter Cruz, presented economic proposals for the negotiation of a collective bargaining agreement (CBA). However, respondent CMC contended that CBA negotiations should be suspended in view of the Order issued on February 4, 1993 by Med-Arbiter Adap declaring the registration of respondent union as null and void. In spite of the refusal of respondent CMC, respondent union still persisted in its demand for CBA negotiations, claiming that it has already been declared as the sole and exclusive bargaining agent of the rank-and-file employees of the hospital. Due to respondent CMC's refusal to bargain collectively, respondent union filed a notice of strike on March 1, 1993. After complying with the other legal requirements, respondent union staged a strike on April 15, 1993. On April 16, 1993, the Secretary of Labor assumed jurisdiction over the case and issued an order certifying the same to the National Labor Relations Commission for compulsory arbitration where the said case is still pending. 12 It is at this juncture that petitioner union, on March 24, 1994, filed a petition for certification election among the regular rank-and-file employees of the Capitol Medical Center Inc. It alleged in its petition that: 1) three hundred thirty one (331) out of the four hundred (400) total rank-and-file employees of respondent CMC signed a petition to conduct a certification election; and 2) that the said employees are withdrawing their authorization for the said union to represent them as they have joined and formed the union Capitol Medical Center Alliance of Concerned Employees (CMC-ACE). They also alleged that a certification election can now be conducted as more that 12 months have lapsed since the last certification
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election was held. Moreover, no certification election was conducted during the twelve (12) months prior to the petition, and no collective bargaining agreement has as yet been concluded between respondent union and respondent CMC despite the lapse of twelve months from the time the said union was voted as the collective bargaining representative. On April 12, 1994, respondent union opposed the petition and moved for its dismissal. It contended that it is the certified bargaining agent of the rank-and-file employees of the Hospital, which was confirmed by the Secretary of Labor and Employment and by this Court. It also alleged that it was not remiss in asserting its right as the certified bargaining agent for it continuously demanded the negotiation of a CBA with the hospital despite the latter's avoidance to bargain collectively. Respondent union was even constrained to strike on April 15, 1993, where the Secretary of Labor intervened and certified the dispute for compulsory arbitration. Furthermore, it alleged that majority of the signatories who supported the petition were managerial and confidential employees and not members of the rank-and-file, and that there was no valid disaffiliation of its members, contrary to petitioner's allegations. Petitioner, in its rejoinder, claimed that there is no legal impediment to the conduct of a certification election as more than twelve (12) months had lapsed since respondent union was certified as the exclusive bargaining agent and no CBA was as yet concluded. It also claimed that the other issues raised could only be resolved by conducting another certification election. In its surrejoinder, respondent union alleged that the petition to conduct a certification election was improper, immoral and in manifest disregard of the decisions rendered by the Secretary of Labor and by this Court. It claimed that CMC employed "legal obstructionism's" in order to let twelve months pass without a CBA having been concluded between them so as to pave the way for the entry of petitioner union. On May 12, 1994, Med-Arbiter Brigida Fadrigon, issued an Order granting the petition for certification election among the rank and file employees. 13 It ruled that the issue was the majority status of respondent union. Since no certification election was held within one year from the date of issuance of a final certification election result and there was no bargaining deadlock between respondent union and the employees that had been submitted to conciliation or had become the subject of a valid notice of strike or lock out, there is no bar to the holding of a certification election. 14 Respondent union appeared from the said Order, alleging that the Med-Arbiter erred in granting the petition for certification election and in holding that this case falls under Section 3, Rule V Book V of the Rules Implementing the Labor Code. 15 It also prayed that the said provision must not be applied strictly in view of the facts in this case. Petitioner union did not file any opposition to the appeal. On November 18, 1994, public respondent rendered a Resolution granting the appeal. 16 He ratiocinated that while the petition was indeed filed after the lapse of one year form the time of declaration of a final certification result, and that no bargaining deadlock had been submitted for conciliation or arbitration, respondent union was not remiss on its right to enter into a CBA for it was the CMC which refused to bargain collectively. 17 CMC and petitioner union separately filed motions for reconsideration of the said Order. CMC contended that in certification election proceedings, the employer cannot be ordered to bargain collectively with a union since the only issue involved is the determination of the bargaining agent of the employees.
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Petitioner union claimed that to completely disregard the will of the 331 rank-and-file employees for a certification election would result in the denial of their substantial rights and interests. Moreover,it contended that public respondent's "indictment" that petitioner "capitalize ( sic) on the ensuing delay which was caused by the Hospital, . . ." was unsupported by the facts and the records. On January 11, 1995, public respondent issued a Resolution which denied the two motions for reconsideration hence this petition. 18 The pivotal issue in this case is whether or not public respondent committed grave abuse of discretion in dismissing the petition for certification election, and in directing the hospital to negotiate a collective bargaining agreement with the said respondent union. Petitioner alleges that public respondent Undersecretary Laguesma denied it due process when it ruled against the holding of a certification election. It further claims that the denial of due process can be gleaned from the manner by which the assailed resolution was written, i.e., instead of the correct name of the mother federation UNIFIED, it was referred to as UNITED; and that the respondent union's name CMCEA-AFW was referred to as CMCEA-AFLO. Petitioner maintains that such errors indicate that the assailed resolution was prepared with "indecent haste." We do not subscribe to petitioner's contention. The errors pointed to by petitioner can be classified as mere typographical errors which cannot materially alter the substance and merit of the assailed resolution. Petitioner cannot merely anchor its position on the aforementioned erroneous' names just to attain a reversal of the questioned resolution. As correctly observed by the Solicitor General, petitioner is merely "nit-picking vainly trying to make a monumental issue out of a negligible error of the public respondent." 19 Petitioner also assails public respondents' findings that the former "capitalize ( sic) on the ensuing delay which was caused by the hospital and which resulted in the non-conclusion of a CBA within the certification year.'' 20 It further argues that the denial of its motion fro a fair hearing was clear case of denial of its right to due process. Such contention of petitioner deserves scant consideration. A perusal of the record shows that petitioner failed to file its opposition to oppose the grounds for respondent union's appeal. It was given an opportunity to be heard but lost it when it refused to file an appellee's memorandum. Petitioner insists that the circumstances prescribed in Section 3, Rule V, Book V Of the Rules Implementing the Labor Code where a certification election should be conducted, viz: (1) that one year had lapsed since the issuance of a final certification result; and (2) that there is no bargaining deadlock to which the incumbent or certified bargaining agent is a party has been submitted to conciliation or arbitration, or had become the subject of a valid notice of strike or lockout, are present in this case. It further claims that since there is no evidence on record that there exists a CBA deadlock, the law allowing the conduct of a certification election after twelve months must be given effect in the interest of the right of the workers to freely choose their sole and exclusive bargaining agent. While it is true that, in the case at bench, one year had lapsed since the time of declaration of a final certification result, and that there is no collective bargaining deadlock, public respondent did not commit grave abuse of discretion when it ruled in respondent union's favor since the delay in the forging of the CBA could not be attributed to the fault of the latter.
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A scrutiny of the records will further reveal that after respondent union was certified as the bargaining agent of CMC, it invited the employer hospital to the bargaining table by submitting its economic proposal for a CBA. However, CMC refused to negotiate with respondent union and instead challenged the latter's legal personality through a petition for cancellation of the certificate of registration which eventually reached this Court. The decision affirming the legal status of respondent union should have left CMC with no other recourse but to bargain collectively; but still it did not. Respondent union was left with no other recourse but to file a notice of strike against CMC for unfair labor practice with the National Conciliation and Mediation Board. This eventually led to a strike on April 15, 1993. Petitioner union on the other hand, after this Court issued an entry of judgment on March 23, 1994, filed the subject petition for certification election on March 24, 1994, claiming that twelve months had lapsed since the last certification election. Was there a bargaining deadlock between CMC and respondent union, before the filing of petitioner of a petition for certification election, which had been submitted to conciliation or had become the subject of a valid notice of strike or lockout? In the case of Divine Word University of Tacloban v. Secretary of Labor and Employment, 21 we had the occasion to define what a deadlock is, viz:\ A "deadlock" is . . . the counteraction of things producing entire stoppage; . . . . There is a deadlock when there is a complete blocking or stoppage resulting from the action of equal and opposed forces . . . . The word is synonymous with the word impasse, which . . "presupposes reasonable effort at good faith bargaining which, despite noble intentions, does not conclude in agreement between the parties." Although there is no "deadlock" in its strict sense as there is no "counteraction" of forces present in this case nor "reasonable effort at good faith bargaining," such can be attributed to CMC's fault as the bargaining proposals of respondent union were never answered by CMC. In fact, what happened in this case is worse than a bargaining deadlock for CMC employed all legal means to block the certification of respondent union as the bargaining agent of the rank-and-file; and use it as its leverage for its failure to bargain with respondent union. Thus, we can only conclude that CMC was unwilling to negotiate and reach an agreement with respondent union. CMC has not at any instance shown willingness to discuss the economic proposals given by respondent union. 22 As correctly ratiocinated by public respondent, to wit: For herein petitioner to capitalize on the ensuing delay which was caused by the hospital and which resulted in the non-conclusion of a CBA within the certification year, would be to negate and render a mockery of the proceedings undertaken before this Department and to put an unjustified premium on the failure of the respondent hospital to perform its duty to bargain collectively as mandated in Article 252 of the Labor Code, as amended, which states". "Article 252. Meaning of duty to bargain collectively the duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and conditions of employment including proposals for adjusting any grievance or questions arising under such agreement and executing a contract incorporating such agreements if requested by either party but such duty does not compel any party to agree to a proposal or to make any concession."
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The duly certified bargaining agent, CMCEA-AFW, should not be made to further bear the brunt flowing from the respondent hospital's reluctance and thinly disguised refusal to bargain. 23 If the law proscribes the conduct of a certification election when there is a bargaining deadlock submitted to conciliation or arbitration, with more reason should it not be conducted if, despite attempts to bring an employer to the negotiation table by the "no reasonable effort in good faith" on the employer certified bargaining agent, there was to bargain collectively. In the case of Kaisahan ng Manggagawang Pilipino vs. Trajano 201 SCRA 453 (1991), penned by Chief Justice Andres R. Narvasa, the factual milieu of which is similar to this case, this Court allowed the holding of a certification election and ruled that the one year period known as the "certification year" has long since expired. We also ruled, that: . . . prior to the filing of the petition for election in this case, there was no such "bargaining deadlock . . (which) had been submitted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout." To be sure, there are in the record assertions by NAFLU that its attempts to bring VIRON to the negotiation table had been unsuccessful because of the latter's recalcitrance, and unfulfilled promises to bargain collectively; but there is no proof that it had taken tiny action to legally coerce VIRON to comply with its statutory duty to bargain collectively. It could have charged VIRON with unfair labor practice; but it did not.It could have gone on a legitimate strike in protest against VIRON's refusal to bargain collectively and compel it to do so; but it did not. There are assertions by NAFLU, too, that its attempts to bargain collectively had been delayed by continuing challenges to the resolution pronouncing it the sole bargaining representative in VIRON; but there is no adequate substantiation thereof, or of how it did in fact prevent initiation of the bargaining process between it and VIRON. 24 Although the statements pertinent to this case are merely obiter, still the fact remains that in the Kaisahan case, NAFLU was counselled by this Court on the steps that it should have undertaken to protect its interest, but which it failed to do so. This is what is strikingly different between the Kaisahan case and the case at bench for in the latter case, there was proof that the certified bargaining agent, respondent union, had taken an action to legally coerce the employer to comply with its statutory duty to bargain collectively, i.e., charging the employer with unfair labor practice and conducting a strike in protest against the employer's refusal to bargain. 25 It is only just and equitable that the circumstances in this case should be considered as similar in nature to a "bargaining deadlock" when no certification election could be held. This is also to make sure that no floodgates will be opened for the circumvention of the law by unscrupulous employers to prevent any certified bargaining agent from negotiating a CBA. Thus, Section 3, Rule V, Book V of the Implement Rules should be interpreted liberally so as to include a circumstance, e.g. where a CBA could not be concluded due to the failure of one party to willingly perform its duty to bargain collectively. The order for the hospital to bargain is based on its failure to bargain collectively with respondent union. WHEREFORE, the Resolution dated November 18, 1994 of public respondent Laguesma is AFFIRMED and the instant petition is hereby DISMISSED. CALTEX REFINERY EMPLOYEES ASSOCIATION (CREA) vs. HON. JOSE S. BRILLANTES G.R. No. 123782 September 16, 1997 Unless shown to be clearly whimsical, capricious or arbitrary, the orders or resolutions of the secretary of labor and employment resolving conflicts on what should be the contents of a collective bargaining
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agreement will be respected by this Court. We realize that, oftentimes, such orders and resolutions are based neither on definitive shades of black or white, nor on what is legally right or wrong. Rather, they are grounded largely on what is possible, fair and reasonable under the peculiar circumstances of each case. Statement of the Case Petitioner Caltex Refinery Employees Association (CREA) seeks through Rule 65 of the Rules of Court "reversal or modification" of three orders of public respondent, then Acting Secretary of Labor and Employment Jose S. Brillantes, in Case No. OS-AJ-0044-95 1 entitled "In re: Labor Dispute at Caltex (Phils.), Inc." The disposition of the first assailed Order 2 of public respondent dated October 9, 1995 reads: 3 WHEREFORE, ON THE BASIS OF THE FOREGOING, the Caltex Refinery Employees Association and Caltex Philippines, Inc. are hereby directed to execute a new collective bargaining agreement embodying therein the appropriate dispositions above spelled out including those subject of previous agreements. Provisions in the old CBA, or existing benefits subject of Company policy or practice not otherwise modified or improved herein are deemed maintained. New demands not otherwise touched upon or disposed of are hereby denied. The motions for reconsideration and clarification of the above Order filed by both petitioner and private respondent were denied in the second assailed Order dated November 21, 1995, which disposed: 4 WHEREFORE, except the modifications hereinabove set forth, the Order dated 9 October 1995 is hereby affirmed. Moreover, pursuant to the Agreement reached by the parties on 13 September 1995 for this Office to commence the proceedings concerning the legality of strike and the termination of the union officers, after the resolution of the CBA issues, both parties are hereby directed to submit their position papers and evidence within ten (10) days from receipt of a copy of this Order. For this purpose, Atty. Tito F. Genilo is hereby designated as Hearing Officer and authorized as such, to immediately conduct hearings and receive evidence and, thereafter, submit his report and recommendations thereon. Petitioner's second motion for reconsideration of the above Order was likewise denied by the third assailed Order dated January 9, 1996, as follows: 5 WHEREFORE, PREMISES CONSIDERED, our Order of 21 November 1995 is hereby affirmed en toto, subject to the afore-mentioned clarification on the issue of Sunday work. No further motions of this nature shall be entertained by this Office. The parties are given another ten (10) days from receipt hereof to submit their respective position papers and evidences (sic) relative to the issue of the legality of strike and termination of the union officers. The Facts Anticipating the expiration of their Collective Bargaining Agreement on July 31, 1995, petitioner and private respondent negotiated the terms and conditions of employment to be contained in a new CBA. The negotiation between the two parties was participated in by the National Conciliation and Mediation Board
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(NCMB) and the Office of the Secretary of Labor and Employment. Some items in the new CBA were amicably arrived at and agreed upon, but others were unresolved. To settle the unresolved issues, eight meetings between the parties were conducted. Because the parties failed to reach any significant progress in these meetings, petitioner declared a deadlock. On July 24, 1995, petitioner filed a notice of strike. Six (6) conciliation meetings conducted by the NCMB failed to settle the parties' differences. Then, the parties held marathon meetings at the plant level, but this remedy proved also unavailing. During a strike vote on August 16, 1995, the members of petitioner opted for a walkout. Private respondent then filed with the Department of Labor and Employment (DOLE) a petition for assumption of jurisdiction in accordance with Article 263 (g) of the Labor Code. In an Order dated August 22, 1995, public respondent assumed jurisdiction "over the entire labor dispute at Caltex (Philippines) Inc.," with the following disposition: 6 WHEREFORE ABOVE PREMISES CONSIDERED, this Office hereby assumes jurisdiction over the entire labor dispute at Caltex (Philippines) Inc. pursuant to Article 263 (g) of the Labor Code, as amended. Accordingly, any strike or lockout, whether actual or intended, is hereby enjoined. The parties are further directed to cease and desist from committing any and all acts which might exacerbate the situation. To expedite the resolution of the instant dispute, the parties are further directed to submit their respective position papers and evidence within ten (10) days from receipt hereof. In defiance of the above Order expressly restraining any strike or lockout, petitioner began a strike and set up a picket in the premises of private respondent on August 25, 1995. Thereafter, several company notices directing the striking employees to return to work were issued, but the members of petitioner defied them and continued their mass action. In the course of the strike, DOLE Undersecretary Bienvenido Laguesma interceded and conducted several conciliation meetings between the contending parties. He was able to convince the members of the union to return to work and to enter into a memorandum of agreement with private respondent. On September 9, 1995, the picket lines were finally lifted. Thereafter, the contending parties filed their position papers pertaining to unresolved issues. 7 Because of the strike, private respondent terminated the employment of some officers of petitioner union. The legality of these dismissals brought additional contentious issues. 8 Again, the parties tried to resolve their differences through conciliation. Failing to come to any substantial agreement, the parties stopped further negotiation and, on September 13, 1995, decided to refer the problem to the secretary of labor and employment: 9 It appearing that the possibility of an amicable settlement appears remote, the parties agreed to submit their respective position paper and evidence simultaneously on 27 September 1995 at the Office of the Secretary. The parties further agreed that there will be no extension of time for filing and no further pleading will be filed.
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The decision of the Secretary of Labor and Employment will be rendered on or before October 9, 1995. The proceedings concerning the legal issues involving the legality of strike and the termination of the Union officers will be commenced by the Office of the Secretary after the resolution of the CBA issues. As already stated, public respondent issued as scheduled on October 9, 1995 the assailed Order resolving the deadlock, followed by two more assailed Orders on November 21, 1995 and January 16, 1996 disposing of the motions for reconsideration/clarification of both parties. Dissatisfied with these Orders issued by public respondent, petitioner sought remedy from this Court. After realizing the urgency of the case and after meticulously reviewing the Petition dated February 23, 1996;Comment by the private respondent dated April 16, 1996 which was adopted as its own by the public respondent;Reply by the petitioner dated September 7, 1996; Rejoinder dated October 3, 1996 and SurRejoinder dated November 12, 1996, the Court resolved to give due course to the petition and to consider the case submitted for resolution without requiring memoranda from the parties. The Issues Petitioner does not specifically pinpoint the issues it wants the Court to rule upon. It appears, however, that petitioner questions public respondent's resolution of five issues in the CBA, specifically on wage increase, union security clause, retirement benefits or application of the new retirement plan, signing bonus and grievance and arbitration machineries. Private respondent, on the other hand, submits this lone issue: 10 Whether or not the Honorable Secretary of Labor and Employment committed grave abuse of discretion in resolving the instant labor dispute. The Court's Ruling The petition is partly meritorious. Preliminary Matter: Certiorari in Labor Cases At the outset, we must reiterate several settled rules in a petition for certiorari involving labor cases. First, the factual findings of quasi-judicial agencies (such as the Department of Labor and Employment), when supported by substantial evidence, are binding on this Court and entitled to great respect, considering the expertise of these agencies in their respective fields. 11 It is well-established that findings of these administrative agencies are generally accorded not only respect but even finality. 12 Second, substantial evidence in labor cases is such amount of relevant evidence which a reasonable mind will accept as adequate to justify a conclusion. 13 Third, in Flores vs. National Labor Relations Commission 14 we explained the role and function of Rule 65 as an extraordinary remedy: It should be noted, in the first place, that the instant petition is a special civil action for certiorari under Rule 65 of the Revised Rules of Court. An extraordinary remedy, its use is available only and restrictively in truly exceptional cases those wherein the action of an inferior court, board or officer performing judicial or quasi-judicial acts is
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challenged for being wholly void on grounds of jurisdiction. The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include correction of public respondent NLRC's evaluation of the evidence and factual findings based thereon, which are generally accorded not only great respect but even finality. No question of jurisdiction whatsoever is being raised and/or pleaded in the case at bench. Instead, what is being sought is a judicial re-evaluation of the adequacy or inadequacy of the evidence on record, which is certainly beyond the province of the extraordinary writ of certiorari. Such demand is impermissible for it would involve this Court in determining what evidence is entitled to belief and the weight to be assigned it. As we have reiterated countless times, judicial review by this Court in labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the proper labor officer or office based his or its determination but is limited only to issues of jurisdiction or grave abuse of discretion amounting to lack of jurisdiction. We shall thus use the foregoing time-tested standards in deciding this petition. 1. Wage Increase The main assailed Order dated October 9, 1995 resolved the ticklish demand for wage increase as follows: 15 With this in mind and taking into view similar factors as financial capacity, position in the industry, package of existing benefits, inflation rate, seniority, and maintenance of the wage differentiation between and among the various classes of employees within the entire Company, this Office hereby finds the following improved benefits fair, reasonable and equitable: 1. Wage increases Effective August 1, 1995 14% Effective August 1, 1996 14% Effective August 1, 1997 13% 2. meal subsidy P 15.00 In denying the motions for reconsideration/clarification of the above award, public respondent ruled in the challenged Order dated November 21, 1995: 16 First, on the matter of wages, we find no compelling reasons to alter or modify our award after having sufficiently passed upon the same arguments raised by both parties in our previous Order. The subsequent agreement on a package of wage increases at Shell Company, adverted to by the Union as the usual yardstick for purposes of developing its own package of improved wage increases, would not be sufficient basis to grant the same increases to the Union members herein considering that other factors, among which is employment size, were carefully taken into account. While it is true that inflation has direct impact on wage increases, it is not quite accurate to state that inflation "as of September 1995" is already registered at 11.8%. The truth of the matter is that the average inflation for the first ten (10) months was only 7.496% and Central Bank projections indicate that it will take a 13.5% inflation for November and December to record an average inflation of 8.5% for the year. We, therefore, maintain the reasonableness of the package of wage increases that we awarded.
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Petitioner belittles the awarded increases. It insists that the increase should be ruled on the basis of four factors: "(a) the economic needs of the [u]nion's members; (b) the [c]ompany's financial capacity; (c) the bargaining history between the [u]nion and the [c]ompany; and (d) the traditional parity in wages between Caltex and Shell Refinery Employees." 17 Petitioner contends that the "inflation rate rose to 11.8% in September [1995], rose further in October, and is still a double-digit figure at the time of this writing." Therefore, public respondent's so-called "improved benefits" are in reality "retrogressive." 18 Petitioner tries to show private respondent's "immense financial capacity" by citing Caltex's "Banaba Housing Up-grading" which would cost "not less than P200,000,000.00" 19 Petitioner does "not begrudge" private respondent's "pampering of its [r]efinery [m]anagers and supervisors," but asks that the rank and file employees be "not left too far behind." 20 Petitioner maintains that the salaries of Shell Refinery employees be used as a "reference point" in upgrading the compensation of private respondent's employees because these two companies are in the "same industry and their refineries are both in Batangas." Thus, the wage increase of petitioner's members should be "15%/15%/15%." 21 Private respondent counters with a "proposed 9% 7% 7% increase for the same period with automatic adjustment should the increase fall short of the inflation rate." Hence, the Secretary's award of "14% 14% 13%" increase really comes "closer to the Union's position." 22 Petitioner's arguments fail to impress us. First, the matter of inflation rate was clearly addressed in public respondent's Order dated November 21, 1995. Contrary to petitioners undocumented claim of 11.8% inflation in September of 1995, the "truth of the matter is that the average inflation for the first ten (10) months was only 7.496%, and Central Bank projections indicate that it will take a 13.5% inflation for November and December to record an average inflation of 8.5% for the year." 23 Second, private respondent's financial capacity has been insufficiently explained in its Comment dated April 16, 1996 in which it stated that the Banaba "upgrading" should not be construed as a yardstick of its financial standing: 24 It is equally amazing how the Union (petitioner) desperately justifies their demands by comparing the "upgrading cost" of the Company's (private respondent) Banaba Housing Facilities, a matter totally unrelated to the case, to the cost of their demands. The Union not only errs in its choice of yardstick of the Company's capacity to pay, it likewise displays its ignorance of the Banaba Housing Program . The Banaba Housing Facility is not a benefit. It is an integral part of an indispensable requirement for smooth Plant operations and assurance of an emergency response crew in times of calamities and accidents. Employees who are required to stay in the housing facility are members of the Refinery's emergency response organization. It is also not a case of "upgrading." The Banaba Housing Facility was built in 1954. A significant number of its structure are dilapidated and in dire need of rehabilitation and preservation. Finally, Banaba is not a yardstick of the Company's capacity to pay, but rather, an eloquent demonstration of the Company's will to survive and remain globally competitive. The above reasoning convinces us that such upgrading should not be equated with private respondent's financial capacity to pay the proposed wage increase, but should be evaluated as a business judgment "to survive and remain globally competitive." We believe that the standard proof of a company's financial standing is its financial statements duly audited by independent and credible external auditors. 25 Third, the traditional parity in wages used by petitioner to justify its proposal is flimsy and trivial. Aside from its bare allegation of "similarity" in salaries and locations, petitioner did not proffer any substantial reason to impute grave abuse of
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discretion on the part of the public respondent. On the other hand, we find private respondent's discussion of this matter reasonable, as the following shows: 26 It is further amazing that the Union continues to use an outmoded concept of the "Shell yardstick" and "relative parities in wages" to justify an imperative need for them to keep their traditional edge in pay over their industry counterparts. It is not just a matter of being above the rest. Sound compensation principle of higher productivity equals higher pay, as well as, recent developments in the industry have negated this argument. Both Shell and Petron continue to benefit from increasing manpower productivity. Shell, for instance, produces 155,000 barrels per day on a 120 manpower complement of operatives and rank and file; while the Company only produces 65,000 barrels per day with its 221 manpower complement. In addition, the counterpart union at Shell incurs an average overtime rate of 37%, as a percentage of base pay; the Union's overtime rate is 102%. Thus, the issue is productivity, not sales, and so far, the Company's Refinery is not as productive as Shell's or Petron's. To ask for relative parity in the face of this reality is not only unreasonable, it is likewise illogical. As it is, the wage increase of 14%, 14% and 13% will result in an average basic salary of P23,510,00 at the end of the three-year cycle. The resulting pay is excessive and disproportionately high compared with the value of the jobs within the bargaining unit. Stated differently, this average salary will be unreasonably high for the skills and qualifications needed for the job. Even now, with an average monthly salary (prior to the DOLE awarded CBA increases) of P16,010plus overtime, holiday and other premiums way above those mandated by law, the Union members are already the highest paid in the Philippines, in terms of gross income. The alleged "similarity" in the situation of Caltex and Shell cannot be considered a valid ground for a demand of wage increase, in the absence of a showing that the two companies are also similar in "substantial aspects," as discussed above. Private respondent is merely asking that an employee should be paid on the basis of work done. If such employee is absent on a certain day, he should not, as a rule, be paid wages for that day. And if the employee has worked only for a portion of a day, he is not entitled to the pay corresponding to a full day. A contrary precept would ultimately result in the financial ruin of the employer. The age-old general rule governing relations between labor and capital, or management and employee, is "a fair day's wage for a fair day's work." If no work is performed by the employee, there can be no wage or pay unless, of course, the laborer was ready, willing and able to work but was locked out, dismissed, suspended or otherwise illegally prevented from working. 27 True, union members have the right to demand wage increases through their collective force; but it is equally cogent that they should also be able to justify an appreciable increase in wages. We observe that private respondent's detailed allegations on productivity are unrebutted. It is noteworthy that petitioner ignored this argument of private respondent and based its demand for wage increase not on the ground that they were as productive as the Shell employees. Thus, we cannot attribute grave abuse of discretion to public respondent. 2. Union Security Clause In the impugned Order dated October 9, 1995, public respondent's contested resolution on the "union [security] clause" reads: 28 The relevant provisions found in Article III of the CBA, which hereby read, thus:
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Sec. 1. Employees of the COMPANY who at the signing of this Agreement are members of the UNION and those who subsequently become members thereof shall maintain their membership with the UNION for the duration of this Agreement as a condition of employment. Sec. 2. Members of the UNION who cease to be members of the UNION in good standing by reason of resignation or expulsion shall not be retained in the employment of the COMPANY. xxx xxx xxx are sought to be amended by the Union, to read as follows: Sec. 1. Employees of the Company who at the signing of this Agreement are members of the Union and those who subsequently become members thereof shall maintain their membership in GOOD STANDING with the Union for the duration of this Agreement as a condition of CONTINUOUS employment. Sec. 2. PURSUANT TO THE FOREGOING, ANY UNION MEMBER WHO CEASES TO BE SUCH MEMBER ON GROUNDS PROVIDED IN ITS CONSTITUTION AND BYLAWS SHALL, UPON PRIOR WRITTEN NOTICE BY THE UNION TO THE COMPANY, BUT SUBJECT TO THE OBSERVANCE OF DUE PROCESS AND THE EXPRESS RATIFICATION OF THE MAJORITY OF THE UNION MEMBERSHIP, BE DISMISSED FROM EMPLOYMENT BY THE COMPANY; PROVIDED, HOWEVER, THAT THE UNION SHALL HOLD THE COMPANY FREE AND BLAMELESS FROM ANY LIABILITY IN THE EVENT THAT THE EMPLOYEE IN ANY MANNER QUESTIONS HIS DISMISSAL. The proposed amendment of the Union gives the same substantial effect as the existing provision. Rather, the same tackles more on procedure which, to our belief, is already sufficiently provided under its constitution and by-laws. Insofar as Union security is concerned, this is sufficiently addressed by the present provisions in the CBA. Hence, we find we are not competent to arbitrarily incorporate any modification thereof. We are convinced that any amendment on this matter should be a product of mutual concern and agreement. 29 Petitioner contends that the foregoing disposition leaving to the parties the decision on the union security clause issue is "contrary to the whole idea of assumption of jurisdiction." Petitioner argues that in spite of the provisions on the "union security clause," it may expel a member only on any of three grounds: nonpayment of dues, subversion, or conviction for a crime involving moral turpitude. If the employee's act does not constitute any of these three grounds, the member would continue to be employed by private respondent. Thus, the disagreement between petitioner and private respondent on this issue is not only "procedural" but also "substantial." 30 On the other hand, private respondent argues that nothing prevents petitioner from expelling its members; however, termination of employment should be based only on these three grounds agreed upon in the existing CBA. Further, private respondent explains that petitioner's citation of Article 249 (a) 31 of the Labor Code is out of context. It adds that the cited section provides only for the right of a union to prescribe its own rules with respect to the acquisition and retention of membership, and that upholding the arguments of petitioner would make the private respondent a policeman of the union. 32 We agree with petitioner. The disagreement between petitioner and private respondent on the union security clause should have been definitively resolved by public respondent. The labor secretary should take cognizance of an issue which is not merely incidental to but essentially involved in the labor dispute
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itself, or which is otherwise submitted to him for resolution. 33 In this case, the parties have submitted the issue of the union security clause for public respondent's disposition. But the secretary of labor has given no valid reason for avoiding the said issue; he merely points out that this issue is a procedural matter. Such vacillation clearly sidesteps the nature of the union security clause as one intended to strengthen the contracting union and to protect it from the fickleness or perfidy of its own members. Without such safeguard, group solidarity becomes uncertain; the union becomes gradually weakened and increasingly vulnerable to company machinations. In this security clause lies the strength of the union during the enforcement of the collective bargaining agreement. It is this clause that provides labor with substantial power in collective bargaining. The secretary of labor assumed jurisdiction over this labor dispute in an industry indispensable to national interest, precisely to settle once and for all the disputes over which he has jurisdiction at his level. In not performing his duty, the secretary of labor committed a grave abuse of discretion. 3. New Retirement Plan Public respondent's contested resolution on "retirement benefits (application of the new retirement plan)" in the Order dated November 21, 1995 reads: 34 Third, the matter of retirement benefits deserves a second look considering that the concerned employees were already previously granted the option to choose between the old and the new plan at the time the latter was initiated and they chose to be covered under the Old Plan. To accede to the Union's demand to cover them under the new plan entails a different arrangement under a new scheme and likewise requires the approval of a Board of Trustees. It is, therefore, understood that the new Retirement Plan does not apply to the more or less 40 employees being sought by the Union to be covered under the New Plan. Petitioner contends that "40 of its members who are still covered by the Old Retirement Plan because they were not able to exercise the option to shift to the New Retirement Plan, for one reason or another, when such option was given in the past" are included in the New Retirement Plan. Petitioner argues that the exclusion of forty employees from the New Plan constitutes grave abuse of discretion for three reasons. First, "it is a case of the left hand taking away, so to speak, what the right hand had given." Second, the change "was done for a very shallow reason." The new scheme was no longer new, "as the New Retirement Plan had been in place for at least two years." Third, in not applying the New Retirement Plan to the 40 employees, public respondent was perpetrating his department's discriminatory practice. 35 Private respondent counters that "these 40 or so employees have opted to remain covered by the old plan despite opportunities given them in 1985 to shift to the New Plan." 36 We hold that public respondent did not commit grave abuse of discretion in respecting the free and voluntary decision of the employees in regard to the Provident Plan and the irrevocable one-time option provided for in the New Retirement Plan. Although the union has every right to represent its members in the negotiation regarding the terms and conditions of their employment, it cannot negate their wishes on matters which are purely personal and individual to them. In this case, the forty employees freely opted to be covered by the Old Plan; their decision should be respected. The company gave them every opportunity to choose, and they voluntarily exercised their choice. The union cannot pretend to know better; it cannot impose its will on them. 4. Grievance Machinery and Arbitration The public respondent's contested resolution on "grievance and arbitration machineries" in the Order dated November 21, 1995 reads: 37
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Seventh, we are constrained to take a closer look at the existing procedure concerning grievance in relation to the modifications being proposed by the Union. In this regard, we affirm our resolution to shorten the periods to process/resolve grievances based on existing practice from (45) days to (30) days at the first step and (10) days to seven (7) days at the second step which is the level of the VP for Manufacturing. We further reviewed the steps through which a grievance may be processed and in line with the principle to expedite the early resolution of grievances, we find that the establishment of a joint Council as an additional step in the grievance procedure, may only serve to protract the proceeding and, therefore, no longer necessary. Instead, the unresolved grievance, if, not settled within (7) days at the level of the VP for Manufacturing, shall automatically be referred by both parties to voluntary arbitration in accordance with R.A. 6715. As to the number of Arbitrators for which the Union proposes to employ only one instead of a panel of three Arbitrators, we find it best to leave the matter to the agreement of both parties. Finally, we hereby advise the parties that the list of accredited voluntary arbitrators is now being maintained and disseminated by the National Conciliation and Mediation Board and no longer by the Bureau of Labor Relations. Petitioner contends that public respondent "derailed the grievance and arbitration scheme proposed by the Union." 38 Petitioner argues that the proposed "Grievance Settlement Council" is intended to "supplement the effort of the Vice President for Manufacturing in reviewing the grievance elevated to him, so that instead of acting alone . . . he will be obliged to convoke a conference of the Council to afford the grievant a thorough hearing." Petitioner's recommendation for a "single arbitrator is based on the proposition that if voluntary arbitration should be resorted to at all, this recourse should entail the least possible expense." 39 Private respondent counters that the disposition on the grievance machinery is likewise "fair and reasonable under the circumstances and in fact was merely a reiteration of the (u)nion's position during the conciliation meetings conducted by Undersecretary Bienvenido Laguesma." 40 No particular setup for a grievance machinery is mandated by law. Rather, Article 260 of the Labor Code, as incorporated by RA 6715, provides for only a single grievance machinery in the company to settle problems arising from "interpretation or implementation of their collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies." Article 260, as amended, reads: Art. 260. Grievance Machinery and Voluntary Arbitration. The parties to a Collective Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies. All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of its submission shall automatically be referred to voluntary arbitration prescribed in the Collective Bargaining Agreement. For this purpose, parties to a Collective Bargaining Agreement shall name and designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, or include in the agreement a procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of qualified Voluntary Arbitrators duly accredited by the Board. In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in the Collective Bargaining Agreement, which shall act with same force and effect
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as if the Arbitrator or panel of Arbitrators has been selected by the parties as described above. We believe that the procedure described by public respondent sufficiently complies with the minimum requirement of the law. Public respondent even provided for two steps in hearing grievances prior to their referral to arbitration. The parties will decide on the number of arbitrators who may hear a dispute only when the need for it arises. Even the law itself does not specify the number of arbitrators. Their alternatives whether to have one or three arbitrators have their respective advantages and disadvantages. In this matter, cost is not the only consideration; full deliberation on the issues is another, and it is best accomplished in a hearing conducted by three arbitrators. In effect, the parties are afforded the latitude to decide for themselves the composition of the grievance machinery as they find appropriate to a particular situation. At bottom, we cannot really impute grave abuse of discretion to public respondent on this issue. 5. Signing Bonus The public respondent's contested resolution on the "signing bonus" in the Order dated November 21, 1995 reads: 41 Fifth, specifically on the issue of whether the signing bonus is covered under the "maintenance of existing benefits" clause, we find that a clarification is indeed imperative. Despite the expressed provision for a signing bonus in the previous CBA, we uphold the principle that the award for a signing bonus should partake the nature of an incentive and premium for peaceful negotiations and amicable resolution of disputes which apparently are not present in the instant case. Thus, we are constrained to rule that the award of signing bonus is not covered by the "maintenance of existing benefits" clause. Petitioner asseverates that the "signing bonus is an existing benefit embodied in the old CBA." 42 It explains that public respondent erred in removing the award of a signing bonus which is "given not only as an incentive for peaceful negotiations and amicable settlement of disputes but also as an extra award to the workers following the settlement of a CBA dispute by whatever means." 43 Private respondent disagrees, contending that a signing bonus is not awarded when CBA negotiations "result in a strike." There are two reasons therefor: First, "the grant of a signing bonus is a matter of discretion and cannot be demanded as a matter of right;" and second the signing bonus is meant as an incentive for a peaceful negotiation. Once these negotiations result in a strike, an illegal one at that, the basis or rationale for such an award is lost." 44 Although proposed by petitioner, 45 the signing bonus was not accepted by private respondent. 46 Besides, a signing bonus is not a benefit which may be demanded under the law. Rather, it is now claimed by petitioner under the principle of "maintenance of existing benefits" of the old CBA. However, as clearly explained by private respondent, a signing bonus may not be demanded as a matter of right. If it is not agreed upon by the parties or unilaterally offered as an additional incentive by private respondent, the condition for awarding it must be duly satisfied. In the present case, the condition sine qua non for its grant a non-strike was not complied with. In fact, private respondent categorically sated in its counter-proposal to the exclusion of those agreed upon before that the new collective bargaining agreement would constitute the only agreement between the parties, as follows: Sec. 4. Scope of Agreement. The terms and conditions of employment of the employees within the appropriate bargaining unit are embodied in this Agreement. On the other hand, all such benefits which are not expressly provided for in this Agreement, but which are now being accorded, may in the future be accorded, or might have been previously accorded to employees, by the COMPANY shall be deemed as purely discretionary or pure acts of grace and magnanimity on the part of the COMPANY in each particular case, and
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the continuance or repetition thereof now or in the future, no matter how long or how often, shall not be construed as establishing a right for the employee and/or obligation on the part of the COMPANY. 47 This provision on the scope of the agreement is further buttressed by the clause on waiver: 48 The parties acknowledge that during the negotiations which resulted in the execution of this Agreement, each of them had the unlimited opportunity to make demands and proposals with respect to any and all subjects and matters proper for collective bargaining and not prohibited by law; and the parties further acknowledge that the understandings and agreements arrived at by them after the exercise of that right and unlimited opportunity are fully set forth in this Agreement. Therefore, the COMPANY and the UNION during the life of this Agreement, each voluntarily and unqualifiedly waives the right and each agrees that the other shall not be obligated to bargain collectively with respect to any subject or matter referred to or covered in this Agreement or with respect to any subject or matter not specifically referred to or covered in this Agreement even though such subject or matter may not have been within the knowledge or contemplation of either or both parties at the time they negotiated or signed this Agreement. Epilogue We have carefully reviewed the assailed Orders. Other than his failure to rule on the issue of union security, the secretary of labor cannot be indicted for grave abuse of discretion amounting to want or excess of jurisdiction. Basically, there is grave abuse of discretion amounting to lack of jurisdiction where the respondent board, tribunal or officer exercising judicial functions exercised its judgment in a capricious, whimsical, arbitrary or despotic manner. However, it has also been said that grave abuse is committed when "the lower court acted capriciously, and whimsically or the petitioner's contention appears td be clearly tenable or the broader interest of justice or public policy [so] require . . . ." Also, grave abuse of discretion is committed when the board, tribunal or officer exercising judicial function fails to consider evidence adduced by the parties. 49 In Saballa vs. National Labor Relations Commission, 50 we ruled on how a decision of an administrative body must be drawn: The Court has previously held that judges and arbiters should draw up their decisions and resolutions with due care, and make certain that they truly and accurately reflect their conclusions and their final dispositions. . . . The same thing goes for the findings of fact made by the NLRC, as it is a settled rule that such findings are entitled to great respect and even finality when supported by substantial evidence, otherwise, they shall be struck down for being whimsical and capricious and arrived at with grave abuse of discretion. It is a requirement of due process and fair play that the parties to a litigation be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. A decision that does not clearly and distinctly state the facts and the law of which it is based leaves the parties in the dark as to how it was reached and is especially prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal. In the present case, the foregoing requirement has been sufficiently met. Petitioner's claim of grave abuse of discretion is anchored on the simple fact that public respondent adopted largely the proposals of private respondent. It should be understood that bargaining is not equivalent to an adversarial litigation where rights and obligations are delineated and remedies applied. It is simply a process of finding a reasonable solution to a conflict and harmonizing opposite positions into a fair and reasonable
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compromise. When parties agree to submit unresolved issues to the secretary of labor for his resolution, they should not expect their positions to be adopted in toto. It is understood that they defer to his wisdom and objectivity in insuring industrial peace. And unless they can clearly demonstrate bias, arbitrariness, capriciousness or personal hostility on the part of such public officer, the Court will not interfere or substitute the said officer's judgment with its own. In this case, it is possible that this Court, or some its members at least, may even agree with the wisdom of petitioner's claims. But unless grave abuse of discretion is cogently shown, this Court will refrain from using its extraordinary power of certiorari to strike down decisions and orders of quasi-judicial officers specially tasked by law to settle administrative questions and disputes. This is particularly true in the resolution of controversies in collective bargaining agreements where the question is rarely one of legal right or wrong nay, of black and white but one of wisdom, cogency and compromise as to what is possible, fair and reasonable under the circumstances. WHEREFORE, premises considered, the petition is partly GRANTED. The assailed Orders are AFFIRMED with the modification that the issue on the union security clause be REMANDED to the Department of Labor and Employment for definite resolution within one month from the finality of this Decision. No costs. THE INSULAR LIFE ASSURANCE CO., LTD., EMPLOYEES ASSOCIATION-NATU vs. THE INSULAR LIFE ASSURANCE CO., LTD. G.R. No. L-25291 January 30, 1971 Appeal, by certiorari to review a decision and a resolution en banc of the Court of Industrial Relations dated August 17, 1965 and October 20, 1965, respectively, in Case 1698-ULP. The Insular Life Assurance Co., Ltd., Employees Association-NATU, FGU Insurance Group Workers & Employees Association-NATU, and Insular Life Building Employees Association-NATU (hereinafter referred to as the Unions), while still members of the Federation of Free Workers (FFW), entered into separate collective bargaining agreements with the Insular Life Assurance Co., Ltd. and the FGU Insurance Group (hereinafter referred to as the Companies). Two of the lawyers of the Unions then were Felipe Enaje and Ramon Garcia; the latter was formerly the secretary-treasurer of the FFW and acting president of the Insular Life/FGU unions and the Insular Life Building Employees Association. Garcia, as such acting president, in a circular issued in his name and signed by him, tried to dissuade the members of the Unions from disaffiliating with the FFW and joining the National Association of Trade Unions (NATU), to no avail. Enaje and Garcia soon left the FFW and secured employment with the Anti-Dummy Board of the Department of Justice. Thereafter, the Companies hired Garcia in the latter part of 1956 as assistant corporate secretary and legal assistant in their Legal Department, and he was soon receiving P900 a month, or P600 more than he was receiving from the FFW. Enaje was hired on or about February 19, 1957 as personnel manager of the Companies, and was likewise made chairman of the negotiating panel for the Companies in the collective bargaining with the Unions. In a letter dated September 16, 1957, the Unions jointly submitted proposals to the Companies for a modified renewal of their respective collective bargaining contracts which were then due to expire on September 30, 1957. The parties mutually agreed and to make whatever benefits could be agreed upon retroactively effective October 1, 1957. Thereafter, in the months of September and October 1957 negotiations were conducted on the Union's proposals, but these were snagged by a deadlock on the issue of union shop, as a result of which the Unions filed on January 27, 1958 a notice of strike for "deadlock on collective bargaining." Several conciliation conferences were held under the auspices of the Department of Labor wherein the conciliators urged the Companies to make reply to the Unions' proposals en toto so that the said Unions might consider the feasibility of dropping their demand for union security in exchange for other benefits. However, the Companies did not make any counter-proposals but, instead, insisted that the Unions first drop their demand for union security, promising money benefits if this was done. Thereupon, and prior to
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April 15, 1958, the petitioner Insular Life Building Employees Association-NATU dropped this particular demand, and requested the Companies to answer its demands, point by point, en toto. But the respondent Insular Life Assurance Co. still refused to make any counter-proposals. In a letter addressed to the two other Unions by the joint management of the Companies, the former were also asked to drop their union security demand, otherwise the Companies "would no longer consider themselves bound by the commitment to make money benefits retroactive to October 1, 1957." By a letter dated April 17, 1958, the remaining two petitioner unions likewise dropped their demand for union shop. April 25, 1958 then was set by the parties to meet and discuss the remaining demands. From April 25 to May 6, 1958, the parties negotiated on the labor demands but with no satisfactory result due to a stalemate on the matter of salary increases. On May 13, 1958 the Unions demanded from the Companies final counter-proposals on their economic demands, particularly on salary increases. Instead of giving counter-proposals, the Companies on May 15, 1958 presented facts and figures and requested the Unions to submit a workable formula which would justify their own proposals, taking into account the financial position of the former. Forthwith the Unions voted to declare a strike in protest against what they considered the Companies' unfair labor practices. Meanwhile, eighty-seven (87) unionists were reclassified as supervisors without increase in salary nor in responsibility while negotiations were going on in the Department of Labor after the notice to strike was served on the Companies. These employees resigned from the Unions. On May 20, 1958 the Unions went on strike and picketed the offices of the Insular Life Building at Plaza Moraga. On May 21, 1958 the Companies through their acting manager and president, the respondent Jose M. Olbes (hereinafter referred to as the respondent Olbes), sent to each of the strikers a letter (exhibit A) quoted verbatim as follows: We recognize it is your privilege both to strike and to conduct picketing. However, if any of you would like to come back to work voluntarily, you may: 1. Advise the nearest police officer or security guard of your intention to do so. 2. Take your meals within the office. 3. Make a choice whether to go home at the end of the day or to sleep nights at the office where comfortable cots have been prepared. 4. Enjoy free coffee and occasional movies. 5. Be paid overtime for work performed in excess of eight hours. 6. Be sure arrangements will be made for your families. The decision to make is yours whether you still believe in the motives of the strike or in the fairness of the Management. The Unions, however, continued on strike, with the exception of a few unionists who were convinced to desist by the aforesaid letter of May 21, 1958. From the date the strike was called on May 21, 1958, until it was called off on May 31, 1958, some management men tried to break thru the Unions' picket lines. Thus, on May 21, 1958 Garcia, assistant
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corporate secretary, and Vicente Abella, chief of the personnel records section, respectively of the Companies, tried to penetrate the picket lines in front of the Insular Life Building. Garcia, upon approaching the picket line, tossed aside the placard of a picketer, one Paulino Bugay; a fight ensued between them, in which both suffered injuries. The Companies organized three bus-loads of employees, including a photographer, who with the said respondent Olbes, succeeded in penetrating the picket lines in front of the Insular Life Building, thus causing injuries to the picketers and also to the strike-breakers due to the resistance offered by some picketers. Alleging that some non-strikers were injured and with the use of photographs as evidence, the Companies then filed criminal charges against the strikers with the City Fiscal's Office of Manila. During the pendency of the said cases in the fiscal's office, the Companies likewise filed a petition for injunction with damages with the Court of First Instance of Manila which, on the basis of the pendency of the various criminal cases against striking members of the Unions, issued on May 31, 1958 an order restraining the strikers, until further orders of the said court, from stopping, impeding, obstructing, etc. the free and peaceful use of the Companies' gates, entrance and driveway and the free movement of persons and vehicles to and from, out and in, of the Companies' building. On the same date, the Companies, again through the respondent Olbes, sent individually to the strikers a letter (exhibit B), quoted hereunder in its entirety: The first day of the strike was last 21 May 1958. Our position remains unchanged and the strike has made us even more convinced of our decision. We do not know how long you intend to stay out, but we cannot hold your positions open for long. We have continued to operate and will continue to do so with or without you. If you are still interested in continuing in the employ of the Group Companies, and if there are no criminal charges pending against you, we are giving you until 2 June 1958 to report for work at the home office. If by this date you have not yet reported, we may be forced to obtain your replacement. Before, the decisions was yours to make. So it is now. Incidentally, all of the more than 120 criminal charges filed against the members of the Unions, except three (3), were dismissed by the fiscal's office and by the courts. These three cases involved "slight physical injuries" against one striker and "light coercion" against two others. At any rate, because of the issuance of the writ of preliminary injunction against them as well as the ultimatum of the Companies giving them until June 2, 1958 to return to their jobs or else be replaced, the striking employees decided to call off their strike and to report back to work on June 2, 1958. However, before readmitting the strikers, the Companies required them not only to secure clearances from the City Fiscal's Office of Manila but also to be screened by a management committee among the members of which were Enage and Garcia. The screening committee initially rejected 83 strikers with pending criminal charges. However, all non-strikers with pending criminal charges which arose from the breakthrough incident were readmitted immediately by the Companies without being required to secure clearances from the fiscal's office. Subsequently, when practically all the strikers had secured clearances from the fiscal's office, the Companies readmitted only some but adamantly refused readmission to 34 officials and members of the Unions who were most active in the strike, on the ground that they committed "acts inimical to the interest of the respondents," without however stating the specific acts
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allegedly committed. Among those who were refused readmission are Emiliano Tabasondra, vice president of the Insular Life Building Employees' Association-NATU; Florencio Ibarra, president of the FGU Insurance Group Workers & Employees Association-NATU; and Isagani Du Timbol, acting president of the Insular Life Assurance Co., Ltd. Employees Association-NATU. Some 24 of the above number were ultimately notified months later that they were being dismissed retroactively as of June 2, 1958 and given separation pay checks computed under Rep. Act 1787, while others (ten in number) up to now have not been readmitted although there have been no formal dismissal notices given to them. On July 29, 1958 the CIR prosecutor filed a complaint for unfair labor practice against the Companies under Republic Act 875. The complaint specifically charged the Companies with (1) interfering with the members of the Unions in the exercise of their right to concerted action, by sending out individual letters to them urging them to abandon their strike and return to work, with a promise of comfortable cots, free coffee and movies, and paid overtime, and, subsequently, by warning them that if they did not return to work on or before June 2, 1958, they might be replaced; and (2) discriminating against the members of the Unions as regards readmission to work after the strike on the basis of their union membership and degree of participation in the strike. On August 4, 1958 the Companies filed their answer denying all the material allegations of the complaint, stating special defenses therein, and asking for the dismissal of the complaint. After trial on the merits, the Court of Industrial Relations, through Presiding Judge Arsenio Martinez, rendered on August 17, 1965 a decision dismissing the Unions' complaint for lack of merit. On August 31, 1965 the Unions seasonably filed their motion for reconsideration of the said decision, and their supporting memorandum on September 10, 1965. This was denied by the Court of Industrial Relations en banc in a resolution promulgated on October 20, 1965. Hence, this petition for review, the Unions contending that the lower court erred: 1. In not finding the Companies guilty of unfair labor practice in sending out individually to the strikers the letters marked Exhibits A and B; 2. In not finding the Companies guilty of unfair labor practice for discriminating against the striking members of the Unions in the matter of readmission of employees after the strike; 3. In not finding the Companies guilty of unfair labor practice for dismissing officials and members of the Unions without giving them the benefit of investigation and the opportunity to present their side in regard to activities undertaken by them in the legitimate exercise of their right to strike; and 4. In not ordering the reinstatement of officials and members of the Unions, with full back wages, from June 2, 1958 to the date of their actual reinstatement to their usual employment. I. The respondents contend that the sending of the letters, exhibits A and B, constituted a legitimate exercise of their freedom of speech. We do not agree. The said letters were directed to the striking employees individually by registered special delivery mail at that without being coursed through the Unions which were representing the employees in the collective bargaining. The act of an employer in notifying absent employees individually during a strike following unproductive efforts at collective bargaining that the plant would be operated the next day and that their jobs were open for them should they want to come in has been held to be an unfair labor practice, as an active interference with the right of collective bargaining through dealing with the employees individually instead of through their
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collective bargaining representatives. (31 Am. Jur. 563, citing NLRB v. Montgomery Ward & Co. [CA 9th] 133 F2d 676, 146 ALR 1045) Indeed, it is an unfair labor practice for an employer operating under a collective bargaining agreement to negotiate or to attempt to negotiate with his employees individually in connection with changes in the agreement. And the basis of the prohibition regarding individual bargaining with the strikers is that although the union is on strike, the employer is still under obligation to bargain with the union as the employees' bargaining representative (Melo Photo Supply Corporation vs. National Labor Relations Board, 321 U.S. 332). Indeed, some such similar actions are illegal as constituting unwarranted acts of interference. Thus, the act of a company president in writing letters to the strikers, urging their return to work on terms inconsistent with their union membership, was adjudged as constituting interference with the exercise of his employees' right to collective bargaining (Lighter Publishing, CCA 7th, 133 F2d 621). It is likewise an act of interference for the employer to send a letter to all employees notifying them to return to work at a time specified therein, otherwise new employees would be engaged to perform their jobs. Individual solicitation of the employees or visiting their homes, with the employer or his representative urging the employees to cease union activity or cease striking, constitutes unfair labor practice. All the abovedetailed activities are unfair labor practices because they tend to undermine the concerted activity of the employees, an activity to which they are entitled free from the employer's molestation. 1 Moreover, since exhibit A is a letter containing promises of benefits to the employees in order to entice them to return to work, it is not protected by the free speech provisions of the Constitution (NLRB v. Clearfield Cheese Co., Inc., 213 F2d 70). The same is true with exhibit B since it contained threats to obtain replacements for the striking employees in the event they did not report for work on June 2, 1958. The free speech protection under the Constitution is inapplicable where the expression of opinion by the employer or his agent contains a promise of benefit, or threats, or reprisal (31 Am. Jur. 544; NLRB vs. Clearfield Cheese Co., Inc., 213 F2d 70; NLRB vs. Goigy Co., 211 F2d 533, 35 ALR 2d 422). Indeed, when the respondents offered reinstatement and attempted to "bribe" the strikers with "comfortable cots," "free coffee and occasional movies," "overtime" pay for "work performed in excess of eight hours," and "arrangements" for their families, so they would abandon the strike and return to work, they were guilty of strike-breaking and/or union-busting and, consequently, of unfair labor practice. It is equivalent to an attempt to break a strike for an employer to offer reinstatement to striking employees individually, when they are represented by a union, since the employees thus offered reinstatement are unable to determine what the consequences of returning to work would be. Likewise violative of the right to organize, form and join labor organizations are the following acts: the offer of a Christmas bonus to all "loyal" employees of a company shortly after the making of a request by the union to bargain; wage increases given for the purpose of mollifying employees after the employer has refused to bargain with the union, or for the purpose of inducing striking employees to return to work; the employer's promises of benefits in return for the strikers' abandonment of their strike in support of their union; and the employer's statement, made about 6 weeks after the strike started, to a group of strikers in a restaurant to the effect that if the strikers returned to work, they would receive new benefits in the form of hospitalization, accident insurance, profit-sharing, and a new building to work in.2 Citing paragraph 5 of the complaint filed by the acting prosecutor of the lower court which states that "the officers and members of the complainant unions decided to call off the strike and return to work on June 2, 1958 by reason of the injunction issued by the Manila Court of First Instance," the respondents contend that this was the main cause why the strikers returned to work and not the letters, exhibits A and B. This assertion is without merit. The circumstance that the strikers later decided to return to work ostensibly on account of the injunctive writ issued by the Court of First Instance of Manila cannot alter the intrinsic quality of the letters, which were calculated, or which tended, to interfere with the employees' right to engage in lawful concerted activity in the form of a strike. Interference constituting unfair labor practice will not cease to be such simply because it was susceptible of being thwarted or resisted, or that it did not
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proximately cause the result intended. For success of purpose is not, and should not, be the criterion in determining whether or not a prohibited act constitutes unfair labor practice. The test of whether an employer has interfered with and coerced employees within the meaning of subsection (a) (1) is whether the employer has engaged in conduct which it may reasonably be said tends to interfere with the free exercise of employees' rights under section 3 of the Act, and it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by statements of threats of the employer if there is a reasonable inference that anti-union conduct of the employer does have an adverse effect on self-organization and collective bargaining. (Francisco, Labor Laws 1956, Vol. II, p. 323, citing NLRB v. Ford, C.A., 1948, 170 F2d 735). Besides, the letters, exhibits A and B, should not be considered by themselves alone but should be read in the light of the preceding and subsequent circumstances surrounding them. The letters should be interpreted according to the "totality of conduct doctrine," ... whereby the culpability of an employer's remarks were to be evaluated not only on the basis of their implicit implications, but were to be appraised against the background of and in conjunction with collateral circumstances. Under this "doctrine" expressions of opinion by an employer which, though innocent in themselves, frequently were held to be culpable because of the circumstances under which they were uttered, the history of the particular employer's labor relations or anti-union bias or because of their connection with an established collateral plan of coercion or interference. (Rothenberg on Relations, p. 374, and cases cited therein.) It must be recalled that previous to the petitioners' submission of proposals for an amended renewal of their respective collective bargaining agreements to the respondents, the latter hired Felipe Enage and Ramon Garcia, former legal counsels of the petitioners, as personnel manager and assistant corporate secretary, respectively, with attractive compensations. After the notice to strike was served on the Companies and negotiations were in progress in the Department of Labor, the respondents reclassified 87 employees as supervisors without increase in salary or in responsibility, in effect compelling these employees to resign from their unions. And during the negotiations in the Department of Labor, despite the fact that the petitioners granted the respondents' demand that the former drop their demand for union shop and in spite of urgings by the conciliators of the Department of Labor, the respondents adamantly refused to answer the Unions' demands en toto. Incidentally, Enage was the chairman of the negotiating panel for the Companies in the collective bargaining between the former and the Unions. After the petitioners went to strike, the strikers were individually sent copies of exhibit A, enticing them to abandon their strike by inducing them to return to work upon promise of special privileges. Two days later, the respondents, thru their president and manager, respondent Jose M. Olbes, brought three truckloads of non-strikers and others, escorted by armed men, who, despite the presence of eight entrances to the three buildings occupied by the Companies, entered thru only one gate less than two meters wide and in the process, crashed thru the picket line posted in front of the premises of the Insular Life Building. This resulted in injuries on the part of the picketers and the strikebreakers.lwph1.t Then the respondents brought against the picketers criminal charges, only three of which were not dismissed, and these three only for slight misdemeanors. As a result of these criminal actions, the respondents were able to obtain an injunction from the court of first instance restraining the strikers from stopping, impeding, obstructing, etc. the free and peaceful use of the Companies' gates, entrance and driveway and the free movement of persons and vehicles to and from, out and in, of the Companies' buildings. On the same day that the injunction was issued, the letter, Exhibit B, was sent again individually and by registered special delivery mail to the strikers, threatening them with dismissal if they did not report for work on or before June 2, 1958. But when most of the petitioners reported for work, the respondents thru a screening committee of which Ramon Garcia was a member refused to admit 63 members of the Unions on the ground of "pending criminal charges." However, when almost all were cleared of criminal charges by the fiscal's office, the respondents adamantly refused admission to 34 officials and union members. It is not, however, disputed that all-non-strikers with
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pending criminal charges which arose from the breakthrough incident of May 23, 1958 were readmitted immediately by the respondents. Among the non-strikers with pending criminal charges who were readmitted were Generoso Abella, Enrique Guidote, Emilio Carreon, Antonio Castillo, Federico Barretto, Manuel Chuidian and Nestor Cipriano. And despite the fact that the fiscal's office found no probable cause against the petitioning strikers, the Companies adamantly refused admission to them on the pretext that they committed "acts inimical to the interest of the respondents," without stating specifically the inimical acts allegedly committed. They were soon to admit, however, that these alleged inimical acts were the same criminal charges which were dismissed by the fiscal and by the courts.. Verily, the above actuations of the respondents before and after the issuance of the letters, exhibit A and B, yield the clear inference that the said letters formed of the respondents scheme to preclude if not destroy unionism within them. To justify the respondents' threat to dismiss the strikers and secure replacements for them in order to protect and continue their business, the CIR held the petitioners' strike to be an economic strike on the basis of exhibit 4 (Notice of Strike) which states that there was a "deadlock in collective bargaining" and on the strength of the supposed testimonies of some union men who did not actually know the very reason for the strike. It should be noted that exhibit 4, which was filed on January 27, 1958, states, inter alia: TO: BUREAU OF LABOR RELATIONS DEPARTMENT OF LABOR MANILA Thirty (30) days from receipt of this notice by the Office, this [sic] unions intends to go on strike against THE INSULAR LIFE ASSURANCE CO., LTD. Plaza Moraga, Manila THE FGU INSURANCE GROUP Plaza Moraga, Manila INSULAR LIFE BUILDING ADMINISTRATION Plaza Moraga, Manila . for the following reason: DEADLOCK IN COLLECTIVE BARGAINING... However, the employees did not stage the strike after the thirty-day period, reckoned from January 27, 1958. This simply proves that the reason for the strike was not the deadlock on collective bargaining nor any lack of economic concessions. By letter dated April 15, 1958, the respondents categorically stated what they thought was the cause of the "Notice of Strike," which so far as material, reads: 3. Because you did not see fit to agree with our position on the union shop, you filed a notice of strike with the Bureau of Labor Relations on 27 January 1958, citing `deadlock in collective bargaining' which could have been for no other issue than the union shop." (exhibit 8, letter dated April 15, 1958.) The strike took place nearly four months from the date the said notice of strike was filed. And the actual and main reason for the strike was, "When it became crystal clear the management double crossed or will not negotiate in good faith, it is tantamount to refusal collectively and considering the unfair labor practice in the meantime being committed by the management such as the sudden resignation of some unionists and [who] became supervisors without increase in salary or change in responsibility, such as the coercion of employees, decided to declare the strike." (tsn., Oct. 14, 1958, p. 14.) The truth of this assertion is amply proved by the following circumstances: (1) it took the respondents six (6) months to consider the
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petitioners' proposals, their only excuse being that they could not go on with the negotiations if the petitioners did not drop the demand for union shop (exh. 7, respondents' letter dated April 7, 1958); (2) when the petitioners dropped the demand for union shop, the respondents did not have a counter-offer to the petitioners' demands. Sec. 14 of Rep. Act 875 required the respondents to make a reply to the petitioners' demands within ten days from receipt thereof, but instead they asked the petitioners to give a "well reasoned, workable formula which takes into account the financial position of the group companies." (tsn., Sept. 8, 1958, p. 62; tsn., Feb. 26, 1969, p. 49.) II. Exhibit H imposed three conditions for readmission of the strikers, namely: (1) the employee must be interested in continuing his work with the group companies; (2) there must be no criminal charges against him; and (3) he must report for work on June 2, 1958, otherwise he would be replaced. Since the evidence shows that all the employees reported back to work at the respondents' head office on June 2, 1953, they must be considered as having complied with the first and third conditions. Our point of inquiry should therefore be directed at whether they also complied with the second condition. It is not denied that when the strikers reported for work on June 2, 1958, 63 members of the Unions were refused readmission because they had pending criminal charges. However, despite the fact that they were able to secure their respective clearances 34 officials and union members were still refused readmission on the alleged ground that they committed acts inimical to the Companies. It is beyond dispute, however, that non-strikers who also had criminal charges pending against them in the fiscal's office, arising from the same incidents whence the criminal charges against the strikers evolved, were readily readmitted and were not required to secure clearances. This is a clear act of discrimination practiced by the Companies in the process of rehiring and is therefore a violation of sec. 4(a) (4) of the Industrial Peace Act. The respondents did not merely discriminate against all the strikers in general. They separated the active from the less active unionists on the basis of their militancy, or lack of it, on the picket lines. Unionists belonging to the first category were refused readmission even after they were able to secure clearances from the competent authorities with respect to the criminal charges filed against them. It is significant to note in this connection that except for one union official who deserted his union on the second day of the strike and who later participated in crashing through the picket lines, not a single union officer was taken back to work. Discrimination undoubtedly exists where the record shows that the union activity of the rehired strikers has been less prominent than that of the strikers who were denied reinstatement. So is there an unfair labor practice where the employer, although authorized by the Court of Industrial Relations to dismiss the employees who participated in an illegal strike, dismissed only the leaders of the strikers, such dismissal being evidence of discrimination against those dismissed and constituting a waiver of the employer's right to dismiss the striking employees and a condonation of the fault committed by them." (Carlos and Fernando, Labor and Social Legislation, p. 62, citing Phil. Air Lines, Inc. v. Phil. Air Lines Emloyees Association, L-8197, Oct. 31, 1958.) It is noteworthy that perhaps in an anticipatory effort to exculpate themselves from charges of discrimination in the readmission of strikers returning to work the respondents delegated the power to readmit to a committee. But the respondent Olbes had chosen Vicente Abella, chief of the personnel records section, and Ramon Garcia, assistant corporate secretary, to screen the unionists reporting back to work. It is not difficult to imagine that these two employees having been involved in unpleasant incidents with the picketers during the strike were hostile to the strikers. Needless to say, the mere act of placing in the hands of employees hostile to the strikers the power of reinstatement, is a form of discrimination in rehiring. Delayed reinstatement is a form of discrimination in rehiring, as is having the machinery of reinstatement in the hands of employees hostile to the strikers, and reinstating a union official who formerly worked in a unionized plant, to a job in another mill, which was
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imperfectly organized. (Morabe, The Law on Strikes, p. 473, citing Sunshine Mining Co., 7 NLRB 1252; Cleveland Worsted Mills, 43 NLRB 545; emphasis supplied.) Equally significant is the fact that while the management and the members of the screening committee admitted the discrimination committed against the strikers, they tossed back and around to each other the responsibility for the discrimination. Thus, Garcia admitted that in exercising for the management the authority to screen the returning employees, the committee admitted the non-strikers but refused readmission to the strikers (tsn., Feb. 6, 1962, pp. 15-19, 23-29). Vicente Abella, chairman of the management's screening committee, while admitting the discrimination, placed the blame therefor squarely on the management (tsn., Sept. 20, 1960, pp. 7-8, 14-18). But the management, speaking through the respondent Olbes, head of the Companies, disclaimed responsibility for the discrimination. He testified that "The decision whether to accept or not an employee was left in the hands of that committee that had been empowered to look into all cases of the strikers." (tsn., Sept. 6, 1962, p. 19.) Of course, the respondents through Ramon Garcia tried to explain the basis for such discrimination by testifying that strikers whose participation in any alleged misconduct during the picketing was not serious in nature were readmissible, while those whose participation was serious were not. (tsn., Aug. 4, 1961, pp. 48-49, 56). But even this distinction between acts of slight misconduct and acts of serious misconduct which the respondents contend was the basis for either reinstatement or discharge, is completely shattered upon a cursory examination of the evidence on record. For with the exception of Pascual Esquillo whose dismissal sent to the other strikers cited the alleged commission by them of simple "acts of misconduct." III. Anent the third assignment of error, the record shows that not a single dismissed striker was given the opportunity to defend himself against the supposed charges against him. As earlier mentioned, when the striking employees reported back for work on June 2, 1958, the respondents refused to readmit them unless they first secured the necessary clearances; but when all, except three, were able to secure and subsequently present the required clearances, the respondents still refused to take them back. Instead, several of them later received letters from the respondents in the following stereotyped tenor: This will confirm the termination of your employment with the Insular Life-FGU Insurance Group as of 2 June 1958. The termination of your employment was due to the fact that you committed acts of misconduct while picketing during the last strike. Because this may not constitute sufficient cause under the law to terminate your employment without pay, we are giving you the amount of P1,930.32 corresponding to one-half month pay for every year of your service in the Group Company. Kindly acknowledge receipt of the check we are sending herewith. Very truly yours, (Sgd.) JOSE M. OLBES President, Insurance Life Acting President, FGU. The respondents, however, admitted that the alleged "acts of misconduct" attributed to the dismissed strikers were the same acts with which the said strikers were charged before the fiscal's office and the courts. But all these charges except three were dropped or dismissed. Indeed, the individual cases of dismissed officers and members of the striking unions do not indicate sufficient basis for dismissal.
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Emiliano Tabasondra, vice-president of the petitioner FGU Insurance Group Workers & Employees Association-NATU, was refused reinstatement allegedly because he did not report for duty on June 2, 1958 and, hence, had abandoned his office. But the overwhelming evidence adduced at the trial and which the respondents failed to rebut, negates the respondents' charge that he had abandoned his job. In his testimony, corroborated by many others, Tabasondra particularly identified the management men to whom he and his group presented themselves on June 2, 1958. He mentioned the respondent Olbes' secretary, De Asis, as the one who received them and later directed them when Olbes refused them an audience to Felipe Enage, the Companies' personnel manager. He likewise categorically stated that he and his group went to see Enage as directed by Olbes' secretary. If Tabasondra were not telling the truth, it would have been an easy matter for the respondents to produce De Asis and Enage who testified anyway as witnesses for the respondents on several occasions to rebut his testimony. The respondents did nothing of the kind. Moreover, Tabasondra called on June 21, 1958 the respondents' attention to his non-admission and asked them to inform him of the reasons therefor, but instead of doing so, the respondents dismissed him by their letter dated July 10, 1958. Elementary fairness required that before being dismissed for cause, Tabasondra be given "his day in court." At any rate, it has been held that mere failure to report for work after notice to return, does not constitute abandonment nor bar reinstatement. In one case, the U.S. Supreme Court held that the taking back of six of eleven men constituted discrimination although the five strikers who were not reinstated, all of whom were prominent in the union and in the strike, reported for work at various times during the next three days, but were told that there were no openings. Said the Court: ... The Board found, and we cannot say that its finding is unsupported, that, in taking back six union men, the respondent's officials discriminated against the latter on account of their union activities and that the excuse given that they did not apply until after the quota was full was an afterthought and not the true reason for the discrimination against them. (NLRB v. Mackay Radio & Telegraph Co., 304 U.S. 333, 58 Sup. Ct. 904, 82 L. Ed. 1381) (Mathews, Labor Relations and the Law, p. 725, 728) The respondents' allegation that Tabasondra should have returned after being refused readmission on June 2, 1958, is not persuasive. When the employer puts off reinstatement when an employee reports for work at the time agreed, we consider the employee relieved from the duty of returning further. Sixto Tongos was dismissed allegedly because he revealed that despite the fact that the Companies spent more than P80,000 for the vacation trips of officials, they refused to grant union demands; hence, he betrayed his trust as an auditor of the Companies. We do not find this allegation convincing. First, this accusation was emphatically denied by Tongos on the witness stand. Gonzales, president of one of the respondent Companies and one of the officials referred to, took a trip abroad in 1958. Exchange controls were then in force, and an outgoing traveller on a combined business and vacation trip was allowed by the Central Bank, per its Circular 52 (Notification to Authorized Agent Banks) dated May 9, 1952, an allocation of $1,000 or only P2,000, at the official rate of two pesos to the dollar, as pocket money; hence, this was the only amount that would appear on the books of the Companies. It was only on January 21, 1962, per its Circular 133 (Notification to Authorized Agent Banks), that the Central Bank lifted the exchange controls. Tongos could not therefore have revealed an amount bigger than the above sum. And his competence in figures could not be doubted considering that he had passed the board examinations for certified public accountants. But assuming arguendo that Tongos indeed revealed the true expenses of Gonzales' trip which the respondents never denied or tried to disprove his statements clearly fall within the sphere of a unionist's right to discuss and advertise the facts involved in a labor dispute, in accordance with section 9(a)(5) of Republic Act 875 which guarantees the untramelled exercise by striking employees of the right to give "publicity to the existence of, or the fact involved in any labor dispute, whether by advertising, speaking, patrolling or by any method not involving fraud or violence." Indeed, it is not only the right, it is as well the duty, of every unionist to advertise the facts of a dispute for the purpose of informing all those affected thereby. In labor disputes, the combatants are expected to expose the truth before the public to justify their respective demands. Being a union man and one of the strikers, Tongos was expected to reveal the whole truth on whether or not the respondent
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Companies were justified in refusing to accede to union demands. After all, not being one of the supervisors, he was not a part of management. And his statement, if indeed made, is but an expression of free speech protected by the Constitution. Free speech on both sides and for every faction on any side of the labor relation is to me a constitutional and useful right. Labor is free ... to turn its publicity on any labor oppression, substandard wages, employer unfairness, or objectionable working conditions. The employer, too, should be free to answer and to turn publicity on the records of the leaders of the unions which seek the confidence of his men ... (Concurring opinion of Justice Jackson in Thomas v. Collins, 323 U.S. 516, 547, 65 Sup. Ct. 315, 89 L. Ed. 430.) (Mathews, Labor Relations and the Law, p. 591.) The respondents also allege that in revealing certain confidential information, Tongos committed not only a betrayal of trust but also a violation of the moral principles and ethics of accountancy. But nowhere in the Code of Ethics for Certified Public Accountants under the Revised Rules and Regulations of the Board of Accountancy formulated in 1954, is this stated. Moreover, the relationship of the Companies with Tongos was that of an employer and not a client. And with regard to the testimonies of Juan Raymundo and Antolin Carillo, both vice-presidents of the Trust Insurance Agencies, Inc. about the alleged utterances made by Tongos, the lower court should not have given them much weight. The firm of these witnesses was newly established at that time and was still a "general agency" of the Companies. It is not therefore amiss to conclude that they were more inclined to favor the respondents rather than Tongos. Pacifico Ner, Paulino Bugay, Jose Garcia, Narciso Dao, Vicente Alsol and Hermenigildo Ramirez, opined the lower court, were constructively dismissed by non-readmission allegedly because they not only prevented Ramon Garcia, assistant corporate secretary, and Vicente Abella, chief of the personnel records section of the Companies, from entering the Companies' premises on May 21, 1958, but they also caused bruises and abrasions on Garcia's chest and forehead acts considered inimical to the interest of the respondents. The Unions, upon the other hand, insist that there is complete lack of evidence that Ner took part in pushing Garcia; that it was Garcia who elbowed his way through the picket lines and therefore Ner shouted "Close up," which the picketers did; and that Garcia tossed Paulino Bugay's placard and a fight ensued between them in which both suffered injuries. But despite these conflicting versions of what actually happened on May 21, 1958, there are grounds to believe that the picketers are not responsible for what happened.lwph1.t The picketing on May 21, 1958, as reported in the police blotter, was peaceful (see Police blotter report, exh. 3 in CA-G.R. No. 25991-R of the Court of Appeals, where Ner was acquitted). Moreover, although the Companies during the strike were holding offices at the Botica Boie building at Escolta, Manila; Tuason Building at San Vicente Street, Manila; and Ayala, Inc. offices at Makati, Rizal, Garcia, the assistant corporate secretary, and Abella, the chief of the personnel records section, reported for work at the Insular Life Building. There is therefore a reasonable suggestion that they were sent to work at the latter building to create such an incident and have a basis for filing criminal charges against the petitioners in the fiscal's office and applying for injunction from the court of first instance. Besides, under the circumstances the picketers were not legally bound to yield their grounds and withdraw from the picket lines. Being where the law expects them to be in the legitimate exercise of their rights, they had every reason to defend themselves and their rights from any assault or unlawful transgression. Yet the police blotter, about adverted to, attests that they did not resort to violence. The heated altercations and occasional blows exchanged on the picket line do not affect or diminish the right to strike. Persuasive on this point is the following commentary: . We think it must be conceded that some disorder is unfortunately quite usual in any extensive or long drawn out strike. A strike is essentially a battle waged with economic weapons. Engaged in it are human beings whose feelings are stirred to the depths. Rising passions call forth hot words. Hot words lead to blows on the picket line. The transformation from economic to physical combat by those engaged in the contest is difficult to prevent even when cool heads direct the fight. Violence of this nature, however much it is to be regretted, must have been in the contemplation of the Congress when it
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provided in Sec. 13 of Act 29 USCA Sec. 163, that nothing therein should be construed so as to interfere with or impede or diminish in any way the right to strike. If this were not so, the rights afforded to employees by the Act would indeed be illusory. We accordingly recently held that it was not intended by the Act that minor disorders of this nature would deprive a striker of the possibility of reinstatement. (Republic Steel Corp. v. N. L. R. B., 107 F2d 472, cited in Mathews, Labor Relations and the Law, p. 378) Hence the incident that occurred between Ner, et al. and Ramon Garcia was but a necessary incident of the strike and should not be considered as a bar to reinstatement. Thus it has been held that: Fist-fighting between union and non-union employees in the midst of a strike is no bar to reinstatement. (Teller, Labor Disputes and Collective Bargaining, Vol. II, p. 855 citing Stackpole Carbon, Co. 6 NLRB 171, enforced 105 F2d 167.) Furthermore, assuming that the acts committed by the strikers were transgressions of law, they amount only to mere ordinary misdemeanors and are not a bar to reinstatement. In cases involving misdemeanors the board has generally held that unlawful acts are not bar to reinstatement. (Teller, Labor Disputes and Collective Bargaining, Id., p. 854, citing Ford Motor Company, 23 NLRB No. 28.) Finally, it is not disputed that despite the pendency of criminal charges against non-striking employees before the fiscal's office, they were readily admitted, but those strikers who had pending charges in the same office were refused readmission. The reinstatement of the strikers is thus in order. [W]here the misconduct, whether in reinstating persons equally guilty with those whose reinstatement is opposed, or in other ways, gives rise to the inference that union activities rather than misconduct is the basis of his [employer] objection, the Board has usually required reinstatement." (Teller, supra, p. 853, citing the Third Annual Report of NLRB [1938], p. 211.) Lastly, the lower Court justified the constructive dismissal of Florencio Ibarra allegedly because he committed acts inimical to the interest of the respondents when, as president of the FGU Workers and Employees Association-NATU, he advised the strikers that they could use force and violence to have a successful picket and that picketing was precisely intended to prevent the non-strikers and company clients and customers from entering the Companies' buildings. Even if this were true, the record discloses that the picket line had been generally peaceful, and that incidents happened only when management men made incursions into and tried to break the picket line. At any rate, with or without the advice of Ibarra, picketing is inherently explosive. For, as pointed out by one author, "The picket line is an explosive front, charged with the emotions and fierce loyalties of the union-management dispute. It may be marked by colorful name-calling, intimidating threats or sporadic fights between the pickets and those who pass the line." (Mathews, Labor Relations and the Law, p. 752). The picket line being the natural result of the respondents' unfair labor practice, Ibarra's misconduct is at most a misdemeanor which is not a bar to reinstatement. Besides, the only evidence presented by the Companies regarding Ibarra's participation in the strike was the testimony of one Rodolfo Encarnacion, a former member of the board of directors of the petitioner FGU Insurance Group Workers and Employees Union-NATU, who became a "turncoat" and who likewise testified as to the union activities of Atty. Lacsina, Ricardo Villaruel and others (annex C, Decision, p. 27) another matter which emphasizes the respondents' unfair labor practice. For under the circumstances, there is good ground to believe that Encarnacion was made to spy on the actvities of the union members. This act of the respondents is considered unjustifiable interference in the union activities of the petitioners and is unfair labor practice. It has been held in a great number of decisions at espionage by an employer of union activities, or surveillance thereof, are such instances of interference, restraint or coercion
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of employees in connection with their right to organize, form and join unions as to constitute unfair labor practice. ... "Nothing is more calculated to interfere with, restrain and coerce employees in the exercise of their right to self-organization than such activity even where no discharges result. The information obtained by means of espionage is in valuable to the employer and can be used in a variety of cases to break a union." The unfair labor practice is committed whether the espionage is carried on by a professional labor spy or detective, by officials or supervisory employees of the employer, or by fellow employees acting at the request or direction of the employer, or an ex-employee..." (Teller, Labor Disputes and Collective Bargaining, Vol. II, pp. 765-766, and cases cited.) . IV. The lower court should have ordered the reinstatement of the officials and members of the Unions, with full back wages from June 2, 1958 to the date of their actual reinstatement to their usual employment. Because all too clear from the factual and environmental milieu of this case, coupled with settled decisional law, is that the Unions went on strike because of the unfair labor practices committed by the respondents, and that when the strikers reported back for work upon the invitation of the respondents they were discriminatorily dismissed. The members and officials of the Unions therefore are entitled to reinstatement with back pay. [W]here the strike was induced and provoked by improper conduct on the part of an employer amounting to an 'unfair labor practice,' the strikers are entitled to reinstatement with back pay. (Rothenberg on Labor Relations, p. 418.) [A]n employee who has been dismissed in violation of the provisions of the Act is entitled to reinstatement with back pay upon an adjudication that the discharge was illegal." (Id., citingWaterman S. S. Corp. v. N. L. R. B., 119 F2d 760; N. L. R. B. v. Richter's Bakery, 140 F2d 870; N. L. R. B. v. Southern Wood Preserving Co., 135 F. 2d 606; C. G. Conn, Ltd. v. N. L. R. B., 108 F2d 390; N. L. R. B. v. American Mfg. Co., 106 F2d 61; N. L. R. B. v. Kentucky Fire Brick Co., 99 F2d 99.) And it is not a defense to reinstatement for the respondents to allege that the positions of these union members have already been filled by replacements. [W]here the employers' "unfair labor practice" caused or contributed to the strike or where the 'lock-out' by the employer constitutes an "unfair labor practice," the employer cannot successfully urge as a defense that the striking or lock-out employees position has been filled by replacement. Under such circumstances, if no job sufficiently and satisfactorily comparable to that previously held by the aggrieved employee can be found, the employer must discharge the replacement employee, if necessary, to restore the striking or locked-out worker to his old or comparable position ... If the employer's improper conduct was an initial cause of the strike, all the strikers are entitled to reinstatement and the dismissal of replacement employees wherever necessary; ... . (Id., p. 422 and cases cited.) A corollary issue to which we now address ourselves is, from what date should the backpay payable to the unionists be computed? It is now a settled doctrine that strikers who are entitled to reinstatement are not entitled to back pay during the period of the strike, even though it is caused by an unfair labor practice. However, if they offer to return to work under the same conditions just before the strike, the refusal to reemploy or the imposition of conditions amounting to unfair labor practice is a violation of section 4(a) (4) of the Industrial Peace Act and the employer is liable for backpay from the date of the offer (Cromwell Commercial Employees and Laborers Union vs. Court of Industrial Relations, L-19778, Decision, Sept. 30, 1964, 12 SCRA 124; Id., Resolution on motion for reconsideration, 13 SCRA 258; see also Mathews, Labor Relations and the Law, p. 730 and the cited cases). We have likewise ruled that discriminatorily dismissed employees must receive backpay from the date of the act of discrimination, that is, from the date of their
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discharge (Cromwell Commercial Employees and Laborers Union vs. Court of Industrial Relations, supra). The respondents notified the petitioner strikers to report back for work on June 2, 1958, which the latter did. A great number of them, however, were refused readmission because they had criminal charges against them pending before the fiscal's office, although non-strikers who were also facing criminal indictments were readily readmitted. These strikers who were refused readmission on June 2, 1958 can thus be categorized as discriminatorily dismissed employees and are entitled to backpay from said date. This is true even with respect to the petitioners Jose Pilapil, Paulino Bugay, Jr. and Jose Garcia, Jr. who were found guilty only of misdemeanors which are not considered sufficient to bar reinstatement (Teller, Labor Disputes and Collective Bargaining, p. 854), especially so because their unlawful acts arose during incidents which were provoked by the respondents' men. However, since the employees who were denied readmission have been out of the service of the Companies (for more than ten years) during which they may have found other employment or other means of livelihood, it is only just and equitable that whatever they may have earned during that period should be deducted from their back wages to mitigate somewhat the liability of the company, pursuant to the equitable principle that no one is allowed to enrich himself at the expense of another (Macleod & Co. of the Philippines v. Progressive Federation of Labor, 97 Phil. 205 [1955]). The lower court gave inordinate significance to the payment to and acceptance by the dismissed employees of separation pay. This Court has ruled that while employers may be authorized under Republic Act 1052 to terminate employment of employees by serving the required notice, or, in the absence thereof, by paying the required compensation, the said Act may not be invoked to justify a dismissal prohibited by law, e.g., dismissal for union activities. ... While Republic Act No. 1052 authorizes a commercial establishment to terminate the employment of its employee by serving notice on him one month in advance, or, in the absence thereof, by paying him one month compensation from the date of the termination of his employment, such Act does not give to the employer a blanket authority to terminate the employment regardless of the cause or purpose behind such termination. Certainly, it cannot be made use of as a cloak to circumvent a final order of the court or a scheme to trample upon the right of an employee who has been the victim of an unfair labor practice. (Yu Ki Lam, et al. v. Nena Micaller, et al., 99 Phil. 904 [1956].) Finally, we do not share the respondents' view that the findings of fact of the Court of Industrial Relations are supported by substantial and credible proof. This Court is not therefore precluded from digging deeper into the factual milieu of the case (Union of Philippine Education Employees v. Philippine Education Company, 91 Phil. 93; Lu Do & Lu Ym Corporation v. Philippine-Land-Air-Sea Labor Union, 11 SCRA 134 [1964]). V. The petitioners (15 of them) ask this Court to cite for contempt the respondent Presiding Judge Arsenio Martinez of the Court of Industrial Relations and the counsels for the private respondents, on the ground that the former wrote the following in his decision subject of the instant petition for certiorari, while the latter quoted the same on pages 90-91 of the respondents' brief: . ... Says the Supreme Court in the following decisions: In a proceeding for unfair labor practice, involving a determination as to whether or not the acts of the employees concerned justified the adoption of the employer of disciplinary measures against them, the mere fact that the employees may be able to put up a valid defense in a criminal prosecution for the same acts, does not erase or neutralize the employer's right to impose discipline on said employees. For it is settled that not even the acquittal of an employee of the criminal charge against him is a bar to the employer's right to impose discipline on its employees,
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should the act upon which the criminal charged was based constitute nevertheless an activity inimical to the employer's interest... The act of the employees now under consideration may be considered as a misconduct which is a just cause for dismissal . (Lopez, Sr., et al. vs. Chronicle Publication Employees Ass'n. et al., G.R. No. L-20179-81, December 28, 1964.) (emphasis supplied) The two pertinent paragraphs in the above-cited decision * which contained the underscored portions of the above citation read however as follows: Differently as regard the dismissal of Orlando Aquino and Carmelito Vicente, we are inclined to uphold the action taken by the employer as proper disciplinary measure. A reading of the article which allegedly caused their dismissal reveals that it really contains an insinuation albeit subtly of the supposed exertion of political pressure by the Manila Chronicle management upon the City Fiscal's Office, resulting in the non-filing of the case against the employer. In rejecting the employer's theory that the dismissal of Vicente and Aquino was justified, the lower court considered the article as "a report of some acts and omissions of an Assistant Fiscal in the exercise of his official functions" and, therefore, does away with the presumption of malice. This being a proceeding for unfair labor practice, the matter should not have been viewed or gauged in the light of the doctrine on a publisher's culpability under the Penal Code. We are not here to determine whether the employees' act could stand criminal prosecution, but only to find out whether the aforesaid act justifies the adoption by the employer of disciplinary measure against them. This is not sustaining the ruling that the publication in question is qualified privileged, but even on the assumption that this is so, the exempting character thereof under the Penal Code does not necessarily erase or neutralize its effect on the employer's interest which may warrant employment of disciplinary measure. For it must be remembered that not even the acquittal of an employee, of the criminal charges against him, is a bar to the employer's right to impose discipline on its employees, should the act upon which the criminal charges was based constitute nevertheless an activity inimical to the employer's interest. In the herein case, it appears to us that for an employee to publish his "suspicion," which actually amounts to a public accusation, that his employer is exerting political pressure on a public official to thwart some legitimate activities on the employees, which charge, in the least, would sully the employer's reputation, can be nothing but an act inimical to the said employer's interest. And the fact that the same was made in the union newspaper does not alter its deleterious character nor shield or protect a reprehensible act on the ground that it is a union activity, because such end can be achieved without resort to improper conduct or behavior. The act of the employees now under consideration may be considered as a misconduct which is a just cause for dismissal .** (Emphasis ours) It is plain to the naked eye that the 60 un-underscored words of the paragraph quoted by the respondent Judge do not appear in the pertinent paragraph of this Court's decision in L-20179-81. Moreover, the first underscored sentence in the quoted paragraph starts with "For it is settled ..." whereas it reads, "For it must be remembered ...," in this Court's decision. Finally, the second and last underlined sentence in the quoted paragraph of the respondent Judge's decision, appears not in the same paragraph of this Court's decision where the other sentence is, but in the immediately succeeding paragraph. This apparent error, however, does not seem to warrant an indictment for contempt against the respondent Judge and the respondents' counsels. We are inclined to believe that the misquotation is more a result of clerical ineptitude than a deliberate attempt on the part of the respondent Judge to mislead. We fully realize how saddled with many pending cases are the courts of the land, and it is not difficult to imagine that because of the pressure of their varied and multifarious work, clerical errors may escape their notice. Upon the other hand, the respondents' counsels have the prima facie right to rely on the
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quotation as it appears in the respondent Judge's decision, to copy it verbatim, and to incorporate it in their brief. Anyway, the import of the underscored sentences of the quotation in the respondent Judge's decision is substantially the same as, and faithfully reflects, the particular ruling in this Court's decision, i.e., that "[N]ot even the acquittal of an employee, of the criminal charges against him, is a bar to the employer's right to impose discipline on its employees, should the act upon which the criminal charges were based constitute nevertheless an activity inimical to the employer's interest." Be that as it may, we must articulate our firm view that in citing this Court's decisions and rulings, it is the bounden duty of courts, judges and lawyers to reproduce or copy the same word-for-word and punctuation mark-for-punctuation mark. Indeed, there is a salient and salutary reason why they should do this. Only from this Tribunal's decisions and rulings do all other courts, as well as lawyers and litigants, take their bearings. This is because the decisions referred to in article 8 of the Civil Code which reads, "Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines," are only those enunciated by this Court of last resort. We said in no uncertain terms in Miranda, et al. vs. Imperial, et al. (77 Phil. 1066) that "[O]nly the decisions of this Honorable Court establish jurisprudence or doctrines in this jurisdiction." Thus, ever present is the danger that if not faithfully and exactly quoted, the decisions and rulings of this Court may lose their proper and correct meaning, to the detriment of other courts, lawyers and the public who may thereby be misled. But if inferior courts and members of the bar meticulously discharge their duty to check and recheck their citations of authorities culled not only from this Court's decisions but from other sources and make certain that they are verbatim reproductions down to the last word and punctuation mark, appellate courts will be precluded from acting on misinformation, as well as be saved precious time in finding out whether the citations are correct. Happily for the respondent Judge and the respondents' counsels, there was no substantial change in the thrust of this Court's particular ruling which they cited. It is our view, nonetheless, that for their mistake, they should be, as they are hereby, admonished to be more careful when citing jurisprudence in the future. ACCORDINGLY, the decision of the Court of Industrial Relations dated August 17, 1965 is reversed and set aside, and another is entered, ordering the respondents to reinstate the dismissed members of the petitioning Unions to their former or comparatively similar positions, with backwages from June 2, 1958 up to the dates of their actual reinstatements. Costs against the respondents. STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE) vs. The Honorable MA. NIEVES R. CONFESOR G.R. No. 114974 June 16, 2004 This is a petition for certiorari under Rule 65 of the Rules of Court filed by the Standard Chartered Bank Employees Union, seeking the nullification of the October 29, 1993 Order 1 of then Secretary of Labor and Employment Nieves R. Confesor and her resolutions dated December 16, 1993 and February 10, 1994. The Antecedents Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation doing business in the Philippines. The exclusive bargaining agent of the rank and file employees of the Bank is the Standard Chartered Bank Employees Union (the Union, for brevity). In August of 1990, the Bank and the Union signed a five-year collective bargaining agreement (CBA) with a provision to renegotiate the terms thereof on the third year. Prior to the expiration of the three-year period2 but within the sixty-day freedom period, the Union initiated the negotiations. On February 18, 1993, the Union, through its President, Eddie L. Divinagracia, sent a letter 3 containing its proposals4 covering political provisions5 and thirty-four (34) economic provisions.6 Included therein was a list of the names of the members of the Unions negotiating panel.7 In a Letter dated February 24, 1993, the Bank, through its Country Manager Peter H. Harris, took note of the Unions proposals. The Bank attached its counter-proposal to the non-economic provisions proposed by the Union.8 The Bank posited that it would be in a better position to present its counter-proposals on
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the economic items after the Union had presented its justifications for the economic proposals. 9 The Bank, likewise, listed the members of its negotiating panel.10 The parties agreed to set meetings to settle their differences on the proposed CBA. Before the commencement of the negotiation, the Union, through Divinagracia, suggested to the Banks Human Resource Manager and head of the negotiating panel, Cielito Diokno, that the bank lawyers should be excluded from the negotiating team. The Bank acceded. 11 Meanwhile, Diokno suggested to Divinagracia that Jose P. Umali, Jr., the President of the National Union of Bank Employees (NUBE), the federation to which the Union was affiliated, be excluded from the Unions negotiating panel. 12 However, Umali was retained as a member thereof. On March 12, 1993, the parties met and set the ground rules for the negotiation. Diokno suggested that the negotiation be kept a "family affair." The proposed non-economic provisions of the CBA were discussed first.13Even during the final reading of the non-economic provisions on May 4, 1993, there were still provisions on which the Union and the Bank could not agree. Temporarily, the notation "DEFERRED" was placed therein. Towards the end of the meeting, the Union manifested that the same should be changed to "DEADLOCKED" to indicate that such items remained unresolved. Both parties agreed to place the notation "DEFERRED/DEADLOCKED."14 On May 18, 1993, the negotiation for economic provisions commenced. A presentation of the basis of the Unions economic proposals was made. The next meeting, the Bank made a similar presentation. Towards the end of the Banks presentation, Umali requested the Bank to validate the Unions "guestimates," especially the figures for the rank and file staff.15 In the succeeding meetings, Umali chided the Bank for the insufficiency of its counter-proposal on the provisions on salary increase, group hospitalization, death assistance and dental benefits. He reminded the Bank, how the Union got what it wanted in 1987, and stated that if need be, the Union would go through the same route to get what it wanted. 16 Upon the Banks insistence, the parties agreed to tackle the economic package item by item. Upon the Unions suggestion, the Bank indicated which provisions it would accept, reject, retain and agree to discuss.17 The Bank suggested that the Union prioritize its economic proposals, considering that many of such economic provisions remained unresolved. The Union, however, demanded that the Bank make a revised itemized proposal. In the succeeding meetings, the Union made the following proposals: Wage Increase: 1st Year Reduced from 45% to 40% 2nd Year - Retain at 20% Total = 60% Group Hospitalization Insurance: Maximum disability benefit reduced from P75,000.00 to P60,000.00 per illness annually Death Assistance: For the employee Reduced from P50,000.00 to P45,000.00 For Immediate Family Member Reduced from P30,000.00 to P25,000.00
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Dental and all others No change from the original demand.18 In the morning of the June 15, 1993 meeting, the Union suggested that if the Bank would not make the necessary revisions on its counter-proposal, it would be best to seek a third party assistance.19 After the break, the Bank presented its revised counter-proposal20 as follows: Wage Increase : 1st Year from P1,000 to P1,050.00 2nd Year P800.00 no change Group Hospitalization Insurance From: P35,000.00 per illness To : P35,000.00 per illness per year Death Assistance For employee From: P20,000.00 To : P25,000.00 Dental Retainer Original offer remains the same21 The Union, for its part, made the following counter-proposal: Wage Increase: 1st Year - 40% 2nd Year - 19.5% Group Hospitalization Insurance From: P60,000.00 per year To : P50,000.00 per year Dental: Temporary Filling/ P150.00 Tooth Extraction Permanent Filling 200.00 Prophylaxis 250.00 Root Canal From P2,000 per tooth To: 1,800.00 per tooth Death Assistance:
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For Employees: From P45,000.00 to P40,000.00 For Immediate Family Member: From P25,000.00 to P20,000.00.22 The Unions original proposals, aside from the above-quoted, remained the same. Another set of counter-offer followed: Management Wage Increase 1st Year P1,050.00 40% 2nd Year - 850.00 19.0%23 Union
Diokno stated that, in order for the Bank to make a better offer, the Union should clearly identify what it wanted to be included in the total economic package. Umali replied that it was impossible to do so because the Banks counter-proposal was unacceptable. He furthered asserted that it would have been easier to bargain if the atmosphere was the same as before, where both panels trusted each other . Diokno requested the Union panel to refrain from involving personalities and to instead focus on the negotiations.24 He suggested that in order to break the impasse, the Union should prioritize the items it wanted to iron out. Divinagracia stated that the Bank should make the first move and make a list of items it wanted to be included in the economic package. Except for the provisions on signing bonus and uniforms, the Union and the Bank failed to agree on the remaining economic provisions of the CBA. The Union declared a deadlock25 and filed a Notice of Strike before the National Conciliation and Mediation Board (NCMB) on June 21, 1993, docketed as NCMB-NCR-NS-06-380-93.26 On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP) and Damages before the Arbitration Branch of the National Labor Relations Commission (NLRC) in Manila, docketed as NLRC Case No. 00-06-04191-93 against the Union on June 28, 1993. The Bank alleged that the Union violated its duty to bargain, as it did not bargain in good faith. It contended that the Union demanded "sky high economic demands," indicative of blue-sky bargaining.27 Further, the Union violated its no strikeno lockout clause by filing a notice of strike before the NCMB. Considering that the filing of notice of strike was an illegal act, the Union officers should be dismissed. Finally, the Bank alleged that as a consequence of the illegal act, the Bank suffered nominal and actual damages and was forced to litigate and hire the services of the lawyer.28 On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves R. Confesor, pursuant to Article 263(g) of the Labor Code, issued an Order assuming jurisdiction over the labor dispute at the Bank. The complaint for ULP filed by the Bank before the NLRC was consolidated with the complaint over which the SOLE assumed jurisdiction. After the parties submitted their respective position papers, the SOLE issued an Order on October 29, 1993, the dispositive portion of which is herein quoted: WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank Employees Union NUBE are hereby ordered to execute a collective bargaining agreement incorporating the dispositions contained herein. The CBA shall be retroactive to 01 April 1993 and shall remain effective for two years thereafter, or until such time as a new CBA has superseded it. All provisions in the expired CBA not expressly modified or not passed upon herein are deemed retained while all new provisions which are being demanded by either party are deemed denied, but without prejudice to such agreements as the parties may have arrived at in the meantime.
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The Banks charge for unfair labor practice which it originally filed with the NLRC as NLRC -NCR Case No. 00-06-04191-93 but which is deemed consolidated herein, is dismissed for lack of merit. On the other hand, the Unions charge for unfair labor practice is similarly dismissed. Let a copy of this order be furnished the Labor Arbiter in whose sala NLRC-NCR Case No. 00-0604191-93 is pending for his guidance and appropriate action.29 The SOLE gave the following economic awards: 1. Wage Increase: a) To be incorporated to present salary rates: Fourth year : 7% of basic monthly salary Fifth year : 5% of basic monthly salary based on the 4th year adjusted salary b) Additional fixed amount: Fourth year : P600.00 per month Fifth year : P400.00 per month 2. Group Insurance a) Hospitalization : P45,000.00 b) Life : P130,000.00 c) Accident : P130,000.00 3. Medicine Allowance Fourth year : P5,500.00 Fifth year : P6,000.00 4. Dental Benefits Provision of dental retainer as proposed by the Bank, but without diminishing existing benefits 5. Optical Allowance Fourth year: P2,000.00 Fifth year : P2,500.00 6. Death Assistance a) Employee : P30,000.00
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b) Immediate Family Member : P5,000.00 7. Emergency Leave Five (5) days for each contingency 8. Loans a) Car Loan : P200,000.00 b) Housing Loan : It cannot be denied that the costs attendant to having ones own home have tremendously gone up. The need, therefore, to improve on this benefit cannot be overemphasized. Thus, the management is urged to increase the existing and allowable housing loan that the Bank extends to its employees to an amount that will give meaning and substance to this CBA benefit.30 The SOLE dismissed the charges of ULP of both the Union and the Bank, explaining that both parties failed to substantiate their claims. Citing National Labor Union v. Insular-Yebana Tobacco Corporation,31 the SOLE stated that ULP charges would prosper only if shown to have directly prejudiced the public interest. Dissatisfied, the Union filed a motion for reconsideration with clarification, while the Bank filed a motion for reconsideration. On December 16, 1993, the SOLE issued a Resolution denying the motions. The Union filed a second motion for reconsideration, which was, likewise, denied on February 10, 1994. On March 22, 1994, the Bank and the Union signed the CBA.32 Immediately thereafter, the wage increase was effected and the signing bonuses based on the increased wage were distributed to the employees covered by the CBA. The Present Petition On April 28, 1994, the Union filed this petition for certiorari under Rule 65 of the Rules of Procedure alleging as follows: A. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE UNIONS CHARGE OF UNFAIR LABOR PRACTICE IN VIEW OF THE CLEAR EVIDENCE OF RECORD AND ADMISSIONS PROVING THE UNFAIR LABOR PRACTICES CHARGED.33 B. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON OTHER UNFAIR LABOR PRACTICES CHARGED.34 C. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE CHARGES OF UNFAIR LABOR PRACTICES ON THE GROUND THAT NO PROOF OF INJURY TO THE PUBLIC INTEREST WAS PRESENTED.35 The Union alleges that the SOLE acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it found that the Bank did not commit unfair labor practice when it interfered with the Unions choice of negotiator. It argued that, Dioknos suggestion that the negotiation be limited as a "family affair" was tantamount to suggesting that Federation President Jose Umali, Jr. be excluded from the Unions negotiating panel. It further argued that contrary to the ruling of the public respondent, damage or injury to the public interest need not be present in order for unfair labor practice to prosper.
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The Union, likewise, pointed out that the public respondent failed to rule on the ULP charges arising from the Banks surface bargaining. The Union contended that the Bank merely went through the motions of collective bargaining without the intent to reach an agreement, and made bad faith proposals when it announced that the parties should begin from a clean slate. It argued that the Bank opened the political provisions "up for grabs," which had the effect of diminishing or obliterating the gains that the Union had made. The Union also accused the Bank of refusing to disclose material and necessary data, even after a request was made by the Union to validate its "guestimates." In its Comment, the Bank prayed that the petition be dismissed as the Union was estopped, considering that it signed the Collective Bargaining Agreement (CBA) on April 22, 1994. It asserted that contrary to the Unions allegations, it was the Union that committed ULP when negotiator Jose Umali, Jr. hurled invectives at the Banks head negotiator, Cielito Diokno, and demanded that she be excluded from the Banks negotiating team. Moreover, the Union engaged in blue-sky bargaining and isolated the no strikeno lockout clause of the existing CBA. The Office of the Solicitor General, in representation of the public respondent, prayed that the petition be dismissed. It asserted that the Union failed to prove its ULP charges and that the public respondent did not commit any grave abuse of discretion in issuing the assailed order and resolutions. The Issues The issues presented for resolution are the following: (a) whether or not the Union was able to substantiate its claim of unfair labor practice against the Bank arising from the latters alleged "interference" with its choice of negotiator; surface bargaining; making bad faith non-economic proposals; and refusal to furnish the Union with copies of the relevant data; (b) whether or not the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction when she issued the assailed order and resolutions; and, (c) whether or not the petitioner is estopped from filing the instant action. The Courts Ruling The petition is bereft of merit. "Interference" under Article 248 (a) of the Labor Code The petitioner asserts that the private respondent committed ULP, i.e., interference in the selection of the Unions negotiating panel, when Cielito Diokno, the Banks Human Resource Manager, suggested to the Unions President Eddie L. Divinagracia that Jose P. Umali, Jr., President of the NUBE, be excluded from the Unions negotiating panel. In support of its claim, Divinagracia executed an affidavit, stating that prior to the commencement of the negotiation, Diokno approached him and suggested the exclusion of Umali from the Unions negotiating panel, and that during the first meeting, Diokno stat ed that the negotiation be kept a "family affair." Citing the cases of U.S. Postal Service36 and Harley Davidson Motor Co., Inc., AMF,37 the Union claims that interference in the choice of the Unions bargaining panel is tantamount to ULP. In the aforecited cases, the alleged ULP was based on the employers violation of Section 8(a)(1) and (5) of the National Labor Relations Act (NLRA),38 which pertain to the interference, restraint or coercion of the employer in the employees exercise of their rights to s elf-organization and to bargain collectively through representatives of their own choosing; and the refusal of the employer to bargain collectively with the
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employees representatives. In both cases, the National Labor Relations Board held that upon the employers refusal to engage in negotiations with the Union for collective -bargaining contract when the Union includes a person who is not an employee, or one who is a member or an official of other labororganizations, such employer is engaged in unfair labor practice under Section 8(a)(1) and (5) of the NLRA. The Union further cited the case of Insular Life Assurance Co., Ltd. Employees Association NATU vs. Insular Life Assurance Co. Ltd.,39 wherein this Court said that the test of whether an employer has interfered with and coerced employees in the exercise of their right to self-organization within the meaning of subsection (a)(1) is whether the employer has engaged in conduct which it may reasonably be said, tends to interfere with the free exercise of employees rights under Section 3 of the Act.40 Further, it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by statements of threats of the employer if there is a reasonable inference that anti-union conduct of the employer does have an adverse effect on self-organization and collective bargaining.41 Under the International Labor Organization Convention (ILO) No. 87 FREEDOM OF ASSOCIATION AND PROTECTION OF THE RIGHT TO ORGANIZE to which the Philippines is a signatory, "workers and employers, without distinction whatsoever, shall have the right to establish and, subject only to the rules of the organization concerned, to job organizations of their own choosing without previous authorization."42 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.43Article 2 of ILO Convention No. 98 pertaining to the Right to Organize and Collective Bargaining, provides: Article 2 1. Workers and employers organizations shall enjoy adequate protection against any acts or interference by each other or each others agents or members in their establishment, functioning or administration. 2. In particular, acts which are designed to promote the establishment of workers organizations under the domination of employers or employers organizations or to support workers organizations by financial or other means, with the object of placing such organizations under the control of employers or employers organizations within the meaning of this Article. The aforcited ILO Conventions are incorporated in our Labor Code, particularly in Article 243 thereof, which provides: 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 selforganization 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. and Articles 248 and 249 respecting ULP of employers and labor organizations. The said ILO Conventions were ratified on December 29, 1953. However, even as early as the 1935 Constitution,44 the State had already expressly bestowed protection to labor as part of the general provisions. The 1973 Constitution,45 on the other hand, declared it as a policy of the state to afford protection to labor, specifying that the workers rig hts to self-organization, collective bargaining, security
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of tenure, and just and humane conditions of work would be assured. For its part, the 1987 Constitution, aside from making it a policy to "protect the rights of workers and promote their welfare," 46 devotes an entire section, emphasizing its mandate to afford protection to labor, and highlights "the principle of shared responsibility" between workers and employers to promote industrial peace. 47 Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer interferes, restrains or coerces employees in the exercise of their right to self-organization or the right to form association. The right to self-organization necessarily includes the right to collective bargaining. Parenthetically, if an employer interferes in the selection of its negotiators or coerces the Union to exclude from its panel of negotiators a representative of the Union, and if it can be inferred that the employer adopted the said act to yield adverse effects on the free exercise to right to self-organization or on the right to collective bargaining of the employees, ULP under Article 248(a) in connection with Article 243 of the Labor Code is committed. In order to show that the employer committed ULP under the Labor Code, substantial evidence is required to support the claim. Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. 48 In the case at bar, the Union bases its claim of interference on the alleged suggestions of Diokno to exclude Umali from the Unions negotiating panel. The circumstances that occurred during the negotiation do not show that the suggestion made by Diokno to Divinagracia is an anti-union conduct from which it can be inferred that the Bank consciously adopted such act to yield adverse effects on the free exercise of the right to self-organization and collective bargaining of the employees, especially considering that such was undertaken previous to the commencement of the negotiation and simultaneously with Divinagracias suggestion that the bank lawyers be excluded from its negotiating panel. The records show that after the initiation of the collective bargaining process, with the inclusion of Umali in the Unions negotiating panel, the negotiations pushed through. The complaint was made only on August 16, 1993 after a deadlock was declared by the Union on June 15, 1993. It is clear that such ULP charge was merely an afterthought. The accusation occurred after the arguments and differences over the economic provisions became heated and the parties had become frustrated. It happened after the parties started to involve personalities. As the public respondent noted, passions may rise, and as a result, suggestions given under less adversarial situations may be colored with unintended meanings.49 Such is what appears to have happened in this case. The Duty to Bargain Collectively If at all, the suggestion made by Diokno to Divinagracia should be construed as part of the normal relations and innocent communications, which are all part of the friendly relations between the Union and Bank. The Union alleges that the Bank violated its duty to bargain; hence, committed ULP under Article 248(g) when it engaged in surface bargaining. It alleged that the Bank just went through the motions of bargaining without any intent of reaching an agreement, as evident in the Banks counter -proposals. It explained that of the 34 economic provisions it made, the Bank only made 6 economic counterproposals. Further, as borne by the minutes of the meetings, the Bank, after indicating the economic provisions it had rejected, accepted, retained or were open for discussion, refused to make a list of items it agreed to include in the economic package.
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Surface bargaining is defined as "going through the motions of negotiating" without any legal intent to reach an agreement.50 The resolution of surface bargaining allegations never presents an easy issue. The determination of whether a party has engaged in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of the intent of the party in question, and usually such intent can only be inferred from the totality of the challenged partys conduct both at and awa y from the bargaining table.51 It involves the question of whether an employers conduct demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.52 The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that the Bank had any intention of violating its duty to bargain with the Union. Records show that after the Union sent its proposal to the Bank on February 17, 1993, the latter replied with a list of its counter-proposals on February 24, 1993. Thereafter, meetings were set for the settlement of their differences. The minutes of the meetings show that both the Bank and the Union exchanged economic and non-economic proposals and counter-proposals. The Union has not been able to show that the Bank had done acts, both at and away from the bargaining table, which tend to show that it did not want to reach an agreement with the Union or to settle the differences between it and the Union. Admittedly, the parties were not able to agree and reached a deadlock. However, it is herein emphasized that the duty to bargain "does not compel either party to agree to a proposal or require the making of a concession."53 Hence, the parties failure to agree did not amount to ULP under Article 248(g) for violation of the duty to bargain. We can hardly dispute this finding, for it finds support in the evidence. The inference that respondents did not refuse to bargain collectively with the complaining union because they accepted some of the demands while they refused the others even leaving open other demands for future discussion is correct, especially so when those demands were discussed at a meeting called by respondents themselves precisely in view of the letter sent by the union on April 29, 196054 In view of the finding of lack of ULP based on Article 248(g), the accusation that the Bank made bad-faith provisions has no leg to stand on. The records show that the Banks counterproposals on the non economic provisions or political provisions did not put "up for grabs" the entire work of the Union and its predecessors. As can be gleaned from the Banks counterproposal, there were many provisions which it proposed to be retained. The revisions on the other provisions were made after the parties had come to an agreement. Far from buttressing the Unions claim that the Bank made bad-faith proposals on the noneconomic provisions, all these, on the contrary, disprove such allegations. We, likewise, find that the Union failed to substantiate its claim that the Bank refused to furnish the information it needed. While the refusal to furnish requested information is in itself an unfair labor practice, and also supports the inference of surface bargaining,55 in the case at bar, Umali, in a meeting dated May 18, 1993, requested the Bank to validate its guestimates on the data of the rank and file. However, Umali failed to put his request in writing as provided for in Article 242(c) of the Labor Code: Article 242. Rights of Legitimate Labor Organization (c) To be furnished by the employer, upon written request, with the annual audited financial statements, 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 representatives 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 negotiation;
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The Union, did not, as the Labor Code requires, send a written request for the issuance of a copy of the data about the Banks rank and file employees. Moreover, as alleged by the Union, the fact that the Bank made use of the aforesaid guestimates, amounts to a validation of the data it had used in its presentation. No Grave Abuse of Discretion On the Part of the Public Respondent The special civil action for certiorari may be availed of when the tribunal, board, or officer exercising judicial or quasi-judicial functions has acted without or in excess of jurisdiction and there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law for the purpose of annulling the proceeding.56 Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility which must be so patent and gross as to amount to an invasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. Mere abuse of discretion is not enough.57 While it is true that a showing of prejudice to public interest is not a requisite for ULP charges to prosper, it cannot be said that the public respondent acted in capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction or excess thereof. Neither was it shown that the public respondent exercised its power in an arbitrary and despotic manner by reason of passion or personal hostility. Estoppel not Applicable In the Case at Bar The respondent Bank argues that the petitioner is estopped from raising the issue of ULP when it signed the new CBA. Article 1431 of the Civil Code provides: Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. A person, who by his deed or conduct has induced another to act in a particular manner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or injury to another.58 In the case, however, the approval of the CBA and the release of signing bonus do not necessarily mean that the Union waived its ULP claim against the Bank during the past negotiations. After all, the conclusion of the CBA was included in the order of the SOLE, while the signing bonus was included in the CBA itself. Moreover, the Union twice filed a motion for reconsideration respecting its ULP charges against the Bank before the SOLE. The Union Did Not Engage In Blue-Sky Bargaining We, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky bargaining or making exaggerated or unreasonable proposals.59 The Bank failed to show that the economic demands made by the Union were exaggerated or unreasonable. The minutes of the meeting show that the Union based its economic proposals on data of rank and file employees and the prevailing economic benefits received by
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bank employees from other foreign banks doing business in the Philippines and other branches of the Bank in the Asian region. In sum, we find that the public respondent did not act with grave abuse of discretion amounting to lack or excess of jurisdiction when it issued the questioned order and resolutions. While the approval of the CBA and the release of the signing bonus did not estop the Union from pursuing its claims of ULP against the Bank, we find the latter did not engage in ULP. We, likewise, hold that the Union is not guilty of ULP. IN LIGHT OF THE FOREGOING, the October 29, 1993 Order and December 16, 1993 and February 10, 1994 Resolutions of then Secretary of Labor Nieves R. Confesor are AFFIRMED. The Petition is hereby DISMISSED. CATHAY PACIFIC STEEL CORPORATION vs. HON. COURT OF APPEALS G.R. No. 164561 August 30, 2006 This is a special civil action for Certiorari under Rule 65 of the Rules of Court seeking to annul and set aside, on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction, (1) the Decision 1 of the Court of Appeals in CA-G.R. SP No. 57179 dated 28 October 2003 which annulled the Decision 2 of the National Labor Relations Commission (NLRC) in NLRC Case No. 017822-99 dated 25 August 1999, thereby, reinstating the Decision 3 of Acting Executive Labor Arbiter Pedro C. Ramos dated 7 August 1998; and (2) the Resolution 4 of the same court, dated 3 June 2004, which denied the petitioners Motion for Reconsideration. Herein petitioners are Cathay Pacific Steel Corporation (CAPASCO), a domestic corporation engaged in the business of manufacturing steel products; Benjamin Chua, Jr. (now deceased), the former CAPASCO President; Virgilio Agerro, CAPASCOs Vice-President; and Leonardo Visorro, Jr., CAPASCOs Administrative-Personnel Manager. Herein private respondents are Enrique Tamondong III, the Personnel Superintendent of CAPASCO who was previously assigned a t the petitioners Cainta Plant, and CAPASCO Union of Supervisory Employees (CUSE), a duly registered union of CAPASCO. The facts of the case are as follows: Four former employees of CAPASCO originally filed this labor case before the NLRC, namely: Fidel Lacambra, Armando Dayson, Reynaldo Vacalares, and Enrique Tamondong III. However, in the course of the proceedings, Fidel Lacambra 5 and Armando Dayson 6 executed a Release and Quitclaim, thus, waiving and abandoning any and all claims that they may have against petitioner CAPASCO. On 3 November 1999, Reynaldo Vacalares also signed a Quitclaim/Release/Waiver. 7 Hence, this Petition shall focus solely on issues affecting private respondent Tamondong. Petitioner CAPASCO, hired private respondent Tamondong as Assistant to the Personnel Manager for its Cainta Plant on 16 February 1990. Thereafter, he was promoted to the position of Personnel/Administrative Officer, and later to that of Personnel Superintendent. Sometime in June 1996, the supervisory personnel of CAPASCO launched a move to organize a union among their ranks, later known as private respondent CUSE. Private respondent Tamondong actively involved himself in the formation of the union and was even elected as one of its officers after its creation. Consequently, petitioner CAPASCO sent a memo 8 dated 3 February 1997, to private respondent Tamondong requiring him to explain and to discontinue from his union activities, with a warning that a continuance thereof shall adversely affect his employment in the company. Private respondent Tamondong ignored said warning and made a reply letter 9 on 5 February 1997, invoking his right as a supervisory employee to join and organize a labor union. In view of that, on 6 February 1997, petitioner CAPASCO through a memo 10terminated the employment of private respondent Tamondong on the ground of loss of trust and confidence, citing his union activities as acts constituting serious disloyalty to the company.
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Private respondent Tamondong challenged his dismissal for being illegal and as an act involving unfair labor practice by filing a Complaint for Illegal Dismissal and Unfair Labor Practice before the NLRC, Regional Arbitration Branch IV. According to him, there was no just cause for his dismissal and it was anchored solely on his involvement and active participation in the organization of the union of supervisory personnel in CAPASCO. Though private respondent Tamondong admitted his active role in the formation of a union composed of supervisory personnel in the company, he claimed that such was not a valid ground to terminate his employment because it was a legitimate exercise of his constitutionally guaranteed right to self-organization. In contrast, petitioner CAPASCO contended that by virtue of private respondent Tamondongs position as Personnel Superintendent and the functions actually performed by him in the company, he was considered as a managerial employee, thus, under the law he was prohibited from joining a union as well as from being elected as one of its officers. Accordingly, petitioners maintained their argument that the dismissal of private respondent Tamondong was perfectly valid based on loss of trust and confidence because of the latters active participatio n in the affairs of the union. On 7 August 1998, Acting Executive Labor Arbiter Pedro C. Ramos rendered a Decision in favor of private respondent Tamondong, decreeing as follows: WHEREFORE, premises considered, judgment is hereby rendered finding [petitioner CAPASCO] guilty of unfair labor practice and illegal dismissal. Concomitantly, [petitioner CAPASCO] is hereby ordered: 1. To cease and desist from further committing acts of unfair labor practice, as charged; 2. To reinstate [private respondent Tamondong] to his former position without loss of seniority rights and other privileges and 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 herein partially computed as follows: a) P167,076.00 - backwages from February 7, 1997 to August 7, 1998; b) P18,564.00 - 13th month pay for 1997 and 1998; c) P4,284.00 - Holiday pay for 12 days; d) P3,570.00 - Service Incentive Leave for 1997 and 1998. P 193,494.00 - Total partial backwages and benefits. 11 Aggrieved, petitioners appealed the afore-quoted Decision to the NLRC. On 25 August 1999, the NLRC rendered its Decision modifying the Decision of the Acting Executive Labor Arbiter Pedro C. Ramos, thus: WHEREFORE, premises all considered, the decision appealed from is hereby MODIFIED: a) Dismissing the Complaint for Illegal Dismissal filed by [private respondent Tamondong] for utter lack of merit; b) Dismissing the Complaint for Unfair Labor Practice for lack of factual basis; c) Deleting the awards to [private respondent Tamondong] of backwages, moral and exemplary damages, and attorneys fees;
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d) Affirming the awards to [private respondent Tamondong], representing 13th month pay for 1997 and 1998, holiday pay for 12 days, and service incentive leave for 1997 totaling P26,418.00; and e) Ordering the payment of backwages to [private respondent Tamondong] reckoned from 16 September 1998 up to the date of this Decision. 12 Petitioners filed a Motion for Clarification and Partial Reconsideration, while, private respondent Tamondong filed a Motion for Reconsideration of the said NLRC Decision, but the NLRC affirmed its original Decision in its Resolution 13 dated 25 November 1999. Dissatisfied with the above-mentioned Decision of the NLRC, private respondents Tamondong and CUSE filed a Petition for Certiorari under Rule 65 of the Rules of Court before the Court of Appeals, alleging grave abuse of discretion on the part of the NLRC. Then, the Court of Appeals in its Decision dated 28 October 2003, granted the said Petition. The dispositive of which states that: WHEREFORE, premises considered, the instant Petition for Certiorari is GRANTED and the herein assailed Decision dated August 25, 1999 of the NLRC, Third Division is ANNULLED and SET ASIDE. Accordingly, the Decision dated August 7, 1998 of NLRC, RAB IV Acting Executive Labor Arbiter Pedro C. Ramos, insofar as [private respondent Tamondong] is concerned is hereby REINSTATED. 14 Consequently, petitioners filed a Motion for Reconsideration of the aforesaid Decision of the Court of Appeals. Nonetheless, the Court of Appeals denied the said Motion for Reconsideration for want of convincing and compelling reason to warrant a reversal of its judgment. Hence, this present Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure. In the Memorandum 15 filed by petitioners, they aver that private respondent Tamondong as Personnel Superintendent of CAPASCO was performing functions of a managerial employee because he was the one laying down major management policies on personnel relations such as: issuing memos on company rules and regulations, imposing disciplinary sanctions such as warnings and suspensions, and executing the same with full power and discretion. They claim that no further approval or review is necessary for private respondent Tamondong to execute these functions, and the notations "NOTED BY" of petitioner Agerro, the Vice-President of petitioner CAPASCO, on the aforesaid memos are nothing but mere notice that petitioner Agerro was aware of such company actions performed by private respondent Tamondong. Additionally, private respondent Tamondong was not only a managerial employee but also a confidential employee having knowledge of confidential information involving company policies on personnel relations. Hence, the Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it held that private respondent Tamondong was not a managerial employee but a mere supervisory employee, therefore, making him eligible to participate in the union activities of private respondent CUSE. Petitioners further argue that they are not guilty of illegal dismissal and unfair labor practice because private respondent Tamondong was validly dismissed and the reason for preventing him to join a labor union was the nature of his position and functions as Personnel Superintendent, which position was incompatible and in conflict with his union activities. Consequently, it was grave abuse of discretion on the part of the Court of Appeals to rule that petitioner CAPASCO was guilty of illegal dismissal and unfair labor practice. Lastly, petitioners maintain that the Court of Appeals gravely abused its discretion when it reinstated the Decision of Executive Labor Arbiter Pedro C. Ramos holding CAPASCO liable for backwages, 13th month pay, service incentive leave, moral damages, exemplary damages, and attorneys fees. On the other hand, private respondents, assert that the assailed Decision being a final disposition of the Court of Appeals is appealable to this Court by a Petition for Review on Certiorari under Rule 45 of the
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Rules of Court and not under Rule 65 thereof. They also claim that petitioners new ground that private respondent Tamondong was a confidential employee of CAPASCO, thus, prohibited from participating in union activities, is not a valid ground to be raised in this Petition for Certiorari seeking the reversal of the assailed Decision and Resolution of the Court of Appeals. Now, given the foregoing arguments raise by both parties, the threshold issue that must first be resolved is whether or not the Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure is the proper remedy for the petitioners, to warrant the reversal of the Decision and Resolution of the Court of Appeals dated 28 October 2003 and 3 June 2004, respectively. The petition must fail. The special civil action for Certiorari is intended for the correction of errors of jurisdiction only or grave abuse of discretion amounting to lack or excess of jurisdiction. Its principal office is only to keep the inferior court within the parameters of its jurisdiction or to prevent it from committing such a grave abuse of discretion amounting to lack or excess of jurisdiction. 16 The essential requisites for a Petition for Certiorari under Rule 65 are: (1) the writ is directed against a tribunal, a board, or an officer exercising judicial or quasi-judicial function; (2) such tribunal, board, or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law. 17 Excess of jurisdiction as distinguished from absence of jurisdiction means that an act, though within the general power of a tribunal, board or officer is not authorized, and invalid with respect to the particular proceeding, because the conditions which alone authorize the exercise of the general power in respect of it are wanting. 18 Without jurisdiction means lack or want of legal power, right or authority to hear and determine a cause or causes, considered either in general or with reference to a particular matter. It means lack of power to exercise authority.19 Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction or, in other words, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or personal hostility, and it must be so patent or gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. 20 In the case before this Court, petitioners fail to meet the third requisite for the proper invocation of Petition for Certiorari under Rule 65, to wit: that there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law. They simply alleged that the Court of Appeals gravely abuse its discretion which amount to lack or excess of jurisdiction in rendering the assailed Decision and Resolution. They did not bother to explain why an appeal cannot possibly cure the errors committed by the appellate court. It must be noted that the questioned Decision of the Court of Appeals was already a disposition on the merits; this Court has no remaining issues to resolve, hence, the proper remedy available to the petitioners is to file Petition for Review under Rule 45 not under Rule 65. Additionally, the general rule is that a writ of certiorari will not issue where the remedy of appeal is available to the aggrieved party. The remedies of appeal in the ordinary course of law and that of certiorari under Rule 65 of the Revised Rules of Court are mutually exclusive and not alternative or cumulative. 21 Time and again this Court reminded members of the bench and bar that the special civil action of Certiorari cannot be used as a substitute for a lost appeal 22 where the latter remedy is available. Such a remedy will not be a cure for failure to timely file a Petition for Review on Certiorari under Rule 45. Nor can it be availed of as a substitute for the lost remedy of an ordinary appeal, especially if such loss or lapse was occasioned by ones own negligence or error in the choice of remedies. 23 In the case at bar, petitioners received on 9 June 2004 the Resolution of the Court of Appeals dated 3 June 2004 denying their Motion for Reconsideration. Upon receipt of the said Resolution, they had 15 days or until 24 June 2004 within which to file an appeal by way of Petition for Review under Rule 45, but instead of doing so, they just allowed the 15 day period to lapse, and then on the 61st day from receipt of the Resolution denying their Motion for Reconsideration, they filed this Petition for Certiorari under Rule
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65 alleging grave abuse of discretion on the part of the appellate court. Admittedly, this Court, in accordance with the liberal spirit pervading the Rules of Court and in the interest of justice, has the discretion to treat a Petition for Certiorari as a Petition for Review on Certiorari under Rule 45, especially if filed within the reglementary period for filing a Petition for Review. 24However, in the present case, this Court finds no compelling reason to justify a liberal application of the rules, as this Court did in the case of Delsan Transport Lines, Inc. v. Court of Appeals. 25 In the said case, this Court treated the Petition for Certiorari filed by the petitioner therein as having been filed under Rule 45 because said Petition was filed within the 15-day reglementary period for filing a Petition for Review on Certiorari. Petitioners counsel therein received the Court of Appeals Resolution denying their Motion for Reconsideration on 26 October 1993 and filed the Petition for Certiorari on 8 November 1993, which was within the 15-day reglementary period for filing a Petition for Review on Certiorari. It cannot therefore be claimed that the Petition was used, as a substitute for appeal after that remedy has been lost through the fault of the petitioner. 26 Conversely, such was not the situation in the present case. Hence, this Court finds no reason to justify a liberal application of the rules. Accordingly, where the issue or question involves or affects the wisdom or legal soundness of the decision, and not the jurisdiction of the court to render said decision, the same is beyond the province of a petition for certiorari.27 It is obvious in this case that the arguments raised by the petitioners delved into the wisdom or legal soundness of the Decision of the Court of Appeals, therefore, the proper remedy is a Petition for Review on Certiorari under Rule 45. Consequently, it is incumbent upon this Court to dismiss this Petition. In any event, granting arguendo, that the present petition is proper, still it is dismissible. The Court of Appeals cannot be said to have acted with grave abuse of discretion amounting to lack or excess of jurisdiction in annulling the Decision of the NLRC because the findings of the Court of Appeals that private respondent Tamondong was indeed a supervisory employee and not a managerial employee, thus, eligible to join or participate in the union activities of private respondent CUSE, were supported by evidence on record. In the Decision of the Court of Appeals dated 28 October 2003, it made reference to the Memorandum 28 dated 12 September 1996, which required private respondent Tamondong to observe fixed daily working hours from 8:00 am to 12:00 noon and from 1:00 pm to 5:00 pm. This imposition upon private respondent Tamondong, according to the Court of Appeals, is very uncharacteristic of a managerial employee. To support such a conclusion, the Court of Appeals cited the case of Engineering Equipment, Inc. v. NLRC 29 where this Court held that one of the essential characteristics 30of an employee holding a managerial rank is that he is not subjected to the rigid observance of regular office hours or maximum hours of work. Moreover, the Court of Appeals also held that upon careful examination of the documents submitted before it, it found out that: [Private respondent] Tamondong may have possessed enormous powers and was performing important functions that goes with the position of Personnel Superintendent, nevertheless, there was no clear showing that he is at liberty, by using his own discretion and disposition, to lay down and execute major business and operational policies for and in behalf of CAPASCO. [Petitioner] CAPASCO miserably failed to establish that [private respondent] Tamondong was authorized to act in the interest of the company using his independent judgment. x x x. Withal, [private respondent] Tamondong may have been exercising certain important powers, such as control and supervision over erring rank-and-file employees, however, x x x he does not possess the power to hire, transfer, terminate, or discipline erring employees of the company. At the most, the record merely showed that [private respondent] Tamondong informed and warned rank-and-file employees with respect to their violations of CAPASCOs rules and regulations. x x x. [Also, the functions performed by private respondent such as] issuance of warning 31 to employees with irregular attendance and unauthorized leave of absences and requiring employees to explain regarding charges of abandonment of work, are normally performed by a mere supervisor, and not by a manager. 32 Accordingly, Article 212(m) of the Labor Code, as amended, differentiates supervisory employees from managerial employees, to wit: supervisory employees are those who, in the interest of the employer,
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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; whereas, managerial employees are those who are 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. Thus, from the foregoing provision of the Labor Code, it can be clearly inferred that private respondent Tamondong was just a supervisory employee. Private respondent Tamondong did not perform any of the functions of a managerial employee as stated in the definition given to it by the Code. Hence, the Labor Code 33 provisions regarding disqualification of a managerial employee from joining, assisting or forming any labor organization does not apply to herein private respondent Tamondong. Being a supervisory employee of CAPASCO, he cannot be prohibited from joining or participating in the union activities of private respondent CUSE, and in making such a conclusion, the Court of Appeals did not act whimsically, capriciously or in a despotic manner, rather, it was guided by the evidence submitted before it. Thus, given the foregoing findings of the Court of Appeals that private respondent is a supervisory employee, it is indeed an unfair labor practice 34on the part of petitioner CAPASCO to dismiss him on account of his union activities, thereby curtailing his constitutionally guaranteed right to self-organization. 35 With regard to the allegation that private respondent Tamondong was not only a managerial employee but also a confidential employee, the same cannot be validly raised in this Petition for Certiorari. It is settled that an issue which was not raised in the trial court cannot be raised for the first time on appeal. This principle applies to a special civil action for certiorari under Rule 65. 36 In addition, petitioners failed to adduced evidence which will prove that, indeed, private respondent was also a confidential employee. WHEREFORE, premises considered, the instant Petition is DISMISSED. The Decision and Resolution of the Court of Appeals dated 28 October 2003 and 3 June 2004, respectively, in CA-G.R. SP No. 57179, which annulled the Decision of the NLRC in NLRC Case No. 017822-99 dated 25 August 1999, thereby, reinstating the Decision of Acting Executive Labor Arbiter Pedro C. Ramos dated 7 August 1998, is hereby AFFIRMED. With costs against petitioners. CAINTA CATHOLIC SCHOOL vs. CAINTA CATHOLIC SCHOOL EMPLOYEES UNION (CCSEU) G.R. No. 151021 May 4, 2006 The main issue for resolution hinges on the validity of a stipulation in a Collective Bargaining Agreement (CBA) that allows management to retire an employee in its employ for a predetermined lengthy period but who has not yet reached the minimum compulsory retirement age provided in the Labor Code. Jurisprudence has answered the question in the affirmative a number of times and our duty calls for the application of the principle of stare decisis. As a consequence, we grant the petition and reverse the Court of Appeals. Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision1 dated 20 August 2001 of the Court of Appeals in CA-G.R. SP No. 50851, which reversed the Resolutions dated 31 January 1997,2 and 30 April 19973 of the National Labor Relations Commission (NLRC), Third Division in NLRC NCR CC No. L-000028-93 (NLRC RAB-IV-7-6827-94-R), as well as the Resolution4 dated 6 December 2001. The antecedent facts follow: On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into between Cainta Catholic School (School) and the Cainta Catholic School Employees Union (Union) effective 1 January 1986 to 31 May 1989. This CBA provided, among others, that: ARTICLE IX DURATION OF AGREEMENT
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This Collective Bargaining Agreement shall become effective and binding upon the parties from January 1, 1986 up to May 31, 1989. At least sixty (60) days before the expiration of this Agreement, the parties hereto shall submit written proposals which shall be made the basis of negotiations for the execution of a new agreement. If no new agreement is reached by the parties at the expiration of this agreement, all the provisions of this Agreement shall remain full force and in effect, up to the time a new Agreement shall be executed. 5 Msgr. Mariano Balbago (Balbago) was appointed School Director in April 1987. From this time, the Union became inactive. It was only in 10 September 1993 that the Union held an election of officers, with Mrs. Rosalina Llagas (Llagas) being elected as President; Paz Javier (Javier), Vice-President; Fe Villegas (Villegas), Treasurer; and Maria Luisa Santos (Santos), Secretary. Llagas was then the Dean of the Student Affairs while Villegas and Santos were Year-Level Chairmen. The other elected officers were Rizalina Fernandez, Ester Amigo, secretaries; Nena Marvilla, treasurer; Gilda Galange and Jimmy del Rosario, auditors; Filomeno Dacanay and Adelina Andres, P.R.O.s; and Danilo Amigo and Arturo Guevarra, business managers. 6 On 15 October 1993, the School retired Llagas and Javier, who had rendered more than twenty (20) years of continuous service, pursuant to Section 2, Article X of the CBA, to wit: An employee may be retired, either upon application by the employee himself or by the decision of the Director of the School, upon reaching the age of sixty (60) or after having rendered at least twenty (20) years of service to the School the last three (3) years of which must be continuous.7 Three (3) days later, the Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB) docketed as NCMB-RB-12-NS-10-124-93. On 8 November 1993, the Union struck and picketed the Schools entrances. On 11 November 1993, then Secretary of Labor Ma. Nieves R. Confesor issued an Order certifying the labor dispute to the National Labor Relations Commission (NLRC). The dispositive portion reads: "WHEREFORE, PREMISES CONSIDERED, this Office hereby certifies the labor dispute at the Cainta Catholic School to the National Labor Relations Commission for compulsory arbitration, pursuant to Article 263(g) of the Labor Code as amended." "Accordingly, all striking teachers and employees are directed to return to work within 24 hours from receipt of this Order and the School Administrator to accept all returning employees under the same terms and conditions prevailing prior to the strike." "Furthermore, the effects of the termination of Ms. Rosalinda Llagas and Paz A. Javier are hereby suspended. In line with this Order, the School Administration is ordered to reinstate them to their former positions without loss of seniority rights and privileges pending determination of the validity of their dismissal." "Both parties are further directed to cease and desist from committing any acts that might aggravate the situation." "SO ORDERED."8 On 20 December 1993, the School filed a petition directly with the NLRC to declare the strike illegal.
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On 27 July 1994, the Union filed a complaint9 for unfair labor practice before the NLRC docketed as NLRC Case No. RAB-IV-7-6827-94-R, entitled, "Cainta Catholic School Employees Union v. Cainta Catholic School, et. al.," before Arbitration Branch IV. Upon motion, then Labor Arbiter Oswald Lorenzo ordered the consolidation of this unfair labor practice case with the above-certified case. On 31 January 1997, the NLRC rendered a Resolution favoring the School. Three (3) issues were passed upon by the NLRC, namely: (1) whether the retirement of Llagas and Javier is legal; (2) whether the School is guilty of unfair labor practice; and (3) whether the strike is legal. The NLRC ruled that the retirement of Llagas and Javier is legal as the School was merely exercising an option given to it under the CBA.10 The NLRC dismissed the unfair labor practice charge against the School for insufficiency of evidence. Furthermore, it was found that the strike declared by the Union from 8 to 12 November 1993 is illegal, thereby declaring all union officers to have lost their employment status.11 The Union moved for reconsideration but it was denied in a Resolution dated 30 April 1997. Hence, on 9 July 1997, the Union filed a petition for certiorari before this Court docketed as G.R. No. 129548. The Court issued a temporary restraining order (TRO) against the enforcement of the subject resolutions effective as of 23 July 1997. The School, however, filed a motion for clarification considering that it had already enforced the 31 January 1997 NLRC Resolution. On 28 July 1997, ten (10) regular teachers, who were declared to have lost their employment status under the aforesaid NLRC Resolution reported back to work but the School refused to accept them by reason of its pending motion for clarification. This prompted the Union to file a petition for contempt against Balbago and his agents before this Court, docketed as G.R. No. 130004, which was later on consolidated with G.R. No. 129548. Pursuant to the ruling of this Court in St. Martin Funeral Homes v. NLRC, 12 the case was referred to the Court of Appeals and re-docketed as CA-G.R. SP No. 50851. On 20 August 2001, the Court of Appeals rendered a decision giving due course and granting the petition to annul and set aside the 31 January 1997 and 30 April 1997 Resolutions of the NLRC; while dismissing the petition for contempt for lack of merit. The decretal portion of the decision reads: WHEREFORE, premises considered, the petition to annul and set aside the 31 January 1997 and the 30 April 1997 resolutions of the National Labor Relations Commission is GRANTED. Judgment is hereby RENDERED directing private respondents: 1) to REINSTATE the terminated union officers, except Rosalinda Llagas, Paz Javier, Gilda Galange and Ester Amigo, to their former positions without loss of seniority rights and other privileges with full backwages, inclusive of allowances and other benefits or their monetary equivalent from 9 June 1997 up to the time of their actual reinstatement; 2) to pay Rosalinda Llagas: a) separation pay equivalent to one (1) month pay for every year of service, in lieu of reinstatement, with full backwages, inclusive of allowances and other benefits or their monetary equivalent from 9 June 1997 up to the time of the finality of this decision; b) moral and exemplary damages in the amount of ten thousand pesos (P10,000.00) and five thousand (P5,000.00), respectively; 3) to pay Paz Javier, or her heirs: a) unpaid salaries, inclusive of allowances and other benefits, including death benefits, or their monetary equivalent from the time her compensation was withheld from her up to the time of her death; b) separation pay equivalent to one (1) months salary for every year of service; and c) moral and exemplary damages in the amount of ten thousand pesos (P10,000.00) and five thousand pesos (P5,000.00), respectively. Private respondents are also ordered to pay petitioner union attorneys fees equivalent to five percent (5%) of the total judgment award.
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The petition for contempt, however, is DISMISSED for lack of merit. No pronouncement as to costs. SO ORDERED.13 In reversing the decision of the NLRC, the Court of Appeals construed the retirement of Llagas and Javier as an act amounting to unfair labor practice when viewed against the backdrop of the relevant circumstances obtaining in the case. The appellate court pointed out, thus: The two happened to be the most vocal, dynamic and influential of all union officers and members and they held considerable suasion over the other employees. Rosalinda Llagas objected to the signing of the prepared form distributed by the school, as a consequence of which, no one accomplished the form, and opposed the formation of the high school faculty club as the teachers already had sufficient representation through the union. Paz Javier, on the other hand, demanded that she be given the floor during the faculty club organizational meeting and went on to win the presidency of the faculty club, conclusively showing that she enjoyed the support of the high school teachers. They were therefore a new and different breed of union leaders assertive, militant and independent the exact opposite of former union president Victor Javier who seemed to be passive, cooperative and pacific. The school saw the two as threats which it could not control, and faced with a very uncomfortable situation of having to contend with an aggressive union which just dominated the high school faculty club (except for Joel Javeniar, all of the faculty clubs officers were union members; Rollo, p. 418), the school decided to "nip in the bud" the reactivated union by retiring its most prominent leaders. xxxx It is not difficult to see the anti-union bias of the school. One of the first acts of private respondent Msgr. Balbago immediately after his assumption of office as school director was to ask for a moratorium on all union activities. With the union in inactive status, the school felt secure and comfortable but when the union reactivated, the school became apprehensive and reacted by retiring the unions two topmost officers by invoking the provisions of the CBA. When the union furnished the school, through counsel, a copy of a proposed CBA on 3 November 1993, the school in a cavalier fashion ignored it on the pretext that the union no longer enjoyed the majority status among the employees x x x 14 The appellate court concluded that the retirement of the two (2) union officers was clearly to bust the reactivated union. Having established that the School committed unfair labor practice, the Court of Appeals declared that the "no-strike, no-lockout clause" in the CBA was not violated when the union members staged a strike from 8 to 12 November 1993.15 It further held that minor disorders or isolated incidents of perceived coercion attending the strike do not categorize it as illegal: We studied carefully the available records and found that the existence of force during the strike was certainly not pervasive and widespread, or consistently and deliberately resorted to as a matter of policy, so as to stamp the strike with illegality, or to cause the loss of employment of the guilty party x x x 16 The motion for reconsideration subsequently filed by the School was denied in a Resolution dated 6 December 2001, save in case of some union officers where the appellate court modified its ruling granting them separation pay instead of reinstatement because of their retirement or death.17 Thereafter, petitioners filed this petition for review on certiorari raising three main issues, summarized as: (1) whether the Schools decision to retire Llagas and Javier constitutes unfair labor practice; (2) whether the strike was legal; and (3) whether some union officers ordered dismissed are entitled to backwages.18
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The School avers that the retirement of Llagas and Javier was clearly in accordance with a specific right granted under the CBA. The School justifies its actions by invoking our rulings in Pantranco North Express, Inc. v. NLRC19and Bulletin Publishing Corporation v. Sanchez20 that no unfair labor practice is committed by management if the retirement was made in accord with management prerogative or in case of voluntary retirement, upon approval of management. The Union, relying on the findings made by the Court of Appeals,21 argues that the retirement of the two union officers is a mere subterfuge to bust the union. 22 The NLRC, however, gave another justification to sustain the validity of the two union officers forcible retirement, viz: The retirement of Rosalinda Llagas has become inevitable because, being a managerial employee by reason of her position as Dean of Student Affairs, she accepted the Union presidency. She lost the trust and confidence on her by the SCHOOL as she occupied a managerial position as Dean of Student Affairs. . . Being also the union president, she has allowed her loyalties to be divided between the administration and the union. As to Paz Javier, her retirement was decided upon after an evaluation shows that she was not performing well as her students were complaining about her brusque attitude and bad language, aside from being habitually absent and late. 23 At the outset, only questions of law are entertained by this Court through a petition for review on certiorari. There are, however, well-recognized exceptions such as in this case when the factual findings of the NLRC and the Court of Appeals are contradictory. 24 A re-evaluation of the records of this case is necessary for its proper resolution. The key issue remains whether the forced retirement of Llagas and Javier was a valid exercise of management prerogative. Undoubtedly, the retirement of the two (2) union officers triggered the declaration of strike by the Union, and the ruling on whether the strike was legal is highly dependent on whether the retirement was valid. We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment of Llagas and Javier, arising as it did from a management prerogative granted by the mutually-negotiated CBA between the School and the Union. Pursuant to the existing CBA,25 the School has the option to retire an employee upon reaching the age limit of sixty (60) or after having rendered at least twenty (20) years of service to the School, the last three (3) years of which must be continuous. Retirement is a different specie of termination of employment from dismissal for just or authorized causes under Articles 282 and 283 of the Labor Code. While in all three cases, the employee to be terminated may be unwilling to part from service, there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. In those two instances, it is indispensable that the employer establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. Retirement, on the other hand, is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees and/or consents to sever his employment with the former.26 Article 287 of the Labor Code, as amended, governs retirement of employees, stating: ART. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.
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In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employees retirement benefits under any collective bargaining agreement and other agreements shall not be less than those provided herein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. The CBA in the case at bar established 60 as the compulsory retirement age. However, it is not alleged that either Javier or Llagas had reached the compulsory retirement age of 60 years, but instead that they had rendered at least 20 years of service in the School, the last three (3) years continuous. Clearly, the CBA provision allows the employee to be retired by the School even before reaching the age of 60, provided that he/she had rendered 20 years of service. Would such a stipulation be valid? Jurisprudence affirms the position of the School. Pantranco North Express, Inc. v. NLRC, cited by petitioners, finds direct application in this case. The CBA involved in Pantranco allowed the employee to be compulsorily retired upon reaching the age of 60 "or upon completing [25] years of service to [Pantranco]." On the basis of the CBA, private respondent was compulsorily retired by Pantranco at the age of 52, after 25 years of service. Interpreting Article 287, the Court ruled that the Labor Code permitted employers and employees to fix the applicable retirement age at below 60 years of age. Moreover, the Court also held that there was no illegal dismissal since it was the CBA itself that incorporated the agreement reached between the employer and the bargaining agent with respect to the terms and conditions of employment; hence, when the private respondent ratified the CBA with his union, he concurrently agreed to conform to and abide by its provisions. Thus, the Court asserted, "[p]roviding in a CBA for compulsory retirement of employees after twenty-five (25) years of service is legal and enforceable so long as the parties agree to be governed by such CBA." 27 A similar set of facts informed our decision in Progressive Development Corporation v. NLRC.28 The CBA therein stipulated that an employee "with [20] years of service, regardless of age, may be retired at his option or at the option of the company." The stipulation was used by management to compulsorily retire two employees with more than 20 years of service, at the ages of 45 and 38. The Court affirmed the validity of the stipulation on retirement as consistent with Article 287 of the Labor Code. Philippine Airlines, Inc. v. Airline Pilots Association of the Phils. 29 further bolsters the Schools position. At contention therein was a provision of the PAL-ALPAP Retirement Plan, the Plan having subsequently been misquoted in the CBA mutually negotiated by the parties. The Plan authorized PAL to exercise the option of retirement over pilots who had chosen not to retire after completing 20 years of service or logging over 20,000 hours for PAL. After PAL exercised such option over a pilot, ALPAP charged PAL with illegal dismissal and union-busting. While the Secretary of Labor upheld the unilateral retirement, it nonetheless ruled that PAL should first consult with the pilot to be retired before it could exercise such option. The Court struck down that proviso, ruling that "the requirement to consult the pilots prior to their retirement defeats the exercise by management of its option to retire the said employees, [giving] the pilot concerned an undue prerogative to assail the decision of management." By their acceptance of the CBA, the Union and its members are obliged to abide by the commitments and limitations they had agreed to cede to management. The questioned retirement provisions cannot be deemed as an imposition foisted on the Union, which very well had the right to have refused to agree to allowing management to retire retire employees with at least 20 years of service. It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in
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nature but impressed with public interest. If the retirement provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided. Certainly, a CBA provision or employment contract that would allow management to subvert security of tenure and allow it to unilaterally "retire" employees after one month of service cannot be upheld. Neither will the Court sustain a retirement clause that entitles the retiring employee to benefits less than what is guaranteed under Article 287 of the Labor Code, pursua nt to the provisions express proviso thereto in the provision. Yet the CBA in the case at bar contains no such infirmities which must be stricken down. There is no essential difference between the CBA provision in this case and those we affirmed in Pantranco and Progressive. Twenty years is a more than ideal length of service an employee can render to one employer. Under ordinary contemplation, a CBA provision entitling an employee to retire after 20 years of service and accordingly collect retirement benefits is "reward for services rendered since it enables an employee to reap the fruits of his labor particularly retirement benefits, whether lump-sum or otherwise at an earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and longer."30 We affirm the continued validity of Pantranco and its kindred cases, and thus reiterate that under Article 287 of the Labor Code, a CBA may validly accord management the prerogative to optionally retire an employee under the terms and conditions mutually agreed upon by management and the bargaining union, even if such agreement allows for retirement at an age lower than the optional retirement age or the compulsory retirement age. The Court of Appeals gravely erred in refusing to consider this case from the perspective of Pantranco, or from the settled doctrine enunciated therein. What the Court of Appeals did instead was to favorably consider the claim of the Union that the real purpose behind the retirement of Llagas and Javier was to "bust" the union, they being its president and vice-president, respectively. To that end, the appellate court favorably adopted the citation by the Union of the American case of NLRB v. Ace Comb, Co.,31 which in turn was taken from a popular local labor law textbook. The citation stated that "[f]or the purpose of determining whether or not a discharge is discriminatory, it is necessary that the underlying reason for the discharge be established. The fact that a lawful cause for discharge is available is not a defense where the employee is actually discharged because of his union activities."32 Reliance on NLRB v. Ace Comb, Co. was grossly inapropos. The case did not involve an employee sought to be retired, but one who cited for termination from employment for cause, particularly for violating Section 8(a)(3) of the National Labor Relations Act, or for insubordination. Moreover, the United States Court of Appeals Eighth Circuit, which decided the case, ultimately concluded that "here the evidence abounds that there was a justifiable cause for [the employees] discharge,"33 his union activities notwithstanding. Certainly, the Union and the Court of Appeals would have been better off citing a case wherein the decision actually concluded that the employee was invalidly dismissed for union activities despite the ostensible existence of a valid cause for termination. Nonetheless, the premise warrants considering whether management may be precluded from retiring an employee whom it is entitled to retire upon a determination that the true cause for compulsory retirement is the employees union activities. The law and this Court frowns upon unfair labor practices by management, including so-called unionbusting. Such illegal practices will not be sustained by the Court, even if guised under ostensibly legal premises. But with respect to an active unionized employee who claims having lost his/her job for union activities, there are different considerations presented if the termination is justified under just or authorized cause under the Labor Code; and if separation from service is effected through the exercise of a duly accorded management prerogative to retire an employee. There is perhaps a greater imperative to recognize the management prerogative on retirement than the prerogative to dismiss employees for just or authorized causes. For one, there is a greater subjectivity, not to mention factual dispute, attached to
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the concepts of just or authorized cause than retirement which normally contemplates merely the attainment of a certain age or a certain number of years in the service. It would be easier for management desirous to eliminate pesky union members to abuse the prerogative of termination for such purpose since the determination of just or authorized cause is rarely a simplistic question, but involves facts highly prone to dispute and subjective interpretation. On the other hand, the exercise by management of its retirement prerogative is less susceptible to dubitability as to the question whether an employee could be validly retired. The only factual matter to consider then is whether the employee concerned had attained the requisite age or number of years in service pursuant to the CBA or employment agreement, or if none, pursuant to Article 287 of the Labor Code. In fact, the question of the amount of retirement benefits is more likely to be questioned than the retirement itself. Evidently, it more clearly emerges in the case of retirement that management would anyway have the right to retire an employee, no matter the degree of involvement of said employee in union activities. There is another point that militates against the Union. A ruling in its favor is tantamount to a concession that a validly drawn management prerogative to retire its employees can be judicially interfered on a showing that the employee in question is highly valuable to the union. Such a rule would be a source of mischief, even if narrowly carved out by the Court, for it would imply that an active union member or officer may be, by reason of his/her importance to the union, somehow exempted from the normal standards of retirement applicable to the other, perhaps less vital members of the union. Indeed, our laws protection of the right to organize labor does not translate into perpetual job security for union leaders by reason of their leadership role alone. Should we entertain such a notion, the detriment is ultimately to the union itself, promoting as it would a stagnating entrenched leadership. We can thus can comfortably uphold the principle, as reiterated in Philippine Airlines, 34 that the exercise by the employer of a valid and duly established prerogative to retire an employee does not constitute unfair labor practice. There are other arguments raised by petitioners. We need to discuss them only in brief, as they are no longer central to the resolution of this case. The School insisted that Llagas and Javier were actually managerial employees, and it was illegal for the Union to have called a strike on behalf of two employees who were not legally qualified to be members of the Union in the first place.35 The Union, on the other hand, maintains that they are rank-and-file employees. Article 212(m) of the Labor Code defines a managerial employee as "one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial actions." The functions of the Dean of Student Affairs, as occupied by Llagas, are enumerated in the Faculty Manual. The salient portions are hereby enumerated: a. Manages the High School Department with the Registrar and Guidance Counselors (acting as a COLLEGIAL BODY) in the absence of the Director or Principal. b. Enforces the school rules and regulations governing students to maintain discipline. xxxx g. Plans with the Guidance Counselors student leadership training programs to encourage dynamic and responsible leadership among the students and submits the same for the approval of the Principal/Director.
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xxxx i. Studies proposals on extra-curricular or co-curricular activities and projects proposed by teachers and students and recommends to the Principal/Director the necessary approval. j. Implements and supervises activities and projects approved by the Principal/Director so that the activities and projects follow faithfully the conditions set forth by the Principal/Director in the approval. k. Assists in the planning, supervising and evaluating of programs of co-curricular activities in line with the philosophy and objectives of the School for the total development of the students. l. Recommends to the Principal policies and rules to serve as guides to effective implementation of the student activity program.36 xxxx It is fairly obvious from a perusal of the list that the Dean of Student Affairs exercises managerial functions, thereby classifying Llagas as a managerial employee. Javier was occupying the position of Subject Area Coordinator. Her duties and responsibilities include: 1. Recommends to the principals consideration the appointment of facul ty members in the department, their promotion, discipline and even termination; 2. Recommends advisory responsibilities of faculty members; 3. Recommends to the principal curricular changes, purchase the books and periodicals, supplies and equipment for the growth of the school; 4. Recommends his/her colleagues and serves as channel between teachers in the department the principal and/or director.37 Supervisory employees, as defined in Article 212(m) 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. In the same vein, a reading of the above functions leads us to conclude that Javier was a supervisory employee. Verily, Javier made recommendations as to what actions to take in hiring, termination, disciplinary actions, and management policies, among others. We can concede, as the Court of Appeals noted, that such job descriptions or appellations are meaningless should it be established that the actual duties performed by the employees concerned are neither managerial nor supervisory in nature. Yet on this point, we defer to the factual finding of the NLRC, the proximate trier of facts, that Llagas and Javier were indeed managerial and supervisory employees, respectively.1avvphil.net Having established that Llagas is a managerial employee, she is proscribed from joining a labor union,38 more so being elected as union officer. In the case of Javier, a supervisory employee, she may join a labor union composed only of supervisory employees.39 Finding both union officers to be employees not belonging to the rank-and-file, their membership in the Union has become questionable, rendering the Union inutile to represent their cause.
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Since the strike has been declared as illegal based on the foregoing discussion, we need not dwell on its legality with respect to the means employed by the Union. Finally, there is neither legal nor factual justification in awarding backwages to some union officers who have lost their employment status, in light of our finding that the strike is illegal. The ruling of the NLRC is thus upheld on this point. We are also satisfied with the disposition of the NLRC that mandates that Llagas and Javier (or her heirs) receive their retirement benefits. WHEREFORE, the petition is GRANTED. The Resolution dated 31 January 1997 of the National Labor Relations Commission in NLRC NCR CC No. L-000028-93 is REINSTATED. PUREFOODS CORPORATION vs. NAGKAKAISANG SAMAHANG MANGGAGAWA NG PUREFOODS RANK-AND-FILE, ST. THOMAS FREE WORKERS UNION G.R. No. 150896 August 28, 2008 The petitioner, Purefoods Corporation, in this Rule 45 petition seeks the reversal of the appellate courts dismissal of its certiorari petition, and our consequent review of the labor commissions finding that it committed unfair labor practice and illegally dismissed the concerned union members. Three labor organizations and a federation are respondents in this caseNagkakaisang Samahang Manggagawa Ng Purefoods Rank-And-File (NAGSAMA-Purefoods), the exclusive bargaining agent of the rank-and-file workers of Purefoods meat division throughout Luzon; St. Thomas Free Workers Union (STFWU), of those in the farm in Sto. Tomas, Batangas; and Purefoods Grandparent Farm Workers Union (PGFWU), of those in the poultry farm in Sta. Rosa, Laguna. These organizations were affiliates of the respondent federation, Purefoods Unified Labor Organization (PULO).1 On February 8, 1995, NAGSAMA-Purefoods manifested to petitioner corporation its desire to re-negotiate the collective bargaining agreement (CBA) then due to expire on the 28th of the said month. Together with its demands and proposal, the organization submitted to the company its January 28, 1995 General Membership Resolution approving and supporting the unions affiliation with PULO, adopting the draft CBA proposals of the federation, and authorizing a negotiating panel which included among others a PULO representative. While Purefoods formally acknowledged receipt of the unions proposals, it refused to recognize PULO and its participation, even as a mere observer, in the negotiation. Consequently, notwithstanding the PULO representatives non-involvement, the negotiation of the terms of the CBA still resulted in a deadlock. A notice of strike was then filed by NAGSAMA-Purefoods on May 15, 1995. In the subsequent conciliation conference, the deadlock issues were settled except the matter of the companys recognition of the unions affiliation with PULO.2 In the meantime, STFWU and PGFWU also submitted their respective proposals for CBA renewal, and their general membership resolutions which, among others, affirmed the two organizations affiliation with PULO. Consistent with its stance, Purefoods refused to negotiate with the unions should a PULO representative be in the panel. The parties then agreed to postpone the negotiations indefinitely. 3 On July 24, 1995, however, the petitioner company concluded a new CBA with another union in its farm in Malvar, Batangas. Five days thereafter, or on July 29, 1995, at around 8:00 in the evening, four company employees facilitated the transfer of around 23,000 chickens from the poultry farm in Sto. Tomas, Batangas (where STFWU was the exclusive bargaining agent) to that in Malvar. The following day, the regular rank-and-file workers in the Sto. Tomas farm were refused entry in the company premises; and on July 31, 1995, 22 STFWU members were terminated from employment. The farm manager, supervisors and electrical workers of the Sto. Tomas farm, who were members of another union, were nevertheless retained by the company in its employ.4 Aggrieved by these developments, the four respondent labor organizations jointly instituted a complaint for unfair labor practice (ULP), illegal lockout/dismissal and damages, docketed as NLRC Case No.
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NLRC-NCR-00-07-05159-95, with the Labor Arbitration Branch of the National Labor Relations Commission (NLRC).5 In the proceedings before the Labor Arbiter (LA), Purefoods interposed, among others, the defenses that PULO was not a legitimate labor organization or federation for it did not have the required minimum number of member unions; that the closure of the Sto. Tomas farm was not arbitrary but was the result of the financial non-viability of the operations therein, or the consequence of the landowners pre termination of the lease agreement; that the other complainants had no cause of action considering that it was only the Sto. Tomas farm which was closed; that the termination of the employees complied with the 30-day notice requirement and that the said employees were paid 30-day advance salary in addition to separation pay; and that the concerned union, STFWU, lost its status as bargaining representative when the Sto. Tomas farm was closed.6 On August 17, 1999, the LA rendered a Decision7 dismissing the complaint, and declaring that the company neither committed ULP nor illegally dismissed the employees. On appeal, the NLRC reversed the ruling of the LA, ordered the payment of P500,000.00 as moral and exemplary damages and the reinstatement with full backwages of the STFWU members. In its March 16, 2001 Decision (CA No. 022059-00), the labor commission ruled that the petitioner companys refusal to recognize the labor organizations affiliation with PULO was unjustified considering that the lat ter had been granted the status of a federation by the Bureau of Labor Relations; and that this refusal constituted undue interference in, and restraint on the exercise of the employees right to self -organization and free collective bargaining. The NLRC said that the real motive of the company in the sudden closure of the Sto. Tomas farm and the mass dismissal of the STFWU members was union busting, as only the union members were locked out, and the company subsequently resumed operations of the closed farm under a new contract with the landowner. Because the requisites of a valid lockout were absent, the NLRC concluded that the company committed ULP. The dispositive portion of the NLRC decision reads: WHEREFORE, respondent Purefoods Corporation is hereby directed to reinstate effective October 1, 2000 employees-members of the STFWU-PULO who were illegally locked out on July 30, 1995 and to pay them their full backwages. SO ORDERED. Its motion for reconsideration having been denied,8 the petitioner corporation filed a Rule 65 petition before the Court of Appeals (CA) docketed as CA-G.R. SP No. 66871. In the assailed October 25, 2001 Resolution,9 the appellate court dismissed outright the companys petition for certiorari on the ground that the verification and certification of non-forum shopping was defective since no proof of authority to act for and on behalf of the corporation was submitted by the corporations senior vice-president who signed the same; thus, the petition could not be deemed filed for and on behalf of the real party-in-interest. Then, the CA, in its November 22, 2001 Resolution,10 denied petitioners motion for reconsideration of the dismissal order. Dissatisfied, petitioner instituted before us the instant petition for review on certiorari under Rule 45. The petition is denied. Section 1, Rule 65 of the Rules of Court explicitly mandates that the petition for certiorari shall be accompanied by a sworn certification of non-forum shopping.11 When the petitioner is a corporation, inasmuch as corporate powers are exercised by the board, the certification shall be executed by a natural person authorized by the corporations board of directors.12 Absent any authority from the board, no person, not even the corporate officers, can bind the corporation.13 Only individuals who are vested with authority by a valid board resolution may sign the certificate of non-forum shopping in behalf of the
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corporation, and proof of such authority must be attached to the petition.14 Failure to attach to the certification any proof of the signatorys authority is a sufficient ground for the dismissa l of the petition.15 In the instant case, the senior vice-president of the petitioner corporation signed the certificate of nonforum shopping. No proof of his authority to sign the said certificate was, however, attached to the petition. Thus, applying settled jurisprudence, we find that the CA committed no error when it dismissed the petition. The Court cannot even be liberal in the application of the rules because liberality is warranted only in instances when there is substantial compliance with the technical requirements in pleading and practice, and when there is sufficient explanation that the non-compliance is for a justifiable cause, such that the outright dismissal of the case will defeat the administration of justice.16 Here, the petitioner corporation, in its motion for reconsideration before the appellate court and in its petition before us, did not present a reasonable explanation for its non-compliance with the rules. Further, it cannot be said that petitioner substantially complied therewith, because it did not attach to its motion for reconsideration any proof of the authority of its signatory. It stands to reason, therefore, that this Court now refuses to condone petitioners procedural transgression. We must reiterate that the rules of procedure are mandatory, except only when, for the most persuasive of reasons, they may be relaxed to relieve a litigant of an injustice not commensurate to the degree of his thoughtlessness in not complying therewith.17 While technical rules of procedure are not designed to frustrate the ends of justice, they are provided to effect the proper and orderly disposition of cases and effectively prevent the clogging of court dockets.18 Be that as it may, this Court has examined the records if only to dispel any doubt on the propriety of the dismissal of the case, and we found no abuse of discretion, much more a grave one, on the part of the labor commission in reversing the ruling of the LA. It is crystal clear that the closure of the Sto. Tomas farm was made in bad faith. Badges of bad faith are evident from the following acts of the petitioner: it unjustifiably refused to recognize the STFWUs and the other unions affiliation with PULO; it concluded a new CBA with another union in another farm during the agreed indefinite suspension of the collective bargaining negotiations; it surreptitiously transferred and continued its business in a less hostile environment; and it suddenly terminated the STFWU members, but retained and brought the non-members to the Malvar farm. Petitioner presented no evidence to support the contention that it was incurring losses or that the subject farms lease agreement was pre-terminated. Ineluctably, the closure of the Sto. Tomas farm circumvented the labor organizations right to collective bargaining and violated the members right to security of tenure. 19 The Court reiterates that the petition for certiorari under Rule 65 of the Rules of Court filed with the CA will prosper only if there is clear showing of grave abuse of discretion or an act without or in excess of jurisdiction on the part of the NLRC.20 It was incumbent, then, for petitioner to prove before the appellate court that the labor commission capriciously and whimsically exercised its judgment tantamount to lack of jurisdiction, or that it exercised its power in an arbitrary or despotic manner by reason of passion or personal hostility, and that its abuse of discretion is so patent and gross as to amount to an evasion of a positive duty enjoined or to act at all in contemplation of law.21 Here, as aforesaid, no such proof was adduced by petitioner. We, thus, declare that the NLRC ruling is not characterized by grave abuse of discretion. Accordingly, the same is also affirmed. However, this Court makes the following observations and modifications: We deem as proper the award of moral and exemplary damages. We hold that the sudden termination of the STFWU members is tainted with ULP because it was done to interfere with, restrain or coerce employees in the exercise of their right to self-organization. Thus, the petitioner company is liable for the payment of the aforesaid damages.22 Notable, though, is that this award, while stated in the body of the NLRC decision, was omitted in the dispositive portion of the said ruling. To prevent any further confusion
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in the implementation of the said decision, we correct the dispositive portion of the ruling to include the payment of P500,000.00 as moral and exemplary damages to the illegally dismissed STFWU members. As to the order of reinstatement, the Court modifies the same in that if it is no longer feasible considering the length of time that the employees have been out of petitioners employ, 23 the company is ordered to pay the illegally dismissed STFWU members separation pay equivalent to one (1) month pay, or one-half (1/2) month pay for every year of service, whichever is higher.24 The releases and quitclaims, as well as the affidavits of desistance,25 signed by the concerned employees, who were then necessitous men at the time of execution of the documents, are declared invalid and ineffective. They will not bar the workers from claiming the full measure of benefits flowing from their legal rights.26 WHEREFORE, premises considered, the petition for review on certiorari is DENIED. The October 25, 2001 and the November 22, 2001 Resolutions of the Court of Appeals in CA-G.R. SP No. 66871 areAFFIRMED. The March 16, 2001 Decision of the National Labor Relations Commission in NLRCNCR-00-07-05159-95 (CA No. 022059-00) is AFFIRMED with the MODIFICATION that petitioner company is ordered to: (1) reinstate the illegally dismissed STFWU members and pay them full backwages from the time of illegal termination up to actual reinstatement; (2) if reinstatement is no longer feasible, pay the illegally dismissed STFWU members their separation pay equivalent to one month pay, or onehalf month pay for every year of service, whichever is higher; and (3) pay moral and exemplary damages in the aggregate amount of P500,000.00 to the said illegally dismissed STFWU members. SHELL OIL WORKERS' UNION vs. SHELL COMPANY OF THE PHILIPPINES, LTD.; G.R. No. L-28607 May 31, 1971 The insistence on the part of respondent Shell Company of the Philippines to dissolve its security guard section, stationed at its Pandacan Installation notwithstanding its being embraced in, and its continuance as such thus assured by an existing collective bargaining contract, resulted in a strike called by petitioner Shell Oil Workers' Union, hereinafter to be designated as the Union, certified a month later on June 27, 1967 by the President to respondent Court of Industrial Relations. Against its decision declaring the strike illegal primarily on the ground that such dissolution was a valid exercise of a management prerogative, this appeal is taken. With due Recognition that the system of industrial democracy fostered in the regime of unionization and collective bargaining leaves room for the free exercise of management rights, but unable to close our eyes to the violation of a contract still in force implicit in such dissolution thus giving rise to an unfair labor practice, we cannot sustain respondent Court of Industrial Relations. Consequently, the harsh and unwarranted sanction imposed, the dismissal of the security guards and the officers of the Union, cannot stand. Insofar, however, as individual liability is deemed incurred for serious acts of violence, whether committed by a leader or member of the Union, we leave things as adjudged. The deep-rooted differences between the parties that led to the subsequent strike were made clear in the presidential certification. As set forth in the opening paragraph of the decision now on appeal: "Before this Court for resolution is the labor dispute between the petitioner Shell Oil Workers' Union, Union for brevity, and the respondent Shell Company of the Philippines Limited, Company for short, which was certified to this Court on June 27, 1967 by the Office of the President of the Republic of the Philippines pursuant to the provision of Section 10 of Republic Act No. 875. Said dispute ... 'was a result of the transfer by the Company of the eighteen (18) security guards to its other department and the consequent hiring of a private security agency to undertake the work of said security guards.'" 1 The respective contentions of the parties were then taken up. Petitioner "filed the petition on July 7, 1967 alleging, among others, that the eighteen (18) security guards affected are part of the bargaining unit and covered by the existing collective bargaining contract, and as such, their transfers and eventual dismissals are illegal being done in violation of the existing contract. It, therefore, prayed that said security guards be reinstated with full back wages from the time of their dismissal up to the time of their actual reinstatement." 2 Then came a summary of the stand Of Shell Company: "For hours hereafter, respondent
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Company filed its Answer [to] the material allegations in the Union's petition and adverted that the issues in this case are: (1) whether or not the Company commits unfair labor practice in contracting out its security service to an independent professional security agency and assigning the 18 guards to other sections of the Company; (2) whether or not the dismissal of the 18 security guards are justified; and (3) whether or not (the strike called by the Union on May 25, 1967 is legal. As special and affirmative defenses, the Company maintained that in contracting out the security service and redeploying the 18 security guards affected, it was merely performing its legitimate prerogative to adopt the most efficient and economical method of operation; that said guards were transferred to other sections with increase, except for four (4) guards, in rates of pay and with transfer bonus; the said action was motivated by business consideration in line with past established practice and made after notice to and discussion with the Union; that the 18 guards concerned were dismiss for wilfully refusing to obey the transfer order; and that the strike staged by the Union on May 25, 1967 is illegal. Primarily, Company prayed, among others, for the dismissal of the Union's petition and the said Union's strike be declared illegal followed by the termination of the employee status of those responsible and who participated in said illegal strike." 3 The move for the dissolution of the security section by reassigning the guards to other positions and contracting out such service to an outside security agency had its origins as far back as 1964. A study made by the Shell Company for the purpose of improving the productivity, organization and efficiency of its Pandacan Installation recommended its dissolution. If an outside agency to perform such service were to be hired, there would be a savings of P96,000.00 annually in addition to further economy consequent on the elimination to overtime an administration expenses. Its implementation was scheduled for 1965. 4 There was then, in July 1966, a joint consultation by the Union and management on the matter. At that stage, it would appear that there was no serious opposition to such a move provided it be done gradually and in close consultation with the Union. There was even an offer if cooperation as long as a scheme for retirement of the security guards affected or their redeployment would be followed. 5 The tentative character of such proposed dissolution was made evident by the fact however that on August 26, 1966, a collective bargaining contract was executed between the Union and the Shell Company effective from the first of the month of that year to December 31, 1969. It contained the usual grievance procedure and no strike clauses. 6 More relevant to the case before this Court, however, was the inclusion of the category of the security guards in such collective bargaining contract. This was stressed in the brief for the petitioner where specific mention is made of the agreement covering rank and file personnel regularly employed by the Company, included in which is the work area covered by the Pandacan Installation. 7 There was likewise specific reference to such positions in the wage schedule for hourly-rated categories appearing in an appendix thereof. 8 Mention was expressly made in another appendix of the regular remuneration as well as premium pay and night compensation.9 Nonetheless, Shell Company was bent on doing away with the security guard section, to be replaced by an outside security agency. That was communicated to the Union in a panel to panel meeting on May 3, 1967. A counter-offer on the part of the Union to reduce the working days per week of the guards from six to five was rejected by Shell Company on the ground of its being unusual and impracticable. Two days later, there was a meeting of the Union where a majority of the members made clear that should there be such a replacement of the company guards by a private security agency, there would be a strike. It was noted in the decision that when the strike vote was taken, of 243 members, 226 were for the approval of a motion to that effect. 10 On the afternoon of May 24, 1967, a notice of reassignment effective at 8:00 o'clock the next morning was handed to the guards affected. At 10:00 o'clock that evening, there was a meeting by the Union attended by ten officers and a majority of the members wherein it was agreed viva voce that if there would be an implementation of the circular dissolving the security section to be replaced by guards from an outside agency, the Union would go on strike immediately.11 The strike was declared at half-past 7:00 o'clock in the morning of May 25, 1967 when security guards from an outside agency were trying to pass the main gate of the Shell Company to their work. With the picket line established, they were unable to enter. Efforts were made by the Conciliation Service of the Department of Labor to settle the matter, but they were unsuccessful. 12 It was not until June 27, 1967, however, that the Presidential certification came. 13 There was a return to work order on July 6, 1967 by respondent Court, by virtue of which pending the resolution of the case, the Shell Company was not to lockout the employees involved and the employees in turn were not to strike.
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The decision of respondent Court was rendered on August 5, 1967. It declared that no unfair labor practice was committed by Shell Company in dissolving its security guards from an outside agency, as such a step was well within management prerogative. Hence for it, the strike was illegal, there being no compliance with the statutory requisites before an economic strike could be staged. Respondent Court sought to reinforce such a conclusion by a finding that its purpose was not justifiable and that it was moreover carried out with violence. There was thus a failure on its part to accord due weight to the terms of an existing collective bargaining agreement. Accordingly as was made clear in the opening paragraph of this opinion we view matters differently. The strike cannot be declared illegal, there being a violation of the collective bargaining agreement by Shell Company. Even if it were otherwise, however, this Court cannot lend sanction of its approval to the outright dismissal of all union officers, a move that certainly would have the effect of considerably weakening a labor organization, and thus in effect frustrate the policy of the Industrial Peace Act to encourage unionization. To the extent, however, that the serious acts of violence occurring in the course of the strike could be made the basis for holding responsible a leader or a member of the Union guilty of their commission, what was decided by respondent Court should not be disturbed. 1. It is the contention of Shell Company, sustained by respondent Court, that the dissolution of the security guard section to be replaced by an outside agency is a management prerogative. The Union argues otherwise, relying on the assurance of the continued existence of a security guard section at least during the lifetime of the collective bargaining agreement. The second, third and fourth assignment of errors, while they could have been more felicitously worded, did attack the conclusion reached by respondent Court as contrary to and in violation of the existing contract. It is to be admitted that the stand of Shell Company as to the scope of management prerogative is not devoid of plausibility if it were not bound by what was stipulated. The growth of industrial democracy fostered by the institution of collective bargaining with the workers entitled to be represented by a union of their choice, has no doubt contracted the sphere of what appertains solely to the employer. It would be going too far to assert, however, that a decision on each and every aspect of the productive process must be reached jointly by an agreement between labor and management. Essentially, the freedom to manage the business remains with management. It still has plenty of elbow room for making its wishes prevail. In much the same way that labor unions may be expected to resist to the utmost what they consider to be an unwelcome intrusion into their exclusive domain, they cannot justly object to management equally being jealous of its prerogatives. More specifically, it cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. To it belongs the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies. it is the opinion of the Court, that while management has the final say on such matter, the labor union is not to be completely left out. What was done by Shell Company in informing the Union as to the step it was intending to take on the proposed dissolution of the security guard section to be replaced by an outside agency is praise-worthy. There should be mutual consultation eventually deference is to be paid to what management decides. Thereby, in the words of Chief Justice Warren, there is likely to be achieved "peaceful accommodation of conflicting interest." 14 In this particular case though, what was stipulated in an existing collective bargaining contract certainly precluded Shell Company from carrying out what otherwise would have been within its prerogative if to do so would be violative thereof. 2. The crucial question thus is whether the then existing collective bargaining contract running for three years from August 1, 1966 to December 31, 1969 constituted a bar to such a decision reached by management? The answer must be in the affirmative. As correctly stressed in the brief for the petitioner, there was specific coverage concerning the security guard section in the collective bargaining contract. It is found not only in the body thereof but in the two appendices concerning the wage schedules as well as the premium pay and the night compensation to which the personnel in such section were entitled. 15 It was thus an assurance of security of tenure, at least, during the lifetime of the agreement. Nor is it a sufficient answer, as set forth in the decision of respondent Court, that while such a section would be abolished, the guards would not be unemployed as they would be transferred to another position with an increase in pay and with a transfer bonus. For what is involved is the integrity of the agreement reached, the terms of which should be binding of both parties. One of them may be released, but only with the
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consent of the other. The right to object belongs to the latter, and if exercised, must be respected. Such a state of affairs should continue during the existence of the contract. Only thus may there be compliance with and fulfillment of the covenants in a valid subsisting agreement. What renders the stand of Shell Company even more vulnerable is the fact that as set forth in its brief and as found by respondent Court as far back as 1964, it had already been studying the matter of dissolving the security guard section and contracting out such service to an outside agency. Apparently, it had reached a decision to that effect for implementation the next year. In July 1966, there was a joint consultation between it and the Union on the matter. Nonetheless on August 26, 1966, a collective bargaining contract was entered into which, as indicated above, did assure the continued existence of the security guard section. The Shell Company did not have to agree to such a stipulation. Or it could have reserved the right to effect a dissolution and reassign the guards. It did not do so. Instead, when it decided to take such a step resulting in the strike, it would rely primarily on provisions in the collective bargaining contract couched in general terms, merely declaratory of certain management prerogatives. Considering the circumstances of record, there can be no justification then for Shell Company's insistence on pushing through its project of such dissolution without thereby incurring a violation of the collective bargaining agreement. 3. The Shell Company, in failing to manifest fealty to what was stipulated in an existing collective bargaining contract, was thus guilty of an unfair labor practice. Such a doctrine first found expression in Republic Savings Bank v. Court of Industrial Relations, 16 the opinion of the Court being penned by Justice Castro. There was a reiteration of such a view in Security Bank Employees Union v. Security Bank and Trust Company. 17 Thus: "It being expressly provided in the industrial Peace Act that [an] unfair labor practice is committed by a labor union or its agent by its refusal 'to bargain collectively with the employer' and this Court having decided in the Republic Savings Bank case that collective bargaining does not end with the execution of an agreement, being a continuous process, the duty to bargain necessarily imposing on the parties the obligation to live up to the terms of such a collective bargaining agreement if entered into, it is undeniable that non-compliance therewith constitutes an unfair labor practice." 18 4. Accordingly, the unfair labor practice strike called by the Union did have the impress of validity. Rightly labor is justified in making use of such a weapon in its arsenal to counteract what is clearly outlawed by the Industrial Peace Act. That would be one way to assure that the objectives of unionization and collective bargaining would not be thwarted. It could, of course, file an unfair labor practice case before the Court of Industrial Relations. It is not precluded, however, from relying on its own resources to frustrate such an effort on the part of employer. So we have consistently held and for the soundest of reasons. 19 There is this categorial pronouncement from the present Chief Justice: "Again, the legality of the strike follows as a corollary to the finding of fact, made in the decision appealed from which is supported by substantial evidence to the effect that the strike had triggered by the Company's failure to abide by the terms and conditions of its collective bargaining agreement with the Union, by the discrimination, resorted to by the company, with regard to hire and tenure of employment, and the dismissal of employees due to union activities, as well as the refusal of the company to bargain collectively in good faith." 20 As a matter of fact, this Court has gone even further. It is not even required that there be in fact an unfair labor practice committed by the employer. It suffices, if such a belief in good faith is entertained by labor, as the inducing factor for staging a strike. So it was clearly stated by the present Chief Justice while still an Associate Justice of this Court: "As a consequence, we hold that the strike in question had been called to offset what petitioners were warranted in believing in good faith to be unfair labor practices on the part of Management, that petitioners were not bound, therefore, to wait for the expiration of thirty (30) days from notice of strike before staging the same, that said strike was not, accordingly, illegal and that the strikers had not thereby lost their status as employees of respondents herein." 21 5. It would thus appear that the decision now on appeal did not reflect sufficient awareness of authoritative pronouncements coming from this Court. What is worse, certain portions thereof yield the impression that an attitude decidedly unsympathetic to labors resort to strike is evident. Such should not
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be the case. The right to self-organization so sedulously guarded by the Industrial Peace Act explicitly includes the right "to engage in concerted activities for the purpose of collective bargaining and to the mutual aid or protection." 22 From and after June 17, 1953 then, there cannot be the least doubt that a strike as form of concerted activity has the stamp of legitimacy. As a matter of law, even under the regime of compulsary arbitration under the Court of Industrial Relations Act, 23 a strike was by no means a forbidden weapon. Such is the thought embodied in the opinion of Justice Laurel in Rex Taxicab Company v. Court of Industrial Relations. 24 Thus: "In other words, the employee, tenant or laborer is inhibited from striking or walking out of his employment only when so enjoined by the Court of Industrial Relations and after a dispute has been submitted thereto and pending award or decision by the court of such dispute. It follows that, as in the present case, the employees or laborers may strike before being ordered not to do so and before an industrial dispute is submitted to the Court of Industrial Relations, subject to the power of the latter, after hearing when public interest so requires or when the dispute cannot, in its opinion, be promptly decided or settled, to order them to return, with the consequence that if the strikers fail to return to work, when so ordered, the court may authorize the employer to accept other employees or laborers." 25 Former Chief Justice Paras, in a case not too long before enactment of the Industrial Peace Act, had occasion to repeat such a view. Thus: "As a matter of fact, a strike may not be staged only when, during the pendency of an industrial dispute, the Court of industrial Relations has issued the proper injunction against the laborers (section 19, Commonwealth Act No. 103, as amended). Capital need not, however, be apprehensive about the recurrence of strikes in view of the system of compulsory arbitration by the Court of Industrial Relations." 26 A strike then, in the apt phrase of Justice J.B.L. Reyes, is "an institutionalized factor of democratic growth." 27 This is to foster industrial democracy. Implicit in such a concept is the recognization that concerning the ends which labor considers worth while, its wishes are ordinarily entitled to respect. Necessarily so, the choice as to when such an objective may be attained by striking likewise belongs to it. There is the rejection of the concept that an outside authority, even if governmental, should make the decisions for it as to ends which are desirable and how they may be achieved. The assumption is that labor can be trusted to determine for itself when the right to strike may be availed of in order to attain a successful fruition in their disputes with management. It is true that there is a requirement, in the Act that before the employees may do so, they must file with the Conciliation Service of the Department of Labor a notice of their intention to strike. 28 Such a requisite however, as has been repeatedly declared by this Court, does not have to be complied with in case of unfair labor practice strike, which certainly is entitled to greater judicial protection if the Industrial Peace Act is to be rendered meaningful. What has been said thus far would demonstrate the unwarranted deviation of the decision now on appeal from what is indicated by the law and authoritative decisions. 6. Respondent Court was likewise impelled to consider the strike illegal because of the violence that attended it. What is clearly within the law is the concerted activity of cessation of work in order that a union's economic demands may be granted or that an employer cease and desist from an unfair labor practice. That the law recognizes as a right. There is though a disapproval of the utilization of force to attain such an objective. For implicit in the very concept of a legal order is the maintenance of peaceful ways. A strike otherwise valid, if violent in character may be placed beyond the pale. Care is to be taken, however, especially where an unfair labor practice is involved, to avoid stamping it with illegality just because it is tainted by such acts. To avoid rendering illusory the recognition of the right to strike, responsibility in such a case should be individual and not collective. A different conclusion would be called for, of course, if the existence of force while the strike lasts is pervasive and widespread, consistently and deliberately resorted to as a matter of policy. It could be reasonably concluded then that even if justified as to ends it becomes illegal because of the means employed. Respondent Court must have unduly impressed by the evidence submitted by the Shell Company to the effect that the strike was marred by acts of force, intimidation and violence on the evening of June 14 and twice in the mornings of June 15 and 16, 1967 in Manila. Attention was likewise called to the fact that even on the following day, with police officials stationed at the strike-bound area, molotov bombs did explode and the streets were obstructed with wooden planks containing protruding nails. Moreover, in the branches of the Shell Company in Iloilo City as well as in Bacolod, on dates unspecified, physical injuries appeared to have been inflicted on management personnel. Respondent Court in the appealed decision
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did penalize with loss of employment the ten individuals responsible for such acts. Nor is it to be lost sight of that before the certification on June 27, 1967, one month had elapsed during which the Union was on strike. Except on those few days specified then, the Shell Company could not allege that the strike was conducted in a manner other than peaceful. Under the circumstances, it would be going too far to consider that it thereby became illegal. This is not by any means to condone the utilization of force by labor to attain its objectives. It is only to show awareness that is labor conflicts, the tension that fills the air as well as the feeling of frustration and bitterness could break out in sporadic acts of violence. If there be in this case a weighing of interests in the balance, the ban the law imposes on unfair labor practices by management that could provoke a strike and its requirement that it be conducted peaceably, it would be, to repeat, unjustified, considering all the facts disclosed, to stamp the strike with illegality. It is enough that individual liability be incurred by those guilty of such acts of violence that call for loss of employee status. Such an approach is reflected in our recent decisions. As was realistically observed by the present Chief Justice, it is usually attended by "the excitement, the heat and the passion of the direct participants in the labor dispute, at the peak thereof ...." 29 Barely four months ago, in Insular Life Assurance Co., Ltd. Employees Association v. Insular life Assurance Co., Ltd ., 30 there is the recognition by this Court, speaking through Justice Castro, of picketing as such being "inherently explosive." 31 It is thus clear that not every form of violence suffices to affix the seal of illegality on a strike or to cause the loss of employment by the guilty party. 7. In the light of the foregoing, there being a valid unfair labor practice strike, the loss of employment decreed by respondent Court on all the Union officers cannot stand. The premise on which such penalty was decreed was the illegality of the strike. We rule differently. Hence, its imposition is unwarranted. It is to be made clear, however, that because of the commission of specific serious acts of violence, the Union's President, Gregorio Bacsa, as well as its Assistant Auditor, Conrado Pea, did incur such a penalty. 32 On this point, it may be observed further that even if there was a mistake in good faith by the Union that an unfair labor practice was committed by the Shell Company when such was not the case, still the wholesale termination of employee status of all the officers of the Union, decreed by respondent Court, hardly commends itself for approval. Such a drastic blow to a labor organization, leaving it leaderless, has serious repercussions. The immediate effect is to weaken the Union. New leaders may of course emerge. It would not be unlikely, under the circumstances, that they would be less than vigorous in the prosecution of labor's claims. They may be prove to fall victims to counsels of timidity and apprehension. At the forefront of their consciousness must be an awareness that a mistaken move could well mean their discharge from employment. That would be to render the right to self-organization illusory. The plain and unqualified constitutional command of protection to labor should not be lost sight of. 33 The State is thus under obligation to lend its aid and its succor to the efforts of its labor elements to improve their economic condition. It is now generally accepted that unionization is a means to such an end. It should be encouraged. Thereby, labor's strength, what there is of it, becomes solidified. It can bargain as a collectivity. Management then will not always have the upper hand nor be in a position to ignore its just demands. That, at any rate, is the policy behind the Industrial Peace Act. The judiciary and administrative agencies in consrtruing it must ever be conscious of its implications. Only thus may there be fidelity to what is ordained by the fundamental law. For if it were otherwise, instead of protection, there would be neglect or disregard. That is ito negate the fundamental principle that the Constitution is the supreme law. WHEREFORE, the decision of respondent Court of Industrial Relations of August 5, 1967 is reversed, the finding of illegality of the strike declared by the Shell Oil Workers' Union on May 25, 1967 not being in accordance with law. Accordingly, the dismissal by the Shell Company on May 27, 1967 of the eighteen security guards, 34 with the exception of Ernesto Crisostomo, who was found guilty of committing a serious act of violence is set aside and they are declared reinstated. The continuance of their status such is, however, dependent on whether or not a security guard section is provided for in the collective bargaining contract entered into after the expiration of the contract that expired on December 31, 1969. The loss of employee status of the officers of the Union, 35 decreed by respondent Court in its decision, is likewise set
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aside, except as to Gregorio Bacsa and Conrado Pena, both of whom did commit serious acts of violence. The termination of the employment status of Nestor Samson, Jose Rey, Romeo Rosales, Antonio Labrador and Sesinando Romero, who committed acts of violence not serious in character, is also set aside, but while allowed to be reinstated, they are not entitled to back pay. Ricardo Pagsibigan and Daniel Barraquel, along with the aforesaid Gregorio Baesa, Conrado Pea and Ernesto Crisostomo, were legally penalized with dismissal because of the serious acts of violence committed by them in the course of the strike. The rest of the employees laid off should be reinstated with back pay to be counted from the date they were separated by virtue of the appealed decision, from which should be deducted whatever earnings may have been received by such employees during such period. The case is hereby remanded to respondent Court for the implementation of this decision. In ascertaining the back wages to which the security guards are entitled, it must likewise be ascertained whether or not the security guard section is continued after December 31, 1969. Without costs. Separate Opinions BARREDO, J., concurring: To be sure, a dissent from the opinion ably written by Our learned colleague, Justice Fernando, may not be entirely without some degree of plausibility. To begin with, the basic conclusion of fact of the Court of Industrial Relations in the appealed decision, which by law and the previously unbroken line of decisions of this Court on the point, We cannot lightly set aside, seem to be logical and supported by evidence not seriously disputed. Withal, when it is considered that there is nothing in the record to show that in acting as it did in this case, respondent Shell Company, Ltd. was not, actuated by any anti-union, much less antilabor motive but by purely economic reasons of sound management, and, in fact, petitioner does not even suggest any such purpose, one must have to hesitate and deliberate long and hard before giving assent to a pronouncement that this respondent is guilty of unfair labor practice, such as to legalize the strike declared by petitioner against it. I take it, however, that in a larger sense this is a policy decision, and all things considered, particularly the constitutional injunctions on social justice and protection to labor, I prefer to err, since the juridical considerations and equities in this case appear to my mind and conscience to be in equipoise, on the side of labor, who, as I see it, acted in the same good faith that management did. I must hasten to add though, that in thus referring to labor, I do not have in mind the union leaders involved in this case to whom the Court of Industrial Relations has attributed personal reasons for their attitude, but I am thinking more of those security guards who felt uncertain about ultimate consequences of their transfer ordered by respondent and naturally found nothing to hold on was the protection of the collective bargaining agreement which they had a right to assume insured the substantial continuance of the terms and conditions of their employment contemplated in said agreement at the time it was entered into. Contrary to the conclusion of the distinguished writer of the main opinion, I regret to say that the record amply supports the finding of the Industrial Court that the transfer of the eighteen security guards concerned was not a violation of the collective bargaining agreement between petitioner and said respondent. The more I go over the considerations of the appealed decision, the more I am convinced not only that the move was never tinged by any antilabor hue but also that respondent had from the very beginning taken petitioner and its duly authorities representatives in its long study and deliberation of the problem, which took years, and had, in fact, consulted them on various aspects thereof. It is not denied that the maintenance of security is not the only aspect of its multifarious departments it has decided to contract out; petitioner did not object to the previous ones. Indeed, it is safe, to conjecture that petitioner has always seen the point of respondent, principally the economy it would achieve and the consequent benefits labor might gain thereby. In this connection, I particularly note that there is nothing in the record indicating that there is factual basis for petitioner's claim that the security guards herein involved would surely suffer economic loss as a result of their questioned transfer; respondent made it plain that overtime and other benefits accruing to them as security guards would likewise be given to them in their new positions. And in answer to petitioner's almost rhetorical question, why were said guards being given additional hourly pay and lump sum bonuses, if respondent did not feel, that their rights were being violated, it is perhaps not unreasonable to suppose that management simply felt that as the company was
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to save money by contracting out its security maintenance, it was but proper that the affected sector of labor' should share a part of its savings. All these, however, do not mean, on the other hand, that petitioner's strike should necessarily be held to be illegal. It is always a wholesome attitude in cases of this nature to give but secondary importance to strict technicalities, whether of substantive or remedial law, and to constantly bear in mind the human values involved which are beyond pecuniary estimation. As a general rule, labor's most potent and effective weapon is the strike, and it is but natural that when things appear to be dimming on the negotiation tables, labor should almost instinctively take a striking posture. In other words, the determination of the legality or illegality of a strike, particularly in this enlightened era of progressive thinking on labor-management relations is something that cannot be achieved by mere straight-jacketed legalistic argumentation and rationalization; the process is broader and deeper than that, for to do justice in deciding such an issue, it is imperative that utmost consideration should be given to the particular circumstances of each case, with a view to having the most comprehensive understanding of the motivations of the parties, in the light of human needs on the part of labor, and in the perspective of the orderly and economical conduct of business and industry, on the part of management. In this particular case, for instance, I cannot agree that respondent has violated its collective bargaining agreement with petitioner, but, on the other hand, I am not ready to conclude that for this reason, the strike here in question was consequently illegal. I hold that the two strike votes taken by the members of the petitioning union were both premised on the sincere and honest belief that there was a legal breach of the said agreement. That now I find, as the Industrial Court did, that technically and in truth, there was no such infringement did not of necessity stamp the said strike with the stigma of illegality. It may not be amiss to add at this juncture, to allay and disabuse possible apprehension that the main opinion may conceivably produce in some quarters, that I do not discern in it any prejudice on the part of Justice Fernando, strictly pro-labor and anti-management. Precisely, I am giving my concurrence to the judgment in this case because I am convinced that, fundamentally he has also viewed the situation at hand in the light of the above considerations, even if our respective approaches and articulation of views have to differ, since I do not own all the perspectives whence he gives support to his conclusions, because I personally do not find any necessity to resort to other authorities, when I feel that plain reasoning, predicated on commonly accepted principles and reliance on one's proper sense of justice can suffice for the occasion. I also concur in the sanctions ordered in the main opinion. The Court has individualized the respective responsibilities of the strikers herein involved because such exactly is what the justice of the situation demands. The reinstatement of those relatively innocent cannot be but only fair and equitable and the approval of the lay-off of those found to have acted beyond the requirements of the circumstances is founded on sound policy. In simple terms, I hold that the mere fact that a strike is not illegal, and I want to emphasize here that there is, in my opinion, a large shade of difference between a strike that is really justified and legal and one that is merely held not to be illegal, cannot be an excuse for resort to violence. Even picketing which is the sister remedy of strikes is not supposed to be completely unrestrained and unrestricted, and unprovoked violence, threats and duress of more or less grave nature employed by strikers against person and property are twice removed from what can be judicially tolerated. PHILIPPINE AMERICAN CIGAR & CIGARETTE FACTORY WORKERS INDEPENDENT UNION (NLU) vs. PHILIPPINE AMERICAN CIGAR & CIGARETTE MANUFACTURING CO., INC. G.R. No. L-18364 February 28, 1963 Appeal by certiorari of petitioner Philippine American Cigar & Cigarette Workers Independent Union (NLU), from a decision of the Court of Industrial Relations dismissing a complaint of said petitioner for unfair labor practice, and ordering respondent Philippine American Cigar & Cigarette Manufacturing Co., Inc. to reinstate Apolonio San Jose, within five (5) days from notice of said decision, without backpay. The pertinent facts are set forth in said decision from which we quote:
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Paragraph 3, sub-paragraph (a) of the complaint states: a. That sometime on October 23, 1958, Apolonio San Jose's brother, Francisco San Jose, who is also a regular worker of the respondent and a member of the complainant union, filed a charge for unfair labor practice against herein respondent docketed as Case No. 1857-ULP of this Court, which case is still pending. b. That subsequent to the filing of the said charge, or on about November 29, 1958 and also on or about December 11, 1958, the respondent herein, by its manager Chua Yiong, summoned and advised union president Lazaro Peralta that if Francisco San Jose will not withdraw his charge against the company (Case No. 1857-ULP), the company will also dismiss his brother Apolonio San Jose, to which the union president replied that that should not be the attitude of the company because Apolonio has nothing to do with his brother's case. c. That on or about January 24, 1959, respondent, by its officers and agents, did dismiss Apolonio San Jose without just and valid cause and in gross violation of the operative collective bargaining agreement between the complainant union and respondent corporation. The allegations in said sub-paragraphs (a), (b) and (c) of the complaint were substantiated by the oral testimony of complainant's witnesses, but the Court finds that such allegations do not constitute unfair labor practice acts on the part of respondent. In sub-paragraphs (a) and (b), the Court finds no interference, coercion and restraint against the employees in the exercise of their guaranteed rights to self-organization and discrimination against complainant Apolonio San Jose in regard to hire or tenure of his employment. In short, the complainants' charge is that if Francisco San Jose would not withdraw his unfair labor practice charge against respondent company, the manager of the latter would dismiss Apolonio San Jose, the brother of Francisco. In fact, said manager dismissed Apolonio San Jose. This may be an illegal or improper dismissal, but certainly, it does not constitute an unfair labor practice. The Court further finds that in sub-paragraph (c), complainants allege that the dismissal of Apolonio San Jose was in gross violation of the collective bargaining agreement between complainant union and respondent corporation. The Court of Industrial Relations found "that the moving cause of Apolonio's dismissal was the refusal of his brother Francisco San Jose, to withdraw his charge of unfair labor practice against the company. But" it added "be that as it may, it cannot constitute an actionable offense under the Act". Seemingly believing that, since the one dismissed by reason of said charge of unfair labor practice was, not the complainant therein, Francisco San Jose, but his brother Apolonio San Jose, the latter's dismissal does not constitute another unfair labor practice under Section 4 (a) (5) of Republic Act No. 875, which provides that: (a) It shall be unfair labor practice for an employer: xxx xxx xxx
(5) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having filed charges or for having given or being about to give testimony under this Act. the lower court concluded that it had no jurisdiction to entertain the claim of petitioner herein. This conclusion is untenable. Although subdivision (5) of paragraph (a) of said Section 4 would seem to refer only to the discharge of the one who preferred charges against the company as constituting unfair labor practice, the aforementioned subdivision (5) should be construed in line with the spirit and purpose of said Section 4
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and of the legislation of which forms part namely, to assure absolute freedom of the employees and laborers to establish labor organizations and unions, as well as to prefer charges before the proper organs of the Government for violation of our labor laws. Now, then, if the dismissal of an employee due to the filing by him of said charges would be and is an undue restraint upon said freedom, the dismissal of his brother owing to the non-withdrawal of the charges of the former, would be and constitute as much a restraint upon the same freedom. In fact, it may be a greater and more effective restraint thereto. Indeed, a complainant may be willing to risk the hazards of a possible and even probable retaliatory action by the employer in the form of a dismissal or another discriminatory act against him personally, considering that nobody is perfect, that everybody commits mistakes and that there is always a possibility that the employer may find in the records of any employee, particularly if he has long been in the service, some act or omission constituting a fault or negligence which may be an excuse for such dismissal or discrimination. Yet, such complainant may not withstand the pressure that would result if his brother or another member of his immediate family were threatened with such action unless the charges in question were withdrawn. In fact, it is a well settled rule of law that what is prohibited to be done directly shall not be allowed to be accomplished indirectly. Thus in the Matter of Quidnick Dye Works, Inc. and Federation of Dyers, Finishers, Printers and Bleachers of America (2 NLRB 963) it was held that the dismissal of a laborer on account of union activities of his brother constituted an unfair labor practice. To the same effect, substantially, are the decisions in the Matter of the Fashion Piece Dye Works, Inc. and Federation of Silk and Rayon Dyers and Finishers of American, 6 NLRB p. 274; In the Matter of Ford Motor Company and H.C. McGarity, 26 NLRB, p. 322 (which refers to the union activities of the wife of the discharged employee), and Union Asbestos & Rubber Co. and United Textile Workers of America, AFL, 98 NLRB p. 1055 (involving the dismissal of a female employee, due to the union activities of her husband). Hence, Teller in his work on Labor Disputes and Collective Bargaining (Vol. 2, p. 859), says: The discharge of relatives of an employee who was himself been discriminately discharged, for no other reason than the relation, is itself of a discriminatory discharge, in violation of Sec. 8(3) of the Act. An illustration is Memphis Furniture Co. (3 NLRB 26 [1937], enforced 2 F2d 1018 [CCA 6, 1938], cert. den. 305 US 627, 59 S Ct 91, 83 L. Ed. 402 [CCA 6, 1938])where the evidence indicated that the sole reason for the dismissal of a female employee was that she was the wife of an employee who has been discharged. It was held that the discharge under the circumstances was discriminatory and a violation of the Act, even though discharged female employee was not herself a member of any union. The Board said: "The respondent thus made union membership and activities a bar to the employment not only of the union member himself but of members of his family as well. A more effective mode of discouragement of union affiliation could hardly be found than the knowledge that such activities put not merely the union member's employment but that of those closely related to him in jeopardy. The direct cause of Mrs. Barmer's discharge was the fact that her husband had been discharged, but the indirect and antecedent cause was discrimination against union members in regard to hire and tenure of employment with intent to discourage membership in the Union." So also the Board has held that the discharge of discriminatingly discharged employees' wives for the reason that the employer did not desire the employees to continue to live in the employer's houses, which they would do so long as their wives remained employed, is itself a discriminating discharge in violation of the Act. (Mexis Textile Mills, 11 NLRB 1167 [1939], enforced 110 F2d 565 [CCA 5, 1940].) In Mansfield Mills, Inc. (3 NLRB 901 [1937] ), the respondent alleged that the wife of an employee who had been discharged allegedly in violation of the Act was herself discharged in consequence of a company rule requiring the dismissal of all members of the family when the head of the family is discharged. The Board said: "Assuming this as the reason for Mrs. Sutton's discharge, we would necessarily find that she was the victim of discrimination in violation of the Act, if we determined that Sutton was discharged as the result of his union affiliation." In the usual case, it is the wife who is the sufferer because of the husband's union affiliation. In I. Youlin and Company (22 NLRB No. 65 [1940]),the husband was discharged for failure to secure his wife's resignation from the union this was held violative of Section 8(3) of the Act.
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In addition to violating Section 4(a) (5) of Republic Act No. 875, the discharge of Apolonio San Jose is, therefore, an unfair labor practice under subdivision (4) of said Section 4(a), which is the counterpart of Section 8(3)of the National Labor Relations Act (Wagner Act) of the United States. Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. 1wph1.t WHEREFORE, the decision appealed from is hereby reversed, insofar as it dismisses the complaint of petitioner herein, and another one shall be entered finding respondent Philippine American Cigar & Cigarette Manufacturing Co., Inc. guilty of unfair labor practice and ordering said respondent to reinstate Apolonio San Jose, immediately after his decision shall have become final, with backpay. It is so ordered. RIZAL CEMENT WORKERS UNION (FFW) vs. MADRIGAL & COMPANY, INC. G.R. No. L19767 April 30, 1964 This is a petition for review on certiorari filed by the Rizal Cement Workers' Union (FFW), hereinafter referred to as the Union, seeking for a modification of the decision and resolution of the Court of Industrial Relations in Case No. 1020-ULP, and to have the respondent Rizal Cement Co., Inc., hereinafter referred to as the Company, declared guilty of unfair labor practice, and the 21 unionmembers involved in the case entitled to back wages from May 28, 1956. In connection with the unfair labor practice case filed by the Union against the Company, resulting from the alleged locking out of the 21 complainants, a decision was rendered by the Court of Industrial Relations, after due trial containing the following findings of fact: The Rizal Cement Workers Union, affiliated with the Federation of Free Workers, heretofore referred to as the Union, is a legitimate labor organization. The twenty-one complainant workers are members of the Union and work at the Bodega Tanque, Paco, Manila, ... . The respondent Rizal Cement Co., Inc. is a corporation likewise organized under the laws of the Philippines and is engaged principally in the manufacture of cement. (Exh. "30 Rizal"). It operates a plant in Binangonan, Rizal, where it manufactures cement. The bags of cement are then sent in barges to the Bodega Tanque at Paco, where they are unloaded by workers therein and sent either directly to customers on trucks and pick-ups or stored in the warehouse for future deliveries. There is also no dispute as to the fact that on May 27, 1956, the Union staged a strike at the plant of the respondent Rizal Cement Co., Inc. in Binangonan, Rizal. In the early morning of the following day, that is, on May 28, 1956, Candido de Leon warehouseman-encargado at the Bodega Tanque, received a telephone call from one Johnny de Leon, manager of the respondent Rizal Cement Co., Inc., with the information that the Union staged a strike against the company on the previous day, May 27, 1956, in Binangonan, Rizal De Leon further informed him that he should take precautionary measures in protecting the properties of the company stored at the Bodega Tanque because of the strikers caused damage to the factory in Binangonan and sabotage might occur. For this reason, he was advised by the manager to request the members of the Union to stay meanwhile outside the premises of the Bodega Tanque. What he did in the morning of May 28, 1956 was to station himself at the gate of the compound. When the workers arrived for work at 7:00 a.m., he did not allow the 21 complaining workers who are members of the Union to enter the gate and allowed only those who are not members of said Union. Upon refusal of Candido de Leon to allow the complaining workers to work on that day, the Union, through Ramon L. Kabigting, Vice-President of the FFW, sent a letter addressed to the Manager, Bodega Tanque, Rizal Cement Co., Inc., which, for ready reference, is hereby quoted as follows:
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May 28, 1956 The Manager Bodega Tanque Rizal Cement Co., Inc. Tanque, Paco, Manila Dear Sir: This morning our union members reported for work at your company promises. Instead of being made to work, they were told by your goodself that they will not be allowed to work anymore. This inspite of the fact that non-FFW members were allowed to work. This is pure discrimination on your part. We are protesting vigorously against your act and are asking you to reinstate these men immediately. Yours truly, s/t RAMON L. KABIGTING Vice President Federation of Free Workers (Exhs. "A" for complainants, and "19" for respondents) The Rizal Cement Co., Inc. through counsel, made a reply dated May 30, 1956, to the foregoing letter, as follows: May 30, 1956 Federation of Free Workers 508 Jalandoni Building Dasmarias, Manila Att'n: Mr. Ramon L. Kabigting Vice President Gentlemen: Your letter dated the 29th instant, addressed to the Manager, Bodega Tanque, of our client, Rizal Cement Co., Inc. has been by the latter referred to us. In reply, please be informed that as the Rizal Cement Workers Union (FFW) National Organization of Laborers and Employees (NOLE-FFW) Federation of Free Workers, of which the persons subject to your letter are members, declared a strike against the Company since two o'clock Sunday morning, May 27, 1956, said persons or "union members" referred to in your letter were requested to stay outside the Company premises, in view of the threat that they were going to commit sabotage, threats which our client had reason to believe would be carried out, considering, as you know, what actually happened in Binangonan, Rizal. Our said client emphatically denies your claim of "discrimination" as being illogical and preposterous. Very truly yours,
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BAUSA & AMPIL By: s/ FELINO G. AMPIL Attorneys for the Rizal Cement Co., Inc. On May 30, 1956, the complaining workers formed a picket line in front of the Madrigal Building on the Escolta, Manila, where the Offices of the respondent companies are located. The picket lasted up to April, 1957. After the complaining workers were not allowed to work on May 28, 1956, the respondent Rizal Cement Co., Inc. hired substitutes in order that the work in the Bodega Tanque, which consists mainly in unloading and loading cement, may not be paralyzed. (Emphasis supplied.) With the foregoing facts, the Court of Industrial Relations resolved in the negative the issue presented therein, i.e., whether the Company's denial to the 21 complaining workers, of entrance to the compound and work constitutes a lockout, for the reason that the said act was resorted to forestall any possible sabotage in the warehouse. It was pointed out that although the strike was declared in and confined the factory in Binangonan Rizal, the activities in the Tanque warehouse in Paco Manila, where the complainants work, complement those at the plant. Also, in the letter of the Union dated September 24, 1954, addressed to the management, and as found by the lower court, the Union made it clear that the set of demands (presented to the Company and denial of which led to the declaration of the strike in question) covers all employees of the Rizal Cement Co., Inc. "including those workers at the Bodega Tanque" (p. 31, decision of Dec. 14, 1961), and that in the notice of strike filed by the Union (Exhs. 125Rizal and 125-A-Rizal), it was specifically declared that the establishment covered by the objected strike covers the "factory, quarry and warehouse," the last place obviously referring to Bodega Tanque. Thus the court held that, under the circumstances, the court was resorted to as a defensive weapon or dictated by economic necessity and, consequently, did not constitute an unfair labor practice. And, as in the decision rendered in the main case (No. 14-IPA) the strikers were ordered reinstated to their former positions without back wages, which decision became final and executory on May 27, 1961, the court directed the Company in this case to reinstate the 21 complainants with back wages only from May 28, 1961. This decision was affirmed by the court en banc by resolution of January 27, 1962. Hence, the filing of the instant petition. It is claimed by petitioner Union in this proceeding that the Company's refusal to admit the 21 complainants to work in the warehouse, simply because they belong to the same Union that staged the strike in the factory, constituted a violation of Section (a) (4) of the Industrial Peace Act (Rep. Act 875). Consequently, it is argued, complainants should have been awarded back wages from May 28, 1956 when the discriminatory act commenced and not only from May 28, 1961 when the decision in the main case because final. 1wph1.t Republic Act 875, on unfair labor practices provides: SEC. 4. Unfair Labor Practices (a) It shall be unfair labor practice for an employer: xxx xxx xxx
(4) To discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization: Provided, That nothing in this Act or any other Act or statute of the Republic of the Philippines shall preclude an employer from making agreement with a labor organization to require as condition of employment membership therein, if such labor organization is the representative of the employees as provided in section twelve.
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xxx xxx xxx
(Emphasis supplied.) It is not herein controverted that the complainants were locked out or denied work by the respondent Company. Under Republic Act 875, however, for the discrimination by reason of union membership to be considered an unfair labor practice, the same must have been committed to courage or discourage such membership in the union. This cannot be said of the act of the Company complained of. As clearly established by the evidence, its refusal to all complainants to work and requirement that the latter stay out of the premises in the meantime (perhaps while the strike was still going on at the factory) was borne out of the Company's justified apprehension and fear that sabotage might be committed in the warehouse where the products machinery and spare parts were stored, as has been the case in Binangonan. It has never been shown that the act of the Company was intended to induce the complain ants to renounce their union-membership or as a deterrent for non-members to affiliate therewith, nor as a retaliatory measure for activities in the union or in furtherance of the cause of the union. As the strikers were declared entitled to wages only from the finality of the decision in the main case (No. 14-IPA) or from May 28, 1961, the award of back wages to herein complainants, also from said date, is justified and reasonable. It may even be stated in support thereof that on May 30, 1956, complainants actually joined the picket line formed in front of the Company's office at Escolta, Manila. WHEREFORE, the decision and resolution appealed from are hereby affirmed, without costs. So ordered. PICOP RESOURCES, INCORPORATED (PRI) vs. ANACLETO L. TAECA G.R. No. 160828 August 9, 2010 This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision1 dated July 25, 2003 and Resolution 2 dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, setting aside the Resolutions dated October 8, 2001 3 and April 29, 20024 of the National Labor Relations Commission in NLRC CA No. M-006309-2001 and reinstating the Decision5 dated March 16, 2001 of the Labor Arbiter. The facts, as culled from the records, are as follows: On February 13, 2001, respondents Anacleto Taeca, Loreto Uriarte, Joseph Balgoa, Jaime Campos, Geremias Tato, Martiniano Magayon, Manuel Abucay and fourteen (14) others filed a Complaint for unfair labor practice, illegal dismissal and money claims against petitioner PICOP Resources, Incorporated (PRI), Wilfredo Fuentes (in his capacity as PRI's Vice President/Resident Manager), Atty. Romero Boniel (in his capacity as PRI's Manager of Legal/Labor), Southern Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes (in his capacity as Secretary General of SPFL), Pascasio Trugillo (in his capacity as Local President of Nagkahiusang Mamumuo sa PICOP Resources, Inc.- SPFL [NAMAPRI-SPFL]) and Atty. Proculo Fuentes, Jr.6 (in his capacity as National President of SPFL). Respondents were regular rank-and-file employees of PRI and bona fide members of Nagkahiusang Mamumuo saPRI Southern Philippines Federation of Labor (NAMAPRI-SPFL), which is the collective bargaining agent for the rank-and-file employees of petitioner PRI. PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a period of five (5) years from May 22, 1995 until May 22, 2000. The CBA contained the following union security provisions: Article II- Union Security and Check-Off Section 6. Maintenance of membership.
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6.1 All employees within the appropriate bargaining unit who are members of the UNION at the time of the signing of this AGREEMENT shall, as a condition of continued employment by the COMPANY, maintain their membership in the UNION in good standing during the effectivity of this AGREEMENT. 6.2 Any employee who may hereinafter be employed to occupy a position covered by the bargaining unit shall be advised by the COMPANY that they are required to file an application for membership with the UNION within thirty (30) days from the date his appointment shall have been made regular. 6.3 The COMPANY, upon the written request of the UNION and after compliance with the requirements of the New Labor Code, shall give notice of termination of services of any employee who shall fail to fulfill the condition provided in Section 6.1 and 6.2 of this Article, but it assumes no obligation to discharge any employee if it has reasonable grounds to believe either that membership in the UNION was not available to the employee on the same terms and conditions generally applicable to other members, or that membership was denied or terminated for reasons other than voluntary resignation or nonpayment of regular union dues. Separation under the Section is understood to be for cause, consequently, the dismissed employee is not entitled to separation benefits provided under the New Labor Code and in this AGREEMENT."7 On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the management of PRI demanding the termination of employees who allegedly campaigned for, supported and signed the Petition for Certification Election of the Federation of Free Workers Union (FFW) during the effectivity of the CBA. NAMAPRI-SPFL considered said act of campaigning for and signing the petition for certification election of FFW as an act of disloyalty and a valid basis for termination for a cause in accordance with its Constitution and By-Laws, and the terms and conditions of the CBA, specifically Article II, Sections 6.1 and 6.2 on Union Security Clause. In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the management of PRI to investigate those union members who signed the Petition for Certification Election of FFW during the existence of their CBA. NAMAPRI-SPFL, likewise, furnished PRI with machine copy of the authorization letters dated March 19, 20 and 21, 2000, which contained the names and signatures of employees. Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty. Romero A. Boniel issued a memorandum addressed to the concerned employees to explain in writing within 72 hours why their employment should not be terminated due to acts of disloyalty as alleged by their Union. Within the period from May 26 to June 2, 2000, a number of employees who were served "explanation memorandum" submitted their explanation, while some did not. In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of the employees to Atty. Fuentes for evaluation and final disposition in accordance with the CBA. After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the management of PRI that the Union found the member's explanations to be unsatisfactory. He reiterated the demand for termination, but only of 46 member-employees, including respondents. On October 16, 2000, PRI served notices of termination for causes to the 31 out of the 46 employees whom NAMAPRIL-SPFL sought to be terminated on the ground of "acts of disloyalty" committed against it when respondents allegedly supported and signed the Petition for Certification Election of FFW before the "freedom period" during the effectivity of the CBA. A Notice dated October 21, 2000 was also served on the Department of Labor and Employment Office (DOLE), Caraga Region.
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Respondents then accused PRI of Unfair Labor Practice punishable under Article 248 (a), (b), (c), (d) and (e) of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes and Pascasio Trujillo were accused of violating Article 248 (a) and (b) of the Labor Code. Respondents alleged that none of them ever withdrew their membership from NAMAPRI-SPFL or submitted to PRI any union dues and check-off disauthorizations against NAMAPRI-SPFL. They claimed that they continue to remain on record as bona fide members of NAMAPRI-SPFL. They pointed out that a patent manifestation of ones disloyalty would have been the explicit resignation or wi thdrawal of membership from the Union accompanied by an advice to management to discontinue union dues and check-off deductions. They insisted that mere affixation of signature on such authorization to file a petition for certification election was not per se an act of disloyalty. They claimed that while it may be true that they signed the said authorization before the start of the freedom period, the petition of FFW was only filed with the DOLE on May 18, 2000, or 58 days after the start of the freedom period. Respondents maintained that their acts of signing the authorization signifying support to the filing of a Petition for Certification Election of FFW was merely prompted by their desire to have a certification election among the rank-and-file employees of PRI with hopes of a CBA negotiation in due time; and not to cause the downfall of NAMAPRI-SPFL. Furthermore, respondents contended that there was lack of procedural due process. Both the letter dated May 16, 2000 of Atty. Fuentes and the follow-up letter dated May 23, 2000 of Trujillo addressed to PRI did not mention their names. Respondents stressed that NAMAPRI-SPFL merely requested PRI to investigate union members who supported the Petition for Certification Election of FFW. Respondents claimed that they should have been summoned individually, confronted with the accusation and investigated accordingly and from where the Union may base its findings of disloyalty and, thereafter, recommend to management the termination for causes.1avvphi1 Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded their termination, it was no longer the bargaining representative of the rank-and-file workers of PRI, because the CBA had already expired on May 22, 2000. Hence, there could be no justification in PR Is act of dismissing respondents due to acts of disloyalty. Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in giving in to the wishes of the Union in discharging them on the ground of disloyalty to the Union amounted to interference with, restraint or coercion of respondents exercise of their right to self-organization. The act indirectly required petitioners to support and maintain their membership with NAMAPRI-SPFL as a condition for their continued employment. The acts of NAMAPRI-SPFL, Atty. Fuentes and Trujillo amounted to actual restraint and coercion of the petitioners in the exercise of their rights to self-organization and constituted acts of unfair labor practice. In a Decision8 dated March 16, 2001, the Labor Arbiter declared the respondents dismissal to be illegal and ordered PRI to reinstate respondents to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages. The dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby entered: 1. Declaring complainants dismissal illegal; and 2. Ordering respondents Picop Resources Inc. (PRI) and NAMAPRI-SPFL to reinstate complainants to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of P420,339.30 as shown in the said Annex "A" plus damages in the amount ofP10,000.00 each, or a total of P210,000.00 and attorneys fees equivalent to 10% of the total monetary award.
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SO ORDERED.9 PRI and NAMAPRI-SPFL appealed to the National Labor Relations Commission (NLRC), which reversed the decision of the Labor Arbiter; thus, declaring the dismissal of respondents from employment as legal. Respondents filed a motion for reconsideration, but it was denied on April 29, 2001 for lack of merit. Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the Court of Appeals and sought the nullification of the Resolution of the NLRC dated October 8, 2001 which reversed the Decision dated March 16. 2001 of Labor Arbiter and the Resolution dated April 29, 2002, which denied respondents motion for reconsideration. On July 25, 2003, the Court of Appeals reversed and set aside the assailed Resolutions of the NLRC and reinstated the Decision dated March 16, 2001 of the Labor Arbiter. Thus, before this Court, PRI, as petitioner, raised the following issues: I WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITION INCLUDING ITS UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO. II WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF LAW FALL WITHIN THE AMBIT OF THE EXTRAORDINARY REMEDY OF CERTIORARI UNDER RULE 65, REVISED RULES OF COURT.10 We will first delve on the technical issue raised. PRI perceived a patent error in the mode of appeal elected by respondents for the purpose of assailing the decision of the NLRC. It claimed that assuming that the NLRC erred in its judgment on the legal issues, its error, if any, is not tantamount to abuse of discretion falling within the ambit of Rule 65. Petitioner is mistaken. The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National Labor Relations Commission.11 This Court held that the proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of courts.12 Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant to the exercise of its original jurisdiction over Petitions for Certiorari is specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues. 13 We now come to the main issue of whether there was just cause to terminate the employment of respondents.
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PRI argued that the dismissal of the respondents was valid and legal. It claimed to have acted in good faith at the instance of the incumbent union pursuant to the Union Security Clause of the CBA. Citing Article 253 of the Labor Code,14 PRI contends that as parties to the CBA, they are enjoined to keep thestatus quo and continue in full force and effect the terms and conditions of the existing CBA during the 60-day period and/or until a new agreement is reached by the parties. Petitioner's argument is untenable. "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.15 However, in terminating the employment of an employee by enforcing the union security clause, the employer needs to determine and prove that: (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. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA.16 As to the first requisite, there is no question that the CBA between PRI and respondents included a union security clause, specifically, a maintenance of membership as stipulated in Sections 6 of Article II, Union Security and Check-Off. Following the same provision, PRI, upon written request from the Union, can indeed terminate the employment of the employee who failed to maintain its good standing as a union member. Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2) occasions demanded from PRI, in their letters dated May 16 and 23, 2000, to terminate the employment of respondents due to their acts of disloyalty to the Union. However, as to the third requisite, we find that there is no sufficient evidence to support the decision of PRI to terminate the employment of the respondents. PRI alleged that respondents were terminated from employment based on the alleged acts of disloyalty they committed when they signed an authorization for the Federation of Free Workers (FFW) to file a Petition for Certification Election among all rank-and-file employees of PRI. It contends that the acts of respondents are a violation of the Union Security Clause, as provided in their Collective Bargaining Agreement. We are unconvinced. We are in consonance with the Court of Appeals when it held that the mere signing of the authorization in support of the Petition for Certification Election of FFW on March 19, 20 and 21, or before the "freedom period," is not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the freedom period. Nothing in the records would show that respondents failed to maintain their membership in good standing in the Union. Respondents did not resign or
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withdraw their membership from the Union to which they belong. Respondents continued to pay their union dues and never joined the FFW. Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. However, we are constrained to believe that an "authorization letter to file a petition for certification election" is different from an actual "Petition for Certification Election." Likewise, as per records, it was clear that the actual Petition for Certification Election of FFW was filed only on May 18, 2000. 17 Thus, it was within the ambit of the freedom period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period.18 This is not the situation in this case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the petition for certification election, or an exercise of respondents right to self-organization. Moreover, PRI anchored their decision to terminate respondents employment on Article 253 of the Labor Code which states that "it shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties." It claimed that they are still bound by the Union Security Clause of the CBA even after the expiration of the CBA; hence, the need to terminate the employment of respondents. Petitioner's reliance on Article 253 is misplaced. The provision of Article 256 of the Labor Code is particularly enlightening. It reads: Article 256. Representation issue in organized establishments. - In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed before the Department of Labor and Employment within the sixty-day period before the expiration of a collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when the verified petition is supported by the written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted between the labor unions receiving the two highest number of votes: Provided, That the total number of votes for all contending unions is at least fifty per cent (50%) of the number of votes cast. At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed.19 Applying the same provision, it can be said that while it is incumbent for the employer to continue to recognize the majority status of the incumbent bargaining agent even after the expiration of the freedom period, they could only do so when no petition for certification election was filed. The reason is, with a pending petition for certification, any such agreement entered into by management with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter as the collective bargaining representative.20 The provision for statusquo is conditioned on the fact that no certification election was filed during the freedom period. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true expression of the will of the workers as to which labor organization would represent them.21 In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000.22 Therefore, following Article 256, at the expiration of the freedom period, PRI's obligation to
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recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when petitions for certification election were filed, as in this case. Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a representational issue, the statusquo provision in so far as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd situation where the union members will be forced to maintain membership by virtue of the union security clause existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented,23 or compromised.1avvphi Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers. Their freedom to choose who should be their bargaining representative is of paramount importance. The fact that there already exists a bargaining representative in the unit concerned is of no moment as long as the petition for certification election was filed within the freedom period. What is imperative is that by such a petition for certification election the employees are given the opportunity to make known of who shall have the right to represent them thereafter. Not only some, but all of them should have the right to do so. What is equally important is that everyone be given a democratic space in the bargaining unit concerned.24 We will emphasize anew that the power to dismiss is a normal prerogative of the employer. This, however, is not without limitations. 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. 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, therefore, respect and protect the rights of their employees, which include the right to labor.25 An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to one month salary for every year of service. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. Moreover, respondents, having been compelled to litigate in order to seek redress for their illegal dismissal, are entitled to the award of attorneys fees equivalent to 10% of the total monetary award.26 WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and the Resolution dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, which set aside the Resolutions dated October 8, 2001 and April 29, 2002 of the National Labor Relations Commission in NLRC CA No. M006309-2001, are AFFIRMED accordingly. Respondents are hereby awarded full backwages and other allowances, without qualifications and diminutions, computed from the time they were illegally dismissed up to the time they are actually reinstated. Let this case be remanded to the Labor Arbiter for proper computation of the full backwages due respondents, in accordance with Article 279 of the Labor Code, as expeditiously as possible. NATIONAL UNION OF WORKERS IN HOTELS RESTAURANTS AND ALLIED INDUSTRIES vs. NATIONAL LABOR RELATIONS COMMISSION; G.R. No. 179402 September 30, 2008
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This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision1dated 30 May 2007 rendered by the Court of Appeals in CA-G.R. SP No. 96171, which affirmed the Resolution2 dated 5 May 2006 of the National Labor Relations Commission (NLRC) in NLRC NCR CC No. 000307-05 NCMB NCR NS 09-199-05, dismissing for lack of merit the complaint for unfair labor practice filed by petitioner National Union of Workers in Hotels, Restaurants and Allied IndustriesManila Pavilion Hotel (NUWHRAIN) against Manila Pavilion Hotel (the Hotel). Petitioner NUWHRAIN is a legitimate labor organization composed of rank-and-file employees of the Hotel,3 while respondent Acesite Philippines Hotel Corporation is the owner and operator of said Hotel. 4 The factual antecedents of the instant Petition are as follows: The Hotel entered into a Collective Bargaining Agreement with HI-MANILA PAVILION HOTEL LABOR UNION (HIMPHLU), the exclusive bargaining agent of the rank-and-file employees of the Hotel. Both parties consented that the representation aspect and other non-economic provisions of the Collective Bargaining Agreement were to be effective for five years or until 30 June 2005; and the economic provisions of the same were to be effective for three years or until 30 June 2003. The parties subsequently re-negotiated the economic provisions of the Collective Bargaining Agreement and extended the term of their effectivity for another two years or until 30 June 2005.5 During the 60-day freedom period which preceded the expiration of the Collective Bargaining Agreement, starting on 1 May 2005 and ending on 30 June 2005, the Hotel and HIMPHLU negotiated the extension of the provisions of the existing Collective Bargaining Agreement for two years, effective 1 July 2005 to 30 June 2007. The parties signed the Memorandum of Agreement on 20 May 2005 and the employees ratified it on 27 May 2005.6 On 21 June 2005, NUWHRAIN was accorded by the Labor Relations Division of the Department of Labor and Employment (DOLE) the status of a legitimate labor organization.7 Thereafter, NUWHRAIN exercised the right to challenge the majority status of the incumbent union, HIMPHLU, by filing a Petition for Certification Election on 28 June 2005. 8 On 5 July 2007, the Industrial Relations Division of the DOLE allowed the registration of the Memorandum of Agreement executed between HIMPHLU and the Hotel, extending the effectivity of the existing Collective Bargaining Agreement for another two years.9 After the lapse of the 60-day freedom period, but pending the disposition of the Petition for Certification Election filed by NUWHRAIN, HIMPHLU served the Hotel with a written demand dated 28 July 200510 for the dismissal of 36 employees following their expulsion from HIMPHLU for alleged acts of disloyalty and violation of its Constitution and by-laws. An Investigation Report11 was attached to the said written demand, stating that the 36 employees, who were members of HIMPHLU, joined NUWHRAIN, in violation of Section 2, Article IV of the Collective Bargaining Agreement, which provided for a union security clause that reads: 12 Section 2. DISMISSAL PURSUANT TO UNION SECURITY CLAUSE. Accordingly, failure to join the UNION within the period specified in the immediately preceding section or failure to maintain membership with the UNION in good standing either through resignation or expulsion from the UNION in accordance with the UNIONs Constitution and by -laws due to disloyalty, joining another union or nonpayment of UNION dues shall be a ground for the UNION to demand the dismissal from the HOTEL of the employee concerned. The demand shall be accompanied by the UNIONs investigation report and the HOTEL shall act accordingly subject to existing laws and jurisprudence on the matter, provided, however, that the UNION shall hold the HOTEL free and harmless from any and all liabilities that may arise should the dismissed employee question in any manner the dismissal. The HOTEL shall not, however, be compelled to act on any such UNION demand if made within a period of sixty (60) days prior to the expiry date of this agreement. (Emphasis provided)
381

On 1 August 2005, the Hotel issued Disciplinary Action Notices 13 (Notices) to the 36 employees identified in the written demand of HIMPHLU. The Notices directed the 36 employees to submit a written explanation for their alleged acts of disloyalty and violation of the union security clause for which HIMPHLU sought their dismissal. The Hotel called the contending unions and the employees concerned for a reconciliatory conference in an attempt to avoid the dismissal of the 36 employees. The reconciliatory conferences facilitated by the Hotel were held on 5 August 2005 and 1 September 2005.14 However, NUWHRAIN proceeded to file a Notice of Strike before the National Conciliation and Mediation Board (NCMB) on 8 September 2005 on the ground of unfair labor practice under Article 248, paragraphs (a) and (b) of the Labor Code.15 The Secretary of Labor intervened and certified the case for compulsory arbitration with the NLRC. The case was docketed as NLRC NCR CC No. 000307-05 NCMB NCR NS 09-199-05, entitled IN RE: Labor Dispute at Manila Pavilion Hotel.16 NUWHRAIN asserted that the Hotel committed unfair labor practice when it issued the Notices to the 36 employees who switched allegiance from HIMPHLU to NUWHRAIN. During the reconciliatory conference held on 5 August 2005, respondents Vice President, Norma Azores, stated her preference to deal with HIMPHLU, while blaming NUWHRAIN for the labor problems of the Hotel. On 1 September 2005, the Resident Manager of the Hotel, Bernardo Corpus, Jr., implored NUWHRAINs members to withdraw their Petition for Certification Election and reaffirm their membership in HIMPHLU. The Notices and the statements made by the officers of the respondent and the Hotel were allegedly intended to intimidate and coerce the employees in the exercise of their right to self-organization. NUWHRAIN claimed that it was entitled to moral damages in the amount of P50,000.00 and exemplary damages of P20,000.0017 Respondent countered that it merely complied with its contractual obligations with HIMPHLU when it issued the assailed Notices, and clarified that none of the 36 employees were dismissed by the Hotel. It further denied that respondents Vice President Norma Azores and the Hotels Resident Manager Bernardo Corpus, Jr. made the statements attributed to them, purportedly expressing their preference for HIMPHLU during the reconciliatory conferences. Thus, respondent insisted that it did not commit unfair labor practice, nor was it liable for moral and exemplary damages.18 In a Resolution19 dated 5 May 2006, the NLRC pronounced that the Hotel was not guilty of unfair labor practice. Firstly, the NLRC adjudged that the execution of the Memorandum of Agreement between respondent and HIMPHLU, extending the effectivity of the existing Collective Bargaining Agreement, was entered into with the view of responding to t he employees economic needs, and not intended to interfere with or restrain the exercise of the right to self-organization of NUWHRAINs members. Secondly, the NLRC determined that the issuance of the Notices directing the 36 employees to explain why they should not be dismissed was in compliance with the Collective Bargaining Agreement provisions regarding the union security clause. Even thereafter, the Hotel had not acted improperly as it did not wrongfully terminate any of the 36 employees. Thirdly, the NLRC interpreted the statements made by the officials of respondent and the Hotel during the reconciliatory conferences encouraging the withdrawal of the Petition for Certification Election and the reaffirmation by the 36 employees of their membership in HIMPHLU as proposed solutions to avoid the dismissal of the said employees. The NLRC concluded that these statements did not constitute unfair labor practice for they could not have coerced or influenced either of the contending unions, both of whom did not agree in the suggested course of action or to any other manner of settling the dispute. Finally, the NLRC declared that the claim for moral and exemplary damages of NUWHRAIN lacked sufficient factual and legal bases. NUWHRAIN filed a Motion for Reconsideration of the foregoing NLRC Resolution. It was denied by the NLRC in another Resolution dated 30 June 2006.20 Thus, NUWHRAIN filed a Petition for Certioraribefore the Court of Appeals, docketed as C.A. G.R. SP No. 96171.
382

In the meantime, on 16 June 2006, the Certification Election for regular rank and file employees of the Hotel was held, which HIMPHLU won. It was accordingly certified as the exclusive bargaining agent for rank and file employees of the Hotel.21 On 30 May 2007, the Court of Appeals promulgated its Decision22 in C.A. G.R. SP No. 96171, upholding the Resolution dated 5 May 2006 of the NLRC in NLRC NCR CC No. 000307-05 NCMB NCR NS 09-19905. It declared that the Hotel had acted prudently when it issued the Notices to the 36 employees after HIMPHLU demanded their dismissal. It clarified that these Notices did not amount to the termination of the employees concerned but merely sought their explanation on why the union security clause should not be applied to them. The appellate court also gave credence to the denial by the officers of the respondent and the Hotel that they made statements favoring HIMPHLU over NUWHRAIN during the reconciliatory conferences. The Court of Appeals further noted that the unhampered organization and registration of NUWHRAIN negated its allegation that the Hotel required its employees not to join a labor organization as a condition for their employment. NUWHRAINs Motion for Reconsideration of the aforementioned Decision of the Court of App eals was denied by the same court in a Resolution dated 24 August 2007.23 Hence, the present Petition, in which NUWHRAIN makes the following assignment of errors: I THE COURT OF APPEALS GAVE MORE PROBATIVE VALUE TO RESPONDENT HOTELS GENERAL AND UNSWORN DENIAL VERSUS THAT OF PETITIONERS SWORN TESTIMONY NARRATING RESPONDENTS HOTELS VIOLATION OF PETITIONERS RIGHT TO SELF ORGANIZATION. SUCH A RULING CONTRADICTS EXISTING JURISPRUDENCE SUCH AS MASAGANA CONCRETE PRODUCTS INC. V. NLRC, G.R. NO. 106916, SEPTEBMER 3, 1999; JRS BUSINESS CORPORATION V. NLRC, 246 SCRA 445 [1995]; and ASUNCION V. NLRC, 362 SCRA 56 [2001]. II THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT HOTEL IS NOT GUILTY OF UNFAIR LABOR PRACTICE CONTRARY TO ARTICLE 248 OF THE LABOR CODE AND THE SUPREME COURTS RULING IN PROGRESSINVE DEVELOPMENT CORPORATION V. CIR, 80 SCRA 434 [1977] and INSULAR LIFE ASSURANCE CO. LTC EMPLOYEES ASSOCIATION-NATU V. THE INSULAR LIFE ASSURANCE CO. LTD., 37 SCRA 244 [1971]. 24 The instant Petition lacks merit, and must accordingly be denied. NUWHRAIN maintains that the respondent committed unfair labor practice when (1) the Hotel issued the Notices to the 36 employees, former members of HIMPHLU, who switched allegiance to NUWHRAIN; and (2) the officers of the respondent and the Hotel allegedly uttered statements during the reconciliatory conferences indicating their preference for HIMPHLU and their disapproval of NUWHRAIN. This argument is specious. The records clearly show that the Notices were issued after HIMPHLU served the Hotel with a letter dated 28 July 2005, demanding the dismissal of 36 of its former members who joined NUWHRAIN. In its letter, HIMPHLU alleged that it had found these members guilty of disloyalty and demanded their dismissal pursuant to the union security clause in the Collective Bargaining Agreement. Had the Hotel totally ignored this demand, as NUWHRAIN suggests it should have done, the Hotel would have been subjected to a suit for its failure to comply with the terms of the Collective Bargaining Agreement.
383

"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. 25 Article 248(e) of the Labor Code recognizes the effectivity of a union shop clause: Art. 248. Unfair labor practices of employers. (e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall prevent the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except of those employees who are already members of another union at the time of the signing of the collective bargaining agreement x x x. (Emphasis supplied.) The law allows stipulations for "union shop" and "closed shop" as a means of encouraging workers to join and support the union of their choice in the protection of their rights and interests vis--vis the employer. By thus promoting unionism, workers are able 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. 26 In Villar v. Inciong,27 this Court held that employees have the right to disaffiliate from their union and form a new organization of their own; however, they must suffer the consequences of their separation from the union under the security clause of the Collective Bargaining Agreement. In the present case, the Collective Bargaining Agreement includes a union security provision. 28 To avoid the clear possibility of liability for breaching the union security clause of the Collective Bargaining Agreement and to protect its own interests, the only sensible option left to the Hotel, upon its receipt of the demand of HIMPHLU for the dismissal of the 36 employees, was to conduct its own inquiry so as to make its own findings on whether there was sufficient ground to dismiss the said employees who defected from HIMPHLU. The issuance by the respondent of the Notices requiring the 36 employees to submit their explanations to the charges against them was the reasonable and logical first step in a fair investigation. It is important to note that the Hotel did not take further steps to terminate the 36 employees. Instead, it arranged for reconciliatory conferences between the contending unions in order to avert the possibility of dismissing the 36 employees for violation of the union security clause of the Collective Bargaining Agreement. This Court, in Malayang Samahan ng Manggagawa sa M. Greenfield v. Ramos29 clearly stated the general rule: the dismissal of an employee by the company pursuant to a labor unions demand in accordance with a union security agreement does not constitute unfair labor practice. An employer is not considered guilty of unfair labor practice if it merely complied in good faith with the request of the certified union for the dismissal of employees expelled from the union pursuant to the union security clause in the Collective Bargaining Agreement.30 In the case at bar, there is even less possibility of sustaining a finding of guilt for unfair labor practice where respondent did not dismiss the 36 employees, despite the insistence of HIMPHLU, the sole bargaining agent for the rank and file employees of the Hotel, on the basis of the union security clause of the Collective Bargaining Agreement. The only act attributed to the respondent is its issuance of the Notices which, contrary to being an unfair labor practice, even afforded the employees involved a chance to be heard. The cases cited by NUWHRAIN are not applicable to the present case given their diverse factual backgrounds. In Progressive Development Corporation v. Court of Industrial Relations, 31 the Court declared the employer guilty of unfair labor practice for singling out its workers who refused to join the employers preferred union by not giving them work assignments and regular status, and eventually dismissing said employees. The employer was found guilty of unfair labor practice in Insular Life Assurance Co., Ltd., Employees Association-NATU v. Insular Life Assurance Co., Ltd.,32 for (1) the dismissal of some of its striking employees without even giving them an opportunity to explain their side; and (2) the acts of discrimination, including the delayed reinstatement of striking employees and the offering of bribes, bonuses, and wage increases to loyal employees after refusing to bargain with the union. None of these acts were attributed to the respondent in the present case.
384

NUWHRAIN claimed that during the reconciliatory conferences, respondents Vice President Norma Azores expressed her preference to deal with HIMPHLU, while blaming NUWHRAIN for the Hotels labor problems; and the Hotels Resident Manager Bernardo Corpus, Jr. implored NUWHRAINs members to withdraw their Petition for Certification Election and reaffirm their membership in HIMPHLU. Before the Court of Appeals, respondent denied that such statements were made and that the officers of the respondent and the Hotel were merely misquoted. During the reconciliatory conferences, wherein the officers of the respondent and the Hotel acted as mediators, one of the proposals laid on the table to settle the dispute between the unions and preclude the dismissal of the 36 employees was for NUWHRAIN to withdraw its Petition for Certification Election and, in return, for HIMPHLU to re-accept the employees without sanctions. Still, NUWHRAIN asserts that the sworn testimony signed by its six union members that the officers of the respondent and the Hotel did utter the offending statements deserve more credence than the unsworn denial of respondent. NUWHRAIN has the burden of proving its allegation that Norma Azores and Bernardo Corpus, Jr. did make the statements being attributed to them. The burden of proof rests upon the party who asserts the affirmative of an issue.33 And in labor cases, the quantum of proof necessary is substantial evidence, or such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion,34 which NUWHRAIN failed to discharge in the present case. Undoubtedly, the members of NUWHRAIN would owe their loyalty to their union, a natural bias which somewhat puts into question their credibility as witnesses, especially since the success of this case would also redound to their benefit. The fact that six members of the union signed a single statement, instead of each member presenting their sincere and individual narrations of events, gives the impression that it was signed in a perfunctory manner and motivated by a sense of union solidarity. The self-serving statement signed by six of NUWHRAINs members have very little weight, even if made under oath, absent any other independent evidence which indicates that the officers of the respondent and the Hotel made such hostile and coercive utterances that tend to interfere or influence the employees exercise of the right to self-organization. In the case at bar, the NLRC found, and the Court of Appeals affirmed, that the officers of the respondent and the Hotel did not make statements that would have constituted unfair labor practice. Findings of fact of the NLRC are given much weight and are considered conclusive by this Court. It is only when such findings are not substantially supported by the records that this Court will step in and make its independent evaluation of the facts. 35 Considering the expertise of these agencies in matters pertaining to labor disputes, the findings of administrative agencies of the Department of Labor are generally accorded not only respect, but also finality.36 Even the surrounding circumstances would contradict NUWHRAINs allegation that the respondent interfered with or coerced its employees in their choice of union membership. In their Reply before the NLRC, NUWHRAIN admitted that before issuing its Notices, the respondent maintained a neutral stand in the dispute between HIMPHLU and NUWHRAIN. 37 Neither did the respondent threaten the 36 employees who shifted their allegiance to NUWHRAIN with any form of reprisal; they were not dismissed for their affiliation with NUWHRAIN. The records are bereft of any instance that would show that respondent rode roughshod over its employees freedom to decide which union to join. In all, respondent had not committed any act which would constitute unfair labor practice. IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed Decision dated 30 May 2007 of the Court of Appeals in CA-G.R. SP No. 96171 is hereby AFFIRMED. Costs against petitioner NUWHRAIN. COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION (CEEA) vs. THE NATIONAL LABOR RELATIONS COMMISSION G.R. No. 121315 July 19, 1999
385

These consolidated cases filed by Complex Electronics Employees Association (G.R. No. 121315) and Complex Electronics Corporation (G.R. No. 122136) assail the Decision of the NLRC dated March 10, 1995 which set aside the Decision of the Labor Arbiter dated April 30, 1993. The antecedents of the present petitions are as follows: Complex Electronics Corporation (Complex) was engaged in the manufacture of electronic products. It was actually a subcontractor of electronic products where its customers gave their job orders, sent their own materials and consigned their equipment to it. The customers were foreign-based companies with different product lines and specifications requiring the employment of workers with specific skills for each product line. Thus, there was the AMS Line for the Adaptive Micro System, Inc., the Heril Line for Heril Co., Ltd., the Lite-On Line for the Lite-On Philippines Electronics Co., etc. The rank and file workers of Complex were organized into a union known as the Complex Electronics Employees Association, herein referred to as the Union. On March 4, 1992, Complex received a facsimile message from Lite-On Philippines Electronics Co., requiring it to lower its price by 10%. The full text reads as follows: This is to inform your office that Taiwan required you to reduce your assembly cost since it is higher by 50% and no longer competitive with that of mainland China. It is further instructed that Complex Price be patterned with that of other sources, which is 10% lower. Please consider and give us your revised rates soon. 1 Consequently, on March 9, 1992, a meeting was held between Complex and the personnel of the Lite-On Production Line. Complex informed its Lite-On personnel that such request of lowering their selling price by 10% was not feasible as they were already incurring losses at the present prices of their products. Under such circumstances, Complex regretfully informed the employees that it was left with no alternative but to close down the operations of the Lite-On Line. The company, however, promised that: 1) Complex will follow the law by giving the people to be retrenched the necessary 1 month notice. Hence, retrenchment will not take place until after 1 month from March 09, 1992. 2) The Company will try to prolong the work for as many people as possible for as long as it can by looking for job slots for them in another line if workload so allows and if their skills are compatible with the line requirement. 3) The company will give the employees to be retrenched a retrenchment pay as provided for by law i.e. half a month for every year of service in accordance with Article 283 of the Labor Code of Philippines. 2 The Union, on the other hand, pushed for a retrenchment pay equivalent to one (1) month salary for every year of service, which Complex refused. On March 13, 1992, Complex filed a notice of closure of the Lite-On Line with the Department of Labor and Employment (DOLE) and the retrenchment of the ninety-seven (97) affected employees. 3 On March 25, 1993, the Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB).1wphi1.nt
386

Two days thereafter, or on March 27, 1993, the Union conducted a strike vote which resulted in a "yes" vote. In the evening of April 6, 1992, the machinery, equipment and materials being used for production at Complex were pulled-out from the company premises and transferred to the premises of Ionics Circuit, Inc. (Ionics) at Cabuyao, Laguna. The following day, a total closure of company operation was effected at Complex. A complaint was, thereafter, filed with the Labor Arbitration Branch of the NLRC for unfair labor practice, illegal closure/illegal lockout, money claims for vacation leave, sick leave, unpaid wages, 13th month pay, damages and attorney's fees. The Union alleged that the pull-out of the machinery, equipment and materials from the company premises, which resulted to the sudden closure of the company was in violation of Section 3 and 8, Rule XIII, Book V of the Labor Code of the Philippines 4 and the existing CBA. Ionics was impleaded as a party defendant because the officers and management personnel of Complex were also holding office at Ionics with Lawrence Qua as the President of both companies. Complex, on the other hand, averred that since the time the Union filed its notice of strike, there was a significant decline in the quantity and quality of the products in all of the production lines. The delivery schedules were not met prompting the customers to lodge complaints against them. Fearful that the machinery, equipment and materials would be rendered inoperative and unproductive due to the impending strike of the workers, the customers ordered their pull-out and transfer to Ionics. Thus, Complex was compelled to cease operations. Ionics contended that it was an entity separate and distinct from Complex and had been in existence since July 5, 1984 or eight (8) years before the labor dispute arose at Complex. Like Complex, it was also engaged in the semi-conductor business where the machinery, equipment and materials were consigned to them by their customers. While admitting that Lawrence Qua, the President of Complex was also the President of Ionics, the latter denied having Qua as their owner since he had no recorded subscription of P1,200,00.00 in Ionics as claimed by the Union. Ionics further argued that the hiring of some displaced workers of Complex was an exercise of management prerogatives. Likewise, the transfer of the machinery, equipment and materials from Complex was the decision of the owners who were common customers of Complex and Ionics. On April 30, 1993, the Labor Arbiter rendered a decision the dispositive portion of which reads: WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the respondent Complex Electronics Corporation and/or Ionics Circuit Incorporated and/or Lawrence Qua, to reinstate the 531 above-listed employees to their former position with all the rights, privileges and benefits appertaining thereto, and to pay said complainants-employees the aggregate backwages amounting P26,949,891.80 as of April 6, 1993 and to such further backwages until their actual reinstatement. In the event reinstatement is no longer feasible for reasons not attributable to the complainants, said respondents are also liable to pay complainants-employees their separation pay to be computed at the rate of one (1) month pay for every year of service, a fraction of at least six (6) months to be considered as one whole year. Further, the aforenamed three (3) respondents are hereby ordered to pay jointly and solidarily the complainants-employees an aggregate moral damages in the amount of P1,062,000.00 and exemplary damages in the aggregate sum of P531,000.00. And finally, said respondents are ordered to pay attorney's fees equivalent to ten percent (10%) of whatever has been adjudicated herein in favor of the complainants.
387

The charge of slowdown strike filed by respondent Complex against the union is hereby dismissed for lack of merit. SO ORDERED. 5 Separate appeals were filed by Complex, Ionics and Lawrence Qua before the respondent NLRC which rendered the questioned decision on March 10, 1995, the decretal portion of which states: WHEREFORE, premises considered, the assailed decision is hereby ordered vacated and set aside, and a new one entered ordering respondent Complex Electronics Corporation to pay 531 complainants equivalent to one month pay in lieu of notice and separation pay equivalent to one month pay for every year of service and a fraction of six months considered as one whole year. Respondents Ionics Circuit Incorporated and Lawrence Qua are hereby ordered excluded as parties solidarily liable with Complex Electronics Corporation. The award of moral damages is likewise deleted for lack of merit. Respondent Complex, however, is hereby ordered to pay attorney's fees equivalent to ten (10%) percent of the total amount of award granted the complainants. SO ORDERED. 6 Complex, Ionics and the Union filed their motions for reconsideration of the above decision which were denied by the respondent NLRC in an Order dated July 11, 1995. 7 Hence these petitions. In G.R. No. 121315, petitioner Complex Electronics Employees Association asseverates that the respondent NLRC erred when it: I SET ASIDE THE DECISION DATED APRIL 30, 1993 ISSUED BY THE HON. LABOR ARBITER JOSE DE VERA. II EXCLUDED PRIVATE RESPONDENTS IONICS CIRCUITS, INCORPORATED AND LAWRENCE QUA AS PARTIES SOLIDARILY LIABLE WITH COMPLEX ELECTRONICS CORPORATION. III FOUND THAT COMPLEX ELECTRONICS CORPORATION WAS NOT GUILTY OF ILLEGAL CLOSURE AND ILLEGAL DISMISSAL OF THE PETITIONERS. IV
388

REMOVED THE AWARD FOR BACKWAGES, REINSTATEMENT AND DAMAGES IN THE DECISION DATED APRIL 30, 1993 ISSUED BY THE HON. LABOR ARBITER JOSE DE VERA.8 On the other hand, in G.R. No. 122136, petitioner Complex Electronics Corporation raised the following issues, to wit: I PUBLIC RESPONDENT NLRC ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION IN PROMULGATING ITS DECISION AND ORDER DATED 10 MARCH 1995, AND 11 JULY 1995, RESPECTIVELY, THE SAME BEING IN CONTRAVENTION OF THE EXPRESS MANDATE OF THE LAW GOVERNING THE PAYMENT OF ONE MONTH PAY IN LIEU OF NOTICE, SEPARATION PAY AND ATTORNEY'S FEES. II THERE IS NO APPEAL, NOR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW. 9 On December 23, 1996, the Union filed a motion for consolidation of G.R. No. 122136 with G.R. No. 121315. 10The motion was granted by this Court in a Resolution dated June 23, 1997. 11 On November 10, 1997, the Union presented additional documentary evidence which consisted of a newspaper clipping in the Manila Bulletin, dated August 18, 1997 bearing the picture of Lawrence Qua with the following inscription: RECERTIFICATION. The Cabuyao (Laguna) operation of Ionic Circuits, Inc. consisting of plants 2, 3, 4 and 5 was recertified to ISO 9002 as electronics contract manufacturer by the TUV, a rating firm with headquarters in Munich, Germany. Lawrence Qua, Ionics president and chief executive officer, holds the plaque of recertification presented by Gunther Theisz (3rd from left), regional manager of TUV Products Services Asia during ceremonies held at Sta. Elena Golf Club. This is the first of its kind in the country that four plants were certified at the same time. 12 The Union claimed that the said clipping showed that both corporations, Ionics and Complex are one and the same. In answer to this allegation, Ionics explained that the photo which appeared at the Manila Bulletin issue of August 18, 1997 pertained only to respondent Ionics' recertification of ISO 9002. There was no mention about Complex Electronics Corporation. Ionics claimed that a mere photo is insufficient to conclude that Ionics and Complex are one and the same. 13 We shall first delve on the issues raised by the petitioner Union. The Union anchors its position on the fact that Lawrence Qua is both the president of Complex and Ionics and that both companies have the same set of Board of Directors. It claims that business has not ceased at Complex but was merely transferred to Ionics, a runaway shop. To prove that Ionics was just a runaway shop, petitioner asserts that out of the 80,000 shares comprising the increased capital stock of Ionics, it was Complex that owns majority of said shares with P1,200,000.00 as its capital subscription and P448,000.00 as its paid up investment, compared to P800,000.00 subscription and P324,560.00 paid-
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up owing to the other stockholders, combined. Thus, according to the Union, there is a clear ground to pierce the veil of corporate fiction. The Union further posits that there was an illegal lockout/illegal dismissal considering that as of March 11, 1992, the company had a gross sales of P61,967,559 from a capitalization of P1,500,000.00. It even ranked number thirty among the top fifty corporations in Muntinlupa. Complex, therefore, cannot claim that it was losing in its business which necessitated its closure. With regards to Lawrence Qua, petitioner maintains that he should be made personally liable to the Union since he was the principal player in the closure of the company, not to mention the clandestine and surreptitious manner in which such closure was carried out, without regard to their right to due process. The Union's contentions are untenable. A "runaway shop" is defined as an industrial plant moved by its owners from one location to another to escape union labor regulations or state laws, but the term is also used to describe a plant removed to a new location in order to discriminate against employees at the old plant because of their union activities. 14 It is one wherein the employer moves its business to another location or it temporarily closes its business for anti-union purposes. 15 A "runaway shop" in this sense, is a relocation motivated by antiunionanimus rather than for business reasons. In this case, however, Ionics was not set up merely for the purpose of transferring the business of Complex. At the time the labor dispute arose at Complex, Ionics was already existing as an independent company. As earlier mentioned, it has been in existence since July 5, 1984. It cannot, therefore, be said that the temporary closure in Complex and its subsequent transfer of business to Ionics was for anti-union purposes. The Union failed to show that the primary reason for the closure of the establishment was due to the union activities of the employees. The mere fact that one or more corporations are owned or controlled by the same or single stockholder is not a sufficient ground for disregarding separate corporate personalities. Thus, in Indophil Textile Mill Workers Union vs. Calica, 16 we ruled that: [I]n the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation of the corporation is a devise to evade the application of the CBA between petitioner Union and private respondent company. While we do not discount the possibility of the similarities of the businesses of private respondent and Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact that the businesses of private respondent and Acrylic are related, that some of the employees of the private respondent are the same persons manning and providing for auxiliary services to the units of Acrylic, and that the physical plants, offices and facilities are situated in the same compound, it is our considered opinion that these facts are not sufficient to justify the piercing of the corporate veil of Acrylic. Likewise, in Del Rosario vs. National Labor Relations Commission, 17 the Court stated that substantial identity of the incorporators of two corporations does not necessarily imply that there was fraud committed to justify piercing the veil of corporate fiction. In the recent case of Santos vs. National Labor Relations Commission, 18 we also ruled that: The basic rule is still that which can be deduced from the Court's pronouncement in Sunio vs.National Labor Relations Commission, thus: . . . . . Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality.
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Ionics may be engaged in the same business as that of Complex, but this fact alone is not enough reason to pierce the veil of corporate fiction of the corporation. Well-settled is the rule that a corporation has a personality separate and distinct from that of its officers and stockholders. This fiction of corporate entity can only be disregarded in certain cases such as when it is used to defeat public convenience, justify wrong, protect fraud, or defend crime. 19 To disregard said separate juridical personality of a corporation, the wrongdoing must be clearly and convincingly established. 20 As to the additional documentary evidence which consisted of a newspaper clipping filed by petitioner Union, we agree with respondent Ionics that the photo/newspaper clipping itself does not prove that Ionics and Complex are one and the same entity. The photo/newspaper clipping merely showed that some plants of Ionics were recertified to ISO 9002 and does not show that there is a relation between Complex and Ionics except for the fact that Lawrence Qua was also the president of Ionics. However, as we have stated above, the mere fact that both of the corporations have the same president is not in itself sufficient to pierce the veil of corporate fiction of the two corporations. We, likewise, disagree with the Union that there was in this case an illegal lockout/illegal dismissal. Lockout is the temporary refusal of employer to furnish work as a result of an industrial or labor dispute. 21 It may be manifested by the employer's act of excluding employees who are union members. 22 In the present case, there was a complete cessation of the business operations at Complex not because of the labor dispute. It should be recalled that, before the labor dispute, Complex had already informed the employees that they would be closing the Lite-On Line. The employees, however, demanded for a separation pay equivalent to one (1) month salary for every year of service which Complex refused to give. When Complex filed a notice of closure of its Lite-On Line, the employees filed a notice of strike which greatly alarmed the customers of Complex and this led to the pull-out of their equipment, machinery and materials from Complex. Thus, without the much needed equipment, Complex was unable to continue its business. It was left with no other choice except to shut down the entire business. The closure, therefore, was not motivated by the union activities of the employees, but rather by necessity since it can no longer engage in production without the much needed materials, equipment and machinery. We quote with approval the findings of the respondent NLRC on this matter: At first glance after reading the decision a quo, it would seem that the closure of respondent's operation is not justified. However, a deeper examination of the records along with the evidence, would show that the closure, although it was done abruptly as there was no compliance with the 30-day prior notice requirement, said closure was not intended to circumvent the provisions of the Labor Code on termination of employment. The closure of operation by Complex on April 7, 1992 was not without valid reasons. Customers of respondent alarmed by the pending labor dispute and the imminent strike to be foisted by the union, as shown by their strike vote, directed respondent Complex to pull-out its equipment, machinery and materials to other safe bonded warehouse. Respondent being mere consignees of the equipment, machinery and materials were without any recourse but to oblige the customers' directive. The pull-out was effected on April 6, 1992. We can see here that Complex's action, standing alone, will not result in illegal closure that would cause the illegal dismissal of the complainant workers. Hence, the Labor Arbiter's conclusion that since there were only two (2) of respondent's customers who have expressed pull-out of business from respondent Complex while most of the customer's have not and, therefore, it is not justified to close operation cannot be upheld. The determination to cease operation is a prerogative of management that is usually not interfered with by the State as no employer can be required to continue operating at a loss simply to maintain the workers in employment. That would be taking of property without due process of law which the employer has the right to resist. (Columbia Development Corp. vs. Minister of Labor and Employment, 146 SCRA 42). As to the claim of petitioner Union that Complex was gaining profit, the financial statements for the years 1990, 1991 and 1992 issued by the auditing and accounting firm Sycip, Gorres and Velayo readily show that Complex was indeed continuously experiencing deficit and losses. 23 Nonetheless, whether or not
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Complex was incurring great losses, it still one of the management's prerogative to close down its business as long as it is done in good faith. Thus, in Catatista et al., vs. NLRC and Victorias Milling Co., Inc. 24 we ruled: In any case, Article 283 of the Labor Code is clear that an employer may close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses, as long as he pays his employees their termination pay in the amount corresponding to their length of service. It would indeed, be stretching the intent and spirit of the law if we were to unjustly interfere in management's prerogative to close or cease its business operations just because said business operations or undertaking is not suffering from any loss. Going now to the issue of personal liability of Lawrence Qua, it is settled that in the absence of malice or bad faith, a stockholder or an officer of a corporation cannot be made personally liable for corporate liabilities. 25 In the present case, while it may be true that the equipment, materials and machinery were pulled-out of Complex and transferred to Ionics during the night, their action was sufficiently explained by Lawrence Qua in his Comment to the petition filed by the Union. We quote: The fact that the pull-out of the machinery, equipment and materials was effected during nighttime is not per sean indicia of bad faith on the part of respondent Qua since he had no other recourse, and the same was dictated by the prevailing mood of unrest as the laborers were already vandalizing the equipment, bent on picketing the company premises and threats to lock out the company officers were being made. Such acts of respondent Qua were, in fact, made pursuant to the demands of Complex's customers who were already alarmed by the pending labor dispute and imminent strike to be stage by the laborers, to have their equipment, machinery and materials pull out of Complex. As such, these acts were merely done pursuant to his official functions and were not, in any way, made with evident bad faith. 26 We perceive no intention on the part of Lawrence Qua and the other officers of Complex to defraud the employees and the Union. They were compelled to act upon the instructions of their customers who were the real owners of the equipment, materials and machinery. The prevailing labor unrest permeating within the premises of Complex left the officers with no other choice but to pull them out of Complex at night to prevent their destruction. Thus, we see no reason to declare Lawrence Qua personally liable to the Union. Anent the award of damages, we are inclined to agree with the NLRC that there is no basis for such award. We again quote the respondent NLRC with favor: By and large, we cannot hold respondents guilty of unfair labor practice as found by the Labor Arbiter since the closure of operation of Complex was not established by strong evidence that the purpose of said closure was to interfere with the employees' right to self-organization and collective bargaining. As very clearly established, the closure was triggered by the customers' pull-out of their equipment, machinery and materials, who were alarmed by the pending labor dispute and the imminent strike by the union, and as a protection to their interest pulled-out of business from Complex who had no recourse but to cease operation to prevent further losses. The indiscretion committed by the Union in filing the notice of strike, which to our mind is not the proper remedy to question the amount of benefits due the complainants who will be retrenched at the closure of the LiteOn Line, gave a wrong signal to customers of Complex, which consequently resulted in the loss of employment of not only a few but to all the of the workers. It may be worth saying that the right to strike should only be a remedy of last resort and must not be used as a show of force against the employer. 27 We shall now go to the issues raised by Complex in G.R. No. 122136.
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Complex claims that the respondent NLRC erred in ordering them to pay the Union one (1) month pay as indemnity for failure to give notice to its employees at least thirty (30) days before such closure since it was quite clear that the employees were notified of the impending closure of the Lite-On Line as early as March 9, 1992. Moreover, the abrupt cessation of operations was brought about by the sudden pull-out of the customers which rendered it impossible for Complex to observe the required thirty (30) days notice. Art. 283 of the Labor Code provides that: Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)month before the intended date thereof . . . . (Emphasis ours.) The purpose of the notice requirement is to enable the proper authorities to determine after hearing whether such closure is being done in good faith, i.e., for bona fide business reasons, or whether, to the contrary, the closure is being resorted to as a means of evading compliance with the just obligations of the employer to the employees affected. 28 While the law acknowledges the management prerogative of closing the business, it does not, however, allow the business establishment to disregard the requirements of the law. The case of Magnolia Dairy Products v. NLRC 29is quite emphatic about this: The law authorizes an employer, like the herein petitioners, to terminate the employment of any employee due to the installation of labor saving devices. The installation of these devices is a management prerogative, and the courts will not interfere with its exercise in the absence of abuse of discretion, arbitrariness, or maliciousness on the part of management, as in this case. Nonetheless, this did not excuse petitioner from complying with the required written notice to the employee and to the Department of Labor and Employment (DOLE) at least one month before the intended date of termination. This procedure enables an employee to contest the reality or good faith character of the asserted ground for the termination of his services before the DOLE. The failure of petitioner to serve the written notice to private respondent and to the DOLE, however, does not ipso facto make private respondent's termination from service illegal so as to entitle her to reinstatement and payment of backwages. If at all, her termination from service is merely defective because it was not tainted with bad faith or arbitrariness and was due to a valid cause. The well settled rule is that the employer shall be sanctioned for non-compliance with the requirements of, or for failure to observe due process in terminating from service its employee. InWenphil Corp. v. NLRC, we sanctioned the employer for this failure by ordering it to indemnify the employee the amount of P1,000.00. Similarly, we imposed the same amount as indemnification in Rubberworld (Phils.), Inc. v. NLRC, and, Aurelio v. NLRC and Alhambra Industries, Inc. v. NLRC. Subsequently, the sum of P5,000.00 was awarded to an employee in Worldwide Papermills, Inc. v.NLRC, and P2,000.00 in Sebuguero, et al., v. NLRC, et al. Recently, the sum of P5,000.00 was again imposed as indemnify against the employer. We see no valid and cogent reason why petitioner should not be likewise sanctioned for its failure to serve the mandatory written notice. Under the attendant facts, we find the amount of P5,000.00, to be just and reasonable. We, therefore, find no grave abuse of discretion on the part of the NLRC in ordering Complex to pay one (1) month salary by way of indemnity. It must be borne in mind that what is at stake is the means of
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livelihood of the workers so they are at least entitled to be formally informed of the management decisions regarding their employment. 30 Complex, likewise, maintains that it is not liable for the payment for the payment of separation pay since Article 283 of the Labor Code awards separation pay only in cases of closure not due to serious business reversals. In this case, the closure of Complex was brought about by the losses being suffered by the corporation. We disagree. Art. 283 further provides: . . . . In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in case of cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. It is settled that in case of closures or cessation of operation of business establishments not due to serious business losses or financial reverses, 31 the employees are always given separation benefits. In the instant case, notwithstanding the financial losses suffered by Complex, such was, however, not the main reason for its closure. Complex admitted in its petition that the main reason for the cessation of the operations was the pull-out of the materials, equipment and machinery from the premises of the corporation as dictated by its customers. It was actually still capable of continuing the business but opted to close down to prevent further losses. Under the facts and circumstances of the case, we find no grave abuse of discretion on the part of the public respondent in awarding the employees one (1) month pay for every year of service as termination pay.1wphi1.nt WHEREFORE, premises considered, the assailed decision of the NLRC is AFFIRMED. ACE NAVIGATION CO., INC. vs. TEODORICO FERNANDEZ G.R. No. 197309 October 10, 2012 For resolution is the petition for review on certiorari1 which seeks to nullify the decision2 dated September 22, 2010 and the resolution3 dated May 26,2011 ofthe Court of Appeals (CA) in CA-G.R. SP No. 112081. The Antecedents On October 9, 2008, seaman Teodorico Fernandez (Fernandez), assisted by his wife, Glenita Fernandez, filed with the National Labor Relations Commission ( NLRC) a complaint for disability benefits, with prayer for moral and exemplary damages, plus attorneys fees, against Ace Navigation Co., Inc., Vela International Marine Ltd., and/or Rodolfo Pamintuan (petitioners). The petitioners moved to dismiss the complaint,4 contending that the labor arbiter had no jurisdiction over the dispute. They argued that exclusive original jurisdiction is with the voluntary arbitrator or panel of voluntary arbitrators, pursuant to Section 29 of the POEA Standard Employment Contract ( POEASEC), since the parties are covered by the AMOSUP-TCC or AMOSUP-VELA (as later cited by the petitioners) collective bargaining agreement ( CBA). Under Section 14 of the CBA, a dispute between a
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seafarer and the company shall be settled through the grievance machinery and mandatory voluntary arbitration. Fernandez opposed the motion.5 He argued that inasmuch as his complaint involves a money claim, original and exclusive jurisdiction over the case is vested with the labor arbiter. The Compulsory Arbitration Rulings On December 9, 2008, Labor Arbiter Romelita N. Rioflorido denied the motion to dismiss, holding that under Section 10 of Republic Act (R.A.) No. 8042, the Migrant Workers and Overseas Filipinos Act of 1995, the labor arbiter has original and exclusive jurisdiction over money claims arising out of an employer-employee relationship or by virtue of any law or contract, notwithstanding any provision of law to the contrary.6 The petitioners appealed to the NLRC, but the labor agency denied the appeal. It agreed with the labor arbiter that the case involves a money claim and is within the jurisdiction of the labor arbiter, in accordance with Section 10 of R.A. No. 8042. Additionally, it declared that the denial of the motion to dismiss is an interlocutory order which is not appealable. Accordingly, it remanded the case to the labor arbiter for further proceedings. The petitioners moved for reconsideration, but the NLRC denied the motion, prompting the petitioners to elevate the case to the CA through a petition for certiorari under Rule 65 of the Rules of Court. The CA Decision Through its decision of September 22, 2010,7 the CA denied the petition on procedural and substantive grounds. Procedurally, it found the petitioners to have availed of the wrong remedy when they challenged the labor arbiters denial of their motion to dismiss by way of an appeal to the NLRC. It stressed that pursuant to the NLRC rules,8 an order denying a motion to dismiss is interlocutory and is not subject to appeal. On the merits of the case, the CA believed that the petition cannot also prosper. It rejected the petitioners submission that the grievance and voluntary arbitration procedure of the parties CBA has jurisdictio n over the case, to the exclusion of the labor arbiter and the NLRC. As the labor arbiter and the NLRC did, it opined that under Section 10 of R.A. No. 8042, the labor arbiter has the original and exclusive jurisdiction to hear Fernandezs money claims. Further, the CA clarified that while the law9 allows parties to submit to voluntary arbitration other labor disputes, including matters falling within the original and exclusive jurisdiction of the labor arbiters under Article 217 of the Labor Code as this Court recognized in Vivero v. Court of Appeals,10 the parties submission agreement must be expressed in unequivocal language. It found no such unequivocal language in the AMOSUP/TCC CBA that the parties agreed to submit money claims or, more specifically, claims for disability benefits to voluntary arbitration. The CA also took note of the POEA-SEC11 which provides in its Section 29 that in cases of claims and disputes arising from a Filipino seafarers employment, the parties cover ed by a CBA shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. The CA explained that the relevant POEA-SEC provisions should likewise be qualified by the ruling in the Vivero case, the Labor Code, and other applicable laws and jurisprudence. In sum, the CA stressed that the jurisdiction of voluntary arbitrators is limited to the seafarers claims which do not fall within the labor arbiters original and exclusive jurisd iction or even in cases where the labor arbiter has jurisdiction, the parties have agreed in unmistakable terms (through their CBA) to submit the case to voluntary arbitration.
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The petitioners moved for reconsideration of the CA decision, but the appellate court denied the motion, reiterating its earlier pronouncement that on the ground alone of the petitioners wrong choice of remedy, the petition must fail. The Petition The petitioners are now before this Court praying for a reversal of the CA judgment on the following grounds: 1. The CA committed a reversible error in disregarding the Omnibus Implementing Rules and Regulations (IRR) of the Migrant Workers and Overseas Filipinos Act of 1995,12 as amended by R.A. No. 10022,13 mandating that "For OFWs with collective bargaining agreements, the caseshall be submitted for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code." 14 The petitioners bewail the CAs rejection of the above argument for the reason tha t the remedy they pursued was inconsistent with the 2005 Revised Rules of Procedure of the NLRC. Citing Municipality of Sta. Fe v. Municipality of Aritao,15 they argue that the "dismissal of a case for lack of jurisdiction may be raised at any stage of the proceedings." In any event, they posit that the IRR of R.A. No. 10022 is in the nature of an adjective or procedural law which must be given retroactive effect and which should have been applied by the CA in resolving the present case. 2. The CA committed a reversible error in ruling that the AMOSUP-VELA CBA does not contain unequivocal wordings for the mandatory referral of Fernandezs claim to voluntary arbitrat ion. The petitioners assail the CAs failure to explain the basis "for ruling that no explicit or unequivocal wordings appeared on said CBA for the mandatory referral of the disability claim to arbitration." 16They surmise that the CA construed the phrase "either party may refer the case to a MANDATORY ARBITRATION COMMITTEE" under Section 14.7(a) of the CBA as merely permissive and not mandatory because of the use of the word "may." They contend that notwithstanding the use of the word "may," the parties unequivocally and unmistakably agreed to refer the present disability claim to mandatory arbitration. 3. The CA committed a reversible error in disregarding the NLRC memorandum prescribing the appropriate action for complaints and/or proceedings which were initially processed in the grievance machinery of existing CBAs. In their motion for reconsideration with the CA, the petitioners manifested that the appellate courts assailed decision had been modified by the following directive of the NLRC: As one of the measures being adopted by our agency in response to the Platform and Policy Pronouncements on Labor Employment, you are hereby directed to immediately dismiss the complaint and/or terminate proceedings which were initially processed in the grievance machinery as provided in the existing Collective Bargaining Agreements (CBAs) between parties, through the issuance of an Order of Dismissal and referral of the disputes to the National Conciliation Mediation Board (NCMB) for voluntary arbitration. FOR STRICT COMPLIANCE.17 4. On July 31, 2012,18 the petitioners manifested before the Court that on June 13, 2012, the Courts Second Division issued a ruling in G.R. No. 172642, entitled Estate of Nelson R. Dulay, represented by his wife Merridy Jane P. Dulay v. Aboitiz Jebsen Maritime, Inc., and General Charterers, Inc.,upholding the jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators over a seafarers money claim. They implore the Court that since the factual backdrop and the issues involved in the case are similar to
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the present dispute, the Dulay ruling should be applied to this case and which should accordingly be referred to the National Conciliation and Mediation Board for voluntary arbitration. The Case for Fernandez In compliance with the Courts directive,19 Fernandez filed on October 7, 2011 his Comment20 (on the Petition) with the plea that the petition be dismissed for lack of merit. Fernandez presents the following arguments: 1. The IRR of the Migrant Workers and Overseas Filipinos Act of 1995 (R.A. No. 8042), as amended by R.A. No. 10022,21 did not divest the labor arbiters of their original and exclusive jurisdiction over money claims arising from employment, for nowhere in said IRR is there such a divestment. 2. The voluntary arbitrators do not have jurisdiction over the present controversy as can be deduced from Articles 261 and 262 of the Labor Code. Fernandez explains that his complaint does not involve any "unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement [nor] from the interpretation or enforcement of company personnel policies[.]"22 As he never referred his claim to the grievance machinery, there is no "unresolved grievance" to speak of. His complaint involves a claim for compensation and damages which is outside the voluntary arbitrators jurisdiction under Article 261. Further, only disputes involving the union and the company shall be referred to the grievance machinery and to voluntary arbitration, as the Court held in Sanyo Philippines Workers Union-PSSLU v. Caizares23 and Silva v. CA.24 3. The CA correctly ruled that no unequivocal wordings appear in the CBA for the mandatory referral of Fernandezs disability claim to a voluntary arbitrator. The Courts Ruling We first rule on the procedural question arising from the labor arbiters denial of the petitioners motion to dismiss the complaint. On this point, Section 6, Rule V of The 2005 Revised Rules of Procedure of the NLRC provides: On or before the date set for the mandatory conciliation and mediation conference, the respondent may file a motion to dismiss. Any motion to dismiss on the ground of lack of jurisdiction, improper venue, or that the cause of action is barred by prior judgment, prescription, or forum shopping, shall be immediately resolved by the Labor Arbiter through a written order. An order denying the motion to dismiss, or suspending its resolution until the final determination of the case, is not appealable. [underscoring ours] Corollarily, Section 10, Rule VI of the same Rules states: Frivolous or Dilatory Appeals. No appeal from an interlocutory order shall be entertained. To discourage frivolous or dilatory appeals, including those taken from interlocutory orders, the Commission may censure or cite in contempt the erring parties and their counsels, or subject them to reasonable fine or penalty. In Indiana Aerospace University v. Comm. on Higher Educ.,25 the Court declared that "[a]n order denying a motion to dismiss is interlocutory"; the proper remedy in this situation is to appeal after a decision has been rendered. Clearly, the denial of the petitioners motion to dismiss in the present case was an interlocutory order and, therefore, not subject to appeal as the CA aptly noted.
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The petitions procedural lapse notwithstanding, the CA proceeded to review the merits of the case and adjudged the petition unmeritorious. We find the CAs action in order. The Labor Code itself declares that "it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process." 26 We now address the focal question of who has the original and exclusive jurisdictio n over Fernandezs disability claim the labor arbiter under Section 10 of R.A. No. 8042, as amended, or the voluntary arbitration mechanism as prescribed in the parties CBA and the POEA -SEC? The answer lies in the States labor relations policy laid down in the Constitution and fleshed out in the enabling statute, the Labor Code. Section 3, Article XIII (on Social Justice and Human Rights) of the Constitution declares: xxxx The 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. Article 260 of the Labor Code (Grievance machinery and voluntary arbitration) states: The parties to a Collective Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies. Article 261 of the Labor Code (Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators), on the other hand, reads in part: 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[.] Article 262 of the Labor Code (Jurisdiction over other labor disputes) declares: The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. Further, the POEA-SEC, which governs the employment of Filipino seafarers, provides in its Section 29 on 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 voluntary 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 voluntary 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. [emphasis ours]
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We find merit in the petition. Under the above-quoted constitutional and legal provisions, the voluntary arbitrator or panel of voluntary arbitrators has original and exclusive jurisdiction over Fernandezs disability claim. There is no dispute that the claim arose out of Fernandezs employment with the petitioners and that their relationship is covered by a CBA the AMOSUP/TCC or the AMOSUP-VELA CBA. The CBA provides for a grievance procedure for the resolution of grievances or disputes which occur during the employment relationship and, like the grievance machinery created under Article 261 of the Labor Code, it is a two-tiered mechanism, with voluntary arbitration as the last step. 1wphi1 Contrary to the CAs reading of the CBAs Article 14, there is unequivocal or unmistakable language in the agreement which mandatorily requires the parties to submit to the grievance procedure any dispute or cause of action they may have against each other. The relevant provisions of the CBA state: 14.6 Any Dispute, grievance, or misunderstanding concerning any ruling, practice, wages or working conditions in the COMPANY or any breach of the Contract of Employment, or any dispute arising from the meaning or application of the provisions of this Agreement or a claim of violation thereof or any complaint or cause of action that any such Seaman may have against the COMPANY, as well as complaints which the COMPANY may have against such Seaman shall be brought to the attention of the GRIEVANCE RESOLUTION COMMITTEE before either party takes any action, legal or otherwise. Bringing such a dispute to the Grievance Resolution Committee shall be unwaivable prerequisite or condition precedent for bringing any action, legal or otherwise, in any forum and the failure to so refer the dispute shall bar any and all legal or other actions. 14.7a) If by reason of the nature of the Dispute, the parties are unable to amicably settle the dispute, either party may refer the case to a MANDATORY ARBITRATION COMMITTEE. The MANDATORY ARBITRATION COMMITTEE shall consist of one representative to be designated by the UNION, and one representative to be designated by the COMPANY and a third member who shall act as Chairman and shall be nominated by mutual choice of the parties. xxx h) Referral of all unresolved disputes from the Grievance Resolution Committee to the Mandatory Arbitration Committee shall be unwaivable prerequisite or condition precedent for bringing any action, claim, or cause of action, legal or otherwise, before any court, tribunal, or panel in any jurisdiction. The failure by a party or seaman to so refer and avail oneself to the dispute resolution mechanism contained in this action shall bar any legal or other action. All parties expressly agree that the orderly resolution of all claims in the prescribed manner served the interests of reaching settlements or claims in an orderly and uniform manner, as well as preserving peaceful and harmonious labor relations between seaman, the Union, and the Company.27 (emphases ours) What might have caused the CA to miss the clear intent of the parties in prescribing a grievance procedure in their CBA is, as the petitioners have intimated, the use of the auxiliary verb " may" in Article 14.7(a) of the CBA which, to reiterate, provides that "if by reason of the nature of the Dispute, the parties are unable to amicably settle the dispute, either party may refer the case to a MANDATORY ARBITRATION COMMITTEE."28 While the CA did not qualify its reading of the subject provision of the CBA, it is reasonable to conclude that it viewed as optional the referral of a dispute to the mandatory arbitration committee when the parties are unable to amicably settle the dispute. We find this a strained interpretation of the CBA provision. The CA read the provision separately, or in isolation of the other sections of Article 14, especially 14.7(h), which, in clear, explicit language, states that the "referral of all unresolved disputes from the Grievance Resolution Committee to the Mandatory Arbitration Committee shall be unwaivable prerequisite or condition
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precedent for bringing any action, claim, or cause of action, legal or otherwise, before any court, tribunal, or panel in any jurisdiction"29 and that the failure by a party or seaman to so refer the dispute to the prescribed dispute resolution mechanism shall bar any legal or other action. Read in its entirety, the CBAs Article 14 (Grievance Procedure) unmistakably reflects the parties agreement to submit any unresolved dispute at the grievance resolution stage to mandatory voluntary arbitration under Article 14.7(h) of the CBA. And, it should be added that, in compliance with Section 29 of the POEA-SEC which requires that in cases of claims and disputes arising from a seafarers employment, the parties covered by a CBA shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. Since the parties used unequivocal language in their CBA for the submission of their disputes to voluntary arbitration (a condition laid down in Vivero for the recognition of the submission to voluntary arbitration of matters within the original and exclusive jurisdiction of labor arbiters), we find that the CA committed a reversible error in its ruling; it disregarded the clear mandate of the CBA between the parties and the POEA-SEC for submission of the present dispute to voluntary arbitration. Consistent with this finding, Fernandezs contention that his complaint for disability benefits is a money claim that falls within the original and exclusive jurisdiction of the labor arbiter under Section 10 of R.A. No. 8042 is untenable. We likewise reject his argument that he never referred his claim to the grievance machinery (so that no unresolved grievance exists as required under Article 261 of the Labor Code), and that the parties to the case are not the union and the employer. 30 Needless to state, no such distinction exists in the parties CBA and the POEA-SEC. It bears stressing at this point that we are upholding the jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators over the present dispute, not only because of the clear language of the parties CBA on the matter; more importantly, we so uphold the voluntary arbitrators jurisdiction, in recognition of the States express preference for voluntary modes of dispute settlement, such as conciliation and voluntary arbitration as expressed in the Constitution, the law and the rules. In this light, we see no need to further consider the petitioners submission regarding the IRR of the Migrant Workers and Overseas Filipinos Act of 1995, as amended by R.A. No. 10022, except to note that the IRR lends further support to our ruling. In closing, we quote with approval a most recent Court pronouncement on the same issue, thus 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.31 (emphasis ours) WHEREFORE, premises considered, the petition is GRANTED. The assailed decision and resolution of the Court of Appeals are SET ASIDE. Teodorico Fernandez's disability claim is REFERRED to the Grievance Resolution Committee of the parties' collective bargaining agreement and/or the Mandatory Arbitration Committee, if warranted. INTERPHIL LABORATORIES EMPLOYEES UNION-FFW vs. INTERPHIL LABORATORIES, INC. G.R. No. 142824 December 19, 2001 Assailed in this petition for review on certiorari are the decision, promulgated on 29 December 1999, and the resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-G.R. SP No. 50978. Culled from the questioned decision, the facts of the case are as follows:
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Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rank-andfile employees of Interphil Laboratories, Inc., a company engaged in the business of manufacturing and packaging pharmaceutical products. They had a Collective Bargaining Agreement (CBA) effective from 01 August 1990 to 31 July 1993. Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar,1 Vice-PresidentHuman Resources Department of respondent company, was approached by Nestor Ocampo, the union president, and Hernando Clemente, a union director. The two union officers inquired about the stand of the company regarding the duration of the CBA which was set to expire in a few months. Salazar told the union officers that the matter could be best discussed during the formal negotiations which would start soon. In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more about the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested for a meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a meeting was held on 15 April 1993 where the union officers asked whether Salazar would be amenable to make the new CBA effective for two (2) years, starting 01 August 1993. Salazar, however, declared that it would still be premature to discuss the matter and that the company could not make a decision at the moment. The very next day, or on 16 April 1993, all the rank-and-file employees of the company refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and left their workplace without sealing the containers and securing the raw materials they were working on . When Salazar inquired about the reason for their refusal to follow their normal work schedule, the employees told him to "ask the union officers." To minimize the damage the overtime boycott was causing the company, Salazar immediately asked for a meeting with the union officers. In the meeting, Enrico Gonzales, a union director, told Salazar that the employees would only return to their normal work schedule if the company would agree to their demands as to the effectivity and duration of the new CBA. Salazar again told the union officers that the matter could be better discussed during the formal renegotiations of the CBA. Since the union was apparently unsatisfied with the answer of the company, the overtime boycott continued. In addition, the employees started to engage in a work slowdown campaign during the time they were working, thus substantially delaying the production of the company.2 On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and the latter filed its counter-proposal. On 03 September 1993, respondent company filed with the National Labor Relations Commission (NLRC) a petition to declare illegal petitioner union's "overtime boycott" and "work slowdown" which, according to respondent company, amounted to illegal strike. The case, docketed NLRC-NCR Case No. 00-0905529-93, was assigned to Labor Arbiter Manuel R. Caday. On 22 October 1993, respondent company filed with the National Conciliation and Mediation Board (NCMB) an urgent request for preventive mediation aimed to help the parties in their CBA negotiations.3 The parties, however, failed to arrive at an agreement and on 15 November 1993, respondent company filed with the Office of the Secretary of Labor and Employment a petition for assumption of jurisdiction. On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor practice allegedly committed by respondent company. On 12 February 1994, the union staged a strike. On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order 4 over the labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent company to "immediately accept all striking workers, including the fifty-three (53) terminated union officers, shop stewards and union members back to work under the same terms and conditions prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its employees in 1993." 5 On the other hand, petitioner union was directed to "strictly and immediately comply with the return-to-work orders issued
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by (the) Office x x x6 The same order pronounced that "(a)ll pending cases which are direct offshoots of the instant labor dispute are hereby subsumed herewith."7 In the i, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner union filed an "Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend Proceedings" seeking the consolidation of the case with the labor dispute pending before the Secretary of Labor. Despite objection by respondent company, Labor Arbiter Caday held in abeyance the proceedings before him. However, on 06 June 1994, Acting Labor Secretary Jose S. Brillantes, after finding that the issues raised would require a formal hearing and the presentation of evidentiary matters, directed Labor Arbiters Caday and M. Sol del Rosario to proceed with the hearing of the cases before them and to thereafter submit their report and recommendation to his office. On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then Secretary of Labor Leonardo A. Quisumbing.8 Then Secretary Quisumbing approved and adopted the report in his Order, dated 13 August 1997, hence: WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be supported by substantial evidence, this Office hereby RESOLVES to APPROVE and ADOPT the same as the decision in this case, and judgment is hereby rendered: (1) Declaring the 'overtime boycott' and 'work slowdown' as illegal strike; (2) Declaring the respondent union officers namely: Nestor Ocampo Carmelo Santos Marites Montejo Rico Gonzales Rod Abuan Segundino Flores President Vice-President Treasurer/Board Member Auditor Director Director
Hernando Clemente Director who spearheaded and led the overtime boycott and work slowdown, to have lost their employment status; and (3) Finding the respondents guilty of unfair labor practice for violating the then existing CBA which prohibits the union or any employee during the existence of the CBA from staging a strike or engaging in slowdown or interruption of work and ordering them to cease and desist from further committing the aforesaid illegal acts. Petitioner union moved for the reconsideration of the order but its motion was denied. The union went to the Court of Appeals via a petition for certiorari. In the now questioned decision promulgated on 29 December 1999, the appellate court dismissed the petition. The union's motion for reconsideration was likewise denied. Hence, the present recourse where petitioner alleged: THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE HONORABLE PUBLIC RESPONDENT IN THE PROCEEDINGS BELOW, COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT
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COMPLETELY DISREGARDED "PAROL EVIDENCE RULE" IN THE EVALUATION AND APPRECIATION OF EVIDENCE PROFERRED BY THE PARTIES. THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, WHEN IT DID NOT DECLARE PRIVATE RESPONDENT'S ACT OF EXTENDING SUBSTANTIAL SEPARATION PACKAGE TO ALMOST ALL INVOLVED OFFICERS OF PETITIONER UNION, DURING THE PENDENCY OF THE CASE, AS TANTAMOUNT TO CONDONATION, IF INDEED, THERE WAS ANY MISDEED COMMITTED. THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD THAT THE SECRETARY OF LABOR AND EMPLOYMENT HAS JURISDICTION OVER A CASE (A PETITION TO DECLARE STRIKE ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING BEFORE THE LABOR ARBITER.9 We sustain the questioned decision. On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to rule on the illegal strike committed by petitioner union, it is undisputed that the petition to declare the strike illegal before Labor Arbiter Caday was filed long before the Secretary of Labor and Employment issued the assumption order on 14 February 1994. However, it cannot be denied that the issues of "overtime boycott" and "work slowdown" amounting to illegal strike before Labor Arbiter Caday are intertwined with the labor dispute before the Labor Secretary. In fact, on 16 March 1994, petitioner union even asked Labor Arbiter Caday to suspend the proceedings before him and consolidate the same with the case before the Secretary of Labor. When Acting Labor Secretary Brillantes ordered Labor Arbiter Caday to continue with the hearing of the illegal strike case, the parties acceded and participated in the proceedings, knowing fully well that there was also a directive for Labor Arbiter Caday to thereafter submit his report and recommendation to the Secretary. As the appellate court pointed out, the subsequent participation of petitioner union in the continuation of the hearing was in effect an affirmation of the jurisdiction of the Secretary of Labor. The appellate court also correctly held that the question of the Secretary of Labor and Employment's jurisdiction over labor and labor-related disputes was already settled in International Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor Union (ALU)10 where the Court declared: In the present case, the 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, this 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. Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto. This is evident from the opening proviso therein reading '(e)xcept as otherwise provided under this Code . . .' Plainly, Article 263(g) of the Labor Code was meant to make both the Secretary (or the various regional directors) and the labor arbiters share jurisdiction, subject to certain conditions. Otherwise, the Secretary would not be able to effectively and efficiently dispose of the primary dispute. To hold the contrary may even lead to the absurd and undesirable result wherein the Secretary and the labor arbiter concerned may have diametrically opposed rulings. As we have said, '(i)t is fundamental that a statute is to be read in a manner that would breathe life into it, rather than defeat it.
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In fine, the issuance of the assailed orders is within the province of the Secretary as authorized by Article 263(g) of the Labor Code and Article 217(a) and (5) of the same Code, taken conjointly and rationally construed to subserve the objective of the jurisdiction vested in the Secretary. 11 Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that the factual findings of the Labor Arbiter, when sufficiently supported by the evidence on record, must be accorded due respect by the Supreme Court.12 Here, the report and recommendation of Labor Arbiter Caday was not only adopted by then Secretary of Labor Quisumbing but was likewise affirmed by the Court of Appeals. We see no reason to depart from their findings. Petitioner union maintained that the Labor Arbiter and the appellate court disregarded the "parol evidence rule"13when they upheld the allegation of respondent company that the work schedule of its employees was from 6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00 am. According to petitioner union, the provisions of their CBA on working hours clearly stated that the normal working hours were "from 7:30 a.m. to 4:30 p.m."14 Petitioner union underscored that the regular work hours for the company was only eight (8) hours. It further contended that the Labor Arbiter as well as the Court of Appeals should not have admitted any other evidence contrary to what was stated in the CBA. The reliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling. 15 Rules of procedure and evidence are not applied in a very rigid and technical sense in labor cases.16 Hence, the Labor Arbiter is not precluded from accepting and evaluating evidence other than, and even contrary to, what is stated in the CBA. In any event, the parties stipulated: Section 1. Regular Working Hours A normal workday shall consist of not more than eight (8) hours. The regular working hours for the Company shall be from 7:30 A.M. to 4:30 P.M. The schedule of shift work shall be maintained; however the company may change the prevailing work time at its discretion, should such change be necessary in the operations of the Company. All employees shall observe such rules as have been laid down by the company for the purpose of effecting control over working hours.17 It is evident from the foregoing provision that the working hours may be changed, at the discretion of the company, should such change be necessary for its operations, and that the employees shall observe such rules as have been laid down by the company. In the case before us, Labor Arbiter Caday found that respondent company had to adopt a continuous 24-hour work daily schedule by reason of the nature of its business and the demands of its clients. It was established that the employees adhered to the said work schedule since 1988. The employees are deemed to have waived the eight-hour schedule since they followed, without any question or complaint, the two-shift schedule while their CBA was still in force and even prior thereto. The two-shift schedule effectively changed the working hours stipulated in the CBA. As the employees assented by practice to this arrangement, they cannot now be heard to claim that the overtime boycott is justified because they were not obliged to work beyond eight hours. As Labor Arbiter Caday elucidated in his report: Respondents' attempt to deny the existence of such regular overtime schedule is belied by their own awareness of the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day that has been going on since 1988. Proof of this is the case undisputedly filed by the union for and in behalf of its members, wherein it is claimed that the company has not been computing correctly the night premium and overtime pay for work rendered between 2:00 A.M. and 6:00 A.M. of the 6:00 P.M. to 6:00 A.M. shift. (tsn pp. 9-10, testimony of Alessandro G. Salazar during hearing on August 9, 1994). In fact, the union VicePresident Carmelo C. Santos, demanded that the company make a recomputation of the overtime records of the employees from 1987 (Exh. "P"). Even their own witness, union Director Enrico C.
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Gonzales, testified that when in 1992 he was still a Quality Control Inspector at the Sucat Plant of the company, his schedule was sometime at 6:00 A.M. to 6:00 P.M., sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M. and sometime at 6:00 P.M. to 6:00 A.M., and when on the 6 to 6 shifts, he received the commensurate pay (t.s.n. pp. 7-9, hearing of January 10, 1994). Likewise, while in the overtime permits, dated March 1, 6, 8, 9 to 12, 1993, which were passed around daily for the employees to sign, his name appeared but without his signatures, he however had rendered overtime during those dates and was paid because unlike in other departments, it has become a habit to them to sign the overtime schedule weekly (t.s.n. pp. 26-31, hearing of January 10, 1994). The awareness of the respondent union, its officers and members about the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day will be further shown in the discussion of the second issue.18 As to the second issue of whether or not the respondents have engaged in "overtime boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, both amounting to illegal strike, the evidence presented is equally crystal clear that the "overtime boycott" and "work slowdown" committed by the respondents amounted to illegal strike. As undisputably testified to by Mr. Alessandro G. Salazar, the company's Vice-President-Human Resources Department, sometime in February, 1993, he was approached by the union President Nestor Ocampo and Union Director Hernando Clemente who asked him as to what was the stand of the company regarding the duration of the CBA between the company and which was set to expire on July 31, 1993. He answered that the matter could be best discussed during the formal renegotiations which anyway was to start soon. This query was followed up sometime in March, 1993, and his answer was the same. In early April, 1993, the union president requested for a meeting to discuss the duration and effectivity of the CBA. Acceding to the request, a meeting was held on April 15, 1993 wherein the union officers asked him if he would agree to make the new CBA effective on August 1, 1993 and the term thereof to be valid for only two (2) years. When he answered that it was still premature to discuss the matter, the very next day, April 16, 1993, all the rank and file employees of the company refused to follow their regular two-shift work schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after the 8-hours work, they abruptly stopped working at 2:00 P.M. and 2:00 A.M., respectively, leaving their place of work without sealing the containers and securing the raw materials they were working on. When he saw the workers leaving before the end of their shift, he asked them why and their reply was "asked (sic) the union officers." Alarmed by the overtime boycott and the damage it was causing the company, he requested for a meeting with the union officers. In the meeting, he asked them why the regular work schedule was not being followed by the employees, and union Director Enrico Gonzales, with the support of the other union officers, told him that if management would agree to a twoyear duration for the new CBA and an effectivity date of August 1, 1993, all employees will return to the normal work schedule of two 12-hour shifts. When answered that the management could not decide on the matter at the moment and to have it discussed and agreed upon during the formal renegotiations, the overtime boycott continued and the employees at the same time employed a work slowdown campaign during working hours, causing considerable delay in the production and complaints from the clients/customers (Exh. "O", Affidavit of Alessandro G. Salazar which formed part of his direct testimony). This testimonial narrations of Salazar was, as earlier said, undisputed because the respondents' counsel waived his cross examination (t.s.n. p. 15, hearing on August 9, 1994). Aside from the foregoing undisputed testimonies of Salazar, the testimonies of other Department Managers pointing to the union officers as the instigators of the overtime boycott and work slowdown, the testimony of Epifanio Salumbides (Exh. "Y") a union member at the time the concerted activities of the respondents took place, is quoted hereunder: "2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor Ocampo ang lahat ng taga-maintenance ng bawat departamento upang dumalo sa isang miting. Sa miting na iyon, sinabi ni Rod Abuan, na isang Direktor ng Unyon, na mayroon ilalabas na
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memo ang Unyon na nag-uutos sa mga empleyado ng Kompanya na mag-imbento ng sari-saring dahilan para lang hindi sila makapagtrabaho ng "overtime". Sinabihan rin ako ni Tessie Montejo na siya namang Treasurer ng Unyon na 'Manny, huwag ka na lang pumasok sa Biyernes para hindi ka masabihan ng magtrabaho ng Sabado at Linggo' na siya namang araw ng "overtime" ko x x x "3. Nakalipas ang dalawang buwan at noong unang bahagi ng Abril 1993, miniting kami ng Shop Stewards namin na sina Ariel Abenoja, Dany Tansiongco at Vicky Baron. Sinabihan kami na huwag ng mag-overtime pag nagbigay ng senyas ang Unyon ng "showtime." "4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco ng "showtime". Dahil dito wala ng empleyadong nag-overtime at sabay-sabay silang umalis, maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18, 1993 na Sabado at Linggo. "5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop Steward, sa opisina ng Unyon. Nadatnan ko doon ang halos lahat ng opisyales ng Unyon na sina: Nestor Ocampo Carmelo Santos Nanding Clemente TessMontejo Segundo Flores Enrico Gonzales Boy Alcantara Rod Abuan Presidente Bise-Presidente Director Chief Steward Director Auditor Shop Steward Director
at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran ng mga opisyales ng Unyon. Tinanong ako ni Rod Aguan kung bakit ako "nag-overtime" gayong "Binigyan ka na namin ng instruction na huwag pumasok, pinilit mo pa ring pumasok." "Management ka ba o Unyonista." Sinagot ko na ako ay Unyonista. Tinanong niya muli kung bakit ako pumasok. Sinabi ko na wala akong maibigay na dahilan para lang hindi pumasok at "mag-overtime." Pagkatapos nito, ako ay pinagmumura ng mga opisyales ng Unyon kaya't ako ay madaliang umalis. xxx xxx xxx
Likewise, the respondents' denial of having a hand in the work slowdown since there was no change in the performance and work efficiency for the year 1993 as compared to the previous year was even rebuffed by their witness Ma. Theresa Montejo, a Quality Control Analyst. For on crossexamination, she (Montejo) admitted that she could not answer how she was able to prepare the productivity reports from May 1993 to February 1994 because from April 1993 up to April 1994, she was on union leave. As such, the productivity reports she had earlier shown was not prepared by her since she had no personal knowledge of the reports (t.s.n. pp. 32-35, hearing of February 27, 1995). Aside from this admission, the comparison made by the respondents was of no moment, because the higher production for the years previous to 1993 was reached when the employees regularly rendered overtime work. But undeniably, overtime boycott and work slowdown from April 16, 1993 up to March 7, 1994 had resulted not only in financial losses to the company but also damaged its business reputation.
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Evidently, from all the foregoing, respondents' unjustified unilateral alteration of the 24-hour work schedule thru their concerted activities of "overtime boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, to force the petitioner company to accede to their unreasonable demands, can be classified as a strike on an installment basis, as correctly called by petitioner company x x x19 It is thus undisputed that members of the union by their own volition decided not to render overtime services in April 1993.20 Petitioner union even admitted this in its Memorandum, dated 12 April 1999, filed with the Court of Appeals, as well as in the petition before this Court, which both stated that "(s)ometime in April 1993, members of herein petitioner, on their own volition and in keeping with the regular working hours in the Company x x x decided not to render overtime".21 Such admission confirmed the allegation of respondent company that petitioner engaged in "overtime boycott" and "work slowdown" which, to use the words of Labor Arbiter Caday, was taken as a means to coerce respondent company to yield to its unreasonable demands. More importantly, the "overtime boycott" or "work slowdown" by the employees constituted a violation of their CBA, which prohibits the union or employee, during the existence of the CBA, to stage a strike or engage in slowdown or interruption of work.22 In Ilaw at Buklod ng Manggagawa vs. NLRC ,23 this Court ruled: x x x (T)he concerted activity in question would still be illicit because contrary to the workers' explicit contractual commitment "that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during the term of x x x (their collective bargaining) agreement." What has just been said makes unnecessary resolution of SMC's argument that the workers' concerted refusal to adhere to the work schedule in force for the last several years, is a slowdown, an inherently illegal activity essentially illegal even in the absence of a no-strike clause in a collective bargaining contract, or statute or rule. The Court is in substantial agreement with the petitioner's concept of a slowdown as a "strike on the installment plan;" as a willful reduction in the rate of work by concerted action of workers for the purpose of restricting the output of the employer, in relation to a labor dispute; as an activity by which workers, without a complete stoppage of work, retard production or their performance of duties and functions to compel management to grant their demands. The Court also agrees that such a slowdown is generally condemned as inherently illicit and unjustifiable, because while the employees "continue to work and remain at their positions and accept the wages paid to them," they at the same time "select what part of their allotted tasks they care to perform of their own volition or refuse openly or secretly, to the employer's damage, to do other work;" in other words, they "work on their own terms." x x x24 Finally, the Court cannot agree with the proposition that respondent company, in extending substantial separation package to some officers of petitioner union during the pendency of this case, in effect, condoned the illegal acts they committed. Respondent company correctly postured that at the time these union officers obtained their separation benefits, they were still considered employees of the company. Hence, the company was merely complying with its legal obligations.25 Respondent company could have withheld these benefits pending the final resolution of this case. Yet, considering perhaps the financial hardships experienced by its employees and the economic situation prevailing, respondent company chose to let its employees avail of their separation benefits. The Court views the gesture of respondent company as an act of generosity for which it should not be punished. WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of the Court of Appeals is AFFIRMED.
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NATIONAL UNION OF WORKERS IN THE HOTEL RESTAURANT AND ALLIED INDUSTRIES (NUWHRAIN-APL-IUF) vs. THE HONORABLE COURT OF APPEALS G.R. No. 163942 November 11, 2008 In G.R. No. 163942, the Petition for Review on Certiorari under Rule 45 of the National Union of Workers in the Hotel Restaurant and Allied Industries Dusit Hotel Nikko Chapter (Union) seeks to set aside the January 19, 2004 Decision1 and June 1, 2004 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 76568 which affirmed the October 9, 2002 Decision3 of the National Labor Relations Commission (NLRC) in NLRC NCR CC No. 000215-02. In G.R. No. 166295, the Petition for Certiorari under Rule 65 of the Union seeks to nullify the May 6, 2004 Decision4 and November 25, 2004 Resolution5 of the CA in CA-G.R. SP No. 70778 which affirmed the January 31, 20026 and March 15, 20027 Orders of the Secretary of Labor and Employment, Patricia A. Sto. Tomas (Secretary). Evolution of the Present Petitions The Union is the certified bargaining agent of the regular rank-and-file employees of Dusit Hotel Nikko (Hotel), a five star service establishment owned and operated by Philippine Hoteliers, Inc. located in Makati City. Chiyuki Fuijimoto and Esperanza V. Alvez are impleaded in their official capacities as the Hotel's General Manager and Director of Human Resources, respectively. On October 24, 2000, the Union submitted its Collective Bargaining Agreement (CBA) negotiation proposals to the Hotel. As negotiations ensued, the parties failed to arrive at mutually acceptable terms and conditions. Due to the bargaining deadlock, the Union, on December 20, 2001, filed a Notice of Strike on the ground of the bargaining deadlock with the National Conciliation and Mediation Board (NCMB), which was docketed as NCMB-NCR-NS-12-369-01. Thereafter, conciliation hearings were conducted which proved unsuccessful. Consequently, a Strike Vote8 was conducted by the Union on January 14, 2002 on which it was decided that the Union would wage a strike. Soon thereafter, in the afternoon of January 17, 2002, the Union held a general assembly at its office located in the Hotel's basement, where some members sported closely cropped hair or cleanly shaven heads. The next day, or on January 18, 2002, more male Union members came to work sporting the same hair style. The Hotel prevented these workers from entering the premises claiming that they violated the Hotel's Grooming Standards. In view of the Hotel's action, the Union staged a picket outside the Hotel premises. Later, other workers were also prevented from entering the Hotel causing them to join the picket. For this reason the Hotel experienced a severe lack of manpower which forced them to temporarily cease operations in three restaurants. Subsequently, on January 20, 2002, the Hotel issued notices to Union members, preventively suspending them and charging them with the following offenses: (1) violation of the duty to bargain in good faith; (2) illegal picket; (3) unfair labor practice; (4) violation of the Hotel's Grooming Standards; (5) illegal strike; and (6) commission of illegal acts during the illegal strike. The next day, the Union filed with the NCMB a second Notice of Strike on the ground of unfair labor practice and violation of Article 248(a) of the Labor Code on illegal lockout, which was docketed as NCMB-NCR-NS-01-019-02. In the meantime, the Union officers and members submitted their explanations to the charges alleged by the Hotel, while they continued to stage a picket just inside the Hotel's compound. On January 26, 2002, the Hotel terminated the services of twenty-nine (29) Union officers and sixty-one (61) members; and suspended eighty-one (81) employees for 30 days, forty-eight (48) employees for 15 days, four (4) employees for 10 days, and three (3) employees for five days. On the same day, the Union
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declared a strike. Starting that day, the Union engaged in picketing the premises of the Hotel. During the picket, the Union officials and members unlawfully blocked the ingress and egress of the Hotel premises. Consequently, on January 31, 2002, the Union filed its third Notice of Strike with the NCMB which was docketed as NCMB-NCR-NS-01-050-02, this time on the ground of unfair labor practice and unionbusting. On the same day, the Secretary, through her January 31, 2002 Order, assumed jurisdiction over the labor dispute and certified the case to the NLRC for compulsory arbitration, which was docketed as NLRC NCR CC No. 000215-02. The Secretary's Order partly reads: WHEREFORE, in order to have a complete determination of the bargaining deadlock and the other incidents of the dispute, this Office hereby consolidates the two Notices of Strike - NCMBNCR-NS-12-369-01 and NCMB-NCR-NS-01-019-02 - and CERTIFIES the entire labor dispute covered by these Notices and the intervening events, to the NATIONAL LABOR RELATIONS COMMISSION for compulsory arbitration pursuant to Article 263 (g) of the Labor Code, as amended, under the following terms: xxxx d. the Hotel is given the option, in lieu of actual reinstatement, to merely reinstate the dismissed or suspended workers in the payroll in light of the special circumstances attendant to their reinstatement; xxxx SO ORDERED. (Emphasis added.) Pursuant to the Secretary's Order, the Hotel, on February 1, 2002, issued an Inter-Office Memorandum,9directing some of the employees to return to work, while advising others not to do so, as they were placed under payroll reinstatement. Unhappy with the Secretary's January 31, 2002 Order, the Union moved for reconsideration, but the same was denied per the Secretary's subsequent March 15, 2002 Order. Affronted by the Secretary's January 31, 2002 and March 15, 2002 Orders, the Union filed a Petition for Certiorari with the CA which was docketed as CA-G.R. SP No. 70778. Meanwhile, after due proceedings, the NLRC issued its October 9, 2002 Decision in NLRC NCR CC No. 000215-02, in which it ordered the Hotel and the Union to execute a CBA within 30 days from the receipt of the decision. The NLRC also held that the January 18, 2002 concerted action was an illegal strike in which illegal acts were committed by the Union; and that the strike violated the "No Strike, No Lockout" provision of the CBA, which thereby caused the dismissal of 29 Union officers and 61 Union members. The NLRC ordered the Hotel to grant the 61 dismissed Union members financial assistance in the amount of month's pay for every year of service or their retirement benefits under their retirement plan whichever was higher. The NLRC explained that the strike which occurred on January 18, 2002 was illegal because it failed to comply with the mandatory 30-day cooling-off period10 and the seven-day strike ban,11 as the strike occurred only 29 days after the submission of the notice of strike on December 20, 2001 and only four days after the submission of the strike vote on January 14, 2002. The NLRC also ruled that even if the Union had complied with the temporal requirements mandated by law, the strike would nonetheless be declared illegal because it was attended by illegal acts committed by the Union officers and members. The Union then filed a Motion for Reconsideration of the NLRC's Decision which was denied in the February 7, 2003 NLRC Resolution. Unfazed, the Union filed a Petition for Certiorari under Rule 65 with
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the CA, docketed as CA-G.R. SP No. 76568, and assailed both the October 9, 2002 Decision and the February 7, 2003 Resolution of the NLRC. Soon thereafter, the CA promulgated its January 19, 2004 Decision in CA-G.R. SP No. 76568 which dismissed the Union's petition and affirmed the rulings of the NLRC. The CA ratiocinated that the Union failed to demonstrate that the NLRC committed grave abuse of discretion and capriciously exercised its judgment or exercised its power in an arbitrary and despotic manner. For this reason, the Union filed a Motion for Reconsideration which the CA, in its June 1, 2004 Resolution, denied for lack of merit. In the meantime, the CA promulgated its May 6, 2004 Decision in CA-G.R. SP No. 70778 which denied due course to and consequently dismissed the Union's petition. The Union moved to reconsider the Decision, but the CA was unconvinced and denied the motion for reconsideration in its November 25, 2004 Resolution. Thus, the Union filed the present petitions. The Union raises several interwoven issues in G.R. No. 163942, most eminent of which is whether the Union conducted an illegal strike. The issues presented for resolution are: -AWHETHER OR NOT THE UNION, THE 29 UNION OFFICERS AND 61 MEMBERS MAY BE ADJUDGED GUILTY OF STAGING AN ILLEGAL STRIKE ON JANUARY 18, 2002 DESPITE RESPONDENTS' ADMISSION THAT THEY PREVENTED SAID OFFICERS AND MEMBERS FROM REPORTING FOR WORK FOR ALLEGED VIOLATION OF THE HOTEL'S GROOMING STANDARDS -BWHETHER OR NOT THE 29 UNION OFFICERS AND 61 MEMBERS MAY VALIDLY BE DISMISSED AND MORE THAN 200 MEMBERS BE VALIDLY SUSPENDED ON THE BASIS OF FOUR (4) SELF-SERVING AFFIDAVITS OF RESPONDENTS -CWHETHER OR NOT RESPONDENTS IN PREVENTING UNION OFFICERS AND MEMBERS FROM REPORTING FOR WORK COMMITTED AN ILLEGAL LOCK-OUT12 In G.R. No. 166295, the Union solicits a riposte from this Court on whether the Secretary has discretion to impose "payroll" reinstatement when he assumes jurisdiction over labor disputes. The Court's Ruling The Court shall first dispose of G.R. No. 166295. According to the Union, there is no legal basis for allowing payroll reinstatement in lieu of actual or physical reinstatement. As argued, Art. 263(g) of the Labor Code is clear on this point. The Hotel, on the other hand, claims that the issue is now moot and any decision would be impossible to execute in view of the Decision of the NLRC which upheld the dismissal of the Union officers and members.
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The Union's position is untenable. The Hotel correctly raises the argument that the issue was rendered moot when the NLRC upheld the dismissal of the Union officers and members. In order, however, to settle this relevant and novel issue involving the breadth of the power and jurisdiction of the Secretary in assumption of jurisdiction cases, we now decide the issue on the merits instead of relying on mere technicalities. We held in University of Immaculate Concepcion, Inc. v. Secretary of Labor: 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.13 Thus, it was settled that in assumption of jurisdiction cases, the Secretary should impose actual reinstatement in accordance with the intent and spirit of Art. 263(g) of the Labor Code. As with most rules, however, this one is subject to exceptions. We held in Manila Diamond Hotel Employees' Union v. Court of Appeals that payroll reinstatement is a departure from the rule, and special circumstances which make actual reinstatement impracticable must be shown.14 In one case, payroll reinstatement was allowed where the employees previously occupied confidential positions, because their actual reinstatement, the Court said, would be impracticable and would only serve to exacerbate the situation. 15In another case, this Court held that the NLRC did not commit grave abuse of discretion when it allowed payroll reinstatement as an option in lieu of actual reinstatement for teachers who were to be reinstated in the middle of the first term.16 We held that the NLRC was merely trying its best to work out a satisfactory ad hoc solution to a festering and serious problem.17 The peculiar circumstances in the present case validate the Secretary's decision to order payroll reinstatement instead of actual reinstatement. It is obviously impracticable for the Hotel to actually reinstate the employees who shaved their heads or cropped their hair because this was exactly the reason they were prevented from working in the first place. Further, as with most labor disputes which have resulted in strikes, there is mutual antagonism, enmity, and animosity between the union and the management. Payroll reinstatement, most especially in this case, would have been the only avenue where further incidents and damages could be avoided. Public officials entrusted with specific jurisdictions enjoy great confidence from this Court. The Secretary surely meant only to ensure industrial peace as she assumed jurisdiction over the labor dispute. In this case, we are not ready to substitute our own findings in the absence of a clear showing of grave abuse of discretion on her part. The issues raised in G.R. No. 163942, being interrelated, shall be discussed concurrently. To be determined whether legal or not are the following acts of the Union: (1) Reporting for work with their bald or cropped hair style on January 18, 2002; and (2) The picketing of the Hotel premises on January 26, 2002. The Union maintains that the mass picket conducted by its officers and members did not constitute a strike and was merely an expression of their grievance resulting from the lockout effected by the Hotel management. On the other hand, the Hotel argues that the Union's deliberate defiance of the company rules and regulations was a concerted effort to paralyze the operations of the Hotel, as the Union officers and members knew pretty well that they would not be allowed to work in their bald or cropped hair style.
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For this reason, the Hotel argues that the Union committed an illegal strike on January 18, 2002 and on January 26, 2002. We rule for the Hotel. Art. 212(o) of the Labor Code defines a strike as "any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute." In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission , we cited the various categories of an illegal strike, to wit: Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz.: (1) [when it] is contrary to a specific prohibition of law, such as strike by employees performing governmental functions; or (2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor Code on the requisites of a valid strike]; or (3) [when it] is declared for an unlawful purpose, such as inducing the employer to commit an unfair labor practice against non-union employees; or (4) [when it] employs unlawful means in the pursuit of its objective, such as a widespread terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of the Labor Code]; or (5) [when it] is declared in violation of an existing injunction[, such as injunction, prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of the Labor Code]; or (6) [when it] is contrary to an existing agreement, such as a no-strike clause or conclusive arbitration clause.18 With the foregoing parameters as guide and the following grounds as basis, we hold that the Union is liable for conducting an illegal strike for the following reasons: First, the Union's violation of the Hotel's Grooming Standards was clearly a deliberate and concerted action to undermine the authority of and to embarrass the Hotel and was, therefore, not a protected action. The appearances of the Hotel employees directly reflect the character and well-being of the Hotel, being a five-star hotel that provides service to top-notch clients. Being bald or having cropped hair per se does not evoke negative or unpleasant feelings. The reality that a substantial number of employees assigned to the food and beverage outlets of the Hotel with full heads of hair suddenly decided to come to work bald-headed or with cropped hair, however, suggests that something is amiss and insinuates a sense that something out of the ordinary is afoot. Obviously, the Hotel does not need to advertise its labor problems with its clients. It can be gleaned from the records before us that the Union officers and members deliberately and in apparent concert shaved their heads or cropped their hair. This was shown by the fact that after coming to work on January 18, 2002, some Union members even had their heads shaved or their hair cropped at the Union office in the Hotel's basement. Clearly, the decision to violate the company rule on grooming was designed and calculated to place the Hotel management on its heels and to force it to agree to the Union's proposals. In view of the Union's collaborative effort to violate the Hotel's Grooming Standards, it succeeded in forcing the Hotel to choose between allowing its inappropriately hair styled employees to continue working, to the detriment of its reputation, or to refuse them work, even if it had to cease operations in affected departments or service units, which in either way would disrupt the operations of the Hotel. This
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Court is of the opinion, therefore, that the act of the Union was not merely an expression of their grievance or displeasure but, indeed, a calibrated and calculated act designed to inflict serious damage to the Hotel's finances or its reputation. Thus, we hold that the Union's concerted violation of the Hotel's Grooming Standards which resulted in the temporary cessation and disruption of the Hotel's operations is an unprotected act and should be considered as an illegal strike. Second, the Union's concerted action which disrupted the Hotel's operations clearly violated the CBA's "No Strike, No Lockout" provision, which reads: ARTICLE XXII - NO STRIKE/WORK STOPPAGE AND LOCKOUT SECTION 1. No Strikes The Union agrees that there shall be no strikes, walkouts, stoppage or slow-down of work, boycott, refusal to handle accounts, picketing, sit-down strikes, sympathy strikes or any other form of interference and/or interruptions with any of the normal operations of the HOTEL during the life of this Agreement. The facts are clear that the strike arose out of a bargaining deadlock in the CBA negotiations with the Hotel. The concerted action is an economic strike upon which the afore-quoted "no strike/work stoppage and lockout" prohibition is squarely applicable and legally binding. 19 Third, the Union officers and members' concerted action to shave their heads and crop their hair not only violated the Hotel's Grooming Standards but also violated the Union's duty and responsibility to bargain in good faith. By shaving their heads and cropping their hair, the Union officers and members violated then Section 6, Rule XIII of the Implementing Rules of Book V of the Labor Code. 20 This rule prohibits the commission of any act which will disrupt or impede the early settlement of the labor disputes that are under conciliation. Since the bargaining deadlock is being conciliated by the NCMB, the Union's action to have their officers and members' heads shaved was manifestly calculated to antagonize and embarrass the Hotel management and in doing so effectively disrupted the operations of the Hotel and violated their duty to bargain collectively in good faith. Fourth, the Union failed to observe the mandatory 30-day cooling-off period and the seven-day strike ban before it conducted the strike on January 18, 2002. The NLRC correctly held that the Union failed to observe the mandatory periods before conducting or holding a strike. Records reveal that the Union filed its Notice of Strike on the ground of bargaining deadlock on December 20, 2001. The 30-day cooling-off period should have been until January 19, 2002. On top of that, the strike vote was held on January 14, 2002 and was submitted to the NCMB only on January 18, 2002; therefore, the 7-day strike ban should have prevented them from holding a strike until January 25, 2002. The concerted action committed by the Union on January 18, 2002 which resulted in the disruption of the Hotel's operations clearly violated the above-stated mandatory periods. Last, the Union committed illegal acts in the conduct of its strike. The NLRC ruled that the strike was illegal since, as shown by the pictures 21 presented by the Hotel, the Union officers and members formed human barricades and obstructed the driveway of the Hotel. There is no merit in the Union's argument that it was not its members but the Hotel's security guards and the police officers who blocked the driveway, as it can be seen that the guards and/or police officers were just trying to secure the entrance to the Hotel. The pictures clearly demonstrate the tense and highly explosive situation brought about by the strikers' presence in the Hotel's driveway. Furthermore, this Court, not being a trier of facts, finds no reason to alter or disturb the NLRC findings on this matter, these findings being based on substantial evidence and affirmed by the CA. 22 Factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality, and bind us when supported by
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substantial evidence.23 Likewise, we are not duty-bound to delve into the accuracy of the factual findings of the NLRC in the absence of clear showing that these were arrived at arbitrarily and/or bereft of any rational basis.24 What then are the consequent liabilities of the Union officers and members for their participation in the illegal strike? Regarding the Union officers and members' liabilities for their participation in the illegal picket and strike, Art. 264(a), paragraph 3 of the Labor Code provides that "[a]ny union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status x x x." The law makes a distinction between union officers and mere union members. Union officers may be validly terminated from employment for their participation in an illegal strike, while union members have to participate in and commit illegal acts for them to lose their employment status.25 Thus, it is necessary for the company to adduce proof of the participation of the striking employees in the commission of illegal acts during the strikes.26 Clearly, the 29 Union officers may be dismissed pursuant to Art. 264(a), par. 3 of the Labor Code which imposes the penalty of dismissal on "any union officer who knowingly participates in an illegal strike." We, however, are of the opinion that there is room for leniency with respect to the Union members. It is pertinent to note that the Hotel was able to prove before the NLRC that the strikers blocked the ingress to and egress from the Hotel. But it is quite apparent that the Hotel failed to specifically point out the participation of each of the Union members in the commission of illegal acts during the picket and the strike. For this lapse in judgment or diligence, we are constrained to reinstate the 61 Union members. Further, we held in one case that union members who participated in an illegal strike but were not identified to have committed illegal acts are entitled to be reinstated to their former positions but without backwages.27 We then held in G & S Transport Corporation v. Infante: With respect to backwages, 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 Officer's Guild v. Compaia 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.28 In this light, we stand by our recent rulings and reinstate the 61 Union members without backwages. WHEREFORE, premises considered, the CA's May 6, 2004 Decision in CA-G.R. SP No. 70778 is hereby AFFIRMED. SANTA ROSA COCA-COLA PLANT EMPLOYEES UNION vs. COCA-COLA BOTTLERS PHILS., INC. G.R. Nos. 164302-03 January 24, 2007 This is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP Nos. 74174 and 74860, which affirmed the ruling of the National Labor Relations Commission (NLRC) in NLRC CA No. 030424-02, and the Labor Arbiter in NLRC Case No. RAB-IV-10-11579-99-L. The Antecedents
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The Sta. Rosa Coca-Cola Plant Employees Union (Union) is the sole and exclusive bargaining representative of the regular daily paid workers and the monthly paid non-commission-earning employees of the Coca-Cola Bottlers Philippines, Inc. (Company) in its Sta. Rosa, Laguna plant. The individual petitioners are Union officers, directors, and shop stewards. The Union and the Company had entered into a three-year Collective Bargaining Agreement (CBA) effective July 1, 1996 to expire on June 30, 1999. Upon the expiration of the CBA, the Union informed the Company of its desire to renegotiate its terms. The CBA meetings commenced on July 26, 1999, where the Union and the Company discussed the ground rules of the negotiations. The Union insisted that representatives from the Alyansa ng mga Unyon sa Coca-Cola be allowed to sit down as observers in the CBA meetings. The Union officers and members also insisted that their wages be based on their work shift rates. For its part, the Company was of the view that the members of the Alyansa were not members of the bargaining unit. The Alyansa was a mere aggregate of employees of the Company in its various plants; and is not a registered labor organization. Thus, an impasse ensued.2 On August 30, 1999, the Union, its officers, directors and six shop stewards filed a "Notice of Strike" with the National Conciliation and Mediation Board (NCMB) Regional Office in Southern Tagalog, Imus, Cavite. The petitioners relied on two grounds: (a) deadlock on CBA ground rules; and (b) unfair labor practice arising from the companys refusal to bargain. The case was docketed as NCMB -RBIV-NS-08046-99.3 The Company filed a Motion to Dismiss4 alleging that the reasons cited by the Union were not valid grounds for a strike. The Union then filed an Amended Notice of Strike on September 17, 1999 on the following grounds: (a) unfair labor practice for the companys refusal to bargain in good faith; and (b) interference with the exercise of their right to self-organization.5 Meanwhile, on September 15, 1999, the Union decided to participate in a mass action organized by the Alyansa ng mga Unyon sa Coca-Cola in front of the Companys premises set for September 21, 1999. 106 Union members, officers and members of the Board of Directors, and shop stewards, individually filed applications for leave of absence for September 21, 1999. Certain that its operations in the plant would come to a complete stop since there were no sufficient trained contractual employees who would take over, the Company disapproved all leave applications and notified the applicants accordingly. 6 A day before the mass action, some Union members wore gears, red tag cloths stating "YES KAMI SA STRIKE" as headgears and on the different parts of their uniform, shoulders and chests. The Office of the Mayor issued a permit to the Union, allowing it "to conduct a mass protest action within the perimeter of the Coca-Cola plant on September 21, 1999 from 9:00 a.m. to 12:00 noon."7 Thus, the Union officers and members held a picket along the front perimeter of the plant on September 21, 1999. All of the 14 personnel of the Engineering Section of the Company did not report for work, and 71 production personnel were also absent. As a result, only one of the three bottling lines operated during the day shift. All the three lines were operated during the night shift with cumulative downtime of five (5) hours due to lack of manning, complement and skills requirement. The volume of production for the day was short by 60,000 physical case[s] versus budget.8 On October 13, 1999, the Company filed a "Petition to Declare Strike Illegal" 9 alleging, inter alia, the following: there was a deadlock in the CBA negotiations between the Union and Company, as a result of which a Notice of Strike was filed by the Union; pending resolution of the Notice of Strike, the Union members filed applications for leave on September 21, 1999 which were disapproved because operations in the plant may be disrupted; on September 20, 1999, one day prior to the mass leave, the Union staged a protest action by wearing red arm bands denouncing the alleged anti-labor practices of the company; on September 21, 1999, without observing the requirements mandated by law, the Union picketed the premises of the Company in clear violation of Article 262 of the Labor Code; because of the slowdown in the work, the Company suffered losses amounting to P2,733,366.29; the mass/protest action conducted on September 21, 1999 was clearly a strike; since the Union did not observe the requirements mandated by law, i.e., strike vote, cooling-off period and reporting requirements, the strike was therefore illegal; the
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Union also violated the provision of the CBA on the grievance machinery; there being a direct violation of the CBA, the Unions action constituted an unfair labor practice; and the officers who knowingly participated in the commission of illegal acts during the strike should be declared to have lost their employment status. The Company prayed that judgment be rendered as follows: 1. Declaring the strike illegal; 2. Declaring the officers of respondent Union or the individual respondents to have lost their employment status; 3. Declaring respondent Union, its officers and members guilty of unfair labor practice for violation of the CBA; and 4. Ordering the respondents to pay petitioner the following claims for damages: a. Actual Damages in the amount of P 4,733,366.29 b. Moral Damages in the amount of Five (5) Million Pesos; and c. Exemplary Damages in the amount of Two (2) Million Pesos.10 The Union filed an Answer with a Motion to Dismiss and/or to Suspend Proceedings 11 alleging therein that the mass action conducted by its officers and members on September 21, 1999 was not a strike but just a valid exercise of their right to picket, which is part of the right of free expression as guaranteed by the Constitution; several thousands of workers nationwide had launched similar mass protest actions to demonstrate their continuing indignation over the ill effects of martial rule in the Philippines. 12 It pointed out that even the officers and members of the Alyansa ng mga Unyon sa Coca-Cola had similarly organized mass protest actions. The Union insisted that officers and members filed their applications for leave for September 21, 1999 knowing fully well that there were no bottling operations scheduled on September 21 and 22, 1999; they even secured a Mayors permit for the purpose. The workers, including the petitioners, merely marched to and fro at the side of the highway near one of the gates of the Sta. Rosa Plant, the loading bay for public vehicles. After 3 hours, everyone returned to work according to their respective shifting schedules. The Union averred that the petition filed by the Company was designed to harass and its officers and members in order to weaken the Unions position in the on -going collective bargaining negotiations. In a letter to the Union President dated October 26, 1999, the NCMB stated that based on their allegations, the real issue between the parties was not the proper subject of a strike, and should be the subject of peaceful and reasonable dialogue. The NCMB recommended that the Notice of Strike of the Union be converted into a preventive mediation case. After conciliation proceedings failed, the parties were required to submit their respective position papers.13 In the meantime, the officers and directors of the Union remained absent without the requisite approved leaves. On October 11, 1999, they were required to submit their explanations why they should not be declared AWOL.14 On November 26, 1999, the Labor Arbiter rendered a Decision15 granting the petition of the Company. He declared that the September 21, 1999 mass leave was actually a strike under Article 212 of the Labor Code for the following reasons: based on the reports submitted by the Production and Engineering Department of the Company, there was a temporary work stoppage/slowdown in the company; 16 out of the usual three (3) lines for production for the day shift, only one line operated by probationary employees was functional and there was a cumulative downtime of five (5) hours attributed to the lack of manning complement and skills requirement. The Labor Arbiter further declared: x x x [T]he September 21, 1999 activity of the union and the individual respondents herein fell within the foregoing definition of a strike. Firstly, the union itself had admitted the fact that on the date in question,
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respondent officers, together with their union members and supporters from the Alyansa ng mga Unyon sa Coca-Cola, did not report for their usual work. Instead, they all assembled in front of the Sta. Rosa Plant and picketed the premises. Very clearly, there was a concerted action here on the part of the respondents brought about a temporary stoppage of work at two out of three bottling lines at the Sta. Rosa Plant. According to Edwin Jaranilla, the Engineering Superintendent (Annex H, petition), all of his departments 14 engineering personnel did not report for work on September 21, 1999, and that only Line 2 operated on the day shift. Honorio Tacla, the Production Superintendent, testified (Annex H-1), that 71 production personnel were likewise absent from their respective work stations on September 21, 1999, and that only Line 2 operated on the day shift. Similarly, Federico Borja, Physical Distribution Superintendent, stated under oath (Annex H-2) that 12 personnel from his department did not report for work on September 21, 1999, and that no forklift servicing was done on Lines 1 and 3. From the foregoing testimonies, it is evident that respondents concerted activity resulted in a temporary stoppage of work at the Sta. Rosa Plant of the company. Thirdly, such concerted activity by respondents was by reason of a labor dispute. Earlier, the union had filed a Notice of Strike against the company on account of a disagreement with the latter regarding CBA ground rules, i.e., the demand of the Union for Alyansa members from other plants to attend as observers during the CBA negotiation, and for the members of the negotiating panel to be paid their wages based on their work shift rate. Moreover, on September 20, 1999, one day before respondents mass leave from work and concerted action, they had worn red tag cloth materials on different parts of their uniform which contained the words, "YES kami sa strike"; "Protesta kami"; "Sahod, karapatan, manggagawa ipaglaban"; and "Union busting itigil." (Annexes G, G-1, G-2 & G3). These indicated that the concerted action taken by respondents against CCBPI was a result of or on account of a labor dispute.17 According to the Labor Arbiter, the strike conducted by the Union was illegal since there was no showing that the Union conducted a strike vote, observed the prescribed cooling-off period, much less, submitted a strike vote to the DOLE within the required time. Consequently, for knowingly participating in the illegal strike, the individual petitioners were considered to have lost their employment status. 18 The Union appealed the decision to the NLRC. On July 31, 2002, the NLRC affirmed the decision of the Labor Arbiter with the modification that Union Treasurer Charlita M. Abrigo, who was on bereavement leave at the time, should be excluded from the list of those who participated in the illegal strike. She was thus ordered reinstated to her former position with full backwages and benefits.19 The Union and its officers, directors and the shop stewards, filed a petition for certiorari in the CA. The case was docketed as CA-G.R. SP No. 74174. Another petition was filed by Ricky G. Ganarial and Almira Romo, docketed as CA-G.R. SP No. 74860. The two cases were consolidated in the 6th Division of the CA. Petitioners alleged the following in their respective petitions: I THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION FOR HAVING DECLARED PETITIONERS TO HAVE LOST THEIR EMPLOYMENT WHEN FACTS WOULD SHOW PETITIONERS WERE NOT AFFORDED DUE PROCESS II THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DECLARING THE PEACEFUL PICKETING CONDUCTED BY THE UNION AS ILLEGAL STRIKE DESPITE ABSENCE OF SUBSTANTIAL EVIDENCE ON THE INTENT TO CREATE TEMPORARY WORK STOPPAGE III
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THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DECLARING THAT PETITIONERS HAVE LOST THEIR EMPLOYMENT FOR KNOWINGLY PARTICIPATING IN AN ILLEGAL STRIKE DESPITE THE FACT THAT PETITIONERS ARE NOT ELECTED OFFICERS OF THE UNION AND ARE MERE SHOP STEWARDS AND DESPITE THE FACT THAT THERE WAS NO PROOF THAT THEY COMMITTED ILLEGAL ACTS. 20 The petitioners, likewise, raised the following, to wit: WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS FINDINGS OF FACTS WHEN HE DECLARED THAT THE STRIKE CONDUCTED BY THE RESPONDENTS ON SEPTEMBER 21, 1999 IS ILLEGAL. WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS FINDINGS OF FACTS WHEN HE DECLARED THAT INDIVIDUAL RESPONDENTS (NOW PETITIONERS), INCLUDING SIX (6) UNION SHOP STEWARDS, ARE CONSIDERED TO HAVE LOST THEIR EMPLOYMENT STATUS (EXCEPT CHARLITA ABRIGO) FOR KNOWINGLY PARTICIPATING IN SAID ILLEGAL STRIKE.21 On September 10, 2003, the CA rendered judgment dismissing the petition for lack of merit. It also declared that petitioners, in CA-G.R. SP No. 74860, were guilty of forum shopping. Petitioners filed a motion for reconsideration which the appellate court denied; hence, the instant petition was filed based on the following grounds: (1) THE HONORABLE COURT OF APPEALS HAS GRAVELY ABUSED ITS DISCRETION IN DISMISSING THE PETITION BEFORE IT FOR LACK OF MERIT WHEN IT IS CLEAR FROM THE EVIDENCE ON RECORD THAT THE SUBJECT MASS ACTION WAS A VALID EXERCISE OF THE WORKERS CONSTITUTIONAL RIGHT TO PICKET WHICH IS PART OF THE RIGHT TO FREE EXPRESSION. (2) THE NLRC GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO WHEN IT CONCLUDED THAT AS A CONSEQUENCE OF THE ILLEGALITY OF THE STRIKE, THE DISMISSAL OF THE OFFICERS OF THE UNION IS JUSTIFIED AND VALID, IS NOT IN ACCORD WITH FACTS AND EVIDENCE ON RECORD. (3) EVEN ASSUMING ARGUENDO THAT THE PROTEST MASS ACTION STAGED BY PETITIONERS ON SEPTEMBER 21, 1999 CONSTITUTES A STRIKE, THE NLRC SERIOUSLY ERRED WHEN IT AFFIRMED THE LABOR ARBITERS DECISION DECLARING THE FORFEITURE OF EMPLOYMENT STATUS OF UNION OFFICERS AND SHOP STEWARDS (WHO HAVE NOT COMMITTED ANY ILLEGAL ACT DURING THE CONDUCT OF THE SAID MASS ACTION) FOR HAVING KNOWINGLY PARTICIPATED IN AN ILLEGAL STRIKE. 22 The threshold issues in these cases are: (a) whether the September 21, 1999 mass action staged by the Union was a strike; (b) if, in the affirmative, whether it was legal; and (c) whether the individual officers and shop stewards of petitioner Union should be dismissed from their employment. On the first and second issues, petitioners maintain that the September 21, 1999 mass protest action was not a strike but a picket, a valid exercise of their constitutional right to free expression and assembly. 23 It was a peaceful mass protest action to dramatize their legitimate grievances against respondent. They did not intend to have a work stoppage since they knew beforehand that no bottling operations were scheduled on September 21, 1999 pursuant to the Logistics Planning Services Mega Manila Production
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Plan dated September 15, 1999.24 Thus, they applied for leaves of absences for September 21, 1999 which, however, were not approved. They also obtained a mayors permit to hold the picket near the highway, and they faithfully complied with the conditions set therein. The protesting workers were merely marching to and fro at the side of the highway or the loading bay near one of the gates of the Company plant, certainly not blocking in any way the ingress or egress from the Companys premises. Their request to hold their activity was for four (4) hours, which was reduced to three (3) hours. Thereafter, they all went back to work. The bottling operations of the Company was not stopped, even temporarily. Since petitioner Union did not intend to go on strike, there was no need to observe the mandatory legal requirements for the conduct of a strike. Petitioners also point out that members belonging to the IBM-KMU at the San Fernando Coca-Cola bottling plant staged simultaneous walkout from their work assignments for two consecutive days, on October 7 and 8, 1999. However, the Secretary of Labor and Employment (SOLE) declared that the walkout was considered a mass action, not a strike, and the officers of the IBM-KMU were only meted a three-day suspension. Respondent accepted the decision of the SOLE and no longer appealed the decision. Petitioners insist that this should, likewise, apply in the resolution of the issue of whether petitioners staged a strike or not, and whether the penalty of dismissal from the employment with the respondent is just and equitable. Petitioners also insist that they were denied the right to due process because the decision of the Labor Arbiter was implemented even while their appeal was pending in the NLRC. The decision of the Labor Arbiter against them was to become final and executory only until after the NLRC shall have resolved their appeal with finality. On the third issue, petitioners aver that even assuming that they had indeed staged a strike, the penalty of dismissal is too harsh. They insist that they acted in good faith. Besides, under Article 264 of the Labor Code, the dismissal of the Union officers who participated in an illegal strike is discretionary on the employer. Moreover, six (6) of the petitioners were shop stewards who were mere members of the Union and not officers thereof. In its comment on the petition, respondent avers that the issues raised by petitioners are factual; hence, inappropriate in a petition for review on certiorari. Besides, the findings of the Labor Arbiter had been affirmed by the NLRC and the CA, and are, thus, conclusive on this Court. Respondent further avers that the law offers no discretion as to the proper penalty that should be imposed against a Union official participating in an illegal strike. Contrary to the contention of petitioners, shop stewards are also Union officers. To support its claim, respondent cited Samahan ng Manggagawa sa Moldex Products, Inc. v. National Labor Relations Commission,25 International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America v. Hoffa; 26 and Coleman v. Brotherhood of Railway and Steamship Clerks, etc.27 The petition is denied for lack of merit. The ruling of the CA that petitioners staged a strike on September 21, 1999, and not merely a picket is correct. It bears stressing that this is a finding made by the Labor Arbiter which was affirmed by the NLRC 28 and the CA.29The settled rule is that the factual findings and conclusions of tribunals, as long as they are based on substantial evidence, are conclusive on this Court.30 The raison detre is that quasi-judicial agencies, like the Labor Arbiter and the NLRC, have acquired a unique expertise since their jurisdictions are confined to specific matters. Besides, under Rule 45 of the Rules of Court, the factual issues raised by the petitioner are inappropriate in a petition for review on certiorari. Whether petitioners staged a strike or not is a factual issue.
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Petitioners failed to establish that the NLRC committed grave abuse of its discretion amounting to excess or lack of jurisdiction in affirming the findings of the Labor Arbiter that petitioners had indeed staged a strike. Article 212(o) of the Labor Code defines strike as a temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. In Bangalisan v. Court of Appeals, 31 the Court ruled that "the fact that the conventional term strike was not used by the striking employees to describe their common course of action is inconsequential, since the substance of the situation, and not its appearance, will be deemed to be controlling."32 The term "strike" encompasses not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts to damage, destroy or sabotage plant equipment and facilities, and similar activities.33 Picketing involves merely the marching to and fro at the premises of the employer, usually accompanied by the display of placards and other signs making known the facts involved in a labor dispute.34 As applied to a labor dispute, to picket means the stationing of one or more persons to observe and attempt to observe. The purpose of pickets is said to be a means of peaceable persuasion.35 A labor dispute includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee.36 That there was a labor dispute between the parties, in this case, is not an issue. Petitioners notified the respondent of their intention to stage a strike, and not merely to picket. Petitioners insistence to stage a strike is evident in the fact that an amended notice to strike was filed even as respondent moved to dismiss the first notice. The basic elements of a strike are present in this case: 106 members of petitioner Union, whose respective applications for leave of absence on September 21, 1999 were disapproved, opted not to report for work on said date, and gathered in front of the company premises to hold a mass protest action. Petitioners deliberately absented themselves and instead wore red ribbons, carried placards with slogans such as: "YES KAMI SA STRIKE," "PROTESTA KAMI," "SAHOD, KARAPATAN NG MANGGAGAWA IPAGLABAN," "CBA-WAG BABOYIN," "STOP UNION BUSTING." They marched to and fro in front of the companys premises during working hours. Thus, petitioners engaged in a concerted activity which already affected the companys operations. The mass concerted activity constituted a strike. The bare fact that petitioners were given a Mayors permit is not conc lusive evidence that their action/activity did not amount to a strike. The Mayors description of what activities petitioners were allowed to conduct is inconsequential. To repeat, what is definitive of whether the action staged by petitioners is a strike and not merely a picket is the totality of the circumstances surrounding the situation. A strike is the most powerful of the economic weapons of workers which they unsheathe to force management to agree to an equitable sharing of the joint product of labor and capital. It is a weapon that can either breathe life to or destroy the Union and its members in their struggle with management for a more equitable due to their labors.37The decision to declare a strike must therefore rest on a rational basis, free from emotionalism, envisaged by the tempers and tantrums of a few hot heads, and finally focused on the legitimate interests of the Union which should not, however, be antithetical to the public welfare, and, to be valid, a strike must be pursued within legal bounds. The right to strike as a means of attainment of social justice is never meant to oppress or destroy the employer. 38 Since strikes cause disparity effects not only on the relationship between labor and management but also on the general peace and progress of society, the law has provided limitations on the right to strike. For a strike to be valid, the following procedural requisites provided by Art. 263 of the Labor Code must be observed: (a) a notice of strike filed with the DOLE 30 days before the intended date thereof, or 15 days in case of unfair labor practice; (b) strike vote approved by a majority of the total union membership in the
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bargaining unit concerned obtained by secret ballot in a meeting called for that purpose, (c) notice given to the DOLE of the results of the voting at least seven days before the intended strike. These requirements are mandatory and the failure of a union to comply therewith renders the strike illegal. 39 It is clear in this case that petitioners totally ignored the statutory requirements and embarked on their illegal strike. We quote, with approval, the ruling of the CA which affirmed the decisions of the NLRC and of the Labor Arbiter: Since it becomes undisputed that the mass action was indeed a strike, the next issue is to determine whether the same was legal or not. Records reveal that the said strike did not comply with the requirements of Article 263 (F) in relation to Article 264 of the Labor Code, which specifically provides, thus: ART. 263. STRIKES, PICKETING, AND LOCKOUTS xxx xxx xxx xxx (f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Ministry may at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided. ART. 264. PROHIBITED ACTIVITIES (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout. Any worker whose employment has been terminated as a consequence or an unlawful lockout shall be entitled to reinstatement with full backwages. 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. xxx xxx xxx xxx Applying the aforecited mandatory requirements to the case at bench, the Labor Arbiter found, thus: In the present case, there is no evidence on record to show that respondents had complied with the above mandatory requirements of law for a valid strike. Particularly, there is no showing that respondents had observed the prescribed cooling-off period, conducted a strike vote, much less submitted a strike vote report to the Department of Labor within the required time. This being the case, respondents strike on September 21, 1999 is illegal. In the recent case of CCBPI Postmix Workers Union vs. NLRC, 2999 (sic) SCRA 410, the Supreme Court had said: "It bears stressing that the strike requirements under Article 264
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and 265 of the Labor Code are mandatory requisites, without which, the strike will be considered illegal. The evidence (sic) intention of the law in requiring the strike notice and strike-vote report as mandatory requirements is to reasonably regulate the right to strike which is essential to the attainment of legitimate policy objectives embodied in the law. Verily, substantial compliance with a mandatory provision will not suffice. Strict adherence to the mandate of the law is required. Aside from the above infirmity, the strike staged by respondents was, further, in violation of the CBA which stipulated under Section 1, Article VI, thereof that, SECTION 1. The UNION agrees that there shall be no strike, walkout, stoppage or slowdown of work, boycott, secondary boycott, refusal to handle any merchandise, picketing, sitdown strikes of any kind, sympathetic or general strike, or any other interference with any of the operations of the COMPANY during the term of this Agreement, so long as the grievance procedure for which provision is made herein is followed by the COMPANY. Here, it is not disputed that respondents had not referred their issues to the grievance machinery as a prior step. Instead, they chose to go on strike right away, thereby bypassing the required grievance procedure dictated by the CBA.40 On the second and third issues, the ruling of the CA affirming the decisions of the NLRC and the Labor Arbiter ordering the dismissal of the petitioners-officers, directors and shop stewards of petitioner Union is correct. It bears stressing, however, that the law makes a distinction between union members and union officers. A worker merely participating in an illegal strike may not be terminated from employment. It is only when he commits illegal acts during a strike that he may be declared to have lost employment status.41 For knowingly participating in an illegal strike or participates in the commission of illegal acts during a strike, the law provides that a union officer may be terminated from employment.42 The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment. It possesses the right and prerogative to terminate the union officers from service. 43 We quote, with approval, the following ruling of the Court of Appeals: As to the imposition of the penalty provided for should an illegal strike be declared as such, We find no legal or factual reason to digress from the following disquisition of the Labor Arbiter, to wit: No doubt, the strike conducted by respondents on September 21, 1999 is illegal. Under Article 264(a) of the Labor Code, it is stated that, Any union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status. xxx. In the present case, CCBPI had already promptly notified respondents and their members of the disapproval of their leave. In fact, in the company notice (of the disapproval of their leave), CCBPI emphasized that "operations will come to a complete stop on September 21, 1999 if all the applications are approved." They were further informed that, there are no sufficiently trained contractual employees who can take over as replacements on that day (Annexes "C," "C-1" to "C-18"). In other words, respondents had known beforehand that their planned mass leave would definitely result in a stoppage of the operations of the company for September 21, 1999. Still, respondents knowingly and deliberately proceeded with their mass action, unmindful of the ill effects thereof on the business operations of the company. In the case of Association of Independent Unions in the Philippines v. NLRC, 305 SCRA 219, the Supreme Court had ruled that, Union officers are duty-bound to guide their members to respect the law. If instead of doing so, the officers urge the members to violate the law and defy the duly constituted authorities, their dismissal from the service is just penalty or sanction for their unlawful acts. The officers responsibility is greater than that of the members.
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Here, the law required respondents to follow a set of mandatory procedures before they could go on with their strike. But obviously, rather than call on their members to comply therewith, respondents were the first ones to violate the same.44 Petitioners cannot find solace in the Order of the Secretary of Labor and Employment (SOLE) in OS-A-J0033-99, NCMB-RB 111-NS-10-44-99 and 11-51-99 involving the labor dispute between the Company and the Union therein (the Ilaw at Buklod ng Manggagawa Local No. 1, representing the daily paid rank and file members of the respondent, as well as the plant-based route helpers and drivers at its San Fernando Plant). In said case, the SOLE found that the simultaneous walkout staged on October 7 and 8, 1999 was indeed a mass action, initiated by the Union leaders. The acts of the Union leaders were, however, found to be illegal which warranted their dismissal, were it not for the presence of mitigating factors, i.e., the walkout was staged in support of their leaders in the course of the CBA negotiation which was pending for more than nine (9) months; the Plant was not fully disrupted as the Company was able to operate despite the severe action of the Union members, with the employment of casual and contractual workers; the Union had complied with the requirements of a strike and refrained from staging an actual strike.45 Neither can the petitioners find refuge in the rulings of this Court in Panay Electric Company v. NLRC 46 or in Lapanday Workers Union v. NLRC.47 In the Panay case, the Court meted the suspension of the union officers, instead of terminating their employment status since the NLRC found no sufficient proof of bad faith on the part of the union officers who took part in the strike to protest the dismissal of their fellow worker, Enrique Huyan which was found to be illegal. In Lapanday, the Court actually affirmed the dismissal of the union officers who could not claim good faith to exculpate themselves. The officers, in fact, admitted knowledge of the law on strike, including its procedure in conducting the same. The Court held that the officers cannot violate the law which was designed to promote their interests. Finally, the contention of petitioners Elenette Moises, Almira Romo, Louie Labayani, Ricky Ganarial, Efren Galan and Jun Carmelito Santos who were appointed as shop stewards of the Union that they were mere members and not the officers of petitioner Union is barren of merit. We agree with the observation of respondent that under Section 501(a) and (b) of the Landrum Griffin Act of 1959,48 shop stewards are officers of the Union: Sec. 501 (a) The officers, agents, shop stewards, and other representatives of a labor organization occupy positions of trust in relation to such organization and its members as a group. It is, therefore, the duty of each such person, taking into account the special problems and functions of a labor organization, to hold its money and property solely for the benefit of the organization and its members and to manage, invest, and expend the same in accordance with its constitution and bylaws and any resolutions of the governing bodies adopted thereunder, to refrain from dealing with such organization as an adverse party in any matter connected with his duties and from holding or acquiring any pecuniary or personal interest which conflicts with the interest of such organization, and to account to the organization for any profit received by him in whatever capacity in connection with transactions conducted by him or under his direction on behalf of the organization. A general exculpatory resolution of a governing body purporting to relieve any such person of liability for breach of the duties declared by this section shall be void as against public policy. (b) When any officer, agent, shop steward, or representative of any labor organization is alleged to have violated the duties declared in subsection (a) of this section and the labor organization or its governing board or officers refuse or fail to sue or recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so by any member of the labor organization, such member may sue such officer, agent, shop steward, or representative in any district court of the United States or in any State court of competent jurisdiction to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization.49
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Under said Act, Section 3(q) thereof provides, as follows: (q) "Officer, agent, shop steward, or other representative", when used with respect to a labor organization, includes elected officials and key administrative personnel, whether elected or appointed (such as business agents, heads of departments or major units, and organizers who exercise substantial independent authority), but does not include salaried non-supervisory professional staff, stenographic, and service personnel.50 Admittedly, there is no similar provision in the Labor Code of the Philippines; nonetheless, petitioners who are shop stewards are considered union officers. Officers normally mean those who hold defined offices. An officer is any person occupying a position identified as an office. An office may be provided in the constitution of a labor union or by the union itself in its CBA with the employer. An office is a word of familiar usage and should be construed according to the sense of the thing.51 Irrefragably, under its Constitution and By-Laws, petitioner Union has principal officers and subordinate officers, who are either elected by its members, or appointed by its president, including the standing committees each to be headed by a member of the Board of Directors. Thus, under Section 1, Article VI of petitioner Unions Constitution and By-Laws, the principal officers and other officers, as well as their functions/duties and terms of office, are as follows: ARTICLE VI PRINCIPAL OFFICERS SECTION 1. The governing body of the UNION shall be the following officers who shall be elected through secret ballot by the general membership: President Auditor
Vice-President two (2)
Public Relations Officer
Secretary
Sergeant-at-Arms
Treasurer
Board of Directors nine (9)
SECTION 2. The above officers shall administer Unions affairs, formulate policies and implement programs to effectively carry out the objectives of the UNION and the Labor Code of the Philippines and manage all the monies and property of the UNION. SECTION 3. The officers of the UNION and the members of the Board of Directors shall hold office for a period of five (5) years from the date of their election until their successors shall have been duly elected and qualified; provided that they remain members of the UNION in good standing. 52 Section 6, Article II of the CBA of petitioner Union and respondent defines the position of shop steward, thus:
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SECTION 6. Shop Stewards. The UNION shall certify a total of eight (8) shop stewards and shall inform management of the distribution of these stewards among the departments concerned.1avvphi1.net Shop Stewards, union officers and members or employees shall not lose pay for attending UnionManagement Labor dialogues, investigations and grievance meetings with management.53 Section 6, Rule XIX of the Implementing Rules of Book V of the Labor Code mentions the functions and duties of shop stewards, as follows: Section 2. Procedures in handling grievances. In the absence of a specific provision in the collective bargaining agreement prescribing for the procedures in handling grievance, the following shall apply: (a) An employee shall present this grievance or complaint orally or in writing to the shop steward. Upon receipt thereof, the shop steward shall verify the facts and determine whether or not the grievance is valid. (b) If the grievance is valid, the shop steward shall immediately bring the complaint to the employees immediate supervisor. The shop steward, the employee and his immediate supervisor shall exert efforts to settle the grievance at their level. (c) If no settlement is reached, the grievance shall be referred to the grievance committee which shall have ten (10) days to decide the case. Where the issue involves or arises from the interpretation or implementation of a provision in the collective bargaining agreement, or from any order, memorandum, circular or assignment issued by the appropriate authority in the establishment, and such issue cannot be resolved at the level of the shop steward or the supervisor, the same may be referred immediately to the grievance committee. All grievance unsettled or unresolved within seven (7) calendar days from the date of its submission to the last step in the grievance machinery shall automatically be referred to a voluntary arbitrator chosen in accordance with the provisions of the collective bargaining agreement, or in the absence of such provisions, by mutual agreement of the parties.54 Thus, a shop steward is appointed by the Union in a shop, department, or plant serves as representative of the Union, charged with negotiating and adjustment of grievances of employees with the supervisor of the employer.55He is the representative of the Union members in a building or other workplace. Blacks La w Dictionary defines a shop steward as a union official who represents members in a particular department. His duties include the conduct of initial negotiations for settlement of grievances. 56 He is to help other members when they have concerns with the employer or other work-related issues. He is the first person that workers turn to for assistance or information. If someone has a problem at work, the steward will help them sort it out or, if necessary, help them file a complaint. 57 In the performance of his duties, he has to take cognizance of and resolve, in the first instance, the grievances of the members of the Union. He is empowered to decide for himself whether the grievance or complaint of a member of the petitioner Union is valid, and if valid, to resolve the same with the supervisor failing which, the matter would be elevated to the Grievance Committee. It is quite clear that the jurisdiction of shop stewards and the supervisors includes the determination of the issues arising from the interpretation or even implementation of a provision of the CBA, or from any order or memorandum, circular or assignments issued by the appropriate authority in the establishment.1awphi1.net In fine, they are part and parcel of the continuous process of grievance resolution designed to preserve and maintain peace among the employees and their employer. They occupy positions of trust and laden with awesome responsibilities.
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In this case, instead of playing the role of "peacemakers" and grievance solvers, the petitioners-shop stewards participated in the strike. Thus, like the officers and directors of petitioner Union who joined the strike, petitioners-shop stewards also deserve the penalty of dismissal from their employment. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision of the Court of Appeals is AFFIRMED. No costs. MSF TIRE AND RUBBER, INC. vs. COURT OF APPEALS G.R. No. 128632 August 5, 1999 Petitioner seeks a review of the decision1 of the Court of Appeals, dated March 20, 1997, which set aside the order of the Regional Trial Court of Makati, dated July 2, 1996, in Civil Case No. 95-770, granting petitioner's application for a writ of preliminary injunction. The facts are as follows: A labor dispute arose between Philtread Tire and Rubber Corporation (Philtread) and private respondent, Philtread Tire Workers' Union (Union), as a result of which the Union filed on May 27, 1994 a notice of strike in the National Conciliation and Mediation Board National Capital Region charging Philtread with unfair labor practices for allegedly engaging in union-busting for violation of the provisions of the collective bargaining agreement. This was followed by picketing and the holding of assemblies by the Union outside the gate of Philtread's plant at Km. 21, East Service Road, South Superhighway, Muntinlupa, Metro Manila. Philtread, on the other hand, filed a notice of lock-out on May 30, 1994 which it carried out on June 15, 1994. In an order, dated September 4, 1994,2 then Secretary of Labor Nieves Confesor assumed jurisdiction over the labor dispute and certified it for compulsory arbitration. She enjoined the Union from striking and Philtread from locking out members of the Union. On December 9, 1994, during the pendency of the labor dispute, entered into a Memorandum of Agreement with Siam Tyre Public Company Limited (Siam Tyre), a subsidiary of Siam Cement. Under the Memorandum of Agreement, Philtread's plant and equipment would be sold to a new company (petitioner MSF Tire and Rubber, Inc.), 80% of which would be owned by Siam Tyre and 20% by Philtread, while the land on which the plant was located would be sold to another company (Sucat Land Corporation), 60% of which would be owned by Philtread and 40% by Siam Tyre. This was done and the Union was informed of the purchase of the plant by petitioner. Petitioner then asked the Union to desist from picketing outside its plant and to remove the banners, streamers, and tent which it had placed outside the plant's fence. As the Union refused petitioner's request, petitioner filed on May 25, 1995 a complaint for injunction with damages against the Union and the latter's officers and directors before the Regional Trial Court of Makati, Branch 59 where the case was docketed as Civil Case No. 95-770. On June 13, 1995, the Union moved to dismiss the complaint alleging lack of jurisdiction on the part of the trial court. It insisted that the parties were involved in a labor dispute and that petitioner, being a mere "alter ego" of Philtread, was not an "innocent bystander." After petitioner made its offer of evidence as well as the submission of the parties' respective memoranda, the trial court, in an order, dated March 25, 1996, denied petitioner's application for injunction and dismissed the complaint. However, on petitioner's motion, the trial court, on July 2, 1996, reconsidered its order, and granted an injunction. Its order read:3
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Considering all that has been stated, the motion for reconsideration is granted. The Order dated March 25, 1996 is reconsideration and set aside. Plaintiff's complaint is reinstated and defendant's motion to dismiss is DENIED. As regards plaintiff's application for the issuance of a writ of preliminary injunction, the Court finds that the plaintiff has established a clear and sustaining right to the injunctive relief, hence, the same is GRANTED. Upon posting by the plaintiff and approval by the Court of a bond in the amount of One Million (P1,000,000.00) Pesos which shall answer for any damage that the defendants may suffer by reason of the injunction in the event that the Court may finally adjudge that the plaintiff is not entitled thereto, let a writ of preliminary injunction issue ordering the defendants and any other persons acting with them and/or on their behalf to desist immediately from conducting their assembly in the area immediately outside the plaintiff's plant at Km. 21 East Service Road, South Superhighway, Muntinlupa, Metro Manila, and from placing and/or constructing banners, streamers, posters and placards, and/or tents/shanties or any other structure, on the fence of, and/or along the sidewalk outside, the said plant premises until further from this Court. SO ORDERED.4 Without filing a motion for reconsideration, the Union filed on August 5, 1996 a petition for certiorari and prohibition before the Court of Appeals. On March 20, 1997, the appellate court rendered a decision granting the Union's petition and ordering the trial court to dismiss the civil case for lack of jurisdiction. Hence, this petition for review. Petitioner makes the following arguments in support of its petition: a. The Court of Appeals erred in not summarily dismissing the Union's petition for its false certification of non-forum shopping and the Union's failure to file a motion for reconsideration before going up to the Court of Appeals on a petition for certiorari. b. The Court of Appeals gravely erred in dismissing Civil Case No. 95-770 for lack of jurisdiction and merit on the alleged grounds that MSF did not have a clear and unmistakable right to entitle it to a writ of preliminary injunction. c. The Court of Appeals' pronouncement that it has not touched upon the issue of whether or not private respondent is a mere innocent bystander to the labor dispute between Philtread and the Union or upon the issue of whether or not private respondent is a mere dummy or continuity of Philtread is contrary to its own conclusions in the body of the decision, which conclusions are erroneous. d. The Court of Appeals gravely abused its discretion when it disallowed the injunction based on Philtread's remaining operations in the country and allowed the Union to exercise its right to communicate the facts of its labor dispute within MSF's premises, given the percentage of interest Philtread has in both MSF and the corporation which owns the land bearing said plant. The issues are (1) whether the Union's failure to disclose the pendency of NCMB-NCR-NS-05-167-96 in its certification of non-forum shopping and its failure to file a motion for reconsideration of the order, dated July 2, 1996, of the trial court were fatal to its petition for review before the Court of Appeals; and (2) whether petitioner has shown a clear legal right to the issuance of a writ of injunction under the "innocent bystander" rule. First. Forum shopping is the institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition. 5 It is an act of
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malpractice and is prohibited and condemned as trifling with courts and abusing their processes. 6 As held in Executive Secretary v.Gordon:7 Forum-shopping consists of filing multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. Thus, it has been held that there is forum-shopping (1) whenever as a result of an adverse decision one forum, a party seeks a favorable decision (other than by appeal or certiorari) in another, or (2) if, after he has filed a petition before the Supreme Court, a party files another before the Court of Appeals since in such case he deliberately splits appeals "in the hope that even as one case in which a particular remedy is sought is dismissed, another case (offering a similar remedy) would still be open, or (3) where a party attempts to obtain a preliminary injunction in another court after failing to obtain the same from the original court. In determining whether or not there is forum-shopping, what is important is the vexation caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or grant the same or substantially the same reliefs and in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same issues.8 Petitioner asserts that the Court of Appeals should have dismissed the Union's petition for review on the ground that the certification of non-forum shopping was false and perjurious as a result of the Union's failure to mention the existence of NCMB-NCR-NS-05-167-96, a proceeding involving the same parties and pending before the National Conciliation and Mediation Board. The argument is without merit. Petitioner was a party to the proceedings before the National Conciliation and Mediation Board in which an order, dated September 8, 1994, was issued by then Secretary of Labor Nieves Confesor, enjoining any strike or lock-out by the parties.9 It was petitioner which initiated the action for injunction before the trial court. Aggrieved by the injunctive order issued by the lower court, the Union was forced to file a petition for review before the Court of Appeals. We cannot understand why petitioner should complain that no mention of the pendency of the arbitration case before the labor department was made in the certificate of non-forum shopping attached to the Union's petition in the Court of Appeals. The petition of the Union in the Court of Appeals was provoked by petitioner's action in seeking injunction from the trial court when it could have obtained the same relief from the Secretary of Labor. Indeed, by focusing on the Union's certification before the appellate court, petitioner failed to notice that its own certification before the lower court suffered from the same omission for which it faults the Union. Although the body of petitioner's complaint mentions NCMB-NCR-NS-05-167-96, its own certification is silent concerning this matter.10 It is not in keeping with the requirements of fairness for petitioner to demand strict application of the prohibition against forum-shopping, when it, too, is guilty of the same omission. Second. Petitioner asserts that its status as an "innocent bystander" with respect to the labor dispute between Philtread and the Union entitles it to a writ of injunction from the civil courts and that the appellate court erred in not upholding its corporate personality as independent of Philtread's. In Philippine Association of Free Labor Unions (PAFLU) v . Cloribel, 11 this Court, through Justice J.B.L. Reyes, stated the "innocent bystander" rule as follows:
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The right to picket as a means of communicating the facts of a labor dispute is a phase of the freedom of speech guaranteed by the constitution. If peacefully carried out, it can not be curtailed even in the absence of employer-employee relationship. The right is, however, not an absolute one. While peaceful picketing is entitled to protection as an exercise of free speech, we believe the courts are not without power to confine or localize the sphere of communication or the demonstration to the parties to the labor dispute, including those with related interest, and to insulate establishments or persons with no industrial connection or having interest totally foreign to the context of the dispute. Thus the right may be regulated at the instance of third parties or "innocent bystanders" if it appears that the inevitable result of its is to create an impression that a labor dispute with which they have no connection or interest exists between them and the picketing union or constitute an invasion of their rights. In one case decided by this Court, we upheld a trial court's injunction prohibiting the union from blocking the entrance to a feed mill located within the compound of a flour mill with which the union had a dispute. Although sustained on a different ground, no connection was found between the two mills owned by two different corporations other than their being situated in the same premises. It is to be noted that in the instances cited, peaceful picketing has not been totally banned but merely regulated. And in one American case, a picket by a labor union in front of a motion picture theater with which the union had a labor dispute was enjoined by the court from being extended in front of the main entrance of the building housing the theater wherein other stores operated by third persons were located.12 (Emphasis added) Thus, an "innocent bystander," who seeks to enjoin a labor strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any connection whatsoever to, either party to the dispute and, therefore, its interests are totally foreign to the context thereof. For instance, inPAFLU v. Cloribel, supra, this Court held that Wellington and Galang were entirely separate entities, different from, and without any connection whatsoever to, the Metropolitan Bank and Trust Company, against whom the strike was directed, other than the incidental fact that they are the bank's landlord and co-lessee housed in the same building, respectively. Similarly, in Liwayway Publications, Inc. v. Permanent Concrete Workers Union,13 this Court ruled that Liwayway was an "innocent bystander" and thus entitled to enjoin the union's strike because Liwayway's only connection with the employer company was the fact that both were situated in the same premises. In the case at bar, petitioner cannot be said not to have such on to the dispute. As correctly observed by the appellate court: Coming now to the case before us, we find that the "negotiation, contract of sale, and the post transaction" between Philtread, as vendor, and Siam Tyre, as vendee, reveals a legal relation between them which, in the interest of petitioner, we cannot ignore. To be sure, the transaction between Philtread and Siam Tyre, was not a simple sale whereby Philtread ceased to have any proprietary rights over its sold assets. On the contrary, Philtread remains as 20% owner of private respondent and 60% owner of Sucat Land Corporation which was likewise incorporated in accordance with the terms of the Memorandum of Agreement with Siam Tyre, and which now owns the land were subject plant is located. This, together with the fact that private respondent uses the same plant or factory; similar or substantially the same working conditions; same machinery, tools, and equipment; and manufacture the same products as Philtread, lead us to safely conclude that private respondent's personality is so closely linked to Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close links with Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close links with Philtread, we find no clear and unmistakable right on the part of private respondent to entitle it to the writ of preliminary injunction it prayed for below. xxx xxx xxx
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We stress that in so ruling, we have not touched on the issue of . . . whether or not private is a mere dummy or continuation of Philtread . . . . 14 Although, as petitioner contends, the corporate fiction may be disregarded where it is used to defeat public convenience, justify wrong, protect fraud, defend crime, or where the corporation is used as a mere alter-ego or business conduit,15 it is not these standards but those of the "innocent bystander" rule which govern whether or not petitioner is to an injunctive writ. Since petitioner is not an "innocent bystander", the trial court's order, dated July 2, 1996, is a patent nullity, the trial court having no jurisdiction to issue the writ of injunction. No motion for reconsideration need be filed where the order is null and void. 16 WHEREFORE, petition is hereby DENIED and the decision of the Court of Appeals is AFFIRMED. 1 PHILIPPINE LONG DISTANCE TELEPHONE CO. INC. vs. MANGGAGAWA NG KOMUNIKASYON SA PILIPINAS; G.R. No. 162783 July 14, 2005 Before Us is a petition for review on certiorari which seeks the reversal and setting aside of the Decision1 and Resolution2 of the Court of Appeals dated 25 November 2003 and 19 March 2004, respectively. The said Decision and Resolution nullified the Order of the Secretary of the Department of Labor and Employment (the Secretary) dated 02 January 2003 in NCMB-NCR-NS-11-405-02 and NCMBNCR-NS-11-412-02 which enjoined the strike staged by the private respondent, and ordered the striking workers to return to work within twenty-four (24) hours, except those who were terminated from service due to redundancy. The exemption of the employees who were terminated from service due to redundancy from the return-to-work order is the hub of the controversy. THE FACTS Petitioner Philippine Long Distance Telephone Co., Inc. (PLDT) is a domestic corporation engaged in the telecommunications business. Private respondent Manggagawa ng Komunikasyon sa Pilipinas (MKP) is a labor union of rank and file employees in PLDT. The members of respondent union learned that a redundancy program would be implemented by the petitioner. Thereupon it filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB) on 04 November 2002 (NCMB-NCR-NS-11-405-02).3 The Notice fundamentally contained the following: UNFAIR LABOR PRACTICES, to wit: 1. PLDTs abolition of the Provisioning Support Division. Such action together with the consequent redundancy of PSD employees and the farming out of the jobs to casuals and contractuals, violates the duty to bargain collectively with MKP in good faith. 2. PLDTs unreasonable refusal to honor its commitment before this Honorable Office that it will provide MKP its comprehensive plan/s with respect to personnel downsizing/reorganization and closure of exchanges. Such refusal violates its duty to bargain collectively with MKP in good faith. 3. PLDTs continued hiring of "contractual", "temporary", "project" and "casual" employees for regular jobs performed by union members, resulting in the decimation of the union membership and in the denial of the right to self-organization to the concerned employees. 4. PLDTs gross violation of the legal and CBA provisions on overtime work and compensation. 5. PLDTs gross violation of the CBA provisions on promotions and job grade re -evaluation or reclassification.
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On 11 November 2002, another Notice of Strike was filed by the private respondent (NCMB-NCR-NS-11412-02), which contained the following: UNFAIR LABOR PRACTICES, to wit: 1. PLDTs alleged restructuring of its GMM Operation Services effective December 31, 2002 and its closure [o]f traffic operations at the Batangas, Calamba, Davao, Iloilo, Lucena, Malolos and Tarlac Regional Operator Services effective December 31, 2002. These twin moves unjustly imperil the job security of 503 of MKPs members and will substantially decimate the parties bargaining unit. And in the light of PLDTs previous commitment before this Honorable Office that it will provide MKP its comprehensive plan/s with respect to personnel downsizing/reorganization and closure of exchanges and of its more recent declaration that the Davao operator services will not be closed, these moves are treacherous and are thus violative of PLDTs duty to bargain collectively with MKP in good faith. That these moves were effected with PLDT paying only lip service to its duties under Art. Iii, Section 9 of the parties CBA signifies PLDTs gross violation of said CBA. A number of conciliation meetings, conducted by the NCMB, National Capital Region, were held between the parties. However, these efforts proved futile. On 23 December 2002, the private respondent staged a strike. On 31 December 2002, three hundred eighty three (383) union members were terminated from service pursuant to PLDTs redundancy program. On 02 January 2003, the Secretary, Patricia Sto. Tomas, issued an Order4 in NCMB-NCR-NS-11-405-02 and NCMB-NCR-NS-11-412-02. Portions of the Order are reproduced hereunder: PLDT is the largest telecommunications entity in the Philippines whose operations are closely linked with the countrys other telecommunication companies. It operates the countrys international gateway system through which overseas telecommunications are made. Its operations are also vital to the services of cellular phone companies. The Company employs more or less 13,000 employees, about 7,000 of whom are members of the union. A work stoppage at PLDT, without doubt, will adversely affect the smooth operations of PLDT as well as those other telecommunication companies dependent upon the continuous operations of PLDT to the detriment of the public. Undoubtedly, PLDTs operations is impressed with public and national interest as communication plays a vital role in furtherance of trade, commerce, and industry specially at this time of globalized economy where information is vital to economic survival. Work stoppage at PLDT will also adversely effect the ordinary day-to-day life of the public in areas of its franchise. Communication is also a component of state security. ... These considerations have in the past guided this Office in consistently exercising its powers under Article 263(g) of the Labor Code, as amended, in handling labor disputes involving the Philippine Long Distance Telephone Company and other telecommunications companies. WHEREFORE, FOREGOING PREMISES CONSIDERED, this Office hereby CERTIFIES the labor dispute at the Philippine Long Distance Telephone Company to the National Labor Relations Commission (NLRC) for compulsory arbitration pursuant to Article 263(g) of the Labor Code as amended. Accordingly, the strike staged by the Union is hereby enjoined. All striking workers are hereby directed to return to work within twenty four (24) hours from receipt of this Order, except those who were terminated due to redundancy.5 The employer is hereby enjoined to accept the striking workers
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under the same terms and conditions prevailing prior to the strike. The parties are likewise directed to cease and desist from committing any act that might worsen the situation. A Motion for Partial Reconsideration6 dated 13 January 2003 was filed by the private respondent with the Office of the Secretary. It alleged that the Order dated 02 January 2003 was issued by the Secretary with grave abuse of discretion. It contended that the petitioner should have been ordered to admit all workers under the same terms and conditions prevailing before the strike. Those who were dismissed pursuant to the petitioners redundancy program should not have been excluded. In doing so, the Secretary, in consequence, prejudged the case and effectively declared the dismissal as valid. The petitioner filed an Opposition to the "Motion for Partial Reconsideration" 7 dated 24 January 2003. It asserted that Article 263(g) of the Labor Code refers to a discretionary power on the part of the Secretary, and thus recognizes that the Secretary has broad powers and wide discretion to do as may be necessary to resolve the labor dispute. On 24 February 2003, the Secretary issued another Order,8 quoted hereunder: In the interest of expeditious labor justice and pursuant to the Order of this Office dated January 2, 2003 certifying the instant labor dispute to the National Labor Relations Commission (NLRC), and in order to avoid any splitting the cause of action and multiplicity of suits, which are obnoxious to the orderly administration of justice, the Motion for Partial Reconsideration filed by the Union, Manggagawa ng Komunikasyon sa Pilipinas (MKP) is merely NOTED without action. WHEREFORE, premises considered, let the Motion for Partial Reconsideration, together with documents filed in connection thereto, be immediately referred to the NLRC for its appropriate action. Henceforth, this Office shall no longer entertain any motions of similar nature. The parties are hereby directed to address all their pleadings and motions to the NLRC. As the private respondent had no other plain, speedy and adequate remedy in the ordinary course of law, it filed a petition for certiorari and mandamus9 under Rule 65 of the 1997 Rules on Civil Procedure before the Court of Appeals. In the main, it argued that Article 263(g) of the Labor Code is very clear that once a strike is certified to the National Labor Relations Commission (NLRC) for compulsory arbitration, it is the direct mandate of the law that an employer should readmit all striking workers under the same terms and conditions prevailing before the strike. It prayed that the Orders of the Secretary dated 02 January 2003 and 24 February 2003 be set aside and, in their place, a new order be rendered directing PLDT to immediately readmit the alleged redundant employees under the same terms and conditions prevailing prior to the strike. The petitioner filed its Comment10 with the Court of Appeals and contended that there was no abuse of discretion when the Secretary issued the two assailed Orders. The Secretary, it asserted, validly exercised the plenary powers granted by Article 263(g) of the Labor Code. This proviso, it pointed out, refers to a discretionary power on the part of the Secretary, and recognizes that the latter has broad powers and wide discretion to do as may be necessary to resolve the labor dispute. On 25 November 2003, the Court of Appeals promulgated its Decision, the dispositive portion of which reads: WHEREFORE, premises considered, the Petition is GRANTED and the assailed Order[s] of respondent Secretary in NCMB-NCR-NS-11-405-02 and NCMB-NCR-NS-11-412-02 [are] hereby SET ASIDE and NULLIFIED for being contrary to law. No costs.11 A Motion for Reconsideration12 was filed by the petitioner before the Court of Appeals, which was, however, denied in a Resolution13 dated 19 March 2004.
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The petitioner then filed a Petition for Review on Certiorari under Rule 4514 before this Court. The private respondent was thereafter required to file its Comment, which it did. On 01 June 2005, the Court gave due course to the petition, and the case was subsequently submitted for decision. ASSIGNMENT OF ERRORS The petitioner assigns as errors the following: I THE COURT OF APPEALS DID NOT RULE IN ACCORD WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT, WHICH RECOGNIZE THAT THE SECRETARYS EXERCISE OF ART. 263(G), LABOR CODE POWERS IS BROAD, PLENARY AND ENTITLED TO RESPECT. II THE COURT OF APPEALS DEPARTED FROM THE USUAL COURSE OF PROCEEDINGS WHEN IT ISSUED THE WRIT OF CERTIORARI DESPITE (A) THE ABSENCE OF "GRAVE ABUSE OF DISCRETION" BY THE SECRETARY OF LABOR; AND (B) THE AVAILABILITY OF OTHER RELIEF TO MKP. III THE MANIFEST AND GRAVE ERROR OF THE COURT OF APPEALS IS EVIDENT FROM THE DECISIONS INTERNAL INCONSISTENCIES. 1V CONTRARY TO MKPS ALLEGATIONS THAT IT WAS RENDERED WITH GRAVE ABUSE OF DISCRETION, THE SECRETARYS ASSUMPTION ORDER IS PRACTICAL, PRESERVES THE PARTIES RIGHTS TO REDRESS, AND IS NOT UNPRECEDENTED.15 ISSUES Culled from the above assignment of errors, the issues that must be addressed by this Court are: I WHETHER OR NOT THE SPECIAL CIVIL ACTION FOR CERTIORARI INSTITUTED BY THE RESPONDENT BEFORE THE COURT OF APPEALS WAS PROCEDURALLY PRECISE, and II WHETHER THE SUBJECT ORDERS OF THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT EXCLUDING FROM THE RETURN-TO-WORK ORDER THE WORKERS DISMISSED DUE TO THE REDUNDANCY PROGRAM OF PETITIONER, ARE VALID OR NOT. THE COURTS RULINGS On the procedural issue
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The petitioner is of the view that a special civil action for certiorari which was instituted by the private respondent before the Court of Appeals was not the proper remedy. It maintained that the Court of Appeals should have recognized that the Secretary did not abuse her discretion in any way, much less in a grave and patent, or an arbitrary or despotic manner, or that she somehow exercised her judgment in a capricious and whimsical way, which is required for the certiorari writ to issue. It also averred that the private respondent had other available reliefs, and that its plainer, speedier and adequate recourse is the proceedings now underway before the NLRC, to which the Secretary referred the parties labor dispute. 16 In its answer, the private respondent averred that the special civil action for certiorari filed with the Court of Appeals was not barred by the supposed other remedy available to MKP. The petitioner, in propositioning that the private respondent should have pursued its relevant claim before the NLRC, is in fact wrongly suggesting that the NLRC can decide whether the Secretary had indeed acted in grave abuse of discretion when she excluded 383 of its members from returning to work in her certification order.17 We rule that the institution of the special civil action for certiorari before the Court of Appeals was procedurally sound. Section 1, Rule 65 of the 1997 Rules on Civil Procedure provides: Section 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasijudicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require. It is the position of the private respondent that the Secretary committed an error of jurisdiction when she excluded from her return-to-work order the alleged redundant strikers, which should be corrected by a special civil action forcertiorari. While she has the power to certify the strike to the NLRC for compulsory arbitration, she did not have the power to exclude a certain class of strikers from returning to work. Further, the private respondent contended that in issuing her assailed orders, the Secretary exceeded her authority.18 The position taken by the private respondent is correct. The special civil action for certiorari was justly availed of by the private respondent. In a special civil action of certiorari, the only question that may be raised is whether or not the respondent has acted without or in excess of jurisdiction or with grave abuse of discretion. 19 This was precisely what was raised by the private respondent in its petition before the Court of Appeals. The respondent asserted in the court a quo that the Secretary violated the law and jurisprudence, and exceeded her authority when she expressly prevented from returning to work those who were terminated due to alleged redundancy while the strike was ongoing.20 The remedy of an aggrieved party in a Decision or Resolution of the Secretary is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, and then seasonably file a special civil action for certiorari under Rule 65 of the 1997 Rules on Civil Procedure.21 This was precisely done by the private respondent. On the substantive issue Article 263(g) of the Labor Code, as amended, which is pertinent to the resolution of the case at bar, provides:
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Art 263. Strikes, picketing, and lockouts. ... (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, allstriking 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. (Emphasis supplied.) In deciding the case, the Court of Appeals made the following observation: The phrase "all striking or locked out employees" and "readmit all workers" does not distinguish or qualify and emphatically is a catch all embracing enumeration of who should be returned to work. "Where the law does not distinguish, courts should not distinguish ( Recaa v. Court of Appeals, 349 SCRA 24 [2001] )."22 In the main, the petitioner contends that the Court of Appeals gave a narrow and too literal interpretation of Article 263(g) to justify its reversal of the Secretarys "qualified" return-to-work Order. The Court of Appeals erroneously favored a rule of statutory construction: ubi lex non distinguit nec nos distinguere debemos. Where the law does not distinguish, courts should not distinguish. 23 The Secretarys power, according to the petitioner, is broad and plenary, and is granted great breadth of discretion. Secretary Sto. Tomas, in issuing the assailed orders, acted with appropriate discretion, because she was secure in the knowledge that the courts have recognized her broad and plenary powers under Art. 263(g). The private respondent, in its Comment, contended that it is untenable for PLDT to stubbornly argue that the Secretary has such great breadth of discretion that even encompasses her questioned directives.24 While conceding that the Secretarys powers under Art. 263(g) may undoubtedly be plenary and discretionary, the same are not absolute and still subject to the limitations set by law. 25 The petition must fail. When the Secretary exercises the powers granted by Article 263(g) of the Labor Code, he is, indeed, granted great breadth of discretion. However, the application of this power is not without limitation, lest the Secretary would be above the law. Discretion is defined as the act or the liberty to decide, according to the principles of justice and ones ideas of what is right and proper under the circumstances, without wilfullness or favor.26 Where anything is left to any person to be done according to his discretion, the law intends it must be done with a sound discretion, and according to law. The discretion conferred upon officers by law is not a capricious or arbitrary discretion, but an impartial discretion guided and controlled in its exercise by fixed legal principles. It is not a mental discretion to be exercised ex gratia, but a legal discretion to be exercised in conformity with the spirit of the law, and in a manner to subserve and not to impede or defeat the ends of substantial justice.27 From the foregoing, it is quite apparent that no matter how broad the exercise of discretion is, the same must be within the confines of law. Thus, the wide latitude of discretion given the Secretary under Art. 263(g) shall and must be within the sphere of law. Our ruling in the case of Phimco Industries, Inc. v. Brillantes28 was most appropriately and auspiciously alluded to by the private respondent. In this case we held:
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. . . This is precisely why the law sets and defines the standard: even in the exercise of his power of compulsory arbitration under Article 263(g) of the Labor Code, the Secretary must follow the law. For "when an overzealous official by-passes the law on the pretext of retaining a laudable objective, the intendment or purpose of the law will lose its meaning as the law itself is disregarded." As Article 263(g) is clear and unequivocal in stating that 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, then the unmistakable mandate must be followed by the Secretary. In the case of Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-Associated Labor Unions (Tasli-Alu) v. Court of Appeals,29 we held: . . . Assumption of jurisdiction over a labor dispute, or as in this case the certification of the same to the NLRC for compulsory arbitration, always co-exists with an order for workers to return to work immediately and for employers to readmit all workers under the same terms and conditions prevailing before the strike or lockout. Time and again, this Court has held that when an official bypasses the law on the asserted ground of attaining a laudable objective, the same will not be maintained if the intendment or purpose of the law would be defeated.30 One last piece. Records would show that the strike occurred on 23 December 2002. Article 263(g) directs that the employer must readmit all workers under the same terms and conditions prevailing before the strike. Since the strike was held on the aforementioned date, then the condition prevailing before it, which was the condition present on 22 December 2002, must be maintained. Undoubtedly, on 22 December 2002, the members of the private respondent who were dismissed due to alleged redundancy were still employed by the petitioner and holding their respective positions. This is the status quo that must be maintained. WHEREFORE, finding no reversible error in the assailed Decision and Resolution of the Court of Appeals dated 25 November 2003 and 19 March 2004, respectively, both are hereby AFFIRMED. Costs against petitioner. CAPITOL MEDICAL CENTER, INC. vs. HON. CRESENCIANO B. TRAJANO; G.R. No. 155690 June 30, 2005 For our resolution is the instant petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision1 dated September 20, 2001 and the Resolution2 dated October 18, 2002 rendered by the Court of Appeals in CA-G.R. SP No. 53479, entitled "Capitol Medical Center, Inc. vs. Hon. Cresenciano B. Trajano, in his capacity as Secretary of the Department of Labor and Employment and Capitol Medical Center Employees Association-AFW." The factual antecedents as gleaned from the records are: Capitol Medical Center, Inc., petitioner, is a hospital with address at Panay Avenue corner Scout Magbanua Street, Quezon City. Upon the other hand, Capitol Medical Center Employees AssociationAlliance of Filipino Workers,respondent, is a duly registered labor union acting as the certified collective bargaining agent of the rank-and-file employees of petitioner hospital.
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On October 2, 1997, respondent union, through its president Jaime N. Ibabao, sent petitioner a letter requesting a negotiation of their Collective Bargaining Agreement (CBA). In its reply dated October 10, 1997, petitioner, chall enging the unions legitimacy, refused to bargain with respondent. Subsequently or on October 15, 1997, petitioner filed with the Bureau of Labor Relations (BLR), Department of Labor and Employment, a petition for cancellation of respondents certificate o f registration, docketed as NCR-OD-9710-006-IRD.3 For its part, on October 29, 1997, respondent filed with the National Conciliation and Mediation Board (NCMB), National Capital Region, a notice of strike, docketed as NCMB-NCR-NS-10-453-97. Respondent alleged that petitioners refusal to bargain constitutes unfair labor practice. Despite several conferences and efforts of the designated conciliator-mediator, the parties failed to reach an amicable settlement. On November 28, 1997, respondent staged a strike. On December 4, 1997, former Labor Secretary Leonardo A. Quisumbing, now Associate Justice of this Court, issued an Order assuming jurisdiction over the labor dispute and ordering all striking workers to return to work and the management to resume normal operations, thus: "WHEREFORE, this Office assumes jurisdiction over the labor disputes at Capitol Medical Center pursuant to Article 263 (g) of the Labor Code, as amended. Consequently, all striking workers are directed to return to work within twenty-four (24) hours from the receipt of this Order and the management to resume normal operations and accept back all striking workers under the same terms and conditions prevailing before the strike. Further, parties are directed to cease and desist from committing any act that may exacerbate the situation. Moreover, parties are hereby directed to submit within 10 days from receipt of this Order proposals and counter-proposals leading to the conclusion of the collective bargaining agreement in compliance with aforementioned Resolution of the Office as affirmed by the Supreme Court. SO ORDERED." Petitioner then filed a motion for reconsideration but was denied in an Order dated April 27, 1998. On June 23, 1998, petitioner filed with this Court a petition for certiorari assailing the Labor Secretarys Orders. Pursuant to our ruling in St. Martin Funeral Home vs.The National Labor Relations Commission, et al.,4 we referred the petition to the Court of Appeals for its appropriate action and disposition. Meantime, on October 1, 1998, the Regional Director, in NCR-OD-9710-006-IRD, issued an Order denying the petition for cancellation of respondent unions certificate of registration. 5 On September 20, 2001, the Appellate Court rendered a Decision affirming the Orders of the Secretary of Labor. The Court of Appeals held: "Anent the first issue raised by the petitioner, We find the same untenable. The public respondent acted well within his duty to order the petitioner hospital to bargain collectively, for it was the surest way to end the dispute. In LMG Chemicals Corporation vs. Secretary of the Department of Labor and Employment, the Hon. Leonardo A. Quisumbing and Chemical Workers Union (G.R. No. 127422, April 17, 2001), the Supreme Court made the following pronouncement, to wit: It is well settled in our jurisprudence that the authority of the Secretary of Labor to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to national
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interest includes and extends to all questions and controversies arising therefrom. The power is plenary and discretionary in nature to enable him to effectively and efficiently dispose of the primary dispute. xxxxxx Indeed, We find no grave abuse of discretion on the part of respondent Secretary of Labor whose power is plenary and includes the resolution of all controversies arising from the labor dispute. In fact, he was merely following the directive laid down by the Supreme Court (Decision dated February 4, 1997) in the case of Capitol Medical Center Alliance of Concerned Employees-Unified Filipino Service Workers (CMC-ACE-UFSW) vs. Hon. Bienvenido E. Laguesma, Undersecretary of the Department of Labor and Employment, Capitol Medical Center Employees Association-Alliance of Filipino Workers and Capitol Medical Center Incorporated and Dra. Thelma Clemente, President, ordering petitioner hospital to collectively bargain with the Capitol Medical Center Employees Association-Alliance of Filipino Workers (private respondent herein) the certified bargaining agent. As earlier mentioned, the petition for cancellation was dismissed by the regional director in a decision dated September 30, 1998. x x x. xxxxxx Said decision by the regional director was affirmed by the Director of the Bureau of Labor Relations in a resolution dated December 29, 1998, dismissing the appeal of the petitioner hospital from the said DOLENCRs decision. Finally, the petition for certiorari (docketed as CA-G.R. SP No. 52736) entitled Capitol Medical Center, Inc. vs. Hon. Benedictor R. Bitonio, Jr., in his capacity as Director of the Bureau of Labor Relations, Department of Labor and Employment; Hon. Maximo B. Lim in his capacity as Regional Director, National Capital Region, Department of Labor and Employment and Capitol Medical Center Employees Association (CMCEA-AFW), was dismissed in a decision dated January 11, 2001. The motion for reconsideration which was subsequently filed was denied on March 23, 2001. xxxxxx In order to allow an employer to validly suspend the bargaining process, there must be a valid petition for certification election. The mere filing of a petition does not ipso facto justify the suspension of negotiation by the employer (Colegio de San Juan de Letran vs. Association of Employees and Faculty of Letran and Eleanor Ambas, G.R. No. 141471, September 18, 2000). If pending a petition for certification, the collective bargaining is allowed by the Supreme Court to proceed, with more reason should the collective bargaining (in this case) continue since the High Court had recognized the respondent as the certified bargaining agent in spite of several petitions for cancellation filed against it. xxxxxx Secondly, We are inclined to agree with the public respondents statement that the primary assumption of jurisdiction may be exercised by this Office even without the necessity of prior notice or hearing given to any of the parties disputants. (page 56 of the Rollo). xxxxxx We are also not convinced by the arguments raised by the petitioner with respect to its third assigned error. This Court fails to see any supervening event that would render the execution of the decision of public respondent impossible. The petitioner asserts that the respondent union has lost its legitimacy, but at every turn it has been ruled by the various labor administrative officials that the respondent union is legitimate. It has failed to convince the labor administrative officials, We are likewise not persuaded.
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Unless and until the Certificate of Registration of the union is cancelled, it (union) remains the certified bargaining agent and the Hospital has the duty to enter into a collective bargaining agreement with it. xxxxxx WHEREFORE, premises considered, the instant petition is DENIED, hereby AFFIRMING the two assailed orders, dated December 4, 1997 and April 27, 1998, of the public respondent in OS-AJ-0024-97 (NCMB-NCR-NS-10-453-97). SO ORDERED." On October 18, 2002, the Court of Appeals issued a Resolution denying petitioners motion for reconsideration. Hence, this petition for review on certiorari. Petitioner contends that its petition for the cancellation of respondent unions certificate of registration involves a prejudicial question that should first be settled before the Secretary of Labor could order the parties to bargain collectively. We are not persuaded. As aptly stated by the Solicitor General in his comment on the petition, the Secretary of Labor correctly ruled that the pendency of a petition for cancellation of union registration does not preclude collective bargaining, thus: "That there is a pending cancellation proceedings against the respondent Union is not a bar to set in motion the mechanics of collective bargaining. If a certification election may still be ordered despite the pendency of a petition to cancel the unions registration certificate (National Union of Bank Employees vs. Minister of Labor, 110 SCRA 274), more so should the collective bargaining process continue despite its pendency. We must emphasize that the majority status of the respondent Union is not affected by the pendency of the Petition for Cancellation pending against it. Unless its certificate of registration and its status as the certified bargaining agent are revoked, the Hospital is, by express provision of the law, duty bound to collectively bargain with the Union. Indeed, no less than the Supreme Court already ordered the Hospital to collectively bargain with the Union when it affirmed the resolution of this Office dated November 18, 1994 directing the management of the Hospital to negotiate a collective bargaining agreement with the Union. That was the categorical directive of the High Court in its Resolution dated February 4, 1997 in Capitol Medical Center Alliance of Concerned Employees-United Filipino Service Worker vs. Hon. Bienvenido E. Laguesma, et al., G.R. No. L-118915." Moreover, as mentioned earlier, during the pendency of this case before the Court of Appeals, the Regional Director, in NCR-OD-9710-006-IRD, issued an Order on October 1, 1998 denying the petition for cancellation of respondents certificate of registration. This Order became final and executory and recorded in the BLRs Book of Entries of Judgments on June 3, 1999. Petitioner also maintains that the Secretary of Labor cannot exercise his powers under Article 263 (g) of the Labor Code without observing the requirements of due process. Article 263 (g) of the Labor Code, as amended, provides: "ART. 263. Strikes, Picketing and Lockouts. xxxxxx
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(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 resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. x x x. In labor disputes adversely affecting the continued operation of such hospitals, clinics or medical institutions, it shall be the duty of the striking union or locking-out employer to provide and maintain an effective skeletal workforce of medical and other health personnel, whose movement and services shall be unhampered and unrestricted, as are necessary to insure the proper and adequate protection of the life and health of its patients, most especially emergency cases, for the duration of the strike or lockout. In such cases, therefore, the Secretary of Labor and Employment is mandated to immediately assume, within twenty-four (24) hours from knowledge of the occurrence of such a strike or lockout, jurisdiction over the same or certify it to the Commission for compulsory arbitration. For this purpose, the contending parties are strictly enjoined to comply with such orders, prohibitions and/or injunctions as are issued by the Secretary of Labor and Employment or the Commission, under pain of immediate disciplinary action, including dismissal or loss of employment status or payment by the locking-out employer of backwages, damages and other affirmative relief, even criminal prosecution against either or both of them. The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining the industries that, in his opinion, are indispensable to the national interest, and from intervening at any time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same. x x x x x x." In Magnolia Poultry Employees Union vs. Sanchez,6 we held that the discretion to assume jurisdiction may be exercised by the Secretary of Labor and Employment without the necessity of prior notice or hearing given to any of the parties. The rationale for his primary assumption of jurisdiction can justifiably rest on his own consideration of the exigency of the situation in relation to the national interests. In sum, petitioners submissions are bereft of merit. WHEREFORE, the petition is DENIED. The assailed Decision dated September 20, 2001 and the Resolution dated October 18, 2002 of the Court of Appeals in CA-G.R. SP No. 53479 are AFFIRMED. Costs against petitioner. PHIMCO INDUSTRIES, INC. vs. HONORABLE ACTING SECRETARY OF LABOR JOSE BRILLANTES G.R. No. 120751 March 17, 1999 At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, seeking to set aside the July 7, 1995 Order 1 of the then Acting Secretary Jose Brillantes of the Department of Labor and Employment, in NCMB-NCR-NS-03-122-95, on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction. The antecedent facts are, as follows: On March 9, 1995, the private respondent, Phimco Industries Labor Association (PILA), duly certified collective bargaining representative of the daily paid workers of the petitioner, Phimco Industries Inc.
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(PHIMCO), filed a notice of strike with the National Conciliation and Mediation Board, NCR, against PHIMCO, a corporation engaged in the production of matches, after a deadlock in the collective bargaining and negotiation. On April 21, 1995, when the several conciliation conferences called by the contending parties failed to resolve their differences PILA, composed of 352 2 members, staged a strike. On June 7, 1995, PILA presented a petition for the intervention of the Secretary of Labor in the resolution of the labor dispute, to which petition PHIMCO opposed. Pending resolution of the said petition or on June 26, 1995, to be precise, PHIMCO sent notice of termination to some 47 3 workers including several union officers. On July 7, 1995, the then Acting Secretary of Labor Jose Brillantes assumed jurisdiction over the labor dispute and issued his Order ruling, thus: WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as amended, this office hereby assumes jurisdiction over the dispute at, Phimco industries, Inc. Accordingly, all the striking workers, except those who have been handed down termination papers on June 26, 1995, are hereby directed to return to work with twenty-four (24) hours from receipt of this Order and for the Company to accept them back under the same terms and conditions prevailing prior to the strike. The parties are further ordered to cease and desist from committing any act that will aggravate the situation. To expedite the resolution of this dispute, the parties are directed to submit their position papers and evidence within ten (10) days from receipt of this Order. SO ORDERED. 4 On July 12, 1995, petitioner brought the present petition; theorizing, that: I THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH THE GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF EXCESS OF JURISDICTION IN ISSUING THE ASSAILED ORDER. II THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE WENT BEYOND THE BASIS FOR ASSUMPTION OF JURISDICTION UNDER ART. 263 OF THE LABOR CODE. 5 On July 31, 1995, two weeks after the filing of the Petition, the public respondent issued another Order 6temporarily holding in abeyance the implementation of the questioned Order dated July 7, 1995 for a period of thirty (30) day; directing, as follows: WHEREFORE PREMISES CONSIDERED, the implementation of our Order dated 7 July 1995 hereby temporarily held in abeyance for a period of thirty (30) days effective from receipt thereof pending the private negotiations of the parties for the settlement of their labor dispute.
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Thereafter, both the Union and the Company are directed to submit to this Office the result of their negotiations for our evaluation and appropriate action. SO ORDERED. 7 The pivotal issue here is: whether or not the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction in assuming jurisdiction over subject labor dispute. The petition is impressed with merit. Art. 263, paragraph (g) of the Labor Code, provides: (g) When, in his opinion, there exist 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 . . . The Labor Code vests in the Secretary of Labor the discretion to determine what industries are indispensable to the national interest. Accordingly, upon the determination by the Secretary of Labor that such industry is indispensable to the national interest, he will assume jurisdiction over the labor dispute in the said industry. 8 This power, however, is not without any limitation. In upholding the constitutionality of B.P. 130 insofar as it amends Article 264 (g) 9 of the Labor Code, it stressed in the case of Free telephone Workers Union vs. Honorable Minister of Labor and Employment, et al., 10 the limitation set by the legislature on the power of the Secretary of Labor to assume jurisdiction over a labor dispute, thus: Batas Pambansa Blg. 130 cannot be any clearer, the coverage being limited to "strikes or lockouts adversely affecting the national interest. 11 In this case at bar, however, the very admission by the public respondent draws the labor dispute in question out of the ambit of the Secretary's prerogative, to wit. While the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest", this office believes that the obtaining circumstances warrant the exercise of the powers under Article 263 (g) of the Labor Code, as amended. 12 The private respondent did not even make any effort to touch on the indispensability of the match factory to the national interest. It must have been aware that a match factory, though of value, can scarcely be considered as an industry "indispensable to the national interest" as it cannot be in the same category as "generation and distribution of energy, or those undertaken by banks, hospitals, and export-oriented industries." 13 Yet, the public respondent assumed jurisdiction thereover, ratiocinating as follows: For one, the prolonged work disruption has adversely affected not only the protagonists, i.e., the workers and the Company, but also those directly and indirectly dependent upon the unhampered and continued operations of the Company for their means of livelihood and existence. In addition, the entire community where the plant is situated has also been placed in jeopardy. If the dispute at the Company remains unabated, possible loss of employment, not to mention consequent social problems, might result thereby compounding the unemployment problem of the country. Thus we cannot be unmindful of the possible dire consequences that might ensue if the present dispute is allowed to remain unresolved, particularly when alternative dispute resolution mechanism obtains to dispose of the differences between the parties herein. 14
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It is thus evident from the foregoing that the Secretary's assumption of jurisdiction grounded on the alleged "obtaining circumstances" and not on a determination that the industry involved in the labor dispute is one indispensable to the "national interest", the standard set by the legislature, constitutes grave abuse of discretion amounting to lack of or excess of jurisdiction. To uphold the action of the public respondent under the premises would be stretching too far the power of the Secretary of Labor as every case of a strike or lockout where there are inconveniences in the community, or work disruptions in an industry though not indispensable to the national interest, would then come within the Secretary's power. It would be practically allowing the Secretary of Labor to intervene in any Labor dispute at his pleasure. This is precisely why the law sets and defines the standard: even in the exercise of his power of compulsory arbitration under Article 263 (g) of the Labor Code, the Secretary must follow the law. For "when an overzealous official by-passes the law on the pretext of retaining a laudable objective, the intendment or purpose of the law will lose its meaning as the law itself is disregarded" 15 In light of the foregoing, we hold that the public respondent gravely abused his discretion in assuming jurisdiction over the labor dispute sued upon in the case. WHEREFORE, the petition is hereby GRANTED; and the assailed Order, dated July 7, 1995, of the Acting Secretary of Labor SET ASIDE. No pronouncement as to costs. SO ORDERED. Romero, Vitug, Panganiban and Gonzaga-Reyes, JJ., concur. Panganiban, J., see concurring opinion. --------------------------------------------------------------------------Separate Opinions
PANGANIBAN, J., concurring opinion; I now agree with Justice Purisima's revised ponencia that the labor secretary acted with grave abuse of discretion in assuming jurisdiction over a labor dispute without any showing that the disputants were engaged in an industry indispensable to national interest. Quite the contrary, the respondent secretary himself admits that the industry, of which petitioner is a part, is not indispensable to national interest. Indeed, a labor dispute must seriously and deleteriously affect an industry indispensable to national interest before the secretary may assume jurisdiction over it. Art. 263 (g) Requires a Labor Dispute in an Industry Indispensable to National Interest. Art. 263 of the Labor Code speaks of the right of workers to engage in concerted activities for their mutual benefit and protection. 1 Concerted activities, like the holding of a strike, are resorted to by employees in their effort to obtain more favorable terms and conditions of work for themselves. Due to its importance, the exercise of such right is limited only by the demands of national interest under paragraph (g) of said article: (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
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compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. xxx xxx xxx The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining the industries that, in his opinion, are indispensable to the national interest, and from intervening at any time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same. From the text and the tenor of the law, it is clear as daylight that the secretary's assumption of jurisdiction over a labor dispute is meant to be used sparingly and only if the national interest demands it. He, like everyone else, must respect labor's paramount right to stage concerted activities. Jurisprudence Requires National Interest to Justify Assumption of Jurisdiction Indeed, the Court has consistently ruled that the secretary's assumption of jurisdiction is intended not to interfere with or impede workers' rights, but to obtain speedy settlement of labor disputes and only if national interests will be affected. 2 Admittedly, the Court has allowed the secretary's assumption of jurisdiction in many cases, some of which are worth mentioning to show the care with which such plenary power should be used. In Philippine School of Business Administration v . Noriel, 3 the Court has declared that the administration of a school is of national interest because " . . . [it] is engaged in the promotion of the physical, intellectual and emotional well-being of the country's youth." Work stoppage at a school unduly prejudices the students and entails great loss to all concerned in terms of time, effort and money. In Sarmiento v. Tuico, 4 an enterprise exporting 90 percent of its production and generating more than $12 million dollars per year was declared to be of national interest. Any disruption of operations would have caused the delay of shipments of export consisting of finished products previously committed to customers abroad, a delay that would have hampered the economic recovery program pursued by the government. The manufacture of drugs and pharmaceuticals has also been declared to belong to the same classification. 5Likewise, the operation of an airline that services domestic routes has been deemed to be imbued with national interest. 6 In one case, a company was considered to be indispensable to national interest, as it was responsible for 22 percent of the tire production in the Philippines, and work disruption would have or only aggravated the already worsening unemployment situation but also discouraged foreign and domestic entrepreneurs from further investing in the country. 7 On the other hand, the Court has disallowed the imprudent use of this power in even more cases. Perhaps the most eloquent of these GTE Directories Corporation v. Sanchez, 8 wherein the Court declared the secretary to be without jurisdiction to take over a labor dispute involving a company that produced telephone directories, viz:
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The production and publication of telephone directories, which is the principal activity of GTE, can scarcely be described as an industry affecting the national interest. GTE is a publishing firm chiefly dependent on the marketing and sale of advertising space for its not inconsiderable revenues. Its services, while of value, cannot be deemed to be in the same category of such essential activities as "the generation or distribution of energy" or those undertaken by "banks, hospitals, and export-oriented industries." It cannot be regarded as playing as vital a role in communication as other mass media. The small number of employees involved in the dispute, the employer's payment of "P10 million in income tax alone to the Philippine Government," and the fact that the "top officers of the union were dismissed during the conciliation process," obviously do not suffice to make the dispute in the case at bar one "adversely affecting the national interest." The Secretary is Vested with Broad Powers When He Assumes Jurisdiction When the secretary assumes jurisdiction under Art. 263(g), he is granted "great breadth of discretion" in order to find a solution to a labor dispute. In The Philippine America Management Co., Inc. v. The Philippine American Management Employees Association (PAMEA-FFW), 9 the Court clarified the extent of the powers vested in the then Court of Industrial Relations, as follows: . . . If the Court of Industrial Relations is granted authority to find a solution in an industrial dispute and such solution consists in the ordering of employees to return back to work, it cannot be contended that the Court of Industrial Relations does not have the power of jurisdiction to carry that solution into effect. And of what use is its power of conciliation and arbitration if it does not have the power and jurisdiction to carry into effect the solution it has adopted. Lastly; if the Court of Industrial Relations has the power to fix the terms and conditions of employment, it certainly can order the return of the workers with or without backpay as a term or condition of the employment. The most obvious of these powers is the automatic enjoinment of an impending strike or lockout or the lifting thereof if one has already taken place. Assumption of jurisdiction always coexist with an order for workers to return to work immediately and for employers to readmit all workers under the same terms and conditions prevailing before the strike or lockout. Defiance of return-to-work order produces forfeiture of workers' employment. 10 Thus, not only does it diminish the right of labor to strike; it also limits the prerogatives of management to hire workers under its own terms and conditions. 11 The secretary is conferred other powers, including jurisdiction over incidents arising from the labor dispute, in order to avoid the undesirable result of diametrically opposed rulings being issued by the secretary and the labor arbiter. These powers comprehend those that the secretary needs to dispose of the primary dispute effectively and efficiently. 12 The almost unlimited breadth of such powers calls for caution on the part of its possessor add strict scrutiny of the excesses of government on the part of the judiciary. Precursor of Article 263(g) The power to restrict strikes and lockouts is of martial law vintage. Before Republic Act. 6715 was enacted, then President Ferdinand Marcos sought to quell mass expressions of dissent, including strikes, through General Order No. 5 which provided: WHEREAS, Proclamation No. 1081 dated Sept. 21, 1972, was issued by me because of a grave national emergency now prevailing throughout the country which has been brought about by the activities of groups of men now actively engaged in criminal conspiracy to seize political power and state power in the Philippines in order to take over the Government by force and violence, the
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extent of which has now assumed the proportion of an actual war against our people and their legitimate Government; and WHEREAS, in order to restore the tranquillity and stability of the nation in the quickest possible manner, it is necessary to prohibit the inhabitants of the country from doing certain acts of undertaking certain activities such as rallies, demonstrations, picketing or strikes in certain vital industries, and other forms of group actions which would cause hysteria or panic among the populace or would incense the people against their legitimate Government, or would generate sympathy for the radical and lawless elements, or would aggravate the already critical political and social turmoil now prevailing throughout the land; NOW, THEREFORE, I, Ferdinand E. Marcos, Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to Proclamation No. 1081 dated Sept. 21, 1972, do hereby order that henceforth and until otherwise ordered by me or by my duly designated representative, all rallies, demonstrations and other forms of group actions by persons within the geographical limits of the Philippines, including strikes and picketing in vital industries such as in companies engaged in the manufacture or processing as well in the distribution of fuel gas, gasoline, and fuel or lubricating oil, in companies engaged in the production or processing of essential commodities or products for exports, and in companies engaged in banking of any kind, as well as in hospitals and in schools and colleges, are strictly prohibited and any person violating this order shall forthwith be arrested and taken into custody and held for the duration of the national emergency or until he or she is otherwise ordered released by me or by my duly designated representative. General Order No. 5, which was accompanied by Letter of Instructions No. 368, specifically detailed the vital industries or firms referred to, as follows: 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: 1. Public Utilities: A. Transportation: 1) All land, air and water companies or firms engaged in passenger, freight or tourist transport; 2) All brokerage, arrastre, warehousing companies or firms; B. Communications: 1) Wire or wireless telecommunications such as telephone, telegraph, telex, and cable companies or firms; 2) Radio and television companies or firms; 3) Print Media companies; 4) Postal and messengerial service companies; C. Companies engaged in electric, light, gas, steam and water power generation and distribution and sanitary service companies;
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D. Other Public Utilities: 1) Ice and Refrigeration plants 2. Companies or firms engaged in the manufacture or processing of the following essential commodities: A. Animal feeds B. Cement C. Chemicals and fertilizers D. Drugs and medicines E. Flour F. Products which are classified as essential commodities in the list of National Economic and Development Authority except the following: rice, corn, some basic cuts of meat, cooking oil, laundry soap, lumber and plywood, galvanized iron sheets, writing pads and notebooks. G. Iron, steel, copper, tin plates and other basic mineral products; H. Milk I. Newsprint J. Tires K. Sugar L. Textile and garments 3. Companies engaged in the production and processing of products for export which are holders of Central Bank or Board of Investment Certificate of Export Orientation, including hotels and restaurants classified as three (3), four (4) or five (5) star by the Department of Tourism; 4. Companies engaged in exploration, development, mining, smelting, or refining coal, oil, iron, copper, gold, and other minerals; 5. Companies or firms engaged in banking, including: A. Commercial Banks B. Saving Banks C. Development Banks D. Investment Banks
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E. Rural Banks F. Savings and Loans Associations G. Cooperative Banks H. Credit Unions 6. Companies or firms which are actually engaged in government infrastructure projects and in activities covered by Defense contracts; 7. Hospitals as defined in Section 2, Rule 1-A, Book III of the Rules and Regulations Implementing the Labor Code of the Philippines; 8. School and Colleges duly recognized by the Government. The Secretary of Labor may include in/or exclude from the above list any industry, firm, or company as the national interest, national security, or general welfare may require. When Republic Act 6715 took effect and General Order No. 5 was repealed, there was no more listing of industries indispensable to national interest. The labor and employment secretary was given discretion in determining which industries would qualify as such. But the discretion cannot be abused. It is subject to judicial review. Under General Order No. 5, the state prohibited the holding of strikes for a stated public purpose: a national emergency and only in enumerated industries considered vital to the ailing economy. Even the height of martial rule in the country, there was no intention to provide a blanket authority to the secretary to assume jurisdiction over labor disputes without any showing that national interest, national security or general welfare demanded it. Police Power Requires Public Necessity After martial law was lifted and democracy was restored, the assumption of jurisdiction in Art. 263(g) has now been viewed as an exercise of the police power of the state with the aim of promoting the common good. A prolonged strike or lockout can be inimical to the national economy. 13 Therefore, it is imbued with public necessity and the right of the state and the public to self-protection. But such public necessity and need for self-protection are absent in labor disputes industries not indispensable to national interest. In the spirit of free enterprise, it is more in keeping with national interest to allow labor to negotiate with management for decent pay and humane working conditions without intervention from the government. Not Always Beneficial to Labor Even for labor, it is not always beneficial to allow the secretary's intervention in a labor dispute under Art. 263. Although the intention may be to find a balance between the demands of labor and the resources of management, intervention from the state and the derogation of the right to strike are not always the solutions to the just demands of labor. More often than not, the intervention is more to the advantage of management, which would not incur overhead expenses that would otherwise be wasted during a work stoppage. For the same reason, it does not necessarily follow that intervention works for the protection of labor. Other Available Remedies
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Even without compulsory arbitration, other remedies for resolving their labor disputes are still available to labor and management. Striking employees can file illegal dismissal cases if they are dismissed without cause. On the other hand, management can dismiss employees engaged in illegal strikes, or it can negotiate with those involved in legal strikes. The Secretary Found No National Interest As stated earlier, Petitioner PHIMCO is a company which manufactures matches and, thus, does not qualify as one engaged in an "industry indispensable to national interest." The respondent labor and employment secretary admits this facts, expressly declaring that "the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest."" He nevertheless assumed jurisdiction over petitioner's labor dispute with PHIMCO Industries Labor Association (PILA), rationalizing thus: 14 While the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest", this Office believes that obtaining circumstances warrant the exercise of the powers under Article 263(g) of the Labor Code, as amended. For one, the prolonged work disruption has adversely affected not only the direct protagonists, i.e., the workers and the Company, but also those directly and indirectly dependent upon the unhampared and continued operations of the Company for their means of livelihood and existence. In addition, the entire community where the plant is situated has also been placed in jeopardy. If the dispute at the Company remains unabated, possible loss of employment, not to mention consequent social problems, might result thereby compounding the unemployment problem of the country. Thus; we cannot be unmindful of the possible dire consequences that might ensue if the present dispute is allowed to remain unresolved, particularly when an alternative dispute resolution mechanism obtains to dispose of the differences between the parties herein. These excuses fail to show how petitioner falls within the category of "industries indispensable to national interest." The allegation of the public respondent that the "match industry like the textile or garment industry may be classified as export-oriented" is sufficiently rebutted by petitioner's simple argument pointing out that its export is very negligible and would not qualify under the definition of "exportoriented industries" in Section 14, Book V, Rule XIII of the Omnibus Rules Implementing the Labor Code. 15 Besides, such allegation does not appear to be supported by the secretary, who in his assailed Order, found that petitioner's business was not an industry indispensable to national interest. The case at bar is peculiar in the sense that it was the union (PILA), rather than management, that petitioned the secretary to assume jurisdiction over the controversy. It appears that PILA had lost belief in the efficacy of its own strike and had chosen to seek refuge in the secretary's power of compulsory arbitration. Petitioner, on the other hand, questions the intervention, obviously because it is not amenable to accepting all the returning workers, some of whom were dismissed by reason of the strike. 16 The assumption of jurisdiction merely muddled the issues. How true it is that the road to damnation is paved with good intentions. The secretary's intention to reconcile the disputants may have been noble but it does not imbue the labor dispute with national interest. Neither does it clothe him with power to assume jurisdiction over the case. WHEREFORE, I vote to GRANT the petition. FAR EASTERN UNIVERSITY - DR. NICANOR REYES MEDICAL FOUNDATION (FEUNRMF) vs.
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FEU-NRMF EMPLOYEES ASSOCIATION-ALLIANCE OF FILIPINO WORKERS (FEUNRMFEA-AFW) G.R. No. 168362 October 12, 2006 Before Us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, as amended, assailing the 22 March 2005 Decision1 of the Court of Appeals in CA-G.R. SP No. 86690 and its 22 June 2005 Resolution2 denying the Motion for Reconsideration of petitioner Far Eastern University - Dr. Nicanor Reyes Medical Foundations (FEU-NRMF) Motion for Reconsideration. The challenged Decision disposed thus: WHEREFORE, finding grave abuse of discretion, committed by public respondent NLRC, the instant petition is GRANTED. The assailed Resolution, dated 23 September 2002, and Order, dated 30 June 2004, are hereby REVERSED and SET ASIDE in so far as the illegality of the strike and loss of employment status of individual petitioners are concerned. All other respects are AFFIRMED. No costs at this instance.3 Petitioner FEU-NRMF is a medical institution duly organized and existing under the Philippine laws. On the other hand, respondent union is a legitimate labor organization and is the duly recognized representative of the rank and file employees of petitioner FEU-NRMF. In 1994, petitioner FEU-NRMF and respondent union entered into a Collective Bargaining Agreement (CBA) that will expire on 30 April 1996. In view of the forthcoming expiry, respondent union, on 21 March 1996, sent a letter-proposal4 to petitioner FEU-NRMF stating therein their economic and non-economic proposals for the negotiation of the new CBA. On 8 May 1996, petitioner FEU-NRMF sent a letter-reply5 flatly rejecting respondent unions demands and proposed to maintain the same provisions of the old CBA. Petitioner FEU-NRMF reasoned that due to financial constraints, it cannot afford to accede to a number of their demands for educational and death benefits, uniforms, longetivity pay, meal allowance and special pay, but nevertheless gave an assurance that it will seriously consider their proposal on salary increase. In an effort to arrive at a compromise, subsequent conciliation proceedings were conducted before the National Conciliation and Mediation Board - National Capital Region (NCMB-NCR) but because of the unyielding stance of both parties, the negotiation failed. On 6 August 1996, respondent union filed a Notice of Strike before NCMB-NCR on the ground of bargaining deadlock. A strike vote was conducted on 23 August 1996 and the result thereof was submitted to NCMB-NCR on 26 August 1996. After the expiration of the thirty-day cooling off period and the sevenday strike ban, respondent union, on 6 September 1996, staged a strike.6 Before the strike was conducted, respondent union, on 4 September 1996, offered a skeletal force of nursing and health personnel who will man the hospitals operation for the duration of the strike. For reasons unknown to respondent union, however, petitioner FEU-NRMF failed or refused to accept the offer. For its part, petitioner FEU-NRMF, on 29 August 1996, filed a Petition for the Assumption of Jurisdiction or for Certification of Labor Dispute with the National Labor Relations Commission (NLRC), underscoring the fact that it is a medical institution engaged in the business of providing health care for its patients.7 Acting on the petition, the Secretary of Labor, on 5 September 1996, granted the petition and thus issued an Order8 assuming jurisdiction over the labor dispute, thereby prohibiting any strike or lockout whether
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actual or impending, and enjoining the parties from committing any acts which may exacerbate the situation. On 6 September 1996, Francisco Escuadra, the NLRC process server, certified that, on 5 September 1996 at around 4:00 P.M., he attempted to serve a copy of the Assumption of Jurisdiction Order to the union officers but since no one was around at the strike area, he just posted copies of the said Order at several conspicuous places within the premises of the hospital. Claiming that they had no knowledge that the Secretary of Labor already assumed jurisdiction over the pending labor dispute as they were not able to receive a copy of the Assumption of Jurisdiction Order, striking employees continued holding a strike until 12 September 1996. On 12 September 1996, the Secretary of Labor issued another Order9 directing all the striking employees to return to work and the petitioner FEU-NRMF to accept them under the same terms and conditions prevailing before the strike. Accordingly, on 13 September 1996, a Return to Work Agreement was executed by the disputing parties, whereby striking employees agreed to return to their work and the petitioner FEU-NRMF undertook to accept them under status pro ante. On the same day, the striking employees returned to their respective stations. Subsequently, petitioner FEU-NRMF filed a case before the NLRC, contending that respondent union staged the strike in defiance of the Assumption of Jurisdiction Order; hence, it was illegal. Further, the said strike was conducted in a deleterious and prejudicial manner, endangering the lives of the patients confined at the hospital. In its complaint docketed as NLRC-NCR No. 10-11-0733-96, petitioner FEUNRMF specifically alleged that the striking employees effectively barricaded the ingress and egress of the hospital, thus, preventing trucks carrying the supplies of medicines and food for the patients from entering the hospitals premises. In one instance, an ambulance carrying a patien t in critical condition was likewise prevented from passing through the blockade. Finally, respondent union also prevented patients from seeking medical assistance by blocking their way into the hospital. In order to redress the wrongful and illegal acts of the respondent union, petitioner FEU-NRMF prayed for the declaration that the strike is illegal and, resultantly, for the dismissal of the striking employees and decertification of the respondent union, plus damages. In contrast, respondent union avers that petitioner FEU-NRMF refused to bargain collectively despite hefty financial gains and, thus, guilty of surface bargaining. Before staging a strike, respondent union complied with the procedural requirements by filing a notice of strike and strike vote with the NCMBNCR. The thirty-day cooling off period and the seven-day strike ban was also fully observed. Respondent union also offered a skeletal work force but it was refused by petitioner FEU-NRMF. The strike was conducted in a peaceful and orderly manner where striking employees merely sat down outside the hospitals premises with their placards airing their grievances. Petitioner FEU -NRMFs allegation of sabotage, therefore, was merely concocted. Finally, respondent maintained that they did not defy any order of the Secretary of Labor because neither its officers nor its members were able to receive a copy of the same. On 27 May 1998, the Labor Arbiter rendered a Decision 10 declaring the strike illegal and dismissing the union officers for conducting the strike in defiance of the Assumption of Jurisdiction Order. The dispositive portion of the decision reads: WHEREFORE, a decision is hereby rendered cast in favor of complainants and against the respondents declaring the strike conducted by the latter last September 5-14, [1996] illegal and the following individual respondents officers of union employed by complainant hospital to have lost their employment status, Dante F. Sugcang, Virgilio P. Blanco, Fernando S.P. Villapando, Lorna M. Melecio, Florencia O. Reyes, Mercedita P. Mendoza and Leonor P. Vajar. The prayer for decertification is hereby denied for lack of jurisdiction and the prayer for damages is likewise denied for lack of sufficient evidence.
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Aggrieved, the respondent union filed a Partial Appeal 11 before the NLRC asserting that the Labor Arbiter gravely abused its discretion in denying a formal trial and in holding that the Assumption of Jurisdiction Order dated 5 September 1996 was properly served. In its Partial Appeal Memorandum 12 filed on 29 July 1998, respondent union claimed that the Labor Arbiter erred in declaring the strike illegal and in adjudging that the union officers have lost their employment status. On 23 September 2002, the NLRC handed down a Resolution13 affirming in toto the Decision of the Labor Arbiter dated 27 May 1998 and, thus, upheld the illegality of the strike and loss of employment status of the union officers. The NLRC found that during the conciliation proceedings before the NCMB-NCR, the union officers admitted that they were aware that the Secretary of Labor issued an Assumption of Jurisdiction Order which enjoined the strike they were conducting. There was, therefore, an utter defiance of the said Order, making the strike illegal. The union officers dismissal is thus warranted. Undaunted, the respondent union filed a Motion for Reconsideration14 which was likewise denied by the NLRC in its Resolution15 dated 30 June 2004, for failure to present positive averment that the Resolution16 dated 11 October 2002 contains palpable or patent errors as required by the NLRC Revised Rules of Procedure. Consequently, the respondent union brought a Petition for Certiorari under Rule 65 before the Court of Appeals seeking to annul the NLRC Resolution dated 23 September 2002, affirming the Decision of the Labor Arbiter dated 27 May 1998 and the Resolution dated 30 June 2004, denying its Motion for Reconsideration. In its Petition17docketed as CA-G.R. SP No. 86690, FEU-NRMF Employees AssociationAlliance of Filipino Workers (FEU-NRMFEA-AFW), Dante Sugcang, Virgilio Blanco, Norma Melencio and Florencia Reyes v. National Labor Relations Commission, and Far Eastern University Dr. Nicanor Reyes Medical Foundation (FEU-NRMF), respondent union alleged that the public respondents committed grave abuse of discretion amounting to lack or excess of jurisdiction in rendering the aforesaid judgments which are contrary to law and established jurisprudence. On 22 March 2005, the Court of Appeals rendered a Decision granting the Petition and reversing the assailed Resolution dated 23 September 2002, and Order dated 30 June 2004, as they were made with grave abuse of discretion amounting to lack or excess of jurisdiction. The appellate court found that no personal service was validly effected by the process server that could bind the striking employees. Similarly ill-fated was petitioner FEU-NRMFs motion for reconsideration which was denied through the Court of Appeals Resolution promulgated on 22 June 2005. 18 Petitioners are now before this Court assailing the aforementioned decision and resolution of the Court of Appeals on the ground that the appellate court erred in reversing both the decisions of the Labor Arbiter and the NLRC.19 For our resolution are the following issues: I. WHETHER OR NOT SERVICE OF THE ASSUMPTION OF JURISDICTION ORDER WAS VALIDLY EFFECTED. II. WHETHER OR NOT THE STRIKE CONDUCTED BY THE RESPONDENT UNION WAS ILLEGAL. III.
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WHETHER OR NOT THE DISMISSAL OF THE UNION OFFICERS WAS VALID. The crucial question for the determination of this Court, however, is whether the service of the Assumption of Jurisdiction Order was validly effected by the process server so as to bind the respondent union and hold them liable for the acts committed subsequent to the issuance of the said Order. The certification/proof of service of the process server, Francisco A. Escuadra, dated 6 September 1996, reads: CERTIFICATION/PROOF OF SERVICE This is to certify that on September 5, 1996 at around 4:00 P.M., I attempted to serve a copy of the Order of Assumption of Jurisdiction issued by the Secretary of Labor and Employment, to the officials of the FEU-NRMF Employees Association-AFL. Since none of the officials of the said union was available to receive a copy of the said Order, I posted copies of the same at several conspicuous places within the premises of Far Eastern University Nicanor Reyes Medical Foundation (FEU-NRMF). The copies of the Order were posted on September 5, 1996 at around 4:30 PM. Manila, Philippines, 6 September 1996.20 It can be inferred from the foregoing that the process server resorted to posting the Order when personal service was rendered impossible since the striking employees were not present at the strike area. This mode of service, however, is not sanctioned by either the NLRC Revised Rules of Procedure or the Revised Rules of Court. The pertinent provisions of the NLRC Revised Rules of Procedure21 read: Section 6. Service of Notices and Resolutions. (a) Notices or summons and copies of orders, shall be served on the parties to the case personally by the Bailiff or duly authorized public officer within three (3) days from receipt thereof or by registered mail; Provided that in special circumstances, service of summons may be effected in accordance with the pertinent provisions of the Rules of Court; Provided further, that in cases of decisions and final awards, copies thereof shall be served on both parties and their counsel or representative by registered mail; Provided further, that in cases where a party to a case or his counsel on record personally seeks service of the decision upon inquiry thereon, service to said party shall be deemed effected upon actual receipt thereof; Provided finally, that where parties are so numerous, service shall be made on counsel and upon such number of complainants, as may be practicable, which shall be considered substantial compliance with Article 224(a) of the Labor Code, as amended. (Emphasis supplied.) An Order issued by the Secretary of Labor assuming jurisdiction over the labor dispute is not a final judgment for it does not dispose of the labor dispute with finality. 22 Consequently, the rule on service of summons and orders, and not the proviso on service of decisions and final awards, governs the service of the Assumption of Jurisdiction Order. Under the NLRC Revised Rules of Procedure, service of copies of orders should be made by the process server either personally or through registered mail. However, due to the urgent nature of the Assumption of Jurisdiction Order and the public policy underlying the injunction carried by the issuance of the said
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Order, service of copies of the same should be made in the most expeditious and effective manner, without any delay, ensuring its immediate receipt by the intended parties as may be warranted under the circumstances. Accordingly, in this case, personal service is the proper mode of serving the Assumption of Jurisdiction Order. It is also provided under the same rules that in special circumstances, service of summons may be effected in accordance with the pertinent provisions of the Rules of Court.23 Parenthetically, the manner upon which personal service may be made is prescribed by the following provisions of the Revised Rules of Court: Rule 13. Filing and Service of Pleadings, Judgments And Other Papers. Section 6. Personal service. Service of the papers may be made by delivering personally a copy to the party or his counsel, or by leaving it in his office with his clerk or with a person having charge thereof. if no person is found in his office, or his office is not known, or he has no office, then by leaving a copy, between the hours of eight in the morning and six in the evening, at the partys or counsels residence, if known, with a person of sufficient age and discretion then residing therein. Let it be recalled that the process server merely posted copies of the Assumption of Jurisdiction Order in conspicuous places in the hospital. Such posting is not prescribed by the rules, nor is it even referred to when the said rules enumerated the different modes of effecting substituted service, in case personal service is impossible by the absence of the party concerned. Clearly, personal service effectively ensures that the notice desired under the constitutional requirement of due process is accomplished. If, however, efforts to find the party concerned personally would make prompt service impossible, service may be completed by substituted service, that is, by leaving a copy, between the hours of eight in the morning and six in the evening, at the partys or counsels residence, if known, with a person of sufficient age and discretion then residing therein. Substituted service derogates the regular method of personal service. It is therefore required that statutory restrictions for effecting substituted service must be strictly, faithfully and fully observed. Failure to comply with this rule renders absolutely void the substituted service along with the proceedings taken thereafter.24 The underlying principle of this rigid requirement is that the person, to whom the orders, notices or summons are addressed, is made to answer for the consequences of the suit even though notice of such action is made, not upon the party concerned, but upon another whom the law could only presume would notify such party of the pending proceedings. 25 Applying this principle in the case at bar, presumption of receipt of the copies of the Assumption of Jurisdiction Order could not be lightly inferred from the circumstances considering the adverse effect in case the parties failed to heed to the injunction directed by such Order. Worthy to note that in a number of cases, we have ruled that defiance of the assumption and return-to-work orders of the Secretary of Labor after he has assumed jurisdiction is a valid ground for the loss of employment status of any striking union officer or member.26 Employment is a property right of which one cannot be deprived of without due process.27 Due process here would demand that the respondent union be properly notified of the Assumption of Jurisdiction Order of the Secretary of Labor enjoining the strike and requiring its members to return to work. Thus, there must be a clear and unmistakable proof that the requirements prescribed by the Rules in the manner of effecting personal or substituted service had been faithfully complied with. Merely posting copies of the Assumption of Jurisdiction Order does not satisfy the rigid requirement for proper service outlined by the above stated rules. Needless to say, the manner of service made by the process server was invalid and irregular. Respondent union could not therefore be adjudged to have defied the said Order since it was not properly apprised thereof. Accordingly, the strike conducted by the respondent union was valid under the circumstances.
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For a strike to be valid, the following requisites must concur: (1) the thirty-day notice or the fifteen-day notice, in case of unfair labor practices; (2) the two-thirds (2/3) required vote to strike done by secret ballot; and (3) the submission of the strike vote to the Department of Labor and Employment at least seven days prior to the strike.28In addition, in case of strikes in hospitals, clinics and medical institutions, it shall be the duty of the striking employees to provide and maintain an effective and skeletal workforce of medical and other health personnel in order to insure the proper and adequate protection of the life and health of its patients.29 These procedural requirements, along with the mandatory cooling off and strike ban periods had been fully observed by the respondent union. It is true that the strike may still be declared invalid where the means employed are illegal even if the procedural requisites before staging a strike were satisfied.30 However, in the absence of evidence to support the allegations that the respondent union did not commit illegal acts during the strike, we are constrained to dismiss the allegations and uphold the strike as a valid exercise of the workers constitutional right to self-organization and collective bargaining. The affidavits presented by the petitioner FEU-NRMF and relied upon by the Labor Arbiter and the NLRC, in arriving at the conclusion that the respondent union committed illegal acts during the strike, could not be given probative value by this Court as the adverse party was not given a chance to crossexamine the affiants. In a catena of labor cases, this Court has consistently held that where the adverse party is deprived of the opportunity to cross-examine the affiants, affidavits are generally rejected for being hearsay, unless the affiants themselves are placed on the witness stand to testify thereon. 31 Neither can this Court rely on the photographs supporting these allegations without verifying its authenticity. Verily, this Court is not bound to uphold the erroneous findings of the administrative bodies. While it is well-settled that findings of facts of the Labor Arbiter, when affirmed by the NLRC, are entitled to great respect and are generally binding on this Court, it is equally settled that this Court will not uphold erroneous conclusions of the said bodies as when we find insufficient or insubstantial evidence on record to support these factual findings. The same holds true when it is perceived that far too much is concluded, inferred or deduced from the bare allegations or insufficient evidence appearing on the record. Prescinding from the above, as the strike conducted by the respondent union is valid and legal, there is therefore no cogent reason to dismiss the union officers. WHEREFORE, premises considered, the instant Petition is DENIED. Costs against the petitioner. UNION OF FILIPRO EMPLOYEES vs. THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION and NESTLE PHILIPPINES G.R. No. 91025 : December 19, 1990 This special civil action of Certiorari assails the resolution (dated June 5, 1989) of the National Labor Relations Commission (NLRC) relative to Certified Case No. 0522, and the resolution denying the motion for reconsideration (dated August 8, 1989). The antecedents are: On June 22, 1988, the petitioner Union of the Filipro Employees, the sole and exclusive bargaining agent of all rank-and-file employees of Nestle Philippines, (private respondent) filed a Notice of Strike at the Department of Labor raising the issues of CBA deadlock and unfair labor practice. The National Conciliation and Mediation Board (NCMB) invited the parties for a conference on February 4, 1988 for the purpose of settling the dispute. The private respondent however, assailed the legal personality of the proponents of the said notice of strike to represent the Nestle employees. This notwithstanding, the NCMB proceeded to invite the parties to attend the conciliation meetings and to which private respondent failed to attend contending that it will deal only with a negotiating panel duly constituted and mandated in accordance with the UFE Constitution and By-laws. The records show that before the filing of said notice of strike, or on June 30, 1987, the respective CBAs in the four (4) units of Nestle, in Alabang-Cabuyao, Makati, Cagayan de Oro and Cebu/Davao work locations
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had all expired. Under the said CBAs, Alabang/Cabuyao and Makati units were represented by the UFE; the Cagayan de Oro unit was represented by WATU; while the Cebu-Davao was represented by TUPAS. Prior to the expiration of the CBAs for Makati and Alabang/Cabuyao, UFE submitted to the company a list of CBA proposals. The company, on the other hand, expressed its readiness to negotiate a new CBA for Makati and Alabang/Cabuyao units but reserved the negotiation for Cagayan de Oro and Cebu-Davao considering that the issue of representation for the latter units was not yet settled. On June 10, 1987 and July 28, 1987, UFE was certified as the sole and exclusive bargaining representative of Cagayan de Oro and Cebu/Davao units, respectively. On September 14, 1987, the Company terminated from employment all UFE Union officers, headed by its president, Mr. Manuel Sarmiento, and all the members of the negotiating panel for instigating and knowingly participating in a strike staged at the Makati, Alabang, Cabuyao and Cagayan de Oro on September 11, 1987 without any notice of strike filed and a strike vote obtained for the purpose. On September 21, 1987, the union filed a complaint for illegal dismissal. The Labor Arbiter, in a decision dated January 12, 1988, upheld the validity of the dismissal of said union officers. The decision was later on affirmed by the respondent NLRC en banc, on November 2, 1988. Respondent company contends that, "with the dismissal of UFE officers including all the members of the union negotiating panel as later on confirmed by the NLRC en banc, said union negotiating panel thus ceased to exist and its former members divested of any legal personality, standing and capacity to act as such or represent the union in any manner whatsoever." The union officers, on the other hand, asserted their authority to represent the regular rank-and-file employees of Nestle, Philippines, being the duly elected officers of the union. In the meantime, private respondent sought guidelines from the Department of Labor on how it should treat letters from several splinter groups claiming to have possessed authority to negotiate in behalf of the UFE. It is noteworthy that aside from the names of the negotiating panel submitted by one UFE officials, three (3) other groups in the Nestle plant in Cabuyao and two groups in the Makati office have expressed a desire to bargain with management professing alleged authorization from and by the general membership. These groups however, it must be noted, belong to just one (1) union, the UFE. In a letter dated August 20, 1988, BLR Director Pura Ferrer-Calleja advised: "Any attempt on the part of management to directly deal with any of the factions claiming to have the imprimatur of the majority of the employees, or to recognize any act by a particular group to adopt the deadlock counter proposal of the management, at this stage, would be most unwise. It may only fan the fire." (Rollo, pp. 61-62) On March 20, 1988 and August 5, 1988, the company concluded separate CBAs with the general membership of the union at Cebu/Davao and Cagayan de Oro units, respectively. The workers thereat likewise conducted separate elections of their officers. Assailing the validity of these agreements, the union filed a case of ULP against the company with the NLRC-NCR Arbitration Branch on November 16, 1988. Efforts to resolve the dispute amicably were taken by the NCMB but yielded negative result because of the irreconcilable conflicts of the parties on the matter of who should represent and negotiate for the workers.: nad On October 18, 1988, petitioner filed a motion asking the Secretary of Labor to assume jurisdiction over the dispute of deadlock in collective bargaining between the parties. On October 28, 1988, Labor Secretary Franklin Drilon certified to the NLRC the said dispute between the UFE and Nestle, Philippines, the relevant portion of which reads as follows: "WHEREFORE, above premises considered, this office hereby certifies the sole issue of deadlock in CBA negotiations affecting the Makati, Alabang and Cabuyao units to the National Labor Relations Commission for compulsory arbitration. "The NLRC is further directed to call all the parties immediately and resolve the CBA deadlock within twenty (20) days from submission of the case for resolution." (Rollo, p. 225)
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On June 5, 1989, the Second Division of the NLRC promulgated a resolution granting wage increase and other benefits to Nestle's employees, ruling on non-economic issues, as well as absolving the private respondent of the Unfair Labor Practice charge. The dispositive portion states as follows: "WHEREFORE, as aforestated, the parties are hereby ordered to execute and implement through their duly authorized representatives a collective bargaining agreement for a duration of five (5) years from promulgation of this Resolution. "SO ORDERED." (Rollo, p. 180) Petitioner finds said resolution to be inadequate and accordingly, does not agree therewith. It filed a motion for reconsideration, which was, however, denied on August 8, 1989. Hence, this petition for Certiorari. Petitioner originally raised 13 errors committed by the public respondent. However, in its Urgent Manifestation and Motion dated September 24, 1990, petitioner limited the issues to be resolved into six (6). Thus, only the following shall be dealt with in this resolution: 1. WHETHER OR NOT THE SECOND DIVISION OF THE NLRC ACTED WITHOUT JURISDICTION IN RENDERING THE ASSAILED RESOLUTION, THE SAME BEING RENDERED ONLY BY A DIVISION OF THE PUBLIC RESPONDENT AND NOT BY EN BANC; 2. WHETHER OR NOT THE RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING THAT THE CBA TO BE SIGNED BY THE PARTIES SHALL COVER SOLELY THE BARGAINING UNIT CONSISTING OF ALL REGULAR RANK-AND-FILE EMPLOYEES OF THE RESPONDENT COMPANY AT MAKATI, ALABANG AND CABUYAO; 3. WHETHER OR NOT THE RESPONDENT NLRC HAD ACTED WITH GRAVE ABUSE OF DISCRETION AND COMMITTED SERIOUS ERRORS IN FACT AND IN LAW WHEN IT RULED THAT THE CBA IS EFFECTIVE ONLY UPON THE PROMULGATION OF THE ASSAILED RESOLUTION; 4. WHETHER OR NOT PUBLIC RESPONDENT HAD SERIOUSLY ERRED IN DENYING PETITIONER'S DEMAND FOR A CONTRACT SIGNING BONUS AND IN TOTALLY DISREGARDING THE LONG PRACTICE AND TRADITION IN THE COMPANY WHICH AMOUNT TO DIMINUTION OF EMPLOYEES BENEFITS; 5. WHETHER OR NOT PUBLIC RESPONDENT SERIOUSLY ERRED IN NOT GRANTING THE UNION'S DEMAND FOR A "MODIFIED UNION SHOP" SECURITY CLAUSE IN THE CBA AS ITS RULING CLEARLY COLLIDES WITH SETTLED JURISPRUDENCE ON THE MATTER; 6. WHETHER OR NOT PUBLIC RESPONDENT ERRED IN ENTIRELY ABSOLVING THE COMPANY FROM THE UNFAIR LABOR PRACTICE CHARGE AND IN DISREGARDING THE SUBSTANTIAL INCRIMINATORY EVIDENCE RELATIVE THERETO; (p. 9, Petitioner's Urgent Manifestation and Motion dated September 24, 1990). Counsel for the private respondent company filed a motion for leave of court to oppose the aforesaid urgent manifestation and motion. It appearing that the allowance of said opposition would necessarily delay the early disposition of this case, the Court Resolved to DISPENSE with the filing of the same.:cralaw We affirm the public respondent's findings and rule as regards the issue of jurisdiction. This case was certified on October 28, 1988 when existing rules prescribed that, it is incumbent upon the Commission en banc to decide or resolve a certified dispute. However, R.A. 6715 took effect during the pendency of this case. Aside from vesting upon each division the power to adjudicate cases filed before the Commission, said Act further provides that the divisions of the Commission shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdiction. Section 5 of RA 6715 provides as follows: "Section 5. Article 213 of the Labor Code of the Philippines, as amended, is further amended to read as follows:
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Art. 213. National Labor Relations Commission. There shall be a National Labor Relations Commission which shall be attached to the Department of Labor and Employment for program and policy coordination only, composed of (a) Chairman and fourteen (14) Members. Five (5) members each shall be chosen from among the nominees of the workers and employers organization, respectively. The Chairman and the four (4) remaining members shall come from the public sector, with the latter to be chosen from among the recommendees of the Secretary of Labor and Employment. Upon assumption into office, the members nominated by the workers and employers organizations shall divest themselves of any affiliation with or interest in the federation or association to which they belong. The Commission may sit en banc or in five (5) divisions, each composed of three (3) members. The Commission shall sit en banc only for purposes of promulgating rules and regulations governing the hearing and disposition of cases before any of its divisions and regional branches and formulating policies affecting its administration and operations. The Commission shall exercise its adjudicatory and all other powers, functions and duties through its divisions. Of the five (5) divisions, the first and second divisions shall handle cases coming from the National Capital Region and the third, fourth and fifth divisions, cases from other parts of Luzon, from the Visayas and Mindanao, respectively. The divisions of the Commission shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdiction. 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. The conclusions of a division on any case submitted to it for decision shall be reached in consultation before the case is assigned to a member for the writing of the opinion. It shall be mandatory for the division to meet for purposes of the consultation ordained therein. A certification to this effect signed by the Presiding Commissioner of the division shall be issued, and a copy thereof attached to the record of the case and served upon the parties. The Chairman shall be the Presiding Commissioner of the first division, and the four (4) other members from the public sector shall be the Presiding Commissioners of the second, third, fourth and fifth divisions, respectively. In case of the effective absence or incapacity of the Chairman, the Presiding Commissioner of the second division shall be the Acting Chairman. The Chairman, aided by the Executive Clerk of the Commission, shall have administrative supervision over the Commission and its regional branches and all its personnel, including the Executive Labor Arbiters and Labor Arbiters. The Commission when sitting en banc, shall be assisted by the same Executive Clerk, and, when acting thru its Divisions, by said Executive Clerk for its First Division and four (4) other Deputy Executive Clerks for the Second, Third, Fourth, and Fifth Divisions, respectively, in the performance of such similar or equivalent functions and duties as are discharged by the Clerk of Court and Deputy Clerks of Court of the Court of Appeals." (Emphasis supplied) In view of the enactment of Republic Act 6715, the aforementioned rules requiring the Commission en banc to decide or resolve a certified dispute have accordingly been repealed. This is supported by the fact that on March 21, 1989, the Secretary of Labor, issued Administrative Order No. 36 (Series of 1989), which reads: "2. Effective March 21, 1989, the date of the effectivity of Republic Act 6715, the Commission shall cease holding en banc sessions for purposes of adjudicating cases and shall discharge their adjudicatory functions and powers through their respective Divisions." Contrary to the claim of the petitioner, the above-cited Administrative Order is valid, having been issued in accordance with existing legislation as the Secretary of Labor is clothed with the power to promulgate rules for the implementation of the said amendatory law.:-cralaw
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Section 36 of R.A. 6715 provides: Section 36. Rule-Making Authority. The Secretary of Labor and Employment is hereby authorized to promulgate such rules and regulations as may be necessary to implement the provisions of this Act." Moreover, it is to be emphasized and it is a matter of judicial notice that since the effectivity of R.A. 6715, many cases have already been decided by the five (5) divisions of the NLRC. We find no legal justification in entertaining petitioner's claim considering that the clear intent of the amendatory provision is to expedite the disposition of labor cases filed before the Commission. To rule otherwise would not be congruous to the proper administration of justice. As to the second issue, the Court is convinced that the public respondent committed no grave abuse of discretion in resolving only the sole issue certified to by the Secretary and formulating a CBA which covers the bargaining units consisting of all regular rank-and-file employees of the respondent company at Makati, Alabang and Cabuyao only. In its assailed resolution, public respondent stated: "A perusal of the records and proceedings of this case reveals that after the issuance by the Secretary of Labor of his Order dated 28 October 1988 certifying the dispute to Us, the Union filed an Urgent Manifestation seeking the modification of the certification order to include the Cebu Davao and Cagayan de Oro divisions, the employees/workers therein being all bonafide members of the Union which is the sole and exclusive bargaining representative of all the regular rank-and-file workers of the company nationwide. Their non-inclusion in the certification order, the union argues, would give premium to the alleged unlawful act of the Company in entering into separate 'Collective Bargaining Agreements' directly with the workers thereat. "In the same vein, the union manifested its intention to file a complaint for ULP against the company and its officers responsible for such act, which it eventually did. "Considering that the Union had reserved the right to prosecute the Company and its officers responsible for the alleged unlawful execution of the CBA directly with the union members in Cagayan de Oro and Cebu/Davao units, as it has in fact filed a case which is now pending with our Arbitration Branch, the issue as to whether such acts constitute ULP is best heard and decided separately from the certified case, not only because of the evidentiary need to resolve the issue, but also because of the delay that may ensue in the resolution of the present conflict. "Furthermore, the consolidation of the issue with the instant case poses complicated questions regarding venue and joinder of parties. We feel that each of the issues propounded by the parties shall be better dealt with separately according to its own merits. "Thus, We rule to resolve the sole issue in dispute certified to this Commission, i.e., the deadlock in the collective bargaining negotiations in Cabuyao/Alabang and Makati units." (Rollo, pp. 174176) We agree. Public respondent's resolution is proper and in full compliance with the order of the Secretary of Labor. The concomitant delay that will result in resolving petitioner's motion for the modification of the certification order to determine whether to include Cebu/Davao and Cagayan de Oro Divisions or not will defeat the very purpose of the Secretary of Labor's assumption of jurisdiction and his subsequent certification order for compulsory arbitration. The assumption of jurisdiction by the Secretary of Labor over labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest is in the nature of a police power measure. It cannot be denied that the private respondent is engaged in an undertaking affected with public interest being one of the largest manufacturers of food products. The compelling consideration of the Secretary's assumption of jurisdiction is the fact that a prolonged strike or lockout is inimical to the national economy and thus, the need to implement some measures to suppress any act which will hinder the company's essential productions is indispensable for the promotion of the common good. Under this situation, the Secretary's certification order for compulsory arbitration which was intended for the immediate formulation of an already delayed CBA was proper.
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Corollarily, the NLRC was thereby charged with the task of implementing the certification order for compulsory arbitration. As the implementing body, its authority did not include the power to amend the Secretary's order (University of Santo Tomas v. National Labor Relations Commission, UST Faculty Union, G.R. No. 89920, October 18, 1990).:- nad For the same reason, We rule that the prayer to declare the respondent company guilty of acts of unfair labor practice when it allegedly resorted to practices designed to delay the collective bargaining negotiations cannot be subsumed in this petition, it being beyond the scope of the certification order. Petitioner argues that because of the public respondent's actuation in this regard, it committed grave abuse of discretion as it allowed multiplicity of suits and splitting causes of action which are barred by procedural rule. We cannot subscribe to this argument. In the recent case of the Philippine Airlines, Inc. v. National Labor Relations Commission, this Court had occasion to define what a compulsory arbitration is. In said case, this Court stated: "When the consent of one of the parties is enforced by statutory provisions, the proceeding is referred to as compulsory arbitration In labor cases, compulsory arbitration is the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties. (G.R. No. 55159, 22 Dec. 89)." When sitting in a compulsory arbitration certified to by the Secretary of Labor, the NLRC is not sitting as a judicial court but as an administrative body charged with the duty to implement the order of the Secretary. Its function only is to formulate the terms and conditions of the CBA and cannot go beyond the scope of the order. Moreover, the Commission is further tasked to act within the earliest time possible and with the end in view that its action would not only serve the interests of the parties alone, but would also have favorable implications to the community and to the economy as a whole. This is the clear intention of the legislative body in enacting Art. 263 paragraph (g) of the Labor Code, as amended by Section 27 of R.A. 6175, which provides: (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 lockout employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same.nad(Emphasis supplied) In view of the avowed but limited purpose of respondent's assumption of jurisdiction over this compulsory arbitration case, it cannot be faulted in not taking cognizance of other matters that would defeat this purpose. As regards the third issue raised by petitioner, this Court finds the provisions of Article 253 and Article 253-A of the Labor Code as amended by R.A. 6715 as the applicable laws, thus: "Art. 253. Duty to bargain collectively when there exists a collective bargaining agreement. When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. Art. 253-A. Terms of a collective bargaining agreement. Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining
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agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in the Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code." Chanrobles virtuallawlibrary(Emphasis supplied) In the light of the foregoing, this Court upholds the pronouncement of the NLRC holding the CBA to be signed by the parties effective upon the promulgation of the assailed resolution. It is clear and explicit from Article 253-A that any agreement on such other provisions of the CBA shall be given retroactive effect only when it is entered into within six (6) months from its expiry date. If the agreement was entered into outside the six (6) month period, then the parties shall agree on the duration of the retroactivity thereof.- nad The assailed resolution which incorporated the CBA to be signed by the parties was promulgated June 5, 1989, and hence, outside the 6 month period from June 30, 1987, the expiry date of the past CBA. Based on the provision of Section 253-A, its retroactivity should be agreed upon by the parties. But since no agreement to that effect was made, public respondent did not abuse its discretion in giving the said CBA a prospective effect. The action of the public respondent is within the ambit of its authority vested by existing laws. In assailing the public respondent's actuation, the Union cited the case of Villar v. Inciong (121 SCRA 444) where this Court ruled: ". . . 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 . . ." In the aforecited case, the Court only pointed out that, it is not right for union members to argue that they cannot be covered by the past and the new CBAs both containing the same closed-shop agreement for acts committed during the interregnum. What was emphasized by this Court is that in no case should there be a period in which no agreement would govern at all. But nowhere in the said pronouncement did We rule that every CBA contracted after the expiry date of the previous CBA must retroact to the day following such date. Hence, it is proper to rule that in the case at bar, the clear and unmistakable terms of Articles 253 and 253-A must be deemed controlling. Articles 253 and 253-A mandate the parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period prior to the expiration of the old CBA and/or until a new agreement is reached by the parties. Consequently, there being no new agreement reached, the automatic renewal clause provided for by the law which is deemed incorporated in all CBAs, provides the reason why the new CBA can only be given a prospective effect. Petitioner claims that because of the prospective effect of the CBA, union members were deprived of substantial amount of monetary benefits which they could have enjoyed had the CBA be given retroactive effect. This would include backwages, the immediate effects of the mandated wage increase on the fringe benefits such as the 13th and 14th month pay, overtime premium, and right to differential pay, leaves, etc. This Court, is not unmindful of these. Nevertheless, We are convinced that the CBA formulated by public respondent is fair, reasonable and just. Even if prospective in effect, said CBA still entitles the Nestle workers and employees reasonable compensation and benefits which, in the opinion of this Court, is one of the highest, if not the highest in the industry. Petitioner did not succeed in overcoming the
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presumption of regularity in the performance of the public respondent's functions. Even if the resolution fell short of meeting the numerous demands of the union, the petitioner failed to establish that public respondent committed grave abuse of discretion in not giving the CBA a retrospective effect. The fourth and fifth assignment of errors should be resolved jointly considering that they are the terms and conditions of the CBA. According to petitioner, the terms and conditions thereof are inadequate, unreasonable, incompetitive and thus, prejudicial to the workers. It further decries public respondent's alleged taking side with the private respondent. Petitioner contends that in issuing the assailed resolutions, public respondent considered only the position of the private respondent and totally disregarded that of the petitioner. It further avers that the awards are bereft of any factual and legal basis. Petitioner made so many claims and statements which were adopted and asserted without good ground. It fails to substantiate why, in not granting its demands for the inclusion in the CBA of a "Contract Signing Bonus" and a "Modified Union Shop Agreement," the assailed resolutions were erroneous and were drawn up arbitrarily and whimsically.chanrobles virtual law library In the case of Palencia v. National Labor Relations Commission, G.R. No. 75763, August 21, 1987, 153 SCRA 247, We ruled that the findings of fact of the then Court of Industrial Relations (now NLRC), are conclusive and will not be disturbed. Thus: "Following a long line of decisions this Court has consistently declined to disturb the findings of fact of the then Court of Industrial Relations whose functions the NLRC now performs. [Pambusco Employees Union Inc. v. Court of Industrial Relations, 68 Phil. 591 (1939); nad Manila Electric Co. v. National Labor Union, 70 Phil. 617 (1940); San Carlos Milling Co. v. Court of Industrial Relations, 111 Phil. 323 (1961),1 SCRA 734; Philippine Educational Institution v. MLQSEA Faculty Assn., 135 Phil. 282 (1968), 26 SCRA 272; University of Pangasinan Faculty Union v. University of Pangasinan and NLRC, G.R. No. L-63122, February 20, 1984, 127 SCRA 691]. The findings of fact are conclusive and will not be disturbed in the absence of a showing that there has been grave abuse of discretion. [Philippine Educational Institution v. MLQSEA Faculty Association, 26 SCRA 272, 276] and there being no indication that the findings are unsubstantiated by evidence [University of Pangasinan Faculty Union v. University of Pangasinan and NLRC, G.R. No. 63122, February 20, 1984, 127 SCRA 694, 704]." Moreover, the NLRC is in the best position to formulate a CBA which is equitable to all concerned. Because of its expertise in settling labor disputes, it is imbued with competence to appraise and evaluate the evidence and positions presented by the parties. In the absence of a clear showing of grave abuse of discretion, the findings of the respondent NLRC on the terms of the CBA should not be disturbed. Taken as a whole, the assailed resolutions are after all responsive to the call of compassionate justice observed in labor law and the dictates of reason which is considered supreme in every adjudication. ACCORDINGLY, PREMISES CONSIDERED, the petition is DISMISSED. The Resolutions of the NLRC, dated June 5, 1989 and August 8, 1989 are AFFIRMED, except insofar as the ruling absolving the private respondent of unfair labor practice which is declared SET ASIDE OVERSEAS WORKERS WELFARE ADMINISTRATION vs. ATTY. CESAR L. CHAVEZ G.R. No. 169802 June 8, 2007 The Case Petitioner Overseas Workers Welfare Administration (OWWA), comes to this Court via the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the 22 September 2005 Decision1 of the Court of Appeals in CA-G.R. SP No. 87702, which affirmed the Order2 dated 30 September 2004, of the Regional Trial Court (RTC), Pasay City, Branch 117, in Civil Case No. 04-0415CFM. The RTC granted the issuance of a writ of preliminary injunction restraining OWWA from implementing its new organizational structure. Factual Antecedents
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OWWA is a government agency tasked primarily to protect the interest and promote the welfare of overseas Filipino workers (OFWs).3 OWWA traces its beginnings to 1 May 1977, when the Welfare and Training Fund for Overseas Workers in the Department of Labor and Employment (DOLE) was created by virtue of Letter of Instructions No. 537, with the main objective, inter alia, of providing social and welfare services to OFW, including insurance coverage, social work, legal and placement assistance, cultural and remittances services, and the like. On 1 May 1980, Presidential Decree No. 1694 was signed into law, formalizing the operations of a comprehensive Welfare Fund (Welfund), as authorized and created under Letter of Instructions No. 537. Presidential Decree No. 1694 further authorized that contributions to the Welfare and Training Fund collected pursuant to Letter of Instructions No. 537 be transferred to the Welfund. On 16 January 1981, Presidential Decree No. 1809 was promulgated, amending certain provisions of Presidential Decree No. 1694.4 Subsequently, Executive Order No. 126 was passed which reorganized the Ministry of Labor and Employment. Executive Order No. 126 also renamed the Welfare Fund as the OWWA. From the records, it is undisputed that on 9 January 2004, as there was yet no formal OWWA structure duly approved by the Department of Budget and Management (DBM) and the Civil Service Commission (CSC), the OWWA Board of Trustees passed Resolution No. 001,5 Series of 2004, bearing the title "Approving the Structure of the Overseas Workers Welfare Administration," and depicting the organizational structure and staffing pattern of the OWWA, as approved by Patricia A. Sto. Tomas (Sto. Tomas), then Chair of the OWWA Board of Trustees and then Secretary of the DOLE. According to Resolution No. 001, the structuring of the OWWA will stabilize the internal organization and promote careerism among the employees. It will also ensure a more efficient and effective delivery of programs and services to member-OFWs. Resolution No. 001 resolved, thus: RESOLVED therefore, to approve as it is hereby approved, the OWWA Structure which is hereto attached and made an integral part of this Resolution, comprising mainly of the approved organizational chart, functional descriptions and staffing pattern, subject to the following: a. There will be no displacement of existing regular employees; b. There will be no temporary appointments; and c. There will be no hiring of casuals, contractuals or consultants in the new structure. RESOLVED further, that the OWWA Structure be immediately submitted for the appropriate actions of competent authorities, particularly the DBM and CSC.6 On 24 March 2004, DBM Secretary Emilia T. Boncodin (Boncodin), approved the organizational structure and staffing pattern of the OWWA.7 In her approval thereof, she stated that the total funding requirements for the revised organizational structure shall be P107,546,379 for four hundred (400) positions. Moreover, DBM Secretary Boncodin underscored that the funding shall come solely from the OWWA funds and that no government funds shall be released for the implementation of the changes made. On 31 May 2004, OWWA Administrator Virgilio R. Angelo (Angelo), issued Advisory No. 01,8 advising the officials and employees of the OWWA that the DBM had recently approved OWWAs organizational chart, functional statements, and the staffing pattern. Advisory No. 01 also announced that a Placement Committee will be created to evaluate and recommend placement of all regular/permanent incumbents of OWWA in the new organizational chart and staffing pattern. All employees were asked to indicate in writing their interest or preference in any of the approved plantilla item, especially for promotion to the Human Resources Management Division, not later than 11 June 2004. Further, Advisory No. 01 emphasized that the OWWA Board of Trustees, thru its Resolution No. 001, Series of 2004, had declared the policy that there will be no displacement of existing regular/permanent employees. Qualified casual and contractual personnel may apply for any vacant item only after all regular/permanent employees of OWWA had been placed.
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Subsequently, on 3 June 2004, DOLE Secretary Sto. Tomas issued Administrative Order No. 171, Series of 2004, creating a Placement Committee to evaluate qualifications of employees; and to recommend their appropriate placement in the new organizational chart, functional statements and staffing pattern of the OWWA. Administrative Order No. 171 was partially amended by Administrative Order No. 171-A, issued by DOLE Acting Secretary Manuel G. Imson (Imson), authorizing the Placement Committee to recommend to the OWWA Administrator their evaluations, which shall thereafter be endorsed to the DOLE Secretary for consideration.9 The Placement Committee was directed to comply with the pertinent CESB/CSC/DBM rules and regulations on its recommended placement of all personnel of OWWA based on the following parameters, to wit10 : 1. There would be no diminution nor displacement of permanent/regular employees of OWWA. 2. Qualified casuals and contractual personnel may likewise be considered in the staffing pattern only after ensuring that the regular(s)/permanent employees of OWWA have already been placed. 3. Decentralization of functions to bring OWWA services closer to the public shall be adopted. Thus, priority in some promotions shall be given to those who opt to be assigned in the regional offices, aside from performance. 4. Deployment in the overseas posts shall be made on rotation basis from both the frontline and the administrative staff, based on performance. 5. Regular/permanent incumbents interested for promotion should indicate their interest in writing to the Placement Committee: Attn: The Chairperson. 6. Those who may opt to retire should submit to the HRMD, their application for retirement, copy furnished the Budget Division for budget allocation purposes. The Placement Committee should complete its task not later than June 30, 2004. On 8 June 2004, OWWA Administrator Angelo issued Advisory No. 02, inviting OWWA officials and employees to an orientation on the new structure, functions and staffing pattern of the OWWA. Moreover, Advisory No. 02 required the holding of elections for the First and Second Level Representatives who will elect from among themselves the regular official representatives and alternates in the Placement Committee deliberations. On 11 June 2004, Advisory No. 03 was issued, announcing the conduct of an election for representatives and alternates representing the employees in the first [Salary Grades (SG) 1-9] and second level (SG 10-24), pursuant to Administrative Order No. 171, dated 3 June 2004, as amended by Administrative Order No. 171-A. On 18 June 2004, DOLE Acting Secretary Imson issued Administrative Order No. 186, Series of 2004,11prescribing the guidelines on the placement of personnel in the new staffing pattern of the OWWA. On 29 June 2004, herein respondents filed with the RTC, a Complaint for Annulment of the Organizational Structure of the OWWA, as approved by OWWA Board Resolution No. 001, Series of 2004, with Prayer for the Issuance of a Writ of Preliminary Injunction12 against herein petitioner OWWA and its Board of Trustees.13 The case was docketed as Civil Case No. 04-0415-CFM. In their Complaint, respondents alleged that the OWWA has around 24 consultants, 29 casual employees, 76 contractual workers, and 356 officers and employees, which number does not include the 85 contractual employees in the Office of the Secretariat of the OWWA Medicare.14 Respondents posited that the approved Organizational Structure and Staffing Pattern of the OWWA increases the number of regular plantilla positions from 356 to 400; however, the increase of 42 positions will not absorb the
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aforementioned consultants and casual and contractual workers. They further averred that the plantilla positions in the Central Office will be reduced from 250 to 140, while the regional offices will have an increase of 164 positions. According to the respondents, the resulting decrease in the number of employees in the Central Office will result in the constructive dismissal of at least 110 employees. Meanwhile, the deployment of the regular central office personnel to the regional offices will displace the said employees, as well as their families. Respondents challenged the validity of the new organizational structure of the OWWA. In fine, they contended that the same is null and void; hence, its implementation should be prohibited. Respondents prayed for the issuance of a writ of preliminary injunction to restrain petitioners from: 1) implementing its organizational structure as approved by the OWWA Board of Trustees in its Resolution dated 9 January 2004; and 2) advertising and proceeding with the recruitment and placement of new employees under the new organizational structure.15 Further, respondents prayed that after trial on the merits, OWWAs organizational structure be declared as unconstitutional and contrary to law; and the OWWA Board of Trustees be declared as having acted contrary to the Constitution and existing laws, and with grave abuse of discretion in approving Resolution No. 001, dated 9 January 2004.16 The Ruling of the RTC On 30 September 2004, the RTC rendered an Order17 granting respondents prayer for a writ of preliminary injunction upon the filing of a bond in the sum of P100,000.00. In the grant thereof, the RTC reasoned that any move to reorganize the structure of the OWWA requires an amendatory law. It deemed Resolution No. 001 was not merely a "formalization of the organizational structure and staffing pattern of the OWWA," but a disruption of the existing organization which disturbs and displaces a number of regular employees, including consultants and casual and contractual employees. The RTC ratiocinated in this wise: x x x All told, what is being done now at OWWA is a reorganization of its structure as originally conceived under P.D. No. 1694 [Organization and Administration of the Welfare for Overseas Workers] and P.D. No. 1809 [Amending Certain Provisions of Presidential Decree 1694, Creating the "Welfare Fund for Overseas Workers"]. In the (sic) light of Section 11 of R.A. No. 6656 which provides that "the executive branch of the government shall implement reorganization schemes within a specified period of time authorized by law", this court doubts whether a reorganization of OWWA can be effected without an enabling law. Further, defendants do not dispute the fact that while the mechanics of the reorganization is still being forged, the DOLE already processed applications and eventually hired employees not from among the existing employees of the OWWA. This appears to be in contravention of Section 4 of R.A. No. 6656 which provides: "Sec. 4. Officers and employees holding permanent appointments shall be given preference for appointment to the new positions in the approved staffing pattern comparable to their former position or in case there are not enough comparable positions, to positions next lower in rank. "No new employees shall be taken in until all permanent officers and employees have been appointed, including temporary and casual employees who possess the necessary qualification requirements, among which is the appropriate civil service eligibility for permanent appointment to positions in the approved staffing pattern, in case there are still positions to be filled, unless such positions are policy-determining, primarily confidential or highly technical in nature."
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Furthermore, defendants (sic) do not dispute the fact that the Placement Committee was hastily constituted, that its members were not educated of their task of job placement, that there was no real to goodness (sic) personnel evaluation and, finally, the Chairman of the Committee was simply hand-picked by the DOLE Secretary contrary to the explicit injunction of Section 8 of the Implementing Rules of R.A .No. 6656 that "the members shall elect their Chairman."18 The RTC also cited the protection afforded by the Constitution to workers, specifically, officers or employees of the Civil Service in ruling that the existing organization of the OWWA need not be disturbed in any way and no single worker will be removed or displaced. Thus: This court entertains no doubt that as workers, plaintiffs enjoy a right that is protected both by the Constitution and statutes. Thus, "(n)o officer or employee of the civil service shall be removed or suspended except for cause provided by law. "(Sec. 2, par. 3, Art. IX, Constitution). "No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws." (Sec. 1, Art. III; ibid.). A persons job is his property. In many cases, as in the Philippine setting, ones job also means ones life and the lives of those who depended on him. Hence, it is a policy of the State to "free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all." (Sec. 8, Art. II, ibid.) Any act that, contrary to law, tends to deprive a worker of his work, violates his rights.19 Finally, the RTC defended its jurisdiction over the controversy despite petitioners protestations that jurisdiction over respondents complaint is lodged in the administrative agencies tasked to implement the new OWWA structure. It ruled that the doctrine of primary jurisdiction is applicable only where the administrative agency exercises its quasi-judicial or administrative function; but, where what is challenged is the constitutionality of a rule or regulation issued by the administrative agency in the performance of its quasi-legislative functions, regular courts have jurisdiction over the matter.20 Therefore, the RTC, in its Order, dated 30 September 2004, granted respo ndents prayer for a writ of preliminary injunction, to wit: WHEREFORE, upon plaintiffs (sic) filing of a bond in the sum of P100,000.00, let a writ of preliminary injunction issue in: 1) restraining the defendants from implementing the new organizational structure of OWWA approved by the Board of Trustees on January 9, 2004 and 2) restraining the defendants from advertising and proceeding with the recruitment and placement of new employees under the new organizational structure.21 Without filing a Motion for Reconsideration, petitioner, thru the Office of the Solicitor General (OSG),22 filed with the Court of Appeals, a Petition for Certiorari and Prohibition with Prayer for Issuance of a Temporary Restraining Order and Writ of Preliminary Injunction under Rule 65 of the Rules of Court, assailing the RTC Order of 30 September 2004.23 The Ruling of the Appellate Court On 22 September 2005, the Court of Appeals rendered the assailed Decision, which dismissed the petition. It affirmed the court a quos findings that respondents possess a clear and legal right to the immediate issuance of the writ. It resolved that it was proper for the RTC to restrain, for the meantime, the implementation of OWWAs reorganization to prevent injury until after the main case is heard and decided.24 It found respondents allegations sufficient to prove the existence of a right that should be protected by a writ of preliminary injunction. Thus: Petitioner averred, too, that majority of the casuals, contractuals and consultants have been employed for more than ten (10) years, if not twenty (20) years, and were not regularized simply due to lack of regular positions in the plantilla or the freezing of recruitment thereto.
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To be sure, private respondents have convincingly adduced evidence of specific acts to substantiate their claim of impending injury and not merely allegations of facts and conclusions of law, but factual evidence of a clear and unmistakable right of being displaced or dismissed by the planned reorganization. These allegations are substantial enough to prove the right in esse. At best, the anxiety of being dismissed or displaced is not premature, speculative and purely anticipatory, but based on real fear which shows a threatened or direct injury[,] it appearing that the reorganization of the OWWA is already slowly being put into motion. Apropos, having successfully established a direct and personal injury as a consequence of the new reorganization[al] structure, it was only proper for the court a quo to grant the writ of preliminary injunction to restrain, for the meantime, the implementation of the reorganization to prevent injury on respondents until after the main case is heard and decided. Truly, as correctly observed by the trial court, private respondents enjoy a right that is protected both by the Constitution and statutes. A persons job is not only his property but his very life. The constitutional protection of the right to life is not just a protection of the right to be alive or to the security of ones limb against physical harm. The right to life is also a right to a good life (Bernas, The Constitution of the Republic of the Philippines, A Commentary, Volume I, First Edition, 1997) which includes the right to earn a living or the right to a livelihood. A fortiori, the requisites for preliminary injunction to issue have adequately been established: the existence of a clear and unmistakable right, and the acts violative of said right. While the evidence to be submitted at the hearing on the motion for preliminary injunction need not be conclusive and complete, We find that private respondents have adequately shown that they are in clear danger of being irreparably injured unless the status quo is observed, in the meantime x x x. 25 The appellate court was likewise of the opinion that the substantial issues raised before the court a quo anent the validity of the organizational structure of the OWWA; the alleged lack of authority of the DBM to approve the same including the alleged violation by the OWWA of relevant statutes; the lack of consultation prior to the reorganization; and the supposed illegal constitution of the Placement Committee, are matters which the RTC is behooved to resolve. In finding no error on the part of the RTC, the Court of Appeals said that without an injunctive relief, any decision that may be rendered in the suit would already be ineffective, moot and academic.26 Aggrieved, petitioner through the OSG,27 filed the instant petition. In the instant petition, petitioner prays that the appealed Decision of the Court of Appeals be reversed and set aside, and that Civil Case No. 04-0415-CFM before the RTC be dismissed for lack of merit.28 The Issue The issue to be resolved is, whether the court a quo gravely abused its discretion in issuing the writ of preliminary injunction. Stated otherwise, the issue is whether the Court of Appeals erred in affirming the RTC in its grant of the assailed writ of preliminary injunction. Clearly, we are thus confined to the matter of the propriety of the issuance of the writ of preliminary injunction by the trial court, and not to the merits of the case which is still pending before the latter. The Case for the Petitioner First, in support of their petition, petitioner posits that the OWWA has already implemented the new organizational structure as the advertisement, recruitment, and placement of OWWA employees have been accomplished; and in the process, none of the respondents have been dismissed. Moreover, the act sought to be prevented has long been consummated; hence, the remedy of injunction should no longer be entertained.
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Second, petitioner adduces the proposition that the reorganization of the OWWA does not require an amendatory law contrary to the holding of the court a quo. The OSG maintains that there was no previous OWWA structure in the first place; and neither did Presidential Decree No. 1694 29 nor Presidential Decree No. 1809,30 provide for an organizational structure for the OWWA. Third, petitioner disputes the existence of the rights of respondents to be protected by the preliminary injunctive writ sought on the ground that the latter did not shown any legal right which needs the protection thereof, nor did they show that any such right was violated to warrant the issuance of a preliminary injunction. Petitioner asserts that respondents did not claim that they are the consultants or casual or contractual workers who would allegedly be displaced; and neither did respondents show that there is only one right or cause of action pertaining to all of them. Neither was there a violation of their rights because respondents have all been given appointments in the new OWWA organizational structure.31 Finally, on respondents allegation that the reorganization of the OWWA will reassign permanent employees to its regional offices, and consequently, displace them and their families, petitioner counters that an employee may be reassigned from one organizational unit to another in the same agency, provided that such reassignment shall not involve a reduction in rank, status or salary.32 The Case for the Respondents Respondents argue that the petitioner railroaded and raced against time to implement the new OWWA organizational structure. They claim that in the process, petitioner exhibited manifest bad faith and injustice. What existed was a hasty reorganization and restructuring of the OWWA without adequate study and consultation, which was thereafter submitted and immediately approved by the Board of Trustees. They insist that the creation of an organizational structure of the OWWA would require a presidential fiat or a legislative enactment pursuant to Republic Act No. 6656. 33 Further, respondents maintain that their right in esse was established during the proceedings for the issuance of the writ of preliminary injunction, as their complaint sufficiently showed the rights and interests of the parties. They alleged that at no stage in the proceedings did petitioner question such rights. In fact, petitioner made a waiver in open court to the effect that it was not presenting testimonial evidence. According to the respondents, such an act was constitutive of an admission by petitioner of the existence of a right in esse in their favor. The Ruling of the Court Section 1, Rule 58 of the Rules of Court, defines a preliminary injunction as an order granted at any stage of an action prior to the judgment or final order requiring a party or a court, an agency or a person to refrain from a particular act or acts.34 Section 3, Rule 58 of the Rules of Court, enumerates the grounds for the issuance of a writ of preliminary injunction as follows: Sec. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be granted when it is established: (a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually; (b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or (c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the
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applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual. A preliminary injunction is granted at any stage of an action or proceeding prior to the judgment or final order.35 It persists until it is dissolved or until the termination of the action without the court issuing a final injunction.36 To be entitled to an injunctive writ, petitioner must show, inter alia, the existence of a clear and unmistakable right and an urgent and paramount necessity for the writ to prevent serious damage.37 A writ of preliminary injunction is generally based solely on initial and incomplete evidence.38 The evidence submitted during the hearing on an application for a writ of preliminary injunction is not conclusive or complete for only a "sampling" is needed to give the trial court an idea of the justification for the preliminary injunction pending the decision of the case on the merits. 39 In fact, the evidence required to justify the issuance of a writ of preliminary injunction in the hearing thereon need not be conclusive or complete.40 It must also be stressed that it does not necessarily proceed that when a writ of preliminary injunction is issued, a final injunction will follow.41 Moreover, the grant or denial of a preliminary injunction is discretionary on the part of the trial court.42 Thus, the rule is, the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of the trial court, unless the court commits grave abuse of discretion. 43 In Toyota Motor Phils. Corporation Workers Association (TMPCWA) v. Court of Appeals, 44 this Court pronounced that grave abuse of discretion in the issuance of writs of preliminary injunction implies a capricious and whimsical exercise of judgment that is equivalent to lack of jurisdiction; or the exercise of power in an arbitrary or despotic manner by reason of passion, prejudice or personal aversion amounting to an evasion of positive duty or to a virtual refusal to perform the duty enjoined, or to act at all in contemplation of law. It is clear that the assessment and evaluation of evidence in the issuance of the writ of preliminary injunction involve findings of facts ordinarily left to the trial court for its conclusive determination.45 The duty of the court taking cognizance of a prayer for a writ of preliminary injunction is to determine whether the requisites necessary for the grant of an injunction are present in the case before it.46However, as earlier stated, if the court commits grave abuse of its discretion in the issuance of the writ of preliminary injunction, such that the act amounts to excess or lack of jurisdiction, the same may be nullified through a writ of certiorari or prohibition. More significantly, a preliminary injunction is merely a provisional remedy, an adjunct to the main case subject to the latters outcome, the sole objective of which is to preserve the status quo until the trial court hears fully the merits of the case.47 The status quo should be that existing at the time of the filing of the case.48 The status quousually preserved by a preliminary injunction is the last actual, peaceable and uncontested status which preceded the actual controversy.49 The status quo ante litem is, ineluctably, the state of affairs which is existing at the time of the filing of the case. Indubitably, the trial court must not make use of its injunctive power to alter such status.50 We hold that the RTC, in granting the assailed writ of preliminary injunction, committed grave abuse of discretion amounting to lack of jurisdiction. In the case at bar, the RTC did not maintain the status quo when it issued the writ of preliminary injunction. Rather, it effectively restored the situation prior to the status quo, in effect, disposing the issue of the main case without trial on the merits. What was preserved by the RTC was the state of affairs before the issuance of Resolution No. 001, which approved the structure of the OWWA, and the subsequent administrative orders pursuant to its passing. The RTC forgot that what is imperative in preliminary injunction cases is that the writ can not be effectuated to establish new relations between the parties. Hence, we find herein an application of the lessons that can be learned from Rualo v. Pitargue.51 In Rualo, this Court determined, among others, the propriety of the writ of preliminary injunction which was issued restraining the Bureau of Internal Revenue from further implementing its reorganization, and enforcing the orders52 pursuant thereto. This Court, in lifting the therein assailed writ, underscored the legal proscription which states that courts should avoid issuing a writ of preliminary injunction which would in effect dispose of the main case without trial.53 According to the Court in Rualo, the trial court, in issuing the writ of preliminary injunction, did not maintain the status quo but restored the situation before the
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status quo, that is, the situation before the issuance of the Revenue Travel Assignment Orders.54 The Court further declared that what existed was an acceptance of therein respondents premise of the illegality of the reorganization, and a prejudgment on the constitutionality of the assailed issuances. 55 As in Rualo, we find herein a similar case where the RTC admitted hook, line and sinker the mere allegations of respondents that the reorganization as instituted was unlawful without the benefit of a full trial on the merits. It also did not maintain the status quo but restored the landscape before the implementation of OWWAs reorganization. In thus issuing the writ of preliminary injunction, the substantive issues of the main case were resolved by the trial court. What was done by the RTC was quite simply a disposition of the case without trial. This is an error in law and an exercise of grave abuse of discretion. Furthermore, we find that the RTC similarly prejudged the validity of the issuances released by the OWWA Board of Trustees, as well as the other governmental bodies (i.e., DBM, DOLE), which approved the organizational structure and staffing pattern of the OWWA. In Rualo, this Court asserted the presumption of regularity of the therein assailed government issuances. In this case, we accentuate the same presumption. Ineluctably, this Court is compelled to rule against the propriety of the grant of the assailed ancillary writ of preliminary injunction on the material ground that the records do not support respondents entitlement thereto. We do not find attendant the requisites for the issuance of a preliminary injunctive writ. This Court is not convinced that respondents were able to show a clear and unmistakable legal right to warrant their entitlement to the writ. A mere blanket allegation that they are all officers and employees of the OWWA without a showing of how they stand to be directly injured by the implementation of its questioned organizational structure does not suffice to prove a right in esse. As was aptly raised by the petitioner, respondents did not show that they were dismissed due to the challenged reorganization. There was no showing that they are the employees who are in grave danger of being displaced. Respondents were similarly wanting in proving that they are the consultants and contractual and casual employees, who will allegedly suffer by reason of the re-organization. This Court is consistently adamant in demanding that a clear and positive right especially calling for judicial protection must be established. 56 As has been reiterated, injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in esse and which may never arise, or to restrain an action which did not give rise to a cause of action.57 In contrast, the rights of OWWA are accorded to it by law. The importance of the reorganization within the body and the benefits that will accrue thereto were accentuated by the Board of Trustees in its Resolution No. 001. The aforesaid resolution declared, inter alia, that the structuring of the OWWA will stabilize the internal organization and promote careerism among the employees, as well as ensure a more efficient and effective delivery of programs and services to member-OFWs.58 However, we go further to opine that even the question of whether the OWWA requires an amendatory law for its reorganization is one that should be best threshed out in the disposition of the merits of the case. Indeed, the question as to the validity of the OWWA reorganization remains the subject in the main case pending before the trial court. Its annulment is outside the realm of the instant Petition. Assuming arguendo that respondents stand to be in danger of being transferred due to the reorganization, under the law, any employee who questions the validity of his transfer should appeal to the CSC.59 Even then, administrative remedies must be exhausted before resort to the regular courts can be had. Finally, as aptly pointed out by the OSG, the acts sought to be prohibited had been accomplished. Injunction will not lie where the acts sought to be enjoined have already been accomplished or consummated.60 The wheels of OWWAs reorganization started to run upon the approval by the Board of Trustees of its Resolution No. 001 entitled, "Approving the Structure of the Overseas Workers Welfare Administration." Subsequently, a series of issuances which approved the organizational structure and staffing pattern of the agency was issued by the DBM, the OWWA Administrator, and by the DOLE. Resolution No. 001 has already been implemented. Case law has it that a writ of preliminary injunction will not issue if the act sought to be enjoined is a fait accompli.1avvphi1 A writ of preliminary injunction being an extraordinary event,61 one deemed as a strong arm of equity or a transcendent remedy,62 it must be granted only in the face of actual and existing substantial rights. In the
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absence of the same, and where facts are shown to be wanting in bringing the matter within the conditions for its issuance, the ancillary writ must be struck down for having been rendered in grave abuse of discretion. WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals, dated 22 September 2005 in CA-G.R. SP No. 87702, is REVERSED and SET ASIDE. The Writ of Preliminary Injunction issued by the Regional Trial Court pursuant to its Order, dated 30 September 2004, in Civil Case No. 04-0415CFM is LIFTED and SET ASIDE. UNIVERSITY of IMMACULATE, CONCEPCION, INC. vs. The HONORABLE SECRETARY OF LABOR G.R. No. 151379 January 14, 2005 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:
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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 panels 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.1a\^/phi1.net
472

On March 10, 1995, the UNION filed another notice of strike, this time citing as a reason the UNIVERSITYs termination of the individual respondents. The UNION alleged that the UNIVERSITYs 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 Secretarys Order directing the reinstatement of the individual respondents woul d render nugatory the decision of the panel of voluntary arbitrators to exclude them from the collective bargaining unit. The UNIVERSITYs 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 Unions 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 xxx 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
473

The Court of Appeals relied upon the doctrine in St. Scholasticas 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 Secretarys assumption order. This Court finds no merit in the UNIVERSITYs contention. In Metrolab Industries, Inc. v. RoldanConfessor ,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 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 Employments power under Article 263(g) of the La bor 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. l^vvphi1.net The Universitys act of suspending and terminating union members and the Unions 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 labormanagement relations.17 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
474

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 Secretarys Order allowing payroll reinstatement instead of actual r einstatement 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.l^vvphi1.net 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 Unions 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 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. MANILA DIAMOND HOTEL EMPLOYEES UNION vs. THE HON. COURT OF APPEALS G.R. No. 140518 December 16, 2004 This petition for review of a decision of the Court of Appeals arose out of a dispute between the Philippine Diamond Hotel and Resort, Inc. ("Hotel"), owner of the Manila Diamond Hotel, and the Manila Diamond Hotel Employees Union ("Union"). The facts are as follows: On November 11, 1996, the Union filed a petition for a certification election so that it may be declared the exclusive bargaining representative of the Hotels employees for the purpose of collective bargaining. The petition was dismissed by the Department of Labor and Employment (DOLE) on January 15, 1997. After a few months, however, on August 25, 1997, the Union sent a letter to the Hotel informing it of its desire to negotiate for a collective bargaining agreement.1 In a letter dated September 11, 1997, the Hotels Human Resources Department Manager, Mary Anne Mangalindan, wrote to the Union stating that the Hotel cannot recognize it as the employees bargaining agent since its petition for certification election had been earlier dismissed by the DOLE.2 On that same day, the Hotel received a letter from the Union stating that they were not giving the Hotel a notice to bargain, but that they were merely asking for the Hotel to engage in collective bargaining negotiations with the Union for its members only and not for all the rank and file employees of the Hotel.3 On September 18, 1997, the Union announced that it was taking a strike vote. A Notice of Strike was thereafter filed on September 29, 1997, with the National Conciliation and Mediation Board (NCMB) for
475

the Hotels alleged "refusal x x x to bargain" and for alleged acts of unfair labor practice. The NCMB summoned both parties and held a series of dialogues, the first of which was on October 6, 1997. On November 29, 1997, however, the Union staged a strike against the Hotel. Numerous confrontations between the two parties followed, creating an obvious strain between them. The Hotel claims that the strike was illegal and it had to dismiss some employees for their participation in the allegedly illegal concerted activity. The Union, on the other hand, accused the Hotel of illegally dismissing the workers. What is pertinent to this case, however, is the Order issued by the then Secretary of Labor and Employment Cresenciano B. Trajano assuming jurisdiction over the labor dispute. A Petition for Assumption of Jurisdiction was filed by the Union on April 2, 1998. Thereafter, the Secretary of Labor and Employment issued an Order dated April 15, 1998, the dispositive portion of which states: WHEREFORE, premises considered[,] this Office CERTIFIES the labor dispute at the Manila Diamond Hotel to the National Labor Relations Commission, for compulsory arbitration, pursuant to Article 263 (g) of the Labor Code, as amended. Accordingly, the striking officers and members of the Manila Diamond Hotel Employees Union -- NUWHRAIN are hereby directed to return to work within twenty-four (24) hours upon receipt of this Order and the Hotel to accept them back under the same terms and conditions prevailing prior to the strike. The parties are enjoined from committing any act that may exacerbate the situation. The Union received the aforesaid Order on April 16, 1998 and its members reported for work the next day, April 17, 1998. The Hotel, however, refused to accept the returning workers and instead filed a Motion for Reconsideration of the Secretarys Order. On April 30, 1998, then Acting Secretary of Labor Jose M. Espaol, issued the disputed Order, which modified the earlier one issued by Secretary Trajano. Instead of an actual return to work, Acting Secretary Espaol directed that the strikers be reinstated only in the payroll.4 The Union moved for the reconsideration of this Order, but its motion was denied on June 25, 1998. Hence, it filed before this Court on August 26, 1998, a petition for certiorariunder Rule 65 of the Rules of Court alleging grave abuse of discretion on the part of the Secretary of Labor for modifying its earlier order and requiring instead the reinstatement of the employees in the payroll. However, in a resolution dated July 12, 1999, this Court referred the case to the Court of Appeals, pursuant to the principle embodied in National Federation of Labor v. Laguesma.5 On October 19, 1999, the Court of Appeals rendered a Decision dismissing the Unions petition and affirming the Secretary of Labors Order for payroll reinstatement. The Court of Appeals held that the challenged order is merely an error of judgment and not a grave abuse of discretion and that payroll reinstatement is not prohibited by law, but may be "called for" under certain circumstances. 6 Hence, the Union now stands before this Court maintaining that: THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED IN RULING THAT THE SECRETARY OF LABORS UNAUTHORIZED ORDER OF MERE "PAYRO LL REINSTATEMENT" IS NOT GRAVE ABUSE OF DISCRETION7 The petition has merit. The Court of Appeals based its decision on this Courts ruling in University of Santo Tomas (UST) v. NLRC.8There, the Secretary assumed jurisdiction over the labor dispute between striking teachers and the university. He ordered the striking teachers to return to work and the university to accept them under the same terms and conditions. However, in a subsequent order, the NLRC provided payroll reinstatement for the striking teachers as an alternative remedy to actual reinstatement. True, this Court held therein that
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the NLRC did not commit grave abuse of discretion in providing for the alternative remedy of payroll reinstatement. This Court found that it was merely an error of judgment, which is not correctible by a special civil action for certiorari. The NLRC was only trying its best to work out a satisfactory ad hoc solution to a festering and serious problem. However, this Court notes that the UST ruling was made in the light of one very important fact: the teachers could not be given back their academic assignments since the order of the Secretary for them to return to work was given in the middle of the first semester of the academic year. The NLRC was, therefore, faced with a situation where the striking teachers were entitled to a return to work order, but the university could not immediately reinstate them since it would be impracticable and detrimental to the students to change teachers at that point in time. In the present case, there is no showing that the facts called for payroll reinstatement as an alternative remedy. A strained relationship between the striking employees and management is no reason for payroll reinstatement in lieu of actual reinstatement. Petitioner correctly points out that labor disputes naturally involve strained relations between labor and management, and that in most strikes, the relations between the strikers and the non-strikers will similarly be tense.9 Bitter labor disputes always leave an aftermath of strong emotions and unpleasant situations. Nevertheless, the government must still perform its function and apply the law, especially if, as in this case, national interest is involved. After making the distinction between UST and the present case, this Court now addresses the issue of whether the Court of Appeals erred in ruling that the Secretary did not commit any grave abuse of discretion in ordering payroll reinstatement in lieu of actual reinstatement. This question is answered by the nature of Article 263(g). As a general rule, the State encourages an environment wherein employers and employees themselves must deal with their problems in a manner that mutually suits them best. This is the basic policy embodied in Article XIII, Section 3 of the Constitution,10 which was further echoed in Article 211 of the Labor Code.11 Hence, a voluntary, instead of compulsory, mode of dispute settlement is the general rule. However, Article 263, paragraph (g) of the Labor Code, which allows the Secretary of Labor to assume jurisdiction over a labor dispute involving an industry indispensable to the national interest, provides an exception: (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 This provision is viewed as an exercise of the police power of the State. A prolonged strike or lockout can be inimical to the national economy and, therefore, the situation is imbued with public necessity and involves the right of the State and the public to self-protection.12 Under Article 263(g), 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. This Court must point out that the law uses the precise phrase of "under the same terms and conditions," revealing that it contemplates only actual reinstatement. This is in keeping with the rationale that any work stoppage or slowdown in that particular industry can be inimical to the national economy. It is clear that Article 263(g) was not written to protect labor from the excesses of management, nor was it written to ease management from expenses, which it normally incurs during a work stoppage or slowdown. It was an error on the part of the Court of Appeals to view the assumption order of the Secretary as a measure to
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protect the striking workers from any retaliatory action from the Hotel. This Court reiterates that this law was written as a means to be used by the State to protect itself from an emergency or crisis. It is not for labor, nor is it for management. It is, therefore, evident from the foregoing that the Secretarys subsequent order for mere payroll reinstatement constitutes grave abuse of discretion amounting to lack or excess of jurisdiction. Indeed, this Court has always recognized the "great breadth of discretion" by the Secretary once he assumes jurisdiction over a labor dispute. However, payroll reinstatement in lieu of actual reinstatement is a departure from the rule in these cases and there must be showing of special circumstances rendering actual reinstatement impracticable, as in the UST case aforementioned, or otherwise not conducive to attaining the purpose of the law in providing for assumption of jurisdiction by the Secretary of Labor and Employment in a labor dispute that affects the national interest. None appears to have been established in this case. Even in the exercise of his discretion under Article 236(g), the Secretary must always keep in mind the purpose of the law. Time and again, this Court has held that when an official by-passes the law on the asserted ground of attaining a laudable objective, the same will not be maintained if the intendment or purpose of the law would be defeated. 13 WHEREFORE, the petition is GRANTED and the assailed Decision of the Court of Appeals dated October 19, 1999 is REVERSED and SET ASIDE. The Order dated April 30, 1998 issued by the Secretary of Labor and Employment modifying the earlier Order dated April 15, 1998, is likewise SET ASIDE. No pronouncement as to costs.
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CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW

CASES ON LABOR RELATIONS

JEFFREY L. ONTANGCO | PUP - COLLEGE OF LAW