SECOND DIVISION

While G.R. No. 67125 was pending, the Monetary Board

G.R. No. 156761 issued Resolution No. 612, dated June 7, 1985, ordering
October 17, 2006 the liquidation of the Bank. The Monetary Board then
appointed a liquidator who, pursuant to the authority
LADY LYDIA CORNISTA-DOMINGO,
Petitioners, vested by the same Board, terminated the employment
of all the employees of the Bank effective June 15, 1985.
- versus -
Thereafter, the liquidator commenced payment of
NATIONAL LABOR RELATIONS separation pay and other benefits to the terminated
COMMISSION, Respondents.
x----------------------------------------------------------------------------- employees.
-------x
Although a number of the Bank employees accepted
DECISION their separation pay and other benefits and executed
GARCIA, J.: quitclaims and releases therefor in favor of the Bank,
others chose to question their termination. Thus,
By this petition for review on certiorari,[1] petitioners on September 25, 1985, the Unionfiled a supplemental
seek the review and reversal of the consolidated petition for prohibition with preliminary injunction in
Decision[2] dated December 21, 2001 of the Court of G.R. No. 67125 opposing Monetary Board Resolution
Appeals (CA) in CA-G.R. SP No. 51218, CA-G.R. SP No. No. 612.
51219 and CA-G.R. SP No. 51220 declaring as null and
void the September 14, 1993 decision and the On August 24, 1990, the Court promulgated a
November 22, 1993 resolution of the National Labor consolidated[3] en banc Decision[4] in G.R. No. 67125
Relations Commission (NLRC) and reinstating the upholding the authority of the Monetary Board to place
decision dated March 31, 1993 of Labor Arbiter Eduardo the respondent Bank under liquidation as well as the
J. Carpio. Likewise, assailed is the CA Resolution legality of the termination of all the Banks employees,
of January 8, 2003, denying the petitioners motion for including the members of the Union. The Court also
reconsideration. rejected the dismissed employees claim for back wages
as it held that they were not illegally dismissed but
The ultimate facts material to the resolution of the case lawfully separated as a result of the Banks liquidation
are as follows: upon order of the Monetary Board.
On January 2, 1992, Congress enacted Republic Act
On April 10, 1983, by virtue of Resolution No. 334 of the (R.A.) No. 7169,[5] authorizing the Central Bank to
Central Banks Monetary Board, the Philippine Veterans reopen the Bank.
Bank (Bank, hereafter) was placed under receivership.

To facilitate the implementation of R.A. No. 7169, a

In consequence, the Bank adopted a retrenchment and Rehabilitation Committee was created by the Monetary
reorganization program which was challenged before Board. The committee thus created was given the
this Court by the Philippine Veterans Bank Employees power to select and to organize an initial manning force
Union (Union, hereafter) on the ground that the headed by a management team to be staffed by a
program allegedly violated the security of tenure of the trained workforce. Hiring preference was given the
Banks employees, in G.R. No. 67125 entitled Philippine veterans and their dependents, other qualifications
Veterans Bank Employees Union-NUBE v. Philippine being equal.[6]
Veterans Bank.
 In time, the Union appealed the Labor Arbiters decision
At this juncture, several employees of the Bank initiated to the NLRC proper.
a series of cases claiming that the enactment of R.A. No.
7169 nullified Monetary Board Resolution No. 612 On September 14, 1993, the NLRC rendered a
placing respondent Bank under liquidation and, in Decision[8] reversing and setting aside that of the Labor
effect, also nullified the liquidators termination of the Arbiter. Additionally, the NLRC directed the immediate
Banks employees. reinstatement of all Union members subject to the
operational requirements of the Bank which it likewise
On January 20, 1992, the Union filed a petition with the ordered to cease and desist from further hiring new
Secretary of Labor and Employment charging the Bank employees. More specifically, the fallo of the NLRC
with unfair labor practices and praying that the decision reads:
Rehabilitation Committee be directed to cease and
ACCORDINGLY, the decision of
desist from screening and hiring new employees and to
the Labor Arbiter is hereby SET ASIDE
immediately reinstate the Banks former and a new one entered, finding the claim
employees. The petition, docketed as NLRC NCR No. 00- for reinstatement of the appellant to be
legal and proper. Accordingly, Appellee
02426-92, also sought payment of the accrued bank therefore is hereby ordered to
collective bargaining agreement benefits and back immediately reinstate all members of
the appellant union inclusive of those
wages of the employees from the time they were who have executed their quitclaims and
terminated from employment in 1985 up to the time of release and all the rest of the PVBEU
members, who will signify their intention
their actual reinstatement. Several other petitions
to be reinstated from the date of this
seeking essentially the same relief were consolidated Decision. In the meanwhile, however,
with NLRC NCR No. 00-02426-92. that the bank has not fully reopened and
activated all its operational
departments, offices and branches, the
In the meantime, on August 3, 1992, the respondent employees reinstatement shall be
conditioned to actual personnel
Bank resumed operations. requirement of the department branch
office to be reopened, for which reason,
preference shall be given to employees
On March 31, 1993, Labor Arbiter Eduardo J. Carpio
formerly occupying the position being
rendered a decision[7] dismissing NLRC NCR No. 00- reinstated or reactivated or at the
02426-92 and all cases consolidated therewith for lack prerogative and discretion of
management, to any position in the
of merit. The dispositive portion of said decision reads: office provided the latter is of equivalent
rank and at least has the same rate of
Wherefore, premises considered, pay.
the claim of the Union for reinstatement
of the individual complainants it For this purpose, appellee is
represents as well as the claims for hereby ordered to temporarily cease and
payment of backwages, other benefits desist from further hiring new
and damages are hereby, as they should employees which might affect the full
be, dismissed for lack of merit. compliance to this Decision. The claim
for backwages and other CBA benefits
The charge for unfair labor are hereby denied for lack merit.
practice filed by the Union against the
respondent Bank is likewise dismissed The claim for unfair labor practice
for lack of factual and legal basis. is also hereby denied for lack of merit.

SO ORDERED. SO ORDERED.
 terms and conditions of the Compromise
On October 1, 1993, the Bank sought a reconsideration
Agreement.
of the said decision. Six days later, or on October 7,
1993, the Union also moved for its partial SO ORDERED.

reconsideration. Both motions, however, were denied

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

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

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

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

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

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

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

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

bound by the same Compromise Agreement.
WHEREFORE, finding the terms The decision dispositively reads:
and conditions set forth in the
Compromise Agreement to be not
WHEREFORE, in the interest of
contrary to law, morals and public policy,
substantial justice and fair play, the
the same is hereby approved and
order appealed from is hereby partially
considered as in complete and full
vacated and Set Aside in that:
satisfaction of the Decision in the above-
entitled case dated September 14, 1993.
a) For those union members who
received and acknowledged receipt of
The parties are hereby enjoined
the first payment as agreed upon in the
to comply strictly and faithfully with the
Compromise Agreement dated January
 26, 1996 and who executed the
reiterated the March 31, 1993 decision of the Labor
corresponding Quitclaim, Waiver and
Release will be bound by the said Arbiter, to wit:
Compromise Agreement which was PREMISES CONSIDERED, the assailed
made the basis of the Order dated NLRC decision dated September 14,
February 16, 1996 appealed from and 1993 as well as its Resolution
they shall continue to receive the money dated November 22, 1993 (CA-G.R. SP
due them on the second and third No. 51218) are both declared NULL and
payments due on December 15, 1996 VOID and SET ASIDE. The Decision
and December 15, 1997, respectively. dated March 31, 1993 of the Labor
Arbiter Eduardo J. Carpio is hereby
b) For those union members who ordered REINSTATED.
signified their opposition and those who
are similarly situated who did not receive Accordingly, the other two (2) petitions,
and acknowledge receipt of the money, CA-G.R. SP No. 51219 and CA-G.R. SP No.
let the case be remanded to the 51220 are hereby DISMISSED for lack of
Arbitration Branch of origin for further merit.
proceedings. The Labor Arbiter so SO ORDERED.
designated to hear is hereby ordered to
proceed with dispatch so as not to
prejudice the parties as the disposition Partly says the CA in its decision:
hereof has been duly delayed.

SO ORDERED. 1. The Supreme Court said in G.R. No.

67125 (189 SCRA 14) that the PVB
employees were not illegally dismissed
but lawfully separated. This is a
Separate petitions were then filed with the Court by the
pronouncement, as categorical as can
Bank, the Union and the petitioners. The Bank assailed be, that the employment relationship
between the Bank and the separated
the reinstatement of union members while
employees had definitely ceased to exist
the Union questioned the lack of award for as of that time;
backwages. For their part, the petitioners questioned
xxx xxx xxxx
the validity of the compromise agreement.

On December 7, 1998, the Court issued a Resolution 4. It is a well-settled doctrine that

referring the three aforesaid petitions to the CA for reinstatement is proper only in cases of
illegal dismissal. The pronouncement of
appropriate action and disposition, pursuant to St.
the Supreme Court that the PVB
Martin Funeral Homes v. NLRC.[13] In the CA, the Banks employees were not illegally dismissed
petition, PVB v. NLRC, et al., was docketed as CA-G.R. SP forecloses any right of reinstatement
under any circumstance.
No. 51218, that of the Union, PVBEU-NUBE v. NLRC, et While the PVB employees concerned
al., was docketed as CA-G.R. SP No. 51219, and that of should be given priority in hiring, they
cannot demand it as a matter of right.
herein petitioners Lady Lydia Cornista Domingo, et al. v.
NLRC, et al., was docketed as CA-G.R. SP No. 51220. The xxx xxx xxx
Evidently, Domingo, et al. ratified the
three (3) petitions were thereafter consolidated.
Compromise Agreement and even
voluntarily received the first payment
On December 21, 2001, the CA rendered the herein under that agreement, executing the
corresponding Quitclaim, Waiver and
challenged consolidated decision declaring that the Release in the process. Having done that,
NLRC gravely abused its discretion in ordering the they are deemed bound by the
Compromise Agreement under the
reinstatement of the union members and accordingly previously discussed principle of res
declared null and void its September 14, 1993 decision judicata and/or estoppel.
and the November 22, 1993 resolution, and instead
xxx xxx xxx
 rehabilitation affect the Courts pronouncement
in Philippine Veterans Bank Employees Union-NUBE v.
Petitioners are now before the Court via the present
Philippine Veterans Bank[15] that the actions of the
recourse essentially arguing that the CA committed
Monetary Board and its duly appointed liquidator were
reversible error in foreclosing their right to be
valid and that the former employees claim for back
reinstated to their former employment with the Bank
wages must be rejected as they were lawfully
upon its rehabilitation and in upholding the validity of
separated. Reinstatement is a relief accorded only to an
the Compromise Agreement entered into by the Bank
employee who was illegally dismissed.[16]
and the Union.

To reiterate, the forcible closure of the Bank by

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

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

Sec. 7. Rehabilitation Committee.
Monetary Board Resolution No. 612 which earlier To facilitate the implementation of the
provisions this Act, there is hereby
placed the Bank under liquidation and caused the
created a rehabilitation committee
termination of employment of the petitioners. The which shall have a term of three (3)
Banks subsequent rehabilitation did not, by any test of months from the date of the approval of
this Act composed of the following: the
reason, revive what was already a dead relationship Executive Secretary, as Chairman, and
between the petitioners and the Bank. Neither did such the Administrator of the Philippine
 Veterans Affairs Office, the President of
in the hiring of new employees, it would have clearly
the Veterans Federation of the
Philippines, a representative from the stated this in R.A. No. 7169. The fact that it did not only
executive board of the Veterans shows its clear legislative intent to give the new bank a
Federation of the Philippines and a
representative from the Board of free hand in the selection and hiring of its new staff.
Trustees of the Veterans of World War II
or their respective representatives, as
members. We have to acknowledge the sad reality that giving in to
petitioners demand of wholesale reinstatement with
Specifically, the committee shall:
back wages, bonuses, holiday pay, vacation and sick
(a) Prepare, finalize and leave benefits would be a fatal blow to the very
submit a viable intention of R.A. No. 7169 to rehabilitate the Bank. The
rehabilitation plan
to the Monetary payment of such substantial amounts would definitely
Board of the further dissipate the remaining assets of the Bank and
Central Bank;
cripple its finances even as, at this point, the Bank is
(b) Select and organize an barely making a profit under the weight of its present
initial manning
liabilities, and ultimately make impossible its desired
force headed by a
management rehabilitation. This clearly contravenes the intent and
team to be spirit of R.A. No. 7169.
composed of
competent,
experienced and Petitioners fault the CA in upholding the validity of the
professional
managers who Compromise Agreement. They claim that said
must possess all agreement is not binding on employees who did not
qualifications and
ratify it and even to those who were allegedly tricked
none of the
disqualifications and/or deceived by the Union into accepting the first
provided under payment under the same agreement.
Central Bank rules
and
regulations. The The argument is utterly baseless. A labor unions
management
team shall be function is to represent its members. It can file an action
staffed by a or enter into compromise agreements on behalf of its
trained
members. Here, majority of the Banks employees
workforce: Provid
ed, That authorized the Union to enter into a compromise
preference shall
agreement with the Bank on their behalves. Union
be given to the
veterans and their members were bound by the resulting compromise
dependents, other agreement when they affixed their signatures thereon,
qualifications
being equal; thereby giving their individual assent thereto, and when
they accepted the benefits due them under that
agreement. As it is, the Compromise Agreement in
The mandate given the Banks rehabilitation committee
question detailed the amounts to be received by each
to select and organize an initial manning force shows
employee. Petitioners and other employees of the Bank
that the lawmakers recognize the fact that the new bank
knew exactly what they were ratifying when they
is entirely without any working force. Congress,
affixed their signatures in the said compromise
therefore, gave the Bank full authority and discretion to
agreement.
recruit and form a new staff. Had Congress intended
that separated employees be rehired and given priority
Further, respondent Union is a closed shop union. For the Bank.[18] We, thus, quote with approval the
this reason, it was the only one with legal authority to following observation of the CA in its challenged
negotiate, transact, and enter into any agreement with Decision of December 21, 2001:
the Bank. The Compromise Agreement was ratified by
As regards the third petition for
282 Union members representing a majority of its entire
certiorari filed by Lady Lydia Cornista
529 membership. The ratification of the Compromise Domingo, et. al. (CA-G.R. SP No. 51220),
Agreement by the majority of the Union members the position taken by the petitioners is
that NLRC committed grave abuse of
necessarily binds the minority. discretion by: a) ordering petitioners
who received the first payment under
the Compromise Agreement to be bound
The general rule that the Labor Arbiter must be present by it, and b) resolving to remand the case
during the signing of the compromise agreement is not to the Labor Arbiter for further
proceedings insofar as those who did not
immune to certain exceptions. Here, the submission of
receive payment are concerned.
the Compromise Agreement on joint motion of the
parties for approval by the Labor Arbiter cured Petitioners Domingo et. al. allege
that (a)s found out by the respondent
whatever defect the signing of the agreement in the NLRC, the Compromise Agreement was
absence of the Labor Arbiter would have caused. So it is not entered into in the presence of the
labor Arbiter and it (NLRC) faulted the
that in Santiago v. De Guzman,[17] the Court ruled: latter in not calling the parties especially
the complainants, to a conference and
A compromise agreement satisfy himself that they (complainants)
entered into by the parties not in the understand the terms and conditions of
presence of the Labor Arbiter before the settlement; and that the agreement
whom the case is pending shall be was entered into freely and voluntarily
approved by him, if after confronting the (Rollo of SP No. 51218-20, p. 886) as
parties, particularly the complainants, he called for under Section 2, Rule V of the
is satisfied that they understand the New Rules of Procedure of the NLRC.
terms and conditions of the settlement
and that it was entered into freely and Further, petitioners contend that
voluntarily by them. (h)ad the respondents NLRC and Labor
Arbiter Carpio followed the rules, they
It is incumbent upon the Labor would have found out that those who
Arbiter not only to persuade the parties received the first payment were only
to settle amicably, but equally to ensure tricked and deceived in(to) receiving the
the compromise agreement is a fair one payment; that had the respondents
and that the same was forged freely, Labor Arbiter and NLRC been more
voluntarily with full understanding of the circumspect in their solemn duties, they
terms and conditions embodies therein should have required the respondent
as well as the consequences thereof. union officers to present a special power
of attorney as required under Article
1878(3) of the Civil Code. (Ibid., pp. 886-
It is likewise noteworthy that as of March 31, 2004, 887).
thirty (30) of the herein thirty-seven (37) petitioners
We are not convinced.
already received payment under the same Compromise
Agreement. The acceptance by said petitioners of the Evidently, Domingo, et. al.
ratified the Compromise Agreement and
benefits bars them from repudiating the even voluntarily received the first
agreement. They cannot be allowed to adopt an payment under that agreement,
executing the corresponding Quitclaim,
inconsistent position at the expense of the
Waiver and Release in the
Bank. Petitioners cannot belatedly reject or repudiate process. Having done that, they are
their acts of accepting the monetary consideration deemed bound by the Compromise
Agreement under the previously
under the compromise agreement, to the prejudice of
 discussed principle of res judicata and/or
Records reveal that when the Bank offered termination
estoppel.
or separation pay to its remaining employees by way of
We find that the subsequent a compromise agreement, a great majority of them
decision of petitioners Domingo, et. al. to
repudiate the Compromise Agreement accepted the amount as justifiable settlement of their
was merely an afterthought, whatever claims.[21] Like these quitclaims and releases, there are
would be the reason for their
subsequent change of mind. Since they voluntary agreements which represent reasonable
had entered into a binding contract on settlements and are considered binding on the
their own volition and received benefits
parties.[22] Petitioners, therefore, cannot renege on the
therefrom, they are therefore estopped
from questioning the validity of said compromise agreement they entered into after
contract later on. Parenthetically, it is accepting benefits earlier simply because they may have
interesting to note that while the
petitioners try to impugn the felt that they committed a mistake in accepting their
Compromise Agreement that they termination/separation pay. As no proof was presented
themselves entered into, they have not
made any offer or effort to return the to show that the compromise agreement in dispute was
money they received as first payment entered into through fraud, misrepresentation or
under said agreement.
coercion, the same must be recognized as valid and
The other allegation of the binding upon all the 529 employees of the Bank. In fine,
petitioners that those who received the the petitioners and the other employees are estopped
first payment were only tricked and
deceived in(to) receiving the payment from questioning the validity of the Compromise
deserves scant consideration. Said Agreement.
petitioners are not only ordinary laborers
but mature, educated and intelligent In law, a compromise agreement, once approved, has
people with college degrees, and the effect of res judicata between the parties and
considering the size of their group, it is
should not be disturbed except for vices of consent,
unbelievable that they could have been
easily duped into doing something forgery, fraud, misrepresentation and coercion,[23] none
against their will and self- of which exists in this case. The Compromise Agreement
interest. Absent a showing that they
were indeed victims of trickery and between the Union and the Bank binds the minority
deception, outside of their own self- Union members.
serving affidavits, the petitioners
allegation does not hold water.
All told, the Court finds and so holds that the CA
committed no reversible error in rendering its
Here, the petitioners and other employees legally challenged decision of December 21, 2001 and
separated were in fact given termination or separation Resolution of January 8, 2003.
pay despite the staggering loss sustained by the
Bank. They were given a very good bargain in the IN VIEW WHEREOF, the instant petition is DENIED.
compromise agreement. They, therefore, have no
reason to complain. Without the subject compromise No pronouncement as to costs.
agreement, they would not have received any
separation pay in light of our ruling in State Investment SO ORDERED.
House, Inc. v. CA,[19] and North Davao Mining
Corporation v. NLRC,[20] where we held that in cases of
serious losses or financial reverses, the Labor Code does
not impose any obligation upon the employer to pay
separation benefits, for obvious reasons.
G.R. No. 158075 June 30, 2006 Acting on the notice, the Hotel, through its Human
Resource Development Manager Mary Anne
PHILIPPINE DIAMOND HOTEL AND RESORT, INC.
Mangalindan, advised the union that since it was not
(MANILA DIAMOND HOTEL), Petitioner,
certified by the DOLE as the exclusive bargaining agent,
vs.
it could not be recognized as such.12
MANILA DIAMOND HOTEL EMPLOYEES
UNION, Respondent. The union clarified that it sought to bargain "for its
members only," and declared that "[the
DECISION
Hotel’s] refusal to bargain[would prompt] the union to
CARPIO MORALES, J.: engage in concerted activities to protect and assert its
rights under the Labor Code."13
The Court of Appeals, by the assailed decision of
November 21, 2002,1 declared the strike staged by By Notice14 to its members dated September 18, 1997,
respondent, Manila Diamond Hotel Employee’s Union the union announced that its executive officers as well
(the union), illegal and its officers to have lost their as its directors decided to go on strike in view of the
employment status. It ordered, however, among other management’s refusal to bargain collectively, and thus
things, the reinstatement and payment of backwages to called for the taking of strike vote.
its members.
Petitioner thereupon issued a Final Reminder and
On November 11, 1996, the union, which was registered Warning15 to respondent against continuing
on August 19, 1996 before the Department of Labor and misinformation campaign and activities which confused
Employment (DOLE),2 filed a Petition for Certification the Hotel employees and disturbed their work
Election3 before the DOLE-National Capital Region performance.
(NCR) seeking certification as the exclusive bargaining
The union went on to file a Notice of Strike16 on
representative of its members.4
September 29, 1997 with the National Conciliation and
The DOLE-NCR denied the union’s petition as it failed to Mediation Board (NCMB) due to unfair labor practice
comply with legal requirements, specifically Section 2, (ULP) in that the Hotel refused to bargain with it and the
Rule V, Book V of the Rules and Regulations rank-and-file employees were being harassed and
Implementing the Labor Code, and was seen to prevented from joining it.17
fragment the employees of petitioner.5
Conciliation conferences were immediately conducted
On June 2, 1997, Francis Mendoza (Mendoza), one of by the NCMB on October 6, 13, and 20, 1997 during
the Hotel’s outlet cashiers, was discovered to have which the union insisted on the adoption of a CBA for its
failed to remit to the Hotel the amount of P71,692.50 at members.18
the end of his May 31, 1997 duty.6 On being directed to
In the meantime, or on or about November 7, 1997,
explain such failure, Mendoza claimed that after
Kimpo filed before the Arbitration Branch a complaint
accomplishing his daily cash remittance report, the
for ULP against petitioner.19
union president Jose Leonardo B. Kimpo (Kimpo) also an
outlet cashier, who signed the same and dropped his More conferences took place between petitioner and
remittances.7 the union before the NCMB.
Kimpo, who was thus directed to explain why no In the conference held on November 20, 1997, the
administrative sanction should be imposed on him for union demanded the holding of a consent election to
violating the standard procedure for remitting cash which the Hotel interposed no objection, provided the
collections, informed that he was not aware of any such union followed the procedure under the law. Petitioner
procedure. then requested that the election be held in January
1998.20
Mendoza was subsequently suspended for one week, it
being "the responsibility of the cashier The parties agreed to meet again on December 1,
to personally drop-off his remittances in the presence 1997.21
of a witness."8 In the meantime or on July 14, 1997,9 he
In the early morning of November 29, 1997, however,
was re-assigned to the Hotel’s Cost Control
the union suddenly went on strike. The following day,
Department.10
the National Union of Workers in the Hotel, Restaurant
Through its president Kimpo, the union later notified and Allied Industries (NUWHRAIN) joined the strike and
petitioner of its intention to negotiate, by Notice to openly extended its support to the union.22 At about
Bargain,11 a Collective Bargaining Agreement (CBA) for this time, Hotel supervisors Vicente T. Agustin (Agustin)
its members. and Rowena Junio (Rowena) failed to report for work
and were, along with another supervisor, Mary Grace U.
de Leon (Mary Grace), seen participating in and On petitioner’s motion for reconsideration, then DOLE
supporting the strike.23 Acting Secretary Jose Español, Jr., by Order of April 30,
1998, modified the April 15, 1998 Order of Secretary
Petitioner thus filed on December 1, 1997 a petition for
Trajano by directing the Hotel to
injunction before the National Labor Relations
just reinstate the strikers to itspayroll, and ordering
Commission (NLRC) to enjoin further commission of
that all cases between the parties arising out of the
illegal acts by the strikers.24
labor disputes which were pending before different
Mary Grace, who was directed to explain her Labor Arbiters be consolidated with the case earlier
participation in the strike, alleged that she was merely certified to the NLRC for compulsory arbitration.32 It
trying "to pacify the group."25 Petitioner, finding her appears that the said order of the Acting Secretary
explanation "arrogant" and unsatisfactory as her active directing the reinstatement of the strikers to the Hotel’s
participation in the strike was confirmed by an eye payroll was carried out.
witness, terminated her services, by communication
By Resolution of November 19, 1999, the NLRC declared
sent on December 9, 1997, drawing her to file a
that the strike was illegal and that the
complaint for illegal dismissal against
26
union officers and members who were reinstated to
petitioner. Agustin, who was also terminated, filed a
the Hotel’s payroll were deemed to have lost their
similar complaint against the Hotel.27
employment status. And it dismissed the complaints
An NLRC representative who conducted an ocular filed by Mary Grace, Agustin, and Rowena as well as the
inspection of the Hotel premises confirmed in his Report union’s complaint for ULP.33
that the strikers obstructed the free ingress to and
On appeal by the union, the Court of Appeals affirmed
egress from the Hotel.28
the NLRC Resolution dismissing the complaints of Mary
By Order of December 8, 1998, the NLRC thus issued a Grace, Agustin and Rowena and of the union. It
Temporary Restraining Order (TRO) directing the modified the NLRC Resolution, however, by ordering
strikers to immediately "cease and desist from the reinstatement with back wages of union members.
obstructing the free ingress and egress from the Hotel Thus it disposed:
premises."29
WHEREFORE, in view of the foregoing, the petition is
The service upon the strikers of the TRO granted only insofar as the dismissal of the union
notwithstanding, they refused to dismantle the tent members is concerned. Consequently, the ruling of the
they put up at the employee’s entrance to the Hotel, public respondent NLRC to the effect that the union
prompting the Hotel’s security guards to, on December members lost their employment status with the Hotel is
10, 1997, dismantle the same during which the strikers hereby reversed and set aside. Private respondent Hotel
as well as the guards were hit by rocks coming from the is hereby ordered
direction of the construction site at the nearby Land to immediately reinstate the members with backwage
Bank Plaza, resulting to physical injuries to some of s from the time they were terminated. The Court finds
them.30 no grave abuse of discretion on the part of the NLRC,
and therefore affirms the ruling of the NLRC as follows:
Despite the efforts of the NCMB, which was joined by
the Department of Tourism, to conciliate the parties, (1) that the strike is illegal;
the same proved futile.
(2) that the union officers lost their employment
On January 14, 1998, Rowena, whose services were status when they formed the illegal strike; and
terminated, also filed a complaint against petitioner for
(3) That the dismissal of Ms. Mary Grace U. de Leon,
illegal dismissal.
Vicente C. Agustin and Rowena Junio is valid.
For its part, petitioner filed on January 28, 1998 a
SO ORDERED.34 (Underscoring supplied)
petition to declare the strike illegal.
In so ruling, the appellate court noted that petitioner
As then DOLE Secretary Cresenciano Trajano’s attempts
failed to establish by convincing and substantial
to conciliate the parties failed, he, acting on the union’s
evidence that the union members who participated in
Petition for Assumption of Jurisdiction, issued on April
the illegal strike committed illegal acts, and although
15, 1998 an order certifying the dispute to the NLRC for
petitioner presented photographs of the striking
compulsory arbitration, and directing the striking
employees, the strikers who allegedly committed illegal
officers and members to return to work within 24 hours
acts were not named or identified.35
and the Hotel to accept them back under the same
terms and conditions prevailing before the strike.31 Hence, the present appeal by petitioner faulting the
appellate court:
I As did the NLRC and the Court of Appeals, this Court
finds the strike illegal.
IN ORDERING THE REINSTATEMENT AND THE PAYMENT
OF BACKWAGES OF THE INDIVIDUAL Article 255 of the Labor Code provides:
RESPONDENTS WHOSE EMPLOYMENT STATUS WERE
ART. 255. EXCLUSIVE BARGAINING REPRESENTATION
PREVIOUSLY DECLARED TO HAVE BEEN LOST BY THE
AND WORKERS’ PARTICIPATION IN POLICY AND
NATIONAL LABOR RELATIONS COMMISSION, THE
DECISION-MAKING
COURT OF APPEALS HAS IN EFFECT DECIDED A
QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW The labor organization designated or selected by the
WHICH HAS NOT YET BEFORE BEEN DETERMINED BY majority of the employees in an appropriate collective
THIS HONORABLE COURT, [AND] bargaining unit shall be the exclusive representative of
the employees in such unit for the purpose of collective
II
bargaining. However, an individual employee or group
IN [THUS] DEVIAT[ING] FROM ESTABLISHED DOCTRINES of employees shall have the right at any time to present
LONG SETTLED BY CONSISTENT JURISPRUDENCE grievances to their employer.
ENUNCIATED BY THIS HONORABLE
36 Any provision of law to the contrary notwithstanding,
COURT. (Underscoring supplied)
workers shall have the right, subject to such rules and
Petitioner argues that: regulations as the Secretary of Labor and Employment
may promulgate, to participate in policy and decision-
IT WAS THE NLRC WHICH DECLARED THAT THE UNION
making process of the establishment where they are
OFFICERS AND MEMBERS HAVE LOST THEIR
employed insofar as said processes will directly affect
EMPLOYMENT AS A CONSEQUENCE OF THEIR STRIKE
their rights, benefits and welfare. For this purpose,
WHICH IT ALSO DECLARED AND FOUND TO BE ILLEGAL.
workers and employers may form labor-management
SUCH BEING THE CASE, IN THE EVENT THE NLRC’s councils: Provided, That the representatives of the
DECISION IS NOT UPHELD AS FAR AS THE workers in such labor management councils shall be
UNION MEMBERS’ LOSING THEIR EMPLOYMENT IS elected by at least the majority of all employees in said
CONCERNED, PETITIONER SHOULD NOT BE HELD LIABLE establishment. (Emphasis and underscoring supplied)
TO PAY THEIR BACKWAGES.
As the immediately quoted provision declares, only the
UNDER THE CIRCUMSTANCES, NEITHER CAN labor organization designated or selected by the
PETITIONER BE VALIDLY DIRECTED TO REINSTATE majority of the employees in an appropriate collective
THEM.37(Emphasis and underscoring supplied) bargaining unit is the exclusive representative of the
employees in such unit for the purpose of collective
Respondents, upon the other hand, pray for the
bargaining.
dismissal of the petition, they arguing that:
The union (hereafter referred to as respondent) is
A. Respondent [union members] must be reinstated and
admittedly not the exclusive representative of the
paid full backwages because their strike was legal and
majority of the employees of petitioner, hence, it could
done in good faith.
not demand from petitioner the right to bargain
B. Even assuming arguendo, that the strike started as an collectively in their behalf.
illegal strike, the union’s unconditional offer to return to
Respondent insists, however, that it could validly
work, coupled with the hotel’s unfair labor practices
bargain in behalf of "its members," relying on Article
during the strike, transformed the strike into a legal
242 of the Labor Code.39 Respondent’s reliance on said
strike.
article, a general provision on the rights of legitimate
C. Even assuming arguendo, that the strike is illegal, the labor organizations, is misplaced, for not every
reinstatement of the strikers and the payment of full legitimate labor organization possesses the rights
backwages is consistent with the ruling in Telefunken mentioned therein.40Article 242 (a) must be read in
Semiconductors Employees Union-FFW v. Secretary, relation to above-quoted Article 255.
283 SCRA 145 which states that the individual liability of
On respondent’s contention that it was bargaining in
each of the union officers and members determines
behalf only of its members, the appellate court,
whether or not strikers should be reinstated.
affirming the NLRC’s observation that the same would
D. Even assuming arguendo, that the strike is illegal, only "fragment the employees" of petitioner,41 held
Article 264 of the Labor Code directs the reinstatement that "what [respondent] will be achieving is to divide
of and payment of full backwages to the the employees, more particularly, the rank-and-file
respondents.38 (Underscoring supplied) employees of [petitioner] . . . the other workers who
are not members are at a serious disadvantage, because
if the same shall be allowed, employees who are non- believed that the employer committed acts of unfair
union members will be economically impaired and will labor practice when the circumstances clearly negate
not be able to negotiate their terms and conditions of even a prima facie [showing to] warrant [such a] belief."
work, thus defeating the very essence and reason of
It is also evident from the records of the instant petition,
collective bargaining, which is an effective safeguard
specifically from the Notice of Strike, that their principal
against the evil schemes of employers in terms and
ground for the strike was the "refusal of the Hotel
conditions of work."42 This Court finds the observation
Management to bargain collectively with the Union for
well-taken.
the benefit of the latter’s members." In the instant case,
It bears noting that the goal of the DOLE is geered it is not disputed that the petitioner UNION is not a
towards "a single employer wide unit which is more to certified bargaining unit to negotiate a collective
the broader and greater benefit of the employees bargaining agreement (CBA) with private respondent
working force."43 The philosophy is to avoid Hotel . . . 45 (Underscoring supplied)
fragmentation of the bargaining unit so as to strengthen
On top of the foregoing observations, this Court notes
the employees’ bargaining power with the
that respondent violated Article 264 which proscribes
management. To veer away from such goal would be
the staging of a strike on the ground of ULP during the
contrary, inimical and repugnant to the objectives of a
pendency of cases involving the same grounds for the
strong and dynamic unionism.44
strike.
Petitioner’s refusal to bargain then with respondent can
Further, the photographs taken during the strike, as well
not be considered a ULP to justify the staging of the
as the Ocular Inspection Report of the NLRC
strike.
representative, show that the strikers, with the use of
The second ground alleged by respondent to justify the ropes and footed placards, blockaded the driveway to
staging of the strike – that petitioner prevented or the Hotel’s points of entrance and exit,46 making it
intimidated some workers from joining the union burdensome for guests and prospective guests to enter
before, during or after the strike – was correctly the Hotel, thus violating Article 264 (e) of the Labor
discredited by the appellate court in this wise: Code which provides:
. . . a careful study of the allegations of petitioners in ART. 264 (e) No person engaged in picketing shall
their petition reveals that it commit any act of violence, coercion or intimidation or
contained general allegations that the Management of obstruct the free ingress to or egress from the
the Hotel committed unfair labor practices by refusing employer’s premises for lawful purposes, or obstruct
to bargain with the union and by alleged acts of union public thoroughfares. (Emphasis supplied)
interference, coercion and discrimination tantamount
Furthermore, the photographs indicate that indeed the
to union-busting. Since it is the union who alleges that
strikers held noise barrage47 and threatened guests with
unfair labor practices were committed by the Hotel, the
bodily harm.48
burden of proof is on the union to prove its allegations
by substantial evidence. Finally, the police reports mention about the strikers’
exploding of firecrackers, causing the guests to panic
Moreover, while petitioner Union continues to accuse
and transfer to other areas of the Hotel.49
the private respondent Hotel of violating their
constitutional right to organize by busting the Union, It is doctrinal that the exercise of the right of private
this Court cannot overlook the events that transpired sector employees to strike is not absolute. Thus Section
prior to the strike that the Union staged on November 3 of Article XIII of the Constitution, provides:
29, 1997. It is beyond argument that a conciliatory
SECTION 3. x x x
meeting was still scheduled to be held on December 1,
1997 before the NCMB. In this conciliatory meeting, It shall guarantee the rights of all workers to self-
petitioner Union could have substantiated and organization, collective bargaining and negotiations and
presented additional evidences. Thus, as held by the peaceful concerted activities, including the right to
Supreme Court in the case of Tiu vs. National Labor strike in accordance with law. They shall be entitled to
Relations Commission: security of tenure, humane conditions of work, and a
living wage. They shall also participate in policy and
"The Court is not unmindful of this rule, but in the case
decision-making processes affecting their rights and
at bar the facts and the evidence did not establish
benefits as may be provided by law. (Emphasis and
events [sic] least a rational basis why the union would
underscoring supplied)
[wield] a strike based on alleged unfair labor practices it
did not even bother to substantiate during the Even if the purpose of a strike is valid, the strike may still
conciliation proceedings. It is not enough that the union be held illegal where the means employed are illegal.
Thus, the employment of violence, intimidation, to have lost their employment, unless they have been
restraint or coercion in carrying out concerted activities readmitted by the Hotel, whereas those not clearly
which are injurious to the rights to property renders a shown to have committed illegal acts should be
strike illegal. And so is picketing or the obstruction to reinstated.
the free use of property or the comfortable enjoyment
Whether those ordered reinstated are entitled to
of life or property, when accompanied by intimidation,
backwages is, however, another matter.
threats, violence, and coercion as to constitute
nuisance.50 For the general rule is that backwages shall not be
awarded in an economic strike on the principle that "a
As the appellate court correctly held, the union officers
fair day’s wage" accrues only for a "fair day’s
should be dismissed for staging and participating in the
labor."55 Even in cases of ULP strikes, award of
illegal strike, following paragraph 3, Article 264(a) of the
backwages rests on the court’s discretion and only in
Labor Code which provides that ". . .[a]ny union officer
exceptional instances.56
who knowingly participates in an illegal strike and any
worker or union officer who knowingly participates in Thus, J.P. Heilbronn Co. v. National Labor
the commission of illegal acts during strike may be Union,57 instructs:
declared to have lost his employment status . . ."
When in case of strikes, and according to the C[ourt of]
An ordinary striking worker cannot, thus be dismissed I[ndustrial] R[elations] even if the strike is legal, strikers
for mere participation in an illegal strike. There must be may not collect their wages during the days they did not
proof that he committed illegal acts during a strike, go to work, for the same reasons if not more, laborers
unlike a union officer who may be dismissed by mere who voluntarily absent themselves from work to attend
knowingly participating in an illegal strike and/or the hearing of a case in which they seek to prove and
committing an illegal act during a strike.51 establish their demands against the company, the
legality and propriety of which demands is not yet
The appellate court found no convincing and substantial
known, should lose their pay during the period of such
proof, however, that the strikers-members of
absence from work. The age-old rule governing the
respondent who participated in the illegal strike
relation between labor and capital or management and
committed illegal acts.
employee is that of a "fair day’s wage for a fair day’s
In the present case, private respondent Hotel failed to labor." If there is no work performed by the employee
established [sic] by convincing and substantial evidence there can be no wage or pay, unless of course, the
that these union members who participated in the laborer was able, willing and ready to work but was
illegal strike committed illegal acts. Consequently, they illegally locked out, dismissed or suspended. It is hardly
cannot be terminated from service for their fair or just for an employee or laborer to fight or litigate
participation in an illegal strike. Moreover, private against his employer on the employer’s time. (Emphasis
respondent Hotel presented as evidence photographs and underscoring supplied)
of the striking employees, the question that comes to
This Court must thus hearken to its policy that "when
our mind is: why were these strikers who allegedly
employees voluntarily go on strike, even if in protest
participated in illegal acts not identified or named?
against unfair labor practices," no backwages during the
Instead the arbitral tribunal found it worthy of credence
strike is awarded.
to summarily dismiss all the union members without
them being named or identified . . . 52 In Cromwell Commercial Employees and Laborers Union
(PTUC) v. Court of Industrial Relations,58 this Court made
This Court finds otherwise. As reflected above, the
a distinction between two types of employees involved
photographs show that some of the workers-strikers
in a ULP: those who are discriminatorily dismissed for
who joined the strike indeed committed illegal acts –
union activities, and those who voluntarily go on strike
blocking the free ingress to and egress from the Hotel,
even if it is in protest of an ULP. Discriminatorily
holding noise barrage, threatening guests, and the like.
dismissed employees were ordered entitled to backpay
The strikers were, in a list53 attached to petitioner’s
from the date of the act of discrimination, that is, from
Position Paper54 filed with the NLRC, named.
the day of their discharge, whereas employees who
The list failed to specifically identify the ones who struck as a voluntary act of protest against what they
actually committed illegal acts, however. Such being the considered a ULP of their employer were held generally
case, a remand of the case to the Labor Arbiter, through not entitled to backpay.59
the NLRC, is in order for the purpose only of
Jurisprudential law, however, recognizes several
determining the respective liabilities of the strikers
exceptions to the "no backwages rule," to wit: when the
listed by petitioner. Those proven to have committed
employees were illegally locked to thus compel them to
illegal acts during the course of the strike are deemed
stage a strike;60 when the employer is guilty of the
grossest form of ULP;61 when the employer committed ELECTROMAT G. R. No. 172699
discrimination in the rehiring of strikers refusing to MANUFACTURING and
readmit those against whom there were pending RECORDING
criminal cases while admitting nonstrikers who were CORPORATION,
Petitioner,
also criminally charged in court;62 or when the workers
who staged a voluntary ULP strike offered to return to
- versus - Present:
work unconditionally but the employer refused to
reinstate them.63 Not any of these or analogous CARPIO, J.,
instances is, however, present in the instant case. Chairperson,
LEONARDO-DE CASTRO,*
Respondent urges this Court to apply the exceptional
HON. CIRIACO BRION,
rule enunciated in Philippine Marine Officers’ Guild v.
LAGUNZAD, in his capacity PERALTA,** and
Compañia Maritima64 and similar cases where the
as Regional Director, PEREZ, JJ.
employees unconditionally offered to return to work, it National Capital Region,
arguing that there was such an offer on its part to return Department of Labor and Promulgated:
to work but the Hotel screened the returning strikers Employment; and HON.
and refused to readmit those whom it found to have HANS LEO J. CACDAC, in July 27, 2011
perpetrated prohibited acts during the strike. his capacity as Director of
Bureau of Labor Relations,
It must be stressed, however, that for the exception Department of Labor and
in Philippine Marine Officers’ Guild to apply, it is Employment,
required that the strike must be legal.65 Public Respondents.
Reinstatement without backwages of striking members
NAGKAKAISANG
of respondent who did not commit illegal acts would
SAMAHAN NG
thus suffice under the circumstances of the case. If
MANGGAGAWA NG
reinstatement is no longer possible, given the lapse of ELECTROMAT-WASTO,
considerable time from the occurrence of the strike, the Private Respondent.
award of separation pay of one (1) month salary for x-------------------------------------------------------------------------
each year of service, in lieu of reinstatement, is in ---------------x
order.66
WHEREFORE, the Decision dated November 21, 2002 of
DECISION
the Court of Appeals is, in light of the foregoing
ratiocinations, AFFIRMED with MODIFICATION in that BRION, J.:
only those members of the union who did not commit
illegal acts during the course of the illegal strike should We resolve the present petition for review
be reinstated but without backwages. The case is, on certiorari[1] assailing the decision[2] and the
therefore, REMANDED to the Labor Arbiter, through the [3]
resolution of the Court of Appeals (CA) dated February
NLRC, which is hereby directed to, with dispatch,
3, 2006 and May 11, 2006, respectively, rendered in CA
identify said members and to thereafter order
G.R. SP No. 83847.
petitioner to reinstate them, without backwages or, in
the alternative, if reinstatement is no longer feasible,
that they be given separation pay at the rate of One (1) The Antecedents
Month pay for every year of service.
SO ORDERED. The private respondent Nagkakaisang Samahan ng
Manggagawa ng Electromat-Wasto (union), a charter
SECOND DIVISION
affiliate of the Workers Advocates for Struggle,
Transformation and Organization (WASTO), applied for
registration with the Bureau of Labor Relations (BLR).
Supporting the application were the following
documents: (1) copies of its ratified constitution and by-
laws (CBL); (2) minutes of the CBLs adoption and
ratification; (3) minutes of the organizational meetings;
(4) names and addresses of the union officers; (5) list of
union members; (6) list of rank-and-file employees in
the company; (7) certification of non-existence of a
collective bargaining agreement (CBA) in the company; 03 removed the safety measures against the
(8) resolution of affiliation with WASTO, a labor commission of fraud in the registration of unions. It
federation; (9) WASTOs resolution of acceptance; (10) noted that there are sufficient safeguards found in
Charter Certificate; and (11) Verification under oath. other provisions of the Labor Code to prevent the
same.[8] In any event, it pointed out that D.O. 40-03 was
The BLR thereafter issued the union a Certification of issued by the DOLE pursuant to its rule-making power
Creation of Local Chapter (equivalent to the certificate under the law.[9]
of registration of an independent union), pursuant to
Department Order No. (D.O.) 40-03.[4] The company moved for reconsideration, arguing that
the unions registration certificate was invalid as there
On October 1, 2003, the petitioner Electromat was no showing that WASTO, the labor federation to
Manufacturing and Recording Corporation (company) which the union is affiliated, had at least ten (10) locals
filed a petition for cancellation of the unions or chapters as required by D.O. 40-03. The CA denied
registration certificate, for the unions failure to comply the motion,[10] holding that no such requirement is
with Article 234 of the Labor Code. It argued that D.O. found under the rules. Hence, the present petition.
40-03 is an unconstitutional diminution of the Labor
Codes union registration requirements under Article The Case for the Petitioner
234.
The company seeks a reversal of the CA rulings, through
On November 27, 2003, Acting Director Ciriaco A. its submissions (the petition[11] and the
Lagunzad of the Department of Labor and Employment memorandum[12]), on the ground that the CA seriously
(DOLE)-National Capital Region dismissed the erred and gravely abused its discretion in affirming the
petition.[5] registration of the union in accordance with D.O. 40-03.
Specifically, it assails as unconstitutional Section 2(E),
In the appeal by the company, BLR Director Hans Leo J. Rule III of D.O. 40-03 which provides:
Cacdac affirmed the dismissal.[6] The company
thereafter sought relief from the CA through a petition The report of creation of a
chartered local shall be accompanied by
for certiorari, contending that the BLR committed grave
a charter certificate issued by the
abuse of discretion in affirming the unions registration federation or national union indicating
despite its non-compliance with the requirements for the creation or establishment of the
registration under Article 234 of the Labor Code. It chartered local.
assailed the validity of D.O. 40-03 which amended the
rules of Book V (Labor Relations) of the Labor Code. It
The company points out that D.O. 40-03 delisted some
posited that the BLR should have strictly adhered to the
of the requirements under Article 234 of the Labor Code
union registration requirements under the Labor Code,
for the registration of a local chapter. Article 234 states:
instead of relying on D.O. 40-03 which it considered as
an invalid amendment of the law since it reduced the ART. 234. Requirements of
requirements under Article 234 of the Labor Code. It [13]
Registration. Any applicant labor
maintained that the BLR should not have granted the organization, association or group of
unions registration through the issuance of a unions or workers shall acquire legal
personality and shall be entitled to the
Certification of Creation of Local Chapter since the
rights and privileges granted by law to
union submitted only the Charter Certificate issued to it legitimate labor organizations upon
by WASTO. issuance of the certificate of registration
based on the following requirements:
The CA Decision
(a) Fifty pesos (P50.00)
registration fee;
In its decision rendered on February 3, 2006,[7] the CA
Tenth Division dismissed the petition and affirmed the (b) The names of its
assailed BLR ruling. It brushed aside the companys officers, their
addresses, the
objection to D.O. 40-03, and its submission that D.O. 40-
 principal address of reconsideration dated February 22, 2006 in CA G.R. SP
the labor
No. 83847, which the union adopted as its comment on
organization, the
minutes of the the present petition.[16]
organizational
meetings and the list Through this comment/opposition,[17] the union
of the workers who submits that the company failed to show that the CA
participated in such
meetings; committed reversible error in upholding the registration
certificate issued to it by the BLR. Citing Castillo v.
(c) The names of all its National Labor Relations Commission,[18] it stressed that
members comprising the issuance of the certificate by the DOLE agencies was
at least twenty
supported by substantial evidence, which should be
percent (20%) of all
the employees in the entitled to great respect and even finality.
bargaining unit where
it seeks to operate; The Courts Ruling

(d) If the applicant union

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

e) The local or chapter of a labor

The Case for the Union federation or national union
shall have and maintain a
In a Resolution dated January 16, 2008,[15] the Court constitution and by-laws, set
directed union board member Alex Espejo, in lieu of of officers and books of
accounts. For reporting
union President Roberto Beltran whose present address purposes, the procedure
could not be verified, to furnish the Court a copy of the governing the reporting of
union comment/opposition to the companys motion for independently registered
 unions, federations or governments implementing policy on the registration of
national unions shall be
locals or chapters of labor federations or national
observed.
unions. The company now assails this particular
amendment as an invalid exercise of the DOLEs rule-
Interpreting these provisions of the old rules, making power.
the Court said that by force of law,[21] the local or
chapter of a labor federation or national union becomes We disagree. As in the case of D.O. 9 (which introduced
a legitimate labor organization upon compliance with the above-cited Section 3 of the old rules) in Progressive
Section 3, Rule II, Book V of the Rules Implementing the Development, D.O. 40-03 represents an expression of
Labor Code, the only requirement being the submission the governments implementing policy on trade
of the charter certificate to the BLR. Further, the Court unionism. It builds upon the old rules by further
noted that Section 3 omitted several requirements simplifying the requirements for the establishment of
which are otherwise required for union registration, as locals or chapters. As in D.O. 9, we see nothing contrary
follows: to the law or the Constitution in the adoption by the
Secretary of Labor and Employment of D.O. 40-03 as this
1) The requirement that the department order is consistent with the intent of the
application for registration government to encourage the affiliation of a local union
must be signed by at least
20% of the employees in the with a federation or national union to enhance the
appropriate bargaining unit; locals bargaining power. If changes were made at all,
these were those made to recognize the distinctions
2) The submission of officers made in the law itself between federations and their
addresses, principal address
local chapters, and independent unions; local chapters
of the labor organization, the
minutes of organization seemingly have lesser requirements because they and
meetings and the list of the their members are deemed to be direct members of the
workers who participated in federation to which they are affiliated, which
such meetings;
federations are the ones subject to the strict
3) The submission of the registration requirements of the law.
minutes of the adoption or
ratification of the In any case, the local union in the present case has more
constitution and by-laws and than satisfied the requirements the petitioner
the list of the members who
complains about; specifically, the union has submitted:
participated in it.[22]
(1) copies of the ratified CBL; (2) the minutes of the CBLs
adoption and ratification; (3) the minutes of the
Notwithstanding these omissions, the Court organizational meetings; (4) the names and addresses
upheld the governments implementing policy of the union officers; (5) the list of union members; (6)
expressed in the old rules when it declared the list of rank-and-file employees in the company; (7) a
in Progressive Development certification of non-existence of a CBA in the company;
(8) the resolution of affiliation with WASTO and the
Undoubtedly, the intent of the law in latters acceptance; and (9) their Charter Certificate.
imposing lesser requirements in the case
These submissions were properly verified as required by
of a branch or local of a registered
federation or national union is to the rules. In sum, the petitioner has no factual basis for
encourage the affiliation of a local union questioning the unions registration, as even the
with a federation or national union in requirements for registration as an independent local
order to increase the local unions have been substantially complied with.
bargaining powers respecting terms and
conditions of labor.[23] We, thus, find no compelling justification to
nullify D.O. 40-03. Significantly, the Court declared in
another case:[24]
It was this same Section 3 of the old rules that D.O. 40-
03 fine-tuned when the DOLE amended the rules on Pagpalain cannot also allege that
Book V of the Labor Code, thereby modifying the Department Order No. 9 is violative of
 public policy. x x x [T]he sole function of [G.R. No. 169717, March 16 2011]
our courts is to apply or interpret the
laws. It does not formulate public policy, SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL
which is the province of the legislative SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR
and executive branches of government. EMPOWERMENT AND REFORMS (SMCC-SUPER),
It cannot, thus, be said that the principles ZACARRIAS JERRY VICTORIO - UNION PRESIDENT,
laid down by the Court PETITIONER,VS. CHARTER CHEMICAL AND COATING
in Progressive and Protection CORPORATION, RESPONDENT.
Technologyconstitute public policy on
the matter. They do, however, constitute DECISION
the Courts interpretation of public
policy, as formulated by the executive DEL CASTILLO, J.:
department through its promulgation of
rules implementing the Labor Code. The right to file a petition for certification election is
However, this public policy has itself accorded to a labor organization provided that it
been changed by the executive complies with the requirements of law for proper
department, through the amendments registration. The inclusion of supervisory employees in
introduced in Book V of the Omnibus a labor organization seeking to represent the bargaining
Rules by Department Order No. 9. It is unit of rank-and-file employees does not divest it of its
not for us to question this change in status as a legitimate labor organization. We apply
policy, it being a well-established these principles to this case.
principle beyond question that it is not
within the province of the courts to pass This Petition for Review on Certiorari seeks to reverse
judgments upon the policy of legislative and set aside the Court of Appeal's March 15, 2005
or executive action. Decision[1] in CA-G.R. SP No. 58203, which annulled and
set aside the January 13, 2000 Decision[2] of the
Department of Labor and Employment (DOLE) in OS-A-
This statement is as true then as it is now. 6-53-99 (NCR-OD-M-9902-019) and the September 16,
2005 Resolution[3] denying petitioner union's motion
for reconsideration.
In light of the foregoing, we find no merit in the
appeal. Factual Antecedents

WHEREFORE, premises considered, we DENY the On February 19, 1999, Samahang Manggagawa sa
Charter Chemical Solidarity of Unions in the Philippines
petition for lack of merit. The assailed decision and for Empowerment and Reforms (petitioner union) filed
resolution of the Court of Appeals are AFFIRMED. Costs a petition for certification election among the regular
against the petitioner Electromat Manufacturing and rank-and-file employees of Charter Chemical and
Recording Corporation. Coating Corporation (respondent company) with the
Mediation Arbitration Unit of the DOLE, National Capital
Region.
SO ORDERED.
On April 14, 1999, respondent company filed an Answer
with Motion to Dismiss[4] on the ground that petitioner
union is not a legitimate labor organization because of
(1) failure to comply with the documentation
requirements set by law, and (2) the inclusion of
supervisory employees within petitioner union.[5]

Med-Arbiter's Ruling

On April 30, 1999, Med-Arbiter Tomas F. Falconitin

issued a Decision[6] dismissing the petition for
certification election. The Med-Arbiter ruled that
petitioner union is not a legitimate labor organization
because the Charter Certificate, "Sama-samang
Pahayag ng Pagsapi at Authorization," and "Listahan ng
mga Dumalo sa Pangkalahatang Pulong at mga
Sumang-ayon at Nagratipika sa Saligang Batas" were
not executed under oath and certified by the union
secretary and attested to by the union president as
required by Section 235 of the Labor Code[7] in relation election among the regular rank-and-file employees of
to Section 1, Rule VI of Department Order (D.O.) No. 9, Charter Chemical and Coating Corporation with the
series of 1997. The union registration was, thus, fatally following choices:
defective.
1. Samahang Manggagawa sa Charter Chemical-
The Med-Arbiter further held that the list of Solidarity of Unions in the Philippines for Empowerment
membership of petitioner union consisted of 12 and Reform (SMCC-SUPER); and
batchman, mill operator and leadman who performed
supervisory functions. Under Article 245 of the Labor 2. No Union.
Code, said supervisory employees are prohibited from
joining petitioner union which seeks to represent the Let the records of this case be remanded to the Regional
rank-and-file employees of respondent company. Office of origin for the immediate conduct of a
certification election, subject to the usual pre-election
As a result, not being a legitimate labor organization, conference.
petitioner union has no right to file a petition for
certification election for the purpose of collective SO DECIDED.[9]
bargaining.
Court of Appeal's Ruling
Department of Labor and Employment's Ruling
On March 15, 2005, the CA promulgated the assailed
On July 16, 1999, the DOLE initially issued a Decision[8] in Decision, viz:
favor of respondent company dismissing petitioner
union's appeal on the ground that the latter's petition WHEREFORE, the petition is hereby GRANTED. The
for certification election was filed out of time. Although assailed Decision and Resolution dated January 13, 2000
the DOLE ruled, contrary to the findings of the Med- and February 17, 2000 are hereby [ANNULLED] and SET
Arbiter, that the charter certificate need not be verified ASIDE.
and that there was no independent evidence presented
to establish respondent company's claim that some SO ORDERED.[10]
members of petitioner union were holding supervisory
positions, the DOLE sustained the dismissal of the
In nullifying the decision of the DOLE, the appellate
petition for certification after it took judicial notice that
court gave credence to the findings of the Med-Arbiter
another union, i.e., Pinag-isang
that petitioner union failed to comply with the
Lakas Manggagawa sa Charter Chemical and Coating
documentation requirements under the Labor Code. It,
Corporation, previously filed a petition for certification
likewise, upheld the Med-Arbiter's finding that
election on January 16, 1998. The Decision granting the
petitioner union consisted of both rank-and-file and
said petition became final and executory on September
supervisory employees. Moreover, the CA held that the
16, 1998 and was remanded for immediate
issues as to the legitimacy of petitioner union may be
implementation. Under Section 7, Rule XI of D.O. No. 9,
attacked collaterally in a petition for certification
series of 1997, a motion for intervention involving a
election and the infirmity in the membership of
certification election in an unorganized establishment
petitioner union cannot be remedied through the
should be filed prior to the finality of the decision calling
exclusion-inclusion proceedings in a pre-election
for a certification election. Considering that petitioner
conference pursuant to the ruling in Toyota Motor
union filed its petition only on February 14, 1999, the
Philippines v. Toyota Motor Philippines Corporation
same was filed out of time.
Labor Union.[11] Thus, considering that petitioner union
is not a legitimate labor organization, it has no legal
On motion for reconsideration, however, the DOLE
right to file a petition for certification election.
reversed its earlier ruling. In its January 13, 2000
Decision, the DOLE found that a review of the records Issues
indicates that no certification election was previously
conducted in respondent company. On the contrary, the I
prior certification election filed by Pinag-isang Lakas
Manggagawa sa Charter Chemical and Coating Whether x x x the Honorable Court of Appeals
Corporation was, likewise, denied by the Med-Arbiter committed grave abuse of discretion tantamount to lack
and, on appeal, was dismissed by the DOLE for being of jurisdiction in granting the respondent [company's]
filed out of time. Hence, there was no obstacle to the petition for certiorari (CA G.R. No. SP No. 58203) in spite
grant of petitioner union's petition for certification of the fact that the issues subject of the respondent
election, viz: company['s] petition was already settled with finality
and barred from being re-litigated.
WHEREFORE, the motion for reconsideration is
hereby GRANTED and the decision of this Office dated II
16 July 1999 is MODIFIED to allow the certification
 precluded from challenging the July 16, 1999 Decision
Whether x x x the Honorable Court of Appeals of the DOLE. The said decision did not attain finality
committed grave abuse of discretion tantamount to lack because the DOLE subsequently reversed its earlier
of jurisdiction in holding that the alleged mixture of ruling and, from this decision, respondent company
rank-and-file and supervisory employee[s] of petitioner timely filed its motion for reconsideration.
[union's] membership is [a] ground for the cancellation
of petitioner [union's] legal personality and dismissal of On the issue of lack of verification of the charter
[the] petition for certification election. certificate, respondent company notes that Article 235
of the Labor Code and Section 1, Rule VI of the
III Implementing Rules of Book V, as amended by D.O. No.
9, series of 1997, expressly requires that the charter
Whether x x x the Honorable Court of Appeals certificate be certified under oath.
committed grave abuse of discretion tantamount to lack
of jurisdiction in holding that the alleged failure to It also contends that petitioner union is not a legitimate
certify under oath the local charter certificate issued by labor organization because its composition is a mixture
its mother federation and list of the union membership of supervisory and rank-and-file employees in violation
attending the organizational meeting [is a ground] for of Article 245 of the Labor Code. Respondent company
the cancellation of petitioner [union's] legal personality maintains that the ruling in Toyota Motor Philippines vs.
as a labor organization and for the dismissal of the Toyota Motor Philippines Labor Union[14] continues to
petition for certification election.[12] be good case law. Thus, the illegal composition of
petitioner union nullifies its legal personality to file the
Petitioner Union's Arguments subject petition for certification election and its legal
personality may be collaterally attacked in the
Petitioner union claims that the litigation of the issue as proceedings for a petition for certification election as
to its legal personality to file the subject petition for was done here.
certification election is barred by the July 16, 1999
Decision of the DOLE. In this decision, the DOLE ruled Our Ruling
that petitioner union complied with all the
documentation requirements and that there was no The petition is meritorious.
independent evidence presented to prove an illegal
mixture of supervisory and rank-and-file employees in The issue as to the legal personality of
petitioner union. After the promulgation of this petitioner union is not barred by the
Decision, respondent company did not move for July 16, 1999 Decision of the DOLE.
reconsideration, thus, this issue must be deemed
settled. A review of the records indicates that the issue as to
petitioner union's legal personality has been timely and
Petitioner union further argues that the lack of consistently raised by respondent company before the
verification of its charter certificate and the alleged Med-Arbiter, DOLE, CA and now this Court. In its July 16,
illegal composition of its membership are not grounds 1999 Decision, the DOLE found that petitioner union
for the dismissal of a petition for certification election complied with the documentation requirements of the
under Section 11, Rule XI of D.O. No. 9, series of 1997, Labor Code and that the evidence was insufficient to
as amended, nor are they grounds for the cancellation establish that there was an illegal mixture of supervisory
of a union's registration under Section 3, Rule VIII of said and rank-and-file employees in its membership.
issuance. It contends that what is required to be Nonetheless, the petition for certification election was
certified under oath by the local union's secretary or dismissed on the ground that another union had
treasurer and attested to by the local union's president previously filed a petition for certification
are limited to the union's constitution and by-laws, election seeking to represent the same bargaining
statement of the set of officers, and the books of unit in respondent company.
accounts.
Upon motion for reconsideration by petitioner union on
Finally, the legal personality of petitioner union cannot January 13, 2000, the DOLE reversed its previous ruling.
be collaterally attacked but may be questioned only in It upheld the right of petitioner union to file the subject
an independent petition for cancellation pursuant to petition for certification election because its previous
Section 5, Rule V, Book IV of the Rules to Implement the decision was based on a mistaken appreciation of
Labor Code and the doctrine enunciated in Tagaytay facts.[15] From this adverse decision, respondent
Highlands International Golf Club Incoprorated v. company timely moved for reconsideration by
Tagaytay Highlands Empoyees Union-PTGWO.[13] reiterating its previous arguments before the Med-
Arbiter that petitioner union has no legal personality to
Respondent Company's Arguments file the subject petition for certification election.

Respondent company asserts that it cannot be The July 16, 1999 Decision of the DOLE, therefore, never
attained finality because the parties timely moved for
reconsideration. The issue then as to the legal All the foregoing supporting requirements shall be
personality of petitioner union to file the certification certified under oath by the Secretary or the Treasurer of
election was properly raised before the DOLE, the the local/chapter and attested to by its President.
appellate court and now this Court.
As readily seen, the Sama-samang Pahayag ng Pagsapi
The charter certificate need not be at Authorization and Listahan ng mga Dumalo sa
certified under oath by the local union's Pangkalahatang Pulong at mga Sumang-ayon at
secretary or treasurer and attested to Nagratipika sa Saligang Batas are not among the
by its president. documents that need to be submitted to the Regional
Office or Bureau of Labor Relations in order to register
Preliminarily, we must note that Congress enacted a labor organization. As to the charter certificate, the
Republic Act (R.A.) No. 9481[16] which took effect on above-quoted rule indicates that it should be executed
June 14, 2007.[17] This law introduced substantial under oath. Petitioner union concedes and the records
amendments to the Labor Code. However, since the confirm that its charter certificate was not executed
operative facts in this case occurred in 1999, we shall under oath. However, in San Miguel Corporation
decide the issues under the pertinent legal provisions (Mandaue Packaging Products Plants) v. Mandaue
then in force (i.e., R.A. No. 6715,[18] amending Book V of Packing Products Plants-San Miguel Corporation
the Labor Code, and the rules and Monthlies Rank-and-File Union-FFW (MPPP-SMPP-
regulations[19] implementing R.A. No. 6715, as amended SMAMRFU-FFW),[22] which was decided under the
by D.O. No. 9,[20] auspices of D.O. No. 9, Series of 1997, we ruled -

series of 1997) pursuant to our ruling in Republic v. In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon.
Kawashima Textile Mfg., Philippines, Inc.[21] Laguesma, 331 Phil. 356 (1996), the Court ruled that it
was not necessary for the charter certificate to be
In the main, the CA ruled that petitioner union failed to certified and attested by the local/chapter
comply with the requisite documents for registration officers. Id. While this ruling was based on the
under Article 235 of the Labor Code and its interpretation of the previous Implementing Rules
implementing rules. It agreed with the Med-Arbiter that provisions which were supplanted by the 1997
the Charter Certificate, Sama-samang Pahayag ng amendments, we believe that the same doctrine
Pagsapi at Authorization, and Listahan ng mga Dumalo obtains in this case. Considering that the charter
sa Pangkalahatang Pulong at mga Sumang-ayon at certificate is prepared and issued by the national union
Nagratipika sa Saligang Batas were not executed under and not the local/chapter, it does not make sense to
oath. Thus, petitioner union cannot be accorded the have the local/chapter's officers x x x certify or attest
status of a legitimate labor organization. to a document which they had no hand in the
preparation of.[23] (Emphasis supplied)
We disagree.
In accordance with this ruling, petitioner union's charter
The then prevailing Section 1, Rule VI of the
certificate need not be executed under oath.
Implementing Rules of Book V, as amended by D.O. No.
Consequently, it validly acquired the status of a
9, series of 1997, provides:
legitimate labor organization upon submission of (1) its
Section 1. Chartering and creation of a local chapter -- A charter certificate,[24] (2) the names of its officers, their
duly registered federation or national union may addresses, and its principal office,[25] and (3) its
directly create a local/chapter by submitting to the constitution and by-laws[26]-- the last two requirements
Regional Office or to the Bureau two (2) copies of the having been executed under oath by the proper union
following: officials as borne out by the records.

(a) A charter certificate issued by the federation or The mixture of rank-and-file and supervisory
national union indicating the creation or establishment employees in petitioner union does not
of the local/chapter; nullify its legal personality as a legitimate
labor organization.
(b) The names of the local/chapter's officers, their
addresses, and the principal office of the local/chapter; The CA found that petitioner union has for its
and membership both rank-and-file and supervisory
employees. However, petitioner union sought to
(c) The local/chapter's constitution and by-laws represent the bargaining unit consisting of rank-and-file
provided that where the local/chapter's constitution employees. Under Article 245[27] of the Labor Code,
and by-laws [are] the same as [those] of the federation supervisory employees are not eligible for membership
or national union, this fact shall be indicated in a labor organization of rank-and-file employees. Thus,
accordingly. the appellate court ruled that petitioner union cannot
be considered a legitimate labor organization pursuant
to Toyota Motor Philippines v. Toyota Motor Philippines Sec. 2. Who may file. - Any legitimate labor organization
Corporation Labor Union[28] (hereinafter Toyota). or the employer, when requested to bargain
collectively, may file the petition.
Preliminarily, we note that petitioner union questions
the factual findings of the Med-Arbiter, as upheld by the The petition, when filed by a legitimate labor
appellate court, that 12 of its members, consisting of organization, shall contain, among others:
batchman, mill operator and leadman, are supervisory
employees. However, petitioner union failed to present x x x x
any rebuttal evidence in the proceedings below after
respondent company submitted in evidence the job (c) description of the bargaining unit which shall be the
descriptions[29] of the aforesaid employees. The job employer unit unless circumstances otherwise require;
descriptions indicate that the aforesaid employees and provided further, that the appropriate bargaining
exercise recommendatory managerial actions which are unit of the rank-and-file employees shall not include
not merely routinary but require the use of independent supervisory employees and/or security
judgment, hence, falling within the definition of guards. (Emphasis supplied)
supervisory employees under Article 212(m)[30] of the
Labor Code. For this reason, we are constrained to agree By that provision, any questioned mingling will prevent
with the Med-Arbiter, as upheld by the appellate court, an otherwise legitimate and duly registered labor
that petitioner union consisted of both rank-and-file organization from exercising its right to file a petition for
and supervisory employees. certification election.

Nonetheless, the inclusion of the aforesaid supervisory Thus, when the issue of the effect of mingling was
employees in petitioner union does not divest it of its brought to the fore in Toyota, the Court, citing Article
status as a legitimate labor organization. The appellate 245 of the Labor Code, as amended by R.A. No. 6715,
court's reliance on Toyota is misplaced in view of this held:
Court's subsequent ruling in Republic v. Kawashima
Textile Mfg., Philippines, "Clearly, based on this provision, a labor organization
Inc.[31] (hereinafter Kawashima). In Kawashima, we composed of both rank-and-file and supervisory
explained at length how and why the Toyota doctrine employees is no labor organization at all. It cannot, for
no longer holds sway under the altered state of the law any guise or purpose, be a legitimate labor organization.
and rules applicable to this case, viz: Not being one, an organization which carries a mixture
of rank-and-file and supervisory employees cannot
R.A. No. 6715 omitted specifying the exact effect any possess any of the rights of a legitimate labor
violation of the prohibition [on the co-mingling of organization, including the right to file a petition for
supervisory and rank-and-file employees] would bring certification election for the purpose of collective
about on the legitimacy of a labor organization. bargaining. It becomes necessary, therefore, anterior
to the granting of an order allowing a certification
It was the Rules and Regulations Implementing R.A. No. election, to inquire into the composition of any labor
6715 (1989 Amended Omnibus Rules) which supplied organization whenever the status of the labor
the deficiency by introducing the following amendment organization is challenged on the basis of Article 245 of
to Rule II (Registration of Unions): the Labor Code.

"Sec. 1. Who may join unions. - x x x Supervisory

employees and security guards shall not be eligible for x x x x
membership in a labor organization of the rank-and-
file employees but may join, assist or form separate In the case at bar, as respondent union's membership
labor organizations of their own; Provided, that those list contains the names of at least twenty-seven (27)
supervisory employees who are included in an existing supervisory employees in Level Five positions, the union
rank-and-file bargaining unit, upon the effectivity of could not, prior to purging itself of its supervisory
Republic Act No. 6715, shall remain in that unit x x x. employee members, attain the status of a legitimate
(Emphasis supplied) labor organization. Not being one, it cannot possess the
requisite personality to file a petition for certification
election." (Emphasis supplied)
and Rule V (Representation Cases and Internal-Union
Conflicts) of the Omnibus Rules, viz: In Dunlop, in which the labor organization that filed a
petition for certification election was one for
"Sec. 1. Where to file. - A petition for certification
supervisory employees, but in which the membership
election may be filed with the Regional Office which has
included rank-and-file employees, the Court reiterated
jurisdiction over the principal office of the employer.
that such labor organization had no legal right to file a
The petition shall be in writing and under oath.
certification election to represent a bargaining unit
composed of supervisors for as long as it counted rank- petition for certification election. This time, given the
and-file employees among its members. altered legal milieu, the Court abandoned the view
in Toyota and Dunlop and reverted to its
It should be emphasized that the petitions for pronouncement in Lopez that while there is a
certification election involved prohibition against the mingling of supervisory and
in Toyota and Dunlop were filed on November 26, 1992 rank-and-file employees in one labor organization, the
and September 15, 1995, respectively; hence, the 1989 Labor Code does not provide for the effects thereof.
Rules was applied in both cases. Thus, the Court held that after a labor organization has
been registered, it may exercise all the rights and
But then, on June 21, 1997, the 1989 Amended Omnibus privileges of a legitimate labor organization. Any
Rules was further amended by Department Order No. 9, mingling between supervisory and rank-and-file
series of 1997 (1997 Amended Omnibus Rules). employees in its membership cannot affect its
Specifically, the requirement under Sec. 2(c) of the 1989 legitimacy for that is not among the grounds for
Amended Omnibus Rules - that the petition for cancellation of its registration, unless such mingling was
certification election indicate that the bargaining unit of brought about by misrepresentation, false statement or
rank-and-file employees has not been mingled with fraud under Article 239 of the Labor Code.
supervisory employees - was removed. Instead, what
the 1997 Amended Omnibus Rules requires is a plain In San Miguel Corp. (Mandaue Packaging Products
description of the bargaining unit, thus: Plants) v. Mandaue Packing Products Plants-San Miguel
Packaging Products-San Miguel Corp. Monthlies Rank-
Rule XI and-File Union-FFW, the Court explained that since the
Certification Elections 1997 Amended Omnibus Rules does not require a local
or chapter to provide a list of its members, it would be
x x x x improper for the DOLE to deny recognition to said local
or chapter on account of any question pertaining to its
Sec. 4. Forms and contents of petition. - The petition individual members.
shall be in writing and under oath and shall contain,
among others, the following: x x x (c) The description of More to the point is Air Philippines Corporation v.
the bargaining unit. Bureau of Labor Relations, which involved a petition for
cancellation of union registration filed by the employer
In Pagpalain Haulers, Inc. v. Trajano, the Court had in 1999 against a rank-and-file labor organization on the
occasion to uphold the validity of the 1997 Amended ground of mixed membership: the Court therein
Omnibus Rules, although the specific provision involved reiterated its ruling in Tagaytay Highlands that the
therein was only Sec. 1, Rule VI, to wit: inclusion in a union of disqualified employees is not
among the grounds for cancellation, unless such
"Section. 1. Chartering and creation of a local/chapter.- inclusion is due to misrepresentation, false statement
A duly registered federation or national union may or fraud under the circumstances enumerated in
directly create a local/chapter by submitting to the Sections (a) and (c) of Article 239 of the Labor Code.
Regional Office or to the Bureau two (2) copies of the
following: a) a charter certificate issued by the All said, while the latest issuance is R.A. No. 9481, the
federation or national union indicating the creation or 1997 Amended Omnibus Rules, as interpreted by the
establishment of the local/chapter; (b) the names of the Court in Tagaytay Highlands, San Miguel and Air
local/chapter's officers, their addresses, and the Philippines, had already set the tone for
principal office of the local/chapter; and (c) the local/ it. Toyota and Dunlop no longer hold sway in the
chapter's constitution and by-laws; provided that where present altered state of the law and the
the local/chapter's constitution and by-laws is the same rules.[32] [Underline supplied]
as that of the federation or national union, this fact shall
be indicated accordingly. The applicable law and rules in the instant case are the
same as those in Kawashima because the present
All the foregoing supporting requirements shall be petition for certification election was filed in 1999 when
certified under oath by the Secretary or the Treasurer of D.O. No. 9, series of 1997, was still in effect.
the local/chapter and attested to by its President." Hence, Kawashima applies with equal force here. As a
result, petitioner union was not divested of its status as
which does not require that, for its creation and a legitimate labor organization even if some of its
registration, a local or chapter submit a list of its members were supervisory employees; it had the right
members. to file the subject petition for certification election.

Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. The legal personality of petitioner union
Tagaytay Highlands Employees Union-PGTWO in which cannot be collaterally attacked by respondent
the core issue was whether mingling affects the company in the certification election proceedings.
legitimacy of a labor organization and its right to file a
Petitioner union correctly argues that its legal
personality cannot be collaterally attacked in the
certification election proceedings. As we explained
in Kawashima:

Except when it is requested to bargain collectively, an

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

The amendments to the Labor Code and its

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

WHEREFORE, the petition is GRANTED. The March 15,

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

No pronouncement as to costs.

SO ORDERED.