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G.R. No.

74262 October 29, 1987
GENERAL RUBBER and FOOTWEAR CORPORATION, petitioner,
vs.
BUREAU OF LABOR RELATIONS, NATIONAL ASSOCIATION OF TRADE UNION OF
MONTHLY PAID EMPLOYEES-NATU, respondents.

PARAS, J.:
Petitioner is a corporation engaged in the business of manufacturing rubber sandals and oilier
rubber products. In 1985, the Samahang Manggagawa sa General Rubber Corporation —
ANGLO was formed by the daily paid — rank and file employees as their union for collective
bargaining, after the expiration on October 15, 1985 of the collective bargaining agreement
previously executed by petitioner with General Rubber Workers Union (Independent) on October
15, 1982. Be it noted however that on July 17, 1985, the monthly — paid employees of the
petitioner-corporation, after forming their own collective bargaining unit the National Association
of Trade Unions of Monthly Paid Employees-NATU, filed a petition for direct certification with tile
Bureau of Labor Relations which petition was opposed by herein petitioner. On September 2,
1985, the Med-Arbiter issued an Order for the holding of a certification election after finding that
a certification election is in order in this case and observing that it is the fairest remedy to
determine whether employees of petitioner desire to have a union or not. On appeal, the Bureau
of Labor Relations denied both the appeal and motion for reconsideration interposed by
petitioner and affirmed the ruling of the Med-Arbiter. Hence, the present petition, imputing
serious error's of law and grave abuse of discretion on the part of the Bureau of Labor Relations
in issuing the assailed order which sanctioned the creation of two (2) bargaining units within
petitioner-corporation with the following:
GROUNDS FOR REVIEW
I
The Bureau of Labor Relations committed serious error of law and grave abuse of discretion in
ordering the creation of a new bargaining unit at petitioner, notwithstanding that there is already
an existing bargaining unit, whose members are represented for collective bargaining purposes
by Samahang Manggagawa sa General Rubber Corporation- ANGLO.
II
The Bureau of Labor Relations committed serious error of law in holding that managerial
employees or those employees exercising managerial functions can legally form and join a labor
organization and be members of the new bargaining unit.
III
The Bureau of Labor Relations committed grave abuse of discretion in holding that supervisors,
employees perform- ing managerial, confidential and technical functions and office personnel,
who are negotiated by petitioner to be excluded from the existing bargaining unit because they
are performing vital functions to management, can form and join a labor organization and be
members of the new bargaining unit.
Expounding on its position, petitioner argues that:
1. The order violates the thrust of the Labor Code insofar as formation of a bargaining unit is
concerned. A policy is in favor of a larger unit and not the creation of smaller units in one
establishment which might lead to formation, thus impractical.

2. Article 246 of the Labor Code explicitly provides that managerial employees are ineligible to
join or form any labor organization. Since it has been shown by the petitioners that 30% of the
monthly-paid employees are managers or employees exercising managerial functions, it was
grave error for the Bureau of Labor Relations to allow these monthly paid employees to form a
union and/or a bargaining unit.
3. The Bureau of Labor Relations overlooked the fact that these monthly-paid-employees are
excluded from the first existing bargaining unit of the daily-paid rank and file employees because
in the year 1963, when the employees of petitioner initially started to exercise their right to selforganization, herein petitioner bargained for the exclusion of the monthly-paid employees from
the existing bargaining unit because they are performing vital functions of management. In view
of this exclusion, petitioner took upon itself to take care of them and directly gave them the
benefits or privileges without having to bargain for them or without the aid of the bargaining arm
or force of a union.
Petitioner's contentions are devoid of merit.
Among other issues answered in the assailed order are the following findings of fact:
Regarding the second issue, we deem it necessary to examine the respective functions of the
employees. It appears therefrom that they perform supervisory functions. Verily they make
recommendation petitions as to what Managerial actions to take in disciplinary cases. However,
that fact alone does not make them managerial employees already, It is more a question of how
effective are those recommendations which aspect has not been clearly established in this case.
As defined in the Labor Code, a "managerial employee is one who is vested with powers or
prerogatives to lay down and execute management policies and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such
managerial actions." Thus, employees who do not fall within this definition are considered rankand-file employees.
Lastly, we find that the third issue has been raised for the first time on appeal. It has been the
policy of the Bureau to encourage the formation of an employer unit "unless circumstances
otherwise require. The proliferation of unions in an employer unit is discouraged as a matter of
policy unless there are compelling reasons which would deny a certain class of employees the
right to self-organization for purposes of collective bargaining, This case does not fall squarely
within the exception. It is undisputed that the monthlies who are rank-and-file have been
historically excluded from the bargaining unit composed of daily-paid rank-and-filers that is,
since 1963 when the existing rank- and- file union was recognized. In fact, the collective
bargaining agreement (CBA) which expired last 15 October 1985 provides as follows:
ARTICLE I
SCOPE
Section 1. Appropriate bargaining unit. — This Agreement covers all regular employees and
workers employed by the company at its factory in Malabon, Metro Manila. The words
"employee," "laborer" and "workers" when used in this Agreement shall be deemed to refer to
those employees within the bargaining unit. Employees who occupy managerial, confidential or
technical positions, supervisors, contract employees, monthly-paid employees, security as wen
as office personnel are excluded from the appropriate bargaining unit (emphasis supplied).
In view of the above, the monthly-paid rank-and-file employees ran form a union of their own,
separate and distinct from the existing rank-and-file union composed of daily-paid workers.
(Rollo, pp. 1920)

Thus, it can be readily seen from the above findings of the Bureau of labor Relations that the
members of private respondent are not managerial employees as claimed by petitioners but
merely considered as rank-and-file employees who have every right to self-organization or to be
heard through a duly certified collective bargaining union. The Supervisory power of the
members of private respondent union consists merely in recommending as to what managerial
actions to take in disciplinary cases. These members of private respondent union do not fit the
definition of managerial employees which We laid down in the case of Bulletin Publishing
Corporation v. Sanchez (144 SCRA 628). These members of private respondent union are
therefore not prohibited from forming their own collective bargaining unit since it has not been
shown by petitioner that "the responsibilities (of these monthly-paid-employees) inherently
require the exercise of discretion and independent judgment as supervisors" or that "they
possess the power and authority to lay down or exercise management policies." Similarly, he
held in the same case that "Members of supervisory unions who do not fall within the definition
of managerial employees shall become eligible to loin or assist the rank-and-file labor
organization, and if none exists, to form or assist in the forming of such rank-and-file
organizations.

posture has no leg to stand on. It has not been shown that private respondent was privy to this
agreement. And even if it were so, it can never bind subsequent federations and unions
particularly private respondent-union because it is a curtailment of the right to self-organization
guaranteed by the labor laws. However, to prevent any difficulty. and to avoid confusion to all
concerned and, more importantly, to fulfill the policy of the New Labor Code as well as to be
consistent with Our ruling in the Bulletin case, supra, the monthly-paid rank-and-file employees
should be allowed to join the union of the daily-paid-rank-and-file employees of petitioner so that
they can also avail of the CBA benefits or to form their own rank-and-file union, without prejudice
to the certification election that has been ordered.
WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of merit.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.

Perhaps it is unusual for the petitioner to have to deal with two (2) collective bargaining unions
but there is no one to blame except petitioner itself for creating the situation it is in. From the
beginning of the existence in 1963 of a bargaining limit for the employees up to the present,
petitioner had sought to indiscriminately suppress the members of the private respondent"s right
to self-organization provided for by law. Petitioner, in justification of its action, maintained that
the exclusion of the members of the private respondent from the bargaining union of the rankand-file or from forming their own union was agreed upon by petitioner corporation with the
previous bargaining representatives namely: the General "Rubber Workers Union PTGWO the
General Workers Union — NAFLU and the General Rubber Workers Union (independent). Such
G.R. No. 102130 July 26, 1994
GOLDEN FARMS, INC., petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR and THE PROGRESSIVE FEDERATION OF
LABOR, respondents.
J.V. Yap Law Office for petitioner.

PUNO, J.:
The sole issue for resolution in this Petition for Certiorari with prayer for the issuance of
preliminary injunction and/or restraining order is whether or not petitioner's monthly paid rankand file employees can constitute a bargaining unit separate from the existing bargaining unit of
its daily paid rank-and-file employees.
Petitioner Golden Farms, Inc., is a corporation engaged in the production and marketing of
bananas for export. On February 27, 1992, private respondent Progressive Federation of Labor
(PFL) filed a petition before the Med-Arbiter praying for the holding of a certification election
among the monthly paid office and technical rank-and-file employees of petitioner Golden
Farms.

Petitioner moved to dismiss the petition on three (3) grounds. First, respondent PFL failed to
show that it was organized as a chapter within petitioner's establishment. Second, there was
already an existing collective bargaining agreement between the rank-and-file employees
represented by the National Federation of Labor (NFL) and petitioner. And third, the employees
represented by PFL had allegedly been disqualified by this Court from bargaining with
management in Golden Farms, Inc., vs. Honorable Director Pura Ferrer-Calleja, G.R. No. 78755,
July 19, 1989. 1
Respondent PFL opposed petitioner's Motion to Dismiss. It countered that the monthly paid
office and technical employees should be allowed to form a separate bargaining unit because
they were expressly excluded from coverage in the Collecting Bargaining Agreement (CBA)
between petitioner and NFL. It also contended that the case invoked by petitioner was
inapplicable to the present case.
In its reply, petitioner argued that the monthly paid office and technical employees should have
joined the existing collective bargaining unit of the rank-and-file employees if they are not
manegerial employees.
On April 18, 1991, the Med-Arbiter granted the petition and ordered that a certification election
be conducted, viz:
WHEREFORE, premises considered, the present petition filed by the
Progressive Federation of Labor, for certification election among the office
and technical employees of Golden Farms, Inc., is, as it is hereby,
GRANTED with the following choices:

1. Progressive Federation of Labor (PFL);
2. No. union.
The designated representation officer is hereby directed to call the parties to
a pre-election conference to thresh out the mechanics of the election and to
conduct and supervise the same within twenty (20) days from receipt by the
parties of this Order. The "Masterlist of Office and Technical Employees"
shall be the basis in determining the employees qualified to vote during the
certification election.
SO ORDERED. 2
Petitioner seasonably appealed to public respondent Secretary of Labor. On August 6, 1991,
respondent Secretary of Labor issued the assailed Decision denying the appeal for lack of
merit. 3 Petitioner filed a Motion for Reconsideration but the same was also denied on
September 13, 1991.
Thus, this petition for certiorari interposing two (2) issues.
I
THE CREATION OF AN ADDITIONAL BARGAINING UNIT FOR CERTAIN
RANK AND FILE EMPLOYEES WILL NOT ONLY SPLIT THE EXISTING
ONE BUT WILL ALSO NEGATE THE PRINCIPLE OF RES JUDICATA.
II
THE PROGRESSIVE FEDERATION OF LABOR BEING THE EXCLUSIVE
BARGAINING AGENT OF THE SUPERVISORY EMPLOYEES IS
DISQUALIFIED FROM REPRESENTING THE OFFICE AND TECHNICAL
EMPLOYEES.
The petition is devoid of merit.
The monthly paid office and technical rank-and-file employees of petitioner Golden Farms enjoy
the constitutional right to self-organization and collective bargaining. 4 A "bargaining unit" has
been defined as a group of employees of a given employer, comprised of all or less than all of
the entire body of employees, which the collective interest of all the employees, consistent with
equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties of
the parties under the collective bargaining provisions of the law. 5 The community or mutuality of
interest is therefore the essential criterion in the grouping. "And this is so because 'the basic test
of an asserted bargaining unit's acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the exercise of their collective bargaining
rights.' 6
In the case at bench, the evidence established that the monthly paid rank-and-file employees of
petitioner primarily perform administrative or clerical work. In contradistinction, the petitioner's
daily paid rank-and-file employees mainly work in the cultivation of bananas in the fields. It is

crystal clear the monthly paid rank-and-file employees of petitioner have very little in common
with its daily paid rank-and-file employees in terms of duties and obligations, working conditions,
salary rates, and skills. To be sure, the said monthly paid rank-and-file employees have even
been excluded from the bargaining unit of the daily paid rank-and-file employees. This
dissimilarity of interests warrants the formation of a separate and distinct bargaining unit for the
monthly paid rank-and-file employees of the petitioner. To rule otherwise would deny this distinct
class of employees the right to self-organization for purposes of collective bargaining. Without
the shield of an organization, it will also expose them to the exploitations of management. So we
held in University of the Philippines vs. Ferrer-Calleja, 7 where we sanctioned the formation of
two (2) separate bargaining units within the establishment, viz:
[T]he dichotomy of interests, the dissimilarity in the nature of the work and
duties as well as in the compensation and working conditions of the
academic and non-academic personnel dictate the separation of these two
categories of employees for purposes of collective bargaining. The
formation of two separate bargaining units, the first consisting of the rankand-file non-academic employees, and the second, of the rank-and-file
academic employees, is the set-up that will best assure to all the employees
the exercise of their collective bargaining rights.
Petitioner next contends that these monthly paid office and technical employees are managerial
employees. They allegedly include those in the accounting and personnel department, cashier,
and other employees holding positions with access to classified information.
We are not persuaded. Article 212, paragraph (m) of the Labor Code, as amended, defines as
managerial employee as follows:
"Managerial employee" is one who is vested with power or prerogatives to
lay down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment. All employees not falling within any of the above
definitions are considered rank-and-file employees for purposes of this
Book.
Given this definition, the monthly paid office and technical employees, accountants,
and cashiers of the petitioner are not managerial employees for they do not participate
in policy-making but are given cut out policies to execute and standard practices to
observe. 8 In the main, the discharge of their duties does not involve the use of
independent judgment. As factually found by the Med-Arbiter, to wit:
A perusal of the list of the office and technical employees sought to be
represented in the instant case, with their corresponding designation does
not show that said Office and Technical employees exercises supervisory or
managerial functions.
The office believes and so hold that the employees whose names appear in
the "Masterlist of Office and Technical Employees" submitted during the
hearing are eligible to join/form a labor organization of their own choice. 9

Finally. Accordingly. thus: WHEREFORE. vs. With costs against petitioner.. on 23 August 1991. SO ORDERED. Buhaning. SO ORDERED. Petitioner submitted this contention only in its Memorandum dated February 12. petitioner cited LRD Case No. A labor bargaining representative. The principle of res judicata is. INC. hands-off stance in certification elections. Torres. Inc.. Honorable Pura Ferrer-Calleja. NCMB-NCR-NS-09-678-91) on grounds that these were issued with grave abuse of discretion and in excess of jurisdiction. the Union filed a notice of strike against Metrolab and Metro Drug Inc. Ruben D. the parties are directed to submit their position papers and evidence on the aforequoted deadlocked issues to this office within twenty (20) days from receipt hereof. Davao City filed by the National Federation of Labor (not the respondent Progressive Federation of Labor). 11 Law and policy demand that employers take a strick. therefore. concur. respectively. whether or not petitioner's confidential employees. Employees Association . however. Inc. in OS-AJ-04491-11 (NCMB-NCR-NS-08-595-9 1. must owe its loyalty to the employees alone and to no other. Narvasa. Finally. the petition is DISMISSED for lack of merit. In the case at bench. The bargaining representative of employees should be chosen free from any extraneous influence of management. Private respondent Metro Drug Corporation Employees Association-Federation of Free Workers (hereinafter referred to as the Union) is a labor organization representing the rank and file employees of petitioner Metrolab Industries. Padilla. February 28. The issue brought to fore in that case was totally different. JJ. The averment of petitioner is baseless and its recklessness borders the contemptuous. On 31 December 1990.Our decision in Golden Farms. vs.: This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking the annulment of the Resolution and Omnibus Resolution of the Secretary of Labor and Employment dated 14 April 1992 and 25 January 1993. No.[1] (Italics ours. and pursuant to Article 263 (g) of the Labor Code. HONORABLE MA. i. (not supervisory employees) under the House of Investment. WHEREFORE. then Labor Secretary Torres issued an order resolving all the disputed items in the CBA and ordered the parties involved to execute a new CBA. in her capacity as Secretary of the Department of Labor and Employment and METRO DRUG CORPORATION EMPLOYEES ASSOCIATION-FEDERATION OF FREE WORKERS. to be effective. issued an assumption order dated 20 September 1991. OXI-UR-70 for Direct Recognition/Certification Election. DECISION KAPUNAN. this Office hereby assumes jurisdiction over the entire labor dispute at Metro Drug. 10 In this Memorandum. as amended. the Collective Bargaining Agreement (CBA) between Metrolab and the Union expired. C. Thereafter. To contain the escalating dispute. Inc.. any strike or lockout is hereby strictly enjoined.) On 27 December 1991. the monthly paid rank-and-file employees of petitioner are being separated as a bargaining unit from its daily paid rank-and-file employees. . does not pose any obstacle in holding a certification election among petitioner's monthly paid rank-and-file employees.J.Metro Drug Distribution Division and Metrolab Industries Inc.. 108855. J. ended in a deadlock. we note that it was petitioner company that filed the motion to dismiss the petition for election. Inc. cit. Consequently. The general rule is that an employer has no standing to question a certification election since this is the sole concern of the workers. the Union filed a motion for reconsideration. [G. The Companies and the Metro Drug Corp. NIEVES ROLDANCONFESOR. op. The alleged error involves a question of fact which this Court cannot resolve.R.e. the dispositive portion of which reads. the then Secretary of Labor and Employment.. respondents.FFW are likewise directed to cease and desist from committing any and all acts that might exacerbate the situation. petitioner. PREMISES CONSIDERED. . The parties failed to settle their dispute despite the conciliation efforts of the National Conciliation and Mediation Board. considering the nature of their work. 1993. The second assigned error which was not raised in the proceedings below must necessarily fail. But even a side glance of the cited case will reveal that it involves a petition for direct certification among the rank-and-file office and technical employees of the Golden Farms Inc. Ladislawa Village. on the ground that they have different interest to protect.. should be included in the bargaining unit of the daily paid rank-and-file employees. Regalado and Mendoza. 1996] METROLAB INDUSTRIES. (hereinafter referred to as Metrolab/MII) and also of Metro Drug. inapplicable. The negotiations for a new CBA.

to their former positions or substantially equivalent. was without prejudice to the outcome of the issues raised in the reconsideration and clarification motions submitted for decision to the Secretary of Labor. respectively. Metrolab laid off 73 of its employees on grounds of redundancy due to lack of work which the Union again promptly opposed on 5 October 1992.[7] Labor Secretary Confesor also ruled that executive secretaries are excluded from the closedshop provision of the CBA. For the parties to incorporate in their respective collective bargaining agreements the clarifications herein contained. on 2 October 1992. The execution. SO RESOLVED. are reiterated.[5] THE PUBLIC RESPONDENT HON. On 14 April 1992. alleging that such act violated the prohibition against committing acts that would exacerbate the dispute as specifically directed in the assumption order. xxx xxx xxx. is hereby denied. Anent the first issue. locked in a stalemate in CBA negotiations. In its petition. after exhaustive negotiations. the Union’s motion for reconsideration is granted in part. is hereby denied.” the number of workers required its production is significantly reduced. the parties entered into a new CBA.On 27 January 1992. . SO RESOLVED. 1. the Union filed a motion for a cease and desist order to enjoin Metrolab from implementing the mass layoff. Issues relative to the CBA agreed upon by the parties and not embodied in our earlier order are hereby ordered adopted for incorporation in the CBA. Metrolab recalled some of the laid off workers on a temporary basis due to availability of work in the production lines. But inasmuch as the legality of the layoff was not submitted for our resolution and no evidence had been adduced upon which a categorical finding thereon can be based. SECRETARY OF LABOR AND EMPLOYMENT GRAVELY ABUSED HER DISCRETION IN INCLUDING EXECUTIVE SECRETARIES AS PART OF THE BARGAINING UNIT OF RANK AND FILE EMPLOYEES. Acting Labor Secretary Nieves Confesor issued a resolution declaring the layoff of Metrolab’s 94 rank and file workers illegal and ordered their reinstatement with full backwages. The layoff of the 94 employees at MII is hereby declared illegal for the failure of the latter to comply with our injunction against committing any act which may exacerbate the dispute and with the 30-day notice requirement. Further. to the extent of assailing our ruling that such layoff tended to exacerbate the dispute.[6] On 25 January 1993. MII is hereby ordered to pay such employees their full backwages computed from the time of actual layoff to the time of actual recall. the Union filed a motion for execution. On the same date. Metrolab assigns the following errors: A THE PUBLIC RESPONDENT HON. filed a motion for clarification regarding the constitution of the bargaining unit covered by the CBA. Metrolab contended that the layoff was temporary and in the exercise of its management prerogative. the parties are enjoined to cease and desist from committing any act which may tend to circumvent this resolution. during the pendency of the abovementioned motion for reconsideration. Labor Secretary Confesor again issued a cease and desist order. Accordingly. positions with full backwages from the date they were illegally laid off on 27 January 1992 until actually reinstated without loss of seniority rights and other benefits. we issued a Temporary Restraining Order enjoining the Secretary of Labor from enforcing and implementing the assailed Resolution and Omnibus Resolution dated 14 April 1992 and 25 January 1993.[2] On the other hand. MII’s motion for reconsideration with respect to the consequences of the second wave of layoff affecting 73 employees. Metrolab laid off 94 of its rank and file employees. however. Finally. The dispositive portion reads as follows: WHEREFORE. MII is hereby ordered to reinstate the 94 employees. Labor Secretary Confesor issued the assailed Omnibus Resolution containing the following orders: Metrolab argues that the Labor Secretary’s order enjoining the parties from committing any act that might exacerbate the dispute is overly broad. Hence. SECRETARY OF LABOR AND EMPLOYMENT COMMITTED GRAVE ABUSE OF DISCRETION AND EXCEEDED HER JURISDICTION IN DECLARING THE TEMPORARY LAYOFF ILLEGAL AND ORDERING THE REINSTATEMENT AND PAYMENT OF BACKWAGES TO THE AFFECTED EMPLOYEES. MII’s motion for partial reconsideration of our 14 April 1992 resolution specifically that portion thereof assailing our ruling that the layoff of the 94 employees is illegal. all prohibitory injunctions issued as a result of our assumption of jurisdiction over this dispute are hereby lifted.[3] Thereafter. we are asked to determine whether or not public respondent Labor Secretary committed grave abuse of discretion and exceeded her jurisdiction in declaring the subject layoffs instituted by Metrolab illegal on grounds that these unilateral actions aggravated the conflict between Metrolab and the Union who were. insofar as not inconsistent herein.[8] Pending the resolution of the aforestated motions. the dispositions and directives contained in all previous orders and resolutions relative to the instant dispute. the same is hereby referred to the NLRC for its appropriate action. 2. [4] On 6 March 1992. sweeping and vague and should not be used to curtail the employer’s right to manage his business and ensure its viability. Metrolab opposed. not from the bargaining unit. Metrolab filed a Partial Motion for Reconsideration alleging that the layoff did not aggravate the dispute since no untoward incident occurred as a result thereof. On 15 October 1992. except those who have already been recalled. Metrolab further asserted that with the automation of the manufacture of its product “Eskinol. On 4 March 1993. and our order of 28 December 1991 is affirmed subject to the modifications in allowances and in the close shop provision. It. On 4 February 1993. likewise. and 3. on various dates. Metrolab moved for a reconsideration. * B On 29 June 1992. Finally. then. the present petition for certiorari with application for issuance of a Temporary Restraining Order. It maintained that the company would suffer a yearly gross revenue loss of approximately sixty-six (66) million pesos due to the withdrawal of its principals in the Toll and Contract Manufacturing Department.

[14] xxx xxx xxx. Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or increase the tensions between the parties should be considered an act’ of exacerbation. A misplaced recourse is not needed to prove that a dispute has been exacerbated. If one has already taken place at the time of assumption or certification. As a result. . management prerogatives must always be exercised consistently with the statutory objective.. The disputed injunction is subsumed under this special grant of authority. When a labor dispute has in fact occurred and a general injunction has been issued restraining the commission of disruptive acts. Metrolab is one of the leading manufacturers and suppliers of medical and pharmaceutical products to the country. There were no work disruptions or stoppages and no mass actions were threatened or undertaken. unruly behavior. this privilege is not absolute but subject to limitations imposed by law. . MII is right to the extent that as a rule. to expect violent reactions. (Italics ours. The case at bench constitutes one of the exceptions. petitioner asserts. Unless such act is enjoined the Union will be compelled to resort to its legal right to mass actions and concerted activities to protest and stop the said management action. 263 (g) of the Labor Code specifically provides that: xxx xxx xxx (g) When. Contrary to petitioner’s allegations.[10] we issued this reminder: xxx xxx xxx xxx . the affected employees calmly accepted their fate “as this was a matter which they had been previously advised would be inevitable. We reaffirm the doctrine that considering their expertise in their respective fields. NLRC. Under a regime of laws. However.) xxx xxx xxx. the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. . This mass layoff is clearly one which would result in a very serious labor dispute unless this Office swiftly intervenes. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. we may not interfere with the legitimate exercise of management prerogatives such as layoffs. As aptly declared by public respondent Secretary of Labor in its assailed resolution: xxx xxx here that one of the substantive evils which Article 263 (g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest. Art. therefore. . For this would depart from its theory of the case that the layoff is subsumed under the instant dispute.[13] The Secretary of Labor ruled. (Italics ours. we find no compelling reason to overturn the findings of the Secretary of Labor. Protest against the subject layoffs need not be in the form of violent action or any other drastic measure. Thus. . Medina ( 177 SCRA 565 [1989]).[15] xxx xxx xxx. On the other hand. thus: xxx xxx xxx. In the instant case the Union registered their dissent by swiftly filing a motion for a cease and desist order. . . But it may nevertheless be appropriate to mention xxx xxx. It is circumscribed by limitations found in law. are not being unjustly curtailed but duly balanced with and tempered by the limitations set by law.. For instance.) xxx xxx xxx.[9] In PAL v. Metrolab and the Union were still in the process of resolving their CBA deadlock when petitioner implemented the subject layoffs. motions and oppositions were filed diverting the parties’ attention.[11] xxx. Tomas v. thereby aggravating the whole conflict. taking into account its special character and the particular circumstances in the case at bench. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest. or the general principles of fair play and justice (University of Sto. and any other chaotic or drastic action from the Union is to expect it to commit acts disruptive of public order or acts that may be illegal. 190 SCRA 758 [1990]).We cannot give credence to Metrolab’s contention. not on speculative reactions. legal remedies take the place of violent ones. delaying resolution of the bargaining deadlock and postponing the signing of their new CBA. for which a notice of strike had already been filed. the Union could not be expected to file another notice of strike. the Union strongly condemned the layoffs and threatened mass action if the Secretary of Labor fails to timely intervene: xxx xxx xxx.the exercise of management prerogatives was never considered boundless. all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. in Cruz vs. it was held that management’s prerogatives must be without abuse of discretion. The Secretary of Labor is expressly given the power under the Labor Code to assume jurisdiction and resolve labor disputes involving industries indispensable to national interest. a collective bargaining agreement.”[12] After a judicious review of the record. in his opinion. This Court recognizes the exercise of management prerogatives and often declines to interfere with the legitimate business decisions of the employer. 3. Metrolab insists that the subject layoffs did not exacerbate their dispute with the Union since no untoward incident occurred after the layoffs were implemented.. . factual findings of administrative agencies supported by substantial evidence are accorded great respect and binds this Court. Instead. xxx xxx xxx All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. One must look at the act itself. That Metrolab’s business is of national interest is not disputed. This unilateral action of management is a blatant violation of the injunction of this Office against committing acts which would exacerbate the dispute. Metro lab’s management prerogatives. NLRC.

.) xxx xxx xxx. not the continuation. It then cites International Hardware. despite the recall of some of the laid off workers. International Hardware involves a case where there had been a reduction of workload. Sa pagpapatupad ng “lay-off” susundin natin ang LAST IN-FIRST OUT policy. and 2. Executive Secretary of the Personnel Manager. Though on a limited scale. Ang mga empleyadong may pinakamaikling serbisyo sa kumpanya ang unang maaapektuhan. Personnel Manager. . it wouldn’t have mattered if the same was announced at the first working day of the year. or equivalent positions. Vice-President for Finance. . the employer therein opted to give them work on a rotating basis. Vice President for Sales. In the assailed Omnibus Resolution. (b) hereof. work was available. MII could have made it very clear in the notices of layoff. Ito ay batay na rin sa nakasaad sa ating CBA na ang mga huling pumasok sa kumpanya ang unang masasama sa “lay-off” kapag nagkaroon ng ganitong mga kalagayan. who are excluded from membership in the Association. Enero 27. b)Close Shop. subject. we ruled on the issue of exclusion as follows: These aside. of the employment relationship. MII could have at least complied with the requirement of the law. Labor Secretary Confesor clarified the CBA provisions on closed-shop and the scope of the bargaining unit in this wise: xxx xxx xxx. Managerial employees. The executive secretaries of the President. That way. Consequently. the first working day of the year. xxx xxx xxx. Ang umpisa ng lay-off ay sa Lunes. 1992. Mahirap tanggapin ang mga bagay na ito subalit kailangan nating gawin dahil hindi kaya ng kumpanya ang magbayad ng suweldo kung ang empleyado ay walang trabaho.[16] (Italics ours. Hindi na muna sila papasok sa kumpanya. Appropriateness of the bargaining unit. Consider the tenor of the pertinent portions of the layoff notice to the affected employees: xxx xxx xxx. Hindi po natin matitiyak kung gaano katagal ang “lay-off” ngunit ang aming tingin ay matatagalan bago magkaroon ng dagdag na trabaho. (sic) it also claims that it broke the bad news only on 27 January 1992 because had it complied with the 30-day notice. it could have broken the bad news on 02 January 1992. Dahil dito. Head of Legal. we reconsider our denial of the modifications which the Union proposes to introduce on the close shop provision. Exclusion from the Scope of the Close Shop Provision MII also seeks to excuse itself from compliance with the 30-day notice with a tautology. Makukuha nila ang suweldo nila sa Enero 30. Inc. mas hihina ang ating kumpanya at mas marami ang máaaring maapektuhan. the above-specified employees are not required to join the Association as a condition for their continued employment. par. We agree with the ruling of the Secretary of Labor. sinimulan na namin ang isang “Redundancy Program” sa mga supervisors. This provision shall not apply to: (i) managerial employees who are excluded from the scope of the bargaining unit. kaya sila ay mawawalan ng trabaho at bibigyan na ng redundancy pay. Dahil sa mga bagay na ito. the notices are couched in a language so uncertain that the only conclusion possible is the permanent termination. or equivalent positions. If there was such an intention. Executive Secretaries of Vice-Presidents. Executive VicePresident. While insisting that there is really no best time to announce a bad news. however. subject to the following exclusions only: 1. 3.We.All Qualified Employees must join the Association immediately upon regularization as a condition for continued employment. vs. par. Attachment I provides: Here. 176 SCRA 256. Vice-President. likewise. Article I (b) of the 1988-1990 CBA provides: xxx. such as. Marami sa atin ang kasama sa “lay-off” dahil wala nang trabaho para sa kanila. While we note that the provision as presently worded has served’ the relationship of the parties well under previous CBA’s. or equivalent positions. and Director for Corporate Planning who may have access to vital labor relations information or who may otherwise act in a confidential capacity to persons who determine or formulate management policies. NLRC. there is no circumstance at all from which we can infer an intention from MII not to sever the employment relationship permanently. thus: xxx xxx really no best time to announce a bad news (sic). napilitan ang ating kumpanya na magsagawa ng “lay-off” ng mga empleyado sa Rank & File dahil nabawasan ang trabaho at puwesto para sa kanila. But as it were. This was the Supreme Court’s basis for holding that there was no intention to permanently severe (sic) the employment relationship. the shift in constitutional policy toward expanding the right of all workers to self-organization should now be formally recognized by the parties. Vice-President for Sales. (ii) the auditors and executive secretaries of senior executive officers. to the application of the provision of Article II. Precisely to avoid laying off the employees.MII insists that the layoff in question is temporary not permanent. Kung tayo ay patuloy na magbabayad ng suweldo. it should have plainly stated so in the notices it sent to the affected employees and the Department of Labor and Employment. In our 14 April 1992 resolution. Executive Vice-President. We are not convinced by this argument. the President. If there is 2. in which the Supreme Court held that the 30-day notice required under Article 283 of the Labor Code need not be complied with if the employer has no intention to permanently severe (sic) the employment relationship. On the other hand. The provisions of Article I (b) and Attachment I of the 1988-1990 CBA shall thus be modified consistently with the foregoing. . and (iii) those employees who are referred to in Attachment I hereof. Ang mga empleyado na kasama sa “lay-off” ay nakalista sa sulat na ito. b): 1. find untenable Metrolab’s contention that the layoff of the 94 rank-and-file employees was temporary. The following positions in the Bargaining Unit are not covered by the Close Shop provision of the CBA (Article I. Exclusions. . Executive Secretary of the Director for Corporate Planning. Nabawasan ang mga puwesto para sa kanila.[17] The second issue raised by petitioner merits our consideration. If Metrolab intended the layoff of the 94 workers to be temporary.

This reading is obviously contrary to the intent of our 14 April 1992 resolution. Human Resources Manager. because if these managerial employees would belong to or be affiliated with a Union.”[19] We concur with Metrolab. Nevertheless. On the main issue raised before Us. In an earlier motion for clarification. vi) the Marketing Director. vs. They point out that managerial employees are lumped under one classification with executive secretaries. it should be noted. Sales Force. The Union can also become company-dominated with the presence of managerial employees in Union membership. Personnel and Industrial Relations Department.” In the first place.. who because of the nature of their duties and responsibilities need not join the Association as a condition for their employment. Similarly. Newly-hired secretaries of Branch Managers and Regional Managers. maintains that executive secretaries of the General Manager and the executive secretaries of the Quality Assurance Manager. division secretaries. there remain MII officer positions for which there may be executive secretaries. . we limited the exclusions to recognize the expanded scope of the right to self-organization as embodied in the Constitution. Accounting Department at Head Office. so that since the former are excluded from the bargaining unit. had this been otherwise the result would have been the same. the exclusion of executive secretaries should be read together with the qualifying phrase “are excluded from membership in the Association” of the same Article and with the heading of Attachment I. Some personnel in the Personnel Department. however. Management System Manager. vii) the Engineering Manager. Their classification as such is not seriously disputed by PEO-FFW. Ferrer-Calleja. radio and telegraph operators.4. Vice-President for Sales. the branch’s cash position. in accordance with law. This is specially true in the present case where the petitioning Union is already the bargaining agent of the rank-and-file employees in the establishment. The exclusion of managerial employees. specifically i) the Quality Assurance Manager. As such. .’ v) the Human Resources Manager. Engineering Manager. Torres[22] we declared: xxx xxx xxx. Secretaries of Audit. Materials Manager and Production Manager. e. all these employees. Cashiers and Controllers are confidential employees. the conversion of the exclusionary provision to one that refers to the bargaining unit from one that merely refers to the close shop provision would effectively curtail all the organizational rights of executive secretaries. this Court explicitly made this rationale applicable to confidential employees: This rationale holds true also for confidential employees such as accounting personnel. in National Association of Trade Union . Both MDD and MII read the exclusion of managerial employees and executive secretaries in our 14 April 1992 resolution as exclusion from the bargaining unit. xxx xxx xxx The basis for the questioned exclusions. In the same manner. vs. . MII points out that it has done away with the positions of Executive Vice-President. are confidential employees. Although Article 245 of the Labor Code[20] limits the ineligibility to join. our intent was to delimit the types of employees excluded from the close shop provision. it is quite obvious that respondent NLRC committed grave abuse of discretion in reversing the decision of the Executive Labor Arbiter and in decreeing that PIDI’s “Service Engineers. These include the General Manager and members of the Management Committee. viii) the Materials Manager. Said employee(s) may act as a spy or spies of either party to a collective bargaining agreement. [18] Metrolab.” xxx xxx xxx. Inc. Augusto Sanchez. If MII had undergone an organizational restructuring since then. with the exception of the service engineers and the sales force personnel. Inc. To allow the confidential employees to join the existing Union of the rank-and-file would be in violation of the terms of the Collective Bargaining Agreement wherein this kind of employees by the nature of their functions/positions are expressly excluded. The latter refers to “Exclusions from Scope of Close Shop Provision” and provides that “[t]he following positions in Bargaining Unit are not covered by the close shop provision of the CBA. Thus. jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence. persons who exercise managerial functions in the field of labor relations. to executive secretaries only. the foregoing group of exclusions is no longer appropriate in its present organizational structure. To repeat. having access to “vital labor information. Marketing Director. are likewise privy to sensitive and highly confidential records. iv) the Management System Manager. the rationale behind the ineligibility of managerial employees to form.” The issue of exclusion has different dimension in the case of MII. Product Development Manager. is no other than the previous CBA between MII and the Union. or have access to confidential matters of. this Court elaborated on this rationale. the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as confidential employees.Republic Planters Bank Supervisors Chapter v. The rationale behind the exclusion of confidential employees from the bargaining unit of the rank and file employees and their disqualification to join any labor organization was succinctly discussed in Philips Industrial Development v. they assist and act in a confidential capacity to. Finance Director. ii) the Product Development Manager. who are all members of the company’s Management Committee should not only be exempted from the closed-shop provision but should be excluded from membership in the bargaining unit of the rank and file employees as well on grounds that their executive secretaries are confidential employees. vault combination. In Bulletin Publishing Co.g. Payroll Staff at Head Office. and Director for Corporate Planning. must therefore still carry the qualifying phrase “from the bargaining unit” in Article I (b)(i) of the 1988-1990 CBA. so must the latter be likewise excluded. iii) the Finance Director. the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. EDP and Financial Systems are included within the rank and file bargaining unit. As regards the other claim of respondent Bank that Branch Managers/OICs. thus: x x x The rationale for this inhibition has been stated to be. form and assist any labor organization to managerial employees. having control.” In Golden Farms. In any event. EDP Staff at Head Office. and ix) the Production Manager. who having access to confidential information. statements of financial condition. . custody and/ or access to confidential matters. By the very nature of their functions. all Staff of General Management. Otherwise. may become the source of undue advantage. By recognizing the expanded scope of the right to self-organization. Hon. and Budget Staff. 5. this is a fact to which we have never been made privy. not from the bargaining unit. assist or join a labor union equally applies to them.. NLRC:[21] xxx xxx xxx.

There is no valid basis for discriminating against them. If confidential employees could unionize in order to bargain for advantages for themselves.. Padilla. Roldan-Confesor. 245 of the Labor Code singles out managerial employees as ineligible to join. Finally. xxx xxx xxx. It however. It is not farfetched that in the course of collective bargaining. However. Legal secretaries therefore fall under the category of confidential employees. SO ORDERED.[23] we ruled that: xxx xxx xxx. thus. or care and protection of the employer’s property. and to see to it that its interest are well protected. . therefore. It is the same reason that impelled this Court to consider the position of confidential employees as included in the disqualification found in Art. like all the other rank and file employees. makes the following contentions: xxx xxx xxx. In the case at bench. this claim is not even disputed by petitioner. particularly the threat of conflict of interest and espionage. Their work is basically routinary and clerical. They do not have to be union members to affect or influence either side. gives rise to a potential conflict between personal interests and their duty as confidential employees to act for and in behalf of Metrolab.[24] xxx xxx xxx. . Upon the other hand. Such a scenario.4 of the Central Bank Manual regarding joint custody. the Union does not disagree with petitioner that the executive secretaries are confidential employees.cash codes for telegraphic transfers. The mandate of the Constitution and the Labor Code. compels such conclusion. concur. Bellosillo.. the petition is partially GRANTED. to act as its representatives. A confidential employee is one entrusted with confidence on delicate matters. under the doctrine of necessary. The resolutions of public respondent Secretary of Labor dated 14 April 1992 and 25 January 1993 are hereby MODIFIED to the extent that executive secretaries of petitioner Metrolab’s General Manager and the executive secretaries of the members of its Management Committee are excluded from the bargaining unit of petitioner’s rank and file employees. JJ. . is not tantamount to discrimination. the nature of employment of confidential employees is quite distinct from the rank and file. among others. . While Art. . xxx xxx xxx. Vitug. demand drafts and other negotiable instruments. warranting a separate category. And in the latest case of Pier 8 Arrastre & Stevedoring Services. and such other duties as required by the legal personnel of the corporation. We thus hold that public respondent acted with grave abuse of discretion in not excluding the four foremen and legal secretary from the bargaining unit composed of rank-and-file employees. 245 as if the disqualification of confidential employees were written in the provision. . they might jeopardize that interest which they are duty-bound to protect. . The employer is not assured of such protection if these employees themselves are union members. or with the custody. the keeping of records and files. Moreover. . premises considered. pursuant to Sec. managerial employees are supposed to be on the side of the employer. primarily of protection to Labor. In any case. unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act “in the interest of the employers. Collective bargaining in such a situation can become one-sided. assist or form any labor organization. . the giving of and receiving notices. and Hermosisima. are not eliminated by non-membership of Metrolab’s executive secretaries or confidential employees in the Union. . should be granted the benefits of the Collective Bargaining Agreement. then they could be governed by their own motives rather than the interest of the employers. the executive secretaries stand to benefit from any agreement executed between the Union and Metrolab. . The Union’s assurances fail to convince. The dangers sought to be prevented. Neither would there be a danger of espionage since the confidential employees would not have any conflict of interest. . As previously discussed. Jr. confidential employees cannot be classified as rank and file. Excluding confidential employees from the rank and file bargaining unit. memoranda and correspondence. 1166. xxx xxx xxx. not being members of the Union. there is always the danger that any employee would leak management secrets to the Union out of sympathy for his fellow rank and filer even if he were not a member of the union nor the bargaining unit. Inc. xxx xxx xxx. legal secretaries are neither managers nor supervisors. the typing of legal documents. handling. they should be differentiated from rank-and-file employees because they are tasked with. There would be no danger of company domination of the Union since the confidential employees would not be members of and would not participate in the decision making processes of the Union. WHEREFORE. confidential employees are similarly disqualified. thus.(I)n the collective bargaining process. Confidential employees are rank and file employees and they. vs. Forming part of the bargaining unit. implication. .

1 P20. sent to the appellee a letter by registered mail dismissing her from the service. rec on app.. 1953. J. rec. on app. 23 October.) On 23 October 1953 the appellee sent a letter to the appellants by messenger. stipulation of facts. letter and on the same date. on app. stipulation of facts. pp. stipulation of facts. 11-16." and ordering the latter to pay to the former the Sum of P13. high costs of living allowance. which represents the plaintiff's basic salary. rec. out of generosity and in consideration of her length of service. complaining against the latter's "inconsiderate and untactful attitude" towards the employees under him and the clients of the appellant company in the Philippines (par. on app. it was suggested that she hand in a formal letter of resignation effective 31 October 1953. 6.58. Annexes A & B. p. rec. she would be considered dismissed from the service (par.222.. rec. 2. the managing directors believed with the appellant manager that it was impossible to maintain her further in the service of the company. 5 stipulation of facts. 19. 21888).). or a total of P518 a month (par. 49. Manuel V. that in order not to adversely affect her chances of future employment with other firms. L-12429 February 27. pp.000 as attorney's fee (civil No.). p. 17-18. p.000 for moral damages and P10. and that should they not hear from her in writing until noon of 23 October 1953. KAMERLING. much to my dislike and disappointment after being in their employment for almost twenty-two (22) years" (par. At the time of her dismissal. pp. V. the date she was dismissed from the service. 1953.: This is an appeal from a judgment rendered by the Court of First Instance of Manila holding that the dismissal of the plaintiff by the defendants "was summary. V. that in view of the contents and tenor of her letter. the appellant J. on app. Christmas bonuses and automatic increases in salary. 1961 ERMIDIA A. V. However. On 5 October 1953 the appellee sent a letter to the managing directors of the appellant company in Hongkong. 48. THE ROYAL INTEROCEAN LINES (Keninkijke Java-China-Pakitvaart Lijnen N. rec. plaintiff-appellee. No. 48-49. when the employment was interrupted.G. the appellee was receiving a basic salary of P312 and a high cost of living allowance of P206. otherwise the appellants would dismiss her. stating that she was "compelled to hand this letter of resignation severing my services from the Royal Interocean Lines effective October 31st. on app. to 21 August 1955. as computed by her pursuant to the defendant company's rules and regulations (Exhibit W). .R. 50. coursed through its manager for the Philippines. Emilio Javier for plaintiff-appellee. The appellee was employed by the appellant Royal Interocean Lines as stenographer-typist and filing clerk from 5 January 1932 until the outbreak of the war on 8 December 1941. Kamerling. on app. 10. rec. P. that despite the fact that they were justified in dismissing her from the service and that she was not entitled to any compensation. 49-50. rec. PADILLA..as willing to grant her a sum equivalent to three months' salary. On 19 October 1953 the appellant manager advised the appellee that her letter of 5 October 1953 had been forwarded to the managing directors of the appellant company in Hongkong. the date she would have retired upon reaching the age of 55 years. the appellant company . when she was dismissed from the service (par. Annex E. and from March 1948 until 23 October 1953. Amsterdam) and J.). defendants-appellants. 5 stipulation of facts. 7.). vs. pp. MARIANO. the appellants refused acceptance of her. unreasonable and arbitrary. from 24 October 1953. San Jose for defendants-appellants. on app. Annex D. The following appears from the stipulation of facts entered into by and between the parties and the documents attached thereto and made an integral part thereof.

" .108 for six monthly salary. that after the appellant company had filed its answer (Exhibit 5) to the complaint and the Court had conducted a hearing. The amount involved in this appeal not being more than P200. on app." and for refusing to reinstate her to her former position (Exhibit 4). 1-10. . pp. 9. The appellee sought reconsideration of her dismissal from the managing directors of the appellant company in Hongkong but received no answer to any of her five letters (par. it would have been certified to the Court of Appeals. this Court. 1953 she wrote a letter to the Managing Directors in Hongkong which was sent through said Kamerling. because her inefficiency as the ground or reason for her dismissal as claimed by the appellants is belied by the successive increases of her compensation.. his normal prerogative to hire or dismiss them.. and the enumeration in section 4 (of unfair labor practices). the filing.R.). L-11745). for having filed charges or for having given or being about to give testimony under this Act. No. p. on app. (See Rotenberg on Labor Relations. that this is the same cause of action upon which her claim for recovery of damages in the ewe at bar is predicated. as the dismissal of the appellee was without cause. as offend by the appellants. Paredes and Dizon. stipulation of facts. The issue involved is whether or not the petitioner was guilty of unfair labor practice in having dismissed the respondent because the latter had filed charges against Kamerling not connected with or necessarily arising from union activities. the employee's (1) having filed charges or (2) having given testimony or (3) being about to give testimony. must be related to his right to self-organization. The judgment appealed from is modified as above stated. deciding the case under review. (5) To dismiss. are modified by "under this Act" appearing after the last item. It would be redundant to repeat "under this Act" after each enumeration connected by the disjunctive conjunction "or. this Court proceeds to render judgment thereon. on app. of Republic Act No. the acting chief prosecutor of the Court of Industrial Relations.) Even from a liberal and grammatical point of view. the latter rendered judgment holding that the appellants were guilty of unfair labor practice and ordering them to reinstate the appellee to her former position with backpay from the date of dismissal to the date of reinstatement. interference or oppression because of one's labor or union activities. of which is the cause of the dismissal of the employee. rec. filed a complaint dated 24 May 1955 in the Court of Industrial Relations.. On 31 October.) . should be paid to her. and that despite the employees' right to selforganization.108 equivalent to six months salary. subsection 5. As the respondent's dismissal has no relation to union activities and the charges filed by her against the petitioner had nothing to do with or did not arise from her union activities. concur. xxx xxx xxx Considering the policy behind the enactment of the statute. stipulation of facts. pp.002. 4 Unfair Labor Practice. .. xxx xxx xxx Despite the employees' right to self-organization. Labrador. 398-399. rec." the appellee has no cause of action against the appellants. Annex F. On 19 December 1953 the appellants finally tendered to the appellant) an offer of compromise settlement whereby she would be paid the sum of P3. p. 875 which reads as follows: "Sec. or otherwise prejudice or discriminate against an employee. Annexes J & K-Stipulation. charging the appellants with unfair labor practice for having dismissed her from the service "for the reason that on October 5. rec. Bautista Angelo.58 and for other just and equitable relief (pp. The prohibition is directed only against the use of the right to employ or discharge as an instrument of discrimination. . B. (par. Considering that the appellee's dismissal by the appellants. Bengzon. because of charges preferred against the appellant manager with the managing directors of the appellant company in Hongkong. (Under subsection 5 of section 4(a). The appellants are ordered to pay the appellee the sum of P3. stipulation of facts. and that the appellants had filed in this Court a petition for certiorari to review the judgment of the Court of Industrial Relations (G. 30-31. In other words. it is readily discoverable that the provisions of sections 1 and 3 are the bases for the protection of the laborer's right to selforganization. complaining against the latter's attitude and behavior to her (Miss Mariano) and other employees. because the element of unfair labor practice is interference in such right. on 2 February 1954 the appellee brought this action for recovery of damages in the total sum of P107. on app. the provision in dispute has to be interpreted in the sense that the charges. there being a stipulation of facts and no dispute as to such facts.which she received on 27 October 1953. The notice of appeal to this Court was filed on 2 May 1957 and the record on appeal allowed on 29 May 1957 before the approval of Republic Act No. Reyes.). the appealed decision is hereby reversed and the directive for the respondent's reinstatement with backpay revoked. However. the employer still retains his inherent right to discipline his employees.). 10.. 2613 on 1 August 1959." did not constitute unfair labor practice. Not satisfied with the offer of compromise. the amount of P3. It appears further on the record that on 25 May 1955.51. rec. 122-124. rec. are nothing more than a detailed description of an employer's acts that may interfere with the right to self-organization and collective bargaining. pp. L. (a) It shall be unfair labor practice for an employer: . The pertinent legal provision is section 4(a). 50. rec.. Nevertheless. JJ. the employer therefore still retains his inherent right to discipline his employees. on app. in order to give rise to unfair labor practice on the part of the employer. 1960. without interest. p." . discharge. J. "his normal prerogative to hire or dismiss them. provided that she would sign a quit claim embodying a provision that she would release the appellants and any of their officers or employees from any civil or criminal liability and from any other liability and from any other liability arising from her employment (par. at the appellee's instance. 19-20. on app. 51. No special pronouncement as to costs. found and held as follows: .108. 7.000. "not connected with or necessarily arising from union activities. the three acts must have reference to the employee's right to self-organization and collective bargaining.

NORMA MABEZA. 4. 118506. she and her coemployees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's compliance with minimum wage and other labor standard provisions of law. SYLVIA IGANA. DECISION KAPUNAN. 1997] NORMA MABEZA. PETER NG/HOTEL SUPREME. 1991.[G. 416 Magsaysay Ave. all of legal ages (sic). JONATHAN PICART and JOSE DIZON. culled from the conflicting versions of petitioner and private respondent. Ng of his Hotel Supreme situated at No. That the said Hotel is separately operated from the Ivy's Grill and Restaurant. That we are executing this affidavit voluntarily without any force or intimidation and for the purpose of informing the authorities concerned and to dispute the alleged report of the Labor Inspector of the Department of Labor and Employment conducted on the said establishment on February 2. are illustrative.[1] The instrument provides:[2] JOINT AFFIDAVIT We. Philippines. MACARIA JUGUETA. NATIONAL LABOR RELATIONS COMMISSION. 1991. 5. J. Petitioner Norma Mabeza contends that around the first week of May. The facts of the case at bar.) EVELYN OGOY (Sgd. No. IN WITNESS WHEREOF. 1991 at Baguio City. EVELYN OGOY.) HERMINIGILDO AQUINO (Sgd. Peter L.) ADELAIDA NONOG (Sgd. petitioner.) SYLVIA IGAMA (Sgd) MACARIA JUGUETA (Sgd. That we are all (8) employees in the hotel and assigned in each respective shifts. 2. HERMINIGILDO AQUINO. we have hereunto set our hands this 7th day of May. depose and say: 1. Baguio City. under oath. (Sgd. April 18. ADELAIDA NONOG. That we have no complaints against the management of the Hotel Supreme as we are paid accordingly and that we are treated well. the natural and historical inclination of capital to ride roughshod over the rights of labor would run unabated.R. 1994 vividly illustrates why courts should be ever vigilant in the preservation of the constitutionally enshrined rights of the working class. That we are employees of Mr.: This petition seeking the nullification of a resolution of public respondent National Labor Relations Commission dated April 28. respondents. Filipinos and residents of Baguio City.) NORMA MABEZA . vs.. Without the protection accorded by our laws and the tempering of courts. 3.

WITH ALL DUE RESPECT.[5] She thereafter reluctantly filed a leave of absence from her job which was denied by management. complainant committed serious misconduct against her employer which is one of the just and valid grounds for an employer to terminate an employee (Article 282 of the Labor Code as amended).[13] We agree. 1994. The complaint was docketed as NLRC Case No. petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the National Labor Relations Commission . For abandonment to arise. complainant was charged in court for the said crime (Exhibit '5' for respondent and Exhibit 'B-6' for the complainant). THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO CONSIDER THAT THE ALLEGED LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN AFTERTHOUGHT ON THE PART OF THE RESPONDENT-EMPLOYER TO JUSTIFY. the hotel's cashier. 1991. 1 piece thermos.) JONATHAN PICART JOSE DIZON SUBSCRIBED AND SWORN to before me this 7th day of May. respondent strongly chided her for refusing to proceed to the City Prosecutor's Office to attest to the affidavit. a bedsheet and two towels from the hotel. loss of confidence. at Baguio City. continue with her unofficial leave of absence. The Solicitor General. 2. 3.[14] In the case at bar. private respondent raised a new ground. THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN FAILING TO CONSIDER THE EVIDENCE ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING UNFAIR LABOR PRACTICE COMMITTED BY THE RESPONDENT. instead.[3] After she refused to proceed to the City Prosecutor's Office . Philippines. he belatedly included a complaint for loss of confidence. petitioner instituted the instant special civil action for certiorari under Rule 65 of the Rules of Court on the following grounds:[12] 1.[8] On May 14.[4] According to her. 1991. the private respondent initially claimed that petitioner abandoned her job when she failed to return to work on May 8. December 1. night differential and other benefits. The fact that she made this attempt clearly indicates not an intention to abandon . Asst. on May 13.[7] Pointing to the Affidavit of May 7. respondent does not dispute the fact that petitioner tried to file a leave of absence when she learned that the hotel management was displeased with her refusal to attest to the affidavit. In fact. there must be concurrence of two things: 1) lack of intention to work. In a supplemental answer submitted eleven (11) months after the original complaint for illegal dismissal was filed. The affidavit was nevertheless submitted on the same day to the Regional Office of the Department of Labor and Employment in Baguio City. In addition to her complaint for illegal dismissal. service incentive leave pay. the failure of which would mean that the dismissal is not justified and the employee is entitled to reinstatement. 1991. As a consequence. 13th month pay. [16] and 2) the presence of overt acts signifying the employee's intention not to work. 1992). 1995 rejects private respondent's principal claims and defenses and urges this Court to set aside the public respondent's assailed resolution. WITH ALL DUE RESPECT. Margarita Choy. respondent NLRC promulgated its assailed Resolution[10] affirming the Labor Arbiter's decision. As gleaned from the affidavit. 1991. His disquisitions in support of his conclusion read as follows: It appears from the evidence of respondent that complainant carted away or stole one (1) blanket.on the same day the affidavit was submitted to the Cordillera Regional Office of DOLE . 1 piece bedsheet.[15] Appended to his last complaint was a suit for qualified theft filed with the Baguio City prosecutor's office. When she attempted to return to work on May 10. Consequently. the private respondent asserted that his employees actually have no problems with management. the same was drawn by management for the sole purpose of refuting findings of the Labor Inspector of DOLE (in an inspection of respondent's establishment on February 2. Labor Arbiter Pati rendered a decision dismissing petitioner's complaint on the ground of loss of confidence.CAR Baguio City. 1991) apparently adverse to the private respondent. '9-A. [17] In the instant case.(Sgd) (Sgd. in order to strengthen his contention that there existed sufficient cause for the termination of petitioner. With these pieces of evidence. ALBEIT ILLEGALLY. supporting this with charges that petitioner had stolen a blanket. three days after her attempt to return to work.' '9-C' and '10' pages 12-14 TSN. in a Manifestation in lieu of Comment dated August 8. It is settled that in termination cases the employer bears the burden of proof to show that the dismissal is for just cause.' '9-B. Pati. she alleged underpayment of wages. The resolution substantially incorporated the findings of the Labor Arbiter. The fiscal's office finding a prima facie evidence that complainant committed the crime of qualified theft issued a resolution for its filing in court but dismissing the charge of perjury (Exhibit '4' for respondent and Exhibit 'B-7' for complainant). THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN ADOPTING THE RULING OF THE LABOR ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES AND BENEFITS ON THE BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF COMPUTATION PREPARED BY ALLEGEDLY BY RESPONDENT'S EXTERNAL ACCOUNTANT) WHICH IS TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT OF WAGES AND BENEFITS. 2 pieces towel (Exhibits '9'. it is crystal clear that the circumstances upon which private respondent anchored his claim that petitioner "abandoned" her job were not enough to constitute just cause to sanction the termination of her services under Article 283 of the Labor Code. He maintained that there was no basis for the money claims for underpayment and other benefits as these were paid in the form of facilities to petitioner and the hotel's other employees. this was the reason why respondent Peter Ng lodged a criminal complaint against complainant for qualified theft and perjury. Additionally. 1991.[9] On April 28. Responding to the allegations made in support of petitioner's complaint for illegal dismissal. 1991. which was supported by a criminal complaint for Qualified Theft he filed before the prosecutor's office of the City of Baguio against petitioner on July 4. informed her that she should not report to work and. 1993. From the evidence on record. THE DISMISSAL OF THE COMPLAINANT FROM HER EMPLOYMENT. WITH ALL DUE RESPECT. [11] Unsatisfied.petitioner avers that she was ordered by the hotel management to turn over the keys to her living quarters and to remove her belongings from the hotel premises. City Prosecutor Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and contents of the affidavit as instructed by management. non-payment of holiday pay. private respondent Peter Ng alleged before Labor Arbiter Pati that petitioner "surreptitiously left (her job) without notice to the management"[6] and that she actually abandoned her work. RAB-CAR-05-0198-91 and assigned to Labor Arbiter Felipe P.

e.[20] has stated that: To be sure. He too. she was prevented from working by private respondents."[22] In the case at bar. The overt act (absence) ought to unerringly point to the fact that the employee has no intention to return to work. in the form of restraint. which are shared only in the higher echelons of management. In fact. regularly handle significant amounts of money or property. In fact. The answer in this case must inevitably be in the affirmative. while absence from work for a prolonged period may suggest abandonment in certain instances. loss of confidence should ideally apply only to cases involving employees occupying positions of trust and confidence or to those situations where the employee is routinely charged with the care and custody of the employer's money or property. petitioner was obviously held up as an example to all of the hotel's employees.' He is not privy to these confidential matters.. Having said this. It is the persons on such levels who. auditors. We agree with the Solicitor General's observation in his manifestation that "[t]his actuation. mere absence of one or two days would not be enough to sustain such a claim. under the provisions of law. To the first class belong managerial employees.[23] Clearly. Like the janitor. assign or discipline employees or effectively recommend such managerial actions. Illustrating this distinction. It was only after she had been repeatedly rebuffed that she filed a case for illegal dismissal. even the lowly janitor must enjoy that trust and confidence in some measure if only because he is the one who opens the office in the morning and closes it at night and in this sense is entrusted with the care or protection of the employer's property. private respondents should have confronted her before dismissing her on that ground. against his employee's right to institute concerted action for better terms and conditions of employment. Inc. we turn to the important question of whether or not the dismissal by the private respondent of petitioner constitutes an unfair labor practice. The pivotal question in any case where unfair labor practice on the part of the employer is alleged is whether or not the employer has exerted pressure. several days after she had been advised to take an informal leave. after realizing that she had to clarify her employment status. etc. and like the janitor again. would normally apply. The security guard does not belong in such category. For refusing to cooperate with the private respondent's scheme. all-encompassing pretext as loss of confidence. those vested with the powers or prerogatives to lay down management policies and/or to hire. These acts militate against the private respondent's claim that petitioner abandoned her job. this Court. She did not report because the cashier told her not to report anymore. interference or coercion. the efforts to justify petitioner's dismissal . to no avail. and that private respondent Ng did not want to see her in the hotel premises. NLRC. if unqualifiedly given the seal of approval by this Court. The first act clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through concerted action. Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for terminating their employees. in the Labor Arbiter's words. The employer's trust and confidence in him is limited to that ministerial function. in an obvious attempt to build a case against her.[18] which is patently not the case here. the suspicious delay in private respondent's filing of qualified theft charges against petitioner long after the latter exposed the hotel's scheme (to avoid its obligations as employer under the Labor Code) by her act of filing illegal dismissal charges against the private respondent would hardly warrant serious consideration of loss of confidence as a valid ground for dismissal. vs. and to the second class belong cashiers. The keys he holds are the symbol of that trust and confidence. in Marina Port Services.. together with the act of terminating or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice. Notably. an illegal dismissal. private respondent Ng did not raise the matter when petitioner went to see him on May 9. Having this in mind. One certainly does not employ a person he distrusts. But two days later or on the 10th of May. It took private respondents 52 days or up to July 4. he has access to this property. Without doubt. every employee must enjoy some degree of trust and confidence from the employer as that is one reason why he was employed in the first place. the act of compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not. because they discharge these sensitive duties. an ordinary chambermaid who has to sign out for linen and other hotel property from the property custodian each day and who has to account for each and every towel or bedsheet utilized by the hotel's guests at the end of her shift would not fall under any of these two classes of employees for which loss of confidence. However. the Solicitor General has himself taken a position opposite the public respondent and has observed that: If petitioner had really committed the acts charged against her by private respondents (stealing supplies of respondent hotel). Such a vague. however. 1991 before finally deciding to file a criminal complaint against petitioner. Private respondents did not do so. could readily reduce to barren form the words of the constitutional guarantee of security of tenure. shall have expired. For in not giving positive testimony in favor of her employer. that they could only cause trouble to management . discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony" [25] under the Labor Code.. By the same token. i. may be considered holding positions of trust and confidence. is analogous to the situation envisaged in paragraph (f) of Article 248 of the Labor Code"[24] which distinctly makes it an unfair labor practice "to dismiss. not a mere afterthought to justify an earlier action taken in bad faith. and handed him her application for leave. the security guard must also be considered as enjoying the trust and confidence of his employer. Notably. 'with the duties of safekeeping and safeguarding company policies. is charged with its care and protection. recall. He is not entrusted. lay-off. in the normal and routine exercise of their functions. It must be genuine. improper and unjustified. Indeed. management instructions.but an intention to return to work after the period of her leave of absence. As the Solicitor General in his manifestation observed: Petitioner's absence on that day should not be construed as abandonment of her job. had it been granted. he is entrusted only with the physical task of protecting that property. she again reported for work. and company secrets such as operation devices.. petitioner tried to resume working with the hotel. whose property he is safeguarding. petitioner had reserved not only her right to dispute the claim and proffer evidence in support thereof but also to work for better terms and conditions of employment. discharge.taints with evident bad faith and deliberate malice petitioner's summary termination from employment. transfer. suspend.[21] More importantly. 1991. "It should not be used as a subterfuge for causes which are illegal. property custodians.on top of the private respondent's scheme of inducing his employees to sign an affidavit absolving him from possible violations of the Labor Code . Furthermore. The manipulations of private respondents should not be countenanced.[19] We now come to the second cause raised by private respondent to support his contention that petitioner was validly dismissed from her job. Evidently. or those who. we have repeatedly held that loss of confidence should not be simulated in order to justify what would otherwise be. if ably supported by evidence.

J. Labor Arbiter Pati accepted hook. we find one more salient reason in this case to set things right: the labor arbiter's evaluation of the money claims in this case incredibly ignores existing law and jurisprudence on the matter. It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages equivalent to the full wage applicable from May 13. emergency cost of living allowance. allowing the former to return to her job would only subject her to possible harassment and future embarrassment. the RESOLUTION of the National Labor Relations Commission dated April 24.A. vs. the claims covering the period of October 1987 up to the time of filing the case on May 13. Padilla. starting with her job at the Belfront Hotel. night differential pay. National Labor Relations Commission. . without corroborative evidence. . During the process leading to the second notice. in the case at bench. Jr. the SSS or the BIR. it is noteworthy that the private respondent never even bothered to inform petitioner of the charges against her.00.. with costs. Implicit in the act of petitioner's termination and the subsequent filing of charges against her was the warning that they would not only be deprived of their means of livelihood. but also possibly. where such conclusions are based on a misperception of facts or where they patently fly in the face of reason and logic. he failed to show how he arrived at the valuations. Hermosisima. 4) Full backwages. Second. concur. In addition to separation pay. 442 (as amended) and its implementing rules limit all money claims arising out of employer-employee relationship to three (3) years from the time the cause of action accrues.[33]petitioner is entitled to full backwages from the time of her illegal dismissal up to the date of promulgation of this decision without qualification or deduction. Its blatant one-sidedness simply raises the suspicion that something more than the facts.[27] These requirements were not met in the instant case. and 13th month pay for the periods alleged by the petitioner as the private respondent has never been able to adduce proof that petitioner was paid the aforestated benefits. from the date of petitioner's illegal dismissal up to the date of promulgation of this decision pursuant to our ruling in Bustamante vs. 1994 is REVERSED and SET ASIDE. 2) Service incentive leave pay. facilities must be charged at fair and reasonable value.000. JJ. separation pay equivalent to one month's salary for every year of continuous service with the private respondent would be proper. Private respondent "failed to present any company policy or guideline to show that the meal and lodging . lodging) but the purpose. Given the seriousness of the second cause (qualified theft) of the petitioner's dismissal. (are) part of the salary.[34] 5) P1. Under the circumstances. A benefit or privilege granted to an employee for the convenience of the employer is not a facility. Finally. their ready availability is a necessary matter in the operations of a small hotel. NLRC. on leave. an award of One Thousand Pesos (P1. such as the private respondent's hotel. respondent failed to produce payroll records. It was only almost two months after petitioner had filed a complaint for illegal dismissal. SO ORDERED."[30] More significantly. Finally. However. or the electricity and water consumed by the petitioner were not facilities but supplements. the food and lodging. This Court does not normally overturn findings and conclusions of quasi-judicial agencies when the same are ably supported by the evidence on record. proof must be shown that such facilities are customarily furnished by the trade. the provision of deductible facilities must be voluntarily accepted in writing by the employee. Clearly. The first is a written notice containing a statement of the cause(s) for dismissal. However. Owing to the strained relations between petitioner and private respondent.[31] Considering.. the law and jurisprudence may have influenced the decision at the level of the Arbiter. Without satisfying these requirements."[28] he failed to provide proof of the employee's written authorization. For clarity. 3) Separation pay equal to one month's salary for every year of petitioner's continuous service with the private respondent starting with her job at the Belfront Hotel. 1988 up to the date of petitioner's illegal dismissal. we will not hesitate to set aside those conclusions. the second is a notice informing the employee of the employer's decision to terminate him stating the basis of the dismissal. where he could have.at great personal inconvenience. Bellosillo and Vitug. as has been pointed out in the Solicitor General's manifestation. that the loss was reported to the police and added as a supplemental answer to petitioner's complaint. as an afterthought.D. On the pretext that records prior to the July 16. such facilities could not be deducted without the employer complying first with certain legal requirements.[26] Granting that meals and lodging were provided and indeed constituted facilities. that hotel workers are required to work different shifts and are expected to be available at various odd hours. therefore.000.. receipts and other relevant documents.[29] Curiously. lodging. 1988 are barred by prescription as P. the employer must give the employee ample opportunity to be heard and defend himself. the dismissal of petitioner without the benefit of notice and hearing prior to her termination violated her constitutional right to due process. the only valuations relied upon by the labor arbiter in his decision were figures furnished by the private respondent's own accountant. . Neither was petitioner given the opportunity to explain the loss of the articles. the law requires that the employer must furnish the employee sought to be terminated from employment with two written notices before the same may be legally effected. 1988 up to the date of her illegal dismissal.[32] We depart from the settled rule that an employee who is unjustly dismissed from work normally should be reinstated without loss of seniority rights and other privileges. Additionally. First. in dismissal cases. "secured certified copies thereof from the nearest regional office of the Department of Labor.00) on top of payment of the deficiency in wages and benefits for the period aforestated would be proper. WHEREFORE. with the assistance of counsel if he so desires. the employer simply cannot deduct the value from the employee's wages. In the instant case. and. the economic benefits due the petitioner are hereby summarized as follows: 1) Deficiency wages and the applicable ECOLA from May 13. petitioner is entitled to payment of service incentive leave pay. Going into the issue of petitioner's money claims. premises considered. The criterion in making a distinction between the two not so much lies in the kind (food. night differential pay and 13th month pay for the same period. 1990 earthquake were lost or destroyed. et al. without qualification or deduction. line and sinker the private respondent's bare claim that the reason the monetary benefits received by petitioner between 1981 to 1987 were less than minimum wage was because petitioner did not factor in the meals. backwages are in order. electric consumption and water she received during the period in her computations. Pursuant to R. their personal liberty. 6715 and our decision in Osmalik Bustamante.

in CIR Case 175-MC and CIR Case 426-ULP. by and between the COMPAÑIA MARITIMA Iligan Branch. petitioner. Vicente A. and L-22951 refers to AFWU's3 appeal in CIR Case 426-ULP. J. vs. represented by its Branch Manager in Iligan City. Tuason for respondent Court of Industrial Relations. 1963. entered into a CONTRACT 4 with AFWU the terms of which We reproduce: — ARRASTRE AND STEVEDORING CONTRACT — KNOW ALL MEN BY THESE PRESENTS: This CONTRACT made and executed this 11th day of August. And AFWU is duly registered legitimate labor organization with 225 members. vs. Philippines.: The three cases before this Court are the respective appeals separately taken by the parties hereto from an order1 of the Court of Industrial Relations en banc affirming its trial judge's decision.G. On August 11. MARITIMA. L-22952 is AFWU's appeal in the same case. . Manager JOSE C.P. through Teves. 1952.. petitioners. TEVES. in the City of Iligan.R. Mariano B. Tuason for respondent Court of Industrial Relations. Nos. COMPAÑIA MARITIMA. MARITIMA is a local corporation engaged in the shipping business. respondents. Rafael and Associates for petitioner. Teves is its branch manager in the port of Iligan City. L-22971: Rafael Dinglasan for petitioner. 1952. Rafael Dinglasan for respondents. 1967 COMPAÑIA MARITIMA and Manager JOSE C. 1967 ALLIED FREE WORKERS' UNION (PLUM). Since these cases were jointly tried and decided in the court a quo and they involve the same fundamental issue — the presence or absence of employer-employee relationship — they are jointly considered herein. rendered on November 4. ALLIED FREEWORKERS' (PLUM) and COURT OF INDUSTRIAL RELATIONS. respondents. L-22951 and L-22952 January 31. Rafael and Associates for respondents. Thus L22971 is the appeal of MARITIMA2 in CIR Case 175-MC. BENGZON. a duly authorized labor union. TEVES. L-22971 January 31. and COURT OF INDUSTRIAL RELATIONS. ----------------------------G.R. and the ALLIED FREE WORKERS' UNION. J. L-22951 and 22952: Vicente A. Mariano B. represented by its President: WITNESSETH. No.

1954. 1961. MARITIMA filed an action9 to rescind the CONTRACT . 1962. a preliminary injunction was issued by Us against the orders of March 24 and . since AFWU did not appeal therefrom. 1962. Moreover. together with those of the Mindanao Workers Alliance — a sister union — formed a picket line at the wharf of Iligan City. this 11th day of August. 12 The subsequent incidents thereto gave rise to the two other proceedings which have previously reached Us here. this civil case has been the subject of three proceedings already which have reached this Court.8 This picket lasted for nine days. a writ of execution ousting the 225 AFWUmembers-laborers from their work in connection with the loading and unloading of cargoes was issued and a levy on execution upon the properties of AFWU was effected. AFWU presented to MARITIMA a written proposal5 for a collective bargaining agreement. This enabled MARITIMA to engage the services of the Mindanao Arrastre Service to do the arrastre and stevedoring work on January 8. 875. It ordered the rescission of theCONTRACT and permanently enjoined AFWU members from performing work in connection with MARITIMA'svessels. but same may be renewed by agreement of the parties. Incidentally.1. again denying the employer-employee relationship between the parties. and on March 31. That the Compañia MARITIMA hereby engage the services of the Allied Free Workers' Union to do and perform all the work of stevedoring and arrastre services of all its vessels or boats calling in the port of Iligan City. 1955. members of AFWU. enjoin AFWU members from doing arrastre and stevedoring work in connection with its. (3). The latter agreed to perform the work subject to the same terms and conditions of the CONTRACT . 1961. This demand embodied certain terms and conditions of employment different from the provisions of theCONTRACT . 3. 1961. upon the instance of AFWU. This harmonious relations between MARITIMA and AFWU lasted up to the latter part of 1953 when the former complained to the latter of unsatisfactory and inefficient service by the laborers doing the arrastre and stevedoring work. Subsequently. which amended some clerical errors in the original decision of December 5. 1961. beginning August 12. the CFI decision in the civil case was promulgated. This injunction was lifted that very evening upon the filing of a counter bond by AFWU. 1954. That the Compañia MARITIMA shall not be liable for the payment of the services rendered by the Allied Free Workers' Union. 1954. 4.an order of execution pending appeal and a writ of injunction against AFWU was issued by the trial court in the civil case. AFWU then filed its notice of appeal. TEVES Branch Manager Compañia Maritima Iligan City SIGNED IN THE PRESENCE OF: 1. Thus. prohibition and mandamus. MARITIMA answered. The new agreement was to be carried out on September 1. 1962. The termination was to take effect as of September 1. 1954. the trial court. MARITIMA found itself charged before the Industrial Court7 of unfair labor practices under Sec. The third incident that reached US 14 involved an order of the same trial court in the same civil case. 1952. However. 1961. we hereunto sign this presents in the City of Iligan. AFWU rendered satisfactory service. On January 6. 1961. That this CONTRACT is good and valid for a period of one (1) month from August 12. MARITIMA informed AFWU of the termination of the CONTRACT because of the inefficient service rendered by the latter which had adversely affected its business. LLUCH President Allied Free Workers' Union Iligan City (SGD) JOSE C. 1954. however Compañia MARITIMAreserves the right to revoke this CONTRACT even before the expiration of the term. by the trial court prohibiting AFWU from interfering in any manner with the loading and unloading of cargoes from MARITIMA'svessels. upon the institution of the petition for certiorari. 1952. AFWU filed a petition for certiorari. 1954. if and when the Allied Free Workers' Unionfails to render good service. as it has been the practice in the port of Iligan City. MARITIMA. Accordingly. 1960.AFWU members-laborers were able to continue the arrastre and stevedoring work in connection with MARITIMA'svessels. vessels. (SGD) JOSE CUETO 2. alleging lack of employer-employee relationship between the parties. (4) and (6) of Rep. AFWU laborers were again back doing the same work as before. 1961. appeal bond and record on appeal. injunction. 1952. was able to secure a writ of preliminary injunction ordering the maintenance of the status quo prior to January 6. On September 9. 1954. No reply was made by MARITIMA. On August 6. dated January 11. This deteriorating situation was admitted as a fact by AFWU'spresident. 4(a). AFWU instituted proceedings in the Industrial Court6 praying that it be certified as the sole and exclusive bargaining agent in the bargaining unit composed of all the laborers doing the arrastre and stevedoring work in connection with MARITIMA's vessels in Iligan City. after January 18. MARITIMA answered. On August 26. (1). IN WITNESS WHEREOF. 1962. upon the institution of the petition for prohibition and injunction in said L8876. On April 16. MARITIMA was again able to engage the services of the Mindanao Arrastre Service. 2. (SGD) SALVADOR T. through Teves. upon motion of MARITIMA . for the loading. Upon motion of MARITIMA. said wages were not charged to the consignees or owners of the cargoes. That the Allied Free Workers' Union shall be responsible for the damages that may be caused to the cargoes in the course of their handling. injunction and prohibition 13 here and on January 18. On July 23. 1954. 11 Meanwhile. Act No. To remedy the situation since MARITIMA's business was being adversely affected — Teves was forced to hire extra laborers from among "stand-by" workers not affiliated to any union to help in the stevedoring and arrastre work. unloading and deliveries of cargoes as same is payable by the owners and consignees of cargoes. on April 1. on March 24. thus preventing the Iligan Stevedoring Union from carrying out the arrastre and stevedoring work it contracted for. MARITIMA then contracted with the Iligan Stevedoring Union for the arrastre and stevedoring work. The wages of these extra laborers were paid by MARITIMA through separate vouchers and not byAFWU. 1960. (SGD) SERGIO OBACH. issued an order for the execution of the decision of January 11. 1954. On December 5. On September 1. During the first month of the existence of the CONTRACT . The first 10 involved a preliminary injunction issued therein on September 9. So. and for recovery of damages against AFWUand its officers. a motion to dissolve said counterbond was filed by MARITIMA but the hearing on this incident was enjoined by Us on March 15. verbally renewed the same. Philippines. On August 24.

But then. The petitioner union operated as a labor contractor under the so-called "cabo" system.31. On November 4. interferences and coercions upon its members-laborers. Teves and the Iligan Stevedoring Union and/or Sergio Obach is hereby dismissed for lack of substantial evidence and merit. was MARITIMA the "employer" and AFWU and/or its members the "employees" with respect to one another? The court a quo held that under the CONTRACT . the union undertakes to haul the said shipper's goods to the boat. 1961. and the office staff composing of the general foreman. As already indicated. the auditor. This was necessary in order to facilitate the collection of freight and handling charges from the government for auditing purposes. with the following under him — one vice-president. Cargoes carried from the warehouses to the boat or from the boat to the consignees were always accompanied by the union checker who hand-carry the "conduci". 1963. There were. the invoice number. 15 Such then was the status of things. The charges for such service were known by the union and collected by them through their bill collector. 26-28. the question is: Under the CONTRACT . This conclusion was based on the following findings of fact. The respondent has no truck of any kind for the service of hauling cargoes because such service is included in the CONTRACT executed between the parties. general manager and the board of directors. the result thereof shall forthwith be submitted to this court for further consideration. the general foreman requests the cargo report from the chief mate of the vessel in order to determine where the cargoes are located in the hold of the boat and to know the destination of these cargoes. The foreman assigned their laborers to perform the required work aboard vessels of the respondent. The payrolls where laborers are listed and paid were prepared by the union itself without the intervention or control of the respondent company and/or its agent at Iligan City. June 9. and field timekeeper all appointed by the general manager of the union and are paid in accordance with the union payroll exclusively prepared by the union in the office. upon motion of MARITIMA this preliminary injunction was lifted by Us insofar as it related to the execution of the order ousting the AFWU laborers from the stevedoring and arrastre work in connection with the MARITIMAvessels. the complaint of the union for unfair labor practices against the Compañia MARITIMA and/or its agent Jose C. So. As contractor. Under the law 16 the duty to bargain collectively arises only between the "employer" and its "employees". The respondent firm have their own separate representatives like checkers who extend aid to the union officers and members in checking the different cargoes unloaded or loaded aboard vessels of the Compañia MARITIMA. "F" and "F-1") and its organizational structure includes the following: General President. the name of the vessel and the number of bills of lading covering the cargoes to be delivered. Where neither party is an "employer" nor an "employee" of the other. and works without specific instructions. In pursuance of the provisions of Section 12 of Republic Act 875 and the Rules of this court on certification election. how to do. general checker. 78-80. THE UNFAIR LABOR PRACTICE CASE (L-22951 * [CIR Case 426-ULP]) Petitioner AFWU's proposition is that the court a quo erred (1) in concluding that MARITIMA had not refused to bargain collectively with it.. general treasurer. and as such it has a complete set of officers and office personnel (Exhs. Once goods are delivered to their destination the union through its bill collectors prepare the bills of collection and the charges thereon are collected by the union bill collectors who are employees of the union and not of the respondent. field checker. on May 16.n. the shipper usually notifies the petitioner union when to load their cargoes aboard CompañiaMARITIMA boats calling in the port of Iligan City. This is shown by the preparation of the union forms known as "conduci" or delivery receipts. the Honorable. pp. 1960. and upon termination of the said election. Under the general manager is the secretary. For instance. however. office timekeeper. the Industrial Court finally rendered its decision. no such duty would exist. The union present payroll may be utilized in determining the qualified voters. assistant general checker. pp. AFWU was an independent contractor of MARITIMA. There were no instances where offices and employees of the respondent Compañia MARITIMA and/or its agent had interferred in the giving of instructions to the laborers performing the arrastre and/or stevedoring work either aboard vessels or at the wharf of Iligan City. the union employs their own trucks or other vehicles or conveyance from shipper's warehouse to the boat or vice-versa. which We can no longer disturb. and when a boat docks in said port. 1962. The dispositive part provided: IN VIEW OF ALL THE FOREGOING CIRCUMSTANCES. When cargoes are to be loaded. general timekeeper. legal counsel. The union engaged the services of their members in undertaking the work of arrastre and stevedoringeither to haul shippers' goods from their warehouses in Iligan City to the MARITIMA boat or from the boat to the different consignees. and the respective subordinates like assistant foreman. stated in the CIR decision: 7. where there is no duty to bargain collectively the refusal to bargain violates no right. and (3) in concluding that the CONTRACTmay not be interferred with even if contrary to law or public policy. The respondent had no intervention whatsoever in the collection of those charges as the same are clearly indicated and described in the labor CONTRACT . and AFWU and/or its members-laborers who do the actual stevedoring and arrastre work on the other hand. The respondent never had any knowledge of the individual names of laborers and/or workers listed in the union payroll or in their roster of membership. pp. The union members who were hired by the union to perform arrastre and stevedoring work on respondents' vessels at Iligan port were being supervised and controlled by the general foreman of the petitioner union or by any union assistant or capataz responsible for the execution of the labor CONTRACTwhen performing arrastre and/or stevedoring work aboard vessels of the Compañia MARITIMA docking at Iligan City. as the majority union. capataz. February 16. These "conduci" or receipts contain informations as to the number and/or volume of cargoes handled by the union. Those delivery receipts are different and separate from the bills of lading and delivery receipts issued by the company to the consignees or shippers. (See t. It is true that MARITIMA admits that it did not answer AFWU's proposal for a collective bargaining agreement. "A"). All the laborers and/or workers hired for said work are union members and are only responsible to their immediate chief who are officers and/or employees of the union. 8.. . the Secretary of Labor or any of his authorized representative is hereby requested to conduct certification election among all the workers and/or stevedores working in the wharf of Iligan City who are performing stevedoring and arrastre service aboard Compañia MARITIMA vessels docking at Iligan City port in order to determine their representative for collective bargaining with the employer. (See Exh. SO ORDERED. instances when the respondents were requested to help the union in the collection of charges for services rendered by members of the union when fertilizers and gasoline drums were loaded aboard the Compañia MARITIMA boats. 32-36. 9.s. (2) in not finding that MARITIMA had committed acts of discrimination. 1960). on the one hand. when a boat arrives. Exhibit "A". . after almost 10 years of hearing the two cases jointly. the fundamental issue involved in these cases before Us consists in whether there is an employer-employee relationship between MARITIMA. whether their desire to be represented by the petitioner Allied Free Workers Union or neither [sic]. Needless to add. In doing this work. the union does not receive instructions as to what to do. with the exclusion of all supervisors. From this it does not necessarily follow that it is guilty of unfair labor practice. August 9. They have no fixed hours of work required by the MARITIMA. 1962.

vs. Cruz.17 Neither is there any direct employment relationship between MARITIMA and the laborers. Now. (Emphasis supplied) And in absolving MARITIMA of the unfair labor charge on this point. the court a quo concluded: From the foregoing circumstances and findings. Hence. is the "most important element" — there is no employer-employee relationship. 21However..19 Of course there is no legal impediment for a union to be an "employer". contracts to do a piece of work according to his own methods. discipline and/or dismiss these erring workers of the union. 17-18. And that it really is engaged in business is shown by the fact that it had arrastre and stevedoring contracts with other shipping firms in Iligan City. There is no showing that this new union. contrary to AFWU's sweeping statement. (Emphasis supplied) The conclusion thus reached by the court a quo is in full accord with the facts and the applicable jurisprudence. Teves. any losses or damages caused with the said cargoes were charged to the account of the union. it is interesting to note that the facts as found by the court a quo strongly indicate that it isAFWU itself who is the "employer" of those laborers. Jur. Al Lagadan et al. Further. In fact. First of all. 41-43. according to his own manner and methods. Suffice it to say on this point that an agent can not represent two conflicting interests that are diametrically opposed. exists in the case at bar. No.R.10. (Exhibit "A"). they could not possibly be in a better class than AFWU which dealt with MARITIMA.S. "An independent contractor is one who. February 15. one who exercising an independent employment. Manila Hotel et al. and that this CONTRACT obligated the petitioner as an independent labor contractor to undertake the arrastre and stevedoring service on Compañia MARITIMA boats docking at Iligan City Port. (Emphasis supplied) 'In determining the existence of employer-employee relationship. (2) paid their wages. in rendering services." (see 56 C. the record does not contain any specific data regarding the third and fourth elements. Respondent cannot.s. the Court finds that the petitioner. These are the very elements constituting an employer-employee relationship. (3) the power of dismissal. 18. payment of wages. We totally agree with the court a quo that AFWU was an independent contractor. if any. was organized with the help of the branch manager Jose C.J. G. The facts very succinctly show that it was AFWU. The organizer of the union like Messrs.18 In this connection. the Iligan Stevedoring Union.' The clear implication of the decision of the Supreme Court is that if the defendant has no power of control — which. . This Court believes that it may not interfere in the implementation of the said labor CONTRACT in the absence of abuse by one party to the prejudice of the other. help or aid of the respondent Compañia MARITIMA or its branch manager Teves in the formation and/or organization of the said Iligan Stevedoring Union. exercises an independent employment or occupation and represents the will of his employer only as to the results of his work and not as to the means whereby it is accomplished. therefore. 445). Labayos and Atty. Erring laborers and/or workers who are affiliates of the union were directly responsible to the union and never to the respondent. under this situation. the court a quo found that it was AFWU that hired them. through its officers. On the contrary. xxx xxx xxx 13. And that the cases sought to be relied upon did not involve representatives of opposing interests. aside from its labor CONTRACT (See Exhibit "A") with the respondent Compañia MARITIMA also has other labor contracts with other shipping firms on the stevedoring and arrastre work. 1956. in its all-out endeavor to make an "employer" out of MARITIMA. And an independent contractor is not an "employee". Their only possible connection with MARITIMA is through AFWU which contracted with the latter. G. the president of the union himself dismissed one inefficient laborer found to have been performing inefficient service at the time (t. Assuming that the share received by the deceased could partake of the nature of wages — on which we need not and do not express our view — and that the second element. The respondents have not at any time interferred in the imposition of disciplinary action upon the laborers who are members of the union. The Court finds no interference in the union activities. 1957). Its organizational structure and operational system is no different from other commercial entities on the same line. the following elements are generally considered. AFWU appears to be more of a distinct and completely autonomous business group or association. L-8967. Obach and their colleagues have never sought the intervention. These factors were present in the relation of the parties as described in their CONTRACT Exhibit "A". AFWU citing an impressive array of jurisprudence. the court a quo did not find that xxx xxx xxx . therefore. The latter have no separate individual contracts with MARITIMA. (3) exercised control and supervision over them. which (1) selected and hired the laborers. pp. 20 Under the particular facts of this case. The petitioner is an independent contractor as defined in the CONTRACT Exhibit "A" and in the evidence submitted by the parties. and (4) the power to control the employee's conduct — although the latter is the most important element (35 Am. et al. Sergio Obach. even goes to the extent of insisting that it be considered a mere "agent" of MARITIMA. and the union likewise imposed the penalty or fine to any employee who caused or committed the damages to cargoes in transit. In one instance. the Supreme Court states the rule as follows. To construe the CONTRACT otherwise would tend to disregard the rights and privileges of the parties intended by them in their CONTRACT . pp. Other disciplinary measures imposed on laborers performing the said work were exercised by the general foreman of the union who has blanket authority from the union general manager to exercise disciplinary control over their members who were assigned to perform the work in a group of laborers assigned by the union to perform loading or unloading cargoes when a Compañia MARITIMA boat docked at Iligan City. without being subject to the control of his employer except as to the result of his work. (2) the More worthy of consideration is the suggestion that the termination of the CONTRACT was in bad faith. No. according to the Supreme Court. April 30. and (4) had the power to discipline and dismiss them. It appears that these people have had previous knowledge and experience in handling stevedoring and in the arrastre service prior to the employment of the Allied Free Workers Union in the Iligan port. The charge of union interference and domination finds no support from the evidence. It even has its own bill collectors and trucking facilities.. nowhere in the 32-page decision of the court a quo can any such finding be found. Anent the second point raised: AFWU claims that the court a quo found that acts of interferences and discriminations were committed by MARITIMA against the former's members simply for their union affiliation.. While cargoes were in transit either from the warehouse to the boat or from the boat to the different consignees. May 31. the Court is of the opinion that no substantial evidence has been presented to sustain the charge of unfair labor practice acts as alleged to have been committed by herein respondent. 1961). of the members of the Allied Free Workers Union as these persons engaged in the stevedoring and arrastre service were employed by the Allied Free Workers Union as independent contractor subject to the terms and conditions of their then existing labor CONTRACT Exhibit "A". L-9110. free from the control and direction of his employer in all matters connected with the performance of the service except as to the result of the work. however.. and who engaged to perform a certain service for another.R.n. namely: (1) the selection and engagement of the employees. said court made the following finding: In Viaña vs.

Evidence is clear that Teves. . On the contrary. That case presupposes an employer-employee relationship between the parties disputants — a basis absolutely wanting in this case. (See Exhibits 'Y'. wrote the petitioner union informing them of the termination of their CONTRACT . the court a quo found as a fact that there is no sufficient evidence of union interference. the branch manager of the Compañia MARITIMA was forced to hire extra laborers from among 'stand-by' workers not affiliated to any union for the purpose of helping in the stevedoring and arrastre work on their vessels because. branch manager Jose C. and this was due to the fact that respondents' vessels were forced to leave cargoes behind in order not to disrupt the schedule of departures. (See Exhibit "N"). the Compañia MARITIMA's representative at Iligan City was authorized to renew verbally with the extension of the CONTRACT Exhibit "A" from month to month basis after the first month of its expiration. In the certification ejection case. the Allied Free Workers Union and its members were working or performing the work of arrastre and stevedoring service aboard 'vessels of the Compañia MARITIMA docking at Iligan City port under the 'cabo system' then prevailing in that teritory. 22 However. at that time. so much so that MARITIMA boats have to leave on schedule without loading cargoes already contacted to be transported. 'Y-1' to 'X-5'). This conclusion cannot be sustained. Teves of the Iligan City MARITIMA Branch. 1954. the Court is satisfied that there is no act or acts of discrimination as claimed by herein petitioner to have been committed by the respondent firm or its branch manager Teves.. And no reason or argument has been advanced to show that the fact of said termination alone constituted union interference. in representation of the principal. in good faith in implementing the provisions of their existent CONTRACT (Exhibit "A"). the former had an oral arrastre and stevedoring agreement with another union. Said the court: 20. "3".n. 65-66. Exhibit "A". Because of the deterioration of the Service rendered to the respondent. xxx xxx xxx 14. CIR. "3-A" and "3-B". MARITIMA continued to avail of the services ofAFWU the court a quo concluded that there came about an implied employeremployee relationship between the parties. 1954. AFWU's third point is again that MARITIMA's act of terminating the CONTRACT constituted union interference. 15. But after the termination of the CONTRACT on August 31. and the business of the respondent company in Iligan City suffered adversely during the year 1954. There was a showing that the laborers employed by the union were inefficient in performing their jobs. xxx xxx xxx x x x Further. the union was an independent contractor. (See Exhibit "N"). This is shown by the court a quo's own finding that prior to the CONTRACT between MARITIMA and AFWU.the termination of the CONTRACT was "in retaliation to AFWU's demand for collective bargaining. As found by the court a quo: . he did so in the concept that the employer firm may so terminate their contract pursuant to paragraph 4 of Exhibit "A" which at the time was the law controlling between them. which was the prevailing custom in the place. In order to solve this inefficiency of the complaining union. In its findings of fact. (Emphasis supplied) Under the "Cabo" system. Respondent Teves reported to the MARITIMA's head office on the financial losses of the company in its operations. the union was not performing and/or rendering efficient service in the loading and unloading of cargoes. or public policy. The evidence does not show substantially any act of interference in the union membership or activities of the petitioner union. 12. the court a quo observed that after the rescission. At times. . 1960). it has not adduced any argument to demonstrate such point. See also t. and the customs and conditions then prevailing were observed by the parties without resorting to the conditions of the former labor contract Exhibit "A". there is authority to the effect that the insertion in a CONTRACT for personal services of a resolutory condition permitting the cancellation of the CONTRACT by one of the contracting parties is valid.. public order. it is contradicted by the established facts. This deteriorating situation was admitted as a fact by the union president (See Exhs. The latter maintains that the lower court should have directly certified it as the majority union. First of all. This situation of harmony lasted up to the latter part of 1953 when the Compañia MARITIMA and its branch manager agent complained to the union of the unsatisfactory service of the union laborers hired to load and unload cargoes aboard Compañia MARITIMA boats. cargoes were left behind because of the union's failure to load them before vessel's departure. has also acted. what was the nature of the relationship betweenMARITIMA and the laborers-members of AFWU? From the finding that after the rescission of the CONTRACT . and when he advised the union of the rescission of the said CONTRACT effective August 31. morals. whereas MARITIMA contends that said court could not even have correctly ordered a certification election considering that there was an absence of employer-employee relationship between it and said laborers. AFWU might say that this right to terminate appearing in paragraph 4 of the CONTRACT is contrary to law. On August 24.. The rescission of their CONTRACT is not a union interference contemplated in the law. August 9. 23 Neither would the termination constitute "union-busting". THE CERTIFICATION ELECTION CASE (L-22952 ** & L-22971 [CIR Case No. As stated. the respondent Compañia MARITIMA. Under this situation. entitled to represent all the workers in the arrastre and stevedoring work unit. After the rescission of the CONTRACT Exhibit "A" on August 31. (Emphasis supplied) We are equally satisfied that the real reason for the termination of the CONTRACT was AFWU's inefficient service. This agreement was also based on the "cabo" system. During the first month of the existence of the labor CONTRACT Exhibit 'A'. (Emphasis supplied) Perhaps. The Union laborers were slow in loading and/or unloading freight from which the respondent Compañia MARITIMA secured its income and/or profits. This step was taken after the company found the union lagging behind their work under the CONTRACT .s. 175-MC]). the court a quo held that MARITIMA'sauthority to terminate the CONTRACT was rightfully exercised: 21. the AFWU laborers continued working in accordance with the "cabo" system. Both MARITIMA and AFWU have appealed from that ruling. There is no question that certification election could not have been proper during the existence of the CONTRACTin view of the court a quo's finding that there was no employment relationship thereunder between the parties. good customs. Oceanic Air Products vs. pp. 1954. the court a quo directed the holding of a certification election among the laborers then doing arrastre and stevedoring work. 1954. 24 cited byAFWU is not in point. The court a quo drew its conclusion from the following findings: 11. Moreover. the petitioner union rendered satisfactory service.. the branch manager of the respondent Compañia MARITIMA informed the union of its intention to rescind the CONTRACT Exhibit "A" because the company had been suffering losses for such inefficient service.

Laurentino Ll. it is not proper to hold certification elections in connection therewith. As We suggested in Bermiso vs. to uphold the court a quo's conclusion would be tantamount to the imposition of an employer-employee relationship against the will of MARITIMA. in its essence. and .4. the element of "control" — must be shown to sustain the conclusion that there came about such relationship. the majority labor union. the purpose must not only be good but the means undertaken must also be lawful. the Compañia MARITIMA through its agent in Iligan City cancelled their oral contractor and entered into a new contractor. Under both. the appealed decision of the Court of Industrial Relations is hereby affirmed insofar as it dismissed the charge of unfair labor practice in CIR Case 426-ULP. 175-MC. extending in fact and in effect the operation of the MARITIMA contract.e. since the parties observed the "cabo" system after the rescission of the CONTRACT. 'If the employer can compel the employee to work against the latter's will. The laborers who are members of the union and hired for the arrastre and stevedoring work were paid on union payrolls and the Compañia MARITIMA has had nothing to do with the preparation of the same. We therefore hold that where — as in this case — there is no duty to bargain collectively. Because of unsatisfactory service rendered by the Iligan Wharf Labor Union headed by Labayos. Hence. but reversed and set aside insofar as it ordered the holding of a certification election in CIR Case No. . . it is evident that. vs. respondent Teves reluctantly signed the said written contract with the union with the assurance however that the same arrange previously had with the former union regarding the performance and execution of the arrastre and stevedoring contract be followed in accordance with the custom of such kind of work at Iligan City. the actual negotiations — which may possibly culminate in a concrete collective bargaining contract — are carried on between the "employer" itself and the officialrepresentative of the "employees" 27 — in most cases. and (3) the laborers were paid on union payrolls and MARITIMA had nothing to do with the preparation of the same. Moreover. The employer and the employee have thus an equality of right guaranteed by the constitution. (2) the charges against the consignees and owners of cargoes were made directly by the union.. A true and sincere concern for the welfare of AFWU members-laborers would call for reforms within AFWU itself. The petitioner union. Salvador Lluch. it is reasonable to assume that AFWU continued being an independent contractor of MARITIMA. Mariano Ll Badelles. "A") was negotiated through the intervention of Messrs.. There is no reason to select a representative to negotiate when there can be no negotiations in the first place. However. i. it cannot be correctly concluded — as did the court a quo — that an employeremployee relationship — even impliedly at that — arose when before there never had been any. It was only to comply with injunctions and other judicial mandates that MARITIMA continued to abide by the status quo. The contract was prepared by their legal panel and after several negotiations. the Iligan Laborers Union acting as an independent labor contractor engaged [in] the services of its members as laborers to perform the contract work of arrastre and stevedoring service aboard vessels of the Compañia MARITIMA calling and docking at Iligan City. to hold certification elections would be pointless. The cancellation of the oral contract with the Iligan Wharf Labor Union headed by Labayos was due to the inefficient service rendered by the said union. 29 the remedy against the "cabo" system need not be sought in the courts but in the laborers themselves who should organize into a closely-knit union "which would secure the privileges that the members desire thru the election of officers among themselves who would not exploit them. That prior to the execution of Exhibit "A". Lastly. Halivas and Raymundo Labayos. there was no real difference between the CONTRACT and the prior oral agreement. being an independent contractor. Under the oral CONTRACT . it would appeal unreasonable and unjust to force such a relationship upon MARITIMA when it had clearly and continuously manifested its intention not to have any more business relationship whatsoever with AFWU because of its inefficient service. the duty to bargain collectively exists only between the "employer" and its "employees". 6. These are the principal characteristics of the "cabo" system on which the parties based their relationship after the termination of the CONTRACT. there is no evidence at all regarding the characteristics of the working arrangement between AFWUand MARITIMA after the termination of the CONTRACT. The labor contract entered into by the petitioner herein (Exh. Both were based on the "cabo" system. insofar as the working arrangement was concerned. is in its operation regarded as disadvantageous to the laborers and stevedores. and the proceeds thereof shall be shared by the union members in accordance with the union's internal rules and regulations. With more reason would be true with respect to the laborers. and for the services therein rendered the union charged shippers and/or consignees in accordance with the consignment or place. Badelles. (1) the union was an independent contractor which engaged the services of its members as laborers. The court a quo's objective in imposing the employer-employee relationship may have been to do away with the "cabo" system which. 26 We said: x x x The general right to make a contract in relation to one's business is an essential part of the liberty of the citizens protected by the due process clause of the constitution. The rule however remains that the end cannot justify the means. (Emphasis supplied) From the above findings. This cannot be done. The only remaining question now is whether. 1954. Since the only function of a certification election is to determine. 25 In Pampanga Bus Co. As already stated. with judicial sanction. Nicanor T. operated as a labor contractor under the so-called "cabor" system. Pambusco Employees' Union. and since the characteristics of said system show that the contracting union was an independent contractor. And there being no such duty. in the particular context of what We have said. And. although not illegal. Exhibit "A" with the Allied Free Workers Union (PLUM) now petitioner in this case. this is oppression (Emphasis supplied) . and this work continued from 1949 to 1952. this is servitude. 28 the order for certification election in question cannot be sustained. If the employee can compel the employer to give him work against the employer's will." Wherefore. the arrastre and stevedoring work was performed by the Iligan Wharf Laborers Union headed by one Raymundo Labayos under a verbal agreement similar to the nature and contents of Exhibit "A". who this official representative or spokesman of the "employees" will be. This system of work is locally known as the 'cabo system'.. even if the AFWU laborers continued to perform arrastre and stevedoring work after August 31. For an action to be sanctioned by the courts. whether it should hire others or not. Therefore. Hijos de Escaño. The right of a laborer to sell his labor to such person as he may choose is. there is neither a "duty to bargain collectively" to speak of. since it would violate MARITIMA's exclusive prerogative to determine whether it should enter into an employment CONTRACT or not. All we have to go on is the court a quo's finding that the "cabo" system was observed — a system that negatives employment relationship. 7. Indeed. 5. The terms and conditions of the same continued and was similar to the oral contractor entered into with the union headed by Labayos. if the evil of the so-called "cabo" system is to be eliminated. The four elements generally regarded as indicating the employeremployee relationship — or at the very least.. the lower court's ruling ordering a certification election can be sustained. the same as the right of an employer to purchase labor from any person whom it chooses. it could not qualify as an "employee". There being no employer-employee relationship between the parties disputants. The lack of such a showing in the case at bar is fatal to AFWU's contention.

vs.174. because the company failed to produce its books of account in support of its claim. had a right to rely on the quoted stipulation. wages. G.R. Dizon. invited them to eat at a hotel and told them that his father-in-law (Fernando) was worried... but held the Angat-Manila Transportation responsible for the laborers' backpay. J. Valentin Fernando. the Union prepared written proposals to the company for a collective bargaining agreement. L-17896 May 30. with unfair labor practice for discharging complainants on account of labor activities.B. but the company accountant.: Appeal by certiorari from a decision of the Court of Industrial Relations (Case No. E. No. stipulating that: 5.L. J.. Reyes. as it is hereby. charging the Angat-Manila Transportation (hereafter termed Angat for brevity's sake). Sanchez and Castro. Zaldivar. Valentin Fernando. While Angat defended by claiming that the sale was forced by operational losses. 1959 up to the time of actual payment". So ordered. . Concepcion. so that the alleged loss of P17. a relative of the operator. that on 20 February 1959. respondent. admonished its officers not to course said proposals. No costs. petitioner. Makalintal..B. they would sell the business. and if the union was not discontinued. The court below considered that Villa-Rey Transit. guilty of unfair labor practice. to avoid union demands. De la Costa and Orendain for petitioner. and that effectively. Inc. C. Cipriano Cid and A.J. 1962 VALENTIN A. dismissed. and its manager.the petition for certification in said case should be. ANGAT LABOR UNION. Angat sold the business to Villa-Rey Transit by written contract. J. Pacis for respondent. — It is hereby understood and agreed between the SELLER and the BUYER that the BUYER assumes absolutely no obligation with reference to employees of the SELLER in employing them or in paying them any amount for salary. The case originated in a complaint filed by the court prosecutor on behalf of certain members of the Angat Labor Union listed in Annex "A" of the complaint. REYES. concur. its officers. one of the Villa-Rey officials informed the employees of the sale and then and there summarily dismissed 12 union members. promising that the company would buy more buses to accommodate all unionists. FERNANDO. its operator. and sentencing the company to pay back wages to the complaining employees "from March 11. that to induce complainants to dissolve the Union. and merely ordered it to give priority in reemployment to the unionists. 2014-ULP) finding the carrier Angat-Manila Transportation.40 for the first quarter of 1959 was unnatural and incredible. the Angat Labor Union. and because of the promise made to the unionists that if their demands were withheld the company would buy additional buses. 2683-IP (Exhibit A). and the Villa-Rey Transit. After due trial. the Industrial Court found that on 10 February 1959. Regala. the Court of Industrial Relations discounted this assertion. indicating that the financial situation of the company enabled it to contemplate such purchase. Gorgonio Cruz. JJ. Gorgonio Cruz.. composed of employees of Angat-Manila. had registered as such union with Permit No. or indemnity because of their loss of employment.L. as buyer. and shortly thereafter. the company manager. because from the testimony it appeared that the business was picking up in 1959.

If an employer is guilty of unfair labor practice when he directly discharges his employees to forestall a demand for collective bargaining. THUS MODIFIED. concur. we agree with appellant that to hold him liable for the back wages of the complainants until they are reinstated by the Villa-Rey Transit. respondents.. For failure however. Andres Fidelino. petitioner. it being a reasonable expectancy that within that period those improperly discharged will have found other suitable employment with the exercise of due diligence.. the employer-employee relation is not necessarily terminated by a severance that was illegal and in violation of section 4(a) (1) of the Industrial Peace Act. Thereafter. 1978. Such a case remains a labor conflict within the jurisdiction of the Industrial Court. G. the Pambansang Kilusang Paggawa (Union for short). 4298. All things considered. NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN).1äwphï1. With regard to the payment of back wages. The Company's motion for reconsideration of the said resolution was denied on January 25. which is in violation of the law. specially since the appellant's maneuvers to block collective bargaining started even before the sale of its business. and 1978. and the dismissal was made after that date by officials of Villa-Rey. over which he has no control. filed a "Notice of Strike". on February 14. Left with no other alternative in its attempt to bring the Company to the bargaining table. The Company did not.R.The main argument of appellant is that since the business was sold to Villa-Rey Transit. a legitimate late labor federation. Having indirectly procured the discharge of its employees. labor contracts being in personam. and such illegal severance does not toll the jurisdiction of the Industrial Court. in all other respects. Concepcion. and instead requested for a resetting which was granted.R.. In the first place. 3 and declared the draft proposal of the Union for a collective bargaining agreement as the governing collective bargaining agreement between the employees and the management. Labrador. 1959. and more specifically on December 7. affirmed. J. Court of Industrial Relations. 49 Off.. JJ. 1978. Padilla. Ablan and Associates for petitioner. (g) of Article 249 2 of the New Labor Code. we believe it equitable to sentence appellant to the payment of six (6) months' wages to the complainants. prompting the Bureau of Labor Relations to certify the case to the National Labor Relations Commission (NLRC) for compulsory arbitration pursuant to Presidential Decree No. L-12607. the Union again wrote the Company reiterating its request for collective bargaining negotiations and for the Company to furnish them with its counter proposals. Eliciting no response to the aforesaid request. in violation of par. No. and Angat made no protest against this evidence. with the Bureau of Labor Relations (BLR) on ground of unresolved economic issues in collective bargaining. G. Ibrahim for private respondent. the decision appealed from is. No. the court below disbelieved that the sale was really made on March 11. et al. because of the appellant's bad faith in procuring their discharge. Costs against appellant. it requested the Company for its counter proposals. won and was subsequently certified in a resolution dated November 29. promulgated on February 22. 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining agent of the rank-and-file employees of Sweden Ice Cream Plant (Company for short). 1986 KIOK LOY. Angat can not evade responsibility on the plea that it is no longer in a position to reinstate them. when the manager attempted to induce the unionists to dissolve the union. set the initial hearing for April 29. doing business under the name and style SWEDEN ICE CREAM PLANT. and the only motivation of record for the sale of its business and assets is the desire to avoid a collective bargaining negotiation. he certainly should not be allowed to evade responsibility if he indirectly causes that discharge by selling to a company that he knows is unwilling to accept his employees. 1962. The labor arbiter. the Union. vs. 1979. 823. labor contracts are not enforceable against a transferee of an enterprise. The pertinent background facts are as follows: In a certification election held on October 3. Inc. Meanwhile. as amended. Abdulcadir T. the Union submitted its position paper. on March 11. On the other hand. to whom the case was assigned. In the second place. Both requests were ignored and remained unacted upon by the Company. . Yet justice would not be satisfied with the mere payment of severance pay to those employees. of the parties to submit their respective position papers as required.ñët The decision of the court below. Gaz. 1979. there was no employer-employee relation between him and the complainants to give jurisdiction to the Industrial Court. Barrera. L-54334 January 22. because Villa-Rey's copy of the sale was dated April 7. in absolving Villa-Rey Transit from the payment of back wages. At the same time. Bautista Angelo. Paredes and Dizon. 5 Conciliation proceedings then followed during the thirty-day statutory cooling-off period.: Petition for certiorari to annul the decision 1 of the National Labor Relations Commission (NLRC) dated July 20. wherein we have ruled that. Angat does not challenge the court's rejection of its claim of operational losses.. the Union furnished 4 the Company with two copies of its proposed collective bargaining agreement. 1979 which found petitioner Sweden Ice Cream guilty of unfair labor practice for unjustified refusal to bargain. CUEVAS. The Company was directed anew to submit its financial statements for the years 1976. the said hearing was cancelled and reset to another date. Java. is supported byVisayan Transportation vs. 1959. 1977. that a transferor in bad faith may be held responsible to employees discharged in violation of the Industrial Peace Act has been decided by this Court in Majestic Employees Association vs. But all attempts towards an amicable settlement failed. 1978. unless expressly assumed. may well result in the appellant becoming obligated to make the monthly wage payments indefinitely. Inc.

the totality of which is indicative of the latter's disregard of. of P. Meanwhile. petitioner Company's approach and attitude-stalling the negotiation by a series of postponements. if requested by either party. as amended. therefore. labor arbiter Andres Fidelino submitted its report to the National Labor Relations Commission. petitioner capitalizes on the issue of due process claiming. who was supposed to be examined. in violation of Section (g) Article 248 (now Article 249). He also ruled that the Company has waived its right to present further evidence and. Certainly. lead to no other conclusion except that it is unwilling to negotiate and reach an agreement with the Union. "E ") hereto attached and made an integral part of this decision. this Court dismissed the petition for lack of merit. is hereby declared to be the collective agreement which should govern the relationship between the parties herein. 1979 when the Union furnished them with a copy of the proposed Collective Bargaining Agreement and it was only then that they came to know of the Union's demands. what is enjoined by the Labor Code — to bargain in good faith. par. SO ORDERED. did not even bother to submit an answer or reply to the said proposal This doctrine was reiterated anew in Bradman vs. 1979 due to the withdrawal of the Company's counsel of record. Neither are WE persuaded by petitioner-company's stand that the Collective Bargaining Agreement which was approved and adopted by the NLRC is a total nullity for it lacks the company's consent. Petitioner has not at any instance. after having been served with a written bargaining proposal by the petitioning Union. considered the case submitted for resolution. there can be no doubt that the Union has a valid cause to complain against its (Company's) attitude. is not under any legal duty to initiate contract negotiation. 1979 as scheduled. 1978. for in the Herald Delivery Carriers Union (PAFLU) vs. the Company's representative. the moves and overall behavior of petitioner-company were in total derogation of the policy enshrined in the New Labor Code which is aimed towards expediting settlement of economic disputes. When the case was called for hearing on June 4. to the Company not only once but twice which were left unanswered and unacted upon. 1979. 8 A Company's refusal to make counter proposal if considered in relation to the entire bargaining process. petitioner had not even honored respondent Union with any reply to the latter's successive letters. non-appearance at the hearing conducted. (a) of the New Labor Code . (Emphasis supplied) Petitioner now comes before Us assailing the aforesaid decision contending that the National Labor Relations Commission acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction in rendering the challenged decision. The petition lacks merit. 1979. the respondent Sweden Ice Cream is hereby declared guilty of unjustified refusal to bargain. It has been indubitably established that (1) respondent Union was a duly certified bargaining agent. the dispositive portion of which reads as follows: WHEREFORE. Petitioner further contends that the National Labor Relations Commission's finding of unfair labor practice for refusal to bargain is not supported by law and the evidence considering that it was only on May 24. (2) it made a definite request to bargain. all of which preconditions are undisputedly present in the instant case. par. 1980. 10 The case at bar is not a case of first impression. Collective bargaining which is defined as negotiations towards a collective agreement. it does contemplate that both parties will approach the negotiation with an open mind and make a reasonable effort to reach a common ground of agreement As a last-ditch attempt to effect a reversal of the decision sought to be reviewed. the Resolution of dismissal was reconsidered and the petition was given due course in a Resolution dated April 1. (1) possession of the status of majority representation of the employees' representative in accordance with any of the means of selection or designation provided for by the Labor Code. (g) of the Labor Code makes it an unfair labor practice for an employer to refuse "to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages. the National Labor Relations Commission rendered its decision. and (3) a demand to bargain under Article 251. failed to appear. the employer. Further. Panganiban then requested for another postponement which the labor arbiter denied. designed to stabilize the relation between labor and management and to create a climate of sound and stable industrial peace. Mr. the claimed denial of due process appeared totally bereft of any legal and factual support. may indicate bad faith and this is specially true where the Union's request for a counter proposal is left unanswered. Hence. that it was denied the right to be heard and present its side when the Labor Arbiter denied the Company's motion for further postponement. Atty. As herein earlier stated. Consequently. sent by the Union (Private respondent) to the respondent (petitioner herein) and which is hereby found to be reasonable under the premises. Petitioner Company now maintains that its right to procedural due process has been violated when it was precluded from presenting further evidence in support of its stand and when its request for further postponement was denied. and finally. all geared towards bringing the Company to the bargaining table. the draft proposal for a collective bargaining agreement (Exh. hours of work. 7 The mechanics of collective bargaining is set in motion only when the following jurisdictional preconditions are present. accompanied with a copy of the proposed Collective Bargaining Agreement. Upon motion of the petitioner. Fortunato Panganiban formally entered his appearance as counsel for the Company only to request for another postponement allegedly for the purpose of acquainting himself with the case. this Court is not prepared to affix its imprimatur to such an illegal scheme and dubious maneuvers. Ching. namely. On July 20. 9 Even during the period of compulsory arbitration before the NLRC.. Atty. 6 is one of the democratic frameworks under the New Labor Code. Court of Industrial Relations 12 wherein it was further ruled that "while the law does not compel the parties to reach an agreement. the Company submitted its position paper on May 28.. Considering the various postponements granted in its behalf. Petitioner's aforesaid submittal failed to impress Us. 1981. We are in total conformity with respondent NLRC's pronouncement that petitioner Company is GUILTY of unfair labor practice. its dismissal is in order. much less its argument that once the Collective Bargaining Agreement is . 1979. however. and (3) the Company made no counter proposal whatsoever all of which conclusively indicate lack of a sincere desire to negotiate. On August 4. On May 24. While it is a mutual obligation of the parties to bargain. From the over-all conduct of petitioner company in relation to the task of negotiation. evinced good faith or willingness to discuss freely and fully the claims and demands set forth by the Union much less justify its opposition thereto. Rodolfo dela Cruz. On July 18. and failure to live up to. and all other terms and conditions of employment including proposals for adjusting any grievance or question arising under such an agreement and executing a contract incorporating such agreement. Herald Publications 11the rule had been laid down that "unfair labor practice is committed when it is shown that the respondent employer. So much so that Article 249. that the Collective Bargaining Agreement approved and adopted by the National Labor Relations Commission is unreasonable and lacks legal basis. 442. . (2) proof of majority representation. It is a mutual responsibility of the employer and the Union and is characterized as a legal obligation. however. Atty. and undue delay in submitting its financial statements.D.The case was further reset to May 11. It did not even bother to furnish or serve the Union with its counter proposal despite persistent requests made therefor.

CONFESOR. 1992 with the two parties submitting their respective proposals and counterproposals. petitioner. 1993 involving a labor dispute at San Miguel Corporation. among others. it must be resolved by the NLRC pursuant to the mandate of P. Hence. The temporary restraining order issued on August 27.[3] Effective October 1. . (Chairman). utmost deference to its findings of reasonableness of any Collective Bargaining Agreement as the governing agreement by the employees and management must be accorded due respect by this Court. Sixty (60) days prior to June 30. 2. 1994.. Negotiations started sometime in July. as in the instant case. September 19. 1980. as amended. JR. SO ORDERED. We agree with the pronouncement that it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the proposals of the other. petitioner-union San Miguel Corporation Employees Union . To that extent. Notwithstanding the spin-offs. the freedom period for purposes of such representation shall be sixty (60) days prior to June 30. where the intervention of the National Labor Relations Commission was properly sought for after conciliation efforts undertaken by the BLR failed. On June 28. (SMFI). After June 30. that: Concepcion. ARTICLE XIV DURATION OF AGREEMENT SECTION 1. JJ. Inc. respondents. Such a stand and the evidence in support thereof should have been presented before the Labor Arbiter which is the proper forum for the purpose. (3) Feeds and Livestocks. shall become effective and shall remain in force and effect until June 30. Magnolia Plant) and SAN MIGUEL FOODS. vs. This Agreement which shall be binding upon the parties hereto and their respective successors-in-interest. Abad Santos. BMeg Plant). In accordance with Article 253-A of the Labor Code as amended. MAGNOLIA CORPORATION (Formerly. But an erring party should not be tolerated and allowed with impunity to resort to schemes feigning negotiations by going through empty gestures. SEC. 873. DECISION KAPUNAN. Dept. No. J. 1994. 1991. 1989 to June 30. 1992. Magnolia and Feeds and Livestock Division were spun-off and became two separate and distinct corporations: Magnolia Corporation (Magnolia) and San Miguel Foods. [G. SEC.PTGWO entered into a Collective Bargaining Agreement (CBA) with private respondent San Miguel Corporation (SMC) to take effect upon the expiration of the previous CBA or on June 30.. 1992. WHEREFORE. 1996] SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO.. HON. MA. Secretary of Labor. 13 More so. The facts are as follows: No pronouncement as to costs. SAN MIGUEL CORPORATION. the term of this Agreement insofar as the representation aspect is concerned. Escolin and Alampay. this Agreement shall nevertheless remain in force up to the time a subsequent agreement is reached by the parties. 1989. which authorizes the said body to determine the reasonableness of the terms and conditions of employment embodied in any Collective Bargaining Agreement. 111262. (4) Magnolia and Agri-business would undergo a restructuring. 1991[2]that the company which was composed of four operating divisions namely: (1) Beer. is LIFTED and SET ASIDE. SMC management informed its employees in a letter dated August 13. shall be for five (5) years from July 1. This CBA provided. the CBA was renegotiated in accordance with the terms of the CBA and Article 253-A of the Labor Code. The instant case being a certified one. (Formerly. (2) Packaging. NIEVES D.[1] In keeping with their vision and long term strategy for business expansion. of Labor & Employment. 1992 either party may initiate negotiations of all provisions of this Agreement.R. concur. represented by its President RAYMUNDO HIPOLITO. INC. If no agreement is reached in such negotiations. 3. except insofar as the representation aspect is concerned.: This is a petition for certiorari assailing the Order of the Secretary of Labor rendered on February 15. 1990. the Company will face the prospect of closing down because it has to pay a staggering amount of economic benefits to the Union that will equal if not exceed its capital. Jr. the instant petition is DISMISSED. the CBA remained in force and effect.D.implemented.

that the renegotiated terms of the CBA shall be effective for the period of three (3) years from June 30. Efren Carreon.[10] As the Secretary of Labor herself observed in the instant case. Amidst all these pleadings. petitioner-union now comes to this Court questioning this Order of the Secretary of Labor. This was incorporated by Section 21 of Republic Act No. 1993 ruled that the renegotiated terms of the CBA at SMC should run for a period of three (3) years. before the amendment of the law as far as the representation aspect is concerned. All other provisions of the CBA shall be negotiated not later than three (3) years after its execution.) Article 253-A is a new provision. 1994. an urgent motion for leave to intervene[7]in the case was filed by the Samahan ng Malayang Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-SMC-FFW) through its authorized representiative. In case of a deadlock in the renegotiation of the collective bargaining agreement. 253-A of the Labor Code. the employees’ right to conclude a new CBA. automatically ceased to be part of the bargaining unit at the SMC. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement. the Secretary of Labor issued the assailed Order on February 15. 6715 (the Herrera-Veloso Law) which took effect on March 21.[4] Several conciliation meetings were held but still no agreement/settlement was arrived at by both parties. the parties shall agree on the duration of retroactivity thereof. he challenged the legal personality of Mr. Raymundo Hipolito. in her questioned Order of February 15. private respondents SMC. 1992 in the matter of the labor dispute at Philippine Refining Company.[8] G. 1992. On March 29. 1995. the law is clear and definite on the duration of the CBA insofar as the representation aspect is concerned. We agree with the Secretary of Labor. Likewise. Dissatisfied. 1992. 1992. No settlement was arrived at despite several meetings held between the parties. This new provision states that the CBA has a term of five (5) years instead of three years. After the parties submitted their respective position papers. and that such CBA shall cover only the employees of SMC and not of Magnolia and SMFI. On November 3. and Unable to agree on these issues with respect to the bargaining unit and duration of the CBA. Borbon v. the Secretary of Labor. but is quite ambiguous with the terms of the other provisions of the CBA. maintaining that the employees of Magnolia and SMFI fall within the bargaining unit of SMC.[9] In order to avert a strike. The Intervenor cited the case of Daniel S. — Any Collective Bargaining Agreement that the parties may enter into shall. economic as well as non-economic provisions. It is a cardinal principle of statutory construction that the Court must ascertain the legislative intent for the purpose of giving effect to any statute. At the same time. 1990. Pertinent to the first issue is Art. the parties may exercise their rights under this Code. Subsequently. Hon. Magnolia and SMFI filed a petition with the Secretary of Labor praying that the latter assume jurisdiction over the labor dispute in a vital industry. to represent the Union as its president when the latter was already officially dismissed from the company on October 4. a strike vote was conducted which resulted in a “yes vote” in favor of a strike. 1993. (underlining supplied.[5] petitioner-union filed a Motion for Issuance of a Temporary Restraining Order or Writ of Preliminary Injunction to enjoin the holding of the certification elections in the different companies. the petitioner-union insisted that the bargaining unit of SMC should still include the employees of the spun-off corporations: Magnolia and SMFI. Petitioner-union contends that the duration for the non-representation provisions of the CBA should be coterminous with the term of the bargaining agency which in effect shall be for the remaining two years of the current CBA. 253-A. alleging that it is one of the contending parties adversely effected by the temporary restraining order.R. citing a previous decision of the Secretary of Labor on December 14. No. shall retroact to the day immediately following such date. On October 2. It then prayed for the lifting of the temporary restraining order.During the negotiations. Jr. on the other hand. 101766. Acting President of the SMCEU-PTGWO. The history of the times and state of the things existing when the act was framed or adopted must be followed and the conditions of the things at the time of the . Furthermore. 253-A of the Labor Code as amended which reads: ART. among others. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Armando. insofar as the representation aspect is concerned. If any such agreement is entered into beyond six months. and that the renegotiated terms of the CBA shall be effective only for the remaining period of two years or until June 30. on March 30. The “representation aspect” refers to the identity and majority status of the union that negotiated the CBA as the exclusive bargaining representative of the appropriate bargaining unit concerned. Bienvenido B. 1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three years or for only two years. the following primordial issues arise: SMC.L. 1993 directing. 1994. 2) Whether or not the bargaining unit of SMC includes also the employees of Magnolia and SMFI. 1995. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. except representation. March 5. On November 4.[6] Meanwhile. a Notice of Strike was filed against SMC. 1992. contended that the members/employees who had moved to Magnolia and SMFI. the CBA should be effective for three years in accordance with Art. 1992. where the Court recognized the separation of the employees of Magnolia from the SMC bargaining unit. the Secretary of Labor assumed jurisdiction over the labor dispute on November 10. Elmer S. “All other provisions” simply refers to the rest of the CBA. As prayed for. filed a petition for the withdrawal/dismissal of the petition considering that the temporary restraining order jeopardized However. SMC requested the National Conciliation and Mediation Board (NCMB) to conduct preventive mediation. petitioner-union declared a deadlock on September 29. the Court issued a resolution granting the temporary restraining order prayed for. Terms of a Collective Bargaining Agreement. be for a term of five (5) years. 1989. Laguesma.

when the CBA has only a three-year lifetime with respect to the terms and conditions and then. Iyan ang advantage. HON. CHAIRMAN HERRERA: Iyon lang.[11] We look into the discussions leading to the passage of the law: nagkaroon ng bagong terms. ‘Yan ang problema. ang nangyari diyan. we are governed by our biases na ito ay destroyer ng Labor. ANIAG: So that if they changed the union. . . CHAIRMAN HERRERA: Yes. that you have to administer the contract. kasi these two periods that are mentioned in the CBA seem to provide some doubts later on in the implementation. VELOSO): Maximum of three years. pag-mayroon certification election. for us na nagne-negotiate. Then. another CBA was formed and this CBA mayroon na naman siyang bagong five years with respect to representation issue. HON. VELASCO): . HON. so baka puwedeng magkaroon ng certification election. HON. . . HON. THE CHAIRMAN (REP. THE CHAIRMAN (SEN. ang thrust natin ay industrial peace. . CHAIRMAN HERRERA: Hindi. HERRERA): You can negotiate for one year. and hazard talaga sa negotiation. all the others three years. ISIDRO: Five years. and that will give him time and the employer to know each other. HON. This is true because what is happening now in the country is that the term ng contract natin. to develop rapport with the management. CHAIRMAN HERRERA: One year na lang because six years nang lahat. If the incumbent union loses. ang karapatan noon sa representation issue mayroon pang two years left. three plus three. HON. the CBA. seven years ang lifetime . ISIDRO: Kasi. CHAIRMAN HERRERA: Not later than three years. Pagnatalo and incumbent unyon. not later than three years. HON. ano ang usual issue . . CHAIRMAN VELOSO: Mon. . CHAIRMAN HERRERA: Two years na lang sa representation. but let us give that allowance for one year to let them know. . and there can be no industrial peace if you encourage union to fight each other. HERRERA): Maximum of three years? HON ISIDRO: Hindi.’[12] xxx xxx xxx HON. mayroon na naman another five years iyong ano . administer the contract. . voluntary arbitration na kayo and then mayroon ka nang probisyon “retroact on the date of the expiry date”. HON. seven years . for four years? . ito bayaran ko lang ito okay na. . HERRERA): Three years. HON. tapos na iyong term. Ganito iyan. insofar as the economic provisions are concerned . As far as the term ang condition. Ganoon and nangyari. ANIAG: Hindi. let us be realistic.enactment of the law should be considered to determine the legislative intent. then. ano? Now. when we negotiate with somebody na hindi natin kilala. JABAR: Boy. HON. CHAIRMAN HERRERA: But on the fifth year. that’s the likelihood.company union. so within three years you have to make a new CBA. I think. HON. HON. That is where you have the gulo. ‘Yan ang nangyayari. it would not want to administer a CBA which has not been negotiated by the union itself. Hindi na. . So. . for one year. iyong last year. duon din mage-expire ang representation. HON. ISIDRO: Assuming that they usually follow the period — three years nang three years. HON. three years na naman iyan — then. . CHAIRMAN HERRERA: Assuming you will follow the practice . I think if a new union wins a certification election. before he can negotiate for a new term. Actually. You know. HON. Ang three years duon sa terms and conditions. HON. pag-negotiate mo hardline na agad. So ang mangyayari diyan. renewed na iyong terms. . the new union. assuming there will be a change of agent. expire ang contract. ISIDRO: Madali iyan. Iyon and nangyari. HON. THE CHAIRMAN (SEN. VELOSO): Yes. . so you have to renew that in three years — you renew for another three years. THE CHAIRMAN (REP. HON. ISIDRO: Not later than three years. eh. then the new union administers the contract for one year to give him time to know his counterpart — the employer. CHAIRMAN HERRERA: Five years. insofar as representation issue is concerned. ang natitira duon sa representation two years na lang. HON. but under this law with respect to representation — five years. CHAIRMAN HERRERA: On the third year you can start negotiating to change the terms and conditions. THE CHAIRMAN (REP. CHAIRMAN HERRERA: That is not true. ISIDRO: Yes. Sabi kasi rito. Three years pa lang ang natatapos. HON. HERRERA): Present practice? THE CHAIRMAN (REP. Yan ang importante. after three years puwede nang magnegotiate in that CBA for the remaining two years. . two years pa rin ang natitira. ang mga employer. I can you (sic) give you more what the incumbent union is giving. . Iyong terms and conditions for three years. Hon. HON. THE CHAIRMAN (SEN. . after three years. ang representation status now can be questioned. HON. ISIDRO: Oo. CHAIRMAN HERRERA: No. HON. mag-aassume and new union. ISIDRO: Yes. THE CHAIRMAN (SEN. VELOSO): In other words. at least he has one year to administer and to adjust. ISIDRO: That is again for purposes of renewing the terms. So. two years or three years but assuming three years which.

we organize. CHAIRMAN VELOSO. then all the advantages gained by both parties in this regard. HON. xxx HON. CHAIRMAN HERRERA: — the representations. pagpasok mo sa kumpanya. the legislators were more inclined to have the period of effectivity for three (3) years insofar as the economic as well as non-economic provisions are concerned. In doing so. CHAIRMAN VELOSO: In other words. Precisely. SMF - monthly-paid employees and daily-paid employees at the Cabuyao Plant. the longer the period of the effectivity . the longer the period of effectivity of the CBA.HON. In the case at bar. . And I think our responsibility here is to create a legal framework to promote industrial peace and to develop responsible and fair labor movement. papasok na ang ibang unyon because the reality in Trade Union committee. we placed premium on the fact that PRC has only two (2) unions and no other union had yet executed a renewed term of 3 years. SMC - daily-paid employees union (IBM) 2. uumpisahan naman ang organizations. The argument that the PRC case is applicable is indeed misplaced. Labor Dispute at Philippine Refining Company). The CBA is a contract between the parties and the parties must respect the terms and conditions of the agreement. mag-ne-negotiate ka ng six months. If the union would insist on a shorter renegotiated term. as it provides: SECTION 1. aabot pa minsan ng one year. it is not difficult to determine the period of effectivity for the nonrepresentation provisions of the CBA. (continuing) . that’s the average. CHAIRMAN HERRERA: representation status. would have gone to naught. this objective cannot be achieved without giving due consideration to the peculiarities and unique characteristics of the employer. HON.[14] Notably.e. CHAIRMAN HERRERA: You have to review that. the framers of the law wanted to maintain industrial peace and stability by having both management and labor work harmoniously together without any disturbance. In the meantime. the residual representative status of the union is effective for only 2 more years. i. Mart. no outside union can enter the establishment within five (5) years and challenge the status of the incumbent union as the exclusive bargaining agent. ISIDRO: Puro three years. Likewise. in ruling for a shortened term. HON. It is equally true that once the economic provisions of the CBA expire. There will be an allowed period of one year. ganoon ang mangyayari. That is what we are trying to avoid. Taking it from the history of their CBAs. we were guided by our considered perception that the said term would improve. Notably. HON. then this Office cannot stand in the way of a more ideal situation. we will continue to discourage the investors and the union will never grow because every other year it has to use its money for the certification election. in other words. mag-a-advance ang federation for three years union dues para panggastos lang sa certification election. the better for industrial peace. the companies concerned continued to recognize the existing unions as the bargaining agents of their respective bargaining units. shall become effective and shall remain in force and effect until June 30. HON. This Agreement which shall be binding upon the parties hereto and their respective successors-in-interest. mag-negotiate when the company is — (interrupted)[13] xxx From the aforesaid discussions. the company conceded to face the same union notwithstanding the spin-offs in order to preserve industrial peace during the infancy of the two corporations. We quote with favor the Order of the Secretary of Labor in the light of SMC’s peculiar situation as compared with PRC’s company situation. HON. Otherwise. That is what we are trying to change. actually. Thus. we ruled that the term of the renegotiated provisions of the CBA should coincide with the remaining term of the agency. the other unions in these companies eventually concluded their CBA negotiations on the remaining term and all of them agreed on a 3-year cycle.. The parties will have to review that. shall be a little bit longer than its lifespan. there is no dispute that the mother corporation (SMC) spun-off two of its divisions and thereby gave birth to two (2) other entities now known as Magnolia Corporation and San Miguel Foods. Ang grabe pang practice diyan. except representation. HON. It can be gleaned from their discussions that it was left to the parties to fix the period. CHAIRMAN VELOSO: Only on — HON. In the instant case. Obviously. they organize. to wit: 1. to maintain stability and avoid confusion when the umbilical cord of the two divisions were severed from their parent. iyong distinction between the terms and the representation aspect — why do we have to distinguish between three and five? What’s wrong with having a uniform expiration period? HON. . Third year na. JABAR: Although there are unions which really get advances. SMC intended to have the terms of the CBA effective for three (3) years reckoned from the expiration of the old or previous CBA which was on June 30. the framers of the law did not give a fixed term as to the effectivity of the terms and conditions of employment. the following CBAs were forged incorporating a term of 3-years on the renegotiated provisions. this office feels that it will betray its mandate should we order the parties to execute a 2- . HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon. if circumstances warrant that the contract duration which it is soliciting from the company for the benefit of the workers. CHAIRMAN HERRERA: Five years. CHAIRMAN HERRERA: That is what we are trying to avoid because ang reality diyan. It is true that in the Philippine Refining Company case (OS-AJ-0031-91 (sic). signing kayo. HON. HON. In order to effect a smooth transition. CHAIRMAN HERRERA: Not later than 3 years ang karamihan ng mga. effective industrial peace. There is a direct link between the voluntary recognition by the company of the continuing representative status of the unions after the aforementioned spin-offs and the stand of the company for a 3-year renegotiated cycle when the economic provisions of the existing CBAs expired. 1989. To our mind. you have only industrial peace for one year. Pagkatapos ng negotiation mo. 1992. the general welfare of both the workers and the company. However. These two cannot be considered independently of each other for they were intended to reinforce one another. . rather than ruin. HON. CHAIRMAN VELOSO: But on the economic issues. Inc. the terms and conditions of employment (economic and non-economic) can not be questioned by the employers or employees during the period of effectivity of the CBA. So. Nonetheless. We must not lose sight of the fact that the primordial purpose of a collective contract is to promote industrial harmony and stability in the terms and conditions of employment. CHAIRMAN VELOSO: At least on second year. With this in mind. ISIDRO: Ang tingin ko lang dito.

FerrerCalleja[25] that: . the employees of the different companies see the need to group themselves together and organize themselves into distinctive and different groups. Interests of employees in the different companies perforce differ. 1991. Inc. therefore. 3. Each Company enforces its own administrative and operational rules and policies and are not dependent on each other in their operations.. shorter product life cycles and shifts in consumer preference. Moreover. greater awareness of operating results.[18] Ever mindful of the employees’ interests. [24] The nature of their products and scales of business may require different skills which must necessarily be commensurated by different compensation packages.[21] We elucidate: The fact that their businesses are related and that the 236 employees of Georgia Pacific International Corporation were originally employees of Lianga Bay Logging Co. the 236 employees. therefore. Management saw the need for these transformations in keeping with its vision and long term strategy as it explained in its letter addressed to the employees dated August 13. 1994 which was mentioned in the Resolution of Undersecretary Bienvenido Laguesma on January 16. Each of the companies are run by. we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling that the effectivity of the renegotiated terms of the CBA shall be for three (3) years. no more valid ground. the companies would consequently have their respective and distinctive concerns in terms of the nature of work.. As a stand-alone enterprise. If this happens. and speedier. CCBPI engineered a dramatic turnaround and has sustained its sales and market share leadership ever since. Thus. the transformation of the companies was a management prerogative and business judgment which the courts can not look into unless it is contrary to law. there is a strong likelihood that such a ruling might spawn discontent and possible mass actions against the company coming from the other unions who had already agreed to a 3-year renegotiated terms. We further stated in the 1987 Annual Report to Stockholders that San Miguel’s businesses will be more autonomous and self sufficient so as to better acquire and master new technologies. Thus. The different companies may have different volumes of work and different working conditions. As subsidiaries. binds the contracting parties. by mutual agreement.. 2. 1991: x x x As early as 1986. The same will however not adversely affect the right of another union to challenge the majority status of the incumbent bargaining agent within sixty (60) days before the lapse of the original five (5) year term of the CBA. With respect to the second issue. SMC is engaged in the business of beer manufacturing. no merit in petitioner-union’s assertion that the employees of Magnolia and SMFI should still be considered part of the bargaining unit of SMC. cope with a labor force with different expertises and expectations. the subject contract is valid and legal and therefore. there is. As a result of the spin-offs: 1. supervised and controlled by different management teams including separate human resource/personnel managers. since this company was organized about ten years ago. and said agreement is ratified by majority of the members in the bargaining unit. enter into a renegotiated contract with a term of three (3) years or one which does not coincide with the said 5-year term.[16] In said memorandum. Magnolia is involved in the manufacturing and processing of dairy products[23] while SMFI is involved in the production of feeds and the processing of chicken. we announced the decentralization program and spoke of the need for structures that can react fast to competition.year renegotiated term for then chaos and confusion. to wit: As a matter of policy the parties are encourages (sic) to enter into a renegotiated CBA with a term which would coincidde (sic) with the aforesaid five (5) year term of the bargaining representative. Petitioner-union’s attempt to include the employees of Magnolia and SMFI in the SMC bargaining unit so as to have a bigger mass base of employees has. new agreements will be negotiated between the management of the new corporations and the bargaining representatives of the employees concerned. Magnolia and SMFI became distinct entities with separate juridical personalities. Ople. They should vote at a separate certification election to determine the collective bargaining representative of the employees of Georgia Pacific International Corporation. and the transformation of Magnolia and FLD will be successful as that of CCBPI. rather than tranquility. the Secretary of Labor had occasion to clarify the term of the renegotiated terms of the CBA vis-a-vis the term of the bargaining agent. Each entity maintains separate financial statements and are audited separately from each other. in determining an appropriate bargaining unit. they can not belong to a single bargaining unit as held in the case ofDiatagon Labor Federation Local 110 of the ULGWP v. that the parties. xxx We only have to look at the experience of Coca-Cola Bottlers Philippines. management has assured the concerned employees that they will be absorbed by the new corporations without loss of tenure and retaining their present pay and benefits according to the existing CBAs. public policy or morals. would be the order of the day. It would then be best to have separate bargaining units for the different companies where the employees can bargain separately according to their needs and according to their own working conditions. Magnolia and FLD will gain better industry focus and flexibility. We reiterate what we have explained in the case of University of the Philippines v. should not be allowed to vote in the certification election at the Lianga Bay Logging Co. Worse. more responsive decision making.[22] Considering the spin-offs. is not a justification for disregarding their separate personalities. For such reason. 1995 in the certification election case involving the SMC employees. the purpose of this Office’s intervention into the parties’ controversy would have been defeated. We are confident that history will repeat itself. likewise.[20] Indubitably. a changing environment.[17] Undeniably. Inc. Inc. The employees sought to be represented by the collective bargaining agent must have substantial mutual interests in terms of employment and working conditions as evinced by the type of work they performed. Hence. wages. hours of work and other conditions of employment. to see the benefits that arise from restructuring a division of San Miguel into a more competitive organization.[15] The issue as to the term of the non-representation provisions of the CBA need not belabored especially when we take note of the Memorandum of the Secretary of Labor dated February 24. Neither can we impute any bad faith on the part of SMC so as to justify the application of the doctrine of piercing the corporate veil. who are now attached to Georgia Pacific International Corporation. Magnolia and SMFI were spun-off to operate as distinct companies on October 1. the test of grouping is mutuality or commonality of interests.[19] They were advised that upon the expiration of the CBAs. In the event however. and master and satisfy the changing needs of our customers and end-consumers.

he/she has the option to keep the shares or sells (sic) his/her shares to his/her union or other employees currently employed by PAL. to be appropriate. No.[2] with the Task Force as mediator. J. Jr.”[1] Conciliation meetings were then held between PAL management and the three unions representing the airline’s employees. LUCIO TAN. PAL management submitted to the Task Force an offer by private respondent Lucio Tan.899 union members. 135547. concur. HON. Labor and Employment. between Philippine Airlines (PAL) and its union. took no part. EDGARDO ESPIRITU in his capacity as Chairman of the PAL Inter-Agency Task Force created under Administrative Order No.. extent and type of organization of employees. No one particular factor is itself decisive of the determination. and Hermosisima. The Temporary Restraining Order issued on March 29. x x In said report. extent and type of organization of employees in other plants of the same employer. DENNIS R. mutual interests in wages. was designated chairman of the Task Force. mediation (for) the purpose of arriving at a total and complete solution of the problem. we do not find any grave abuse of discretion on the part of the Secretary of Labor in rendering the assailed Order. Transportation and Communication. in view of stock investments in SMC. (Chairman). when PAL and PALEA agreed to a more systematic reduction in PAL’s work force and the payment of separation benefits to all retrenched employees.000 fully paid shares of stock of Philippine Airlines with a par value of PHP5. and the relationship between the unit or units proposed and the employer’s organization. 305. The factual antecedents of this case are as follows: On June 5. 16. Faced with bankruptcy. necessarily renders moot and academic any further discourse on the propriety of the elections which petitioners impugn via the present recourse (p. PALEA went on strike to protest the retrenchment measures adopted by the airline. BARRIENTOS. Vitug.: In this special civil action for certiorari and prohibition. JR. such as substantial similarity of work and duties. vs. BIENVENIDO LAGUESMA in his capacity as Secretary of Labor and Employment. 1998. HENRY SO UY. Laguesma. Padilla. 1998. management. 16 creating an Inter-Agency Task Force (Task Force) to address the problems of the ailing flag carrier. JAIME J. On September 4. 1998. which was brought to our attention by private respondents. Chairman and Chief Executive Officer of PAL. Should any share-owning employee leave PAL. the PAL Employees Association (PALEA). and working conditions of the employees. This development.. [G. As a result.00/share will be transferred in favor of each employee of Philippine Airlines in the active payroll as of September 15. 2002] GERARDO F. petitioners charge public respondents with grave abuse of discretion amounting to lack or excess of jurisdiction for acts taken in regard to the enforcement of the agreement dated September 27. then President Joseph E. causing serious losses to the financially beleaguered flag carrier. and ISAGANI ALDEA. . HON. Finally.. 1995 is lifted. From the issued shares of stock within the group of Mr. 316-317. January 23. Labor Laws. Public respondent Edgardo Espiritu. 1998. but the most pertinent to our case are: (1) will of the employees (Globe Doctrine). What are these factors? Rothenberg mentions a good number. such as temporary. work. or similarity of compensation and working conditions. WHEREFORE. PAL’s financial situation went from bad to worse. 319. PHILIPPINE AIRLINES (PAL). PAL pilots affiliated with the Airline Pilots Association of the Philippines (ALPAP) went on a three-week strike. then the Secretary of Finance. AQUINO. and (4) employment status. The weight accorded to any particular factor varies in accordance with the particular question or questions that may arise in a given case. seasonal and probationary employees x x. J. Estrada issued Administrative Order No. ALFRED A. xxx An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in the 10th Annual Report of the National Labor Relations Board wherein it is emphasized that the factors which said board may consider and weigh in fixing appropriate units are: the history. OCAMPO.[T]here are various factors which must be satisfied and considered in determining the proper constituency of a bargaining unit. working conditions and other subjects of collective bargaining (citing Smith on Labor Laws. ANTONIO V.R. we take note of the fact that the separate interests of the employees of Magnolia and SMFI from those of SMC has been recognized in the case of Daniel Borbon v. The pertinent portion of said plan reads: 1. the desires of the employees. In view of all the foregoing. and Tourism. DELA ROSA. BAUTISTA. (3) prior collective bargaining history. the skill wages. RAMISO. the history. DECISION QUISUMBING. AMBROCIO PALAD. JORGE P. The strike ended four days later. ARANAS. JJ. Rollo). of a plan to transfer shares of stock to its employees. together with the Securities and Exchange Commission (SEC). or other employers in the same industry. Foreign Affairs. hours. the petition is DISMISSED for lack of merit. Lucio Tan’s holdings. It was “empowered to summon all parties concerned for conciliation. these workers are no longer connected with San Miguel Corporation in any manner because Magnolia has ceased to be a division of San Miguel Corporation and has been formed into a separate corporation with a personality of its own (p. PAL adopted a rehabilitation plan and downsized its labor force by more than one-third. it is likewise emphasized that the basic test in determining the appropriate bargaining unit is that a unit. On August 28.[26] We quote: Even assuming in gratia argumenti that at the time of the election they were regular employees of San Miguel. Bellosillo. Francisco. and operation x x. The Task Force was composed of the Departments of Finance. SO ORDERED. DAVID SORIMA. Rollo). 1998. the history of their collective bargaining. the ownership of 60. which affected 1. and ALEXANDER O. MANOLO E. On July 22. nonetheless. (2) affinity and unit of employees’ interest. 1998. RIVERA. petitioners. the eligibility of the employees for membership in the union or unions involved. respondents. 162) x x. must affect a grouping of employees who have substantial.

Likewise.000 shares of stock with a par value of P5. The ‘union shop/maintenance of membership’ provision under the PAL-PALEA CBA shall be respected. On September 23. (1) Is an original action for certiorari and prohibition the proper remedy to annul the PAL-PALEA agreement of September 27. MAY NOT BE WAIVED. To enhance and strengthen labor-management relations. we would request for a suspension of the Collective Bargaining Agreements (CBAs) for 10 years. To assure investors and creditors of industrial peace. In the absence of applicable Company rule or regulation.738 PALEA members cast their votes in the referendum under DOLE supervision held on September 21-22.371 rejected it. b. PAL shall grant the benefits under the 26 July 1998 Memorandum of Agreement forged by and between PAL and PALEA. ALPAP. In order for PAL to attain (a) degree of normalcy while we are tackling its problems. consistent with the mandate of A. the provisions of the Labor Code shall apply. The aggregate shares of stock transferred to PAL employees will allow them three (3) members to (sic) the PAL Board of Directors. On September 27. 3. respondents pray for the dismissal of the petition for . 5. 1998. 1998. Union members. the PALEA board again wrote the President proposing the following terms and conditions. stipulating the suspension of the PALPALEA CBA unconstitutional and contrary to public policy? 4. 7.[6] Among the signatories to the letter were herein petitioners Rivera. PAL informed the Task Force that it was shutting down its operations effective September 23. the union’s directors subsequently resolved to reject Tan’s offer. 16 and merely supervised the conduct of the October 3. Each PAL employee shall be granted 60. as officers and/or members of the PALEA Board of Directors. rejected this counter-offer. provided the following safeguards are in place: a. petitioners aver that public respondents as functionaries of the Task Force. BEING FOUNDED ON PUBLIC POLICY. subject to the ratification by the general membership. Of the votes cast. we shall address and find solutions to the wide range of problems besetting PAL.324 PALEA members cast their votes in a DOLE-supervised referendum. become partners in the boardroom and together. gravely abused their discretion and exceeded their jurisdiction when they actively pursued and presided over the PAL-PALEA agreement. 3. 1998. No.00. The airline claimed that given its labor problems. from Mr. and FASAP. 61% were in favor of accepting the PAL-PALEA agreement. On October 7. c. PALEA offered a 10-year moratorium on strikes and similar actions and a waiver of some of the economic benefits in the existing CBA. On October 2. the Board of Directors of PALEA voted to accept Tan’s offer and requested the Task Force’s assistance in implementing the same. the PALEA board wrote President Estrada anew. 1. PAL resumed domestic operations. and hence. PALEA members who have been retrenched but have not received separation benefits shall be granted priority in the hiring/rehiring of employees. Respondents. rehabilitation was no longer feasible. 1998. PALEA sought the intervention of the Office of the President in immediately convening the parties. Under intense pressure from PALEA members. PAL shall continue recognizing PALEA as the duly certified bargaining agent of the regular rank-and-file ground employees of the Company. PAL ceased its operations and sent notices of termination to its employees. with adequate representation from both PAL management and PALEA. Two days later. (to) the suspension of the PAL-PALEA CBA for a period of ten (10) years. to prevent the imminent closure of PAL. the PAL management. 1998. Furthermore. PALEA informed the Department of Labor and Employment (DOLE) that it had no objection to a referendum on the Tan’s offer. seven officers and members of PALEA filed this instant petition to annul the September 27. to those employees who may opt to retire or be separated from the company. PALEA shall. argue that the public respondents merely served as conciliators or mediators. Thus. however. in turn. rejected Tan’s offer. On September 17. while 34% rejected it. 1998.[5] Tan. 1998. PAL management accepted the PALEA proposal and the necessary referendum was scheduled. thus. the existing Labor-Management Coordinating Council shall be reorganized and revitalized.[3] On September 10. the airline had no alternative but to close shop. NOR THE WAIVER. 2. be granted adequate representation in committees or bodies which deal with matters affecting terms and conditions of employment. and Aranas. PALEA. with three (3) seats in the PAL Board and an additional seat from government shares as indicated by His Excellency. Anent the first issue. however. On the same date. The issues now for our resolution are: 2. 6. Ramiso. 1998. RATIFIED. 5.O. preparatory to liquidating its assets and paying off its creditors. 1998. 1998. No salary deduction. public respondents did not perform any judicial and quasi-judicial act pertaining to jurisdiction. 1998 referendum during which the PALEA members ratified the agreement. as far as practicable. II PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED THEIR JURISDICTION IN PRESIDING OVER THE CONCLUSION OF THE PAL-PALEA AGREEMENT UNDER THREAT OF ABUSIVE EXERCISE OF PAL’S MANAGEMENT PREROGATIVE TO CLOSE BUSINESS USED AS SUBTERFUGE FOR UNION-BUSTING.055 voted in favor of Tan’s offer while 1. including the SEC under the direction of the Inter-Agency Task Force. 1998. We. Of the votes cast. PALEA agrees. Lucio Tan’s shareholdings.2. with full medical benefits. 1998. 1998agreement entered into between PAL and PALEA on the following grounds: I PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED THEIR JURISDICTION IN ACTIVELY PURSUING THE CONCLUSION OF THE PAL-PALEA AGREEMENT AS THE CONSTITUTIONAL RIGHTS TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING. (2) Is the PAL-PALEA agreement of September 27.799 out of 6.[4] On September 19. seeking his intervention. On September 18. subject to ratification by the general membership: 1.

prohibits the parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same. and the exercised voluntary modes in settling disputes. We find no conflict between said agreement and Article 253-A of the Labor Code. Instead. board. This would involve review of the facts and factual issues raised in a special civil action for certiorari which is not the function of this Court. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five-year term of the Collective Bargaining Agreement. there is available to petitioners a plain. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution."[21] Petitioners further allege that the 10-year suspension of the CBA under the PAL-PALEA agreement virtually installed PALEA as a company union for said period. but preventing the latter’s closure. Furthermore. that voluntarily entered into the CBA with PAL. PAL shall continue recognizing PALEA as the duly certified-bargaining agent of the regular rank-and-file ground employees of the Company. board. shall retroact to the day immediately following such date. or officer has acted without or in excess of jurisdiction. officer. We find the argument devoid of merit. in violation of Article 253-A of the Labor Code mandating that an exclusive bargaining agent serves for five years only. Nothing in Article 253-A. the courts must be practical and realistic and give due consideration to the context in which it is negotiated and the purpose which it is intended to serve. an action which properly falls under the jurisdiction of the regional trial courts. in effect.”[18] The primary purpose of a CBA is the stabilization of labor-management relations in order to create a climate of a sound and stable industrial peace. Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation. and (3) there is no appeal or any plain. a national concern. what exists is a contract between a private firm and one of its labor unions. PALEA. . may be negotiated not later than three years after the execution. Petitioners ask this Court to examine the circumstances that led to the signing of said agreement. the requisites are: (1) the impugned act must be that of a “tribunal. or resolution of either public respondents involved. The agreement afforded full protection to labor.[8] Petitioners allege grave abuse of discretion under Rule 65 of the 1997 Rules of Civil Procedure. They allegedly pressured the PALEA leaders into accepting the agreement. order. A CBA is “a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect to wages. The questioned proviso of the agreement reads: a. inasmuch as what is at stake here is industrial peace in the nation’s premier airline and flag carrier. in the higher interest of justice[13] and in view of the public interest involved. considering the prayer of the parties principally we shall look into the substance of the petition. while the other provisions. be for a term of five (5) years. 253-A. way beyond the maximum statutory life of a CBA. and adequate remedy in the ordinary course of law. and adequate remedy in the ordinary course of law. with the peculiar and unique intention of not merely promoting industrial peace at PAL. amounting to unfair labor practice.[11] Neither certiorari nor prohibition is the remedy in the present case. a board. petitioners’ proper remedy is an ordinary civil action for annulment of contract.[20] The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe financial situation faced by the employer. or person exercising judicial. The other is to assign specific timetables wherein negotiations become a matter of right and requirement. Article 253-A of the Labor Code reads: ART. Petitioners further assert that public respondents were partial towards PAL management. the parties shall agree on the duration of the retroactivity thereof. includes the right to suspend it. petitioners contend that the controverted PAL-PALEA agreement is void because it abrogated the right of workers to self-organization[14] and their right to collective bargaining. corporation. hours of work and all other terms and conditions of employment. quasi-judicial. albeit entered into with the assistance of the Task Force. or with grave abuse of discretion amounting to lack or excess of jurisdiction. the parties may exercise their rights under this Code. or an officer exercising judicial or quasi-judicial functions. provided for in Article 253-A. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement.[9] For writs of prohibition. insofar as representation is concerned. It was also PALEA that voluntarily opted for the 10-year suspension of the CBA. promoted the shared responsibility between workers and employers. speedy. The essential requisites for a petition for certiorari under Rule 65 are: (1) the writ is directed against a tribunal. as the exclusive bargaining agent of PAL’s ground employees. speedy. If any such agreement is entered into beyond six months. quasi-judicial or ministerial functions. In case of a deadlock in the renegotiation of the collective bargaining agreement. It is not the act of public respondents Finance Secretary Edgardo Espiritu and Labor Secretary Bienvenido Laguesma as functionaries of the Task Force. whether exercising judicial. Article 253-A has a two-fold purpose. including conciliation to foster industrial peace. On the second issue. While the petition is denominated as one for certiorari and prohibition. but also to foreclose any renegotiation or any possibility to forge a new CBA for a decade or up to 2008. after all. The acts of public respondents in sanctioning the 10-year suspension of the PAL-PALEA CBA did not contravene the “protection to labor” policy of the Constitution. its object is actually the nullification of the PAL-PALEA agreement. It violates the “protection to labor” policy[16] laid down by the Constitution. said agreement satisfies the first purpose of Article 253-A.[12] Nevertheless.[19] In construing a CBA. One is to promote industrial stability and predictability. The right to free collective bargaining.” and (2) there is no plain.[17] Petitioners submit that a 10-year CBA suspension is inordinately long.[15] Petitioners claim that the agreement was not meant merely to suspend the existing PAL-PALEA CBA. or person.violating the “hierarchy of courts” doctrine enunciated in People v. As such. (2) such tribunal. board. By agreeing to a 10-year suspension. officer. Terms of a Collective Bargaining Agreement. insofar as the representation aspect is concerned. it was PALEA. 2000. and adequate remedy in the ordinary course of law. or ministerial functions. Either case was the union’s exercise of its right to collective bargaining. In the instant case. Cuaresma[7] and Enrile v. which expires on September 30. a CBA has a term of five years. Salazar. abdicated the workers’ constitutional right to bargain for another CBA at the mandated time. speedy. The first and second requisites for certiorari and prohibition are therefore not present in this case. except for representation. – Any Collective Bargaining Agreement that the parties may enter into shall. Under this provision. Neither is there a judgment.” [10] The assailed agreement is clearly not the act of a tribunal. including proposals for adjusting any grievances or questions arising under such agreement.

The Code was circulated among the employees and was immediately implemented. that being penal in nature the Code must conform with the requirements of sufficient publication. MELO. Buena. 7-14. the law has allowed stipulations for “union shop” and “closed shop” as means of encouraging workers to join and support the union of their choice in the protection of their rights and interests vis-à-vis the employer. 1985. policies. dominate. and alleging that by implementing the Code.R.) PAL filed a motion to dismiss the complaint. It prayed that implementation of the Code be held in abeyance. Adolpho M. the parties agreed to suspend the CBA and put in abeyance the limit on the representation period. In sum. 1993 b. we are of the view that the PAL-PALEA agreement dated September 27. running counter to the construction of penal laws and making punishable any offense within PAL's contemplation. and cited provisions of Articles IV and I of Chapter II of the Code as defective for. We are unable to declare the objective of union security an unfair labor practice. LABOR ARBITER ISABEL P. oppressive. there being no grave abuse of discretion shown.Said proviso cannot be construed alone. the representation limit for the exclusive bargaining agent applies only when there is an extant CBA in full force and effect. PAL maintained that Article 253 of the Labor Code cited by PALEA reffered to the requirements for negotiating a CBA which was inapplicable as indeed the current CBA had been negotiated. In the instant case. respondents. and De Leon. as issued and promulgated by the company through its duly authorized officials. that PAL should discuss the substance of the Code with PALEA. J. 1985. 2. WHEREFORE. concur. [22] contracts cannot be construed by parts. was guilty of unfair labor practice. and that the Code was arbitrary. a company union exists when the employer acts “[t]o initiate. Record.. that employees dismissed under the Code be reinstated and their cases subjected to further hearing. taken together. PALEA alleged that copies of the Code had been circulated in limited numbers. JJ. but clauses must be interpreted in relation to one another to give effect to the whole. 41).[23] The aforesaid provision must be read within the context of the next clause. PHILIPPINE AIRLINES. Every employee is bound to comply with all applicable rules. respectively. NATIONAL LABOR RELATIONS COMMISSION. Under Article 248 (d) of the Labor Code. SO ORDERED. and prejudicial to the rights of the employees. it had not violated the collective bargaining agreement (CBA) or any provision of the Labor Code. petitioner. and that PAL be declared guilty of unfair labor practice and be ordered to pay damages (pp. The ‘union shop/maintenance of membership’ provision under the PAL-PALEA CBA shall be respected. ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA). the Philippine Airlines Employees Association (PALEA) filed a complaint before the National Labor Relations Commission (NLRC) for unfair labor practice (Case No. the instant petition is DISMISSED. No pronouncement as to costs. Non-exclusivity. — This Code does not contain the entirety of the rules and regulations of the company.[25] the contract must be upheld. Guerzon for respondent PALEA. regulations.. Any violations . (Chairman). Under Article 1374 of the Civil Code. vs. NCR-7-2051-85) with the following remarks: "ULP with arbitrary implementation of PAL's Code of Discipline without notice and prior discussion with Union by Management" (Rollo. the Court is presented the issue of whether or not the formulation of a Code of Discipline among employees is a shared responsibility of the employer and the employees. clearly show the intent of the parties to maintain “union security” during the period of the suspension of the CBA. Bellosillo. INC. Thus. 1998. but from the whole read together. procedures and standards.: In the instant petition for certiorari. Assailing the complaint as unsupported by evidence. PALEA contended that PAL. (PAL). by its unilateral implementation of the Code. the Philippine Airlines.[24] Petitioners’ contention that the agreement installs PALEA as a virtual company union is also untenable. assist or otherwise interfere with the formation or administration of any labor organization. on August 20. On March 15. productivity and behaviour. In its position paper. Under said article. a construction must be adopted as will give effect to all. Under the principle of inviolability of contracts guaranteed by the Constitution. 85985 August 13. asserting its prerogative as an employer to prescibe rules and regulations regarding employess' conduct in carrying out their duties and functions. Its objective is to assure the continued existence of PALEA during the said period. which provides: G. In its reply to PAL's position paper. p. We also do not agree that the agreement violates the five-year representation limit mandated by Article 253-A. (PAL) completely revised its 1966 Code of Discipline. In construing an instrument with several provisions. The legal effect of a contract is not determined alone by any particular provision disconnected from all others. These provisions are the following: Sec. No. including the giving of financial or other support to it or its organizers or supporters. PALEA maintained that Article 249 (E) of the Labor Code was violated when PAL unilaterally implemented the Code. It is State policy to promote unionism to enable workers to negotiate with management on an even playing field and with more persuasiveness than if they were to individually and separately bargain with the employer. Solon Garcia for petitioner. and some employees were forthwith subjected to the disciplinary measures embodied therein. Jr. including standards of quality. is a valid exercise of the freedom to contract. For this reason. The aforesaid provisions. Mendoza. Inc.” The case records are bare of any showing of such acts by PAL. specifically Paragraphs E and G of Article 249 and Article 253 of the Labor Code.

even in the absence of said clear provision of law. there was no law which mandated the sharing of responsibility therefor between employer and employee. II).) Respondent Commission thereupon disposed: WHEREFORE. at no time in our contemporary history is the need for a cooperative." She found Section 1 of the Code aforequoted as "an all embracing and all encompassing provision that makes punishable any offense one can think of in the company".) As stated above. Management can no longer exclude labor in the deliberation and adoption of rules and regulations that will affect them.) She thereupon disposed: WHEREFORE. the labor arbiter considered the case submitted for decision. respondent is directed to furnish each employee with a copy of the appealed Code of Discipline. 1986. the NLRC made the following observations: Indeed. found no evidence of unfair labor practice committed by PAL and affirmed the dismissal of PALEA's charge. 38-39. There is no dispute that adoption of rules of conduct or discipline is a prerogative of management and is imperative and essential if an industry. 6715. propriety and fairness. the arbiter concluded that "(t)he phrase ignorance of the law excuses no one from compliance . The penalty for an offense shall be determined on the basis of his past record of offenses of any nature or the absence thereof. has to survive in a competitive world. However. failure of management to discuss the provisions of a contemplated code of discipline which shall govern the conduct of its employees would result in the erosion and deterioration of an otherwise harmonious and smooth relationship between them as did happen in the instant case. SO ORDERED. she stated that such "failure" on the part of PAL resulted in the imposition of penalties on employees who thought all the while that the 1966 Code was still being followed.] (T)hereafter. duties and welfare. Rollo. Furnish all employees with the new Code of Discipline. supportive and smooth relationship between labor and management more keenly felt if we are to survive economically. Original Record. 5. too. and (d) requiring PAL to reconsider pending cases still in the arbitral level (p.Rollo. the exercise of management prerogatives was never considered boundless. 40. . an employee may be dismissed if the number of his past offenses warrants such penalty in the judgment of management even if each offense considered separately may not warrant dismissal. Sec. The complainant union in this case has the right to feel isolated in the adoption of the New Code of Discipline. dismissed for lack of merit. In fact. 39.thereof shall be punishable with a penalty to be determined by the gravity and/or frequency of the offense. Reconsider the cases of employees meted with penalties under the New Code of Discipline and remand the same for further hearing. Ortiguerra handling the case called the parties to a conference but they failed to appear at the scheduled date. In fact. that the law explicitly considered it a State policy "(t)o ensure the participation of workers in decision and policy-making processes affecting the rights. Medina (177 SCRA 565 [1989]) it was held that management's prerogatives must be without abuse of discretion. Other dispositions of the Labor Arbiter are sustained. premises considered. The pending cases adverted to in the appealed decision if still in the arbitral level. particularly the disputed provisions [." (pp. The more habitual an offender has been. 1989. 1985. it was only on March 2.) The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated. and 3. labor-management cooperation is now "the thing. the Principal issue submitted for resolution in the instant petition is whether management may be compelled to share with the union or its employees its prerogative of formulating a code of discipline. 2. 149. On the other hand. Cumulative Record. Rollo. . But labor climate has progressed. 1988. 7. due regard shall be given to the length of time between commission of individual offenses to determine whether the employee's conduct may indicate occasional lapses (which may nevertheless require sterner disciplinary action) or a pattern of incorrigibility. we modify the appealed decision in the sense that the New Code of Discipline should be reviewed and discussed with complainant union. respondent PAL is hereby ordered as follows: 1. Interpreting such failure as a waiver of the parties' right to present evidence. (p. In a sense." The latter provision was interpreted by the Constitutional Commissioners to mean participation in "management"' (Record of the Constitutional Commission. is "objectionable for it violates the rule against double jeopardy thereby ushering in two or more punishment for the same misdemeanor. representing its members. amending Article 211 of the Labor Code. . (p. 8. 7. (p. the NLRC through Commissioner Encarnacion. participation by the union in the adoption of the code if conduct could have accelerated and enhanced their feelings of belonging and would have resulted in cooperation rather than resistance to the Code. 3-4. Indeed. (b) engaging in quasi-judicial legislation in ordering PAL to share said prerogative with the union.) PAL appealed to the NLRC. . Rollo. All other claims of the complainant union (is) [are] hereby. the greater shall be the penalty for the latest offense. SO ORDERED. should be reconsidered by the respondent Philippine Air Lines. Vol. . In the Philippine scene. finds application only after it has been conclusively shown that the law was circulated to all the parties concerned and efforts to disseminate information regarding the new law have been exerted. Labor Arbiter Isabel P. premises considered. Habitual offenders or recidivists have no place in PAL. NLRC Decision. Thus. while Section 7. PAL asserts that when it revised its Code on March 15. the arbiter held that PAL was "not totally fault free" considering that while the issuance of rules and regulations governing the conduct of employees is a "legitimate management prerogative" such rules and regulations must meet the test of "reasonableness. Petition. Thus. (c) deciding beyond the issue of unfair labor practice. there should be candidness and openness by Management and participation by the union. in Cruz vs. The Code of Discipline involves security of tenure and loss of employment — a property right! It is time that management realizes that to attain effectiveness in its conduct rules. Discuss with PALEA the objectionable provisions specifically tackled in the body of the decision. with the approval of Republic Act No. NLRC Decision ff." However. our Constitution has recognized the principle of "shared responsibility" between employers and workers and has likewise recognized the right of workers to participate in "policy and decision-making process affecting their rights . On November 7. likewise quoted above. On August 19. a decision was rendered finding no bad faith on the part of PAL in adopting the Code and ruling that no unfair labor practice had been committed." (pp." Noting that PAL's assertion that it had furnished all its employees copies of the Code is unsupported by documentary evidence. Thus. Nonetheless. p.) PAL then filed the instant petition for certiorari charging public respondents with grave abuse of discretion in: (a) directing PAL "to share its management prerogative of formulating a Code of Discipline". — An employee's record of offenses shall be cumulative. with Presiding Commissioner Bonto-Perez and Commissioner Maglaya concurring. p.

In view of these aspects of the case which border on infringement of constitutional rights. direct and control operations. or the general principles of fair play and justice (University of Sto.. NLRC (154 713 [1987]). PAL asserts that all its employees have been furnished copies of the Code. Republic Act No. the petition is DISMISSED and the questioned decision AFFIRMED. NLRC. the attainment of a harmonious labor-management relationship and the then already existing state policy of enlightening workers concerning their rights as employees demand no less than the observance of transparency in managerial moves affecting employees' rights. transfer employees from one department. The implementation of the provisions may result in the deprivation of an employee's means of livelihood which. It is circumscribed by limitations found in law. pp 180-181. JJ. A close scrutiny of the objectionable provisions of the Code reveals that they are not purely business-oriented nor do they concern the management aspect of the business of the company as in the San Miguel case. even before Article 211 of the labor Code (P. recognized PAL's "exclusive right to make and enforce company rules and regulations to carry out the functions of management without having to discuss the same with PALEA and much less. Moreover. as enunciated in Abbott Laboratories (Phil." This was. Ople (170 SCRA 25 [1989]). 145 SCRA 268 [1986]). cannot thus be sustained. 190 SCRA 758 [1990]). concur. Bidin. 44. . And one such mater is the formulation of a code of discipline. Public respondents found to the contrary. Petitioner's Memorandum. to promote. whatever disciplinary measures are adopted cannot be properly implemented in the absence of full cooperation of the employees. 6715.). . PALEA in effect. Rollo. 11-12. discipline. p. a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employees. 6715 had not yet been enacted (Petitioner's Memorandum.D. NLRC. to say the least is entitled to great respect..In San Miguel Brewery Sales Force Union (PTGWO) vs. WHEREFORE. Petitioner's assertion that it needed the implementation of a new Code of Discipline considering the nature of its business cannot be overemphasized. Inc. in favor of the worker" (Employees Association of the Philippine American Life Insurance Company vs. we upheld the company's right to implement a new system of distributing its products. its being a local monopoly in the business demands the most stringent of measures to attain safe travel for its patrons. as employees. but gave the following caveat: So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements. 212). In treating the latter. vs Carnation Philippines. to lay-off employees for valid and legal causes.) All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. duties and welfare. In fact. 28. . Such provision in the collective bargaining agreement may not be interpreted as cession of employees' rights to participate in the deliberation of matters which may affect their rights and the formulation of policies relative thereto. tilt "the scales of justice when there is doubt. p. which finding. assign employees to work. to another. a collective bargaining agreement. of their being left out in the determination of cardinal and fundamental matters affecting their employment. Feliciano. Romero and Vitug. obtain the latter'sconformity thereto" (pp. on June 27. demote. it must be duly established that the prerogative being invoked is clearly a managerial one. Indeed. Management of the Company includes the right to organize. we must uphold the constitutional requirements for the protection of labor and the promotion of social justice." PAL's position that it cannot be saddled with the "obligation" of sharing management prerogatives as during the formulation of the Code. While such "obligation" was not yet founded in law when the Code was formulated. Tomas vs. The exercise by management of its prerogative shall be done in a just reasonable. as correctly pointed out by the NLRC. "(d) To promote the enlightenment of workers concerning their rights and obligations . according to Justice Isagani Cruz. Such cooperation cannot be attained if the employees are restive on account. amplified by Republic Act No 6715 when it decreed the "participation of workers in decision and policy making processes affecting their rights. The provisions of the Code clearly have repercusions on the employee's right to security of tenure. humane and/or lawful manner. industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights.) Petitioner's view is based on the following provision of the agreement: The Association recognizes the right of the Company to determine matters of management it policy and Company operations and to direct its manpower. 1990. it was already declared a policy of the State. management should see to it that its employees are at least properly informed of its decisions or modes action. plan. 442) was amended by Republic Act No. SO ORDERED. Rollo. is a property right (Callanta. to introduce new or improved methods or facilities or to change existing methods or facilities and the right to make and enforce Company rules and regulations to carry out the functions of management. Thus. Verily. vs. of course. this Court will uphold them. to hire. No special pronouncement is made as to costs. (at p. for these factors. suspend or discharge employees for just cause. PAL posits the view that by signing the 1989-1991 collective bargaining agreement. 199 SCRA 628 [1991] 635). Nonetheless.

DIGESTS .