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Title V

COVERAGE
Article 243. Coverage and employees right to self-organization.
All persons employed in commercial, industrial and agricultural
enterprises and in religious, charitable, medical, or educational
institutions, whether operating for profit or not, shall have the right
to self-organization and to form, join, or assist labor organizations
of their own choosing for purposes of collective bargaining.
Ambulant, intermittent and itinerant workers, self-employed
people, rural workers and those without any definite employers
may form labor organizations for their mutual aid and protection.
(As amended by Batas Pambansa Bilang 70, May 1, 1980).
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1. ORGANIZING IN GENERAL
The rights to organize and to bargain, in a general sense, are given
not exclusively to employees. Even workers who are not
employees of any particular employer may form their
organizations to protect their interests.
Under Art. 243 of this Code, the right to organize refers also to
forming, joining or assisting a labor organization. Connected to
Art. 246 this right carries with it the right to engage in group
action, provided it is peaceful, to support the organizations
objective which is not necessarily bargaining but, simply, to aid
and protect its members. But this kind of group action must be
differentiated from strike which, because it is work stoppage, must
observe certain regulation; otherwise, the strike may be declared
illegal and its leaders may be thrown out of their jobs.
1.1 Coverage of the Right to Organize; Exceptions
The right to form, join or assist a labor organization is granted to
all kinds of employees of all kinds of employerspublic or
private, profit or non-profit, commercial or religious. Their usual
form of organization is a union and the usual purpose is collective
bargaining with their employers.
But the seemingly all-inclusive coverage of all persons in Article
243 actually admits exceptions. Under Art. 245, for instance,
managerial employees, regardless of the kind of organization
where they are employed, may not join, assist or form any labor
organization, meaning a labor union.
Accordingly, managerial employees cannot, in the absence of an
agreement to the contrary, be allowed to share in the concessions
obtained by the labor union through collective negotiation.
Otherwise, they would be exposed to the temptation of colluding
with the union during the negotiations to the detriment of the
employer. However, there is nothing to prevent the employer from
granting benefits to managerial employees equal to or higher than
those afforded to union members.
Supervisors are allowed to organize, but they cannot for, join or
assist a rank-and-file union.
2. RIGHT TO ORGANIZE CANNOT BE BARGAINED
AWAY

LABOR RELATIONS
Although we have upheld the validity of the CBA as the law
among the parties, its provisions cannot override what is expressly
provided by law that only managerial employees are ineligible to
join, assist or form any labor organization. Therefore, regardless of
the challenged employees' designations, whether they are
employed as Supervisors or in the confidential payrolls, if the
nature of their job does not fall under the definition of
"managerial" as defined in the Labor Code, they are eligible to be
members of the bargaining unit and to vote in the certification
election. Their right to self-organization must be upheld in the
absence of an express provision of law to the contrary. It cannot be
curtailed by a collective bargaining agreement.
3. EMPLOYEES OF NONPROFIT INSTITUTIONS
Under Article 243 of the Labor Code, the rank-and-file employees
of non-profit medical institutions are permitted to form, organize
or join labor unions of their choice for purposes of collective
bargaining. If the union has complied with the requisites provided
by law for calling a certification election, it is incumbent upon the
DOLE Regional Director to conduct such certification election to
ascertain the bargaining representative of the hospital employees.
4.
EXCEPTION:
COOPERATIVE

EMPLOYEE-MEMBERS

OF

A cooperative is by its nature different from an ordinary business


concern being run either, by persons, partnerships or corporations.
Its owners and/or members are the ones who run and operate the
business while the others are its employees. As above stated,
irrespective of the name of shares owned by its members they are
entitled to cast one vote each in deciding upon the affair of the
cooperative. Their share capital earn limited interests. They enjoy
special privileges as exemption from income tax and sales taxes,
preferential right to supply their products to State agencies and
even exemption from minimum wage laws.
An employee of such a cooperative who is a member and coowner thereof cannot invoke the right to collective bargaining for
certainly an owner cannot bargain with himself or his co-owners.
However, in so far as it involves cooperatives with employees who
are not members or co-owners thereof, certainly such employees
are entitled to exercise the rights of all workers to organization,
collective bargaining, negotiations and others as are enshrined in
the Constitution and existing laws of the country.
In another case, the court clarified that it is the fact of ownership
of the cooperative, and not involvement in the management
thereof, which disqualifies a member from joining any labor
organization within the cooperative. Thus, irrespective of the
degree of their participation in the actual management of the
cooperative, all members thereof cannot form, assist or join a labor
organization for the purpose of collective bargaining.
But member-employees of a cooperative may withdraw as
members of the cooperative in order to join a labor union.
Membership in a cooperative is voluntary; inherent in it is the right
not to join.
4.1 Exception to Exception: Association, not Union

LABOR RELATIONS
While the members of a cooperative who are also its employees
cannot unionize for bargaining purposes, the law does not prohibit
them from forming an association for their mutual aid and
protection as employees.
D.O. No. 40-03 allows and defines a workers association as one
which is organized for the mutual aid and protection of its
members or for any legitimate purpose other than collective
bargaining.
5. EXCEPTION: INTERNATIONAL ORGANIZATIONS
A certification election cannot be conducted in an international
organization which the Philippine Government has granted
immunity from local jurisdiction.
The grant of such immunity is a political question whose
resolution by the executive branch of government is conclusive
upon the courts
(1) International Organization and Specialized AgenciesThe term
"international organization" is generally used to describe an organization
set up by agreement between two or more states. Under contemporary
international law, such organizations are endowed with some degree of
international legal personality such that they are capable of exercising
specific rights, duties and powers. They are organized mainly as a means
for conducting general international business in which the member states
have an interest. The United Nations, for instance, is an international
organization dedicated to the propagation of world peace. "Specialized
agencies" are international organizations having functions in particular
fields. The term appears in Articles 57 and 63 of the Charter of the United
Nations.
(2) Principles Underlying the Grant of International Immunities to
International OrganizationsThere are basically three propositions
underlying the grant of international immunities to international
organizations. These principles, contained in the ILO Memorandum are
stated thus: 1) international institutions should have a status which
protects them against control or interference by any one government in the
performance of functions for the effective discharge of which they are
responsible to democratically constituted international bodies in which all
the nations concerned are represented; 2) no country should derive any
national financial advantage by levying fiscal charges on common
international funds; and 3) the international organization should, as a
collectivity of States members, be accorded the facilities for the conduct
of its official business customarily extended to each other by its individual
member States. The theory behind all three propositions is said to be
essentially institutional in character. "It is not concerned with the status,
dignity or privileges of individuals, but with the elements of functional
independence necessary to free international institutions from national
control and to enable them to discharge their responsibilities impartially
on behalf of all their members. The raison d'etre for these immunities is
the assurance of unimpeded performance of their functions by the
agencies concerned.
(3) Labors Basic Rights RemainThe immunity of International Catholic
Migration Commission (ICMC) and the International Rice Research
Institution (IRRI) from local jurisdiction by no means deprives labor of its
basic rights, which are guaranteed by Article II, Section 18, Article III,
Section 8, and Article XIII, Section 3, of the 1987 Constitution; and
implemented by Articles 243 and 246 of the Labor Code.
(4) Certification Election Barred by ImmunityThe immunity granted
being "from every form of legal process except in so far as in any
particular case they have expressly waived their immunity," it is
inaccurate to state that a certification election is beyond the scope of that

immunity for the reason that it is not a suit against ICMC. A certification
election cannot be viewed as an independent or isolated process. It could
trigger off a series of events in the collective bargaining process together
with related incidents and/or concerted activities, which could inevitably
involve ICMC in the "legal process," which includes any penal, civil and
administrative proceedings. The eventuality of Court litigation is neither
remote and from which international organizations are precisely shielded
to safeguard them from the disruption of their functions. Clauses on
jurisdictional immunity are said to be standard provisions in the
constitutions of international Organizations. The immunity covers the
organization concerned, its property and its assets...

5.1 Waiver of Immunity


Waiver of its immunity is discretionary to IRRI. Without such
express waiver the NLRC or its labor arbiters have no jurisdiction
over IRRI even in cases of alleged illegal dismissal of any of its
employees.
5.2 Foreign Workers
Foreigners, whether natural or juridical, as well as foreign corporations
are strictly prohibited from engaging directly or indirectly in all forms of
trade union activities. However, aliens working in the country with valid
work permits may exercise the right to self-organization if they are
nationals of a country that grants the same or similar rights to Filipino
workers. (Art. 269)

6. EXCEPTION: RELIGIOUS OBJECTORS; IGLESIA NI


CRISTO MEMBERS
Under the Industrial Peace Act (1953) which preceded the Labor
Code (and even under the present Code) the employer and the
union could enter into a closed shop agreement which would
compel employees to become union workers as a condition of
continued employment. But in 1961 R.A. No. 3350 was passed to
exempt from such compulsory union membership the followers of
any religious sect (such as the Iglesia ni Cristo) whose teachings
forbid membership in labor unions. The constitutionality of R.A.
No. 3350 was upheld by the Supreme Court in Victoriano v.
Elizalde.
It may not be amiss to point out here that the free exercise of
religious profession or belief is superior to contract rights. In case
of conflict, the latter must, therefore, yield to the former.
6.1 Does the Exemption Still Stand?
6.2 Iglesia Ni Cristo Members May Form and Join Own Union
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Article 244. Right of employees in the public service. Employees
of government corporations established under the Corporation
Code shall have the right to organize and to bargain collectively
with their respective employers. All other employees in the civil
service shall have the right to form associations for purposes not
contrary to law. (As amended by Executive Order No. 111,
December 24, 1986).
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1. GOVERNMENT EMPLOYEES RIGHT TO ORGANIZE;
LIMITATIONS

LABOR RELATIONS
The highest law of the land guarantees to government employees
the right to organize and to negotiate, but not the right to strike.
1.1 Limited Purpose
The extent of the government employees' right of self-organization
differs significantly from that of employees in the private sector.
The latter's right of self-organization, i.e., "to form, join or assist
labor organizations for purposes of collective bargaining,"
admittedly includes the right to deal and negotiate with their
respective employers in order to fix the terms and conditions of
employment and also, to engage in concerted activities for the
attainment of their objectives, such as strikes, picketing, boycotts.
But the right of government employees to "form, join or assist
employees organizations of their own choosing" under Executive
Order No. 180 is not regarded as existing or available for
"purposes of collective bargaining," but simply "for the
furtherance and protection of their interests."
In other words, the right of Government employees to deal and
negotiate with their respective employers is not quite as extensive
as that of private employees. Excluded from negotiation by
government employees are the "terms and conditions of
employment...that are fixed by law," it being only those terms and
conditions not otherwise fixed by law that "may be subject of
negotiation between the duly recognized employees' organizations
and appropriate government authorities."
Declared to be 'not negotiable' are matters "that require appropriation of
funds;" e.g., increase in salary emoluments and other allowances, car plan,
special hospitalization, medical and dental services, increase in retirement
benefits (Sec. 3, Rule VIII), and those "that involve the exercise of
management
prerogatives;"
e.g.,
appointment,
promotion,
assignment/detail, penalties as a result of disciplinary actions, etc. (Sec. 4,
Id.) Considered negotiable are such matters as schedule of vacation and
other leaves, work assignment of pregnant women; recreational, social,
athletic, and cultural activities and facilities, etc. (Sec. 2, Id.).

1.2 No Signing Bonus


Employees and officers of SSS are not entitled to the signing
bonus provided for in the collective negotiation agreement because
the process of collective negotiations in the public sector does not
encompass terms and conditions of employment requiring the
appropriation of public funds. The Court reminds the Social
Security Commission officials that the SSS fund is not their money
1.3 Excepted Employees
Excepted from the application of Executive Order 180, however,
are members of the Armed Forces of the Philippines, including
police officers, policemen, firemen, and jail guards (Sec. 4). For
reasons of security and safety, they are not allowed to unionize.
A high level employee is one whose functions are normally
considered policy determining, managerial or one whose duties are
highly confidential in nature. A managerial function refers to the
exercise of powers such as: (1) to effectively recommend such
managerial actions; (2) to formulate or execute management
policies and decisions; or (3) to hire, transfer, lay-off, recall,
dismiss, assign or discipline employees.

Professors at the University of the Philippines who are not


exercising managerial or highly confidential functions are rankand-file employees and may unionize separately from the nonacademic personnel.
In short, the professors, associate professors and assistant
professors of the University of the Philippines are rank-and-file
employees. The full professors, associate professors, assistant
professors, instructors and the research, extension and professional
staff may, if so minded, organize themselves into a separate
collective bargaining unit.
1.4 Right to Strike
EO No. 180 also concedes to government employees, like their
counterparts in the private sector, the right to engage in concerted
activities, including the right to strike, the executive order is quick to add
that those activities must be exercised in accordance with law, i.e. are
subject both to "Civil Service Law and rules" and "any legislation that
may be enacted by Congress," that "the resolution of complaints,
grievances and cases involving government employees" is not ordinarily
left to collective bargaining or other related concerted activities, but to
"Civil Service Law and labor laws and procedures whenever applicable;"
and that in case "any dispute remains unresolved after exhausting all
available remedies under existing laws and procedures, the parties may
jointly refer the dispute to the (Public Sector Labor-Management) Council
for appropriate action." What is more, the Rules and Regulations
implementing Executive Order No. 180 explicitly provide that since the
"terms and conditions of employment in the government, including any
political subdivision or instrumentality thereof and government-owned
and controlled corporations with original charters are governed by law, the
employees therein shall not strike for the purpose of securing changes
thereof.

2. REGISTRATION
Sec. 7. Government employees' organizations shall register with the
Civil Service Commission and the Department of Labor and Employment.
The application shall be filed with the Bureau of Labor Relations of the
Department which shall process the same in accordance with the
provisions of the Labor Code of the Philippines, as amended. Applications
may also be filed with the Regional Offices of the Department of Labor
and Employment which shall immediately transmit the said applications
to the Bureau of Labor Relations within three (3) days from receipt
thereof.
Sec. 8. Upon approval of the application, a registration certificate be
issued to the organization recognizing it as a legitimate employees'
organization with the right to represent its members and undertake
activities to further and defend its interest. The corresponding certificates
of registration shall be jointly approved by the Chairman of the Civil
Service Commission and Secretary of Labor and Employment. (E.O. No.
180)

3. CERTIFICATION
CORPORATION

ELECTION

IN

GOVERNMENT

A certification election to choose the union that will represent the


employees may be conducted by the Bureau of Labor Relations in
a government corporation, whether governed by the Labor Code or
the Civil Service rules.
3.1 Election of Officers in Government Unions

1.3a Professors as rank-and-file employees

LABOR RELATIONS
It is quite clear from this provision that BLR has the original and
exclusive jurisdiction on all inter-union and intra-union conflicts.
An intra-union conflict would refer to a conflict within or inside a
labor union, and an inter-union controversy or dispute, one
occurring or carried on between or among unions. The subject of
the case at bar, which is the election of the officers and members
of the board of KMKK-MWSS, is, clearly, an intra-union conflict,
being within or inside a labor union. It is well within the powers of
the BLR to act upon.
4. WHEN PSLMC MAY RULE ON LEGALITY OF
DISMISSAL
The Public Sector Labor-Management Council, created by
Executive Order No. 180 (June 1, 1987) has jurisdiction to hear
charges of unfair labor practice filed by government employees
against their employer, e.g., the Pamantasan ng Lungsod ng
Maynila. In deciding the ULP charge the PSLMC may also rule on
the complainants dismissal if the two issuesULP and dismissal
are unavoidably interlinked.
5. UNION-BUSTING IN A GOVERNMENT AGENCY, U.L.P.
5.1 Even Temporary Employees May Organize
Even temporary employees enjoy the basic right to form
organization or association for purposes not contrary to law.
Under Art. 277(c) of the Labor Code, any employee, whether
employed for a definite period of not, shall beginning on his first
day of service, be considered an employee for purposes of
membership in any labor union.
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Article 245. Ineligibility of managerial employees to join any labor
organization; Right of Supervisory Employees. - Managerial
employees are not eligible to join, assist or form any labor
organization. Supervisory employees shall not be eligible for
membership in the collective bargaining unit of the rank-and-file
employees but may join, assist or form separate collective
bargaining units and/or legitimate labor organizations of their own.
The rank-and-file union and the supervisors union operating
within the same establishment may join the same federation or
national union. (As amended by Section 18, Republic Act No.
6715, March 21, 1989 and Section 8, Republic Act No. 9481
which lapsed into law on May 25, 2007 and became effective on
June 14, 2007).
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1. CATEGORIES OF EMPLOYEES
RA 6715 which took effect on March 21, 1989 (15 days after its
publication in the "Philippines Daily Inquirer") provides that
although "supervisory employees shall not be eligible for
membership in a labor organization of the rank and file
employees," they may, however, "join, assist or form separate
labor organization of their own."
2. INELIGIBILITY OF MANAGERS
2.1 Types of Managerial Employees

The term "manager" generally refers to "anyone who is responsible for


subordinates and other organizational resources." As a class, managers
constitute three levels of a pyramid, namely, top management, middle
management, and first-line management which is also called supervisor.
Below this third level are the operatives or operating employees who, we
may add, are also called rank-and-file.
FIRST-LINE MANAGERS The lowest level in an organization at
which individuals are responsible for the work of others is called first-line
or first-level management. First-line managers direct operating employees
only; they do not supervise other managers. Examples of first-line
managers are the "foreman" or production supervisor in a manufacturing
plant, the technical supervisor in a research department, and the clerical
supervisor in a large office. First-level managers are often called
supervisors.
MIDDLE MANAGERS The term middle management can refer to
more than one level in an organization. Middle managers direct the
activities of other managers and sometimes also those of operating
employees. Middle managers' principal responsibilities are to direct the
activities that implement their organizations' policies and to balance the
demands of their superiors with the capacities of their subordinates. A
plant manager in an electronics firm is an example of a middle manager.
TOP MANAGERS Composed of a comparatively small group of
executives, top management is responsible for the overall management of
the organization. It establishes operating policies and guides the
organization's interactions with its environment. Typical titles of top
managers are "chief executive officer," "president," and "senior vicepresident." Actual titles vary from one organization to another and are not
always a reliable guide to membership in the highest management
classification.
As can be seen from this description, a distinction exists between those
who have the authority to devise, implement and control strategic and
operational policies (top and middle managers) and those whose task is
simply to ensure that such policies are carried out by the rank-and-file
employees of an organization (first-level managers/supervisors). What
distinguishes them from the rank-and-file employees is that they act in the
interest of the employer in supervising such rank-and-file employees.
"Managerial employees" may therefore be said to fall into two distinct
categories: the "managers" per se, who compose the former group
described above, and the "supervisors" who form the latter group.
Whether they belong to the first or the second category, managers, vis-avis employers, are, likewise, employees.

2.2 Constitutionality of the Prohibition


The question is whether the first sentence of Art. 245 of the Labor
Code, prohibiting managerial employees from forming, assisting
or joining any labor organization, is constitutional in light of Art.
III, Sec. 8 of the Constitution which provides:
The right of the people, including those employed in the public and
private sectors, to form unions, association, or societies for purposes not
contrary to law shall not be abridged.

The present Article 245 is the result of the amendment of the


Labor Code in 1989 by R.A. No. 6715, otherwise known as the
Herrera-Veloso Law. Unlike the Industrial Peace Act or the
provisions of the Labor Code which it superseded, R.A. No. 6715
provides separate definitions of the terms "managerial" and
"supervisory employees" (See Art. 212[m]).
Although the definition of "supervisory employees" seems to have
been unduly restricted to the last phrase of the definition in the

Industrial Peace Act, the legal significance given to the phrase


"effectively recommends" remains the same. In fact, the distinction
between top and middle managers, who set management policy,
and front-line supervisors, who are merely responsible for
ensuring that such policies are carried out by the rank and file, is
articulated in the present definition.
The rationale for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with a Union, the
latter might not be assured of their loyalty to the Union in view of evident
conflict of interests. The Union can also become company-dominated with
the presence of managerial employees in Union membership.

2.2a Other Opinions


Justice Puno further airs a warning: To declare Article 245 of the Labor
Code unconstitutional cuts deep into our existing industrial life and will
open the floodgates to unionization at all levels of the industrial hierarchy.
Such a ruling will wreak havoc on the existing set-up between
management and labor. If all managerial employees will be allowed to
unionize, then all who are in the payroll of the company, starting from the
president, vice-president, general managers and everyone, with the
exception of the directors, may go on strike or picket the employer.
Company officers will join forces with the supervisors and rank-and-file.

3. EVOLUTION
ORGANIZE

OF

SUPERVISORS

RIGHT

TO

Unlike managers, supervisors can unionize.


3.1 First Period: Under the Industrial Peace Act
The problem was that although the Industrial Peace Act defined a
supervisor, it failed to define a manager or managerial
employee. So the question arose: Did the word supervisor
include manager? Could managers also unionize? In a case
involving Caltex managers, the Court answered affirmatively.
3.2 Second Period: Under the Labor Code Before Amendment by
R.A. No. 6715
This time the question was: Did managerial employee include
supervisor? Were supervisors also banned from unionizing? Yes.
The prohibition was applied to supervisors in the case of Bulletin
Publishing Corp. V. Sanchez, 144 SCRA 428, decided on October
7, 1986.
3.3 Third Period: Under the Labor Code as Amended by RA 6715
R.A. No. 6715 presents a compromise formula: retain the
ineligibility of managerial employees but revive the right of
supervisory employees to unionize.
4. DEFINITION OF MANAGER AND SUPERVISOR
Unlike in the Industrial Peace Act and the Labor Code before such
amendment, the power to decide on managerial acts is now
separated from the power to recommend those managerial acts,
such as laying down policy, hiring or dismissing employees, etc. A
supervisor has the power only to recommend while a managerial
employee has the power to decide and do those acts.

LABOR RELATIONS
But to make one a supervisor, the power to recommend must not
be merely routinary or clerical in nature but requires the use of
independent judgment. In other words, the recommendation is (1)
discretionary or judgmental (not clerical), (2) independent (not a
dictation of someone else), and (3) effective (given particular
weight in making the management decision). If these qualities are
lacking or, worse, if the power to recommend is absent, then the
person is not really a supervisor but a rank-and-file employee and
therefore belongs or should belong to a rank-and-file organization.
Similarly, a so-called manager, no matter how his position is titled,
is not really a manager in the eyes of the law if he does not possess
managerial powers (to lay down and execute management policies
and/ or to hire, transfer, suspend, lay-off, recall, discharge, assign
or discipline employees). If he can only recommend the exercise
of any of these powers, he is only a supervisor, hence, may join,
assist or form a supervisors organization.
5. TEST OF SUPERVISORY STATUS
The test of "supervisory" or "managerial status" depends on whether a
person possesses authority to act in the interest of his employer in the
matter specified in Article 212 (k) of the Labor Code and Section 1 (m) of
its Implementing Rules and whether such authority is not merely routinary
or clerical in nature, but requires the use of independent judgment. Thus,
where such recommendatory powers as in the case at bar, are subject to
evaluation, review and final action by the department heads and other
higher executives of the company, the same, although present, are not
effective and not an exercise of independent judgment as required by law.
It is the nature of an employee's functions and not the nomenclature or
title given to his job which determines whether he has rank-and-file or
managerial status. Among the characteristics of managerial rank are: (1)
He is not subject to the rigid observance of regular office hours; (2) His
work requires the consistent exercise of discretion and judgment in its
performance; (3) the output produced or the result accomplished cannot be
standardized in relation to a given period of time; (4) He manages a
customarily recognized department or subdivision of the establishment,
customarily and regularly directing the work of other employees therein;
(5) He either has the authority to hire or discharge other employees or his
suggestions and recommendations as to hiring and discharging,
advancement and promotion or other change of status of other employees
are given particular weight; and (6) As a rule, he is not paid hourly wages
nor subjected to maximum hours of work.

5.1 The Power to Recommend


The power to recommend, in order to qualify an employee as a
supervisor, must not only be effective but should require the use of
independent judgment. It should not be merely of a routinary or
clerical nature.
5.2 Examples of Ineffective or Clerical Recommendation
6.
SEGREGATION
SUPERVISORS

OF

RANK-AND-FILE

AND

Article 245 allows supervisory employees to form, join, or assist


separate labor organizations of their own, but they are not eligible
for membership in a labor organization of the rank-and-file
employees. Neither may a rank-and-file join a union of
supervisors.

LABOR RELATIONS
This policy of segregating the supervisors union from that of the
rank-and-file is founded on fairness to the employees themselves.
It will be doubly detrimental to the employer if the supervisors and
the rank-and-file, as members of only one union, could take a
common stand against the employer.
6.1 Effects of Having Mixed Membership
A union whose membership is a mixture of supervisors and rankand-file is not and cannot become a legitimate labor organization.
It cannot petition for a certification election, much less ask to be
recognized as the bargaining representative of employees.
The Labor Code has made it a clear statutory policy to prevent
supervisory employees from joining labor organizations consisting of
rank-and-file employees as the concerns which involve members of either
group are normally disparate and contradictory.
Clearly, based on Article 245, a labor organization composed of both rankand-file and supervisory employees is no labor organization at all. It
cannot, for any guise or purpose, be a legitimate labor organization. Not
being one, an organization which carries a mixture of rank-and-file and
supervisory employees cannot possess any of the rights of a legitimate
labor organization, including the right to file a petition for certification
election for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification
election, to inquire into the composition of any labor organization
whenever the status of the labor organization is challenged on the basis of
Article 245 of the Labor Code.
The rationale behind the Code's exclusion of supervisors from unions of
rank-and-file employees is that such employees, while in the performance
of supervisory functions, become the alter ego of management in the
making and the implementing of key decisions at the sub-managerial
level. Certainly, it would be difficult to find unity or mutuality of interests
in a bargaining unit consisting of a mixture of rank-and-file and
supervisory employees. And this is so because the fundamental test of a
bargaining unit's acceptability is whether or not such a unit will best
advance to all employees within the unit the proper exercise of their
collective bargaining rights. The Code itself has recognized this, in
preventing supervisory employees from joining unions of rank-and-file
employees.

6.2 How Many? How Few?


6.3 Illegal Mixed Membership Must Be Raised and Proved
6.4 Cancellation of Union Registration on Ground of Inclusion of
Disqualified Positions: What needs to be Proved
What is essential is the nature of the employees function and not the
nomenclature or title given to the job which determines whether the
employee has rank-and-file or managerial status or whether he is a
supervisory employee.

The implementing Rules state that the legal personality of the


petitioner union cannot be subject to collateral attack but may be
questioned only in an independent petition for cancellation.
To summarize, the petition for certification election is not the
proper forum to raise the issue of legal personality of the union.
Also, a petition to cancel union registration cannot be heard or
decided by the Med-Arbiter but either the DOLE Regional
Director for enterprise-level or the BLR Director for national
unions.

6.5 Affiliation of Supervisors and Rank-and-File Unions


Even in affiliating with a federation, the unions of the supervisors
and of the ran-and-file should be segregated.
The peculiar role of supervisors is such that while they are not managers,
when they recommend action implementing management policy or ask for
the discipline or dismissal of subordinates, they identify with the interests
of the employer and may act contrary to the interests of the rank-and-file.
We agree with the petitioner's contention that a conflict of interest may
arise in the areas of discipline, collective bargaining and strikes. Members
of the supervisory union might refuse to carry out disciplinary measures
against their co-member rank-and-file employees. In the area of
bargaining, their interests cannot be considered identical. The needs of one
are different from those of the other. Moreover, in the event of a strike, the
national federation might influence the supervisors' union to conduct a
sympathy strike on the sole basis of affiliation.
Thus, if the intent of the law is to avoid a situation where supervisors
would merge with the rank and-file or where the supervisors' labor
organization would represent conflicting interests, then a local supervisors'
union should not be allowed to affiliate with the national federation of
union of rank-and-file employees where that federation actively
participates in union activity in the company.

6.6 Restriction in Affiliation Clarified in De La Salle


First, the rank-and-file employees are directly under the authority
of the supervisory employees. Second, the national federation is
actively involved in union activities in the company. If these two
conditions are absent, the rule prohibiting supervisors from
affiliating with the mother union of the rank-and-file union does
not apply.
The affiliation of two local unions in a company with the same national
federation is not by itself a negate-on of their independence since in
relation to the employer, the local unions are considered as the principals,
while the federation is deemed to be merely their agent.

7. CONFIDENTIAL EMPLOYEES
7.1 First Swing: Inclusion Among Rank-and-File
7.2 Second Swing: Exclusion from Rank-and-File
7.3 Third Swing: Inclusion Among Supervisors
7.4 Fourth Swing: Inclusion Among Monthly Paid Rank-and-File
7.4a Limited Exclusion; Doctrine of Necessary Implication
A confidential employee is one entrusted with confidence on
delicate matters, or with the custody, handling, or care and
protection of the employer's property. While Art. 245 of the Labor
Code singles out managerial employees as ineligible to join, assist
or form any labor organization, under the doctrine of necessary
implication, confidential employees are similarly disqualified.
The doctrine of necessary implication means that what is implied
in a statute is as much a part thereof as that which is expressed.

7.4b The Metrolab and Meralco Summations: Exclusion from


Bargaining unit and Closed-shop Clause
Although Article 245 of the Labor Code limits the ineligibility to join,
form and assist any labor organization to managerial employees,
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, are
likewise privy to sensitive and highly confidential records.

7.4c Who Are Confidential Employees?


Confidential employees assist and act in a confidential capacity to,
or have access to confidential matters of, persons who exercise
managerial functions in the field of labor relations. As such, the
rationale behind the ineligibility of managerial employees to form,
assist or join a labor union equally applies to them.
Confidential employees are 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, are likewise privy to sensitive
and highly confidential records.
By the very nature of their functions, they assist and act in a
confidential capacity to, or have access to confidential matters of,
persons who exercise managerial functions in the field of labor
relations.
7.4d The Labor Nexus
The broad rationale behind this rule is that employees should not be
placed in a position involving a potential conflict of interests.
"Management should not be required to handle labor relations matters
through employees who are represented by the union with which the
company is required to deal and who in the normal performance of their
duties may obtain advance information of the company's position with
regard to contract negotiations, the disposition of grievances, or other
labor relations matters."

Art. 245 of the Labor Code does not directly prohibit confidential
employees from engaging in union activities. However, under the
doctrine of necessary implication, the disqualification of
managerial employees equally applies to confidential employees.
The confidential-employee rule justifies exclusion of confidential
employees because in the normal course of their duties they
become aware of management policies relating to labor relations.
It must be stressed, however, that when the employee does not
have access to confidential labor relations information, there is no
legal prohibition against confidential employees from forming,
assisting, or joining a union.

LABOR RELATIONS
Under the old rules, security guards were barred from joining a
labor organization of the rank-and-file. Under RA 6715, they may
now freely join a labor organization of the rank-and-file or that of
the supervisory union, depending on their rank.
________
Article 245-A. Effect of inclusion as members of employees
outside the bargaining unit. - The inclusion as union members of
employees outside the bargaining unit shall not be a ground for the
cancellation of the registration of the union. Said employees are
automatically deemed removed from the list of membership of
said union. (Introduced as new provision by Section 9, Republic
Act No. 9481 which lapsed into law on May 25, 2007 and became
effective on June 14, 2007).
________
Article 246. Non-abridgment of right to self-organization. It shall
be unlawful for any person to restrain, coerce, discriminate against
or unduly interfere with employees and workers in their exercise
of the right to self-organization. Such right shall include the right
to form, join, or assist labor organizations for the purpose of
collective bargaining through representatives of their own
choosing and to engage in lawful concerted activities for the same
purpose or for their mutual aid and protection, subject to the
provisions of Article 264 of this Code. (As amended by Batas
Pambansa Bilang 70, May 1, 1980).
________
1. CONCEPT OF THE RIGHT TO SELF ORGANIZATION
This is a key article that offers an inclusionary definition of the
right to self-organization (S.O.) by saying not what it is but what it
includes. It includes at least two rights: (1) the right to form, join
or assist labor organizations, and (2) the right to engage in lawful
concerted activities. The labor organization may be a union or
association of employees, as mentioned in Article 212(g). Its
purposes may be collective bargaining (as stated in this Article) or
dealing with the employer [as stated in Article 212(g)].
The right to form labor organization is twin to the right to engage
in concerted activities.
It is worth noting, finally, that the right to self-organization is
granted not only to employees but to workers, whether
employed or not. In fact, constitutionally speaking, the right to
form associations or societies is a right of the people, whether
workers or not.

7.4e New CBA may include employees excluded from old CBA;
Expired CBA may be Modified, not just Renewed

No personinside or outside of government, employer or nonemployer, unionist or non-unionistmay abridge these rights. If
abridged in the workplace, the abridgment is termed ULP (unfair
labor practice).

The employer and the union in an enterprise may negotiate and


agree whom to cover in their CBA. And they are free to change
their agreement: people excluded before may be included now, or
vice versa.

Article 246, is both (in mixed metaphors), the conceptual mother


and the formidable fortress of the prohibition expounded in the
next three articles.
________

8. SECURITY GUARDS MAY JOIN RANK-AND-FILE OR


SUPERVISORS UNION

Title VI
UNFAIR LABOR PRACTICES
Chapter I

CONCEPT
Article 247. Concept of unfair labor practice and procedure for
prosecution thereof. Unfair labor practices violate the
constitutional right of workers and employees to self-organization,
are inimical to the legitimate interests of both labor and
management, including their right to bargain collectively and
otherwise deal with each other in an atmosphere of freedom and
mutual respect, disrupt industrial peace and hinder the promotion
of healthy and stable labor-management relations.
Consequently, unfair labor practices are not only violations of the
civil rights of both labor and management but are also criminal
offenses against the State which shall be subject to prosecution and
punishment as herein provided.
Subject to the exercise by the President or by the Secretary of
Labor and Employment of the powers vested in them by Articles
263 and 264 of this Code, the civil aspects of all cases involving
unfair labor practices, which may include claims for actual, moral,
exemplary and other forms of damages, attorneys fees and other
affirmative relief, shall be under the jurisdiction of the Labor
Arbiters. The Labor Arbiters shall give utmost priority to the
hearing and resolution of all cases involving unfair labor practices.
They shall resolve such cases within thirty (30) calendar days from
the time they are submitted for decision.
Recovery of civil liability in the administrative proceedings shall
bar recovery under the Civil Code.
No criminal prosecution under this Title may be instituted without
a final judgment finding that an unfair labor practice was
committed, having been first obtained in the preceding paragraph.
During the pendency of such administrative proceeding, the
running of the period of prescription of the criminal offense herein
penalized shall be considered interrupted: Provided, however, that
the final judgment in the administrative proceedings shall not be
binding in the criminal case nor be considered as evidence of guilt
but merely as proof of compliance of the requirements therein set
forth. (As amended by Batas Pambansa Bilang 70, May 1, 1980
and later further amended by Section 19, Republic Act No. 6715,
March 21, 1989).
________
1. CONCEPT OF UNFAIR LABOR PRACTICE
As noted at the start of Book V a major aim of labor relations
policy is industrial democracy whose realization is most felt in free
collective bargaining or negotiation over terms and conditions of
employment. But for bargaining negotiation to be true and
meaningful, the employees, first of all, must organize themselves.
Because self-organization is a prerequisitethe lifebloodof
industrial democracy, the right to self-organize has been enshrined
in the Constitution, and any act intended to weaken or defeat the
right is regarded by law as an offense. The offense is technically
called unfair labor practice (ULP). Literally, it does not mean an
unfair practice by labor but a practice unfair to labor, although the
offender may either be an employer or a labor organization.
The victim of the offense is not just the workers as a body and the
well-meaning employers who value industrial peace, but the State

LABOR RELATIONS
as well. Thus, the attack to this constitutional right is considered a
crime which therefore carries both civil and criminal liabilities.
A consideration of the entire law on the matter clearly discloses the
intention of the lawmaker to consider acts which are alleged to constitute
unfair labor practices as violations of the law or offenses, to be prosecuted
in the same manner as a criminal offense. The reason for this provision is
that the commission of an unfair labor practice is an offense against a
public right or interest and should be prosecuted in the same manner as a
public offense. The reason for the distinction between an unfair labor
practice case and a mere violation of an employer of its contractual
obligation towards an employees is, x x x that unfair labor practice cases
involve violations of a public right or policy, to be prosecuted like
criminal offenses whereas a breach of an obligation of the employer to his
employee is only a contractual breach to be redressed like an ordinary
contract or obligation.

1.1 Elements
Commission of unfair labor practice at the enterprise level needs
the presence of certain elements: first, there is employeremployee relationship between the offender and the offended;
and second, the act done is expressly defined in the Code as an
act of unfair labor practice. The first element is required because
ULP is negation of, a counteraction to, the right to organize which
is available only to employees in relation to their employer. No
organizational right can be negated or assailed if employeremployee relationship is absent in the first place.
The second element is that the act done is prohibited by the Code,
specifically in Articles 248 and 261 for an employer and Article
249 for a labor organization. Art. 212(k) emphatically defines
unfair labor practice as any unfair labor practice as expressly
defined in this Code. Art. 261 amplifies Art. 248(i) by stating that
violation of a CBA is unfair labor practice only if the violation is
gross in character.
The prohibited acts, it should be stressed, are all related to the
workers self-organizational right and to the observance of a
collective bargaining agreement (CBA). The only possible
exception is Art. 248(f) referring to dismissing or prejudicing an
employee giving testimony under this Code [regardless of the
subject of the testimony].
Because ULP is and has to be related to the right to selforganization and to the observance of the CBA, it follows that not
every unfair act is unfair labor practice.
ULP, therefore, has a limited, technical meaning because it is a
labor relations concept with a statutory definition. It refers only to
acts opposed to workers right to organize. Without that element,
the act, no matter how unfair, is not unfair labor practice as legally
defined.
Stripped of legalese, unfair labor practice, when committed by the
employer, commonly connotes anti-unionism.
1.2 Prejudice to Public Interest not an Element of U.L.P.
A showing of prejudice to public interest is not a requisite for ULP
charges to prosper.
2. PROSECUTION OF U.L.P.

Under Art. 247 ULP has civil as well as criminal aspects. The civil
aspect may include liability for damages and these may be passed
upon by a labor arbiter.
To prosecute ULP as criminal offense is not possible until after
finality of judgment in the labor case, finding that the respondent
indeed committed unfair labor practice. But such judgment will
not serve as evidence of ULP in the criminal case; the criminal
charge must be proved independently from the labor case.
Moreover, while only substantial evidence is required in labor case
in the NLRC, proof beyond reasonable doubt is needed to convict
in the criminal case of ULP.

LABOR RELATIONS
the individual authorization required under Article 242, paragraph
(o) of this Code shall not apply to the non-members of the
recognized collective bargaining agent;
(f) To dismiss, discharge or otherwise prejudice or discriminate
against an employee for having given or being about to give
testimony under this Code;
(g) To violate the duty to bargain collectively as prescribed by this
Code;
(h) To pay negotiation or attorneys fees to the union or its officers
or agents as part of the settlement of any issue in collective
bargaining or any other dispute; or

The criminal charge, states Art. 228, falls under the concurrent
jurisdiction of the Municipal or Regional Trial Court. The same
article defines the penalty of fine and/ or imprisonment.

(i) To violate a collective bargaining agreement.

Under Art. 289, the penalty shall be imposed upon the guilty
officers of a corporation, partnership, association or entity. If the
ULP is committed by a labor organization the parties liable are
those mentioned in Art. 249.

The provisions of the preceding paragraph notwithstanding, only


the officers and agents of corporations, associations or partnerships
who have actually participated in, authorized or ratified unfair
labor practices shall be held criminally liable. (As amended by
Batas Pambansa Bilang 130, August 21, 1981).
________

The offense prescribes in one year. (Art. 290)


________
Chapter II
UNFAIR LABOR PRACTICES OF EMPLOYERS
Article 248. Unfair labor practices of employers. It shall be
unlawful for an employer to commit any of the following unfair
labor practice:
(a) To interfere with, restrain or coerce employees in the exercise
of their right to self-organization;
(b) To require as a condition of employment that a person or an
employee shall not join a labor organization or shall with-draw
from one to which he belongs;
(c) To contract out services or functions being performed by union
members when such will interfere with, restrain or coerce
employees in the exercise of their rights to self-organization;

1. CONDITIONS PRECEDENT TO U.L.P. CHARGE


Before an employee may be considered aggrieved by an alleged
unfair labor practice (ULP) by an employer, it must be
demonstrated, firstly, that the injured party comes within the
definition of employee as that term is defined by the Code, and
secondly, the act charged as ULP must fall under the prohibition of
Art. 248 (acts of the employer) or 249 (acts of the union).
Nonetheless, specific denomination of the act is not necessary to
prosecute ULP. In resolving the question of whether or not an
employer committed the act charged in the complaint, it is of no
consequence, either as a matter of procedure or of substantive law,
how the act is denominatedwhether as a restraint, interference or
coercion, or a discriminatory discharge, or as a refusal to bargain,
or even as a combination of any or all of these. For however the
employers conduct may be characterized, what is important is that
it constituted an unfair labor practice.
2. ILO CONVENTION NO. 98

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


formation or administration of any labor organization, including
the giving of financial or other support to it or its organizers or
supporters;
(e) To discriminate in regard to wages, hours of work and other
terms and conditions of employment in order to encourage or
discourage membership in any labor organization. Nothing in this
Code or in any other law shall stop the parties from requiring
membership in a recognized collective bargaining agent as a
condition for employment, except those employees who are
already members of another union at the time of the signing of the
collective bargaining agreement. Employees of an appropriate
bargaining unit who are not members of the recognized collective
bargaining agent may be assessed a reasonable fee equivalent to
the dues and other fees paid by members of the recognized
collective bargaining agent, if such non-union members accept the
benefits under the collective bargaining agreement: Provided, that

Article 1
1. Workers shall enjoy adequate protection against acts of anti-union
discrimination in respect of their employment.
2. Such protection shall apply more particularly in respect of acts
calculated to-(a) make the employment of a worker subject to the condition that he shall
not join a union or shall relinquish trade union membership;
(b) cause the dismissal of or otherwise prejudice a worker by reason of
union membership or because of participation in union activities outside
working hours or, with the consent of the employer, within working hours.
Article 2

1. Workers' and employers' organisations shall enjoy adequate protection


against any acts of interference by each other or each other's agents or
members in their establishment, functioning or administration.
2. In particular, acts which are designed to promote the establishment of
workers' organisations under the domination of employers or employers'
organisations, or to support workers' organisations by financial or other
means, with the object of placing such organisations under the control of
employers or employers' organisations, shall be deemed to constitute acts
of interference within the meaning of this Article.

3. NO U.L.P.: ILLUSTRATIVE INSTANCES OF VALID


EXERCISE OF MANAGEMENT RIGHTS
The law on unfair labor practices is not intended to deprive
employers of their fundamental right to prescribe and enforce such
rules as they honestly believe to be necessary to the proper,
productive and profitable operation of their business. Nor are his
rights of selection and discharge of his employees wrested from
him by the Act. Rothenberg stresses that an employer, subject to
the provisions of his contract with his employees, has the same full
measure of control over his business as he had prior to the
enactment of the Wagner Act and undiminished by the amended
Act. The only condition imposed upon this control is that it must
not be exercised so as to effect a violation of the Act and its
several prohibitions.

LABOR RELATIONS
substitution of the judgment of the employer in the conduct of its
business. Such management prerogative may be availed of without
fear of any liability so long as it is exercised in good faith for the
advancement of the employers' interest and not for the purpose of
defeating or circumventing the rights of employees under special
laws or valid agreement and are not exercised in a malicious,
harsh, oppressive, vindictive or wanton manner or out of malice or
spite.
3.4 Forced Vacation Leave
Where the vacation leave without pay, which the employer
requires employees to take in view of the economic crisis, is
neither malicious, oppressive or vindictive, ULP is not committed.
3.5 Issuance of Rules or Policy
Every business enterprise endeavors to increase its profits. In the
process, it may adopt or devise means designed towards that goal.
Even as the law is solicitous of the welfare of the employees, it
must also protect the right of an employer to exercise what are
clearly management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose cannot be
denied.

3.1 Personnel Movements

3.6 Taking Action Against Slowdown

As a rule, it is the prerogative of the company to promote, transfer


or even demote its employees to other positions when the interests
of the company reasonably demand it. Unless there are instances
which directly point to interference by the company with the
employees' right to self-organization, the transfer of private
respondent should be considered as within the bounds allowed by
law. Furthermore, although private respondent was transferred to a
lower position, his original rank and salary remained
undiminished.

Employees have the right to strike, but they have no right to


continue working on their own terms while rejecting the standards
desired by their employer. Hence, an employer does not commit an
unfair labor practice by discharging employees who engaged in a
slowdown, even if their object is a pay increase which is lawful.
Moreover, an employer does not violate the act by discharging
only some of the employees who participate in the slowdown
where he discharges them to serve as an example to stop the
slowdown and not for discriminatory reasons.

It is the companys prerogative to promote its employees to


managerial positions. Managerial positions are offices which can
only be held by persons who have the trust of the corporation and
its officers. It should not be prevented from doing so. A promotion
which is manifestly beneficial to an employee should not give rise
to a gratuitous speculation that such a promotion was made simply
to deprive the union of the membership of the promoted employee.

4. DETERMINATION OF VALIDITY

3.2 Acceptance of Mass Resignation


Acceptance of a voluntary resignation is not ULP. In a Philippine
Airlines case the court said that the pilots "protest
retirement/resignation" was not a concerted activity which was
protected by law. They did not assume the status of strikers. They
cannot, therefore, validly claim that the company committed unfair
labor practice. When the pilots voluntarily terminated their
employment relationship with the company, they cannot claim that
they were dismissed.
3.3 Grant of Profit-Sharing Benefits to Non-Union Members
Management has the prerogative to regulate, according to its
discretion and judgment, all aspects of employment. This flows
from the established rule that labor law does not authorize the

Necessarily, determining the validity of an employers act involves


an appraisal of his motives.
An employer may treat freely with an employee and is not obliged to
support his actions with a reason or purpose. However, where the
attendant circumstances, the history of employer's past conduct and like
considerations, coupled with an intimate connection between the
employer's action and the union affiliations or activities of the particular
employee or employees taken as a whole raise a suspicion as to the
motivation for the employer's action, the failure of the employer to ascribe
a valid reason therefor may justify an inference that his unexplained
conduct in respect of the particular employee or employees was inspired
by the latter's union membership or activities.
While the presence of this mere suspicion neither takes the place of
evidence that the employer's conduct was improperly motivated nor
dispenses with the requirement of proof of the fact, such suspicion, when
coupled with other facts which in themselves, might have been inadequate
to support an adverse finding against the employer, may suffice to sustain
a finding that the employer's action violated the prohibition of the Act.

5. FIRST U.L.P.: INTERFERENCE (ART. 248[a])

10

In summarized form, the nine U.L.P. acts of an employer under


Art. 248 are: (1) Interference, (2) yellow dog condition, (3)
contracting out, (4) company unionism, (5) discrimination, (6)
discrimination because of testimony, (7) violation of duty to
bargaining, (8) paid negotiation, and (9) violation of CBA.
5.1 Interrogation
Persistent interrogation of employees to elicit information as to
what had happened at union meetings and the identity of the active
union employees was held as violative of organizational rights of
employees.
In order that the questioning of an employee concerning his union
activities would not be deemed coercive, the employer must
communicate to the employee the purpose of the questioning,
assure him that no reprisal would take place, and obtain his
participation on a voluntary basis. In addition, questioning must
also occur in a context free from employer hostility to union
organization and must not itself be coercive in nature.
5.2 U.L.P. Even Before Union is Registered
An employer who interfered with the right to self-organization
before the union is registered can be held guilty of ULP.

LABOR RELATIONS
employees and reporting back to the employer. It is plainly evident
that such conduct on the employers part, however subtly it may be
accomplished, constitutes interference with the employees
exercise of their rights. Inasmuch as the pressure results more
from the employees apprehension than from the employers
purpose in spying and the use of its result, it has been held to be no
answer to a charge of unfair labor practice that the fruits of
espionage were not used.
When an employer engages in surveillance or takes steps leading
his employees to believe it is going on, a violation results because
the employees come under threat of economic coercion or
retaliation for their union activities. Unlawful surveillance was
properly found where supervisors were present near the place
where union meeting was being held to check the names of
employees leaving the meeting.
5.6 Economic Inducements
A violation results from an employers announcement of benefits
prior to a representation election, where it is intended to induce the
employees to vote against the union.
It is well-settled rule that while a representation election is
pending, the conferral of employee benefits for the purpose of
inducing the employees to vote against a union is unlawful.

5.3 Prohibiting Organizing Activities


A rule prohibiting solicitation of union membership in company
property is unlawful if it applies to non-working time as well as to
working time.
Where majority of the employees live on the premises of the
employer and cannot be reached by any means or procedures
practically available to union organizers, the employer may be
required to permit non-employee union organizers to come within
its premises, in order to solicit employees.
However, in the absence of showing that the illegal dismissal was
dictated by anti-union motives, the same does not constitute an
unfair labor practice as would be a valid ground for strike. The
remedy is an action for reinstatement with backwages and
damages.
We have held that unfair labor practice cases are not, in view of
the public interest involved, subject to compromises.
5.4 Violence or Intimidation
An employer unlawfully coerced employees by directing two
individuals to his office at gun point on the day of representation
election after the individuals had informed the employer that they
were on the premises to vote in the election.
5.5 Espionage and Surveillance
One form of pressure which some over-eager employers
sometimes use is the practice of spying upon employees. This
device consists of using one or a small group of employees, or
other agents, inspired by profit opportunism, vengeance or come
kindred human frailty to use his or their access to employees
quarters and affairs for the purpose of spying upon fellow

5.7 Employers Expression of Opinion; Totality of Conduct


Doctrine
The doctrine holds that the culpability of employers remarks was
to be evaluated not only on the basis of their implications, but
against the background of and in conjunction with collateral
circumstances.
(1) Letter to individual employeesIt is an act of interference for the
employer to send a letter to all employees notifying them to return to work
at a time specified therein, otherwise new employees would be engaged to
perform their jobs. Individual solicitation of the employees or visiting
their homes, with the employer or his representative urging the employees
to cease union activity or cease striking, constitutes unfair labor practice.
All the above-detailed activities are unfair labor practices because they
tend to undermine the concerted activity of the employees, an activity to
which they are entitled free from the employer's molestation.
(2) Strike-breakingWhen the respondent company offered reinstatement
and attempted to "bribe" the strikers with "comfortable cots," "free coffee
and occasional movies," "overtime" pay for "work performed in excess of
eight hours," and "arrangements" for their families, so they would
abandon the strike and return to work, they were guilty of strike-breaking
and/or union-busting and, consequently, of unfair labor practice.
(3) Acts violative of right to organizeViolative of the right to organize,
form and join labor organizations are the following acts: the offer of a
Christmas bonus to all "loyal" employees of a company shortly after the
making of a request by the union to bargain; wage increases given for the
purpose of mollifying employees after the employer has refused to bargain
with the union, or for the purpose of inducing striking employees to return
to work; the employer's promises of benefits in return for the strikers'
abandonment of their strike in support of their union; and the employer's
statement, made about 6 weeks after the strike started, to a group of
strikers in a restaurant to the effect that if the strikers returned to work,
they would receive new benefits in the form of hospitalization, accident
insurance, profit-sharing, and a new building to work in.

11

(4) Test of interference or coercionThe test of whether an employer has


interfered with and coerced employees within the meaning of subsection
(a) (1) is whether the employer has engaged in conduct which it may
reasonably be said tends to interfere with the free exercise of employees'
rights under section 3 of the Act, and it is not necessary that there be direct
evidence that any employee was in fact intimidated or coerced by
statements of threats of the employer if there is a reasonable inference that
anti-union conduct of the employer does have an adverse effect on selforganization and collective bargaining.
(5) The totality of conduct doctrinethe letters of the company
president to the individual strikers should not be considered by themselves
alone but should be read in the light of the preceding and subsequent
circumstances. The letters should be interpreted according to the "totality
of conduct doctrine," whereby the culpability of an employer's remarks
has to be evaluated not only on the basis of their implicit implications, but
were to be appraised against the background of and in conjunction with
collateral circumstances.

5.8 Mass Layoff Amounting to U.L.P.


A companys capital reduction efforts, to camouflage the fact that
it has been making profits, and to justify the mass lay-off of its
employees especially union members, were an unfair labor
practice which can neither be countenanced nor condoned.
5.9 Lockout or Closure Amounting to U.L.P.
A lockout, actual or threatened, as a means of dissuading the
employees from exercising their rights under the Act is clearly an
unfair labor practice. However, to hold an employer who actually
or who threatens to lock out his employees guilty of a violation of
the Act, the evidence must establish that the purpose thereof was to
interfere with the employees exercise of their rights.
An honest closing of ones plant is not a violation of the Act.
However, cessation of operations, actual or threatened, does
constitute an unfair labor practice, if it is, directly or indirectly,
expressly or by innuendo, calculated or employed to interfere with
the employees rights under the Act. Proof of the employers state
of mind, unless it is expressed, is often very difficult. However, it
may be proven by circumstantial evidence.
The rule is that it is unlawful for the employer to threaten its
employees with moving or shutting down the plant and consequent
loss of employment, as the result of their support for the union.
An employer which closed its business to put an end to a unions
activities, and which made no effort to allow the employees
attempt to exercise their right to self-organization and collective
bargaining, and even threatening the employees that they would
lose their jobs if they did not cease affiliation with the union,
commits unfair labor practice.
5.9a Sale in Bad Faith
Where the sale of a business enterprise was attended with bad faith, there
is no need to consider the applicability of the rule that labor contracts
being in personam are not enforceable against the transferee. The latter is
in the position of tort-feasor having been a party likewise responsible for
the damage inflicted on the members of the aggrieved union and therefore
cannot justly escape liability.

LABOR RELATIONS
It is irrational to suppose that a purchaser of a manufacturing
enterprise is not aware of the labor-management situation in the
firm he bought.
5.9b Assumption of Obligations by New Company
5.10 Successor Employer; Piercing the Corporate Veil
Closure is likewise not legal and the employees cannot be
separated if, in fact, there is no closure because the closed
department or company reappeared although under a new name. If
the new company is, for instance, engaging in the same business
as the closed company or department, or is owned by the same
people, and the closure is calculated to defeat the workers
organizational right, then, the closure may be declared a
subterfuge and the doctrine of successor employer will be
applied, that is, the new company will be treated as a continuation
or successor of the one that closed. If such be the case, the
separated employees will have to be employed in the new firm
because in the first place they should not have been separated at
all.
The successor employer ruling is an enforcement of the legal
recourse called piercing the veil of corporate entity.
Under the doctrine of piercing the veil of corporate entity, when valid
grounds therefore exist, the legal fiction that a corporation is an entity
with a juridical personality separate and distinct from its members or
stockholders may be disregarded. In such cases, the corporation will be
considered as a mere association of persons. The members or stockholders
of the corporation will be considered as the corporation, that is, liability
will attach directly to the officers and stockholders. The doctrine applies
when the corporate fiction is used to defeat public convenience, justify
wrong, protect fraud, or defend crime, or when it is made as a shield to
confuse the legitimate issues or where a corporation is the mere alter ego
or business conduit of a person, or where the corporation is so organized
and controlled and its affairs are so conducted as to make it merely an
instrumentality, agency, conduit or adjunct of another corporation.

6. SECOND U.L.P.: YELLOW DOG CONDITION (ART.


248[b])
Contract provisions whereby an employee agrees that during the
period of his employment he will not become a member of a labor
union have been outlawed in the United States, by legislation in
some states, as well as by Federal legislation.
The yellow dog contract is a promise exacted from workers as a
condition of employment that they are not to belong to, or attempt
to foster, a union during their period of employment.
An American scheme, the typical yellow dog contract is an at-will
employment agreement which contains, in addition to the usual
provisions for employment, the following three provisions: (1) a
representation by the employee that he is not a member of a labor
union; (2) a promise by the employee not to join a labor union; (3)
a promise by the employee that, upon joining a labor union, he will
quit his employment.
7. THIRD U.L.P.: CONTRACTING OUT (ART. 248[c])
Contracting out itself, is not ULP; it is the ill intention that makes
it so.

12

LABOR RELATIONS
An employers contracting out of work is itself an unfair labor
practice where motivated by a desire to prevent his employees
from organizing and selecting a collective bargaining
representative, rid himself of union men, or escape his statutory
duty to bargain collectively with his employees bargaining
representative.
As we have previously held, the company can determine in its best
business judgment whether it should contract out the performance of some
of its work for as long as the employer is motivated by good faith, and the
contracting out must not have been resorted to to circumvent the law or
must not have been the result of malicious or arbitrary action.

7.1 Contracting out restricted by CBA


7.2 Runaway Shop
Resorting to a runaway shop is a U.L.P. A runaway shop is
defined as an industrial plant moved by its owners from one
location to another to escape union labor regulations or state laws,
but the term is also used to describe a plant removed to a new
location in order to discriminate against employees at the old plant
because of their union activities. Moreover, it has been held that
where a plant removal is for business reasons but the relocation is
hastened by anti-union motivation, the early removal is an unfair
labor practice. It is immaterial that the relocation is accompanied
by a transfer of title to a new employer who is an alter ego of the
original employer.
Runaway shop refers to business relocation animated by anti-union
animus. Sameness of business is not reason enough to show runaway shop to pierce the veil of separate corporate entity.
A "runaway shop" is defined as an industrial plant moved by its owners
from one location to another to escape union labor regulations or state
laws, but the term is also used to describe a plant removed to a new
location in order to discriminate against employees at the old plant
because of their union activities. It is one wherein the employer moves its
business to another location or it temporarily closes its business for antiunion purposes. A "runaway shop" in this sense, is a relocation motivated
by anti-union animus rather than for business reasons.
Mere ownership by a single stockholder or by another corporation of all or
nearly all of the capital stock of a corporation is not of itself sufficient
ground for disregarding the separate corporate personality.
This fiction of corporate entity can only be disregarded in certain cases
such as when it is used to defeat public convenience, justify wrong,
protect fraud, or defend crime. To disregard said separate juridical
personality of a corporation, the wrongdoing must be clearly and
convincingly established.

8. FOURTH U.L.P.: COMPANY-DOMINATION OF UNION


(ART. 248[d])
Domination of a labor union usually manifests in the following
forms:
(a) Initiation of the company union idea. This may further occur in
three styles: (1) outright formation by the employer or his
representatives; (2) employee formation on outright demand or
influence by employer; and (3) managerially motivated formation
by employees.

(b) Financial support to the union. An employer commits unfair


labor practice if he defrays the union expenses or pays the
attorneys fees to the attorney who drafted the constitution and bylaws of the union.
(c) Employer encouragement and assistance. Immediately
granting the union exclusive recognition as a bargaining agent
without determining whether the union represents the majority of
employees is an illegal form of assistance amounting to unfair
labor practice.
(d) Supervisory assistance. This takes the form of soliciting
membership, permitting union activities during working time or
coercing employees to join the union by threats of dismissal or
demotion.
An employer was held to have unlawfully aided a union by
assisting its attempt to secure authorization cards from employees
and by executing a contract with such union when it was not the
authorized representative of the employees.
A labor union is company-dominated where it appears that key officials of
the company have been forcing employees belonging to a rival labor
union to join the former under pain of dismissal should they refuse to do
so; that hey officials of the company, as well as its legal counsel, have
attended the election of officers of the former union; that officers and
members of the rival union were dismissed allegedly pursuant to a
retrenchment policy of the company, after they had presented demands for
the improvement of the working conditions despite its alleged
retrenchment policy; and that, after dismissal of the aforesaid officers of
the rival labor union, the company engages the services of new laborers.

9. FIFTH U.L.P.: DISCRIMINATION (ART. 248[e])


What the law prohibits is discrimination to encourage or
discourage membership in a labor organization. Where the purpose
is to influence the union activity of employees, the discrimination
is unlawful. But discrimination is not the same as differentiation or
classification. For instance, it is common management practice to
classify jobs and grant them varying levels of pay benefits
package. These are valid differentiations that recognize differences
in job requirements or contributions. They are not necessarily
discrimination classifiable as ULP.
Under the Industrial Peace Act, to constitute an unfair labor practice, the
discrimination committed by the employer must be in regard to the "hire
or tenure of employment or any term or condition of employment to
encourage or discourage membership in any labor organization." The
exaction, by the Company, from the strikers returning to work, of a
promise not to destroy company property and not to commit acts of
reprisal against the Union-members who did not participate in the strike,
cannot be considered as intended to encourage or discourage Unionmembership. Taking the circumstances surrounding the prescribing of that
condition, the requirement by the Company is actually an act of selfpreservation and designed to insure the maintenance of peace and order in
the Company premises.

Discouraging membership in a labor organization includes not


only discouraging adhesion to union membership but also
discouraging participation in union activities such as legitimate
strike.
9.1 Discrimination in Work Quota

13

LABOR RELATIONS
Considered in the light of the anti-union attitude exhibited by respondent
company in transferring union president Leones from the main office in
Manila to Cebu when the union was still being organized, and which act
was found by the NLRC as constituting unfair labor practice and unionbusting in connection with the application for clearance to terminate
Leones filed by respondent company, 34 the uneven application of its
marketing plan by respondent company is patently an act of
discrimination, considered as an unfair labor practice under Art. 248(e) of
the Labor Code.

9.2 Discrimination in Bonus Allocation or Salary Adjustments


There is unfair and unjust discrimination in the granting of salary
adjustments where the evidence shows that (a) the management
paid the employees of the unionized branch; (b) where the salary
adjustments were granted to employees of one of its nonunionized
branches although it was losing in its operations; and (c) the total
salary adjustments given every ten of its unionized employees
would not even equal the salary adjustments given one employee
in the nonunionized branch.
9.3 Discrimination in Layoff or Dismissal
Even where business conditions justified a layoff of employees,
unfair labor practices in the form of discriminatory dismissal were
found where only unionists were permanently dismissed while
nonunionists were not.
Labor is a person's means of livelihood. He cannot be deprived of his
labor or work without due process of law. Retrenchment very heart of
one's employment. While the right of strikes at the very heart of an
employer to dismiss an employee is conceded in a valid retrenchment, the
right differs from and should not be confused with the manner in which
such right is exercised. It should not be oppressive and abusive since it
affects one's person and property. Due process of law demands nothing
less.

9.4 Discrimination in Regularization


9.5 Discrimination by Blacklisting
A blacklist has been defined as a list of persons marked out for
special avoidance, antagonism or enmity on the part of those who
prepare the list, or those among whom it is intended to circulate, as
where a trade union blacklists workmen who refuse to conform
to its rules, or where a list of insolvent or untrustworthy persons is
published by a commercial agency or mercantile association.
When it is resorted to by a combination of employers to prevent
employment of employees for union activities, it may constitute
unfair labor practice. Aside from constituting an unfair labor
practice, it may give rise to a right of action for damages by the
employees prejudice under Article 28 of the new Civil Code.
In its broad sense, however that is, in the sense of the employers
circulating a list of former employees of notorious laziness or negligence
in the performance of their duties or of incorrigible propensity to create
trouble in the place of employment, it may be a proper measure for the
protection of employers. Thus, it has been held that unless the action of
the employers in combining or in passing communications among
themselves for the purpose of excluding unwanted workers from
employment, constitutes a libel or slander (and according to some
decisions the defamation, to be actionable, must be malicious), the

excluded employee possesses no right of action because the employers


community of interest acts both to justify the combination and to privilege
the communication.

9.6 Indirect Discrimination


It is a well settled rule of law that what is prohibited to be done
directly shall not be allowed to be accomplished indirectly.
Thus, the following acts have been held unfair labor practices: (1)
the dismissal of a laborer in account of union activities of his
brother; (2) the discharge of an employee due to the union
activities of the wife; and (3) the discharge of a wife due to the
union activities of the husband.
9.7 Test of Discrimination
For the purpose of determining whether or not a discharge is
discriminatory, it is necessary that the underlying reason for the
discharge be established. The fact that a lawful cause for discharge
is available is not a defense where the employee is actually
discharged because of his union activities. If the discharge is
actually motivated by a lawful reason, the fact that the employee is
engaged in union activities at the time will not lie against the
employer and prevent him from the exercise of his business
judgment to discharge an employee for cause.
Where circumstances establish a discriminatory motive on the part
of the employer, the assignment of a just cause will be unavailing.
If it can be established that the true and basic inspiration for the
employers act is derived from the employees union affiliations or
activities, the assignment by the employer of another reason,
whatever its semblance of validity, is unavailing.
An interference that the discharge of an employee was motivated
by his union activity must be based upon evidence, direct or
circumstantial, not upon mere suspicion.
9.8 Constructive Discharge
Where the employer prohibits employees from exercising their
rights under the Act, on pain of discharge, and the employee quits
as a result of the prohibition, a constructive discharge occurs,
which may be remedies in an unfair labor practice proceeding.
9.9 Discharge Due to Union Activity, A Question of Fact
The question of whether an employee was discharged because of his union
activities is essentially a question of fact as to which the findings of the
Court of Industrial Relations are conclusive and binding if supported by
substantial evidence considering the record as a whole. This is so because
the Industrial Court is governed by the rule of substantial evidence, rather
than by the rule of preponderance of evidence as in any ordinary civil
cases. Substantial evidence has been defined as such relevant evidence as
a reasonable mind might accept as adequate to support a conclusion. It
means such evidence which affords a substantial basis from which the fact
in issue can be reasonably inferred.

9.10 Valid Discrimination: Union Security Clause


There is a form of encouragement of union membership which is
not considered ULP. This is where Management and Union enter
into a collective bargaining agreement containing a union security

14

LABOR RELATIONS
clause. Despite variations and limitations, a union security clause
essentially requires membership in the union so that an employee
may retain his job and the unions existence is assured.
Union security is a generic term which is applied to and
comprehends closed shop, union shop, maintenance of
membership or any other form of agreement which imposes upon
employees the obligation to acquire or retain union membership as
a condition affecting employment. It is indeed compulsory union
membership whose objective is to assure continued existence of
the union. In a sense, there is discrimination when certain
employees are obliged to join a particular union. But it is
discrimination favouring unionism; it is a valid kind of
discrimination.
The employer is not guilty of unfair labor practice if it merely
complies in good faith with the request of the certified union for
the dismissal of employees expelled from the union pursuant to the
union security clause in the collective bargaining agreement.
9.10a Kinds of Union Security Agreements
Closed-shop: Only union members can be hired by the company
and they must remain as union members to retain employment in
the company.

Constitution. But this Court has laid down the ruling that a closed shop is
a valid form of union security, and such provision in a collective
bargaining agreement is not a restriction of the right of freedom of
association guaranteed by the Constitution.
It is the policy of the State to promote unionism to enable the workers to
negotiate with management on the same level and with more
persuasiveness than if they were to individually and independently bargain
for the improvement of their respective conditions. To this end, the
Constitution guarantees to them the rights "to self-organization, collective
bargaining and negotiations and peaceful concerted actions including the
right to strike in accordance with law." There is no question that these
purposes could be thwarted if every worker were to choose to go his own
separate way instead of joining his co-employees in planning collective
action and presenting a united front when they sit down to bargain with
their employers. It is for this reason that the law has sanctioned
stipulations for the union shop and the closed shop as a means of
encouraging the workers to join and support the labor union of their own
choice as their representative in the negotiation of their demands and the
protection of their interest vis-a-vis the employer.
A closed-shop agreement is an agreement whereby an employer binds
himself to hire only members of the contracting union who must continue
to remain members in good standing to keep their jobs. It is "the most
prized achievement of unionism." It adds membership and compulsory
dues. By holding out to loyal members a promise of employment in the
closed-shop, it welds group solidarity. It is a very effective form of union
security agreement.

Union Shop: Nonmembers may be hired, but to retain employment


must become union members after a certain period. The
requirement applies to present and future employees.

9.10c Advantages and Disadvantages of Closed-Shop Agreement

Modified Union Shop: Employees who are not union members at


the time of signing the contract need not join the union, but all
workers hired thereafter must join.

a. Increases the strength and bargaining power of labor


organizations.

Maintenance of Membership Shop: No employee is compelled to


join the union, but all present or future members must, as a
condition of employment, remain in good standing in the union.
Exclusive Bargaining Shop: The union is recognized as the
exclusive bargaining agent for all employees in the bargaining
unit, whether union members or not.

A closed-shop agreement is advantageous because it

b. Prevents non-union workers from sharing in the benefits of the


unions activities without also sharing its obligations.
c. Prevents the weakening of labor organizations by discrimination
against union members.
d. Eliminates the lowering of standards caused by competition
with non-union workers.

Bargaining for Members Only: The union is recognized as the


bargaining agent only for its own members

e. Enables labor organizations effectively to enforce collective


agreements.

Agency Shop: An agreement whereby employees must either join


the union or pay the union as exclusive bargaining agent a sum
equal to that paid by the members. This is directed against free
rider employees who benefits from union activities without
contributing financially to union support. It prevents situation
where non-union members enrich themselves at the expense of
union members. Another term for agency shop agreement is
maintenance of treasury shop.

f. Facilitates the collection of dues and the enforcement of union


rules.

The above variations are opposite of open shop, an arrangement


which does not require union membership as a condition of
employment.
9.10b Validity of Closed-Shop Agreement
It is true that disaffiliation from a labor union is not open to legal
objection. It is implicit in the freedom of association ordained by the

g. Creates harmonious relations between the employer and


employee.
But it is disadvantageous as it
a. Results in monopolistic domination of employment by labor
organizations.
b. Interferes with the freedom of contract and personal liberty of
the individual worker.
c. Compels employers to discharge all non-union workers
regardless of efficiency, length of service, etc.

15

d. Facilitates the use of labor organizations by unscrupulous union


leaders for the purpose of extortion, restraint of trade, etc.
e. Denies to non-union workers equal opportunity for employment.
f. Enables union to charge exorbitant dues and initiation fees.
9.10d Valid Dismissal Because of Application of Union Security
Clause
Union security clauses in collective bargaining agreements, if freely and
voluntarily entered into, are valid and binding. Corollary, dismissals
pursuant to union security clauses are valid and legal subject only to the
requirement of due process, that is, notice and hearing prior to dismissal.
Thus, the dismissal of an employee by the company pursuant to a labor
union's demand in accordance with a union security agreement does not
constitute unfair labor practice.
Even if the union members were unaware of the closed-shop stipulation in
the CBA, they were bound by it. Neither their ignorance of, nor their
dissatisfaction with its terms and conditions would justify breach thereof
or the formation by them of a union of their own. This is so because a
union member who is employed under an agreement between the union
and his employer is bound by the provisions thereof, since it is a joint and
several contract of the members of the union entered into by the union as
their agent.
This provision is an indirect restriction on the right of an employee to selforganization. It is a solemn pronouncement of a policy that while an
employee is given the right to join a labor organization, such right should
only be asserted in a manner that will not spell the destruction of the same
organization The law requires loyalty to the union on the part of its
members in order to obtain to the full extent its cohesion and integrity.

9.10e Dismissal Pursuant to Closed-Shop Clause Must Clearly


Appear in Contract
In order to validly dismiss an employee by force of the union
security clause, there should be a clear and unequivocal statement
that the loss of the status of a member of good standing in the
union shall be a cause for dismissal.
Union shop, as with closed-shop provisions, should be strictly
construed against the existence of union shop. Sometimes harsh
and onerous, such provisions should not be extended beyond the
explicit coverage of their terms, and will not be deemed to
authorize by implication any dismissal of employees already
working before the agreement was made.
9.10f Due Process Required in Enforcing Union Security Clause;
Intra-union Matter becomes Termination Dispute with Employer
Although a union security clause in a CBA may be validly
enforced and that dismissal pursuant thereto may likewise be valid,
this does not erode the fundamental requirement of due process.
The reason behind the enforcement of union security clauses
which is the sanctity and inviolability of contracts cannot override
one's right to due process.
9.10g Liability of Union to Pay Wages and Fringe Benefits of
Illegally Dismissed Employee
9.10h Employer in Good Faith Not Liable

LABOR RELATIONS
9.10i Closed-Shop, To Whom Not Applicable
All employees in the bargaining unit covered by a closed-shop
agreement are subject to its terms, except the following: (1) any
employee who at the time the closed-shop agreement takes effect
is a bona fide member of religious organization which prohibits its
members from joining labor unions on religious grounds; (2)
employees already in the service and already members of a labor
union or unions other than the majority union at the time the
closed-shop agreement took effect; (3) Confidential employees
who are excluded from the rank-and-file bargaining unit; and (4)
employees excluded from the closed-shop by express terms of the
agreement.
It is well settled in this jurisdiction that, in the absence of a manifest intent
to the contrary, "closed shop" provisions in a collective bargaining
agreement "apply only to persons to be hired or to employees who are not
yet members of any labor organization" and that said provisions of the
agreement are not applicable to those already in the service at the time of
its execution. To hold that the employees in a company who are members
of a minority union may be compelled to disaffiliate from their union and
join the majority or contracting union, would render nugatory the right of
all employees to self organization and to form, join or assist labor
organizations of their own choosing, a right guaranteed by the Industrial
Peace Act (sec. 3, Rep. Act No. 875) as well as by the Constitution (Art.
III, sec. 1[6]).

9.10j Agency Fee Instead of Union Membership


The employees who are benefitting from the CBA, without being
members of the bargaining union, may be required to pay an
agency fee. The collection of agency fees in an amount equivalent
to union dues and fees, from employees who are not union
members, is recognized by Article 248 (e) of the Labor Code. A
written authorization from the non-union employee is imposed.
The employee's acceptance of benefits resulting from a collective
bargaining agreement justifies the deduction of agency fees from
his pay and the union's entitlement thereto. In this aspect, the legal
basis of the union's right to agency fees is neither contractual nor
statutory, but quasi-contractual, deriving from the established
principle that non-union employees may not unjustly enrich
themselves by benefiting from employment conditions negotiated
by the bargaining union.
The justification of collecting agency fee is the unions
accomplishment in having negotiated a CBA in behalf of the
employees. The union served as agent of the employees, and the
agency fee is recognition of the agents efforts. The fee is
collectible only from employees deriving economic benefits from
the union-negotiated CBA.
10. SIXTH U.L.P.: DISCRIMINATION BECAUSE OF
TESTIMONY (ART. 248[f])
The law protects not only the employees right to form, join, or
assist labor organizations but also their right to testify on matters
covered by the Code. If this right is not protected, the right to selforganization will be indirectly defeated because the employees
will fear their employers reprisal. By protecting the employees
right to testify, the law therefore shields the workers right to selforganization from indirect assault by the employer. Thus, it is ULP
to dismiss, discharge, or otherwise prejudice or discriminate

16

LABOR RELATIONS
against an employee for having given or being about to give
testimony under this Code.
Employers reprisal against a testifying employee is ULP because,
furthermore, it violates the right to engage in concerted activity, a
right included in the right to self-organize (Art. 246) and reiterated
in Article 263(b). Concerted activity does not always require a
number of people acting in unison. An employee acting alone in
pursuing a group interest may be said to be doing a concerted
activity which the employer may not curtail.
10.1 Refusal to Testify
Clearly, the efforts to justify petitioner's dismissal 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 taints with
evident bad faith and deliberate malice petitioner's summary termination
from employment. 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, in the form of restraint, interference or
coercion, against his employee's right to institute concerted action for
better terms and conditions of employment. Without doubt, the act of
compelling employees to sign an instrument indicating that the employer
observed labor standards provisions of law when he might have not,
together with the act of terminating or coercing those who refuse to
cooperate with the employer's scheme constitutes unfair labor practice.
The first act clearly preempts the right of the hotel's workers to seek better
terms and conditions of employment through concerted action.

10.2 Labor Standards Violation May Lead to a Srike


Art. 118. Retaliatory measures. It shall be unlawful for an
employer to refuse to pay or reduce the wages and benefits,
discharge or in any manner discriminate against any employee
who has filed any complaint or instituted any proceeding under
this Title or has testified or is about to testify in such proceedings.
And yet, Articles 118 and 248 are related. They both speak of
employees filing a complaint or giving testimony. But the subject
of complaint or testimony under Article 118 is limited to matters
about wages, the subject of Title I of Book III. Under Article 248,
on the other hand, the subject testified to is any issue covered by
the Code. Both articles likewise speak of retaliation by the
employer. Retaliation is wrong, and more than that, Article 248
considers it an unfair labor practice which, under Art. 263, is a
legal reason for employees to hold a strike.
11. SEVENTH U.L.P.: VIOLATION OF THE DUTY TO
BARGAIN (ART. 248[g])
The seventh ULP act under Art. 248 refers to violating the duty to
bargain. See Articles 252 and 253
12. EIGHT U.L.P.: PAID NEGOTIATION (ART. 248[h])
Self-organization and collective bargaining are treasured rights of
workers. The law zealously shields them from corruption. It is a
punishable act of ULP for the employer to pay the union or any of
its officers or agents any negotiation fee or attorneys fee as part of
settlement in collective bargaining or any labor dispute. To do so is
not unlawful. It is ethically reprehensible.
13. NINTH U.L.P.: VIOLATION OF THE CBA (ART. 248[i])

After a CBA is concluded, its implementation follows.


Implementation is still part of the bargaining process which, it
should be recalled, rests on the parties duty to bargain. The duty
to bargain, it should also be recalled, requires good faith. And
good faith implies faithful observance of what has been agreed
upon. It logically follows that noncompliance with the agreement
is non-observance of good faith in bargaining; therefore, the
noncompliance amounts to ULP.
But such violation, to constitute ULP, must be gross, according
to Art. 261.
14. RELIEF IN U.L.P. CASES
14.1 Cease and Desist Order
To support a cease and desist order, the record must show that the
restrained misconduct was an issue in the case; that there was a
finding of fact of said misconduct and such finding of fact was
supported by evidence. The Court is not authorized to issue blank
cease and desist orders, but must confine its injunction orders to
specific act or acts which are related to past misconduct. A cease
and desist order is not invalidated because the act complained of
was voluntarily discontinued prior to or during the course of the
proceedings. But if the act complained of happened so long a time
that there is no longer any threat or probability of a recurrence, a
cease and desist order will not be justified.
14.2 Affirmative Order
The Court does not only have the power to issue negative or
prohibitive orders but also affirmative or positive orders.
The order may usually direct the full reinstatement of the
discharged employees to their substantially equivalent position
without prejudice to their seniority and other rights and privileges.
14.3 Order to Bargain; Mandated CBA
Likewise, when an employer has failed or refused to bargain with
the proper bargaining agent of his employees, the Court may, in
addition to the usual cease and desist orders, issue an affirmative
order to compel the respondent to bargain with the bargaining
agent.
14.4 Disestablishment
Where the employer had initiated, dominated or assisted in or
interfered with the formation or establishment of any labor
organization or contributed financial or other support to it, the
Court may issue, in addition to a cease and desist order, an order
directing the employer to withdraw all recognition from the
dominated labor union and to disestablish the same.
15. U.L.P. NOT SUBJECT TO COMPROMISE
Unfair labor practice cases are not, in view of the public interest
involved, subject to compromises. The relation between capital
and labor are not merely contractual. They are so impressed with
the public interest that labor contracts must yield to the common
good.

17

16. U.L.P. IN A GIVEN PERIOD SHOULD BE INCLUDED


IN SINGLE CHARGE
When a labor union accuses an employer of acts of unfair labor
practice allegedly committed during a given period of time, the
charges should include all acts of unfair labor practice committed
against any and all members of the Union during that period. The
Union should not, upon the dismissal of the charges first preferred,
be allowed to split its cause of action and harass the employer with
subsequent charges. based upon acts committed during the same
period of time.
17. EMPLOYERS RESPONSIBILITY FOR U.L.P. ACTS BY
SUBORDINATE OFFICIALS
Knowledge by the employer of the employees improper acts:
Where it was established that the employer was aware of the
employees wrongdoing, his failure to prevent continuation of the
course of conduct or his failure to renounce any connection or
affinity therewith, invited the imputation of fault and responsibility
to the employer.
Continuity of improper conduct by employee: A single utterance by
a supervisory employee, whether improvident or deliberate on the
employees part, was not ordinarily and n absence of proof of
actual authority held to be sufficient to convict an employer of an
unfair labor practice; however, continued, repeated or widespread
activities by such supervisory employee in affront of the rights of
the body of employees was deemed ample justification for
ascribing knowledge and blame to the employer.
Employers past policy and attitude: It has been held that, among
other things, the similarity between the past attitude or policy of
the employer and that of the offending supervisory employee
might, in certain cases, be indicative of a concert of effort between
the two.
________

LABOR RELATIONS
(d) To cause or attempt to cause an employer to pay or deliver or
agree to pay or deliver any money or other things of value, in the
nature of an exaction, for services which are not performed or not
to be performed, including the demand for fee for union
negotiations;
(e) To ask for or accept negotiation or attorneys fees from
employers as part of the settlement of any issue in collective
bargaining or any other dispute; or
(f) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only
the officers, members of governing boards, representatives or
agents or members of labor associations or organizations who have
actually participated in, authorized or ratified unfair labor practices
shall be held criminally liable. (As amended by Batas Pambansa
Bilang 130, August 21, 1981).
________
1.
RESTRAINT
OR
COERCION
BY
LABOR
ORGANIZATION; INTERFERENCE BY UNION IS NOT
ULP
A labor organization commits ULP when it restrains or coerces
employees in their right to self-organization. This provision of Art.
249(a) parallels with Art. 248(a). But interference is left out.
This deliberate omission is the equivalent of license of labor
organization to engage in those practices which, at the hands of an
employer, would constitute actionable unfair labor practices by
way of interference. In other words, a labor organization may
interfere in the employees right to self-organization as long as the
interference does not amount to restraint or coercion.
Interference by a labor organization is not ULP because interfering
in the exercise of the right to organize is itself a function of selforganizing.
1.1 Coercing Participation in Strike

Chapter III
UNFAIR LABOR PRACTICES OF LABOR
ORGANIZATIONS
Article 249. Unfair labor practices of labor organizations. - It shall
be unfair labor practice for a labor organization, its officers, agents
or representatives:

The provision is violated by a unions restraining or coercing an


employee in the exercise of his right to refuse to participate in or
recognize a strike. Similarly, violation is committed when a union
threatens employees with bodily harm in order to force them to
strike.
2. UNION-INDUCED DISCRIMINATION

(a) To restrain or coerce employees in the exercise of their right to


self-organization. However, a labor organization shall have the
right to prescribe its own rules with respect to the acquisition or
retention of membership;
(b) To cause or attempt to cause an employer to discriminate
against an employee, including discrimination against an employee
with respect to whom membership in such organization has been
denied or to terminate an employee on any ground other than the
usual terms and conditions under which membership or
continuation of membership is made available to other members;
(c) To violate the duty, or refuse to bargain collectively with the
employer, provided it is the representative of the employees;

The law forbids as ULP union attempts to cause an employer to


grant advantages for union members over non-members, for union
members in good standing over suspended or expelled members,
for union members over permit holders, for members of the union
executive board over more senior employees, for members of one
union over members of another union, or for members of one local
over members of another local.
The forbidden discrimination may refer to terms of hiring or firing,
in layoff, in seniority, or in benefits.
2.1 Arbitrary Use of Union Security Clause

18

LABOR RELATIONS
The broad rule is that the union has the right to determine its
membership and to prescribe the conditions for the acquisition and
retention thereof. Consequently, admission to membership may not
be compelled. This rule, however, is qualified in the case of labor
unions holding a monopoly in the supply of labor, either in a given
locality, or as regards a particular employer by reason of a closedshop or similar agreements. In such case, qualified applicants may
not be arbitrarily excluded from membership and their admission
may not be barred by unreasonable rules.
It is well settled that labor unions are not entitled to arbitrarily exclude
qualified applicants for membership, and a closed-shop provision would
not justify the employer in discharging, or a union in insisting upon the
discharge of, an employee whom the union thus refuses to admit to
membership, without any reasonable ground therefor.4 Needless to say, if
said unions may be compelled to admit new members, who have the
requisite qualifications, with more reason may the law and the courts
exercise the coercive power when the employee involved is a long
standing union member, who, owing to provocations of union officers,
was impelled to tender his resignation, which he forthwith withdrew or
revoked. Surely, he may, at least, invoke the rights of those who seek
admission for the first time, and cannot arbitrarily he denied readmission.
The Court stresses, however, that union security clauses are also governed
by law and by principles of justice, fair play, and legality. Union security
clauses cannot be used by union officials against an employer, much less
their own members, except with a high sense of responsibility, fairness,
prudence, and judiciousness.
A union member may not be expelled from her union, and consequently
from her job, for personal or impetuous reasons or for causes foreign to
the closed-shop agreement and in a manner characterized by arbitrariness
and whimsicality.

2.2 Not Disloyalty to Ask Help from Another Union


3. REFUSAL TO BARGAIN
ULP under Art. 249(c) is intended to insure that unions approach
the bargaining table with the same attitude of willingness to agree
as the Act requires of management.
A union violates its duty to bargain collectively by entering
negotiations with a fixed purpose of not reaching an agreement or
signing a contract.
4.
FEATHERBEDDING
ARRANGEMENTS

AND

MAKE-WORK

Art. 249(d) refers to featherbedding. Featherbedding is the name


given to employee practices which create or spread employment
by unnecessarily maintaining or increasing the number of
employees used, or the amount of time consumed, to work on a
particular job.
In spite of employee assertions that these so-called featherbedding
practices are directly related to job security, health and safety, most
courts at common law found these practices to be economically
wasteful and without any legitimate employee justification.
________
Title VII
COLLECTIVE BARGAINING AND
ADMINISTRATION OF AGREEMENTS

ART. 250. Procedure in collective bargaining. - The following


procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a
written notice upon the other party with a statement of its
proposals. The other party shall make a reply thereto not later than
ten (10) calendar days from receipt of such notice;
(b) Should differences arise on the basis of such notice and reply,
either party may request for a conference which shall begin not
later than ten (10) calendar days from the date of request.
(c) If the dispute is not settled, the Board shall intervene upon
request of either or both parties or at its own initiative and
immediately call the parties to conciliation meetings. The Board
shall have the power to issue subpoenas requiring the attendance
of the parties to such meetings. It shall be the duty of the parties to
participate fully and promptly in the conciliation meetings the
Board may call;
(d) During the conciliation proceedings in the Board, the parties
are prohibited from doing any act which may disrupt or impede the
early settlement of the disputes; and
(e) The Board shall exert all efforts to settle disputes amicably and
encourage the parties to submit their case to a voluntary arbitrator.
(As amended by Section 20, Republic Act No. 6715, March 21,
1989).
________
Article 251. Duty to bargain collectively in the absence of
collective bargaining agreements. In the absence of an agreement
or other voluntary arrangement providing for a more expeditious
manner of collective bargaining, it shall be the duty of employer
and the representatives of the employees to bargain collectively in
accordance with the provisions of this Code.
________
1. NATURE OF COLLECTIVE BARGAINING
1.1 Definition
Collective bargaining or negotiations towards a collective
agreement is a democratic framework to stabilize the relation
between labor and management and to create a climate of sound
and stable industrial peace. It is a mutual responsibility of the
employer and the Union and is characterized as a legal obligation.
Collective bargaining includes four related but distinguishable
processes:
(1) negotiation between representatives of the management and the
union over wages, hours, and other terms of employment;
(2) the execution of a written contract embodying the terms agreed
upon;
(3) negotiation of any question arising as to the interpretation or
application of the contract; and

19

(4) negotiation over the terms of a new contract or proposed


modifications, when an existing agreement is validly opened for
negotiations.
Collective bargaining is a system made up of a set of continuous
processes; it is customary and helpful to distinguish negotiation of
contracts (the legislative phase of the union-employer
relationship), administration of contracts (the executive phase),
and interpretation or application of contracts (the judicial phase).
In common usage as well as in legal terminology, collective
bargaining denotes negotiations looking forward to a collective
agreement. However, it does not end with the execution of an
agreement. It is a continuous process. It requires both parties, the
employer and duly authorized representatives of employees, to
deal with each other with open and fair minds and sincerely
endeavor to fight the obstacles in the process to stabilize
employer-employee relationship.
1.1a CBA Defined
A collective bargaining agreement (CBA), as used in Article 252
of the Labor Code, refers to a contract executed upon request of
either the employer or the exclusive bargaining representative
incorporating the agreement reached after negotiations with
respect to wages, hours of work and all other terms and conditions
of employment, including proposals for adjusting any grievances
or questions arising under such agreement.
While the terms and conditions of a CBA constitute the law between the
parties, it is not, however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. A CBA, as a labor contract
within the contemplation of Article 1700 of the Civil Code of the
Philippines which governs the relations between labor and capital, is not
merely contractual in nature but impressed with public interest, thus, it
must yield to the common good. As such, it must be construed liberally
rather than narrowly and technically, and the courts must place a practical
and realistic construction upon it, giving due consideration to the context
in which it is negotiated and purpose which it is intended to serve.

A CBA is more than a contract; it is a generalized code to govern a


myriad of cases which the draftsmen wholly anticipate. It covers
the whole employment relationship and prescribes the rights and
duties of the parties.

LABOR RELATIONS
problems and objectives, both where they differ and where they
are identical.
Moreoverand this is very importantit provides an orderly
procedure by which each side can seek to present to the other the
best possible case for the satisfaction of its particular demands.
It elicits the consent of those who will have to live under the terms
of any agreement derived from the bargaining process. Stability is
an important element in employment, and consent assures
stability because parties who have accepted an agreement will live
by its terms.
2. EMERGENCE OF COLLECTIVE BARGAINING
First in Great Britain, but not much later in other countries,
working men sought to protect themselves against the harsh effects
of new machines, new methods of production, new divisions of
labor and new intensities of competition by forming organizations
capable of representing their interests as a group vis--vis
employees and the State.
2.1 Originator
The credit for coining the expression belongs to Beatrice Webb,
who first used it in 1891 in her study on The Cooperative
Movement in Great Britain.
In non-English speaking countries, particularly on the European
continent, where the process of collective bargaining has an
equally long history, the emphasis was placed on the term
collective agreement because during the early period the
workers aimed not so much at establishing the procedure of
bargaining itself as at having such agreements recognized and
enforced as legally binding contracts.
2.2 Adoption in the Philippines
In the Philippines the idea of collective bargaining first gained
formal and official recognition through Commonwealth Act No.
213, approved by President Manuel L. Quezon on November 21,
1936.

1.2 Rationale

But it is the Industrial Peace Act (RA No. 875, approved by


President Elpidio Quirino on June 17, 1953), that defined
collective bargaining and outlined its procedure.

By collective bargaining the employee shares through his chosen


representatives in fixing the conditions under which he works, and
a rule of law is substituted for absolute authority.

3. PARTIES TO COLLECTIVE BARGAINING

1.3 Strength of the Collective Bargaining Method


Collective bargaining is also a means of ensuring workers
participation in decision-making. The notion that workers are
entitled to participate in setting the terms under which they are to
work is inherent in collective bargaining; even the most
rudimentary form of collective bargaining involves a transfer of
certain issues, be it only wages, from the area of unilateral to the
area of bilateral decision-making.
It provides an opportunity for the exchange of information tending
to enhance the understanding of the parties for each other

The duty to bargain collectively arises only between the


employer and its employees. Where neither party is an
employer nor an "employee" of the other, no such duty would
exist. Needless to add, where there is no duty to bargain
collectively the refusal to bargain violates no right.
The parties, then, to collective bargaining as traditionally
understood, are the employer and the employees represented by
their labor union.
Article. 212. (j) "Bargaining representative" means a legitimate labor
organization whether or not employed by the employer.

20

The bargaining representative of the employees is an entitythe


unionand not the officers of the union.
4. JURISDICTIONAL PRECONDITIONS OF COLLECTIVE
BARGAINING
While it is a mutual obligation of the parties to bargain, the
employer, however, is not under any legal duty to initiate contract
negotiation. The mechanics of collective bargaining is set in
motion only when the following jurisdictional preconditions are
present, namely:
(1) possession of the status of majority representation of the
employees' representative in accordance with any of the means of
selection or designation provided for by the Labor Code;
(2) proof of majority representation; and
(3) a demand to bargain under Article 251, par. (a) of the New
Labor Code.
An employers duty to recognize and bargain collectively with a
union as the collective bargaining representative of his employees
does not arise until after the union requests the employer to
bargain. Hence, an employer is not in default respecting the duty to
bargain until a request therefor has been made.

LABOR RELATIONS
employees before the expiration of the one-year period. The rule is
the same whether the union lost its majority as a result of the
employers unfair labor practices or through no fault of the
employer.
A union which has been certified by the NLRB as a bargaining
representative for a particular unit enjoys an irrefutable
presumption of a majority status for one year, absent special
circumstances. Following the expiration of the one-year
certification period, there continues to be a presumption in favor of
a union majority, though the presumption is rebuttable. Employee
turnover does not constitute unusual circumstances shortening
the period.
6. SINGLE ENTERPRISE BARGAINING PROCEDURE
BROADLY DESCRIBED
The law gives primacy to free collective bargaining (Art. 211) and
allows the parties to devise their bargaining rules (Art. 251). This
is the basic reason the bargaining procedure is governed primarily
by agreement of the parties.
In the presence of validly agreed procedure, the Labor Code
procedure applies suppletorily only.
D.O. No. 40-03 supplements the codal provisions:

It is essential to the right of a putative bargaining agent to represent the


employees that it be the delegate of a majority of the employees and,
conversely, an employer is under duty to bargain collectively only when
the bargaining agent is representative of the majority of the employees. A
natural consequence of these principles is that the employer has the right
to demand of the asserted bargaining agent proof of its representation of
its employees. Having the right to demonstration of this fact, it is not an
'unfair labor practice' for an employer to refuse to negotiate until the
asserted bargaining agent has presented reasonable proof of majority
representation. It is necessary however, that such demand be made in good
faith and not merely as a pretext or device for delay or evasion. The
employer's right is however to reasonable proof.

4.1 Bargaining with Minority Union, ULP


Where a majority representative has been designated, it is an
unfair labor practice, [for the employer] as a refusal of collective
bargaining, to deal and negotiate with the minority representative.

Section 3. When single enterprise bargaining available. - Any voluntarily


recognized or certified labor union may demand negotiations with its
employer for terms and conditions of work covering employees in the
bargaining unit concerned.
Section 4. Procedure in single enterprise bargaining - A recognized or
certified labor union that desires to negotiate with its employer shall
submit such intention in writing to the employer, together with its
proposals for collective bargaining.

The recognized or certified labor union and its employer may


adopt such procedures and processes they may deem appropriate
and necessary for the early termination of their negotiations. They
shall name their respective representatives to the negotiation,
schedule the number and frequency of meetings, and agree on
wages, benefits and other terms and conditions of work for all
employees covered in the bargaining unit.

On the union side, where there exists a legitimate issue as to which


of several unions is the legitimate representative of employees, it
is ULP for one of the unions to stage a strike and demand that the
employer sit down with it for collective bargaining.

7. MULTI-EMPLOYER BARGAINING

5. WHEN BARGAINING SHOULD BEGIN

The Philippines so far has tried only enterprise-level, or


decentralized bargaining.

If the three jurisdictional preconditions are present, the collective


bargaining should begin within the 12 months following the
determination and certification of the employees exclusive
bargaining representative. This period is known as the
certification year.
The employers duty to bargain during the certification year has
been held to extend throughout the entire year. Absent unusual
circumstances, an employer commits an unfair labor practice by
refusing to bargain with the union during its certification year,
notwithstanding the repudiation of the union by a majority of its

Collective bargaining may take place at the national, industry, or


enterprise level.

7.1 Rationale of Multi-employer Bargaining


When a number of employees join forces for purposes of
collective bargaining, the unit structure is described as a multiemployer bargaining unit. The structure may consist of an
association representing employers, or even a whole industry, or it
may be composed of only a few employers who bargain as a
group, or through an association.

21

LABOR RELATIONS
Competitive pressures are the dominant forces that encourage both
unions and employers to enter into multi-employer or industrywide bargaining relationships. Small employers in highly
competitive and labor-intensive fields may find it easier to operate
with uniformity of labor cost.
The multi-employer unit is particularly advantageous to both sides
in industries composed of many small, financially weak
employers.
Multi-employer bargaining provides both management and unions
with significant cost savings in negotiation of labor agreements. It
is cheaper to negotiate one master multi-employer agreement than
a number of single-employer agreements.
There are, however, other considerations than costs, such as intraorganizational issues, that the parties take into account before
opting for multi-employer units. Multi-employer bargaining may
not only overlook the needs of various employee groups, but also
ignore particular requirements of individual employers.
What may be readily acceptable to one employer may be
considered as financially disastrous by another.
To arrive at multi-employer agreements is much more difficult
than to arrive at single-employer contracts. The expanded size of
the unit composed of many heterogeneous groups leads to
intensive intra-organizational bargaining both on the unions and
on the employers side. At times, these intra-organizational
pressures may lead to lengthy delays in negotiations and even to
breakdown of bargaining.
7.2 Multi-employer Bargaining Procedure (D.O. No. 40-03)
Section 5. When multi-employer bargaining available. - A legitimate labor
union(s) and employers may agree in writing to come together for the
purpose of collective bargaining, provided:
(a) only legitimate labor unions who are incumbent exclusive bargaining
agents may participate and negotiate in multi-employer bargaining;
(b) only employers with counterpart legitimate labor unions who are
incumbent bargaining agents may participate and negotiate in multiemployer bargaining; and
(c) only those legitimate labor unions who pertain to employer units who
consent to multi-employer bargaining may participate in multi-employer
bargaining.
Section 6. Procedure in multi-employer bargaining. - Multi-employer
bargaining may be initiated by the labor unions or by the employers.
(a) Legitimate labor unions who desire to negotiate with their employers
collectively shall execute a written agreement among themselves, which
shall contain the following:
1) the names of the labor unions who desire to avail of multi-employer
bargaining;
2) each labor union in the employer unit;
3) the fact that each of the labor unions are the incumbent exclusive
bargaining agents for their respective employer units;
4) the duration of the collective bargaining agreements, if any, entered into
by each labor union with their respective employers.

Legitimate labor unions who are members of the same registered


federation, national, or industry union are exempt from execution of this
written agreement.
(b) The legitimate labor unions who desire to bargain with multiemployers shall send a written notice to this effect to each employer
concerned. The written agreement stated in the preceding paragraph, or
the certificates of registration of the federation, national, or industry
union, shall accompany said notice.
Employers who agree to group themselves or use their existing
associations to engage in multiemployer bargaining shall send a written
notice to each of their counterpart legitimate labor unions
indicating their desire to engage in multi-employer bargaining. Said notice
shall indicate the following:
1) the names of the employers who desire to avail of multi-employer
bargaining;
2) their corresponding legitimate labor organizations;
3) the fact that each corresponding legitimate union is any incumbent
exclusive bargaining agent;
4) the duration of the current collective bargaining agreement, if any,
entered into by each employer with the counterpart legitimate labor union.
(c) Each employer or concerned labor union shall express its willingness
or refusal to participate in multi-employer bargaining in writing,
addressed to its corresponding exclusive bargaining agent or employer.
Negotiations may commence only with regard to respective employers
and labor unions who consent to participate in multi-employer bargaining;
(d) During the course of negotiations, consenting employers and the
corresponding legitimate labor unions shall discuss and agree on the
following:
1) the manner by which negotiations shall proceed;
2) the scope and coverage of the negotiations and the agreement; and
3) where appropriate, the effect of the negotiations on current agreements
or conditions of employment among the parties.
Section 7. Posting and registration of collective bargaining agreement. Two (2) signed copies of collective bargaining agreement reached through
multi-employer bargaining shall be posted for at least five ( 5) days in two
conspicuous areas in each workplace of the employer units concerned.
Said collective bargaining agreement shall affect only those employees in
the bargaining units who have ratified it.
The same collective bargaining agreement shall be registered with the
Department in accordance with the following Rule.

7.4 Optional
Under D.O. No. 40-03 multi-employer bargaining is purely
optional for employers and unions.
Unlike other bargaining units, the multi-employer unit is based
primarily on the consent of the firms involved.
________
Article 252. Meaning of duty to bargain collectively. The duty to
bargain collectively means the performance of a mutual obligation
to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect to wages,

22

LABOR RELATIONS
hours of work and all other terms and conditions of employment
including proposals for adjusting any grievances or questions
arising under such agreement and executing a contract
incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to
make any concession.
________
Article 253. Duty to bargain collectively when there exists a
collective bargaining agreement. When there is a collective
bargaining agreement, the duty to bargain collectively shall also
mean that neither party shall terminate nor modify such agreement
during its lifetime. However, either party can serve a written notice
to terminate or modify the agreement at least sixty (60) days prior
to its expiration date. It shall be the duty of both parties to keep the
status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties.
________
1. DUTY TO BARGAIN DEFINED
The law contemplates and defines two situations when the duty to
bargain exists: Situation one, when there is yet no collective
bargaining agreement (Art. 252), and Situation two, where a CBA
exists (Art. 253).
For Situation One, the duty to bargain means in essence the mutual
obligation of the employer and the employees majority union to
meet and convene.
The purposes of the meeting and convening are:
(1) to negotiate an agreement on the subjects of:
(a) wages, (b) hours of work, and (c) all other terms and conditions
of employment including proposals for adjusting grievances or
questions arising under such agreement; and

1.1 Four Forms of ULP in Bargaining


(1) failure to meet and convene; (2) evading the mandatory
subjects of bargaining; (3) bad faith in bargaining, including
failure or refusal to execute the collective agreement, if requested;
and (4) gross violation of the CBA.
2. FIRST U.L.P. IN BARGAINING: FAILURE OR REFUSAL
TO MEET AND CONVENE
An employer is guilty of an unfair labor practice in refusing to
bargain with the representative of a majority of his employees. To
bargain in good faith, an employer must not only meet and confer
with the union which represents his employees, but also must
recognize the union for the purpose of collective bargaining. In
addition, he must recognize the union as the bargaining
representative of all the employees in the appropriate bargaining
unit, even if they are not all members of the union.
The duty to bargain extends beyond the period of contract
negotiations, and applies to labor-management relations during the
term of the agreement. Since a collective bargaining agreement
does not define all the rights and obligations of the employer and
his employees, negotiation of grievances is part and parcel of the
bargaining process.
The failure of refusal of an employer to bargain collectively with
his employees constitutes an enjoinable unfair labor practice not
only under the subdivision of the Act dealing expressly with
collective bargaining, but also under the subsection making it an
unfair labor practice to: interfere with, restrain or coerce
employees in the exercise of their guaranteed rights, on the theory
that refusal by an employer to bargain collectively with his
employees constitutes interference with the latters right of selforganization.
2.1 Unresolved Petition for Union Cancellation
2.2 Selling the Company

(2) to execute a contract incorporating such agreement if requested


by either party.
The kind of compliance required is prompt, expeditious, and in
good faith.
The limitations or reservations of the duty are that it does not
compel any party to agree to a proposal or to make a concession.
For Situation Two, the duty to bargain means all of the above and,
additionally, the obligation not to terminate or modify the CBA
during its lifetime. But 60 days before the CBA expires, either
party may notify the other in writing that it desires to terminate or
modify the agreement. During the 60-day period and until a new
agreement is reached, the CBA remains in full force and effect; the
parties are duty-bound to keep the status quo. The law therefore
provides for automatic renewal or extension of the CBA. This 60day period under Art. 253 refers to submission of proposals to
renegotiate the nonrepresentational provisions of the CBA. It does
not always coincide with the 60-day period mentioned in Articles
253-A and 256 pertaining to freedom period to resolve
representation contest between unions

If an employer is guilty of unfair labor practice when he directly


discharges his employees to forestall a demand for collective
bargaining, 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.
The basic rule is that if the transfer of assets and employees from
one employer to another leaves intact the identity of the employing
enterprise, the transferors duty to recognize and bargain with an
incumbent union devolves upon the transferee as successor
employer. That means that an acquiring employer is a successor
to the bargaining obligations of his predecessor if there is a
continuity in the business operation. Only a high degree of
enterprise continuity will justify imposing obligations under a
contract with the union to which the new employer was not a party.
A mere change in ownership of a business is insufficient to alter a
unions status as bargaining representative.
2.3 Successor Employer: Continuity and Identity

23

In making the determination as to whether an employer is


successor, the NLRB looks to the totality of circumstances to
determine whether there has been a substantial and material
alteration in the employing enterprise. If there is a substantial and
material alteration in the employing enterprise, the new employer
need not bargain with the incumbent union.
2.4 Conversion to Independent Franchise or Operation
A decision to withdraw capital from a company-operated facility
and relinquish the operating control to an independent dealership
lies very much at the core of entrepreneurial control, and hence is
not a mandatory subject of bargaining
2.5 Do Economic Exigencies Justify Refusal to Bargain?
An employer has been held not guilty of a refusal to bargain by
adamantly rejecting the unions economic demands where he is
operating at a loss, on a low profit margin, or in a depressed
industry, as long as he continues to negotiate.
2.6 Acts not Deemed Refusal to Bargain
The duty to bargain is not violated by:
(1) adoption of an adamant bargaining position in good faith,
particularly when the company is operating at a loss;
(2) refusal to bargain over demands for commission of unfair labor
practices;
(3) refusal to bargain during period of illegal strike.
If a union engages in an illegal strike, the employer has no
obligation to bargain until he is notified that the illegal strike has
been terminated.
Where, pursuant to an honest doubt, the employer has demanded
additional proof or acquisition of an official certification of
bargaining agency, there is no obligation or duty on the employers
part to enter into negotiations until the demanded proof is
presented pending the certification proceedings, unless it can be
established that the demand lacks in good faith and is intended as
an obstruction to negotiations.
Neither is the duty to bargain violated where:
(1) there is no request for bargaining;
(2) the union seeks recognition for an inappropriately large unit;
(3) the union seeks to represent some persons who are excluded
from the Act;
(4) the rank-and-file unit includes supervisors or inappropriate
otherwise;
(5) the demand for recognition and bargaining is made within the
year following a certification election in which the clear choice
was no union and no ad interim significant change has taken place
in the unit;

LABOR RELATIONS
(6) the union makes unlawful bargaining demands.
2.7 Alleged Interference in the Selection of the Unions
Negotiation Panel
In order to show that the employer committed ULP under the Labor Code,
substantial evidence is required to support the claim. Substantial evidence
has been defined as such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.

2.8 Non-reply to Proposal; CBA Imposed on Employer


Collective bargaining, designed to stabilize the relation between labor and
management and to create a climate of sound and stable industrial peace.
It is a legal obligation, so much so that Article 248 of the Labor Code
makes it an unfair labor practice for an employer to refuse "to meet and
convene promptly and expeditiously in good faith for the purpose of
negotiating an agreement with respect to wages, hours of work, and all
other terms and conditions of employment.
We agree with the pronouncement that it is not obligatory upon either side
of a labor controversy to precipitately accept or agree to the proposals of
the other. But an erring party should not be tolerated and allowed with
impunity to resort to schemes feigning negotiations by going through
empty gestures.

2.8a Repetition in Divine Word University


A companys refusal to make counter proposal if considered in relation to
the entire bargaining process, may indicate bad faith and this is especially
true where the Unions request for a counter proposal is left unanswered.
Moreover, the Court added in the same case that it is not obligatory upon
either side of a labor controversy to precipitately accept or agree to the
proposals of the other. But an erring party should not be tolerated and
allowed with impunity to resort to schemes feigning negotiations by going
through empty gestures.

3. SECOND U.L.P. IN BARGAINING: EVADING THE


MANDATORY SUBJECTS
It is the obligation of the employer and the employees
representative to bargain with each other with respect to wages,
hours, and other terms and conditions of employment. They are
statutory or mandatory proposals. An employers refusal to
negotiate a mandatory subject of bargaining is an unfair labor
practice although the employer has every desire to reach
agreement and earnestly and in all good faith bargains to that end.
On the other hand, an employers duty to bargain is limited to the
mandatory bargaining subjects; as to other matters, he is free to
bargain or not to bargain.
A mere remote, direct, or incidental impact is insufficient to render
a subject a mandatory subject of bargaining; in order for a matter
to be subject to mandatory collective bargaining, it must materially
or significantly affect the terms or conditions of employment.
3.1 Wages and Employment Conditions
The term wages, as used in 29 USCS Sec. 158(d), has been held
to include not only compensation but also other emoluments of
value furnished by the employer to his employees. Under our
Labor Code, wage refers to remuneration or earnings, however
designated, capable of being expressed in terms of money, etc.

24

Since the passage of the Taft-Hartley Act, the National Labor Relations
Board has held that industrial pensions, group insurance, and merit
increases all are matters about which employers must bargain collectively.

The following are examples of matters considered as mandatory


subjects of bargaining:
(1) Wages and other types of compensation, including merit
increases;

LABOR RELATIONS
dos and donts for employees of the enterprise are work rules,
forming part of terms and conditions of employment, that are
proper subjects of collective bargaining. Hardly may the employer
contend that they are non-negotiable matters.
3.3 Management Prerogatives Clause

(4) Bonuses;

An employer does not commit an unfair labor practice by insisting,


to the point of a bargaining impasse, on the inclusion in the
contract of a management prerogatives clause, even though some
of the matters covered by the clause are conditions of
employment which are mandatory subjects of bargaining under
29 USCS Sec. 158(d). Thus, an employers insistence that its
decisions regarding hiring and tenure of employment should not be
reviewable by arbitration is not a refusal to bargain.

(5) Pensions and retirement plans;

3.4 Union Discipline Clause

(6) Seniority;

An employer may bargain to an impasse over his proposal that the


union eliminate a piecework ceiling imposed by a union rule
which subjects members to discipline for exceeding the production
quota. However, an employers insistence to the point of a
bargaining impasse on the unions withdrawal of fines imposed on
member-employees who crossed a picket line around the
employers plant is an unlawful refusal to bargain, since the right
not to withdraw fines is an internal union affairs, a matter
involving relations between employees and their unions, and
therefore not a mandatory bargaining item.

(2) Working hours and working days, including work shifts;


(3) Vacations and holidays;

(7) Transfer;
(8) Lay-offs;
(9) Employee workloads;
(10) Work rules and regulations;
(11) Rent of company houses;
(12) Union security arrangements.
3.1a Wage Agreement; Solomonic Approach
We take note of the "middle ground" approach employed by the Secretary
in this case which. we do not necessarily find to be the best method of
resolving a wage dispute. Merely finding the midway point between the
demands of the company and the union, and "splitting the difference" is a
simplistic solution that fails to recognize that the parties may already be at
the limits of the wage levels they can afford. It may lead to the danger too
that neither of the parties will engage in principled bargaining; the
company may keep its position artificially low while the union presents an
artificially high position, on the fear that a "Solomonic" solution cannot be
avoided. Thus, rather than encourage agreement, a "middle ground
approach" instead promotes a "play safe" attitude that leads to more
deadlocks than to successfully negotiated CBAs.

3.2 Workloads and Work Rules


Employee workloads are a mandatory subject of bargaining.
Employer rules concerning coffee breaks, lunch periods, smoking,
employee discipline, and dress are also mandatory subjects of
bargaining, as are plant safety rules and general regulations.
Company rules relating to safety and work practices come within
the meaning of the phrase other terms and conditions of
employment as used in the Act and, therefore, constitute a
mandatory subject of collective bargaining.
3.2a Code of Conduct
Work rules and regulations are commonly compiled into a booklet
usually called Code of Discipline or Code of Conduct. Such

3.5 Arbitration, Strike-Vote, or No-Strike Clause


An employer may lawfully bargain to an impasse over his proposal
that the collective bargaining agreement include an arbitration
clause or a no-strike clause which prohibits the employees from
striking during the life of the agreement.
3.6 No-Lockout Clause; Clause Fixing Contractual Term
An employers statutory duty to bargain requires him to negotiate
over the unions proposal that their agreement include a clause
binding him not to lock out the employees. An employers refusal
to bargaining over the duration of the contract to be entered into is
also an unfair labor practice. But an employers obligation to enter
into a collective bargaining agreement does not require that the
employer enter into an unalterable obligation for an extended
period of time, and many collective bargaining agreements contain
a clause permitting termination or modification by either party
upon prescribed notice.
3.7 Signing Bonus
Signing bonus is a grant motivated by goodwill created when a
CBA is successfully negotiated and signed between the employer
and the union. Where goodwill does not exist, why ask for a
signing bonus?
In contractual terms, a signing bonus is justified by and is the
consideration paid for the goodwill that existed in the negotiations that
culminated in the signing of a CBA. Without the goodwill, the payment of
a signing bonus cannot be justified and any order for such payment, to our
mind, constitutes grave abuse of discretion.

25

LABOR RELATIONS
In short, if the reason behind a signing bonus is absent, no signing
bonus need be given.
3.8 No Duty to Agree Even on Mandatory Subjects
The Act does not compel agreements between employers and
employees, and neither party is legally obligated to yield even on a
mandatory bargaining subject. Where the subject of the dispute is a
mandatory bargaining subject, either party may bargain to an
impasse as long as he bargains in good faith. The duty to bargain
does not obligate a party to make concessions or yield a position
fairly held. Hence, an employers adamant insistence on a
bargaining position is not necessarily a refusal to bargain in good
faith.
Even if the negotiating party thumbs down the other partys
proposals, there is no violation of the duty to bargainhence, no
ULPas long as the negative reply can be explained in good faith.
3.9 Non-mandatory Subjects
An employer cannot insist, to the point of creating a bargaining
impasse, on the inclusion of a provision outside the scope of the
statutory bargaining subjects, even if he acts in good faith. On the
other hand, it is lawful to insist on the inclusion of a provision in a
collective bargaining agreement if the provision is within the scope
of a statutory subject of bargaining.
An employer bargains to an impasse over a non-mandatory
bargaining subject when he refuses to reach any agreement with
the union unless the union capitulates to him on that subject.
However, it has been held that a bargaining impasse may be
reached over a non-mandatory bargaining subject although that
subject is not the sole cause for the parties failure to agree. When
a subject under discussion is not mandatory, it may be discussed if
both parties agree, but a strike or lockout may not be used to
compel a negotiation or agreement.
While most matters that might be discussed or proposed in
collective bargaining are likely to bear some relation, even if
tenuous, to wage, hours, and other terms and conditions of
employment, not all proposals that somehow respond to a
problem that is customarily bargained about may themselves be
insisted upon to impasse. By once bargaining and agreeing on a
permissive subject of bargaining, the parties do not make the
subject a mandatory topic of future bargaining.
3.10 Bargaining to the Point of Impasse: Not necessarily Bad Faith
The adamant insistence on a bargaining position to the point where
the negotiations reach an impasse does not establish bad faith.
Neither can bad faith be inferred from a partys insistence on the
inclusion of a particular substantive provision unless it concerns
trivial matters or is obviously intolerable.
The question as to what are mandatory and what are merely permissive
subjects of collective bargaining is of significance on the right of a party
to insist on his position to the point of stalemate. A party may refuse to
enter into a collective bargaining contract unless it includes a desired
provision as to a matter which is a mandatory subject of collective
bargaining; but a refusal to contract unless the agreement covers a matter
which is not a mandatory subject is in substance a refusal to bargain about
matters which are mandatory subjects of collective bargaining, and it is no

answer to the charge of refusal to bargain in good faith that the insistence
on the disputed clause was not the sole cause of the failure to agree or that
agreement was not reached with respect to other disputed clauses.

Stated in another way, the ruling means that bargaining to the point
of deadlock may or may not amount to bargaining in bad faith
depending on whether the insistence refers to a mandatory or a
non-mandatory subject of bargaining.
The reason is that the duty to bargain requires meeting and
convening on terms and conditions of employment but does not
require assent to the other partys proposals.
Over a non-mandatory subject, on the other hand, a party may not
insist on bargaining to the point of impasse, otherwise his
insistence can be construed as bargaining in bad faith. It may be
construed as evasion of the duty to bargain; such evasion is ULP.
The above rulings do not mean that non-mandatory subjects
cannot be proposed or that the proponent cannot demand serious
discussion of such proposal. What the rulings forbid is the posture
of making settlement on a non-mandatory subject a precondition to
the discussion or settlement of a mandatory subject. If a nonmandatory subject is proposed and agreed upon, the agreeing
party, by itself, is binding.
3.11 When Is There Deadlock or Impasse?
A bargaining impasse over an issue exists where good faith
bargaining on the part of the parties has failed to resolve the issue
and there are no definite plans for further efforts to break the
deadlock.
Impasse, within the meaning of the federal labor laws,
presupposes reasonable effort at good faith bargaining which,
despite noble intentions, does not conclude in an agreement
between the parties. In the NLRBs view, whether a bargaining
impasse exists is a matter of judgment dependent on such factors
as the bargaining history, the parties good faith in negotiations, the
length of the negotiations, the importance of the issue or issues as
to which there is disagreement, and the contemporaneous
understanding of the parties as to the state of negotiations.
3.11a Duty to Bargain When There Is Deadlock or Impasse
Deadlock does not mean the end of bargaining. It signals rather the
need to continue the bargaining with the assistance of a third party
as conciliator or arbitrator whose first aim is to get the parties back
to the negotiating table and help them craft a win-win solution.
3.11b Strike or Lockout in Case of Deadlock
Bargaining may proceed smoothlyand this is the wish of most
negotiation panelsbut it may also be marred by insinuations,
misunderstandings, and apparently irreconcilable bargaining
positions. Deadlock develops. In fact, deadlock may occur anytime
for various reasons such as unacceptability of a proposal or
counter proposal, grandstanding of a negotiator, autocratic or
arrogant stance, or imprecise wording of a stipulation.
The law (Art. 263) recognizes bargaining deadlock as a valid
reason to declare a strike or lockout. Strike/ lockout presents a

26

major deviation from the preferred smooth route of bargaining. At


this point of bargaining scenario, strike/ lockout is supposed to be
a method of resolving an impasse, a device to constrain the parties
to end an impasse and go back to the negotiation table. But strike/
lockout, while meant to be a solution, frequently becomes a
problem in itself.
Although the union's petition was for "compulsory arbitration," the
subsequent agreement of petitioner to submit the matter for arbitration in
effect made the arbitration a voluntary one. The essence of voluntary
arbitration, after all, is that it is by agreement of the parties, rather than
compulsion of law, that a matter is submitted for arbitration. It does not
matter that the person chosen as arbitrator is a labor arbiter who, under
Art. 217 of the Labor Code, is charged with the compulsory arbitration of
certain labor cases. There is nothing in the law that prohibits these labor
arbiters from also acting as voluntary arbitrators as long as the parties
agree to have him hear and decide their dispute.

4. THIRD U.L.P. IN BARGAINING: BAD FAITH


Bargaining deadlock may be precipitated not only by hard-line
positions on mandatory or non-mandatory subjects. It may also
arise because of lack of good faith in bargaining.
Good-faith bargaining demands more than sterile and repetitive
discussion of formalities precluding actual negotiation, more than
formal replies which constitute in effect a refusal to treat with the
union, and more than a willingness to enter upon a sterile
discussion of union-management differences. It requires a sincere
effort to reach agreement, although it does not require agreement
itself. Moreover, the duty to bargain does not end with the
negotiation of the agreement.
The duty to bargain collectively may be violated without a general
failure of subjective good faith, and there is no occasion to
consider the issue of good faith if a party refuses even to negotiate
in fact about any of the mandatory subjects. AN employer cannot
be guilty of a refusal to bargain if the union is not itself bargaining
in good faith.
4.1 Determination of Good Faith
The crucial question whether or not a party has met his statutory duty to
bargain in good faith typically turns on the facts of the individual case.
There is no per se test of good faith in bargaining. Good faith or bad faith
is an inference to be drawn from the facts and is largely a matter for the
NLRBs expertise. To some degree, the question of good faith may be a
question of credibility.

A fair criterion of good faith in collective bargaining requires that


the parties involved deal with each other with open and fair mind
and sincerely endeavor to overcome obstacles or difficulties
existing between them to the end that employment relations may
be established and obstruction to the free flow of commerce
prevented. Mere pretended bargaining will not suffice; neither
must the mind be hermetically sealed against the thought of
entering into an agreement. To do less that is required by the
standards of good faith and conduct is a refusal to bargain
collectively and violates the spirit and intent of the Act.
4.2 When Can Bargaining in Bad Faith Occur?

LABOR RELATIONS
Bargaining in bad faith is considered ULP under Art, 248(g). But if
one will be charged with bargaining in bad faith, the charge should
be raised while the bargaining is in progress. When the bargaining
is finished and the CBA has been executed voluntarily by the
parties, a charge of bargaining in bad faith is too late and
untenable.
With the execution of the CBA, bad faith bargaining can no longer be
imputed upon any of the parties thereto. All provisions in the CBA are
supposed to have been jointly and voluntarily incorporated therein by the
parties. This is not a case where private respondent exhibited an
indifferent attitude towards collective bargaining because the negotiations
were not the unilateral activity of petitioner union. The CBA is proof
enough that private respondent exerted "reasonable effort at good faith
bargaining."
The unions proposal, not being part of the signed contract, cannot serve
as basis of holding the management guilty of bad faith in bargaining or in
implementing their contract as signed.

4.3 Instances of Bad Faith: Delay of, or Imposing Time Limit on,
Negotiations
An unwarranted delay in negotiations may be evidence of bad faith
on the part of the employer. However, an employer has been held
not guilty of bad faith for failing to complete a collective
bargaining contract during a 3-year period, where many
conferences had been held during the period, even though the
employer had insisted on a no-strike clause and had raised wages
during negotiations for the purpose of meeting competition.
The National Labor Relations Board of the United States reported
that lack of good faith is indicated where the employer engages in
unfair labor practices while bargaining with the union; where it
engages in dilatory tactics during negotiations; or where it
institutes a wage cut by unilateral action and without consulting
the majority representative.
Nonetheless, the prior adjudication of bad faith on an earlier
occasion is not itself substantial evidence of present bad faith.
As the Court held in the case of Kiok Loy v. NLRC, 141 SCRA 179, 186
(1986), the company's refusal to make counter-proposal to the union's
proposed CBA is an indication of its bad faith.

4.3a Bad Faith: Surface Bargaining; Shifting Bargaining Positions;


Blue Sky Bargaining
Surface bargaining, which means a sophisticated pretense in the
form of apparent bargaining, does not satisfy the statutory duty to
bargain. The duty is not discharged by merely meeting together or
simply manifesting a willingness to talk. It requires more than a
willingness to enter upon a sterile discussion of unionmanagement differences. Collective bargaining is not simply an
occasion for purely formal meetings between management and
labor while each maintains an attitude of take it or leave it, but
presupposes a desire to reach an ultimate agreement to enter into a
collective bargaining contract. An employers proposals which
could not be offered with any reasonable expectation that they
would be accepted by the union constitute surface bargaining.
Repeated shifts in position and attitude on the part of an employer
whenever a tentative agreement is reached are evidence of a

27

refusal to bargain collectively in good faith. It has also been held


that an employer cannot reject a unions acceptance of the
employers counter offer on the ground that the union had earlier
rejected the offer.

LABOR RELATIONS
of a legitimate labor organization which is certified as the
exclusive bargaining agent, is to ask for and be furnished with the
employers annual audited financial statements, including the
balance sheet and the profit and loss statement. Such information
is crucial in bargaining.

Surface bargaining is defined as "going through the motions of


negotiating" without any legal intent to reach an agreement. The
resolution of surface bargaining allegations never presents an easy issue.
The determination of whether a party has engaged in unlawful surface
bargaining is usually a difficult one because it involves, at bottom, a
question of the intent of the party in question, and usually such intent can
only be inferred from the totality of the challenged partys conduct both at
and away from the bargaining table. It involves the question of whether an
employers conduct demonstrates an unwillingness to bargain in good
faith or is merely hard bargaining. x x x We, likewise, do not agree that
the Union is guilty of ULP for engaging in blue-sky bargaining or making
exaggerated or unreasonable proposals.

An employer is under a duty, upon request of the bargaining


representative, to provide information relevant to the issues at the
bargaining table. Refusal to provide relevant information after the
same has been requested constitutes per se violation of the duty to
bargain. Relevant information or data may include information
concerning the employees in the bargaining unit, such as their
names, addresses, and seniority standing, or concerning the
financial status of the employer, especially where needed to
substantiate claims of inability to pay.

4.3b Bad Faith: Inflexible Demands; Strike Amid Negotiation

5. FOURTH U.L.P. IN BARGAINING: GROSS VIOLATION


OF THE CONTRACT

4.3c Bad Faith: Boulwarism; Take-It-or-Leave-It Bargaining


The new plan was threefold. As negotiations approached, the Company
would use its local management personnel on the desires of the work force
on the type and level of benefits; these were then translated into specific
proposals, whose cost and effectiveness were researched in order to
determine an attractive bargaining offer within the Company's means; the
Company then attempted to "sell" its proposals to its employees and the
general public through a publicity campaign in plant newspapers,
bulletins, letters, television and radio announcements and personal
contacts. The Company announced in negotiations that it rejected the
usual horse trading approach to bargaining, with each side eventually
compromising initial unreasonable positions; it advertised its initial
proposals as fair and firm. Though willing to accept Union
suggestions based on facts it might have overlooked, the Company
refused to change its position simply because the Union disagreed with it.
We have already indicated that one of the central tenets of "the Boulware
approach" is that the "product" or "firm, fair offer" must be marketed
vigorously to the "consumers" or employees, to convince them that the
Company, and not the Union, is their true representative.
The aim, in a word, was to deal with the Union through the employees,
rather than with the employees through the Union.

4.4 Not Bad Faith to Propose Modifications to the Expiring CBA


It is not bad-faith bargaining when a party proposes modifications
to the expiring CBA. The second sentence of Article 253 explicitly
refers to serving a written notice to terminate or modify the
agreement. Modification may mean addition to, subtraction from,
or other ways of changing the contents or phraseology of contents
of the expiring CBA. It does not connote a one-direction
movement. But whichever way it is proposed to go, the proposed
changes require honest explanation.
What was excluded from the old CBA may be proposed for
inclusion in the forthcoming CBA, or vice-versa. Negotiation
precisely contemplates proposals and counter-proposals.
4.5 Giving of Information
Part of good-faith bargaining, and a method to expedite the
process, is supplying of information to the other party, as required
by law. It should be recalled that under Art. 242 one of the rights

At this stage, the negotiations are over; the document has been
signed, sealed, and delivered. Implementation should follow. But
at this stage the collective bargaining process is not yet over, and
the duty to bargain is still operative because such duty further
requires faithful adherence to the contractual provisions. Violation
of the contract amounts to ULP, if the violation is gross.
6. RATIFICATION
REQUIREMENTS

BY

THE

CBU;

MANDATORY

The agreement negotiated by the employees bargaining agent


should be ratified or approved by the majority of all the workers in
the bargaining unit.
The proper ratifying group is not just the majority union but the
majority of all the workers in the bargaining unit represented in
the negotiation.
The ratification and the manner of doing it are mandatory.
The Implementing Rules require posting of the CBA in two
conspicuous places for five days. In one case, the CBA was not
posted for at least five days in two conspicuous places in the
establishment before ratification, to enable the workers to clearly
inform themselves of its provisions. Moreover, the CBA submitted
to the MOLE did not carry the sworn statement of the union
secretary, attested by the union president, that the CBA had been
duly posted and ratified, as required by the Implementing Rules
and Regulations. The court ruled that these requirements being
mandatory, non-compliance therewith rendered the said CBA
ineffective.
6.1 Invalid Ratification
6.2 When Ratification Not Needed
Ratification of the CBA by the employees in the bargaining unit is
not needed when the CBA is a product of an arbitral award by
appropriate government authority or by a voluntary arbitrator. The
arbitral award may result from voluntary arbitration under Art.262
or from the secretarys assumption of jurisdiction or certification
of the dispute to the NLRC, under Art. 263(g).

28

LABOR RELATIONS
In any of those situations the CBA still needs to be posted in two
conspicuous places in the workplace, but the posting is for the
information of, and not ratification by, the employees affected.
Moreover, the CBA has to be registered with the DOLE regional
office.
To require ratification of the CBA in case of arbitral awards will be
inconsistent with the nature of arbitration as a dispute-settlement
device.
The preceding comment, however, does not mean that the arbitral
award is beyond question. Certiorari on proper grounds is
available.
6.3 Ratified but Unsigned
Lack of the purely ministerial act of signing the formal contract
did not obviate the fact that there was a binding contract.
6.4 Unratified but Implemented
The parties to a collective agreement are required to furnish copies to the
appropriate Regional Office with accompanying proof of ratification by
the majority of all the workers in the bargaining unit. This was not done in
the case at bar. But we do not declare the CBA invalid or void considering
that the employees have enjoyed benefits from it. They cannot receive
benefits under provisions favorable to them and later insist that the CBA is
void simply because other provisions turn out not to the liking of certain
employees. It is iniquitous to receive benefits from a CBA and later on
disclaim its validity.

7. EXECUTION OF CONTRACT
A party to a collective bargaining may be required to sign a
contract where the agreement has been reached by the parties and
only one partys refusal to execute a contract is preventing its
being carried into effect. Such refusal is an unfair labor practice
7.1 Unwritten or Unsigned Agreement
American courts have held that a collective bargaining agreement
is valid though not reduced to writing or signed, if neither party
requests a written instrument.
7.2 Effect of Signing on Other Disputes
8. REGISTRATION OF C.B.A.

copies of the following documents which must be certified under oath by


the representative(s) of the employer(s) and labor union(s) concerned
(a) the collective bargaining agreement;
(b) a statement that the collective bargaining agreement was posted in at
least two (2) conspicuous places in the establishment or establishments
concerned for at least five (5) days before its ratification; and
(c) a statement that the collective bargaining agreement was ratified by the
majority of the employees in the bargaining unit of the employer or
employers concerned.
No other document shall be required in the registration of collective
bargaining agreements

The application may be denied if the supporting documents are


incomplete or not verified under oath. The denial, if by the
Regional office, is appealable to the Bureau within ten (10) days or
to the Secretary if the denial is by the Bureau.
9. AUTOMATIC RENEWAL OF CBA
The parties shall continue the CBA in full force and effect until
they reach a new agreement.
It is clear from the above provision of law that until a new Collective
Bargaining Agreement has been executed by and between the parties, they
are duty-bound to keep the status quo and to continue in full force and
effect the terms and conditions of the existing agreement. The law does
not provide for any exception nor qualification as to which of the
economic provisions of the existing agreement are to retain force and
effect, therefore, it must be understood as encompassing all the terms and
conditions in the said agreement.

________
Article 253-A. Terms of a collective bargaining agreement. Any
Collective Bargaining Agreement that the parties may enter into
shall, insofar as the representation aspect is concerned, be for a
term of five (5) years. No petition questioning the majority status
of the incumbent bargaining agent shall be entertained and no
certification election shall be conducted by the Department of
Labor and Employment outside of the sixty-day period
immediately before the date of expiry of such five-year term of the
Collective Bargaining Agreement. All other provisions of the
Collective Bargaining Agreement shall be renegotiated not later
than three (3) years after its execution.

It is believed that failure to register the CBA does not make it


invalid or unenforceable. Its non-registration, however, renders the
contract-bar rule inoperative.

Any agreement on such other provisions of the Collective


Bargaining Agreement entered into within six (6) months from the
date of expiry of the term of such other provisions as fixed in such
Collective Bargaining Agreement, shall retroact to the day
immediately following such date. If any such agreement is entered
into beyond six months, the parties shall agree on the duration of
retroactivity thereof. In case of a deadlock in the renegotiation of
the Collective Bargaining Agreement, the parties may exercise
their rights under this Code. (As amended by Section 21, Republic
Act No. 6715, March 21, 1989).
________

8.1 Requirements for Registration

1. DURATION OF A C.B.A.

Section 2. Requirements for registration. - The application for CBA


registration shall be accompanied by the original and two (2) duplicate

RA No. 9715 (March 21, 2989) has introduced through Art. 253-A
a significant change in setting the durations or terms of a CBA at

The collective agreement, having been properly ratified, should be


registered with the DOLE Regional Office where the bargaining
union is registered or where it principally operates. Art. 231
requires the registration within thirty (3) calendar days from
execution of the agreement. Multi-employer collective bargaining
agreements shall be filed with the Bureau.

29

LABOR RELATIONS
five years for the representation aspect and not more than three
years for all other provisions. The representation aspect refers
to the identity and majority status of the union that negotiated the
CBA as the exclusive representative of the bargaining unit. All
other provisions: simply refers to the rest of the CBA, economic as
well as non-economic other than representational.
The conference agreed to make the terms and conditions or
economic provision of the CBA good only for three years so as
to protect the economic gains of the workers.
Obviously, the framers of the law wanted to maintain industrial peace and
stability by having both management and labor work harmoniously
together without any disturbance. Thus, no outside union can enter the
establishment within five (5) years and challenge the status of the
incumbent union as the exclusive bargaining agent. Likewise, the terms
and conditions of employment (economic and non-economic) cannot be
questioned by the employers or employees during the period of effectivity
of the CBA. The CBA is a contract between the parties and the parties
must respect the terms and conditions of the agreement. Notably, the
framers of the law did not give a fixed term as to the effectivity of the
terms and conditions of employment. It can be gleaned from their
discussions that it was left to the parties to fix the period.
The issue as to the term of the non-representation provisions of the CBA
need not belabored especially when we take note of the Memorandum of
the Secretary of Labor dated February 24, 1994. In said memorandum, the
Secretary of Labor had occasion to clarify the term of the renegotiated
terms of the CBA vis-a-vis the term of the bargaining agent, to wit:
As a matter of policy the parties are encourages (sic) to enter into a
renegotiated CBA with a term which would coincide (sic) with the
aforesaid five (5) year term of the bargaining representative.
In the event however, that the parties, by mutual agreement, enter into a
renegotiated contract with a term of three (3) years or one which does not
coincide with the said 5-year term, and said agreement is ratified by
majority of the members in the bargaining unit, the subject contract is
valid and legal and therefore, binds the contracting parties. The same will
however not adversely affect the right of another union to challenge the
majority status of the incumbent bargaining agent within sixty (60) days
before the lapse of the original five (5) year term of the CBA.

2. EFFECTIVITY AND RETROACTIVITY OF A C.B.A.


If the CBA is the very first for the bargaining unit, the Code does
not state any rule on the CBAs effectivity date. The parties have to
decide it for themselves. But if the ensuing CBA is renewal,
modification or renegotiation of an expiring one, the Code offers a
formula for the effectivity date. Article 253-A provides that the
ensuing agreement, if entered into within six (6) months from
expiry of the old one, shall retroact to the date following such
expiry date; thus, if the CBA expired on December 31 and the new
one is concluded on, say, March 31, its effectivity date is January
1. If, on the other hand, the new agreement is concluded after June
30, then the matter of retroaction and the possible retroactive date
are left to the parties.
When, precisely, is the date an agreement is concluded or
entered into?
The determining point is the date the parties agreed, not the date they
signed. Art. 253-A refers merely to an "agreement" which, according to
Black's Law Dictionary is "a coming together of minds; the coming
together in accord of two minds on a given proposition." This is similar to

Art. 1305 of the Civil Code's definition of "contract" as "a meeting of


minds between two persons." The two terms, "agreement" and "contract,"
are indeed similar, although the former is broader than the latter because
an agreement may not have all the elements of a contract. As in the case of
contracts, however, agreements may be oral or written. Hence, even
without any written evidence of the Collective Bargaining Agreement
made by the parties, a valid agreement existed in this case from the
moment the minds of the parties met on all matters they set out to discuss,
as provided under Art. 1315 of the Civil Code.

2.1 Effectivity of CBA Concluded After Six Months from


Expiration of Old CBA
Significantly, the law does not specifically cover the situation
where six months have elapsed but the parties have reached no
agreement with respect to effectivity. In this eventuality, we hold
that any provision of law should then apply, for the law abhors a
vacuum.
One such provision is the principle of hold over, i.e., that in the absence of
a new CBA, the parties must maintain the status quo and must continue in
full force and effect the terms and conditions of the existing agreement
until a new agreement is reached. In this manner, the law prevents the
existence of a gap in the relationship between the collective bargaining
parties. Another legal principle that should apply is that in the absence of
an agreement between the parties, then, an arbitrated CBA takes on the
nature of any judicial or quasi-judicial award; it operates and may be
executed only prospectively unless there are legal justifications for its
retroactive application.

3. EXTENSION OF EFFECTIVITY OF C.B.A., WHEN


VALID
3.1 Ten-Year Suspension of CBA
________
Article 254. Injunction prohibited. No temporary or permanent
injunction or restraining order in any case involving or growing
out of labor disputes shall be issued by any court or other entity,
except as otherwise provided in Articles 218 and 264 of this Code.
(As amended by Batas Pambansa Bilang 227, June 1, 1982).
________
1. NO-INJUNCTION POLICY
An injunction may require or restrain the doing of an act.
Article 254 announces the policy that labor disputes are generally
not subject to injunction. If the rule were otherwise, it would
contradict the declared policy, under Article 211(a), to promote
and emphasize the primacy of free collective bargaining and
negotiations, including voluntary arbitration, mediation and
conciliation, as modes of settling labor or industrial disputes.
The policy, basically, is freedom at the workplace. The law, true to
the tenets of free enterprise system, allows management and labor
to fashion the contents and incidents of their relationship. If there
is dispute between the parties, the responsibility to solve it
devolves upon them primarily, not upon the government.
Government intervention is the exception rather than the rule. This
anti-injunction policy applies even as regards wage-fixing by the
wage commission or regional wage boards.

30

LABOR RELATIONS
Moreover, any injunctive order in non-national interest disputes
can be directed only against the illegal acts being committed in
connection with the labor dispute; it cannot be directed against the
dispute itself.
There is no power the exercise of which is more delicate which requires
grater caution, deliberation, and sound discretion, or (which is) more
dangerous in a doubtful case than the issuing of an injunction; it is the
strong arm of equity that never ought to be extended unless to cases of
great injury, where courts of law cannot afford an adequate or
commensurate remedy in damages. The right must be clear, the injury
impending or threatened, so as to be averted only by protection preventive
process of injunction.

1.1 Reason of the No-Injunction Policy


The labor injunction is an employers most effective remedy in
labor dispute. However narrow its scope and form, the issuance of
an injunction for any purpose in a labor dispute will generally tip
the scales of the controversy. The issuance of an injunction in the
early phases of a strike can critically sway the balance of the
economic struggle against the union. Enforced by the courts
contempt powers, even a preliminary injunction is an effectual
strike-breaking weapon because so much time ordinarily elapses
between the issuance of a preliminary injunction and the time
when a final decree can be reviewed on appeal.
1.2 Injunction Issued by Regular Court, When Proper
Regular courts are without authority to issue injunction orders in
cases involving or originating from labor disputes even if the
complaint was filed by non-striking employees and the employer
was also made a respondent to the action or even if the
complainant was a customer of the strike-bound employer or a
sister company of the strike-bound employer, whose premises
were picketed by the strikers.
The court may issue an injunction, whether temporary or permanent, as
provided in said section of Republic Act 875, only in a case involving or
growing out of a labor dispute.

________
Article 255. Exclusive bargaining representation and workers
participation in policy and decision-making. The labor
organization designated or selected by the majority of the
employees in an appropriate collective bargaining unit shall be the
exclusive representative of the employees in such unit for the
purpose of collective bargaining. However, an individual employee
or group of employees shall have the right at any time to present
grievances to their employer.
Any provision of law to the contrary notwithstanding, workers
shall have the right, subject to such rules and regulations as the
Secretary of Labor and Employment may promulgate, to
participate in policy and decision-making processes of the
establishment where they are employed insofar as said processes
will directly affect their rights, benefits and welfare. For this
purpose, workers and employers may form labor-management
councils: Provided, That the representatives of the workers in such
labor-management councils shall be elected by at least the majority
of all employees in said establishment. (As amended by Section
22, Republic Act No. 6715, March 21, 1989).
________

1.
WORKERS
PARTICIPATORY
CONSTITUTIONAL MEANING

RIGHT:

ITS

The crucial question is: what is the meaning or extent of the


workers right to participate in policy and decision-making?
Enlightening in this regard are the deliberations of the 1986
Constitutional Commission. They reveal that the intention was to
refer to participation in grievance procedures and voluntary modes
of settling disputes and not to formulation of corporate programs
or policies.
There are three levels in which employees could influence
management in their decision-making, and one would be at the
corporate level. This would refer to strategic policies pertaining
to the mergers, acquisitions, pricing and marketing policies,
disposition of profits and the like. The second level would be the
plant or department level. It is here where administrative
decisions are made. Decisions made in this level may refer to
hiring, firing, and promotion of employees, cost and quality
control, resource allocations, achievement of target quotas, etc.
And the third will be the shop-floor level. It is here where the socalled operating decisions are made. Decisions made in this level
usually refer to scheduling of work, safety regulations, work
methods, training of new employees. So these are the different
levels in which we hope there would be this democratic
participation of workers in vital issues that affect both
management and the workers.
1.1 Employees Participation in Formulating the Code of
Discipline
Indeed, it was only on March 2, 1989, with the approval of Republic Act
No. 6715, amending Article 211 of the Labor Code, 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,
duties and welfare." However, even in the absence of said clear
provision of law, the exercise of management prerogatives was never
considered boundless.
Verily, a line must be drawn between management prerogatives regarding
business operations per se and those which affect the rights of the
employees. In treating the latter, management should see to it that its
employees are at least properly informed of its decisions or modes action.

2. WORKERS PARTICIPATION
OBJECTIVE; THE LMC

AS

THE

REAL

Article 255 deals with the crucial concept of employee


participation. The law, while promoting collective bargaining,
really aims at employee participation in policy and decisionmaking. Collective Bargaining is just one of the forms of
employee participation. Despite so much interest in and promotion
of collective bargaining, it is incorrect to say that the device which
secures industrial democracy is collective bargaining and no other.
And it is equally misleading to say that collective bargaining is the
end-goal of employee representation. Rather, the real aim is
employee participation in whatever form it may appear
bargaining or no bargaining, union or no union.
This is why Art. 255, second sentence, reserves the right of an
individual employee or group of employees (unionized or

31

ununionized, or inside or outside a union) to present grievances to


their employer at any time. Effectively voicing ones grievance is
reserved and hallowed by law, with or without collective
bargaining.
But individual representation in dealing or bargaining with the
employer is weak. For this reason the law provides another forum
the labor-management council aside from or instead of a union.
An LMC is versatile. It can exist where there is no union or coexist with a union. One thing it cannot and must not do is to
replace a union. While a labor union is hamstrung by such legal
prescriptions as formal registration, limited bargaining unit,
majority status, mandatory and non-mandatory subjects, etc., an
LMC need not be held back by any of these. It can represent
employees across the enterprise, present grievances regardless of
the grievants rank, and proffer proposals unhindered by
formalities. It can also handle projects and programs whoever is
the proponent, form committees for myriad purposes, instill
discipline and improve productivity.

LABOR RELATIONS
bargaining representative must be given the opportunity to be
present at the meeting between the employer and employee.
4. COLLECTIVE BARGAINING UNIT (CBU) DEFINED
At the enterprise level there are three democratic devices,
statutorily embedded, to advance the cause of industrial peace,
namely: airing of grievance even by an individual employee
directly to the employer anytime; participation in policy and
decision-making by employees, whether unionized or not; and
collective bargaining with the employer by unionized employees.

2.1 Departments Promotion of LMC and Other Councils

The collective bargaining that the law envisions occurs between


the employer and the employees comprised in an appropriate
collective bargaining unit (CBU) represented by a union. As
initially explained in Art. 234, the CBU is that group of jobs and
jobholders represented by the recognized or certified union when it
bargains with the employer. The group may comprise all the
supervisors or, separately, all the rank-and-file population in the
company. Or it may be less than all of these two categories,
although the law prefers to have only one grouping per category in
one enterprise because the more solid the unit, the stronger its
bargaining capacity. But if a single unit (only one for all
supervisors or only one for all rank-and-file) is not feasible, the
law allows subgroups as bargaining units, provided only that each
sub-group is appropriate. It is appropriate if its members share
substantially common concerns and interests.

Section 1. Creation of labor-management and other councils. - The


Department shall promote the formation of labor-management councils in
organized and unorganized establishments to enable the workers to
participate in policy and decision-making processes in the establishment,
insofar as said processes will directly affect their rights, benefits and
welfare, except those which are covered by collective bargaining
agreements or are traditional areas of bargaining.

As defined in D.O. No. 40-03 which is now the revised Book V of


the Rules Implementing the Labor Code, bargaining unit refers
to a group of employees sharing mutual interests within a given
employer unit, comprised of all or less than all of the entire body
of employees in the employer unit or any specific occupational or
geographical grouping within such employer unit.

3. INDIVIDUAL GRIEVANCE

Within one unit there may be one or more unions. The bargaining
unit therefore is not the same as, and usually a bigger group than, a
union. But only one union should represent the whole CBU in
bargaining with the employer. The chosen union is called the
bargaining agent, its principal being the CBU members
themselves.

The LMC, in short, can deal with the employer on matters


affecting the employees rights, benefits and welfare. Dealing
with the employer, we have seen, is broader, freer, and (from the
employers viewpoint) less threatening method than collective
bargaining.

As briefly indicated above, the presence of an employees


organization,--a union, an LMC or other forumdoes not replace
the individual employees right to pursue grievances. Each
employee retains the right to deal with his or her employer, and
vice-versa. The labor organization is a representative of the
collective employees, but this fact does not mean that an employee
can act only through the representative. For these reasons, the law
(rt. 255) explicitly preserves and respects the right of an individual
employee or any group of employees to directly present grievances
to their employers at any time. Even when under investigation, an
employee can choose to handle personally his defense, unassisted
by any representative (Art. 277[b]). The second sentence of Art.
255 is meant to be an exception to the exclusiveness of the
representative role of the labor organization. Such individual right
cannot be taken away even by a unions constitution and by-laws.
American jurisprudence holds that notwithstanding a unions
obligation as exclusive bargaining representative to process the
grievances of all bargaining unit employees, individual employees
may at any time present grievances directly to the employer for
adjustment without the intervention of the bargaining
representative, and without subjecting the employer to liability for
refusing to bargain with the union. However, the adjustment of the
grievances must be consistent with the terms of the current
collective bargaining contract or agreement. Moreover, the

The bargaining union has to be the majority union, the one where
majority of the CBU members belong.
Representative union, bargaining union, majority union,
bargaining agent, and bargaining representative are one and
the same. It refers to the union that represents the CBU in
bargaining or dealing with the employer.
5. APPROPRIATENESS
FACTORS CONSIDERED

OF

BARGAINING

UNIT;

The determination of what constitutes a proper bargaining unit lies


primarily in the discretion of the Bureau, since no individual factor is
given by law decisive weight. But while the determination of the
appropriate collective bargaining unit (CBU) is a primary function of the
Bureau, it is subject to the legal requirement that proper consideration
should be given to all legally relevant factors.
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. Industrial

32

experience indicates that the most efficacious bargaining unit is one which
is comprised of constituents enjoying a community of interest. This
community of interest is reflected in groups having substantial similarity
of work and duties or similarity of compensation and working conditions.

In making judgments about community of interest in these


different settings, the Board will look to such factors as: (1)
similarity in the scale and manner of determining earnings; (2)
similarity in employment benefits, hours of work and other terms
and conditions of employment; (3) similarity in the kinds of work
performed; (4) similarity in the qualifications, skills and training of
the employees; (5) frequency of contact or interchange among the
employees; (6) geographic proximity; (7) continuity or integration
of production processes; (8) common supervision and
determination of labor-relations policy; (9) history of collective
bargaining; (10) desires of the affected employees; or (11) extent
of union organization.
Geographical location can be completely disregarded if the
communal or mutual interests of the employees are not sacrificed.
5.1 Bargaining History Not Decisive Factor
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.

5.2 Exclusion of Confidential Employees


By the very nature of their functions, they assist and act in a confidential
capacity to, or have access to confidential matters of, persons who
exercise managerial functions in the field of labor relations. As such, the
rationale behind the ineligibility of managerial employees to form, assist
or join a labor union equally applies to them.

5.3 Temporary or Part-Time Employees


The NLRB has been upheld in excluding temporary employees
from bargaining units of workers in certain jobs. In determining
whether temporary or part-time employees are sufficiently
identified with the regular employees, so as to be properly
included in the bargaining unit, one of the important factors
considered by the NLRB is the reasonable likelihood that the
temporary or part-time employees will eventually become
adequately identified in employment with the other members of
the bargaining unit.
5.4 Seasonal Employees
The full-time seasonal employees who have a reasonable
expectation of substantial seasonal employment from year to year
have been held properly included in the unit, but part-time
seasonal employees who receive none of the fringe benefits
enjoyed by full-time employees have insufficient common interest
with the full-time employees to be included in the same bargaining
unit.
5.5 Probationary Employees
The fact that an employee is given a classification such as
beginner, trainee or probationary employee, and the fact that
contemplation of permanent tenure is subject to satisfactory
completion of an initial trial period, are insufficient to warrant

LABOR RELATIONS
such employees exclusion from a bargaining unit. Moreover, the
eligibility of probationary employees does not turn on the
proportion of such employees who, willingly or not, fail to
continue to work for the employer throughout the trial period.
6. REFERENDUM WHERE INTERESTS ARE DISSIMILAR
The decision then of the Executive Labor Arbiter in merely
directing the holding of a referendum to determine the will of the
service engineers, sales representatives as to their inclusion or
exclusion in the bargaining unit is the most appropriate procedure
that conforms with their right to form, assist or join a labor union
or organization.
6.1 Desire of the Employees; The Globe Doctrine
The desires of the employees are relevant to the determination of
the appropriate bargaining unit. The relevancy of the wishes of
employees concerning their inclusion or exclusion from a
proposed bargaining unit is inherent in the basic right to self
organization. While the desires of the employees with respect to
their inclusion in a bargaining unit is not controlling, it is a factor
which would be taken into consideration in reaching a decision.
7. SINGLE OR EMPLOYER UNIT IS FAVORED
It has been the policy of the Bureau of Labor Relations to
encourage the formation of an employer unit unless circumstances
otherwise require. In other words, one employer enterprise
constitutes only one bargaining unit. The more solid the employees
are, the stronger is their bargaining capacity.
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.
Single plant units are presumed to be appropriate for purposes of
collective bargaining.
Instead of forming another bargaining unit, the law requires them to be
members of the existing one. The ends of unionism are better served if all
the rank-and-file employees with substantially the same interests and who
invoke their right to self-organization are part of a single unit so that they
can deal with their employer with just one and yet potent voice. The
employees' bargaining power with management is strengthened thereby.

7.1 Exception to One-unit Policy


The one unit-one company rule is not without exception. The
exclusion of the subject employees from the rank-and-file
bargaining unit and the CBA is definitely a compelling reason,
for it completely deprived them of the chance to bargain
collectively with petitioner and are thus left with no recourse but
to group themselves into a separate and distinct bargaining unit
and form their own organization.
The usual exception, of course, is where the employer unit has to give
way to the other units like the craft unit, plant unit, or a subdivision
thereof; the recognition of these exceptions takes into account the policy
to assure employees of the fullest freedom in exercising their rights.
Otherwise stated, the one company-one union policy must yield to the
right of the employees to form unions or associations for purposes not

33

contrary to law, to self-organization and to enter into collective bargaining


negotiations, among others, which the Constitution guarantees.

8. TWO COMPANIES WITH RELATED BUSINESSES


Two corporations cannot be treated as a single bargaining unit
even if their businesses are related.
8.1 Subsidiaries and Spun-Off Corporations
Subsidiaries or corporations formed out of former divisions of a
mother company following a bona fide reorganization may
constitute separate bargaining units.
Moreover, in determining an appropriate bargaining unit, the test of
grouping is mutuality or commonality of interests. The employees sought
to be represented by the collective bargaining agent must have substantial
mutual interests in terms of employment and working conditions as
evinced by the type of work they performed. Considering the spin-offs,
the companies would consequently have their respective and distinctive
concerns in terms of the nature of work, wages, hours of work and other
conditions of employment. Interests of employees in the different
companies perforce differ. SMC is engaged in the business of the beer
manufacturing. Magnolia is involved in the manufacturing and processing
of dairy products while SMFI is involved in the production of feeds and
the processing of chicken. The nature of their products and scales of
business may require different skills which must necessarily be
commensurated by different compensation packages. The different
companies may have different volumes of work and different working
conditions. For such reason, the employees of the different companies see
the need to group themselves together and organize themselves into
distinctive and different groups. It would then be best to have separate
bargaining units for the different companies where the employees can
bargain separately according to their needs and according to their own
working conditions.

9. SUMMATION OF SIGNIFICANCE
It is helpful to reiterate that the bargaining unit is not the same as
the union; in fact, there may be several unions (majority and
minority) in one bargaining unit. Determining the scope or
membership of the bargaining unit is significant and far-reaching
because it leads to the determination also of: (1) the employees
who can vote in the certification election; (2) the employees to be
represented in bargaining with the employer; and (3) the
employees who will be covered by the resulting CBA.
Distinguishing the CBU from the union is important because
1. in a CE the voters are the CBU, whether union or non-union
members;
2. in CBA ratification the voters are the unit, not just the union
members;
3. in strike voting, the voters are the members of the union, not all
of the unit.
________
Article 256. Representation Issue in Organized Establishments. In organized establishments, when a verified petition questioning
the majority status of the incumbent bargaining agent is filed by
any legitimate labor organization including a national union or
federation which has already issued a charter certificate to its local

LABOR RELATIONS
chapter participating in the certification election or a local chapter
which has been issued a charter certificate by the national union or
federation before the Department of Labor and Employment
within the sixty (60)-day period before the expiration of the
collective bargaining agreement, the Med-Arbiter shall
automatically order an election by secret ballot when the verified
petition is supported by the written consent of at least twenty-five
percent (25%) of all the employees in the bargaining unit to
ascertain the will of the employees in the appropriate bargaining
unit. To have a valid election, at least a majority of all eligible
voters in the unit must have cast their votes. The labor union
receiving the majority of the valid votes cast shall be certified as
the exclusive bargaining agent of all the workers in the unit. When
an election which provides for three or more choices results in no
choice receiving a majority of the valid votes cast, a run-off
election shall be conducted between the labor unions receiving the
two highest number of votes: Provided, That the total number of
votes for all contending unions is at least fifty percent (50%) of the
number of votes cast. In cases where the petition was filed by a
national union or federation, it shall not be required to disclose the
names of the local chapters officers and members.
At the expiration of the freedom period, the employer shall
continue to recognize the majority status of the incumbent
bargaining agent where no petition for certification election is
filed. (As amended by Section 23, Republic Act No. 6715, March
21, 1989 and Section 10, Republic Act No. 9481 which lapsed into
law on May 25, 2007 and became effective on June 14, 2007).
________
Article 257. Petitions in Unorganized Establishments. - In any
establishment where there is no certified bargaining agent, a
certification election shall automatically be conducted by the MedArbiter upon the filing of a petition by any legitimate labor
organization, including a national union or federation which has
already issued a charter certificate to its local/chapter participating
in the certification election or a local/chapter which has been
issued a charter certificate by the national union or federation. In
cases where the petition was filed by a national union or
federation, it shall not be required to disclose the names of the
local chapters officers and members. (As amended by Section 24,
Republic Act No. 6715, March 21, 1989 and Section 11, Republic
Act No. 9481 which lapsed into law on May 25, 2007 and became
effective on June 14, 2007).
________
Article 258. When an employer may file petition. When
requested to bargain collectively, an employer may petition the
Bureau for an election. If there is no existing certified collective
bargaining agreement in the unit, the Bureau shall, after hearing,
order a certification election.
All certification cases shall be decided within twenty (20) working
days.
The Bureau shall conduct a certification election within twenty
(20) days in accordance with the rules and regulations prescribed
by the Secretary of Labor.
________
Article 258-A. Employer as Bystander. - In all cases, whether the
petition for certification election is filed by an employer or a

34

legitimate labor organization, the employer shall not be considered


a party thereto with a concomitant right to oppose a petition for
certification election. The employers participation in such
proceedings shall be limited to:
(1) being notified or informed of petitions of such nature; and
(2) submitting the list of employees during the pre-election
conference should the Med-Arbiter act favorably on the petition.
(As amended by Section 12, Republic Act No. 9481 which lapsed
into law on May 25, 2007 and became effective on June 14, 2007).
________
Article 259. Appeal from certification election orders. Any party
to an election may appeal the order or results of the election as
determined by the Med-Arbiter directly to the Secretary of Labor
and Employment on the ground that the rules and regulations or
parts thereof established by the Secretary of Labor and
Employment for the conduct of the election have been violated.
Such appeal shall be decided within fifteen (15) calendar days. (As
amended by Section 25, Republic Act No. 6715, March 21, 1989).
________
1.
DETERMINING
THE
BARGAINING
OVERVIEW OF THE METHODS

UNION:

To bargain with the employer, the employees in the collective


bargaining unit (CBU) can be represented by one and only one
union which has to be a legitimate labor organization duly
designated or selected by the employees in the CBU.
Under the Code a bargaining representative is defined as a
legitimate labor organization or any officer or agent of such
organization whether or not employed by the employer. The
Implementing Rules, however, as amended by D.O. No. 40-03
drops the officer or agent as it states: Exclusive bargaining
representative means any legitimate labor union duly recognized
or certified as the sole and exclusive bargaining representative or
agent of all the employees in a bargaining unit.
The selection of such bargaining agent may take place in an
organized or an unorganized establishment. Organized
establishment refers to an enterprise where there exists a
recognized or certified sole and exclusive bargaining agent. The
employer company is unorganized where no union has yet been
duly recognized or certified as bargaining representative. Art. 256
speaks of an organized firm; Art. 257, of the unorganized.
Whether the proceedings take place in an organized or an
unorganized bargaining unit, and whether the proceedings are
called consent election or certification election, the objective is the
same, namely, to identify the union that will represent the
employees in bargaining with the employer. Until this
representation dispute is resolved, no CBA can be entered into.
In an unorganized establishment, the employer may voluntarily
recognize the bargaining agent. If there are obstacles to this, the
petition to hold an election may be filed anytime by any legitimate
labor organization (LLO), except within 12 months from a
previous CE, run-off, or consent election.

LABOR RELATIONS
In an organized establishment, on the other hand, voluntary
recognition is not possible. A petition to hold a CE has to be filed
within the freedom period which means the last sixty (60) days
of the fifth year of the expiring CBA; in other words, the contest
between unions comes at intervals of roughly four years and ten
months. The petition may be filed by any LLO, but the petition
must have the written support of at least twenty-five percent (25%)
of the employees in the bargaining unit. The 25% initial support
indicates that the petitioner has a fair chance of winning and that
the petition is not just a nuisance.
Conceivably but rarely an employer may also file a petition for a
CE.
The election is conducted under the supervision and control of
DOLE officials. It ends up with a formal and official statement of
results, certifying which union won, if any. Hence, the election is
appropriately called certification election.
Where one casting of votes is not decisive enough to elect a union,
the election officials may require a run-off election if certain other
conditions exist, as explained below.
But a certification election, a run-off election, or a consent election
is needed only when two or more unions are vying for the office
of exclusive bargaining representative (EBR). Where there is but
one union in the bargaining unit and there is ample proof that that
union carries the majority of the employees, the law allows the
employer to voluntarily recognize such union. Voluntary
recognition does away with the more tedious electoral contest
between unions.
There are, therefore, three methods to determine the bargaining
union: (1) voluntary recognition; (2) certification election with or
without run-off; and (3) consent election.
2. FIRST METHOD: VOLUNTARY RECOGNITION (V.R.)
The employers voluntary recognition of the employees union
significantly facilitates the bargaining process. The employees,
especially the union leaders and organizers, rejoice when they are
able to convince the employer to voluntarily recognize and
subsequently bargain with their union. But VR requires three
concurrent conditions.
First, voluntary recognition is possible only in an unorganized
establishment. In an organized setting the employer cannot
voluntarily recognized any new union because the law (Art. 256)
requires him to continue recognizing and dealing with the
incumbent union as long as it has not been properly replaced by
another union.
Second, only one union is asking for recognition; if there are two
or more unions asking to be recognized the employer cannot
recognize any of them; the rivalry must be resolved through an
election;
Third, the union voluntarily recognized should be the majority
union as indicated by the fact that members of the bargaining unit
did not object to the projected recognition. If no objection is
raised, the recognition will proceed, the DOLE will be informed
and CBA negotiation will commence. If objection is raised, the

35

recognition is barred, and a certification election or consent


election will have to take place.
2.1 VR Under D.O. No. 40-03
Section 1. When and where to file. - In unorganized establishments with
only one legitimate labor organization, the employer may voluntarily
recognize the representation status of such a union. Within thirty (30) days
from such recognition, the employer and union shall submit a notice of
voluntary recognition with the Regional Office which issued the
recognized labor union's certificate of registration or certificate of creation
of a chartered local.
Section 2. Requirements for voluntary recognition. - The notice of
voluntary recognition shall be accompanied by the original copy and two
(2) duplicate copies of the following documents:
(a) a joint statement under oath of voluntary recognition attesting to the
fact of voluntary recognition;
(b) certificate of posting of the joint statement of voluntary recognition for
fifteen (15) consecutive days in at least two (2) conspicuous places in the
establishment or bargaining unit where the union seeks to operate;
(c) the approximate number of employees in the bargaining unit,
accompanied by the names of those who support the voluntary recognition
comprising at least a majority of the members of the bargaining unit; and
(d) a statement that the labor union is the only legitimate labor
organization operating within the bargaining unit.
All accompanying documents of the notice for voluntary recognition shall
be certified under oath by the employer representative and president of the
recognized labor union.
Section 3. Action on the Notice. - Where the notice of voluntary
recognition is sufficient in form, number and substance and where there is
no other registered labor union operating within the bargaining unit
concerned, the Regional Office, through the Labor Relations Division
shall, within ten (10) days from receipt of the notice, record the fact of
voluntary recognition in its roster of legitimate labor unions and notify the
labor union concerned.
Where the notice of voluntary recognition is insufficient in form, number
and substance, the Regional Office shall, within the same period, notify
the labor union of its findings and advise it to comply with the necessary
requirements. Where neither the employer nor the labor union failed to
complete the requirements for voluntary recognition under Section 2 of
this Rule within thirty (30) days from receipt of the advisory, the Regional
Office shall return the notice for voluntary recognition together with all its
accompanying documents without prejudice to its re-submission.
Section 4. Effect of recording of fact of voluntary recognition. - From the
time of recording of voluntary recognition, the recognized labor union
shall enjoy the rights, privileges and obligations of an existing bargaining
agent of all the employees in the bargaining unit.
Entry of voluntary recognition shall bar the filing of a petition for
certification election by any labor organization for a period of one (1) year
from the date of entry of voluntary recognition. Upon expiration of this
one-year period, any legitimate labor organization may file a petition for
certification election in the same bargaining unit represented by the
voluntarily recognized union, unless a collective bargaining agreement
between the employer and voluntarily recognized labor union was
executed and registered with the Regional Office in accordance with Rule
XVII of these Rules.

LABOR RELATIONS
Simply said, the last paragraph means that the employer and the
union should conclude and register a CBA within one year from
the voluntary recognition, otherwise, the recognition will lapse and
a rival union may petition for a certification election.
3. SECOND METHOD: CERTIFICATION ELECTION
(C.E.)
Whenever there is doubt as to whether a particular union represents the
majority of the rank-and-file employees, in the absence of a legal
impediment, the holding of a certification election is the most democratic
method of determining the employees' choice of their bargaining
representative. It is the appropriate means whereby controversies and
disputes on representation may be laid to rest, by the unequivocal vote of
the employees themselves.
Exercising their suffrage through the medium of the secret ballot, they can
select the exclusive bargaining representative that, emboldened by their
confidence and strengthened by their support shall fight for their rights at
the conference table. That is how union solidarity is achieved and union
power is increased in the free society. Hence, rather than being inhibited
and delayed, the certification election should be given every
encouragement under the law, that the will of the workers may be
discovered and, through their freely chosen representatives, pursued and
realized.

3.1 Fact-Finding
In labor legislation, certification proceedings is not a litigation in
the sense in which the term is ordinarily understood, but an
investigation of non-adversary and fact finding character. As such,
it is not bound by technical rules of evidence.
The law does not contemplate the holding of a certification
election unless the preliminary inquiry shows a reasonable doubt
as to which of the contending unions represents a majority, or
unless ten per centum of the laborers demand this election. But
these grounds necessarily depend on the weight of the evidence
adduced by the rival unions, and this weight, in turn, cannot be
determined properly if the right to cross examination is denied.
Certification proceedings directly involve only two issues: (a)
proper composition and constituency of the bargaining unit; and
(b) veracity of majority membership claims of the competing
unions so as to identify the one union that will serve as the
bargaining representative of the entire bargaining unit.
But some of the employees may not want to have a union; hence,
No Union is one of the choices (candidates) named in the
ballot. If No Union wins, the company pr the bargaining unit
remains ununionized for at least 12 months, the period known as
the 12-month bar. After that period, a petition for a CE may be
filed again.
3.1a Certification Election Differentiated from Union Election
A union election is held pursuant to the union's constitution and bylaws,
and the right to vote in it is enjoyed only by union members. A union
election should be distinguished from a certification election, which is the
process of determining, through secret ballot, the sole and exclusive
bargaining agent of the employees in the appropriate bargaining unit, for
purposes of collective bargaining. Specifically, the purpose of a
certification election is to ascertain whether or not a majority of the

36

employees wish to be represented by a labor organization and, in the


affirmative case, by which particular labor organization.
In a certification election, all employees belonging to the appropriate
bargaining unit can vote. Therefore, a union member who likewise
belongs to the appropriate bargaining unit is entitled to vote in said
election. However, the reverse is not always true; an employee belonging
to the appropriate bargaining unit but who is not a member of the union
cannot vote in the union election, unless otherwise authorized by the
constitution and bylaws of the union. Verily, union affairs and elections
cannot be decided in a non-union activity.

The winners in a union election become officers and


representatives of the union only. The winner in a certification
election is an entity, a union, which becomes the representative of
the whole bargaining unit that includes even the members of the
defeated unions.
3.2 Direct Certification No Longer Allowed
Even in a case where a union has filed a petition for certification
election, the mere fact that there was no opposition does not
warrant a direct certification.
The holding of a certification election at the proper time is not necessarily
a mere formality as there was a compelling legal reason not to directly and
unilaterally certify a union whose legitimacy is precisely the object of
litigation in a pending cancellation case filed by certain "concerned
salesmen," who also claim majority status.
The direct certification originally allowed under Article 257 of the Labor
Code has apparently been discontinued as a method of selecting the
exclusive bargaining agent of the workers. This amendment affirms the
superiority of the certification election over the direct certification which
is no longer available now under the change in said provision.

3.3 Who Files Petition for CE


Any legitimate labor organization or any employer, when
requested to bargain collectively while the majority status of the
union is in doubt, may file a petition for certification election
(PCE)
In an unorganized establishment one a petition is filed by a
legitimate labor organization, the Med-arbiter shall automatically
order the conduct of a certification election. The tenor of Article
257 is one of command, so such order is not appealable. To make
it appealable will contradict the objective stated in Article 211, to
promote free trade unionism. But the application of Article 257 has
to be initiated by a genuine petition from a legitimate labor
organization. Indeed, the law did not reduce the Med-Arbiter to an
automaton which can instantly be set to impulse by the mere filing
of a petition for certification election. He is still tasked to satisfy
himself that all the conditions of the law are met, and among the
legal requirements is that the petitioning union must be a
legitimate labor organization in good standing.
In an organized establishment the incumbent bargaining agent, of
course, will not file a PCE because it will not contest its own
incumbency. The filer will most likely be a union that was
defeated in the CE held some five years before. In any such
petition the incumbent union is a necessary party, a forced
intervenor. But even so, it does not thereby lose its representative
status; it remains the sole bargaining representative until it is

LABOR RELATIONS
replaced by another. And until so replaced it has the right to retain
the recognition by the employer.
The employer, says Article 258, may file a PCE when it has been
asked to bargain. If this happens, the holding of the CE becomes
mandatory if there is no existing registered collective bargaining
agreement. However, instead of itself filing a petition, the
employer usually lets the unions interplead to determine who
among them will bargain with the employer.
Other unions which are interested in joining a certification election
may file a motion for intervention. Such motion is governed by the
same rules that apply to a PCE.
Whether petitioner or intervenor, the union has to be an LLO.
If the petition for certification election was filed by the federation which is
merely an agent, the petition is deemed to be filed by the chapter, the
principal, which must be a legitimate labor organization. The chapter
cannot merely rely on the legitimate status of the mother union.
Where the constitution, by-laws and the list of members who supposedly
ratified the same were not attested to by the union president, and the
constitution and by-laws were not verified under oath, the local union has
no personality to file a petition for certification election it not being a
legitimate labor organization. The petition should be dismissed.
A union that has no legal personality to file a petition for CE has no
personality either to file a petition-in-intervention.

3.4 Where to File the Petition for CE


A petition for certification election (PCE) shall be filed with the
Regional Office which issued the petitioning unions certificate of
registration or certificate of creation of chartered local. The
petition shall be heard and resolved by the Med-Arbiter.
Where two or more petitions involving the same bargaining unit
are filed in one Regional Office, the same shall be automatically
consolidated with the Med-Arbiter who first acquired jurisdiction.
Where the petitions are filed in different Regional Offices, the
Regional Office in which the petitions are first filed shall exclude
all others; in which case, the latter shall indorse the petition to the
former for consolidation.
3.5 When to File the Petition
The proper time to file a petition for CE depends on whether the
CBU has a CBA or not. If it has no CBA , the petition may be filed
anytime outside the 12-month bar. If it has a CBA, it can be filed
only within the last 60 days of the fifth year of the CBA.
3.6 Action on the Petition: Preliminary Conference
The preliminary conference shall determine the following:
(a) the bargaining unit to be represented;
(b) contending labor unions;
(c) possibility of a consent election;

37

(d) existence of any of the bars to certification election under


Section3 of D.O. No. 40-03;
(e) such other matters as may be relevant for the final disposition
of the case.
If at the preliminary conference the unions agree to hold a consent
election, then the PCE will no longer be heard and the unions will
instead prepare for the consent election.
If the unions fail to agree to hold a consent election, the Medarbiter proceeds to consider the petition. He may deny and dismiss,
or he may grant, the petition. Denial or grant of the petition is
always appealable to the Secretary. Never appealable, however, is
the approval of a PCE in an unorganized (ununionized) bargaining
unit, the reason being that the law wants the ununionized
unionized.
3.7 Action on the Petition: Hearings and Pleadings
If the contending unions fail to agree to a consent election during
the preliminary conference, the Med-arbiter may conduct as many
hearings as he may deem necessary. But the conduct of the
hearings cannot exceed fifteen (15) days from the date of the
scheduled preliminary conference/ hearing. After that time the
petition shall be considered submitted for decision. The Medarbiter shall have control of the proceedings. Postponements or
continuances are discouraged.
The failure of any party to appear in the hearing(s) when notified
or to file its pleadings shall be deemed a waiver of its right to be
heard. The Med-arbiter, however, upon the agreement of the
parties for meritorious reasons, may allow the cancellation of
scheduled hearing(s). The cancellation of any scheduled hearing(s)
shall not be used as a basis for extending the 15-day period within
which to terminate the same.
Within ten (10) days from the date of the last hearing, the Medarbiter shall issue a formal order denying or granting the petition.
In organized establishments, however, no order or decision shall be
issued by the Med-arbiter during the freedom period.
The reason for the last-mentioned rule is that during the entire 60day freedom period, up to its last day, the door should remain open
for any union to file a PCE or a motion for intervention.
3.8 Action on the Petition: Denial; Grounds
The Med-arbiter, after due hearing may dismiss the petition on any
of the following grounds:

LABOR RELATIONS
The first three grounds are applicable to establishments with or
without a CBA; the last two are pertinent only to an establishment
with a CBA about to expire on its fifth year.
3.8a Ground 1: Petitioner not an LLO
Excepting Article 258, only a legitimate labor organization (LLO)
can file a petition for certification election. Thus, if the petitioning
union is not listed in the DOLEs list of LLOs or it has no CBA
registered in the DOLE, these facts raise doubt as to its being an
LLO, and the med-arbiter may dismiss the PCE.
But even if the union is listed as LLO or is a party to a CBA, its
legitimacy may still be questioned in a separate and independent
petition for cancellation to be heard and decided by the BLR
Director or the Regional Director himself.
Does the filing of a petition to cancel the petitioners registration
cause the suspension or dismissal of the PCE? No, the mere filing
foes not. To serve as a ground for dismissal of a PCE, the legal
personality of the petitioner should have been revoked or cancelled
with finality.
The filing or pendency of any inter/intra-union dispute and other related
labor relations dispute is not a prejudicial question to any petition for
certification election and shall not be a ground for the dismissal of a
petition for certification election or suspension of proceedings for
certification election.

The justification for this rule is that the employees opportunity to


choose a bargaining agent can easily be blocked or forestalled by
an employer through the simple expedience of questioning the
legitimacy of the petitioner union.
Suspension of Proceedings: Company Union Charge
A complaint for unfair labor practice may be considered a prejudicial
question in a proceeding for certification election when it is charged
therein that one or more labor unions participating in the election are
being aided, or are controlled, by the company or employer. The reason is
that the certification election may lead to the selection of an employerdominated or company union as the employees bargaining representative,
and when the court finds that said union is employer-dominated in the
unfair labor practice case, the union selected would be decertified and the
whole election proceedings would be rendered useless and nugatory.

NONETHELESS, a certification election cannot be stayed during


the pendency of unfair labor practice charge against a union filed
by the employer.

(1) Not an LLO

Similarly, certification election may be ordered despite pendency


of a petition to cancel the unions registration certificate founded
on alleged illegal strike by the union.

(2) Twelve-month Bar

3.8b Ground 2: The 12-month Bar (certification year bar)

(3) Negotiation Bar or Deadlock Bar

No petition for a CE may be filed within one year from the date of
a valid certification, consent, or run-off election or from the date of
entry of a voluntary recognition of the union by the employer.
Thus, if an election had been held but not one of the unions won a
PCE may be filed again but only after 12 months. The law does
not want more than one election in a 12-month period. The same
bar applies if No Union won in the previous election.

(4) No 25% Support


(5) Contract Bar; PCE Filed Outside the Freedom Period

38

LABOR RELATIONS
On the other hand, if a union has won, such union and the
employer must within 12 months start negotiating a collective
agreement. If they fail to do so, they are defeating the employees
wish to have a CBA; hence, the union or unions that lost can
petition again for a certification election after 12 months from the
last election so as to replace the unproductive bargaining agent
which, perhaps, is cavorting with the employer.
Ordinarily, a bargaining agent who failed to secure a CBA within 12
months could be suspected as a tool of management and should deserve to
be replaced. But if circumstances show that the cause of not having
concluded a CBA was not the unions fault, such union should not be
blamed, and a CE should not be authorized even though no CBA has been
concluded despite passage of twelve months. The situation takes the
nature of a deadlock bar.
The 12-month prohibition presupposes that there was an actual conduct of
election i.e. ballots were cast and there was a counting of votes. In this
case, there was no certification election conducted precisely because the
first petition was dismissed, on the ground of a defective petition which
did not include all the employees who should be properly included in the
collective bargaining unit, the certification year bar does not apply.

Neither does this bar apply if in fact there was a failure of election
because less than majority of the CBU members voted. In that
case, another PCE may be filed within six (6) months.
An election held less than a year after an invalid election is not
barred. Also not barred would be a second election held among a
group of employees who had not participated in the first election
and had not been given the opportunity to be represented as part of
the unit in the first election.
A radical change in the size of a bargaining unit within a short
period of time, raising a question as to the majority status of the
certified representative, may also prompt the NLRB to entertain a
petition for an election during the certification year.
The one-year rule does not apply to a unit clarification petition
filed during the certification year.
In a CE, the No Union choice won. Within 12 months from that
election the employer voluntarily recognized a new union and then
concluded with it a CBA. Is the 12-month bar violated? Are the
recognition and the CBA valid?
Excepted from the contract-bar rule are certain types of contracts which
do not foster industrial stability, such as contracts where the identity of the
representative is in doubt. Any stability derived from such contracts must
be subordinated to the employees' freedom of choice because it does not
establish the kind of industrial peace contemplated by the law.

In other words, the court strongly doubted that the union


voluntarily recognized by the employer was really the employees
choice. Most probably, it was a company union.
3.8c Ground 3: Negotiation or Deadlock Bar
Neither will a PCE prosper if the negotiation is caught in a
deadlock. The deadlock does not erase that fact that there is
negotiation which is a barrier to holding a certification election.
The parties should be allowed to try to resolve their deadlock;
replacing the negotiating union will not help.

The Deadlock Bar Rule simply provides that a petition for


certification election can only be entertained if there is no pending
bargaining deadlock submitted to conciliation or arbitration or had
become the subject of a valid notice of strike or lockout. The
principal purpose is to ensure stability in the relationship of the
workers and the management.
A "deadlock" is the counteraction of things producing entire stoppage;
there is a deadlock when there is a complete blocking or stoppage
resulting from the action of equal and opposed forces. The word is
synonymous with the word impasse, which "presupposes reasonable effort
at good faith bargaining which, despite noble intentions, does not
conclude in agreement between the parties."
If the law proscribes the conduct of a certification election when there is a
bargaining deadlock submitted to conciliation or arbitration, with more
reason should it not be conducted if, despite attempts to bring an employer
to the negotiation table by the "no reasonable effort in good faith" on the
employer certified bargaining agent, there was to bargain collectively. It is
only just and equitable that the circumstances in this case should be
considered as similar in nature to a "bargaining deadlock" when no
certification election could be held.

Deadlock Bar Rule, When Not Applicable; Artificial Deadlock


The deadlock that bars a CE must be genuine and not a drama.
One indicator that it is genuine is the submission of the deadlock
to a third-party conciliator or arbitrator. Another is that the
deadlock is the subject of a valid notice of strike or lockout. An
artificial deadlocka deadlock prearranged or preserved by
collusion of the employer and the majority unionis deception of
the workers, hence, not a barrier to a petition for a CE.
3.8d Ground 4: 25 Percent Support to PCE
Article 256 requires that the petition for a CE in an organized
establishment which may be filed within the freedom period
should be supported by at least twenty-five percent (25%) of the
bargaining unit.
The support requirement is explained by government policy to
favor the self-organization of workers. In a company still
unorganized the workers should find it easy to organize, but one a
union has established itself as the employees representative, it
should not be so easy for another union to replace the incumbent.
Trying to so will disturb the peace in the enterprise. To justify the
disturbance, it must appear that a sizeable portion of the
employeesat least 25%desires to have a new union. Without
this minimum support the challenge to the incumbent looks like a
nuisance.
The CBU, Not the Enterprise
If a companys rank-and-file employees are unionized but the
supervisors are not, does the supervisors petition need the 25%
minimum support?
NO, because the company is considered unorganized. The petition
for CE involves only the supervisors, not the rank-and-file. Insofar
as the supervisors are concerned, the establishment is considered
ununionized. Hence the requirement for 25% support to the
petition does not apply.

39

LABOR RELATIONS
In other words, in deciding whether the 25% requirement is
applicable or not, the law considers the CBU involved, not the
whole enterprise. This, again, makes it easy for workers to
unionize, a basic objective of labor relations law.
Election Despite Lack of 25 Percent Support
Even in the situation where the 25% is needed. This requirement
may be relaxed.
Compliance with the said requirement need not even be established with
absolute certainty. The Court has consistently ruled that "even conceding
that the statutory requirement of 30% of the labor force asking for a
certification election had not been strictly complied with, respondent
Director is still empowered to order that it be held precisely for the
purpose of ascertaining which of the, contending labor organizations shall
be the exclusive collective bargaining agent."

Effect of Withdrawal of Signatories


If a petition for a certification election lacks the 25% support
because a sizeable number of union members has withdrawn their
membership, may the petition still be granted? Or must it be
dismissed? A critical fact to consider is whether the withdrawal
happened before or after the filing of the petition. If it happened
before the filing, the withdrawal is presumed voluntary and it
does not affect the propriety of the petition; if after, the
withdrawal is deemed involuntary (perhaps pressured by the
employer) and it does not necessarily cause the dismissal of the
petition
The presumption would arise that the withdrawal was procured through
duress, coercion or for valuable consideration. In other words, the
distinction must be that withdrawals made before the filing of the petition
are presumed voluntary unless there is convincing proof to the contrary,
whereas withdrawals made after the filing of the petition are deemed
involuntary.
The reason for such distinction is that if the withdrawal or retraction is
made before the filing of the petition, the names of employees supporting
the petition are supposed to be held secret to the opposite party. Logically,
any such withdrawal or retraction shows voluntariness in the absence of
proof to the contrary. Moreover, it becomes apparent that such employees
had not given consent to the filing of the petition, hence the subscription
requirement has not been met.
When the withdrawal or retraction is made after the petition is filed, the
employees who are supporting the petition become known to the opposite
party since their names are attached to the petition at the time of filing.
Therefore, it would not be unexpected that the opposite party would use
foul means for the subject employees to withdrawal their support.

3.8e Ground 5: PCE Filed Outside the Freedom Period; the


Contract Bar
This means that there exists in the bargaining unit a CBA still in
effect at the time the PCE is filed. The ban spans a period of five
years, excluding, however, the last sixty (60) days of the fifth (last)
year of the CBA.
The contract bar rule prohibits the filing of a petition for certification
election during the existence of a collective bargaining agreement except
within the freedom period, as it is called, when the said agreement is
about to expire. The purpose, obviously, is to ensure stability in the

relationships of the workers and the management by preventing frequent


modifications of any collective bargaining agreement earlier entered into
by them in good faith and for the stipulated original period.

The freedom period under Articles 253-A and 256 is different


from and ought not to be mistaken for the other sixty-day period
mentioned in Art. 253. The latter speaks of the right of the parties
to propose modifications to the existing CBA, as an exception to
the rule that the CBA cannot be modified during its lifetime. To
clarify terms, the sixty days in Art. 253 may be called
renegotiation notice period or simply notice/proposal period,
in contrast to the freedom period under Arts. 253-A and 256.
The notice period is the last 60 days of the second or third year of
the nonrepresentational provisions; the freedom period is the last
60 days of the CBAs fifth year of the representational aspect. The
notice period is an economic event involving the employer and the
bargaining union; the freedom period is a political event involving
only the unions and the employees. The two periods, of course,
may coincide on the fifth year of the CBA.
Registered CBA
To bar a certification election it is no longer necessary that the
CBA be certified; it is enough that it is registered in accordance
with Art. 231.
Contract-Bar Rule Applied: Extended CBA Under Deadlock
No petition for certification election may be filed before the onset
of the freedom period not after such period. The old CBA is
extended until a new one is signed.
Section 6, Rule V, Book V of the implementing Rules provides that a
petition for certification election or a motion for intervention can only be
entertained within sixty days prior to the expiry date of an existing
collective bargaining agreement. Otherwise put, the rule prohibits the
filing of a petition for certification election during the existence of a
collective bargaining agreement except within the freedom period, as it is
called, when the said agreement is about to expire.
Article 253 of the Labor Code provides that: "it shall be the duty of both
parties to keep the status quo and to continue in full force and effect the
terms and conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties." Despite the lapse
of the formal effectivity of the CBA the law still considers the same as
continuing in force and effect until a new CBA shall have been validly
executed. Hence, the contract bar rule still applies.

Contract-Bar Rule Applied: Unproved Surreptitious Registration


of CBA
Even if the existing CBA is registered surreptitiously, as alleged by
the petitioner union, but no evidence is presented proving the
alleged surreptitious registration, the petition for CE cannot be
granted. The contract-bar rule applies. Whether or not the CBA
was indeed surreptitiously registered is a factual matter whose
determination is outside the ambit of a petition for certiorari.
Contract-Bar Rule Not Applied: (a) Defective CBA
To be a bar to a certification election, the CBA must be adequate in that it
comprises substantial terms and conditions of employment.

40

LABOR RELATIONS
(b) Referendum to Register on Independent Union
This referendum is neither union disaffiliation nor severance; it is not
disallowed by law even while a CBA exists.

(c) CBA Signed Before or Within Freedom Period Despite


Injunctive Order
A collective bargaining agreement which was prematurely renewed is not
a bar to the holding of a certification election. Such indecent haste in
renewing the CBA despite an order enjoining them from doing so is
designed to frustrate the constitutional right of the employees to selforganization. Moreover, We cannot countenance the actuation of the
petitioner and the management in this case which is not conducive to
industrial peace.

Validity of CBA Signed During Representation Dispute


It is true that the contract-bar rule does not apply during the freedom
period; i.e., within that period a petition for CE may be entertained. But
it is equally true that the petition for CE does not bar the employer and the
incumbent union from renegotiating and renewing the expiring CBA. In
other words, a CBA may be renegotiated before, during, or after the 60day freedom period. But if during such period a PCE is filed, the Medarbiter can order the suspension of the renegotiation until the
representation proceedings finally end.

The law is attempting a balancing feat. By allowing a PCE during


the freedom period the law preserves democratic between unions,
and, in the same breadth, by allowing CBA renegotiation during
the same freedom period, the law safeguards the opportunity to
possibly upgrade the employees employment condition.
The question may be asked: What would be the effect on the
renegotiated CBA if a union other than the one that executed it
should win the CE? In a pertinent case, it was held that the union
thus certified would have to respect the contract, but that it may
bargain with the management to shorten the life of the contract if it
is too long.
When a collective bargaining agreement is entered into at a time when the
petition for certification election had already been filed by a union and
was then pending resolution, the said CBA cannot be deemed permanent,
precluding the commencement of negotiations by another union with the
management. In the meantime however, so as not to deprive the workers
of the benefits of the said agreement, it shall be recognized and given
effect on a temporary basis, subject to the results of the certification
election. The agreement may be continued in force if the union is certified
as the exclusive bargaining representative of the workers or may be
rejected and replaced in the event that the rival emerges as the winner.

But in a 2005 decision the Court took one step further. It


invalidated the hasty recognition of a union and the signing of a
CBA with that union where such acts were done while there was a
pending petition for certification election by another union.
Basic to the contract bar rule is the proposition that the delay of the right
to select representatives can be justified only where stability is deemed
paramount. Excepted from the contract bar rule are certain types of
contracts which do not foster industrial stability, such as contracts where
the Identity of the representative is in doubt. Any stability derived from
such contracts must be subordinated to the employees' freedom of choice
because it does not establish the type of industrial peace contemplated by
the law.

A CBA automatically renewed usually operates as a bar to a certification


election. But it is not a bar if the employer has served notice that it will
terminate the contract if and when the union no longer represents the
majority of the employees.

3.9 Invalid Grounds for the Denial/Suspension of the Petition


Questions pertaining to the validity of petitioning unions
certificate of registration, or its legal personality as a labor
organization, or the validity of registration and execution of
collective bargaining agreements shall be heard and resolved by
the Regional Director in an independent petition for cancellation of
the unions registration. They are not reasons for the Med-arbiter
to suspend hearing the PCE. However, the Med-arbiter himself
may rule on the objection if the pending union is not found in the
Departments roster of legitimate labor organizations or an alleged
collective bargaining agreement is unregistered with the
Department.
3.9a Authority to Decide Existence of Employer-Employee
Relationship; Med-Arbiters Order Appealable to Secretary
Does the Med-arbiter or the Secretary of Labor and Employment
have the authority to determine the existence of an employeremployee relationship between the parties in a petition for
certification election?
All issues pertaining to the existence of employer-employee
relationship or to eligibility to union membership shall be resolved
in the order or decision ranting or denying the petition for
certification election. In other words, those issues do not stall the
PCE and they are not grounds for dismissing a PCE.
It is absurd to suggest that the med-arbiter and Secretary of Labor cannot
make their own independent finding as to the sentence of such
relationship and must have to rely and wait for such a determination by
the labor arbiter or NLRC in a separate proceeding. For then, given a
situation where there is no separate complaint filed with the labor arbiter,
the med-arbiter and/or the Secretary of Labor can never decide a
certification election case or any labor-management dispute properly
brought before them as they have no authority to determine the existence
of an employer-employee relationship. Such a proposition is, to say the
least, anomalous.
Once there is a determination as to the existence of such a relationship, the
med-arbiter can then decide the certification election case. 9 As the
authority to determine the employer-employee relationship is necessary
and indispensable in the exercise of jurisdiction by the med-arbiter, his
finding thereon may only be reviewed and reversed by the Secretary of
Labor who exercises appellate jurisdiction under Article 259 of the Labor
Code, as amended.

It is apparent that incidental to the power of the med-arbiter to hear


and decide representation cases is the power to determine who the
eligible voters are. In so doing, it is axiomatic that the med-arbiter
should determine the legality of the employees' membership in the
union.
3.10 Action on the Petition: Is the Employer a Bystander? See Art.
258-A
3.10a Employer a Bystander; Cannot Oppose PCE
3.11 Action on the Petition: Approval

41

LABOR RELATIONS
Section 13. Order/Decision on the petition. - Within ten (10) days from the
date of the last hearing, the Med-Arbiter shall issue a formal order
granting the petition or a decision denying the same. In organized
establishments, however, no order or decision shall be issued by the MedArbiter during the freedom period.
The order granting the conduct of a certification election shall state the
following:
(a) the name of the employer or establishment;
(b) the description of the bargaining unit;
(c) a statement that none of the grounds for dismissal enumerated in the
succeeding paragraph exists;
(d) the names of contending labor unions which shall appear as follows:
petitioner union/s in the order in which their petitions were filed, forced
intervenor, and no union; and
(e) a directive upon the employer and the contending union(s) to submit
within ten (10) days from receipt of the order, the certified list of
employees in the bargaining unit, or where necessary, the payrolls
covering the members of the bargaining unit for the last three (3) months
prior to the issuance of the order

3.12 Appeal of Order Granting or Denying Petition


Section 17. Appeal. - The order granting the conduct of a certification
election in an unorganized establishment shall not be subject to appeal.
Any issue arising therefrom may be raised by means of protest on the
conduct and results of the certification election.
The order granting the conduct of a certification election in an organized
establishment and the decision dismissing or denying the petition, whether
in an organized or unorganized establishment, may be appealed to the
Office of the Secretary within ten (10) days from receipt thereof.
The appeal shall be verified under oath and shall consist of a
memorandum of appeal, specifically stating the grounds relied upon by
the appellant with the supporting arguments and evidence.

In short, denial of any petition for CE is always appealable, but


never appealable is the approval of any PCE in an enterprise still
ununionized. The reason is sound and simple: the law wants to
unionized the ununionized.
Section 18. Where to file appeal. - The memorandum of appeal shall be
filed in the Regional Office where the petition originated, copy furnished
the contending unions and the employer, as the case may be. Within
twenty-four (24) hours from receipt of the appeal, the Regional Director
shall cause the
transmittal thereof together with the entire records of the case to the
Office of the Secretary.
Section 19. Finality of Order/Decision. - Where no appeal is filed within
the ten-day period, the Med-Arbiter shall enter the finality of the
order/decision in the records of the case and cause the transmittal of the
records of the petition to the Regional Director.
Section 20. Period to Reply. - A reply to the appeal may be filed by any
party to the petition within ten (10) days from receipt of the memorandum
of appeal. The reply shall be filed directly with the Office of the Secretary.
Section 21. Decision of the Secretary. - The Secretary shall have fifteen
(15) days from receipt of the entire records of the petition within which to

decide the appeal. The filing of the memorandum of appeal from the order
or decision of the Med-Arbiter stays the holding of any certification
election.
The decision of the Secretary shall become final and executory after ten
(10) days from receipt thereof by the parties. No motion for
reconsideration of the decision shall be entertained.
Section 22. Transmittal of records to the Regional Office. - Within fortyeight (48) hours from notice of receipt of decision by the parties and
finality of the decision, the entire records of the case shall be remanded to
the Regional Office of origin for implementation. Implementation of the
decision shall not be stayed unless restrained by the appropriate court.

May a certification election be held legally upon petition of Union


B while a petition for CE by Union A is pending on appeal at the
Office of the Secretary? No, the appeal should first be resolved.
3.13 Conducting the CE
3.13a Pre-election Conference
Section 1. Raffle of the case. - Within twenty-four (24) hours from receipt
of the notice of entry of final judgment granting the conduct of a
certification election, the Regional Director shall cause the raffle of the
case to an Election Officer who shall have control of the pre-election
conference and election proceedings.
Section 2. Pre-election conference. - Within twenty-four (24) hours from
receipt of the assignment for the conduct of a certification election, the
Election Officer shall cause the issuance of notice of preelection
conference upon the contending unions and the employer, which shall be
scheduled within ten (10) days from receipt of the assignment.
The pre-election conference shall set the mechanics for the election and
shall determine, among others, the following:
(a) date, time and place of the election, which shall not be later than fortyfive (45) days from the date of the first pre-election conference, and shall
be on a regular working day and within the employer's premises, unless
circumstances require otherwise;
(b) list of eligible and challenged voters;
(c) number and location of polling places or booths and the number of
ballots to be prepared with appropriate translations, if necessary;
(d) name of watchers or representatives and their alternates for each of the
parties during election;
(e) mechanics and guidelines of the election.
Section 3. Waiver of right to be heard. - Failure of any party to appear
during the pre-election conference despite notice shall be considered as a
waiver to be present and to question or object to any of the agreements
reached in said pre-election conference. Nothing herein, however, shall
deprive the non-appearing party or the employer of its right to be
furnished notices of subsequent pre-election conferences and to attend the
same.
Section 4. Minutes of pre-election conference. - The Election Officer shall
keep the minutes of matters raised and agreed upon during the preelection conference. The parties shall acknowledge the completeness and
correctness of the entries in the minutes by affixing their signatures
thereon. Where any of the parties refuse to sign the minutes, the Election
Officer shall note such fact in the minutes, including the reason for refusal
to sign the same. In all cases, the parties shall be furnished a copy of the
minutes.

42

The pre-election conference shall be completed within thirty (30) days


from the date of the first hearing.
Section 6. Posting of Notices. - The Election Officer shall cause the
posting of notice of election at least ten (10) days before the actual date of
the election in two (2) most conspicuous places in the company premises.
The notice shall contain:
(a) the date and time of the election;

LABOR RELATIONS
certification election shall be considered a qualified voter, unless
his/her dismissal was declared final judgment at the time of the
conduct of the certification election.

(b) names of all contending unions;

In Philippine jurisprudence it is now settled that employees who have


been improperly laid off but who have a present, unabandoned right to or
expectation of re-employment, are eligible to vote in certification
elections. 10 Thus, and to repeat, if the dismissal is under question, as in
the case now at bar whereby a case of illegal dismissal and/or unfair labor
practice was filed, the employees concerned could still qualify to vote in
the elections.

(c) the description of the bargaining unit and the list of eligible and
challenged voters.

Probationary Employee

The posting of the notice of election, the information required to be


included therein and the duration of posting cannot be waived by the
contending unions or the employer.

3.13b Conducting the CE: The Voters


One of the matters the pre-election conference threshes out is the
list of voters.
Section 5. Qualification of voters; inclusion-exclusion. - All employees
who are members of the appropriate bargaining unit sought to be
represented by the petitioner at the time of the issuance of the order
granting the conduct of a certification election shall be eligible to vote.

The list of voters should be based on the employer-certified list of


employees in the CBU or payrolls. If the employer does not submit
the list or payrolls, the union may submit its own list.
Even the list of employees submitted to the SSS may be used as
basis to comprise the list of voters for the CE. It should ideally be
the payroll which should have been used for the purpose of the
election. However, the unjustified refusal of a company to submit
the payroll in its custody, despite efforts to make it produce it,
compelled resort to the SSS list as the next best source of
information. After all, the SSS list is a public record whose
regularity is presumed.
Only the employees who are directly employed by the employer
and working along the activities to which the employer is engaged
and linked by employer-employee relationship are qualified to
participate in the certification election, irrespective of the period
of their employment.
Employees of an independent contractor who undertakes to do a
piece of work for his account and responsibility, with minimum
interference on the part of the other contracting party (indirect
employer), not being laborers or employees of the latter, are not
qualified to participate therein.
In case of disagreement over the voters' list or over the eligibility of
voters, all contested voters shall be allowed to vote. But their votes shall
be segregated and sealed in individual envelopes in accordance with
Sections 10 and 11 of this Rule.

Dismissed Employee
An employee who has been dismissed from work but has contested
the legality of the dismissal in a forum of appropriate jurisdiction
at the time of the issuance of the order for the conduct of a

In a certification election all rank-and-file employees in the appropriate


bargaining unit are entitled to vote. This principle is clearly stated in Art.
255 of the Labor Code which states that the "labor organization
designated or selected by the majority of the employees in an appropriate
bargaining unit shall be the exclusive representative of the employees in
such unit for the purpose of collective bargaining."
Collective bargaining covers all aspects of the employment relation and
the resultant CBA negotiated by the certified union binds all employees in
the bargaining unit. Hence, all rank-and-file employees, probationary or
permanent, have a substantial interest in the selection of the bargaining
representative. The Code makes no distinction as to their employment
status as basis for eligibility in supporting the petition for certification
election. The law refers to "all" the employees in the bargaining unit. All
they need to be eligible to support the petition is to belong to the
"bargaining unit.".

INK Believers May Vote


In the CE all members of the unit, whether union members or not,
have the right to vote. Union membership is not a prerequisite. If
majority of the unit members do not want a union, as expressed in
the CE, such majority decision must be respected.
Logically, the right NOT to join, affiliate with, or assist any union, and to
disaffiliate or resign from a labor organization, is subsumed in the right to
join, affiliate with, or assist any union, and to maintain membership
therein. The right to form or join a labor organization necessarily includes
the right to refuse or refrain from exercising said right. It is self-evident
that just as no one should be denied the exercise of a right granted by law,
so also, no one should be compelled to exercise such a conferred right.
The fact that a person has opted to acquire membership in a labor union
does not preclude his subsequently opting to renounce such membership.
The purpose of a certification election is precisely the ascertainment of the
wishes of the majority of the employees in the appropriate bargaining unit:
to be or not to be represented by a labor organization, and in the
affirmative case, by which particular labor organization. If the results of
the election should disclose that the majority of the workers do not wish to
be represented by any union, then their wishes must be respected, and no
union may properly be certified as the exclusive representative of the
workers in the bargaining unit in dealing with the employer regarding
wages, hours and other terms and conditions of employment. The minority
employees who wish to have a union represent them in collective
bargaining can do nothing but wait for another suitable occasion to
petition for a certification election and hope that the results will be
different. They may not and should not be permitted, however, to impose
their will on the majority who do not desire to have a union certified as
the exclusive workers' benefit in the bargaining unit upon the plea that
they, the minority workers, are being denied the right of self-organization
and collective bargaining.

43

LABOR RELATIONS
The respondents' argument that the petitioners are disqualified to vote
because they "are not constituted into a duly organized labor union"
"but members of the INK which prohibits its followers, on religious
grounds, from joining or forming any labor organization" and "hence,
not one of the unions which vied for certification as sole and exclusive
bargaining representative," is specious. Neither law, administrative rule
nor jurisprudence requires that only employees affiliated with any labor
organization may take part in a certification election. On the contrary, the
plainly discernible intendment of the law is to grant the right to vote to all
bona fide employees in the bargaining unit, whether they are members of
a labor organization or not.

3.13c Conducting the CE: The Voting


Section 7. Secrecy and sanctity of the ballot. - To ensure secrecy of the
ballot, the Election Officer, together with the authorized representatives of
the contending unions and the employer, shall before the start of the actual
voting, inspect the polling place, the ballot boxes and the polling booths.
Section 8. Preparation of ballots. - The Election Officer shall prepare the
ballots in English and Filipino or the local dialect, corresponding to the
number of voters and a reasonable number of extra ballots. All ballots
shall be signed at the back by the Election Officer and authorized
representative of each of the contending unions and employer. Failure or
refusal to sign the ballots shall be considered a waiver thereof and the
Election Officer shall enter the fact of such refusal or failure in the records
of the case as well as the reason for the refusal or failure to sign.
Section 9. Marking of votes. - The voter must put a cross () or check ()
mark in the square opposite the name of the union of his choice or "No
Union" if he/she does not want to be represented by any union.
If a ballot is torn, defaced or left unfilled in such a manner as to create
doubt or confusion or to identify the voter, it shall be considered spoiled.
If the voter inadvertently spoils a ballot, he/she shall return it to the
Election Officer who shall destroy it and give him/her another ballot.
Section 10. Challenging of votes. - An authorized representative of any of
the contending unions and employer may challenge a vote before it is
deposited in the ballot box only on any of the following grounds:
(a) that there is no employer-employee relationship between the voter and
the company;
(b) that the voter is not a member of the appropriate bargaining unit which
petitioner seeks to represent.
Section 11. Procedure in the challenge of votes. - When a vote is properly
challenged, the Election Officer shall place the ballot in an envelope
which shall be sealed in the presence of the voter and the representatives
of the contending unions and employer. The Election Officer shall indicate
on the envelope the voter's name, the union or employer challenging the
voter, and the ground for the challenge. The sealed envelope shall then be
signed by the Election Officer and the representatives of the contending
unions and employer. The Election Officer shall note all challenges in the
minutes of the election and shall be responsible for consolidating all
envelopes containing the challenged votes. The envelopes shall be opened
and the question of eligibility shall be passed upon only if the number of
segregated voters will materially alter the results of the election.
Section 12. On-the-spot questions. - The Election Officer shall rule on any
question relating to and raised during the conduct of the election. In no
case, however, shall the election officer rule on any of the grounds for
challenge specified in the immediately preceding section.
Section 13. Protest; when perfected. - Any party-in-interest may file a
protest based on the conduct or mechanics of the election. Such protests
shall be recorded in the minutes of the election proceedings. Protests not
so raised are deemed waived.

The protesting party must formalize its protest with the Med-Arbiter, with
specific grounds, arguments and evidence, within five (5) days after the
close of the election proceedings. If not recorded in the minutes and
formalized within the prescribed period, the protest shall be deemed
dropped.
Section 15. Conduct of election and canvass of votes. - The election
precincts shall open and close on the date and time agreed upon during the
pre-election conference. The opening and canvass shall proceed
immediately after the precincts have closed. Failure of any party or the
employer or his/her/their representative to appear during the election
proceedings shall be considered a waiver to be present and to question the
conduct thereof.

ULP in Relation to Election


The employer deserves our strongest condemnation for ignoring the
petitioners' request for permission for some time out to attend to the
hearing of their petition before the med-arbiter. It is not only an act of
arrogance, but a brazen interference as well with the employees right to
self-organization, contrary to the prohibition of the Labor Code against
unfair labor practices.
It is unfair labor practice for the company to suspended the workers on the
ground of "abandonment of work" on the day on which the pre-election
conference had been scheduled. It is the employees right to hold a
certification election, the exercise of which is their sole prerogative.
A company commits unfair labor practice where it issued suspension and
termination orders while the employees are in the midst of a certification
election preliminary to a labor management conference "to normalize
employer-employee relations."

3.13d Conducting the CE: Canvassing of Votes


The voting shall close on the date and time agreed upon in the preelection conference. Canvassing shall immediately follow.
Section 14. Canvassing of votes. - The votes shall be counted and
tabulated by the Election Officer in the presence of the representatives of
the contending unions. Upon completion of the canvass, the Election
Officer shall give each representative a copy of the minutes of the election
proceedings and results of the election. The ballots and the tally sheets
shall be sealed in an envelope and signed by the Election Officer and the
representatives of the contending unions and transmitted to the MedArbiter, together with the minutes and results of the election, within
twenty-four (24) hours from the completion of the canvass.
Where the election is conducted in more than one region, consolidation of
results shall be made within fifteen (15) days from the conduct thereof.

3.13e Who Wins in CE: Proclamation and Certification


Section 20. Proclamation and certification of the result of the election. Within twenty-four (24) hours from final canvass of votes, there being a
valid election, the Election Officer shall transmit the records of the case to
the Med-Arbiter who shall, within the same period from receipt of the
minutes and results of election, issue an order proclaiming the results of
the election and certifying the union which obtained a majority of the
valid votes cast as the sole and exclusive bargaining agent in the subject
bargaining unit, under any of the following conditions:
(a) no protest was filed or, even if one was filed, the same was not
perfected within the five-day period for perfection of the protest;

44

(b) no challenge or eligibility issue was raised or, even if one was raised,
the resolution of the same will not materially change the results of the
elections.
The winning union shall have the rights, privileges and obligations of a
duly certified collective bargaining agent from the time the certification is
issued.
Where majority of the valid votes cast results in "No Union" obtaining the
majority, the Med-Arbiter shall declare such fact in the order.
Section 16. Certification of Collective Bargaining Agent. - The union
which obtained a majority of the valid votes cast shall be certified as the
sole and exclusive bargaining agent of all the employees in the appropriate
bargaining unit within five (5) days from the day of the election, provided
no protest is recorded in the minutes of the election.

3,13f Failure of Election: Motion for a Remedial Election


Section 17. Failure of election. - Where the number of votes cast in a
certification or consent election is less than the majority of the number of
eligible voters and there are no material challenged votes, the Election
Officer shall declare a failure of election in the minutes of the election
proceedings.
Section 18. Effect of failure of election. - A failure of election shall not bar
the filing of a motion for the immediate holding of another certification or
consent election within six (6) months from date of declaration of failure
of election.
Section 19. Action on the motion. - Within twenty-four (24) hours from
receipt of the motion, the Election Officer shall immediately schedule the
conduct of another certification or consent election within fifteen (15)
days from receipt of the motion and cause the posting of the notice of
certification election at least ten (10) days prior to the scheduled date of
election in two (2) most conspicuous places in the establishment. The
same guidelines and list of voters shall be used in the election.

3.13g Run-off Election


Section 1. When proper. - When an election which provides for three (3)
or more choices results in none of the contending unions receiving a
majority of the valid votes cast, and there are no objections or challenges
which if sustained can materially alter the results, the Election Officer
shall motu propio conduct a run-off election within ten (10) days from the
close of the election proceedings between the labor unions receiving the
two highest number of votes; provided, that the total number of votes for
all contending unions is at least fifty (50%) percent of the number of votes
cast.
"No Union" shall not be a choice in the run-off election.
Notice of run-off elections shall be posted by the Election Officer at least
five (5) days before the actual date of run-off election.
Section 2. Qualification of voters. - The same voters' list used in the
certification election shall be used in the run-off election. The ballots in
the run-off election shall provide as choices the unions receiving the
highest and second highest number of the votes cast. The labor union
receiving the greater number of valid votes cast shall be certified as the
winner, subject to Section 20, Rule IX.

To summarize, a run-off election is proper if five concurrent


conditions exist, namely:
1. a valid election took place because majority of the CBU
members voted.

LABOR RELATIONS
2. the election presented a least three choices, e.g., Union One,
Union Two, and No Union, meaning there are at least two union
candidates.
3. not one of the unions obtained the majority ofthe valid votes.
4. the total number of votes for all the unions is at least 50% of the
valid votes cast.
5. there is no unresolved challenge of voter or election protest.
3.14 Appeal to Secretary as to Election ResultSee D.O. No. 40E-03 (dated 30 November 2005)
3.15 Election Irregularities, Protest by Employer
The manner in which the election was held could make the difference
between industrial strife and industrial harmony in the company. What an
employer is prohibited from doing is to interfere with the conduct of the
certification election for the purpose of influencing its outcome. But
certainly an employer has an abiding interest in seeing to it that the
election is clean, peaceful, orderly and credible.

4. THIRD METHOD: CONSENT ELECTION


Like a CE, its purpose is the same, namely, to find out which union
should serve as the bargaining agent. The difference is that a
certification is ordered by the Department while a consent election
is voluntarily agreed upon by the parties, with or without the
intervention of the Department.
Two or more unions are involved in a consent election. And like
certification election, consent election may take place in an
unorganized or organized establishment.
4.1 Effect of Consent Election
Section 23. Effects of consent election. - Where a petition for certification
election had been filed, and upon the intercession of the Med-Arbiter, the
parties agree to hold a consent election, the results thereof shall constitute
a bar to the holding of a certification election for one (1) year from the
holding of such consent election. Where an appeal has been filed from the
results of the consent election, the running of the one-year period shall be
suspended until the decision on appeal has become final and executory.
Where no petition for certification election was filed but the parties
themselves agreed to hold a consent election with the intercession of the
Regional Office, the results thereof shall constitute a bar to another
petition for certification election.

5. THE WINNER
REPRESENTATIVE

AS

SOLE

AND

EXCLUSIVE

Collective bargaining contemplates the representation of the


collective bargaining interests of all the employees in the particular
bargaining unit by a properly selected bargaining agent. The
selection of a bargaining agent by a majority of such employees,
under express provisions of the Act, constitutes the agent as the
representative of all the employees within the particular bargaining
unit. The Act provides that such bargaining agent shall be the
exclusive representative of the employees. The term exclusive
was interpreted under the original Act to mean that the employer
must treat with the representative to the exclusion of all other
claiming bargaining agents.

45

5.1 Exclusive Bargaining Agent Represents Even the Minority


Union
On the part of the union that won in the certification election, it becomes,
and is certified as, the exclusive bargaining agent of all the workers in the
bargaining unit. It represents even the members of the minority union.
However, although the union has every right to represent its members in
the negotiation regarding the terms and conditions of their employment, it
cannot negate their wishes on matters which are purely personal and
individual to them.

5.2 Protection and Capacity of the Loser; the Duty of Fair


Representation
What if the majority union neglects the interest of the employees
in the minority union? The majority union in such case will be
violating its duty of fair representation. This duty obligates the
majority union to serve the interest of all members of the whole
bargaining unit without hostility or discrimination.
What can the minority do? The minority union, although a loser in
the election, does not lose its character as a lawful labor
organization entitled to protection under Article 246 which makes
it unlawful for any person to abridge the right to self-organization.
(see also Article 255)
May a minority union charge the employer with ULP? Yes. It can
file an individual or group complaint for ULP. It can even engage
in peaceful concerted activity. But it cannot resort to work
stoppage or strike because strike is reserved, under Article 263, to
an exclusive bargaining representative (i.e., the majority union), if
there is one.
5.3 Is the Bargaining Union a Majority Union?
The minority unions entitlement to protection gains greater force
and respect if it is remembered that the bargaining union does not
always comprise the numerical majority in the bargaining unit.
Article 256 requires, for a union to win a CE, only a majority of
the valid votes cast. The majority of the valid votes may be lesser
that the majority of the employees in the bargaining unit.
Article 256 therefore does not support Article 255; in fact, they are
incongruent. Whereas Article 255 requires selection by majority of
the unit members, Article 256 requires only majority of the valid
votes cast. The result may be a bargaining agent that does not carry
the mandate of the majority of the employees.
5.4 May the Bargaining Agent Represent Retired Employees?
In pursuing their claim for retirement benefits under the CBA, the
claimant retirees are represented by the union of which they were
former members.
________
Title VII-A
GRIEVANCE MACHINERY
AND VOLUNTARY ARBITRATION

LABOR RELATIONS
Article. 260. Grievance machinery and voluntary arbitration. - The
parties to a Collective Bargaining Agreement shall include therein
provisions that will ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the adjustment
and resolution of grievances arising from the interpretation or
implementation of their Collective Bargaining Agreement and
those arising from the interpretation or enforcement of company
personnel policies.
All grievances submitted to the grievance machinery which are not
settled within seven (7) calendar days from the date of its
submission shall automatically be referred to voluntary arbitration
prescribed in the Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining Agreement
shall name and designate in advance a Voluntary Arbitrator or
panel of Voluntary Arbitrators, or include in the agreement a
procedure for the selection of such Voluntary Arbitrator or panel of
Voluntary Arbitrators, preferably from the listing of qualified
Voluntary Arbitrators duly accredited by the Board. In case the
parties fail to select a Voluntary Arbitrator or panel of Voluntary
Arbitrators, the Board shall designate the Voluntary Arbitrator or
panel of Voluntary Arbitrators, as may be necessary, pursuant to
the selection procedure agreed upon in the Collective Bargaining
Agreement, which shall act with the same force and effect as if the
Arbitrator or panel of Arbitrators has been selected by the parties
as described above.
________
1. CONTRACT ADMINISTRATION AS PART OF THE
DUTY TO BARGAIN
Collective bargaining is not an end in itself. It is a means to an
end, which is the making of collective agreements stabilizing
employment relations for a period of time with results
advantageous both to the worker and the employer.
However narrowly it may canalize its course, the execution of a
contract does not complete collective bargaining. Piece rates and
work assignments frequently require day-to-day adjustments;
periodic decisions must be made concerning such matters as shop
rules, job content, and the letting of subcontracts. There will be
ambiguities in the agreement to be clarified and gaps be filled. In
other words, the duty to bargain continues into the contract
administration stage.
In effect, therefore, contract negotiations are the legislative
process of collective bargaining; the day-to-day working out of
plant problems is its administrative or judicial aspects.
Strengthening the binding force of the CBA, Art. 248 considers as
unfair labor practice any act that violates an existing collective
bargaining agreement. But this law must be related to Art, 261
which limits that kind of ULP to gross violations only.
2. C.B.A., LAW BETWEEN THE PARTIES
The provisions of the collective bargaining agreement must be respected
since its terms and conditions "constitute the law between the parties."
Those who are entitled to its benefits can invoke its provisions. In the
event that an obligation therein imposed is not fulfilled, the aggrieved
party has the right to go to court for redress.

46

Unilaterally formulated rules and policy can neither contradict nor


undermine the CBA provisions.

LABOR RELATIONS
expressly making reference to it. Only thus could its validity
insofar as some of its provisions are concerned be assured.
4. BINDING EFFECT OF AGREEMENT

Since the collective bargaining agreement is considered the law between


the parties, containing as it does the agreed terms of employment of the
employee with his employer, unilaterally imposed orders or rules
qualifying the terms contained in the agreement are subordinate to the
CBA. At most, such rules, such as the rules on trips abroad formulated by
petitioner [school] a few months before Legaspis application, are merely
suppletory and can neither contradict nor undermine the terms found in
the CBA.

A collective bargaining agreement entered into by officers of a union, as


agent of the members, and an employer, gives rise to valid enforceable
contractual relations, against the individual union members in matters that
affect them peculiarly, and against the union in matters that affect the
entire membership or large classes of its members," and "a union member
who is employed under an agreement between the union and his employer
is bound by the provisions thereof, since it is a joint and several contract
of the members of the union entered into by the union as their agent."

2.1 Construing the Contract


4.1 Persons Entitled to Benefits
The CBA being a contract, the rules embodied in the Civil Code on
interpretation of contracts should govern. The intent of the parties should
be ascertained by considering relevant provisions of the said CBA. The
intention of the parties is primordial; if the terms of the contract are clear,
the literal meaning of the stipulations shall control, but if the words appear
to be contrary to the evident intention of the parties, the latter shall prevail
over the former.

It is true that whatever benefits the majority union obtains from the
employer accrue to its members as well as to non-members. For the
benefits of a collective bargaining agreement are extended to all
employees regardless of their membership in the union because to
withhold the same from the non-members would be to discriminate
against them.

Any doubts or ambiguity in the contract between management and the


union members should be resolved in the light of Article 1702 of the Civil
Code that: In case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living for the laborer.
This is also in consonance with the principle enunciated in the Labor Code
that all doubts should be resolved in favor of the worker.

It is even conceded that a laborer can claim benefits from a collective


bargaining agreement entered into between the company and the union of
which he is a member at the time of the conclusion of the agreement, even
after he has resigned from said union.

But contracts which are not ambiguous are to be interpreted according to


their literal meaning and should not be interpreted beyond their obvious
intendment.

Managers, who are not allowed to unionize to bargain collectively


with the employer, cannot claim the benefits contained in the CBA
negotiated by the workers under them. They cannot obtain
indirectly what they cannot do directly.

Compliance with a CBA is mandated by the expressed policy to give


protection to labor. In the same vein, CBA provisions should be
"construed liberally rather than narrowly and technically, and the courts
must place a practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and purpose which it
is intended to serve." This is founded on the dictum that a CBA is not an
ordinary contract but one impressed with public interest. It goes without
saying, however, that only provisions embodied in the CBA should be so
interpreted and complied with.

2.2 Proposal Contained in Minutes but Not in the CBA Itself


A proposal mentioned in the negotiation but not embodied in the
collective bargaining contract itself is not part of the CBA. It
cannot serve as basis of a charge of violating the CBA or of
bargaining in bad faith.
2.3 Zipper Clause
A device to forestall negotiation proposals after the CBA has been
signed is the zipper clause. It is a stipulation in a CBA indicating
that issues that could have been negotiated but not contained in the
CBA cannot be raised for negotiation when the CBA is already in
effect. In short, the CBA is a complete agreement; negotiation is
closed, as a zipper does.

4.2 Managers Not Entitled to CBA Benefits; Exception

Accordingly, managerial employees cannot, in the absence of an


agreement to the contrary, be allowed to share in the concessions obtained
by the labor union through collective negotiation. Otherwise, they would
be exposed to the temptation of colluding with the union during the
negotiations to the detriment of the employer.
However, there is nothing to prevent the employer from granting benefits
to managerial employees equal to or higher than those afforded to union
members. There can be no conflict of interest where the employer himself
voluntarily agrees to grant such benefits to managerial employees. In the
case at bar, at the beginning of petitioner's employment, he was told that
those who are not covered by the CBA would nevertheless be entitled to
benefits which would be, if not higher, at least equivalent to those
provided in the CBA. That private respondents made such a promise to
petitioner is not denied by them.

4.3 Effect of Collective Agreement on the Individual Contracts of


Employment

3. LAW DEEMED WRITTEN IN CONTRACT

When a collective agreement is concluded between a labor union


and an employer, the members of the labor union are precluded
from entering into individual contracts of employment. But if the
agreement merely fixes wages and working conditions, the
employer may enter into particular contracts of employment with
his employees even though both are bound by the general contract
as to wages and working conditions.

The principle is thus well-settled that an existing law enters into


and forms part of a valid contract without the need for the parties

5. ENFORCEABILITY
ENTERPRISE

AGAINST

TRANSFEREE

OF

47

LABOR RELATIONS
5.1 Purchase of Assets
The rule is that unless expressly assumed, labor contracts such as
employment contracts and collective bargaining agreements are not
enforceable against a transferee of an enterprise, labor contracts being in
personam, thus binding only between the parties. A labor contract merely
creates an action in personally and does not create any real right which
should be respected by third parties. This conclusion draws its force from
the right of an employer to select his employees and to decide when to
engage them as protected under our Constitution, and the same can only
be restricted by law through the exercise of the police power.
As a general rule, there is no law requiring a bona fide purchaser of assets
of an on-going concern to absorb in its employ the employees of the latter.

5.2 Exceptions
Although the purchaser of the assets or enterprise is not legally bound to
absorb in its employ the employers of the seller of such assets or
enterprise, the parties are liable to the employees if the transaction
between the parties is colored or clothed with bad faith.

5.3 Merger and Consolidation


Merger takes place when two or more corporations join into a
single corporation which is one of the merging corporations; the
separate existence of the other constituent corporations ceases.
Consolidation occurs when two or more corporations join into a
new single corporation; the separate existence of all the constituent
corporations ceases, except that of the consolidated corporation.
Section 80. Effects of merger or consolidation. - The merger or
consolidation shall have the following effects:
xxx
5. The surviving or consolidated corporation shall be responsible and
liable for all the liabilities and obligations of each of the constituent
corporations in the same manner as if such surviving or consolidated
corporation had itself incurred such liabilities or obligations; and any
pending claim, action or proceeding brought by or against any of such
constituent corporations may be prosecuted by or against the surviving or
consolidated corporation. The rights of creditors or liens upon the property
of any of such constituent corporations shall not be impaired by such
merger or consolidation. (n)

5.4 Wiley Doctrine


The disappearance by merger of a corporate employer which has
entered into a collective bargaining agreement with a union does
not automatically terminate all rights of the employees covered by
the agreement, even though the merger is for genuine business
reasons. Under the Wiley doctrine, a duty to arbitrate arising from
a collective bargaining agreement survives the employers ceasing
to do business as a separate entity after its merger with a
substantially large corporation, so as to be binding on the larger
corporation, where relevant similarity and continuity of operations
across the change in ownership is evidenced by the wholesale
transfer of the smaller corporations employees to the larger
corporations plant. If a contractual duty to arbitrate survives the
employers merger into another corporate employer, question as to
the effect of the merger on the rights of the employees covered by
the agreementthe former employees of the merged employer
are arbitrable if questions as to those rights would have been
arbitrable before the merger.

But a duty to arbitrate arising from collective bargaining


agreement does not survive in every case in which the ownership
or corporate structure of an enterprise is changed. It does not
survive where there is lack of any substantial continuity of identity
in the business enterprise before and after a change, or where the
union abandons its right to arbitration by failing to make its claims
known.
6.
CHANGE
OF
BARGAINING
SUBSTITUTIONARY DOCTRINE

AGENT;

How does disaffiliation affect the CBA?


The agreement is binding on the parties for the period therein specified.
The employees cannot revoke the validly executed collective bargaining
contract with their employer by the simple expedient of changing their
bargaining representative. Thus, when there occurs a shift in employees'
union allegiance after the execution of a bargaining contract with their
employer, and the employees change their bargaining representative, the
contract continues to bind them up to its expiration date. The new agent,
however, may bargain for the shortening of the contract period.
In formulating the "substitutionary" doctrine, the only consideration
involved was the employees' interest in the existing bargaining agreement.
The agent's interest never entered the picture. In fact, the justification 9 for
said doctrine was:
xxx that the majority of the employees, as an entity under the statute, is the
true party in interest to the contract, holding rights through the agency of
the union representative. Thus, any exclusive interest claimed by the agent
is defeasible at the will of the principal.... (Emphasis supplied)
Stated otherwise, the "substitutionary" doctrine only provides that the
employees cannot revoke the validly executed collective bargaining
contract with their employer by the simple expedient of changing their
bargaining agent. And it is in the light of this that the phrase "said new
agent would have to respect said contract" must be understood. It only
means that the employees, thru their new bargaining agent, cannot renege
on their collective bargaining contract, except of course to negotiate with
management for the shortening thereof.
The "substitutionary" doctrine, therefore, cannot be invoked to support the
contention that a newly certified collective bargaining agent automatically
assumes all the personal undertakings like the no-strike stipulation here
in the collective bargaining agreement made by the deposed union.
When BBWU bound itself and its officers not to strike, it could not have
validly bound also all the other rival unions existing in the bargaining
units in question. BBWU was the agent of the employees, not of the other
unions which possess distinct personalities. To consider UNION
contractually bound to the no-strike stipulation would therefore violate the
legal maxim that res inter alios nec prodest nec nocet.

7. GRIEVANCES
A grievance is defined as any question by either the employer or
the union regarding the interpretation or application of the
collective bargaining agreement or company personnel policies or
any claim by either party that the other party is violating any
provision of the CBA or company personnel policies.
If the term grievance is to be applied in the loose or generic sense,
any dispute or controversy respecting terms and conditions of
employment which an employee or group of employees may

48

LABOR RELATIONS
present to the employer can be a grievance, even without a union
or CBA.
The expansion of the original and exclusive jurisdiction of
voluntary arbitrators to include questions arising from the
interpretation and enforcement of company personnel policies has
the effect of widening the meaning and interpretation of a
grievance to include a situation where there is no collective
bargaining agent and no CBA.
Personnel policies are guiding principles stated in broad, longrange terms that express the philosophy or beliefs of an
organizations top authority regarding personnel matters.
They deal with matters affecting efficiency and well-being of
employees and include, among others, the procedures in
administration of wages, benefits, promotions, transfer and other
personnel movements which are usually not spelled out in the
collective agreement. The usual source of grievances, however, is
the rules and regulations governing disciplinary actions.
7.1 By-passing the Grievance Machinery: ULP
All grievances arising from the implementation or interpretation of
the collective bargaining agreement and/or interpretation and
enforcement of company personnel policies are compulsorily
subject to the grievance of machinery.

7.2 Waiver of Grievance Machinery Procedure and Submission to


VA
Article 262 of the Labor Code provides that upon agreement of the
parties, the voluntary arbitrator can hear and decide all other labor
disputes.
Contrary to the finding of the Court of Appeals, voluntary arbitration as a
mode of settling the dispute was not forced upon respondents. Both
parties indeed agreed to submit the issue of validity of the dismissal of
petitioner to the jurisdiction of the voluntary arbitrator by the Submission
Agreement duly signed by their respective counsels. As the voluntary
arbitrator had jurisdiction over the parties' controversy, discussion of the
second issue is no longer necessary.
The employees waiver of her option to submit her case to grievance
machinery did not amount to relinquishing her right to avail herself of
voluntary arbitration.

7.3 Structure and Procedure


In the absence of applicable provision in the collective bargaining
agreement, a grievance committee shall be created within ten (10) days
from signing of the collective bargaining agreement. The committee shall
be composed of at least two (2) representatives each from the members of
the bargaining unit and the employer, unless otherwise agreed upon by the
parties. The representatives from among the members of the bargaining
unit shall be designated by the union.

Upholding the requirement, the Court has ruled that the grievance
procedure provided in the CBA should be adhered to by the
parties. Refusal or failure to do so is an unfair labor practice,
because the grievance procedure is part of the continuous process
of collective bargaining. It is intended to promote friendly
dialogue between labor and management as a means of
maintaining industrial peace.

Section 2. Procedure in handling grievances. - In the absence of a specific


provision in the collective bargaining agreement or existing company
practice prescribing for the procedures in handling grievance, the
following shall apply:

Before an aggrieved employee may resort to the courts to enforce


his individual rights under a bargaining contract, the employee
must exhaust all the remedies available to him under such contract.
And a court should not entertain any complaint by an aggrieved
employee until proper use has been made of the contract grievance
procedure agreed upon by employer and the bargaining
representative.

(b) If the grievance is valid, the shop steward shall immediately bring the
complaint to the employee's immediate supervisor. The shop steward, the
employee and his immediate supervisor shall exert efforts to settle the
grievance at their level.

The grievance machinery under the agreement is the very heart of


industrial self0government.
May a grievance be brought to voluntary arbitration without
passing through the grievance procedure under the CBA?
This appears to be proscribed by the Labor Code which directs the
parties to a CBA to establish a grievance machinery for the
adjustment and resolution of grievances arising from the
interpretation or enforcement of company personnel policies.
In view, however, of the State policy to encourage voluntary
arbitration of all other labor-management disputes, it is submitted
that a grievance may be brought directly to voluntary arbitration
without passing through the grievance machinery, especially when
the latter has been proven to be ineffective in the past, or when the
parties inadvertently failed to include a grievance machinery
provision in their CBA.

(a) An employee shall present this grievance or complaint orally or in


writing to the shop steward. Upon receipt thereof, the shop steward shall
verify the facts and determine whether or not the grievance is valid.

(c) If no settlement is reached, the grievance shall be referred to the


grievance committee which shall have ten (10) days to decide the case.
Where the issue involves or arises from the interpretation or
implementation of a provision in the collective bargaining agreement, or
from any order, memorandum, circular or assignment issued by the
appropriate authority in the establishment, and such issue cannot be
resolved at the level of the shop steward or the supervisor, the same may
be referred immediately to the grievance committee.

8. VOLUNTARY ARBITRATION
Section 3. Submission to voluntary arbitration. - Where grievance remains
unresolved, either party may serve notice upon the other of its decision to
submit the issue to voluntary arbitration. The notice shall state the issue or
issues to be arbitrated, copy thereof furnished the board or the voluntary
arbitrator or panel of voluntary arbitrators named or designated in the
collective bargaining agreement. If the party upon whom the notice is
served fails or refuses to respond favorably within seven (7) days from
receipt thereof, the voluntary arbitrator or panel of voluntary arbitrators
designated in the collective bargaining agreement shall commence
voluntary arbitration proceedings. Where the collective bargaining
agreement does not so designate, the board shall call the parties and

49

appoint a voluntary arbitrator or panel of voluntary arbitrators, who shall


thereafter commence arbitration proceedings in accordance with the
proceeding paragraph.
In instances where parties fail to select a voluntary arbitrator or panel of
voluntary arbitrators, the regional branch of the Board shall designate the
voluntary arbitrator or panel of voluntary arbitrators, as may be necessary,
which shall have the same force and effect as if the parties have selected
the arbitrator.

The parties to a CBA will decide on the number of arbitrators who


may hear a dispute only when the need for it arises. Even the law
itself does not specify the number of arbitrators. Their alternatives
whether to have one or three arbitrators have their respective
advantages and disadvantages. In this matter, cost is not the only
consideration; full deliberation on the issues is another, and it is
best accomplished in a hearing conducted by three arbitrators. In
effect, the parties are afforded the latitude to decide for themselves
the composition of the grievance machinery as they find
appropriate to a particular situation.
Labor arbitration is the reference of a labor dispute to a third party
for determination on the basis of evidence and arguments
presented by such parties, who are bound to accept the decision.
Voluntary arbitration has been defined as a contractual proceeding
whereby the parties to any dispute or controversy, in order to obtain a
speedy and inexpensive final disposition of the matter involved, select a
judge of their own choice and by consent submit their controversy to him
for determination. Under voluntary arbitration, on the other hand, referral
of a dispute by the parties is made, pursuant to a voluntary arbitration
clause in their collective agreement, to an impartial third person for a final
and binding resolution.
Ideally, arbitration awards are supposed to be complied with by both
parties without delay, such that once an award has been rendered by an
arbitrator, nothing is left to be done by both parties but to comply with the
same. After all, they are presumed to have freely chosen arbitration as the
mode of settlement for that particular dispute. Pursuant thereto, they have
chosen a mutually acceptable arbitrator who shall hear and decide their
case. Above all, they have mutually agreed to de bound by said arbitrator's
decision.
Compulsory arbitration is a system whereby the parties to a dispute are
compelled by the government to forego their right to strike and are
compelled to accept the resolution of their dispute through arbitration by a
third party. 1 The essence of arbitration remains since a resolution of a
dispute is arrived at by resort to a disinterested third party whose decision
is final and binding on the parties, but in compulsory arbitration, such a
third party is normally appointed by the government.
In Philippine context, the judge in voluntary arbitration is called
arbitrator, while that in compulsory is labor arbiter. The jurisdiction of a
VA is stated in Articles 261 and 262 while that of an LA is in Article 217.

8.1 Voluntary Arbitration: A Private Judicial System


A voluntary arbitrator is not a public tribunal imposed upon the
parties by a superior authority which the parties are obliged to
accept. He has no general character to administer justice for a
community which transcends the parties. He is rather part of a
system of self-government created by and confined to the parties.

LABOR RELATIONS
The primary function of voluntary labor arbitration is to provide
(1) a process for the orderly disposition of disputes and (2) a
foundation for stable labor-management relations.
8.2 Voluntary Arbitration: A Master Procedure
In labor-management relations voluntary arbitration is a master
procedure. Any and all kinds of labor disputes may be submitted
to, settled, or resolved through voluntary arbitration, if the parties
so desire. Money claims, bargaining deadlocks, strike or lockout,
employment termination, and even questions about existence or
absence of employer-employee relationship, may be resolved by
the partieswith finalityby availing themselves of voluntary
arbitration.
As a master procedure voluntary arbitration takes precedence over
other dispute settlement devices (i.e., cases before the labor arbiter
or Secretary of Labor or the NLRC)
A dispute pending in voluntary arbitration (or compulsory
arbitration, for that matter) cannot be the subject of a strike or
lockout notice.
9. WHO MAY BE ACCREDITED AS VOLUNTARY
ARBITRATOR
The following are the minimum criteria for accreditation as voluntary
arbitrator:
1. A Filipino citizen residing in the Philippines;
2. A holder of at least a Bachelors Degree in any field of behavioral or
applied sciences or equivalent educational training short of a Bachelors
Degree;
3. At least five (5) years experience in the field of Labor-Management
relations;
4. Completion of a training course on voluntary arbitration conducted by
the Board; and
5. A person of good moral character, noted for impartiality, probity, and
has not been civilly, criminally and administratively adjudged guilty of
any offense involving moral turpitude as evidenced by a duly sworn
affidavit.

10. HOW VOLUNTARY ARBITRATOR IS CHOSEN


A voluntary arbitrator is chosen by the parties themselves
(preferably accredited by the NCMB). The choice is usually
influenced by the trust in the persons fairness and knowledge of
the dynamics, including law, of labor-management relation.
The preferred method of selection is by mutual agreement of the
parties. Alternative methods include the selection or appointment
by an administrative agency like the NCMB.
Parties in general may choose between the use of a temporary
(when a dispute is already at hand; specific) or permanent
arbitrator (before a dispute arises; for a period of time, usually
during the life of the CBA). They have also a choice as to the
number of arbitrators, either a sole arbitrator or a panel of
arbitrators or Arbitration Board.

50

11. DISTINGUISHED FROM A COURT OF LAW


Court of Law
Formal
Follow precedents
Rules
of
evidence
observed
Decisions
may
be
appealed to the higher
court
Hear a great variety of
cases
Services of a lawyer is
essential
due
to
complexity

Arbitration
Informal
Not obliged
Not observed
No comparable
recourse
Hear
only
disputes
Not essential

appeal

industrial

Arbitration, in sum, is a non-technical and relatively inexpensive


procedure for obtaining a quick solution to industrial disputes by
persons who have specialized knowledge of labor management
relations.
________
Article. 261. Jurisdiction of Voluntary Arbitrators or panel of
Voluntary Arbitrators. - The Voluntary Arbitrator or panel of
Voluntary Arbitrators shall have original and exclusive jurisdiction
to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining
Agreement and those arising from the interpretation or
enforcement of company personnel policies referred to in the
immediately preceding article. Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and
shall be resolved as grievances under the Collective Bargaining
Agreement. For purposes of this article, gross violations of
Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such
agreement.
The Commission, its Regional Offices and the Regional Directors
of the Department of Labor and Employment shall not entertain
disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose and refer the same to the
Grievance Machinery or Voluntary Arbitration provided in the
Collective Bargaining Agreement.
________
Article. 262. Jurisdiction over other labor disputes. - The Voluntary
Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including
unfair labor practices and bargaining deadlocks.
________

LABOR RELATIONS
to an impartial outsider for settlement the collective bargaining
issue which they had been unable to settle by themselves, whether
or not aided by conciliators. Contract interpretation disputes are
disputes arising under an existing collective bargaining agreement,
involving such matters as the interpretation and application of the
contract, or alleged violation of its provisions.
Arbitration of contract negotiation disputes is often known as
arbitration of interest, while arbitration of contract interpretation
disputes is known as arbitration of grievance or rights.
2. JURISDICTION OF L.A. AND V.A.
The aforecited provisions of law cannot be read in isolation or separately.
They must be read as a whole and each Article of the Code reconciled one
with the other. An analysis of the provisions of Articles 217, 261, and 262
indicates, that:
1. The jurisdiction of the Labor Arbiter and Voluntary Arbitrator or Panel
of Voluntary Arbitrators over the cases enumerated in Articles 217, 261
and 262, can possibly include money claims in one form or another.
2. The cases where the Labor Arbiters have original and exclusive
jurisdiction are enumerated in Article 217, and that of the Voluntary
Arbitrator or Panel of Voluntary Arbitrators in Article 261.
3. The original and exclusive jurisdiction of Labor Arbiters is qualified by
an exception as indicated in the introductory sentence of Article 217 (a),
to wit:
Art. 217.
Jurisdiction of Labor Arbiters . . . (a) Except as
otherwise provided under this Code the Labor Arbiter shall have original
and exclusive jurisdiction to hear and decide . . . the following cases
involving all workers. . . .
The phrase "Except as otherwise provided under this Code" refers to the
following exceptions:
A. Art. 217. Jurisdiction of Labor Arbiters . . .
xxx
(c) Cases arising from the interpretation or implementation of collective
bargaining agreement and those arising from the interpretation or
enforcement of company procedure/policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitrator as may be provided in said agreement.
B. Art. 262. Jurisdiction over other labor disputes. The Voluntary
Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including unfair
labor practices and bargaining deadlocks.
4. The jurisdiction of Voluntary Arbitrator or Panel of Voluntary
Arbitrators is provided for in Arts. 261 and 262 of the Labor Code as
indicated above.

1. ARBITRABLE DISPUTES

A. A close reading of Article 261 indicates that the original and exclusive
jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is
limited only to:

In the field of labor relations, arbitration applies to two kinds of


disputes: (1) contract-negotiation disputes; and (2) contractinterpretation disputes. Contract negotiation disputes are disputes
as to the terms of a collective bargaining agreement. Where there
is an existing agreement to arbitrate such disputes, and a
bargaining deadlock or impasse has arisen, the disputants submit

. . . unresolved grievances arising from the interpretation or


implementation of the Collective Bargaining Agreement and those arising
from the interpretation or enforcement of company personnel policies . . .
Accordingly, violations of a collective bargaining agreement, except those
which are gross in character, shall no longer be treated as unfair labor

51

LABOR RELATIONS
practice and shall be resolved as grievances under the Collective
Bargaining Agreement. . . . .
B. Voluntary Arbitrators or Panel of Voluntary Arbitrators, however, can
exercise jurisdiction over any and all disputes between an employer and a
union and/or individual worker as provided for in Article 262.
It must be emphasized that the jurisdiction of the Voluntary Arbitrator or
Panel of Voluntary Arbitrators under Article 262 must be voluntarily
conferred upon by both labor and management. The labor disputes
referred to in the same Article 262 can include all those disputes
mentioned in Article 217 over which the Labor Arbiter has original and
exclusive jurisdiction.
As shown in the above contextual and wholistic analysis of Articles 217,
261, and 262 of the Labor Code, the National Labor Relations
Commission correctly ruled that the Labor Arbiter had no jurisdiction to
hear and decide petitioner's money-claim-underpayment of retirement
benefits, as the controversy between the parties involved an issue "arising
from the interpretation or implementation" of a provision of the collective
bargaining agreement. The Voluntary Arbitrator or Panel of Voluntary
Arbitrators has original and exclusive jurisdiction over the controversy
under Article 261 of the Labor Code, and not the Labor Arbiter.

2.1 Jurisdiction over Termination Disputes


The preference or bias of the law in favor of voluntary arbitration
justifies the view that employment termination disputes, arising
from CBA or personnel policy implementation, are cognizable by
a voluntary arbitrator and not a labor arbiter. Such termination
cases, if filed with a labor arbiter, is to be dismissed for lack of
jurisdiction and referred to the concerned NCMB Regional Branch
for appropriate action.
Article 260 of the Labor Code on grievance machinery and voluntary
arbitrator states that "(t)he parties to a Collective Bargaining Agreement
shall include therein provisions that will ensure the mutual observance of
its terms and conditions. They shall establish a machinery for the
adjustment and resolution of grievances arising from the interpretation or
implementation of their Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel
policies." It is further provided in said article that the parties to a CBA
shall name or designate their respective representatives to the grievance
machinery and if the grievance is not settled in that level, it shall
automatically be referred to voluntary arbitrators (or panel of voluntary
arbitrators) designated in advance by the parties. It need not be mentioned
that the parties to a CBA are the union and the company. Hence, only
disputes involving the union and the company shall be referred to the
grievance machinery or voluntary arbitrators.
Article 261 of the Labor Code which grants to voluntary arbitrators
original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the
collective bargaining agreement and those arising from the interpretation
or enforcement of company personnel policies. Note the phrase
"unresolved grievances." In the case at bar, the termination of petitioner is
not an unresolved grievance.
Article 260 further provides that the parties to a CBA shall name or
designate their respective representative to the grievance machinery and if
the grievance is unsettled in that level, it shall automatically be referred to
the voluntary arbitrators designated in advance by the parties to a CBA of
the union and the company. It can thus be deduced that only disputes
involving the union and the company shall be referred to the grievance
machinery or voluntary arbitrators.

Policies are formulated by management even before a company


opens for business in order to guide the men in the operational
level, the line manager or supervisor as to the scope of their
activities, authority and responsibility, and to enable them to arrive
at sound decisions. Policies are valuable in fixing definite
objectives for the organization. Policy statements are also needed
to allow subordinate executives to make fair and consistent
decisions on recurrent problems. They promote uniformity of
action and prevent conflicting decisions especially as regards labor
matter.
Company policies must be issued by top management which is
responsible for making major policies that are by nature companywide in application.
Minor policies, better known as rules and procedures, are the
extension of major policies and are usually formulated by minor
executives or department managers. Rules are specific guides
intended to govern conduct and action of operating supervisors
and employees in the performance of their designated activities.
Procedures are made to specify ways or methods of carrying out
policies and rules. A procedure tells what work or task to do, how
to do it, and when to do it.
2.2 Jurisdiction over CBA Violations
CBA violations not constituting ULP are likewise cognizable by a
voluntary arbitrator if not resolved through the grievance
machinery. If the violations, however, are gross in character,
these are to be treated as unfair labor practice which, following
Art. 217 (a-1), are to be heard and decided by a labor arbiter.
The law wants the industrial players to resolve their differences by
and among themselves as much as possible. And if they need help,
they are likewise free to agree where that help may come from.
For a ULP case to be cognizable by the Labor Arbiter, and the NLRC to
exercise its appellate jurisdiction, the allegations in the complaint should
show prima facie the concurrence of two things, namely: (1) gross
violation of the CBA; AND (2) the violation pertains to the economic
provisions of the CBA.
Unsubstantiated conclusions of bad faith and unjustified refusal to reemploy petitioners, to our mind, do not constitute gross violation of the
CBA for purposes of lodging jurisdiction with the Labor Arbiter and the
NLRC. Although evidentiary matters are not required (and even
discouraged) to be alleged in complaint, still, sufficient details supporting
the conclusion of bad faith and unjust refusal to re-employ petitioners
must be indicated. Furthermore, it is even doubtful if the CBA provision
on re-employment fits into the accepted notion of an economic provision
of the CBA.

2.3 Other Cases


Section 4. Jurisdiction of voluntary arbitrator or panel of voluntary
arbitrators. - The voluntary arbitrator or panel of voluntary arbitrators
shall have exclusive and original jurisdiction to hear and decide all
grievances arising from the implementation or interpretation of the
collective bargaining agreements and those arising from the interpretation
or enforcement of company personnel policies which remain unresolved
after exhaustion of the grievance procedure.

2.1a Policies, Rules, Procedures

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They shall also have exclusive and original jurisdiction, to hear and decide
wage distortion issues arising from the application of any wage orders in
organized establishments, as well as unresolved grievances arising from
the interpretation and implementation of the productivity incentive
programs under RA 6971.
Upon agreement of the parties, any other labor dispute may be submitted
to a voluntary arbitrator or panel of voluntary arbitrators. Before or at any
stage of the compulsory arbitration process, the parties may opt to submit
their dispute to voluntary arbitration.
The National Labor Relations Commission, its regional branches and
Regional Directors of the Department of Labor and Employment shall not
entertain disputes, grievances or matters under the exclusive and original
jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators and
shall immediately dispose and refer the same to the appropriate grievance
machinery or voluntary arbitration provided in the collective bargaining
agreement.

2.4 Dispute over Companys Drug Abuse Policy


A unions petition to enjoin implementation of the companys drug policy
is a labor dispute beyond RTCs jurisdiction. It is a personnel policy
dispute within the jurisdiction of a VA.

3. HOW VOLUNTARY ARBITRATION IS INITIATED


Voluntary arbitration may be initiated either by 1) a Submission or
2) by a Demand or Notice invoking a collective agreement
arbitration clause. Sometimes both instruments are used in a case.
Submission is sometimes called a Stipulation or an Agreement
to Arbitrate. It is used where there is no previous agreement to
arbitrate. The Submission, which must be signed by both parties,
describes an existing dispute; it often names the arbitrator,
procedures in the hearing and it sometimes contains considerable
details of the arbitrators authority and other matters which the
parties wish to control. Submission is more appropriate in interest
disputes since collective agreement generally do not provide for
the arbitration of such disputes that may arise in the future.
Submission is often entered into after the dispute has materialized
and the issues can already be defined.
However, Demand or Notice of Intent to Arbitrate is more
applicable to rights dispute because collective agreements are
required under RA 6715 to provide for a grievance procedure and
a voluntary arbitration clause with respect to disputes arising from
the application or interpretation of the agreement. Thus, there is an
agreement to arbitrate future dispute that may arise under and
during the term of the CBA. If a dispute is covered by such an
arbitration clause, arbitration may be initiated unilaterally by one
party by serving upon the other a written demand or notice of
intent to arbitrate.
3.1 The Submission Agreement; Extent of Arbitrators Authority
Although the contract may establish the breadth of the arbitrators
power and the limits of his authority, his power may be more
sharply defined in the submission agreement. Frequently, the
parties jointly formulate in writing the specific issues to be decided
by the arbitrator. Sometimes the arbitrator is asked by the parties to
help them frame the issue on the basis of the written grievance or
the case as presented.

LABOR RELATIONS
In general, the arbitrator is expected to decide those questions
expressly stated and limited in the submission agreement.
However, since arbitration is the final resort for the adjudication of
disputes, the arbitrator will assume that he has the power to make a
final settlement.
It is thus essential to stress that the Voluntary Arbitrator had
plenary jurisdiction and authority to interpret the agreement to
arbitrate and to determine the scope of hs own authority subject
only, in a proper case, to the certiorari jurisdiction of this Court.
Generally, the arbitrator is expected to decide only those questions
expressly delineated by the submission agreement. Nevertheless,
the arbitrator can assume that he has the necessary power to make
a final settlement since arbitration is the final resort for
adjudication of disputes.
The issue of regularization should be viewed as two-tiered issue. While
the submission agreement mentioned only the determination of the date or
regularization, law and jurisprudence give the voluntary arbitrator enough
leeway of authority as well as adequate prerogative to accomplish the
reason for which the law on voluntary arbitration was created speedy
labor justice. It bears stressing that the underlying reason why this case
arose is to settle, once and for all, the ultimate question of whether
respondent employees are entitled to higher benefits. To require them to
file another action for payment of such benefits would certainly
undermine labor proceedings and contravene the constitutional mandate
providing full protection to labor.

4. POWERS OF THE ARBITRATOR


The study of collective bargaining agreements discloses different
types of arbitration clauses with varying degrees of power granted
to the arbitration. This power may be very limited or unusually
broad in scope.
4.1 Power to Arbitrate Any Dispute
The contract clause that gives the arbitrator the broadest scope of
power is commonly known as the disputes clause.
This type of clause grants the arbitrator jurisdiction to hear and
determine practically any matter in dispute between the parties.
Moreover, he is not necessarily limited to matters specifically
stated in the contract. It is common, however, for some
relationship to be shown between the matter in dispute and the
provisions of the contract.
4.2 No Power to Add To or Subtract From the Contract
Some arbitration clauses limit the arbitrators power to an
interpretation and application of the contract and further
specifically provide that he shall have no power to add to or
subtract from the contract.
Such clauses clearly state the parties intention that the arbitrator
will be empowered only to interpret the contract but not add to or
modify it.
As a general rule, the authority of an arbitrator embraces or covers
the following:

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LABOR RELATIONS
1. General authority to investigate and hear the case upon notice of
the parties and to render an award based on the contract and record
of the case;
2. Incidental authority to perform all acts necessary to an adequate
discharge of his duties and responsibilities like setting and conduct
of hearing, attendance of witnesses and proof documents and other
evidences, fact-finding and other modes of discovery, reopening of
hearing, etc.;
3. Special power in aid of his general contractual authority like the
authority to determine arbitrability of any particular dispute and to
modify any provision of existing agreement upon which a
proposed change is submitted for arbitration.
5. FUNCTIONS OF ARBITRATOR
The labor arbitrator under a collective bargaining agreement is an
indispensable agency in the continuous collective bargaining
process. He sits to settle disputes at the plant leveldisputes
which require for their solution knowledge of the custom and
practices of a particular factory or of a particular industry as
reflected in particular agreements.
On the other hand, the power and authority of arbitrators in labor
dispute cases is derived from and limited by the terms of the
parties agreement. The arbitrator is confined to interpretation and
application of the CBA; he does not sit to dispense his own brand
of industrial justice. The arbitrators authority is contractual rather
than judicial in nature; his power is conferred by the CBA; and his
duty with respect to that agreement is to settle disputes arising
thereunder by applying and interpreting that agreement.
But so long as an arbitrator is not arbitrary, he has wide latitude in
exercising his authority, especially in fashioning an appropriate
remedy.

All parties to the dispute shall be entitled to attend the arbitration


proceedings. The attendance of any third party or the exclusion of
any witness from the proceedings shall be determined by the
Voluntary Arbitrator or panel of Voluntary Arbitrators. Hearing
may be adjourned for cause or upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory for the
Voluntary Arbitrator or panel of Voluntary Arbitrators to render an
award or decision within twenty (20) calendar days from the date
of submission of the dispute to voluntary arbitration.
The award or decision of the Voluntary Arbitrator or panel of
Voluntary Arbitrators shall contain the facts and the law on which
it is based. It shall be final and executory after ten (10) calendar
days from receipt of the copy of the award or decision by the
parties.
Upon motion of any interested party, the Voluntary Arbitrator or
panel of Voluntary Arbitrators or the Labor Arbiter in the region
where the movant resides, in case of the absence or incapacity of
the Voluntary Arbitrator or panel of Voluntary Arbitrators, for any
reason, may issue a writ of execution requiring either the sheriff of
the Commission or regular courts or any public official whom the
parties may designate in the submission agreement to execute the
final decision, order or award.
________
1. COMPLIANCE WITH DUTY TO ARBITRATE
If a CBA requires settlement of disputes exclusively by the
arbitration, then arbitration is needed before court suits for breach
of the contract may be filed.
Nonetheless, the parties to a CBA may waive the arbitration
covenants of the agreement, but their conduct must clearly show
that intention.

5.1 Arbitrators Interpretation of CBA


It is said that an arbitral award does not draw its essence from the CBA;
hence, there is an unauthorized amendment or alteration thereof, if:

2.
WHO
DETERMINES
PROCEDURES

THE

ARBITRATION

3. It is without factual support in view of its language, its context, and any
other indicia of the parties' intention;

In practice, voluntary arbitration of labor cases use procedures


based on the Labor Code as amended by RA 6715 and its
Implementing Rules, the CBA, and other agreements of the
parties, the directives of the arbitrator, and the procedural rules of
appropriate agencies like the NCMB Procedural Guidelines in
Conduct of Voluntary Arbitration Proceedings.

4. It ignores or abandons the plain language of the contract;

3. ETHICAL STANDARDS OF ARBITRATORS

5. It is mistakenly based on a crucial assumption which concededly is a


nonfact;

An arbitrator is obliged to maintain a high level of professional


ethics in his relationship with the parties and the appointing
agencies. He also has a responsibility to society. His conduct
should be above reproach. Since in effect, he is a judge, and his
ethics must be on the same high level as the code that governs the
conduct of judicial tribunals.

1. It is so unfounded in reason and fact;


2. It is so unconnected with the working and purpose of the agreement;

6. It is unlawful, arbitrary or capricious; and


7. It is contrary to public policy.

________
Article. 262-A. Procedures. - The Voluntary Arbitrator or panel of
Voluntary Arbitrators shall have the power to hold hearings,
receive evidences and take whatever action is necessary to resolve
the issue or issues subject of the dispute, including efforts to effect
a voluntary settlement between parties.

Failure on the part of the voluntary arbitrator to render a decision,


resolution, order or award within the prescribed period, shall upon
complaint of a party, be sufficient ground for the Board to discipline said
voluntary arbitrator, pursuant to the guidelines issued by the Secretary. In
cases that the recommended sanction is de-listing, it shall be unlawful for

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the voluntary arbitrator to refuse or fail to turn over to the board, for its
further disposition, the records of the case within ten (10) calendar days
from demand thereof.

4. VOLUNTARY ARBITRATION AWARD GENERALLY


FINAL; EXCEPTIONS
The decisions of voluntary arbitrators must be given the highest respect
and as a general rule must be accorded a certain measure of finality. This
is especially true where the arbitrator chosen by the parties enjoys the first
rate credentials. It is not correct, however, that this respect precludes the
exercise of judicial review over their decisions.
Inspite of statutory provisions making 'final' the decisions of certain
administrative agencies, we have taken cognizance of petitions
questioning these decisions where want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice, or
erroneous interpretation of the law were brought to our attention.
A voluntary arbitrator by the nature of her fucntions acts in quasi-judicial
capacity. There is no reason why herdecisions involving interpretation of
law should be beyond this Court's review. Administrative officials are
presumed to act in accordance with law and yet we do hesitate to pass
upon their work where a question of law is involved or where a showing
of abuse of authority or discretion in their official acts is properly raised in
petitions for certiorari.

The Labor Code and its Implementing Rules thus clearly reflect
the important public policy of encouraging recourse to voluntary
arbitration and of shortening the arbitration process by rendering
the arbitral award non- appealable to the NLRC. The result is that
a voluntary arbitral award may be modified and set aside only
upon the same grounds on which a decision of the NLRC itself
may be modified or set aside, by the Supreme Court.

LABOR RELATIONS
4.2a From VA to CA: Mode of Appeal is Rule 43, not 65
The mode of appeal from VA to the CA is therefore Rule 43 of the 1997
Rules of Procedure. It is not Rule 65 because a petition for certiorari under
that Rule lies only where there is no appeal and no plain, speedy and
adequate remedy in the ordinary course of law. Certiorari under Rule 65
cannot be allowed when a party to a case fails to appeal a judgment
despite the availability of that remedy, certiorari not being a substitute for
lost appeal. The remedies of appeal and certiorari are mutually exclusive
and not alternative or successive.

4.3 Findings of Facts of a Voluntary Arbitrator


________
Article. 262-B. Cost of voluntary arbitration and Voluntary
Arbitrators fee. - The parties to a Collective Bargaining
Agreement shall provide therein a proportionate sharing scheme
on the cost of voluntary arbitration including the Voluntary
Arbitrators fee. The fixing of fee of Voluntary Arbitrators,
whether shouldered wholly by the parties or subsidized by the
Special Voluntary Arbitration Fund, shall take into account the
following factors:
(a) Nature of the case;
(b) Time consumed in hearing the case;
(c) Professional standing of the Voluntary Arbitrator;
(d) Capacity to pay of the parties; and
(e) Fees provided for in the Revised Rules of Court.
________

4.1 Motion for Reconsideration*


Section 7. Finality of Award/Decision. - The decision, order, resolution or
award of the voluntary arbitrator or panel of voluntary arbitrators shall be
final and executory after ten (10) calendar days from receipt of the copy
of the award or decision by the parties and it shall not be subject of a
motion for reconsideration.

4.2 Review of Award by Certiorari


The voluntary arbitrator no less performs a state function pursuant to a
governmental power delegated to him under the provisions therefor in the
Labor Code and he falls, therefore, within the contemplation of the term
"instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place
him within the exceptions to said Sec. 9 since he is a quasi-judicial
instrumentality as contemplated therein.
A fortiori, the decision or award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the Court of Appeals, in line
with the procedure outlined in Revised Administrative Circular No. 1-95,
just like those of the quasi-judicial agencies, boards and commissions
enumerated therein.
In effect, this equates the award or decision of the voluntary arbitrator
with that of the regional trial court. Consequently, in a petition for
certiorari from that award or decision, the Court of Appeals must be
deemed to have concurrent jurisdiction with the Supreme Court. As a
matter of policy, this Court shall henceforth remand to the Court of
Appeals petitions of this nature for proper disposition.

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