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GOVERNING LAW

VOL. 200, AUGUST 8, 1991

399

Oca, Jr. vs. Trajano

G.R. No. 76189. August 8, 1991.*

ROBERTO M. OCA, JR., ET AL.,** and PHILIPPINE TRANSPORT AND GENERAL WORKERS
ORGANIZATION (PTGWOOCA GROUP), petitioners, vs. CRESENCIANO B. TRAJANO, Director of the BLR-
MOLE, ANDRES, L. DINGLASAN, JR., ET AL.*** and PHILIPPINE TRANSPORT AND GENERAL WORKERS
ORGANIZATION (PTGWO-DINGLASAN GROUP) and CARLOS T. RULLAMAS (PTGWO-III), respondents.

Labor Law; Election of Officers; Cancellation of a labor union’s certificate; Due process; Case at Bar;
For the cancellation of a labor union’s certificate of authority under Art. 239 of the Labor Code, the
causes provided therein must be substantially proved, with the requisite notices given and hearings
held.—From the foregoing, it is apparent that respondent Labor Director’s refusal to declare the
validity of the election of officers of either parties is not tainted with abuse of

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* THIRD DIVISION.

** Referring to the other federation officers elected at the convention held at the Army and Navy Club
in Manila.

*** Referring to the other set of federation officers elected at the convention held at the Magsaysay
Hall, SSS Building, Q.C.

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Oca, Jr. vs. Trajano

discretion. However, that part of the decision which ordered the parties to “secure new registration
certificates as Philippine Transport and General Workers Organization (PTGWO)-Oca and Philippine
Transport and General Workers Organization (PTGWO)-Dinglasan, within thirty (30) days from receipt
of this decision” is without basis. No provision in the Labor Code sanctions such an act. For the
cancellation of a labor union’s certificate of authority under Article 239 of the Labor Code, the causes
provided therein must be substantially proved, with the requisite notices given and hearings held. In
this case, such elementary elements of due process were not observed.

PETITION for certiorari to review the decision of the Bureau of Labor Relations.
The facts are stated in the opinion of the Court.

D.T. Dagum, Jr. and P.T. De Quiroz for petitioners.

Isidro D. Amoroso for respondent Carlos T. Rullamas.

A.B. Serquina and Lagman for private respondents.

FERNAN, C.J.:

“United we stand, divided we fall,” could very well have been the motto of the Philippine Transport and
General Workers Organization (PTGWO). Founded in the 1950’s by one of the Philippine labor
movement’s leading pillars, the late Roberto Oca, Sr., the labor organization encompasses a good
number of affiliate unions and is one of the founding members of the Trade Union Congress of the
Philippines. But just like good things and good times, good organizations also come to an end. This case
chronicles PTGWO’s story.

During the 11th PTGWO national convention held on April 22, 1979, herein private respondent Andres L.
Dinglasan, Jr. was elected National President while herein petitioner Roberto M. Oca, Jr. was elected
National Executive Vice President. Their terms of office were both for three (3) years.

On February 26, 1982, Dinglasan convened an executive board meeting to thresh out the mechanics of
the national convention of PTGWO for that year. Of the thirty three (33) voting members of the board,
thirty one (31) were present. However, before the body could agree on the date of the convention, a
number of participants questioned the qualifications of some members to sit on the board. To cut the
heated argument

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Oca, Jr. vs. Trajano

then ensuing, the meeting was adjourned. Thereafter, Oca and some members of the board left the
conference hall.

Nonetheless, the nineteen (19) members who remained asked Dinglasan to reconvene the meeting,
which he did. This body passed, among others, a resolution to hold the national convention on April 18,
1982. On the other hand, Oca and his group, in a special board meeting on March 19, 1982, decided to
hold their convention on April 4, 1982; thereby prompting Dinglasan and his group in their board
meeting of April 1, 1982 to advance their convention date also to April 4, 1982.

Hence, on April 4, 1982, the groups of Dinglasan and Oca held their respective conventions at different
venues and elected their own set of officers.
On April 15, 1982, PTGWO and Dinglasan filed a petition with the Bureau of Labor Relations to declare
the convention and election of officers held by the Oca group as illegal, null and void.1

Pending resolution of the dispute, PTGWO-III, a group of fifteen (15) local unions headed by Carlos T.
Rullamas and identified with the Dinglasan faction, moved to intervene for the reason that its members
had allegedly already “seceded” from the camp of Dinglasan. Intervenor prayed that it be permitted to
use the name PTGWO or, in the alternative, to allow the three factions to operate independently of each
other.

On May 15, 1986, herein respondent Director Cresenciano B. Trajano rendered a decision, declaring
both conventions of doubtful validity. Finding that the rift between the two (2) factions had become
unbridgeable so that a convention to unify them might not be a workable solution, respondent Director
concluded that there was no other alternative but to recognize the “sad fact that the PTGWO, once a
monolithic labor federation, has to be split into two: PTGWO-Oca and PTGWO-Dinglasan.”2 He went
further to say that “with the division of PTGWO into Dinglasan and Oca wings on 4 April 1982, PTGWO
ceased to exist as PTGWO.”3 On this basis, he disposed thus:4

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1 BLR Case No. 08-82.

2 Annex “A-1”, Petition, p. 16, Rollo.

3 Annex “A-2”, Petition, p. 17, Rollo.

4 Ibid.

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Oca, Jr. vs. Trajano

“WHEREFORE, the petition and motion above-referred to should be, as they are hereby dismissed. The
groups of Roberto M. Oca, Jr. and Andres L. Dinglasan, Jr. are hereby ordered to secure new registration
certificates as Philippine Transport and General Workers Organization (PTGWO)-Oca and Philippine
Transport and General Workers Organization (PTGWO)-Dinglasan, respectively, within thirty (30) days
from receipt of this Decision. Intervenor PTGWO-III is allowed to register as a separate labor federation
under a different name, but after compliance with the requirements of registration under the Labor
Code.

“SO DECIDED.”

Feeling aggrieved by the decision, all the parties filed their respective motions for reconsideration. On
July 22, 1986, Director Trajano issued an Order denying the motion for reconsideration filed by Oca, Jr.5
The record does not indicate whether the motion for reconsideration filed by Dinglasan, Jr. and the
intervenor were resolved.

Alleging grave abuse of discretion amounting to lack of jurisdiction on the part of the BLR Director,
Roberto Oca, Jr., et al. and PTGWO-Oca are now before Us by way of this petition for certiorari.

Petitioners and private respondents both assail the conclusion reached by respondent BLR Director that
PTGWO has ceased to exist as PTGWO. Each side, however, insists on the validity of its convention, and
consequently, its right to continue using the name PTGWO and to operate under PTGWO’s Registration
Permit No. 1194-MM-IP with all the privileges and benefits appurtenant thereto.

The crux of the petition hinges on the validity of either group’s election of officers. On the other hand,
the latter depends upon the validity of the respective Executive Board Meetings and National
Conventions called.

Elementary is the rule that the Constitution and By-laws of an organization serve as a contract that binds
its members. In this instance, the pertinent provisions of the Constitution and By-Laws are as follows:6

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5 Annex “B”, Petition, p. 18, Rollo.

6 pp. 290-293, Rollo.

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ARTICLE VII—NATIONAL CONVENTION

Section 24. DATE AND PLACE OF CONVENTION—The National Convention shall hold (sic) every three
years at a time during the first half of April, the inclusive dates, time, place to be fixed by (sic) National
Executive Board which shall be at least sixty (60) days before its holding.

Section 34. SPECIAL CONVENTIONS—On fifteen (15) days notice, special conventions may be called by
the National Executive Board, or upon petition of affiliates whose combined membership represent
majority of the entire membership of the organization as evidenced by the reports of the National
Secretary to the last Convention.

ARTICLE VIII—THE NATIONAL EXECUTIVE BOARD


Section 38. INTERIM AUTHORITY—Between Conventions, supreme authority, subject to the general
policies (sic) down by the Convention, shall be exercised by the National Executive Board.

Section 39. COMPOSITION—The National Executive Board shall be composed of the National President,
1st National Executive Vice President for General Workers, 2nd National Executive Vice President for
Transport, four (4) National Vice Presidents for General Workers, four (4) National Vice Presidents for
Transport, a National Secretary, National Treasurer, ten (10) National Executive Board (sic) for General
Workers, ten (10 National Executive Board (sic) for Transport, and all the appointive officers which shall,
however, have no vote.

Section 40. MEETINGS AND QUORUM—The National Executive Board shall normally meet immediately
after the close of the regular convention and at least once every quarter thereafter, or upon call of the
National President, at his initiative or upon petition of at least one-fourth (1/4) of its members, for a
special meeting. A majority of the members of the National Executive Board shall constitute a quorum
to transact business.

Section 46. APPOINTIVE OFFICERS—The officers to be appointed by the National President subject to
confirmation by the National Executive Board shall be:

a) Two National Assistant Secretaries, one each for Transport and General Workers;

The presence of a quorum during petitioner Oca’s and respondent Dinglasan’s respective Board
meetings is questionable. As

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Oca, Jr. vs. Trajano

found by the public respondent Director7:

“x x x In both meetings the quorum requirement (majority of the members of the national executive
board (Section 40, Article VIII, PTGWO Constitution)—33, elective and approximately 36, appointive
(Section 39, Article VIII in relation to section 46, Article IX, PTGWO Constitution) has not been met.”

Moreover, petitioner Oca’s Board Meeting and subsequent Convention were tainted with invalidity. The
call for “a special Board meeting to fix the special convention” made by the National Secretary, Johnny
Oca, was anomalous since only the National President of the Union was empowered to call a special
Board Meeting, “at his own initiative or upon petition of at least one fourth (1/4) of the Board
members.”

Petitioner argues that section 40 of the By-Laws provides alternately and successively for:

a. The National Executive Board shall normally meet immediately after the close of the regular
convention;
b. At least once every quarter thereafter;

c. Or upon call of the National President at his initiative;

d. Or upon petition of at least 1/4 of its members for a special meeting.8

Petitioner has apparently misread section 40. An analysis of the cited section shows that what alternates
are the instances when the Board shall meet, not the authority as to who can call for such meeting. It
would seem that petitioner has confused this discretionary power properly lodged in the President with
that of the Secretary’s ministerial duty to “call” or inform the Board members of a forthcoming meeting.
Considering the anomalous “call” for a special meeting made by the National Secretary, matters taken
up during said special meeting, such as the calling of a national convention, are likewise tainted.

Still further, both Conventions were in violation of the sixtyday requirement imposed by section 24 of
the By-Laws. Said section clearly provides that the National Convention’s dates,

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7 Annex “A-1”, supra.

8 pp. 274-275, Rollo.

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Oca, Jr. vs. Trajano

time and place shall be fixed by the National Executive Board which shall be at least sixty (60) days
before the holding.9 As succinctly found by the public respondent Labor Director:10

“x x x On this score alone, the validity of the conventions called by petitioner and respondents on 4 April
1982 is subject to question. The group headed by petitioner (Dinglasan) fixed the final date of the
convention barely three (3) days before the holding, while respondents (Oca) did so only sixteen (16)
days prior to their convention.”

The word used in the underscored phrase is “shall.” According to Webster’s Third International
Dictionary of the English Language—the word “shall” means “ought to, must, x x x obligation—used to
express a command or exhortation, used in laws, regulations or directives to express what is
mandatory.”11 Thus, it was imperative for both petitioners and private respondents to strictly follow
the command therein with respect to the period for calling a National Convention.

From the foregoing, it is apparent that respondent Labor Director’s refusal to declare the validity of the
election of officers of either parties is not tainted with abuse of discretion. However, that part of the
decision which ordered the parties to “secure new registration certificates as Philippine Transport and
General Workers Organization (PTGWO)-Oca and Philippine Transport and General Workers
Organization (PTGWO)-Dinglasan, within thirty (30) days from receipt of this decision” is without basis.
No provision in the Labor Code sanctions such an act. For the cancellation of a labor union’s certificate
of authority under Article 239 of the Labor Code, the causes provided therein must be substantially
proved, with the requisite notices given and hearings held. In this case, such elementary elements of
due process were not observed.

In lieu thereof, reliance should have been made on the Union Constitution and By-laws. Sections 38 and
4712 provide:

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9 Italics ours.

10 Annex “A-1”, supra.

11 As cited in Baranda vs. Gustillo, 165 SCRA 757.

12 pp. 292-293, Rollo, Emphasis ours.

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Oca, Jr. vs. Trajano

Section 38. INTERIM AUTHORITY—Between conventions, supreme authority, subject to the general
policies down (sic) by the Convention, shall be exercised by the National Executive Board.

Section 47. TERMS OF OFFICE—The elective officers shall be installed at the Convention at which they
were elected and shall serve until their successors shall have been elected and qualified and duly
installed at the next National Convention. The tenure of office of appointive officers shall expire with
each national convention and may be removed only under the provisions of Section 41, Article VIII of
this Constitution.

Since we have ruled that the Conventions/Board Meetings of both petitioners and private respondents
are tainted, then it necessarily follows that the incumbent officers constituting the National Executive
Board are entitled to remain in office, until their successors have been elected, qualified and duly
installed at a National Convention.

It appears from the manifestations filed by the parties that pending resolution of this case, the two (2)
factions had been able to negotiate collective bargaining agreements with various companies.
Considering that these CBA’s were entered into in good faith, each faction acting in the honest belief
that it is entitled to operate as the legitimate PTGWO and so as not to disturb the rights, benefits and
privileges accorded by the CBA’s to the parties therein, the CBA’s entered into by PTGWODinglasan and
PTGWO-Oca are recognized as valid and binding until their respective expiry dates.
WHEREFORE, premises considered, the decision of public respondent is hereby MODIFIED. The Bureau
of Labor Relations is directed to supervise the election of officers of the Philippine Transport and
General Workers Organization within sixty (60) days from finality of this decision, without prejudice to
the right of any group of workers or unions to secede and to form their own or to affiliate with another
federation. The collective bargaining agreements entered into by PTGWODinglasan and PTGWO-Oca are
recognized as valid and binding until their respective expiry dates. This decision is immediately
executory. No costs.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

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VOL. 200, AUGUST 9, 1991

407

Ancheta vs. Court of Appeals

Decision modified.

Note.—No denial of due process to employers where they were given opportunity to present evidence
but failed to appear at the scheduled hearings. (Divine Word High School vs. National Labor Relations
Commission, 143 SCRA 346.)

——o0o——

© Copyright 2017 Central Book Supply, Inc. All rights reserved. Oca, Jr. vs. Trajano, 200 SCRA 399, G.R.
No. 76189 August 8, 1991

RIGHTS AND OBLIGATIONS OF MEMBERS

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SUPREME COURT REPORTS ANNOTATED

Ferrer vs. National Labor Relations Commission

G.R. No. 100898. July 5, 1993.*

ALEX FERRER, RAFAEL FERRER, HENRY DIAZ, DOMINGO BANCOLITA, GIL DE GUZMAN, and FEDERATION
OF DEMOCRATIC LABOR UNIONS, (FEDLU), petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION
(SECOND DIVISION), HUI KAM CHANG (In his capacity as General Manager of Occidental Foundry
Corporation), OCCIDENTAL FOUNDRY CORPORATION, MACEDONIO S. VELASCO (In his capacity as
representative of the Federation of Free Workers), GENARO CAPITLE, JESUS TUMAGAN, ERNESTO
BARROGA, PEDRO LLENA, GODOFREDO PACHECO, MARCELINO CASTILLO, GEORGE IGNAS, PIO
DOMINGO, and JAIME BAYNADO, respondents.

Labor Law; Labor Unions; Collective Bargaining; A CBA provision for a closed shop is a valid form of
union security and it is not a restriction on the right or freedom of association guaranteed by the
Constitution.—A CBA is the law between the company and the union and compliance therewith is
mandated by the express policy to give

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* THIRD DIVISION.

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Ferrer vs. National Labor Relations Commission

protection to labor. Said policy should be given paramount consideration unless otherwise provided
for by law (Meycauayan College vs. Drilon, 185 SCRA 50 [1990]). A CBA provision for a closed shop is a
valid form of union security and it is not a restriction on the right or freedom of association
guaranteed by the Constitution (Lirag Textile Mills, Inc. vs. Blanco, 109 SCRA 87 [1981]). However, in
the implementation of the provisions of the CBA, both parties thereto should see to it that no right is
violated or impaired.

Same; Same; Same; Due Process; The manner in which the dismissal was enforced left much to be
desired in terms of respect for the right of petitioners to procedural due process.—In the case at bar,
while it is true that the CBA between OFC and the SAMAHAN provided for the dismissal of employees
who have not maintained their membership in the union, the manner in which the dismissal was
enforced left much to be desired in terms of respect for the right of petitioners to procedural due
process.

Same; Same; Same; Same; Same; The SAMAHAN should have observed its own constitution and by-
laws by giving petitioner an opportunity to air their side and explain their moves.—No hearing
(“pandinig”) was ever conducted by the SAMAHAN to look into peti-tioners’ explanation of their
moves to oust the union leadership under Capitle, or their subsequent affiliation with FEDLU. While it
is true that petitioners’ actions might have precipitated divisiveness and, later, showed disloyalty to
the union, still, the SAMAHAN should have observed its own constitution and by-laws by giving
petitioners an opportunity to air their side and explain their moves. If, after an investigation the
petitioners were found to have violated union rules, then and only then should they be subjected to
proper disciplinary measures.

Same; Same; Same; Same; The need for a company investigation is founded on the consistent ruling of
the Court that the twin requirements of notice and hearing which are essential elements of due
process must be met in employment-termination cases.—The need for a company investigation is
founded on the consistent ruling of this Court that the twin requirements of notice and hearing which
are essential elements of due process must be met in employment-termination cases. The employee
concerned must be notified of the employer’s intent to dismiss him and of the reason or reasons for
the proposed dismissal. The hearing affords the employee an opportunity to answer the charge or
charges against him and to defend himself therefrom before dismissal is effected.

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Same; Same; Same; Same; Even if no hearing is conducted, the requirement of due process would
have been met where a chance to explain a party’s side of the controversy had been accorded him.—
Observance to the letter of company rules on investigation of an employee about to be dismissed is
not mandatory. It is enough that there is due notice and hearing before a decision to dismiss is made
(Mendoza vs. NLRC, 195 SCRA 606 [1991]). But even if no hearing is conducted, the requirement of
due process would have been met where a chance to explain a party’s side of the controversy had
been accorded him.

Same; Same; Same; Same; The need for the observance of an employee’s right to procedural due
process in termination cases cannot be overemphasized.—If an employee may be considered illegally
dismissed because he was not accorded fair investigation (Hellenic Philip-pine Shipping vs. Siete, 195
SCRA 179 [1991]), the more reason there is to strike down as an inexcusable and disdainful rejection
of due process a situation where there is no investigation at all (See: Collegio del Sto. Niño vs. NLRC,
197 SCRA 611 [1991]; Artex Development Co., Inc. vs. NLRC, 187 SCRA 611 [1990]). The need for the
observance of an employee’s right to procedural due process in termination cases cannot be
overemphasized. After all, one’s employment, profession, trade, or calling is a “property right” and
the wrongful interference therewith gives rise to an actionable wrong (Callanta vs. Carnation
Philippines, Inc., 145 SCRA 268 [1986]). Verily, a man’s right to his labor is property within the
meaning of constitutional guarantees which he cannot be deprived of without due process.

Same; Same; Same; Same; While the law recognizes the right of an employer to dismiss employees in
warranted cases, it frowns upon arbitrariness as when employees are not accorded due process.—
While the law recognizes the right of an employer to dismiss employees in warranted cases, it frowns
upon arbitrariness as when employees are not accorded due process (Tan, Jr. vs. NLRC, 183 SCRA 651
[1990]). Thus, the prerogatives of the OFC to dismiss petitioners should not have been whimsically
done for it unduly exposed itself to a charge of unfair labor practice for dismissing petitioners in line
with the closed shop provision of the CBA, without a proper hearing.

Same; Same; Same; Same; While termination of employment is traditionally considered a


management prerogative, it is not an absolute prerogative subject as it is to limitations founded in
law, the CBA or general principles of fair play and justice.—Neither can the manner of dismissal be
considered within the ambit of managerial prerogatives,

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for while termination of employment is traditionally considered a management prerogative, it is not


an absolute prerogative subject as it is to limitations founded in law, the CBA, or general principles of
fair play and justice.

Same; Same; Same; The right of a local union to disaffiliate from a federation in the absence of any
provision in the federation’s constitution preventing disaffiliation of a local union is legal.—
Parenthetically, the right of a local union to disaffiliate from a federation in the absence of any
provision in the federation’s constitution preventing disaffiliation of a local union is legal (People’s
Industrial and Commercial Employees and Workers Org. (FFW) vs. People’s Industrial and Commercial
Corp., 112 SCRA 440 [1982]). Such right is consistent with the constitutional guarantee of freedom of
association.

Same; Dismissal; Benefits; A legally dismissed employee may now be paid his back wages, allowances,
and other benefits for the entire period he was out of work subject to the rule enunciated before the
Mercury Drug Rule which is that the employer may, however, deduct any amount which the employee
may have earned during the period of his illegal termination.—A legally dismissed employee may now
be paid his back wages, allowances, and other benefits for the entire period he was out of work
subject to the rule enunciated before the Mercury Drug Rule, which is that the employer may,
however, deduct any amount which the employee may have earned during the period of his illegal
termination (East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40 SCRA 521 [1971]).
Computation of full back wages and presentation of proof as to income earned elsewhere by the
illegally dismissed employee after his termination and before actual reinstatement should be
ventilated in the execution proceedings before the Labor Arbiter concordant with Section 3, Rule 8 of
the 1990 new Rules of Procedure of the National Labor Relations Commission.

PETITION for certiorari of the decision of the National Labor Relations Commission.

The facts are stated in the opinion of the Court.

Generosa P. Jacinto and Raymundo D. Mallilin for private respondents.

MELO, J.:

The petition for certiorari before us seeks to annul and set


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aside: (a) the decision dated June 20, 1991 of the Second Division of the National Labor Relations
Commission (NLRC) (Penned by Commissioner Rustico L. Diokno and concurred in by Presiding
Commissioner Edna Bonto-Perez and Commissioner Domingo H. Zapanta) which affirmed in toto the
decision of April 5, 1990 of Labor Arbiter Eduardo J. Carpio dismissing the complaint for illegal dismissal
and unfair labor practice on the ground that both the company and the union merely complied with the
collective bargaining agreement provision sanctioning the termination of any employee who fails to
retain membership in good standing with the union; and (b) the NLRC resolution denying the motion for
the reconsideration of said decision (NLRC NCR Case No. 00-10-04855-89).

Petitioners were regular and permanent employees of the Occidental Foundry Corporation (OFC) in
Malanday, Valenzuela, Metro Manila which was under the management of Hui Kam Chang. As piece
workers, petitioners’ earnings ranged from P110 to P140 a day. They had been in the employ of OFC for
about ten years at the time of their dismissal in 1989 (p. 38, Rollo).

On January 5, 1989, the Samahang Manggagawa ng Occiden-tal Foundry Corporation-FFW (SAMAHAN)


and the OFC entered into a collective bargaining agreement (CBA) which would be effective for the
three-year period between October 1, 1988 and September 30, 1991 (Memorandum for OFC and Hui
Kam Chang, p. 6, Rollo; p. 551). Article II thereof provides for a union security clause thus:

Section 1—The company agrees that all permanent and regular factory workers in the company who are
members in good standing of the union or who thereafter may become members, shall as a condition of
continued employment, maintain their membership in the union in good standing for the duration of
the agreement.

xxx xxx xxx

Section 3—The parties agree that failure to retain membership in good standing with the UNION shall be
ground for the operation of paragraph 1 hereof and the dismissal by the company of the aforesaid
employee upon written request by the union. The aforesaid request shall be accompanied by a verified
carbon original of the Board of (sic) Resolution by the UNION signed by at least a majority of its officers/
directors. (p. 562, Rollo.)

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On May 6, 1989, petitioner Alex Ferrer and the SAMAHAN, filed in the Department of Labor and
Employment (DOLE), a complaint for the expulsion from SAMAHAN of the following officers: Genaro
Capitle (president), Jesus Tumagan (vice-presi-dent), Godofredo Pacheco (auditor), and Marcelino
Pacheco (board member) (Case No. NCR-00-M-89-11-01). The complaint was founded on said officers’
alleged inattentiveness to the economic demands of the workers. However, on September 4, 1989,
petitioners Diaz and Alex Ferrer withdrew the petition (p. 590, Rollo).

On September 10, 1989, petitioners conducted a special elec-tion of officers of the SAMAHAN (pp. 205
& 583, Rollo). Said election was, however, later questioned by the FFW. Nonetheless, the elected set of
officers tried to dissuade the OFC from remitting union dues to the officers led by Capitle who were
allied with the FFW. Later, however, Romulo Erlano, one of the officers elected at the special election,
manifested to the DOLE that he was no longer objecting to the remittance of union dues to the officers
led by Capitle. Petitioners’ move to stage a strike based on economic demands was also later disowned
by members of the SAMAHAN.

The intraunion squabble came to a head when, on September 11, 1989, a resolution expelling
petitioners from the SAMAHAN was issued by the aforesaid union officials headed by Capitle, together
with board members George Ignas, Pio Domingo, and Jaime Baynado (pp. 286 & 599, Rollo). The
following day, Capitle sent OFC the following letter:

12 September 1989

Mr. Hui Kam Chang

General Manager

Malanday, Valenzuela

Metro Manila

Dear Mr. Chang:

In compliance with Article II, Sec. 3 of the Union Security Clause as enunciated in our Collective
Bargaining Agreement, I would like you to dismiss the following employees on the ground of failure to
retain

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membership in good standing:

1. Alex Ferrer

2. Gil de Guzman
3. Henry Diaz

4. Domingo Bancolita

5. Rafael Ferrer, Jr.

Attached herewith is the verified carbon original of the Board Resolution of the union signed by the
majority of its officers/directors.

Thank you very much.

Very truly yours,

(Sgd.)

GENARO CAPITLE

President

(p. 66, Rollo.)

Although petitioners received this letter weeks after its date, it appears that on that same date, they
had learned about their dismissal from employment as shown by the letter also dated September 13,
1989 which they sent the Federation of Democratic Labor Unions (FEDLU). They volunteered therein to
be admitted as members of the FEDLU and requested that they be represented (“katawanin”) by said
federation before the DOLE in the complaint which they intended to file against the union (SAMAHAN),
the FFW and the company for illegal dismissal, reinstatement, and other benefits in accordance with law
(p. 74, Rollo).

Thereafter, on various dates, petitioners sent individual letters to Hui Kam Chang professing innocence
of the charges levelled against them by the SAMAHAN and the FFW and pleading that they be reinstated
(pp. 69-73, Rollo). Their letters appear to have elicited no response.

Thus, contending that their dismissal was without cause and in utter disregard of their right to due
process of law, petitioners, through the FEDLU, filed a complaint for illegal dismissal and unfair labor
practice before the NLRC against Hui Kam Chang, OFC, Macedonio S. Velasco (as representative of the
FFW), the FFW, and the SAMAHAN officers headed by Capitle (p. 75,

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Rollo).
In due course, after the case was ventilated through position papers and other documents, the labor
arbiter rendered a decision dismissing petitioners’ complaint (pp. 79-89, Rollo). He found that in
dismissing petitioners, OFC was “merely complying with the mandatory provisions of the CBA—the law
between it and the union.” He added:

To register compliance with the said covenant, all that is necessary is a written request of the union
requesting dismissal of the employees who have failed to retain membership in good standing with the
union. The matter or question, therefore, of determining why and how did complainants fail to retain
membership in good standing is not for the company to inquire via formal investigation. By having the
request of the union, a legal presumption that the request was born out of a formal inquiry by the union
that subject employees failed to retain membership in good standing, failed to exist. This means
generally that where a valid closed shop or similar agreement is in force with respect to a particular
bargaining unit as in the case a quo, the employer shall refuse to employ any person unless he is a
member of the majority union and the employer shall dismiss employees who fail to retain their
membership in the majority union. This must be deemed a just cause recognized by law and
jurisprudence. The effect is discrimination to encourage membership in other unions. (pp. 86-87, Rollo.)

Hence, the labor arbiter concluded, the dismissal of petitioners was an exercise of legitimate
management prerogative which cannot be considered as an unfair labor practice. On whether the
SAMAHAN and the FFW could be held liable for illegal dismissal and unfair labor practice, the arbiter
opined that since there was no employer-employee relationship between petitioners and respondent
unions, the complaint against the latter has no factual and legal bases, because petitioners “should not
have confused expulsion from membership in the union as one and the same incident to their
subsequent employment termination.”

Consequently, petitioners appealed to the NLRC on the grounds that there was prima facie evidence of
abuse of discretion on the part of the labor arbiter and that he committed serious errors in his findings
of facts.

On June 20, 1991, the NLRC rendered the herein questioned decision affirming in toto the decision of
the labor arbiter. Petitioners’ motion for the reconsideration of the NLRC decision

418

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Ferrer vs. National Labor Relations Commission

having been denied, they resorted to the instant petition for certiorari which presents the issue of
whether or not respondent Commission gravely abused its discretion in affirming the decision of the
labor arbiter which is allegedly in defiance of the elementary principles of procedural due process as the
petitioners were summarily dismissed from employment without an investigation having been
conducted by the OFC on the veracity of the allegation of the SAMAHAN-FFW that they violated the
CBA.
A CBA is the law between the company and the union and compliance therewith is mandated by the
express policy to give protection to labor. Said policy should be given paramount consideration unless
otherwise provided for by law (Meycauayan College vs. Drilon, 185 SCRA 50 [1990]). A CBA provision for
a closed shop is a valid form of union security and it is not a restriction on the right or freedom of
association guaranteed by the Constitution (Lirag Textile Mills, Inc. vs. Blanco, 109 SCRA 87 [1981]).
However, in the implementation of the provisions of the CBA, both parties thereto should see to it that
no right is violated or impaired. In the case at bar, while it is true that the CBA between OFC and the
SAMAHAN provided for the dismissal of employees who have not maintained their membership in the
union, the manner in which the dismissal was enforced left much to be desired in terms of respect for
the right of petitioners to procedural due process.

In the first place, the union has a specific provision for the permanent or temporary “expulsion” of its
erring members in its constitution and by-laws (“saligang batas at alituntunin”). Under the heading
membership and removal (“pag-aanib at pagtitiwalag”), it states:

SEC. 4. Ang sinumang kasapi ay maaring itwalag (sic) ng Samahan pangsamantala o tuluyan sa
pamamgitan (sic) ng tatlo’t ikaapat (3/4) na bahagi ng dami ng bilang ng Pamunuang Tagapagpaganap.
Pagkaraan lamang sa pandinig sa kanyang kaso. Batay sa sumusunod:

(a) Sinumang gumawa ng mga bagay bagay na labag at lihis sa patakaran ng Samahan.

(b) Sinumang gumawa ng mga bagay na maaring ikabuwag ng Samahan.

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(c) Hindi paghuhulog ng butaw sa loob ng tatlong buwan na walang sakit o Doctor’s Certificate.

(d) Hindi pagbibigay ng abuloy na itinatadhana ng Samahan.

(e) Sinumang kasapi na natanggal sa kapisanan at gustong sumapi uli ay magpapanibago ng bilang, mula
sa taon ng kanyang pagsapi uli sa Samahan. (Italics supplied; Ibid., p. 177).

No hearing (“pandinig”) was ever conducted by the SAMAHAN to look into petitioners’ explanation of
their moves to oust the union leadership under Capitle, or their subsequent affiliation with FEDLU.
While it is true that petitioners’ actions might have precipitated divisiveness and, later, showed
disloyalty to the union, still, the SAMAHAN should have observed its own constitution and by laws by
giving petitioners an opportunity to air their side and explain their moves. If, after an investigation the
petitioners were found to have violated union rules, then and only then should they be subjected to
proper disciplinary measures.

Here lies the distinction between the facts of this case and that of Cariño vs. NLRC (185 SCRA 177
[1990]) upon which the Solicitor General heavily relies in supporting the stand of petitioners. In Cariño,
the erring union official was given the chance to answer the complaints against him before an
investigating committee created for that purpose. On the other hand, herein petitioners were not given
even one opportunity to explain their side in the controversy. This procedural lapse should not have
been overlooked considering the union security provision of t he CBA.

What aggravated the situation in this case is the fact that OFC itself took for granted that the SAMAHAN
had actually conducted an inquiry and considered the CBA provision for the closed shop as self-
operating that, upon receipt of a notice that some members of the SAMAHAN had failed to maintain
their membership in good standing in accordance with the CBA, it summarily dismissed petitioners. To
make matters worse, the labor arbiter and the NLRC shared the same view in holding that “(t)he matter
or question, therefore, of determining why and how did complainants fail to retain membership in good
standing is not for the company to inquire via formal investigation” (pp. 87 & 135, Rollo). In this regard,
the following words of my learned brother, Mr. Justice Feliciano, in the Resolution in Cariño are apt:

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Ferrer vs. National Labor Relations Commission

4. Turning now to the involvement of the Company in the dismissal of petitioner Cariño, we note that
the Company upon being formally advised in writing of the expulsion of petitioner Cariño from the
Union, in turn simply issued a termination letter to Cariño, the termination being made effective the
very next day. We believe that the Company should have given petitioner Cariño an opportunity to
explain his side of the controversy with the Union. Notwithstanding the Union’s Security Clause in the
CBA, the Company should have reasonably satisfied itself by its own inquiry that the’ Union had not
been merely acting arbitrarily and capriciously in impeaching and expelling petitioner Cariño . . .

xxx

xxx

xxx

5. We conclude that the Company had failed to accord to petitioner Cariño the latter’s right to
procedural due process. The right of an employee to be informed of the charges against him and to
reasonable opportunity to present his side in a controversy with either the Company or his own Union,
is not wiped away by a Union Security Clause or a Union Shop Clause in a CBA. An employee is entitled
to be protected not only from a company which disregards his rights but also from his own Union the
leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and
hence dismissal from his job. (pp. 186 & 189.)

The need for a company investigation is founded on the consistent ruling of this Court that the twin
requirements of notice and hearing which are essential elements of due process must be met in
employment-termination cases. The employee concerned must be notified of the employer’s intent to
dismiss him and of the reason or reasons for the proposed dismissal. The hearing affords the employee
an opportunity to answer the charge or charges against him and to defend himself therefrom before
dismissal is effected (Kwikway Engineering Works vs. NLRC, 195 SCRA 526 [1991]; Salaw vs. NLRC, 202
SCRA 7 [1991]). Observance to the letter of company rules on investigation of an employee about to be
dismissed is not mandatory. It is enough that there is due notice and hearing before a decision to
dismiss is made (Mendoza vs. NLRC, 195 SCRA 606 [1991]). But even if no hearing is conducted, the
requirement of due process would have been met where a chance to explain a party’s side of the
controversy had been accorded him (Philippine Airlines, Inc.

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Ferrer vs. National Labor Relations Commission

vs. NLRC, 198 SCRA 748 [1991]).

If an employee may be considered illegally dismissed because he was not accorded fair investigation
(Hellenic Philippine Shipping vs. Siete, 195 SCRA 179 [1991]), the more reason there is to strike down as
an inexcusable and disdainful rejection of due process a situation where there is no investigation at all
(See: Collegio del Sto. Nino vs. NLRC, 197 SCRA 611 [1991]; Artex Development Co., Inc. vs. NLRC, 187
SCRA 611 [1990]). The need for the observance of an employee’s right to procedural due process in
termination cases cannot be overemphasized. After all, one’s employment, profession, trade, or calling
is a “property right” and the wrongful interference therewith gives rise to an actionable wrong (Callanta
vs. Carnation Philippines, Inc., 145 SCRA 268 [1986]). Verily, a man’s right to his labor is property within
the meaning of constitutional guarantees which he cannot be deprived of without due process
(Batangas Laguna Tayabas Bus Co. vs. Court of Appeals, 71 SCRA 470 [1976]).

While the law recognizes the right of an employer to dismiss employees in warranted cases, it frowns
upon arbitrariness as when employees are not accorded due process (Tan, Jr. vs. NLRC, 183 SCRA 651
[1990]). Thus, the prerogatives of the OFC to dismiss petitioners should not have been whimsically done
for it unduly exposed itself to a charge of unfair labor practice for dismissing petitioners in line with the
closed shop provision of the CBA, without a proper hearing (Tropical Hut Employees’ Union-CGW vs.
Tropical Hut Food Market, Inc., 181 SCRA 173 [1990]; citing Binalbagan-Isabela Sugar Co., Inc. (BISCOM)
vs. Philippine Association of Free Labor Unions (PAFLU), 8 SCRA 700 [1983]). Neither can the manner of
dismissal be considered within the ambit of managerial prerogatives, for while termination of
employment is traditionally considered a management prerogative, it is not an absolute prerogative
subject as it is to limitations founded in law, the CBA, or general principles of fair play and justice
(University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).

Under rule XIV, Sections 2, 5, and 6 of the rules implementing Batas Pambansa Blg. 130, the OFC and the
SAMAHAN should solidarily indemnify petitioners for the violation of their right to procedural due
process (Great Pacific Life Assurance Corporation vs. NLRC, 187 SCRA 694 [1990], citing Wenphil vs.
NLRC,

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SUPREME COURT REPORTS ANNOTATED

Ferrer vs. National Labor Relations Commission

170 SCRA 69 [1989], Cariño vs. NLRC, supra). However, such penalty may be imposed only where the
termination of employment is justified and not when the dismissal is illegal as in this case where the
damages are in the form of back wages.

As earlier discussed, petitioners’ alleged act of sowing disunity among the members of the SAMAHAN
could have been ventilated and threshed out through a grievance procedure within the union itself. But
resort to such procedure was not pursued. What actually happened in this case was that some
members, including petitioners, tried to unseat the SAMAHAN leadership headed by Capitle due to the
latter’s alleged inattention to petitioners’ demands for the implementation of the P25-wage increase
which took effect on July 1, 1989. The intraunion controversy was such that petitioners even requested
the FFW to intervene to facilitate the enforcement of the said wage increase (Petition, p. 54; p. 55,
Rollo).

Petitioners sought the help of the FEDLU only after they had learned of the termination of their
employment upon the recommendation of Capitle. Their alleged application with federations other than
the FFW (Labor Arbiter’s Decision, pp. 4-5; pp. 82-83, Rollo) can hardly be considered as disloyalty to the
SAMAHAN, nor may the filing of such applications denote that petitioners failed to maintain in good
standing their membership in the SAMAHAN. The SAMAHAN is a different entity from FFW, the
federation to which it belonged. Neither may it be inferred that petitioners sought disaffiliation from the
FFW for petitioners had not formed a union distinct from that of the SAMAHAN. Parenthetically, the
right of a local union to disaffiliate from a federation in the absence of any provision in the federation’s
constitution preventing disaffiliation of a local union is legal (People’s Industrial and Commercial
Employees and Workers Org. (FFW) vs. People’s Industrial and Commercial Corp., 112 SCRA 440 [1982]).
Such right is consistent with the constitutional guarantee of freedom of association. (Tropical Hut Em-
ployees’ Union-CGW vs. Tropical Hut Food Market, Inc., 181 SCRA 173 [1990]).

Hence, while petitioners’ act of holding a special election to oust Capitle, et al. may be considered as an
act of sowing disunity among the SAMAHAN members, and, perhaps, disloyalty to the union officials,
which could have been dealt with by the union as

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Ferrer vs. National Labor Relations Commission

a disciplinary matter, it certainly cannot be considered as constituting disloyalty to the union. Faced with
a SAMAHAN leadership which they had tried to remove as officials, it was but a natural act of self-
preservation that petitioners fled to the arms of the FEDLU after the union and the OFC had tried to
terminate their employment. Petitioners should not be made accountable for such an act.

With the passage of Republic Act No. 6715 which took effect on March 21, 1989, Article 279 of the Labor
Code was amended to read as follows:

Security of Tenure.—In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.

and as implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure of the National Labor
Relations Commission, it would seem that the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court of
Industrial Relations, 56 SCRA 694 [1974]) which limited the award of back wages of illegally dismissed
workers to three (3) years “without deduction or qualification” to obviate the need for further
proceedings in the course of execution, is no longer applicable.

A legally dismissed employee may now be paid his back wages, allowances, and other benefits for the
entire period he was out of work subject to the rule enunciated before the Mercury Drug Rule, which is
that the employer may, however, deduct any amount which the employee may have earned during the
period of his illegal termination (East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40 SCRA 521
[1971]). Computation of full back wages and presentation of proof as to income earned elsewhere by
the illegally dismissed employee after his termination and before actual reinstatement should be
ventilated in the execution proceedings before the Labor Arbiter concordant with Section 3, Rule 8 of
the 1990 new Rules of Procedure of the National Labor Relations Commission.

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SUPREME COURT REPORTS ANNOTATED

Ferrer vs. National Labor Relations Commission

Inasmuch as we have ascertained in the text of this discourse that the OFC whimsically dismissed
petitioners without proper hearing and has thus opened OFC to a charge of unfair labor practice, it
ineluctably follows that petitioners can receive their back wages computed from the moment their
compensation was withheld after their dismissal in 1989 up to the date of actual reinstatement. In such
a scenario, the award of back wages can extend beyond the 3-year period fixed by the Mercury Drug
Rule depending, of course, on when the employer will reinstate the employees.

It may appear that Article 279 of the Labor Code, as amended by Republic Act No. 6715, has made the
employer bear a heavier burden than that pronounced in the Mercury Drug Rule, but perhaps Republic
Act No. 6715 was enacted precisely for the employer to realize that the employee must be immediately
restored to his former position, and to impress the idea that immediate reinstatement is tantamount to
a cost-saving measure in terms of overhead expense plus incremental productivity to the company
which lies in the hands of the employer.

WHEREFORE, the decision appealed from is hereby SET ASIDE and private respondents are hereby
ordered to reinstate petitioners to their former or equivalent positions without loss of seniority rights,
and with full back wages, inclusive of allowances and other benefits or their monetary equivalent,
pursuant to Article 279 of the Labor Code, as amended by Republic Act No. 6715.

SO ORDERED.

Feliciano (Chairman), Bidin, Davide, Jr. and Romero, JJ., concur.

Decision set aside.

Note.—The determination of the existence and sufficiency of just cause must be exercised with fairness
and in good faith and after observing due process (Gubac vs. National Labor Relations Commission, 187
SCRA 412).

——o0o——

425

© Copyright 2017 Central Book Supply, Inc. All rights reserved. Ferrer vs. National Labor Relations
Commission, 224 SCRA 410, G.R. No. 100898 July 5, 1993

No. L-24864. April 30, 1985.*

FORTUNATO HALILI, doing business under the name and style HALILI TRANSIT (substituted by EMILIA
DE VERA DE HALILI), petitioner, vs. COURT OF INDUSTRIAL RELATIONS and HALILI BUS DRIVERS and
CONDUCTORS UNION (PTGWO), respondents.

No. L-27773. April 30, 1985.*

EMILIA DE VERA VDA. DE HALILI, petitioner, vs. COURT OF INDUSTRIAL RELATIONS and HALILI BUS
DRIVERS AND CONDUCTORS UNION (PTGWO), respondents.

No. L-38655. April 30, 1985.*

FELICIDAD M. TOLENTINO, et al., petitioners, vs. COURT OF INDUSTRIAL RELATIONS, et al., respondents.

No. L-30110. April 30, 1985.*

EMILIA DE VERA VDA. DE HALILI, petitioner, vs.

_______________
* EN BANC.

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Halili vs. Court of Industrial Relations

HALILI BUS DRIVERS AND CONDUCTORS UNION-PTGWO and COURT OF INDUSTRIAL RELATIONS,
respondents.

Administrative Law; Labor Law, Requisites for validity of administrative proceedings.—This Court, as
earlier stated, nullified said orders dated September 23, 1982 and February 9, 1983 of Labor Arbiter
Valenzuela as violative of the due process clause. It is a settled rule that in administrative
proceedings, or cases coming before administrative tribunals exercising quasi-judicial powers, due
process requires not only notice and hearing, but also the consideration by the administrative tribunal
of the evidence presented; the existence of evidence to support the decision; its substantiality; a
decision based thereon or at least contained in the record and disclosed to the parties; such decision
by the administrative tribunal resting on its own independent consideration of the law and facts of
the controversy; and such decision acquainting the parties with the various issues involved and the
reasons therefor (Ang Tibay vs. Court, 69 Phil. 635, cited on p. 84, Philippine Constitution Law,
Fernando, 1984 ed.).

Attorneys; Labor Law; Act of counsel of filing a motion in the Supreme Court for authority to sell
property in question which he acknowledged that he has no authority, a violation.—Significantly,
Atty. Pineda’s act of filing a motion with this Court on December 1, 1982 praying for authority to sell
was by itself an admission on his part that he did not possess the authority to sell the property and
that this Court was the proper body which had the power to grant such authority.

Same; Same; Counsel knew the Labor Arbiter has no authority to authorize sale of property at bar
Only the final orders or decisions of a Labor Arbiter or NLRC may be implemented.—He could not and
did not even wait for such valid authority but instead previously obtained the same from the labor
arbiter whom he knew was not empowered to so authorize. Under Article 224 (a) of the Labor Code,
only final decisions or awards of the NLRC, the Labor Arbiter, or compulsory or voluntary arbitrators
may be implemented or may be the subject of implementing orders by aforenamed body or officers.

Same; Same; A 30% to 45% attorney’s lien on award to union members is exorbitant.—The 45%
attorney’s lien on the award of those union members who were no longer working and the 30% lien

114

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SUPREME COURT REPORTS ANNOTATED

Halili vs. Court of Industrial Relations

on the benefits of those who were still working as provided for in the alleged retainer’s contract are
very exorbitant and unconscionable in view of Section 11, Rule VIII of Book III which explicitly
provides: “Sec. 11. Attorney’s fees.—Attorney’s fees on any judicial or administrative proceedings for
the recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted from
the total amount due the winning party.”

Same; Same; Donation of a portion of attorney’s fees to the Union is improper.—The amount of
P101,856,00 which Atty. Pineda donated to the Union and which actually corresponds to 5% of the
total 35% attorney’s fees taken from the proceeds (p. 263, L-24864, rec.) appears improper since it
amounts to a rebate or commission. This amount was subsequently treated as union miscellaneous
operating expenses without the consent of the general membership.

Same; Same; The pleadings show a deceitful pattern on the part of Atty. Pineda who alternatively
signed on behalf of “J.C. Espinas” and Associates” or “B.C. Pineda” as lone counsel.—A deeper scrutiny
of the pleadings in L-24864 notably indicates a fraudulent or deceitful pattern in the actuations of
Atty. Pineda. Thus, in his motion for execution of judgment filed on September 18, 1965 in this, he
signed for and in behalf of “J.C. Espinas & Associates” (p. 323, rec.). In his manifestation dated
December 10, 1968, he signed as “B.C. Pineda,” lone counsel for petitioner (p. 327, rec.); and yet, he
carried the address of Espinas & Associates at 716 G. Puyat Building, Escolta.

Same; Same; Sale; The Court’s resolution which made null and void the orders for authority to sell
issued by Arbiter Valenzuela makes the sale of the Union property illegal.—In view of Our resolution
of October 18, 1983, which set aside as null and void the questioned orders dated September 23, 1982
and February 9, 1983 issued by Arbiter Raymundo Valenzuela, the sale of the Union property and the
distribution of the proceeds therefrom had been effected without authority and, therefore, illegal.
Consequently, Atty. Pineda and Arbiter Valenzuela become liable for their unauthorized acts.

Contempt; Labor Law; Contempt, defined.—Contempt of court is a defiance of the authority, justice or
dignity of the court; such conduct as tends to bring the authority and administration of the law into
disrespect or to interfere with or prejudice parties litigant or their witnesses during litigation (12 Am.
jur 389, cited in 14 SCRA 813).

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Halili vs. Court of Industrial Relations

Same; Same; Contempt powers inherent in all courts.—This Court has thus repeatedly declared that
the power to punish for contempt is inherent in all courts and is essential to the preservation of order
in judicial proceedings and to the enforcement of judgments, orders, and mandates of the court, and
consequently, to the due administration of justice (Slade Perkins vs. Director of Prisons, 58 Phil. 271;
In re Kelly, 35 Phil. 944; Commissioner of Immigration vs. Cloribel, 20 SCRA 1241; Montalban vs.
Canonoy, 38 SCRA 1).

Same; Same; Criminal contempt and civil contempt, defined and distinguished.—In the matter of
exercising the power to punish contempts, this Court enunciated in the Slade Perkins case that “the
exercise of the power to punish contempts has a twofold aspect, namely (1) the proper punishment of
the guilty party for his disrespect to the court or its order; and (2) to compel his performance of some
act or duty required of him by the court which he refuses to perform. Due to this twofold aspect of
the exercise of the power to punish them, contempts are classified as civil or criminal. A civil
contempt is the failure to do something ordered to be done by a court or a judge for the benefit of the
opposing party therein; and a criminal contempt, is conduct directed against the authority and dignity
of a court or of a judge, as in unlawfully assailing or discrediting the authority or dignity of a court or
of a judge, or in doing a duly forbidden act. Where the punishment imposed, whether against a party
to a suit or a stranger, is wholly or primarily to protect or vindicate the dignity and power of the court,
either by fine payable to the government or by imprisonment, or both, it is deemed a judgment in a
criminal case. Where the punishment is by fine directed to be paid to a party in the nature of damages
for the wrong inflicted, or by imprisonment as a coercive measure to enforce the performance of
some act for the benefit of the party or in aid of the final judgment or decree rendered in his behalf,
the contempt judgment will, if made before final decree, be treated as in the nature of an
interlocutory order, or, if made after final decree, as remedial in nature, and may be reviewed only on
appeal from the final decree, or in such other mode as is appropriate to the review of judgments in
civil cases. x x x x x x x x x The question of whether the contempt committed is civil or criminal, does
not affect the jurisdiction or the power of a court to punish the same.

Attorneys; Court may suspend or debar a lawyer whose acts show his unfitness to continue as a
member of the Bar.—The Court may suspend or disbar a lawyer for any conduct on his part showing
his unfitness for the confidence and trust which characterize the at-

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Halili vs. Court of Industrial Relations

torney and client relations, and the practice of law before the courts, or showing such a lack of
personal honesty or of good moral character as to render him unworthy of public confidence (7 C.J.S.
733).

Same; Statutory grounds for disbarment are not a limitation to the court’s power in this respect.—It is
a well-settled rule that the statutory grounds for disbarment or suspension are not to be taken as a
limitation on the general power of the courts in this respect. The inherent powers of the court over its
officers cannot be restricted (In re Pelaez, 44 Phil. 567).

Same; Criminal Law; An attorney may be criminally liable for breach of professional duty.—The
aforequoted criminal sanction for unprofessional conduct of an attorney is without prejudice to
proper administrative action, such as disbarment or suspension of attorneys (p. 503, Criminal Law
Annotated, Padilla, 1972 Ed.).

Same; Same; Labor Law; A labor arbiter who acts beyond his authority may be prosecuted before the
Tanodbayan and held liable for disbarment.—Labor Arbiter Raymundo Valenzuela should be made to
answer for having acted without or beyond his authority in proper administrative charges. He could
also be prosecuted before the Tanodbayan under the provisions of the Anti-Graft Law. Independently
of his liabilities as a government officer, he could be the subject of disbarment proceedings under
Section 27, Rule 138 of the Revised Rules of Court.

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

Contempt; Manila Banking Corporation could no longer be held in contempt after it obeyed the
Court’s orders.—The Manila Banking Corporation (Cubao Branch) per manifestation and motion dated
October 28, 1983 and reiterated on November 10, 1983, had transmitted

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

Contempt; Labor Law; The Union is dropped from the contempt charge in view of its explanation.—In
the same motion, Mr. Capuno clarifies that with regard to attorneys’ fees, Atty. Pineda made the
Union officers believe that he would be the one to pay the fees of Attys. Espinas and Lopez for which
reason, the 35% increased fees was approved by the Union’s board in good faith. The Union likewise
confirms that Atty. Pineda came into the picture only when he was assigned by Atty. Espinas in 1965
to execute the CIR decision which, thru Atty. Espinas’ handling, was upheld by this Court in L-24864 in
1968. The Union officers were aware that Atty. Espinas was the principal counsel even after Atty.
Pineda’s assignment. They also knew of the original contract for 20% attorney’s fees which was
increased to 35% by Atty. Pineda upon the arrangement that with the increase, he would answer for
the payment of Attys. Espinas and Lopez’ fees and for necessary representation expenses. Acting on
the aforesaid motion, this Court in its resolution of August 28, 1964, dropped the Union and its
officers from the within contempt charge.

RESOLUTION

MAKASIAR, J.:

Before Us for resolution is the urgent motion to cite Atty. Benjamin C. Pineda, Ricardo Capuno and
Manila Bank (Cubao Branch) in contempt for the alleged continued failure of aforenamed parties to
comply with the temporary mandatory restraining order issued by this Court on September 1, 1983 and
with the resolution dated September 13, 1983 which again directed Atty. Pineda and union
administrator Capuno to comply with the aforesaid mandatory restraining order and which ordered the
Manila Bank to transfer the funds allocated for the workers to the NLRC (p. 376, L-24864, rec.; p. 301,
L027773 rec.).

The issuance of the temporary mandatory restraining order stemmed from the questioned orders of
September 23, 1982

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Halili vs. Court of Industrial Relations

and February 9, 1983 issued by Labor Arbiter Raymundo Valenzuela in Case No. 1099-V before the NLRC
which orders respectively allowed the sale of the property awarded to satisfy or answer for the claims of
the union members in these four cases and authorized the distribution of the proceeds of the purchase.

For a better appreciation of the aforesaid motion for contempt, We must recall certain prefatory facts
which the Solicitor General has so aptly summed up. Thus:

“The above-entitled cases involve disputes regarding claims for overtime of more than five hundred bus
drivers and conductors of Halili Transit. Litigation initially commenced with the filing of a complaint for
overtime with the defunct Court of Industrial Relations on August 20, 1958 docketed as CIR Case No.
1099-V. The disputes were eventually settled when the contending parties reached an Agreement on
December 23, 1974, the pertinent portions of which are as follows:

“ ‘WHEREAS, in the face of this strong urging on the part of the Supreme Court Justices upon the parties
to put an immediate end to this case by amicable settlement, the parties repeatedly came to
conference, conscientiously explored all avenues of settlement, and finaly arrived at the tentative
agreement (tentative because of the condition that the same be sanctioned by the court in the estate
case) whereby the Administratrix would transfer to the employees title to that tract of land, covered by
TCT No. 36389, containing an area of approximately 33,952 square meters, situated in the Barrio of San
Bartolome, Municipality of Caloocan, Province of Rizal, and pay in addition the cash amount of
P25,000.00 in full and final satisfaction of all the claims and causes of action of all of the employees
against the estate of Fortunato F. Halili, subject of CIR Case No. 1099-V.

xxx xxx xxx

“ ‘NOW, THEREFORE, for and in consideration of the foregoing and of the covenants, stipulations and
undertakings hereinafter contained, the parties have agreed as follows:

“ ‘1. The UNION, its officers and members-claimants relative to CIR Case No. 1099-V, shall withdraw and
dismiss with prejudice Case No. 1099-V filed by the UNION in behalf of

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its members-claimants before the Court of Industrial Relations and all its incidents thereto.

“ ‘2. The ESTATE shall deliver or cause to be delivered to the UNION the following:

“ ‘(a) Deed of Transfer of a parcel of land situated in Barrio San Bartolome, Caloocan City, containing an
area of THIRTY-THREE THOUSAND NINE HUNDRED FIFTY-TWO (33,952) Square Meters, more or less, and
covered by Transfer Certificate of Title No. 35389 of the Registry of Deeds of Rizal, to be made, upon
authority and approval granted by the Court of First of Rizal, Branch IV, at Quezon City, in Proc. No. Q-
10852 in the name of the Halili Bus Drivers & Conductors Union (PTGWO), free from any and all liens,
encumbrances, and any and all claims whatsoever.

“ ‘(b) Negotiable Check for TWENTY-FIVE THOUSAND (P25,000.00) PESOS in the name of Dom ingo D.
Cabading, President of the UNION.

“ ‘3. The transfer of the above-described parcel of land and receipt of the amount of P25,000.00
constitute the full and final satisfaction of the claims and award in said CIR Case No. 1099-V, as well as
any and all attorney’s liens in said case, for and in consideration of which the UNION members-claimants
in CIR Case No. 1099-V by these presents now and forever release and quitclaim Halili Enterprises, Halili
Transit, Fortunato F. Halili, his estate, heirs and successors by reason of CIR Case No. 1099-V, it being
their intention that they be absolutely, completely and finally absolved and released from any and all
liability in said case, including attorneys’ liens, the transfer of the property and payment of the amount
hereinabove stated constituting for all intents and purposes a full, final and complete settlement and
satisfaction of the award in CIR Case No. 1099-V and all incidents thereto.

“ ‘4. The UNION and its undersigned officers hereby warrant that the UNION is a duly registered labor
organization and that in a special meeting called for the purpose they were duly authorized on
December 22, 1974, by all the members-claimants in CIR Case No. 1099-V to sign this Memorandum of
Agreement with Release and Quitclaim which was unanimously approved and ratified by said members
claimants as evidenced by a Resolution dated December 22,
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1974, a copy of which is attached hereto and made a part hereof as Annex “B”, and hereby jointly and
severally hold the estate and heirs of Fortunato F. Halili free and harmless from, and undertake to
indemnify them for, any and all liability for any claims by members of the UNION, their heirs, assigns and
agents relating to CIR Case No. 1099-V or attorneys’ liens in connection therewith’ (69 SCRA 509-510).

“On January 6, 1975, pursuant to the Agreement, the administratrix of the estate of Fortunato F. Halili
executed a Deed of Conveyance of Real Property, transferring the aforementioned parcel of land to the
Halili Bus and Conductors Union (PTGWO) in trust for the members of the union claimants. The parcel of
land was eventually registered in the name of the Union on February 14, 1975. Hence, on February 10,
1976, the contending parties moved for the dismissal of G.R. No. L-30110 and G.R. No. L-38655, which
this Honorable Court granted on February 27, 1976 (69 SCRA 505). The two other cases, G.R. No. L-
24864 and G.R. No. L-27773, were previously disposed of on February 26, 1968 and December 28, 1970,
respectively (22 SCRA 785, and 36 SCRA 522).

“On August 9, 1982, the Union, through Atty. Benjamin C. Pineda, filed an urgent motion with the
Ministry of Labor and Employment (MOLE) requesting for authority to sell and dispose of the property.
The motion was granted in an order dated September 23, 1982. A prospective buyer, the Manila
Memorial Park Cemetery, Inc. expressed its misgivings on the authority of the Union to sell the property
in view of sec. 66 of PD 1529 which requires no less than an order from a court of competent jurisdiction
as authority to sell property in trust. So, Atty. Pineda filed a motion with the Supreme Court on
December 1, 1982 requesting for authority to sell the property. This Honorable Court, however, merely
noted the motion in a resolution dated December 8, 1982.

“Nevertheless, Atty. Pineda, without authority from the Supreme Court but relying on the earlier
authority given him by the Ministry of Labor, filed another urgent motion with the latter, praying that
the Union be authorized to sell the lot to the Manila Memorial Park Cemetery, Inc. and to make
arrangements with it such that payment will be advanced for the real estate taxes inclusive of penalties,
attorney’s lien which is equivalent to a thirty-five percent (35%) of the total purchase price, and home
developer’s fee of P69,000.00. Apparently, the prospective purchaser had decided to withdraw its
objection regarding the Union’s authority to sell. In an Order dated February 9, 1983, Labor Arbiter
Raymundo R. Valen-

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zuela granted the motion. So, the sale was finally consummated on June 7, 1983, resulting in the
execution of an escrow agreement on June 8, 1983 wherein the purchase price was deposited under
escrow with the Manila Bank-Cubao Branch. The Bank then released the amounts due the claimants in
accordance with the escrow agreement” (pp. 352-356, L-24864 rec.).

The dispositive portion in L-24864 is re-stated hereunder:

“WHEREFORE, the appealed order and resolution en banc are hereby affirmed and the Court of
Industrial Relations is hereby enjoined to make a judicial determination of the union membership of the
claimants, while the Examining Division of said court shall proceed with its computation of the
compensable hours of work rendered by, and the corresponding compensation payable to, the drivers
and conductors admitted by both parties to be union members since October 1, 1956 and those
contended by the union to be such members but disputed by the employer. No costs. So ordered” (p.
186, L-24864 rec.).

When Atty. Jose C. Espinas (herein movant and alleged original counsel for the Union) learned of the
sale and apportionment of the proceeds from past Union president Amado Lopez, he requested Labor
Arbiter Raymundo Valenzuela to allow him to look into the records of Case No. 1099-V. The latter,
however, told him that the records of the aforecited case were missing. Thereupon, Atty. Espinas
requested Director Pascual Reyes of the NLRC to locate the records (p. 356, L-24864 rec.).

Hence, Atty. Espinas filed the urgent motion with prayer for a temporary mandatory restraining order
on August 26, 1983 and the supplement thereto on August 29, 1983 (pp. 215, 227, L-24864 rec.).

On August 30, 1983, the records of Case No. 1099-V were finally found and Atty. Espinas was dully
informed of the development.

The above two motions question the legality of the orders dated September 23, 1982 and February 9,
1983 issued by Labor Arbiter Raymundo Valenzuela in Case No. 1099-V before the NLRC which
authorized the sale of the awarded property and the distribution of the proceeds from such purchase. .

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Movants Union and counsel Espinas upon filing of the motions urgently pray of this Court to:

1. Require Atty. Benjamin C. Pineda to deposit with the NLRC the amount of P712,992.00 paid to him or
deposited to his account at Manila Bank, Cubao Branch, allegedly representing 35% attorney’s fees on
the sale of 33,952 square meters of the lot registered in the name of the Union;
2. Require the Halili Drivers and Conductors Union through Domingo Cabading or any of his
representatives to deposit with the NLRC the 6% alleged union expenses paid to them or similarly
deposited to their account;

3. Implead with leave of court the Manila Bank-Cubao Branch to require the said bank to prevent further
withdrawals of amount deposited in the name of Atty. Pineda and/or the Halili Drivers and Conductors
Union or any of its officers and to turn over any remaining deposits to the NLRC for proper disposition;

4. Should Atty. Pineda and the Union officers have already withdrawn the deposits or parts thereof,
require them to post a bond in the equivalent amounts of 35% (attorney’s fees), 6% (union expenses),
and 5% (broker’s fee) respectively of the total proceeds of the sale of the property, solidarily (p. 219, L-
24864 rec.; p. 160, L-27773 rec.).

Likewise, and after due consideration of the merits, movants prayed that—

1. the order of Arbiter Valenzuela dated February 9, 1983 be nullified insofar as it allows Atty. Pineda
35% attorney’s fees;

2. the NLRC be directed to locate the records of Case No. 1099-V or reconstitute the same and
thereafter to equitably dispose 20% as fees to all lawyers who participated in the proceedings and any
excess amounts to be again distributed to the workers; and

3. these cases be remanded to the NLRC with instructions as above-stated and that the proper penalty
be

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imposed on those involved and who have acted fraudulently and illegally (p. 220, L-24864 rec.; p. 165, L-
27773 rec.).

The succeeding pleadings and developments which are common to all these cases are now presented
chronologically.

On August 29, 1983, Atty. Espinas, for himself and members of the respondent Union, filed a
supplement to urgent motion stating that the prayers in the urgent motion of August 26, 1983 are
reiterated and praying for the nullification of Arbiter Valenzuela’s order not only on the award of
attorney’s fees but also on the allowance of payment of “union obligations” not previously authorized
nor approved by the NLRC (p. 227, L-24864, rec.; p. 176, L-27773 rec.).

In its resolution dated September 1, 1983, this Court impleaded the Manila Bank, Cubao Branch as party
respondent and directed the issuance of a temporary mandatory restraining order (p. 234, L-24864 rec.
& p. 187, L-27773 rec.). This Court correspondingly issued a temporary mandatory restraining order on
the same date which enjoined Atty. Benjamin C. Pineda or his agents or any person acting in his stead to
deposit with the NLRC the amount of P712,992.00 paid to him or deposited in his account at Manila
Bank, Cubao Branch allegedly representing 35% attorney’s fees on the sale of 33,952 square meters of
the lot registered in the name of Halili Drivers and Conductors Union; directed the Union thru Domingo
Cabading or his agents to deposit with the NLRC 6% alleged union expenses paid to the Union or
similarly deposited to its account; and ordered the NLRC and Manila Bank, Cubao Branch, or their agents
or persons in their stead not to allow withdrawals of amounts deposited in the name of Atty. Benjamin
C. Pineda and/or the Union or any of its officers (p. 235, L-24864; p. 188, L-27773 rec.).

On September 6, 1983, respondent Union, thru Atty. Pineda, filed its comment, in compliance with the
resolution of September 1, 1983, on the urgent motion and the supplement thereto both filed by
counsel Espinas, alleging therein that the subject matter sought to be enjoined or mandated by the
restraining order ceased to exist rendering the same moot and

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academic, and thus praying for the dismissal of the said motion and the supplement thereto (p. 237, L-
24864 rec.; p. 191, L-27773 rec.).

On September 7, 1983, Atty. Pedro Lopez, an original associate of Atty. Espinas, filed his motion for
leave to intervene, with the submission that the lawyers involved should only divide 20% fees as per the
workers’ contract and the rest refunded by Atty. Pineda and the alleged “union officers” for
redistribution to the members (p. 265, L-24864, rec.; p. 219, L-27773 rec.).

Atty. Espinas, in behalf of the workers, filed a manifestation and motion to require Atty. Pineda and the
union to comply with the temporary mandatory restraining order on September 9, 1983, with prayer
that the Manila Bank be ordered to transfer the funds allocated for the workers to the NLRC, which
should be instructed to pay the workers upon proper identification (without prejudice to additional
shares) or to mail such amounts by money order or manager’s check to the workers’ addresses as
furnished to the NLRC (p. 274, L-24864, rec.; p. 231, L-27773 rec.).

On September 12, 1983, petitioner filed a manifestation in compliance with the resolution of September
2, 1983 stating, among other things, that its liability had been completely extinguished with the approval
of the Memorandum of Agreement with Release and Quitclaim in L-38655 and L-30110; that said
agreement operated as an absolute and complete release of petitioner from any liability to the Union;
and that petitioner had not been given any notice of any proceedings respecting cases subsequent to
the promulgation of the decisions aforestated (p. 281, L-24864, rec.; p. 237, L-27773 rec.).

Counsel Espinas (for the workers involved) filed his reply to comments of respondent Union on
September 14, 1983 praying for this Court to:
1. nullify the order of February 9, 1983 issued by Arbiter Raymundo Valenzuela in CIR Case No. 1099-V
and others connected therewith regarding the distribution of proceeds of the sale of the land belonging
to the members-claimants for lack of due process and for being contrary to law;

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Pineda as illegal and unconscionable and in disregard of other lawyers in the case;

3. require reimbursement to the members—from the Union P101,856.00 allocated without their
consent as Union expenses; P101,856 unreceipted brokers’ fees less P4,020.40 expenses for the transfer
of title; to refund the 1% of the net proceeds, P9,596.18, for named claimants; and to secure a refund of
P308,000.00 from the P712,992.00 fees of Atty. Pineda (the excess of 20% fees for all lawyers);

4. subject the balance of P404,992.00 of the remainder of Atty. Pineda’s 35% fees for distribution among
the three lawyers as may be determined by the NLRC; and

5. should this Court so decides, fix the fees (p. 285, L-24864 rec.; p. 240, L-27773 rec.).

On September 13, 1983, the Solicitor General filed his comment on the urgent motion and the
supplement thereto dated August 25, 1983 and August 29, 1983, respectively with the
recommendations that (1) the orders of Arbiter Valenzuela dated September 23, 1982 and February 9,
1983 be nullified for having been issued without due process; (2) the case must be remanded to the
NLRC for further proceedings; and (3) the temporary restraining order issued by this Court on
September 1, 1983 be maintained, pending final resolution by the NLRC (p. 351, L-24864 rec.).

The Solicitor General, on October 6, 1983, filed his manifestation and motion in lieu of comment on the
motion of Atty. Pedro Lopez for leave to intervene in L-24864 and L-27773 (p. 360, L-24864 rec.; p. 289,
L-27773 rec.).

On October 6, 1983, counsel Espinas filed his comment on the intervention of Atty. Pedro Lopez wherein
he offers no objection to the latter’s intervention and states that said counsel is also entitled to
attorney’s fees in accordance with his participation (p. 364, L-24864 rec.; p. 292, L-27773 rec.).

Atty. Pineda filed his comment and manifestation on October 7, 1983, in compliance with the resolution
of September 13, 1983, alleging therein that as per Retainer’s Contract dated January 1, 1967, he
handled Case No. 1099-V before the Court 125

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of Industrial Relations alone. On the mandatory restraining order, Atty. Pineda claims that as of October
4, 1983, he had a balance of P2,022.70 in his account with the Manila Bank (p. 370, L-24864 rec.; p. 295,
L-27773 rec.).

In its resolution dated October 18, 1983, this Court (1) set aside as null and void the orders of
September 23, 1982 and February 9, 1983 of Arbiter Raymundo R. Valenzuela; (2) allowed the
intervention of Atty. Pedro Lopez; (3) directed the Manila Bank (Cubao Branch), Atty. Benjamin Pineda,
and the Halili Drivers and Conductors Union through Domingo Cabading or any of his representatives, to
comply with the temporary mandatory restraining order issued on September 1, 1983 and the
resolution dated September 13, 1983, within ten [10] days from receipt thereof; and (4) remanded these
cases to the NLRC for further proceedings (p. 374, L-24864 rec.; p. 299, L-27773 rec.).

The day before or on October 17, 1983, Sergio de Pedro, as representative of the workers and assisted
by Atty. Espinas, thus filed the urgent motion to cite Atty. Pineda, Ricardo Capuno and Manila Bank
(Cubao Branch) in contempt, alleging therein that after two letters dated October 6 and October 14,
1983 to the NLRC which inquired as to whether or not compliance with the restraining order had been
made, the Commission certified that as of October 14, 1983, no deposits had been effected by the
parties so directed (p. 376, L-24864 rec.; p. 301, L-27773 rec.).

In its manifestation and motion filed on November 2, 1983, respondent Manila Banking Corporation
(Rustan-Cubao Branch), in compliance with this Court’s resolution of September 13, 1983, stated that it
transmitted or paid to the NLRC the amount of P417,380.64 under Cashier’s Check No. 34084190 for the
account of the Union and P2,022.70 under Cashier’s Check No. 34084191 for the account of Atty. Pineda
and thus prayed therein that the aforesaid transmittals be deemed as sufficient compliance with the
aforecited resolution and that the urgent motion to cite respondents in contempt dated October 17,
1983 be considered moot and academic (p. 390, L-24864 rec.).

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On November 8, 1983, respondent Atty. Pineda filed his manifestation and motion in lieu of comment,
in compliance with this Court’s resolution of October 20, 1983, stating that he and respondent Union
thereby adopt the aforecited manifestation and motion of respondent Manila Banking Corporation and
thus prayed that since they have complied with this Court’s resolution of September 13, 1983, the
urgent motion to cite them for contempt be considered moot and academic (p. 394, L-24864 rec.; p.
310, L-27773 rec.).

On November 10, 1983, respondent Manila Banking Corporation filed another manifestation and motion
in lieu of comment, by way of compliance with the Court’s resolution of October 20, 1983 with prayer
that its previous manifestation and motion dated October 28, 1983 and filed on November 2, 1983 be
considered as sufficient compliance with the resolution of September 13, 1983 which would render the
urgent motion to cite respondents in contempt moot and academic (p. 396, L-24864 rec.; p. 312, L-
27773 rec.).

On the foregoing manifestations and motions, representative Sergio de Pedro, with the assistance of
Atty. Espinas, filed a comment on November 16, 1983 wherein he alleged that out of the P2,037,120.00
purchase price, only P1,940,127.29 was deposited with the Manila Bank; that Atty. Pineda has yet to
return the balance of P710,969.30; and that the Union has still to account for P111,452.18 (p. 399, L-
24864 rec.; p. 315, L-27773 rec.).

On December 14, 1983, respondent Union filed its reply to Mr. de Pedro’s above unsigned comment
therein stating among other things that the alleged missing amount of P96,992.71 was used for the
payment of outstanding real estate taxes on real property of said Union covered by TCT No. 205755 and
that the amount of P2,022,70 only was remitted by Manila Bank to the NLRC for the account of Atty.
Pineda (p. 323, L-27773 rec.).

On December 20, 1983, Mr. de Pedro and Atty. Espinas, for the workers involved, filed their rejoinder to
the comment of Atty. Pineda and Mr. Capuno reiterating therein their plea to declare Atty. Pineda and
Mr. Capuno in contempt of court and to mete out the proper penalty (p. 328, L-27773 rec.).

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The Manila Banking Corporation filed its compliance with the Court resolution of November 22, 1983 on
February 3, 1984, praying that its report to the NLRC on the amount of withdrawals be considered as
sufficient compliance with the said resolution (p. 343, L-27773 rec.).

Atty. Espinas filed his comment and motion on March 15, 1984, stating among other things that as per
report of the Manila Bank to the NLRC, Atty. Pineda has not yet complied with the said order. He thus
moved that Atty. Pineda be required to post a bond on the undeposited balance in the amounts of
P710,969.30 and that Mr. Capuno be also required to post a bond before the NLRC on the undeposited
balance of P52,236.04 during the pendency of the motion for contempt (p. 373, L-27773 rec.).

On April 4, 1984, Mr. Sergio de Pedro filed his reply to the aforesaid comment of the Union
administrator and Atty. Pineda stating therein that there are still questions to be resolved on the merits
before the NLRC and hence, prays that Arbiter Antonio Tirona be required to continue hearing the
merits of the case pending in the said Commission (p. 377, L-27773 rec.).

Before We resolve the motion for contempt, certain crucial facts which have surfaced and which
precipitated Our issuance of the resolution of October 18, 1983 declaring the two questioned orders of
Arbiter Valenzuela as null and void, must be retraced.
Then Union President Amado Lopez, in a letter dated August 21, 1958, informed J.C. Espinas and
Associates that the general membership of the said Union had authorized a 20% contingent fee for the
law firm based on whatever amount would be awarded the Union (p. 267, L-24864 rec.).

Atty. Jose C. Espinas, the original counsel, established the award of 897 workers’ claim in the main cases
before the defunct CIR and the Supreme Court. In L-24864, the Notice of Judgment of this Court dated
February 26, 1968 was served on Messrs. J.C. Espinas & Associates (p. 188, L-24864 rec.). In L-27773, the
Notice of Judgment dated December 29, 1970 was sent to Atty. B.C. Pineda & Associates under same
address—716 Puyat Bldg., Suit 404 at Escolta, Manila (p. 147,

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L-27773 rec.). Note that this is the same address of Atty. J.C. Espinas & Associates.

When Atty. Pineda appeared for the Union in these cases, still an associate of the law firm, his
appearance carried the firm name “B.C. Pineda and Associates,” giving the impression that he was the
principal lawyer in these cases.

Atty. Pineda joined the law firm of Atty. Espinas in 1965 when these cases were pending resolution. He
always held office in the firm’s place at Puyat Building, Escolta until 1974, except in 1966 to 1967 when
he transferred to the Lakas ng Manggagawa Offices. During this one-year stint at the latter office, Atty.
Pineda continued handling the case with the arrangement that he would report the developments to
the Espinas firm. When he rejoined the law firm in 1968, he continued working on these cases and using
the Puyat Building office as his address in the pleadings.

When Atty. Pineda rejoined the Espinas firm in 1968, he did not reveal to his partners (he was made the
most senior partner) that he had a retainer’s contract entered into on January 1, 1967 which allegedly
took effect in 1966. He stayed with the law firm until 1974 and still did not divulge the 1967 retainer’s
contract. Only the officers of the Union knew of the contract.

The alleged retainer’s contract between Atty. Pineda and the Union appears anomalous and even illegal
as well as unethical considering that—

1. The contract was executed only between Atty. Pineda and the officers of the Union chosen by about
125 members only. It was not a contract with the general membership. Only 14% of the total
membership of 897 was represented. This violates Article 242 (d) of the Labor Code which provides:

“The members shall determine by secret ballot, after due deliberation, any question of major policy
affecting the entire membership of the organization, unless the nature of the organization or force
majeure renders such secret ballot impractical, in which case the board of directors of the organization
may make the decision in behalf of the general membership” (emphasis supplied).

2. The contingent fee of 30% for those who were still work-
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ing with Halili Transit and the 45% fee for those who were no longer working worked to the prejudice of
the latter group who should and were entitled to more benefits. Thus, too, when the alleged retainer’s
contract was executed in 1967, the Halili Transit had already stopped operations in Metro Manila. By
then, Atty. Pineda knew that all the workers would be out of work which would mean that the 45%
contingent fee would apply to all.

3. The contract which retroactively took effect on January 1, 1966, was executed when Atty. Espinas was
still handling the appeal of Halili Transit in the main case before the Supreme Court. Atty. Pineda would
have but did not substitute himself in place of Atty. Espinas or the law firm on the basis of such contract.

4. When Atty. Pineda filed his motion for approval of his attorney’s lien with Arbiter Valenzuela on
February 8, 1983, he did not attach the retainer’s contract.

5. The retainer’s contract was not even notarized (p. 248, L-24864 rec.).

The Manila Memorial Park Cemetery, Inc., as the prospective buyer, initially expressed its misgivings
over the authority of the Union to sell subject property conformably with Section 66 of P.D. No. 1529,
which requires an order from a court of competent jurisdiction authorizing the sale of a property in
trust. The pertinent portion of Section 66 provides:

“No instruments which transfers or mortgages or in any way deals with registered land in trust shall be
registered, unless the enabling power thereto is expressly conferred in the trust instrument, or unless a
final judgment or order of a court of competent jurisdiction has construed the instrument in favor of the
power, in which case a certified copy of such judgment or order may be registered.”

The decision of aforenamed purchaser to stop questioning the Union’s authority to sell and the
expeditious manner by which Arbiter Valenzuela granted Atty. Pineda’s motion for such authority to sell
the property make the entire transaction dubious and irregular.

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Thus, without notice to the other lawyers and parties, Atty. Pineda commenced the proceeds before the
NLRC with the filing of a motion and manifestation on August 9, 1982 with Arbiter Valenzuela of the
NLRC Office of the Labor Ministry wherein he asked for authority to sell the property. On September 23,
1983 or just over a month, Arbiter Valenzuela approved the motion per order of the same date. Notably,
only Atty. Pineda and the lawyers of the purchaser were informed of such order.

On February 4, 1983, again without notice to Atty. Espinas and Atty. Lopez, Atty. Pineda filed a motion
with Arbiter Valenzuela wherein he asked for authority to distribute the proceeds of the sale of the
property. This distribution would include his attorney’s fee which was allegedly the subject of a
retainer’s contract entered into between him and the alleged Union officers. On February 9, 1983, or
barely five days from the day the motion was filed, Arbiter Valenzuela, without informing the other
lawyers and relying exclusively on the unverified motion of Atty. Pineda (the records of the case were
not on hand), approved the said motion which authorized the apportionment.

This Court, as earlier stated, nullified said orders dated September 23, 1982 and February 9, 1983 of
Labor Arbiter Valenzuela as violative of the due process clause. It is a settled rule that in administrative
proceedings, or cases coming before administrative tribunals exercising quasi-judicial powers, due
process requires not only notice and hearing, but also the consideration by the administrative tribunal of
the evidence presented; the existence of evidence to support the decision; ils substantiality; a decision
based thereon or at least contained in the record and disclosed to the parties; such decision by the
administrative tribunal resting on its own independent consideration of the law and facts of the
controversy; and such decision acquainting the parties with the various issued involved and the reasons
therefor (Ang Tibay vs. Court, 89 Phil. 635, cited on p. 84, Philippine Constitutional Law, Fernando, 1984
ed.).

Significantly, Atty. Pineda’s act of filing a motion with this Court on December 1, 1982 praying for
authority to sell was by

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Halili vs. Court of Industrial Relations

itself an admission on his part that he did not possess the authority to sell the property and that this
Court was the proper body which had the power to grant such authority. He could not and did not even
wait for such valid authority but instead previously obtained the same from the labor arbiter whom he
knew was not empowered to so authorize. Under Article 224 (a) of the Labor Code, only final decisions
or awards of the NLRC, the Labor Arbiter, or compulsory or voluntary arbitrators may be implemented
or may be the subject of implementing orders by aforenamed body or officers.

When Atty. Espinas discovered the sale of the property, he went to Arbiter Valenzuela to look into the
transaction who told him that the records of CIR Case No. 1099-V were missing. It took director Pascual
Reyes of the NLRC to locate the records.

The 45% attorney’s lien on the award of those union members who were no longer working and the
30% lien on the benefits of those who were still working as provided for in the alleged retainer’s
contract are very exorbitant and unconscionable in view of Section 11, Rule VIII of Book III which
explicitly provides:

“Sec. 11. Attorney’s fees.—Attorney’s fees on any judicial or administrative proceedings for the recovery
of wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total
amount due the winning party.”

The amount of P101,856.00 which Atty. Pineda donated to the Union and which actually corresponds to
5% of the total 35% attorney’s fees taken from the proceeds (p. 263, L-24864, rec.) appears improper
since it amounts to a rebate or commission. This amount was subsequently treated as union
miscellaneous operating expenses without the consent of the general membership.

Thus, in the case of Amalgamated Laborers’ Association vs. Court of Industrial Relations (L-23467, 22
SCRA 1267 [March 27, 1968]), We declared:

“We strike down the alleged oral agreement that the union president should share in the attorney’s
fees. Canon 34 of Legal

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Ethics condemns this arrangement in terms clear and explicit. It says: ‘No division of fees for legal
services is proper, except with another lawyer, based upon a division of service or responsibility.’ The
union president is not the attorney for the laborers. He may seek compensation only as such president.
An agreement whereby a union president is allowed to share in attorney’s fees is immoral. Such a
contract we emphatically reject. It cannot be justified.

“A contingent fee contract specifying the percentage of recovery an attorney is to receive in a suit
‘should be reasonable under all the circumstances of the case, including the risk and uncertainty of the
compensation, but should always be subject to the supervision of a court, as to its reasonableness.’ ”
(italics supplied).

A deeper scrutiny of the pleadings in L-24864 notably indicates a fraudulent or deceitful pattern in the
actuations of Atty. Pineda. Thus, in his motion for execution of judgment filed on September 18, 1965 in
this case, he signed for and in behalf of “J.C. Espinas & Associates” (p. 323, rec.). In his manifestation
dated December 10, 1968, he signed as “B.C. Pineda,” lone counsel for petitioner (p. 327, rec.); and yet,
he carried the address of Espinas & Associates at 716 G. Puyat Building, Escolta.

However, in the October 29, 1968 resolution of this Court, a copy thereof was served on “Messrs. J.C.
Espinas, B.C. Pineda, J.J. dela Rosa & Associates” at Puyat Building, Escolta (p. 324, rec.). In the notice of
judgment dated December 29, 1970, this Court addressed the said pleading to “Attys. B.C. Pineda &
Associates” with the same Puyat Building address (p. 325, rec.). Notably also, then Union President
Amado Lopez addressed his letter dated August 21, 1958 to “J.C. Espinas & Associates” wherein he
informed the latter that the general membership of the Union had authorized them a 20% contingent
fee on whatever award would be given the workers (p. 267, rec.).

The Manila Banking Corporation (Cubao Branch) has manifested that it turned over to the NLRC the
amount of P417,380.64 for the Union’s account, which appears to be the balance of P950,021.76
corresponding to the net proceeds for distribution to the workers after deducting P525,480.40, the total
payments to claimants. The amount of P417,380.64 ap-

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pears lacking, since accurately computed, the balance should be P424,541.36.

However, the Union has yet to account for P101,856.00, the 5% donation or share from Atty. Pineda’s
attorney’s fee of 35%.

For the account of Atty. Pineda, the Manila Banking Corporation has remitted to the NLRC the amount
of P2,022.70 only. This means that Atty. Pineda is still accountable for the amount of P710,969.30. He is
directed to return the amount of P712,992.00 representing the 35% attorney’s fees he unlawfully
received.

In view of Our resolution of October 18, 1983, which set-aside as null and void the questioned orders
dated September 23, 1982 and February 9, 1983 issued by Arbiter Raymundo Valenzuela, the sale of the
Union property and the distribution of the proceeds therefrom had been effected without authority
and, therefore, illegal Consequently, Atty. Pineda and Arbiter Valenzuela become liable for their
unauthorized acts.

Atty. Pineda should be cited for indirect contempt under paragraphs (b), (c) and (d) of Section 3, Rule 71
of the Revised Rules of Court. The said paragraphs read thus:

“Sec. 3. Indirect contempts to be punished after charge and hearing.—x x x xxx xxx

“(b) Disobedience of or resistance to a lawful writ, process, order, judgment, or command of a court, or
injunction granted by a court or judge, including the act of a person who, after being dispossessed or
ejected from any real property by the judgment or process of any court of competent jurisdiction, enters
or attempts or induces another to enter into or upon such real property, for the purpose of executing
acts of ownership or possession, or in any manner disturbs the possession given to the person adjudged
to be entitled thereto;

“(c) Any abuse of or any interference with the process or proceedings of a court not constituting direct
contempt under section 1 of this rule;

“(d) Any improper conduct tending, directly or indirectly to impede, obstruct, or degrade the
administration of justice.”
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Contempt of court is a defiance of the authority, justice or dignity of the court; such conduct as tends to
bring the authority and administration of the law into disrespect or to interfere with or prejudice parties
litigant or their witnesses during litigation (12 Am. jur 389, cited in 14 SCRA 813).

Contempt of court is defined as a disobedience to the court by acting in opposition to its authority,
justice and dignity. It signifies not only a willful disregard or disobedience of the court’s orders, but such
conduct as tends to bring the authority of the court and the administration of law into disrepute or in
some manner to impede the due administration of justice (17 C.J.S. 4).

This Court has thus repeatedy declared that the power to punish for contempt is inherent in all courts
and is essential to the preservation of order in judicial proceedings and to the enforcement of
judgments, orders, and mandates of the court, and consequently, to the due administration of justice
(Slade Perkins vs. Director of Prisons, 58 Phil. 271; In re Kelly, 35 Phil. 944; Commissioner of Immigration
vs. Cloribel, 20 SCRA 1241; Montalban vs. Canonoy, 38 SCRA 1).

In the matter of exercising the power to punish contempts, this Court enunciated in the Slade Perkins
case that “the exercise of the power to punish contempts has a twofold aspect, namely (1) the proper
punishment of the guilty party for his disrespect to the court or its order; and (2) to compel his
performance of some act or duty required of him by the court which he refuses to perform. Due to this
twofold aspect of the exercise of the power to punish them, contempts are classified as civil or criminal.
A civil contempt is the failure to do something ordered to be done by a court or a judge for the benefit
of the opposing party therein; and a criminal contempt, is conduct directed against the authority and
dignity of a court or of a judge, as in unlawfully assailing or discrediting the authority or dignity of the
court or judge, or in doing a duly forbidden act. Where the punishment imposed, whether against a
party to a suit or a stranger, is wholly or primarily to protect or vindicate the dignity and power of the
court, either by fine payable to the government or by imprisonment, or both, it is deemed a judgment in
a criminal case. Where the

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punishment is by fine directed to be paid to a party in the nature of damages for the wrong inflicted, or
by imprisonment as a coercive measure to enforce the performance of some act for the benefit of the
party or in aid of the final judgment or decree rendered in his behalf, the contempt judgment will, if
made before final decree, be treated as in the nature of an interlocutory order, or, if made after final
decree, as remedial in nature, and may be reviewed only on appeal from the final decree, or in such
other mode as is appropriate to the review of judgments in civil cases. x x x x x x x x x The question of
whether the contempt committed is civil or criminal, does not affect the jurisdiction or the power of a
court to punish the same. x x x x x x x x x” (58 Phil. 271, 272).

For civil contempt, Section 7, Rule 71 of the Revised Rules of Court explicitly provides:

“Sec. 7, Rule 71. Imprisonment until order obeyed. When the contempt consists in the omission to do an
act which is yet in the power of the accused to perform, he may be imprisoned by order of a superior
court until he performs it.”

Thus, in the case of Harden vs. Director of Prisons (L-2349, 81 Phil. 741 [Oct. 22, 1948]), where petitioner
was confined in prison for contempt of court, this Court, in denying the petition and resolving the
question of petitioner’s indefinite confinement, had the occasion to apply and clarify the aforequoted
provision in the following tenor:

“The penalty complained of is neither cruel, unjust nor excessive. In Ex-parte Kemmler, 136 U.S. 436, the
United States Supreme Court said that ‘punishments are cruel when they involve torture or a lingering
death, but the punishment of death is not cruel, within the meaning of that word as used in the
constitution. It implies there something inhuman and barbarous, something more than the
extinguishment of life.’

“The punishment meted out to the petitioner is not excessive. It is suitable and adapted to its objective;
and it accords with section 7, Rule 64 of the Rules of Court which provides that ‘when the contempt
consists in the omission to do an act which is yet in the power of the accused to perform, he may be
imprisoned by order of a

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superior court until he performs it.’

“If the term of imprisonment in this case is indefinite and might last through the natural life of the
petitioner, yet by the terms of the sentence the way is left open for him to avoid serving any part of it by
complying with the orders of the court, and in this manner put an end to his incarceration. In these
circumstances, the judgment cannot be said to be excessive or unjust. (Davis vs. Murphy [1947], 188 P.,
229-231.) As stated in a more recent case (De Wees [1948], 210 S.W., 2d, 145-147), ‘to order that one
be imprisoned for an indefinite period in a civil contempt is purely a remedial measure. Its purpose is to
coerce the contemner to do an act within his or her power to perform. He must have the means by
which he may purge himself of the contempt.’ The latter decision cites Staley vs. South Jersey Realty Co.,
83 N.J. Eq., 300, 90 A., 1042, 1043, in which the theory is expressed in this language:
“ ‘In a “civil contempt” the proceeding is remedial, it is a step in the case the object of which is to coerce
one party for the benefit of the other party to do or to refrain from doing some act specified in the order
of the court. Hence, if imprisonment be ordered, it is remedial in purpose and coercive in character, and
to that end must relate to something to be done by the defendant by the doing of which he may
discharge himself. As quaintly expressed, the imprisoned man “carries the keys to his prison in his own
pocket” ’ ” (pp. 747-748).

Likewise, American courts had long enunciated these rul ings:

“The commitment of one found in contempt of a court order only until the contemnor shall have purged
himself of such contempt by complying with the order is a decisive characteristic of civil contempt.
Maggio v. Zeitz, 333 US 56, 92 L. ed. 476, 68 S Ct 401.”

“Civil or quasi-criminal contempt is contemplated by a statute providing that if any person refused to
obey or perform any rule, order, or judgment of court, such court shall have power to fine and imprison
such person until the rule, order, or judgment shall be complied with. Evans v. Evans, 193 Miss 468, 9 So
2d. 641.” (17 Am. Jur. 2d).

The reason for the inherent power of courts to punish for contempt is that respect of the courts
guarantees the stability of the judicial institution. Without such guarantee said in-

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Halili vs. Court of Industrial Relations

stitution would be resting on a very shaky foundation (Salcedo vs. Hernandez, 61 Phil. 724; Cornejo vs.
Tan, 85 Phil. 722).

Likewise, Atty. Pineda should be subject to disbarment proceedings under Section 27 of Rule 138 of the
Revised Rules of Court which provides:

“Sec. 27. Attorneys removed or suspended by Supreme Court on what grounds.—A member of the bar
may be removed or suspended from his office as attorney by the Supreme Court for any deceit,
malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his
conviction of a crime involving moral turpitude, or for any violation of the oath which he is required to
take before admission to practice, or for a willful disobedience of any lawful order of a superior court, or
for corruptly or willfully appearing as an attorney for a party to a case without authority so to do. The
practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or
brokers, constitutes malpractice.”

The Court may suspend or disbar a lawyer for any conduct on his part showing his unfitness for the
confidence and trust which characterize the attorney and client relations, and the practice of law before
the courts, or showing such a lack of personal honesty or of good moral character as to render him
unworthy of public confidence (7 C.J.S. 733).
It is a well-settled rule that the statutory grounds for disbarment or suspension are not to be taken as a
limitation on the general power of the courts in this respect. The inherent powers of the court over its
officers cannot be restricted (In re Pelaez, 44 Phil. 567).

Finally, Atty. Pineda could be prosecuted for betrayal of trust by an attorney under Article 209 of the
Revised Penal Code. Said article provides:

“Art. 209. Betrayal of trust by an attorney or solicitor, Revelation of secrets.—In addition to the proper
administrative action, the penalty of prision correccional in its minimum period, or a fine ranging from
200 to 1,000 pesos, or both, shall be imposed upon any attorney-at-law or solicitor (procurador judicial)
who, by any malicious breach of professional duty or inexcusable negligence or ignorance, shall
prejudice his client, or reveal any of the secrets of the

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latter learned by him in his professional capacity” (italics supplied).

The aforequoted criminal sanction for unprofessional conduct of an attorney is without prejudice to
proper administrative action, such as disbarment or suspension of attorneys (p. 503, Criminal Law
Annotated, Padilla, 1972 Ed.).

Labor Arbiter Raymundo Valenzuela should be made to answer for having acted without or beyond his
authority in proper administrative charges. He could also be prosecuted before the Tanodbayan under
the provisions of the Anti-Graft Law. Independently of his liabilities as a government officer, he could be
the subject of disbarment proceedings under Section 27, Rule 138 of the Revised Rules of Court.

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

The Manila Banking Corporation (Cubao Branch) per manifestation and motion dated October 28, 1983
and reiterated on November 10, 1983, had transmitted to the NLRC the remaining balance of
P417,380.64 and P2,022.70 for the account of the Union and Atty. Pineda, respectively. This turnover of
the aforecited amounts is a sufficient compliance with Our restraining order and resolution of
September 13, 1983 and hence, the Manila Banking Corporation can no longer be liable for contempt of
court.
Very recently, on August 23, 1984, respondent Union, thru Acting Administrator Ricardo Capuno, filed its
motion to drop Halili Bus Drivers and Conductors Union from the contempt charge in view of these
reasons:

1. The Manila Bank has already turned over to the NLRC the amount of P59,716.14 which represents the
re-

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maining balance of 5% earmarked for Union expenses incurred in the case aside from the amounts
deposited in escrow for the workers. The amount of P42,140.00 was spent legitimately by the Union for
administration purposes relative to the subject property. The Union asserts that it is ready and willing to
account for all expenses and withdrawals from the bank before the NLRC.

2. The alleged 5% donation of Atty. Pineda to the Union taken from the 35% attorneys’ fees was given to
and received by then President Domingo Cabading alone, who thereafter left for the United States.

3. The 1% allocated for unknown claimants or those not previously listed in the amount of P9,596.18 can
easily be accounted for by the Union before the NLRC.

In the same motion, Mr. Capuno clarifies that with regard to attorneys’ fees, Atty. Pineda made the
Union officers believe that he would be the one to pay the fees of Attys. Espinas and Lopez for which
reason, the 35% increased fees was approved by the Union’s board in good faith. The Union likewise
confirms that Atty. Pineda came into the picture only when he was assigned by Atty. Espinas in 1965 to
execute the CIR decision which, thru Atty. Espinas’ handling, was upheld by this Court in L-24864 in
1968. The Union officers were aware that Atty. Espinas was the principal counsel even after Atty.
Pineda’s assignment. They also knew of the original contract for 20% attorney’s fees which was
increased to 35% by Atty. Pineda upon the arrangement that with the increase, he would answer for the
payment of Attys. Espinas and Lopez’ fees and for necessary representation expenses (p. 450, L-24864
rec.).

Acting on the aforesaid motion, this Court in its resolution of August 28, 1964, dropped the Union and
its officers from the within contempt charge (p. 455, L-24864 rec.).

WHEREFORE, ATTY. BENJAMIN PINEDA IS HEREBY FOUND GUILTY OF INDIRECT CONTEMPT OF COURT
FOR WHICH HE IS HEREBY SENTENCED TO IMPRISONMENT IN THE MANILA CITY JAIL UNTIL THE ORDERS
OF THIS COURT DATED SEPTEMBER 1 AND SEPTEMBER 13, 1983 ARE COM-

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Floresca vs. Philex Mining Corporation

PLIED WITH.

ATTY. BENJAMIN PINEDA IS ALSO DIRECTED TO SHOW CAUSE WHY HE SHOULD NOT BE DISBARRED
UNDER RULE 138 OF THE REVISED RULES OF COURT.

LET COPIES OF THIS RESOLUTION AND THE RESOLUTION OF OCTOBER 18, 1983 BE FURNISHED THE
MINISTRY OF LABOR AND THE TANODBAYAN FOR APPRORIATE ACTION.

SO ORDERED.

Fernando, C.J., Teehankee, Aquino, Melencio-Herrera, Escolin, De la Fuente, Cuevas and Alampay, JJ.,
concur. Concepcion, Jr., Plana, Relova and Gutierrez, Jr., JJ., no part.

Abad Santos, J., I reserve my vote.

Atty. Pineda guilty of indirect contempt of court.

——o0o——

© Copyright 2017 Central Book Supply, Inc. All rights reserved. Halili vs. Court of Industrial Relations,
136 SCRA 112, No. L-24864, No. L-27773, No. L-38655, No. L-30110 April 30, 1985

710

SUPREME COURT REPORTS ANNOTATED

Palacol vs. Ferrer-Calleja

G.R. No. 85333. February 26, 1990.*

CARMELITO L. PALACOL, ET AL., petitioners, vs. PURA FERRER-CALLEJA, Director of the Bureau of
Labor Relations, MANILA CCBPI SALES FORCE UNION, and COCA-COLA BOTTLERS (PHILIPPINES), INC.,
respondents.

Labor Standards; Labor Relations; Collective Bargaining; Special Assessments; Strict compliance with
legal requirements regarding special assessments must be observed.—The respondent-Union brushed
aside the defects pointed out by petitioners in the manner of compliance with the legal requirements
as “insignificant technicalities.” On the contrary, the failure of the Union to comply strictly with the
requirements set out by the law invalidates the questioned special assessment. Substantial
compliance is not enough in view of the fact that the special assessment will diminish the
compensation of the

_______________
* FIRST DIVISION.

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Palacol vs. Ferrer-Calleja

union members. Their express consent is required, and this consent must be obtained in accordance
with the steps outlined by law, which must be followed to the letter. No shortcuts are allowed.

Same; Same; Same; Same; Written resolution of a majority of all members of the union at a general
membership meeting, required for validity of levy of a special assessment.—As earlier outlined by
petitioners, the Union obviously failed to comply with the requirements of paragraph (n). It held local
membership meetings on separate occasions, on different dates and at various venues, contrary to
the express requirement that there must be a general membership meeting. The contention of the
Union that “the local membership meetings are precisely the very general meetings required by law”
is untenable because the law would not have specified a general membership meeting had the
legislative intent been to allow local meetings in lieu of the latter. It submitted only minutes of the
local membership meetings when what is required is a written resolution adopted at the general
meeting. Worse still, the minutes of three of those local meetings held were recorded by a union
director and not by the union secretary. The minutes submitted to the Company contained no list of
the members present and no record of the votes cast. Since it is quite evident that the Union did not
comply with the law at every turn, the only conclusion that may be made therefrom is that there was
no valid levy of the special assessment pursuant to paragraph (n) of Article 241 of the Labor Code.

Same; Same; Same; Same; Withdrawal of individual authorization is equivalent to no authorization at


all; The law does not require that the disauthorization must be in individual form.—Paragraph (o) on
the other hand requires an individual written authorization duly signed by every employee in order
that a special assessment may be validly checked-off. Even assuming that the special assessment was
validly levied pursuant to paragraph (n), and granting that individual written authorizations were
obtained by the Union, nevertheless there can be no valid check-off considering that the majority of
the union members had already withdrawn their individual authorizations. A withdrawal of individual
authorizations is equivalent to no authorization at all. Hence, the ruling in Galvadores that “no check-
offs from any amounts due employees may be effected without an individual written authorization
signed by the employees x x x” is applicable. The Union points out, however, that said
disauthorization are not valid for being collective in form, as they are “mere bunches of randomly
procured signatures, under loose sheets of paper.” The contention deserves no merit for the simple
reason that the documents containing

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Palacol vs. Ferrer-Calleja

the disauthorization have the signatures of the union members. The Court finds these retractions to
be valid. There is nothing in the law which requires that the disauthorizations must be in individual
form.

Same; Same; Same; Same; Payment of services rendered by union officers, not to be taken from
special assessments but from regular union dues.—Of the stated purposes of the special assessment,
as embodied in the board resolution of the Union, only the collection of a special fund for labor and
education research is mandated, as correctly pointed out by the Union. The two other purposes,
namely, the purchase of vehicles and other items for the benefit of the union officers and the general
membership, and the payment of services rendered by union officers, consultants and others, should
be supported by the regular union dues, there being no showing that the latter are not sufficient to
cover the same. The last stated purpose is contended by petitioners to fall under the coverage of
Article 222 (b) of the Labor Code. The contention is impressed with merit. Article 222 (b) prohibits
attorney’s fees, negotiation fees and similar charges arising out of the conclusion of a collective
bargaining agreement from being imposed on any individual union member. The collection of the
special assessment partly for the payment for services rendered by union officers, consultants and
others may not be in the category of “attorney’s fees or negotiation fees.” But there is no question
that it is an exaction which falls within the category of a “similar charge,” and, therefore, within the
coverage of the prohibition in the aforementioned article.

PETITION for certiorari to review the order of the Bureau of Labor Relations Commission.

The facts are stated in the opinion of the Court.

Wellington B. Lachica for petitioners.

Adolpho M. Guerzon for respondent Union.

GANCAYCO, J.:

Can a special assessment be validly deducted by a labor union from the lump-sum pay of its members,
granted under a collective bargaining agreement (CBA), notwithstanding a subsequent disauthorization
of the same by a majority of the union members? This is the main issue for resolution in the instant
petition for certiorari.

As gleaned from the records of the case, the pertinent facts are as follows:

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713

Palacol vs. Ferrer-Calleja

On October 12, 1987, the respondent Manila CCBPI Sales Force Union (hereinafter referred to as the
Union), as the collective bargaining agent of all regular salesmen, regular helpers, and relief helpers of
the Manila Plant and Metro Manila Sales Office of the respondent Coca-Cola Bottlers (Phil-ippines), Inc.
(hereinafter referred to as the Company) concluded a new collective bargaining agreement with the
latter.1 Among the compensation benefits granted to the employees was a general salary increase to be
given in lump-sum including recomputation of actual commissions earned based on the new rates of
increase.

On the same day, the president of the Union submitted to the Company the ratification by the union
members of the new CBA and authorization for the Company to deduct union dues equivalent to P10.00
every payday or P20.00 every month and, in addition, 10% by way of special assessment, from the CBA
lump-sum pay granted to the union members. The last one among the aforementioned is the subject of
the instant petition.

As embodied in the Board Resolution of the Union dated September 29, 1987, the purpose of the special
assessment sought to be levied is “to put up a cooperative and credit union; purchase vehicles and other
items needed for the benefit of the officers and the general membership; and for the payment for
services rendered by union officers, consultants and others.”2 There was also an additional proviso
stating that the “matter of allocation x x x shall be at the discretion of our incumbent Union President.”

This “Authorization and CBA Ratification” was obtained by the Union through a secret referendum held
in separate local membership meetings on various dates.3 The total membership of the Union was
about 800. Of this number, 672 members originally authorized the 10% special assessment, while 173
opposed the same.4

Subsequently however, one hundred seventy (170) members of the Union submitted documents to the
Company stating that

_______________

1 Page 4, Rollo.

2 Page 10, Rollo.

3 Page 96, Rollo.

4 Page 34, Rollo.

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SUPREME COURT REPORTS ANNOTATED


Palacol vs. Ferrer-Calleja

although they have ratified the new CBA, they are withdrawing or disauthorizing the deduction of any
amount from their CBA lump-sum. Later, 185 other union members submitted similar documents
expressing the same intent. These members, numbering 355 in all (170 + 185), added to the original
oppositors of 173, turned the tide in favor of disauthorization for the special assessment, with a total of
528 objectors and a remainder of 272 supporters.5

On account of the above-mentioned disauthorization, the Company, being in a quandary as to whom to


remit the payment of the questioned amount, filed an action for interpleader with the Bureau of Labor
Relations in order to resolve the conflicting claims of the parties concerned. Petitioners, who are regular
rank-and-file employees of the Company and bona fide members of the Union, filed a motion/complaint
for intervention therein in two groups of 161 and 94, respectively. They claimed to be among those
union members who either did not sign any individual written authorization, or having signed one,
subsequently withdrew or retracted their signatures therefrom.

Petitioners assailed the 10% special assessment as a violation of Article 241(o) in relation to Article
222(b) of the Labor Code.

Article 222(b) provides as follows:

“ART. 222. Appearances and Fees.—

xxx xxx xxx

(b) No attorney’s fees, negotiation fees or similar charges of any kind arising from any collective
bargaining negotiations or conclusion of the collective agreement shall be imposed on any individual
member of the contracting union; Provided, however, that attorney’s fees may be charged against union
funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any
sort to the contrary shall be null and void.”

On the other hand, Article 241(o) mandates that:

“ART. 241. Rights and conditions of membership in a labor organization.—

xxx xxx xxx

(o) Other than for mandatory activities under the Code, no

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5 Page 35, Rollo.

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715
Palacol vs. Ferrer-Calleja

special assessments, attorney’s fees, negotiation fees or any other extraordinary fees may be checked
off from any amount due to an employee without an individual written authorization duly signed by the
employee. The authorization should specifically state the amount, purpose and beneficiary of the
deduction;”

As authority for their contention, petitioners cited Galva-dores v. Trajano,6 wherein it was ruled that no
check-offs from any amount due employees may be effected without individual written authorizations
duly signed by the employees specifically stating the amount, purpose, and beneficiary of the deduction.

In its answer, the Union countered that the deductions not only have the popular indorsement and
approval of the general membership, but likewise complied with the legal requirements of Article 241
(n) and (o) of the Labor Code in that the board resolution of the Union imposing the questioned special
assessment had been duly approved in a general membership meeting and that the collection of a
special fund for labor education and research is mandated.

Article 241(n) of the Labor Code states that—

“ART. 241. Rights and conditions of membership in a labor organization.—

xxx xxx xxx

(n) No special assessment or other extraordinary fees may be levied upon the members of a labor
organization unless authorized by a written resolution of a majority of all the members at a general
membership meeting duly called for the purpose. The secretary of the organization shall record the
minutes of the meeting including the list of all members present, the votes cast, the purpose of the
special assessment or fees and the recipient of such assessments or fees. The record shall be attested to
by the president;”

Med-Arbiter Manases T. Cruz ruled in favor of petitioners in an order dated February 15, 1988 whereby
he directed the Company to remit the amount it had kept in trust directly to the rank-and-file personnel
without delay.

On appeal to the Bureau of Labor Relations, however, the

_______________

6 144 SCRA 138 (1986).

716

716

SUPREME COURT REPORTS ANNOTATED

Palacol vs. Ferrer-Calleja


order of the Med-Arbiter was reversed and set aside by the respondent-Director in a resolution dated
August 19, 1988 upholding the claim of the Union that the special assessment is authorized under
Article 241(n) of the Labor Code, and that the Union has complied with the requirements therein.

Hence, the instant petition.

Petitioners allege that the respondent-Director committed a grave abuse of discretion amounting to lack
or excess of jurisdiction when she held Article 241(n) of the Labor Code to be the applicable provision
instead of Article 222(b) in relation to Article 241(o) of the same law.

According to petitioners, a cursory examination and comparison of the two provisions of Article 241
reveals that paragraph (n) cannot prevail over paragraph (o). The reason advanced is that a special
assessment is not a matter of major policy affecting the entire union membership but is one which
concerns the individual rights of union members.

Petitioners further assert that assuming arguendo that Article 241(n) should prevail over paragraph (o),
the Union has nevertheless failed to comply with the procedure to legitimize the questioned special
assessment by: (1) presenting mere minutes of local membership meetings instead of a written
resolution; (2) failing to call a general membership meeting; (3) having the minutes of three (3) local
membership meetings recorded by a union director, and not by the union secretary as required; (4)
failing to have the list of members present included in the minutes of the meetings; and (5) failing to
present a record of the votes cast.7 Petitioners concluded their argument by citing Galvadores.

After a careful review of the records of this case, We are convinced that the deduction of the 10%
special assessment by the Union was not made in accordance with the requirements provided by law.

Petitioners are correct in citing the ruling of this Court in Galvadores which is applicable to the instant
case. The principle “that employees are protected by law from unwarranted practices that diminish their
compensation without their knowl-

_______________

7 Page 12, Rollo.

717

VOL. 182, FEBRUARY 26, 1990

717

Palacol vs. Ferrer-Calleja

edge and consent”8 is in accord with the constitutional principle of the State affording full protection to
labor.9

The respondent-Union brushed aside the defects pointed out by petitioners in the manner of
compliance with the legal requirements as “insignificant technicalities.” On the contrary, the failure of
the Union to comply strictly with the requirements set out by the law invalidates the questioned special
assessment. Substantial compliance is not enough in view of the fact that the special assessment will
diminish the compensation of the union members. Their express consent is required, and this consent
must be obtained in accordance with the steps outlined by law, which must be followed to the letter. No
shortcuts are allowed.

The applicable provisions are clear. The Union itself admits that both paragraphs (n) and (o) of Article
241 apply. Paragraph (n) refers to “levy” while paragraph (o) refers to “check-off” of a special
assessment. Both provisions must be complied with. Under paragraph (n), the Union must submit to the
Company a written resolution of a majority of all the members at a general membership meeting duly
called for the purpose. In addition, the secretary of the organization must record the minutes of the
meeting which, in turn, must include, among others, the list of all the members present as well as the
votes cast.

As earlier outlined by petitioners, the Union obviously failed to comply with the requirements of
paragraph (n). It held local membership meetings on separate occasions, on different dates and at
various venues, contrary to the express requirement that there must be a general membership meeting.
The contention of the Union that “the local membership meetings are precisely the very general
meetings required by law”10 is untenable because the law would not have specified a general
membership meeting had the legislative intent been to allow local meetings in lieu of the latter.

It submitted only minutes of the local membership meetings when what is required is a written
resolution adopted at the general meeting. Worse still, the minutes of three of those local

_______________

8 Emphasis supplied.

9 Section 3, Article XIII, 1987 Constitution.

10 Page 105, Rollo.

718

718

SUPREME COURT REPORTS ANNOTATED

Palacol vs. Ferrer-Calleja

meetings held were recorded by a union director and not by the union secretary. The minutes submitted
to the Company contained no list of the members present and no record of the votes cast. Since it is
quite evident that the Union did not comply with the law at every turn, the only conclusion that may be
made therefrom is that there was no valid levy of the special assessment pursuant to paragraph (n) of
Article 241 of the Labor Code.
Paragraph (o) on the other hand requires an individual written authorization duly signed by every
employee in order that a special assessment may be validly checked-off. Even assuming that the special
assessment was validly levied pursuant to paragraph (n), and granting that individual written
authorizations were obtained by the Union, nevertheless there can be no valid check-off considering
that the majority of the union members had already withdrawn their individual authorizations. A
withdrawal of individual authorizations is equivalent to no authorization at all. Hence, the ruling in
Galvadores that “no check-offs from any amounts due employees may be effected without an individual
written authorization signed by the employees x x x” is applicable.

The Union points out, however, that said disauthorizations are not valid for being collective in form, as
they are “mere bunches of randomly procured signatures, under loose sheets of paper.”11 The
contention deserves no merit for the simple reason that the documents containing the disauthorizations
have the signatures of the union members. The Court finds these retractions to be valid. There is
nothing in the law which requires that the disauthorization must be in individual form.

Moreover, it is well-settled that “all doubts in the implementation and interpretation of the provisions
of the Labor Code x x x shall be resolved in favor of labor.”12 And as previously stated, labor in this case
refers to the union members, as employees of the Company. Their mere desire to establish a separate
bargaining unit, albeit uproven, cannot be construed against them in relation to the legality of the
questioned special assessment. On the contrary, the same may even be taken to

_______________

11 Pages 108-109, Rollo.

12 Article 4, Labor Code.

719

VOL. 182, FEBRUARY 26, 1990

719

Palacol vs. Ferrer-Calleja

reflect their dissatisfaction with their bargaining representative, the respondent-Union, as shown by the
circumstances of the instant petition, and with good reason.

The Med-Arbiter correctly ruled in his Order that:

“The mandate of the majority rank and file have (sic) to be respected considering they are the ones
directly affected and the realities of the high standards of survival nowadays. To ignore the mandate of
the rank and file would enure to destabilizing industrial peace and harmony within the rank and file and
the employer’s fold, which we cannot countenance.

Moreover, it will be recalled that precisely union dues are collected from the union members to be
spent for the purposes alluded to by respondent. There is no reason shown that the regular union dues
being now implemented is not sufficient for the alleged expenses. Furthermore, the rank and file have
spoken in withdrawing their consent to the special assessment, believing that their regular union dues
are adequate for the purposes stated by the respondent. Thus, the rank and file having spoken and, as
we have earlier mentioned, their sentiments should be respected.”

Of the stated purposes of the special assessment, as embodied in the board resolution of the Union,
only the collection of a special fund for labor and education research is mandated, as correctly pointed
out by the Union. The two other purposes, namely, the purchase of vehicles and other items for the
benefit of the union officers and the general membership, and the payment of services rendered by
union officers, consultants and others, should be supported by the regular union dues, there being no
showing that the latter are not sufficient to cover the same.

The last stated purpose is contended by petitioners to fall under the coverage of Article 222 (b) of the
Labor Code. The contention is impressed with merit. Article 222 (b) prohibits attorney’s fees,
negotiations fees and similar charges arising out of the conclusion of a collective bargaining agreement
from being imposed on any individual union member. The collection of the special assessment partly for
the payment for services rendered by union officers, consultants and others may not be in the category
of “attorney’s fees or negotiations fees.” But there is no question that it is an exaction which falls within
the

720

720

SUPREME COURT REPORTS ANNOTATED

Palacol vs. Ferrer-Calleja

category of a “similar charge,” and, therefore, within the coverage of the prohibition in the
aforementioned article. There is an additional proviso giving the Union President unlimited discretion to
allocate the proceeds of the special assessment. Such a proviso may open the door to abuse by the
officers of the Union considering that the total amount of the special assessment is quite considerable—
P1,027,694.33 collected from those union members who originally authorized the deduction, and
P1,267,863.39 from those who did not authorize the same, or subsequently retracted their
authorizations.13 The former amount had already been remitted to the Union, while the latter is being
held in trust by the Company.

The Court, therefore, strikes down the questioned special assessment for being a violation of Article
241, paragraphs (n) and (o), and Article 222 (b) of the Labor Code.

WHEREFORE, the instant petition is hereby GRANTED. The Order of the Director of the Bureau of Labor
Relations dated August 19, 1988 is hereby REVERSED and SET ASIDE, while the order of the Med-Arbiter
dated February 17, 1988 is reinstated, and the respondent Coca-Cola Bottlers (Philippines), Inc. is hereby
ordered to immediately remit the amount of P1,267,863.39 to the respective union members from
whom the said amount was withheld. No pronouncement as to costs. This decision is immediately
executory.
SO ORDERED.

Narvasa, Griño-Aquino and Medialdea, JJ., concur.

Cruz, J., No part. Related to one of the counsel.

Petition granted; order reversed and set aside.

Note.—A clause in a collective bargaining agreement providing that “The company will deduct the Union
agency fee from the wages of workers who are not members of the Union, provided the aforesaid
workers authorize the company to make such deductions in writing or if no such authorization is given, if
a competent court directs the company to make such deduc-tion,” is not a permissible form of union
security. (National

_______________

13 Page 5, Rollo.

721

VOL. 182, FEBRUARY 26, 1990

721

Republic vs. Court of Appeals

Brewery and Allied Industries Labor Union of the Philippines vs. San Miguel Brewery, Inc., L-18170,
August 31, 1963, 8 SCRA 805.)

——o0o——

© Copyright 2017 Central Book Supply, Inc. All rights reserved. Palacol vs. Ferrer-Calleja, 182 SCRA 710,
G.R. No. 85333 February 26, 1990

42

SUPREME COURT REPORTS ANNOTATED

Volkschel Labor Union vs. Bureau of Labor Relations

No. L-45824. June 19, 1985.*

VOLKSCHEL LABOR UNION, petitioner, vs. BUREAU OF LABOR RELATIONS, ASSOCIATED LABOR UNION
FOR METAL WORKERS, DMG, INC., PEOPLE’S CAR, INC., KARBAYAN, INC., and RTC TRADING, INC.,
respondents.
Labor Law; Unions; Disaffiliation; Constitutional Law; Right of a local union to disaffiliate from its
mother union; Freedom of local union to serve the interest of all its members, including the freedom
to disaffiliate; Right to disaffiliate is consistent with the constitutional guarantee of freedom of
association.—The right of a local union to disaffiliate from its mother union is well-settled. In previous
cases, it has been repeatedly held that a local union, being a separate and voluntary association, is
free to serve the interest of all its members including the freedom to disaffiliate when circumstances
warrant. This right is consistent with the Constitutional guarantee of freedom of association (Article
IV, Section 7, Philippine Constitution).

Same; Same; Same; Same; One union for every industry policy should not violate the constitutional
mandate of protecting labor and the workers’ right to self organization; Workingmen’s welfare, the
paramount consideration in the implementation of the Labor Code and its implementing regulations;
Restricting the right to self-organization due to the existence of a collective bargaining agreement
would go against the spirit of the labor law.—In reversing the

________________

* SECOND DIVISION.

43

VOL. 137, JUNE 19, 1985

43

Volkschel Labor Union vs. Bureau of Labor Relations

Med-Arbiter’s resolution, respondent Bureau declared: the Department of Labor is set on a task to
restructure the labor movement to the end that the workers will unite themselves along industry
lines. Carried to its complete fruition, only one union for every industry will remain to bargain
collectively for the workers. The clear policy therefore even now is to conjoin workers and worker
groups, not to dismember them. This policy is commendable. However, we must not lose sight of the
constitutional mandate of protecting labor and the workers’ right to self-organization. In the
implementation and interpretation of the provisions of the Labor Code and its implementing
regulations, the workingman’s welfare should be the primordial and paramount consideration. In the
case at bar, it would go against the spirit of the labor law to restrict petitioner’s right to self-
organization due to the existence of the CBA. We agree with the Med-Arbiter’s opinion that “A
disaffiliation does not disturb the enforceability and administration of a collective agreement; it does
not occasion a change of administrators of the contract nor even an amendment of the provisions
thereof.” But nowhere in the record does it appear that the contract entered into by the petitioner
and ALUMETAL prohibits the withdrawal of the former from the latter.

Same; Same; Same; Same; Check-off; Obligation of employee to pay union dues is co-terminous with
his affiliation or membership; A contract between an employee and the parent organization as
bargaining agent for employees, terminated by the disaffiliation of the local union.—This now brings
us to the second issue. Under Section 3, Article I, of the CBA, the obligation of the respondent
companies to deduct and remit dues to ALUMETAL is conditioned on the individual check-off
authorization of petitioner’s members. In other words, ALUMETAL is entitled to receive the dues from
respondent companies as long as petitioner union is affiliated with it and respondent companies are
authorized by their employees (members of petitioner union) to deduct union dues. Without said
affiliation, the employer has no link to the mother union. The obligation of an employee to pay union
dues is co-terminous with his affiliation or membership. “The employees’ check-off authorization,
even if declared irrevocable, is good only as long as they remain members of the union concerned.” A
contract between an employer and the parent organization as bargaining agent for the employees is
terminated by the disaffiliation of the local of which the employees are members. Respondent
companies therefore were wrong in continuing the check-off in favor of respondent federation since
they were duly notified of the disaffiliation and of petitioner’s members having already rescinded
their check-off authorization.

44

44

SUPREME COURT REPORTS ANNOTATED

Volkschel Labor Union vs. Bureau of Labor Relations

Same; Same; Same; Same; Same; Entitlement by local union which has disaffiliated and continued to
represent the employees of an employer to check-off dues under a collective bargaining contract.—
Suffice it to state that respondent federation is not entitled to union dues payments from petitioner’s
members. “A local union which has validly withdrawn from its affiliation with the parent association
and which continues to represent the employees of an employer is entitled to the check-off dues
under a collective bargaining contract.”

PETITION for certiorari to review the resolutions of the Bureau of Labor Relations.

The facts are stated in the opinion of the Court.

Ignacio P. Lacsina for petitioner.

William D. Dichoso for respondent DMG, Inc.

Abraham B. Drapiza for private respondent.

CUEVAS, J.:

Petition for certiorari to review the Resolutions dated January 25, 1977 and March 14, 1977 of the
Bureau of Labor Relations.

On April 25, 1977, however, a Supplemental Petition was filed seeking the issuance of—
(1) A preliminary mandatory injunction commanding respondents to return to petitioner the union dues
amounting to about P55,000.00 lawfully pertaining to it but illegally levied upon, collected and handed
over by respondent Bureau, acting through the NLRC sheriff, to respondent Associated Labor Union for
Metalworkers, with the collusion of respondents DMG, Inc., Karbayan, Inc. and RTC Machineries, Inc.;

(2) A preliminary restraining order prohibiting respondents from making further delivery to respondent
Associated Labor Union for Metalworkers of Union dues collected or to be collected through check-off
from the wages of petitioner’s members by respondents, DMG, Inc., Karbayan, Inc., RTC Machineries,
Inc., and People’s Car, Inc., under or by virtue of the questioned writ

45

VOL. 137, JUNE 19, 1985

45

Volkschel Labor Union vs. Bureau of Labor Relations

of execution issued by respondent Bureau, dated April 4, 1977.

Petitioner was once affiliated with the Associated Labor Union for Metal Workers (ALUMETAL for short).
On August 1, 1975, both unions, using the name Volkschel Labor Union-Associated Labor Union for
Metal Workers, jointly entered into a collective bargaining agreement with respondent companies. One
of the subjects dealt with is the payment of union dues which is provided for in Section 3, Article I, of the
CBA, which reads:

“Section 3. CHECK-OFF.—The COMPANY agrees to make payroll deductions not oftener than twice a
month of UNION membership dues and such special assessments fees or fines as may be duly
authorized by the UNION, provided that the same is covered by the individual check-off authorization of
the UNION members. All said deductions shall be promptly transmitted within five (5) days by the
COMPANY to the UNION Treasurer. The COMPANY shall prepare two (2) checks. One (1) check will be
under the name of the local union as their local fund including local special assessment funds and the
other check will be for the ALU Regional Office regarding the remittance of the UNION dues deduction.”

On March 10, 1976, a majority of petitioner’s members decided to disaffiliate from respondent
federation in order to operate on its own as an independent labor group pursuant to Article 241
(formerly Article 240) of the Labor Code of the Philippines, the pertinent portion of which reads:

“Incumbent affiliates of existing federations or national unions may disaffiliate only for the purpose of
joining a federation or national union in the industry or region in which it properly belongs or for the
purpose of operating as an independent labor group.”

Accordingly, a resolution was adopted and signed by petitioner’s members revoking their check-off
authorization in favor of ALUMETAL and notices thereof were served on ALUMETAL and respondent
companies.

Confronted with the predicament of whether or not to continue deducting from employees’ wages and
remitting union
46

46

SUPREME COURT REPORTS ANNOTATED

Volkschel Labor Union vs. Bureau of Labor Relations

dues to respondent ALUMETAL which wrote respondent companies advising them to continue
deducting union dues and remitting them to said federation, respondent companies sought the legal
opinion of the respondent Bureau as regards the controversy between the two unions. On November
11, 1976, Med-Arbiter George A. Eduvalla of respondent Bureau rendered a Resolution which in effect
found the disaffiliation legal but at the same time gave the opinion that petitioner’s members should
continue paying their dues to ALUMETAL in the concept of agency fees.1

From the said Resolution of the Med-Arbiter both petitioner and respondent ALUMETAL appealed to the
Director of respondent Bureau. Petitioner contended that the Med-Arbiter’s opinion to the effect that
petitioner’s members remained obligated to pay dues to respondent ALUMETAL was inconsistent with
the dispositive finding that petitioner’s disaffiliation from ALUMETAL was valid. ALUMETAL, on the other
hand, assailed the Resolution in question asserting that the disaffiliation should have been declared
contrary to law.

On January 25, 1977, respondent Bureau, through its Acting Director, Francisco L. Estrella, REVERSED the
Med-Arbiter’s Resolution, and declared that the Bureau recognized “the continued affiliation of
Volkschel Labor Union with the Associated Labor Union for Metal Workers.”2

Petitioner appealed the Acting Director’s Resolution to the Secretary of Labor (now Minister of Labor
and Employment) who, treating the appeal as a Motion for Reconsideration, referred the same back to
respondent Bureau, On March 14, 1977, the Bureau denied the appeal for lack of merit.

Hence, the instant petition.

Meanwhile, on April 4, 1977, on motion of ALUMETAL, the then Acting Secretary of Labor, Amado Gat
Inciong, issued a writ of execution commanding the Sheriff of the National Labor Relations Commission
“to enforce and execute the order

________________

1 Annex “A”, Pages 2-3.

2 Annex “C”, Page 3.

47

VOL. 137, JUNE 19, 1985


47

Volkschel Labor Union vs. Bureau of Labor Relations

of January 25, 1977, which has become final and executory.3 Pursuant thereto, the NLRC Sheriff
enforced and implemented the Order of January 25, 1977, as a result of which respondent companies
turned over and handed to respondent federation the union dues and other assessments in accordance
with the check-off provision of the CBA.

From the pleadings filed and arguments of counsel, the following issues present themselves for this
Court’s resolution.

Is petitioner union’s disaffiliation from respondent federation valid?

II

Do respondent companies have the right to effect union dues collections despite revocation by the
employees of the check-off authorization? and

III

Is respondent federation entitled to union dues payments from petitioner union’s members
notwithstanding their disaffiliation from said federation?

We resolve the first issue in the affirmative.

The right of a local union to disaffiliate from its mother union is well-settled. In previous cases, it has
been repeatedly held that a local union, being a separate and voluntary association, is free to serve the
interest of all its members including the freedom to disaffiliate when circumstances warrant.4 This right
is consistent with the Constitutional guarantee of freedom of association (Article IV, Section 7, Philippine
Constitution).

________________

3 Annex “A”, Supplemental Petition.

4 Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, 66 SCRA 512; People’s Industrial &
Commercial Employees and Workers Organization (FFW) v. People’s Industrial & Commercial
Corporation, 112 SCRA 440.

48
48

SUPREME COURT REPORTS ANNOTATED

Volkschel Labor Union vs. Bureau of Labor Relations

Petitioner contends that the disaffiliation was not due to any opportunist motives on its part. Rather it
was prompted by the federation’s deliberate and habitual dereliction of duties as mother federation
towards petitioner union. Employees’ grievances were allegedly left unattended to by respondent
federation to the detriment of the employees’ rights and interests.

In reversing the Med-Arbiter’s resolution, respondent Bureau declared: the Department of Labor is set
on a task to restructure the labor movement to the end that the workers will unite themselves along
industry lines. Carried to its complete fruition, only one union for every industry will remain to bargain
collectively for the workers. The clear policy therefore even now is to conjoin workers and worker
groups, not to dismember them.5 This policy is commendable. However, we must not lose sight of the
constitutional mandate of protecting labor and the workers’ right to self-organization. In the
implementation and interpretation of the provisions of the Labor Code and its implementing
regulations, the workingman’s welfare should be the primordial and paramount consideration. In the
case at bar, it would go against the spirit of the labor law to restrict petitioner’s right to self-organization
due to the existence of the CBA. We agree with the Med-Arbiter’s opinion that “A disaffiliation does not
disturb the enforceability and administration of a collective agreement; it does not occasion a change of
administrators of the contract nor even an amendment of the provisions thereof.”6 But nowhere in the
record does it appear that the contract entered into by the petitioner and ALUMETAL prohibits the
withdrawal of the former from the latter.

This now brings us to the second issue. Under Section 3, Artide I, of the CBA, the obligation of the
respondent companies to deduct and remit dues to ALUMETAL is conditioned on the individual check-
off authorization of petitioner’s members. In other words, ALUMETAL is entitled to receive the dues
from respondent companies as long as petitioner union is affiliated with it and respondent companies
are authorized by their

________________

5 Annex “C”, Page 2.

6 Annex “A”, Page 2.

49

VOL. 137, JUNE 19, 1985

49

Volkschel Labor Union vs. Bureau of Labor Relations


employees (members of petitioner union) to deduct union dues. Without said affiliation, the employer
has no link to the mother union. The obligation of an employee to pay union dues is coterminous with
his affiliation or membership. “The employees’ check-off authorization, even if declared irrevocable, is
good only as long as they remain members of the union concerned.”7 A contract between an employer
and the parent organization as bargaining agent for the employees is terminated by the disaffiliation of
the local of which the employees are members.8 Respondent companies therefore were wrong in
continuing the check-off in favor of respondent federation since they were duly notified of the
disaffiliation and of petitioner’s members having already rescinded their check-off authorization.

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

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

No costs.

SO ORDERED.

Makasiar, Aquino, Concepcion, Jr., Abad Santos and Escolin, JJ., concur.

________________

7 Phil. Federation of Petroleum Workers v. Court of Industrial Relations, 37 SCRA 711.

8 51 C.J.S. 865 (citing Textile Workers Union of America, C.I.O. versus Bellman Brook Bleaching
Company).

50

50

SUPREME COURT REPORTS ANNOTATED

Espiritu vs. Court of Appeals

Resolution reversed and set aside.

Notes.—The purpose of a certification election is to give employees true representation in their


collective bargaining with an employer. (Confederation of Citizens Labor Union vs. Noriel, 116 SCRA
694.)
Local union and local members have the right to disaffiliate from federation in the absence of a
provision in the federation’s by laws prohibiting disaffiliation. (People’s Industrial and Commercial
Employees’ Workers Organization vs. People’s Industrial and Commercial Corporation, 112 SCRA 440.)

One who petitions the courts for an early union election cannot afterwards be heard to claim, after an
election was actually held wherein the other party’s ticket won, except for one slot, that said election is
null and void because of a policy of the Ministry of Labor that the term of union officers should be three
years and not less. (San Miguel Corporation Employees’ Union vs. Noriel, 103 SCRA 185.)

——o0o——

© Copyright 2017 Central Book Supply, Inc. All rights reserved. Volkschel Labor Union vs. Bureau of
Labor Relations, 137 SCRA 42, No. L-45824 June 19, 1985

VOL. 304, MARCH 11, 1999

489

ABS-CBN Supervisors Employees Union Members vs.

ABS-CBN Broadcasting Corporation

G.R. No. 106518. March 11, 1999.*

ABS-CBN SUPERVISORS EMPLOYEES UNION MEMBERS, petitioner, vs. ABS-CBN BROADCASTING


CORP., HERBERT RIVERA, ALBERTO BERBON, CINDY MUÑOZ, CELSO JAMBALOS, SALVADOR DE VERA,
ARNULFO ALCAZAR, JAKE MADERAZO, GON CARPIO, OSCAR LANDRITO, FRED GARCIA, CESAR LOPEZ
and RUBEN BARRAMEDA, respondents.

Labor Law; Certiorari; Motions for Reconsideration; Statutory Construction; Pleadings and Practice;
Section 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code, providing that the
decision of the Secretary of Labor shall be final and executory, cannot be construed to mean that the
decision of the Secretary cannot be reconsidered since the same is reviewable by writ of certiorari
under Rule 65.—Section 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code,
provides: “The Secretary shall have fifteen (15) calendar days within which to decide the appeal from
receipt of the records of the case. The decision of the Secretary shall be final and inappealable.”
[Italics supplied]. (Comment, p. 101) The aforecited provision cannot be construed to mean that the
Decision of the public respondent cannot be reconsidered since the same is reviewable by writ of
certiorari under Rule 65 of the Rules of Court. As a rule, the law requires a motion for reconsideration
to enable the public respondent to correct his mistakes, if any.

Same; Same; Same; Same; Administrative Law; Exhaustion of Administrative Remedies; A party
aggrieved by a decision of the Secretary of Labor must be allowed to move for a reconsideration of
the same so that he can bring a special civil action for certiorari before the Supreme Court.—So also,
considering that a decision of the Secretary of Labor is subject to judicial review only through a special
civil action of certiorari and, as a rule, cannot be resorted to without the aggrieved party having
exhausted administrative remedies through a motion for reconsideration, the aggrieved party, must
be allowed to move for a reconsideration of the same so that he can bring a special civil action for
certiorari before the Supreme Court.

_______________

* THIRD DIVISION.

490

490

SUPREME COURT REPORTS ANNOTATED

ABS-CBN Supervisors Employees Union Members vs.

ABS-CBN Broadcasting Corporation

Same; Estoppel; The active participation of a party against whom an action was brought, coupled with
his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending,
is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the
case and will bar said party from later on impugning the court or body’s jurisdiction.—It appears that
the petitioners filed with the public respondent a Motion for Early Resolution dated June 24, 1992,
averring that private respondents’ Motion for Reconsideration did not contain substantial factual or
legal grounds for the reversal of subject decision. Consequently, petitioners are now estopped from
raising the issue sought for resolution. In Alfredo Marquez vs. Secretary of Labor, the Court said: “x x x
The active participation of the party against whom the action was brought, coupled with his failure to
object to the jurisdiction of the court or quasi-judicial body where the action is pending, is
tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the
case and will bar said party from later on impugning the court or body’s jurisdiction.”

Same; Check-Offs; Words and Phrases; A check-off is a process or device whereby the employer, on
agreement with the Union, recognized as the proper bargaining representative, or on prior
authorization from its employees, deducts union dues or agency fees from the latter’s wages and
remits them directly to the union; The system of check-off is primarily for the benefit of the Union and
only indirectly, for the individual employees.—“A check-off is a process or device whereby the
employer, on agreement with the Union, recognized as the proper bargaining representative, or on
prior authorization from its employees, deducts union dues or agency fees from the latter’s wages and
remits them directly to the union.” Its desirability in a labor organization is quite evident. It is assured
thereby of continuous funding. As this Court has acknowledged, the system of check-off is primarily
for the benefit of the Union and only indirectly, for the individual employees.

Same; Same; The legal basis of check-off is found in statutes or in contracts.—The legal basis of check-
off is found in statutes or in contracts. The statutory limitations on check-offs are found in Article 241,
Chapter II, Title IV, Book Five of the Labor Code.
491

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ABS-CBN Broadcasting Corporation

Same; Same; Article 222 (b) of the Labor Code prohibits the payment of attorney’s fees only when it is
effected through forced contributions from the workers from their own funds as distinguished from
the union funds.—And this court elucidated the object and import of the said provision of law in Bank
of Philippine Islands Employees Union—Association Labor Union (BPIEU-ALU) vs. National Labor
Relations Commission: “The Court reads the afore-cited provision (Article 222 [b] of the Labor Code)
as prohibiting the payment of attorney’s fees only when it is effected through forced contributions
from the workers from their own funds as distinguished from the union funds. x x x”

Same; Same; Requisites before special assessment for Union’s incidental expenses, attorney’s fees
and representation expenses may be considered valid.—Noticeably, Article 241 speaks of three (3)
requisites that must be complied with in order that the special assessment for Union’s incidental
expenses, attorney’s fees and representation expenses, as stipulated in Article XII of the CBA, be valid
and upheld namely: (1) authorization by a written resolution of the majority of all the members at the
general membership meeting duly called for the purpose; (2) secretary’s record of the minutes of the
meeting; and (3) individual written authorization for check-off duly signed by the employee
concerned.

Same; Same; The amount of check-off to be deducted is uncertain where although not fixed, it is
determinable.—Petitioner’s contention that the amount to be deducted is uncertain is not persuasive
because the check-off authorization clearly stated that the sum to be deducted is equivalent to ten
percent (10%) of all and whatever benefits may accrue under the CBA. In other words, although the
amount is not fixed, it is determinable.

Same; Same; No deductions may be taken from the workers who did not sign any check-off
authorization.—Premises studiedly considered, we are of the irresistible conclusion and, so find, that
the ruling in BPIEU-ALU vs. NLRC that (1) the prohibition against attorney’s fees in Article 222,
paragraph (b) of the Labor Code applies only when the payment of attorney’s fees is effected through
forced contributions from the workers; and (2) that no deductions must be taken from the workers
who did not sign the check-off authorization, applies to the case under consideration.

492

492

SUPREME COURT REPORTS ANNOTATED

ABS-CBN Supervisors Employees Union Members vs.


ABS-CBN Broadcasting Corporation

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the opinion of the Court.

Camacho and Associates for petitioners.

Makalintal, Barot, Torres & Ibarra for private respondent.

PURISIMA, J.:

At bar is a special civil action for Certiorari1 seeking the reversal of the Order2 dated July 31, 1992 of
public respondent Department of Labor and Employment Undersecretary Bienvenido E. Laguesma3 in
Case No. NCR-OD-M-90-07-037.

From the records on hand, it can be gathered, that:

On December 7, 1989, the ABS-CBN Supervisors Employees Union (“the Union”), represented by
respondent Union Officers, and ABS-CBN Broadcasting Corporation (“the Company”) signed and
concluded a Collective Bargaining Agreement with the following check-off provision, to wit:

“Article XII—The [C]ompany agrees to advance to the Union a sum equivalent to 10% of the sum total of
all the salary increases and signing bonuses granted to the Supervisors under this Collective Bargaining
Agreement and upon signing hereof to cover the Union’s incidental expenses, including attorney’s fees
and representation

_________________

1 The nature of the petition is ambiguous as it is worded, as follows: “This is a petition for review on
certiorari under Rule 45/65 of the Revised Rules of Court . . . .” The Court, however, resolved to treat the
petition as one under Rule 65 in the interest of justice, equity and fairplay. (Salazar vs. NLRC, 256 SCRA
273 [1996]).

2 “Annex A,” Petition; Rollo, 28-33.

3 Public respondent Bienvenido E. Laguesma is not named in the case title but his Order dated 31 July
1992 is subject of this case. Petitioner’s counsel, Atty. Manuel N. Camacho had impressed to this Court
his inadequacy and incompetency of procedural law and he is hereby sternly warned that a repetition of
a similar display of lack of legal skills will be dealt with more severely.

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ABS-CBN Supervisors Employees Union Members vs.

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expenses for its organization and (sic) preparation and conduct hereof, and such advance shall be
deducted from the benefits granted herein as they accrue.”

On September 19, 1990, Petitioners4 filed with the Bureau of Labor Relations, DOLE-NCR, Quezon City, a
Complaint against the Union Officers5 and ABS-CBN Broadcasting Corporation, praying that (1) the
special assessment of ten percent (10%) of the sum total of all salary increases and signing bonuses
granted by respondent Company to the members of the Union be declared illegal for failure to comply
with the Labor Code, as amended, particularly Article 241, paragraphs (g), (n), and (o); and in utter
violation of the Constitution and By-Laws of the ABS-CBN Supervisors Employees Union; (2) respondent
Company be ordered to suspend further deductions from petitioners’ salaries for their shares thereof.

In their Answers, respondent Union Officers and Company prayed for the dismissal of the Complaint for
lack of merit. They argued that the check-off provision is in accordance with law as majority of the Union
members individually executed a written authorization giving the Union Officers and the Company a
blanket authority to deduct subject amount.

_________________

4 Namely: Corina Sanchez, Ma. Angelica Lazo, Nicolas Belleza, Rogelio I. Gomez, Abraham Alhambra,
Adelaida M. Espiritu, Servillano Caoagdan, Arlene Sinsuan, David Fabros, Adoracion G. Camacho, Beverly
S. Fernandez, Adora L. Jacila, Teresita C. Estrella, Josefino M. Sta. Ana, Emilia F. Guilalas, Albert L.
Brillantes, Rodolfo Tapel, Zoilo Gonzales, Ernesto Balingit, Victoriano Rasido, Isabelo C. Albarracin, Cesar
M. Solidum, Leonora V. Buenaventura, Roberto Saura, Diosdado Ricafrente, Alfon Marquez III, Rosario
Villa, Gus Abelgas, Stephanie Quirino, Victor L. Lima, Erlindo Alvarado, Atanacio Pascua, Edgar Padil,
Rizal C. Benjamin, Edgardo Ramos, Santos Bautista, Manuel Manio, Eladio Aligora, W. Osinsao, Neil A.
Ocampo, Maria Teresita F. Naval, Claude Vitug and Isagani Oro.

5 Namely: Herbert R. Rivera, Alberto Berbon, Cindy Muñoz, Celso Jambalos, Salvador De Vera, Arnulfo
Alcazar, Jake Maderazo, Gon Carpio, Oscar Landrito, Fred Garcia, Cesar Lopez, Ruben Barrameda.

494

494

SUPREME COURT REPORTS ANNOTATED

ABS-CBN Supervisors Employees Union Members vs.

ABS-CBN Broadcasting Corporation

On January 21, 1991, Med-Arbiter Rasidali C. Abdullah issued the following Order:6
“WHEREFORE, premises considered, judgment is hereby rendered:

a) declaring the special assessment of 10% of the sum total of CBA benefits as illegal;

b) ordering respondents union officers to refund to the complainants and other union members the
amount of Five Hundred Thousand Pesos (P500,000.00) advanced by the respondent Company as part
of the 10% sum total of CBA benefits without unnecessary delay;

c) ordering the respondent company to stop and desist from further making advances and deductions
from the union members’ salaries their share in the advances already made to the union;

d) ordering the respondent Company to remit directly to the complainants and other union members
the amount already deducted from the union members’ salaries as part of their share in the advances
already made to the union and which it had kept in trust during the pendency of this case; and

e) directing the respondents union officers and respondent Company to submit report on the
compliance thereof.

SO ORDERED.”

On appeal, respondent DOLE Undersecretary Bienvenido E. Laguesma handed down a Decision7 on July
1, 1991, disposing as follows:

“WHEREFORE, the appeals are hereby denied, the Order of the Med-Arbiter is affirmed en toto.”

On July 5, 1991, the aforesaid Decision was received by the respondent Union Officers and respondent
Company. On July 13, 1991, they filed their Motion for Reconsideration stating, inter alia that the
questioned ten percent (10%) special as-

__________________

6 “Annex C,” Petition; Rollo, 41-56.

7 “Annex B,” Petition; Rollo, pp. 34-40.

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sessment is valid pursuant to the ruling in Bank of the Philippine Islands Employee Union-ALU vs. NLRC.8

On July 31, 1992, Undersecretary B. E. Laguesma issued an Order;9 resolving, thus:


“WHEREFORE, the Decision dated 01 July 1991 is hereby SET ASIDE. In lieu thereof, a new one is hereby
entered DISMISSING the Complaint/Petition for lack of merit.”

Hence, the present petition seeking to annul and set aside the above-cited Order of public respondent
Undersecretary B. E. Laguesma, for being allegedly tainted with grave abuse of discretion amounting to
lack of jurisdiction.

Did the public respondent act with grave abuse of discretion in issuing the challenged Order reversing
his own Decision of July 1, 1991? Such is the sole issue posited, which we resolve in the negative. The
petition is unmeritorious.

Petitioners claim10 that the Decision of the Secretary of Labor and Employment dated July 1, 1991,
affirming in toto the Order of Med-Arbiter Rasidali Abdullah dated January 31, 1991, cannot be a subject
of a motion for reconsideration because it is final and unappealable pursuant to Section 8, Rule VIII,
Book V of the Omnibus Rule Implementing the Labor Code. It is further argued that the only remedy of
the respondent Union Officers is to file a petition for certiorari with this Court.

Section 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code, provides:

“The Secretary shall have fifteen (15) calendar days within which to decide the appeal from receipt of
the records of the case. The decision of the Secretary shall be final and inappealable.” [Italics supplied].
(Comment, p. 101)

________________

8 171 SCRA 556.

9 “Annex A,” Petition; Rollo, 28-33.

10 See: Petition, p. 9; Rollo, 15.

496

496

SUPREME COURT REPORTS ANNOTATED

ABS-CBN Supervisors Employees Union Members vs.

ABS-CBN Broadcasting Corporation

The aforecited provision cannot be construed to mean that the Decision of the public respondent
cannot be reconsidered since the same is reviewable by writ of certiorari under Rule 65 of the Rules of
Court. As a rule, the law requires a motion for reconsideration to enable the public respondent to
correct his mistakes, if any. In Pearl S. Buck Foundation, Inc. vs. NLRC,11 this Court held:

“Hence, the only way by which a labor case may reach the Supreme Court is through a petition for
certiorari under Rule 65 of the Rules of Court alleging lack or excess of jurisdiction or grave abuse of
discretion. Such petition may be filed within a reasonable time from receipt of the resolution denying
the motion for reconsideration of the NLRC decision.” [Italics supplied].

Clearly, before a petition for certiorari under Rule 65 of the Rules of Court may be availed of, the filing of
a motion for reconsideration is a condition sine qua non to afford an opportunity for the correction of
the error or mistake complained of.

So also, considering that a decision of the Secretary of Labor is subject to judicial review only through a
special civil action of certiorari and, as a rule, cannot be resorted to without the aggrieved party having
exhausted administrative remedies through a motion for reconsideration, the aggrieved party, must be
allowed to move for a reconsideration of the same so that he can bring a special civil action for certiorari
before the Supreme Court.12

Furthermore, it appears that the petitioners filed with the public respondent a Motion for Early
Resolution13 dated June 24, 1992, averring that private respondents’ Motion for Reconsideration did
not contain substantial factual or legal

__________________

11 182 SCRA 446 [1990]; Rodrigo Bordeos, et al. vs. NLRC, 262 SCRA 424 [1996].

12 Due to ambiguous nature of this petition, the Court restrained itself to discuss the failure of herein
petitioners to file a motion for reconsideration before the sala of public respondent to have the assailed
Order dated July 31, 1992 reconsidered.

13 See: private respondents’ “Rejoinder,” p. 3; Rollo, 133-144.

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grounds for the reversal of subject decision. Consequently, petitioners are now estopped from raising
the issue sought for resolution. In Alfredo Marquez vs. Secretary of Labor,14 the Court said:

“x x x The active participation of the party against whom the action was brought, coupled with his failure
to object to the jurisdiction of the court or quasi-judicial body where the action is pending, is
tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case
and will bar said party from later on impugning the court or body’s jurisdiction.”

What is more, it was only when the public respondent issued the Order adverse to them that the
petitioners raised the question for the first time before this Court. Obviously, it is a patent afterthought
which must be abhorred.
Petitioners also argued that the check-off provision in question is illegal because it was never submitted
for consideration and approval to “all the members at a general membership meeting called for the
purpose”; and further alleged that the formalities mandated by Art. 241, paragraphs (n) and (o) of the
Labor Code, as amended, were not complied with.

“A check-off is a process or device whereby the employer, on agreement with the Union, recognized as
the proper bargaining representative, or on prior authorization from its employees, deducts union dues
or agency fees from the latter’s wages and remits them directly to the union.”15 Its desirability in a
labor organization is quite evident. It is assured thereby of continuous funding. As this Court has
acknowledged, the system of check-off is primarily for the benefit of the Union and only indirectly, for
the individual employees.

The legal basis of check-off is found in statutes or in contracts.16 The statutory limitations on check-offs
are found in

________________

14 171 SCRA 337, 346.

15 Holy Cross of Davao College, Inc. vs. Joaquin, 263 SCRA 358 [1996].

16 Ibid., p. 368.

498

498

SUPREME COURT REPORTS ANNOTATED

ABS-CBN Supervisors Employees Union Members vs.

ABS-CBN Broadcasting Corporation

Article 241, Chapter II, Title IV, Book Five of the Labor Code, which reads:

“Rights and conditions of membership in a labor organization—The following are the rights and
conditions of membership in a labor organization: x x x

(g) No officer, agent, or member of a labor organization shall collect any fees, dues, or other
contributions in its behalf or make any disbursement of its money or funds unless he is duly authorized
pursuant to its constitution and by-laws.

xxx

(n) No special assessment or other extraordinary fees may be levied upon the members of a labor
organization unless authorized by a written resolution of a majority of all the members of a general
membership meeting duly called for the purpose. The secretary of the organization shall record the
minutes of the meeting including the list of all members present, the votes cast, the purpose of the
special assessment or fees and the recipient of such assessment or fees. The record shall be attested to
by the president.

(o) Other than for mandatory activities under the Code, no special assessments, attorney’s fees,
negotiation fees or any other extraordinary fees may be checked off from any amount due to an
employee without an individual written authorization duly signed by the employee. The authorization
should specifically state the amount, purpose and beneficiary of the deductions. [Italics supplied]

Article 241 of the Labor Code, as amended, must be read in relation to Article 222, paragraph (b) of the
same law, which states:

“No attorney’s fees, negotiation fees or similar charges of any kind arising from collective bargaining
negotiations or conclusion of the collective agreement shall be imposed on any individual member of
the contracting union: Provided, however, that attorney’s fees may be charged against union funds in an
amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the
contrary shall be null and void.” [Italics supplied]

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And this court elucidated the object and import of the said provision of law in Bank of Philippine Islands
Employees Union-Association Labor Union (BPIEU-ALU) vs. National Labor Relations Commission:17

“The Court reads the afore-cited provision (Article 222 [b] of the Labor Code) as prohibiting the payment
of attorney’s fees only when it is effected through forced contributions from the workers from their own
funds as distinguished from the union funds. x x x”

Noticeably, Article 241 speaks of three (3) requisites that must be complied with in order that the
special assessment for Union’s incidental expenses, attorney’s fees and representation expenses, as
stipulated in Article XII of the CBA, be valid and upheld namely: (1) authorization by a written resolution
of the majority of all the members at the general membership meeting duly called for the purpose; (2)
secretary’s record of the minutes of the meeting; and (3) individual written authorization for check-off
duly signed by the employee concerned.

After a thorough review of the records on hand, we find that the three (3) requisites for the validity of
the ten percent (10%) special assessment for Union’s incidental expenses, attorney’s fees and
representation expenses were met.

It can be gleaned that on July 14, 1989, the ABS-CBN Supervisors Employee Union held its general
meeting, whereat it was agreed that a ten percent (10%) special assessment from the total economic
package due to every member would be checked-off to cover expenses for negotiation, other
miscellaneous expenses and attorney’s fees. The minutes of the said meeting were recorded by the
Union’s Secretary, Ma. Carminda M. Munoz, and noted by its President, Herbert Rivera.18

_______________

17 171 SCRA 556, 569.

18 See: p. 205, “Memorandum,” Solicitor General; Rollo, 193-213; Records, pp. 391-393.

500

500

SUPREME COURT REPORTS ANNOTATED

ABS-CBN Supervisors Employees Union Members vs.

ABS-CBN Broadcasting Corporation

On May 24, 1991, said Union held its General Membership Meeting, wherein majority of the members
agreed that “in as much as the Union had already paid Atty. P. Pascual the amount of P500,000.00, the
same must be shared by all the members until this is fully liquidated.”19

Eighty-five (85) members of the same Union executed individual written authorizations for check-off,
thus:

“Towards that end, I hereby authorize the Management and/or Cashier of ABS-CBN BROADCASTING
CORPORATION to deduct from my salary the sum of P30.00 per month as my regular union dues and
said Management and/or Cashier are further authorize (sic) to deduct a sum equivalent to 10% of all and
whatever benefits that will become due to me under the COLLECTIVE BARGAINING AGREEMENT (CBA)
that may be agreed upon by the UNION and MANAGEMENT and to apply the said sum to the advance
that Management will make to our Union for incidental expenses such as attorney’s fees,
representations and other miscellaneous expenses pursuant to Article XII of the proposed CBA.”20

Records do not indicate that the aforesaid check-off authorizations were executed by the eighty-five
(85) Union members under the influence of force or compulsion. There is, then, the presumption that
such check-off authorizations were executed voluntarily by the signatories thereto. Petitioner’s
contention that the amount to be deducted is uncertain21 is not persuasive because the check-off
authorization clearly stated that the sum to be deducted is equivalent to ten percent (10%) of all and
whatever benefits may accrue under the CBA. In other words, although the amount is not fixed, it is
determinable.

Petitioners further contend that Article 241 (n) of the Labor Code, as amended, on special assessments,
contemplates a

_________________
19 Ibid., p. 206; Minutes of General Membership Meeting; May 24, 1991.

20 Ibid.; Records, pp. 289-374.

21 Petition, p. 13; Rollo, 19.

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general meeting after the conclusion of the collective bargaining agreement.

Subject Article does not state that the general membership meeting should be called after the
conclusion of a collective bargaining agreement. Even granting ex gratia argumenti that the general
meeting should be held after the conclusion of the CBA, such requirement was complied with since the
May 24, 1991 General Membership Meeting was held after the conclusion of the Collective Bargaining
Agreement, which was signed and concluded on December 7, 1989.

Considering that the three requisites aforesaid for the validity of a special assessment were observed or
met, we uphold the validity of the ten percent (10%) special assessment authorized in Article XII of the
CBA.

We also concur in the finding by public respondent that the Bank of the Philippine Islands Employees
Union-ALU vs. NLRC22 is apposite in this case. In BPIEU-ALU, the petitioners, impugned the Order of the
NLRC, holding that the validity of the five percent (5%) special assessment for attorney’s fees is contrary
to Article 222, paragraph (b) of the Labor Code, as amended. The court ratiocinated, thus:

“The Court reads the aforecited provision as prohibiting the payment of attorney’s fees only when it is
effected through forced contributions from the workers from their own funds as distinguished from the
union funds. The purpose of the provision is to prevent imposition on the workers of the duty to
individually contribute their respective shares in the fee to be paid the attorney for his services on
behalf of the union in its negotiations with the management. x x x” [Italics supplied]

However, the public respondent overlooked the fact that in the said case, the deduction of the
stipulated five percent (5%) of the total economic benefits under the new collective bargaining
agreement was applied only to workers who gave their individual signed authorizations. The Court
explained:

______________

22 Supra, p. 11.
502

502

SUPREME COURT REPORTS ANNOTATED

ABS-CBN Supervisors Employees Union Members vs.

ABS-CBN Broadcasting Corporation

“x x x And significantly, the authorized deductions affected only the workers who adopted and signed
the resolution and who were the only ones from whose benefits the deductions were made by BPI. No
similar deductions were taken from the other workers who did not sign the resolution and so were not
bound by it.” [Italics supplied]

While the court also finds merit in the finding by the public respondent that Palacol vs. Ferrer-Calleja23
is inapropos in the case under scrutiny, it does not subscribe to public respondent’s reasoning—that
Palacol should not be retroactively applied to the present case in the interest of justice, equity and
fairplay.24 The inapplicability of Palacol lies in the fact that it has a different factual milieu from the
present case. In Palacol, the check-off authorization was declared invalid because majority of the Union
members had withdrawn their individual authorizations, to wit:

“Paragraph (o) on the other hand requires an individual written authorization duly signed by every
employee in order that special assessment may be validly checked-off. Even assuming that the special
assessment was validly levied pursuant to paragraph (n), and granting that individual written
authorizations were obtained by the Union, nevertheless there can be no valid check-off considering
that the majority of the Union members had already withdrawn their individual authorizations. A
withdrawal of individual authorization is equivalent to no authorization at all.” x x x [Italics supplied]

In this case, majority of the Union members gave their individual written check-off authorizations for the
ten percent (10%) special assessment. And they have never withdrawn their individual written
authorizations for check-off.

There is thus cogent reason to uphold the assailed Order, it appearing from the records of the case that
twenty (20)25 of

___________________

23 182 SCRA 710.

24 Order dated 31 July 1992; Rollo, 32.

25 Namely: Corina Sanchez, Ma. Angelica Lazo, Isagani Oro, Albert Brillantes, Ernesto Balingit, Victoriano
Rizaldo, Isabelo Al-

503
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ABS-CBN Broadcasting Corporation

the forty-two (42) petitioners executed a Compromise Agreement26 ratifying the controversial check-off
provision in the CBA.

Premises studiedly considered, we are of the irresistible conclusion and, so find, that the ruling in BPIEU-
ALU vs. NLRC that (1) the prohibition against attorney’s fees in Article 222, paragraph (b) of the Labor
Code applies only when the payment of attorney’s fees is effected through forced contributions from
the workers; and (2) that no deductions must be taken from the workers who did not sign the check-off
authorization, applies to the case under consideration.

WHEREFORE, the assailed Order, dated July 31, 1992, of DOLE Undersecretary B. E. Laguesma is
AFFIRMED except that no deductions shall be taken from the workers who did not give their individual
written check-off authorization. No pronouncement as to costs.

SO ORDERED.

Romero (Chairman), Vitug, Panganiban and Gonzaga-Reyes, JJ., concur.

Order affirmed, but no deduction shall be taken from workers who did not give written check-off
authorization.

Note.—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. (Holy Cross
of Davao College, Inc. vs. Joaquin, 263 SCRA 358 [1996])

——o0o——

__________________

barracin, Cesar Solidum, Roberto Saura, Alfon Marquez III, Rosario Villa, Gus Abelgas, Victor Lima,
Erlindo Alvarado, Atanacio Pascual, Edgar Padil, Santos Bautista, Manuel Manio, W. Osinsao and Claude
Vitug.

26 “Annex 39”; Rollo, 78-80.

504

© Copyright 2017 Central Book Supply, Inc. All rights reserved. ABS-CBN Supervisors Employees Union
Members vs. ABS-CBN Broadcasting Corporation, 304 SCRA 489, G.R. No. 106518 March 11, 1999
804

SUPREME COURT REPORTS ANNOTATED

Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja

No. L-78061. November 24, 1988.*

LITTON MILLS EMPLOYEES ASSOCIATION-KAPATIRAN AND ROGELIO ABONG, petitioners, vs.


HONORABLE PURA FERRER-CALLEJA, in her capacity as Director of the Bureau of Labor Relations,
RODOLFO UMALI AND LITTON MILLS, INC., respondents.

Labor Law; Union; Joining a federation is one ground for losing membership in the union.—One of the
grounds for losing membership in the union, as aforestated, is by joining a federation. There is no
dispute in the present case that GATCORD is a labor federation, to which respondent Umali affiliated
the petitioner-union, as evidenced by the mimeographed leaflets he caused to be distributed among
the union-members, urging them to continue affiliating with GATCORD, the Pledge of Allegiance of
newly appointed Shop Steward Norberto David, and the letter of Umali to LMI, dated 20 August 1986,
the last two (2) being attested to by GATCORD's National President Timoteo Aranjuez, and the fact
that the letter dated 20 August 1986 was writen on paper with GATCORD's letterhead. Also, the
affiliation of the petitioner-union with GATCORD was affirmed by Umali himself, when he presented
the alleged 700 signatures of union-members who supported his move of affiliating the union (LMEA-
K) with GATCORD. Hence, it cannot be denied that Umali did not only propose the affiliation, but in
fact affiliated the petitioner-union with GATCORD, in contravention of the above-cited prohibition in
Section 5, Article IV of the petitioner-union's Constitution and By-Laws.

Same; Same; Same; Court finds that the affiliation of petitionerunion with GATCORD was done by
Umali without the support of the majority of the union membership.—This Court takes notice of the
fact that in all of the pleadings submitted by respondent Umali, he never bothered to refute the
charge of the petitioners as to the questioned 161 signatures; neither has he denied that the union
members who opposed the affiliation were more than those who supported it. Hence, this Court finds
that the affiliation of the petitioner-union with GATCORD was done by Umali without the support of
the majority of the union membership.

Same; Same; Same; Same; The affiliation of petitioner-union with GATCORD converted the former's
status from that of an inde-

________________

* SECOND DIVISION.

805

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Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja

pendent union to that of a local of a labor federation.—Furthermore, the Court notes that the
collective bargaining agreement of the petitioner-union (LMEA-K) with LMI was to expire only on 31
October 1987, whereas, Umali affiliated the union around August 1986, or about 14 months before
the expiration of said CBA. The affiliation of the petition-union with GATCORD converted the former's
status from that of an independent union to that of a local of a labor federation. Such change in status
not only affects the identity of the petitioner-union but also its powers, duties and privileges, for as a
local, it will have to contend with and consult the federation, in matters affecting the union.

Same; Same; Same; Same; Same; Affiliation with a federation is a major modification in the status of
the petitioner-union.—The act of affiliating with a federation is a major modification in the status of
the petitioner-union. And such act is a violation of the rule that no modification of the CBA can be
made during its existence, unless either party serves written notice to terminate or modify the
agreement at least sixty (60) days prior to its expiration dated. Hence, there was a violation of the
existing CBA on the part of Umali.

Same; Same; Impeachment; Procedure to be followed in the impeachment of a union officer.—As to


the impeachment of a union officer, Section 2, Article XV of the petitioner-union's Constitution and
By-Laws provides the procedures to be followed, to wit: (1) Impeachment should be initiated by
petition signed by at least 30% of all bonafide members of the union, and addressed to the Chairman
of the Executive Board; (b) A general membership meeting shall be convened by the Board Chairman
to consider the impeachment of an officer; (c) Before any impeachment vote is finally taken, the
union officer against whom impeachment charges have been filed shall be given ample opportunity to
defend himself; and (d) A majority of all the members of the union shall be required to impeach or
recall union officers.

Same; Same; Same; Same; Procedure was not followed by the petitioners when they impeached
Umali.—It clearly appears that the above cited procedure was not followed by the petitioners when
they impeached Umali. To be sure, there was difficulty on the part of the petitioners in complying
with the required procedure for impeachment, considering that the petition to impeach had to be
addressed to the Chairman of the Executive Board of the Union, and that the majority membership
which would decide on the impeachment had to be convened only upon call of the Chairman of the
Executive Board

806

806

SUPREME COURT REPORTS ANNOTATED

Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja

who in the case at bar, happened to be respondent Umali himself.


Same; Same; Same; Same; Same; Petitioners should have shown substantial compliance with the
impeachment procedure.—Nevertheless, despite the practical difficulties in complying with the said
procedure, petitioners should have shown substantial compliance with said impeachment procedure,
by giving Umali ample opportunity to defend himself, as contrasted to an outright impeachment, right
after he failed to appear before the first and only investigation scheduled on 27 August 1986 in the
Litton Canteen.

PETITION for certiorari with preliminary injunction to review the decision of the Bureau of Labor
Relations.

The facts are stated in the opinion of the Court.

Paterno D. Menzon Law Office for petitioners.

The Solicitor General for public respondent.

Ferdinand M. Casis for private respondent Umali.

Marquinez, Juanitas, Perez, Gonzales, Bolos & Associates for respondent, Litton Mills, Inc.

PADILLA, J.:

This is a petition for review on certiorari, with prayer for preliminary injunction, seeking to prevent
private respondent Rodolfo Umali from affiliating the petitioner-union, Litton Mills Employees
Association-Kapatiran (LMEA-K, for short), with the National Union of Garments, Textile Cordage and
General Workers of the Philippines (GATCORD, for short), and to enjoin the latter or any of its
representatives from representing petitioner-union in any capacity whatsoever. The petition also seeks
to declare as null and void petitionerunion's affiliation with GATCORD: that LMEA-K union President,
Rodolfo Umali, be declared impeached, and that respondent company, Litton Mills, Inc. (LMI, for short)
be ordered by this Court to terminate Umali from his employment.

Petitioner-union, LMEA-K, is a legitimate labor organization in the respondent company, LMI, while
individual petitioner, Rogelio Abong, and individual respondent, Rodolfo Umali, are the vice-president,
respectively, of LMEA-K.

The facts of the case are as follows:

On 14 August 1986, without the knowledge and approval of

807

VOL. 167, NOVEMBER 24, 1988

807

Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja


the general membership of LMEA-K, Umali "Affiliated" petitioner-union with the federation of
GATCORD. This is evidenced by the Pledge of Allegiance signed by the union's newly appointed shop
steward, Norberto David, dated 14 August 1986, which was attested to by Timoteo Aranjuez,
GATCORD's President, as inducting officer.1

Umali then caused mimeographed leaflets to be distributed to the union-members, urging them to
continue affiliating with GATCORD, at the same time maligning petitioner-union's legal counsel Paterno
D. Menzon, as well as Messrs. Badillo and Abong, the former and incumbent vice-president of
petitioner-union.2

As a consequence, a majority of the union-members, numbering 725,3 out of a total membership of


1,100, more or less, opposed the affiliation of LMEA-K with GATCORD, and expressly manifested their
intention to remain as an independent-union, in a statement, "Sama-Samang Kapasiyahan", dated 18
August 1986,4 which, among others, also authorized petitioner Abong to take appropriate steps against
respondent Umali, including impeachment, should the latter continue the affiliation of the petitioner-
union with GATCORD.

Despite the opposition of a majority of the union membership to the petitioner-union's affiliation with
GATCORD, Umali continued with it, as evidenced by a letter he wrote to LMI, dated 20 August 1986,
which was written on paper with the letterhead of GATCORD printed on it. The said letter, which was in
reference to the number of workers of LMI who were to be given regular appointments, and those who
were to be terminated and replaced, was again attested to by Timoteo Aranjuez, GATCORD's National
President.5

Thereafter, Abong and the majority of the elected union officers signed a letter, dated 24 August 1986,
addressed to Umali, accusing him of disloyalty by reasons of his affiliation with GATCORD, and advising
him to appear before them on

_______________

1 Petition, Annex "A", Rollo, p. 11.

2 Id., Annex "B", Rollo, p. 12.

3 Decision of the Med-Arbiter, Rollo, pp. 34, 36.

4 Petition, Annex "C", Rollo, p. 13.

5 Id., Annex "D", Rollo, p. 14.

808

808

SUPREME COURT REPORTS ANNOTATED

Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja


27 August 1986 at 2:00 p.m. in the company canteen, to refute the charge of disloyalty against him. The
same letter warned Umali that his failure to attend said meeting would be interpreted as an admission
on his part of the charge levelled against him. Umali did not show up at the appointed confrontation of
27 August 1986.

Consequently, the majority of the union officers, led by Abong, voted to impeach Umali, who was
informed of this fact by letter, dated 30 August 1986, addressed to him, with copy furnished Mr. James
Go, the senior vice-president of LMI. Abong also wrote the latter, informing him, of Umali's
impeachment, and invoking the provision of the collective bargaining agreement on union security, i.e.,
that the petitionerunion may request LMI to dismiss an impeached officer or members of the union.

The company's position on the request of the petitioners, as stated in its letter to the petitioners, dated
10 September 1986, was that the petitioners should first comply with the provision of the CBA, to wit:

"An employee who is expelled from the Union for cause shall, upon demand by the Union, be
terminated from employment, provided that all pertinent requirements of the Ministry of Labor and
Employment are first complied with; provided that the Union shall hold the company free from any
liability that may arise due to said termination."5-a

In other words, LMI required the petitioners to first thresh out the matter with the proper office of the
Department of Labor and Employment, before it could act on petitioners' request to terminate Umali
from his employment with LMI.

On 25 September 1986, petitioners lodged a complaint against Umali and LMI before the med-arbiter
section of the National Capital Region of the Department of Labor and Employment, docketed as NCR-
LRD-M-9-718-86, praying that, after notice and hearing, an order be issued declaring as valid the
impeachment of Rodolfo Umali and that respondent company be ordered to comply with Sec. 5, par. b
Article IV of the CBA, by

_______________

5-a Rollo, p. 18.

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VOL. 167, NOVEMBER 24, 1988

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Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja

terminating the employment of Umali, and proclaiming Rogelio Abong, the union's vice-president, as the
new president of the union.6

Umali filed his answer, after which petitioners filed their reply averring that Umali's open defiance of the
will of the majority of the union members for the union to remain an independent union, and Umali's
contention that the majority wanted to affiliate with GATCORD, without submitting up to that time any
evidence to support such contention were clear evidence of his disloyalty to petitioner-union, for which
he ought to be impeached. Thereafter, petitioners filed a Supplemental Reply stating, among others,
that of the 700 signatures of union members eventually submitted by Umali, as belonging to those who
supported affiliation with GATCORD, a) 111 signatures were forged or faked signatures, b) 6 were those
of resigned employees, and c) 44 were by those who signed 2 or 3 times, summing up to a total of 161
signatures that should be excluded from Umali's submission of 700 affirming signatures, thereby leaving
only 539 signatures in favor of affiliation with GATCORD.

Aside from averring unauthorized affiliation of LMEA-K with GATCORD, petitioner-union (LMEA-K)
alleged in its supplemental reply that the mere use by Umali of falsified signatures of union members
was enough reason for his expulsion as president of LMEA-K.

On 15 November 1986, Med-Arbiter Residali Abdullah issued an order declaring that the issue of
affiliation cannot be dealt with in the complaint filed by petitioners, and that the impeachment of Umali
was null and void.

The Med-Arbiter found no valid ground to sustain the impeachment of Rodolfo Umali as president of the
petitionerunion, since Umali was not afforded his right to due process, his impeachment having been
approved without compliance with the procedure laid down in the petitioner-union's constitution and
by-laws. The Med-Arbiter also considered the petitioner-union's "Sama-Samang Kapasiyahan" as mere
declarations of some union members opposing the proposed affiliation of the union with GATCORD, and
stating their preference to

_______________

6 Decision of Med-Arbiter, Rollo, p. 32.

810

810

SUPREME COURT REPORTS ANNOTATED

Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja

remain an independent union, but not as a petition charging respondent Umali with a specific offense
against the union.

The Med-Arbiter further held that the letter-decision of the petitioner-union which impeached
respondent Umali was bereft of any legal merit, because the non-appearance of Umali at the first
scheduled meeting of 27 August 1986 cannot be legally construed as an admission on his part of the
charges levelled against him. The Med-Arbiter then held thus:

"Again, even on the assumption that respondent Umali urged the general membership of the
complainant union to join with him in his move to affiliate the union.with the federation but [sic] such
act on the part of Rodolfo Umali cannot to our mind be considered union disloyalty to warrant his
removal from office and his expulsion from the union. It should be noted that Litton Mills Employees
Association-KAPATIRAN is an independent registered labor organization without any affiliation. So that,
respondent Umali cannot be held liable under Par. (b), Section 5, Art. IV of the union's constitution and
by-laws as he was only trying to affiliate the union with the federation for reason, perhaps, to avail [sic]
the services and assistance of the federation and not organizing or joining another labor union,
Organizing or joining another labor union is different from affiliation of the union. The former implies
abandonment of the union membership as what the [sic] respondent Umali did. On this score,
respondent Umali cannot be stripped of his membership much less to remove him (sic) from the union
presidency. xxx.

"As to the second issue, it appearing that the impeachment of respondent Umali is adjudged to be
without valid ground, the union security clause of the existing CBA does not apply. Hence, the prayer of
the complainants to terminate the employment of Rodolfo Umali with Litton Mills, Inc. should not be
given due course."7

Petitioners appealed the Med-Arbiter's order to the public respondent, who, in a Resolution, dated 13
February 1987, dismissed the appeal for lack of merit, and affirmed in toto the order of the Med-Arbiter,
dated 17 November 1986. Petitioner's motion for reconsideration was denied in an order dated 1 April
1987.

Hence, the present recourse.

_______________

7 Rollo, pp. 38-39.

811

VOL. 167, NOVEMBER 24, 1988

811

Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja

The controversy, in the case at bar stems from respondent Umali's act of affiliating the petitioner-union
with GATCORD, which caused the union officers to impeach Umali for disloyalty to the union. The
impeachment is anchored on a provision in the petitioner-union's Constitution and By-Laws, which reads
as follows:

"Art. IV, Section 5. Membership may be lost under the following grounds:

xxx xxx xxx

b) Organizing or joining another labor union or any federation.

xxx xxx x x x"7-a (Italics supplied)

One of the grounds for losing membership in the union, as aforestated, is by joining a federation. There
is no dispute in the present case that GATCORD is a labor federation, to which respondent Umali
affiliated the petitioner-union as evidenced by mimeographed leaflets he caused to be distributed
among the union-members, urging them to continue affiliating with GATCORD, the Pledge of Allegiance
of newly-appointed Shop Steward Norberto David, and the letter of Umali to LMI, dated 20 August 1986,
the last two (2) being attested to by GATCORD's National President Timoteo Aranjuez, and the fact that
the letter dated 20 August 1986 was written on paper with GATCORD's letterhead. Also, the affiliation of
the petitionerunion with GATCORD was affirmed by Umali himself, when he presented the alleged 700
signatures of union-members who supported his move of affiliating the union (LMEA-K) with GATCORD.
Hence, it cannot be denied that Umali did not only propose the affiliation, but in fact affiliated the
petitionerunion with GATCORD, in contravention of the above-cited prohibition in Section 5, Article IV of
the petitioner-union's Constitution and By-Laws.

And yet, if the act of Umali in affiliating the petitioner-union with GATCORD, is with the consent of a
majority of the union membership, then any violation of the petitioner-union's

_______________

7-a Rollo, p. 57.

812

812

SUPREME COURT REPORTS ANNOTATED

Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja

Constitution and By-Laws becomes of little consequence. It will appear in such case that the union itself
has ratified the act of affiliation. It will be noted that Umali, albeit belatedly, presented the signatures of
700 members of the union, as proof of the support he had from them for the union's affiliation with
GATCORD.

On the other hand, petitioners presented 725 signatures, or 65.9% of the entire union membership, who
signed the "SamaSamang Kapasiyahan", as proof of those who opposed the affiliation, in addition to
petitioners' allegation that out of the 700 signatures presented by Umali, 161 signatures were either
forged or faked, twice or thrice written, or signatures of already resigned employees.

This Court takes notice of the fact that in all of the pleadings submitted by respondent Umali, he never
bothered to refute the charge of the petitioners as to the questioned 161 signatures; neither has he
denied that the union members who opposed the affiliation were more than those who supported it.
Hence, this Court finds that the affiliation of the petitionerunion with GATFORD was done by Umali
without the support of the majority of the union membership.

Furthermore, the Court notes that the collective bargaining agreement of the petitioner-union (LMEA-K)
with LMI was to expire only on 31 October 1987, whereas, Umali affiliated the union around August
1986, or about 14 months before the expiration of said CBA. The affiliation of the petitioner-union with
GATCORD converted the former's status from that of an independent union to that of a local of a labor
federation. Such change in status not only affects the identity of the petitionerunion but also its powers,
duties and privileges, for as a local, it will have to contend with and consult the federation, in matters
affecting the union.

The act of affiliating with a federation is a major modification in the status of the petition-union. And
such act is a violation of the rule that no modification of the CBA can be made during its existence,
unless either party serves written notice to terminate or modify the agreement at least sixty (60) days
prior to its expiration date.8 Hence, there was a violation

_______________

8 Article 253, Labor Code.

813

VOL. 167, NOVEMBER 24, 1988

813

Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja

of the existing CBA, on the part of Umali.

As to the impeachment of a union officer, Section 2, Article XV of the petitioner-union's Constitution and
By-Laws provides the procedures to be followed, to wit: (1) Impeachment should be initiated by petition
signed by at least 30% of all bona fide members of the union, and addressed to the Chairman of the
Executive Board; (b) A general membership meeting shall be convened by the Board Chairman to
consider the impeachment of an officer; (c) Before any impeachment vote is finally taken, the union
officer against whom impeachment charges have been filed shall be given ample opportunity to defend
himself; and (d) A majority of all the members of the union shall be required to impeach or recall union
officers.

It clearly appears that the above cited procedure was not followed by the petitioners when they
impeached Umali. To be sure, there was difficulty on the part of the petitioners in complying with the
required procedure for impeachment, considering that the petition to impeach had to be addressed to
the Chairman of the Executive Board of the Union, and that the majority membership which would
decide on the impeachment had to be convened only upon call of the Chairman of the Executive Board
who, in the case at bar, happened to be respondent Umali himself.

Nevertheless, despite the practical difficulties in complying with the said procedure, petitioners should
have shown substantial compliance with said impeachment procedure, by giving Umali ample
opportunity to defend himself, as contrasted to an outright impeachment, right after he failed to appear
before the first and only investigation scheduled on 27 August 1986 in the Litton Canteen.

The above conclusions notwithstanding, the Court believes that the union-members themselves know
what is best for them, i.e., whether they still want respondent Umali as their Union President, and
whether they wish to affiliate their union with GATCORD. And, the best and most appropriate means of
ascertaining the will of the union members is through a certification election.

Consistent with the foregoing observations, it appears from the record that a group of employees
headed by petitioner Rogelio Abong broke away from the petitioner-union and formed

814

814

SUPREME COURT REPORTS ANNOTATED

Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja

a new union, called Litton Mills Workers Union, and that in a certification election that followed, said
Litton Mills Workers Union, headed by petitioner Abong, was chosen as the collective bargaining agent.9

Because of this supervening event, it now appears clear that the majority of the heretofore members of
petitioner-union (LMEA-K) do not wish respondent Umali to continue as their president; neither do they
wish their union to be affiliated with the GATCORD federation. Consequently, the issues in this petition
have become moot and academic.

The Manifestation of the petitioners, dated 9 October 1987, after informing the Court of the election of
the Litton Mills Workers union headed by petitioner Abong, as the collective bargaining representative
in LMI, reiterates the prayer that respondent Umali be considered and declared as impeached. This issue
has, to the mind of the Court, likewise become moot and academic for it is inconceivable that Umali will
be retained as president of the new collective bargaining agent, the Litton Mills Workers Union, while
Umali's continued presidency of LMEA-K., as a minority union if still existing in LMI, has ceased to be of
any moment in the instant case.

WHEREFORE, the petition is DENIED for having become moot and academic. Without pronouncement as
to costs.

SO ORDERED.

Melencio-Herrera, (Chairman), Paras, Sarmiento and Regalado, JJ., concur.

Petition denied.

Note.—Employees's right to form unions to protect their interest is statutory and constitutionally
recognized. (Vassar Industries Employees Union (VIEU) vs. Estrella, 82 SCRA 280).

——o0o——

_______________
9 Rollo, p. 114. This information is contained in a Manifestation, dated 9 October 1987, filed by counsel
for the petitioners, served on all the parties, and unrebutted by respondents.

815

© Copyright 2017 Central Book Supply, Inc. All rights reserved. Litton Mills Employees Asso.-Kapatiran
vs. Ferrer-Calleja, 167 SCRA 804, No. L-78061 November 24, 1988

VOL. 144, SEPTEMBER 23, 1986

245

Villaor vs. Trajano

No. L-69188. September 23, 1986.*

MIGUEL J. VILLAOR and CECILIO V. BAUTISTA, petitioners, vs. HON. CRESENCIANO B. TRAJANO, in his
capacity as Director, Bureau of Labor Relations of the Ministry of Labor and Employment; OCTAVIO A.
PINEDA, RAFAEL SAMSON, EDUARDO C. FLORA, MARIO S. SANTOS and CARLOS BANDALAN,
respondents.

Labor Law; Jurisdiction; The Bureau of Labor Relations has jurisdiction to resolve election disputes in
labor unions.—From the aforequoted provisions, it is safe to conclude that the freedom of the unions
from interference from the government presupposes that there is no inter-union or intra-union
conflict. In the instant case, there is no question that there is an intra-union conflict.

Same; Same; The petitioners are deemed to have exhausted the administrative remedies prescribed
in the union by-laws by reason of the refusal of the Board of Directors to approve the Special Board of
Inquiry that is to investigate the election protest.—The Board of Inquiry, created by the President, has
the sole power to investigate cases involving acts committed by any officer, member of the Board or
member of the Association that the power of the Board to remove or discipline any union officer,
including the President himself or the COMELEC members cannot be exercised until the Board of
Inquiry submits its report and recommendation based on their findings on the acts complained of
after due investigation. With this as a premise, petitioners claim that in their Reply and Opposition
dated

_______________

* SECOND DIVISION.

246

246
SUPREME COURT REPORTS ANNOTATED

Villaor vs. Trajano

September 14, 1984, in connection with the three (3) consolidated cases before Med-Arbiter
Napoleon V. Fernando, Nos. NLR-LRD-M-6-185484, NLR-LRD-M6-156-84 and NLR-LRD-N-6-204-84, they
called attention to the fact that they have exhausted administrative remedies provided in the PALEA
Charter—On May 17, 1984, PALEA President Miguel J. Villaor created the Special Board of Inquiry and
appointed Rey Taggueg, as chairman, Ildefonso Medina and Rodolfo de Guzman, as members,
however, the Board refused to approve the newly created Special Board of Inquiry for fear that they
themselves may be the first to be subjected to investigation for the acts complained of in Case No.
NCR-LRD-M-6-156-84. This claim of petitioners was never denied by the private respondents.
Accordingly, there is no question that the Med-Arbiter rightly exercised jurisdiction over the case.

Same; Private respondent Santos is bound by his conceding to the election of Villaor made before
filing the protest at bar.—From the aforequoted provision, as opined by the Solicitor General, “once a
candidate concedes the election, he is precluded from filing a protest.” Private respondent Mario S.
Santos, prior to filing his election protest, in his letter of March 6, 1984 to herein petitioner Miguel J.
Villaor, had already unequivocably conceded the position of president to the latter.

Same; The acts of PALEA’s Comelec of ordering the opening of ballot boxes and ordering a special
election without hearing were in violation of the union’s by-laws.—Likewise, from the aforequoted
provision, it is mandatory for the PALEA COMELEC to set the election protest for appropriate hearing
on the issues raised before it could finally resolve the case. In the instant case, it is undisputed that
the PALEA COMELEC, without conducting any formal hearing on the issues raised, on the basis of the
pleadings of the parties, informed the parties in a letter dated April 23, 1984 that the ballot boxes in
the questioned precincts would be opened and their voters’ list retrieved on April 25, 1984 at 10:00 in
the morning. Likewise, on April 27, 1984, the PALEA COMELEC, without the benefit of formal hearing,
resolved the election protest by setting aside the proclamation dated February 25, 1984 of Miguel J.
Villaor as PALEA President, Cecilio V. Bautista as Vice-President, and Ernesto P. Galang as Secretary;
directing the canvassing of the segregated ballots in precincts 1, 4, and 4-A; and directing the holding
of a special election in Cebu and Mactan on May 4, 1984.

Same; The order by PALEA’s Comelec for a special election

247

VOL. 144, SEPTEMBER 23, 1986

247

Villaor vs. Trajano

while the Med-Arbiter is hearing the protest shows its partiality.—The holding of the May 4, 1984
special election, when its legality is still pending determination by the Med-Arbiter, therefore, further
shows the partiality of the respondent PALEA COMELEC members.

PETITION to review the decision of the Bureau of Labor Relations.


The facts are stated in the opinion of the Court.

Wenceslao C. Laureta for petitioners.

Bernardino Julve for private respondents.

Porter Puguon for public respondent.

PARAS, J.:

This is a petition to review on certiorari the November 14, 1984 decision of respondent BLR Director
Cresenciano B. Trajano in BLR Case No. A-182-84, entitled “Miguel J. Villaor, et al., Petitioners vs.
Octavio Pineda, et al., Respondents, and Mario S. Santos, et al., Intervenor,” setting aside the
MedArbiter’s Orders of June 27, 1984 and August 1, 1984.

The Philippine Air Lines Employees’ Association (PALEA) is the bargaining agent of the workers in the
Philippine Air Lines (PAL). The union has a Board of Directors composed of the president, vice-president,
secretary, treasurer and 17 directors elected for a term of three (3) years by members in “good
standing” on the last Thursday of February of the election year. It has also a Commission on Election
(COMELEC) whose members sit for a term of three (3) years. At present, the COMELEC is composed of
herein respondents Octavio Pineda, as chairman, and Rafael Samson and Edwardo Flora, as members.
The then incumbent president and vice-president were herein respondents Mario S. Santos and Carlos
Bandalan, respectively.

On February 17-23, 1984, in Metro Manila and on February 20, 1984 in Cebu/Mactan area, PALEA held
its election for National Officers. Herein petitioner Miguel J. Villaor won the election over respondent
Mario S. Santos for the presidency, Villaor obtaining 1,954 votes to Santos’ 1,809 votes, or a dif-

248

248

SUPREME COURT REPORTS ANNOTATED

Villaor vs. Trajano

ference of 145 votes. Likewise, herein petitioner Cecilio V. Bautista won against Carlos V. Bandalan for
the position of vice-president, Bautista garnering 1,264 votes as against Bandalan’s 1,220 votes, or a
difference of 44 votes. They were proclaimed on February 25, 1984.

Subsequently, the defeated candidates—respondent Mario S. Santos, for president; respondent Carlos
V. Bandalan, for vice-president; and Antonio Josue, for secretary, filed their election protests with the
PALEA COMELEC within the 30 day reglementary period, as provided under the Constitution and By-
Laws of the Association, on the grounds that (1) a number of votes in precincts 1, 4 and 4-A were
segregated and not counted; and (2) a substantial number of PALEA members in Cebu/Mactan area
were not able to vote on February 20, 1984 by reason of the voting days having been reduced from two
(February 20-21, 1984) to just one day (February 20, 1984). Respondent Mario S. Santos filed his protest
on March 12, 1984; respondent Carlos Bandalan filed his protest on February 27, 1984; and Antonio
Josue on March 14, 1984, before PALEA COMELEC composed of the herein other respondents.

Meanwhile, on March 6, 1984, respondent Mario S. Santos sent petitioner Miguel J. Villaor a letter, the
body of which reads—

“We formally turnover to you PALEA’s CBA proposals in the ongoing PAL-PALEA CBA negotiations. Other
pertinent records are either accompanying these proposals or on file with the office.

“Other PALEA properties, including the President’s car and another vehicle, shall also be turned over to
you at the appropriate time.

“On the CBA negotiation, we would like to inform you that we are filing a manifestation with the
Director-Bureau of Labor Relations in order to withdraw PALEA’s declaration of deadlock. This will give
you and the other officers-elect a free hand to continue with the PAL-PALEA CBA negotiation.

“As we have the common objective of protecting and promoting the interests of our members, we wish
you all the luck and best of everything for our members and our union.”

249

VOL. 144, SEPTEMBER 23, 1986

249

Villaor vs. Trajano

On April 17, 1984, petitioners filed their joint Comment/Answer to the election protests cases, and two
(2) basic issues were joined, to wit:

1. Whether or not the more than 40 to 47 ballots cast by alleged qualified PALEA members in Precincts
1, 4 and 4-A which were segregated and invalidated actually resulted in the disenfranchisement of said
PALEA voters; and

2. Whether or not the qualified PALEA voters in the Cebu/Mactan areas were deprived of their right to
vote as a result of the sudden change from the two day traditional election days in previous years to just
one day.

On the basis of the election protests and the Comment/Answer thereto, respondent PALEA COMELEC
members, in a letter dated April 25, 1984, informed the parties that the ballot boxes in the questioned
precincts would be opened and their voters list retrieved on April 25, 1984 at 10:00 in the morning.

On April 24, 1984, herein petitioners Miguel J. Villaor and Cecilio V. Bautista, and Ernesto P. Galang filed
a complaint/petition with the Regional Office of the Ministry of Labor and Employment (MOLE) against
the PALEA COMELEC members, seeking their disqualification from their/positions as such on the ground
of alleged partiality for the protestants. The Regional Office summoned the parties to appear before
Med-Arbiter Renato D. Parungao “on the 25th of April at 9:30 a.m.”
On April 25, 1984, herein petitioners Miguel J. Villaor and Cecilio V. Bautista, and respondent PALEA
COMELEC member Edwardo C. Flora appeared before the Med-Arbiter who issued an Order “enjoining
the respondents from opening the ballot boxes subject of the controversy.” On the same day, at 10:30
a.m. respondents Octavio Pineda and Rafael Samson proceeded to open the ballot boxes.

On April 27, 1984, respondents, sitting en banc, resolved the election protests, the dispositive portion of
which reads—

“WHEREFORE, AND IN VIEW OF ALL THE FOREGOING, THE PALEA COMELEC HEREBY RESOLVES, AS IT

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SUPREME COURT REPORTS ANNOTATED

Villaor vs. Trajano

HEREBY RESOLVED—

“1. To set aside the proclamation dated February 25, 1984 of Miguel J. Villaor as PALEA President, Cecilio
V. Bautista as Vice-President and Ernesto P. Galang as Secretary;

“2. To count the segregated votes of qualified PALEA members, as verified, in Precincts 1, 4 and 4-A. The
counting shall be held on May 4, 1984 at 1300 H at the PALEA COMELEC Office;

“3. To hold a special election on May 4, 1984 from 0500 H to 1700 H, in Cebu/Mactan to allow PALEA
members, not able to vote on February 20, 1984, to cast their votes for the positions of President, Vice-
President and Secretary; and

“4. To proclaim the winning candidates for PALEA President, Vice-President and Secretary immediately
after the election, counting and canvassing of votes as hereinabove indicated.

SO RESOLVED.”

On May 3, 1984, petitioners filed a motion with the MedArbiter to cite COMELEC members for
contempt, to suspend them from office, and to annul their Resolution of April 27, 1984 “for being issued
without jurisdiction.” On the same day, a notice was issued directing the parties and the petitioners’
counsel to appear for hearing at 1:30 p.m. on May 3 and 4, 1984. On the May 3, 1984 scheduled hearing,
none of the parties appeared, and on the May 4, 1984 scheduled hearing, only the petitioners’ counsel
appeared.

In conformity with the Resolution of April 27, 1984, respondents PALEA COMELEC members counted the
segregated ballots in precincts 1, 4 and 4-A on May 4, 1984 and likewise held on said date a special
election in Cebu/Mactan area. As a result of the election of May 4, 1984, Mario S. Santos, Carlos V.
Bandalan and Ernesto Galang, were proclaimed on May 5, 1984 as the duly elected President, Vice-
President and Secretary respectively by PALEA COMELEC.
On May 8, 1984, Petitioner Miguel J. Villaor filed a motion to annul the May 4, 1984 election and the
proclamation of the winners contending that these were “premature” as no action had yet been taken
on the motion to declare the April 27, 1984 Resolution void. On May 31, 1984, the respondents filed
their omnibus

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answer to the petition and the subsequent motions filed by the petitioners.

On the same date, May 31, 1984, herein respondents Mario S. Santos and Carlos V. Bandalan filed their
Notice To Admit Intervention (Record, p. 128) in the case filed by Villaor, et al. against the PALEA
COMELEC members. The intervention was allowed when therein petitioners withdrew their opposition
thereto. The intervenors likewise manifested that they were adopting the position paper filed by the
respondents therein as their own.

On June 5, 1984, petitioners filed a motion for injunction alleging that Mario S. Santos and “his cohorts”
had inveigled the Board of Directors to adopt a resolution including Santos in the union panel and that
as a result thereof, the PAL refused to continue negotiating with the union.

On June 8, 1984, herein respondents Mario S. Santos and Carlos V. Bandalan filed their answer in
intervention alleging that they were duly proclaimed officers of the union and the ones recognized by
the Board of Directors.

On the same day, June 8, 1984, the Med-Arbiter issued a temporary restraining order “enjoining the
respondents and the intervenors to cease and desist from acting as PALEA President, Vice-President and
Secretary in order to maintain the status quo prevailing prior to the filing of the instant petition.” The
Med-Arbiter furthermore directed them to show cause why injunction should not be granted in favor of
the petitioners. The intervenors filed an opposition on June 19, 1984.

On June 27, 1984, the Med-Arbiter issued a writ of preliminary injunction (Ibid., pp. 116417) “enjoining
both the respondents and intervenors to cease and desist from further committing the acts complained
of until the intra-union conflict and all its attendant incidents are finally resolved.” Moreover, the Med-
Arbiter declared that “Miguel J. Villaor remains as President of the Philippine Airlines Employees’
Association (PALEA) unless ordered otherwise.”

The Med-Arbiter, after hearing, issued an Order dated August 1, 1984, (Ibid, pp. 119-127) the dispositive
portion of which reads—

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Villaor vs. Trajano

“WHEREFORE, premises considered the petition is hereby granted and let an order issue, as it is hereby
issued:

“a) Declaring respondents Octavio Pineda, Rafael Samson and Edwardo Flora as disqualified from their
office as chairman and members, respectively, of the PALEA Commission on Elections and ordering them
to desist from further performing their functions as Comelec officers;

“b) Declaring as null and void Resolution dated 27 April 1984, promulgated ex-parte in complete
violation of Sec. 6, Article XIX of the PALEA Constitution and By-laws;

“c) Declaring the special election conducted by the respondents (PALEA Comelec) on 4 May 1984 as
invalid and that the results thereof, proclaiming Mario S. Santos, Carlos V. Bandalan, as President and
Vice-President, respectively, as likewise declared null and void;

“d) The writ of preliminary injunction dated 27 June 1984, enjoining intervenors Mario S. Santos and
Carlos V. Bandalan as President and Vice-President, of PALEA, but, also from interfering with the on-
going CBA negotiations between the PAL Management and PALEA and also from interfering in any
manner with the operation of the activities of PALEA, shall continue to remain binding and effective until
this intra-union conflict and its attendant aspects are finally resolved and terminated, in which case the
said injunctive writ shall likewise be dissolved.”

Therein respondent PALEA COMELEC members and intervenors Mario S. Santos and Carlos V. Bandalan
appealed the said Order of the Med-Arbiter to the Bureau of Labor Relations (BLR).

BLR Director Cresenciano B. Trajano, in a decision dated November 14, 1984, (Ibid., pp. 33-42) set aside
the Med-Arbiter’s Orders of June 27, 1984 and August 1, 1984, and at the same time dismissed the
petition of Miguel J. Villaor and Cecilio V. Bautista for lack of merit. Hence, the instant petition (Ibid., pp.
56-115).

The First Division of this Court, in a Resolution dated January 16, 1985, resolved without giving due
course to the petition to require the respondents to comment within ten (10) days from notice thereof
(Ibid., p. 203). In compliance with the said Resolution, private respondents

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filed their comment (Ibid., pp. 237-247) on March 18, 1985.

On March 28, 1985, petitioners filed their “Reply” to the comment filed by the private respondents.
On March 29, 1985, the Solicitor General filed his comment. In the same, the Solicitor General
concluded that it is his opinion that respondent BLR Director committed reversible error in setting aside
the Med-Arbitef’s Orders, and recommended that the instant petition be given due course.

Petitioners, in compliance with the Resolution of the First Division of this Court dated April 22, 1985
(Ibid., p. 273) filed on May 17, 1985 their “Reply” to the “Comment” filed by the Solicitor General.

Public respondent, in compliance with the June 16, 1985 Resolution of the First Division of this Court,
filed his comment (Ibid., pp. 327-374) on August 8, 1985.

The First Division of this Court, in a Resolution dated August 26, 1985 (Ibid., p. 374-a) resolved (a) to give
due course to the petition; and (b) to require the parties to submit simultaneous memoranda within
thirty (30) days from notice.

Petitioners filed their memorandum (Ibid., pp. 391-435) on October 28, 1985; Private respondents filed
their memorandum (Ibid., pp. 438-464) on November 5, 1985; and public respondent, in a “Motion”
dated November 19, 1985 (Ibid., pp. 462-464), respectfully moved that the comment he has filed be
treated and considered as memorandum. Said motion was granted by the First Division of this Court in
its Resolution of January 13, 1986 (Ibid., p. 476).

The sole issue in this case is—

Whether or not the decision of public respondent Bureau of Labor Relations Director issued on
November 14, 1984 was promulgated with grave abuse of discretion amounting to lack of jurisdiction.

In his Decision of November 14, 1984 (p. 7, Ibid., p. 39), Public respondent BLR Director Cresenciano B.
Trajano, in reversing Med-Arbiter Renato D. Parungo’s ruling disqualifying therein respondents as
members of the PALEA COM-

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Villaor vs. Trajano

ELEC, stressed that the Philippine Constitution assures the right of workers to self-organization and this
right implies the freedom of unions from interference by employers and the government; that it
includes the right of unions to elect their officers in full freedom and guarantee that the government
refrains from any interference which would restrict this right or impede its lawful exercise; and that “It
shall be unlawful for any person,” Article 247 of the Labor Code states, “to unduly interfere with
employees and workers in their exercise of the right to self-organization.” With the foregoing as his
premise, he opined that the right of self-organization is impaired when the government dissolves a
union COMELEC and proceeds to resolve an election protest pending before it.

In this connection, attention is invited to Article 226 of the Labor Code, which reads—
“ART. 226. Bureau of Labor Standards.—The Bureau of Labor Relations and the Labor Code relations
divisions of the regional offices of the Department of Labor (now the Ministry of Labor and Employment)
shall have original and exclusive authority to act, at their own initiative or upon request of either or both
parties, on all inter-union and intra-union conflicts and all disputes arising from or affecting labor-
management relations in all workplaces whether agricultural or non-agricultural, except those arising
from the implementation of collective bargaining agreements which shall be the subject of grievance
procedure and/or voluntary arbitration.”

as supplemented by Policy Instruction No. 6—relating to the distribution of jurisdiction over labor
cases—

“x x x xxx xxx

“3. The following cases are under the exclusive original jurisdiction of the Med-Arbiter Section of the
Regional Office:

xxx xxx xxx

“b) Intra-union cases.”

From the aforequoted provisions, it is safe to conclude that the freedom of the unions from interference
from the government presupposes that there is no inter-union or intra-union conflict. In the instant
case, there is no question that there is an intraunion conflict.

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Villaor vs. Trajano

Public respondent further opined that the COMELEC should have been allowed to discharge its functions
without prejudice to the right of petitioners to apply for relief from the Board of Directors. He averred
that under the union constitution, the Board has the power to remove or discipline, by three-fourths’
votes, any union officer including the president himself or the members of the COMELEC, and
accordingly concluded that only after the remedy failed could the petitioners be allowed to bring their
case to the Med-Arbiter. In short, the petitioners should first exhaust administrative remedies before
bringing their case to the Med-Arbiter.

Anent this opinion of public respondent, petitioners averred that pursuant to Section 4 of Article VII of
the PALEA Constitution and By-Laws, which reads;

“Section 4—As a fact-finding body, the Chairman and members of the Board of Inquiry (created by the
President) shall have the sole power to conduct investigation on involving an act specified under Article
18, Section of this Constitution committed by any officer, member of the board or members of the
Association and submit thereto reports and recommendations based on their findings to the Board of
Directors who shall have the sole power to render decisions and impose penalty to whoever is guilty.”
The Board of Inquiry, created by the President, has the sole power to investigate cases involving acts
committed by any officer, member of the Board or member of the Association that the power of the
Board to remove or discipline any union officer, including the President himself or the COMELEC
members cannot be exercised until the Board of Inquiry submits its report and recommendation based
on their findings on the acts complained of after due investigation. With this as a premise, petitioners
claim that in their Reply and Opposition dated September 14, 1984, in connection with the three (3)
consolidated cases before Med-Arbiter Napoleon V. Fernando, Nos. NLR-LRD-M-6-185-184, NLR-LRD-
M6-156-84 and NLR-LRD-N-6-204-84, they called attention to the fact that they have exhausted
administrative remedies provided in the PALEA Charter—On May 17, 1984, PALEA President Miguel J.
Villaor created the Special Board of Inquiry and ap-

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SUPREME COURT REPORTS ANNOTATED

Villaor vs. Trajano

Rodolfo de Guzman, as members, however, the Board refused to approve the newly created Special
Board of Inquiry for fear that they themselves may be the first to be subjected to investigation for the
acts complained of in Case No. NCR-LRD M-6-156-84. This claim of petitioners was never denied by the
private respondents.

Accordingly, there is no question that the Med-Arbiter rightly exercised jurisdiction over the case.

Section 6 of Article XIX of the PALEA Constitution provides:

“Sec. 6. In cases where a situation arises, whereby the losing candidate does not concede to the result of
the election, he may, if he so desires, submit in writing, his protest to the Commission on Election within
30 days after the proclamation of the winning candidates and the Commission on Election, sitting en
banc, shall hear and decide such protest. x x x.

From the aforequoted provision, as opined by the Solicitor General, “once a candidate concedes the
election, he is precluded from filing a protest.” Private respondent Mario S. Santos, prior to filing his
election protest, in his letter of March 6, 1984 to herein petitioner Miguel J. Villaor, had already
unequivocably conceded the position of president to the latter.

Likewise, from the aforequoted provision, it is mandatory for the PALEA COMELEC to set the election
protest for appropriate hearing on the issues raised before it could finally resolve the case. In the instant
case, it is undisputed that the PALEA COMELEC, without conducting any formal hearing on the issues
raised, on the basis of the pleadings of the parties, informed the parties in a letter dated April 23, 1984
that the ballot boxes in the questioned precincts would be opened and their voters’ list retrieved on
April 25, 1984 at 10:00 in the morning. Likewise, on April 27, 1984, the PALEA COMELEC, without the
benefit of formal hearing, resolved the election protest by setting aside the proclamation dated
February 25, 1984 of Miguel J. Villaor as PALEA President, Cecilio V. Bautista as Vice-President, and
Ernesto P. Galang as Secretary; directing the canvassing of the segregated ballots SUPREME COURT
REPORTS ANNOTATED

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Villaor vs. Trajano

in precincts 1, 4, and 4-A; and directing the holding of a special election in Cebu and Mactan on May 4,
1984.

Besides, it appears that respondents Octavio Pineda and Rafael Samson intentionally disregarded the
summons of Med-Arbiter Renato D. Parungo to appear before him at 9:00 a.m. on April 25, 1984 so that
they can carry out their plan to open the ballot boxes. Please note that the herein petitioners alleged
that Med-Arbiter Parungo issued a restraining order enjoining the respondents, as PALEA COMELEC
members, to refrain from proceeding with their plan to open the ballot boxes. Said restraining order was
personally served on respondent Edwardo Flora who immediately called the PALEA office and after
respondent Octavio Pineda was on the phone, Flora informed him, in the presence of Med-Arbiter
Parungo, about the restraining order served upon them. Notwithstanding said information, respondents
Pineda and Samson went ahead and opened the ballot boxes as planned. This allegation of petitioners
was never denied by the respondents. Respondent PALEA COMELEC members, likewise disregarded
Med-Arbiter Renato D. Parungo’s notice for them to appear for hearing at 1:30 p.m. on May 3 and 4,
1984.

The May 4, 1984 special election in Cebu and Mactan is without factual and legal justification. As aptly
observed by the Solicitor General, the same was resorted to only to accommodate the herein other
private respondents—

“There is absolutely no justification for calling the said May 4, 1984 election. There is no law which
allows ‘piece meal’ elections. Obviously, such move was resorted to by the PALEA Comelec to
accommodate defeated candidates for president and vice-president in the February 20, 1984 election,
Mario and Carlos Bandalan (respondent herein), and enable them to overcome the winning margin of
winning candidates therein, Villaor and Bautista (herein petitioners), who won by only 145 and 44 votes,
respectively.

It is the contention of the protestants that a great number of PALEA members were deprived of their
right to vote because it had been the tradition since 1969 to hold election in Cebu and Mactan for two
days; and that the holding of elections for only one day was done without notice to all PALEA members

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Villaor vs. Trajano

in said station. On the other hand, it is the contention of the petitioners that the change was agreed
upon by all the candidates concerned in a conference held at SMCD Office, Nichols Field, on February
20, 1982. On said controversy, while public respondent found for the protestants, the Solicitor General
is for the petitioners. Be that as it may, it is a fact that the PALEA COMELEC issued on February 15, 1984
a bulletin announcing that the elections in that area would be only on February 20, 1984. Hence, it
cannot be said that the voters therein were not duly notified. In addition to this, worth mentioning is the
comment of the Solicitor General, which reads:

“x x x. Besides, we do not see how these 103 members could have failed to know about the one-day
election. It was held within the office premises, and, surely, they must have been told of such fact by the
other members who voted in the election. It would appear that these 193 members simply did not
bother to vote for one reason or another. And we do not see the necessity of holding a two-day election
in said areas with only 500 members, and hold a one-day election in Metro Manila area which has about
4,000 members. That it is the tradition to hold a two-day election in said areas is not a valid argument.
Tradition can always be overturned, as what happened in the instant case.”

The holding of the May 4, 1984 special election, when its legality is still pending determination by the
Med-Arbiter, therefore, further shows the partiality of the respondent PALEA COMELEC members.

WHEREFORE, the assailed decision of respondent BLR Director is hereby SET ASIDE and the Orders of
June 27, 1984 and August 1, 1984 of Med-Arbiter Renato D. Parungo are hereby REVIVED.

SO ORDERED.

Feria (Chairman), Fernan, Alampay and Gutierrez, Jr., JJ., concur.

Decision set aside and orders revived.

——o0o——

259

© Copyright 2017 Central Book Supply, Inc. All rights reserved. Villaor vs. Trajano, 144 SCRA 245, No. L-
69188 September 23, 1986

VOL. 211,JULY27,1992

843

Pepsi-Cola Sales and Advertising Union vs. Secretary of Labor

G.R. No. 97092. July 27, 1992.*

PEPSI-COLA SALES AND ADVERTISING UNION, petitioner, vs. HON. SECRETARY OF LABOR and
ROBERTO ALISASIS, respondents.
Labor Law; Words and Phrases; Jurisdiction; A union member’s claim under the union benefit plan is
an intra-union conflict under the med-arbiter’s jurisdiction.—No definition is given by law of these
precise terms, “intra-union and inter-union conflicts.” It is known, however, that “intra-” and “inter-”
are both combining forms, prefixes—the first, “intra-,” meaning “within, inside of [intramural,
intravenous];” and the other, “inter-,” denoting “1. between or among: the second element is singular
in form [interstate] 2. with or on each other (or one another), together, mutual, reciprocal, mutually,
or reciprocally [interact].” An intra-union conflict would therefore 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. In this sense, the controversy between Alisasis and his union, PSAU—respecting the former’s
rights under the latter’s “Mutual Aid Plan”—would be an intra-union conflict under Article 226 of the
Labor Code and hence, within the exclusive, original jurisdiction of the MedArbiter of the Bureau of
Labor Relations whose decision, it may additionally be mentioned, is appealable to the Secretary of
Labor.

Same; Same; Same.—Certainly, said controversy is not one of those within the jurisdiction of the
Labor Arbiters in accordance with Article 217 of the Code, it not being an unfair labor practice case, or
a termination dispute, or one involving wages, rates of pay, hours of work and other terms and
conditions of employment (which is “accompanied with a claim for reinstatement”), or one for
damages arising from the employer-employee relations, or one for a violation of Article 264 of the
Code, or any other claim arising from employer-employee relations, or from the interpretation or
implementation of a collective bargaining agreement or of company personnel policies.

Same; A union member dismissed for a valid cause though his dismissal was arbitrary, cannot claim
any benefit from his labor union’s mutual aid and benefit plan.—It was merely “the manner in which
such a dismissal from employment was effected x x (that was

__________________

*SECOND DIVISION.

844

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SUPREME COURT REPORTS ANNOTATED

Pepsi-Cola Sales and Advertising Union vs. Secretary of Labor

deemed as) not in accordance with law, (there having been) failure to comply with the notice
requirement under Batas Pambansa Blg. 130 on termination of employees.” That imperfection is,
however, a circumstance quite distinct from the existence of what the NLRC has clearly and expressly
conceded to be a “valid and lawful cause in the dismissal of complainant by respondent.” And this is
precisely the reason why, as already pointed out, the NLRC declined to accord to Alisasis all the
remedies or reliefs usually attendant upon an illegal termination of employment—e.g., reinstatement,
award of damages—although requiring payment by the employer of the sum of P1,000.00 simply on
account of its failure “to comply with the notice requirement under Batas Pambansa Blg. 130 on
termination of employees.”

Same; Same.—The petitioner union (PSAU) was therefore quite justified in considering Alisasis as a
“member dismissed for cause,” and hence disqualified under its amended by-laws to claim any
“Benefit or return of contributions x x under any circumstances, x x.” The ruling to the contrary of the
Med-Arbiter and the Secretary of Labor Employment must thus be set aside as tainted with grave
abuse of discretion.

PETITION for certiorari to review the order and resolution of the secretary of Labor and Employment.

The facts are stated in the opinion of the Court.

Gilbert P. Lorenzo, for petitioner.

Florante M. Yambot, for private respondent.

NARVASA, C.J.:

In its Decision in G.R. No. 80587 (Wenphil Corporation v. NLRC), promulgated on February 8, 1989,1 this
Court2 laid down the doctrine governing an illegal dismissal case where the employee satisfactorily
establishes that his employment was terminated without due process—i.e., without written notice to
him of the charges against him and without according him opportunity to defend himself personally or
through a representative—but the employer nevertheless proves the exis-

_________________

1170 SCRA 69.

2First Division, per Gancayco, J., who has since retired.

845

VOL. 211,JULY27,1992

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Pepsi-Cola Sales and Advertising Union vs. Secretary of Labor

tence of just cause for the employee’s dismissal. The controlling principle in such a case is that since the
employee’s dismissal was for just cause, he is entitled neither to reinstatement or back wages nor
separation pay or salaries for the unexpired portion of his contract, being entitled only to the salaries
earned up to the last day of employment; at the same time, however, as a general proposition, the
employer is obliged, on account of its failure to comply with the requirements of due process in
terminating the services of the employee, to pay damages to the latter fixed at P1,000.00, a sum
deemed adequate for the purpose.

This doctrine, which has since been reaffirmed by this Court,3 applies in the case at bar, in resolution of
the issue of whether or not the private respondent, Roberto Alisasis, may be considered to have been
dismissed for just cause within the meaning of the charter papers organizing and governing a mutual aid
program of which he was a participant.

From 1964 until sometime about 1985, Alisasis was an employee of the Pepsi-Cola Bottling Co., Inc. and
later, of the Pepsi-Cola Products (Philippines) Inc., after the latter had bought out the former.4 He was
also a member of the labor organization of all regular route and truck salesmen and truck helpers of the
company—the Pepsi Cola Sales & Advertising Union (PSAU)—from June 1, 1965 up to the termination of
his employment in 1985.5 As a member of the PSAU, he was also a participant in the “Mutual Aid Plan”
set up by said union sometime in 1980. During the entire period of his employment, there were
regularly deducted from his wages the amounts corresponding to union dues as well as contributions to
the fund of the Mutual Aid Plan.6

On May 7, 1986, Alisasis filed with the NLRC Arbitration Branch, Capital Region, Manila, a complaint for
illegal dismissal against Pepsi-Cola, Inc.7 This resulted in a judgment by

_________________

3SEE Seahorse Maritime Corp. v. NLRC, 173 SCRA 390 (1980); Kwikway Engineering Works v. NLRC, 195
SCRA 526 (1991).

4Rollo, pp. 37-38.

5Id., pp. 25, 32-33.

6Id., pp. 25, 55.

7Docketed as NLRC NCR Case No. 5-1794-86.

846

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SUPREME COURT REPORTS ANNOTATED

Pepsi-Cola Sales and Advertising Union vs. Secretary of Labor

the Labor Arbiter dated January 25, 1988 declaring him to have been illegally dismissed and ordering the
employer to reinstate him “to his former position without loss of seniority rights and with full
backwages for one (1) year from the time he was not allowed to report for work x x.”8 The judgment
was subsequently affirmed with modification by the Fourth Division of the NLRC dated December 29,
1989,9 disposing of the appeal as follows:10
“In view therefore of the foregoing considerations, the decision appealed from is hereby modified in the
sense that the order for respondent to reinstate complainant is hereby set aside. The rest of the
decision shall stand.”

The deletion of the relief of reinstatement was justified by the NLRC in the following manner:11

“Certainly, with the actuations of complainant, respondent had ample reason or enough basis then to
lose trust and confidence in him. Complainant, being a salesman, should be considered to have occupied
a position of responsibility so that, if respondent had lost trust and confidence in him, the former could
validly and legally terminate the services of the latter (Lamaan Trading, Inc. vs. Leodegario, Jr., G.R.
73245, September 30, 1986).

However, although there was valid and lawful cause in the dismissal of complainant by respondent, the
manner in which it was effected was not in accordance with law. Complainant was not given written
notice by respondent but was only verbally advised, thru its Field Sales Manager, sometime in May 1985
that he should not report for work anymore, obviously, because there was a charge against him. Andthis
is what makes the dismissal of complainant arbitrary and illegal for failure to comply with the notice
requirement under Batas Pambansa Blg. 130 on termination of employees.

Ordinarily, when the dismissal of an employee is declared unjustified or illegal, he is entitled to


reinstatement and backwages (Art. 279 of the Labor Code). However, in the instant case, considering
that

_________________

8Rollo, p. 37.

9Id., pp. 37-44.

10Italics supplied.

11Rollo, pp. 42-43—Italics supplied.

847

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847

Pepsi-Cola Sales and Advertising Union vs. Secretary of Labor

respondent had already lost trust and confidence in complainant which is founded on a reasonable
ground, as discussed earlier, there is no point in requiring respondent to reinstate complainant to his
former position. To do so would be tantamount to compelling the management to employ someone
whom it can no longer trust, which is oppressive.”
It appears that both Alisasis and Pepsi-Cola, Inc. accepted the NLRC’s verdict and complied therewith;
that Pepsi-Cola gave Alisasis back wages for one (1) year; and that Alisasis issued the corresponding
quitclaim and considered himself separated from his employment.

Alisasis thereafter asked his labor organization, PSAU, to pay him monetary benefits in accordance with
Section 3, Article X of the “Amended By-Laws of the Mutual Aid Plan of the Pepsi-Cola Sales &
Advertising Union (U.O.E.F.),12 in an amount equal to “One (P1.00) Peso per year of service multiplied
by the number of member(s) * *.”13 PSAU demurred, invoking in its turn Section 1, Article XII of the
same amended by-laws, declaring as disqualified from any entitlement to the PLAN and x x (from any)
Benefit or return of contributions x x under any circumstances,”inter alia, “(a)ny member dismissed for
cause.”14

Alisasis thereupon filed a complaint against the union, PSAU, with the Med Arbitration Unit, National
Capital Region, Department of Labor and Employment, to compel the latter to pay him his claimed
benefits.15 The principal defenses alleged by PSAU were that Alisasis was disqualified to claim any
benefits under the Mutual Aid Plan, supra; and that the Med-Arbiter had no original jurisdiction over the
case since Alisasis’ claim for financial assistance was not among the cases cognizable by Med-Arbiters
under the law “such as representation cases, internal union and inter-union disputes x x (or) a violation
of the union’s constitution and by-laws and the rights and conditions of membership in a labor
organization.”16 After due pro-

________________

12Id., pp. 45-54.

13Id., p. 51.

14Id., p. 52.

15The complaint was filed on January 17, 1990, and was docketed as Case No. NCR-Od-M-90-01-037.

16Rollo, p. 6.

848

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Pepsi-Cola Sales and Advertising Union vs. Secretary of Labor

ceedings, the Med-Arbiter promulgated an Order on April 16, 1990, ruling that he had jurisdiction and
“ordering respondent x x (PSAU) to pay complainant Roberto Alisasis x x his claim for financial assistance
under the Mutual Aid Fund of the union.” PSAU appealed to the Secretary of Labor and Employment
who, by Resolution dated July 25, 1990, denied the appeal but reduced the Med-Arbiters’ award from
P18,669.00 to P17,886.00.17 Nullification of the Med-Arbiter’s Order of April 16, 1990 and the
respondent Secretary’s Resolution of July 25, 1990 is the prayer sought by the petitioner in the special
civil action of certiorari at bar.

Resolving first the issue of whether or not the case at bar is within the original jurisdiction of the Med-
Arbiter of the Bureau of Labor Relations, the Court holds that it is.

The jurisdiction of the Bureau of Labor Relations and its Divisions is set forth in the first paragraph of
Article 226 of the Labor Code, as amended, viz.:

“ART.226. Bureau of Labor Relations.—The Bureau of Labor Relations and the Labor Relations Divisions
in the regional offices of the Department of Labor shall have original and exclusive authority to act, at
their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts,
and all disputes, grievances or problems arising from or affecting labor management relations in all
workplaces whether agricultural or non-agricultural, except those arising from the implementation or
interpretation of collective bargaining agreements which shall be the subject of grievance procedure
and/or voluntary arbitration.

“x x x.”

It is evident that the case at bar does not concern a dispute, grievance or problem “arising from or
affecting labor-management relations.” So, if it is to be deemed as coming within the Med-Arbiter’s
jurisdiction, it will have to be as either an “intraunion” or “inter-union” conflict.

No definition is given by law of these precise terms, “intraunion and inter-union conflicts.” It is known,
however, that “intra-” and “inter-” are both combining forms, prefixes—the

_______________

17Id., p. 26, Annex D, petition.

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Pepsi-Cola Sales and Advertising Union vs. Secretary of Labor

first, “intra-,” meaning “within, inside of [intramural, intravenous];” and the other, “inter-,” denoting “1.
between or among: the second element is singular in form [interstate] 2. with or on each other (or one
another), together, mutual, reciprocal, mutually, or reciprocally [interact].”18 An intra-union conflict
would therefore 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. In this sense, the controversy between
Alisasis and his union, PSAU—respecting the former’s rights under the latter’s “Mutual Aid Plan”—would
be an intra-union conflict under Article 226 of the Labor Code and hence, within the exclusive, original
jurisdiction of the Med-Arbiter of the Bureau of Labor Relations whose decision, it may additionally be
mentioned, is appealable to the Secretary of Labor.
Certainly, said controversy is not one of those within the jurisdiction of the Labor Arbiters in accordance
with Article 217 of the Code, it not being an unfair labor practice case, or a termination dispute, or one
involving wages, rates of pay, hours of work and other terms and conditions of employment (which is
“accompanied with a claim for reinstatement”), or one for damages arising from the employer-
employee relations, or one for a violation of Article 264 of the Code, or any other claim arising from
employer-employee relations, or from the interpretation or implementation of a collective bargaining
agreement or of company personnel policies.

The second issue relates to the character of Alisasis’ dismissal from employment. The Court holds that
Alisasis had

_________________

18Webster’s New World Dictionary of the American Language, Second College Edition. Webster’s Third
New International Dictionary, 1986 ed., describes “inter-” as a “prefix xx (signifying) 1: between, among,
in the midst [intermediate] [interspace] 2: mutual, reciprocal [intermarry [intermesh [interrelation]
[interwine] 3: between or among the parts of [intercostal] [interdental] 4: carried on between
[intercollegiate] [intercommunication] [international] 5: occurring between: intervening [interglacial]
[intertidal] 6: shared by or derived from two or more [interdepartmental] [interfaith] 7: between the
limits of: within [intertropical]—”intra” as another prefix meaning 1a: within___esp. in adjectives
formed from adjectives [intraglacial] [intravaginal] [intracellular] [intra-European] [intracosmical] x x x.”

850

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SUPREME COURT REPORTS ANNOTATED

Pepsi-Cola Sales and Advertising Union vs. Secretary of Labor

indeed been “dismissed for cause.” His employer had established this factual proposition by competent
evidence to the satisfaction of both the Labor Arbiter and the National Labor Relations Commission. In
the latter’s view, and in its own words, “Certainly, with the actuations of complainant, x x (Alisasis’
employer) had ample reason or enough basis then to lose trust and confidence in him x x x considering
that (said employer) had already lost trust and confidence in complainant which is founded on a
reasonable ground, as discussed earlier, (and therefore) there is no point in requiring respondent to
reinstate complainant to his former position x x (as to) do so would be tantamount to compelling the
management to employ someone whom it can no longer trust, which is oppressive.”

It was merely “the manner in which such a dismissal from employment was effected x x (that was
deemed as) not in accordance with law, (there having been) failure to comply with the notice
requirement under Batas Pambansa Blg. 130 on termination of employees.” That imperfection is,
however, a circumstance quite distinct from the existence of what the NLRC has clearly and expressly
conceded to be a “valid and lawful cause in the dismissal of complainant by respondent.” And this is
precisely the reason why, as already pointed out, the NLRC declined to accord to Alisasis all the
remedies or reliefs usually attendant upon an illegal termination of employment—e.g., reinstatement,
award of damages—although requiring payment by the employer of the sum of P1,000.00 simply on
account of its failure “to comply with the notice requirement under Batas Pambansa Blg. 130 on
termination of employees.” The situation is on all fours with that in the Wenphil Corporation Case,19
cited in this opinion’s opening paragraph, in which the following pronouncements, among others, were
made:

“Thus in the present case, where the private respondent, who appears to be of violent temper, caused
trouble during office hours and even defied his superiors as they tried to pacify him, should not be

_________________

19170 SCRA 67, 76; italics and parenthetical insertions supplied. The doctrine has since been applied to
other cases: SEE footnote 3,supra.

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Pepsi-Cola Sales and Advertising Union vs. Secretary of Labor

rewarded with re-employment and back wages. It may encourage him to do even worse and will render
a mockery of the rules of discipline that employees are required to observe. Under the circumstances
the dismissal of the private respondent for just cause should be maintained. He has no right to return to
his former employer.

However, the petitioner (employer) must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. x x Thus, it must be imposed a
sanction for its failure to give a formal notice and conduct an investigation as required by law before
dismissing x x (respondent) from employment. Considering the circumstances of this case petitioner
(employer) must indemnify the private respondent (employee) the amount of P1,000.00. The measure
of this award depends on the facts of each case and the gravity of the omission committed by the
employer.”

The petitioner union (PSAU) was therefore quite justified in considering Alisasis as a “member dismissed
for cause,” and hence disqualified under its amended by-laws to claim any “Benefit or return of
contributions x x under any circumstances, x x.” The ruling to the contrary of the Med-Arbiter and the
Secretary of Labor and Employment must thus be set aside as tainted with grave abuse of discretion.

WHEREFORE, the petition is granted and the writ of certiorari prayed for issued, NULLIFYING and
SETTING ASIDE the challenged Order of the Med-Arbiter dated April 16, 1990 and the Resolution of the
respondent Secretary of Labor and Employment dated July 25, 1990, and DIRECTING THE DISMISSAL of
Alisasis’ complaint in NLRC Case No. NCR-Od-M-90-01-037, without pronouncement as to costs.

SO ORDERED.
Padilla, Regalado and Nocon, JJ., concur.

Paras, J., Retired as of July 4, 1992.

Petition granted; order and resolution nullified and set aside.

Note.—Labor arbiters have adjudicative powers to try and decide, or hear and determine any claims
brought before them for recovery of wages, simple money claims, and other benefits

852

852

SUPREME COURT REPORTS ANNOTATED

Bernardo, Jr. vs. Mejia

(Baritua vs. Secretary of the Department of Labor and Employment, 204 SCRA 332).

——o0o——

© Copyright 2017 Central Book Supply, Inc. All rights reserved. Pepsi-Cola Sales and Advertising Union
vs. Secretary of Labor, 211 SCRA 843, G.R. No. 97092 July 27, 1992

VOL. 165, AUGUST 31, 1988

239

Rodriguez vs. Director, Bureau of Labor Relations

Nos. L-76579-82. August 31, 1988.*

BENEDICTO RODRIGUEZ, etc., petitioner vs. HON. DIRECTOR, BUREAU OF LABOR RELATIONS, CARLOS
GALVADORES and LIVI MARQUEZ, respondents.

No. L-80504. August 31, 1988.*

REY C. SUMANGIL, VIRGILIO V. HERNANDEZ, et al., petitioners, vs. MANOLITO PARAN, ROSALINDA DE
GUZMAN, FREE TELEPHONE WORKERS UNION, PHILIPPINE LONG DISTANCE TELEPHONE CO., and HON.
PURA FERRER-CALLEJA, respondents.

Labor; Unions; General elections for union officers; Elections for union officers which were attended
by grave irregularities, held invalid.—A review of the record fails to disclose any grave abuse of
discretion tainting the adjudgment of respondent Director of Labor Relations that the general
elections for union officers held in 1986 were attended by grave irregularities, rendering the elections
invalid. That finding must thus be sustained. The dates for provincial elections were set for July 14 to
18, 1986. But they were in fact held on July 21 and 22, 1986, without prior notice to all voting
members, and without ground rules duly prescribed therefor. The elections in Metro Manila were
conducted under no better circumstances. It was held on July 25, 1986 in disregard and in defiance of
the temporary restraining order properly issued by the Med-Arbiter on July 23, 1986, notice of which
restraining order had been regularly served on the same date, as the proofs adequately show, on both
the Union President, Manolito Paran, and the Chairman of the Union COMELEC, Benedicto Rodriguez.
Moreover, as in the case of the provincial elections, there were no ground rules or guidelines set for
the Metro Manila elections. Undue haste, lack of adequate safeguards to ensure integrity of the
voting, and absence of notice of the dates of balloting, thus attended the elections in the provinces
and in Metro Manila. They cannot but render the proceedings void.

Same; Same; Same; Free and honest elections are indispensable to the enjoyment by employees and
workers of their right to self-organization; The right would be diluted if the election is not fairly

________________

* FIRST DIVISION.

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Rodriguez vs. Director, Bureau of Labor Relations

and honestly conducted.—It goes without saying that free and honest elections are indispensable to
the enjoyment by employees and workers of their constitutionally protected right to self-
organization. That right “would be diluted if in the choice of the officials to govern x x (union) affairs,
the election is not fairly and honestly conducted,” and the labor officers concerned and the courts
have the duty “to see to it that no abuse is committed by any official of a labor organization in the
conduct of its affairs.”

Same; Same; Same; The assent of 30% of the union membership is not a factor in the acquisition of
jurisdiction by the Bureau of Labor Relations over all inter-union and intra-union conflicts, and all
disputes, grievances or problems arising from labor-management relations; Use of the permissive
word “may” in Article 242 of the Labor Code.—The respondent Director’s ruling, however, that the
assent of 30% of the union membership, mentioned in Article 242 of the Labor Code, was mandatory
and essential to the filing of a complaint for any violation of rights and conditions of membership in a
labor organization (such as the arbitrary and oppressive increase of union dues here complained of),
cannot be affirmed and will be reversed. The very article relied upon militates against the proposition.
It states that a report of a violation of rights and conditions of membership in a labor organization
may be made by “(a)t least thirty percent (30%) of all the members of a union or “any member or
members specially concerned.” The use of the permissive “may” in the provision at once negates the
notion that the assent of 30% of all the members is mandatory. More decisive is the fact that the
provision expressly declares that the report may be made, alternatively by “any member or members
specially concerned.” And further confirmation that the assent of 30% of the union members is not a
factor in the acquisition of jurisdiction by the Bureau of Labor Relations is furnished by Article 226 of
the same Labor Code, which grants original and exclusive jurisdiction to the Bureau, and the Labor
Relations Division in the Regional Offices of the Department of Labor, over “all inter-union and intra-
union conflicts, and all disputes, grievances or problems arising from or affecting labor management
relations,” making no reference whatsoever to any such 30%-support requirement. Indeed, the
officials mentioned are given the power to act “on all inter-union and intra-union conflicts (1) “upon
request of either or both parties” as well as (2) “at their own initiative.”

Same; Same; Same; Petition to nullify the union elections clearly involved an intra-union conflict over
which jurisdiction could be assumed by the Labor Relations Director or the Med-Arbiters.—

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Rodriguez vs. Director, Bureau of Labor Relations

These considerations apply equally well to controversies over elections. In the cases at bar, the
petition to nullify the 1986 union elections could not be deemed defective because it did not have the
assent of 30% of the union membersip. The petition clearly involved an intra-union conflict—one
directly affecting the right of suffrage of more than 800 union members and the integrity of the union
elections—over which, as the law explicitly provides, jurisdiction could be assumed by the Labor
Relations Director or the Med-Arbiters “at their own initiative” or “upon request of either or both
parties.”

Same; Same; Same; Union Dues; The resolution of the union’s Legislative Council increasing the union
dues is illegal and void because it does not bear the signature of at least two-thirds of the members of
the Council as required by the union’s constitution and by-laws, and the absence of proper ratification
of the resolution by a majority of the general union membership at a plebiscite.—As regards the final
issue concerning the increase of union dues, the respondent Director found that the resolution of the
union’s Legislative Council to this effect does not bear the signature of at least two-thirds (2/3) of the
members of the Council, contrary to the requirement of the union constitution and bylaws; and that
proof is wanting of proper ratification of the resolution by a majority of the general union
membership at a plebiscite called and conducted for that purpose again in violation of the
constitution and by laws. The resolution increasing the union dues must therefore be struck down, as
illegal and void, arbitrary and oppressive. The collection of union dues at the increased rates must be
discontinued; and the dues thus far improperly collected must be refunded to the union members or
held in trust for disposition by them in accordance with their charter and rules, in line with this
Court’s ruling in a parallel situation.

PETITION for certiorari to review the decision of the Bureau of Labor Relations.

The facts are stated in the opinion of the Court.


Conrado Leaño for petitioner in G.R No. 76579-82 and private respondent in G.R. No. 80504.

King and Adorio Law Offices for petitioners in G.R. No. L-80504.

Potenciano Flores for private respondent Marquez in G.R. No. 76579-82.

The Solicitor General for public respondent.

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SUPREME COURT REPORTS ANNOTATED

Rodriguez vs. Director, Bureau of Labor Relations

NARVASA, J.:

The above entitled special civil actions of certiorari were separately instituted but have been
consolidated because they involve disputes among employees of the Philippines Long Distance
Telephone Company (PLDT), who are members of the same union, the Free Telephone Workers Union
(FTWU). The disputes concern the validity of the general elections for union officers in 1986, and the
increase of union dues adopted and put into effect by the incumbent officers subsequent to said
elections.

G.R. Nos. 76579-82: Controversy Respecting Elections of Officers

Assailed by the petitioners in G.R. No. 76579-82 are (1) the decision dated October 10, 1986 of the
Director of Labor Relations (BLR) annulling the elections of officers of the labor union above mentioned,
FTWU, and (2) the resolution dated October 30, 1986, denying their motion for reconsideration of the
decision.

The union’s by-laws provide for the election of officers every three (3) years, in the month of July.
Pursuant thereto, the union’s Legislative Council set the provincial elections for its officers on July 14 to
18, 1986, and those for Metro Manila on July 25, 1986.

The same Council also quite drastically raised the fees for the filing of certificates of candidates which
had therefore ranged from P75.00 to P100.00. The filing fee for each candidate for president of the
labor organization was increased to P3,000; that for each candidate for vice-president, secretary-
general, treasurer and auditor, to P2,000.00; and that for assistant secretary, assistant treasurer and
assistant auditor, to P1,000.00 each.

Bureau of Labor Relations Cases: Nos. LRD-M-7-503-86 & LRD-M-7-504-86

Although the increased fees were paid in due course by the candidates, no less than two complaints
were filed with the

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Rodriguez vs. Director, Bureau of Labor Relations

Bureau of Labor Relations for their invalidation as excessive, prohibitive and arbitrary. One, docketed as
Case No. LRD-M-7-503-86, was presented by Rey Sumangil, a candidate for president, and the members
of his slate. The other, Case No. LRD-M-7-504-86, was filed by Carlos Galvadores, also a presidential
candidate, and his group. Impleaded as respondents in both complaints were Benedicto Rodriguez, the
Chairman of the Commission on Elections of the union, and the incumbent union officers, headed by the
president, Manolito Paran. Acting on the complaints, the Med-Arbiter issued on July 8, 1986 a
restraining order against the enforcement of the new rates of fees.

Other BLR Cases: Nos. LRD-M-7-557-86 and LRD-M-7-559-86

It appears that notwithstanding the cases questioning the candidates’ fees, the elections for the
provinces of Visayas and Mindanao and certain areas of Luzon were nevertheless held on July 21 and 22,
1986, which are dates different from those specified by the Legislative Council (i.e., July 14 to 18, 1986).
The validity of the elections was very shortly challenged on the ground of lack of (1) due notice and (2)
adequate ground rules. Carlos Galvadores and his fellow candidates filed on July 22, 1986 a petition with
the BLR, docketed as Case No. LRD-M-7-557-86, praying that the Union’s COMELEC be directed to
promulgate ground rules for the conduct of the provincial elections. On the day following, Livi Marquez,
a candidate for vice-president, together with other candidates in his ticket, filed another petition against
the same Union COMELEC and Manolito Paran, the union president—docketed as Case No. LRD-M-7-
559-86—seeking to restrain the holding of the elections scheduled on July 25, 1986 in the Metro Manila
are until (1) ground rules therefor had been formulated and made known to all members of the labor
organization, and (2) the issue of the filing fees had been finally decided. In connection with these
complaints, a temporary restraining order was issued on July 23, 1986 prohibiting the holding of
elections on July 25, 1986.

The restraining order notwithstanding, the Union COME-

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Rodriguez vs. Director, Bureau of Labor Relations

LEC proceeded with the general elections in all the PLDT branches in Metro Manila on July 25, 1986. It
then reported that as of July 15, 1986 the number of qualified voters was 9,429 of which 6,903 actually
voted, the percentage of turn-out being 73%, and that those who obtained the highest number of votes
for the various elective positions were:

Manolito Paran
President

3,030 votes

Eduardo de Leon

1st Vice-President

2,185 votes

Efren de Lima

2nd Vice-President

2,806 votes

Roger Rubio

Secretary General

2,462 votes

Virgilio Tulay

Asst. Sec. General

2,924 votes

Rosalinda de Guzman

Treasurer

2,659 votes

Filmore Dalisay

Asst. Treasurer

2,525 votes

Damiana Yalung

Auditor

2,942 votes

Jaime Pineda

Asst. Auditor

3,082 votes

Livi Marquez and Carlos Galvadores, and their respective groups, forthwith filed separate motions
praying that the COMELEC be declared guilty of contempt for defying the temporary restraining order,
and for the nullification not only of the Metro Manila elections of July 25, 1986 but also the provincial
elections of July 21 and 22, 1986.
The four (4) cases were jointly decided by Med-Arbiter Rasidali Abdullah on August 28, 1986. His
judgment denied the petitions to nullify the elections, as well as the motion for contempt, but
invalidated the increase in rates of filing fees for certificates of candidacies. The judgment accorded
credence to the Union COMELEC’s averment that it had not received the restraining order on time. It
took account, too, of the fact that the turn-out of voters was 73%, much higher than the turn-out of 62%
to 63% in prior elections, which fact, in the MedArbiter’s view was a clear manifestation of the union
members’ desire to go ahead with the elections and express their will therein.

This judgment was however overturned by the Officer-in-Charge of Labor Relations, on appeal
seasonably taken. The OIC’s decision, dated October 10, 1986 nullified the general elections in the
provinces and Metro Manila on the ground of (1) lack of notice to the candidates and voters, (2) failure
to disseminate the election ground rules to all parties concerned,

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Rodriguez vs. Director, Bureau of Labor Relations

and (3) disregard of the temporary restraining order of the Med-Arbiter. The decision stressed the
following points:1

“The undue haste with which the questioned general elections were held raises doubts as to its validity.
In its desire to conduct the elections as scheduled, the respondents unwittingly disregarded mandatory
procedural requirements. The respondents’ pretensions that the appellants were duly furnished with
the ground rules/guide-lines of the general elections and that the same were properly disseminated to
the qualified voters of the union are not supported by the records.

“x x x x

“Moreover, the Union’s Comelec did not follow the schedule of election outlined in the guidelines.
Specifically, the guidelines fixed the elections in Visayas-Mindanao on July 14, 16 and 18, 1986, in
Northern Luzon, on July 16, 17, 18 and 21, 1986 and in Southern Luzon on July 16, 17 and 18, 1986
(records, pp. 67-70). Surprisingly, however, the Union’s Comelec conducted the elections in Northern
and Southern Luzon on July 21, and 22, 1986 and in Visayas-Mindanao on July 25, 1986 without proper
notice to the appellants.

“Accordingly, the unwarranted failure of the Union’s Comelec to duly furnish the appellants the
guidelines and properly disseminate the same to the voters, and the holding of the elections not in
accordance with the schedule set by the guidelines and in open defiance of the July 23, 1986 Restraining
Order, precipitated an uncalled for confusion among the appellants’ supporters and unduly prevented
them from adopting the appropriate electoral safeguards to protect their interests. Under the
circumstances, this Office is constrained to invalidate the general elections held on July 21, 22 and 25,
1986 and declare the results thereof null and void.
“Furthermore, only 6,903 out of the 9,426 qualified voters trooped to the polls during the July 21, 22
and 25, 1986 general elections. Considering the closeness of the result of the elections, the 2,056
qualified voters, if they were able to cast their votes, could have drastically altered the results of the
elcetions. But more important, the disenfranchisement of the remaining 27% qualififed voters is a
curtailment of Trade Unionism implicitly ordained in the worker’s right to self-organization explicitly
protected by the Constitution.

“x x x x

“The submission of the respondents that they did not receive a copy of the injunctive order is
completely rebuffed by the records. It

_______________

1 Rollo, pp. 68-69.

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Rodriguez vs. Director, Bureau of Labor Relations

appears that the same was received and signed by a certain Cenidoza for respondent Manolito Paran at
4:30 P.M. of July 23, 1986 and by respondent Benedicto Rodriguez himself, also on July 23, 1986 at 4:30
P.M. In the case of Manolitao Paran, the restraining order in question was served at his office/postal
address at Rm. 310 Regina Bldg., Escolta, Manila.”

It is this decision of the BLR Officer-in-Charge which is the subject of the certiorari actions filed in this
Court by Benedicto Rodriguez, the chairman of the Union COMELEC, and docketed as G.R. Nos. 76579-
82. He claims the decision was rendered with grave abuse of discretion considering that (a) the Med-
Arbiter had found no fraud or irregularity in the elections; (b) the election was participated in by more
than 73% of the entire union membership; and (c) the petition for nullity was not supported by 30% of
the general membership.

G.R. No. 80504: Controversy Respecting Labor Union Dues

The terms of office of the old officers (Manolito Paran, et al.) ended in August, 1986. However, the new
set of officers (headed by the same Manolito Paran) apparently could not assume office under a new
term because of the proceedings assailing the validity of the elections pending before the Bureau of
Labor Relations. What happened was that the old officers continued to exercise the functions of their
respective offices under the leadership of Manolito Paran.

On January 17, 1987, the Legislative Council of the union passed a resolution which generated another
controversy. That resolution increased the amount of the union dues from P21.00 to P50.00 a month. It
was then presented to the general membership for ratification at a referendum called for the purpose.
Rey Sumangil and his followers objected to the holding of the referendum. When their objection went
unheeded, they and their supporters, all together numbering 829 or so, boycotted the referendum and
formally reiterated their protest against it. Subsequently the union officers announced that the
referendum has resulted in a ratification of the increased union dues.

On March 1, 1987 Manolito Paran requested the PLDT to deduct the union dues at the new, increased
rates, from the

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Rodriguez vs. Director, Bureau of Labor Relations

salaries of all union members and dispense with their individual written authorizations therefor. PLDT
acceded to the request and effected the check-off of the increased dues for the payroll period from
March 1 to March 15, 1987.

BLR Case No. NCR-OD-M-7-3-206-87

Once again Rey Sumangil and his followers hied themselves off to the Bureau of Labor Relations. They
filed a petition on March 26, 1987 challenging the resolution for the increase in union dues, docketed as
BLR Case No. NCR-OD-M-73-206-87. They contended that since the terms of the members of the
Legislative Council who approved the resolution had already expired in August, 1986, and their
reelection had been nullified by the Bureau, they had no authority to act as members of the council;
consequently, it could not be said that the resolution for the increase of union dues had been approved
by 2/3 vote of the Council members, as provided by the union constitution and by laws; hence, the
resolution was void. They further contended that there had been no valid ratification of the resolution
because the plebiscite had been “rigged.”

Once again Rey Sumangil and his group were unsuccessful in proceedings at the level of the Med-
Arbiter. The latter denied their petition on the ground of lack of support of at least 30% of all members
of the union, citing Article 242 of the Labor Code which reads as follows:

“Art. 242.—Rights and conditions of membership in a labor organization.—x x Any violation of the above
rights and conditions of membership shall be a ground for cancellation of union registration and
expulsion of officer from office, whichever is appropriate. At least thirty percent (30%) of all the
members of a union or any member or members specially concerned may report such violation to the
Bureau. The Bureau shall have the power to hear and decide any reported violation to mete the
appropriate penalty.”

Again Sumangil and his group went up on appeal to the Director of Labor Relations, before whom they
raised the issue of whether or not the petition in fact had the support of at least 30% of the members,
and said 30%-support was indeed a condition sine qua non for acquisition by the Med-Arbiters (in

248
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Rodriguez vs. Director, Bureau of Labor Relations

the Labor Relations Division in a Regional Office of the MOLE) of jurisdiction over the case. Again
Sumangil and his followers were successful in their appeal.

On July 1, 1987 the Director of Labor Relations rendered a decision reversing that of the Med-Arbiter.
The Director ordered the cessation of the collection of the twenty-nine peso increase and the return of
the amounts already collected. In the first place, according to her, the petition was supported by 6,022
signatures, a number comprising more than 30% of the total membership of the union (10,413). In the
second place, the Director ruled, even assuming the contrary, the lack of 30%-support will not preclude
the BLR from taking cognizance of the petition where there is a clear violation of the rights and
conditions of union membership because Article 226 of the Labor Code, expressly confers on it the
authority to act on all intra-union and inter-union conflicts and grievances affecting labor and
management relations, at the instance of either or both parties. The provision cited reads as follows:

“Art. 226.—Bureau of Labor Relations.—The Bureau of Labor Relations and the Labor Relations division
in the Regional Offices of the Department of Labor shall have original and exclusive authority to act, at
their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts,
and all disputes, grievances or problems arising from or affecting labor management relations xx.”

As regards Article 242 of the Labor Code, relied upon by the Med-Arbiter, the Director expressed the
view that the 30%-support therein provided is not mandatory, and is not a condition precedent to the
valid presentation of a grievance before the Bureau of Labor Relations. The Director ruled, finally, that
Sumangil and the other union members had a valid grievance calling for redress, since the record
disclosed no compliance with the requirement that the resolution for the increase of union dues be
passed by at least 2/3 vote of the members of the Legislative Council and be ratified by a majority of the
entire membership at a plebiscite.

But not long afterwards, the Director reversed herself. The Manggagawa sa Komunikasyon sa Pilipinas
(MKP)—with which Paran’s Union, the FTWU, is affiliated—intervened in the case

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Rodriguez vs. Director, Bureau of Labor Relations

and moved for reconsideration of her decision. By resolution dated October 1, 1987, the Director set
aside her decision of July 1, 1987 and entered a new one dismissing the petition of Sumangil and
company, in effect affirming the Med-Arbiter’s order. The Director opined that the intervenor (MKP)
was correct in its contention that there was no 30%-membership-support for the petition, since only 829
members had signed their support therefor, as correctly found by the Med-Arbiter, and because of this,
the BLR never acquired jurisdiction over the case. According to her:2

“The rationale for such requirement is not difficult to discern. It is to make certain that there is a prima
facie case against prospective respondents whether it be the union or its officers and thus forestall
nuisance or harassment petitions/complaints. The requirement was intended to shield the union from
destabilization and paralyzation coming from adventurous and ambitious members or non-members
engaged in union politics under the guise of working for the union welfare.

“x x As found out by the Med-Arbiter in the Office of origin all signatures except that of 829 were
obtained without the knowledge of the signatories. At this point we cannot permit 829 members to
‘rock the boat.’ so to speak, of a union which has at present ten thousand four hundred and thirteen
(10,413) passengers.”

In an effort to set aside this reversing resolution of the Labor Relations Director, Rey Sumangil and his
group have come to this Court via the instant special civil action of certiorari. In their petition they insist
that the support of 30% of the union membership is not a jurisdictional requirement for the ventilation
of their grievance before the BLR; and assuming the contrary, they have proven that 3,50l workers had
in fact joined in the petition, constituting 33% of the total membership. They also emphasize the validity
of their grievance, drawing attention to the absence of the requisite 2/3 vote essential for validity of any
resolution increasing the rates of union dues, and the doubtful result of the referendum at which the
resolution had allegedly been ratified.

Three issues are thus presented to the Court in these cases.

________________

2 Rollo, pp. 21-22.

250

250

SUPREME COURT REPORTS ANNOTATED

Rodriguez vs. Director, Bureau of Labor Relations

The first involves the validity of the 1986 general elections for union officers; the second, whether or not
30%-membership support is indispensable for acquisition of jurisdiction by the Bureau of Labor
Relations of a complaint for alleged violation of rights and conditions of union members; and third, the
validity of the increase in union dues.

The General Elections of 1986

A review of the record fails to disclose any grave abuse of discretion tainting the adjudgment of
respondent Director of Labor Relations that the general elections for union officers held in 1986 were
attended by grave irregularities, rendering the elections invalid. That finding must thus be sustained.
The dates for provincial elections were set for July 14 to 18, 1986. But they were in fact held on July 21
to 22, 1986, without prior notice to all voting members, and without ground rules duly prescribed
therefor. The elections in Metro Manila were conducted under no better circumstances. It was held on
July 25, 1986 in disregard and in defiance of the temporary restraining order properly issued by the
Med-Arbiter on July 23, 1986, notice of which restraining order had been regularly served on the same
date, as the proofs adequately show, on both the Union, President, Manolito Paran, and the Chairman
of the Union COMELEC, Benedicto Rodriguez. Moreover, as in the case of the provincial elections, there
were no ground rules or guidelines set for the Metro Manila elections. Undue haste, lack of adequate
safeguards to ensure integrity of the voting, and absence of notice of the dates of balloting, thus
attended the elections in the provinces and in Metro Manila. They cannot but render the proceedings
void.

The claim that there had been a record-breaking voter turnout of 73%, even if true, cannot purge the
elections of their grave infirmities. The elections were closely contested. For example, in the presidential
contest, Manolito Paran appeared to have won over Rey Sumangil by only 803 votes, and in the vice-
presidential race, Eduardo de Leon won over Dominador Munar by only 204 votes. These results would
obviously have been affected by the ballots of the 2,056 voters who had been unable to cast their votes
because of lack of notice of actual

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Rodriguez vs. Director, Bureau of Labor Relations

dates of the elections.

It goes without saying that free and honest elections are indispensable to the enjoyment by employees
and workers of their constitutionally protected right to self-organization. That right “would be diluted if
in the choice of the officials to govern x x (union) affairs, the election is not fairly and honestly
conducted,” and the labor officers concerned and the courts have the duty “to see to it that no abuse is
committed by any official of a labor organization in the conduct of its affairs.”3

The Matter of 30%-Support for Complaints for Violations of Union Membership Rights

The respondent Director’s ruling, however, that the assent of 30% of the union membership, mentioned
in Article 242 of the Labor Code, was mandatory and essential to the filing of a complaint for any
violation of rights and conditions of membership in a labor organization (such as the arbitrary and
oppressive increase of union dues here complained of), cannot be affirmed and will be reversed. The
very article relied upon militates against the proposition. It states that a report of a violation of rights
and conditions of membership in a labor organization may be made by “(a)t least thirty percent (30%) of
all the members of a union or any member or members specially concerned.”4 The use of the
permissive “may” in the provision at once negates the notion that the assent of 30% of all the members
is mandatory. More decisive is the fact that the provision expressly declares that the report may be
made, alternatively by “any member or members specially concerned.” And further confirmation that
the assent of 30% of the union members is not a factor in the acquisition of jurisdiction by the Bureau of
Labor Relations is furnished by Article 226 of the same Labor Code, which grants original and exclusive
jurisdiction to the Bureau, and the Labor Relations Division in the Regional Offices of the Department of
Labor, over “all interunion and intra-union conflicts, and all disputes, grievances or problems arising
from or affecting labor management rela-

________________

3 Pasudeco v. BLR, 101 SCRA 732.

4 Italics supplied.

252

252

SUPREME COURT REPORTS ANNOTATED

Rodriguez vs. Director, Bureau of Labor Relations

tions,” making no reference whatsoever to any such 30%-support requirement. Indeed, the officials
mentioned are given the power to act “on all inter-union and intra-union conflicts (1) “upon request of
either or both parties” as well as (2) ”at their own initiative.” There can thus be no question about the
capacity of Rey Sumangil and his group of more than eight hundred, to report and seek redress in an
intra-union conflict involving a matter they are specially concerned, i.e., the rates of union dues being
imposed on them.

These considerations apply equally well to controversies over elections. In the cases at bar, the petition
to nullify the 1986 union elections could not be deemed defective because it did not have the assent of
30% of the union membership. The petition clearly involved an intra-union conflict—one directly
affecting the right of suffrage of more than 800 union members and the integrity of the union
elections—over which, as the law explicitly provides, jurisdiction could be assumed by the Labor
Relations Director or the Med-Arbiters “at their own initiative” or “upon request of either or both
parties.”

The assumption of jurisdiction by the Med-Arbiter and the Labor Relations Director over the cases at bar
was entirely proper. It was in fact their duty to do so, given the facts presented to them. So this Court
has had occasion to rule:5

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

“For the protection of union members and in order that the affairs of the union may be administered
honestly, labor officials should be vigilant and watchful in monitoring and checking the administration of
union affairs.
“Laxity, permissiveness, neglect and apathy in supervising and regulating the activities of union officials
would result in corruption and oppression. Internal safeguards within the union can easily be ignored or
swept aside by abusive, arrogant and unscrupulous union officials to the prejudice of the members.

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

_______________

5 Duyag v. Inciong, 98 SCRA 522, 533.

253

VOL. 165, AUGUST 31, 1988

253

Rodriguez vs. Director, Bureau of Labor Relations

As regards the final issue concerning the increase of union dues, the respondent Director found that the
resolution of the union’s Legislative Council to this effect6 does not bear the signature of at least two-
thirds (2/3) of the members of the Council, contrary to the requirement of the union constitution and
by-laws; and that proof is wanting of proper ratification of the resolution by a majority of the general
union membership at a plebiscite called and conducted for that purpose, again in violation of the
constitution and by-laws. The resolution increasing the union dues must therefore be struck down, as
illegal and void, arbitrary and oppressive. The collection of union dues at the increased rates must be
discontinued; and the dues thus far improperly collected must be refunded to the union members or
held in trust for disposition by them in accordance with their charter and rules, in line with this Court’s
ruling in a parallel situation,7 viz:

“. . . All amounts already collected must be credited accordingly in favor of the respective members
either for their future legal dues or other assessments or even delinquencies, if any. And if this
arrangement regarding the actual refund of what might be excessive dues is not acceptable to the
majority of the members, the matter may be decided in a general meeting called for the purpose.”

WHEREFORE, in G.R. Nos. 76579-82, the petition for certiorari is DISMISSED, no grave abuse of
discretion or other serious error having been shown in the decision of the respondent Director of Labor
Relations, said decision—ordering the holding of new elections for officers of the Free Telephone
Workers Union—being on the contrary in accord with the facts and the law, but in the G.R. No. 80504,
the petition for certiorari is granted, the challenged order dated October 1, 1987 is set aside, and the
decision of July 1, 1987 of the Labor Relations Director reinstated, modified only as to the treatment of
the excess collections which shall be disposed of in the manner herein indicated. Costs against petitioner
in G.R. Nos. 76579-82 and private respondents (except the PLDT) in G.R. No. 80504.

________________
6 Resolution No. 87-02, January 17, 1987.

7 San Miguel Corporation v. Noriel, 103 SCRA 185.

254

254

SUPREME COURT REPORTS ANNOTATED

Unitran/Bachelor Express, Inc. vs. Olvis

Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

Petition dismissed.

Note.—Certification election is invalid because certain irregularities such as that (1) The workers on the
night shift and same as those in the afternoon shift were not able to vote, so much so that out of 1,010
votes only 692 voted and about 318 failed to vote; (2) the secrecy of the ballot was not safeguarded; (3)
the election supervisors were remiss in their duties and were apparently “intimidated” by a union
representative; and (4) the participating unions were overzealous in wooing the employees to vote in
their favor by resorting to such tactics as giving free tricycle rides & T-shirts. (Confederation of Citizens
Labor Union (CCLU) vs. Novel, 116 SCRA 694.)

——o0o——

© Copyright 2017 Central Book Supply, Inc. All rights reserved. Rodriguez vs. Director, Bureau of Labor
Relations, 165 SCRA 239, Nos. L-76579-82, No. L-80504 August 31, 1988

CERTIFICATION ELECTION PROCEEDINGS

GENERALLY

ROLE OF EMPLOYER

G.R. No. 101730. June 17, 1993.*

PHILIPPINE TELEGRAPH AND TELEPHONE CORPORATION, petitioner, vs. HON. BIENVENIDO E.


LAGUESMA and PT&T SUPERVISORY EMPLOYEES UNION-APSOTEU, respondents.

Labor Law; Certification Election; Supervisory Employees; Case at Bar; Since no certified bargaining
agent represented the supervisory employees, PT&T may be deemed an unorganized establishment
within the purview of Art. 257 of the Labor Code.—The applicable provision of law in the case at bar is
Art. 257 of the Labor Code. It reads—“Art. 257.

________________
18 Decision of the Court of Appeals, Rollo, p. 40.

* FIRST DIVISION.

453

VOL. 223, JUNE 17, 1993

453

Phil. Telegraph and Telephone Corp. vs. Laguesma

Petitions in unorganized establishments.—In any establishment where there is no certified bargaining


agent, a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a
petition by a legitimate labor organization” (italics supplied). The supervisory employees of PT&T did
not yet have a certified bargaining agent to represent them at the time the UNION, which is a
legitimate labor organization duly registered with the Department of Labor and Employment, filed the
petition for certification election. Since no certified bargaining agent represented the supervisory
employees, PT&T may be deemed an unorganized establishment within the purview of Art. 257 of the
Labor Code.

Same; Same; Same; It is a well settled rule that an employer has no standing to question a
certification election since it is the sole concern of the workers, unless the former filed the
certification election itself pursuant to Art. 258 of the Labor Code.—It is well-settled that an employer
has no standing to question a certification election since this is the sole concern of the workers. The
only exception to this rule is where the employer has to file the petition for certification election itself
pursuant to Art. 258 of the Labor Code because it was requested to bargain collectively. But, other
than this instance, the choice of a collective bargaining agent is purely the internal affair of labor.

PETITION for review on certiorari of the decision of the Undersecretary of Labor.

The facts are stated in the opinion of the Court.

Leonard U. Sawal for private respondent.

BELLOSILLO, J.:

Can a petition for certification election filed by supervisory employees of an unorganized


establishment—one without a certified bargaining agent—be dismissed on the ground that these
employees are actually performing managerial functions?

This is the issue for consideration in this petition for certiorari and mandamus, with prayer for the
issuance of a temporary restraining order, of the Resolution of 11 June 19911 of then Acting Secretary of
Labor and Employment Nieves D. Confesor
________________

1 Annex “A”, Petition; Rollo, pp. 22-26.

454

454

SUPREME COURT REPORTS ANNOTATED

Phil. Telegraph and Telephone Corp. vs. Laguesma

dismissing the appeal from the Order of 11 December 19902 of the Med-Arbiter which granted the
petition for certification election, and of the Order of 15 August 19913 denying reconsideration.

On 22 October 1990, private respondent PT&T Supervisory Employees Union-APSOTEU (UNION, for
brevity) filed a petition before the Industrial Relations Division of the Department of Labor and
Employment praying for the holding of a certification election among the supervisory employees of
petitioner Philippine Telegraph & Telephone Corporation (PT&T, for brevity). On 29 October 1990,
UNION amended its petition to include the allegation that PT&T was an unorganized establishment
employing roughtly 100 supervisory employees from whose ranks will constitute the bargaining unit
sought to be established.

On 22 November 1990, PT&T moved to dismiss the petition for certification election on the ground that
UNION members were performing managerial functions and thus were not merely supervisory
employees. Moreover, PT&T alleged that a certified bargaining unit already existed among its rank-and-
file employees which barred the filing of the petition.

On 27 November 1990, respondent UNION opposed the motion to dismiss, contending that under the
Labor Code supervisory employees are not eligible to join the labor organization of the rank-and-file
employees although they may form their own.

On 4 December 1990, PT&T filed its reply to the opposition and manifested that it is the function of an
employee which is determinative of whether said employee is a managerial or supervisory employee.

On 11 December 1990, the Med-Arbiter granted the petition and ordered that “a certification election x
x x (be) conducted among the supervisory personnel of the Philippine Telegraph & Telephone
Corporation (PT&T).”4 Petitioner PT&T appealed to the Secretary of Labor and Employment.

On 24 May 1991, PT&T filed its supplemental appeal and attached copies of the job descriptions and
employment service records of these supervisory employees, including samples of

________________

2 Annex “G”, Petition; Rollo, pp. 28-30.


3 Annex “B”, Petition; Rollo, pp. 28-30.

4 Annex “G”, Petition, p. 3; Rollo, p. 52.

455

VOL. 223, JUNE 17, 1993

455

Phil. Telegraph and Telephone Corp. vs. Laguesma

memoranda and notices they made which purportedly illustrate their exercise of management
prerogatives. On 31 May 1991, petitioner submitted more job descriptions to further bolster its
contention.

On 11 June 1991, then Acting Secretary of Labor and Employment Nieves R. Confesor denied petitioner’s
appeal for lack of merit. However, she did not rule on the additional evidence presented by PT&T.
Instead, she directed that the evidence “should be scrutinized and x x x considered during the
exclusioninclusion proceedings where the employees who should be part of the bargaining unit x x x will
be determined.”5

On 15 August 1991, respondent Undersecretary of Labor and Employment Bienvenido E. Laguesma


denied reconsideration of the resolution dismissing the appeal. Hence, the instant petition anchored on
the ground that public respondent committed grave abuse of discretion in failing to rule on the
additional evidence submitted by petitioner which would have buttressed its contention that there were
no supervisory employees in its employ and which, as a consequence, would have barred the holding of
a certification election.

The petition is devoid of merit.

The applicable provision of law in the case at bar is Art. 257 of the Labor Code. It reads—

“Art. 257. Petitions in unorganized establishments.—In any establishment where there is no certified
bargaining agent, a certification election shall automatically be conducted by the Med-Arbiter upon the
filing of a petition by a legitimate labor organization” (italics supplied).

The supervisory employees of PT&T did not yet have a certified bargaining agent to represent them at
the time the UNION, which is a legitimate labor organization duly registered with the Department of
Labor and Employment,6 filed the petition for certification election. Since no certified bargaining agent
represented the supervisory employees, PT&T may be deemed an unorganized establishment within the
purview of Art. 257 of the Labor Code.

________________

5 Annex “A”, Petition, p. 3; Rollo, p. 25.

6 Rollo, p. 32.
456

456

SUPREME COURT REPORTS ANNOTATED

Phil. Telegraph and Telephone Corp. vs. Laguesma

The fact that petitioner’s rank-and-file employees were already represented by a certified bargaining
agent does not make PT&T an organized establishment vis-a-vis the supervisory employees. After all,
supervisory employees are “not x x x eligible for membership in a labor organization of the rank-and-file
employees.”7

Consequently, the Med-Arbiter, as sustained by public respondent, committed no grave abuse of


discretion in granting the petition for certification election among the supervisory employees of
petitioner PT&T because Art. 257 of the Labor Code provides that said election should be automatically
conducted upon filing of the petition. In fact, Sec. 6 of Rule V, Book V, of the Implementing Rules and
Regulations makes it mandatory for the Med-Arbiter to order the holding of a certification election. It
reads—

“Sec. 6. Procedure.—Upon receipt of a petition, the Regional Director shall assign the case to a Med-
Arbiter for appropriate action. The Med-Arbiter, upon receipt of the assigned petition, shall have twenty
(20) working days from submission of the case for resolution within which to dismiss or grant the
petition.

In a petition filed by a legitimate organization involving an unorganized establishment, the Med-Arbiter


shall immediately order the conduct of a certification election x x x” (italics supplied)

Furthermore, PT&T did not possess the legal personality to file a motion to dismiss the petition for
certification election even if based on the ground that its supervisory employees are in reality
managerial employees. It is well-settled that an employer has no standing to question a certification
election8 since this is the sole concern of the workers.9 The only exception to this rule is

________________

7 Art. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory
employees.—Managerial employees are not eligible to join, assist or form any labor organization.
Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of their own (italics supplied).

8 California Manufacturing Corporation v. Laguesma, G.R. No. 97020, 8 June 1992, 209 SCRA 606.

9 Asian Design and Manufacturing Corporation v. Calleja, G.R.

457
VOL. 223, JUNE 17, 1993

457

Phil. Telegraph and Telephone Corp. vs. Laguesma

where the employer has to file the petition for certification election itself pursuant to Art. 25810 of the
Labor Code because it was requested to bargain collectively. But, other than this instance, the choice of
a collective bargaining agent is purely the internal affair of labor.11

What PT&T should have done was to question the inclusion of any disqualified employee in the
certification election during the exclusion-inclusion proceedings before the representation officer.
Indeed, this is precisely the purpose of the exclusion-inclusion proceedings, i.e., to determine who
among the employees are entitled to vote and be part of the bargaining unit sought to be certified.

Then Acting Secretary Nieves D. Confesor therefore did not abuse her discretion when she opted not to
act upon the additional evidence presented by petitioner PT&T. For, the holding of a certification
election in an unorganized establishment is mandatory and must immediately be ordered upon petition
by a legitimate labor organization, which is the case here.

At any rate, the additional evidence presented by petitioner failed to sufficiently show that the
supervisory employees who sought to be included in the bargaining unit were in fact performing
managerial functions. On the contrary, while these supervisory employees did exercise independent
judgment which is not routinary or clerical in nature, their authority was merely recommendatory in
character. In all instances, they were still accountable for their actions to a superior officer, i.e., their
respective superintendents. The Solicitor General succinctly puts it thus—

“A perusal of petitioner’s annexes x x x would readily show that the power of said supervisors in matters
relating to the exercise of

________________

No. 77415, 29 June 1989, 174 SCRA 477.

10 Art. 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 x x x.

11 Trade Unions of the Philippines and Allied Services v. Trajano, G.R. No. 61153, 17 January 1983, 120
SCRA 64.

458

458

SUPREME COURT REPORTS ANNOTATED

Phil. Telegraph and Telephone Corp. vs. Laguesma


prerogatives for or against rank-and-flle employees is not absolute but merely recommendatory in
character. Note that their reports recommending or imposing disciplinary action against rank-and-file
employees always bore the concurrence of one or two superiors x x x and the job descriptions x x x
clearly stated that these supervisors directly reported to a superior and were accountable to the
latter”12 (italics supplied).

As the Med-Arbiter himself noted, “it is incredible that only rank-and-file and managerial employees are
the personnel of respondent firm, considering the line of service it offers to the public”13 and the fact
that it employed 2,500 employees, more or less, all over the country.

A word more. PT&T alleges that respondent UNION is affiliated with the same national federation
representing its rank-and-file employees. Invoking Atlas Lithographic Services, Inc. v. Laguesma,14 PT&T
seeks the disqualification of respondent UNION. Respondent, however, denied it was affiliated with the
same national federation of the rank-and-file employees union, the Associated Labor Union or ALU. It
clarified that the PT&T Supervisory Employees Union is affiliated with Associated Professional,
Supervisory Office, Technical Employees Union or APSOTEU, which is a separate and distinct national
federation from ALU.

IN VIEW OF THE FOREGOING, the Petition for Certiorari and Mandamus with prayer for the issuance of a
temporary restraining order is DENIED.

Costs against petitioner.

SO ORDERED.

Cruz (Chairman), Griño-Aquino and Quiason, JJ., concur.

Petition denied.

Note.—An employer has no legal personality to oppose petition for certification election (California
Manufacturing Corp. vs.

_______________

12 Comment, p. 5; Rollo, p. 164.

13 Annex “G”, Petition, p. 2; Rollo, p. 51.

14 G.R. No. 96566, 6 January 1992, 205 SCRA 12.

459

VOL. 223, JUNE 17, 1993

459

Town Savings and Loan Bank, Inc. vs. Court of Appeals

Laguesma, 209 SCRA 606).


——o0o——

© Copyright 2017 Central Book Supply, Inc. All rights reserved. Phil. Telegraph and Telephone Corp. vs.
Laguesma, 223 SCRA 452, G.R. No. 101730 June 17, 1993

Judgment affirmed in toto.

Notes.—There is no treachery if the attack was preceded by a heated argument. (People vs. Gasper, 225
SCRA 189 [1993])

Where treachery not adequately proved, accused could only be convicted of homicide. (People vs.
Manlulu, 231 SCRA 701 [1994])

——o0o——

G.R. No. 116172. October 10, 1996.*

SAN MIGUEL FOODS, INC.-CEBU B-MEG FEED PLANT, petitioner, vs. HON. BIENVENIDO E. LAGUESMA,
Undersecretary of DOLE and ILAW AT BUKLOD NG MANGGAGAWA (IBM), respondents.

Labor Law; Unions; Words and Phrases; “Legitimate Labor Organization,” Defined.—Article 212(h) of
the Labor Code defines a legitimate labor organization as “any labor organization duly registered with
the Department of Labor and Employment, and includes any branch or local thereof.” It is important
to determine whether or not a particular labor organization is legitimate since legitimate labor
organizations have exclusive rights under the law which cannot be exercised by non-legitimate unions,
one of which is the right to be certified as the exclusive representative of all the employees in an
appropriate collective bargaining unit for purposes of collective bargaining.

Same; Same; Ordinarily, a labor organization attains the status of legitimacy only upon the issuance in
its name of a Certificate of Registration by the Bureau of Labor Relations.—The pertinent question,
therefore, must be asked: When does a labor organization acquire legitimacy? Ordinarily, a labor
organization attains the

_______________

* FIRST DIVISION.

69

VOL. 263, OCTOBER 9, 1996

69

San Miguel Foods, Inc.-Cebu B-Meg Feed Plant vs. Languesma


status of legitimacy only upon the issuance in its name of a Certificate of Registration by the Bureau of
Labor Relations pursuant to Articles 234 and 235 of the Labor Code.

Same; Same; When an unregistered union becomes a branch, local or chapter of a federation, some of
the requirements for registration mentioned in Arts. 234 and 235 of the Labor Code are no longer
required.—The foregoing procedure is not the only way by which a labor union may become
legitimate, however. When an unregistered union becomes a branch, local or chapter of a federation,
some of the aforementioned requirements for registration are no longer required. Section 3, Rule II,
Book V of the Implementing Rules of the Labor Code governs the procedure for union affiliation.

Same; Same; Certification Elections; The choice of a collective bargaining agent is the sole concern of
the employees; An employer that involves itself in a certification election lends suspicion to the fact
that it wants to create a company union.—In any case, this Court notes that it is petitioner, the
employer, which has offered the most tenacious resistance to the holding of a certification election
among its monthly-paid rank-and-file employees. This must not be so, for the choice of a collective
bargaining agent is the sole concern of the employees. The only exception to this rule is where the
employer has to file the petition for certification election pursuant to Article 258 of the Labor Code
because it was requested to bargain collectively, which exception finds no application in the case
before us. Its role in a certification election has aptly been described in Trade Unions of the
Philippines and Allied Services (TUPAS) v. Trajano, as that of a mere by-stander. It has no legal
standing in a certification election as it cannot oppose the petition or appeal the Med-Arbiter’s orders
related thereto. An employer that involves itself in a certification election lends suspicion to the fact
that it wants to create a company union. This Court should be the last agency to lend support to such
an attempt at interference with a purely internal affair of labor.

Same; Same; Same; While employers may rightfully be notified or informed of petitions for
certification election, they should not, however, be considered parties thereto with the concomitant
right to oppose it.—While employers may rightfully be notified or informed of petitions of such
nature, they should not, however, be considered parties thereto with the concomitant right to oppose
it. Sound policy dictates that they should maintain a strictly hands-off policy.

70

70

SUPREME COURT REPORTS ANNOTATED

San Miguel Foods, Inc.-Cebu B-Meg Feed Plant vs. Languesma

Same; Same; Same; The certification election is the most democratic and expeditious method by
which the laborers can freely determine the union that shall act as their representative in their
dealings with the establishment.—It bears stressing that no obstacle must be placed to the holding of
certification elections, for it is a statutory policy that should not be circumvented. The certification
election is the most democratic and expeditious method by which the laborers can freely determine
the union that shall act as their representative in their dealings with the establishment where they are
working. It is the appropriate means whereby controversies and disputes on representation may be
laid to rest, by the unequivocal vote of the employees themselves. Indeed, it is the keystone of
industrial democracy.

Same; Same; Same; What is required to be certified under oath by the secretary or treasurer and
attested to by the local’s president are the “constitution and by-laws, a statement on the set of
officers, and the books of accounts” of the organization — the charter certificate issued by the mother
union need not be certified under oath.—Petitioner next asseverates that the Charter Certificate
submitted by the private respondent was defective in that it was not certified under oath and
attested to by the organization’s secretary and President. Petitioner is grasping at straws. Under our
ruling in the Progressive Development Corporation case, what is required to be certified under oath
by the secretary or treasurer and attested to by the local’s president are the “constitution and by-
laws, a statement on the set of officers, and the books of accounts” of the organization. The charter
certificate issued by the mother union need not be certified under oath by the secretary or treasurer
and attested to by the local’s president.

Certiorari; The Supreme Court is definitely not the proper venue to consider a factual issue as it is not
a trier of facts.—This is a factual issue which petitioner should have raised before the Med-Arbiter so
as to allow the private respondent ample opportunity to present evidence to the contrary. This Court
is definitely not the proper venue to consider this matter for it is not a trier of facts. It is noteworthy
that petitioner did not challenge the legal personality of the federation in the proceedings before the
Med-Arbiter. Nor was this issue raised in petitioner’s appeal to the Office of the Secretary of Labor
and Employment. This matter is being raised for the first time in this petition. An issue which was
neither alleged in the

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pleadings nor raised during the proceedings below cannot be ventilated for the first time before this
Court. It would be offensive to the basic rule of fair play, justice and due process.

Same; Certiorari is a remedy narrow in its scope and inflexible in character — it is not a general utility
tool in the legal workshop.—Certiorari is a remedy narrow in its scope and inflexible in character. It is
not a general utility tool in the legal workshop. Factual issues are not a proper subject for certiorari, as
the power of the Supreme Court to review labor cases is limited to the issue of jurisdiction and grave
abuse of discretion. It is simply unthinkable for the public respondent Undersecretary of Labor to have
committed grave abuse of discretion in this regard when the issue as to the legal personality of the
private respondent IBM Federation was never interposed in the appeal before said forum.

Labor Law; It bears stressing that labor legislation seeks in the main to protect the interest of the
members of the working class and it should never be used to subvert their will.—The certification
election sought to be stopped by petitioner is, as of now, fait accompli. The monthly paid rank-and-
file employees of SMFI have already articulated their choice as to who their collective bargaining
agent should be. In the certification election held on August 20, 1994, the SMFI workers chose IBM at
SMFI to be their sole and exclusive bargaining agent. This democratic decision deserves utmost
respect. Again, it bears stressing that labor legislation seeks in the main to protect the interest of the
members of the working class. It should never be used to subvert their will.

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the opinion of the Court.

Estenzo, Torrente, Paloma and Solon for petitioner.

Danilo L. Pilapil for private respondent.

HERMOSISIMA, JR., J.:

This is a petition for certiorari under Rule 65 to review and set aside two Resolutions of Mediator-Arbiter
Achilles V. Manit, dated January 5, 1994 and April 6, 1994, and the

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affirmation Order on appeal of the public respondent, Undersecretary Bienvenido E. Laguesma of the
Department of Labor and Employment. The petition below was entitled: “In Re: Petition for Direct
Certification as the Sole and Exclusive Bargaining Agent of All Monthly Paid Employees of SMFI-Cebu B-
Meg Feeds Plant,” docketed as OS-MA-A-3-51-94 (R0700-9309-RU-036).

The essential facts are not disputed.

On September 24, 1993, a petition for certification election among the monthly-paid employees of the
San Miguel Foods, Inc.-Cebu B-Meg Feeds Plant was filed by private respondent labor federation Ilaw at
Buklod ng Manggagawa (IBM, for brevity) before Med-Arbiter Achilles V. Manit, alleging, inter alia, that
it is a legitimate labor organization duly registered with the Department of Labor and Employment
(DOLE) under Registration Certificate No. 5369-IP. SMFI-Cebu B-Meg Feeds Plant (SMFI, for brevity),
herein petitioner, is a business entity duly organized and existing under the laws of the Philippines which
employs roughly seventy-five (75) monthly paid employees, almost all of whom support the present
petition. It was submitted in said petition that there has been no certification election conducted in
SMFI to deter-mine the sole and exclusive bargaining agent thereat for the past two years and that the
proposed bargaining unit, which is SMFI’s monthly paid employees, is an unorganized one. It was also
stated therein that petitioner IBM (herein private respondent) has already complied with the mandatory
require­­ments for the creation of its local or affiliate in SMFI’s establishment.

On October 25, 1993, herein petitioner SMFI filed a Motion to Dismiss the aforementioned petition
dated September 24, 1993 on the ground that a similar petition remains pending between the same
parties for the same cause of action before Med-Arbiter Achilles V. Manit.
SMFI was referring to an evidently earlier petition, docketed as CE CASE NO R0700-9304-RU-016, filed
on April 28, 1993 before the office of Med-Arbiter Manit. Indeed, both petitions involved the same
parties, cause of action and relief

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being prayed for, which is the issuance of an order by the Med-Arbiter allowing the conduct of a
certification election in SMFI’s establishment. The contention is that the judgment that may be rendered
in the first petition would be determinative of the outcome of the second petition, dated September 24,
1993.

On December 2, 1993, private respondent IBM filed its Opposition to SMFI’s Motion to Dismiss
contending, among others, that the case referred to by SMFI had already been resolved by Med-Arbiter
Manit in his Resolution and Order dated July 26, 19931 and September 2, 1993,2 respectively, wherein
IBM’s first petition for certification election was denied mainly due to IBM’s failure to comply with
certain mandatory requirements of the law. This denial was affirmed by the Med-Arbiter in another
Order dated November 12, 19933 wherein the Resolutions dated July 26, 1993 and September 2, 1993
were made to stand. Thus, IBM argues that there having been no similar petition pending before Med-
Arbiter Manit, another petition for certification election may be refiled as soon as the said requirements
are met. These requirements were finally satisfied before the second petition for certification election
was brought on September 24, 1993.

On January 5, 1994, Med-Arbiter Manit, this time, granted the second petition for certification election
of private respondent IBM in this wise:

“Let, therefore, a certification election be conducted among the monthly paid rank and file employees
of SMFI-CEBU B-MEG FEEDS PLANT at Lo-oc, Mandaue City. The choices shall be: YES — for IBM AT
SMFI-CEBU B-MEG; and NO — for No Union.

The parties are hereby notified of the pre-election conference which will take place on January 17, 1994
at 3:00 o’clock in the afternoon to set the date and time of the election and to thresh out

_______________

1 Rollo, pp. 52-53.

2 Rollo, pp. 67-69.

3 Rollo, p. 83.

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the mechanics thereof. On said date and time the respondent is directed to submit the payroll of its
monthly paid rank and file employees for the month of June 1993 which shall be the basis for the list of
the eligible voters. The petitioner is directed to be ready to submit a list of the monthly paid rank and
file employees of SMFI-CEBU B-MEG FEEDS PLANT when the respondent fails to submit the required
payroll.

SO ORDERED.”4

Petitioner SMFI appealed the foregoing Order to the Secretary of Labor and Employment alleging that
the Med-Arbiter erred in directing the conduct of certification election considering that the local or
chapter of IBM at SMFI is still not a legitimate labor organization with a right to be certified as the
exclusive bargaining agent in petitioner’s establishment based on two grounds: (1) the authenticity and
due execution of the Charter Certificate submitted by IBM in favor of its local at SMFI cannot yet be
ascertained as it is still not known who is the legitimate and authorized representative of the IBM
Federation who may validly issue said Charter Certificate; and (2) a group of workers or a local union
shall acquire legal personality only upon the issuance of a Certificate of Registration by the Bureau of
Labor Relations under Article 234 of the Labor Code, which IBM at SMFI did not possess.

In a resolution dated April 6, 1994, public respondent Undersecretary Bienvenido Laguesma, by


authority of the Secretary of Labor and Employment, denied petitioner’s appeal, viz.:

“WHEREFORE, the appeal is hereby denied for lack of merit and the Order of the Med-Arbiter is hereby
affirmed.

Let the records of this case be forwarded to the Regional Office of origin for the immediate conduct of
certification election subject to the usual pre-election conference.

SO RESOLVED.”5

_______________

4 Rollo, pp. 31-32.

5 Rollo, p. 40.

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Thereafter, a Motion for Reconsideration was filed which was also denied by the public respondent in
his Order dated May 24, 1994.6

Hence, the instant petition interposing the following justifications:

“1) THE HONORABLE UNDERSECRETARY BIENVENIDO E. LAGUESMA GRAVELY ABUSED HIS DISCRETION
WHEN HE ARBITRARILY RULED THAT ‘A LOCAL OR CHAPTER OF A LABOR FEDERATION, LIKE
RESPONDENT IBM, NEED NOT OBTAIN A CERTIFICATE OF REGISTRATION FROM THE BUREAU OF LABOR
RELATIONS TO ACQUIRE LEGAL PERSONALITY,’ WHEN ARTICLE 234 OF THE LABOR CODE OF THE
PHILIPPINES AND SECTION 3 OF RULE II OF BOOK V OF THE RULES IMPLEMENTING THE LABOR CODE, AS
AMENDED, CLEARLY PROVIDES THAT A GROUP OF WORKERS OR A LOCAL UNION SHALL ACQUIRE LEGAL
PERSONALITY ONLY UPON THE ISSUANCE OF THE CERTIFICATE OF REGISTRATION BY THE BUREAU OF
LABOR RELATIONS; AND,

2) THE HONORABLE UNDERSECRETARY BIENVENIDO E. LAGUESMA GRAVELY ABUSED HIS DISCRETION


WHEN HE PREMATURELY AND ARBITRARILY RULED THAT RESPONDENT IBM IS A LEGITIMATE LABOR
ORGANIZATION WHEN THE AUTHENTICITY AND DUE EXECUTION OF THE CHARTER CERTIFICATE
SUBMITTED BY RESPONDENT IBM CANNOT YET BE ASCERTAINED BECAUSE IT IS STILL NOT KNOWN WHO
ARE THE LEGITIMATE OFFICERS OF THE IBM FEDERATION WHO MAY VALIDLY ISSUE SAID CHARTER
CERTIFICATE AS THE CASE FILED TO RESOLVE THE ISSUE ON WHO ARE THE LEGITIMATE OFFICERS OF THE
IBM FEDERATION IS STILL PENDING RESOLUTION BEFORE THIS HONORABLE SUPREME COURT.”7

The petition has no merit.

Petitioner asserts that IBM at SMFI is not a legitimate labor organization notwithstanding the fact that it
is a local or chapter of the IBM Federation. This is so because under

_______________

6 Rollo, p. 42.

7 Rollo, p. 20.

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Article 234 of the Labor Code, any labor organization shall acquire legal personality only upon the
issuance of the Certificate of Registration by the Bureau of Labor Relations.

We do not agree.
I

Article 212(h) of the Labor Code defines a legitimate labor organization as “any labor organization duly
registered with the Department of Labor and Employment, and includes any branch or local thereof.”

It is important to determine whether or not a particular labor organization is legitimate since legitimate
labor organizations have exclusive rights under the law which cannot be exercised by non-legitimate
unions, one of which is the right to be certified as the exclusive representative of all the employees in an
appropriate collective bargaining unit for purposes of collective bargaining. These rights are found under
Article 242 of the Labor Code, to wit:

“ART. 242. Rights of legitimate labor organizations.—A legitimate labor organization shall have the
right:

(a) To act as the representative of its members for the purpose of collective bargaining;

(b) To be certified as the exclusive representative of all the employees in an appropriate collective
bargaining unit for purposes of collective bargaining;

(c) To be furnished by the employer, upon written request, with his annual audited financial
statements, including the balance sheet and the profit and loss statement, within thirty (30) calendar
days from the date of receipt of the request, after the union has been duly recognized by the employer
or certified as the sole and exclusive bargaining representative of the employees in the bargaining unit,
or within sixty (60) calendar days before the expiration of the existing collective bargaining agreement,
or during the collective bargaining negotiation;

(d) To own property, real or personal, for the use and benefit of the labor organization and its
members;

(e) To sue and be sued in its registered name; and

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(f) To undertake all other activities designed to benefit the organization and its members, including
cooperative, housing welfare and other projects not contrary to law.

x x x x x x x x x.”

The pertinent question, therefore, must be asked: When does a labor organization acquire legitimacy?

Ordinarily, a labor organization attains the status of legitimacy only upon the issuance in its name of a
Certificate of Registration by the Bureau of Labor Relations pursuant to Articles 234 and 235 of the
Labor Code, viz.:
“ART. 234. Requirements of registration.—Any applicant labor organization, association or group of
unions or workers shall acquire legal personality and shall be entitled to the rights and privileges granted
by law to legitimate labor organizations upon issuance of the certificate of registration based on the
following requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the
minutes of the organizational meetings and the list of the workers who participated in such meetings;

(c) The names of all its members comprising at least twenty percent (20%) of all the employees in the
bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial
reports; and

(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or
ratification, and the list of the members who participated in it.

ART. 235. Action on application.—The Bureau shall act on all applications of registration within thirty
(30) days from filing.

All requisite documents and papers shall be certified under oath by the secretary or the treasurer of the
organization, as the case may be, and attested to by its president.”

The foregoing procedure is not the only way by which a labor union may become legitimate, however.
When an un--

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registered union becomes a branch, local or chapter of a federation, some of the aforementioned
requirements for registration are no longer required.8 Section 3, Rule II, Book V of the Implementing
Rules of the Labor Code governs the procedure for union affiliation, the relevant portions of which
provide:

“Sec. 3. Union Affiliation: Direct Membership with National Union.—An affiliate of a labor federation
or national union may be a local or chapter thereof or an independently registered union.

(a) The labor federation or national union concerned shall issue a charter certificate indicating the
creation or establishment of a local or chapter, copy of which shall be submitted to the Bureau of Labor
Relations within thirty (30) days from issuance of such charter certificate.
(b) An independently registered union shall be considered an affiliate of a labor federation or national
union after submission to the Bureau of the contract or agreement of affiliation within thirty (30) days
after its execution.

xxx xxx xxx

(e) The local or chapter of a labor federation or national union shall have and maintain a constitution
and by-laws, set of officers and books of accounts. For reporting purposes, the procedure governing the
reporting of independently registered unions, federations or national unions shall be observed.”

Paragraph (a) refers to a local or chapter of a federation which did not undergo the rudiments of
registration while paragraph (b) refers to an independently registered union which affiliated with a
federation. Implicit in the foregoing differentiation is the fact that a local or chapter need not be
independently registered. By force of law (in this case, Article 212 [h]), such local or chapter becomes a
legitimate labor organization upon compliance with the aforementioned

_______________

8 Progressive Development Corporation v. Secretary, Department of Labor and Employment, 205 SCRA
802, 810 [1992].

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provisions of Section 39 (a) and (e), without having to be issued a Certificate of Registration in its favor
by the BLR.

The cases of Lopez Sugar Corporation v. Secretary of Labor and Employment,10 Phoenix Iron and Steel
Corporation v. Secretary of Labor and Employment,11 and Protection Technology, Inc. v. Secretary,
Department of Labor and Employment,12 all going back to our landmark holding in Progressive
Development Corporation v. Secretary, Department of Labor and Employment,13 unequivocably laid
down the rule, thus:

“A local or chapter therefore becomes a legitimate labor organization only upon submission of the
following to the BLR:

1) A charter certificate, within 30 days from its issuance by the labor federation or national union, and

2) The constitution and by-laws, a statement on the set of officers, and the books of accounts all of
which are certified under oath by the secretary or treasurer, as the case may be, of such local or
chapter, and attested to by its president.
Absent compliance with these mandatory requirements, the local or chapter does not become a
legitimate labor organization.”

Corollarily, the satisfaction of all these requirements by the local or chapter shall vest upon it the status
of legitimacy with all its concomitant statutory privileges, one of which is the right to be certified as the
exclusive representative of all the employees in an appropriate bargaining unit.

In the case at bench, public respondent Bienvenido E. Laguesma, in affirming the finding of the Med-
Arbiter that IBM at SMFI is a legitimate labor organization,14 made the following material
pronouncements amply supported by the records:

_______________

9 Ibid.

10 247 SCRA 1, 8 [1995].

11 244 SCRA 173, 177 [1995].

12 242 SCRA 99, 106 [1995].

13 Supra.

14 Rollo, p. 31.

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“[t]he resolution of the issue raised by the respondent on whether or not petitioner is a legitimate labor
organization will depend on the documents submitted by the petitioner in the second petition.

A close scrutiny of the records shows that at the time of the filing of the subject petition on 24
September 1993 by the petitioner Ilaw at Buklod ng Manggagawa, for and in behalf of its local affiliate
IBM at SMFI-CEBU B-MEG, the latter has been clothed with the status and/or character of a legitimate
labor organization. This is so, because on 19 July 1993, petitioner submitted to the Bureau of Labor
Relations (BLR), this Department, the following documents: charter certificate, constitution and by-laws,
names and addresses of the union officers and a certification of the union’s secretary on the non-
availability of the union’s Books of Accounts. Said documents (except the charter certificate) are
certified under oath and attested to by the local union’s secretary and President, respectively.”15

Petitioner SMFI does not dispute the fact that IBM at SMFI has complied with the second set of
requirements, i.e., constitution, by-laws, et al. What is controverted is the non-compliance with the
requirement as to the charter certificate which must be submitted to the BLR within thirty (30) days
from its issuance by the labor federation. While the presence of a charter certificate is conceded,
petitioner maintains that the validity and authenticity of the same cannot yet be ascertained as it is still
not known who is the legitimate and authorized representative of the IBM Federation who may validly
issue said charter certificate in favor of its local, IBM at SMFI. According to petitioner, there are two (2)
contending sets of officers of the IBM Federation at the time the charter certificate was issued in favor
of IBM at SMFI, the faction of Mr. Severino O. Meron and that of Mr. Edilberto B. Galvez.

On this point, public respondent, in upholding the legitimate status of IBM at SMFI, backed up by the
Solicitor General, had this to say:

_______________

15 Rollo, pp. 37-38.

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“The contention of the respondent that unless and until the issue on who is the legitimate national
president, of the Ilaw at Buklod ng Manggagawa is resolved, the petitioner cannot claim that it has a
valid charter certificate necessary for it to acquire legal personality is untenable. We wish to stress that
the resolution of the said issue will not in any way affect the validity of the charter certificate issued by
the IBM in favor of the local union. It must be borne in mind that the said charter certificate was issued
by the IBM in its capacity as a labor organization, a juridical entity which has a separate and distinct legal
personality from its members. When as in this case, there is no showing that the Federation acting as a
separate entity is questioning the legality of the issuance of the said charter certificate, the legality of
the issuance of the same in favor of the local union is presumed. This, notwithstanding the alleged
controversy on the leadership of the federation.”16

We agree with this position of the public respondent and the Solicitor General. In addition, private
respondent’s Com­ment to this petition indicates that in the election of officers held to determine the
representatives of IBM, the faction of Mr. Meron lost to the group of Mr. Edilberto Galvez, and the latter
was acknowledged as the duly elected IBM National President.17 Thus, the authority of Mr. Galvez to
sign the charter certificate of IBM at SMFI, as President of the IBM Federation,18 can no longer be
successfully questioned. A punctilious examination of the records presents no evidence to the contrary
and petitioner, instead of squarely refuting this point, skirted the issue by insisting that the mere
presence of two contending factions in the IBM prevents the issuance of a valid and authentic charter
certificate in favor of IBM at SMFI. This averment of petitioner simply does not deserve any merit.

II
In any case, this Court notes that it is petitioner, the employer, which has offered the most tenacious
resistance to the

_______________

16 Rollo, pp. 38-39.

17 Rollo, p. 118.

18 Rollo, p. 78.

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holding of a certification election among its monthly-paid rank-and-file employees. This must not be so,
for the choice of a collective bargaining agent is the sole concern of the employees.19 The only
exception to this rule is where the employer has to file the petition for certification election pursuant to
Article 25820 of the Labor Code because it was requested to bargain collectively,21 which exception
finds no application in the case before us. Its role in a certification election has aptly been described in
Trade Unions of the Philippines and Allied Services (TUPAS) v. Trajano,22 as that of a mere by-stander. It
has no legal standing in a certification election as it cannot oppose the petition or appeal the Med-
Arbiter’s orders related thereto. An employer that involves itself in a certification election lends
suspicion to the fact that it wants to create a company union.23 This Court should be the last agency to
lend support to such an attempt at interference with a purely internal affair of labor.24

While employers may rightfully be notified or informed of petitions of such nature, they should not,
however, be considered parties thereto with the concomitant right to oppose it.

_______________

19 R. Transport Corporation v. Laguesma, 227 SCRA 826, 833 [1993].

20 ART. 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 and Employment.

21 Phil. Telegraph and Telephone Corp. v. Laguesma, 223 SCRA 452, 456-457 [1993].
22 120 SCRA 64, 66 [1983].

23 Philippine Scout Veterans Security and Investigation Agency v. Torres, 224 SCRA 682, 690 [1993].

24 Consolidated Farms, Inc. v. Noriel, 84 SCRA 469, 473 [1978].

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Sound policy dictates that they should maintain a strictly hands-off policy.25

It bears stressing that no obstacle must be placed to the holding of certification elections,26 for it is a
statutory policy that should not be circumvented.27 The certification election is the most democratic
and expeditious method by which the laborers can freely determine the union that shall act as their
representative in their dealings with the establishment where they are working.28 It is the appropriate
means whereby controversies and disputes on representation may be laid to rest, by the unequivocal
vote of the employees themselves.29 Indeed, it is the keystone of industrial democracy.30

III

Petitioner next asseverates that the Charter Certificate submitted by the private respondent was
defective in that it was not certified under oath and attested to by the organization’s secretary and
President.

_______________

25 Philippine Scout Veterans Security and Investigation Agency, supra.

26 Trade Unions of the Philippines v. Laguesma, 233 SCRA 565, 571 [1994], citing Warren Manufacturing
Workers Union v. Bureau of Labor Relations, 159 SCRA 387 [1988]; General Textiles Allied Workers
Association v. Director of Bureau of Labor Relations, 84 SCRA 430 [1978]; Philippine Association of Free
Labor Unions v. Bureau of Labor Relations, 69 SCRA 132 [1976].

27 Ibid., citing Belyca Corporation v. Ferrer-Calleja, 168 SCRA 184 [1988]; Philippine Airlines Employees’
Association (PALEA) v. Ferrer-Calleja, 162 SCRA 426 [1988]; George and Peter Lines, Inc. v. Associated
Labor Unions (ALU), 134 SCRA 82 [1986].

28 Port Workers Union of the Phils. (PWUP) v. Laguesma, 207 SCRA 329, 333 [1992], citing National
Association of Free Trade Unions v. Bureau of Labor Relations, 164 SCRA 12 [1988].

29 Trade Unions of the Philippines, supra, at 572, citing PALEA v. Ferrer-Calleja, 162 SCRA 426, 431
[1988].
30 Ibid.

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Petitioner is grasping at straws. Under our ruling in the Progressive Development Corporation31 case,
what is required to be certified under oath by the secretary or treasurer and attested to by the local’s
president are the “constitution and by-laws, a statement on the set of officers, and the books of
accounts” of the organization. The charter certificate issued by the mother union need not be certified
under oath by the secretary or treasurer and attested to by the local’s president.

IV

Petitioner, in its Reply to public respondent’s Comment, nevertheless calls the attention of this court to
the fact that, contrary to the assertion of private respondent IBM that it is a legitimate labor federation
and therefore has the capacity and authority to create a local or chapter at SMFI, the Chief of the Labor
Organizations Division of the Bureau of Labor Relations — Manila had allegedly issued a certification last
January 17, 1995 to the effect that private respondent is not a legitimate labor federation.32

This is a factual issue which petitioner should have raised before the Med-Arbiter so as to allow the
private respondent ample opportunity to present evidence to the contrary. This Court is definitely not
the proper venue to consider this matter for it is not a trier of facts. It is noteworthy that petitioner did
not challenge the legal personality of the federation in the proceedings before the Med-Arbiter. Nor was
this issue raised in petitioner’s appeal to the Office of the Secretary of Labor and Employment. This
matter is being raised for the first time in this petition. An issue which was neither alleged in the
pleadings nor raised during the proceedings below cannot be ventilated for the first time before this
Court. It would be offensive to the basic rule of fair play, justice and due process.33 Certiorari is a
remedy narrow in its

_______________

31 Supra, at 813.

32 Rollo, p. 162.

33 C. Alcantara & Sons, Inc. v. NLRC, 229 SCRA 109, 115 [1994], citing Medida v. C.A., 208 SCRA 887
[1992].

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scope and inflexible in character. It is not a general utility tool in the legal workshop.34 Factual issues
are not a proper subject for certiorari, as the power of the Supreme Court to review labor cases is
limited to the issue of jurisdiction and grave abuse of discretion.35 It is simply unthinkable for the public
respondent Undersecretary of Labor to have committed grave abuse of discretion in this regard when
the issue as to the legal personality of the private respondent IBM Federation was never interposed in
the appeal before said forum.

Finally, the certification election sought to be stopped by petitioner is, as of now, fait accompli. The
monthly paid rank-and-file employees of SMFI have already articulated their choice as to who their
collective bargaining agent should be. In the certification election held on August 20, 1994,36 the SMFI
workers chose IBM at SMFI to be their sole and exclusive bargaining agent. This democratic decision
deserves utmost respect. Again, it bears stressing that labor legislation seeks in the main to protect the
interest of the members of the working class. It should never be used to subvert their will.37

WHEREFORE, the petition is DENIED. Costs against petitioner.

SO ORDERED.

Bellosillo, Vitug and Kapunan, JJ., concur.

Padilla (Chairman), J., No part, on account of interests in San Miguel Group of companies.

Petition denied.

_______________

34 Herrera, Oscar M., Remedial Law, Volume III, 1996 ed., p. 164.

35 Oscar Ledesma and Company v. National Labor Relations Commission, 246 SCRA 47, 51 [1995].

36 Rollo, p. 127.

37 Trade Unions of the Philippines, supra. San Miguel Foods, Inc.-Cebu B-Meg Feed Plant vs. Languesma,
263 SCRA 68, G.R. No. 119417 October 9, 1996

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SUPREME COURT REPORTS ANNOTATED

Air Line Pilots Association of the Philippines vs. Court of Industrial Relations
No. L-33705. April 15, 1977.*

AIR LINE PILOTS ASSOCIATION OF THE PHILIPPINES (GASTON GROUP), petitioner, vs. THE COURT OF
INDUSTRIAL RELATIONS and AIR LINES PILOTS ASSOCIATION OF THE PHILIPPINES (GOMEZ GROUP),
respondents.

No. L-35206. April 15, 1977.*

CESAR CHAVEZ, JUR., FRANCISCO ACHONDOA, SERAFIN ADVINCULA, MAXIMO R. AFABLE, ALFREDO
AGBULOS, SOLOMON A. HERRERA, NEMESIO ALMARIO, JULIUS AQUINO, RENE ARELLANO, CARLITO
ARRIBE, FERNANDO AYUBO, GENEROSO BALTAZAR, EDDIE BATONGMALAQUE, URSO D. BELLO,
TOMAS BERNALES, RUDOLFO BIDES, AUGUSTO BLANCO, HORACIO BOBIS, ROMEO B. BONTUYAN.
ANTONINO E. BUENAVENTURA, PEDRO BUÑI, ISABELO BUSTAMANTE, JOSE BUSTAMANTE, RICARDO
BUSTAMANTE, ERNESTO D. BUZON, TRANQUILINO CABE, ISIDORO CALLEJA, CESAR CAÑETA,
FERNANDO CARAG, ROGELIO CASINO, JOSE CASTILLO, NICANOR CASTILLO, RAFAEL CASTRO, JOSE DE
LA CONCEPCION, CARLOS CRUZ, WILFREDO CRUZ, MAGINOO CUSTODIO, TOMAS DE LARA, JOSE DE
LEON, BENJAMIN DELFIN, GREGORIO DELGADO, IRINEO DEROTAS, DUMAGUIN, BENEDICTO
FELICIANO, RODRIGO FRIAS, JOSE GIL, ANTONIO GOMEZ, ROBERTO GONZALEZ, BIENVENIDO
GOROSPE, AMADO R. GULOY,

_______________

* EN BANC

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JOSE GUTIERREZ, ANTONIO IBARRETA, MUSSOLINI IGNACIO, ROBERTO INIGO, MATIAS JABIER,
ROGELIO JARAMILLO, HARRY JISON, ALBERTO JOCSON, VALENTIN LABATA, JAIME LACSON, JORGE
LACSON, FRANCISCO LANSANG, MENANDRO LAUREANO, JESUS LAQUINDANUM, LEONARDO LONTOC,
RAUL LOPEZ, RENE LORENZO, OSBORNE LUCERO, ARISTON LUISTRO, MANUEL LUKBAN, VIRGILIO
MABABA, MARIANO MAGTIBAY, EDGARDO MAJARAIS, EMILIO MALLARE, LEONCIO MANARANG,
ALFREDO MARBELLA, ALFREDO MARTINEZ, EDILBERTO MEDINA, CLEMENTE MIJARES, EDMUNDO
MISA, CONRADO MONTALBAN, FERNANDO NAVARRETE, EUGENIO NAVEA, ERNESTO TOMAS,
NIERRAS, PATROCINIO OBRA, VICTORINO ORGULLO, CLEMENTE PACIS, CESAR PADILLA, ROMEO
PAJARILLO, RICARDO PANGILINAN, CIRILO PAREDES, AMANDO PARIS, ALBERTO PAYUMO, PEDRO
PENERA, FRANCISCO PEPITO, ADOLFO PEREZ, DOMINGO POLOTAN, EDUARDO RAFAEL, SANTOS
RAGAZA, TEODORO RAMIREZ, RAFAEL RAVENA, ANTONIO REYES, GREGORIO RODRIGUEZ, LEONARDO
SALCEDO, HENRY SAMONTE, PAQUITO SAMSON, ARTHUR B. SANTOS, ARTURO T. SANTOS ANGELES
SARTE, VALERIANO SEGURA, RUBEN SERRANO, LINO SEVERINO, ANGEL SEVILLA, BENJAMIN SOLIS,
PATROCINIO TAN, RAFAEL TRIAS, EDGARDO VELASCO, LORETO VERGEIRE, RUBEN VICTORINO,
ALEXANDER VILLACAMPA, CAMILO VILLAGONZALO, BAYANI VILLANUEVA, RIZAL VILLANUEVA,
ROMULO VILLANUEVA, ROLANDO VILLANUEVA, CARLOS VILLAREAL, and ALFONSO SAPIRAIN, AND
OTHERS and AIR LINE PILOTS ASSOCIATION OF THE PHILIPPINES (GASTON), petitioners, vs. THE
HONORABLE JUDGES ARSENIO I. MARTINEZ. AMANDO C. BUGAYONG and JOAQUIN M. SALVADOR of
the COURT OF INDUSTRIAL RELATIONS, BEN HUR GOMEZ, claiming to represent AIR LINE PILOTS
ASSOCIATION OF THE PHILIPPINES, CARLOS ORTIZ AND OTHERS, and PHILIPPINE AIR LINES, INC.,
respondents.

Labor law; A certification proceeding is not a litigation, but an investigation of a non-adversary, fact-
finding character.—This Court

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has always stressed that a certification proceeding is not a litigation, in the sense in which this term is
ordinarily understood, but an investigation of a non-adversary, fact-finding character in which the
Court of Industrial Relations plays the part of a disinterested investigator seeking merely to ascertain
the desires of employees as to the matter of their representation. Such being the nature of a
certification proceeding, we find no cogent reason that should prevent the industrial court, in such a
proceeding, from inquiring into and satisfying itself about matter which may be relevant and crucial,
though seemingly beyond the purview of such a proceeding, to the complete realization of the well-
known purposes of a certification case.

Same; Industrial Court should be allowed ample discretion in securing disclosure of facts in a
certification case.—Such a situation may arise, as it did in the case at bar, where a group of pilots of a
particular airline anticipating their forced retirement or resignation on account of strained relations
with the airline arising from unfulfilled economic demands, decided to adopt an amendment to their
organization’s constitution and by-laws in order to enable them to retain their membership standing
therein even after the termination of their employment with the employer concerned. The industrial
court definitely should be allowed ample discretion to secure a disclosure of circumstances which will
enable it to act fairly in a certification case.

Same; When adoption of amendment to a union’s by-laws is legal.—We have made a careful
examination of the records of L-33705 and we find the adoption of the resolution introducing the
questioned amendment to be in substantial compliance with the ALPAP constitution and by-laws.
Indeed, there is no refutation of the fact that 221 out of the 270 members of ALPAP did cast their
votes in favor of the said amendment on October 30, 1970 at the ALPAP general membership
meeting.

Same; The term “labor organization” as defined by RA 875 is not limited to the employees of a
particular employer.—This Court cannot likewise subscribe to the restrictive interpretation made by
the court below of the term “labor oganization,” which Section 2(e) of R.A. 875 defines as “any union
or association of employees which exists, in whole or in part, for the purpose of collective bargaining
or of dealing with employers concerning terms and conditions of employment.” The absence of the
condition which the court below would attach to the statutory concept of a labor organization, as
being limited to the employees of a particular employer, is quite evident from the law. The emphasis
of the Industrial Peace Act is clearly on the purposes for which a union or association of employees is
established rather than

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that membership therein should be limited only to the employees of a particular employer. Trite to
say, under Section 2(h) of R.A. 875 “representative” is defined as including “a legitimate labor
organization or any officer or agent of such organization, whether or not employed by the employer
or employee whom he represents.” It cannot be overemphasized likewise that a labor dispute can
exists “regardless of whether the disputants stand in the proximate relation of employer and
employee.”

Same; When election of a set of officers by minority group in a union not binding.—Moreover, this
Court cannot hold as valid and binding the election of Ben Hur Gomez as President of ALPAP. He was
elected at a meeting of only 45 ALPAP members called just one day after the election of Felix C.
Gaston as President of ALPAP who, as shown, received a majority of 180 votes out of a total
membership of 270.

Same; A labor union may authorize a segment thereof to bargain collectively with the employer and in
the exercise of such authority to have custody of the union’s fund and office and make use of the
unions name.—In our opinion, it is perfectly within the powers and prerogatives of a labor
organization, through its duly elected officers, to authorized a segment of that organization to bargain
collectively with a particular employer, particularly where those constituting the segment share a
common and distinguishable interest, apart from the rest of their fellow union members, on matters
that directly affect the terms and conditions of their particular employment. As the circumstances
pertinent to the case at bar presently stand, ALPAP (Gaston) has extended recognition to ALPAP
(Gomez) to enter and conclude collective bargaining contracts with PAL. Having given ALPAP (Gomez)
this authority, it would be clearly unreasonable on the part of ALPAP (Gaston) to disallow the former
a certain use of the office, funds and name of ALPAP when such use is necessary or would be required
to enable ALPAP (Gomez) to exercise, in a proper manner, its delegated authority to bargain
collectively with PAL. Clearly, an intelligently considered adjustment of grievances and integration of
the diverse and varying interests that not infrequently and, often, unavoidably permeate the
membership of a labor organization, will go a long way, in achieving peace and harmony within the
ranks of ALPAP. Of course, in the eventuality that the pilots presently employed by PAL and who
subscribe to the leadership of Ben Hur Gomez should consider it to their better interest to have their
own separate office, name and union funds, nothing can prevent them from setting up a separate
labor union. In that eventuality, whatever vested rights, interest or participation they may have in the
assets, including cash funds, of ALPAP as a result of their

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membership therein should properly be liquidated in favor of such withdrawing members of the
association.

Same; Non-compliance with the rule that all issues in a certified labor dispute should be ventilated in
the case where the same was docketed is not an error or jurisdiction.—While it is correct, as
submitted by ALPAP (Gaston), that in the 1971 case of Philippine Federation of Petroleum Workers
(PFPW) vs. CIR (37 SCRA 716) this Court held that in a certified labor dispute all issues involved in the
same should be determined in the case where the certified dispute was docketed and that the parties
should not be permitted to isolate other germane issues or demands and reserve them for
determination in the other cases pending before other branches of the industrial court,
noncompliance with this rule is at best an error in procedure, rather than of jurisdiction, which is not
beyond the power of this Court to review where sufficient reason exist, a situation not obtaining in
the case at bar.

Same; Employees who voluntarily retired and/or resigned from employment are not entitled to
reinstatement.—After a thoroughgoing study of the records of these two consolidated petitions, this
Court finds that the matter of the reinstatement of the pilots who retired or resigned from PAL was
ventilated fully and adequately in the certification case in all its substantive aspects, including the
allegation of the herein petitioners that they were merely led to believe in good faith that in retiring
or resigning from PAL they were simply exercising their rights to engage in concerted activity. In the
light of the circumstances thus found below, it can be safely concluded that the mass retirement and
resignation action of the herein petitioners was intentionally planned to abort the effects of the
October 7, 10 and 19, 1970 return-to-work orders of the industrial court (which they, in fact, ignored
for more than a week) by placing themselves beyond the jurisdictional control of the said court
through the umbrella of the constitutional prohibition against involuntary servitude, thereby enabling
them to pursue their main pressure objective of grounding most, if not all, PAL flight operations.
Clearly, the powers given to the industrial court in a certified labor dispute will be meaningless and
useless to pursue where its jurisdiction cannot operate.

Same; Same.—We cannot consequently disagree with the court a quo when it concluded that the
actuations of the herein petitioners after they retired and resigned en masse—their retrieval of
deposits and other funds from the ALPAP Cooperative Credit Union on the ground that they have
already retired or resigned, their employment with another airline, the filing of a civil suit for the
recovery of their

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retirement pay where they invoked the provision against involuntary servitude to obtain payment
thereof, and their repeated manifestations before the industrial court that their retirement and
resignation were not sham, but voluntary and intentional—are, in the aggregate, indubitable
indications that the said pilots did retire/resign from PAL with full awareness of the likely
consequences of their acts. Their protestations of good faith, after nearly a year of underscoring the
fact that they were no longer employed with PAL, cannot but appear to a reasonable mind as a late
and regrettable ratiocination.

Same; “Strike” as used in the statute means temporary stoppage of work.—Parenthetically, contrary
to ALPAP (Gaston)’s argument that the pilots’ retirement/resignation was a legitimate concerted
activity, citing Section 2(1) of the Industrial Peace Act which defines “strike” as “any temporary
stoppage of work by the concerted action of employees as a result of an industrial dispute,” it is
worthwhile to observe that as the law defines it, a strike means only a “temporary stoppage of work.”
What the mentioned pilots did, however, cannot be considered, in the opinion of this Court, as mere
“temporary stoppage of work.” What they contemplated was evidently a permanent cut-off of
employment relationship with their erstwhile employer, the Philippine Air Lines.

Same; Same; A legitimate concerted activity cannot be used to circumvent judicial orders or be tossed
around like a plaything.—A legitimate concerted activity is a matter that cannot be used to
circumvent judicial orders or be tossed around like a plaything. Definitely, neither employers nor
employees should be allowed to make a judicial authority a now-you’ve-got-it-now-you-don’t affair.
The courts cannot hopefully effectuate and vindicate the sound policies of the Industrial Peace Act
and all our labor laws if employees, particularly those who on account of their highly advance
technical background and relatively better life status are far above the general working class
spectrum, will be permitted to defy and invoke the jurisdiction of the courts whenever the alternative
chosen will serve to feather their pure and simple economic demands.

PETITIONS for certiorari of the resolutions of the Court of Industrial Relations.

The facts are stated in the opinion of the Court.

J. C. Espinas & Associates for petitioner (Gaston Group).

Jose K. Manguiat, Jr. for respondent Court, et al.

E. Morabe & Associates for respondent (Gomez Group).

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Air Line Pilots Association of the Philippines vs. Court of Industrial Relations

CASTRO, C.J.:

These are two petitions for certiorari (L-33705 and L-35206), consolidated for purposes of decision
because they involve more or less the same parties and interlocking issues.

In L-33705 the petitioner Air Line Pilots Association of the Philippines (Gaston group) maintains that the
Court of Industrial Relations acted without jurisdiction in passing upon (1) the question of which, in a
certification proceeding, between the set of officers elected by the group of Philippine Air Lines pilots
headed by Captain Felix Gaston, on the one hand, and the set of officers elected by the group headed by
Captain Ben Hur Gomez, on the other, is the duly elected set of officers of the Air Line Pilots Association
of the Philippines, and (2) the question of which, between the two groups, is entitled to the name, office
and funds of the said Association.

In L-35206 the individual petitioners (numbering 127) and the Air Line Pilots Association of the
Philippines (hereinafter referred to as ALPAP) (Gaston) maintain that the industrial court acted without
jurisdiction and with grave abuse of discretion in promulgating its resolution dated June 19, 1972 which
suspended the hearing of the said petitioners’ plea below for reinstatement and/or return to work in
the Philippine Air Lines (hereinafter referred to as PAL) or, alternatively, the payment of their retirement
and/or separation pay, as the case may be, until this Court shall have decided L-33705.

L-33705

On January 2, 1971, the Air Line Pilots Association of the Philippines, represented by Ben Hur Gomez
who claimed to be its President, filed a petition with the Court of Industrial Relations praying for
certification as the sole and exclusive collective bargaining representative of “all the pilots now under
employment by the Philippine Air Lines, Inc. and are on active flight and/or operational assignments.”
The petition which was docketed in the sala of Judge Joaquin M. Salvador as Case 2939-MC was opposed
in the name of the same association by Felix C. Gaston (who also claimed to be its President) on the
ground that the industrial court has no jurisdiction over the subject-matter of the petition “because a
certification proceeding in the Court of Industrial Relations is not the proper forum for the

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adjudication of the question as to who is the lawful president of a legitimate labor organization.”

On May 29, 1971, after hearing the petition, Judge Salvador rendered a decision certifying the—

“. . . ALPAP composed only of pilots employed by PAL with Capt. Ben Hur Gomez as its president, as the
sole and exclusive bargaining representative of all the pilots employed by PAL and are on active flights
and/or operational assignments, and as such is entitled to all the rights and privileges of a legitimate
labor organization, including the right to its office and its union funds.”

The following circumstances were cited by Judge Salvador to justify the conclusions reached by him in
his decision, namely:

(a) that there has been no certification election within the period of 12 months prior to the date the
petition for certification was filed;

(b) that the PAL entered into a collective bargaining agreement with ALPAP for “pilots in the employ of
the Company” only for the duration of the period from February 1, 1969 to January 31, 1972;

(c) that PAL pilots belonging to the Gaston group, in defiance of court orders issued in Case 101-IPA(B)
(see L-35206, infra) retired/resigned en masse from the PAL and accompanied this with actual acts of
not reporting for work;

(d) that the pilots affiliated with the Gaston group tried to retrieve their deposits and other funds from
the ALPAP Cooperative Credit Union on the ground that they have already retired/resigned from PAL;

(e) that some of the members of the Gaston group joined another airline after their
retirement/resignation;

(f) that the Gaston group claimed before the industrial court that the order enjoining them from retiring
or resigning constituted a violation of the prohibition against involuntary servitude (see L-35206, infra);
and

(g) that the contention that the mass retirement or resignation was merely an involuntary protest by
those affiliated with the Gaston group is not borne out by the evidence as, aside from their
aforementioned acts, the said group of pilots even filed a civil complaint against the PAL in which the
cessation of their employment with PAL was strongly stressed by them.

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It appears that prior to the filing of the certification petition below, a general ALPAP membership
meeting was held on October 30, 1970, at which 221 out of 270 members adopted a resolution
amending ALPAP’s constitution and by-laws by providing in a new section thereof that—
“Any active member who shall be forced to retire or forced to resign or otherwise terminated for union
activities as solely determine by the Association shall have the option to either continue to be and
remain as an active member in good standing or to resign in writing his active membership with the
Association. . .”

According to ALPAP (Gaston), the foregoing amendment was adopted “In anticipation of the fact that
they may be forced to resign or retire because of their ‘union activities.’ ” At this period of time, PAL and
ALPAP were locked in a labor dispute certified by the President to the industrial court and docketed as
Case 101-IPA(B) (see L-35206, infra).

On December 12, 1970, despite a no-work-stoppage order of the industrial court, a substantial majority
of ALPAP members filed letters of retirement/resignation from the PAL.

Thereafter, on December 18-22, 1970, an election of ALPAP officers was held, resulting in the election of
Felix C. Gaston as President by 180 votes. Upon the other hand, on December 23, 1970, about 45 pilots
who did not tender their retirement or resignation with PAL gathered at the house of Atty. Morabe and
elected Ben Hur Gomez as ALPAP President.

On June 3, 1971, ALPAP (Gaston) filed an opposition in Case 101-IPA(B) to an urgent ex parte motion of
the PAL to enjoin the members of ALPAP from retiring or resigning en masse. It was claimed by ALPAP
(Gaston that—

“1. Insofar as herein oppositors are concerned, the allegations of respondent that their ‘resignations’
and ‘retirements’ are sham resignations and retirements and that ‘There is no honest or genuine desire
to terminate the employee relationship with PAL’ are completely false. Their bona fide intention to
terminate their employer-employee relationship with PAL is conclusively shown by the fact that they
have not sought reinstatement in or re-employment by PAL and also by the fact that they are either
seeking employment in another airline company;

“2. Respondent in effect recognized such bona fide intention of the herein oppositors as shown by the
fact that it accepted said resignations and retirements and did not initiate any contempt

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proceedings against them; and

“3. The action of herein oppositors in filing their resignations and retirements was a legitimate exercise
of their legal and constitutional rights and the same, therefore, cannot be considered as a valid ground
to deprive them of benefits which they had already earned including, among others, retirement benefits
to which they are entitled under the provisions of an existing contract between petitioner and
respondent. Such deprivation would constitute impairment of the obligations of contract.”
On June 15, 1971, the industrial court en banc, acting on a motion for reconsideration filed by ALPAP
(Gaston) in Case 2939-MC against the decision of Judge Salvador, denied the same. The said court’s
resolution was then appealed to this Court (L-33705).

L-35206

On October 3, 1970, the President of the Philippines certified a labor dispute between members of
ALPAP and the PAL to the Court of Industrial Relations. The dispute which had to do with union
economic demands was docketed as Case No. 101-IPA(B) and was assigned to Judge Ansberto P.
Paredes.

On October 7, 1970, after conferring with both parties for two days, Judge Paredes issued a return-to-
work order, the pertinent portions of which read as follows:

“PALEA and ALPAP, their officers and members, and all employees who have joined the present strikes
which resulted from the labor disputes certified by the President to the Court, or who have not reported
for work as a result of the strikes, are hereby ordered forthwith to call off the strikes and lift the picket
lines . . . and return to work not later than Friday, October 9, 1970, and management to admit them
back to work under the same terms and conditions of employment existing before the strikes, including
what has been earlier granted herein.

“PAL is ordered not to suspend, dismiss or lay-off any employee as a result of these strikes. Read into
this order is the provision of Section 19, C.A. 103, as amended, for the guidance of the parties.

“x x x

“Failure to comply with any provision of this Order shall constitute contempt of court, and the employee
failing or refusing to work by October 9, 1970, without justifiable cause, shall immediately be replaced
by PAL, and may not be reinstated without prior Court

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order and on justifiable grounds.”

On October 10, 1970, Judge Paredes, having been informed that the strikes had not been called off,
issued another order directing the strikers to lift their pickets and return to work and explaining that his
order of October 7, 1970 partook of the nature of amandatory injunction under the doctrine laid down
in Philippine Association of Free Labor Unions (PAFLU) vs. Hon. Joaquin M. Salvador, et al., (L-29471 and
L-29487, September 28, 1968).
The strike, however, continued until the industrial court en banc denied, on October 19, 1970, ALPAP’s
motion for reconsideration of the said orders.

On October 22, 1970, the strikers returned to work, except (according to the PAL) two pilots, one of
them being Felix C. Gaston who allegedly refused to take the flights assigned to him. Due to his refusal,
among other reasons, PAL terminated Gaston’s services on October 27, 1970. His dismissal was reported
to the industrial court on October 29, 1970. Thereafter, the court a quo set the validity of Gaston’s
dismissal for hearing, but, on several occasions, he refused to submit his side before the hearing
examiner, claiming that his case would be prosecuted through the proper forum at the proper time.

On November 24, 1970, the PAL filed an urgent ex parte motion with the industrial court to enjoin the
members of ALPAP from proceeding with their intention to retire or resign en masse. On November 26,
1970, Judge Paredes issued an order commanding ALPAP members—

“. . . not to strike or in any way cause any stoppage in the operation and service of PAL, under pain of
dismissal and forfeiture of rights, and privileges accruing to their respective employments should they
disregard this Order; and PAL is also ordered not to lockout any of such members and officers of ALPAP
under pain of contempt and cancellation of its franchise.”

ALPAP filed a motion for the reconsideration of the foregoing order claiming, among others, that it
subjected them to involuntary servitude:

“It is crystal-clear that the disputed Order in effect compels the members of petitioner to work against
their will. Stated differently, the members of petitioner association are being perced or forced by the
Trial Court to be in a state of slavery for the benefit of respondent corporation. In this regard, therefore,
the Trial Court grossly violated

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a constitutional mandate which states:

“No involuntary servitude in any form shall exist except as a punishment for crime whereof the party
shall have been duly convicted.’ (Article III, Section 1 (13)).

“The constitutional provision does not provide any condition as to the cause or causes of the
unwillingness to work. Suffice it to say that an employee for whatever reason of his own, cannot be
compelled and forced to work against his will.”

The court a quo, however, denied the foregoing motion for reconsideration on December 11, 1970.

Just the same, on December 12, 1970, a substantial majority of the members of ALPAP staged a mass
resignation and/or retirement from PAL:
“In vigorous protest to your provocative harrassment, unfair labor tactics, the contemptuous lockout of
our co-members and your vicious and vindictive attitude towards labor most exemplified by the illegal
termination of the services of our President, Capt. Felix C. Gaston. . .”

The mentioned individual letters of retirement/resignation were accepted by PAL on December 14,
1970, with the caveat that the pilots concerned will not be entitled to any benefit or privilege to which
they may otherwise be entitled by reason of their employment with the PAL, as the pilots’ acts
constituted a violation of the November 26, 1970 order of the industrial court.

On December 28, 1970, Ben Hur Gomez, alleging that he was elected President of ALPAP by its members
who did not join the mass resignation and retirement, filed a motion in Case 101-IPA (B) praying that he
be allowed to represent the ALPAP (which was theretofore represented by Capt. Felix Gaston) becuase
the pilots who retired or resigned from PAL ceased to be employees thereof and no longer have any
interest in the subject-matter of the said case. This was later converted into a motion to intervene on
February 9, 1971.

On September 1, 1971, Felix Gaston filed a motion for contempt against PAL stating that his dismissal
from PAL on October 27, 1970 was without just cause and in violation of the Order of the industrial
court dated October 7, 1970 as well as section 19 of C.A. 103. He prayed that he be reinstated.

On October 23, 1971, twenty-one pilots who filed their retirement from PAL filed a petition in the
industrial court

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praying also that they be readmitted to PAL or, failing so, that they be allowed to retire with the benefits
provided for under the PAL Retirement Plan or, if they are not yet eligible to retire under said Plan, that
they be given separation pay. In their petition for reinstatement, said pilots (who were later joined by
other pilots similarly situated) alleged, inter alia—

“1. That they are some of the employees of the respondent company and members of the petitioner
union who resigned en masse or retired en masse from the respondent after having been led to believe
in good faith by Capt. Felix Gaston who was then the uncontested president of the petitioner union and
their counsel that such a mass resignation or mass retirement was a valid exercise of their right to
protest the dismissal of Capt. Gaston in connection with the certified dispute that was pending before
the Court.

“2. That later on they came to know that such a mass resignation or mass recrement was enjoined by
this Honorable Court ‘under the pain of dismissal and forfeiting of rights and privileges accruing to their
respective employment if they disregarded such order of injunction.
“3. That they did not deliberately disregard such injunction order and if they failed to comply with it
within a reasonable time, it was because they were made to believe and assured by their leader that
such resignation or retirement was a lawful exercise of concerted action; that the full consequences of
such act was not explained to them by counsel; and, in addition, they were told that those who returned
to the company would be expelled from the union, and suffer the corresponding penalty.

“x x x.”

ALPAP (Gomez) opposed the foregoing petitions. In this connection, the records disclose that on August
20, 1971, 89 of the pilots who retired en masse from PAL filed a complaint with the Court of First
Instance of Manila in Case 15084 for the recovery of retirement benefits due them under the PAL
Retirement Plan. The complaint was dismissed by the trial court on PAL’s motion. The records, however,
do not disclose the reason for the said dismissal.

On December 23, 1971, Judge Paredes issued an order deferring action on the motion to dismiss the
petitions for reinstatement on the ground that the matters alleged in the said petitions would required
the submission of proof. ALPAP (Gomez) filed a motion for reconsideration of this order but the

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same was denied by the industrial court en banc for being pro forma.

On February 1, 1972, ALPAP (Gaston) joined and consolidated the mentioned petitions for
reinstatement. The same was opposed by both PAL and ALPAP (Gomez).

On March 24, 1972, ALPAP (Gomez) filed a motion to suspend the proceedings in Case 101-IPA(B) until
the prejudicial question of who should prosecute the main case (Case 101-IPA) is resolved. On April 18,
1972, Judge Paredes issued an order deferring the hearing of the main case until this Court shall have
decided L-33705, but allowing other matters, including the consolidated petition for reinstatement, to
be heard.

On May 5, 1972, ALPAP (Gomez) filed another motion to suspend the hearing on the mentioned petition
for reinstatement on the ground that this Court’s decision in L-33705 should be awaited. ALPAP (Gaston)
opposed that motion on the ground that the matter had already been denied twice and the order
setting the case for hearing was merely interlocutory. On May 15, 1972, Judge Paredes denied the said
motion to suspend the hearing on the petition for reinstatement “unless a countermanding Order is
issued by a higher Court.”

On May 18, 1972, ALPAP (Gomez) filed a motion for reconsideration of Judge Paredes’ order, alleging
that employee status of those who resigned or retired en masse was an issue in the mentioned Case
2939-MC the decision on which is still pending consideration before this Court in L-33705.
On June 19, 1972, the industrial court en banc passed a resolution reversing Judge Paredes’ order on the
ground that the question of the employee status of the pilots who were seeking reinstatement with PAL
has already been raised squarely in Case 2939-MC and resolved by the said tribunal which found that
the said pilots have already lost their employee status as a consequence of their resignations and/or
retirements from PAL which had been duly accepted by the latter.

DISCUSSION

In its brief before this Court, ALPAP (Gaston) states that it does not question the recognition extended
by PAL to ALPAP (Gomez) as the collective bargaining agent of all PAL pilots on

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active flight duty. Neither does it dispute the assumption by ALPAP (Gomez) of the authority to manage
and administer the collective bargaining agreement between ALPAP and PAL (which at any rate had
expired on January 31, 1972) nor the right of ALPAP (Gomez) to negotiate and conclude any other
collective bargaining agreement with PAL. What it disputes, however, is the authorization given by the
industrial court to ALPAP (Gomez), in a certification proceeding, to take over the corporate name, office
and funds of ALPAP.

This Court has always stressed that a certification proceeding is not a litigation, in the sense in which this
term is ordinarily understood, but an investigation of a non-adversary, fact-finding character in which
the Court of Industrial Relations plays the part of a disinterested investigator seeking merely to ascertain
the desires of employees as to the matter of their representation (National Labor Union vs. Go Soc and
Sons, 23 SCRA 436; Benguet Consolidated, Inc. vs. Bobok Lumber Jack Ass’n., L-11029, May 23, 1958;
Bulakena Restaurant and Caterer vs. C.I.R., 45 SCRA 95; LVN Pictures, Inc. vs. Philippine Musicians Guild
(FFW) and C.I.R., 1 SCRA 132). Such being the nature of a certification proceeding, we find no cogent
reason that should prevent the industrial court, in such a proceeding, from inquiring into and satisfying
itself about matters which may be relevant and crucial, though seemingly beyond the purview of such a
proceeding, to the complete realization of the well-known purposes of a certification case.

Such a situation may arise, as it did in the case at bar, where a group of pilots of a particular airline,
allegedly anticipation their forced retirement or resignation on account of strained relations with the
airline arising from unfulfilled economic demands, decided to adopt an amendment to their
organization’s constitution and by-laws in order to enable them to retain their membership standing
therein even after the termination of their employment with the employer concerned. The industrial
court definitely should be allowed ample discretion to secure a disclosure of circumstances which will
enable it to act fairly in a certification case.
This Court nonetheless finds, after a close and dispassionate study of the facts on record, that the
industrial court’s conclusion, that the mentioned amendment to the ALPAP constitution and by-laws is
illegal (a) because it was not adopted in accordance with the procedure prescribed and (b) because

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members of a labor organization cannot adopt an amendment to their fundamental charter so as to


include non-employees (of PAL) as members, is erroneous.

We have made a careful examination of the records of L-33705 and we find the adoption of the
resolution introducing the questioned amendment to be in substantial compliance with the ALPAP
constitution and by-laws. Indeed, there is no refutation of the fact that 221 out of the 270 members of
ALPAP did cast their votes in favor of the said amendment on October 30, 1970 at the ALPAP general
membership meeting.

This Court cannot likewise subscribe to the restrictive interpretation made by the court below of the
term “labor organization,” which Section 2(e) of R.A. 875 defines as “any union or association of
employees which exists, in whole or in part, for the purpose of collective bargaining or of dealing with
employers concerning terms and conditions of employment.” The absence of the condition which the
court below would attach to the statutory concept of a labor organization, as being limited to the
employees of a particular employer, is quite evident from the law. The emphasis of the Industrial Peace
Act is clearly on the purposes for which a union or association of employees is established rather than
that membership therein should be limited only to the employees of a particular employer. Trite to say,
under Section 2(h) of R.A. 875 “representative” is defined as including “a legitimate labor organization
or any officer or agent of such organization, whether or not employed by the employer or employee
whom he represents.” It cannot be overemphasized likewise that a labor dispute can exist “regardless of
whether the disputants stand in the proximate relation of employer and employee.” (Section 2(j), R.A.
875).

There is, furthermore, nothing in the constitution and bylaws of ALPAP which indubitably restricts
membership therein to PAL pilots alone.1 Although according to ALPAP

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1 Section 2(a), Article II of the ALPAP Constitution and By-Laws provides: “Any person of lawful age and
good moral character who serves as an air line pilot, i.e., first pilot or captain, co-pilot or first officer,
reserve pilot or reserve captain, or has served in these capacities in an air line transportation company,
shall be eligible for membership in the Association in accordance with the stipulations in this Section and
elsewhere in the Constitution and by-laws.”
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(Gomez there has never been an instance when a non-PAL pilot became a member of ALPAP, the
complete lack of any such precondition for ALPAP membership cannot but be interpreted as an
unmistakable authority for the association to accept pilots into its fold though they may not be under
PAL’s employ.

The fundamental assumptions relied upon by the industrial court as bases for authorizing ALPAP
(Gomez) to take over the office and funds of ALPAP being, in this Court’s opinion, erroneous, and, in the
absence of any serious dispute that on December 18-22, 1970 Felix C. Gaston, and four other pilots,
were elected by the required majority of ALPAP members as officers of their association, this Court
hereby rules that the mentioned authorization to ALPAP (Gomez) to take over the office, funds and
name of ALPAP was done with grave abuse of discretion.

Moreover, this Court cannot hold as valid and binding the election of Ben Hur Gomez as President of
ALPAP. He was elected et a meeting of only 45 ALPAP members called just one day after the election of
Felix C. Gaston as President of ALPAP who, as shown, received a majority of 180 votes out of a total
membership of 270. Under the provisions of section 4, article III of the Constitution and By-Laws of
ALPAP, duly elected officers of that association shall remain in office for ac least one year:

“The term of office of the officers of the Association shall start on the first day of the fiscal year of the
Association. It shall continue for one year or until they are reelected or until their successors have been
elected or appointed and takes office in accordance with the Constitution and by-laws.”

While this Court considers the ruling of the court below, on the matter of who has the exclusive rights to
the office, funds and name of ALPAP, as having been erroneously made, we cannot hold, however, that
those belonging to the group of ALPAP (Gomez) do not possess any right at all over the office, funds and
name of ALPAP of which they are also members.

In our opinion, it is perfectly within the powers and prerogatives of a labor organization, through its duly
elected officers, to authorize a segment of that organization to bargain collectively with a particular
employer, particularly where those constituting the segment share a common and distinguishable
interest, apart from the rest of their fellow union members, on

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matters that directly affect the terms and conditions of their particular employment. As the
circumstances pertinent to the case at bar presently stand, ALPAP (Gaston) has extended recognition to
ALPAP (Gomez) to enter and conclude collective bargaining contracts with PAL. Having given ALPAP
(Gomez) this authority, it would be clearly unreasonable on the part of ALPAP (Gaston) to disallow the
former a certain use of the office, funds and name of ALPAP when such use is necessary or would be
required to enable ALPAP (Gomez) to exercise, in a proper manner, its delegated authority to bargain
collectively with PAL. Clearly, an intelligently considered adjustment of grievances and integration of the
diverse and varying interests that not infrequently and, often, unavoidably permeate the membership of
a labor organization, will go a long way, in achieving peace and harmony within the ranks of ALPAP. Of
course, in the eventuality that the pilots presently employed by PAL and who subscribe to the leadership
of Ben Hur Gomez should consider it to their better interest to have their own separate office, name and
union funds, nothing can prevent them from setting up a separate labor union. In that eventuality,
whatever vested rights, interest or participation they may have in the assets, including cash funds, of
ALPAP as a result of their membership therein should properly be liquidated in favor of such
withdrawing members of the association.

On the matter of whether the industrial court also abuse its authority for allowing ALPAP (Gomez) to
appropriate the ALPAP name, it does not appear that the herein petitioner has shown below any
exclusive franchise or right to the use of that name. Hence, there is no proper basis for correcting the
action taken by the court below on this regard.

L-35206

The threshold issue posed in L-35206 is whether the Court of Industrial Relations acted without
jurisdiction and with grave abuse of discretion in promulgating the resolution dated June 19, 1972
suspending hearings on the mentioned petition for reinstatement until this Court shall have decided L-
33705.

We find no merit to the charge made.

While it is correct, as submitted by ALPAP (Gaston), that in the 1971 case of Philippine Federation of
Petroleum Workers

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(PFPW) vs. CIR (37 SCRA 716) this Court held that in a certified labor dispute all issues involved in the
same should be determined in the case where the certified dispute was docketed and that the parties
should not be permitted to isolate other germane issues or demands and reserve them for
determination in the other cases pending before other branches of the industrial court, non-compliance
with this rule is at best an error in procedure, rather than of jurisdiction, which is not beyond the power
of this Court to review where sufficient reasons exists, a situation not obtaining in the case at bar.

After a thoroughgoing study of the records of these two consolidated petitions, this Court finds that the
matter of the reinstatement of the pilots who retired or resigned from PAL was ventilated fully and
adequately in the certification case in all its substantive aspects, including the allegation of the herein
petitioners that they were merely led to believe in good faith that in retiring or resigning from PAL they
were simply exercising their rights to engage in concerted activity. In the light of the circumstances thus
found below, it can be safely concluded that the mass retirement and resignation action of the herein
petitioners was intentionally planned to abort the effects of the October 7, 10 and 19, 1970 return-to-
work orders of the industrial court (which they, in fact, ignored for more than a week) by placing
themselves beyond the jurisdictional control of the said court through the umbrella of the constitutional
prohibition against involuntary servitude, thereby enabling them to pursue their main pressure
objective of grounding most, if not all, PAL flight operations. Clearly, the powers given to the industrial
court in a certified labor dispute will be meaningless and useless to pursue where its jurisdiction cannot
operate.

We cannot consequently disagree with the court a quo when it concluded that the actuations of the
herein petitioners after they retired and resigned en masse —their retrieval of deposits and other funds
from the ALPAP Cooperative Credit Union on the ground that they have already retired or resigned,
their employment with another airline, the filing of a civil suit for the recovery of their retirement pay
where they invoked the provision against involuntary servitude to obtain payment thereof, and their
repeated manifestations before the industrial court that their retirement and resignation were not
sham, but voluntary and intentional—are, in the aggregate, indubitable

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indications that the said pilots did retire/resign from PAL with full awareness of the likely consequences
of their acts. Their protestations of good faith, after nearly a year of underscoring the fact that they
were no longer employed with PAL, cannot but appear to a reasonable mind as a late and regrettable
ratiocination.

Parenthetically, contrary to ALPAP (Gaston)’s argument that the pilots’ retirement/resignation was a
legitimate concerted activity, citing Section 2(1) of the Industrial Peace Act which defines “strike” as
“any temporary stoppage of work by the concerted action of employees as a result of an industrial
dispute,” it is worthwhile to observe that as the law defines it, a strike means only a “temporary
stoppage of work.” What the mentioned pilots did, however, cannot be considered, in the opinion of
this Court, as mere “temporary stoppage of work.” What they contemplated was evidently a permanent
cut-off of employment relationship with their erstwhile employer, the Philippine Air Lines. In any event,
the dispute below having been certified as existing in an industry indispensable to the national interest,
the said pilots’ rank disregard for the compulsory orders of the industrial court and their daring and
calculating venture to disengage themselves from that court’s jurisdiction, for the obvious purpose of
satisfying their narrow economic demands to the prejudice of the public interest, are evident badges of
bad faith.

A legitimate concerted activity is a matter that cannot be used to circumvent judicial orders or be tossed
around like a plaything. Definitely, neither employers nor employees should be allowed to make of
judical authority a now-you’ve-got-it-now-you-don’t affair. The courts cannot hopefully effectuate and
vindicate the sound policies of the Industrial Peace Act and all our labor laws if employees, particularly
those who on account of their highly advanced technical background and relatively better life status are
far above the general working class spectrum, will be permitted to defy and invoke the jurisdiction of
the courts whenever the alternative chosen will serve to feather their pure and simple economic
demands.

ACCORDINGLY, in L-33705 the resolution of the Court of Industrial Relations dated June 15, 1971
upholding the decision of Judge Joaquin M. Salvador dated May 29, 1971 is hereby modified in
accordance with the foregoing opinion. Felix C. Gaston or whoever may be the incumbent President of
ALPAP

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is hereby ordered to give to any member withdrawing his membership from ALPAP whatever right,
interest or participation such member may have in the assets, including cash funds, of ALPAP as a result
of his membership in that association.

In L-35206, the petition assailing the resolution of the Court of Industrial Relations dated June 19, 1972,
is hereby dismissed for lack of merit insofar as the petitioners’ allegations of their right to reinstatement
with PAL is concerned. With reference to the alternative action, re: payment of their claims for
retirement or separation pay, the Secretary of Labor, in accordance with the applicable procedure
prescribed by law, is hereby ordered to determine whether such claim is in order, particularly in view of
the caveat made by PAL, in accepting the petitioners’ individual letters of retirement/resignation, that
said petitioners shall not be entitled to any benefit or privilege to which they may otherwise be entitled
by reason of their employment with PAL as the former’s acts constituted a violation of the order of the
industrial court dated November 26, 1970.

Without costs in both instances.

Barredo, Makasiar, Antonio, Muñoz Palma, Concepcion Jr., and Martin, JJ.,concur. Fernando, J.,
concurs in the opinion of the Chief Justice in L-33705 and in the opinion of Justice Teehankee in L-35206.

Teehankee, J., files a separate opinion.


Aquino, J., did not take part.

SEPARATE OPINION

TEEHANKEE, J.:

In L-33705, a certification proceeding, I concur with the ruling1 that there is nothing in the law which
supports respondent court’s restrictive interpretation that would limit membership in a labor
organization to the employees of a particular employer, (for such an archaic view would be practically a
death blow to the cause of unionism and would

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1 At page 14, decision.

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fragment unions into as many employers that there may be); and that specifically in the case of ALPAP
(Air Line Pilots Association of the Philippines) there is nothing in its Constitution and by-laws that would
restrict its membership to Philippine Air Lines, Inc. (PAL) pilots alone. (Obviously, the organizational set
up was for ALPAP as a union to be composed of all airline pilots in the Philippines regardless of
employer, patterned after the ALPAP (Air Line Pilots Association) in the United States which has a
reputed membership of 46,000 with locals established by the members at their respective companies of
employment).

The Court therefore properly upheld the election of the Gaston faction by a clear majority of the ALPAP
membership (221 out of 270) as against the Gomez faction of 45 members; recognized Gaston’s election
as president of ALPAP as against the rump election of Gomez to the same position; and ruled out
respondent court’s action of authorizing the Gomez faction to take over the office, funds and name of
ALPAP as a grave abuse of discretion and a nullity.

Of course, only the pilots actually in the employ of the PAL to the exclusion of those who had resigned
or retired or otherwise been separated from its employment could take part in the PAL certification
election. Under normal circumstances, the ALPAP as the duly organized labor union (composed of both
factions) would manage and administer the collective bargaining agreement arrived at between
employer and employees.

But this did not hold true in the present case, since in effect the Gomez faction consisting of pilots who
continued in the employ of PAL and did not follow the action of the majority composing the Gaston
faction of resigning and retiring en masse from their employment separated themselves from ALPAP and
were granted separate recognition by PAL as the ALPAP (Gomez) faction constituting the exclusive
collective bargaining representation for the pilots who continued in its employ. The original union ALPAP
as headed by Gaston on concedes this and makes it quite clear in its brief that it does not question the
recognition extended by PAL to the Gomez faction nor the latter’s right to manage and administer the
collective bargaining agreement and to negotiate and conclude any other collective bargaining
agreement with PAL.

The actual dispute was thus reduced to whether the Gomez

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faction in separating themselves from ALPAP as headed by Gaston could take over and appropriate the
corporate name, office and funds of ALPAP, as authorized by respondent court.

Such take-over or appropriation of ALPAP by the Gomez faction could not be validly done nor authorized
by respondent court, as now ruled by this Court. But since ALPAP does recognize the right of the Gomez
faction to separate and secede from ALPAP and for the members of the Gomez faction composed of
pilots who have remained in the employ of PAL to form thier own union, the Court’s judgment has
ordered ALPAP as headed by Gaston as the recognized president thereof or his duly elected successor to
give to any withdrawing member, i.e. the members of the Gomez faction “whatever right, interest or
participation such member may have in the assets, including cash funds of ALPAP as a result of his
membership in that association.”

I take this to mean that ALPAP is thereby ordered to liquidate the membership of each withdrawing
member (although ALPAP is a non-stock association) and give him the equivalent of the net book value
in cash of his aliquot share in the net assets of ALPAP as of the date of withdrawal de facto of the Gomez
faction which may be fixed as December 23, 1970, the date when Ben Hur Gomez was elected as
president of his faction by ALPAP members who did no join the mass resignation or retirement. I believe
that in fairness the equivalent value of any use made by the Gomez faction of the ALPAP office and
funds from and after their date of withdrawal (which obviously was in and for their own exclusive
interest and benefit) should in turn be offset against whatever may be determined to be the collective
value of their ALPAP membership as of the date of their withdrawal on December 23, 1970.

In L-35206, the judgment penned by the Chief Justice rejects the petitioners-pilots’ petition for
readmission to PAL and their grounds in support thereof, inter alia, that they were led to believe in good
faith by their union president Gaton and their counsel that their mass resignation and retirement were a
valid exercise of their right to protest the dismissal of Gaston notwithstanding the pendency of their
certified dispute in the industrial court, that they were assured by their leader that it was a lawful
exercise of concerted action, that the full consequences of such act were not explained to them by
counsel
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and that they had so acted under threat of expulsion from the union (which appear to be borne out by
the fact that within the year after finally appreciating the full consequences of their illconceived mass
protest retirement and resignation they sought to withdraw the same and petitioned for readmission in
line with the return-to-work orders).

The principal ground for the Court’s judgment cannot be faulted, to wit, that such action of mass
retirement and resignation which plainly intended to abort the effects of the industrial court’s return-to-
work orders and to place petitionerspilots beyond the court’s jurisdictional control, after the President
had certified the labor dispute thereto for compulsory arbitration in the public interest, could not be
sanctioned nor tolerated since “clearly, the powers given to the industrial court in a certified labor
dispute will be meaningless and useless to pursue where its jurisdiction cannot operate.”2

Still, since the industrial court en banc set aside Judge Paredes’ orders to receive proof on the pilots’
petitions for reinstatement on the basis inter alia of the Gomez faction’s contention that the prejudicial
question of who of the two factions should prosecute the main case (the labor dispute) should first be
resolved in the certification case pending as Case L-33705 before this Court3 and since the matters
raised in the petition for reinstatement were quite serious and did required the submission of proof as
held by Judge Paredes in the December 23, 1971 order, the question of merit of the pilots’ rank-and-file
petitions for reinstatement could perhaps have been deferred and likewise remanded to the National
Labor Relations Commission—since after all their alternative prayer for payment of their claims for
retirement or separation pay is being remanded to the National Labor Relations Commission “to
determine whether such claim is in order” by receiving the proof of the parties—and such proof covers
the very same matters raised as supporting grounds and reasons in the petitions for reinstatement.

After all, if the pilots duly substantiated with convincing proof their allegations in support of their
petitions for reinstatement that they had been misled and/or coerced by their leader and counsel into
presenting their mass retirement

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2 At page 17, decision.

3 At page 11, decision.

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and resignation without the full consequences having been explained to them the pilots would be in the
same situation of rank-and-file members of a union who engage in an illegal strike, in which case under
this Court’s liberal and compassionate doctrine, only the leaders (and those who actually resorted to
violence which is of no application here) would receive the capital of dismissal—unless this Court were
somehow to make an exception of the pilots and exclude them from the application of this established
doctrine because “of their highly advanced technical background and relatively better life status—far
above the general working class spectrum.”4

Withal, the Court’s decision requires the National Labor Relations Commission with reference to the
pilots’ alternative claims for retirement or separation pay “to determine whether such claim is in order,
particularly in view of the caveat made by PAL, in accepting the petitioners’ individual letters of
retirement/resignation, that said petitioners shall not be entitled to any benefit or privilege to which
they may otherwise be entitled by reason of their employment with PAL as the former’s acts constituted
a violation of the order of the industrial court dated November 26, 1970.”

The said November 26, 1970 order commanded ALPAP members “not to strike or in any way cause any
stoppage in the operation and service of PAL, under pain of dismissal and forfeiture of rights and
privileges accruing to their respective employments should they disregard this Order; and PAL is also
ordered not to lockout any of such members and officers of ALPAP under pain of contempt and
cancellation of its franchise.”

I venture to suggest as a specific guideline5 for the National Labor Relations Commission’s consideration
(in order to expedite settlement of the case and assuage the anxieties of petitioners and their families)
that the pending question appears to be one of law, whose resolution would not be affected by the
proof that may be submitted to the said commission upon remand of the case.

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4 At page 18, decision.

5 See also writer’s suggested guidelines in his separate opinion in PCIB vs. Escolin, 56 SCRA 266, 405
(1974) and 67 SCRA 202, 204 (Sept. 30, 1975) re Resolution on motions for reconsideration.

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The question of law is: was it within the industrial court’s power as provided in Judge Paredes’ above-
quoted order to order “forfeiture of rights and privileges accruing to their respective employments”
should they disregard his return-to-work order? It should be noted that the PAL in accepting the letters
of retirement/resignation made the caveat that the pilots concerned would forfeit any retirement
benefit or privilege that they would otherwise be entitled to by reason of their employment with PAL, as
their acts constituted a violation of the cited return-to-work order, thus indicating that were it not for
such order, PAL would have no basis for imposing any forfeiture of earned retirement privileges since it
was in turn accepting the pilots’ retirement and resignation.

If the industrial court had no such power to order forfeiture of the pilots’ retirement/resignation
privileges and benefits for violation of its return to work order, then there would be no legal basis for
the denial of such retirement privileges and benefits.

That the industrial court had such power is open to grave doubts. For disregard and violation of the
return to work order, the industrial court could impose the capital penalty of dismissal from
employment. True, the pilots carried out an ill-advised mass retirement/resignation to abort the effects
of the return-to-work order but the effectiveness of the penalty of dismissal is borne out by the fact that
within the year the pilots had come to realize and regret the futility of their act and were seeking
readmission. Then again, the industrial Court had the power of contempt—it could have declared the
mass retirement illegal as this Court has in fact so declared and used its coercive power of contempt
under Rule 71, section 7 by requiring imprisonment of the petitioners until they purged themselves of
contempt by complying with the return-to-work order.

But to declare the forfeiture of retirement privileges and benefits which the petitioners had earned and
would otherwise be entitled to by reason of their years of employment of PAL appears to be beyond the
coercive as well as punitive powers of the industrial court—in the same way that is threatened
cancellation of PAL’s franchise as granted by Congress for violation of the lockout prohibition aspect of
the same order was beycnd its powers.

The end result, then, would be that assuming that petitioners

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had willfully violated the return-to-work order of November 26, 1970 and had not been misled into
presenting their mass retirement/resignation, such violation could not legally result in a forfeiture of
their retirement privileges and benefits as decreed in the order since such forfeiture was beyond the
industrial court’s power and authority. Their loss of employment and the denial of their readmission
certainly constitute sufficient punishment and vindication of the court’s authority. All the more so would
such non-forfeiture of earned retirement privileges and benefits be in consonance with fairness and
equity should the pilots duly establish the factual averments of their cited petition for readmission and
for payment of their said privileges and benefits.

In L-33705, resolution modified. In L-35206, petition dismissed.


Notes.—Illegally laid employees are entitled to leave benefits during the period of their layoff in
addition to back wages. (Philippine Air Lines, Inc. vs. Philippine Airlines Employees Association, 19 SCRA
483; Philippine Sugar Institute vs. Court of Industrial Relations, 19 SCRA 471).

The existence of a valid cause for dismissal negatives the claim that an employee was dismissed for
union activities because the idea of dismissal, as an unfair labor practice, is incompatible with dismissal
for a just cause. (Ormoc Sugar Co., Inc. vs. OSCO Workers’Fraternity Labor Union, 1 SCRA 21).

An employer is entitled to fire employees for a just cause and challenging a superior officer to a flight is
a sufficient ground for such dismissal as a measure of self-protection of the employer whose interest
was jeopardized thereby. (Mindanao Rapid Co., Inc. vs. Omandam, 42 SCRA 250).

Reinstatement refers to a restoration to a state from which one has been removed, or a return to the
position from which one was taken out. Reinstatement presupposes that the previous position from
which one had been removed still exists, or that there is an unfilled position more or less of similar
nature as the one previously occupied by the employee. (Philippine Engineering Corporation vs. Court of
Industrial Relations, 41 SCRA 89). Reinstatement is not possible anymore where the position formerly
held is no longer available. The law cannot exact compliance with what is impossible. (Ibid.).

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The burden is upon the petitioner union to show before the respondent court that reinstatement of the
employees concerned is justified in spite of their failure to comply strictly with the return-to-work order,
or that the refusal of the respondent employer to reinstate them constitutes unjust discrimination.
(Philippine Air Lines Employees’ Association vs. PAL, 38 SCRA 373).

——o0o—— Air Line Pilots Association of the Philippines vs. Court of Industrial Relations, 76 SCRA 274,
No. L-33705, No. L-35206 April 15, 1977

484

SUPREME COURT REPORTS ANNOTATED

Reyes vs. Trajano

G.R. No. 84433. June 2, 1992.*

ALEXANDER REYES, ALBERTO M. NERA, EDGARDO M. GECA, and 138 others, petitioners, vs.
CRESENCIANO B. TRAJANO, as Officer-in-Charge, Bureau of Labor Relations, Med-Arbiter PATERNO
ADAP, and TRI-UNION EMPLOY-EES UNION, et al., respondents.
Labor Law; Words and Phrases; The right to self-organization includes the right not to form or join a
union.—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.

Same; Same; Same.—The purpose of a certification election is precisely the ascertainment of the
wishes of the majority of the employees in the appropriate bargaining unit: to be or not to be
represented by a labor organization, and in the affirmative case, by which particular labor
organization. If the results of the election should disclose that the majority of the workers do not wish
to be represented by any union, then their wishes must be respected, and no union may properly be
certified as the exclusive representative of the workers in the bargaining unit in dealing with the
employer regarding wages, hours and other terms and conditions of employment. The minority
employees—who wish to have a union represent them in collective bargaining—can do nothing but
wait for another suitable occasion to petition for a certification election and hope that the results will
be different. They may not and should not be permitted, however, to impose their will on the
majority—who do not desire to have a union certified as the exclusive workers' benefit in the
bargaining unit—upon the plea that they, the minority workers, are being denied the right of self-
organization and collective bargaining. As repeatedly stated, the right of self-organization embraces
not only the right to form, join or

_______________

* SECOND DIVISION.

485

VOL. 209, JUNE 2, 1992

485

Reyes vs. Trajano

assist labor organizations, but the concomitant, converse right NOT to form, join or assist any labor
union.

Same; INK employees have the right to participate in a certification election and vote for "No
Union."—That the INK employees, as employees in the same bargaining unit in the true sense of the
term, do have the right of self-organization, is also in truth beyond question, as well as the fact that
when they voted that the employees in their bargaining unit should be represented by "NO UNION,"
they were simply exercising that right of self-organization, albeit in its negative aspect. The
respondents' argument that the petitioners are disqualified to vote because they "are not constituted
into a duly organized labor union"—"but members of the INK which prohibits its followers, on
religious grounds, from joining or forming any labor organization"—and "hence, not one of the unions
which vied for certification as sole and exclusive bargaining representative," is specious. Neither law,
administrative rule nor jurisprudence requires that only employees affiliated with any labor
organization may take part in a certification election. On the contrary, the plainly discernible
intendment of the law is to grant the right to vote to all bona fide employees in the bargaining unit,
whether they are members of a labor organization or not,

Same; Failure to take part in previous elections no bar to right to participate in future elections.—
Neither does the contention that petitioners should be denied the right to vote because they "did not
participate in previous certification elections in the company for the reason that their religious beliefs
do not allow them to form, join or assist labor organizations," persuade acceptance. No law,
administrative rule or precedent prescribes forfeiture of the right to vote by reason of neglect to
exercise the right in past certification elections. In denying the petitioners' right to vote upon these
egregiously fallacious grounds, the public respondents exercised their discretion whimsically,
capriciously and oppressively and gravely abused the same.

PETITION for certiorari to review the decision of the Bureau of Labor Relations.

The facts are stated in the opinion of the Court.

Eliseo M. Cruz for petitioners.

Potenciano Flores, Jr. for private respondents.

486

486

SUPREME COURT REPORTS ANNOTATED

Reyes vs. Trajano

NARVASA, C.J.:

The officer-in-charge of the Bureau of Labor Relations (Hon. Cresenciano Trajano) sustained the denial
by the Med Arbiter of the right to vote of one hundred forty-one (141) members of the "Iglesia ni Kristo"
(INK), all employed in the same company, at a certification election at which two (2) labor organizations
were contesting the right to be the exclusive representative of the employees in the bargaining unit.
That denial is assailed as having been done with grave abuse of discretion in the special civil action of
certiorari at bar, commenced by the INK members adversely affected thereby.

The certification election was authorized to be conducted by the Bureau of Labor Relations among the
employees of TriUnion Industries Corporation on October 20, 1987. The competing unions were the Tri-
Union Employees Union-Organized Labor Association in Line Industries and Agriculture (TUEUOLALIA),
and Trade Union of the Philippines and Allied Services (TUPAS). Of the 348 workers initially deemed to
be qualified voters, only 240 actually took part in the election, conducted under the supervision of the
Bureau of Labor Relations, Among the 240 employees who cast their votes were 141 members of the
lNK.

The ballots provided for three (3) choices. They provided for votes to be cast, of course, for either of the
two (2) contending labor organizations, (a) TUPAS and (b) TUEU-OLALIA; and, conformably with
established rule and practice,1 for (c) a third choice: "NO UNION."

The final tally of the votes showed the following results;

TUPAS

TUEU-OLALIA

95

NO UNION

SPOILED

CHALLENGED

141

The challenged votes were those cast by the 141 INK members. They were segregated and excluded
from the final count in

________________

1 SEE footnote 5, infra.

487

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487

Reyes vs. Trajano

virtue of an agreement between the competing unions, reached at the pre-election conference, that the
INK members should not be allowed to vote "because they are not members of any union and refused
to participate in the previous certification elections."
The INK employees promptly made known their protest to the exclusion of their votes. They filed a
petition to cancel the election alleging that it "was not fair" and the result thereof did "not reflect the
true sentiments of the majority of the employees." TUEU-OLALIA opposed the petition. It contended
that the petitioners "do not have legal personality to protest the results of the election," because "they
are not members of either contending unit, but ** of the INK" which prohibits its followers, on religious
grounds, from joining or forming any labor organization **."

The Med-Arbiter saw no merit in the INK employees' petition. By Order dated December 21, 1987, he
certified the TUEUOLALIA as the sole and exclusive bargaining agent of the rank-and-file employees. In
that Order he decided the fact that "religious belief was (being) utilized to render meaningless the rights
of the non-members of the Iglesia ni Kristo to exercise the rights to be represented by a labor
organization as the bargaining agent," and declared the petitioners as "not possessed of any legal
personality to institute this present cause of action" since they were not parties to the petition for
certification election.

The petitioners brought the matter up on appeal to the Bureau of Labor Relations. There they argued
that the MedArbiter had "practically disenfranchised petitioners who had an overwhelming majority,"
and "the TUEU-OLALIA certified union cannot be legally said to have been the r esult of a valid election
where at least fifty-one percent of all eligible voters in the appropriate bargaining unit shall have cast
their votes." Assistant Labor Secretary Cresenciano B. Trajano, then Officer-in-Charge of the Bureau of
Labor Relations, denied the appeal in his Decision of July 22, 1988. He opined that the petitioners are
"bereft of legal personality to protest their alleged disenfranchisement" since they "are not constituted
into a duly of ganized labor union, hence, not one of the unions which vied for certification as sole and
exclusive bargaining represen-

488

488

SUPREME COURT REPORTS ANNOTATED

Reyes vs. Trajano

tative." He also pointed out that the petitioners "did not participate in previous certification elections in
the company for the reason that their religious beliefs do not allow them to form, join or assist labor
organizations."

It is this Decision of July 22,1988 that the petitioners would have this Court annul and set aside in the
present special civil action of certiorari.

The Solicitor General having expressed concurrence with the position taken by the petitioners, public
respondent NLRC was consequently required to file, and did thereafter file, its own comment on the
petition. In that comment it insists that "if the workers who are members of the Iglesia ni Kristo in the
exercise of their religious belief opted not to join any labor organization as a consequence of which they
themselves can not have a bargaining representative, then the right to be represented by a bargaining
agent should not be denied to other members of the bargaining unit."
Guaranteed to all employees or workers is the "right to selforganization and to form, join, or assist labor
organizations of their own choosing for purposes of collective bargaining." This is made plain by no less
than three provisions of the Labor Code of the Philippines.2 Article 243 of the Code provides as follows:3

ART. 243. Coverage and employees right to self-organization.—All persons employed in commercial,
industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions
whether operating for profit or not, shall have the right to self-organization and to form, join, or assist
labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent
and itinerant workers, self-employed people, rural workers and those without any definite employers
may form labor organizations for their mutual aid and protection.

Article 248 (a) declares it to be an unfair labor practice for an employer. among others. to "interfere
with? restrain or coerce employees in the exercise of their right to self-organization." Similarly, Article
249 (a) makes it an unfair labor practice for a

_______________

2 As amended inter alia by R.A. Nos. 6715, 6725 and 6727.

3 Italics supplied.

489

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489

Reyes vs. Trajano

labor organization to "restrain or coerce employees in the exercise of their rights to self-organization
xx."

The same legal proposition is set out in the Omnibus Rules Implementing the Labor Code, as amended,
as might be expected. Section 1, Rule II (Registration of Unions), Book V (Labor Relations) of the
Omnibus Rules provides as follows:4

"SEC. 1. Who may join unions; exception.—All persons employed in commercial, industrial and
agricultural enterprises, including employees of government corporations established under the
Corporation Code as well as employees of religious, medical or educational institutions, whether
operating for profit or not, except managerial employees, shall have the right to self-organization and to
form, join or assist labor organizations for purposes of collective bargaining. Ambulant, intermittent and
itinerant workers, self-employed people, rural workers and those without any definite employers may
form labor organizations for their mutual aid and protection.

x x x x."
The right of self-organization includes the right to organize or affiliate with a labor union or determine
which of two or more unions in an establishment to join, and to engage in concerted activities with co-
workers for purposes of collective bargaining through representatives of their own choosing, or for their
mutual aid and protection, i.e., the protection, promotion, or enhancement of their rights and
interests.5

Logically, the right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign from a labor
organization, is subsumed in the right to join, affiliate with, or assist any union, and to maintain
membership therein. The right to form or join a labor organization necessarily includes the right to
refuse or refrain from exercising said right. It is self-evident that just as no one should be denied the
exercise of a right granted by law, so also, no one should be compelled to exercise such a conferred
right. The fact that a person has opted to acquire membership in a labor union does not preclude his
subsequently opting to

_______________

4 Italics supplied.

5 ART. 247, Labor Code, as amended; SEE Fernandez and Quiazon, Law of Labor Relations, p. 162,

490

490

SUPREME COURT REPORTS ANNOTATED

Reyes vs. Trajano

renounce such membership.6

As early as 1974 this Court had occasion to expatiate on these self-evident propositions in Victoriano v.
Elizalde Rope Workers' Union, et al.,7 viz.:

"x x What the Constitution and Industrial Peace Act recognize and guarantee is the 'right' to form or join
associations. Notwithstanding the different theories propounded by the different schools of
jurisprudence regarding the nature and contents of a 'right/ it can be safely said that whatever theory
one subscribes to, a right comprehends at least two broad notions, namely: first, liberty or freedom, i.e.,
the absence of legal restraint, whereby an employee may act for himself without being prevented by
law; second, power, whereby an employee may, as he pleases, join or refrain from joining an
association. It is therefore the employee who should decide for himself whether he should join or not an
association; and should he choose to join, he himself makes up his mind as to which association he
would join; and even after he has joined, he still retains the liberty and the power to leave and cancel his
membership with said organization at any time (Pagkakaisa Samahang Manggagawa ng San Miguel
Brewery vs. Enriquez, et al, 108 Phil 1010, 1019). It is clear, therefore, that the right to join a union
includes the right to abstain from joining any union (Abo, et al. vs. PHILAME [KG] Employees Union, et al,
L19912, January 20, 1965, 13 SCRA 120, 123, quoting Rothenberg, Labor Relations). Inasmuch as what
both the Constitution and the Industrial Peace Act have recognized, and guaranteed to the employee, is
the 'right' to join associations of his choice, it would be absurd to say that the law also imposes, in the
same breath, upon the employee the duty to join associations. The law does not enjoin an employee to
sign up with any association."

The right to refuse to join or be represented by any labor organization is recognized not only by the law
but also in the

_______________

6 To be sure, the right not to join a union, or discontinue membership therein, is subject to certain
qualifications or exceptions as e.g., when there is a closed shop or similar agreement in effect in the
establishment, although it has been held that such agreements are not applicable to any religious sect
which prohibits affiliation of their members in any labor organization (Sec. 4(a), R.A. 875 [The Industrial
Peace Act], as amended by R.A. No. 3350)

7 59 SCRA 54, 66-67 (1974).

491

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491

Reyes vs. Trajano

rules drawn up for implementation thereof. The original Rules on Certification promulgated by the
defunct Court of Industrial Relations required that the ballots to be used at a certification election to
determine which of two or more competing labor unions would represent the employees in the
appropriate bargaining unit should contain, aside from the names of each union, an alternative choice of
the employee voting, to the effect that he desires not to be represented by any union.8 And where only
one union was involved, the ballots were required to state the question—"Do you desire to be
represented by said union?"—as regards which the employees voting would mark an appropriate
square, one indicating the answer, "Yes," the other, "No."

To be sure, the present implementing rules no longer explicitly impose the requirement that the ballots
at a certification election include a choice for "NO UNION." Section 8 (Rule VI, Book V of the Omnibus
Rules) entitled "Marking and canvassing of votes," pertinently provides that:

"xx (a) The voter must write a cross (X) or a check (/) in the square opposite the union of his choice. If
only one union is involved, the voter shall make his cross or check in the square indicating 'YES' or 'NO.'

x x x x."

Withal, neither the quoted provision nor any other in the Omnibus Implementing Rules expressly bars
the inclusion of that choice of "NO UNION" in the ballots. Indeed, it is doubtful if the employee's
alternative right NOT to form, join or assist any labor organization or withdraw or resign from one may
be validly eliminated and he be consequently coerced to vote for one or another of the competing
unions and be represented by one of them. Besides, the statement in the quoted provision that "(i)f only
one union is involved, the voter shall make his cross or check in the square indicating 'YES' or 'NO,' is
quite clear acknowledgment of the alternative possibility that the "NO" votes may outnumber the "YES"
votes—indicating that the

______________

8 SEE Fernandez & Quiazon, op. cit, pp. 499-501.

492

492

SUPREME COURT REPORTS ANNOTATED

Reyes vs. Trajano

majority of the employees in the company do not wish to be represented by any union—in which case,
no union can represent the employees in collective bargaining. And whether the prevailing "NO" votes
are inspired by considerations of religious belief or discipline or not is beside the point, and may not be
inquired into at all.

The purpose of a certification election is precisely the ascertainment of the wishes of the majority of the
employees in the appropriate bargaining unit: to be or not to be represented by a labor organization,
and in the affirmative case, by which particular labor organization, If the results of the election should
disclose that the majority of the workers do not wish to be represented by any union, then their wishes
must be respected, and no union may properly be certified as the exclusive representative of the
workers in the bargaining unit in dealing with the employer regarding wages, hours and other terms and
conditions of employment. The minority employees—who wish to have a union represent them in
collective bargaining—can do nothing but wait for another suitable occasion to petition for a
certification election and hope that the results will be different. They may not and should not be
permitted, however, to impose their will on the majority—who do not desire to have a union certified as
the exclusive workers' benefit in the bargaining unit—upon the plea that they, the minority workers, are
being denied the right of self-organization and collective bargaining, As repeatedly stated, the right of
self-organization embraces not only the right to form, join or assist labor organizations, but the
concomitant, converse right NOT to form, join or assist any labor union.

That the INK employees, as employees in the same bargaining unit in the true sense of the term, do
have the right of selforganization, is also in truth beyond question, as well as the fact that when they
voted that the employees in their bargaining unit should be represented by "NO UNION," they were
simply exercising that right of self-organization, albeit in its negative aspect.

The respondents' argument that the petitioners are disqualified to vote because they "are not
constituted into a duly organized labor union"—"but members of the INK which prohibits its followers,
on religious grounds, from joining or forming any
493

VOL. 209, JUNE 2, 1992

493

Reyes vs. Trajano

labor organization"—and "hence, not one of the unions which vied for certification as sole and exclusive
bargaining representative," is specious. Neither law, administrative rule nor jurisprudence requires that
only employees affiliated with any labor organization may take part in a certification election. On the
contrary, the plainly discernible intendment of the law is to grant the right to vote to all bona fide
employees in the bargaining unit, whether they are members of a labor organization or not. As held in
Airtime Specialists, Inc. v. Ferrer-Calleja.9

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

Neither does the contention that petitioners should be denied the right to vote because they "did not
participate in previous certification elections in the company for the reason that their religious beliefs do
not allow them to form, join or assist labor organizations," persuade acceptance. No law, administrative
rule or precedent prescribes forfeiture of the right to vote by reason of neglect to exercise the right in
past certification elections. In denying the petitioners' right to vote upon these egregiously fallacious
grounds, the public respondents exercised their discretion whimsically, capriciously and oppressively
and gravely abused the same.

WHEREFORE, the petition for certiorari is GRANTED; the

_______________

9 180 SCRA 749, 754 (1989).

494

494

SUPREME COURT REPORTS ANNOTATED


San Miguel Corporation vs. NLRC

Decision of the then Officer-in-Charge of the Bureau of Labor Relations dated December 21, 1987
(affirming the Order of the Med-Arbiter dated July 22, 1988) is ANNULLED and SET ASIDE; and the
petitioners are DECLARED to have legally exercised their right to vote, and their ballots should be
canvassed and, if validly and properly made out, counted and tallied for the choices written therein.
Costs against private respondents.

SO ORDERED.

Paras, Padilla and Regalado, JJ., concur.

Nocon, J., On leave.

Petition granted; decision annulled and set aside.

Notes.—Employees' right to form union to protect their interest in statutorily and constitutionally
recognized (Vassar Industries Employees Union (VIEU) vs. Estrella, 82 SCRA 280).

The right of employees to join any labor organization is protected by the Constitution (Ibid, 82 SCRA
280).

——o0o—— Reyes vs. Trajano, 209 SCRA 484, G.R. No. 84433 June 2, 1992

VOL. 211, JULY 3, 1992

95

Philippine Fruits and Vegetables Industries, Inc. vs. Torres

G.R. No. 92391. July 3, 1992.*

PHILIPPINE FRUITS AND VEGETABLE INDUSTRIES, INC., petitioner, vs. HON. RUBEN D. TORRES, in his
capacity as Secretary of the Department of Labor and Employment and TRADE UNION OF THE
PHILIPPINES AND ALLIED SERVICES (TUPAS), respondents.

Labor Law; Words and Phrases; Meaning of “Close of election proceedings.”—As explained correctly
by the Solicitor General, the phrase “close of election proceedings” as used in Sections 3 and 4 of the
pertinent Implementing Rules refers to that period from the closing of the polls to the counting and
tabulation of the votes as it could not have been the intention of the Implementing Rules to include in
the term “close of the election proceedings” the period for the final determination of the challenged
votes and the canvass thereof, as in the case at bar which may take a very long period. Thus, if a
protest can be formalized within five days after a final determination and canvass of the challenged
votes have been made, it would result in an undue

__________________

*SECOND DIVISION.
96

96

SUPREME COURT REPORTS ANNOTATED

Philippine Fruits and Vegetables Industries, Inc. vs. Torres

delay in the affirmation of the employees’ expressed choice of a bargaining representative.

Same; One-day deficiency in giving notice of holding of certification election is insignificant where
compelling majority took part in election.—Petitioner would likewise bring into issue the fact that the
notice of certification election was posted only on December 12, 1988 or four days before the
scheduled elections on December 16, 1988, instead of the five-day period as required under Section 1
of Rule VI, Book V of the Implementing Rules. But it is not disputed that a substantial number, or 291
of 322 qualified voters, of the employees concerned were informed, thru the notices thus posted, of
the elections to be held on December 16, 1988, and that such employees had in fact voted accordingly
on election day. Viewed thus in the light of the substantial participation in the elections by voter-
employees, and further in the light of the all-too settled rule that in interpreting the Constitution’s
protection to labor and social justice provisions and the labor laws and rules and regulations
implementing the constitutional mandate, the Supreme Court adopts the liberal approach which
favors the exercise of labor rights, We find the lack of one day in the posting of notices insignificant,
and hence, not a compelling reason at all in nullifying the elections.

Same; Employees who may vote in certification election.—At any rate, it is now well-settled that
employees who have been improperly laid off but who have a present, unabandoned right to or
expectation of re-employment, are eligible to vote in certification elections. 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.

Same; Employer has no role in certification election except when asked to bargain collectively under
the “Bystander Rule.”___And finally, the Court would wish to stress once more the rule which it has
consistently pronounced in many earlier cases that a certification election is the sole concern of the
workers and the employer is regarded as nothing more than a bystander with no right to interfere at
all in the election. The only exception here is where the employer has to file a petition for certification
election pursuant to Article 258 of the Labor Code because it is requested to bargain collectively. Thus,
upon the score alone of the “Bystander Rule”, the instant petition would have been dismissed
outright.

97

VOL.211,JULY 3,1992

97

Philippine Fruits and Vegetables Industries, Inc. vs. Torres


PETITION for review on certiorari of the resolution of the Secretary of Labor and Employment.

The facts are stated in the opinion of the Court.

Alfredo L. Bentulan for private respondent (TUPAS).

PARAS, J.:

This petition for review on certiorari with prayer for the issuance of a temporary restraining order
and/or preliminary injunction assails the following:

(1)The Resolution dated December 12, 1989 of public respondent Secretary of Labor1 affirming on
appeal the Order dated March 7, 1989 issued by Med-Arbiter Danilo T. Basa, and certifying private
respondent Trade Union of the Philippines and Allied Services (or TUPAS) as the sole and exclusive
bargaining agent of all regular rank-and-file and seasonal workers at Philippine Fruits and Vegetable
Industries, Inc. (or PFVII), petitioner herein; and

(2)The Order dated February 8, 1990 issued by public respondent Secretary of Labor2 denying
petitioner’s Urgent Motion for Reconsideration.

Petitioner PFVII contends the questioned resolution and order are null and void as they are contrary to
law and have been issued with grave abuse of discretion, and having no other plain, speedy and
adequate remedy in the ordinary course of law, it filed with this Court the petition now at hand.

The facts of the case are well-stated in the Comment filed by the Solicitor General, and are thus
reproduced hereunder, as follows:

“On October 13, 1988, Med-Arbiter Basa issued an Order granting the petition for Certification election
filed by the Trade Union of the Philippines and Allied Services (TUPAS). Said order directed the holding
of a certification election among the regular and seasonal workers of the Philippine Fruits and
Vegetables, Inc. (p. 42, NLRC, Records).

________________

1.Then Secretary of Labor Franklin M. Drilon.

2Then Secretary of Labor Ruben D. Torres.

98

98

SUPREME COURT REPORTS ANNOTATED

Philippine Fruits and Vegetables Industries, Inc. vs. Torres


“After a series of pre-election conferences, all issues relative to the conduct of the certification election
were threshed out except that which pertains to the voting qualifications of the hundred ninety four
(194) workers enumerated in the lists of qualified voters submitted by TUPAS.

“After a late submission by the parties of their respective position papers, Med-Arbiter Basa issued an
Order dated December 9, 1988 allowing 184 of the 194 questioned workers to vote, subject to
challenge, in the certification election to be held on December 16, 1989. Copies of said Order were
furnished the parties (p. 118, NLRC, Records) and on December 12, 1988 the notice of certification
election was duly posted. One hundred sixty eight (168) of the questioned workers actually voted on
election day.

“In the scheduled certification election, petitioner objected to the proceeding, through a Manifestation
(p. 262, NLRC, Records) filed with the Representation Officer before the close of the election
proceedings. Said Manifestation pertinently reads:

‘The posting of the list of eligible voters authorized to participate in the certification election was short
of the five (5) days provided by law considering that it was posted only on December 12, 1988 and the
election was held today, December 16, 1988 is only four days prior to the scheduled certification
election.’

“By agreement of petitioner and TUPAS, workers whose names were inadvertently omitted in the list of
qualified voters were allowed to vote, subject to challenge (p. 263, NLRC, Records). Thirty eight of them
voted on election day.

“Initial tally of the election results excluding the challenged votes showed the following:

Total No. of the Votes

...............................................

291

Yes votes

....................................................................

40

No votes

.....................................................................

38

Spoiled

.......................................................................

Challenged (Regular)

..............................................
38

Total No. of Votes Cast

.........................................

123

“On January 6, 1989, Management and TUPAS agreed to have the 36 challenged votes of the regular
rank-and-file employees opened and a canvass thereof showed:

Yes votes

........................................................................

20

No votes

.........................................................................

14

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VOL.211,JULY 3,1992

99

Philippine Fruits and Vegetables Industries, Inc. vs. Torres

Spoiled

.......................................................................

Total

................................................................

38

“Added to the initial election results of December 16, 1988, the canvass of results showed:

Yes

...............................................................................

60

No

................................................................................
52

Spoiled

.......................................................................

11

Total

................................................................

123

“Based on the foregoing results, the yes votes failed to obtain the majority of the votes cast in said
certification election, hence, the necessity of opening the 168 challenged votes to determine the true
will of the employees.

“On January 20, 1989, petitioner filed a position paper arguing against the opening of said votes mainly
because said voters are not regular employees nor seasonal workers for having allegedly rendered work
for less than 180 days.

“Trade Union of the Philippines and Allied Services (TUPAS), on the other hand, argued that the
employment status of said employees has been resolved when Labor Arbiter Ricardo N. Martinez, in his
Decision dated November 26, 1988 rendered in NLRC Case No. SubRab-01-09-7-0087-88, declared that
said employees were illegally dismissed.

“In an Order dated February 2, 1989 (pp. 278-280, NLRC, Records) Med-Arbiter Basa ordered the
opening of said 168 challenged votes upon his observation that said employees were illegally dismissed
in accordance with the foregoing Decision of Labor Arbiter Martinez. As canvassed, the results showed:

Yes votes

....................................................................

165

No votes

.....................................................................

Spoiled

.......................................................................

Total

................................................................

168
“On February 23, 1989, petitioner formally filed a Protest (pp. 284-287, NLRC, Records) claiming that the
required five day posting of notice was not allegedly complied with and that the list of qualified voters
so posted failed to include fifty five regular workers agreed upon by the parties as qualified to vote. The
Protest further alleged that voters who were ineligible to vote were allowed to vote.

100

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SUPREME COURT REPORTS ANNOTATED

Philippine Fruits and Vegetables Industries, Inc. vs. Torres

“Med-Arbiter Basa, in his Order dated March 7, 1989, dismissed said Protest which Order was affirmed
on appeal in the Resolution dated December 12, 1989 of then Secretary of Labor, Franklin Drillon.

“Petitioner’s Motion for Reconsideration was denied for lack of merit in public respondent’s Order dated
February 28, 1990.” (pp. 84-88, Rollo)3

The instant petition has, for its Assignment of Errors, the following:

(1)The Honorable Secretary of Labor and Employment acted with grave abuse of discretion amounting
to lack of jurisdiction and committed manifest error in upholding the certification of TUPAS as the sole
bargaining agent mainly on an erroneous ruling that the protest against the canvassing of the votes cast
by 168 dismissed workers was filed beyond the reglementary period.

(2)The Honorable Secretary of Labor committed an abuse of discretion in completely disregarding the
issue as to whether or not non-regular seasonal workers who have long been separated from
employment prior to the filing of the petition for certification election would be allowed to vote and
participate in a certification election.4

The Court finds no merit in the petition.

For it is to be noted that the formal protest of petitioner PFVII was filed beyond the reglementary
period. A close reading of Sections 3 and 4, Rule VI, Book V of the Implementing Rules of the Labor Code,
which read as follows:

“Section3. Representation officer may rule on any-on-the-spot questions.—The Representation officer


may rule on any on-the-spot question arising from the conduct of the election. The interested party may
however, file a protest with the representation officer before the close of the proceedings.

“Protests not so raised are deemed waived. Such protest shall be contained in the minutes of the
proceedings.” (italics supplied)

“Section4. Protest to be decided in twenty (20) working days.—Where the protest is formalized before
the med-arbiter within five (5) days after the close of the election proceedings, the med-arbiter

_______________
3Rollo, pp. 84-88.

4Ibid., at p. 9.

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Philippine Fruits and Vegetables Industries, Inc. vs. Torres

shall decide the same within twenty (20) working days from the date of formalization. If not formalized
within the prescribed period, the protest shall be deemed dropped. The decision may be appealed to
the Bureau in the same manner and on the same grounds as provided under Rule V.” (Italics supplied)

would readily yield, as a matter of procedure, the following requirements in order that a protest filed
thereunder would prosper, to wit:

(1)The protest must be filed with the representation officer and made of record in the minutes of the
proceedings before the close of election proceedings, and

(2)The protest must be formalized before the Med-Arbiter within five (5) days after the close of the
election proceedings.

The records before Us quite clearly disclose the fact that petitioner, after filing a manifestation of
protest on December 16, 1988, election day, only formalized the same on February 20, 1989, or more
than two months after the close of election proceedings (i.e., December 16, 1988). We are not
persuaded by petitioner’s arguments that election proceedings include not only casting of votes but
necessarily includes canvassing and appreciation of votes cast and considering that the canvassing and
appreciation of all the votes cast were terminated only on February 16, 1989, it was only then that the
election proceedings are deemed closed, and thus, when the formal protest was filed on February 20,
1989, the five-day period within which to file the formal protest still subsisted and its protest was
therefore formalized within the reglementary period.5

As explained correctly by the Solicitor General, the phrase “close of election proceedings” as used in
Sections 3 and 4 of the pertinent Implementing Rules refers to that period from the closing of the polls
to the counting and tabulation of the votes as it could not have been the intention of the Implementing
Rules to include in the term “close of the election proceedings” the period for the final determination of
the challenged votes and the canvass thereof, as in the case at bar which may take a very

_________________

5Rollo, pp. 66-67; Annex “I” of the Petition.

102
102

SUPREME COURT REPORTS ANNOTATED

Philippine Fruits and Vegetables Industries, Inc. vs. Torres

long period.6 Thus, if a protest can be formalized within five days after a final determination and
canvass of the challenged votes have been made, it would result in an undue delay in the affirmation of
the employees’ expressed choice of a bargaining representative.7

Petitioner would likewise bring into issue the fact that the notice of certification election was posted
only on December 12, 1988 or four days before the scheduled elections on December 16, 1988, instead
of the five-day period as required under Section 1 of Rule VI, Book V of the Implementing Rules. But it is
not disputed that a substantial number, or 291 of 322 qualified voters, of the employees concerned
were informed, thru the notices thus posted, of the elections to be held on December 16, 1988, and that
such employees had in fact voted accordingly on election day. Viewed thus in the light of the substantial
participation in the elections by voter-employees, and further in the light of the all-too settled rule that
in interpreting the Consti-tution’s protection to labor and social justice provisions and the labor laws and
rules and regulations implementing the constitutional mandate, the Supreme Court adopts the liberal
approach which favors the exercise of labor rights,8 We find the lack of one day in the posting of notices
insignificant, and hence, not a compelling reason at all in nullifying the elections.

As regards the second assignment of error, the public respondent Secretary of Labor did not completely
disregard the issue as to the voting rights of the alleged separated employees for precisely, he affirmed
on appeal the findings of the Med-Arbiter when he ruled

“The election results indicate that TUPAS obtained majority of the valid notes cast in the election—60
plus 165, or total of 225 votes out of a possible total of 291.

WHEREFORE, premises considered, the appeal is hereby denied and the Med-Arbiter’s order dated 7
March 1989 affirmed. Petitioner TUPAS is hereby certified as the sole and exclusive bargaining

_________________

6Rollo, p. 91; Comment of the Solicitor General, p. 8.

7Ibid., Id.

8Manila Electric Company vs. NLRC, G.R. No. 78763, July 12, 1989.

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Philippine Fruits and Vegetables Industries, Inc. vs. Torres


agent of all regular rank-and-file and seasonal workers at Philippine Fruits and Vegetable Industries,
Inc.”9 (p. 26, Rollo)

At any rate, it is now well-settled that employees who have been improperly laid off but who have a
present, unabandoned right to or expectation of re-employment, are eligible to vote in certification
elections.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.11 And finally, the Court would wish to stress once more the rule which it
has consistently pronounced in many earlier cases that a certification election is the sole concern of the
workers and the employer is regarded as nothing more than a bystander with no right to interfere at all
in the election. The only exception here is where the employer has to file a petition for certification
election pursuant to Article 258 of the Labor Code because it is requested to bargain collectively. Thus,
upon the score alone of the “Bystander Rule”, the instant petition would have been dismissed outright.

WHEREFORE, the petition filed by Philippine Fruits and Vegetable Industries, Inc. (PFVII) is hereby
DISMISSED for lack of merit.

SO ORDERED.

Narvasa (C.J., Chairman), Padilla, Regalado and Nocon, JJ., concur.

Petition dismissed.

Note.—The purpose of certification election is to give the employees true representation in their
collective bargaining with an employer (Balmar Farms, Inc. vs. NLRC, 202 SCRA 648).

——o0o——

______________

9 Rollo, p. 26; Annex “B”, p. 5.

10 Rothenberg on Labor Relations, p. 548.

11 Samahang Manggagawa ng Via Mare vs. Noriel, 98 SCRA 507.

104 Philippine Fruits and Vegetables Industries, Inc. vs. Torres, 211 SCRA 95, G.R. No. 92391 July 3, 1992

VOL. 246, JULY 14, 1995

365

Militante vs. National Labor Relations Commission

G.R. No. 113448. July 14, 1995.*


DANILO Q. MILITANTE, BERNARDINO O. TEJADA, MIGUEL C. SALONGA, ALEJANDRO FRANCISCO,
EFREN AYAG, LORENZO ABAREDES, OSCAR ABLANIDA, REYNALDO ACIERTO, NORBERTO AFABLE,
CESAR AGARAO, ARCANGEL ALCOY, ROQUE ALDE, ANACLETO ALDON, JUANITO ALEJANDRIA,
ERNESTO ALMARINES, MAMERTO ANCIRO, TRONILO ANDAYA, JOSE ANG, AMADOR APILADO,
WILSON AGUILAR, TOMAS AQUINO, ORLANDO ARANDA, RAMON ARCALES, ROMEO ARGUELLES,
VIRGILIO ARAGO, SOFRONIO ARIETA, RAYMUNDO ARMADA, FERNANDO AROMIN, SALVADOR
ASPIRAS, JULIAN AUX, RODOLFO ABARILLES, SANTOS ARCENILLA, ROSENDO AGUINALDO, ROMEO
ABLANIDA, CELSO ALAC, INIGO ABANG, DANIEL BABICA, BONIFACIO BAJADE, PEPITO BALBERO,
ROMEO BALBERO, APOLONIO BALDIVIA, LEONARDO BALTES, PEDRO BALTES, JAIME BANGKAYA,
NARCISO BANGOT, DOMINGO BARALLAS, BASILIO BARERA, MANUEL BENEBE, EDILBERTO BERMUDEZ,
ARTEMIO BETANIO, NICOLAS BIATON, GREGORIO BONIFACIO, ANDRES BOQUIREN, SANTIAGO
BRECINO, JACINTO BUHAY, RUBEN BUNAO, MANUELITO BUSA, PABLITO BUSTILLO, ARTEMIO
BATILARAN, ANGELO BALTES, DIONISIO BORRES, FELICIANO CABALQUINTO, DOMINGO CABENELA,
JR., LEONCIO CAINDOY, CONRADO CALCES, MARIANO CALLA, RODEL CALLA, ABELARDO CAMBARE,
PACIANO CAMIO, GIL CARANTO, SOLOMON CASTANEDA, JESUS CAWILI, AN-

_______________

* FIRST DIVISION.

366

366

SUPREME COURT REPORTS ANNOTATED

Militante vs. National Labor Relations Commission

TONIO CAYETANO, CESAR CELIS, JOSE CENETA, CECILIO CES, ROMEO CES, BENTIO CHING, JOSE
COLAPO, ROMULO CONDE, SANTOS CONDE, WIFREN CORTEZ, SOFRONIO COSE, GENARO COSMOD,
EDUARDO CUNANAN, LEODEGARO CURITANA, SALVADOR CUSTODIO, LUCIANO CUTOR, RUBEN
CARINO, ANTONIO CAANGAY, FORTUNATO CALIZON, HERMINIO CADIZ, ERNANI CALALAS, PERFECTO
CABALLERO, DANTE DAANG, FLORENTE DACQUEL, BENJAMIN DATILES, ROBERTO DE CASTRO,
REYNALDO DE DUQUE, ANTHONY DE LA CRUZ, ROLANDO DE LA CRUZ, ROGELIO DE LA ROSA, OSCAR
DEL CASTILLO, VICENTE DE LEON, LAMBERTO DE LOS REYES, RENATO DE LOS SANTOS, JOSE DEL RIO,
CONRADO DEL ROSARIO, ERNESTO DERECHO, MANUEL DESIDERIO, LAUREANO DEYMOS, REYNALDO
DIAZ, CESAR DIEGOR, EDGARDO DIMAANDAL, RENATO DIZON, VIRGILIO DIZON, ANTONIO
DOMINGUEZ, GODOFREDO DURANTE, JULIAN DOLOGIN, RUBEN DE LOS REYES, WILDREDO ECHAGUE,
ELEAZAR EDAR, RODOLFO ELIANG, LUIS ENRIQUEZ, BIENVENDIO ESPALLARDO, JOVENCIO ESPANOL,
EDUARDO ESPINO, REYNALDO ESPINOSA, WILFREDO ESPINOSA, NORBERTO ESTANIL, PRUDENTE
ESTO, LEOCADIO ESTRADA, HENRY EVANGELISTA, JOEY ELARDO, RUBEN FABILLAR, MARIO FELICIANO,
FORFIRIO FERMO, ALEJANDRO FRANCISCO, ARSENIO FUENTES, BASILIO FUERTES, LORETO FULO,
ANDRES FLORENDO, EUGENIO FRANCISCO, ROSENDO FRANCISCO, NAPOLEON FERNANDEZ, TEOTIMO
GALERA, EFREN GAN, MANUEL GARCIA, TEOFILO GARCIA, AGAPITO GARON, ROGELIO GEBANA,
FLORENCIO GLORIA, ANTONIO GONZAGA, JR., ALEXANDER GONZALES, OSCAR GORGOD, TROADIO
GALBISO, JESSE GUIRREY, LUDUVICO GARINGO, CARLITO DUARTE, ALLAN HARTPENCE, BONIFACIO
HEARY, MAURO HERMO, ROGELIO HICETA, ROGELIO HIDALGO, ROLANDO GOJAR, ANTONIO
DONGSAL, JUAN INANO, JOSE INGALLA, PEDRO IRONAN, LEONARDO ISIP, RENATO ISIP, ARTEMIO
JALDO, LEVY JARQUE, PEDRO JASMIN, JAIME JAVIER, LITO LABABO, WILSON LACRA, JOSE LAGUILLES,
ERNESTO LAPIRA, ALFRED LAPUT, JOVITO LASAN, NARCISO LAZARTE, JUANITO LEGASPI,

367

VOL. 246, JULY 14, 1995

367

Militante vs. National Labor Relations Commission

VALENZUELA LEVISITO, JUANITO LISTANA, LUDUVICO LLAGAS, ROMEO LLENOS, PABLO LOPEZ, JR.,
ISAIAS LOVERIA, ROMEO LOZADA, FLORO LUMAGBAS, CESAR LUMIARES, OLIMPIO LUPOS, RICARDO
MABUTI, JOSE LASALA, ROMEO LADROMA, JAIME JACA, DANIEL LIBERATO, JR., ADRIANO MADISON,
DAMIL MADRID, VIRGILIO MAGTALAS, PASCUAL MAHAYHAY, EMILIANO MALIT, JR., DONALD
MAMALLAS, PEDRO MANANON, SUERLITO MANAO, MAXIMO MANUTA, APOLINARIO MARENTES,
RAYMUNDO MARTORILLAS, LEONARDO MENDOZA, ROBERTO MERCADO, ROMEO MERCADO, JOSE
MESA, JOSE MIJARES, GODOFREDO MILANES, JESUS MIRANDA, ARTURO MISAJON, RODOLFO MOGO,
JOSE MOLINO, JUANITO MONTES, BALTAZAE MORERA, ROMEO MANICDAO, ALEJANDRO MIRANDA,
DELFIN MAALLO, ANTONIO MORENO, EMMANUEL MACUTAY, PEDRO MANZANO, TERESITO MIJARES,
FELIPE MEKITPIKIT, FRANCISCO JAVIER, FRANCIS NAMOCATCAT, BENJAMIN NARAG, VIRGILIO
NARBARTE, ERIBERTO NASAYAO, ARESTIDES NAVIDAD, COSME NESIO, LUCIO NIDEA, ERNESTO
NIEGAS, EPIFANIO NINO, DOMINGO NOLASCO, RICARDO NARZOLES, ROQUE NONATO, ALFREDO
NAUTAN, MAXIMO OBREGON, FULGENCIO ONSE, ANTERO ORATE, WILFREDO ORBE, RENTO ORIA,
EDUARDO ORCILLA, HERNANI OPEDA, FREDDIE PALAAD, RODRIGO PARRENO, SULPICIO PAWAAN,
RODOLFO PACANAN, GUILLERMO PADILLA, TEODORICO PAGAL, ANTONIO PALACIO, BENJAMIN
PALAROAN, JOSE PALENCIA, FRANCISCO PALMERO, ROBERTO PALOMATA, ROMEO PALOMIA, DANILA
PAMINTUAN, FLORENTINO PAMOR, PROCESO PANGAN, CRESTINO PASCUA, ROMEO PATIAG, GENESIS
PEREZ, ELIGIO PINEDA, FELIX PIGUERRO, VICTORINO PLANA, DAVID POLIQUIT, RAYMUNDO PUSPUS,
RODOLFO MORALEDA, BARTOLOME GUIAMBAO, RANILLO QUINTANA, HECTOR NAVALASCA,
EVARISTO RABINO, PABLO RACE, RAMON RAPI, JESUS RAVILLAS, ROMEO RAZON, WILFREDO RECOCO,
REYNALDO REGALADO, REONARDO REYNES, SERGERONIMO RICALDE, FRANCISCO RIVERA, RUBEN
RIVERA, LIBERATO ROBLES, MANUEL ROGEL, ERNESTO ROSATASE, RUBEN

368

368

SUPREME COURT REPORTS ANNOTATED

Militante vs. National Labor Relations Commission


ROS, PEDRO ROXAS, PACIFICO RUIZ, FELIX RUNES, REYNALDO RAMOS, PETRONILO REYES, SALVADOR
MONTANEZ, ADELIO SAGUID, ANTONIO SALES, RONNIE SAPIO, REYNALDO SANTOS, RUFO SALISI,
ALFREDO SAYSON, JOSELITO SAPIO, KIEL SABASAN, JUAN SABLON, ALFREDO SACOLLES, NOLITO
SADIWA, RIZAL SAGUID, DIODANTE SAILOG, FREDERICO SALAS, JAIME SALCEDO, LAUREANO
SALGADO, MENANDRO SALISI, GRACIANO SALUZA, MIGUEL SAMARINGA, CRISOSTOMO SANICO,
MARIANO SANICO, CARLITO SANTOS, MARCELO SANTOS, EDUARDO SANTUELE, OSCAR SANTUELE,
LEONARDO SAPUNGAN, LUDUVICO SARANILLO, CONRADO SEBASTIAN, ROMUALDO SELUDO,
RODOLFO SILLOGO, EMMANUEL SODSOD, ERNESTO SOLLEZA, FEDERICO SORIANO, JOSE SUMASTRE,
EDGAR TABON, IGNACIO TAMPOL, RUBEN TAN, DOMINADOR TARA, LIBERATO TATAD, ALEJANDRO
TECSON, FRANCISCO TELOMEROS, PEDRO TEMPLORA, JR., REYNALDO TIERRA, JORGE TINIO, JR.,
LEOPOLDO TOLENTINO, MANUEL TOMBUCON, DIOLITO TORRENUEVA, OSCAR TRIBUNAL, ERNESTO
TUAZON, VICENTE TERADO, LEONARDO VELASQUEZ, NESTOR VENDIVIL, FELIPE VERSOSA, DIMETRIO
VERGARA, JUANITO VELARDE, MARIO VENDIVIL, WILFREDO VERDEJO, CARLOS VERGARA, ARTURO
VILLAFLOR, JOVENCIO VILLAFLOR, CARLOS VILLA-FUERTO, JOSE VILLARDO, RAUL VILLAREAL,
MARCELO VINAS, RUBEN VISEN, RODRIGO VISITO, BENEDICTO YTANG, EDUARDO ZINAMAAN,
LEVISTO VALENZUELA, BERNARDINO TEJADA, FEDERICO ALBURO, SEVERINO ASUNO, JOSE AREGLO,
ANTONIO TEJERA, RENATO ABALAYAN, ALBERTO BETANIO, SANTOS ARSINELIA, WILFREDO BALTAZAR,
PEDRO APOLONIO, MANUEL CASPI, MAXIMO CUESTA, EDUARDO DAGUMAN, JULIO DE LEON,
REYNALDO DE LA CRUZ, ADRIANO DE LA CRUZ, VICTOR ESPINA, ROBERTO ELIZALDE, CARLOS
ESTABILLO, GERONIMO FERNANDEZ, WILFREDO GILOK, JAYSON GARILAO, ROMULADO GERNA,
CHARLES HODGES, SOFRONIO ESPERAS, LOWELL ILACIO, ROBERTO HERBUELA, JOEL NAMORO,
DOMINGO SALON, ESTEBENSON SALOMON, EDUARDO NOLIDO, ESPIDIO

369

VOL. 246, JULY 14, 1995

369

Militante vs. National Labor Relations Commission

SAPIANDANTE, MODESTO TERCIO, ARTURO LOTERTE, LORETO TAYAM, ROBERTO RIZALDE, MARIO
OCAMPO, PEDRO DANCHEZ, EDUARDO VILLARUEL, PASTOR LOZANO, MACARIO PETATE, and
LORENZO ABLETES, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, GOLDEN TAXI CAB
COMPANY, LORENZO ZAMORA, DOÑA NENA ZAMORA and DOÑA PACING ZAMORA, respondents.

Actions; Res Judicata; Elements of Res Judicata.—Res Judicata has the following elements: (1) that the
previous judgment has become final; (2) that the prior judgment was rendered by a court having
jurisdiction over the subject matter and the parties; (3) that the first judgment was rendered on the
merits; and (4) that there was substantial identity of parties, subject matter and causes of action, as
between the prior and subsequent actions (Diwa v. Donato, 234 SCRA 608 [1994]).

Same; Same; Labor Law; Administrative Law; Substantial Evidence; Factual findings of quasi-judicial
agencies like the NLRC, which have acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only respect but, at times, finality if such findings are supported
by substantial evidence.—We cannot simply disregard these factual findings made by the Labor
Arbiter, as well as the conclusion arrived at by NLRC, inasmuch as the same are supported by the
records of the case and in accord with law and jurisprudence. In Five J Taxi v. National Labor Relations
Commission, 235 SCRA 556 (1994), we ruled: “This Court has repeatedly declared that the factual
findings of quasi-judicial agencies like the NLRC, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only respect but, at times,
finality if such findings are supported by substantial evidence. Where, however, such conclusions are
not supported by the evidence, they must be struck down for being whimsical and capricious and,
therefore, arrived at with abuse of discretion.”

Same; Same; Same; Collective Bargaining; Unions; 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.—The legal
conclusion of the Labor Arbiter and NLRC on the binding effect of the judgment in the NLRC NCR CA
No. 003194-92 on petitioners finds support in Article 255 of the Labor Code of the Philippines, as
amended. Said article provides: “Exclusive bargaining

370

370

SUPREME COURT REPORTS ANNOTATED

Militante vs. National Labor Relations Commission

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. x x x.”

Same; Same; Same; Same; Same; Parties; Where a union certified as the exclusive bargaining agent in
a bargaining unit had previously filed a case in representation not only of its members but also of the
members of a rival union, the latter’s members cannot subsequently claim that they were not parties
in the earlier case.—Inasmuch as GTEWU-ANGLO was certified as the exclusive bargaining agent in the
consent election conducted on March 17, 1989, petitioners cannot now claim that they were not
parties in the first case filed by GTEWU-ANGLO, which represented not only PACIWU-TUCP but also
GTEWU-ANGLO. Hence, all the requisites of res judicata being present, said principle should be made
to apply, thus barring any subsequent action such as the consolidated cases subject of this petition.

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the opinion of the Court.

Enrico Berbano for petitioners.

Pablo Cruz for private respondents.

QUIASON, J.:
This is a petition for certiorari to reverse the Decision of the National Labor Relations Commission
(NLRC) in NLRC NCR CA No. 004908-93, affirming the order of the Labor Arbiter which dismissed, for
having been barred by prior judgment, NLRC-NCR Cases Nos. 00-01-00618-93, 00-03-01784-93, and 00-
03-02073-93.

The Golden Taxi Employees and Workers Union-ANGLO (GTEWU-ANGLO), represented by Ernesto
Serrano, as union president, filed a case against respondent Golden Taxi Cab Co. (Company) and/or
Lorenzo Zamora and Jose Zamora (NLRC-NCR Case No. 00-05-02875-90) for illegal lock-out, violation of

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Militante vs. National Labor Relations Commission

B.P. Blg. 130, as amended by R.A. No. 6715, unfair labor practice, and payment of actual, moral and
exemplary damages and attorney’s fees. In his decision, Labor Arbiter Patricio P. Libo-on found that the
closure of respondent company was illegal, and ordered private respondents to pay the members of
GTEWU-ANGLO P22,947,200.00 as separation pay and the equivalent of 10% of the award as attorney’s
fees (Rollo, p. 48). Upon appeal, NLRC in NLRC NCR CA No. 003194-92, reversed the decision of the
Labor Arbiter and in lieu thereof directed private respondents to pay, as financial assistance, the
workers named in the list attached to its decision the amount of P5,646,699.50 plus P564,669.95 as
attorney’s fees (Rollo, p. 69).

On January 25, 1993, a complaint was filed by Danilo Q. Militante against Lorenzo Zamora, Doña Nena
Zamora and Doña Pacing Zamora for illegal lockout, illegal dismissal, non-remittance of SSS deduction,
deduction for burial benefits, non-payment of premium pay for rest day, thirteenth-month pay and
separation pay with a prayer for reinstatement, upgrading of SSS payments, payment of separation pay,
thirteenth-month pay and premium pay for rest day (NLRC NCR Case No. 00-01-00618-93).

On March 9, 1993, another complaint was filed by Miguel C. Salonga against respondent Company,
Lorenzo Zamora, Doña Nena Zamora and Doña Pacing Zamora, for illegal dismissal and non-payment of
retirement benefits with a prayer for payment of retirement benefits and other benefits (NLRC NCR Case
No. 00-03-01784-93).

On March 15, 1993, private respondents filed a motion to dismiss the complaints on the grounds of res
judicata and prescription, arguing that the NLRC decision in NLRC NCR CA No. 003194-92 barred these
subsequent complaints.

On March 19, 1993, another complaint was filed against respondent company, Lorenzo Zamora, Doña
Nena Zamora and Doña Pacing Zamora by Bernardino O. Tejada again for illegal lockout, illegal
deductions of SSS and burial benefits, illegal dismissal, non-payment of separation pay, holiday pay and
thirteenth-month pay, and payment of moral damages and attorney’s fees with a prayer for upgrading
of SSS payments, payment of separation pay, thirteenth-month pay, premium pay for rest day,
attorney’s fees, moral damages, holiday pay and reimbursement

372

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SUPREME COURT REPORTS ANNOTATED

Militante vs. National Labor Relations Commission

of illegal deductions (NLRC NCR CA No. 00-03-02073-93).

On April 28, 1993, Labor Arbiter Ramon V. C. Reyes issued an order dismissing the three consolidated
cases on the ground of bar by prior judgment. Upon appeal (NLRC NCR CA No. 004908-93), NLRC
rendered a decision dismissing the appeal for lack of merit. Hence, this petition.

II

Petitioners argue that NLRC acted with grave abuse of discretion, amounting to lack or excess of
jurisdiction: (1) in holding that petitioner’s causes of action are barred by the prior final judgment in
NLRC NCR CA No. 003194-92 despite the lack of jurisdiction of NLRC over the complaint therein and the
lack of identity of parties, subject matter, and cause of action between the two cases; (2) in not holding
that the decision in the previous case did not prejudice but even entitled petitioners, who are members
of the exclusive bargaining representative Philippine Agricultural Commercial ands Industrial Workers
Union-Trade Union Congress of the Philippines (PACIWU-TUCP), to the award of financial assistance; and
(3) in failing to comply with its duty to use every and all reasonable means to ascertain speedily and
without regard to technicalities of law or procedure the facts in each case.

III

We find no grave abuse of discretion committed by NLRC in applying the principle of res judicata in NLRC
NCR CA No. 004908-93 (NCR No. 00-01-00618-93; 00-03-01784-93; 00-03-02073-93), subject of this
petition by reason of the previous judgment rendered in NLRC NCR CA No. 003194-92 (NLRC NCR Case
No. 00-05-02875-90).

Res Judicata has the following elements: (1) that the previous judgment has become final; (2) that the
prior judgment was rendered by a court having jurisdiction over the subject matter and the parties; (3)
that the first judgment was rendered on the merits; and (4) that there was substantial identity of
parties, subject matter and causes of action, as between the prior and subsequent actions (Diwa v.
Donato, 234 SCRA 608 [1994]).

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Militante vs. National Labor Relations Commission

It is undisputed that the NLRC decision in NLRC NCR CA No. 003194-92 was decided on the merits and
has already become final.

Petitioners insist, however, that they, being members of the rival union PACIWU-TUCP, were not parties
in the first case filed by GTEWU-ANGLO (Rollo, p. 12). Such claim is not supported by the records of the
case. The Labor Arbiter’s decision in the subsequent consolidated cases, which was affirmed by NLRC,
states:

“It is not disputed that on May 27, 1990, the date the company filed its notice of closure with the
Department of Labor and Employment, copy furnished the complainant Union, the said Union was
already ‘certified’ (in fact more than a year earlier after winning the March 17, 1989 Consent election) as
‘the exclusive bargaining agent of all the rank and file employees’ of respondent company . The effect of
such a certification brought about the legal mandate that henceforth, complainant Union ‘shall be the
exclusive representative’ (Art. 255, Labor Code) of all the ‘rank and file employees (take note, not just
the union members) of respondent company not only for the purpose of entering into a collective
bargaining agreement’ on ‘terms and conditions of employment’ (Arts. 251, 252, ibid), but also in the
matter of ‘rights, benefits and welfare’ (Art. 255, ibid) of the said represented workers. x x x” (Rollo, p.
41).

In their opposition to respondents’ motion to dismiss filed in NLRC NCR Case No. 00-01-00618-93,
petitioners apprised the Labor Arbiter thus:

“For the information of the Honorable Labor Arbiter, the herein mentioned case was initiated by Ernesto
Serrano who was the union president of GTEWU-ANGLO for and in behalf of all the workers and
employees of the Golden Taxi Co. numbering about 1,649, whether or not the worker is a member of
the union as the law on this point is clear that as the winner of the certification/consent Election on
March 17, 1989, GTEWU-ANGLO, became the exclusive bargaining agent of all the rank and file
employees of the respondent company. x x x” (Rollo, p. 103).

Petitioners further explained in said opposition:

“What happened in this case was that, while the herein mentioned case was first filed before the
Arbitration Branch of this Honor-

374

374

SUPREME COURT REPORTS ANNOTATED

Militante vs. National Labor Relations Commission

able Commission and assigned to the Honorable Labor Arbiter PATRICIO LIBO-ON, all the workers of
respondent company were complainants until the case was decided in complainants’ favor, but when
the herein mentioned case was elevated on appeal by respondent company to the First Division of the
Honorable Commission and was decided on 20 November 1992, the complainants in this instant case
were no longer included, hence, this instant complaint” (Rollo, p. 104).

In the first case (NLRC NCR CA No. 003194-92), NLRC resolved two issues insofar as the award is
concerned: (1) the determination of the employees who are to receive financial assistance; and (2) the
amount they are entitled to receive. In conclusion, NLRC took out those who no longer worked with
respondent company before its closure, and favored only those who actively pursued the case. It limited
the award of financial assistance only to those mentioned in the list attached to its decision resulting in
the exclusion from the benefits of petitioners.

We cannot simply disregard these factual findings made by the Labor Arbiter, as well as the conclusion
arrived at by NLRC, inasmuch as the same are supported by the records of the case and in accord with
law and jurisprudence. In Five J Taxi v. National Labor RelationsCommission, 235 SCRA 556 (1994), we
ruled:

“This Court has repeatedly declared that the factual findings of quasi-judicial agencies like the NLRC,
which have acquired expertise because their jurisdiction is confined to specific matters, are generally
accorded not only respect but, at times, finality if such findings are supported by substantial evidence.
Where, however, such conclusions are not supported by the evidence, they must be struck down for
being whimsical and capricious and therefore, arrived at with abuse of discretion” (at p. 560).

The legal conclusion of the Labor Arbiter and NLRC on the binding effect of the judgment in the NLRC
NCR CA No. 003194-92 on petitioners finds support in Article 255 of the Labor Code of the Philippines,
as amended. Said article provides:

“Exclusive bargaining representation and workers participation in policy and decision making.—The
labor organization designated or

375

VOL. 246, JULY 14, 1995

375

Militante vs. National Labor Relations Commission

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. x x x.”

Inasmuch as GTEWU-ANGLO was certified as the exclusive bargaining agent in the consent election
conducted on March 17, 1989, petitioners cannot now claim that they were not parties in the first case
filed by GTEWU-ANGLO, which represented not only PACIWU-TUCP but also GTEWU-ANGLO. Hence, all
the requisites of res judicata being present, said principle should be made to apply, thus barring any
subsequent action such as the consolidated cases subject of this petition.

The Solicitor General, in his comment filed for NLRC, observes that with the exception of the complaint
docketed as NLRC NCR No. 00-03-01784-93, charging private respondents with illegal dismissal and non-
payment of retirement benefits, the other two complaints contained monetary claims such as non-
remittance of SSS deduction and deductions for burial benefits, non-payment of holiday pay and
thirteenth-month pay. However, inasmuch as these claims were neither raised nor determined in the
first case, even indirectly, petitioners cannot be said to be precluded from filing and pursuing these
claims. We agree with the Solicitor General.

WHEREFORE, the petition is DISMISSED, without prejudice to petitioners’ right to submit before the
Labor Arbiter all the unresolved money claims.

SO ORDERED.

Padilla (Chairman), Davide, Jr. and Kapunan, JJ., concur.

Bellosillo, J., On leave.

Petition dismissed.

Notes.—For res judicata to apply, absolute identity of parties is not required because substantial
identity is sufficient. (Development Bank of the Philippines vs. Pundogar, 218 SCRA 118 [1993]).

Once a case has been decided one way, then another case involving exactly the same point at issue
should be decided in the

376

376

SUPREME COURT REPORTS ANNOTATED

Sulpicio Lines, Inc. vs. Court of Appeals

same manner. (Tay Chun Suy vs. Court of Appeals, 229 SCRA 151 [1994]).

——o0o—— Militante vs. National Labor Relations Commission, 246 SCRA 365, G.R. No. 113448 July 14,
1995

VOL. 359, JUNE 25, 2001

555

Sandoval Shipyards, Inc. vs. Pepito

FREDELINO SOCO, ALBERTO MONIVA, FLAVIANO CANETE, JOSE JUDILLA, ARNULFO TRADIO, PRIMO
AUMAN, ALEJANDRO TAPDASAN, GERRY CALVO, MARLON ABELLAR, MANOLO VILLEGAS, BONIFACIO
CANO, RODELIO MONDEJAR, RICARDO IBALE, PAULINO LABRA, ANTONIO ALINSUG, PIO CAPAROSO,
MAXIMO PANUGAN, SILVESTRE IGOT, DANILO CASAS, ROLIE BENOLA, RUDINO MOLATO, LEONARDO
QUIMOD, ELPIDIO LINAO, AURELIO GOC-ONG, NESTOR BASAKA, RODRIGO AUMAN, ILUMINADO
ABUCAY, ANASTAGIO TRADIO, JR., EDUARDO SUGAROL, JUAN FORMINTIRA, ROSENDO SOCO, JIMMY
MONDIEGO, CELSO JUDAYA, MARCIAL GONZAGA, APOLONIO ARCENAL, SIMEON ANTOLIJAO,
MARCELO SUGAROL, ERNESTO SENO, MARIO BASAKA, GORGONIO CUYOS, ROGELIO EDAR, JAIME
IBALE, PATRICIO CANO, FELIX SARME, WILFREDO CANTERO, LORETO JUDAYA, CARIS MUSOR, RICKY
ERMAC, LUIS MONLEON, CIRILO AGUIPO, PEDRO QUINAPONDON, CHRISTOPHER JUDAYA, GERRY
AUMAN, ALFIN IGOT, NELSON ALIVIO, LIMUEL LIBERIAGA, DANILO MAQUILAN, DANIEL RIVERA,
ROMEO BASAKA, PAULINO FLORES, JUAN CODENERA, SEVERINO GOMEZ, EDUARDO IBALE, RONITO
CAPAROSO, GALO IBALE, ALEJANDRE MULIG, EUSTAQUIO DIOLA, EUDILO LAURON, ALEXANDER
AGUIPO, GILBERTO DESUCATAN, CRISPULO ENTERINA, FLORINTINO CODINERO, SAMUEL AUMAN,
MARGARITO LABISTE, SERGIO SOCO, SILVERIO IBALE, JOSELITO SUGAROL, GARY IBALE, NONITO
GARBO, LORETO PEPITO, ANRITO MONARES, NICANOR CUYOS, OSCAR ALIMPO-OS, REYNALDO
PEPITO, PEDRO VILLEGAS, JR., REY HENDERSON, JOSE ALEX MAGLASANG, and the HONORABLE COURT
OF APPEALS, respondents.span>h1>

Remedial Law; Judgments; Res Judicata; Court’s pronouncement in the Manila Golf case that the
decision in a certification election case does

_______________

* FIRST DIVISION.

556

556

SUPREME COURT REPORTS ANNOTATED

Sandoval Shipyards, Inc. vs. Pepito

not foreclose further dispute regarding the existence or non-existence of an employer-employee


relationship not an obiter dictum.—Our pronouncement in the Manila Golf case that the decision in a
certification election case, by the very nature of such proceeding, does not foreclose further dispute
regarding the existence or non-existence of an employer-employee relationship, was not obiter
dictum as petitioners suggest, but rather was part of the resolution of the main issue in said case.

Same; Same; Same; Requisites for res judicata to apply.—It is established doctrine that for res
adjudicata to apply, the following requisites must concur: (1) the former judgment or order must be
final; (2) the court which rendered said judgment or order must have jurisdiction over the subject
matter and the parties; (3) said judgment or order must be on the merits; and (4) there must be
between the first and second actions identity of parties, subject matter and cause of action

PETITION for review on certiorari of a decision of the Court of Appeals.span>

The facts are stated in the opinion of the Court.span>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <span class="counsel-rw"><i>Sycipi>span><i>, i><span


class="counsel-rw"><i>Salazari>span><i>, i><span class="counsel-rw"><i>Hernandez &amp; Gatmaitan
and Lapinid &amp; Lapinidi>span> for petitioners.
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <span class="counsel-rw"><i>Laoi>span><i>, i><span
class="counsel-rw"><i>Cenizai>span><i>, i><span class="counsel-rw"><i>Canei>span><i>, i><span
class="counsel-rw"><i>Zaragoza Law Officesi>span> for private respondents.

<span class="ponente-rw">KAPUNANspan>, <i>Ji>.:

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure.
Petitioners assail the Decision of the Court of Appeals, Former Fifteenth Division, dated December 20,
1999 in <span class="docketcitationref-rw" id="p359scra9970555001359dcr224">CA-G.R. SP <span
style='font-weight:bold; background-color:yellow;'>Nospan>. 51729span>,<span class="ref-footnote-
rw" onmouseout="JavaScript:showhide('popup1073')"
onmouseover="JavaScript:showhide('popup1073')"><a
href="#p359scra8960556001"><sup>1sup>a><span class="popup-rw" id="popup1073">Frisco Pepito, et
al., Petitioners, vs. National Labor Relations Commission (4th Division) and Sandoval Shipyard, Inc. et al.,
Respondents.span>span> and its resolution, dated May 15, 2000 denying petitioners’ motion for
reconsideration.

The facts of the case are as follows:

Sometime in 1992, the National Federation of Labor (NFL) filed with the Department of Labor and
Employment (DOLE) a petition

_______________

1 Frisco Pepito, et al., Petitioners, vs. National Labor Relations Commission (4th Division) and Sandoval
Shipyard, Inc. et al., Respondents.

<span class="pb-rw" id="p359scra9980557">557span>

VOL. 359, JUNE 25, 2001

557

Sandoval Shipyards, Inc. vs. Pepito

for certification election, alleging that its members, which included private respondents Prisco Pepito, et
al., were regular employees of petitioner Sandoval Shipyards, Inc. (SSI). Finding that the NFL members
were rank-and-file employees of SSI, the Med-Arbiter issued an order directing that a certification
election be held.

However, in a Resolution dated 25 November 1992, then Undersecretary Bienvenido Laguesma reversed
the Med-Arbiter’s Order and ruled that there was a valid subcontracting agreement between SSI and its
subcontractors, and that <span style='font-weight:bold; background-color:yellow;'>nospan> employer-
employee relationship existed between SSI and private respondents, since the latter were the
employees of the subcontractors.<span class="ref-footnote-rw"
onmouseout="JavaScript:showhide('popup1074')"
onmouseover="JavaScript:showhide('popup1074')"><a
href="#p359scra8960557001"><sup>2sup>a><span class="popup-rw" id="popup1074">See Resolution
of Undersecretary Bienvenido Laguesma dated November 25, 1992, Rollo, pp. 56-67.span>span>

In 1993, several cases for illegal dismissal were filed by private respondents against SSI and its President,
petitioner Vicente Sandoval. Private respondents alleged that they were employees of SSI and that
sometime in 1985, some sections of the company were temporarily closed while others remained open.
Later, some of them were told to secure a Mayor’s Permit and then were made parties to contracts with
SSI stipulating that they were labor-only contractors. They averred further that after they organized a
workers’ union in 1992 to protect themselves against SSI’s persistent violation of labor standards, the
company did not allow them to report for work. Consequently, SSI’s employees, including private
respondents, went on strike on March 26, 1992. On April 6, 1992, SSI accepted its employees back to
work, except those who were identified as officers and members of the union. The company claimed
that these persons were not its employees but those of the contractors. In their complaint, private
respondents prayed for reinstatement with backwages, damages and attorney’s fees.

On December 27, 1996, the Labor Arbiter rendered its Decision in the illegal dismissal cases. He found
that while private respondents were illegally dismissed, they were not entitled to reinstatement with
backwages, damages and attorney’s fees. The Labor Arbiter ruled that there was <span style='font-
weight:bold; background-color:yellow;'>nospan> employer-employee relationship between SSI and
private respondents, reasoning that said issue

_______________

2 See Resolution of Undersecretary Bienvenido Laguesma dated November 25, 1992, Rollo, pp. 56-67.

<span class="pb-rw" id="p359scra9980558">558span>

558

SUPREME COURT REPORTS ANNOTATED

Sandoval Shipyards, Inc. vs. Pepito

has been laid to rest in the November 25, 1992 resolution of Undersecretary Laguesma in the
certification election case.<span class="ref-footnote-rw"
onmouseout="JavaScript:showhide('popup1075')"
onmouseover="JavaScript:showhide('popup1075')"><a
href="#p359scra8960558001"><sup>3sup>a><span class="popup-rw" id="popup1075">Decision of
Labor Arbiter Dominador A. Almirante dated December 27, 1996, Id., at 73.span>span>

Private respondents then appealed the decision of the Labor Arbiter to the National Labor Relations
Commission (NLRC), which affirmed the Labor Arbiter’s decision.<span class="ref-footnote-rw"
onmouseout="JavaScript:showhide('popup1076')"
onmouseover="JavaScript:showhide('popup1076')"><a
href="#p359scra8960558002"><sup>4sup>a><span class="popup-rw" id="popup1076">Decision of the
National Labor Relations Commission dated December 10, 1997, Id., at 81-91.span>span>
Not satisfied with the decision of the NLRC, private respondents appealed the same to the Court of
Appeals. The appellate court reversed the decision of the NLRC and held that SSI is the direct employer
of private respondents.<span class="ref-footnote-rw" onmouseout="JavaScript:showhide('popup1077')"
onmouseover="JavaScript:showhide('popup1077')"><a
href="#p359scra8960558003"><sup>5sup>a><span class="popup-rw" id="popup1077">Decision of the
Court of Appeals dated December 20, 1999, Id., at 33-36.span>span> Petitioners filed a motion for
reconsideration but the same was denied for lack of merit.<span class="ref-footnote-rw"
onmouseout="JavaScript:showhide('popup1078')"
onmouseover="JavaScript:showhide('popup1078')"><a
href="#p359scra8960558004"><sup>6sup>a><span class="popup-rw" id="popup1078">Resolution of
the Court of Appeals dated May 15, 2000, Id., at 39.span>span>

Hence, the present appeal. Petitioners contend that the Court of Appeals erred in applying this Court’s
pronouncement in <span class="titlecitationref-rw" id="p359scra9970555001359tcr708"><i>Manila Golf
&amp; Country Club us. Intermediate Appellate Courti>span><span class="ref-footnote-rw"
onmouseout="JavaScript:showhide('popup1079')"
onmouseover="JavaScript:showhide('popup1079')"><a
href="#p359scra8960558005"><sup>7sup>a><span class="popup-rw" id="popup1079">37 SCRA 207
(1994).span>span> that a decision in a certification election case regarding the existence of an
employer-employee relationship does not foreclose all further dispute between the parties as to the
existence or non-existence of such relationship. They contend that such pronouncement is <i>obiter
dictumi> since the issue involved therein was whether or not the persons rendering caddying services
for the golf club’s members and their guests in the club’s courses or premises are employees of Manila
Golf and Country Club and therefore within the compulsory coverage of the Social Security System, not
the correctness of the Med-Arbiter’s finding in the certification election case that <span style='font-
weight:bold; background-color:yellow;'>nospan> employer-employee relationship existed between the
golf club and the caddies.<span class="ref-footnote-rw"
onmouseout="JavaScript:showhide('popup1080')"
onmouseover="JavaScript:showhide('popup1080')"><a
href="#p359scra8960558006"><sup>8sup>a><span class="popup-rw" id="popup1080">Petition, Rollo,
pp. 15-16.span>span>

The Court does not agree with petitioner.

Our pronouncement in the <i>Manila Golf casei> that the decision in a certification election case, by the
very nature of such proceeding,

_______________

3 Decision of Labor Arbiter Dominador A. Almirante dated December 27, 1996, Id., at 73.

4 Decision of the National Labor Relations Commission dated December 10, 1997, Id., at 81-91.

5 Decision of the Court of Appeals dated December 20, 1999, Id., at 33-36.

6 Resolution of the Court of Appeals dated May 15, 2000, Id., at 39.
7 37 SCRA 207 (1994).

8 Petition, Rollo, pp. 15-16.

<span class="pb-rw" id="p359scra9980559">559span>

VOL. 359, JUNE 25, 2001

559

Sandoval Shipyards, Inc. vs. Pepito

does not foreclose further dispute regarding the existence or nonexistence of an employer-employee
relationship, was not <i>obiter dictumi> as petitioners suggest, but rather was part of the resolution of
the main issue in said case.

<i>Manila Golfi> involved three separate proceedings initiated by a group of caddies against Manila Golf
and Country Club, Inc.: (1) a petition for certification election; (2) a petition for compulsory arbitration;
and (3) a petition for compulsory social security coverage. In the certification election proceeding, the
Med-Arbiter found that an employer-employee relationship existed between the golf club and the
caddies. On the other hand, the petition for compulsory arbitration was dismissed by the Labor Arbiter
upon finding that <span style='font-weight:bold; background-color:yellow;'>nospan> employer-
employee relationship existed between Manila Golf and the caddies, which dismissal was later affirmed
by the NLRC. The Social Security Commission also dismissed the caddies’ petition for compulsory social
security coverage, stating that the caddies were not employees of the golf club, but this ruling was later
reversed by the Intermediate Appellate Court.<span class="ref-footnote-rw"
onmouseout="JavaScript:showhide('popup1081')"
onmouseover="JavaScript:showhide('popup1081')"><a
href="#p359scra8960559001"><sup>9sup>a><span class="popup-rw" id="popup1081">Manila Golf and
Country Club, Inc. vs. IAC, supra, at 211-214.span>span>

One of the questions in said case which this Court had to address in order to resolve the main issue was
which of the three proceedings should be recognized as being decisive of the issue regarding the
existence of an employer-employee relationship. It was in this context that the questioned
pronouncement in said case was made.

Clearly, such pronouncement was not <i>obiter dictumi> since the determination as to whether the
finding of the Med-Arbiter in the certification election case operates as <i>res adjudicata,i> or bar by
prior judgment, was necessary in resolving the main issue therein.

The Court of Appeals correctly applied the ruling in <span class="titlecitationref-rw"


id="p359scra9970555001359tcr709"><i>Manila Golf &amp; Country Club vs. IACi>span> that “however
final it may become, the decision in a certification election case, by the very nature of such proceeding,
is not such as to foreclose all further dispute as to the existence, or non-existence of an employer-
employee relationship”<span class="ref-footnote-rw" onmouseout="JavaScript:showhide('popup1082')"
onmouseover="JavaScript:showhide('popup1082')"><a
href="#p359scra8960559002"><sup>10sup>a><span class="popup-rw" id="popup1082">Id, at
214.span>span> between SSI and private respondents herein.
_______________

9 Manila Golf and Country Club, Inc. vs. IAC, supra, at 211-214.

10 Id, at 214.

<span class="pb-rw" id="p359scra9980560">560span>

560

SUPREME COURT REPORTS ANNOTATED

Sandoval Shipyards, Inc. vs. Pepito

<p class="fp-rw" id="p359scra8920560001">It is established doctrine that for <i>res adjudicatai> to


apply, the following requisites must concur: (1) the former judgment or order must be final; (2) the
court which rendered said judgment or order must have jurisdiction over the subject matter and the
parties; (3) said judgment or order must be on the merits; and (4) there must be between the first and
second actions identity of parties, subject matter and cause of action.<span class="ref-footnote-rw"
onmouseout="JavaScript:showhide('popup1083')"
onmouseover="JavaScript:showhide('popup1083')"><a
href="#p359scra8960560001"><sup>11sup>a><span class="popup-rw" id="popup1083">Saura vs.
Saura, Jr., 313 SCRA 465, 476 (1999).span>span>p>

This Court further explained in the <i>Manila Golfi> case:

<p class="fp-rw" id="p359scra8920560003">Clearly, implicit in these requisites is that the action or


proceedings in which is issued the “prior Judgment” that would operate in bar of a subsequent action
between the same parties for the same cause, be <i>adversarial,i> or contentious, “one having opposing
parties; (is) contested, as distinguished from an ex parte hearing or proceeding<i>.i> * * * of which the
party seeking relief has given legal notice to the other party and afforded the latter an opportunity to
contest it,” and a certification case is not such a proceeding, as this Court has already ruled:p><div
class="block-rw extract-rw" id="p359scra9930560003" title="Block General"><p class="fp-rw"
id="p359scra8920560004">“A certification proceeding is not a litigation in the sense in which this term
is commonly understood, but a mere investigation of a non-adversary, fact-finding character, in which
the investigating agency plays the part of a disinterested investigator seeking merely to ascertain the
desires of the employees as to the matter of their representation. The court enjoys a wide discretion in
determining the procedure necessary to insure the fair and free choice of bargaining representatives by
the employees.” (Citations omitted.)<span class="ref-footnote-rw"
onmouseout="JavaScript:showhide('popup1084')"
onmouseover="JavaScript:showhide('popup1084')"><a
href="#p359scra8960560002"><sup>12sup>a><span class="popup-rw" id="popup1084">Manila Golf
and Country Club, Inc. vs. IAC, supra, at 215; see also National Labor Union vs. Go Soc &amp; Sons, 23
SCRA 431, 436 (1968); George Peter Lines, Inc. vs. Court of Appeals, 134 SCRA 82, 85 (1985); Arguellez
vs. Young, 153 SCRA 690, 699 (1987); ...span>span>p>div><p id="p359scra8920560005">Considering
the foregoing, both the Labor Arbiter and the NLRC therefore erred in relying on the pronouncement of
then Undersecretary Laguesma in the certification proceeding that there was <span style='font-
weight:bold; background-color:yellow;'>nospan> employer-employee relationship between SSI and
private respondents.p>

_______________

11 Saura vs. Saura, Jr., 313 SCRA 465, 476 (1999).

12 Manila Golf and Country Club, Inc. vs. IAC, supra, at 215; see also National Labor Union vs. Go Soc &
Sons, 23 SCRA 431, 436 (1968); George Peter Lines, Inc. vs. Court of Appeals, 134 SCRA 82, 85 (1985);
Arguellez vs. Young, 153 SCRA 690, 699 (1987); Associated Labor Union vs. Calleja, 179 SCRA 127, 130-
131 (1989); Port Workers Union of the Philippines vs. Undersecretary of Labor and Employment, 207
SCRA 329, 335 (1992).

<span class="pb-rw" id="p359scra9980561">561span>

VOL. 359, JUNE 25, 2001

561

Sandoval Shipyards, Inc. vs. Pepito

Moreover, the appellate court found that: (1) the so-called subcontractors do not have a license to
engage in subcontracting; (2) the salaries of private respondents are actually paid by SSI and are given to
the subcontractors who in turn give the salaries to the private respondents; (3) it was SSI which hired
the private respondents and placed them under their respective subcontractors; <i>andi> (4) private
respondents use SSI’s tools and equipment in their work.<span class="ref-footnote-rw"
onmouseout="JavaScript:showhide('popup1085')"
onmouseover="JavaScript:showhide('popup1085')"><a
href="#p359scra8960561001"><sup>13sup>a><span class="popup-rw" id="popup1085">See Decision
of the Court of Appeals, Rollo, pp. 34-36; TSN of the proceedings before the Labor Arbiter, November 9,
1995, Id., at 163-170.span>span>

Based on these findings, the Court of Appeals was correct in declaring that the alleged subcontractors
are in effect “labor-only” contractors and are thus mere agents of petitioner SSI. The last paragraph of
Article 106 of the Labor Code is clear on this point:

<p class="fp-rw" id="p359scra8920561003">There is “labor-only” contracting where the person


supplying workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited and placed by such
person are performing activites which are directly related to the principal business of such employer. In
such cases, the person or intermediary shall be considered merely as an agent of the employer who shall
be responsible to the workers in the same manner and extent as if the latter were directly employed by
him.p>

The appellate court properly noted that the issue as to whether private respondents were illegally
dismissed, which was resolved in the affirmative by the Labor Arbiter, was not appealed by petitioners.
Such ruling has therefore attained finality. Thus, SSI, as the direct employer of private respondents, is
liable to either reinstate them and pay them backwages or to pay them separation pay. However,
because there is not enough evidence on this matter, there is a need to remand the case to the Labor
Arbiter for further proceedings to determine whether or not there are jobs still available for private
respondents in SSI.

<span class="dispositiveportion-rw">WHEREFORE, the petition is hereby DISMISSED and the decision of


respondent Court of Appeals is hereby AFFIRMED.span>

_______________

13 See Decision of the Court of Appeals, Rollo, pp. 34-36; TSN of the proceedings before the Labor
Arbiter, November 9, 1995, Id., at 163-170.

<span class="pb-rw" id="p359scra9980562">562span>

562

SUPREME COURT REPORTS ANNOTATED

Re: Report on the Judicial Audit Conducted in the RTC, Brs. 87 & 98, Quezon City

SO ORDERED.

Puno, Pardo and Ynares-Santiago, JJ., concur.

Davide, Jr. (C.J.), No part; a party was a former client when I was still in the private practice of law.

<span class="shortdisposition-rw"><i>Petition dismissed, judgment affirmedi>.span>

Note.—Res judicata applies only where judgment on the merit is finally rendered on the first complaint.
(Cruz vs. Court of Appeals, 309 SCRA 714 [1999])

——o0o—— Sandoval Shipyards, Inc. vs. Pepito, 359 SCRA 555, G.R. No. 143428 June 25, 2001

OTHER KINDS OF RECOGNITION OF EMPLOYEE REPRESENTATIVES

DIRECT CERTIFICATION

584

SUPREME COURT REPORTS ANNOTATED

Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE

G.R. No. 94045. September 13, 1991.*

CENTRAL NEGROS ELECTRIC COOPERATIVE, INC. (CENECO), petitioner, vs. HONORABLE SECRETARY,
DEPARTMENT OF LABOR AND EMPLOYMENT, and CENECO UNION OF RATIONAL EMPLOYEES (CURE),
respondents.
Labor Law; Labor Organization; Collective Bargaining; Petitioner deemed to have submitted the issue
of membership withdrawal from the cooperative to the jurisdiction of the med-arbiter and now
estopped

________________

* SECOND DIVISION.

585

VOL. 201, SEPTEMBER 13, 1991

585

Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE

from questioning that same jurisdiction which it invoked in its motion to dismiss after obtaining an
adverse ruling thereon.—From a perusal of petitioner’s motion to dismiss filed with the med-arbiter,
it becomes readily apparent that the sole basis for petitioner’s motion is the illegality of the
employees’ membership in respondent union despite the fact that they allegedly are still members of
the cooperative. Petitioner itself adopted the aforesaid argument in seeking the dismissal of the
petition for certification election filed with the medarbiter, and the finding made by the latter was
merely in answer to the arguments advanced by petitioner. Hence, petitioner is deemed to have
submitted the issue of membership withdrawal from the cooperative to the jurisdiction of the med-
arbiter and it is now estopped from questioning that same jurisdiction which it invoked in its motion
to dismiss after obtaining an adverse ruling thereon.

Same; Same; Same; Argument of CENECO that the withdrawal was merely to subvert the ruling of the
Court in the Batangas case is without merit.—The argument of CENECO that the withdrawal was
merely to subvert the ruling of this Court in the BATANGAS case is without merit. The case referred to
merely declared that employees who are at the same time members of the cooperative cannot join
labor unions for purposes of collective bargaining. However, nowhere in said case is it stated that
member-employees are prohibited from withdrawing their membership in the cooperative in order to
join a labor union.

Same; Same; Same; The right to join an organization necessarily includes the equivalent right that to
join the same.—It appears that the Articles of Incorporation of CENECO do not provide any ground for
withdrawal from membership which accordingly gives rise to the presumption that the same may be
done at any time and for whatever reason. In addition, membership in the cooperative is on a
voluntary basis. Hence, withdrawal therefrom cannot be restricted unnecessarily. The right to join an
organization necessarily includes the equivalent right not to join the same.

Same; Same; Same; Constitutional Law; The avowed policy of the state to afford full protection to
labor and to promote the primacy of free collective bargaining mandates that the employees’ right to
form and join unions for the purposes of collective bargaining be accorded the highest
consideration.—The right of the employees to self-organization is a compelling reason why their
withdrawal from the cooperative must be allowed. As pointed out by CURE, the resignation of the
member-employees is an expression of their preference for union

586

586

SUPREME COURT REPORTS ANNOTATED

Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE

membership over that of membership in the cooperative. The avowed policy of the State to afford full
protection to labor and to promote the primacy of free collective bargaining mandates that the
employees’ right to form and join unions for purposes of collective bargaining be accorded the highest
consideration.

Same; Same; Same; Where a union has filed a petition for certification election, the mere fact that no
opposition is made does not warrant a direct certification.—We have said that where a union has filed
a petition for certification election, the mere fact that no opposition is made does not warrant a direct
certification.

Same; Same; Same; The most effective way of determining which labor organization can truly
represent the working force is by certification election.—While there may be some factual variances,
the rationale therein is applicable to the present case in the sense that it is not alone sufficient that a
union has the support of the majority. What is equally important is that everyone be given a
democratic space in the bargaining unit concerned. The most effective way of determining which
labor organization can truly represent the working force is by certification election.

SPECIAL CIVIL ACTION for certiorari to review the order of the Secretary of the Department of Labor and
Employment.

The facts are stated in the opinion of the Court.

Enrique S. Tabino for petitioner.

Edmundo G. Manlapao for private respondent.

REGALADO, J.:

In this special civil action for certiorari, petitioner Central Negros Electric Cooperative, Inc. (CENECO)
seeks to annul the order1 issued by then Acting Secretary of Labor Bienvenido E. Laguesma on June
6,1990, declaring the projected certification election unnecessary and directing petitioner CENECO to
continue recognizing private respondent CENECO Union of Rational Employees (CURE) as the sole and
exclusive bargaining representative of all the rank-and-file employees of petitioner’s

________________
1 Annex A, Petition; Rollo, 20.

587

VOL. 201, SEPTEMBER 13, 1991

587

Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE

electric cooperative for purposes of collective bargaining.

It appears from the records that on August 15, 1987, CENECO entered into a collective bargaining
agreement with CURE, a labor union representing its rank-and-file employees, providing for a term of
three years retroactive to April 1, 1987 and extending up to March 31, 1990. On December 28,1989,
CURE wrote CENECO proposing that negotiations be conducted for a new collective bargaining
agreement (CBA).

On January 18, 1990, CENECO denied CURE’s request on the ground that, under applicable decisions of
the Supreme Court, employees who at the same time are members of an electric cooperative are not
entitled to form or join a union.2 Prior to the submission of the proposal for CBA renegotiation, CURE
members, in a general assembly held on December 9, 1989, approved Resolution No. 35 whereby it was
agreed that “all union members shall withdraw, aw, retract, or recall the union members’ membership
from Central Negros Electric Cooperative, Inc. in order to avail (of) the full benefits under the existing
Collective Bargaining Agreement entered into by and between CENECO and CURE, and the supposed
benefits that our union may avail (of) under the renewed CBA."3 This was ratified by 259 of the 362
union members. CENECO and the Department of Labor and Employment, Bacolod District, were
furnished copies of this resolution.

However, the withdrawal from membership was denied by CENECO on February 27, 1990 under
Resolution No. 90 “for the reason that the basis of withdrawal is not among the grounds covered by
Board Resolution No. 5023, dated November 22,1989 and that said request is contrary to Board
Resolution No. 5033 dated December 13, 1989, x x x."4

By reason of CENECO’s refusal to renegotiate a new CBA. CURE filed a petition for direct recognition or
for certification election, supported by 282 or 72% of the 388 rank-and-file employees in the bargaining
unit of CENECO.

CENECO filed a motion to dismiss on the ground that there

________________

2 Annex J., id., ibid., 108.

3 Annex 4, Comment of CURE; ibid., 139.


4 Annex I, Petition; ibid., 107.

588

588

SUPREME COURT REPORTS ANNOTATED

Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE

are legal constraints to the filing of the certification election, citing the ruling laid down by this Court in
Batangas I Electric Cooperative Labor Union vs. Romeo A Young,5 (BATANGAS case) to the effect that
“employees who at the same time are members of an electric cooperative are not entitled to form or
join unions for purposes of collective bargaining agreement, for certainly an owner cannot bargain with
himself or his coowners.”

Med-Arbiter Felizardo T. Serapio issued an order,6 granting the petition for certification election which,
in effect, was a denial of CENECO’s motion to dismiss, and directing the holding of a certification
election between CURE and No Union/ CENECO appealed to the Department of Labor and Employment
which issued the questioned order modifying the aforestated order of the med-arbiter by directly
certifying CURE as the exclusive bargaining representative of the rank-and-file employees of CURE.

Hence, this petition.

Petitioner CENECO argues that respondent Secretary committed a grave abuse of discretion in not
applying to the present case the doctrine enunciated in the BATANGAS case that employees of an
electric cooperative who at the same time are members of the electric cooperative are prohibited from
forming or joining labor unions for purposes of a collective bargaining agreement. While CENECO
recognizes the employees’ right to self-organization, it avers that this is not absolute. Thus, it opines that
employees of an electric cooperative who at the same time are members thereof are not allowed to
form or join labor unions for purposes of collective bargaining. However, petitioner does not hesitate to
admit that the prohibition does not extend to employees of an electric cooperative who are not
members of the cooperative.

The issue, therefore, actually involves a determination of whether or not the employees of CENECO who
withdrew their membership from the cooperative are entitled to form or join CURE for purposes of the
negotiations for a collective bargain-

________________

5 167 SCRA 136 (1988).

6 Annex F, id.; ibid., 80.

589
VOL. 201, SEPTEMBER 13, 1991

589

Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE

ing agreement proposed by the latter.

As culled from the records, it is the submission of CENECO that the withdrawal from membership in the
cooperative and, as a consequence, the employees’ acquisition of membership in the union cannot be
allowed for the following reasons:

1. It was made as a subterfuge or to subvert the ruling in the BATANGAS case:

2. To allow the withdrawal of the members of CENECO from the cooperative without justifiable reason
would greatly affect the objectives and goals of petitioner as an electric cooperative;

3. The Secretary of Labor, as well as the Med-Arbiter, has no jurisdiction over the issue of the
withdrawal from membership which is vested in the National Electrification Administration (NEA) which
has direct control and supervision over the operations of electric cooperatives; and

4. Assuming that the Secretary has jurisdiction, CURE failed to exhaust administrative remedies by. not
referring the matter of membership withdrawal to the NEA,

The petition is destitute of merit; certiorari will not lie.

We first rule on the alleged procedural infirmities affecting the instant case. CENECO avers that the
med-arbiter has no jurisdiction to rule on the issue of withdrawal from membership of its employees in
the cooperative which, it claims, is properly vested in the NEA which has control and supervision over all
electric cooperatives.

From a perusal of petitioner’s motion to dismiss filed with the med-arbiter, it becomes readily apparent
that the sole basis for petitioner’s motion is the illegality of the employees’ membership in respondent
union despite the fact that they allegedly are still members of the cooperative. Petitioner itself adopted
the aforesaid argument in seeking the dismissal of the petition for certification election filed with the
med-arbiter, and the finding made by the latter was merely in answer to the arguments advanced by
petitioner. Hence, petitioner is deemed to have submitted the issue of membership withdrawal from
the cooperative to the jurisdiction of the med-arbiter and it is now estopped from questioning that
same jurisdiction which it invoked in its motion to dismiss after obtaining an adverse ruling thereon.

590

590

SUPREME COURT REPORTS ANNOTATED

Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE

Under Article 256 of the Labor Code, to have a valid certification election at least a majority of all eligible
voters in the unit must have cast their votes. It is apparent that incidental to the power of the med-
arbiter to hear and decide representation cases is the power to determine who the eligible voters are. In
so doing, it is axiomatic that the med-arbiter should determine the legality of the employees’
membership in the union. In the case at bar, it obviously becomes necessary to consider first the
propriety of the employees’ membership withdrawal from the cooperative before a certification
election can be had.

Lastly, it is petitioner herein who is actually questioning the propriety of the withdrawal of its members
from the cooperative. Petitioner could have brought the matter before the NEA if it wanted to and if
such remedy had really been available, and there is nothing to prevent it from doing so. It would be
absurd to fault the employees for the neglect or laxity of petitioner in protecting its own interests.

The argument of CENECO that the withdrawal was merely to subvert the ruling of this Court in the
BATANGAS case is without merit. The case referred to merely declared that employees who are at the
same time members of the cooperative cannot join labor unions for purposes of collective bargaining.
However, nowhere in said case is it stated that member-em-ployees are prohibited from withdrawing
their membership in. the cooperative in order to join a labor union.

As discussed by the Solicitor General, Article I, Section 9 of the Articles of Incorporation and By-Laws of
CENECO provides that “any member may withdraw from membership upon compliance with such
uniform terms and conditions as the Board may prescribe.” The same section provides that upon
withdrawal, the member is merely required to surrender his membership certificate and he is to be
refunded his membership fee less any obligation that he has with the cooperative. There appears to be
no other condition or requirement imposed upon a withdrawing member. Hence, there is no just cause
for petitioner’s denial of the withdrawal from membership of its employees who are also members of
the union.7

________________

7 Rollo, 167–170.

591

VOL. 201, SEPTEMBER 13, 1991

591

Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE

The alleged board resolutions relied upon by petitioner in denying the withdrawal of the members
concerned were never presented nor their contents disclosed either before the med-arbiter or the
Secretary of Labor if only to prove the ratiocination for said denial. Furthermore, CENECO never averred
noncompliance with the terms and conditions for withdrawal, if any. It appears that the Articles of
Incorporation of CENECO do not provide any ground for withdrawal from membership which
accordingly gives rise to the presumption that the same may be done at any time and for whatever
reason. In addition, membership in the cooperative is on a voluntary basis. Hence, withdrawal
therefrom cannot be restricted unnecessarily. The right to join an organization necessarily includes the
equivalent right not to join the same.

The right of the employees to self-organization is a compelling reason why their withdrawal from the
cooperative must be allowed. As pointed out by CURE, the resignation of the member-employees is an
expression of their preference for union membership over that of membership in the cooperative. The
avowed policy of the State to afford full protection to labor and to promote the primacy of free
collective bargaining mandates that the employees’ right to form and join unions for purposes of
collective bargaining be accorded the highest consideration.

Membership in an electric cooperative which merely vests in the member a right to vote during the
annual meeting becomes too trivial and insubstantial vis-a-vis the primordial and more important
constitutional right of an employee to join a union of his choice. Besides, the 390 employees of CENECO,
some of whom have never been members of the cooperative, represent a very small percentage of the
cooperative’s total membership of 44,000. It is inconceivable how the withdrawal of a negligible number
of members could adversely affect the business concerns and operations of CENECO.

We rule, however, that the direct certification ordered by respondent Secretary is not proper. By virtue
of Executive Order No. 111, which became effective on March 4, 1987, the direct certification originally
allowed under Article 257 of the Labor Code has apparently been discontinued as a method of selecting
the exclusive bargaining agent of the workers. This amendment affirms the superiority of the
certification election over the

592

592

SUPREME COURT REPORTS ANNOTATED

Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE

direct certification ;which is no longer available now under the change in said provision.8

We have said that where a union has filed a petition for certification election, the mere fact that no
opposition is made does not warrant a direct certification.9 In said case which has similar features to
that at bar, wherein the respondent Minister directly certified the union, we held that:

“x x x As pointed out by petitioner in its petition, what the respondent Minister achieved in rendering
the assailed orders was to make a mockery of the procedure provided under the law for representation
cases because: x x x (c) By directly certifying a Union without sufficient proof of majority representation,
he has in effect arrogated unto himself the right, vested naturally in the employees to choose their
collective bargaining representative. (d) He has in effect imposed upon the petitioner the obligation to
negotiate with a union whose majority representation is under serious question; This is highly irregular
because while the Union enjoys the blessing of the Minister, it does not enjoy the blessing of the
employees. Petitioner is therefore under threat of being held liable for refusing to negotiate with a
union whose right to bargaining status has not been legally established.”
While there may be some factual variances, the rationale therein is applicable to the present case in the
sense that it is not alone sufficient that a union has the support of the majority. What is equally
important is that everyone be given a democratic space in the bargaining unit concerned. The most
effective way of determining which labor organization can truly represent the working force is by
certification election.10

WHEREFORE, the questioned order for the direct certification of respondent CURE as the bargaining
representative of the employees of petitioner CENECO is hereby ANNULLED and SET ASIDE. The med-
arbiter is hereby ordered to conduct a certification election among the rank-and-file employees of

________________

8 National Association of Free Trade Unions (NAFTU-TUCP) vs. Bureau of Labor Relations (BLR), et al.,
164 SCRA 12 (1988),

9 Colgate Palmolive Philippines, Inc. vs. Ople, et al., 163 SCRA 323 (1988).

10 Associated Labor Unions (ALU) vs. Ferrer-Calleja, etc., et al., 179 SCRA (1989).

593

VOL. 201, SEPTEMBER 13, 1991

593

Davao City Water District vs. Civil Service Commission

CENECO with CURE and No Union as the choices therein.

SO ORDERED.

Melencio-Herrera (Chairman), Paras and Padilla, JJ., concur.

Sarmiento, J., On leave.

Order annulled and set aside.

Note.—Employees of a cooperative who are members-co-owners have no right to collective bargaining


(San Jose Electric Service Cooperative, Inc. (SAJELCO) vs. Ministry of Labor and Employment, 173 SCRA
697).

——o0o—— Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE, 201 SCRA 584, G.R. No. 94045
September 13, 1991
VOLUNTARY RECOGNITION

OL. 182, FEBRUARY 23, 1990

561

Ilaw at Buklod ng Manggagawa vs. Ferrer-Calleja

G.R. No. 84685. February 23, 1990.*

ILAW AT BUKLOD NG MANGGAGAWA (IBM) LOCAL NO. 56, petitioner, vs. HON. PURA FERRER-
CALLEJA, in her capacity as Director, BUREAU OF LABOR RELATIONS, and SAN MIGUEL CORPORATION,
respondents.

Labor Law; The employer has no authority to certify a local union as exclusive collective bargaining
representative.—The petition has no merit. Ordinarily, in an unorganized establishment like the SMC
Calasiao Beer Region, it is the union that files a petition for a certification election if there is no
certified bargaining agent for the workers in the establishment. If a union asks the employer to
voluntarily recognize it as the bargaining agent of the employees, as the petitioner did, it in effect asks
the employer to certify it as the bargaining representative of the employees—a certification which the
employer has no authority to give, for it is the employees’ prerogative (not the em-ployer’s) to
determine whether they want a union to represent them, and, if so, which one it should be.

SPECIAL CIVIL ACTION for certiorari to review the orders of the Bureau of Labor Relations.

The facts are stated in the opinion of the Court.

E.N.A. Cruz & Associates for petitioner.

Siguion Reyna, Montecillo & Ongsiako for private respondent.

GRIÑO-AQUINO, J.:

This is a special civil action of certiorari with a prayer for the

_______________

* FIRST DIVISION.

562

562

SUPREME COURT REPORTS ANNOTATED

Ilaw at Buklod ng Manggagawa vs. Ferrer-Calleja


issuance of a writ of preliminary injunction to annul the orders dated February 22, 1988 and June 23,
1988, of the Med-Arbiter and the Bureau of Labor Relations (BLR), respectively, for the holding of a
certification election in the Calasiao Beer Region of the San Miguel Corporation.

On September 7, 1987, petitioner Union, formerly registered with the Labor Organization Division of the
Bureau of Labor Relations, as the San Miguel Corporation Sales Force Union Calasiao Beer Region-IBM
Local No. 56, a local union of Ilaw at Buklod ng Manggagawa (IBM), which is a national union, requested
San Miguel Corporation for voluntary recognition as the sole and exclusive bargaining representative of
all the covered employees which consist of the monthly-and daily-paid employees of the Calasiao Sales
Office, now Dagupan Sales Office. As the territorial coverage of the Calasiao Beer Region embraces the
regional sales office and the six (6) sales offices in Calasiao, Carmen, Alaminos, Tarlac, Cabanatuan and
San Isidro, SMC denied the union’s request and instead, suggested that it avail of a certification election.
So, on November 27, 1987, SMC, through its North-Central Luzon Sales Operations Manager, filed a
petition for certification election among the sales personnel of the Region only, excluding the daily-paid
and monthly-paid employees, but including the sales offices of the entire beer region.

The Union filed a motion to dismiss alleging that the petition for certification election was premature as
it did not ask SMC to bargain collectively with it. It cited Article 258 of the Labor Code which provides:

“ART. 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.”

On February 22, 1988, the Med-Arbiter issued an order, the

563

VOL. 182, FEBRUARY 23, 1990

563

Ilaw at Buklod ng Manggagawa vs. Ferrer-Calleja

dispositive portion of which reads as follows:

“IN VIEW OF ALL THE FOREGOING, let therefore, a certification election be conducted among the sales
force personnel of the SMC-North Central Luzon Beer Region covering the following sales offices:
Dagupan City, Carmen, Alaminos, Tarlac, Cabanatuan and San Isidro, within twenty (20) days from
receipt hereof with the following choices:

“1. San Miguel Corporation Sales Force Labor Union Cala-siao Beer Region—Ilaw at Bukod ng
Manggagawa (IBM) Local No. 56;

“2. No union.
Parties are hereby directed to attend a pre-election conference which shall be called by this Office one
(1) week before the actual conduct of said election, with corresponding notices to be sent to them.” (p.
6, Rollo.)

Petitioner appealed the order to the Bureau of Labor Relations (BLR) which denied the appeal on June
23, 1988 for lack of merit. Hence, this petition for certiorari alleging that the Director of the BLR gravely
abused her discretion in ordering the holding of a certification election. Parenthetically, the certification
election was actually conducted on September 19, 1988 resulting in “NO UNION” as the winner.

The petition has no merit. Ordinarily, in an unorganized establishment like the SMC Calasiao Beer
Region, it is the union that files a petition for a certification election if there is no certified bargaining
agent for the workers in the establishment. If a union asks the employer to voluntarily recognize it as
the bargaining agent of the employees, as the petitioner did, it in effect asks the employer to certify it as
the bargaining representative of the employees—a certification which the employer has no authority to
give, for it is the employees’ prerogative (not the employer’s) to determine whether they want a union
to represent them, and, if so, which one it should be.

The petitioner’s request for voluntary recognition as the bargaining representative of the employees
was in effect a request to bargain collectively, or the first step in that direction, hence, the employer’s
request for a certification election was in accordance with Article 258 of the Labor Code, and the public
respondents did not abuse their discretion in granting the request.

564

564

SUPREME COURT REPORTS ANNOTATED

Lim vs. Court of Appeals

WHEREFORE, the petition for certiorari is dismissed for lack of merit. Costs against the petitioner.

SO ORDERED.

Narvasa, Gancayco and Medialdea, JJ., concur.

Cruz, J., No part. Related to one of the counsel.

Petition dismissed.

Notes.—The Labor Code grants original and exclusive jurisdiction over the conciliation and mediation of
disputes, grievances or problems in the regional offices of DOLE. (Montoya vs. Escayo, 171 SCRA 442.)

In the case of Democratic Labor Association vs. Cebu Steve-doring Co, Inc., the Court laid down the test
of proper grouping which is community and mutuality of interest. (Belyca Corp. vs. Ferrer-Calleja, 168
SCRA 184.)

——o0o—— Ilaw at Buklod ng Manggagawa vs. Ferrer-Calleja, 182 SCRA 561, G.R. No. 84685 February
23, 1990
CONSENT ELECTION

VOL. 237, OCTOBER 19, 1994

647

Algire vs. De Mesa

G.R. No. 97622. October 19, 1994.*

CATALINO ALGIRE and OTHER OFFICERS OF UNIVERSAL ROBINA TEXTILE MONTHLY SALARIED
EMPLOYEES UNION (URTMSEU), petitioners, vs. REGALADO DE MESA, et al., and HON. SECRETARY OF
LABOR, respondents.

Labor Relations; Consent Election; Consent election is an agreed one, the purpose being merely to
determine the issue of majority representation of all the workers in the appropriate collective
bargaining unit.—It is unmistakable that the election held on November 15, 1990 was a consent
election and not a certification election. It was an agreed

_______________

* THIRD DIVISION.

648

648

SUPREME COURT REPORTS ANNOTATED

Algire vs. De Mesa

one, the purpose being merely to determine the issue of majority representation of all the workers in
the appropriate collective bargaining unit. It is a separate and distinct process and has nothing to do
with the import and effort of a certification election.

Same; Certification Election; The choice by the majority of employees of the union officers that should
best represent them in the collective bargaining negotiations should be achieved through the
democratic process of an election.—In any event, the choice by the majority of employees of the
union officers that should best represent them in the forthcoming collective bargaining negotiations
should be achieved through the democratic process of an election, the proper forum where the true
will of the majority may not be circumvented but clearly defined. The workers must be allowed to
freely express their choice once and for all in a determination where everything is open to their sound
judgment and the possibility of fraud and misrepresentation is minimized, if not eliminated, without
any unnecessary delay and/or maneuvering.

PETITION for certiorari to nullify and set aside a decision of the Secretary of Labor.
The facts are stated in the opinion of the Court.

C.A. Montano Law Office for petitioner.

Cabio and Ravanes Law Offices and Jaime D. Lauron for private respondents.

ROMERO, J.:

This petition for certiorari seeks to nullify and set aside the decision dated January 31, 1991 of the
Secretary of Labor which reversed on appeal the Order dated December 20, 1990 issued by Med-arbiter
Rolando S. de la Cruz declaring petitioners as the duly-elected officers of the Universal Robina Textile
Monthly Salaried Employees Union (URTMSEU) as well as the Order dated March 5, 1991 denying
petitioner Catalino Algire’s motion for reconsideration.

The case arose out of the election of the rightful officers to represent the union in the Collective
Bargaining Agreement (CBA) with the management of Universal Robina Textile at its plant in Km. 50, Bo.
San Cristobal, Calamba, Laguna.

649

VOL. 237, OCTOBER 19, 1994

649

Algire vs. De Mesa

Universal Robina Textile Monthly Salaried Employees Union, (URTMSEU), through private respondent
Regalado de Mesa, filed on September 4, 1990 a petition for the holding of an election of union officers
with the Arbitration Branch of the Department of Labor and Employment (DOLE). Acting thereon,
DOLE’s med-arbiter Rolando S. de la Cruz issued an Order dated October 19, 1990 directing that such an
election be held.

In the pre-election conference, it was agreed that the election by secret ballot be conducted on
November 15, 1990 between petitioners (Catalino Algire, et al.) and private respondents (Regalado de
Mesa, et al.) under the supervision of DOLE through its duly appointed representation officer.

The official ballot contained the following pertinent instructions:

“Nais kong pakatawan sa grupo ni:

1. Mark check (/) or cross (x) inside the box specified above who among the two contending parties you
desire to be represented for the purpose of collective bargaining.

2. This is a secret ballot. Don’t write any other markings.”1

The results of the election were as follows:


Lino Algire group

133

Regalado de Mesa group

133

Spoiled

_____

Total votes cast

272

On November 19, 1990, Catalino Algire filed a Petition and/or Motion (RO 400-9009-AU-002), which
DOLE’s Med-Arbitration unit treated as a protest, to the effect that one of the ballots wherein one voter
placed two checks inside the box opposite the phrase “Lino Algire and his officers,” hereinafter referred
to as

_______________

1 Annex “A,” Rollo, p. 25.

650

650

SUPREME COURT REPORTS ANNOTATED

Algire vs. De Mesa

the “questioned ballot,” should not have been declared spoiled, as the same was a valid vote in their
favor. The group argued that the two checks made even clearer the intention of the voter to exercise his
political franchise in favor of Algire’s group.
During the scheduled hearing thereof, both parties agreed to open the envelope containing the spoiled
ballots and it was found out that, indeed, one ballot contained two (2) checks in the box opposite
petitioner Algire’s name and his officers.

On December 20, 1990, med-arbiter de la Cruz issued an Order declaring the questioned ballot valid,
thereby counting the same in Algire’s favor and accordingly certified petitioner’s group as the union’s
elected officers.2

Regalado de Mesa, et al. appealed from the decision of the medarbiter to the Secretary of Labor in Case
No. OS-A-1-37-91 (RO 400-9009-AU-002). On January 31, 1991, the latter’s office granted the appeal and
reversed the aforesaid Order. In its stead, it entered a new one ordering “the calling of another election
of officers of the Universal Robina Textile Monthly Salaried Employees Union (URTMSEU), with the same
choices as in the election of 15 November, 1990, after the usual pre-election conference.”3

Director Maximo B. Lim of the Industrial Relations Division, Regional Office No. IV of the DOLE set the
hearing for another pre-election conference on March 22, 1991, reset to April 2, 1991, and finally reset
to April 5, 1991.

Catalino Algire’s group filed a motion for reconsideration of the Order. It was denied for lack of merit
and the decision sought to be reconsidered was sustained.

Algire, et al. filed this petition on the following issues:

“(1) the Secretary of Labor erred in applying Sections 1 and 8 (6), Rule VI, Book V of the Rules and
Regulations implementing the Labor Code to the herein case, considering that the case is an intra-union
activity, which act constitutes a grave abuse in the exercise of authority amounting to lack of
jurisdiction.

(2) the assailed decision and order are not supported by law and evidence.”

_______________

2 Rollo, pp. 26-31.

3 Rollo, pp. 32-33.

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Algire vs. De Mesa

with an ex-parte motion for issuance of a temporary restraining order, alleging that the assailed decision
of the office of the Secretary of Labor as public respondent is by nature immediately executory and the
holding of an election at any time after April 5, 1991, would render the petition moot and academic
unless restrained by this Court.
On April 5, 1991, we issued a temporary restraining order enjoining the holding of another election of
union officers pursuant to the January 31, 1991 decision.4

There is no merit in the petition.

The contention of the petitioner is that a representation officer (referring to a person duly authorized to
conduct and supervise certification elections in accordance with Rule VI of the Implementing Rules and
Regulations of the Labor Code) can validly rule only on on-the-spot questions arising from the conduct of
the elections, but the determination of the validity of the questioned ballot is not within his
competence. Therefore, any ruling made by the representation officer concerning the validity of the
ballot is deemed an absolute nullity because—such is the allegation—it was done without or in excess of
his functions amounting to lack of jurisdiction.

To resolve the issue of union representation at the Universal Robina Textile plant, what was agreed to
be held at the company’s premises and which became the root of this controversy, was a consent
election, not a certification election.

It is unmistakable that the election held on November 15, 1990 was a consent election and not a
certification election. It was an agreed one, the purpose being merely to determine the issue of majority
representation of all the workers in the appropriate collective bargaining unit. It is a separate and
distinct process and has nothing to do with the import and effort of a certification election.5

The ruling of DOLE’s representative in that election that the questioned ballot is spoiled is not based on
any legal provision or rule justifying or requiring such action by such officer but simply in pursuance of
the intent of the parties, expressed in the written

_______________

4 Rollo, p. 41.

5 Warren Manufacturing Workers Union v. Bureau of Labor Relations, G.R. No. 76185, March 30, 1988,
159 SCRA 387.

652

652

SUPREME COURT REPORTS ANNOTATED

Algire vs. De Mesa

instructions contained in the ballot, which is to prohibit unauthorized markings thereon other than a
check or a cross, obviously intended to identify the votes in order to preserve the sanctity of the ballot,
which is in fact the objective of the contending parties.

If indeed petitioner’s group had any opposition to the representation officer’s ruling that the questioned
ballot was spoiled, it should have done so seasonably during the canvass of votes. Its failure or inaction
to assail such ballot’s validity shall be deemed a waiver of any defect or irregularity arising from said
election. Moreover, petitioners even question at this stage the clear instruction to mark a check or cross
opposite the name of the candidate’s group, arguing that such instruction was not clear, as two checks
“may be interpreted that a voter may vote for Lino Algire but not with (sic) his officers or vice-versa,”6
notwithstanding the fact that a pre-election conference had already been held where no such question
was raised.

In any event, the choice by the majority of employees of the union officers that should best represent
them in the forthcoming collective bargaining negotiations should be achieved through the democratic
process of an election, the proper forum where the true will of the majority may not be circumvented
but clearly defined. The workers must be allowed to freely express their choice once and for all in a
determination where everything is open to their sound judgment and the possibility of fraud and
misrepresentation is minimized, if not eliminated, without any unnecessary delay and/or maneuvering.

WHEREFORE, the petition is DENIED and the challenged decision is hereby AFFIRMED.

SO ORDERED.

Bidin (Acting Chairman), Melo and Vitug, JJ., concur.

Feliciano, J., On leave.

Petition denied, judgment affirmed.

Note.—Consent election is a separate, distinct process, and has nothing to do with the import and effect
of a certification

_______________

6 Rollo, p. 10 of Memorandum on p. 107.

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People vs. Flores

election. Neither does it shorten the terms of an existing collective bargaining agreement nor entitle the
participants therewith to immediately re-negotiate a new agreement, although it does not preclude
workers from exercising their right to choose their sole and exclusive bargaining representative within
the freedom period. (Warren Manufacturing Workers Union vs. Bureau of Labor Relations, 159 SCRA
387 [1988])

——o0o—— Algire vs. De Mesa, 237 SCRA 647, G.R. No. 97622 October 19, 1994
RUN OFF ELECTION

694

SUPREME COURT REPORTS ANNOTATED

Confederation of Citizens Labor Unions vs. Noriel

No. L-56902. September 21, 1982.*

CONFEDERATION OF CITIZENS LABOR UNIONS (CCLU) and REDSON EMPLOYEES AND LABORERS
ASSOCIATION, petitioners, vs. Hon. CARMELO C. NORIEL, Officer-in-Charge of the Bureau of Labor
Relations, MARGARITA C. ENRIQUEZ, Election Supervisor of the Ministry of Labor and Employment,
ASSOCIATED LABOR UNIONS (ALU) and REDSON TEXTILE MANUFACTURING CORPORATION,
respondents.

Labor Law; Circumstances showing irregularities in the holding of the certification election sufficient
to invalidate the same.—We hold that the certification election is invalid because of certain
irregularities such as that (1) the workers on the night shift (ten p.m. to six a.m.) and some of those in
the afternoon shift were not able to vote, so much so that out of 1,010 voters only 692 voted and
about 318 failed to vote (p. 88, Rollo); (2) the secrecy of the ballot was not safeguarded; (3) the
election supervisors were remiss in their duties and were apparently “intimidated” by a union
representative and (4) the participating unions were overzealous in wooing the employees to vote in
their favor by resorting to such tactics as giving free tricycle rides and T-shirts.

Same; Purpose of a certification election.—The purpose of a certification election is to give employees


“true representation in their collective bargaining with an employer.” (51 C.J.S. 969) That purpose was
not achieved in the run-off election because many employees or union members were not able to
vote and the employer, through apathy or deliberate intent, did not render assistance in the holding
of the election. It should be noted that ALU’S written protest (later withdrawn) was based on the
same grounds invoked by CCLU in its protest. That fact alone should have alerted to disregard the
technicality that CCLU’S protest was not filed on time.

_______________

* SECOND DIVISION.

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Confederation of Citizens Labor Unions vs. Noriel

SPECIAL CIVIL ACTIONS of certiorari and prohibition to review the resolutions of the Officer-In-Charge of
the Bureau of Labor Relations.
The facts are stated in the opinion of the Court.

Oliver B. Gesmundo for petitioners.

Solicitor General Estelito P. Mendoza, Asst. Solicitor General Ramon A. Barcelona and Solicitor Dennis
M. Taningco for respondents.

AQUINO, J.:

These special civil actions of certiorari and prohibition deal with the alleged irregular holding of a
certification election.

Petitioner Confederation of Labor Unions (CCLU) was one of the four unions wanting to be certified as
the collective bargaining representative of the employees in the Redson Textile Manufacturing
Corporation with place of business at Brixton Hill Street, Capitolyo, Pasig, Metro Manila. Its co-
petitioner, the Redson Employees and Laborers Association, is a CCLU local in the said corporation.

The other unions aspiring to become the collective bargaining representative were the National Union
of Garments Textile and General Workers of the Philippines (GATCORD), the National Trade Union
(NATU) and the Associated Labor Unions (ALU).

On August 7, 1980, a certification election was held in the premises of the corporation from eight-
twenty in the morning to five-thirty in the afternoon. Out of the 831 votes cast, CCLU garnered 356
votes; ALU, 338 votes; NATU, 82 votes and GATCORD, 42 votes. Eight votes were spoiled and five votes
were challenged or segregated.

As no union obtained a majority vote, CCLU and ALU, which had the two largest number of votes, agreed
in a pre-election conference on September 2, 1980 that a run-off election would be held on November
6, 1980 from six o’clock in the morning to six o’clock in the evening. CCLU requested that the
certification election be conducted for two days but ALU objected to that request.

696

696

SUPREME COURT REPORTS ANNOTATED

Confederation of Citizens Labor Unions vs. Noriel

On November 6, 1980, Margarita C. Enriquez, Reynaldo F. de Luna and one Francisco, three election
supervisors from the Ministry of Labor and Employment, arrived at around seven o’clock in the morning
near the Redson Textile compound but they were not allowed by the security guard to enter the
company premises in spite of the heavy rain. So, after consulting through the phone with their chief, a
certain Attorney Padilla, the said election supervisors decided to hold the certification election “outside
the premises of the company in a small store outside of the annex building” (Annex C, Rollo, p. 27). They
used as ballot box “an improvised carton box.” The union representatives did not object to the
improvised polling place and ballot box.

Voting started at eleven o’clock. During the election and just before it was closed at six-thirty in the
evening, the ALU representative, Sebastian P. Taneo, executed a written protest or manifestation,
alleging that the management of Redson Textile did not allow the run-off election to be held within its
premises; that the company prevented fifty percent of the workers from voting by not allowing them to
get out of the company premises and inducing them to work overtime; that its security guards
“manhandled” the ALU vice-president and that their “active intervention” caused “chaos and confusion”
for around thirty minutes; that the company refused to furnish election paraphernalia like the polling
place and the ballot box and that the election supervisors declared the election closed in spite of ALU’s
objection.

Taneo prayed that the votes should not be counted, that another day be scheduled for the continuation
of the election and that the company be ordered to allow its workers to vote (Rollo, pp. 29-35).

At around seven-thirty in the evening, the votes cast were canvassed. Of the 692 votes cast, ALU got 366
votes as against CCLU’s 313 votes, or a margin of 53 votes. There were 1,010 voters. Because ALU won,
its representative, Taneo, withdrew his protest or manifestation by writing on the minutes of the
proceeding that his protest or manifestation was withdrawn “before the close of the proceedings”. On
the

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other hand, the CCLU representatives refused to sign the minutes of the election.

On the following day, November 7, CCLU through its representative, Juan L. Fresnoza, filed with the
Bureau of Labor Relations a protest wherein he prayed that the November 6 certification election as
well as the “continuation of the election” on November 7 be annulled.

Fresnoza alleged that the previous day’s certification election was irregular and disorderly because (a)
no booths were provided for by the company; (b) the election started much later than the hour agreed
upon by the parties, and (c) ALU distributed white T-shirts printed with “ALU TAYO”, gave free tricycle
rides to ALU voters and hired around fifteen husky men and around twenty-five women who “forced”
voters to vote for ALU.

According to Fresnoza, when he and Oscar Sanchez, the acting president of Redson Employees and
Laborers Association (RELA-CCLU), protested against those activities before election supervisor
Margarita C. Enriquez, the latter allegedly retorted, “Wala akong magagawa, magagalit na naman si Mr.
Taneo” (Rollo, pp. 36-37).
On November 10, 1980, Fresnoza and Sanchez filed with the Bureau of Labor Relations a joint affidavit
attesting to what transpired during the certification election as alleged in the aforesaid protest and
added therein that when they protested before the election supervisors, the latter told them to “place
their protest in writing so that they (supervisors) could consolidate the protests in their election report”
(Rollo, pp. 38-39).

On February 19, 1981, CCLU informed the Bureau of Labor Relations that the election was conducted
without regard to the provisions of section 6, Rule VI, Book V of the Rules and Regulations Implementing
the Labor Code.

Carmelo C. Noriel. Officer-in-Charge of the Bureau of Labor Relations, in his resolution of February 26,
1981, dismissed CCLU’s protest for lack of merit. He observed that CCLU failed to submit the pleadings
and evidences required in the hearing on January 19, 1981 and that CCLU failed to file a protest either
“before or during the election proceeding” and,

698

698

SUPREME COURT REPORTS ANNOTATED

Confederation of Citizens Labor Unions vs. Noriel

therefore, pursuant to section 3, Rule VI, Book V of the aforementioned rules, CCLU is deemed to have
waived its right to protest.

Noriel in his resolution of March 26, 1981, denying CCLU’s motion for reconsideration, certified ALU as
the exclusive bargaining representative of the employees in Redson Textile Manufacturing Corporation.

On June 6, 1981 CCLU and RELA-CCLU filed the instant petition for certiorari and prohibition to annul the
certification election. They complained that the certification election was conducted in violation of the
following provisions of Rule VI, Book V of the Rules and Regulations Implementing the Labor Code:

“SEC. 6. Duties of representation officer.—Before the actual voting commences the representation
officer shall inspect the polling place, the ballot boxes, and the polling booths to insure secrecy of
balloting. The parties shall be given opportunity to witness the inspection proceedings. After the
examination of the ballot box, the representation officer shall lock it with three keys one of which he
shall keep and the rest forthwith given one each to the employer’s representative and the
representative of the labor organization. If more than one union is involved, the holder of the third shall
be determined by drawing of lots. The key shall remain in the possession of the representation officer
and the parties during the entire proceedings and thereafter until all the controversies concerning the
conduct of the election shall have been definitely resolved.”

The Solicitor General in his comment contends that the certification election should be upheld because
CCLU, by not filing a protest with the election supervisor before the close of the election proceeding,
waived its right to protest (Sec. 3, Rule VI, Book V of Implementing Rules and Regulations).
We hold that the certification election is invalid because of certain irregularities such as that (1) the
workers on the night shift (ten p.m. to six a.m.) and some of those in the afternoon shift were not able
to vote, so much so that out of 1,010 voters only 692 voted and about 318 failed to vote (p. 88, Rollo);
(2) the secrecy of the ballot was not safeguarded; (3) the election supervisors were remiss in their duties
and were apparently

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Confederation of Citizens Labor Unions vs. Noriel

“intimidated” by a union representative and (4) the participating unions were overzealous in wooing the
employees to vote in their favor by resorting to such tactics as giving free tricycle rides and T-shirts.

The purpose of a certification election is to give the employees “true representation in their collective
bargaining with an employer” (51 C.J.S. 969). That purpose was not achieved in the run-off election
because many employees or union members were not, able to vote and the employer, through apathy
or deliberate intent, did not render assistance in the holding of the election.

It should be noted that ALU’s written protest (later withdrawn) was based on the same grounds invoked
by CCLU in its protest. That fact alone should have alerted Noriel to disregard the technicality that
CCLU’s protest was not filed on time.

WHEREFORE, the resolutions of the Officer-in-Charge of the Bureau of Labor Relations dated February
26 and March 19, 1981 are hereby set aside. Another run-off certification election should be conducted
inside the premises of Redson Textile Manufacturing Corporation. The management is ordered to allow
all its employees to participate in the certification election and to assist in the holding of an orderly
election. The election supervisors or representation officers are also enjoined to fulfill their duties under
the Labor Code and the rules and regulations implementing the same.

SO ORDERED.

Barredo (Chairman), Concepcion, Jr., Abad Santos and De Castro, JJ., concur.

Guerrero and Escolin, JJ., did not take part.

Resolutions set aside.

Notes.—Workers should be given the opportunity to participate in a certification election.


(Confederation of Citizens Labor Union vs. Noriel, 98 SCRA 474.)

700

700
SUPREME COURT REPORTS ANNOTATED

Arevalo vs. Quilatan

Holding of certification elections is a clear statutory policy that should not be circumvented. (Associated
Trade Unions-ATU vs. Noriel 89 SCRA 264.)

Certification election may be ordered where a union’s right to continue as union representative is
seriously being assailed. (National Organization of Trade Union vs. Secretary of Labor, 90 SCRA 462.)

——o0o—— Confederation of Citizens Labor Unions vs. Noriel, 116 SCRA 694, No. L-56902 September
21, 1982

BARS TO CERTIFICATION ELECTION

18

SUPREME COURT REPORTS ANNOTATED

National Congress of Unions in the Sugar Industry of the Philippines vs. Trajano

G.R. No. 67485. April 10, 1992.*

NATIONAL CONGRESS OF UNIONS IN THE SUGAR INDUSTRY OF THE PHILIPPINES (NACUSIP)-TUCP,


petitioner, vs. DIR. CRESENCIANO B. TRAJANO, BUREAU OF LABOR RELATIONS, MINISTRY OF LABOR
AND EMPLOYMENT, MANILA, FEDERATION OF UNIONS OF RIZAL (FUR)-TUCP AND CALINOG REFINERY
CORPORATION (NASUREFCO), respondents.

Labor Law; Labor Unions; Certification Election; A representation question may not be entertained if a
bargaining deadlock to which an incumbent or certified bargaining agent is a party had been
submitted to conciliation or arbitration before filing of a petition for certification election.—The clear
mandate of the aforequoted section is that a petition for certification election may be filed at any
time, in the absence of a collective bargaining agreement. Otherwise put, the rule prohibits the filing
of a petition for certification election in the following cases: (1) during the existence of a collective
bargaining agreement except within the freedom period; (2) within one (1) year from the date of
issuance of declaration of a final certification election result; or (3) during the existence of a
bargaining deadlock to which an incumbent or certified bargaining agent is a party and which had
been submitted to conciliation or arbitration or had become the subject of a valid notice of strike or
lockout. 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.

Courts; Jurisdictions; Certiorari; The writ of certiorari issues for the correction of errors of jurisdiction
only on grave abuse of discretion amounting to lack or excess of jurisdiction.—A director of the
Bureau of Labor Relations, by the nature of his functions, acts in a quasi-judicial capacity. We find no
reason why his decision should be beyond this Court’s review. Administrative officials, like the
director of the Bureau of Labor Relations are presumed to act in accordance with law
_____________

* FIRST DIVISION.

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National Congress of Unions in the Sugar Industry of the Philippines vs. Trajano

but this Court will not hesitate to pass upon their work where there is a showing of abuse of authority
or discretion in their official acts or when their decisions or orders are tainted with unfairness or
arbitrariness. Noteworthy is the fact that a certification was issued by Executive Labor Arbiter
Celerino Grecia II on October 21, 1982 certifying that the petition for deadlock in RAB Case No. VI-
0220-82 was forwarded to the Executive Labor Arbiter for compulsory arbitration (see Rollo, p. 19).
The respondent Director erred in finding that the order issued by the Med-Arbiter dismissing the
petition for certification election was irregular and was merely based on information.

PETITION for certiorari to review the decision of the Bureau of Labor Relations.

The facts are stated in the opinion of the Court.

Zoilo V. Dela Cruz, Jr., Beethoven R. Buenaventura and Ruben B. Garcia for petitioner.

Gualberto D. Balla for private respondent Federation of Unions of Rizal.

MEDIALDEA, J.:

This petition for certiorari seeks to annul and set aside the decision rendered by the respondent Director
Cresenciano B. Trajano of the Bureau of Labor Relations, Ministry of Labor and Employment, dated
November 18, 1983 affirming the order of Med-Arbiter Demetrio Correa dated May 2, 1983 giving due
course to the petition for certification election filed by private respondent Federation of Unions of Rizal
(FUR)-TUCP; and the order dated March 21, 1984 denying the motion for reconsideration for lack of
merit.

The antecedent facts are as follows:

Petitioner National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP)-TUCP is the
certified exclusive bargaining representative of the rank and file workers of Calinog Refinery
Corporation. Private respondent Federation of Unions of Rizal (FUR)-TUCP is a labor organization duly
registered with the Department of Labor and Employment while private respondent Calinog Refineries
Employees Union (CREU)-NACUSIP is the certified exclusive bargaining representative of the rank and
file workers of the private respondent

20

20

SUPREME COURT REPORTS ANNOTATED

National Congress of Unions in the Sugar Industry of the Philippines vs. Trajano

Calinog Refinery Corporation by virtue of the certification election held on March 30, 1981.

On June 21, 1982, petitioner union filed a petition for deadlock in collective bargaining with the Ministry
of Labor and Employment (now Department of Labor and Employment). In order to obviate friction and
tension, the parties agreed to submit the petition for deadlock to compulsory arbitration on July 14,
1982 and was docketed as RAB Case No. VI-0220-82.

On July 21, 1982, private respondent FUR-TUCP filed with the Regional Office No. VI, MOLE (now DOLE),
Iloilo City a petition for certification election among the rank and file employees of private respondent
company, alleging that: (1) about forty-five percent (45%) of private respondent company’s employees
had disaffiliated from petitioner union and joined private respondent union; (2) no election had been
held for the past twelve (12) months; and (3) while petitioner union had been certified as the sole
collective bargaining agent, for over a year it failed to conclude a collective bargaining agreement with
private respondent company. Petitioner union filed a motion to intervene in the petition for certification
election filed by private respondent union.

By order dated July 23, 1982, the Acting Med-Arbiter Pacifico V. Militante dismissed the petition for
certification election for lack of merit since the petition is barred by a pending bargaining deadlock.

On August 25, 1982, private respondent union filed an appeal to the Bureau of Labor Relations, Manila.

The Bureau of Labor Relations through respondent Director Cresenciano B. Trajano rendered a decision
on September 30, 1982 setting aside the order of the Acting Med-Arbiter and remanding the case to
Regional Office VI, Iloilo City for hearing and reception of evidence.

On May 2, 1983, Honorable Med-Arbiter Demetrio Correa issued an order in LRD Case No. 4293 giving
due course to the petition of private respondent FUR-TUCP and ordering that an election be held within
20 days from receipt of the order.

From the order of Med-Arbiter Correa, petitioner interposed an appeal to the Bureau of Labor Relations.

During the pendency of the appeal or on September 10, 1983,

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21

National Congress of Unions in the Sugar Industry of the Philippines vs. Trajano

a collective bargaining agreement was entered and executed by the management of the National Sugar
Refineries Co., Inc. and petitioner union and was subsequently ratified by a majority of the rank and file
employees. On the basis of the concluded CBA, the Honorable Executive Labor Arbiter Celerino Grecia II
issued an award dated September 12, 1983 adopting the submitted agreement as the CBA between the
parties.

On November 18, 1983, respondent Director Trajano rendered a decision affirming with qualification
the order of MedArbiter Correa dated May 2, 1983, the pertinent portions of which provide as follows:

“It appears that the Calinog Refinery Employees UnionNACUSIP-TUCP no longer commands the support
of the majority of the employees. This observation is buttressed by the fact that more than seventy five
percent (75%) of the workers have disaffiliated from the intervenor and joined the ranks of the
petitioner. Thus, intervenor’s status as sole and exclusive bargaining representative is now of doubtful
validity.

“For the above-mentioned reason, we stand obliged to resort to the most expeditious, practical and
democratic option open to us, that is, the conduct of a certification election. Through this forum, the
true sentiments of the workers as to which labor organization deserves their loyalty can be fairly
ascertained. In any event, it is our view that the 10 September 1983 collective agreement should be
respected by the union that shall prevail in the election not only because it is an arbitration award but
also because substantial benefits are provided thereunder. Otherwise stated, the winning union shall
administer said agreement. In passing, it may be pointed out that CAREFCO has been included as one of
the contending parties in the election. We feel that it is error for the acting Med-Arbiter to do so
considering that the company is a mere bystander in this representation dispute.

“WHEREFORE, as above qualified, the Order dated 2 May 1983 is affirmed.

“SO DECIDED.” (Rollo, pp. 40-41)

From the decision of respondent Director Trajano, petitioner filed a motion for reconsideration dated
December 6, 1983.

The respondent Director in his order dated March 21, 1984 denied the motion for reconsideration for
lack of merit and affirmed the Bureau’s decision of November 18, 1983.

22

22

SUPREME COURT REPORTS ANNOTATED

National Congress of Unions in the Sugar Industry of the Philippines vs. Trajano

Hence, this petition.


This Court in a resolution dated December 10, 1984 resolved to grant the urgent motion of petitioner for
the issuance of a restraining order and issued a temporary restraining order enjoining the respondents
from conducting and holding the certification election on December 17, 1984 among the rank and file
employees of respondent company (see Rollo, p. 99).

Petitioner maintains that respondent Director Trajano committed grave abuse of discretion amounting
to lack of jurisdiction when it rendered a decision affirming the order of MedArbiter Correa finding that
the deadlock is “nothing but a mere subterfuge to obstruct the exercise of the workers of their
legitimate right to self-organization, a last minute maneuver to deny the workers the exercise of their
constitutional rights” (Rollo, p. 28) and ordering a certification election among the rank and file workers
of respondent company.

Furthermore, petitioner stresses that the finding that the contract (deadlock) bar rule has no room for
application in the instant case, runs counter to the provision of Section 3 of the Rules Implementing
Batas Pambansa Blg. 130 which prohibits the filing of a petition for certification election during the
pendency of a bargaining deadlock.

In conformity with the petitioner’s contentions, the Solicitor General insists that the respondent
Director has acted arbitrarily in issuing the assailed decision and order. In addition, it argues that the
CBA concluded on September 10, 1983 has a life span of three (3) years and constitutes a bar to the
petition for certification election pursuant to Section 3 of the Rules Implementing Batas Pambansa Blg.
130.

The pivotal issue therefore, is whether or not a petition for certification election may be filed during the
pendency of a bargaining deadlock submitted to arbitration or conciliation.

After a careful review of the records of this case, the Court finds the petition meritorious and holds that
the respondent Director gravely abused his discretion when he affirmed the order of Med-Arbiter
Correa calling for a certification election among the rank and file workers of private respondent
company.

The law on the matter is Section 3, Book V, Rule V of the

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National Congress of Unions in the Sugar Industry of the Philippines vs. Trajano

Omnibus Rules Implementing the Labor Code, to wit:

“Sec. 3. When to file.—In the absence of a collective bargaining agreement duly registered in
accordance with Article 231 of the Code, a petition for certification election may be filed at any time.
However, no certification election may be held within one year from the date of issuance of a final
certification election result. Neither may a representation question be entertained if, before the filing of
a petition for certification election, a bargaining deadlock to which an incumbent or certified bargaining
agent is a party had been submitted to conciliation or arbitration or had become the subject of valid
notice or strike or lockout.

“If a collective bargaining agreement has been duly registered in accordance with Article 231 of the
Code, a petition for certification election or a motion for intervention can only be entertained within
sixty (60) days prior to the expiry date of such agreement.”

The clear mandate of the aforequoted section is that a petition for certification election may be filed at
any time, in the absence of a collective bargaining agreement. Otherwise put, the rule prohibits the
filing of a petition for certification election in the following cases:

(1) during the existence of a collective bargaining agreement except within the freedom period;

(2) within one (1) year from the date of issuance of declaration of a final certification election result; or

(3) during the existence of a bargaining deadlock to which an incumbent or certified bargaining agent is
a party and which had been submitted to conciliation or arbitration or had become the subject of a valid
notice of strike or lockout.

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.

In the case at bar, a bargaining deadlock was already submitted to arbitration when private respondent
FUR-TUCP filed a petition for certification election. The same petition was dismissed for lack of merit by
the Acting Med-Arbiter in an order

24

24

SUPREME COURT REPORTS ANNOTATED

National Congress of Unions in the Sugar Industry of the Philippines vs. Trajano

dated July 23, 1982 on the sole ground that the petition is barred by a pending bargaining deadlock.
However, respondent Director set aside the same order and subsequently affirmed an order giving due
course to the petition for certification election and ordering that an election be held.

The law demands that the petition for certification election should fail in the presence of a then pending
bargaining deadlock.

A director of the Bureau of Labor Relations, by the nature of his functions, acts in a quasi-judicial
capacity. We find no reason why his decision should be beyond this Court’s review. Administrative
officials, like the director of the Bureau of Labor Relations are presumed to act in accordance with law
but this Court will not hesitate to pass upon their work where there is a showing of abuse of authority or
discretion in their official acts or when their decisions or orders are tainted with unfairness or
arbitrariness.
Noteworthy is the fact that a certification was issued by Executive Labor Arbiter Celerino Grecia II on
October 21, 1982 certifying that the petition for deadlock in RAB Case No. VI-0220-82 was forwarded to
the Executive Labor Arbiter for compulsory arbitration (see Rollo, p. 19). The respondent Director erred
in finding that the order issued by the Med-Arbiter dismissing the petition for certification election was
irregular and was merely based on information.

All premises considered, the Court is convinced that the assailed decision and order of the respondent
Director is tainted with arbitrariness that would amount to grave abuse of discretion.

ACCORDINGLY, the petition is GRANTED; the decision dated November 18, 1983 and order dated March
21, 1984 of the respondent Director Cresenciano B. Trajano are hereby nullified and the order of Med-
Arbiter Militante dated July 23, 1982 dismissing the petition for certification election is hereby
reinstated.

SO ORDERED.

Narvasa (C.J.), Cruz and Griño-Aquino, JJ., concur.

Bellosillo, J., On leave.

25

VOL. 208, APRIL 10, 1992

25

Red V Coconut Products, Ltd. vs. Leogardo, Jr.

Petition granted; decision and order nullified.

Note.—Factual findings of National Labor Relations Commission are not correctible by certiorari but by
ordinary appeal. (Manila Hotel Corp. v. NLRC, 141 SCRA 169.)

——o0o—— National Congress of Unions in the Sugar Industry of the Philippines vs. Trajano, 208 SCRA
18, G.R. No. 67485 April 10, 1992
VOL. 267, FEBRUARY 4, 1997

503

Capitol Medical Center Alliance of Concerned Employees-

Unified Filipino Service Workers vs. Laguesma

G.R. No. 118915. February 4, 1997.*

CAPITOL MEDICAL CENTER ALLIANCE OF CONCERNED EMPLOYEES-UNIFIED FILIPINO SERVICE


WORKERS, (CMC-ACE-UFSW), petitioners, vs. HON. BIENVENIDO E. LAGUESMA, Undersecretary of the
Department of Labor and Employment; CAPITOL MEDICAL CENTER EMPLOYEES ASSOCIATION-
ALLIANCE OF FILIPINO WORKERS AND CAPITOL MEDICAL CENTER INCORPORATED AND DRA. THELMA
CLEMENTE, President, respondents.

Actions; Due Process; Pleadings and Practice; A party cannot merely anchor its position on erroneous
names—typographical errors which cannot materially alter the substance and merit of an assailed
resolution—just to attain a reversal of said resolution.—Petitioner alleges that public respondent
Undersecretary Laguesma denied it due process when it ruled against the holding of a certification
election. It further claims that the denial of due process can be gleaned from the manner by which the
assailed resolution was written, i.e., instead of the correct name of the mother federation UNIFIED, it
was referred to as UNITED; and that the respondent union’s name CMCEA-AFW was referred to as
CMCEA-AFLO. Petitioner maintains that such errors indicate that the assailed resolution was prepared
with “indecent haste.” We do not subscribe to petitioner’s contention. The errors pointed to by
petitioner can be classified as mere typographical errors which cannot materially alter the substance
and merit of the assailed resolution. Petitioner

_______________

* FIRST DIVISION.

504

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Capitol Medical Center Alliance of Concerned Employees-

Unified Filipino Service Workers vs. Laguesma

cannot merely anchor its position on the aforementioned erroneous’ names just to attain a reversal of
the questioned resolution. As correctly observed by the Solicitor General, petitioner is merely
“nitpicking, vainly trying to make a monumental issue out of a negligible error of the public
respondent.”
Same; Same; A party cannot complain of denial of due process when it failed to file its opposition to
oppose the other party’s appeal—Petitioner also assails public respondents’ findings that the former
“capitalize (sic) on the ensuing delay which was caused by the hospital and which resulted in the non-
conclusion of a CBA within the certification year.” It further argues that the denial of its motion for a
fair hearing was a clear case of a denial of its right to due process. Such contention of petitioner
deserves scant consideration. A perusal of the record shows that petitioner failed to file its opposition
to oppose the grounds for respondent union’s appeal. It was given an opportunity to be heard but lost
it- when it refused to file an appellee’s memorandum.

Labor Law; Certification Elections; Collective Bargaining; Even if one year had lapsed since the time of
declaration of a final certification result, and there is no collective bargaining deadlock, there is no
grave abuse of discretion committed by the DOLE when it ruled against another certification election
filed by another union where the delay in forging of the CBA could not be attributed to the fault of the
union who won the earlier certification election.—While it is true that, in the case at bench, one year
had lapsed since the time of declaration of a final certification result, and that there is no collective
bargaining deadlock, public respondent did not commit grave abuse of discretion when it ruled in
respondent union’s favor since the delay in the forging of the CBA could not be attributed to the fault
of the latter, A scrutiny of the records will further reveal that after respondent union was certified as
the bargaining agent of CMC, it invited the employer hospital to the bargaining table by submitting its
economic proposal for a CBA However, CMC refused to negotiate with respondent union and instead
challenged the latter’s legal personality through a petition for cancellation of the certificate of
registration which eventually reached this Court. The decision affirming the legal status of respondent
union should have left CMC with no other recourse but to bargain collectively, but still it did not.
Respondent union was left with no other recourse but to file a notice of strike against CMC for unfair
labor practice with the

505

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National Conciliation and Mediation Board. This eventually led to a strike on April 15, 1993.

Same; Same; Same; Words and Phrases; “Deadlock,” Defined.—In the case of Divine Word University
of Tacloban v. Secretary of Labor and Employment, we had the occasion to define what a deadlock is,
viz: “A ‘deadlock’ is x x x the counterclaim of things producing entire stoppage; x x x. There is a
deadlock when there is a complete blocking or stoppage resulting from the action of equal and
opposed forces x x x. The word is synonymous with the word impasse, which x x x ‘presupposes
reasonable effort at good faith bargaining which, despite noble intentions, does not conclude in
agreement between the parties.'"
Same; Same; Same; Same.—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 certified
bargaining agent, there was “no reasonable effort in good faith” on the part of the employer to
bargain collectively.

Same; Same; Same; Same; Section 3, Rule V, Book V of the Implementing Rules of the Labor Code
should be interpreted liberally so as to include a circumstance, e.g. where a CBA could not be
concluded due to the failure of one party to willingly perform its duty to bargain collectively.—This is
what is strikingly different between the Kaisahan case and the case at bench for in the latter case,
there was proof that the certified bargaining agent, respondent union, had taken an action to legally
coerce the employer to comply with its statutory duty to bargain collectively, i.e., charging the
employer with unfair labor practice and conducting a strike in protest against the employer’s refusal
to bargain. It is only just and equitable that the circumstances in this case should be considered as
similar in nature to a “bargaining deadlock” when no certification election could be held. This is also
to make sure that no floodgates will be opened for the circumvention of the law by unscrupulous
employers to prevent any certified bargaining agent from negotiating a CBA. Thus, Section 3, Rule V,
Book V of the Implementing Rules should be interpreted liberally so as to include a circumstance, e.g.
where a CBA could not be concluded due to the failure of one party to willingly perform its duty to
bargain collectively.

506

506

SUPREME COURT REPORTS ANNOTATED

Capitol Medical Center Alliance of Concerned Employees-

Unified Filipino Service Workers vs. Laguesma

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari and Prohibition.

The facts are stated in the opinion of the Court.

Bayani G. Diwa for petitioner.

Edgar R. Martir for private respondent.

HERMOSISIMA, JR., J.:

This petition for certiorari and prohibition seeks to reverse and set aside the Order dated November 18,
1994 of public respondent Bienvenido E. Laguesma, Undersecretary of the Department of Labor and
Employment, in Case No. OS-A136–941 which dismissed the petition for certification election filed by
petitioner for lack of merit and further directed private respondent hospital to negotiate a collective
bargaining agreement with respondent union, Capitol Medical Center Employees Association-Alliance of
Filipino Workers.

The antecedent facts are undisputed.

On February 17, 1992, Med-Arbiter Rasidali C. Abdullah issued an Order which granted respondent
union’s petition for certification election among the rank-and-file employees of the Capitol Medical
Center.2 Respondent CMC appealed the Order to the Office of the Secretary by questioning the legal
status of respondent union’s affiliation with the Alliance of Filipino Workers (AFW). To correct any
supposed infirmity in its legal status, respondent union registered itself independently and withdrew the
petition which had earlier been granted. Thereafter, it filed another petition for certification election.

On May 29, 1992, Med-Arbiter Manases T. Cruz issued an order granting the petition for certification
election.3 Respondent CMC again appealed to the Office of the Secretary which

_______________

1 NCR-00-M-9403–052.

2 Rollo, pp. 145–153.

3 Rollo, pp. 154–158.

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affirmed4 the Order of the Med-Arbiter granting the certification election.

On December 9, 1992, elections were finally held with respondent union garnering 204 votes, 168 in
favor of no union and 8 spoiled ballots out of a total of 380 votes cast. Thereafter, on January 4, 1993,
Med-Arbiter Cruz issued an Order certifying respondent union as the sole and exclusive bargaining
representative of the rank-and-file employees at CMC.5

Unsatisfied with the outcome of the elections, respondent CMC again appealed to the Office of the
Secretary of Labor which appeal was denied on February 26, 1993.6 A subsequent motion for
reconsideration filed by respondent CMC was likewise denied on March 23, 1993.7

Respondent CMC’s basic contention was the supposed pendency of its petition for cancellation of
respondent union’s certificate of registration in Case No. NCR-OD-M-92211–028. In the said case, Med-
Arbiter Paterno Adap issued an Order dated February 4, 1993 which declared respondent union’s
certificate of registration as null and void.8 However, this order was reversed on appeal by the Officer-
in-Charge of the Bureau of Labor Relations in her Order issued on April 13, 1993. The said Order
dismissed the motion for cancellation of the certificate of registration of respondent union and declared
that it was not only a bona fide affiliate or local of a federation (AFW), but a duly registered union as
well. Subsequently, this case reached this Court in Capitol Medical Center, Inc. v. Hon. Perlita Velasco,
G.R. No. 110718, where we issued a Resolution dated December 13, 1993, dismissing the petition of
CMC for failure to sufficiently show that public respondent committed grave abuse of discretion.9 The
motion

_______________

4 Rollo, pp. 164–169.

5 Rollo, pp. 172–173.

6 Rollo, pp. 174–176.

7 Rollo, pp. 177–178.

8 Rollo, pp. 199–203.

9 Rollo, p. 281.

508

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SUPREME COURT REPORTS ANNOTATED

Capitol Medical Center Alliance of Concerned Employees-

Unified Filipino Service Workers vs. Laguesma

for reconsideration filed by CMC was likewise denied in our Resolution dated February 2, 1994.10
Thereafter, on March 23, 1994, we issued an entry of judgment certifying that the Resolution dated
December 13, 1993 has become final and executory.11

Respondent union, after being declared as the certified bargaining agent of the rank-and-file employees
of respondent CMC by Med-Arbiter Cruz, presented economic proposals for the negotiation of a
collective bargaining agreement (CBA). However, respondent CMC contended that CBA negotiations
should be suspended in view of the Order issued on February 4, 1993 by Med-Arbiter Adap declaring the
registration of respondent union as null and void. In spite of the refusal of respondent CMC, respondent
union still persisted in its demand for CBA negotiations, claiming that it has already been declared as the
sole and exclusive bargaining agent of the rank-and-file employees of the hospital.

Due to respondent CMC’s refusal to bargain collectively, respondent union filed a notice of strike on
March 1, 1993. After complying with the other legal requirements, respondent union staged a strike on
April 15, 1993. On April 16, 1993, the Secretary of Labor assumed jurisdiction over the case and issued
an order certifying the same to the National Labor Relations Commission for compulsory arbitration
where the said case is still pending.12

It is at this juncture that petitioner union, on March 24, 1994, filed a petition for certification election
among the regular rank-and-file employees of the Capitol Medical Center, Inc. It alleged in its petition
that: 1) three hundred thirty one (331) out of the four hundred (400) total rank-and-file employees of
respondent CMC signed a petition to conduct a certification election; and 2) that the said employees are
withdrawing their authorization for the said union to represent them as they have joined and formed
the union Capitol Medi-

_______________

10 Rollo, p. 282.

11 Rollo, p. 283.

12 Rollo, pp, 209–210.

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cal Center Alliance of Concerned Employees (CMC-ACE). They also alleged that a certification election
can now be conducted as more that 12 months have lapsed since the last certification election was held.
Moreover, no certification election was conducted during the twelve (12) months prior to the petition,
and no collective bargaining agreement has as yet been concluded between respondent union and
respondent CMC despite the lapse of twelve months from the time the said union was voted as the
collective bargaining representative.

On April 12, 1994, respondent union opposed the petition and moved for its dismissal. lt contended that
it is the certified bargaining agent of the rank-and-file employees of the Hospital, which was confirmed
by the Secretary of Labor and Employment and by this Court. It also alleged that it was not remiss in
asserting its right as the certified bargaining agent for it continuously demanded the negotiation of a
CBA with the hospital despite the latter’s avoidance to bargain collectively. Respondent union was even
constrained to strike on April 15, 1993, where the Secretary of Labor intervened and certified the
dispute for compulsory arbitration. Furthermore, it alleged that majority of the signatories who
supported the petition were managerial and confidential employees and not members of the rank-and-
file, and that there was no valid disaffiliation of its members, contrary to petitioner’s allegations.

Petitioner, in its rejoinder, claimed that there is no legal impediment to the conduct of a certification
election as more than twelve (12) months had lapsed since respondent union was certified as the
exclusive bargaining agent and no CBA was as yet concluded. It also claimed that the other issues raised
could only be resolved by conducting another certification election.

In its surrejoinder, respondent union alleged that the petition to conduct a certification election was
improper, immoral and in manifest disregard of the decisions rendered by the Secretary of Labor and by
this Court. It claimed that CMC employed legal obstructionisms” in order to let twelve

510

510

SUPREME COURT REPORTS ANNOTATED

Capitol Medical Center Alliance of Concerned Employees-

Unified Filipino Service Workers vs. Laguesma

months pass without a CBA having been concluded between them so as to pave the way for the entry of
petitioner union. On May 12,1994, Med-Arbiter Brigida Fadrigon, issued an Order granting the petition
for certification election among the rank-and-file employees.13 It ruled that the issue was the majority
status of respondent union. Since no certification election was held within one year from the date of
issuance of a final certification election result and there was no bargaining deadlock between
respondent union and the employees that had been submitted to conciliation or had become the
subject of a valid notice of strike or lock out, there is no bar to the holding of a certification election.14

Respondent union appealed from the said Order, alleging that the Med-Arbiter erred in granting the
petition for certification election and in holding that this case falls under Section 3, Rule V, Book V of the
Rules Implementing the Labor Code.15 It also prayed that the said provision must not be applied strictly
in view of the facts in this case.

Petitioner union did not file any opposition to the appeal.

On November 18, 1994, public respondent rendered a Resolution granting the appeal.16 He ratiocinated
that while the petition was indeed filed after the lapse of one year from the time of declaration of a final
certification result, and that no bargaining deadlock had been submitted for conciliation or arbitration,
respondent union was not remiss on its right to enter into a CBA for it was the CMC which refused to
bargain collectively.17

CMC and petitioner union separately filed motions for reconsideration of the said Order.

CMC contended that in certification election proceedings, the employer cannot be ordered to bargain
collectively with a

_______________

13 Rollo, pp. 26–31.

14 Ibid.
15 Rollo, pp. 71–77.

16 Rollo, pp. 33–41.

17 Ibid.

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union since the only issue involved is the determination of the bargaining agent of the employees.

Petitioner union claimed that to completely disregard the will of the 331 rank-and-file employees for a
certification election would result in the denial of their substantial rights and interests. Moreover, it
contended that public respondent’s “indictment” that petitioner “capitalize (sic) on the ensuing delay
which was caused by the Hospital, x x x” was unsupported by the facts and the records.

On January 11, 1995, public respondent issued a Resolution which denied the two motions for
reconsideration, hence this petition.18

The pivotal issue in this case is whether or not public respondent committed grave abuse of discretion in
dismissing the petition for certification election, and in directing the hospital to negotiate a collective
bargaining agreement with the said respondent union.

Petitioner alleges that public respondent Undersecretary Laguesma denied it due process when it ruled
against the holding of a certification election. It further claims that the denial of due process can be
gleaned from the manner by which the assailed resolution was written, i.e., instead of the correct name
of the mother federation UNIFIED, it was referred to as UNITED; and that the respondent union’s name
CMCEA-AFW was referred to as CMCEA-AFLO. Petitioner maintains that such errors indicate that the
assailed resolution was prepared with “indecent haste.”

We do not subscribe to petitioner’s contention.

The errors pointed to by petitioner can be classified as mere typographical errors which cannot
materially alter the substance and merit of the assailed resolution.

Petitioner cannot merely anchor its position on the aforementioned erroneous’ names just to attain a
reversal of the questioned resolution. As correctly observed by the Solicitor General, petitioner is merely
“nit-picking, vainly trying to

________________

18 Rollo, pp. 43–44.


512

512

SUPREME COURT REPORTS ANNOTATED

Capitol Medical Center Alliance of Concerned Employees-

Unified Filipino Service Workers vs. Laguesma

make a monumental issue out of a negligible error of the public respondent."19

Petitioner also assails public respondents’ findings that the former “capitalize (sic) on the ensuing delay
which was caused by the hospital and which resulted in the non-conclusion of a CBA within the
certification year."20 It further argues that the denial of its motion for a fair hearing was a clear case of a
denial of its right to due process.

Such contention of petitioner deserves scant consideration.

A perusal of the record shows that petitioner failed to file its opposition to oppose the grounds for
respondent union’s appeal.

It was given an opportunity to be heard but lost it when it refused to file an appellee’s memorandnm.

Petitioner insists that the circumstances prescribed in Section 3, Rule V, Book V of the Rules
Implementing the Labor Code where a certification election should be conducted, viz: (1) that one year
had lapsed since the issuance of a final certification result; and (2) that there is no bargaining deadlock
to which the incumbent or certified bargaining agent is a party has been submitted to conciliation or
arbitration, or had become the subject of a valid notice of strike or lockout, are present in this case. It
further claims that since there is no evidence on record that there exists a CBA deadlock, the law
allowing the conduct of a certification election after twelve months must be given effect in the interest
of the right of the workers to freely choose their sole and exclusive bargaining agent.

While it is true that, in the case at bench, one year had lapsed since the time of declaration of a final
certification result, and that there is no collective bargaining deadlock, public respondent did not
commit grave abuse of discretion when it ruled in respondent union’s favor since the delay in

________________

19 Rollo, p. 351.

20 Rollo, p. 14.

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the forging of the CBA could not be attributed to the fault of the latter.

A scrutiny of the records will further reveal that after respondent union was certified as the bargaining
agent of CMC, it invited the employer hospital to the bargaining table by submitting its economic
proposal for a CBA. However, CMC refused to negotiate with respondent union and instead challenged
the latter’s legal personality through a petition for cancellation of the certificate of registration which
eventually reached this Court. The decision affirming the legal status of respondent union should have
left CMC with no other recourse but to bargain collectively, but still it did not. Respondent union was
left with no other recourse but to file a notice of strike against CMC for unfair labor practice with the
National Conciliation and Mediation Board. This eventually led to a strike on April 15, 1993.

Petitioner union on the other hand, after this Court issued an entry of judgment on March 23, 1994,
filed the subject petition for certification election on March 24, 1994, claiming that twelve months had
lapsed since the last certification election.

Was there a bargaining deadlock between CMC and respondent union, before the filing of petitioner of
a petition for certification election, which had been submitted to conciliation or had become the subject
of a valid notice of strike or lockout?

In the case of Divine Word University of Tacloban v. Secretary of Labor and Employment,21 we had the
occasion to define what a deadlock is, viz:

“A ‘deadlock’ is x x x the counterclaim of things producing entire stoppage; x x x. There is a deadlock


when there is a complete blocking or stoppage resulting from the action of equal and opposed forces x x
x. The word is synonymous with the word impasse, which x x x ‘presupposes reasonable effort at good
faith bargaining which,

_______________

21 213 SCRA 759 (1992).

514

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SUPREME COURT REPORTS ANNOTATED

Capitol Medical Center Alliance of Concerned Employees-

Unified Filipino Service Workers vs. Laguesma

despite noble intentions, does not conclude in agreement between the parties.’ "
Although there is no “deadlock” in its strict sense as there is no “counteraction” of forces present in this
case nor “reasonable effort at good faith bargaining,” such can be attributed to CMC’s fault as the
bargaining proposals of respondent union were never answered by CMC. In fact, what happened in this
case is worse than a bargaining deadlock for CMC employed all legal means to block the certification of
respondent union as the bargaining agent of the rank-andfile; and used it as its leverage for its failure to
bargain with respondent union. Thus, we can only conclude that CMC was unwilling to negotiate and
reach an agreement with respondent union. CMC has not at any instance shown willingness to discuss
the economic proposals given by respondent union.22

As correctly ratiocinated by public respondent, to wit:

“For herein petitioner to capitalize on the ensuing delay which was caused by the hospital and which
resulted in the non-conclusion of a CBA within the certification year, would be to negate and render a
mockery of the proceedings undertaken before this Department and to put an unjustified premium on
the failure of the respondent hospital to perform its duty to bargain collectively as mandated in Article
252 of the Labor Code, as amended, which states.”

“Article 252. Meaning of duty to bargain collectively—the duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and
conditions of employment including proposals for adjusting any grievance or questions arising under
such agreement and executing a contract incorporating such agreements if requested by either party
but such duty does not compel any party to agree to a proposal or to make any concession.”

________________

22 Cf. Kiok Loy v. National Labor Relations Commission, 141 SCRA 179 (1987).

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The duly certified bargaining agent, CMCEA-AFW, should not be made to further bear the brunt flowing
from the respondent hospital’s reluctance and thinly disguised refusal to bargain.23

If the law proscribes the conduct of a certification election when there is a bargaining deadlock
submitted to conciliation or arbitration, with more reason should it not be conducted if, despite
attempts to bring an employer to the negotiation table by the certified bargaining agent, there was “no
reasonable effort in good faith” on the part of the employer to bargain collectively.
In the case of Kaisahan ng Manggagawang Pilipino vs. Trajano, 201 SCRA 453 (1991), penned by Chief
Justice Andres R. Narvasa, the factual milieu of which is similar to this case, this Court allowed the
holding of a certification election and ruled that the one year period known as the “certification year”
has long since expired. We also ruled, that:

“x x x prior to the filing of the petition for election in this case, there was no such ‘bargaining deadlock x
x (which) had been submitted to conciliation or arbitration or had become the subject of a valid notice
of strike or lockout.’ To be sure, there are in the record assertions by NAFLU that its attempts to bring
VIRON to the negotiation table had been unsuccessful because of the latter’s recalcitrance, and
unfulfilled promises to bargain collectively; but there is no proof that it had taken any action to legally
coerce VIRON to comply with its statutory duty to bargain collectively. It could have charged VIRON with
unfair labor practice; but it did not. It could have gone on a legitimate strike in protest against VIRON’s
refusal to bargain collectively and compel it to do so; but it did not. There are assertions by NAFLU, too,
that its attempts to bargain collectively had been deayed by continuing challenges to the resolution
pronouncing it the sole bargaining representative in VIRON; but there is no adequate substantiation
thereof, or of how it did in fact prevent initiation of the bargaining process between it and VIRON.24

________________

23 Rollo, p. 40.

24 Italics supplied.

516

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SUPREME COURT REPORTS ANNOTATED

Capitol Medical Center Alliance of Concerned Employees-

Unified Filipino Service Workers vs. Laguesma

Although the statements pertinent to this case are merely obiter, still the fact remains that in the
Kaisahan case, NAFLU was counselled by this Court on the steps that it should have undertaken to
protect its interest, but which it failed to do so.

This is what is strikingly different between the Kaisahan case and the case at bench for in the latter case,
there was proof that the certified bargaining agent, respondent union, had taken an action to legally
coerce the employer to comply with its statutory duty to bargain collectively, i.e., charging the employer
with unfair labor practice and conducting a strike in protest against the employer’s refusal to bargain.25
It is only just and equitable that the circumstances in this case should be considered as similar in nature
to a “bargaining deadlock” when no certification election could be held. This is also to make sure that no
floodgates will be opened for the circumvention of the law by unscrupulous employers to prevent any
certified bargaining agent from negotiating a CBA. Thus, Section 3, Rule V, Book V of the Implementing
Rules should be interpreted liberally so as to include a circumstance, e.g. where a CBA could not be
concluded due to the failure of one party to willingly perform its duty to bargain collectively.

The order for the hospital to bargain is based on its failure to bargain collectively with respondent union.

WHEREFORE, the Resolution dated November 18, 1994 of public respondent Laguesma is AFFIRMED and
the instant petition is hereby DISMISSED.

SO ORDERED.

Padilla (Chairman), Bellosillo, Vitug and Kapunan, JJ., concur.

Resolution affirmed, petition dismissed.

________________

25 Kaisahan ng Manggagawang Pilipino v. Trajano, 201 SCRA 453 (1991).

517

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Sy vs. Mongcupa

Note.—A decision in a certification case does not foreclose all further dispute between the parties as to
the existence, or non-existence, of employer-employee relationship between them. (Manila Golf &
Country Club, Inc. vs. Intermediate Appellate Court, 237 SCRA 207 [1994])

——o0o—— Capitol Medical Center Alliance of Concerned Employees-Unified Filipino Service Workers
vs. Laguesma, 267 SCRA 503, G.R. No. 118915 February 4, 1997
178

SUPREME COURT REPORTS ANNOTATED

Associated Labor Union (ALU) vs. Ferrer-Calleja

G.R. No. 77282. May 5, 1989. *

ASSOCIATED LABOR UNIONS (ALU), petitioner, vs. HON. PURA FERRER-CALLEJA, as Director of the
Bureau of Labor Relations, Ministry of Labor and Employment; PHILIPPINE SOCIAL SECURITY LABOR
UNION (PSSLU); SOUTHERN PHILIPPINES FEDERATION OF LABOR (SPFL); and GAW TRADING, INC.,
respondents.

Labor Law; Labor Relations; Unions; Collective Bargaining; Certification election; Mechanics of
collective bargaining are set in motion only when the jurisdictional preconditions have been complied
with. ___ We have previously held that the mechanics of collective bargaining are set in motion only
when the following jurisdictional preconditions are present, namely, (1) possession of the status of
majority representation by the employees’ representative in accordance with any of the means of
selection and/or designation provided for by the Labor Code; (2) proof of majority representation; and
(3) a demand to bargain under Article 251, paragraph (a) of the New Labor Code. In the present case,
the standing of petitioner as an exclusive bargaining representative is dubious, to say the least. It may
be recalled that respondent company, in a letter dated May 12, 1986 and addressed to petitioner,
merely indicated that it was “not against the desire of (its) workers” and required petitioner to
present proof that it was supported by the majority thereof in a meeting to be held on the same date.
The only express recognition of petitioner as said employees’ bargaining representative that We see
in the records is in the collective bargaining agreement entered into two days thereafter. Evidently,
there was precipitate haste on the part of respondent company in recognizing petitioner union, which
recognition appears to have been based on the self-serving claim of the latter that it had the support
of the majority of the employees in the bargaining unit. Furthermore, at the time of the supposed
recognition, the employer was obviously aware that there were other unions existing in the unit. As
earlier stated, respondent company’s letter is dated May 12, 1986 while the two other unions,
Southern Philippine Federation of Labor (hereafter, SPFL) and Philippine Social Security Labor Union
(PSSLU, for short), went on strike earlier on May 9, 1986. The unusual promptitude in the recognition
of petitioner union by respondent company as

_______________

* SECOND DIVISION.

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Associated Labor Union (ALU) vs. Ferrer-Calleja


the exclusive bargaining representative of the workers in GAW Trading, Inc., under the fluid and
amorphous circumstances then obtaining, was decidedly unwarranted and improvident.

Same; Same; Same; Same; Same; Failure to properly determine with legal certainty whether the union
enjoyed majority representation may be a ground to nullify the certification. ___ It bears mention that
even in cases where it was the then Minister of Labor himself who directly certified the union as the
bargaining representative, this Court voided such certification where there was a failure to properly
determine with legal certainty whether the union enjoyed a majority representation. In such a case,
the holding of a certification election at a proper time would not necessarily be a mere formality as
there was a compelling reason not to directly and unilaterally certify a union.

Same; Same; Same; Same; Same; Failure to post the Collective Bargaining Agreement in at least 2
conspicuous places in the establishment is an additional infirmity. ___ An additional infirmity of the
collective bargaining agreement involved was the failure to post the same in at least two (2)
conspicuous places in the establishment at least five days before its ratification. Petitioner’s
rationalization was that “(b)ecause of the real existence of the illegal strike staged by SPFL in all the
stores of GAW Trading, Inc. it had become impossible to comply with the posting requirement in so
far as the realization of its purpose is concerned as there were no impartial members of the unit who
could be apprised of the CBA’s contents.” This justification is puerile and unacceptable. In the first
place, the posting of copies of the collective bargaining agreement is the responsibility of the
employer which can easily comply with the requirement through a mere mechanical act. The fact that
there were “no impartial members of the unit” is immaterial. The purpose of the requirement is
precisely to inform the employees in the bargaining unit of the contents of said agreement so that
they could intelligently decide whether to accept the same or not. The assembly of the members of
ALU wherein the agreement in question was allegedly explained does not cure the defect.

Same; Same; Same; Same; Same; Contract Bar Rule; Repudiation made by some of the workers of the
alleged negotiation and ratification of the CBA is a ground to annul the same. ___ Another potent
reason for annulling the disputed collective bargaining agreement is the finding of respondent
director that one hundred eighty-one (181) of the two hundred eighty-one (281) workers who
“ratified” the same now “strongly

180

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Associated Labor Union (ALU) vs. Ferrer-Calleja

and vehemently deny and/or repudiate the alleged negotiation and ratification of the CBA”. Although
petitioner claims that only seven (7) of the repudiating group of workers belong to the total number
who allegedly ratified the agreement, nevertheless such unsubstantiated contention weighed against
the factual findings of the respondent director cannot negate the fact that the controverted contract
will not promote industrial stability. The Court has long since declared that: “x x x 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.”

Same; Same; Technical rules of procedure do not strictly apply in the adjudication of labor disputes.
___ At this juncture, petitioner should be reminded that the technical rules of procedure do not
strictly apply in the adjudication of labor disputes. Consequently, its objection that the evidence with
respect to the aforesaid repudiation of the supposed collective bargaining agreement cannot be
considered for the first time on appeal to the Bureau of Labor Relations should be disregarded,
especially considering the weighty significance thereof.

SPECIAL CIVIL ACTION for certiorari and prohibition to review the decision of the Director of the Bureau
of Labor Relations.

The facts are stated in the opinion of the Court.

Romeo S. Occeñ a, Leonard U. Sawal, Edgemelo C. Rosales and Ernesto Carreon for petitioner.

Henrick F. Gingoyon for respondent SPFL.

Wenifredo L. Orcullo for respondent Southern Philippines Federation of Labor.

Miguel A. Enrique, Jr. for respondent GAW Trading, Inc.

REGALADO, J.:

Petitioner Associated Labor Unions (ALU, for brevity) instituted this special civil action for certiorari and
prohibition to

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overturn the decision of the respondent director 1 dated December 10, 1986, which ordered the holding
of a certification election among the rank-and-file workers of the private respondent GAW Trading, Inc.
The averments in the basic petition therefor, which succinctly but sufficiently detail the relevant factual
antecedents of this proceeding, justify their being quoted in full, thus:

“1. The Associated Labor Unions (ALU) thru its Regional Vice-President Teofanio C. Nunez, in a Letter
dated May 7, 1986 (ANNEX C) informed GAW Trading, Inc. that majority of the latter’s employees have
authorized ALU to be their sole and exclusive bargaining representative, and requested GAW Trading
Inc., in the same Letter for a conference for the execution of an initial Collective Bargaining Agreement
(CBA);

“2. GAW Trading Inc. received the Letter of ALU aforesaid on the same day of May 7, 1986 as
acknowledged thereunder and responded (sic) ALU in a Letter dated May 12, 1986 (Annex D) indicating
its recognition of ALU as the sole and exclusive bargaining agent for the majority of its employees and
for which it set the time for conference and/or negotiation at 4:00 P.M. on May 12, 1986 at the Pillsbury
Office, Aboitiz Building, Juan Luna Street, Cebu City;

“3. On the following day of May 13, 1986, per Transmittal Letter on even date (ANNEX E) ALU’s
Chairman of the Negotiating Panel furnished GAW Trading Inc. ten (10) final copies of the Collective
Bargaining Agreement for Comment, or otherwise, for signing;

“4. On May 15, 1986, ALU in behalf of the majority of the employees of GAW Trading Inc. and GAW
Trading Inc. signed and executed the Collective Bargaining Agreement (ANNEX F) x x x.

“5. In the meantime, at about 1:00 P.M. of May 9, 1986, the Southern Philippines Federation of Labor
(SPFL) together with Nagkahiusang Mamumuo sa GAW (NAMGAW) undertook a x x x Strike x x x after it
failed to get the management of GAW Trading Inc. to sit for a conference respecting its demands
presented at 11:00 A.M. on the same day in an effort to pressure GAW Trading Inc. to make a turnabout
of its standing recognition of ALU as the sole and exclusive bargaining representative of its employees,
as to which strike GAW Trading Inc. filed a petition for Restraining Order/Preliminary Injunction, dated
June 1, 1986 (Annex H) and which strike Labor Arbi t e r

_______________

1 Rollo, 25-27; Annex A. Petition.

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Associated Labor Union (ALU) vs. Ferrer-Calleja

Bonifacio B. Tumamak held as illegal in a Decision dated August 5, 1986 (ANNEX I);

“6. On May 19, 1986, GAW Lumad Labor Union (GALLU-PSSLU) Federation x x x filed a Certification
Election petition (ANNEX J), but, as found by Med-Arbiter Candido M. Cumba in its (sic) Order dated
June 11, 1986 (ANNEX K) , without having complied (sic) the subscription requirement for which it was
merely considered an intervenor until compliance thereof in the other petition for direct recognition as
bargaining agent filed on May 28, 1986 by Southern Philippines Federation of Labor (SPFL) as found in
the same Order (ANNEX K) ;
7 . In the meantime, the Collective Bargaining Agreement executed by ALU and GAW Trading Inc.
(ANNEX F) was duly filed on May 27, 1986 with the Ministry of Labor and Employment in Region VII,
Cebu City;

“8. Nevertheless, Med-Arbiter Candido M. Cumba in his Order of June 11, 1986 (Annex K ) ruled for the
holding of a certification election in all the branches of GAW Trading Inc. in Cebu City, as to which ALU
filed a Motion for Reconsideration dated June 19, 1986 (ANNEX L) which was treated as an appeal on
that questioned Order for which reason the entire record of subject certification case was forwarded to
the Director, Bureau of Labor Relations, Ministry of Labor and Employment, Manila (ANNEX M);

“9. Bureau of Labor Relations Director Cresenciano B. Trajano, rendered a Decision on August 13, 1986
(Annex B) granting ALU’s appeal (Motion for Reconsideration) and set aside the questioned Med-Arbiter
Order of June 11, 1986 (Annex K ), on the ground that the CBA has been effective and valid and the
contract bar rule applicable;

“10. But the same Decision of Director Cresenciano B. Trajano was sought for reconsideration both by
Southern Philippines Federation of Labor (SPFL) on August 26, 1986 (ANNEX N) supplemented by the
‘SUBMISSION OF ADDITIONAL EVIDENCE’ dated September 29, 1986 (ANNEX O), and Philippine Social
Security Labor Union (PSSLU) on October 2, 1986 (ANNEX P), which were opposed by both GAW Trading,
Inc. on September 2, 1986 (ANNEX Q) and ALU on September 12, 1986 (ANNEX R);” 2

The aforesaid decision of then Director Trajano was thereafter reversed by respondent director in her
aforecited decision which is now assailed in this action. A motion for reconsidera-

_______________

2 Ibid., 8-11.

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tion of ALU 3 appears to have been disregarded, hence, its present resort grounded on grave abuse of
discretion by public respondent.

Public respondent ordered the holding of a certification election, ruling that the “contract bar rule”
relied upon by her predecessor does not apply in the present controversy. According to the decision of
said respondent, the collective bargaining agreement involved herein is defective because it “was not
duly submitted in accordance with Section I, Rule IX , Book V of the Implementing Rules of Batas
Pambansa Blg. 130.” It was further observed that “(t)here is no proof tending to show that the CBA has
been posted in at least two conspicuous places in the establishment at least five days before its
ratification and that it has been ratified by the majority of the employees in the bargaining unit.”
We find no reversible error in the challenged decision of respondent director. A careful consideration of
the facts culled from the records of this case, especially the allegations of petitioner itself as
hereinabove quoted, yields the conclusion that the collective bargaining agreement in question is
indeed defective, hence unproductive of the legal effects attributed to it by the former director in his
decision which was subsequently and properly reversed.

We have previously held that the mechanics of collective bargaining are set in motion only when the
following jurisdictional preconditions are present, namely, (1) possession of the status of majority
representation by the employees’ representative in accordance with any of the means of selection
and/or designation provided for by the Labor Code; (2) proof of majority representation; and (3) a
demand to bargain under Article 251, paragraph (a), of the New Labor Code. 4 In the present case, the
standing of petitioner as an exclusive bargaining representative is dubious, to say the least. It may be
recalled that respondent company, in a letter dated May 12, 1986 and ad dressed to

_______________

3 Ibid., 11; Annex S, Petition.

4 K iok Loy vs. National Labor Relations Commission, 141 SCRA 179, l85 (1986).

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Associated Labor Union (ALU) vs. Ferrer-Calleja

petitioner, merely indicated that it was “not against the desire of (its) workers” and required petitioner
to present proof that it was supported by the majority thereof in a meeting to be held on the same date.
5 The only express recognition of petitioner as said employees’ bargaining representative that We see in
the records is in the collective bargaining agreement entered into two days thereafter. 6 Evidently, there
was precipitate haste on the part of respondent company in recognizing petitioner union, which
recognition appears to have been based on the self-serving claim of the latter that it had the support of
the majority of the employees in the bargaining unit. Furthermore, at the time of the supposed
recognition, the employer was obviously aware that there were other unions existing in the unit. As
earlier stated, respondent company’s letter is dated May 12, 1986 while the two other unions, Southern
Philippine Federation of Labor (hereafter, SPFL) and Philippine Social Security Labor Union (PSSLU, for
short), went on strike earlier on May 9, 1986. The unusual promptitude in the recognition of petitioner
union by respondent company as the exclusive bargaining representative of the workers in GAW
Trading, Inc. under the fluid and amorphous circumstances then obtaining, was decidedly unwarranted
and improvident.

It bears mention that even in cases where it was the then Minister of Labor himself who directly
certified the union as the bargaining representative, this Court voided such certification where there
was a failure to properly determine with legal certainty whether the union enjoyed a majority
representation. In such a case, the holding of a certification election at a proper time would not
necessarily be a mere formality as there was a compelling reason not to directly and unilaterally certify a
union. 7

An additional infirmity of the collective bargaining agreement involved was the failure to post the same
in at least two (2) conspicuous places in the establishment at least five days

_______________

5 Rollo, 9, 34; Annex D, Petition.

6 Ibid., 37.

7 Colgate Palmolive Philippines, Inc. vs. Hon. Blas F. Ople, et al., G.R. No. 73691, June 30, 1988.

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before its ratification. 8 Petitioner’s rationalization was that “(b)ecause of the real existence of the
illegal strike staged by SPFL in all the stores of GAW Trading, Inc. it had become impossible to comply
with the posting requirement in so far as the realization of its purpose is concerned as there were no
impartial members of the unit who could be apprised of the CBA’s contents.” 9 This justification is
puerile and unacceptable.

In the first place, the posting of copies of the collective bargaining agreement is the responsibility of the
employer which can easily comply with the requirement through a mere mechanical act. The fact that
there were “no impartial members of the unit” is immaterial. The purpose of the requirement is
precisely to inform the employees in the bargaining unit of the contents of said agreement so that they
could intelligently decide whether to accept the same or not. The assembly of the members of ALU
wherein the agreement in question was allegedly explained does not cure the defect. The contract is
intended for all the employees and not only for the members of the purported representative alone. It
may even be said that the need to inform the non-members of the terms thereof is more exigent and
compelling since, in all likelihood, their contact with the persons who are supposed to represent them is
limited. Moreover, to repeat, there was an apparent and suspicious hurry in the formulation and
finalization of said collective bargaining accord. In the aforementioned letter where respondent
company required petitioner union to present proof of its support by the employees, the company
already suggested that petitioner ALU at the same time submit the proposals that it intended to embody
in the projected agreement. This was on May 12, 1986, and promptly on the following day the
negotiating panel furnished respondent company final copies of the desired agreement which, with
equal dispatch, was signed on May 15, 1986.
Another potent reason for annulling the disputed collective bargaining agreement is the finding of
respondent director that

_______________

8 Sec. 1(a), Rule IX , Book V, Implementing Rules of B.P. 130.

9 Rollo, 16.

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Associated Labor Union (ALU) vs. Ferrer-Calleja

one hundred eighty-one (181) of the two hundred eighty-one (281) workers who “ratified” the same
now “strongly and vehemently deny and/or repudiate the alleged negotiation and ratification of the
CBA.” 10 Although petitioner claims that only seven (7) of the repudiating group of workers belong to
the total number who allegedly ratified the agreement, nevertheless such unsubstantiated contention
weighed against the factual findings of the respondent director cannot negate the fact that the
controverted contract will not promote industrial stability. The Court has long since declared that:

“x x x 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.” 11

At this juncture, petitioner should be reminded that the technical rules of procedure do not strictly
apply in the adjudication of labor disputes. 12 Consequently, its objection that the evidence with respect
to the aforesaid repudiation of the supposed collective bargaining agreement cannot be considered for
the first time on appeal to the Bureau of Labor Relations should be disregarded, especially considering
the weighty significance thereof.

Both petitioner and private respondent GAW Trading, Inc. allege that the employees of the latter are
now enjoying the benefits of the collective bargaining agreement that both parties had forged.
However, We cannot find sufficient evidence of record to support this contention. The only evidence
cited by petitioner is the supposed payment of union fees by s aid em-

________________

10 Ibid., 27.
11 Firestone Tire & Rubber Company Employees Union, etc. vs. Estrella, etc., et al. 81 SCRA 49, 54
(1978).

12 Art. 221, Labor Code, as amended.

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Associated Labor Union (ALU) vs. Ferrer-Calleja

ployees, a premise too tenuous to sustain the desired conclusion. Even the actual number of workers in
the respondent company is not clear from the records. Said private respondent claims that it is two
hundred eighty-one (281) 13 but petitioner suggests that it is more than that number. The said parties
should be aware that this Court is not an adjudicator of facts. Worse, to borrow a trite but apt phrase,
they would heap the Ossa of confusion upon the Pelion of uncertainty and still expect a definitive ruling
on the matter thus confounded.

Additionally, the inapplicability of the contract bar rule is further underscored by the fact that when the
disputed agreement was filed before the Labor Regional Office on May 27, 1986, a petition for
certification election had already been filed on May 19, 1986. Although the petition was not supported
by the signatures of thirty percent (30% ) of the workers in the bargaining unit, the same was enough to
initiate said certification election.

WHEREFORE, the order of the public respondent for the conduct of a certification election among the
rank-and-file workers of respondent GAW Trading Inc. is AFFIRMED. The temporary restraining order
issued in this case pursuant to the Resolution of March 25, 1987 is hereby lifted.

SO ORDERED.

Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

Order affirmed.

Note. ___ In interpreting the protection to labor and social justice provisions of the Constitution and the
labor laws on rules and regulations implementing the constitutional mandates, the Supreme Court has
always adopted the liberal approach which favors the exercise of labor rights. ( Adamson and Adamson,
Inc. vs. Court of Industrial Relations, 127 SCRA 268.)

——o0o—— Associated Labor Union (ALU) vs. Ferrer-Calleja, 173 SCRA 178, G.R. No. 77282 May 5, 1989
VOL. 81, JANUARY 6, 1978

49

Firestone Tire & Rubber Company Employees Union vs. Estrella

Nos. L-45513-14. January 6, 1978.*

IN THE MATTER OF PETITION FOR DIRECT CERTIFICATION OR CERTIFICATION ELECTION. FIRESTONE


TIRE & RUBBER COMPANY EMPLOYEES’ UNION (FEU), petitioner, vs. THE HON. FRANCISCO L.
ESTRELLA, as Acting Director of the Bureau of Labor Relations, FIRESTONE TIRE & RUBBER COMPANY
OF THE PHILIPPINES and ASSOCIATED LABOR UNIONS (ALU), respondents.

FIRESTONE TIRE & RUBBER COMPANY EMPLOYEES UNION, represented by Romulo Ramos as
President, petitioner, vs. THE HON. FRANCISCO L. ESTRELLA, as Acting Director of the Bureau of Labor
Relations, and ASSOCIATED LABOR UNIONS (ALU), respondents.

Labor law; Contracts which do not foster industrial stability are exempt from the contract-bar rule as
when there is a substantial schism or disaffiliation by employees from the present bargaining agent.—
It seems to be the better view that a contract does not operate as a bar to representation
proceedings, where it is shown that because of a schism in the union the contract can no longer
promote industrial stability, and the direction of the election is in the interest of industrial stability as
well as in the interest of the employees’ right in the selection of their bargaining representatives.
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
certains of contract 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. In the case at bar, it is doubtful if any contract that may have been entered into between
respondent ALU and respondent company will foster stability in the bargaining unit, in view of the
fact that a substantial number of the employees therein

______________

*SECOND DIVISION.

50

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SUPREME COURT REPORTS ANNOTATED

Firestone Tire & Rubber Company Employees Union vs. Estrella

have resigned from ALU and joined petitioner FEU. At any rate, this is a matter that must be finally
determined by means of a certification election.
Same; Only a certified CBA will serve to bar a certification election.—It appearing that the extension
of the life of the collective bargaining agreement for a period of one year was not certified by the
Bureau of Labor Relations, it cannot, therefore, also bar the certification election. Only a certified
collective bargaining agreement would serve as a bar to such election.

PETITIONS for certiorari to review the resolutions of the Acting Director of the Bureau of Labor
Relations.

The facts are stated in the opinion of the Court.

Avelino D. Latosa for petitioner.

Venerando B. Briones for private respondent.

ANTONIO, J.:

Petition to set aside two Resolutions issued by respondent Acting Director Francisco L. Estrella of the
Bureau of Labor Relations in BLR Cases Nos. A-070-76 and 2106-76.

The petition alleges that on June 21, 1973, the National Labor Relations Commission certified a three-
year collective bargaining agreement between respondents Associated Labor Union (ALU) and Firestone
Tire & Rubber Company of the Philippines. Said collective bargaining agreement was to be effective
from February 1, 1973 to January 31, 1976.

On February 1, 1974, the afore-mentioned respondents entered into a “Supplemental Agreement”


extending the life of the collective bargaining agreement for one year, making it effective up to January
31, 1977. The extension was not ratified by the covered employees nor submitted to the Department of
Labor for certification.

Within the sixty-day period prior to the original expiry date of the agreement, some 233 out of about
400 rank-and-file employees of respondent Company resigned from respondent ALU. Subsequently, the
number of these employees who resigned from the union was increased to 276 and, by way of letter to
the Director of the Bureau of Labor Relations, they requested for the issuance of a certificate of

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Firestone Tire & Rubber Company Employees Union vs. Estrella

registration in favor of petitioner Firestone Tire & Rubber Company Employees’ Union (FEU). On January
28, 1976, Registration Permit No. 8571-IP was issued to petitioner FEU.

On February 10, 1976, ten (10) days after the original expiry date of the collective bargaining agreement,
petitioner FEU filed a petition with the Bureau of Labor Relations for direct certification or certification
election,1 with the written consent of 308 employees, or 77% of the 400-man bargaining unit.
On February 20, 1976, respondent ALU filed with the Bureau of Labor Relations a petition for the
cancellation of the registration certificate of petitioner FEU,2 alleging that at the time of FEU’s
registration, respondent ALU was the recognized and certified collective bargaining agent in the unit,
and that FEU had not submitted the required sworn statement that there is no recognized or certified
collective bargaining agent therein.

On February 23, 1976, respondent ALU prayed for the dismissal of R04-MED-143-76 on the grounds,
among others, that it has a pending petition for the cancellation of FEU’s registration certificate and that
there is an existing collective bargaining agreement, due to expire on January 31, 1977, which
constitutes a valid bar to the holding of a certification election.

Respondent Company likewise opposed the holding of a certification election on the ground, however,
that the petition therefor was filed late, considering that it was filed ten (10) days after the expiry date
of the collective bargaining agreement.

On April 6, 1976, the Med-Arbiter issued an Order granting the petition for certification election.
Respondents ALU and the Company filed separate appeals from the order before the Bureau of Labor
Relations.

The Order of the Med-Arbiter was affirmed by the Honorable Director Carmelo C. Noriel on September
23, 1976, and Motions for Reconsideration were filed by ALU and the Company on October 11, 1976.

On January 25, 1977, respondent Acting BLR Director Francisco L. Estrella issued a Resolution reversing
the Order of the Med-Arbiter which was affirmed by Director Noriel, and holding:

______________

1Case No. R04-MED-143-76, renumbered BLR Case No. A-070-76.

2BLR Case No. 2106-76.

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SUPREME COURT REPORTS ANNOTATED

Firestone Tire & Rubber Company Employees Union vs. Estrella

“* * * that there indeed exists a prejudicial question involving the very legal personality of the petitioner
union. In BLR Case No. 2106-76, the validity of the registration certificate of petitioner is at issue. It is
therefore obvious that the present representation question should wait for the final disposition of the
issue on petitioner’s legal personality, if only to forestall what may prove to be unnecessary
proceedings.”3
The issue of whether or not there was an existing collective bargaining agreement which serves as a bar
to the holding of a certification election was not resolved by respondent Acting Director Francisco L.
Estrella.

On June 8, 1976, BLR Case No. 2106-76 for the cancellation of petitioner FEU’s certificate of registration
was dismissed by the Med-Arbiter. Respondents ALU and the Company appealed to the Bureau of Labor
Relations, but the appeals were dismissed by Director Carmelo C. Noriel. Motions for Reconsideration
were filed by the same respondents and on January 25, 1977, respondent Acting Director Francisco L.
Estrella entered a Resolution reversing the decision of Director Noriel and revoking the certificate of
registration of petitioner FEU. Respondent Acting Director Estrella ruled that according to Section 4,
Rule II, Book V of the Rules of Implementing the Labor Code, no union may be registered when there is
in the bargaining unit a recognized or certified collective bargaining agent. The Acting Director found
that there was such a bargaining agent in the unit (ALU), and that there was in fact a collective
bargaining agreement which was yet to expire on January 31, 1977. On that score, it was held that FEU’s
application for registration was premature, and that it should have waited for the expiration of the
collective bargaining agreement.

The two Resolutions issued by Respondent Acting Director Francisco L. Estrella are subject of the instant
petition for review by way of certiorari.

It is petitioner’s contention that the issue of whether or not there was an existingcontract or collective
bargaining agreement to validly bar the holding of a certification election should have been resolved by
respondent Acting Director in BLR Case No. A-070-76, as it was already intertwined with the issue of
petitioner’s legal personality as assailed in BLR Case No. 2106-76, According to petitioner, “if the

______________

3Annex “B”, Petition, p. 27, Rollo.

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Firestone Tire & Rubber Company Employees Union vs. Estrella

petition for certification election in this case is not barred by the contract in question, then the
registration certificate of petitioner, acquired as it was within the sixty-day freedom period of such
contract must, of necessity, be likewise not barred or denied as premature.” Likewise, petitioner alleges
that “there being no pronouncement on the applicability of the ‘contract bar’ rule in this case, the
cancellation of the registration certificate of petitioner is devoid of legal basis, hence it was done by the
respondent BLR Acting Director in grave abuse of discretion.”

Further, it is petitioner’s stand that the Acting Director erred in concluding that the collective bargaining
agreement was to expire on January 31, 1977, for which reason he held that petitioner’s application for
registration was premature. The expiry date of January 31, 1977, according to petitioner, was
unauthorized because the extension of the contract for a period of one year was not certified by the
Department of Labor and was “used to foil the constitutional right of the workers to self-organization
and to engage in collective bargaining.”

The petition prays that the Resolutions of respondent Acting Director, both dated January 25, 1977, be
set aside, and the orders/decisions of Director Carmelo C. Noriel, dated September 23, 1976 and
October 8, 1976, be affirmed.

Respondent Firestone Tire and Rubber Company of the Philippines filed its Comment to the instant
petition, contending, mainly, that petitioner FEU had no legal personality as a union because its non-
compliance with Section 4, Rule II, Book V of the Rules and Regulations Implementing the Labor Code is
sufficient ground for the cancellation of its registration certificate.

Respondent ALU likewise filed its Comment, reiterating the contention that FEU had no legal personality
to ask for a direct certification or certification election because its certificate of registration was
obtained fraudulently and has, in fact, been cancelled.

In the meantime, due to the fact that the collective bargaining agreement had already expired,
respondent ALU demanded that respondent Company negotiate with it for a new agreement. The
Company requested for specific advice on the proper course of action from the Department of Labor. In
response to the request, the Department answered that “in the absence of any adjudication from
competent authority and in accordance with existing jurisprudence

54

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SUPREME COURT REPORTS ANNOTATED

Firestone Tire & Rubber Company Employees Union vs. Estrella

* * * there is no legal impediment for (the) Company to negotiate a new collective bargaining
agreement with the Associated Labor Unions.”

Accordingly, a new collective bargaining agreement was entered into between ALU and the Company on
April 1, 1977.

It appears that on January 31, 1977, FEU filed with Regional Office No. 4 Case No. R04-MED-808-77, a
petition for direct certification/certification election, utilizing its questioned Registration Permit No.
8571-IP, dated January 26, 1976.

We find this petition meritorious. In BLR Case No. 2160-76, Director Carmelo C. Noriel, resolving the
pivotal issue of whether or not the failure of FEU to submit “a sworn statement * * * to the effect that
there is no recognized or certified collective bargaining agent in the bargaining unit concerned” warrants
the revocation of its registration, said:

“This Bureau answers in the negative.


*** *** ***

“* * * notwithstanding the existence of a certified or recognized collective bargaining agent, the policy
of this Office sanctions a registration of new union during the freedom period especially if it has become
apparent that a substantial number of union members has decided to form a new labor organization, as
aptly illustrated in the case at bar. If the rule were otherwise, no recourse whatsoever shall be accorded
to members of a bargaining unit who would like to make a free choice of their bargaining
representative, thereby placing the constitutional rights of the workers to self-organization and
collective bargaining in mockery, if not, in utter illusion.”

This view is supported by precedents, it seems to be the better view that a contract does not operate as
a bar to representation proceedings, where it is shown that because of a schism in the union the
contract can no longer serve to promote industrial stability, and the direction of the election is in the
interest of industrial stability as well as in the interest of the employees’ right in the selection of their
bargaining representatives.4 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

______________

4Re: Hershey Chocolate Corp., 121 NLRB 901.

55

VOL. 81, JANUARY 6, 1978

55

Firestone Tire & Rubber Company Employees Union vs. Estrella

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.5

In the case at bar, it is doubtful if any contract that may have been entered into between respondent
ALU and respondent Company will foster stability in the bargaining unit, in view of the fact that a
substantial number of the employees therein have resigned from ALU and joined petitioner FEU. At any
rate, this is a matter that must be finally determined by means of a certification election.

In Foamtex Labor Union-TUPAS vs. Noriel,6 We said:

“* * * The question of whether or not the disaffiliation was validly made appears not to be of much
significance, considering that the petition for direct certification is supported by eighty (80) out of a total
of one hundred twenty (120) of the rank and file employees of the unit. Pursuant to Article 256 of the
Labor Code, if there is any reasonable doubt as to whom the employees have chosen as their
representative for the purpose of collective bargaining, the Bureau shall order a secret ballot election to
be conducted by the Bureau to ascertain who is the freely chosen representative of the employees
concerned, * * *’. It is very clear from the aforementioned circumstances that there is actually a
reasonable doubt as to whom the employees have chosen as their representative for the purpose of
collective bargaining.

“As to whether or not the disaffiliation was actually and validly made, or whether Foamtex Labor Union
of respondent Belga is the true collective bargaining representative of the employees are questions that
need not be resolved independently of each other. Such questions may be answered once and for all the
moment is determined, by means of the secret ballot election, the union to which the majority of the
employees have really reposed their allegiance. The important factor here is the true choice of the
employees, and the most expeditious and effective manner of determining this is by means of the
certification election, as it is for this very reason that such procedure has been incorporated in the law.
To order that a separate secret ballot election be conducted for the purpose of determining the
question of policy, i.e., whether or not the majority of the employees desire to disaffiliate from the
mother union, would be merely a circuitous way of ascertaining the majority’s true choice.

______________

5Re: Paragon Products Corporation, 134 NLRB 662.

672 SCRA 371, 376-378.

56

56

SUPREME COURT REPORTS ANNOTATED

Firestone Tire & Rubber Company Employees Union vs. Estrella

As observed PAFLU v. Bureau of Labor Relations (69 SCRA 132, 139), a certification election for the
collective bargaining process ‘is one of the fairest and most effective way of determining which labor
organization can truly represent the working force. It is a fundamental postulate that the will of the
majority, if given in an honest election with freedom on the part of the voters to make their choice, is
controlling. No better device can assure the institution of industrial democracy with the two parties to a
business enterprise, management and labor, establishing a regime of self-rule.’ ”

Similarly, in Philippine Labor Alliance Council (PLAC) vs. Bureau of Labor Relations, et al.,7 it was held
that once the fact of disaffiliation has been demonstrated beyond doubt, a certification election is the
most expeditious way of determining which labor organization is to be the exclusive bargaining
representative.
It appearing that the extension of the life of the collective bargaining agreement for a period of one year
was not certified by the Bureau of Labor Relations, it cannot, therefore, also bar the certification
election. Only a certified collective bargaining agreement would serve as a bar to such election.8

Corollarily, therefore, petitioner’s application for registration was not premature, as it need not have
waited for the expiration of the one-year extension, the agreement having expired on January 31, 1976.

WHEREFORE, the instant petition for certiorari is granted. The two Resolutions, both dated January 25,
1977 in BLR Cases Nos. A-060-76 and 2106-76 are hereby REVERSED and set aside. Costs against private
respondents.

Barredo (Actg. Chairman), Aquino, Concepcion Jr. and Guerrero, JJ., concur.

Fernando (Chairman) and Santos, JJ., are on leave.

Guerrero, J., was designated to sit in the Second Division.

Petition granted.

______________

775 SCRA 162.

8Foamtex Labor Union-TUPAS vs. Noriel, supra, pp. 377-378.

57

VOL. 81, JANUARY 6, 1978

57

Firestone Tire & Rubber Company Employees Union vs. Estrella

Notes.—The law allows a petition for certification to be filed within a reasonable period before the
renewal of an existing bargaining agreement. (Compania Maritima vs. Compania Maritima Labor Union,
43 SCRA 464).

When a labor organization objects to the participation in a certification election of a company-


dominated union and as a result, a complaint for unfair labor practice case against the employer is filed,
the status of the latter union must be first cleared in such a proceeding before the voting could take
place. (B. F. Goodrich Philippines, Inc. vs. B. F. Goodrich Confidential and Salaried Employees Union-
NATU, 49 SCRA 532).

The NLRC may require a collective bargaining agreement to be certified by it before the agreement
could be a bar to any certification election. (Confederation of Citizens Labor Unions vs. National Labor
Relations Commission, 60 SCRA 450).

Substantial benefits due from an existing collective bargaining agreement do not preclude the holding of
a certification election; nor may any damage result from a certification election be a bar to such election
whose principal purpose is to ascertain the desires of the employees as to their collective bargaining
representative. (Confederation of Citizens Labor Unions vs. National Labor Relations Commission, 60
SCRA 450).

An agreement entered into by the company with a union not chosen by all the employees of said
company in a certification election is not binding on the other employees not members of said union.
(Sta. Cecilia Sawmills, Inc. vs. Court of Industrial Relations, 10 SCRA 433).

A general allegation that workers were threatened, coerced, and intimidated to vote for respondent
union, without anything to indicate the number of workers involved, without the supporting affidavit of
any of them, and without an offer to introduce their testimony or any of them will be deemed
insufficient to warrant the invalidation of the certification election in question. (Acoje Workers Union vs.
National Mines and Allied Workers’ Union (NAMAWU), 7 SCRA 730).

——o0o——

58 Firestone Tire & Rubber Company Employees Union vs. Estrella, 81 SCRA 49, Nos. L-45513-14 January
6, 1978

316

SUPREME COURT REPORTS ANNOTATED

United CMC Textile Workers Union vs. Bureau of Labor Relations

No. L-51337. March 22, 1984.*

UNITED CMC TEXTILE WORKERS UNION, petitioner, vs. BUREAU OF LABOR RELATIONS, HON.
CARMELO NORIEL, PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS, (JULY CONVENTION),
respondents.

Labor Law; Certification Election; Prejudicial Question; Pendency of a formal charge of company
domination, a prejudicial question that bars proceedings for a certification election; Reason.—Under
settled jurisprudence, the pendency of a formal charge of company domination is a prejudicial
question that, until decided, bars proceedings for a certification election, the reason being that the
votes of the members of the dominated union would not be free. The ULP Case herein was filed on
August 31, 1978, or anterior to the Certification Case, which was presented on September 5, 1978. The
pendency of the charge was known to respondent public official by virtue of the Motion to Dismiss
filed by petitioner as intervenor in the Certification Case. No allegation has been made that said ULP
Case was instituted in bad faith to forestall the Certification Case.

Same; Same; Same; Same; Rationale for suspension of certification election proceedings.—The
rationale for the suspension of the election proceedings has been further amplified as follows: What is
settled law, dating from the case of Standard Cigarette Workers’ Union v. Court of Industrial Relations
(101 Phil. 126), decided in 1957, is that if it were a labor organization objecting to the

_______________
* FIRST DIVISION.

317

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317

United CMC Textile Workers Union vs. Bureau of Labor Relations

participation in a certification election of a company-dominated union, as a result of which a


complaint for an unfair labor practice case against the employer was filed, the status of the latter
union must be first cleared in such a proceeding before such voting could take place. In the language
of Justice J.B.L. Reyes as ponente: ‘As correctly pointed out by Judge Lanting in his dissenting opinion
on the denial of petitioner’s motion for reconsideration, 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
employer-dominated 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.’
(Ibid., 128).

PETITION to review the resolution of the Bureau of Labor Relations.

The facts are stated in the opinion of the Court.

MELENCIO-HERRERA, J.:

The question to resolve is whether or not public respondent acted with grave abuse of discretion in
affirming the Order of the Med-Arbiter calling for a certification election despite: (a) the pendency of an
unfair labor practice case filed by petitioner charging respondent PAFLU as being company-dominated;
(b) the existence of a deadlock in negotiations for renewal of the collective bargaining agreement
between petitioner and the Central Textile Mills, Inc. (CENTEX, for short); and (c) a reasonable doubt as
to whether the 30% requirement for holding a certification election has been met.

Petitioner is a legitimate labor organization, the incumbent collective bargaining representative of all
rank and file workers of CENTEX since 1956. Respondent PAFLU is also a legitimate labor organization
seeking representation as the bargaining agent of the rank and file workers of CENTEX.

318
318

SUPREME COURT REPORTS ANNOTATED

United CMC Textile Workers Union vs. Bureau of Labor Relations

On August 31, 1978, petitioner filed a complaint for Unfair Labor Practice (R4-LRD-C-8-1493-78) (the ULP
Case, for brevity) against CENTEX and PAFLU alleging that CENTEX had “helped and cooperated in the
organization of the Central Textile Mills, Inc. Local PAFLU by allowing the organizing members of the
PAFLU to solicit signatures of employees of the company who are members of the complainant union to
disaffiliate from complainant union and join the respondent PAFLU, during company time and inside the
company premises on August 21, 1978 and the following days thereafter.”1

While the ULP Case was pending, PAFLU, on September 5, 1978, filed a Petition for Certification Election
(R4-LRD-M-9-432-78) (the Certification Case, for short) among the rank and file workers of CENTEX,
alleging that: 1) there has been no certification election during the 12 months period prior to the filing
of the petition; 2) the petition is supported by signatures of 603 workers, or more than 30% of the rank
and file workers of CENTEX; 3) the collective bargaining agreement between CENTEX and petitioner will
expire on October 31, 1978; 4) the petition is filed within the 60-day-freedom-period immediately
preceding the expiration of the CBA, and 5) there is no legal impediment to the filing of the petition.2

Petitioner intervened in the Certification Case and filed a Motion to Dismiss on September 27, 1978 on
the grounds that: 1) the ULP Case charging that PAFLU is a company-dominated union is a prejudicial
question and bars the holding of the certification election; and 2) PAFLU failed to comply with the 30%
requirement for mandatory certification election since only 440 of the 603 are valid signatures and that
719 signatories are required as constitutive of 30% of the rank and file workers totalling 2,397 and not
1,900 as alleged by PAFLU.3

_______________

1 p. 22, Rollo.

2 pp. 11-12, ibid.

3 pp. 15-21, ibid.

319

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319

United CMC Textile Workers Union vs. Bureau of Labor Relations

On October 16, 1978, petitioner filed a Notice of Strike with the Bureau of Labor Relations for deadlock
in the CBA negotiations with CENTEX. The parties having failed to effect a conciliation, the Labor
Minister assumed jurisdiction on November 9, 1978 in Case No. AJML-033-784 (referred to hereafter as
the Deadlock Case).

A Supplemental Motion to Dismiss in the Certification Case was filed by petitioner on December 7, 1978
alleging that the Labor Minister had already taken cognizance of the deadlock in the CBA negotiations
and constituted an impediment to the holding of a certification election.5

On December 18, 1978, in the Deadlock Case, the Deputy Minister of Labor released a Decision directing
petitioner and CENTEX to execute and sign a CBA to take effect on November 1, 1978 up to October 30,
1981 based on the guidelines enumerated therein, and to furnish the Office of the Minister of Labor
with a signed copy of the renewed agreement not later than January 31, 1979.6

On January 23, 1979, in the Certification Case, the Med-Arbiter issued an Order for the holding of a
certification election among CENTEX rank and file workers, whereby qualified voters could choose either
PAFLU or petitioner as the collective bargaining representative or No Union at all.7 This was affirmed by
respondent Director of the Bureau of Labor Relations on appeal, in the challenged Resolution, dated
May 25, 1979, stating that: 1) the Bureau has discretion to order certification election where several
unions are contending for representation and when there is doubt as to whether the 30% requirement
has been met; and 2) to preclude the filing of a petition for certification election the notice of strike for
deadlock in CBA negotiations must occur prior to the petition.8

_______________

4 p. 32, ibid.

5 p. 130, ibid.

6 pp. 32-34, ibid.

7 pp. 35-37, ibid.

8 pp. 47-48, ibid.

320

320

SUPREME COURT REPORTS ANNOTATED

United CMC Textile Workers Union vs. Bureau of Labor Relations

A Motion for Reconsideration filed by petitioner was denied for lack of merit in the Resolution of August
20, 19799, also assailed herein.

Hence, this petition, on the general proposition that public respondent has committed serious error of
law and acted with grave abuse of discretion, and that petitioner has no plain and adequate remedy in
the ordinary course of law. We issued a Temporary Restraining Order enjoining the conduct of the
certification election, and eventually gave the Petition due course.
The issues raised are: (1) is the pendency of the ULP Case charging a participating union in the
certification election proceedings as company-dominated a prejudicial question to the conduct of the
election? (2) Does the decision in the Deadlock Case directing the parties to execute a CBA have the
effect of barring the certification election? (3) Does respondent Director have the discretion to call for a
certification election even if the 30% consent requirement is lacking?

The case can be resolved on the basis of the first issue alone, which must be answered in the
affirmative. Under settled jurisprudence, the pendency of a formal charge of company domination is a
prejudicial question that, until decided, bars proceedings for a certification election10, the reason being
that the votes of the members of the dominated union would not be free.11 The ULP Case herein was
filed on August 31, 1978, or anterior to the Certification Case, which was presented on September 5,
1978. The pendency of the charge was known to respondent public official by virtue of the Motion to
Dismiss filed by petitioner as intervenor in the Certification Case. No allegation has been made that said
ULP Case was instituted in bad faith to forestall the Certification Case. The following ruling is thus
squarely in point:

_______________

9 pp. 49-55, ibid.

10 Standard Cigarette Workers Union vs. Court of Industrial Relations, 101 Phil. 126 (1957).

11 Manila Paper Mills Employees vs. Court of Industrial Relations, 104 Phil. 10 (1958).

321

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321

United CMC Textile Workers Union vs. Bureau of Labor Relations

“There is no assertion that such complaint was flimsy, or made in bad faith or filed purposely to forestall
the certification election. So, no reason existed for the Industrial Court to depart from its established
practice of suspending the election proceeding. And this seems to be accepted rule in the law of labor
relations, the reason being, in the words of Mr. Justice Montemayor, ‘if there is a union dominated by
the company, to which some of the workers belong, an election among workers and employees of the
company would not reflect the true sentiment and wishes of the said workers and employees because
the votes of the members of the dominated union would not be free.’ (Manila Paper Mills Employees vs.
Court of Industrial Relations, 104 Phil. 10).

“And we have held, through Mr. Justice J.B.L. Reyes, that such charge of company domination is a
prejudicial question that until decided, shall suspend or bar proceedings for certification election.
(Standard Cigarette Workers’ Union vs. Court of Industrial Relations, 101 Phil. 126).
“Indeed, if as a result of the Pelta’s complaint in Case No. 255-ULP, the Workers Union should be
ordered dissolved as a company-dominated union, any election held in the meantime would be a waste
of energy and money to all parties concerned.”12

The rationale for the suspension of the election proceedings has been further amplified as follows:

“What is settled law, dating from the case of Standard Cigarette Workers’ Union v. Court of Industrial
Relations (101 Phil. 126), decided in 1957, is that if it were a labor organization objecting to the
participation in a certification election of a company-dominated union, as a result of which a complaint
for an unfair labor practice case against the employer was filed, the status of the latter union must be
first cleared in such a proceeding before such voting could take place. In the language of Justice J.B.L.
Reyes as ponente: ‘As correctly pointed out by Judge Lanting in his dissenting opinion on the denial of
petitioner’s motion for reconsideration, 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,

_______________

12 Acoje Mines Employees and Acoje United Workers Union vs. Acoje Labor Union and Acoje Mining
Co., 104 Phil. 814 at 816 & 817 (1958).

322

322

SUPREME COURT REPORTS ANNOTATED

United CMC Textile Workers Union vs. Bureau of Labor Relations

or are controlled, by the company or employer. The reason is that the certification election may lead to
the selection of an employer-dominated 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.’ (Ibid., 128). The next year, the same jurist had occasion to reiterate such doctrine in Manila
Paper Mills Employees and Workers Association v. Court of Industrial Relations (104 Phil. 10 [1958]),
thus: ‘We agree with the CIR on the reasons given in its order that only a formal charge of company
domination may serve as a bar to and stop a certification election, the reason being that if there is a
union dominated by the Company, to which some of the workers belong, an election among the workers
and employees of the company would not reflect the true sentiment and wishes of the said workers and
employees from the standpoint of their welfare and interest, because as to the members of the
company dominated union, the vote of the said members in the election would not be free. It is equally
true, however, that the opposition to the holding of a certification election due to a charge of company
domination can only be filed and maintained by the labor organization which made the charge of
company domination, because it is the entity that stands to lose and suffer prejudice by the certification
election, the reason being that its members might be overwhelmed in the voting by the other members
controlled and dominated by the Company,’ (Ibid., 15). It is easily understandable why it should be thus.
There would be an impairment of the integrity of the collective bargaining process if a company-
dominated union were allowed to participate in a certification election. The timid, the timorous, and the
faint-hearted in the ranks of labor could easily be tempted to cast their votes in favor of the choice of
management. Should it emerge victorious, and it becomes the exclusive representative of labor at the
conference table, there is a frustration of the statutory scheme. It takes two to bargain. There would be
instead a unilateral imposition by the employer. There is need therefore to inquire as to whether a labor
organization that aspires to be the exclusive bargaining representative is company-dominated before
the certification election.”13

_______________

13 B. F. Goodrich Philippines, Inc. vs. B. F. Goodrich (Marikina Factory) Confidential & Salaried
Employees Union-NATU, 49 SCRA 532 at 538-540 (1973).

323

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323

United CMC Textile Workers Union vs. Bureau of Labor Relations

With the suspension of the certification proceedings clearly called for by reason of a prejudicial
question, the necessity of passing upon the remaining issues is obviated.

WHEREFORE, the Resolution of August 20, 1979 issued by public respondent affirming the Order of the
Med-Arbiter, dated January 23, 1979, calling for a certification election is hereby REVERSED and SET
ASIDE. The Temporary Restraining Order heretofore issued by this Court shall continue to be in force
and effect until the status is cleared of respondent Philippine Association of Free Labor Unions (July
Convention) in Case No. R4-LRD-M-9-432-78 entitled “In the Matter of Certification Election Among
Rank and File Workers of Central Textile Mills, Inc., Philippine Association of Free Labor Unions,
Petitioner, United CMC Textile Workers Union, Intervenor.”

No costs.

SO ORDERED.

Plana, Relova, Gutierrez, Jr., and De la Fuente, JJ., concur.

Teehankee, J., is on official leave.

Resolution reversed and set aside.

Notes.—Director of Labor Relations may order a certification even if less than 30% of the employees ask
for a certification election. (Eastland Manufacturing Company, Inc. vs. Noriel, 111 SCRA 674.)
Clear majority of workers of a union who have not only ratified the collective bargaining agreement of
their union but affirmed their membership therein renders unnecessary the holding of the petition for
the certification election despite written support of 30% of workers of the rival union. (Trade Unions of
the Philippines and Allied Services vs. Inciong, 115 SCRA 847.)

The purpose of a certification election is to give employees

324

324

SUPREME COURT REPORTS ANNOTATED

Lecaroz vs. Sandiganbayan

true representation in their collective bargaining with an employer. (Confederation of Citizens Labor
Union vs. Noriel 116 SCRA 694.)

——o0o—— United CMC Textile Workers Union vs. Bureau of Labor Relations, 128 SCRA 316, No. L-
51337 March 22, 1984

802

SUPREME COURT REPORTS ANNOTATED

Progressive Development Corporation vs. Secretary, Department of Labor and Employment

G.R. No. 96425. February 4,1992.*

PROGRESSIVE DEVELOPMENT CORPORATION, petitioner, vs. THE HONORABLE SECRETARY,


DEPARTMENT OF LABOR AND EMPLOYMENT, MED-ARBITER EDGARDO DELA CRUZ, AND
PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN)-TUCP, respondents.

Labor Law; Labor Organization; Certification Election; Court has repeatedly stressed that the holding
of a certification election is based on a statutory policy that cannot be circumvented.—The Court has
repeatedly stressed that the holding of a certification election is based on a statutory policy that
cannot be circumvented. (Airtime Specialists, Inc. v. Ferrer-Calleja, 180 SCRA 749 [1989]; Belyca
Corporation v. Ferrer-Calleja, 168 SCRA 184 [1988]; George and Peter Lines, Inc.

_______________

* THIRD DIVISION.

803

VOL. 205, FEBRUARY 4, 1992


803

Progressive Development Corporation vs. Secretary, Department of Labor and Employment

v. Associated Labor Unions, 134 SCRA 82 [1986]). The workers must be allowed to freely express their
choice in a determination where everything is open to their sound judgment and the possibility of
fraud and misrepresentation is eliminated.

Same; Same; Same; Article 242 enumerates the exclusive rights of a legitimate labor organization
among which is the right to be certified as the exclusive representative of all the employees in an
appropriate collective bargaining unit for purposes of collective bargaining.—But while Article 257
cited by the Solicitor General directs the automatic conduct of a certification election in an
unorganized establishment, it also requires that the petition for certification election must be filed by
a legitimate labor organization. Article 242 enumerates the exclusive rights of a legitimate labor
organization among which is the right to be certified as the exclusive representative of all the
employees in an appropriate collective bargaining unit for purposes of collective bargaining.

Same; Same; Same; Legitimate labor organization defined.—Meanwhile, Article 212(h) defines a
legitimate labor organization as "any labor organization duly registered with the DOLE and includes
any branch or local thereof." (Italics supplied) Rule I, Section 1(j), Book V of the Implementing Rules
likewise defines a legitimate labor organization as "any labor organization duly registered with the
DOLE and includes any branch, local or affiliate thereof."

Same; Same; Same; Same; A labor organization acquires legitimacy only upon registration with the
BLR.—Ordinarily, a labor organization acquires legitimacy only upon registration with the BLR.

Same; Same; Same; Same; Same; When an unregistered union becomes a branch, local or chapter of a
federation, some of the aforementioned requirements for registration are no longer required.—But
when an unregistered union becomes a branch, local or chapter of a federation, some of the
aforementioned requirements for registration are no longer required.

Same; Same; Same; Same; Same; Same; The intent of the law in imposing lesser requirements in the
case of a branch or local of a registered federation or national union is to encourage the affiliation of a
local union with a federation, or national union in order to increase the local union's bargaining
powers respecting terms and conditions of

804

804

SUPREME COURT REPORTS ANNOTATED

Progressive Development Corporation vs. Secretary, Department of Labor and Employment

labor.—Undoubtedly, the intent of the law in imposing lesser requirements in the case of a branch or
local of a registered federation or national union is to encourage the affiliation of a local union with a
federation or national union in order to increase the local union's bargaining powers respecting terms
and conditions of labor.
Same; Same; Same; Same; Same; Same; The certification and attestation requirements are preventive
measures against the commission of fraud.—The certification and attestation requirements are
preventive measures against the commission of fraud. They likewise afford a measure of protection to
unsuspecting employees who may be lured into joining unscrupulous or fly-by-night unions whose
sole purpose is to control union funds or to use the union for dubious ends.

Same; Same; Same; Same; Same; Same; Requirements before a local or chapter becomes a legitimate
labor organization.—A local or chapter therefore becomes a legitimate labor organization only upon
submission of the following to the BLR: 1) A charter certificate, within 30 days from its issuance by the
labor federation or national union, and 2) The constitution and by-laws, a statement on the set of
officers, and the books of accounts all of which are certified under oath by the secretary or treasurer,
as the case may be, of such local or chapter, and attested to by its president. Absent compliance with
these mandatory requirements, the local or chapter does not become a legitimate labor organization.

Same; Same; Same; Same; Same; Same; Same; Failure of the secretary of PDEU-Kilusan to certify the
required documents under oath is fatal to its acquisition of a legitimate status.—In the case at bar, the
failure of the secretary of PDEU-Kilusan to certify the required documents under oath is fatal to its
acquisition of a legitimate status.

Same; Same; Same; Same; Same; Same; Where 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.—At this juncture, it is important to clarify the
relationship between the mother union and the local union. In the case of Liberty Cotton Mills
Workers Union v. Liberty Cotton Mills, Inc., 66 SCRA 512 [1975]), the Court held that the mother
union, acting for and in behalf of its affiliate, had the status of an agent while the local union
remained the basic unit of the association, free to serve the common interest of all its members

805

VOL. 205, FEBRUARY 4, 1992

805

Progressive Development Corporation vs. Secretary, Department of Labor and Employment

subject only to the restraints imposed by the constitution and by-laws of the association. Thus, where
as in this case 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.

PETITION for certiorari to review the resolution and orders of the Secretary of Department of Labor and
Employment.

The facts are stated in the opinion of the Court.

Beltran, Bacungan & Candoy for petitioner.


Jimenez & Associates co-counsel for petitioner.

GUTIERREZ, JR., J.:

The controversy in this case centers on the requirements before a local or chapter of a federation may
file a petition for certification election and be certified as the sole and exclusive bargaining agent of the
petitioner's employees.

Petitioner Progressive Development Corporation (PDC) filed this petition for certiorari to set aside the
following:

1) Resolution dated September 5, 1990, issued by respondent Med-Arbiter Edgardo dela Cruz, directing
the holding of a certification election among the regular rank-and-file employees of PDC;

2) Order dated October 12,1990, issued by the respondent Secretary of Labor and Employment, denying
PDC's appeal; and

3) Order dated November 12, 1990, also issued by the respondent Secretary, denying the petitioner's
Motion for Reconsideration.

On June 19,1990, respondent Pambansang Kilusan ng Paggawa (KILUSAN)-TUCP (hereinafter referred to


as Kilusan) filed with the Department of Labor and Employment (DOLE) a petition for certification
election among the rank-and-file employees of the petitioner alleging that it is a legitimate labor
federation and its local chapter, Progressive Development Employees Union, was issued charter
certificate No. 90-6-1153. Kilusan claimed that there was no existing collective bar-

806

806

SUPREME COURT REPORTS ANNOTATED

Progressive Development Corporation vs. Secretary, Department of Labor and Employment

gaining agreement and that no other legitimate labor organization existed in the bargaining unit.

Petitioner PDC filed its motion to dismiss dated July 11,1990 contending that the local union failed to
comply with Rule II, Section 3, Book V of the Rules Implementing the Labor Code, as amended, which
requires the submission of: (a) the constitution and by-laws; (b) names, addresses and list of officers
and/or members; and (c) books of accounts.

On July 16,1990, respondent Kilusan submitted a rejoinder to PDC's motion to dismiss claiming that it
had submitted the necessary documentary requirements for registration, such as the constitution and
by-laws of the local union, and the list of officers/members with their addresses. Kilusan further averred
that no books of accounts could be submitted as the local union was only recently organized.

In its "Supplemental Position Paper" dated September 3, 1990, the petitioner insisted that upon
verification with the Bureau of Labor Relations (BLR), it found that the alleged minutes of the
organizational meeting was unauthenticated, the list of members did not bear the corresponding
signatures of the purported members, and the constitution and by-laws did not bear the signatures of
the members and was not duly subscribed. It argued that the private respondent therefore failed to
substantially comply with the registration requirements provided by the rules. Additionally, it prayed
that MedArbiter Edgardo dela Cruz inhibit himself from handling the case for the reason that he
allegedly had prejudged the same.

In his September 5, 1990 resolution, Med-Arbiter dela Cruz held that there was substantial compliance
with the requirements for the formation of a chapter. He further stated that mere issuance of the
charter certificate by the federation was sufficient compliance with the rules. Considering that the
establishment is unorganized, he maintained that a certification election should be conducted to resolve
the question of representation.

Treating the motion for reconsideration filed by PDC as an appeal to the Office of the Secretary,
Undersecretary Laguesma held that the same was merely a "reiteration of the issues already ventilated
in the proceedings before the Med-Arbiter,

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Progressive Development Corporation vs. Secretary, Department of Labor and Employment

specifically, the matter involving the formal organization of the chapter." (Rollo, p. 20) PDC's motion for
reconsideration from the aforementioned ruling was likewise denied. Hence, this petition.

In an order dated February 25, 1991, the Court resolved to issue a temporary restraining order enjoining
the public respondents from carrying out the assailed resolution and orders or from proceeding with the
certification election. (Rollo, pp. 37-39)

It is the petitioner's contention that a labor organization (such as the Kilusan) may not validly invest the
status of legitimacy upon a local or chapter through the mere expedient of issuing a charter certificate
and submitting such certificate to the BLR (Rollo, p. 85) Petitioner PDC posits that such local or chapter
must at the same time comply with the requirement of submission of duly subscribed constitution and
by laws, list of officers and books of accounts. (Rollo, p. 35) PDC points out that the constitution and by-
laws and list of officers submitted were not duly subscribed. Likewise, the petitioner claims that the
mere filing of the aforementioned documents is insufficient; that there must be due recognition or
acknowledgment accorded to the local or chapter by the BLR through a certificate of registration or any
communication emanating from it. (Rollo, p. 86)

The Solicitor General, in behalf of the public respondents, avers that there was substantial compliance
with the requirements for the formation of a chapter. Moreover, he invokes Article 257 of the Labor
Code which mandates the automatic conduct by the Med-Arbiter of a certification election in any
establishment where there is no certified bargaining agent.
The Court has repeatedly stressed that the holding of a certification election is based on a statutory
policy that cannot be circumvented. (Airtime Specialists, Inc. v. Ferrer-Calleja, 180 SCRA 749 [1989];
Belyca Corporation v. Ferrer-Calleja, 168 SCRA 184 [1988]; George and Peter Lines, Inc. v. Associated
Labor Unions, 134 SCRA 82 [1986]). The workers must be allowed to freely express their choice in a
determination where everything is open to their sound judgment and the possibility of fraud and
misrepresentation is eliminated.

808

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SUPREME COURT REPORTS ANNOTATED

Progressive Development Corporation vs. Secretary, Department of Labor and Employment

But while Article 257 cited by the Solicitor General directs the automatic conduct of a certification
election in an unorganized establishment, it also requires that the petition for certification election must
be filed by a legitimate labor organization. Article 242 enumerates the exclusive rights of a legitimate
labor organization among which is the right to be certified as the exclusive representative of all the
employees in an appropriate collective bargaining unit for purposes of collective bargaining.

Meanwhile, Article 212(h) defines a legitimate labor organization as "any labor organization duly
registered with the DOLE and includes any branch or local thereof." (Italics supplied) Rule I, Section 1(j),
Book V of the Implementing Rules likewise defines a legitimate labor organization as "any labor
organization duly registered with the DOLE and includes any branch, local or affiliate thereof." (Italics
supplied)

The question that now arises is: when does a branch, local or affiliate of a federation become a
legitimate labor organization?

Ordinarily, a labor organization acquires legitimacy only upon registration with the BLR. Under Article
234 (Requirements of Registration):

Any applicant labor organization, association or group of unions or workers shall acquire legal
personality and shall be entitled to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration based on the following requirements:

(a) Fifty-pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the
minutes of the organizational meetings and the list of the workers who participated in such meetings;

(c) The names of all its members comprising at least twenty 20% percent of all the employees in the
bargaining unit where it seeks to operate;

(d) If the applicant has been in existence for one or more years, copies of its annual financial reports;
and
(e) Four copies of the constitution and by-laws of the applicant union, the minutes of its adoption or
ratification and the list of the members who participated in it."

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Progressive Development Corporation vs. Secretary, Department of Labor and Employment

And under Article 235 (Action on Application):

"The Bureau shall act on all applications for registration within thirty (30) days from filing.

All requisite documents and papers shall be certified under oath by the secretary or the treasurer of the
organization, as the case may be, and attested to by its president."

Moreover, section 4 of Rule II, Book V of the Implementing Rules requires that the application should be
signed by at least twenty percent (20%) of the employees in the appropriate bargaining unit and be
accompanied by a sworn statement of the applicant union that there is no certified bargaining agent or,
where there is an existing collective agreement duly submitted to the DOLE, that the application is filed
during the last sixty (60) days of the agreement.

The respondent Kilusan questions the requirements as too stringent in their application but the purpose
of the law in prescribing these requisites must be underscored. Thus, in Philippine Association of Free
Labor Unions v. Secretary of Labor, 27 SCRA 40 (1969), the Court declared:

"The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the freedom of
assembly and association guaranteed in the Bill of Rights is devoid of factual basis. The registration
prescribed in paragraph (b) of said section is not a limitation to the right of assembly or association,
which may be exercised with or without said registration. The latter is merely a condition sine qua non
for the acquisition of legal personality by labor organizations, associations or unions and the possession
of the "rights and privileges granted by law to legitimate labor organizations." The Constitution does not
guarantee these rights and privileges, much less said personality, which are mere statutory creations, for
the possession and exercise of which registration is required to protect both labor and the public against
abuses, fraud, or impostors who pose as organizers, although not truly accredited agents of the union
they purport to represent. Such requirement is a valid exercise of the police power, because the
activities in which labor organizations, associations and unions of workers are engaged affect public
interest, which should be protected. Furthermore, the obligation to submit financial statements, as a
condition for the non-cancellation of a certificate of registration, is a reasonable

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SUPREME COURT REPORTS ANNOTATED


Progressive Development Corporation vs. Secretary, Department of Labor and Employment

regulation for the benefit of the members of the organization, considering that the same generally
solicits funds or membership, as well as oftentimes collects, on behalf of its members, huge amounts of
money due to them or to the organization." (Italics supplied)

But when an unregistered union becomes a branch, local or chapter of a federation, some of the
aforementioned requirements for registration are no longer required. The provisions governing union
affiliation are found in Rule II, Section 3, Book V of the Implementing Rules, the relevant portions of
which are cited below:

"SEC. 3. Union affiliation; direct membership with national union.—An affiliate of a labor federation or
national union may be a local or chapter thereof or an independently registered union.

a) The labor federation or national union concerned shall issue a charter certificate indicating the
creation or establishment of a local or chapter, copy of which shall be submitted to the Bureau of Labor
Relations within thirty (30) days from issuance of such charter certificate.

b) An independently registered union shall be considered an affiliate of a labor federation or national


union after submission to the Bureau of the contract or agreement of affiliation within thirty (30) days
after its execution.

xxx xxx xxx

e) The local or chapter of a labor federation or national union shall have and maintain a constitution and
by laws, set of officers and books of accounts. For reporting purposes, the procedure governing the
reporting of independently registered unions, federations or national unions shall be observed."

Paragraph (a) refers to a local or chapter of a federation which did not undergo the rudiments of
registration while paragraph (b) refers to an independently registered union which affiliated with a
federation. Implicit in the foregoing differentiation is the fact that a local or chapter need not be
independently registered. By force of law (in this case, Article 212[h]), such local or chapter becomes a
legitimate labor organization upon compliance with the aforementioned provisions of Section 3.

Thus, several requirements that are otherwise required for union registration are omitted, to wit:

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Progressive Development Corporation vs. Secretary, Department of Labor and Employment

1) The requirement that the application for registration must be signed by at least 20% of the employees
in the appropriate bargaining unit;

2) The submission of officers' addresses, principal address of the labor organization, the minutes of
organizational meetings and the list of the workers who participated in such meetings;
3) The submission of the minutes of the adoption or ratification of the constitution and by laws and the
list of the members who participated in it.

Undoubtedly, the intent of the law in imposing lesser requirements in the case of a branch or local of a
registered federation or national union is to encourage the affiliation of a local union with a federation
or national union in order to increase the local union's bargaining powers respecting terms and
conditions of labor.

The petitioner maintains that the documentary requirements prescribed in Section 3(c), namely: the
constitution and bylaws, set of officers and books of accounts, must follow the requirements of law.
Petitioner PDC calls for the similar application of the requirement for registration in Article 235 that all
requisite documents and papers be certified under oath by the secretary or the treasurer of the
organization and attested to by the president.

In the case at bar, the constitution and by-laws and list of officers submitted to the BLR, while attested
to by the chapter's president, were not certified under oath by the secretary. Does such defect warrant
the withholding of the status of legitimacy to the local or chapter?

In the case of union registration, the rationale for requiring that the submitted documents and papers
be certified under oath by the secretary or treasurer, as the case may be, and attested to by the
president is apparent. The submission of the required documents (and payment of P50.00 registration
fee) becomes the Bureau's basis for approval of the application for registration. Upon approval, the
labor union acquires legal personality and is entitled to all the rights and privileges granted by the law to
a legitimate labor organization. The employer naturally needs assurance that the union it is dealing with
is a bona-fide organization, one which has not submitted

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Progressive Development Corporation vs. Secretary, Department of Labor and Employment

false statements or misrepresentations to the Bureau. The inclusion of the certification and attestation
requirements will in a marked degree allay these apprehensions of management. Not only is the
issuance of any false statement and misrepresentation a ground for cancellation of registration (see
Article 239 (a), (c) and (d)); it is also a ground for a criminal charge of perjury.

The certification and attestation requirements are preventive measures against the commission of
fraud. They likewise afford a measure of protection to unsuspecting employees who may be lured into
joining unscrupulous or fly-by-night unions whose sole purpose is to control union funds or to use the
union for dubious ends.

In the case of union affiliation with a federation, the documentary requirements are found in Rule II,
Section 3(e), Book V of the Implementing Rules, which we again quote as follows:
"(c) The local or chapter of a labor federation or national union shall have and maintain a constitution
and by-laws, set of officers and books of accounts. For reporting purposes, the procedure governing the
reporting of independently registered unions, federations or national unions shall be observed." (Italics
supplied)

Since the "procedure governing the reporting of independently registered unions" refers to the
certification and attestation requirements contained in Article 235, paragraph 2, it follows that the
constitution and by-laws, set of officers and books of accounts submitted by the local and chapter must
likewise comply with these requirements. The same rationale for requiring the submission of duly
subscribed documents upon union registration exists in the case of union affiliation. Moreover, there is
greater reason to exact compliance with the certification and attestation requirements because, as
previously mentioned, several requirements applicable to independent union registration are no longer
required in the case of the formation of a local or chapter. The policy of the law in conferring greater
bargaining power upon labor unions must be balanced with the policy of providing preventive measures
against the commission of fraud.

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Progressive Development Corporation vs. Secretary, Department of Labor and Employment

A local or chapter therefore becomes a legitimate labor organization only upon submission of the
following to the BLR:

1) A charter certificate, within 30 days from its issuance by the labor federation or national union, and

2) The constitution and by-laws, a statement on the set of officers, and the books of accounts all of
which are certified under oath by the secretary or treasurer, as the case may be, of such local or
chapter, and attested to by its president.

Absent compliance with these mandatory requirements, the local or chapter does not become a
legitimate labor organization.

In the case at bar, the failure of the secretary of PDEUKilusan to certify the required documents under
oath is fatal to its acquisition of a legitimate status.

We observe that, as borne out by the facts in this case, the formation of a local or chapter becomes a
handy tool for the circumvention of union registration requirements. Absent the institution of
safeguards, it becomes a convenient device for a small group of employees to foist a not-so-desirable
federation or union on unsuspecting co-workers and pare the need for wholehearted voluntariness
which is basic to free unionism. The records show that on June 16, 1990, Kilusan met with several
employees of the petitioner. Excerpts of the "Minutes of the Organizational/General Membership
Meeting of Progressive Development Employees Union (PDEU)-Kilusan", are quoted below:
"The meeting was formally called to order by Bro. Jose V. Paningao, KILUSAN secretary for organization
by explaining to the general membership the importance of joining a union. He explained to the
membership why they should join a union, and briefly explained the ideology of the Pambansang Kilusan
ng Paggawa-TUCP as a democratically based organization and then read the proposed Constitution and
By-Laws, after which said Constitution and By-Laws was duly and unanimously ratified after some
clarification.

Bro. Jose Parungao was also unanimously voted by the group to act as the chairman of the COMELEC in
holding the organizational election of officers of the Union.

Bro. Parungao, officially opened the table for the nomination of candidates after which the election of
officers followed by secret

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SUPREME COURT REPORTS ANNOTATED

Progressive Development Corporation vs. Secretary, Department of Labor and Employment

balloting and the following were the duly elected officers." (Original Record, p. 25)

The foregoing shows that Kilusan took the initiative and encouraged the formation of a union which
automatically became its chapter. On June 18,1990, Kilusan issued a charter certificate in favor of PDEU-
KILUSAN (Records, page 1). It can be seen that Kilusan was moving very fast.

On June 19,1990, or just three days after the organizational meeting, Kilusan filed a petition for
certification election (Records, pages 2 and 3) accompanied by a copy each of the charter certificate,
constitution and by-laws and minutes of the organizational meeting. Had the local union filed an
application for registration, the petition for certification election could not have been immediately filed.
The applicant union must first comply with the "20% signature" requirement and all the other requisites
enumerated in Article 234. Moreover, since under Article 235 the BLR shall act on any application for
registration within thirty (30) days from its filing, the likelihood is remote that, assuming the union
complied with all the requirements, the application would be approved on the same day it was filed.

We are not saying that the scheme used by the respondents is per se illegal for precisely, the law allows
such strategy. It is not this Court's function to augment the requirements prescribed by law in order to
make them wiser or to allow greater protection to the workers and even their employer. Our only
recourse is, as earlier discussed, to exact strict compliance with what the law provides as requisites for
local or chapter formation.

It may likewise be argued that it was Kilusan (the mother union) and not the local union which filed the
petition for certification election and, being a legitimate labor organization, Kilusan has the personality
to file such petition.

At this juncture, it is important to clarify the relationship between the mother union and the local union.
In the case of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills Inc., 66 SCRA 512 [1975]), the
Court held that the mother union, acting for and in behalf of its affiliate, had the status of an agent while
the local union remained the basic unit of the association, free to serve the common interest of all its
members

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Progressive Development Corporation vs. Secretary, Department of Labor and Employment

subject only to the restraints imposed by the constitution and by-laws of the association. Thus, where as
in this case 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.

The Court's conclusion should not be misconstrued as impairing the local union's right to be certified as
the employees' bargaining agent in the petitioner's establishment. We are merely saying that the local
union must first comply with the statutory requirements in order to exercise this right. Big federations
and national unions of workers should take the lead in requiring their locals and chapters to faithfully
comply with the law and the rules instead of merely snapping union after union into their folds in a
furious bid with rival federations to get the most number of members.

WHEREFORE, the petition is GRANTED. The assailed resolution and orders of respondents Med-Arbiter
and Secretary of Labor and Employment, respectively, are hereby SET ASIDE. The temporary restraining
order dated February 25, 1991 is made permanent.

SO ORDERED.

Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur.

Petition granted. Resolution and orders set aside.

Note.—The employer has no authority to certify a local union as exclusive collective bargaining
representative. (Ilaw at Buklod ng Manggagawa vs. Ferrer-Calleja, 182 SCRA 561.)

——o0o——

Progressive Development Corporation vs. Secretary, Department of Labor and Employment, 205 SCRA
802, G.R. No. 96425 February 4, 1992
COLLECTIVE BARGAINING AND ADMINISTRATION OF AGREEMENT

CBA

586

SUPREME COURT REPORTS ANNOTATED

Trade Unions of the Philippines vs. Laguesma

G.R. No. 95013. September 21, 1994.*

TRADE UNIONS OF THE PHILIPPINES/FEBRUARY SIX MOVEMENT (TUPAS/FSM), petitioner, vs. HON.
BIENVENIDO LAGUESMA, TRANSUNION CORPORATION-GLASS DIVISION, AND INTEGRATED LABOR
ORGANIZATION (ILOPHILIPPINES), respondents.

Labor Law; Certiorari; Appeal; This court is not a trier of facts and it is not its function to examine and
evaluate the probative value of all evidence presented to the concerned tribunal which formed the
basis of its impugned decision, resolution or order.—The argument deserves scant consideration. It is
elementary that the special civil action for certiorari under Rule 65 of the Revised Rules of Court can
be availed of to nullify or modify the proceedings before the concerned tribunal, board, or officer
exercising judicial functions who has acted without or in excess of its jurisdiction or with grave abuse
of discretion and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary
course of law. This Court is not a trier of facts and it is not its function to examine and evaluate the
probative value of all evidence presented to the concerned tribunal which formed the basis of its
impugned decision, resolution or order. Following this hoary rule, it is inappropriate to review the
factual findings of the Med-Arbiter and the Secretary of Labor, regarding the date of filing of the CBA
on March 14,

_______________

* SECOND DIVISION.

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Trade Unions of the Philippines vs. Laguesma

1990 prior to the filing of the petition for certification election; the company’s voluntary recognition
and DOLE’s certification of ILO-PHILS. as the sole and exclusive bargaining representative of the rank-
and-file employees of Transunion Corporation-Glassware Division; and the subsequent registration of
the CBA. They are binding on this Court as they are supported by substantial evidence. In contrast,
petitioner’s bare allegation pertaining to the “antedating” of the date of filing of the CBA is
unsubstantiated and based purely on conjectures.

Same; Certification Election; Collective Bargaining Agent; The certification of ILO-PHILS. “as the sole
and exclusive bargaining agent of the rank-and-file workers of Transunion-Glassware Division” means
it shall remain as such during the existence of the CBA to the exclusion of other labor organizations.—
It is crystal clear from the records that the rank-and-file employees of private respondent’s Glassware
Division are, at present, represented by ILO-PHILS. Hence, petitioner’s reliance on the March 22, 1990
Certification issued by Director Bautista, Jr., is misplaced. The existence and filing of their CBA was
confirmed in a Certification, dated April 24, 1990, issued by Director Romeo A. Young of DOLE—
Region IV. The certification of ILO-PHILS. “as the sole and exclusive bargaining agent of the rank-and-
file workers of TransunionGlassware Division,” means it shall remain as such during the existence of
the CBA, to the exclusion of other labor organizations, including petitioner, and no petition
questioning the majority status of the incumbent bargaining agent shall be entertained, nor shall
certification election be conducted, outside of the sixty-day freedom period immediately before the
expiry date of the five-year term of the CBA.

Same; Same; Same; Presumption of Regularity of Official Functions; In the absence of any substantial
evidence that DOLE officials or personnel, in collusion with private respondent, had antedated the
filing date of the CBA, the presumption on regularity in the performance of official functions holds.—It
appears that the procedural requirement of filing the CBA within 30 days from date of execution
under Article 231 was not met. The subject CBA was executed on November 28, 1989. It was ratified
on December 8, 1989, and then filed with DOLE for registration purposes on March 14, 1990. Be that
as it may, the delay in the filing of the CBA was sufficiently explained, i.e., there was an inter-union
conflict on who would succeed to the presidency of ILOPHILS. The CBA was registered by the DOLE
only on May 4, 1990. It would be injudicious for us to assume, as what petitioner did, that the said
CBA was filed only on April 30, 1990, or five (5) days before its registration, on the unsupported
surmise that it was done to suit the law that enjoins Regional Offices of DOLE to act upon an
application for

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Trade Unions of the Philippines vs. Laguesma

absence of any substantial evidence that DOLE officials or personnel, in collusion with private
respondent, had antedated the filing date of the CBA, the presumption on regularity in the
performance of official functions holds.

Same; Same; Same; Collective Bargaining Agreement; Non-compliance with the cited procedural
requirement should not adversely affect the substantive validity of the CBA.—More importantly, non-
compliance with the cited procedural requirement should not adversely affect the substantive validity
of the CBA between ILO-PHILS and the Transunion Corporation-Glassware Division covering the
company’s rank and file employees. A collective bargaining agreement is more than a contract. It is
highly impressed with public interest for it is an essential instrument to promote industrial peace.
Hence, it bears the blessings not only of the employer and employees concerned but even the
Department of Labor and Employment. To set it aside on technical grounds is not conducive to the
public good.

PETITION for review of a resolution of the Secretary of Labor.

The facts are stated in the opinion of the Court.

Alar, Comia, Manalo and Associates Law Offices for petitioner.

Arcaya & Associates for Transunion Corp.-Glass Division.

Francisco A. Mercado, Jr. for Integrated Labor Organization (ILO-Phils.)

PUNO, J.:

Petitioner Trade Unions of the Philippines-February Six Movement (TUPAS-FSM) seeks the reversal of
the Resolution, dated July 25, 1990, rendered by then Secretary of Labor and Employment Ruben D.
Torres, in OS-MA-A-5-167-90, which dismissed the petition for certification election filed by petitioner
TUPASFSM for being prematurely filed.1

The controlling facts, as culled from the records, are as follows:

_______________

1 Annex “A” of Petition; Rollo, p. 20; reiterated by the Order dated August 23, 1990 denying petitioner’s
motion for reconsideration.

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Trade Unions of the Philippines vs. Laguesma

On March 23, 1990, TUPAS-FSM filed a petition for certification election with the Regional Office No. IV
of the Department of Labor and Employment (DOLE), for the purpose of choosing a bargaining
representative for the rank-and-file employees of Transunion Corporation’s industrial plant, situated in
Canlubang, Laguna, known as the Transunion Corporation-Glassware Division. Petitioner had then
secured a Certification, dated March 22, 1990, issued by Tomas B. Bautista, Jr., Director IV of DOLE
(Region IV), that “Transunion Corporation” has no existing collective bargaining agreement with any
labor organization.2
It appears, however, that before the filing of said petition, or on November 15, 1989, Integrated Labor
Organization (ILO-Phils.) was duly certified by DOLE as the sole and exclusive bargaining agent of the
rank-and-file employees of Transunion Corpora-tion-Glassware Division.3 On November 28, 1989, a
collective bargaining agreement (CBA) was then forged between Transunion-Glassware Division and ILO-
Phils covering the company’s rank-and-file employees. The CBA, with a five-year term from December 1,
1989 to December 1, 1994, was ratified by a great majority of the rank-and-filers on December 8, 1989.4
In the meantime, the President of ILO-PHILS. died. An inter-union

_________________

2 Annex “B” of Petition; Rollo, p. 26.

3 The Order dated November 15, 1989 of Med-Arbiter Rolando S. dela Cruz, reads:

“O R D E R

“Considering PSSLU’s (Philippine Social Security Labor Union) manifestation during the conference on
July 27, 1989, that it is withdrawing from further participation in this (petition for certification election)
case, and the Company’s Manifestation filed on October 13, 1989 stating, among others, that it is
voluntarily recognizing petitioner ILO as the sole and exclusive bargaining agent of its rank-and-file
workers, let the Integrated Labor Organization (ILO-PHILS.) be, as it is hereby CERTIFIED as the sole and
exclusive bargaining agent of the rank-and-file workers of Transunion Corporation-Glassware Division.

“SO ORDERED.”

4 Annex “C” of Petition; Rollo, p. 27; See also Annexes “D” and “E”, Comment (Transunion Corporation-
Glassware Division); Rollo, pp. 84-94.

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Trade Unions of the Philippines vs. Laguesma

conflict followed and the subject CBA was filed with DOLE, for registration purposes, only on March 14,
1990, more or less, three (3) months from its execution. Finally, on May 4, 1990, the Certification of
Registration was issued by DOLE through Regional Director Romeo A. Young.5

ILO-Phils., intervened in the certification election proceedings initiated by TUPAS-FSM. It opposed the
petition in view of the existing CBA between ILO and the Transunion CorporationGlassware Division. It
stressed that the petition for certification election should be entertained only during the freedom
period, or sixty days before the expiration of the CBA. Med-Arbiter Rolando S. dela Cruz dismissed the
petition on the ground of prematurity.
TUPAS-FSM appealed contending: (1) that pursuant to Article 231 of the Labor Code, CBAs shall be filed
with the Regional Office of the DOLE within thirty (30) days from the date of signing thereof; (2) that
said requirement is mandatory, although it would not affect the enforceability of the CBA as between
the parties thereto; and (3) since the CBA was filed outside the 30-day period specified under Article 231
of the Labor Code, the prohibition against certification election under Article 232 of the same Code
should not apply to third parties such as petitioner.

As stated earlier, the Secretary of Labor and Employment affirmed the impugned Order of the Med-
Arbiter, ruling that the belated submission of the CBA was excusable and that the requirement of the
law was substantially complied with upon the filing of a copy of the CBA prior to the filing of the petition
for certification election. TUPAS-FSM then filed a motion for reconsideration, but it was also denied.
Hence, this petition for certiorari where petitioner alleged:

GRAVE ABUSE OF DISCRETION ON THE PART OF THE PUBLIC RESPONDENTS AMOUNTING TO LOSS OF
JURISDICTION; and

THE RESOLUTION IS CONTRARY TO THE FACTS AND THE LAW.

The petition lacks merit.

Petitioner raises both factual and legal issues in this present petition.

_____________

5 Rollo, p. 27.

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Trade Unions of the Philippines vs. Laguesma

First, the factual issues. Relying on the March 22, 1990 DOLE Certification issued by Director Bautista, Jr.,
supra, petitioner insists there was no existing CBA between Transunion Corporation and any labor
organization when it filed its petition for certification election on March 23, 1990. To further strengthen
its position, petitioner charges that the filing of the CBA was antedated to March 14, 1990, to make it
appear that the same was already existing and filed before the filing of the petition for certification
election. Petitioner also claims that since Article 231 of the Labor Code mandates DOLE to act on the
CBA filed in its office within five (5) days from date of filing thereof, the subject CBA was filed on April
30, 1990, or five (5) days before its registration on May 4, 1990.

The argument deserves scant consideration. It is elementary that the special civil action for certiorari
under Rule 65 of the Revised Rules of Court can be availed of to nullify or modify the proceedings before
the concerned tribunal, board, or officer exercising judicial functions who has acted without or in excess
of its jurisdiction or with grave abuse of discretion and there is no appeal, nor any plain, speedy, and
adequate remedy in the ordinary course of law. This Court is not a trier of facts and it is not its function
to examine and evaluate the probative value of all evidence presented to the concerned tribunal which
formed the basis of its impugned decision, resolution or order.6 Following this hoary rule, it is
inappropriate to review the factual findings of the Med-Arbiter and the Secretary of Labor, regarding the
date of filing of the CBA on March 14, 1990 prior to the filing of the petition for certification election; the
company’s voluntary recognition and DOLE’s certification of ILO-PHILS. as the sole and exclusive
bargaining representative of the rank-and-file employees of Transunion Corporation-Glassware Division;
and the subsequent registration of the CBA. They are binding on this Court as they are supported by
substantial evidence. In contrast, petitioner’s bare allegation pertaining to the “antedating” of the date
of filing of the CBA is unsubstantiated and based purely on conjectures.

_______________

6 Valdez, Jr., et al., v. Comelec, G.R. No. 85129, January 31, 1989, En Banc, Minute Resolution.

592

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SUPREME COURT REPORTS ANNOTATED

Trade Unions of the Philippines vs. Laguesma

It is crystal clear from the record that the rank-and-file employees of private respondent’s Glassware
Division are, at present, represented by ILO-PHILS. Hence, petitioner’s reliance on the March 22, 1990
Certification issued by Director Bautista, Jr., is misplaced. The existence and filing of their CBA was
confirmed in a Certification, dated April 24, 1990, issued by Director Romeo A. Young of DOLE-Region
IV.7 The certification of ILO-PHILS. “as the sole and exclusive bargaining agent of the rank-and-file
workers of Transunion-Glassware Division,” means it shall remain as such during the existence of the
CBA, to the exclusion of other labor organizations, including petitioner, and no petition questioning the
majority status of the incumbent bargaining agent shall be entertained, nor shall certification election
be conducted, outside of the sixty-day freedom period immediately before the expiry date of the five-
year term of the CBA.8

We now resolve the legal issue. Petitioner points out that the subject CBA was filed beyond the 30-day
period prescribed under Article 231 of the Labor Code. It also insists that under Article 232 of the Labor
Code, the prohibition on the filing of a petition for certification election applies when the CBA had been
duly registered and, in this case, since the CBA was not registered in accordance with the Art. 231, the
prohibition will not apply. We disagree.

Articles 231 and 232 of the Labor Code read:

“Art. 231.—Registry of unions and file of collective agreements.—xxx.

“Within thirty (30) days from the execution of a Collective Bargaining Agreement, the parties shall
submit copies of the same directly to the Bureau or the Regional Office of the Department of Labor and
Employment for registration accompanied with verified proofs of its posting in two conspicuous places
in the place of work and ratification by the majority of all the workers in the bargaining unit. The Bureau
or Regional Office shall act upon the application for registration of such Collective Bargaining Agreement
within five (5) days from receipt thereof. The Regional Offices shall furnish the Bureau with a copy of the
Collective Bargaining Agreement within five (5) days from its submission.

_______________

7 Rollo, p. 112.

8 Article 253-A, Labor Code, as amended by RA 6715.

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Trade Unions of the Philippines vs. Laguesma

“x x x.”

“Art. 232.—Prohibition on Certification Election.—The Bureau shall not entertain any petition for
certification election or any other action which may disturb the administration of duly registered
existing collective bargaining agreements affecting the parties except under Articles 253, 253-A and 256
of this Code.”

Corollary thereto, Article 253-A of the same Code reads:

“Art. 253-A.—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 the sixty-day period immediately
before the date of expiry of such five year term of the Collective Bargaining Agreement. x x x.”

It appears that the procedural requirement of filing the CBA within 30 days from date of execution
under Article 231 was not met. The subject CBA was executed on November 28, 1989. It was ratified on
December 8, 1989, and then filed with DOLE for registration purposes on March 14, 1990. Be that as it
may, the delay in the filing of the CBA was sufficiently explained, i.e., there was an inter-union conflict
on who would succeed to the presidency of ILO-PHILS. The CBA was registered by the DOLE only on May
4, 1990. It would be injudicious for us to assume, as what petitioner did, that the said CBA was filed only
on April 30, 1990, or five (5) days before its registration, on the unsupported surmise that it was done to
suit the law that enjoins Regional Offices of DOLE to act upon an application for registration of a CBA
within five (5) days from its receipt thereof. In the absence of any substantial evidence that DOLE
officials or personnel, in collusion with private respondent, had antedated the filing date of the CBA, the
presumption on regularity in the performance of official functions holds.
More importantly, non-compliance with the cited procedural requirement should not adversely affect
the substantive validity of the CBA between ILO-PHILS and the Transunion CorporationGlassware
Division covering the company’s rank and file employees. A collective bargaining agreement is more
than a contract.

594

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SUPREME COURT REPORTS ANNOTATED

Trade Unions of the Philippines vs. Laguesma

instrument to promote industrial peace. Hence, it bears the blessings not only of the employer and
employees concerned but even the Department of Labor and Employment. To set it aside on technical
grounds is not conducive to the public good.

IN VIEW WHEREOF, the impugned July 25, 1990 Resolution, and August 23, 1990 Order of Secretary
Ruben D. Torres and Undersecretary Bienvenido E. Laguesma, respectively, in OS-MA-A-5-167-90, is
AFFIRMED in toto. Costs against petitioner.

SO ORDERED.

Narvasa (C.J., Chairman), Padilla, Regalado and Mendoza, JJ., concur.

Petition affirmed in toto.

Notes.—Rule provides that no certification election may be held within one year from the date of
issuance of a final certification election result. (R. Transport Corporation vs. Laguesma, 227 SCRA 826
[1993])

Article 242 of the Labor Code enumerates the exclusive rights of a legitimate labor organization among
which is the right to be certified as the exclusive representative of all the employees in an appropriate
collective bargaining unit for purposes of collective bargaining. (Progressive Development Corporation
vs. Secretary, Department of Labor and Employment, 205 SCRA 802 [1992])

——o0o—— Trade Unions of the Philippines vs. Laguesma, 236 SCRA 586, G.R. No. 95013 September
21, 1994
VOL. 220, MARCH 19, 1993

197

Davao Integrated Port Stevedoring Services us. Abarquez

G.R. No. 102132. March 19, 1993.*

DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN V. ABARQUEZ, in his
capacity as an accredited Voluntary Arbitrator and THE ASSOCIATION OF TRADE UNIONS (ATU-TUCP),
respondents.

Labor Law; 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.

Same; CBA not an ordinary contract.—While the terms and conditions of a CBA constitute the law
between the parties, it is not,

_____________

5 People vs. Pacalso Mat-an, G.R. No. 91115, December 29, 1992, citing People vs. Natan, 193 SCRA 355
(1991).

* THIRD DIVISION.

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Davao Integrated Port Stevedoring Services vs. Abarquez

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 musts 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.

Same; Nature of sick leave benefits.—Sick leave benefits, like other economic benefits stipulated in
the CBA such as maternity leave and vacation leave benefits, among others, are by their nature,
intended to be replacements for regular income which otherwise would not be earned because an
employee is not working during the period of said leaves. They are non-contributory in nature, in the
sense that the employees contribute nothing to the operation of the benefits. By their nature, upon
agreement of the parties, they are intended to alleviate the economic condition of the workers.

Same; Intermittent field workers who are members of a regular pool are entitled to sick leave benefits
under the CBA at bar.—After a careful examination of Section 1 in relation to Section 3, Article VIII of
the 1989 CBA in light of the facts and circumstances attendant in the instant case, we find and so hold
that the last sentence of Section 1, Article VIII of the 1989 CBA, invoked by petitioner-company does
not bar the regular intermittent workers from the privilege of commutation or conversion to cash of
the unenjoyed portion of their sick leave with pay benefits, if qualified. For the phrase "herein sick
leave privilege," as used in the last sentence of Section 1, refers to the privilege of having a fixed 15-
day sick leave with pay which, as mandated by Section 1, only the non-intermittent workers are
entitled to. This fixed 15-day sick leave with pay benefit should be distinguished from the variable
number of days of sick leave, not to exceed 15 days, extended to intermittent workers under Section 3
depending on the number of hours of service rendered to the company, including overtime pursuant
to the schedule provided therein. It is only fair and reasonable for petitioner-company not to stipulate
a fixed 15-day sick leave with pay for its regular intermittent workers since, as the term "intermittent"
implies, there is irregularity in their work-days. Reasonable and practical interpretation must be
placed on contractual provisions. Interpretatio fienda est ut res magis valeat quam pereat. Such
interpretation is to be adopted, that the thing may continue to have efficacy rather than fail.

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Davao Integrated Port Stevedoring Services vs. Abarquez

Same; An employer may not unilaterally withdraw benefits enjoyed for a long time by its
employees.—Whatever doubt there may have been early on was clearly obliterated when petitioner-
company recognized the said privilege and paid its intermittent workers the cash equivalent of the
unenjoyed portion of their sick leave with pay benefits during the lifetime of the CBA of October 16,
1985 until three (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege
of commutation or conversion to cash, being an existing benefit, the petitioner-company may not
unilaterally withdraw, or diminish such benefits. It is a fact that petitioner-company had, on several
instances in the past, granted and paid the cash equivalent of the unenjoyed portion of the sick leave
benefits of some intermittent workers. Under the circumstances, these may be deemed to have
ripened into company practice or policy which cannot be peremptorily withdrawn.

Same; Voluntary arbitrator may order grant of benefits as part of his authority to interpret a CBA.—
Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the
commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in
his decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the herein
public respondent is the necessary consequence of the exercise of his arbitral power as Voluntary
Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arising
from the interpretation or implementation of the Collective Bargaining Agreement." We, therefore,
find that no grave abuse of discretion was committed by public respondent in issuing the award
(decision). Moreover, his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be
faulted with and is absolutely correct.

PETITION for review on certiorari of the award issued by the Voluntary Arbitrator.

The facts are stated in the opinion of the Court.

Libron, Gaspar & Associates for petitioner.

Bansalan B. Metilla for Association of Trade Unions (ATU-TUCP).

ROMERO, J.:

In this petition for certiorari, petitioner Davao Integrated Port

200

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Davao Integrated Port Stevedoring Services vs. Abarquez

Services Corporation seeks to reverse the Award1 issued on September 10, 1991 by respondent Ruben
V. Abarquez, in his capacity as Voluntary Arbitrator of the National Conciliation and Mediation Board,
Regional Arbitration Branch XI in Davao City in Case No. AC-211-BX1-10-003-91 which directed
petitioner to grant and extend the privilege of commutation of the unenjoyed portion of the sick leave
with pay benefits to its intermittent field workers who are members of the regular labor pool and the
present regular extra pool in accordance with the Collective Bargaining Agreement (CBA) executed
between petitioner and private respondent Association of Trade Unions (ATU-TUCP), from the time it
was discontinued and henceforth.

The facts are as follows:

Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private respondent
ATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file workers of petitioner-
company, entered into a collective bargaining agreement (CBA) on October 16, 1985 which, under
Sections 1 and 3, Article VIII thereof, provide for sick leave with pay benefits each year to its employees
who have rendered at least one (1) year of service with the company, thus:

"ARTICLE VIII

Section 1. Sick Leaves—The Company agrees to grant 15 days sick leave with pay each year to every
regular non-intermittent worker who already rendered at least one year of service with the company.
However, such sick leave can only be enjoyed upon certification by a company designated physician, and
if the same is not enjoyed within one year period of the current year, any unenjoyed portion thereof,
shall be converted to cash and shall be paid at the end of the said one year period. And provided
however, that only those regular workers of the company whose work are not intermittent, are entitled
to the herein sick leave privilege.

xxx xxx xxx

_____________

1 Annex "E," Petition, pp. 39-43, Rollo. Article 262-A of the Labor Code used the terms "decision, order
or award" in describing the decision of the voluntary arbitrator. There is no significance attached to the
use of term "award" by public respondent contrary to petitioner's apprehension.

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Davao Integrated Port Stevedoring Services vs. Abarquez

Section 3.—All intermittent field workers of the company who are members of the Regular Labor Pool
shall be entitled to vacation and sick leaves per year of service with pay under the following schedule
based on the number of hours rendered including overtime, to wit:

Hours of Service Per

Calendar Year

Vacation

Leave

Sick Leave

Less than 750

NII

NII

751—825

6 days

6 days

826- 900
7

901- 925

926—1,050

1,051—1,125

10

10

1,126-1,200

11

11

1,201—1,275

12

12

1,276—1,350

13

13

1,351—1,425

14

14

1,426—1,500

15

15

The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the
above provided Sections 1 and 2 hereof, respectively."
Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits were reproduced
under Sections 1 and 3, Article VIII of the new CBA, but the coverage of the said benefits was expanded
to include the "present Regular Extra Labor Pool as of the signing of this Agreement." Section 3, Article
VIII, as revised, provides, thus:

"Section 3—All intermittent field workers of the company who are members of the Regular Labor Pool
and present Regular Extra Labor Pool as of the signing of his agreement shall be entitled to vacation and
sick leaves per year of service with pay under the following schedule based on the number of hours
rendered including overtime, to wit:

Hours of Service Per

Calendar Year

Vacation Leave

Sick Leave

Less than 750

NII

NII

751—825

6 days

6 days

826- 900

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SUPREME COURT REPORTS ANNOTATED

Davao Integrated Port Stevedoring Services vs. Abarquez

901—925

926—1,050
9

1,051—1,125

10

10

1,126-1,200

11

11

1,201—1,275

12

12

1,276—1,350

13

13

1,351—1,425

14

14

1,426—1,500

15

15

The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the
above provided Sections 1 and 2 hereof, respectively."

During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal on April 15,
1989, or until July 1989 (a total of three (3) years and nine (9) months), all the field workers of petitioner
who are members of the regular labor pool and the present regular extra labor pool who had rendered
at least 750 hours up to 1,500 hours were extended sick leave with pay benefits. Any unenjoyed portion
thereof at the end of the current year was converted to cash and paid at the end of the said one-year
period pursuant to Sections 1 and 3, Article VIII of the CBA. The number of days of their sick leave per
year depends on the number of hours of service per calendar year in accordance with the schedule
provided in Section 3, Article VIII of the CBA.

The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent
workers or its conversion to cash was, however, discontinued or withdrawn when petitioner-company
under a new assistant manager, Mr. Benjamin Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the
latter's resignation in June 1989), stopped the payment of its cash equivalent on the ground that they
are not entitled to the said benefits under Sections 1 and 3 of the 1989 CBA.

The Union objected to the said discontinuance of commutation or conversion to cash of the unenjoyed
sick leave with pay benefits of petitioner's intermittent workers contending that it is a deviation from
the true intent of the parties that negotiated the CBA; that it would violate the principle in labor laws
that benefits already extended shall not be taken away and that it would result in discrimination
between the non-intermittent and the intermittent workers of the petitioner-company.

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Davao Integrated Port Stevedoring Services vs. Abarquez

Upon failure of the parties to amicably settle the issue on the interpretation of Sections 1 and 3, Article
VIII of the 1989 CBA, the Union brought the matter for voluntary arbitration before the National
Conciliation and Mediation Board, Regional Arbitration Branch XI at Davao City by way of complaint for
enforcement of the CBA. The parties mutually designated public respondent Ruben Abarquez, Jr. to act
as voluntary arbitrator.

After the parties had filed their respective position papers,2 public respondent Ruben Abarquez, Jr.
issued on September 10, 1991 an Award in favor of the Union ruling that the regular intermittent
workers are entitled to commutation of their unenjoyed sick leave with pay benefits under Sections 1
and 3 of the 1989 CBA, the dispositive portion of which reads:

"WHEREFORE, premises considered, the management of the respondent Davao Integrated Port
Stevedoring Services Corporation is hereby directed to grant and extend the sick leave privilege of the
commutation of the unenjoyed portion of the sick leave of all the intermittent field workers who are
members of the regular labor pool and the present extra pool in accordance with the CBA from the time
it was discontinued and henceforth.

SO ORDERED."

Petitioner-company disagreed with the aforementioned ruling of public respondent, hence, the instant
petition.

Petitioner-company argued that it is clear from the language and intent of the last sentence of Section 1,
Article VIII of the 1989 CBA that only the regular workers whose work are not intermittent are entitled
to the benefit of conversion to cash of the unenjoyed portion of sick leave, thus: "x x x And provided,
however, that only those regular workers of the Company whose work are not intermittent are entitled
to the herein sick leave privilege."

Petitioner-company further argued that while the intermittent workers were paid the cash equivalent of
their unenjoyed sick leave with pay benefits during the previous management of Mr. Beltran who
misinterpreted Sections 1 and 3 of Article VIII of the 1985 CBA, it was well within petitioner-company's
rights

_____________

2 pp. 24-38, Rollo.

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SUPREME COURT REPORTS ANNOTATED

Davao Integrated Port Stevedoring Services vs. Abarquez

to rectify the error it had committed and stop the payment of the said sick leave with pay benefits. An
error in payment, according to petitioner-company, can never ripen into a practice.

We find the arguments unmeritorious.

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,3 it is not, however, an
ordinary contract to which is applied the principles of law governing ordinary contracts.4 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.5

It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from the other related
section on sick leave with pay benefits, specifically Section 3 thereof, in its attempt to justify the
discontinuance or withdrawal of the privilege of commutation or conversion to cash of the unenjoyed
portion of the sick leave benefit to regular intermittent workers. The manner they were deprived of the
privilege previously recognized and extended to them by petitioner-company during the lifetime of

_____________
3 Meycauayan College v. Drilon, 185 SCRA 50 (1990); Kapisanan ng mga Manggagawa sa La Suerte-
FOITAF v. Noriel, G.R. No. L-45475, June 20, 1977, 77 SCRA 414; Mactan Workers Union v. Aboitiz, G.R.
No. L-30241, June 30, 1972, 45 SCRA 577.

4 Transportation-Communication Employees Union v. Union P.R. Co., 385 US 157, 17 L Ed 2d 264, 87 S Ct


369; John Wiley & Sons, Inc. v. Livingston, 376 US 543, 11 L Ed 2d 898, 84 S Ct 909.

5 48A Am Jur 2d, s. 1800, pp. 255-256.

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Davao Integrated Port Stevedoring Services vs. Abarquez

the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989, or a period of
three (3) years and nine (9) months, is not only tainted with arbitrariness but likewise discriminatory in
nature. Petitioner-company is of the mistaken notion that since the privilege of commutation or
conversion to cash of the unenjoyed portion of the sick leave with pay benefits is found in Section 1,
Article VIII, only the regular non-intermittent workers and no other can avail of the said privilege
because of the proviso found in the last sentence thereof.

It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to
two (2) distinct classes of workers in petitioner's company, namely: (1) the regular non-intermittent
workers or those workers who render a daily eight-hour service to the company and are governed by
Section 1, Article VIII of the 1989 CBA; and (2) intermittent field workers who are members of the
regular labor pool and the present regular extra labor pool as of the signing of the agreement on April
15, 1989 or those workers who have irregular working days and are governed by Section 3, Article VIII of
the 1989 CBA.

It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided they
comply with the conditions set forth under Section 1 in relation to the last paragraph of Section 3, to
wit: (1) the employee-applicant must be regular or must have rendered at least one year of service with
the company; and (2) the application must be accompanied by a certification from a company-
designated physician.

Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave and
vacation leave benefits, among others, are by their nature, intended to be replacements for regular
income which otherwise would not be earned because an employee is not working during the period of
said leaves.6 They are non-contributory in nature, in the sense that the employees contribute nothing to
the operation of the benefits.7 By their nature, upon agreement of the parties, they are intended to
alleviate the economic condition of the workers.

______________
6 Singapore Airlines Local Employees Association v. NLRC, G.R. No. L-65786, July 16, 1984, 130 SCRA 472.

7 Nestlé Philippines, Inc. v. NLRC, G.R. No. 921231, February 4, 1991, 193 SCRA 504.

206

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SUPREME COURT REPORTS ANNOTATED

Davao Integrated Port Stevedoring Services vs. Abarquez

After a careful examination of Section 1 in relation to Section 3, Article VIII of the 1989 CBA in light of
the facts and circumstances attendant in the instant case, we find and so hold that the last sentence of
Section 1, Article VIII of the 1989 CBA, invoked by petitioner-company does not bar the regular
intermittent workers from the privilege of commutation or conversion to cash of the unenjoyed portion
of their sick leave with pay benefits, if qualified. For the phrase "herein sick leave privilege," as used in
the last sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave with pay which,
as mandated by Section 1, only the non-intermittent workers are entitled to. This fixed 15-day sick leave
with pay benefit should be distinguished from the variable number of days of sick leave, not to exceed
15 days, extended to intermittent workers under Section 3 depending on the number of hours of service
rendered to the company, including overtime pursuant to the schedule provided therein. It is only fair
and reasonable for petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular
intermittent workers since, as the term "intermittent" implies, there is irregularity in their work-days.
Reasonable and practical interpretation must be placed on contractual provisions. Interpretatio fienda
est ut res magis valeat quam pereat. Such interpretation is to be adopted, that the thing may continue
to have efficacy rather than fail.8

We find the same to be a reasonable and practical distinction readily discernible in Section 1, in relation
to Section 3, Article VIII of the 1989 CBA between the two classes of workers in the company insofar as
sick leave with pay benefits are concerned. Any other distinction would cause discrimination on the part
of intermittent workers contrary to the intention of the parties that mutually agreed in incorporating
the questioned provisions in the 1989 CBA.

Public respondent correctly observed that the parties to the CBA clearly intended the same sick leave
privilege to be accorded the intermittent workers in the same way that they are both

_____________

8 Singapore Airlines Local Employees Association v. NLRC, supra, citing Martin v. Sheppard, 102 S Co.
2nd p. 1036; Adamowski v. Bard, AC Pa. 193F 2s p. 578.

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207

Davao Integrated Port Stevedoring Services vs. Abarquez

given the same treatment with respect to vacation leaves—non-commutable and non-cumulative. If
they are treated equally with respect to vacation leave privileges, with more reason should they be on
par with each other with respect to sick leave privileges.9 Besides, if the intention were otherwise,
during its renegotiation, why did not the parties expressly stipulate in the 1989 CBA that regular
intermittent workers are not entitled to commutation of the unenjoyed portion of their sick leave with
pay benefits?

Whatever doubt there may have been early on was clearly obliterated when petitioner-company
recognized the said privilege and paid its intermittent workers the cash equivalent of the unenjoyed
portion of their sick leave with pay benefits during the lifetime of the CBA of October 16, 1985 until
three (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege of
commutation or conversion to cash, being an existing benefit, the petitioner-company may not
unilaterally withdraw, or diminish such benefits.10 It is a fact that petitioner-company had, on several
instances in the past, granted and paid the cash equivalent of the unenjoyed portion of the sick leave
benefits of some, intermittent workers.11 Under the circumstances, these may be deemed to have
ripened into company practice or policy which cannot be peremptorily withdrawn.12

Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the
commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in his
decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the herein
public respondent is the necessary consequence of the exercise of his arbitral power as Voluntary
Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arising

______________

9 p. 43, Rollo.

10 Article 100, Labor Code of the Philippines; Nestlé Philippines, Inc. v. NLRC, G.R. No. 91231, February
4, 1991, 193 SCRA 504; Tiangco, et. al. v. Leogardo, G.R. No. L-57636, May 16, 1983, 122 SCRA 267.

11 p. 29, Rollo; p. 36, Rollo.

12 Republic Planters Bank v. NLRC, G.R. No. L-79488, September 30, 1988, 166 SCRA 197.

208

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Office of the Court Administrator vs. Villar-Nool


from the interpretation or implementation of the Collective Bargaining Agreement." We, therefore, find
that no grave abuse of discretion was committed by public respondent in issuing the award (decision).
Moreover, his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and
is absolutely correct.

WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award (decision) of public
respondent dated September 10, 1991 is hereby AFFIRMED. No costs.

SO ORDERED.

Feliciano (Acting Chairman), Bidin, Davide, Jr., and Melo, JJ., concur.

Gutierrez, Jr., J., On terminal leave.

Petition dismissed. Award affirmed.

Note.—Collective Bargaining which is defined as negotiations toward a collective agreement, is one of


the democratic framework under the New Labor Code, designed to stabilize the relation between labor
and management and to create a climate of sound and stable industrial peace (Kiok Loy vs. National
Labor Relations Commission, 141 SCRA 179).

—o0o— Davao Integrated Port Stevedoring Services vs. Abarquez, 220 SCRA 197, G.R. No. 102132
March 19, 1993

G.R. No. 85867. May 13, 1993.*

E. RAZON, INC. [Formerly known as Metro Port Services, Inc.], petitioner, vs. THE HONORABLE
SECRETARY OF LABOR AND EMPLOYMENT (DOLE) and MARINA PORT SERVICES, INC. (MARINA),
respondents.

Labor Law; Labor Contracts; Collective Bargaining Agreements; Collective Bargaining Agreements
unenforceable against persons not parties thereto.—Proceeding from the general rule laid out in
Fernando vs. Angat Labor Union (5 SCRA 248 [1962], that a collective bargaining agreement is a
contract in personam and, therefore, not enforceable against the successor-employer, Secretary
Drilon brushed aside MPSI’s contention that MARINA assumed the obligation to pay MPSI’s workers
their separation pay when, upon the termination of MPSI’s contract with PPA, MARINA took over the
arrastre operations.

Same; Same; Same.—As such, when MARINA rehired the ERI/ MPSI employees, it had all the right to
consider them as new ones. On the other hand, ERI/MPSI, to whom years of service had been
rendered by its suddenly jobless employees, had the corresponding obligation to grant them what is
theirs under the law and the collective bargaining agreement. After all, a collective bargaining
agreement is the law

_______________

* THIRD DIVISION.
2

SUPREME COURT REPORTS ANNOTATED

E. Razon, Inc. vs. Secretary of Labor and Employment

between the parties (Plastic Town Center Corporation vs. NLRC, 172 SCRA 580 [1989]; Roche [Phil.] vs.
NLRC, 178 SCRA 386 [1989], and compliance therewith is mandated by the express policy of the law
(Meycauayan College vs. Drilon, 185 SCRA 50 [1990]).

Same; Separation pay when required.—Under Article 283 of the Labor Code, separation pay is
required where the termination of employment relationship is occasioned by the “cessation of
operations” of an establishment. The said article, therefore, puts the burden of paying separation pay
on ERI/MPSI, the employer for whom services had been rendered by the employees who were
separated from employment in view of the cessation of its business operations by the cancellation of
its management contract with the PPA.

PETITION for certiorari to annul and set aside the orders of the then Secretary of Labor.

The facts are stated in the opinion of the Court.

Cruz, Durian, Agabin, Atienza, Alday & Tuason for petitioner.

Abad & Associates for Marina Port Services, Inc.

MELO, J.:

The petition for certiorari before us seeks to annul and set aside: (a) the order of May 31, 1988 of the
then Secretary of the Department of Labor and Employment directing the Metro Port Services, Inc., now
known as E. Razon, Inc., to satisfy fully the separation pay of its employees at the rate agreed upon in
the Agreement of November 3, 1987; and (b) the order of November 21, 1988, denying the motion for
the reconsideration of the said earlier order (BLR-NS-10-499-87).

Petitioner E. Razon, Inc. (ERI) is a corporation organized in 1962 principally to bid for the right to operate
arrastre services in Manila. Through public bidding on January 18, 1974, ERI and the government,
through the Philippine Ports Authority (PPA), executed a management contract covering all the piers in
South Harbor, Manila for a term of five years renewable for another five years (p. 127, Rollo; Decision of
June 22, 1987 in G.R. No. 75197, “E. Razon, Inc., et al. vs. Philippine Ports Authority, et al.”).

VOL. 222, MAY 13, 1993


3

E. Razon, Inc. vs. Secretary of Labor and Employment

ERI became Metro Port Services, Inc. (MPSI) in 1978 when parties close to then President Marcos,
specifically his brother-in-law, Alfredo “Bejo” Romualdez, allegedly coerced Enrique Razon, who owned
93% of ERI's equity, into endorsing in blank stock certificates covering 60% of such equity. Upon the
expiration of the management contract in 1978, it was extended to June 30, 1980. The PPA then
executed a new contract with ERI/MPSI for a term of eight (8) years beginning July 1, 1980 (p. 129,
Rollo).

On July 19, 1986 or two years before the expiration of the eight-year term, the PPA cancelled the
management contract for alleged violations thereof. PPA took over the cargo-handling operations as
well as all the equipment of MPSI (p. 138, Rollo).

Two days later or on July 21, 1986, the PPA issued Permit No. 104286 for cargo-handling services to
Marina Port Services, Inc. (MARINA) (p. 78, Rollo). The permit, which was to take effect for a one-year
period or until July 20, 1987,1 contained the following pertinent paragraph as part of the additional
terms and conditions appended as Annex B to the permit:

7. Labor and personnel of previous operator, except those positions of trust and confidence, shall be
absorbed by grantee. Labor or employees benefits provided for under existing CBA shall likewise be
honored. (p. 79, Rollo.)

Thus, MARINA began operating the arrastre services and required all workers of ERI/MPSI to accomplish
individual information sheets. Weeks later, the bulk of the 2,700 employees concerned discovered that
they had been hired by MARINA as new employees effective July 21, 1986. Hence, they clamored for the
payment of their separation pay but both the MARINA and ERI/MPSI refused to be liable therefor. In a
bid to prevent disruption of work, PPA authorized MARINA to deduct P2,000,000.00 from the amount
due the MPSI as MARINA’s rentals for MPSI equipment, as partial payment of the employees’ separation
pay (p. 138, Rollo).

Still dissatisfied, the employees who were members of the Associated Workers Union (AWU) filed a
notice of strike on

______________

1 The contract was renewed on March 10, 1987 and was to last for eight years (p. 153, Rollo).

SUPREME COURT REPORTS ANNOTATED

E. Razon, Inc. vs. Secretary of Labor and Employment


October 12, 1987. This move prompted the PPA, MARINA, ERI, and representatives of the AWU,
Associated Port Checkers Workers Union (APCWU), Associated Skilled and Technical Employees Union
(ASTEU), and Marina Management Employees (MARINE ME) to meet and forge an Agreement on
November 3, 1987 for the “immediate and reasonable resolution of the long standing claim of
separation benefits which resulted in impending labor strikes”. (p. 51, Rollo.) The Agreement provided
that the separation benefits would be computed at “one (1) month for every year of service”. (pp. 51
and 192, Rollo.) Another provision of the Agreement stated:

4. That Metro Port Services, Inc. and MARINA without admitting liability of the labor claims of the
workers agreed that PPA through MARINA shall disburse the amount of P5 million directly to the
workers. Said amount partakes of the nature of rental subject to the determination of the fair and
reasonable rental of equipment from the date of take-over of MARINA and of the fair market value
thereof by independent appraiser mutually agreed by PPA, MARINA, and Metro Port Services, Inc. (p.
192, Rollo.)

Although the Agreement specifically stated that the remaining balance of the separation benefits shall
be paid in full before December 24, 1987, the workers went on strike on December 22, 1987 because
they were apprehensive that the said benefits would not be paid as the appraisal of the pieces of
equipment and machinery of MPSI had not been completed. The members of the AWU were joined by
the APCWU, the ASTEU, and the MARINA ME (p. 139, Rollo).

The MPSI then requested the Secretary of Labor and Employment to immediately assume jurisdiction
over the dispute to prevent paralyzation of the vital operations of the Port of Manila. Invoking Article
263(g) of the Labor Code, then Secretary of Labor Franklin M. Drilon issued the order of December 23,
1987 holding that the labor dispute was “imbued with national interest” and ordering the striking
workers to return to work within 24 hours and the management to accept them back. He also directed
the parties to comply faithfully with the Agreement of November 3, 1987 and, pending the appraisal of
the reasonable rental and market value of the MPSI equipment, the amount of P5 million which the
Presidential Commission on Good Govern-

VOL. 222, MAY 13, 1993

E. Razon, Inc. vs. Secretary of Labor and Employment

ment (PCGG) had committed to unfreeze from the account of MPSI was made available. He also directed
the National Conciliation and Mediation Board to form a committee to monitor and assist in the
implementation of the November 3, 1987 Agreement (Annex “A” to Petition; pp. 51-55, Rollo).

The separation pay of the workers was later taken from the proceeds of the sale to PPA of ERI cargo-
handling equipment and the rentals from July 21, 1986 to January 29, 1988 of MARINA for the said
equipment (Petition, pp. 6-7; pp. 24-25, Rollo).
On May 31, 1988, Secretary Drilon issued the herein assailed order answering in the negative the
question of whether or not MARINA assumed liability for the separation pay under Paragraph 7 of the
Additional Terms and Conditions annexed to PPA Permit No. 104286. Proceeding from the general rule
laid out in Fernando vs. Angat Labor Union (5 SCRA 248 [1962], that a collective bargaining agreement is
a contract in personam and, therefore, not enforceable against the successor-employer, Secretary Drilon
brushed aside MPSI’s contention that MARINA assumed the obligation to pay MPSI’s workers their
separation pay then, upon the termination of MPSI’s contract with PPA, MARINA took over the arrastre
operations. He emphasized a “seemingly minor but rather crucial point” thus: “The present dispute
crystallized not from a normal business take-over, i.e., through sale or merger of a business enterprise,
but from cancellation of contract which was subsequently upheld valid by the Supreme Court. The
Agreement which now binds MARINA to assume obligations to the workers is not between the two
business enterprises but arose from the Permit to Operate issued by the PPA to MARINA. . .”

Secretary Drilon rationalized that Paragraph 7 would only have been perceived by the parties as
applicable prospectively since “MARINA had then yet to start its operations” and because Paragraph 14
of the same permit states that MARINA shall be responsible for “all obligations, liabilities or claims
arising out of any transaction or undertakings in connection with their cargo handling operations as of
the actual date of transfer thereof.” Accordingly, he opined that “the satisfaction of any workers’ claims
is an undertaking connected with “MARINA’s actual cargo handling operations” and, therefore, its
obligations should commence only “as of the actual takeover.” Corollarily, he stated

SUPREME COURT REPORTS ANNOTATED

E. Razon, Inc. vs. Secretary of Labor and Employment

that “compensation for loss of employment from the entity to whom past services have been rendered
should be forthcoming.” He disposed of the case thus:

WHEREFORE, IN VIEW OF THE FOREGOING, this Office hereby directs the Metro Port Services, Inc. to
pay the remaining balance due to the workers in full satisfaction of their separation pay at the rate
earlier agreed upon by the parties as embodied in the Agreement of November 3, 1987.

SO ORDERED. (pp. 140-141, Rollo.)

MPSI and AWU moved for the reconsideration of said order on the ground that certain vital facts on
record had not been considered. On November 21, 1988, however, Secretary Drilon denied said motions
(p. 159, Rollo). Hence, the instant petition for certiorari filed by E. Razon, Inc. which had apparently
renounced the use of the name MPSI.

Claiming that it is a sequestered corporation as ownership of 60% of its shares of stock is still in litigation
at the Sandiganbayan and that, should said court rule that the shares of stock mentioned belong to the
government, “it would not be the petitioner that would lose the millions of pesos paid to the workers”
(p. 20, Rollo), petitioner charges the then Secretary of Labor and Employment with grave abuse of
discretion amounting to excess of jurisdiction in: (a) refusing to hold that MARINA became its successor-
employer on July 20, 1986 and, therefore bound itself to honor the workers’ rights to security of tenure
and seniority privileges, despite the provision of Paragraph 7 of the permit to operate; (b) making a
“strained interpretation” of said permit to absolve MARINA from paying separation pay; (c) refusing to
hold that MARINA discontinued and, therefore, terminated the employment of the workers when it
absorbed them as new employees; (d) holding petitioner liable for separation pay notwithstanding the
fact that it never dismissed or separated said workers, and (e) failing to hold MARINA liable for
separation pay and to order MARINA to reimburse petitioner the amounts paid from its assets and funds
(pp. 12-13, Petition; pp. 31-32, Rollo).

There appears to be no quarrel over the issue of whether or not separation pay should be paid to the
workers of ERI/MPSI. The controversy actually is: which of the contending corporations, petitioner
ERI/MPSI or private respondent MARINA, should

VOL. 222, MAY 13, 1993

E. Razon, Inc. vs. Secretary of Labor and Employment

pay such benefit to the employees concerned.

Separation or severance pay is an allowance usually based on length of service that is payable to an
employee on severance except usually in case of disciplinary discharge, or as compensation due an
employee upon the severance of his employment status with the employer (Marcopper Mining
Corporation vs. NLRC, 200 SCRA 167 [1991]). Under Article 283 of the Labor Code, separation pay is
required where the termination of employment relationship is occasioned by the “cessation of
operations” of an establishment. The said article, therefore, puts the burden of paying separation pay
on ERI/MPSI, the employer for whom services had been rendered by the employees who were
separated from employment in view of the cessation of its business operations by the cancellation of its
management contract with the PPA. Petitioner, however, argues otherwise and would shift liability for
separation pay to MARINA on the strength of Paragraph 7 of the additional terms and conditions
appended to the permit to operate granted to MARINA.

Paragraph 7 aforequoted provides that the employees of the “previous operator”, meaning ERI/MPSI,
shall be “absorbed” by the permit “grantee”, meaning MARINA, and the benefits given the same
employees under the “existing CBA” shall be “honored”. A key in the interpretation of this paragraph is
the word “absorb” which is synonymous with the words “assimilate” or “incorporate” and which, in
business parlance, means “to take over” (Webster’s Third New International Dictionary, 1966 Ed., p. 7).
As such, it appears at first blush, that an “absorbing” employer shall be responsible for all the benefits
accruing to the “absorbed” employees.

The circumstances of this case, however, do not warrant the conclusion that, by “absorbing” the
ERI/MPSI employees, MARINA took the place of the ERI/MPSI as an employer as if there had been no
interruption in the employer-employee relationship between ERI/MPSI and its employees and,
therefore, MARINA should assume all responsibilities of ERI/MPSI. For, while in Marina Port Services,
Inc. vs. NLRC (193 SCRA 420 [1991]), the Court opined that by virtue of Paragraph 7, security guards of
the MPSI did become employees of MARINA, the undeniable fact is that, by the termination of its
management contract with the PPA, ERI/MPSI ceased to be an employer. Admittedly, the conse-

SUPREME COURT REPORTS ANNOTATED

E. Razon, Inc. vs. Secretary of Labor and Employment

quent separation from the employment of its employees was not of the ERI/MPSI’s own making.
However, it may not validly lay such consequence on the lap of MARINA which, like itself, had no hand in
the termination of the management contract by the PPA. The fact that a couple of days later, the PPA,
without public bidding, issued to MARINA, a permit to operate, does not imply that MARINA stepped
into the shoes of ERI/MPSI as if there were absolute identity between them. Parenthetically, the issue of
the legality of the cancellation of MPSI’s permit to operate was laid to rest in E. Razon, Inc. vs. Philippine
Ports Authority (151 SCRA 233 [1987]).

By absorbing ERI/MPSI employees and honoring the terms and conditions in the collective bargaining
agreement between ERI/MPSI and the employees, MARINA did not assume the responsibility of
ERI/MPSI to pay separation pay to its employees. As correctly put by public respondent, Paragraph 7,
insofar as it refers to employees’ benefits, should be applied prospectively with respect to MARINA. This
conclusion is supported by Paragraph 14 of Permit No. 104286 granted to MARINA which states:

14. Grantee shall be responsible for all obligations, liabilities or claims arising out of any transactions or
undertakings in connection with their cargo handling operations as of the actual date of transfer thereof
to grantee.” (Italics supplied.)

MARINA might have been impelled not only by compassion for the employees but also by their tested
skills in hiring them back upon their separation from the employment of ERI/MPSI. It should be recalled,
however, there is no law that requires the purchaser to absorb the employees of the selling corporation
(San Felipe Neri School of Mandaluyong, Inc. vs. NLRC, 201 SCRA 478 [1991], citing MDII Supervisors and
Confidential Employees Association (FFW) vs. Presidential Assistant on Legal Affairs, 79 SCRA 40 [1977]).
As such, when MARINA rehired the ERI/MPSI employees, it had all the right to consider them as new
ones. On the other hand, ERI/MPSI, to whom years of service had been rendered by its suddenly jobless
employees, had the corresponding obligation to grant them what is theirs under the law and the
collective bargaining agreement. After all, a collective bargaining agreement is the law between the
parties (Plastic

VOL. 222, MAY 13, 1993


9

E. Razon, Inc. vs. Secretary of Labor and Employment

Town Center Corporation vs. NLRC, 172 SCRA 580 [1989]; Roche [Phil] vs. NLRC, 178 SCRA 386 [1989],
and compliance therewith is mandated by the express policy of the law (Meycauayan College vs. Drilon,
185 SCRA 50 [1990]).

The situation in this case is completely different from that obtaining in Filipinas Port Services, Inc. vs.
NLRC (200 SCRA 773 [1991]), where the petitioner was obligated “not only to absorb the workers of the
dissolved companies but also to include the length of service earned by the absorbed employees with
their former employers as well” because said case involved a merger of different companies into a single
company as a result of the PPA’s integration of stevedoring/arrastre services. On the other hand, in the
case at bar, there is no privity of contract between ERI/MPSI and MARINA so as to make the latter a
common or even substitute employer that it should be burdened with the obligations of the former.

WHEREFORE, the petition is hereby DISMISSED and the assailed orders AFFIRMED, with costs against
petitioner.

SO ORDERED.

Feliciano (Chairman), Bidin, Davide, Jr. and Romero, JJ., concur.

Petition dismissed. Assailed orders affirmed.

Notes.—Labor contracts are not enforceable against a transferee of an enterprise, labor contracts being
in personam, thus binding only between the parties. (Associated Labor Unions-VIMCONTU vs. National
Labor Relations Commission, 204 SCRA 913).

Petitioner’s contentions that private respondents are not entitled to separation pay on the ground that
there was no termination of the latter’s employment but a mere change of ownership in the assets and
properties of the school is untenable. (San Felipe Neri School of Mandaluyong, Inc. vs. National Labor
Relations Commission, 201 SCRA 478).

——o0o—— E. Razon, Inc. vs. Secretary of Labor and Employment, 222 SCRA 1, G.R. No. 85867 May 13,
1993

668

SUPREME COURT REPORTS ANNOTATED

Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.

G.R. Nos. 58768-70. December 29, 1989.*

LIBERTY FLOUR MILLS EMPLOYEES, ANTONIO EVARISTO and POLICARPIO BIASCAN, petitioners, vs.
LIBERTY FLOUR MILLS, INC. PHILIPPINE LABOR ALLIANCE COUNCIL (PLAC) and NATIONAL LABOR
RELATIONS COMMISSION, (NLRC), respondents.
Labor; Arbitration; Jurisdiction; Petitioners are estopped from raising objections against the choice of
the voluntary arbitrator.—We find there was no such violation as the choice of the voluntary
arbitrator was not limited to Bacuñgan although he was probably the first preference. Moreover, the
petitioners are estopped from raising this objection now because they did not seasonably interpose it
and instead willingly submitted to Cabal’s jurisdiction when he undertook to hear their complaint.

Same; Same; Same; Supreme Court; Exception to finality of judgment; Decision of voluntary
arbitrator, final and unappealable.—In sustaining Laber Arbiter Lomabao, the NLRC agreed that the
decision of Voluntary Arbiter Cabal was final and unappealable under Article 262-A of the Labor Code
and so could no longer be reviewed by it. True enough. However, it is equally true that the same
decision is not binding on this Court, as we held in Oceanic Bic Division (FFW) v. Romero and
reiterated in Mantrade/FMMC Division Employees and Workers Union v. Bacuñgan. The rule as
announced in these cases is reflected in the following statements: In spite of statutory provisions
making “final” the decision 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.

_______________

* FIRST DIVISION.

669

VOL. 180, DECEMBER 29, 1989

669

Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.

Same; Emergency allowances under PD 525; Allowances absorbed by the wage increase required
under the CBA.—The Court holds that such allowances are indeed absorbed by the wage increases
required under the agreement.

Same; Same; Same; Same; The company falls under par. (a) of Sec. 5 of LOI 174 which has a
capitalization of more than P1 million and must pay a minimum allowance of P50.00 a month;
Amount of allowance already covered by the increases under the CBA.—It is not denied that the
company falls under paragraph (a), as it has a capitalization of more than P1 million, and so must pay
a minimum allowance of P50.00 a month. This amount is clearly covered by the increases prescribed
in the CBA, which required a monthly increase (on the basis of 30 days) of P60.00 for 1974, to be
increased by P30.00 in 1975 (to P90.00) and another P30.00 in 1976 (to P120.00). The first increase in
1974 was already above the minimum allowance of P50.00, which was exceeded even more with the
increases of P1.00 for each of the next two years.

Same; Same; Same; Same; Interpretation; Sec. 15 of PD 525 should be related to the other sections to
give effect to the intent and spirit of the decree; Under Sec. 15, any benefit over and above the
prescribed allowances may still be agreed upon by the employees and the employer.—Obviously, this
section should not be read in isolation but must be related to the other sections above-quoted, to give
effect to the intent and spirit of the decree. The meaning of the section simply is that any benefit over
and above the prescribed allowances may still be agreed upon by the employees and the employer or,
if already granted, may no longer be withdrawn or diminished.

Same; Same; Same; Same; No benefits are being waived under Sec. 2 of the CBA; Benefits are already
included in the wage increase; The law considers the increases as equivalent to or in lieu of the
emergency allowance granted by PD 525.—While the principle is correct, the application is not, for
there are no benefits being waived under the provision. The benefits are already included in the wage
increases. It is the law itself that considers these increases, under the conditions prescribed in LOI No.
174, as equivalent to, or in lieu of, the emergency allowance granted by P.D. No. 525.

Same; Same; Same; No waiver of increases as petitioners are not entitled to the additional P50.00
allowance.—In fact, the company agreed to grant the emergency allowance even before the
obligation was imposed by the government. What the petitioners claim they are

670

670

SUPREME COURT REPORTS ANNOTATED

Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.

being made to waive is the additional P50.00 allowance but the truth is that they are not entitled to
this because they are already enjoying the stipulated increases. There is no waiver of these increases.

Same; Same; Same; Same; Difference between the stipulated wage increase and the statutory
minimum wage will be paid by the company.—Moreover, Section 2 provides that the wage increase
shall be considered payment of any statutory increase of the minimum wage “as far as it will go,”
which means that any amount not covered by such wage increase will have to be made good by the
company. In short, the difference between the stipulated wage increase and the statutory minimum
wage will have to be paid by the company notwithstanding and, indeed, pursuant to the said article.
There is no waiver as to this.

Same; Same; Same; CBA; An uncertified CBA duly filed and submitted to the Bureau of Labor Relations
is certifiable for having complied with all the requirements for certification.—In its challenged
decision, the public respondent held that in demanding the dismissal of Evaristo and Biascan, PLAC
had acted prematurely because the 1974 CBA providing for union shop and pursuant to which the two
petitioners were dismissed had not yet been certified. The implication is that it was not yet in effect
and so could not be the basis of the action taken against the two petitioners. This conclusion is
erroneous. It disregards the ruling of this Court in Tanduay Distillery Labor Union v. NLRC, were we
held; The fact, therefore, that the Bureau of Labor Relations (BLR) failed to certify or act on TDLU’s
request for certification of the CBA in question is of no moment to the resolution of the issues
presented in this case. The BLR itself found in its order of July 8,1982, that the “(un)certified CBA was
duly filed and submitted on October 29, 1980, to last until June 30, 1982 is certifiable for having
complied with all the requirements for certification.”

Same; Same; Same; Same; The certification of the CBA by the Bureau of Labor Relations is not
required for its validity; Once a CBA is duly entered and signed by the parties, it becomes effective as
between the parties whether or not the same has been certified by the Bureau.—Evidence on record
show that after the cancellation of the registration certificate of the Federation of Democratic Labor
Unions, no other union contested the exclusive representation of the Philippine Labor Alliance Council
(PLAC), consequently, there was no more legal impediment that stood on the way as to the validity
and enforceability of the provisions of the collective bargaining agreement entered into by and
between respondent corporation and respondent

671

VOL. 180, DECEMBER 29, 1989

671

Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.

union. The certification of the collective bargaining agreement by the Bureau of Labor Relations is not
required to put a stamp of validity to such contract. Once it is duly entered into and signed by the
parties, a collective bargaining agreement becomes effective as between the parties regardless of
whether or not the same has been certified by the BLR.

Same; Same; Same; Same; Claim for backwages by two employees who have been readmitted to the
union, not allowed; Union shop clause validly enforced against them and justified the termination of
their services.—The petitioners say that the reinstatement issue of Evaristo and Biascan has become
academic because the former has been readmitted and the latter has chosen to await the resolution
of this case. However, they still insist on the payment of their back wages on the ground that their
dismissal was illegal. This claim must be denied for the reason already given. The union shop clause
was validly enforced against them and justified the termination of their services.

Same; Same; Same; Policy of the State to promote unionism; Constitutional guarantee of right to self
organization, collective bargaining and negotiations and peaceful concerted actions including the right
to strike.—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.
Same; Same; Same; Same; Court would have preferred to resolve the case in favor of petitioners but
the law and the facts are against them.—The Court would have preferred to resolve this case in favor
of the petitioners, but the law and the facts are against them. For all the concern of the State, for the
well-being of the worker, we must at all times conform to the requirements of the law as long as such
law has not been shown to be violative of the Constitution. No such violation has been shown here.

672

PETITION for certiorari to review the resolution of the National Labor Relations Commission.

The facts are stated in the opinion of the Court.

Julius A. Magno for petitioners.

De Leon, Diokno & Associates for respondent Liberty Flour Mills, Inc.

CRUZ, J.:

In this petiton for certiorari, the resolution of the public respondent dated August 3, 1978, is faulted for:
(a) affirming the decision of the labor arbiter dismissing the employees’ claim for emergency allowance
for lack of jurisdiction; and (b) modifying the said decision by disallowing the award of back wages to
petitioners Policarpio Biascan and Antonio Evaristo.

The basic facts are as follows:

On February 6, 1974, respondent Philippine Labor Alliance Council (PLAC) and respondent Liberty Flour
Mills, Inc. entered into a three-year collective bargaining agreement effective January 1, 1974, providing
for a daily wage increase of P2.00 for 1974, P1.00 for 1975 and another P1.00 for 1976. The agreement
contained a compliance clause, which will be explained later in this opinion. Additionally, the parties
agreed to establish a union shop by imposing “membership in good standing for the duration of the CBA
as a condition for continued employment” of workers.1

On October 18, 1974, PLAC filed a complaint against the respondent company for non-payment of the
emergency cost-of-living allowance under P.D. No. 525.2 A similar complaint was filed on March 4, 1975,
this time by the petitioners, who apparently were already veering away from PLAC.3

On March 20, 1975, petitioners Evaristo and Biascan, after organizing a union called the Federation of
National Demo-

_______________

1 Rollo, p. 166.

2 Ibid.
3 Id., p. 167.

673

VOL. 180, DECEMBER 29, 1989

673

Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.

cratic Labor Unions, filed with the Bureau of Labor Relations a petition for certification election among
the rank-and-file employees of the respondent company.4 PLAC then expelled the two for disloyalty and
demanded their dismissal by the respondent company, which complied on May 20, 1975.5

The objection of Evaristo and Biascan to their termination were certified for compulsory arbitration and
assigned to Labor Arbiter Apolinario N. Lomabao, Jr. Meanwhile, the claims for emergency allowance
were referred for voluntary arbitration to Edmundo Cabal, who eventually dismissed the same on the
ground that the allowances were already absorbed by the wage increases. This latter case was
ultimately also certified for compulsory arbitration and consolidated with the termination case being
heard by Lomabao. His decision was, on appeal, dealt with by the NLRC as above stated,6 and the
motion for reconsideration was denied on August 26, 1981.7

At the outset, we note that the petitioners are taking an ambivalent position concerning the CBA
concluded in 1974. While claiming that this was entered into in bad faith and to forestall the payment of
the emergency allowances expected to be decreed, they nonetheless invoke the same agreement to
support their contention that their complaint for emergency allowances was invalidly referred to
voluntary arbitrator Cabal rather than Froilan M. Bacuñgan.

We find there was no such violation as the choice of the voluntary arbitrator was not limited to
Bacuñgan although he was probably the first preference. Moreover, the petitioners are estopped from
raising this objection now because they did not seasonably interpose it and instead willingly submitted
to Cabal’s jurisdiction when he undertook to hear their complaint.

In sustaining Labor Arbiter Lomabao, the NLRC agreed that the decision of Voluntary Arbiter Cabal was
final and unappealable under Article 262-A of the Labor Code and so could no longer be reviewed by it.
True enough. However, it is equally true that the same decision is not binding on this Court, as we

_______________

4 Id., p. 25.

5 Id., p. 54.

6 Id., p. 108.

7 Id., p. 116.

674
674

SUPREME COURT REPORTS ANNOTATED

Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.

held in Oceanic Bic Division (FFW) v. Romero8 and reiterated in Mantrade/FMMC Division Employees
and Workers Union v. Bacuñgan.9 The rule as announced in these cases is reflected in the following
statements:

In spite of statutory provisions making “final” the decision 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.

xxx

A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity. There is no reason
why her decisions involving interpretation of law should be beyond this Court’s review. Administrative
officials are presumed to act in accordance with law and yet we do not hesitate to pass upon their work
where a question of law is involved or where a showing of abuse of authority or discretion in their
official acts is properly raised in petitions for certiorari.

Accordingly, the validity of the voluntary arbiter’s finding that the emergency allowance sought by the
petitioners are already absorbed in the stipulated wage increases will now be examined by the Court
itself.

The position of the company is that the emergency allowance required by P.D. No. 525 is already
covered by the wage increases prescribed in the said CBA. Furthermore, pursuant to its Article VIII, such
allowances also include all other statutory minimum wage increases that might be decreed during the
lifetime of the said agreement.

That agreement provided in Section 2 thereof as follows:

Section 2. The wage increase in the amounts and during the period above set forth shall, in the event of
any statutory increase of the minimum wage, either as allowance or as basic wage, during the life of this
Agreement, be considered compliance and payment of such required statutory increase as far as it will
go and under no circumstances will it be cumulative nor duplication to the differential amount involved
consequent to such statutory wage increase.

_______________

8 130 SCRA 392.

9 144 SCRA 510.

675
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675

Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.

The Court holds that such allowances are indeed absorbed by the wage increases required under the
agreement. This is because Section 6 of the Interpretative Bulletin on LOI No. 174 specifically provides:

Sec. 6. Allowances under LOI.—All allowances, bonuses, wage adjustments and other benefits given by
employers to their employees shall be treated by the Department of Labor as in substantial compliance
with the minimum standards set forth in LOI No. 174 if:

(a) they conform with at least the minimum allowances scales specified in the immediately preceding
Section; and

(b) they are given in response to the appeal of the President in his speech on 4 January 1974,orto
countervail the quantum jump in the cost of living as a result of the energy crisis starting in November
1973, or pursuant to Presidential Decree No. 390; Provided, That the payment is retroactive to 18
February 1974 or earlier.

The allowances and other benefits may be granted unilaterally by the employer or through collective
bargaining, and may be paid at the same time as the regular wages of the employees.

Allowances and other benefits which are not given in substantial compliance with the LOI as interpreted
herein shall not be treated by the Department of Labor as emergency allowances in the contemplation
of the LOI unless otherwise shown by sufficient proof. Thus, without such proof, escalation clauses in
collective bargaining agreements concluded before the appeal of the President providing for automatic
or periodic wage increases shall not be considered allowances for purposes of the LOI. (Emphasis
supplied.)

The “immediately preceding section” referred to above states:

SEC. 5. Determination of Amount of Allowances.—In determining the amount of allowances that should
be given by employers to meet the recommended minimum standards, the LOI has classified employers
into three general categories. As an implementation policy, the Department of Labor shall consider as
sufficient compliance with the scales of allowances recommended by the LOI if the following monthly
allowances are given by employers:

(a) P50.00 or higher where the authorized capital stock of the corporation, or the total assets in the case
of other undertakings, exceeds P1 million;

(b) P30.00 or higher where the authorized capital stock of the corporation, or the total assets in the case
of other undertakings, is not less than P100,000.00 but not more than P1 million; and

676
676

SUPREME COURT REPORTS ANNOTATED

Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.

(c) P15.00 or higher where the authorized capital stock or total assets, as the case may be, is less than
P100,000.00.

It is not denied that the company falls under paragraph (a), as it has a capitalization of more than P1
million,10 and so must pay a minimum allowance of P50.00 a month. This amount is clearly covered by
the increases prescribed in the CBA, which required a monthly increase (on the basis of 30 days) of
P60.00 for 1974, to be increased by P30.00 in 1975 (to P90.00) and another P30.00 in 1976 (to P120.00).
The first increase in 1974 was already above the minimum allowance of P50.00, which was exceeded
even more with the increases of P1.00 for each of the next two years.

Even if the basis used were 26 days a month (excluding Sundays), the conclusion would remain
unchanged as the raise in wage would be P52.00 for 1974, which amount was increased to P78.00 in
1975 and to P104.00 in 1976.

But the petitioners contend that the wage increases were the result of negotiation undertaken long
before the promulgation of P.D. No. 525 and so should not be considered part of the emergency
allowance decreed. In support of this contention, they cite Section 15 of the Rules implementing P.D.
No. 525, providing as follows:

Nothing herein shall prevent the employer and his employees, from entering into any agreement with
terms more favorable to the employees than those provided herein, or be construed to sanction the
diminution of any benefits granted to the employees under existing laws, agreements, and voluntary
practice.

Obviously, this section should not be read in isolation but must be related to the other sections above-
quoted, to give effect to the intent and spirit of the decree. The meaning of the section simply is that
any benefit over and above the prescribed allowances may still be agreed upon by the employees and
the employer or, if already granted, may no longer be withdrawn or diminished.

The petitioners also maintain that the above-quoted Section 2 of CBA is invalid because it constitutes a
waiver by the laborers

_______________

10 Rollo, pp. 39, 44 and 50.

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Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.

of future benefits that may be granted them by law. They contend this cannot be done because it is
contrary to public policy.

While the principle is correct, the application is not, for there are no benefits being waived under the
provision. The benefits are already included in the wage increases. It is the law itself that considers
these increases, under the conditions prescribed in LOI No. 174, as equivalent to, or in lieu of, the
emergency allowance granted by P.D. No. 525.

In fact, the company agreed to grant the emergency allowance even before the obligation was imposed
by the government. What the petitioners claim they are being made to waive is the additional P50.00
allowance but the truth is that they are not entitled to this because they are already enjoying the
stipulated increases. There is no waiver of these increases.

Moreover, Section 2 provides that the wage increase shall be considered payment of any statutory
increase of the minimum wage “as far as it will go,” which means that any amount not covered by such
wage increase will have to be made good by the company. In short, the difference between the
stipulated wage increase and the statutory minimum wage will have to be paid by the company
notwithstanding and, indeed, pursuant to the said article. There is no waiver as to this.

Curiously, Article 2 was produced verbatim in the collective bargaining agreement concluded by the
petitioners with the company in 1977 after PLAC had been replaced by the new labor union formed by
petitioners Evaristo and Biascan.11 It is difficult to understand the petitioners’ position when they blow
hot and cold like this.

Coming now to the second issue, we find that it must also be resolved against the petitioners.

Evaristo and Biascan claim they were illegally dismissed for organizing another labor union opposed to
PLAC, which they describe as a company union. Arguing that they were only exercising the right to self
organization as guaranteed by the Constitution, they insist they are entitled to the back wages which the
NLRC disallowed while affirming their reinstatement.

_______________

11 Ibid., p. 94.

678

678

SUPREME COURT REPORTS ANNOTATED

Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.

In its challenged decision, the public respondent held that in demanding the dismissal of Evaristo and
Biascan, PLAC had acted prematurely because the 1974 CBA providing for union shop and pursuant to
which the two petitioners were dismissed had not yet been certified.12 The implication is that it was not
yet in effect and so could not be the basis of the action taken against the two petitioners. This
conclusion is erroneous. It disregards the ruling of this Court in Tanduay Distillery Labor Union v.
NLRC,13 were we held:

The fact, therefore, that the Bureau of Labor Relations (BLR) failed to certify or act on TDLU’s request for
certification of the CBA in question is of no moment to the resolution of the issues presented in this
case. The BLR itself found in its order of July 8, 1982, that the “(un)certified CBA was duly filed and
submitted on October 29,1980, to last until June 30, 1982 is certifiable for having complied with all the
requirements for certification.” (Emphasis supplied.)

The CBA concluded in 1974 was certifiable and was in fact certified on April 11, 1975. It bears stressing
that Evaristo and Biascan were dismissed only on May 20, 1975, more than a month after the said
certification.

The correct view is that expressed by Commissioner Cecilio P. Seno in his concurring and dissenting
opinion,14 viz.:

I cannot however subscribe to the majority view that the “dismissal of complainants Biascan and
Evaristo, x x x was, to say the least, a premature action on the part of the respondents because at the
time they were expelled by PLAC the contract containing the union security clause upon which the
action was based was yet to be certified and the representation status of the contracting union was still
in question.

Evidence on record show that after the cancellation of the registration certificate of the Federation of
Democratic Labor Unions, no other union contested the exclusive representation of the Philippine Labor
Alliance Council (PLAC), consequently, there was no more legal impediment that stood on the way as to
the validity and enforceability of the provisions of the collective bargaining agreement entered into

_______________

12 Id., pp. 110-111.

13 149 SCRA 470.

14 Rollo, p. 106.

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Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.

by and between respondent corporation and respondent union. The certification of the collective
bargaining agreement by the Bureau of Labor Relations is not required to put a stamp of validity to such
contract. Once it is duly entered into and signed by the parties, a collective bargaining agreement
becomes effective as between the parties regardless of whether or not the same has been certified by
the BLR.

To be fair, it must be mentioned that in the certification election held at the Liberty Flour Mills, Inc. on
December 27, 1976, the Ilaw at Buklod ng Manggagawa, with which the union organized by Biascan and
Evaristo was affiliated, won overwhelmingly with 441 votes as against the 5 votes cast for PLAC.15
However, this does not excuse the fact that the two disaffiliated from PLAC as early as March 1975 and
thus rendered themselves subject to dismissal under the union shop clause in the CBA.

The petitioners say that the reinstatement issue of Evaristo and Biascan has become academic because
the former has been readmitted and the latter has chosen to await the resolution of this case. However,
they still insist on the payment of their back wages on the ground that their dismissal was illegal. This
claim must be denied for the reasons already given. The union shop clause was validly enforced against
them and justified the termination of their services.

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

_______________

15 Ibid., p. 84.

680

680

SUPREME COURT REPORTS ANNOTATED

Icao vs. Apalisok

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.

The Court would have preferred to resolve this case in favor of the petitioners, but the law and the facts
are against them. For all the concern of the State, for the well-being of the worker, we must at all times
conform to the requirements of the law as long as such law has not been shown to be violative of the
Constitution. No such violation has been shown here.

WHEREFORE, the petition is DISMISSED, without any pronouncement as to costs. It is so ordered.


Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

Petition dismissed.

Note.—Arbitration proceedings before the NLRC are no longer necessary if the striking workers have
been permanently replaced either because they had been constrained to defy the return-to-work order
or had been dismissed for failure to meet the prescribed work load. (NFLU vs. NLRC, 139 SCRA 589)

——o0o—— Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc., 180 SCRA 668, G.R. Nos. 58768-70
December 29, 1989

268

SUPREME COURT REPORTS ANNOTATED

Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations
Commission

G.R. No. 102636. September 10, 1993.*

METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO V.


BALINANG, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and
METROPOLITAN BANK & TRUST COMPANY, respondents.

Labor Law; National Labor Relations Commission; Wages; The issue of whether or not a wage
distortion exists as a consequence of the grant of a wage increase to certain employees is a question
of fact the determination of which is the statutory function of the NLRC.—The issue of whether or not
a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we
agree, is, by and large, a question of fact the determination of which is the statutory function of the
NLRC. Judicial review of labor cases, we may add, does not go beyond the evaluation of the sufficiency
of the evidence upon which the labor officials’ findings rest. As such, factual findings of the NLRC are
generally accorded not only respect but also finality provided that its decisions are supported by
substantial evidence and devoid of any taint of unfairness or arbitrariness. When, however, the
members of the same labor tribunal are not in accord on those aspects of a case, as in this case, this
Court is well cautioned not to be as so conscious in passing upon the sufficiency of the evidence, let
alone the conclusions derived therefrom.

Same; Same; Same; Same; In mandating an adjustment, the law did not require that there be an
elimination or total abrogation of quantitative wage or salary differences, a severe contraction
thereof is enough.—The definition of “wage distortion,” aforequoted, shows that such distortion can
so exist when, as a result of an increase in the prescribed wage rate, an “elimination or severe
contraction of intentional quantitative differences in wage or salary rates” would occur “between and
among employee groups in an establishment as to effectively obliterate the distinctions embodied in
such wage structure based on skills, length of service, or other logical bases of differentiation.” In
mandating an adjustment, the law did not require that there be an elimination or total abrogation of
quantitative wage or salary differences; a severe contraction thereof is enough. As has been aptly

_______________
* THIRD DIVISION.

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Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations
Commission

observed by Presiding Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction
between personnel groupings comes close to eighty-three (83%), which cannot, by any stretch of
imagination, be considered less than severe.

Same; Same; Same; Same; Same; The Solicitor General has correctly emphasized that the intention of
the parties, whether the benefits under a collective bargaining agreement should be equated with
those granted by law or not unless there are compelling reasons otherwise must prevail and be given
effect.—The “intentional quantitative differences” in wage among employees of the bank has been
set by the CBA to about P900 per month as of 01 January 1989. It is intentional as it has been arrived
at through the collective bargaining process to which the parties are thereby concluded. The Solicitor
General, in recommending the grant of due course to the petition, has correctly emphasized that the
intention of the parties, whether the benefits under a collective bargaining agreement should be
equated with those granted by law or not, unless there are compelling reasons otherwise, must
prevail and be given effect.

PETITION for certiorari to review the decision of the National Labor Relations Commission.

The facts are stated in the resolution of the Court.

Gilbert P. Lorenzo for petitioners.

Marcial G. dela Fuente for private respondents.

RESOLUTION

VITUG, J.:

In this petition for certiorari, the Metropolitan Bank & Trust Company Employees Union-ALU-TUCP
(MBTCEU) and its president, Antonio V. Balinang, raise the issue of whether or not the implementation
by the Metropolitan Bank and Trust Company of Republic Act No. 6727, mandating an increase in pay of
P25 per day for certain employees in the private sector, created a distortion that would require an
adjustment under said law in the wages of the latter’s other various groups of employees.
On 25 May 1989, the bank entered into a collective bargaining agreement with the MBTCEU, granting a
monthly P900 wage

270

270

SUPREME COURT REPORTS ANNOTATED

Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations
Commission

increase effective 01 January 1989, P600 wage increase effective 01 January 1990, and P200 wage
increase effective 01 January 1991. The MBTCEU had also bargained for the inclusion of probationary
employees in the list of employees who would benefit from the first P900 increase but the bank had
adamantly refused to accede thereto. Consequently, only regular employees as of 01 January 1989 were
given the increase to the exclusion of probationary employees.

Barely a month later, or on 01 July 1989, Republic Act 6727, “an act to rationalize wage policy
determination by establishing the mechanism and proper standards therefor, x x x fixing new wage
rates, providing wage incentives for industrial dispersal to the countryside, and for other purposes,”
took effect. Its provisions, pertinent to this case, state.

“SEC. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of all workers and
employees in the private sector, whether agricultural or non-agricultural, shall be increased by twenty
five pesos (P25) per day, x x x: Provided, That those already receiving above the minimum wage rates up
to one hundred pesos (P100.00) shall also receive an increase of twenty-five pesos (P25.00) per day, x x
x.

xxx xxx xxx

(d) If expressly provided for and agreed upon in the collective bargaining agreements, all increases in the
daily basic wage rates granted by the employers three (3) months before the effectivity of this Act shall
be credited as compliance with the increases in the wage rates prescribed herein, provided that, where
such increases are less than the prescribed increases in the wage lates under this Act, the employer shall
pay the difference. Such increase shall not include anniversary wage increases, merit wage increase and
those resulting from the regularization or promotion of employees.

Where the application of the increases in the wage rates under this Section results in distortions as
defined under existing laws in the wage structure within an establishment and gives rise to a dispute
therein, such dispute shall first be settled voluntarily between the parties and in the event of a deadlock,
the same shall be finally resolved through compulsory arbitration by the regional branches of the
National Labor Relations Commission (NLRC) having jurisdiction over the workplace.

It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute arising under
this Section within twenty

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Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations
Commission

(20) calendar days from the time said dispute is formally submitted to it for arbitration. The pendency of
a dispute arising from a wage distortion shall not in any way delay the applicability of the increase in the
wage rates prescribed under this Section.”

Pursuant to the above provisions, the bank gave the P25 increase per day, or P750 a month, to its
probationary employees and to those who had been promoted to regular or permanent status before
01 July 1989 but whose daily rate was P100 and below. The bank refused to give the same increase to its
regular employees who were receiving more than P100 per day and recipients of the P900 CBA increase.

Contending that the bank’s implementation of Republic Act 6727 resulted in the categorization of the
employees into (a) the probationary employees as of 30 June 1989 and regular employees receiving
P100 or less a day who had been promoted to permanent or regular status before 01 July 1989, and (b)
the regular employees as of 01 January 1989, whose pay was over P100 a day, and that, between the
two groups, there emerged a substantially reduced salary gap, the MBTCEU sought from the bank the
correction of the alleged distortion in pay. In order to avert an impending strike, the bank petitioned the
Secretary of Labor to assume jurisdiction over the case or to certify the same to the National Labor
Relations Commission (NLRC) under Article 263 (g) of the Labor Code.1 The parties ultimately agreed to
refer the issue for compulsory arbitration to the NLRC.

The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05 February 1991, the labor
arbiter disagreed with

_______________

1 This provision states:

“(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption or certification order. x x x.”

272

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SUPREME COURT REPORTS ANNOTATED


Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations
Commission

the bank’s contention that the increase in its implementation of Republic Act 6727 did not constitute a
distortion because “only 143 employees or 6.8% of the bank’s population of a total of 2,108 regular
employees” benefited. He stressed that “it is not necessary that a big number of wage earners within a
company be benefited by the mandatory increase before a wage distortion may be considered to have
taken place,” it being enough, he said, that such increase “result(s) in the severe contraction of an
intentional quantitative difference in wage rates between employee groups.”

The labor arbiter concluded that since the “intentional quantitative difference” in wage or salary rates
between and among groups of employees is not based purely on skills or length of service but also on
“other logical bases of differentiation, a P900.00 wage gap intentionally provided in a collective
bargaining agreement as a quantitative difference in wage between those who WERE regular employees
as of January 1, 1989 and those who WERE NOT as of that date, is definitely a logical basis of
differentiation (that) deserves protection from any distorting statutory wage increase.” Otherwise, he
added, “a minimum wage statute that seeks to uplift the economic condition of labor would itself
destroy the mechanism of collective bargaining which, with perceived stability, has been labor’s
constitutional and regular source of wage increase for so long a time now.” Thus, since the “subjective
quantitative difference” between wage rates had been reduced from P900.00 to barely P150.00,
correction of the wage distortion pursuant to Section 4(c) of the Rules Implementing Republic Act 6727
should be made.

The labor arbiter disposed of the case, thus:

WHEREFORE, premises considered, the respondent is hereby directed to restore to complainants and
their members the Nine Hundred (P900.00) Pesos CBA wage gap they used to enjoy over non-regular
employees as of January 1, 1989 by granting them a Seven Hundred Fifty (P750.00) Pesos monthly
increase effective July 1, 1989.

SO ORDERED.”2

_______________

2 Rollo, pp. 35-37.

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Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations
Commission
The bank appealed to the NLRC. On 31 May 1991, the NLRC Second Division, by a vote of 2 to 1,
reversed the decision of the Labor Arbiter. Speaking through Commissioners Rustico L. Diokno and
Domingo H. Zapanta, the NLRC said:

“x x x a wage distortion can arise only in a situation where the salary structure is characterized by
intentional quantitative differences among employee groups determined or fixed on the basis of skills,
length of service, or other logical basis of differentiation and such differences or distinctions are
obliterated or contracted by subsequent wage increases (In Re: Labor Dispute at the Bank of the
Philippine Islands, NCMB-RB-7-11-096-89, Secretary of Labor and Employment, February 18, 1991).

As applied in this case, We noted that in the new wage salary structure, the wage gaps between Levels 6
and 7 levels 5 and 6, and levels 6 and 7 (sic) were maintained. While there is a noticeable decrease in
the wage gap between Levels 2 and 3, Levels 3 and 4, and Levels 4 and 5, the reduction in the wage gaps
between said levels is not significant as to obliterate or result in severe contraction of the intentional
quantitative differences in salary rates between the employee groups. For this reason, the basic
requirement for a wage distortion to exist does not appear in this case. Moreover, there is nothing in
the law which would justify an across-the-board adjustment of P750.00 as ordered by the Labor Arbiter.

WHEREFORE, premises considered, the appealed decision is hereby set aside and a new judgment is
hereby entered, dismissing the complaint for lack of merit.

SO ORDERED.”3

In her dissent, Presiding Commissioner Edna Bonto-Perez opined:

“There may not be an obliteration nor elimination of said quantitative distinction/difference aforecited
but clearly there is a contraction. Would such contraction be severe as to warrant the necessary
correction sanctioned by the law in point, RA 6727? It is my considered view that the quantitative
intended distinction in pay between the two groups of workers in respondent company was contracted
by more than fifty (50%) per cent or in particular by more or less eighty-three (83%)

_______________

3 Ibid., pp. 49-50.

274

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SUPREME COURT REPORTS ANNOTATED

Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations
Commission

percent hence, there is no doubt that there is an evident severe contraction resulting in the complained
of wage distortion.
Nonetheless, the award of P750.00 per month to all of herein individual complainants as ordered by the
Labor Arbiter below, to my mind is not the most equitable remedy at bar, for the same would be an
across the board increase which is not the intention of RA 6727. For that matter, herein complainants
cannot by right claim for the whole amount of P750.00 a month or P25.00 per day granted to the
workers covered by the said law in the sense that they are not covered by the said increase mandated
by RA 6727. They are only entitled to the relief granted by said law by way of correction of the pay scale
in case of distortion in wages by reason thereof.

Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on 21 May 1991 by the
Regional Tripartite Wages and Productivity Commission for correction of pay scale structures in cases of
wage distortion as in this case at bar which is:

Minimum Wage

=% x

Prescribed

Distortion

___________

Actual Salary

Increased

Adjustment

would be the most equitable and fair under the circumstances obtaining in this case.

For this very reason, I register my dissent from the majority opinion and opt for the modification of the
Labor Arbiter’s decision as afore-discussed.”4

The MBTCEU filed a motion for the reconsideration of the decision of the NLRC; having been denied, the
MBTCEU and its president filed the instant petition for certiorari, charging the NLRC with grave abuse of
discretion by its refusal (a) “to acknowledge the existence of a wage distortion in the wage or salary
rates between and among the employee groups of the respondent bank as a result of the bank’s partial
implementation” of Republic Act 6727 and (b) to give due course to its claim for an across-the-board
P25 increase under Republic Act No. 6727.5

We agree with the Solicitor General that the petition is impressed with merit.6

_______________

4 Ibid., pp. 55-56.

5 Ibid., p. 12.

6 Manifestation in Lieu of Comments, p. 1; Rollo, p. 134.

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Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations
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The term “wage distortion”, under the Rules Implementing Republic Act 6727, is defined, thus:

“(p) Wage Distortion means a situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage or salary rates between
and among employee groups in an establishment as to effectively obliterate the distinctions embodied
in such wage structure based on skills, length of service, or other logical bases of differentiation.”

The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to
certain employees, we agree, is, by and large, a question of fact the determination of which is the
statutory function of the NLRC.7 Judicial review of labor cases, we may add, does not go beyond the
evaluation of the sufficiency of the evidence upon which the labor officials’ findings rest.8 As such,
factual findings of the NLRC are generally accorded not only respect but also finality provided that its
decisions are supported by substantial evidence and devoid of any taint of unfairness or arbitrariness.9
When, however, the members of the same labor tribunal are not in accord on those aspects of a case, as
in this case, this Court is well cautioned not to be as so conscious in passing upon the sufficiency of the
evidence, let alone the conclusions derived therefrom.

In this case, the majority of the members of the NLRC, as well as its dissenting member, agree that there
is a wage distortion arising from the bank’s implementation of the P25 wage increase; they do differ,
however, on the extent of the distortion that can warrant the adoption of corrective measures required
by the law.

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7 Cardona v. NLRC, G.R. No. 89007, March 11, 1991, 195 SCRA 92.

8 Philippine Overseas Drilling and Oil Development Corporation v. Ministry of Labor, G.R. No. 55703,
November 27, 1986, 146 SCRA 79, 88.

9 Artex Development Co., Inc. v. NLRC, G.R. No. 65045, July 20, 1990, 187 SCRA 611, 615; Five J Taxi v.
NLRC, G.R. No. 100138, August 5, 1992, 212 SCRA 225.

276

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SUPREME COURT REPORTS ANNOTATED

Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations
Commission

The definition of “wage distortion,”10 aforequoted, shows that such distortion can so exist when, as a
result of an increase in the prescribed wage rate, an “elimination or severe contraction of intentional
quantitative differences in wage or salary rates” would occur “between and among employee groups in
an establishment as to effectively obliterate the distinctions embodied in such wage structure based on
skills, length of service, or other logical bases of differentiation.” In mandating an adjustment, the law
did not require that there be an elimination or total abrogation of quantitative wage or salary
differences; a severe contraction thereof is enough. As has been aptly observed by Presiding
Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction between personnel
groupings comes close to eightythree (83%), which cannot, by any stretch of imagination, be considered
less than severe.

The “intentional quantitative differences” in wage among employees of the bank has been set by the
CBA to about P900 per month as of 01 January 1989. It is intentional as it has been arrived at through
the collective bargaining process to which the parties are thereby concluded.11 The Solicitor General, in
recommending the grant of due course to the petition, has correctly emphasized that the intention of
the parties, whether the benefits under a collective bargaining agreement should be equated with those
granted by law or not, unless there are compelling reasons otherwise, must prevail and be given
effect.12

In keeping then with the intendment of the law and the agreement of the parties themselves, along with
the often repeated rule that all doubts in the interpretation and implementation of labor laws should be
resolved in favor of labor,13 we must approximate an acceptable quantitative difference between and

_______________

10 This is now under Art. 124 of the Labor Code as amended by Rep. Act 6727.

11 Plastic Town Center Corporation v. NLRC G.R. No. 81176, April 19, 1989, 172 SCRA 580, 585.

12 Filipinas Golf & Country Club, Inc. v. NLRC G.R. No. 61918, August 23, 1989, 176 SCRA 625, 632.
13 International Pharmaceuticals, Inc. v. Secretary of Labor G.R. Nos. 92981-83, January 9, 1992, 205
SCRA 59.

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VOL. 226, SEPTEMBER 10, 1993

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Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations
Commission

among the CBA agreed work levels. We, however, do not subscribe to the labor arbiter’s exacting
prescription in correcting the wage distortion. Like the majority of the members of the NLRC, we are also
of the view that giving the employees an across-the-board increase of P750 may not be conducive to the
policy of encouraging “employers to grant wage and allowance increases to their employees higher than
the minimum rates of increases prescribed by statute or administrative regulation,” particularly in this
case where both Republic Act 6727 and the CBA allow a credit for voluntary compliance. As the Court,
through Associate Justice Florentino Feliciano, also pointed out in Apex Mining Company, Inc. v. NLRC:14

“x x x. (T)o compel employers simply to add on legislated increases in salaries or allowances without
regard to what is already being paid, would be to penalize employers who grant their workers more
than the statutorily prescribed minimum rates of increases. Clearly, this would be counter-productive so
far as securing the interests of labor is concerned. x x x.”

We find the formula suggested then by Commissioner Bonto-Perez, which has also been the standard
considered by the regional Tripartite Wages and Productivity Commission for the correction of pay scale
structures in cases of wage dis