1
G.R. No. 96189. July 14, 1992.*
UNIVERSITY OF THE PHILIPPINES, petitioner, vs. HON. PURA FERRER-CALLEJA,
Director of the Bureau of Labor Relations, Department of Labor and Employment,
and THE ALL U.P. WORKERS’ UNION, represented by its President, Rosario del
Rosario, respondents.
Labor Laws; Labor Organization; Professors, associate professors and assistant professors
cannot be considered as exercising such managerial or highly confidential functions as would
justify their being categorized as “high-level employees” of the University of the Philippines.—
As regards the first issue, the Court is satisfied that it has been correctly resolved by the
respondent Director of Bureau Relations. In light of Executive Order No. 180 and its
implementing rules, as well as the University’s charter and relevant regulations, the
professors, associate professors and assistant professors (hereafter simply referred to as
professors) cannot be considered as exercising such managerial or highly confidential
functions as would justify their being categorized as “high-level employees” of the institution.
Same; Same; Same; It is the University Academic Personnel Committee composed of deans,
the assistant for academic affairs and the chief of personnel which formulates the policies,
rules and standards respecting selection, compensation and promotion of members of the
academic staff.—From the foregoing, it is evident that it is the University Academic Personnel
Committee, composed of deans, the assistant for academic affairs and the chief of personnel,
which formulates the policies, rules and standards respecting selection, compensation and
promotion of members of the academic staff. The departmental and college academic
personnel committees’ functions are purely recommendatory in nature, subject to review and
evaluation by the University Academic Personnel Board.
Same; Same; Same; Membership in the University Council can not elevate the professors to
the status of high-level employees.—Neither can membership in the University Council
elevate the professors to the status of high-level employees.
Same; Same; Same; Same; Even assuming arguendo that UP professors discharge policy-
determining functions through the University Council, still such exercise would not qualify
them as high-level employees within the context of E.O. 180.—Even assuming arguendo that
UP professors discharge policy-determining functions through the University Council, still such
exercise would not qualify them as high-level employees within the context of E.O. 180. As
correctly observed by private respondent, “Executive Order No. 180 is a law concerning
public sector unionism. It must therefore be construed within that context. Within that
context, the University of the Philippines represents the government as an employer. ‘Policy-
determining’ refers to policy-determination in university matters that affect those same
matters that may be the subject of negotiation between public sector management and labor.
The reason why ‘policy-determining’ has been laid down as a test in segregating rank-and-file
from management is to ensure that those who lay down policies in areas that are still
negotiable in public sector collective bargaining do not themselves become part of those
employees who seek to change these policies for their collective welfare.”
Same; Same; Bargaining Unit defined.—A “bargaining unit” has been defined as a group of
employees of a given employer, comprised of all or less than all of the entire body of
employees, which the collective interest of all the employees, consistent with equity to the
employer, indicate to be the best suited to serve the reciprocal rights and duties of the
parties under the collective bargaining provisions of the law.
Same; Same; Same; Our labor laws do not provide the criteria for determining the proper
collective bargaining unit.—Our labor laws do not however provide the criteria for
determining the proper collective bargaining unit.
Same; Same; Same; Same; The basic test of an asserted bargaining unit’s acceptability is
whether or not it is fundamentally the combination which will best assure to all employees
the exercise of their collective bargaining rights.—The Court further explained that “(t)he test
of the grouping is community or mutuality of interests. And this is so because ‘the basic test
of an asserted bargaining unit’s acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the exercise of their collective bargaining
rights’ (Rothenberg on Labor Relations, 490).” Hence, in that case, the Court upheld the trial
court’s conclusion that two separate bargaining units should be formed, one consisting of
regular and permanent employees and another consisting of casual laborers or stevedores.
Same; Same; Same; Same; Same; The community or mutuality of interests test has provided
the standard in determining the proper constituency of a collective bargaining unit.—Since
then, the “community or mutuality of interests” test has provided the standard in determining
the proper constituency of a collective bargaining unit. In Alhambra Cigar & Cigarette
Manufacturing Company, et al. vs. Alhambra Employees’ Association (PAFLU), 107 Phil. 23,
the Court, noting that the employees in the administrative, sales and dispensary departments
of a cigar and cigarette manufacturing firm perform work which have nothing to do with
production and maintenance, unlike those in the raw lead (malalasi), cigar, cigarette, packing
(precintera) and engineering and garage departments, authorized the formation of the
former set of employees into a separate collective bargaining unit. The ruling in the
Democratic Labor Association case, supra, was reiterated in Philippine Land-Air-Sea Labor
Union vs. Court of Industrial Relations, 110 Phil. 176, where casual employees were barred
from joining the union of the permanent and regular employees.
SPECIAL CIVIL ACTION of certiorari to review the decision of the Bureau of Labor Relations.
The facts are stated in the opinion of the Court.
NARVASA, C.J.:
In this special civil action of certiorari the University of the Philippines seeks the nullification
of the Order dated October 30, 1990 of Director Pura Ferrer-Calleja of the Bureau of Labor
Relations holding that “professors, associate professors and assistant professors (of the
University of the Philippines) are xx rank-and-file employees xx;” consequently, they should,
together with the so-called non-academic, non-teaching, and all other employees of the
University, be represented by only one labor organization.1 The University is joined in this
undertaking by the Solicitor General who “has taken a position not contrary to that of
petitioner and, in fact, has manifested xx that he is not opposing the petition xx.”2
The case3 was initiated in the Bureau of Labor Relations by a petition filed on March 2, 1990
by a registered labor union, the “Organization of Non-Academic Personnel of UP” (ONAPUP).4

Claiming to have a membership of 3,236 members—comprising more than 33% of the 9,617
persons constituting the non-academic personnel of UP-Diliman, Los Baños, Manila, and
Visayas, it sought the holding of a certification election among all said non-academic
employees of the University of the Philippines. At a conference thereafter held on March 22,
1990 in the Bureau, the University stated that it had no objection to the election.
On April 18, 1990, another registered labor union, the “All UP Workers’ Union,”5 filed a
comment, as intervenor in the certification election proceeding. Alleging that its membership
covers both academic and non-academic personnel, and that it aims to unite all UP rank-and-
file employees in one union, it declared its assent to the holding of the election provided the
appropriate organizational unit was first clearly defined. It observed in this connection that
the Research, Extension and Professorial Staff (REPS), who are academic non-teaching
personnel, should not be deemed part of the organizational unit.
For its part, the University, through its General Counsel,6 made of record its view that there
should be two (2) unions: one for academic, the other for non-academic or administrative,
personnel considering the dichotomy of interests, conditions and rules governing these
employee groups.
Director Calleja ruled on the matter on August 7, 1990.7 She declared that “the appropriate
organizational unit xx should embrace all the regular rank-and-file employees, teaching and
non-teaching, of the University of the Philippines, including all its branches” and that there
was no sufficient evidence “to justify the grouping of the non-academic or administrative
personnel into an organization unit apart and distinct from that of the academic or teaching
personnel.” Director Calleja adverted to Section 9 of Executive Order No. 180, viz.:
“SEC.9. The appropriate organizational unit shall be the employer unit consisting of rank-and-
file employees, unless circumstances otherwise require.”
and Section 1, Rule IV of the Rules Implementing said EO 180 (as amended by SEC. 2,
Resolution of Public Sector Labor Management Council dated May 14, 1989, viz.:
“x x x      x x x
“For purposes of registration, an appropriate organizational unit may refer to:
“x x x      x x x
d. State universities or colleges, government-owned or controlled corporations with original
charters.”
She went on to say that the general intent of EO 180 was “not to fragmentize the employer
unit, as “can be gleaned from the definition of the term “accredited employees’ organization,”
which refers to:
“x x a registered organization of the rank-and-file employees as defined in these rules
recognized to negotiate for the employees in an organizational unit headed by an officer with
sufficient authority to bind the agency, such as xxx xxx state colleges and universities.”
The Director thus commanded that a certification election be “conducted among rank-and-file
employees, teaching and non-teaching” in all four autonomous campuses of the UP, and that
management appear and bring copies of the corresponding payrolls for January, June, and
July, 1990 at the “usual preelection conference xx.”
At the pre-election conference held on March 22, 1990 at the Labor Organizational Division of
the DOLE,8 the University sought further clarification of the coverage of the term, “rank-and-
2
file” personnel, asserting that not every employee could properly be embraced within both
teaching and non-teaching categories since there are those whose positions are in truth
managerial and policy-determining, and hence, excluded by law.
At a subsequent hearing (on October 4, 1990), the University filed a Manifestation seeking
the exclusion from the organizational unit of those employees holding supervisory positions
among non-academic personnel, and those in teaching staff with the rank of Assistant
Professor or higher, submitting the following as grounds therefor:
1) Certain “high-level employees” with policy-making, managerial, or confidential functions,
are ineligible to join rank-and-file employee organizations under Section 3, EO 180:
“SEC.3. High-level employees whose functions are normally considered as policy-making or
managerial or whose duties are of a highly confidential nature shall not be eligible to join the
organization of rank-and-file government employees;
2) In the University hierarchy, not all teaching and non-teaching personnel belong to the
rank-and-file: just as there are those occupying managerial positions within the non-teaching
roster, there is also a dichotomy between various levels of the teaching or academic staff;
3) Among the non-teaching employees composed of Administrative Staff and Research
personnel, only those holding positions below Grade 18 should be regarded as rank-and-file,
considering that those holding higher grade positions, like Chiefs of Sections, perform
supervisory functions including that of effectively recommending termination of appointments
or initiating appointments and promotions; and
4) Not all teaching personnel may be deemed included in the term, “rank-and-file;” only
those holding appointments at the instructor level may be so considered, because those
holding appointments from Assistant Professor to Associate Professor to full Professor take
part, as members of the University Council, a policy-making body, in the initiation of policies
and rules with respect to faculty tenure and promotion.9
The ONAPUP quite categorically made of record its position; that it was not opposing the
University’s proferred classification of rank-and-file employees. On the other hand, the “All UP
Workers’ Union” opposed the University’s view, in a Position Paper presented by it under date
of October 18, 1990. Director Calleja subsequently promulgated an Order dated October 30,
1990, resolving the “sole issue” of “whether or not professors, associate professors and
assistant professors are included in the definition of high-level employee(s)” in light of Rule I,
Section (1) of the Implementing Guidelines of Executive Order No. 180, defining “high level
employee” as follows:
“1. High Level Employee—is one whose functions are normally considered policy determining,
managerial or one whose duties are highly confidential in nature. A managerial function
refers to the exercise of powers such as:
1.To effectively recommend such managerial actions;
2.To formulate or execute management policies and decisions; or
3.To hire, transfer, suspend, lay-off, recall, dismiss, assign or discipline employees.”

The Director adjudged that said teachers are rank-and-file employees “qualified to join unions
and vote in certification elections.” According to her—
“A careful perusal of the University Code xx shows that the policy-making powers of
the Council are limited to academic matters, namely, prescribing courses of study and rules
of discipline, fixing student admission and graduation requirements, recommending to the
Board of Regents the conferment of degrees, and disciplinary power over students. The
policy-determining functions contemplated in the definition of a high-level employee pertain
to managerial, executive, or organization policies, such as hiring, firing, and disciplining of
employees, salaries, teaching/working hours, other monetary and non-monetary benefits,
and other terms and conditions of employment. They are the usual issues in collective
bargaining negotiations so that whoever wields these powers would be placed in a situation
of conflicting interests if he were allowed to join the union of rank-and-file employees.
The University seasonably moved for reconsideration, seeking to make the following points,
to wit:
1) UP professors do “wield the most potent managerial powers: the power to rule on tenure,
on the creation of new programs and new jobs, and conversely, the abolition of old programs
and the attendant re-assignment of employees.”
2) To say that the Council is “limited to (acting on) academic matters” is error, since
academic decisions “are the most important decisions made in a University xx (being, as it
were) the heart, the core of the University as a workplace.
3) Considering that the law regards as a “high level” employee, one who performs either
policy-determining, managerial, or confidential functions, the Director erred in applying only
the “managerial functions” test, ignoring the “policy-determining-functions” test.
4) The Director’s interpretation of the law would lead to absurd results, e.g.: “an
administrative officer of the College of Law is a high level employee, while a full Professor
who has published several treatises and who has distinguished himself in argument before
the Supreme Court is a mere rank-and-file employee. A dormitory manager is classified as a
high level employee, while a full Professor of Political Science with a Ph. D. and several
Honorary doctorates is classified as rank-and-file.”10
The motion for reconsideration was denied by Director Calleja, by Order dated November 20,
1990. The University would now have this Court declare void the Director’s Order of October
30, 1990 as well as that of November 20, 1990.11 A temporary restraining order was issued
by the Court, by Resolution dated December 5, 1990 conformably to the University’s
application therefor.
Two issues arise from these undisputed facts. One is whether or not professors, associate
professors and assistant professors are “high-level employees” “whose functions are normally
considered policy determining, managerial or xx highly confidential in nature.” The other is
whether or not, they, and other employees performing academic functions,12 should
comprise a collective bargaining unit distinct and different from that consisting of the non-
academic employees of the University,13 considering the dichotomy of interests, conditions
and rules existing between them.
3
As regards the first issue, the Court is satisfied that it has been correctly resolved by the
respondent Director of Bureau Relations. In light of Executive Order No. 180 and its
implementing rules, as well as the University’s charter and relevant regulations, the
professors, associate professors and assistant professors (hereafter simply referred to as
professors) cannot be considered as exercising such managerial or highly confidential
functions as would justify their being categorized as “high-level employees” of the institution.
The Academic Personnel Committees, through which the professors supposedly exercise
managerial functions, were constituted “in order to foster greater involvement of the faculty
and other academic personnel in appointments, promotions, and other personnel matters
that directly affect them.”14 Academic Personnel Committees at the departmental and college
levels were organized “consistent with, and demonstrative of the very idea of consulting the
faculty and other academic personnel on matters directly affecting them” and to allow
“flexibility in the determination of guidelines peculiar to a particular department or college.”15
Personnel actions affecting the faculty and other academic personnel should, however, “be
considered under uniform guidelines and consistent with the Resolution of the Board (of
Regents) adopted during its 789th Meeting (11-26-69) creating the University Academic
Personnel Board.”16 Thus, the Departmental Academic Personnel Committee is given the
function of “assist(ing) in the review of the recommendations initiated by the Department
Chairman with regard to recruitment, selection, performance evaluation, tenure and staff
development, in accordance with the general guidelines formulated by the University
Academic Personnel Board and the implementing details laid down by the College Academic
Personnel Committee;”17 while the College Academic Personnel Committee is entrusted with
the following functions:18
1. Assist the Dean in setting up the details for the implementation of policies, rules, standards
or general guidelines as formulated by the University Academic Personnel Board;
2. Review the recommendations submitted by the DAPCs with regard to recruitment,
selection, performance evaluation, tenure, staff development, and promotion of the faculty
and other academic personnel of the College;
3. Establish departmental priorities in the allocation of available funds for promotion;
4. Act on cases of disagreement between the Chairman and the members of the DAPC
particularly on personnel matters covered by this Order;
5. Act on complaints and/or protests against personnel actions made by the Department
Chairman and/or the DAPC.
The University Academic Personnel Board, on the other hand, performs the following
functions:19
1. Assist the Chancellor in the review of the recommendations of the CAPC’S.
2. Act on cases of disagreement between the Dean and the CAPC.
3. Formulate policies, rules, and standards with respect to the selection, compensation, and
promotion of members of the academic staff.
4. Assist the Chancellor in the review of recommendations on academic promotions and on
other matters affecting faculty status and welfare.

From the foregoing, it is evident that it is the University Academic Personnel Committee,
composed of deans, the assistant for academic affairs and the chief of personnel, which
formulates the policies, rules and standards respecting selection, compensation and
promotion of members of the academic staff. The departmental and college academic
personnel committees’ functions are purely recommendatory in nature, subject to review and
evaluation by the University Academic Personnel Board. In Franklin Baker Company of the
Philippines vs. Trajano,20 this Court reiterated the principle laid down in National
Merchandising Corp. vs. Court of Industrial Relations,21 that the power to recommend, in
order to qualify an employee as a supervisor or managerial employee “must not only be
effective but the exercise of such authority should not be merely of a routinary or clerical
nature but should require the use of independent judgment.” Where such recommendatory
powers, as in the case at bar, are subject to evaluation, review and final action by the
department heads and other higher executives of the company, the same, although present,
are not required by law.
Significantly, the personnel actions that may be recommended by the departmental and
college academic personnel committees must conform with the general guidelines drawn up
by the university personnel academic committee. This being the case, the members of the
departmental and college academic personnel committees are not unlike the chiefs of
divisions and sections of the National Waterworks and Sewerage Authority whom this Court
considered as rank-and-file employees in National Waterworks & Sewerage Authority vs.
NWSA Consolidated Unions,22 because “given ready policies to execute and standard
practices to observe for their execution, x x x they have little freedom of action, as their main
function is merely to carry out the company’s orders, plans and policies.”
The power or prerogative pertaining to a high-level employee “to effectively recommend such
managerial actions, to formulate or execute management policies or decisions and/or to hire,
transfer, suspend, lay-off, recall, dismiss, assign or discipline employees”23 is exercised to a
certain degree by the university academic personnel board/committees and ultimately by the
Board of Regents in accordance with Section 6 of the University Charter,24 thus:
(e) To appoint, on the recommendation of the President of the University,
professors, instructors, lecturers and other employees of the University; to fix their
compensation, hours of service, and such other duties and conditions as it may deem proper;
to grant them in its discretion leave of absence under such regulations as it may promulgate,
any other provision of law to the contrary notwithstanding, and to remove them for cause
after investigation and hearing shall have been had.
Another factor that militates against petitioner’s espousal of managerial employment status
for all its professors through membership in the departmental and college academic
personnel committees is that not all professors are members thereof. Membership and the
number of members in the committees are provided as follows:25
Section2. Membership in Committees.—Membership in committees may be made either
through appointment, election, or by some other means as may be determined by the faculty
and other academic personnel of a particular department or college.
Section3. Number of Members.—In addition to the Chairman, in the case of a department,
and the Dean in the case of a college, there shall be such number of members representing
4
the faculty and academic personnel as will afford a fairly representative, deliberative and
manageable group that can handle evaluation of personnel actions.
Neither can membership in the University Council elevate the professors to the status of high-
level employees. Sections 6 (f) and 9 of the UP Charter respectively provide:26
Sec.6. The Board of Regents shall have the following powers and duties x x x;
x x x      x x x
(f) To approve the courses of study and rules of discipline drawn up by the University Council
as hereinafter provided; x x x
Sec.9. There shall be a University Council consisting of the President of the University and of
all instructors in the university holding the rank of professor, associate professor, or assistant
professor. The Council shall have the power to prescribe the courses of study and rules of
discipline, subject to the approval of the Board of Regents. It shall fix the requirements for
admission to any college of the university, as well as for graduation and the receiving of a
degree. The Council alone shall have the power to recommend students or others to be
recipients of degrees. Through its president or committees, it shall have disciplinary power
over the students within the limits prescribed by the rules of discipline approved by the Board
of Regents. The powers and duties of the President of the University, in addition to those
specifically provided in this Act shall be those usually pertaining to the office of president of a
university.
It is readily apparent that the policy-determining functions of the University Council are
subject to review, evaluation and final approval by the Board of Regents. The Council’s power
of discipline is likewise circumscribed by the limits imposed by the Board of Regents. What
has been said about the recommendatory powers of the departmental and college academic
personnel committees applies with equal force to the alleged policy-determining functions of
the University Council. Even assuming arguendo that UP professors discharge policy-
determining functions through the University Council, still such exercise would not qualify
them as high-level employees within the context of E.O. 180. As correctly observed by private
respondent,”Executive Order No. 180 is a law concerning public sector unionism. It must
therefore be construed within that context. Within that context, the University of the
Philippines represents the government as an employer. ‘Policy-determining’ refers to policy-
determination in university matters that affect those same matters that may be the subject of
negotiation between public sector management and labor. The reason why ‘policy-
determining’ has been laid down as a test in segregating rank-and-file from management is
to ensure that those who lay down policies in areas that are still negotiable in public sector
collective bargaining do not themselves become part of those employees who seek to change
these policies for their collective welfare.”27
The policy-determining functions of the University Council refer to academic matters, i.e.
those governing the relationship between the University and its students, and not the
University as an employer and the professors as employees. It is thus evident that no conflict
of interest results in the professors being members of the University Council and being
classified as rank-and-file employees.

Be that as it may, does it follow, as public respondent would propose, that all rank-and-file
employees of the university are to be organized into a single collective bargaining unit?
A “bargaining unit” has been defined as a group of employees of a given employer,
comprised of all or less than all of the entire body of employees, which the collective interest
of all the employees, consistent with equity to the employer, indicate to be the best suited to
serve the reciprocal rights and duties of the parties under the collective bargaining provisions
of the law. Our labor laws do not however provide the criteria for determining the proper
collective bargaining unit. Section 12 of the old law, Republic Act No. 875 otherwise known as
the Industrial Peace Act, simply reads as follows:29
Section12. Exclusive Collective Bargaining Representation for Labor Organizations.—The labor
organization designated or selected for the purpose of collective bargaining by the majority of
the employees in an appropriate collective bargaining unit shall be the exclusive
representative of all the employees in such unit for the purpose of collective bargaining in
respect to rates of pay, wages, hours of employment, or other conditions of employment;
Provided, That any individual employee or group of employees shall have the right at any
time to present grievances to their employer.
Although said Section 12 of the Industrial Peace Act was subsequently incorporated into the
Labor Code with minor changes, no guidelines were included in said Code for determination
of an appropriate bargaining unit in a given case.30 Thus, apart from the single descriptive
word “appropriate,” no specific guide for determining the proper collective bargaining unit
can be found in the statutes. Even Executive Order No. 180 already adverted to is not much
help. All it says, in its Section 9, is that “(t)he appropriate organizational unit shall be the
employer unit consisting of rank-and-file employees, unless circumstances otherwise require.”
Case law fortunately furnishes some guidelines.
When first confronted with the task of determining the proper collective bargaining unit in a
particular controversy, the Court had perforce to rely on American jurisprudence. In
Democratic Labor Association vs. Cebu Stevedoring Company, Inc., decided on February 28,
1958,31 the Court observed that “the issue of how to determine the proper collective
bargaining unit and what unit would be appropriate to be the collective bargaining agency” x
x x “is novel in this jurisdiction; however, American precedents on the matter abound xx (to
which resort may be had) considering that our present Magna Carta has been patterned after
the American law on the subject.” Said the Court:
“x x x Under these precedents, there are various factors which must be satisfied and
considered in determining the proper constituency of a bargaining unit. No one particular
factor is itself decisive of the determination. The weight accorded to any particular factor
varies in accordance with the particular question or questions that may arise in a given case.
What are these factors? Rothenberg mentions a good number, but the most pertinent to our
case are: (1) will of the employees (Globe Doctrine); (2) affinity and unit of employees’
interest, such as substantial similarity of work and duties, or similarity of compensation and
working conditions; (3) prior collective bargaining history; and (4) employment status, such
as temporary, seasonal and probationary employees. x x.
“x x x      x x x
5
“An enlightening appraisal of the problem of defining an appropriate bargaining unit is given
in the 10th Annual Report of the National Labor Relations Board wherein it is emphasized that
the factors which said board may consider and weigh in fixing appropriate units are: the
history, extent and type of organization of employees; the history of their collective
bargaining; the history, extent and type of organization of employees in other plants of the
same employer, or other employers in the same industry; the skill, wages, work, and working
conditions of the employees; the desires of the employees; the eligibility of the employees for
membership in the union or unions involved; and the relationship between the unit or units
proposed and the employer’s organization, management, and operation. x x.
“x x In said report, it is likewise emphasized that the basic test in determining the appropriate
bargaining unit is that a unit, to be appropriate, must affect a grouping of employees who
have substantial, mutual interests in wages, hours, working conditions and other subjects of
collective bargaining (citing Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162). x
x.”
The Court further explained that “(t)he test of the grouping is community or mutuality of
interests. And this is so because ‘the basic test of an asserted bargaining unit’s acceptability
is whether or not it is fundamentally the combination which will best assure to all employees
the exercise of their collective bargaining rights’ (Rothenberg on Labor Relations, 490).”
Hence, in that case, the Court upheld the trial court’s conclusion that two separate bargaining
units should be formed, one consisting of regular and permanent employees and another
consisting of casual laborers or stevedores.
Since then, the “community or mutuality of interests” test has provided the standard in
determining the proper constituency of a collective bargaining unit. In Alhambra Cigar &
Cigarette Manufacturing Company, et al. vs. Alhambra Em-ployees’ Association (PAFLU), 107
Phil. 23, the Court, noting that the employees in the administrative, sales and dispensary
departments of a cigar and cigarette manufacturing firm perform work which have nothing to
do with production and maintenance, unlike those in the raw lead (malalasi), cigar, cigarette,
packing (precintera) and engineering and garage departments, authorized the formation of
the former set of employees into a separate collective bargaining unit. The ruling in the
Democratic Labor Association case, supra, was reiterated in Philippine Land-Air-Sea Labor
Union vs. Court of Industrial Relations, 110 Phil. 176, where casual employees were barred
from joining the union of the permanent and regular employees.
Applying the same “community or mutuality of interests” test, but resulting in the formation
of only one collective bargaining unit is the case of National Association of Free Trade Unions
vs. Mainit Lumber Development Company Workers Union-United Lumber and General
Workers of the Phils., G.R. No. 79526, December 21, 1990, 192 SCRA 598. In said case, the
Court ordered the formation of a single bargaining unit consisting of the Sawmill Division in
Butuan City and the Logging Division in Zapanta Valley, Kitcharao, Agusan Norte of the Mainit
Lumber Development Company. The Court reasoned:
“Certainly, there is a mutuality of interest among the employees of the Sawmill Division and
the Logging Division. Their functions mesh with one another. One group needs the other in
the same way that the company needs them both. There may be difference as to the nature

of their individual assignments but the distinctions are not enough to warrant the formation
of a separate bargaining unit.”
In the case at bar, the University employees may, as already suggested, quite easily be
categorized into two general classes: one, the group composed of employees whose
functions are nonacademic, i.e., janitors, messengers, typists, clerks, receptionists,
carpenters, electricians, grounds-keepers, chauffeurs, mechanics, plumbers;32 and two, the
group made up of those performing academic functions, i.e., full professors, associate
professors, assistant professors, instructors—who may be judges or government executives—
and research, extension and professorial staff.33 Not much reflection is needed to perceive
that the community or mutuality of interests which justifies the formation of a single
collective bargaining unit is wanting between the academic and non-academic personnel of
the university. It would seem obvious that teachers would find very little in common with the
University clerks and other non-academic employees as regards responsibilities and functions,
working conditions, compensation rates, social life and interests, skills and intellectual
pursuits, cultural activities, etc. On the contrary, the dichotomy of interests, the dissimilarity
in the nature of the work and duties as well as in the compensation and working conditions
of the academic and non-academic personnel dictate the separation of these two categories
of employees for purposes of collective bargaining. The formation of two separate bargaining
units, the first consisting of the rank-and-file non-academic personnel, and the second, of the
rank-and-file academic employees, is the set-up that will best assure to all the employees the
exercise of their collective bargaining rights. These special circumstances, i.e., the dichotomy
of interests and concerns as well as the dissimilarity in the nature and conditions of work,
wages and compensation between the academic and non-academic personnel, bring the case
at bar within the exception contemplated in Section 9 of Executive Order No. 180. It was
grave abuse of discretion on the part of the Labor Relations Director to have ruled otherwise,
ignoring plain and patent realities.
WHEREFORE, the assailed Order of October 30, 1990 is hereby AFFIRMED in so far as it
declares the professors, associate professors and assistant professors of the University of the
Philippines as rank-and-file employees. The Order of August 7, 1990 is MODIFIED in the
sense that the non-academic rank-and-file employees of the University of the Philippines shall
constitute a bargaining unit to the exclusion of the academic employees of the institution.—
i.e, full professors, associate professors, assistant professors, instructors, and the research,
extension and professorial staff, who may, if so minded, organize themselves into a separate
collective bargaining unit; and that, therefore, only said non-academic rank-and-file
personnel of the University of the Philippines in Diliman, Manila, Los Baños and the Visayas
are to participate in the certification election.
SO ORDERED.
G.R. No. 110399. August 15, 1997.*
SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT EMPLOYEES UNION AND
ERNESTO L. PONCE, President, petitioners, vs. HONORABLE BIENVENIDO E.
LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND
EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED-
ARBITER AND SAN MIGUEL CORPORATION, respondents.
6
Labor Law; Labor Unions; Criteria to Determine who are Confidential Employees.—
Confidential employees are those who (1) assist or act in a confidential capacity, (2) to
persons who formulate, determine, and effectuate management policies in the field of labor
relations. The two criteria are cumulative, and both must be met if an employee is to be
considered a confidential employee—that is, the confidential relationship must exist between
the employee and his supervisor, and the supervisor must handle the prescribed
responsibilities relating to labor relations.
Same; Same; Reason behind the confidential employee rule.—The exclusion from bargaining
units of employees who, in the normal course of their duties, become aware of management
policies relating to labor relations is a principal objective sought to be accomplished by the
“confidential employee rule.” The broad rationale behind this rule is that employees should
not be placed in a position involving a potential conflict of interests. “Management should not
be required to handle labor relations matters through employees who are represented by the
union with which the company is required to deal and who in the normal performance of their
duties may obtain advance information of the company’s position with regard to contract
negotiations, the disposition of grievances, or other labor relations matters.”
Same; Same; Same; In determining the confidentiality of certain employees, a key question
frequently considered is the employee’s necessary access to confidential labor relations
information.—An important element of the “confidential employee rule” is the employee’s
need to use labor relations information. Thus, in determining the confidentiality of certain
employees, a key question frequently considered is the employee’s necessary access to
confidential labor relations information.
Same; Same; Same; An employee may not be excluded from appropriate bargaining unit
merely because he has access to confidential information concerning employer’s internal
business operations and which is not related to the field of labor relations.—It is evident that
whatever confidential data the questioned employees may handle will have to relate to their
functions. From the foregoing functions, it can be gleaned that the confidential information
said employees have access to concern the employer’s internal business operations. As held
in Westinghouse Electric Corporation v. National Labor Relations Board, “an employee may
not be excluded from appropriate bargaining unit merely because he has access to
confidential information concerning employer’s internal business operations and which is not
related to the field of labor relations.”
Same; Same; Same; Confidential employees who may be excluded from bargaining unit must
be strictly defined so as not to needlessly deprive many employees of their right to bargain
collectively through representatives of their choosing.—It must be borne in mind that Section
3 of Article XIII of the 1987 Constitution mandates the State to guarantee to “all” workers the
right to self-organization. Hence, confidential employees who may be excluded from
bargaining unit must be strictly defined so as not to needlessly deprive many employees of
their right to bargain collectively through representatives of their choosing.
Same; Same; Appropriate Bargaining Unit Defined.—An appropriate bargaining unit may be
defined as “a group of employees of a given employer, comprised of all or less than all of the
entire body of employees, which the collective interest of all the employees, consistent with

equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of
the parties under the collective bargaining provisions of the law.”
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
ROMERO, J.:
This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking
to reverse and set aside the Order of public respondent, Undersecretary of the Department of
Labor and Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA
A-2-70-911 entitled “In Re: Petition for Certification Election Among the Supervisory and
Exempt Employees of the San Miguel Corporation Magnolia Poultry Products Plants of
Cabuyao, San Fernando and Otis, San Miguel Corporation Supervisors and Exempt Employees
Union, Petitioner.” The Order excluded the employees under supervisory levels 3 and 4 and
the socalled exempt employees from the proposed bargaining unit and ruled out their
participation in the certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the Department of Labor and Employment
(DOLE) a Petition for Direct Certification or Certification Election among the supervisors and
exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando
and Otis.
On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct
of certification election among the supervisors and exempt employees of the SMC Magnolia
Poultry Products Plants of Cabuyao, San Fernando and Otis as one bargaining unit.
On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with
Memorandum on Appeal, pointing out, among others, the Med-Arbiter’s error in grouping
together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining
unit, and in including supervi-sory levels 3 and above whose positions are confidential in
nature. On July 23, 1991, the public respondent, Undersecretary Laguesma, granted
respondent company’s Appeal and ordered the remand of the case to the Med-Arbiter of
origin for determination of the true classification of each of the employees sought to be
included in the appropriate bargaining unit. Upon petitioner-union’s motion dated August 7,
1991, Undersecretary Laguesma granted the reconsideration prayed for on September 3,
1991 and directed the conduct of separate certification elections among the supervisors
ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of the three
plants at Cabuyao, San Fernando and Otis. On September 21, 1991, respondent company,
San Miguel Corporation filed a Motion for Reconsideration with Motion to suspend
proceedings. On March 11, 1993, an Order was issued by the public respondent granting the
Motion, citing the doctrine enunciated in Philips Industrial Development, Inc. v. NLRC2 case.
Said
Order reads in part:
7
“x x x Confidential employees, like managerial employees, are not allowed to form, join or
assist a labor union for purposes of collective bargaining.
In this case, S3 and S4 Supervisors and the so-called exempt employees are admittedly
confidential employees and therefore, they are not allowed to form, join or assist a labor
union for purposes of collective bargaining following the above court’s ruling. Consequently,
they are not allowed to participate in the certification election.
WHEREFORE, the Motion is hereby granted and the Decision of this Office dated 03
September 1991 is hereby modified to the extent that employees under supervisory levels 3
and 4 (S3 and S4) and the so-called exempt employees are not allowed to join the proposed
bargaining unit and are therefore excluded from those who could participate in the
certification election.”3
Hence this petition.
For resolution in this case are the following issues:
1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are
considered confidential employees, hence ineligible from joining a union.
2.If they are not confidential employees, do the employees of the three plants constitute an
appropriate single bargaining unit.
On the first issue, this Court rules that said employees do not fall within the term
“confidential employees” who may be prohibited from joining a union.
There is no question that the said employees, supervisors and the exempt employees, are not
vested with the powers and prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are,
therefore, not qualified to be classified as managerial employees who, under Article 2454 of
the Labor Code, are not eligible to join, assist or form any labor organization. In the very
same provision, they are not allowed membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of their own. The only
question that need be addressed is whether these employees are properly classified as
confidential employees or not.
Confidential employees are those who (1) assist or act in a confidential capacity, (2) to
persons who formulate, determine, and effectuate management policies in the field of labor
relations.5 The two criteria are cumulative, and both must be met if an employee is to be
considered a confidential employee—that is, the confidential relationship must exist between
the employee and his supervisor, and the supervisor must handle the prescribed
responsibilities relating to labor relations.6
The exclusion from bargaining units of employees who, in the normal course of their duties,
become aware of management policies relating to labor relations is a principal objective
sought to be accomplished by the “confidential employee rule.” The broad rationale behind
this rule is that employees should not be placed in a position involving a potential conflict of
interests.7 “Management should not be required to handle labor relations matters through

employees who are represented by the union with which the company is required to deal and
who in the normal performance of their duties may obtain advance information of the
company’s position with regard to contract negotiations, the disposition of grievances, or
other labor relations matters.” There have been ample precedents in this regard, thus in
Bulletin Publishing Company v. Hon. Augusto Sanchez,9 the Court held that “if these
managerial employees would belong to or be affiliated with a Union, the latter might not be
assured of their loyalty to the Union in view of evident conflict of interest. The Union can also
become company-dominated with the presence of managerial employees in Union
membership.” The same rationale was applied to confidential employees in “Golden Farms,
Inc. v. Ferrer-Calleja”10 and in the more recent case of “Philips Industrial Development, Inc.
v. NLRC”11 which held that confidential employees, by the very nature of their functions,
assist and act in a confidential capacity to, or have access to confidential matters of, persons
who exercise managerial functions in the field of labor relations. Therefore, the rationale
behind the ineligibility of managerial employees to form, assist or join a labor union was held
equally applicable to them.12
An important element of the “confidential employee rule” is the employee’s need to use labor
relations information. Thus, in determining the confidentiality of certain employees, a key
question frequently considered is the employees’ necessary access to confidential labor
relations information.13
It is the contention of respondent corporation that Supervisory employees 3 and 4 and the
exempt employees come within the meaning of the term “confidential employees” primarily
because they answered in the affirmative when asked “Do you handle confidential data or
documents?” in the Position Questionnaires submitted by the Union.14 In the same
questionnaire, however, it was also stated that the confidential information handled by
questioned employees relate to product formulation, product standards and product
specification which by no means relate to “labor relations.” Granting arguendo that an
employee has access to confidential labor relations information but such is merely incidental
to his duties and knowledge thereof is not necessary in the performance of such duties, said
access does not render the employee a confidential employee.16 “If access to confidential
labor relations information is to be a factor in the determination of an employee’s confidential
status, such information must relate to the employer’s labor relations policies. Thus, an
employee of a labor union, or of a management association, must have access to confidential
labor relations information with respect to his employer, the union, or the association, to be
regarded a confidential employee, and knowledge of labor relations information pertaining to
the companies with which the union deals, or which the association represents, will not cause
an employee to be excluded from the bargaining unit representing employees of the union or
association.”17 “Access to information which is regarded by the employer to be confidential
from the business standpoint, such as financial information18 or technical trade secrets, will
not render an employee a confidential employee.”19
Herein listed are the functions of supervisors 3 and higher:
1.To undertake decisions to discontinue/temporarily stop shift operations when situations
require.
2.To effectively oversee the quality control function at the processing lines in the storage of
chicken and other products.
8
3.To administer efficient system of evaluation of products in the outlets.
4.To be directly responsible for the recall, holding and rejection of direct manufacturing
materials.
5.To recommend and initiate actions in the maintenance of sanitation and hygiene
throughout the plant.20
It is evident that whatever confidential data the questioned employees may handle will have
to relate to their functions. From the foregoing functions, it can be gleaned that the
confidential information said employees have access to concern the employer’s internal
business operations. As held in Westing-house Electric Corporation v. National Labor
Relations Board,21 “an employee may not be excluded from appropriate bargaining unit
merely because he has access to confidential information concerning employer’s internal
business operations and which is not related to the field of labor relations.”
It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the
State to guarantee to “all” workers the right to self-organization. Hence, confidential
employees who may be excluded from bargaining unit must be strictly defined so as not to
needlessly deprive many employees of their right to bargain collectively through
representatives of their choosing.22
In the case at bar, supervisors 3 and above may not be considered confidential employees
merely because they handle “confidential data” as such must first be strictly classified as
pertaining to labor relations for them to fall under said restrictions. The information they
handle are properly classifiable as technical and internal business operations data which, to
our mind, has no relevance to negotiations and settlement of grievances wherein the
interests of a union and the management are invariably adversarial. Since the employees are
not classifiable under the confidential type, this Court rules that they may appropriately form
a bargaining unit for purposes of collective bargaining. Furthermore, even assuming that they
are confidential employees, jurisprudence has established that there is no legal prohibition
against confidential employees who are not performing managerial functions to form and join
a union.23
In this connection, the issue of whether the employees of San Miguel Corporation Magnolia
Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining
unit needs to be threshed out.
It is the contention of the petitioner union that the creation of three (3) separate bargaining
units, one each for Cabuyao, Otis and San Fernando as ruled by the respondent
Undersecretary, is contrary to the one-company, one-union policy. It adds that Supervisors
level 1 to 4 and exempt employees of the three plants have a similarity or a community of
interests.
This Court finds the contention of the petitioner meritorious.
An appropriate bargaining unit may be defined as “a group of employees of a given
employer, comprised of all or less than all of the entire body of employees, which the
collective interest of all the employees, consistent with equity to the employer, indicate to be

best suited to serve the reciprocal rights and duties of the parties under the collective
bargaining provisions of the law.”24
A unit to be appropriate must effect a grouping of employees who have substantial, mutual
interests in wages, hours, working conditions and other subjects of collective bargaining. It is
readily seen that the employees in the instant case have “community or mutuality of
interests,” which is the standard in determining the proper constituency of a collective
bargaining unit.26 It is undisputed that they all belong to the Magnolia Poultry Division of San
Miguel Corporation.
This means that, although they belong to three different plants, they perform work of the
same nature, receive the same wages and compensation, and most importantly, share a
common stake in concerted activities. In light of these considerations, the Solicitor General
has opined that separate bargaining units in the three different plants of the division will
fragmentize the employees of the said division, thus greatly diminishing their bargaining
leverage. Any concerted activity held against the private respondent for a labor grievance in
one bargaining unit will, in all probability, not create much impact on the operations of the
private respondent. The two other plants still in operation can well step up their production
and make up for the slack caused by the bargaining unit engaged in the concerted activity.
This situation will clearly frustrate the provisions of the Labor Code and the mandate of the
Constitution.27
The fact that the three plants are located in three different places, namely, in Cabuyao,
Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial.
Geographical location can be completely disregarded if the communal or mutual interests of
the employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-
academic rank and file employees of the University of the Philippines in Diliman, Quezon City,
Padre Faura, Manila, Los Baños, Laguna and the Visayas were allowed to participate in a
certification election. We rule that the distance among the three plants is not productive of
insurmountable difficulties in the administration of union affairs. Neither are there regional
differences that are likely to impede the operations of a single bargaining representative.
WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of
the Med-Arbiter on December 19, 1990 is REINSTATED under which a certification election
among the supervisors (level 1 to 4) and exempt employees of the San Miguel Corporation
Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit
is ordered conducted.
SO ORDERED.
9
SAN MIGUEL CORPORATION, petitioner, vs. THE HONORABLE BIENVENIDO E.
LAGUESMA and NORTH LUZON MAGNOLIA SALES LABOR UNION-INDEPENDENT,
respondents.
Labor Law; Bargaining Unit, defined.—A bargaining unit is a “group of employees of a given
employer, comprised of all or less than all of the entire body of employees, consistent with
equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties
of the parties under the collective bargaining provisions of the law.”
Same; Same; Factor in determining collective bargaining units.—The fundamental factors in
determining the appropriate collective bargaining unit are: (1) the will of the employees
(Globe Doctrine); (2) affinity and unity of the employees’ interest, such as substantial
similarity of work and duties, or similarity or compensation and working conditions
(Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity
of employment status.
Same; Same; The collective bargaining history of a company is not decisive of what should
comprise the collective bargaining unit.—Contrary to petitioner’s assertion, this Court has
categorically ruled that the existence of a prior collective bargaining history is neither decisive
nor conclusive in the determination of what constitutes an appropriate bargaining unit.
Same; Same; Employees sought to be represented by the collective bargaining agent must
have substantial mutual interest.—In-deed, the test of grouping is mutuality or commonality
of interests. The employees sought to be represented by the collective bargaining agent must
have substantial mutual interests in terms of employment and working conditions as evinced
by the type of work they perform.
Lawyers; Client-Lawyer Relationship; A client is bound by the mistakes of his counsel. Only
when it would result in serious injustice should an exception thereto be called for.—As
discussed earlier, the collective bargaining history of a company is not decisive of what
should comprise the collective bargaining unit. Insofar as the alleged “mistake” of the
substitute lawyer is concerned, we find that this mistake was the direct result of the
negligence of petitioner’s lawyers. It will be noted that Atty. Ona was under the supervision
of two (2) other lawyers, Attys. Jacinto de la Rosa, Jr. and George C. Nograles. There is
nothing in the records to show that these two (2) counsels were likewise unavailable at that
time. Instead of deferring the hearing, petitioner’s counsels chose to proceed therewith.
Indeed, prudence dictates that, in such case, the lawyers allegedly actively involved in SMC’s
labor case should have adequately and sufficiently briefed the substitute lawyer with respect
to the matters involved in the case and the specific limits of his authority. Unfortunately, this
was not done in this case. The negligence of its lawyers binds petitioner. As held by this
Court in the case of Villa Rhecar Bus v. De la Cruz: “x x x As a general rule, a client is bound
by the mistakes of his counsel. Only when the application of the general rule would result in
serious injustice should an exception thereto be called for.”
Labor Law; Collective Bargaining Agreement; It is not the convenience of the employer that
constitutes the determinative factor in forming an appropriate bargaining unit.—In the case
at bench, petitioner insists that each of the sales offices in northern Luzon should be
considered as a separate bargaining unit for negotiations would be more expeditious.
Petitioner obviously chooses to follow the path of least resistance. It is not, however, the

convenience of the employer that constitutes the determinative factor in forming an
appropriate bargaining unit. Equally, if not more important, is the interest of the employees.
In choosing and crafting an appropriate bargaining unit, extreme care should be taken to
prevent an employer from having any undue advantage over the employees’ bargaining
representative. Our workers are weak enough and it is not our social policy to further
debilitate their bargaining representative.
PETITION for review of a resolution and an order of the Undersecretary of Labor.
The facts are stated in the opinion of the Court.
PUNO, J.:
Petitioner San Miguel Corporation (SMC) prays that the Resolution dated March 19, 1991 and
the Order dated April 12, 1991 of public respondent Undersecretary Bienvenido E. Laguesma
declaring respondent union as the sole and exclusive bargaining agent of all the Magnolia
sales personnel in northern Luzon be set aside for having been issued in excess of jurisdiction
and/or with grave abuse of discretion.
On June 4, 1990, the North Luzon Magnolia Sales Labor Union (respondent union for brevity)
filed with the Department of Labor a petition for certification election among all the regular
sales personnel of Magnolia Dairy Products in the North Luzon Sales Area. Petitioner opposed
the petition and questioned the appropriateness of the bargaining unit sought to be
represented by respondent union. It claimed that its bargaining history in its sales offices,
plants and warehouses is to have a separate bargaining unit for each sales office. The
petition was heard on November 9, 1990 with petitioner being represented by Atty. Alvin C.
Batalla of the Siguion Reyna law office. Atty. Batalla withdrew petitioner’s opposition to a
certification election and agreed to consider all the sales offices in northern Luzon as one
bargaining unit. At the pre-election conference, the parties agreed, inter alia, on the date,
time and place of the consent election. Respondent union won the election held on November
24, 1990. In an Order dated December 3, 1990,2 Mediator-Arbiter Benalfre J. Galang certified
respondent union as the sole and exclusive bargaining agent for all the regular sales
personnel in all the sales offices of Magnolia Dairy Products in the North Luzon Sales Area.
Petitioner appealed to the Secretary of Labor. It claimed that Atty. Batalla was only
authorized to agree to the holding of certification elections subject to the following
conditions: (1) there would only be one general election; (2) in this general election, the
individual sales offices shall still comprise separate bargaining units.3
In a Resolution dated March 19, 1991,4 public respondent, by authority of the Secretary of
Labor, denied SMC’s appeal and affirmed the Order of the Med-Arbiter.
Hence this petition for certiorari.
Petitioner claims that:
THE HONORABLE UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF
DISCRETION WHEN HE IGNORED AND TOTALLY DISREGARDED PETITIONER’S VALID AND
10
JUSTIFIABLE GROUNDS WHY THE ERROR MADE IN GOOD FAITH BY PETITIONER’S
COUNSEL BE CORRECTED, AND INSTEAD RULED:
A. THAT PRIVATE RESPONDENT IS “THE SOLE AND EXCLUSIVE BARGAINING AGENT
FOR ALL THE REGULAR SALES OFFICES OF MAGNOLIA DAIRY PRODUCTS, NORTH
LUZON SALES AREA”, COMPLETELY IGNORING THE ESTABLISHED BARGAINING
HISTORY OF PETITIONER SMC.
B. THAT PETITIONER IS ESTOPPED FROM QUESTIONING THE “AGREEMENT”
ENTERED INTO AT THE HEARING ON 9 NOVEMBER 1990, IN CONTRAVENTION OF
THE ESTABLISHED FACTS OF THE CASE AND THE APPLICABLE LAW ON THE
MATTER.
We find no merit in the petition.
The issues for resolution are: (1) whether or not respondent union represents an appropriate
bargaining unit, and (2) whether or not petitioner is bound by its lawyer’s act of agreeing to
consider the sales personnel in the north Luzon sales area as one bargaining unit.
Petitioner claims that in issuing the impugned Orders, public respondent disregarded its
collective bargaining history which is to have a separate bargaining unit for each sales office.
It insists that its prior collective bargaining history is the most persuasive criterion in
determining the appropriateness of the collective bargaining unit.
There is no merit in the contention.
A bargaining unit is a “group of employees of a given employer, comprised of all or less than
all of the entire body of employees, consistent with equity to the employer, indicate to be the
best suited to serve the reciprocal rights and duties of the parties under the collective
bargaining provisions of the law.”5
The fundamental factors in determining the appropriate collective bargaining unit are: (1) the
will of the employees (Globe Doctrine);6 (2) affinity and unity of the employees’ interest,
such as substantial similarity of work and duties, or similarity of compensation and working
conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4)
similarity of employment status.7
Contrary to petitioner’s assertion, this Court has categorically ruled that the existence of a
prior collective bargaining history is neither decisive nor conclusive in the determination of
what constitutes an appropriate bargaining unit. Indeed, the test of grouping is mutuality or
commonality of interests. The employees sought to be represented by the collective
bargaining agent must have substantial mutual interests in terms of employment and working
conditions as evinced by the type of work they perform.
In the case at bench, respondent union sought to represent the sales personnel in the
various Magnolia sales offices in northern Luzon. There is similarity of employment status for
only the regular sales personnel in the north Luzon area are covered. They have the same
duties and responsibilities and substantially similar compensation and working conditions. The

commonality of interest among the sales personnel in the north Luzon sales area cannot be
gainsaid. In fact, in the certification election held on November 24, 1990, the employees
concerned accepted respondent union as their exclusive bargaining agent. Clearly, they have
expressed their desire to be one.
Petitioner cannot insist that each of the sales office of Magnolia should constitute only one
bargaining unit. What greatly militates against this position is the meager number of sales
personnel in each of the Magnolia sales office in northern Luzon. Even the bargaining unit
sought to be represented by respondent union in the entire north Luzon sales area consists
only of approximately fifty-five (55) employees.9 Surely, it would not be for the best interest
of these employees if they would further be fractionalized. The adage “there is strength in
number” is the very rationale underlying the formation of a labor union.
Anent the second issue, petitioner claims that Atty. Batalla was merely a substitute lawyer for
Atty. Christine Ona, who got stranded in Legaspi City. Atty. Batalla was allegedly unfamiliar
with the collective bargaining history of its establishment. Petitioner claims it should not be
bound by the mistake committed by its substitute lawyer.
We are not persuaded. As discussed earlier, the collective bargaining history of a company is
not decisive of what should comprise the collective bargaining unit. Insofar as the alleged
“mistake” of the substitute lawyer is concerned, we find that this mistake was the direct
result of the negligence of petitioner’s lawyers. It will be noted that Atty. Ona was under the
supervision of two (2) other lawyers, Attys. Jacinto de la Rosa, Jr. and George C. Nograles.
There is nothing in the records to show that these two (2) counsels were likewise unavailable
at that time. Instead of deferring the hearing, petitioner’s counsels chose to proceed
therewith. Indeed, prudence dictates that, in such case, the lawyers allegedly actively
involved in SMC’s labor case should have adequately and sufficiently briefed the substitute
lawyer with respect to the matters involved in the case and the specific limits of his authority.
Unfortunately, this was not done in this case. The negligence of its lawyers binds petitioner.
As held by this Court in the case of Villa Rhecar Bus v. De la Cruz:10
“x x x As a general rule, a client is bound by the mistakes of his counsel. Only when the
application of the general rule would result in serious injustice should an exception thereto be
called for.”
In the case at bench, petitioner insists that each of the sales offices in northern Luzon should
be considered as a separate bargaining unit for negotiations would be more expeditious.
Petitioner obviously chooses to follow the path of least resistance. It is not, however, the
convenience of the employer that constitutes the determinative factor in forming an
appropriate bargaining unit. Equally, if not more important, is the interest of the employees.
In choosing and crafting an appropriate bargaining unit, extreme care should be taken to
prevent an employer from having any undue advantage over the employees’ bargaining
representative. Our workers are weak enough and it is not our social policy to further
debilitate their bargaining representative.
In sum, we find that no arbitrariness or grave abuse of discretion can be attributed to public
respondent’s certification of respondent union as the sole and exclusive bargaining agent of
all the regular Magnolia sales personnel of the north Luzon sales area.
11
WHEREFORE, premises considered, the challenged Resolution and Order of public respondent
are hereby AFFIRMED in toto, there being no showing of grave abuse of discretion or lack of
jurisdiction.
SO ORDERED.
G.R. No. 146206. August 1, 2011.*
SAN MIGUEL FOODS, INCORPORATED, petitioner, vs. SAN MIGUEL CORPORATION
SUPERVISORS and EXEMPT UNION, respondent.
Labor Law; Collective Bargaining Agreements; Bargaining Unit; Words and Phrases; An
appropriate bargaining unit is defined as a group of employees of a given employer,
comprised of all or less than all of the entire body of employees, which the collective interest
of all the employees, consistent with equity to the employer, indicate to be best suited to
serve the reciprocal rights and duties of the parties under the collective bargaining provisions
of the law.—In G.R. No. 110399, the Court explained that the employees of San Miguel
Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute
a single bargaining unit, which is not contrary to the one-company, one-union policy. An
appropriate bargaining unit is defined as a group of employees of a given employer,
comprised of all or less than all of the entire body of employees, which the collective interest
of all the employees, consistent with equity to the employer, indicate to be best suited to
serve the reciprocal rights and duties of the parties under the collective bargaining provisions
of the law.
Same; Same; Same; The basic test of an asserted bargaining unit’s acceptability is whether
or not it is fundamentally the combination which will best assure to all employees the
exercise of their collective bargaining rights.—In National Association of Free Trade Unions v.
Mainit Lumber Development Company Workers Union—United Lumber and General Workers
of the Phils, 192 SCRA 598 (1990), the Court, taking into account the “community or
mutuality of interests” test, ordered the formation of a single bargaining unit consisting of the
Sawmill Division in Butuan City and the Logging Division in Zapanta Valley, Kitcharao, Agusan
[Del] Norte of the Mainit Lumber Development Company. It held that while the existence of a
bargaining history is a factor that may be reckoned with in determining the appropriate
bargaining unit, the same is not decisive or conclusive. Other factors must be considered.
The test of grouping is community or mutuality of interest. This is so because the basic test
of an asserted bargaining unit’s acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the exercise of their collective bargaining
rights. Certainly, there is a mutuality of interest among the employees of the Sawmill Division
and the Logging Division. Their functions mesh with one another. One group needs the other
in the same way that the company needs them both. There may be differences as to the
nature of their individual assignments, but the distinctions are not enough to warrant the
formation of a separate bargaining unit.
Same; Same; Same; Confidential Employees; Criteria; Words and Phrases; Confidential
employees are defined as those who (1) assist or act in a confidential capacity, in regard (2)
to persons who formulate, determine, and effectuate management policies in the field of
labor relations; The exclusion from bargaining units of employees who, in the normal course

of their duties, become aware of management policies relating to labor relations is a principal
objective sought to be accomplished by the “confidential employee rule”; A confidential
employee is one entrusted with confidence on delicate, or with the custody, handling or care
and protection of the employer’s property; Confidential employees, such as accounting
personnel, should be excluded from the bargaining unit, as their access to confidential
information may become the source of undue advantage.—Confidential employees are
defined as those who (1) assist or act in a confidential capacity, in regard (2) to persons who
formulate, determine, and effectuate management policies in the field of labor relations. The
two criteria are cumulative, and both must be met if an employee is to be considered a
confidential employee—that is, the confidential relationship must exist between the employee
and his supervisor, and the supervisor must handle the prescribed responsibilities relating to
labor relations. The exclusion from bargaining units of employees who, in the normal course
of their duties, become aware of management policies relating to labor relations is a principal
objective sought to be accomplished by the “confidential employee rule.” A confidential
employee is one entrusted with confidence on delicate, or with the custody, handling or care
and protection of the employer’s property. Confidential employees, such as accounting
personnel, should be excluded from the bargaining unit, as their access to confidential
information may become the source of undue advantage. However, such fact does not apply
to the position of Payroll Master and the whole gamut of employees who, as perceived by
petitioner, has access to salary and compensation data. The CA correctly held that the
position of Payroll Master does not involve dealing with confidential labor relations
information in the course of the performance of his functions. Since the nature of his work
does not pertain to company rules and regulations and confidential labor relations, it follows
that he cannot be excluded from the subject bargaining unit.
Same; Same; Same; Same; The rationale for the separate category of confidential employees
and disqualification to join any labor organization is similar to the inhibition for managerial
employees, because if allowed to be affiliated with a union, the latter might not be assured of
their loyalty in view of evident conflict of interests and the union can also become company-
denominated with the presence of managerial employees in the union membership.—
Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor
organization to managerial employees, jurisprudence has extended this prohibition to
confidential employees or those who by reason of their positions or nature of work are
required to assist or act in a fiduciary manner to managerial employees and, hence, are
likewise privy to sensitive and highly confidential records. Confidential employees are thus
excluded from the rank-and-file bargaining unit. The rationale for their separate category and
disqualification to join any labor organization is similar to the inhibition for managerial
employees, because if allowed to be affiliated with a union, the latter might not be assured of
their loyalty in view of evident conflict of interests and the union can also become company-
denominated with the presence of managerial employees in the union membership. Having
access to confidential information, confidential employees may also become the source of
undue advantage. Said employees may act as a spy or spies of either party to a collective
bargaining agreement.
Same; Same; Same; Same; The positions of Human Resource Assistant and Personnel
Assistant belong to the category of confidential employees and, hence, are excluded from the
bargaining unit, considering their respective positions and job descriptions.—In this regard,
the CA correctly ruled that the positions of Human Resource Assistant and Personnel
12
Assistant belong to the category of confidential employees and, hence, are excluded from the
bargaining unit, considering their respective positions and job descriptions. As Human
Resource Assistant, the scope of one’s work necessarily involves labor relations, recruitment
and selection of employees, access to employees’ personal files and compensation package,
and human resource management. As regards a Personnel Assistant, one’s work includes the
recording of minutes for management during collective bargaining negotiations, assistance to
management during grievance meetings and administrative investigations, and securing legal
advice for labor issues from the petitioner’s team of lawyers, and implementation of company
programs. Therefore, in the discharge of their functions, both gain access to vital labor
relations information which outrightly disqualifies them from union membership.
Same; Same; Certification Elections; Law and policy demand that employers take a strict,
hands-off stance in certification elections—a labor bargaining representative, to be effective,
must owe its loyalty to the employees alone and to no other.—It bears stressing that a
certification election is the sole concern of the workers; hence, an employer lacks the
personality to dispute the same. The general rule is that an employer has no standing to
question the process of certification election, since this is the sole concern of the workers.
Law and policy demand that employers take a strict, hands-off stance in certification
elections. The bargaining representative of employees should be chosen free from any
extraneous influence of management. A labor bargaining representative, to be effective, must
owe its loyalty to the employees alone and to no other. The only exception is where the
employer itself has to file the petition pursuant to Article 258 of the Labor Code because of a
request to bargain collectively.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
   The facts are stated in the opinion of the Court.
PERALTA, J.:
The issues in the present case, relating to the inclusion of employees in supervisor levels 3
and 4 and the exempt employees in the proposed bargaining unit, thereby allowing their
participation in the certification election; the application of the “community or mutuality of
interests” test; and the determination of the employees who belong to the category of
confidential employees, are not novel.
In G.R. No. 110399, entitled San Miguel Corporation Supervisors and Exempt Union v.
Laguesma,1 the Court held that even if they handle confidential data regarding technical and
internal business operations, supervisory employees 3 and 4 and the exempt employees of
petitioner San Miguel Foods, Inc. (SMFI) are not to be considered confidential employees,
because the same do not pertain to labor relations, particularly, negotiation and settlement of
grievances. Consequently, they were allowed to form an appropriate bargaining unit for the
purpose of collective bargaining. The Court also declared that the employees belonging to the
three different plants of San Miguel Corporation Magnolia Poultry Products Plants in Cabuyao,
San Fernando, and Otis, having “community or mutuality of interests,” constitute a single
bargaining unit. They perform work of the same nature, receive the same wages and
compensation, and most importantly, share a common stake in concerted activities. It was

immaterial that the three plants have different locations as they did not impede the
operations of a single bargaining representative.2
Pursuant to the Court’s decision in G.R. No. 110399, the Department of Labor and
Employment—National Capital Region (DOLE-NCR) conducted pre-election conferences.3
However, there was a discrepancy in the list of eligible voters, i.e., petitioner submitted a list
of 23 employees for the San Fernando plant and 33 for the Cabuyao plant, while respondent
listed 60 and 82, respectively.4
On August 31, 1998, Med-Arbiter Agatha Ann L. Daquigan issued an Order5 directing Election
Officer Cynthia Tolentino to proceed with the conduct of certification election in accordance
with Section 2, Rule XII of Department Order No. 9.On September 30, 1998, a certification
election was conducted and it yielded the following results,6 thus:
  Cabuyao
Plant
San Fernando
Plant
Total
Yes 23 23  46
No  0  0   0
Spoiled  2  0   2
Segregated 41 35  76
Total Votes       
            Cast 66 58 124
On the date of the election, September 30, 1998, petitioner filed the Omnibus Objections and
Challenge to Voters,7 questioning the eligibility to vote by some of its employees on the
grounds that some employees do not belong to the bargaining unit which respondent seeks
to represent or that there is no existence of employer-employee relationship with petitioner.
Specifically, it argued that certain employees should not be allowed to vote as they are: (1)
confidential employees; (2) employees assigned to the live chicken operations, which are not
covered by the bargaining unit; (3) employees whose job grade is level 4, but are performing
managerial work and scheduled to be promoted; (4) employees who belong to the Barrio
Ugong plant; (5) non-SMFI employees; and (6) employees who are members of other unions.
On October 21, 1998, the Med-Arbiter issued an Order directing respondent to submit proof
showing that the employees in the submitted list are covered by the original petition for
certification election and belong to the bargaining unit it seeks to represent and, likewise,
directing petitioner to substantiate the allegations contained in its Omnibus Objections and
Challenge to Voters. In compliance thereto, respondent averred that (1) the bargaining unit
contemplated in the original petition is the Poultry Division of San Miguel Corporation, now
known as San Miguel Foods, Inc.; (2) it covered the operations in Calamba, Laguna, Cavite,
and Batangas and its home base is either in Cabuyao, Laguna or San Fernando, Pampanga;
and (3) it submitted individual and separate declarations of the employees whose votes were
challenged in the election. Adding the results to the number of votes canvassed during the
September 30, 1998 certification election, the final tally showed that: number of eligible
voters – 149; number of valid votes cast – 121; number of spoiled ballots - 3; total number
of votes cast – 124, with 118 (i.e., 46 + 72 = 118 ) “Yes” votes and 3 “No” votes.10
13
The Med-Arbiter issued the Resolution11 dated February 17, 1999 directing the parties to
appear before the Election Officer of the Labor Relations Division on March 9, 1999, 10:00
a.m., for the opening of the segregated ballots. Thereafter, on April 12, 1999, the segregated
ballots were opened, showing that out of the 76 segregated votes, 72 were cast for “Yes”
and 3 for “No,” with one “spoiled” ballot.12
Based on the results, the Med-Arbiter issued the Order13 dated April 13, 1999, stating that
since the “Yes” vote received 97% of the valid votes cast, respondent is certified to be the
exclusive bargaining agent of the supervisors and exempt employees of petitioner’s Magnolia
Poultry Products Plants in Cabuyao, San Fernando, and Otis.
On appeal, the then Acting DOLE Undersecretary, in the Resolution14 dated July 30, 1999, in
OS-A-2-70-91 (NCR-OD-M-9010-017), affirmed the Order dated April 13, 1999, with
modification that George C. Matias, Alma Maria M. Lozano, Joannabel T. Delos Reyes, and
Marilyn G. Pajaron be excluded from the bargaining unit which respondent seeks to
represent. She opined that the challenged voters should be excluded from the bargaining
unit, because Matias and Lozano are members of Magnolia Poultry Processing Plants Monthly
Employees Union, while Delos Reyes and Pajaron are employees of San Miguel Corporation,
which is a separate and distinct entity from petitioner.
Petitioner’s Partial Motion for Reconsideration15 dated August 14, 1999 was denied by the
then Acting DOLE Undersecretary in the Order16 dated August 27, 1999.
In the Decision17 dated April 28, 2000, in CA-G.R. SP No. 55510, entitled San Miguel Foods,
Inc. v. The Honorable Office of the Secretary of Labor, Bureau of Labor Relations, and San
Miguel Corporation Supervisors and Exempt Union, the Court of Appeals (CA) affirmed with
modification the Resolution dated July 30, 1999 of the DOLE Undersecretary, stating that
those holding the positions of Human Resource Assistant and Personnel Assistant are
excluded from the bargaining unit.
Petitioner’s Motion for Partial Reconsideration18 dated May 23, 2000 was denied by the CA in
the Resolution19 dated November 28, 2000.
Hence, petitioner filed this present petition raising the following issues:
I. WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE WHEN
IT EXPANDED THE SCOPE OF THE BARGAINING UNIT DEFINED BY THIS
COURT’S RULING IN G.R. NO. 110399.
II. WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE—
SPECIFICALLY, THIS COURT’S DEFINITION OF A “CONFIDENTIAL
EMPLOYEE”—WHEN IT RULED FOR THE INCLUSION OF THE “PAYROLL
MASTER” POSITION IN THE BARGAINING UNIT.
III. WHETHER THIS PETITION IS A “REHASH” OR A “RESURRECTION” OF THE
ISSUES RAISED IN G.R. NO. 110399, AS ARGUED BY PRIVATE RESPONDENT.

Petitioner contends that with the Court’s ruling in G.R. No. 11039920 identifying the specific
employees who can participate in the certification election, i.e., the supervisors (levels 1 to 4)
and exempt employees of San Miguel Poultry Products Plants in Cabuyao, San Fernando, and
Otis, the CA erred in expanding the scope of the bargaining unit so as to include employees
who do not belong to or who are not based in its Cabuyao or San Fernando plants. It also
alleges that the employees of the Cabuyao, San Fernando, and Otis plants of petitioner’s
predecessor, San Miguel Corporation, as stated in G.R. No. 110399, were engaged in
“dressed” chicken processing, i.e., handling and packaging of chicken meat, while the new
bargaining unit, as defined by the CA in the present case, includes employees engaged in
“live” chicken operations, i.e., those who breed chicks and grow chickens.
Respondent counters that petitioner’s proposed exclusion of certain employees from the
bargaining unit was a rehashed issue which was already settled in G.R. No. 110399. It
maintains that the issue of union membership coverage should no longer be raised as a
certification election already took place on September 30, 1998, wherein respondent won
with 97% votes. Petitioner’s contentions are erroneous. In G.R. No. 110399, the Court
explained that the employees of San Miguel Corporation Magnolia Poultry Products Plants of
Cabuyao, San Fernando, and Otis constitute a single bargaining unit, which is not contrary to
the one-company, one-union policy. An appropriate bargaining unit is defined as a group of
employees of a given employer, comprised of all or less than all of the entire body of
employees, which the collective interest of all the employees, consistent with equity to the
employer, indicate to be best suited to serve the reciprocal rights and duties of the parties
under the collective bargaining provisions of the law.21
In National Association of Free Trade Unions v. Mainit Lumber Development Company
Workers Union—United Lumber and General Workers of the Phils,22 the Court, taking into
account the “community or mutuality of interests” test, ordered the formation of a single
bargaining unit consisting of the Sawmill Division in Butuan City and the Logging Division in
Zapanta Valley, Kitcharao, Agusan [Del] Norte of the Mainit Lumber Development Company.
It held that while the existence of a bargaining history is a factor that may be reckoned with
in determining the appropriate bargaining unit, the same is not decisive or conclusive. Other
factors must be considered. The test of grouping is community or mutuality of interest. This
is so because the basic test of an asserted bargaining unit’s acceptability is whether or not it
is fundamentally the combination which will best assure to all employees the exercise of their
collective bargaining rights.23 Certainly, there is a mutuality of interest among the employees
of the Sawmill Division and the Logging Division. Their functions mesh with one another. One
group needs the other in the same way that the company needs them both. There may be
differences as to the nature of their individual assignments, but the distinctions are not
enough to warrant the formation of a separate bargaining unit.24
Thus, applying the ruling to the present case, the Court affirms the finding of the CA that
there should be only one bargaining unit for the employees in Cabuyao, San Fernando, and
Otis25 of Magnolia Poultry Products Plant involved in “dressed” chicken processing and
Magnolia Poultry Farms engaged in “live” chicken operations. Certain factors, such as specific
line of work, working conditions, location of work, mode of compensation, and other relevant
conditions do not affect or impede their commonality of interest. Although they seem
separate and distinct from each other, the specific tasks of each division are actually
14
interrelated and there exists mutuality of interests which warrants the formation of a single
bargaining unit.
Petitioner asserts that the CA erred in not excluding the position of Payroll Master in the
definition of a confidential employee and, thus, prays that the said position and all other
positions with access to salary and compensation data be excluded from the bargaining unit.
This argument must fail. Confidential employees are defined as those who (1) assist or act in
a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate
management policies in the field of labor relations.26 The two criteria are cumulative, and
both must be met if an employee is to be considered a confidential employee—that is, the
confidential relationship must exist between the employee and his supervisor, and the
supervisor must handle the prescribed responsibilities relating to labor relations. The
exclusion from bargaining units of employees who, in the normal course of their duties,
become aware of management policies relating to labor relations is a principal objective
sought to be accomplished by the “confidential employee rule.”27
A confidential employee is one entrusted with confidence on delicate, or with the custody,
handling or care and protection of the employer’s property.28 Confidential employees, such
as accounting personnel, should be excluded from the bargaining unit, as their access to
confidential information may become the source of undue advantage.29 However, such fact
does not apply to the position of Payroll Master and the whole gamut of employees who, as
perceived by petitioner, has access to salary and compensation data. The CA correctly held
that the position of Payroll Master does not involve dealing with confidential labor relations
information in the course of the performance of his functions. Since the nature of his work
does not pertain to company rules and regulations and confidential labor relations, it follows
that he cannot be excluded from the subject bargaining unit. Corollarily, although Article
24530 of the Labor Code limits the ineligibility to join, form and assist any labor organization
to managerial employees, jurisprudence has extended this prohibition to confidential
employees or those who by reason of their positions or nature of work are required to assist
or act in a fiduciary manner to managerial employees and, hence, are likewise privy to
sensitive and highly confidential records.31 Confidential employees are thus excluded from
the rank-and-file bargaining unit. The rationale for their separate category and
disqualification to join any labor organization is similar to the inhibition for managerial
employees, because if allowed to be affiliated with a union, the latter might not be assured of
their loyalty in view of evident conflict of interests and the union can also become company-
denominated with the presence of managerial employees in the union membership.32 Having
access to confidential information, confidential employees may also become the source of
undue advantage. Said employees may act as a spy or spies of either party to a collective
bargaining agreement.33
In this regard, the CA correctly ruled that the positions of Human Resource Assistant and
Personnel Assistant belong to the category of confidential employees and, hence, are
excluded from the bargaining unit, considering their respective positions and job descriptions.
As Human Resource Assistant,34 the scope of one’s work necessarily involves labor relations,
recruitment and selection of employees, access to employees’ personal files and
compensation package, and human resource management. As regards a Personnel
Assistant,35 one’s work includes the recording of minutes for management during collective
bargaining negotiations, assistance to management during grievance meetings and

administrative investigations, and securing legal advice for labor issues from the petitioner’s
team of lawyers, and implementation of company programs. Therefore, in the discharge of
their functions, both gain access to vital labor relations information which outrightly
disqualifies them from union membership.
The proceedings for certification election are quasi-judicial in nature and, therefore, decisions
rendered in such proceedings can attain finality.36 Applying the doctrine of res judicata, the
issue in the present case pertaining to the coverage of the employees who would constitute
the bargaining unit is now a foregone conclusion. It bears stressing that a certification
election is the sole concern of the workers; hence, an employer lacks the personality to
dispute the same. The general rule is that an employer has no standing to question the
process of certification election, since this is the sole concern of the workers.37 Law and
policy demand that employers take a strict, hands-off stance in certification elections. The
bargaining representative of employees should be chosen free from any extraneous influence
of management. A labor bargaining representative, to be effective, must owe its loyalty to
the employees alone and to no other.38 The only exception is where the employer itself has
to file the petition pursuant to Article 25839 of the Labor Code because of a request to
bargain collectively.
With the foregoing disquisition, the Court writes finis to the issues raised so as to forestall
future suits of similar nature.
WHEREFORE, the petition is DENIED. The Decision dated April 28, 2000 and Resolution dated
November 28, 2000 of the Court of Appeals, in CA-G.R. SP No. 55510, which affirmed with
modification the Resolutions dated July 30, 1999 and August 27, 1999 of the Secretary of
Labor, are AFFIRMED.
SO ORDERED.
GR No. L-28223. August 30, 1968.
MECHANICAL DEPARTMENT LABOR UNION SA PHILIPPINE NATIONAL RAILWAYS,
petitioner, vs. COURT OF INDUSTRIAL RELATIONS and SAMAHAN NG MGA
MANGGAGAWA SA CALOOCAN SHOPS, respondents.
Labor law; Labor union; Formation and separation of bargaining unit; Globe doctrine; Case at
bar.—Under the Globe doctrine (Globe Machine &' Stamping Co., 3 NLRB 294, applied in
Democratic Labor Union v. Cebu Stevedoring Co., L10321, Feb. 28, 1958), bargaining units
may be formed through separation of new units from existing ones whenever plebiscites had
shown the workers' desire to have their own representatives. In the case at bar, the appeal
of the Mechanical Department Labor Union, questioning the applicability under the
circumstances of the Globe doctrine of considering the will of the employees in determining
what union should represent them, is premature, since the result of the ordered plebiscite
among the workers of the Caloocan shops (who desire to form a new bargaining unit) may
be adverse to the formation of a separate unit, in which event, all questions raised in the
appealed case would be rendered moot and academic.
Appellant contends that the application of the "Globe'flbctrine" is not warranted because the
workers of the Caloocan shops do not require different skills from the rest of the workers in
the Mechanical Department of the Railway Company. This question is primarily one of fact.
15
The Industrial Court has found that there is a basic difference, in that those in the Caloocan
shops not only have a community of interest and working conditions but perform major
repairs of railway rolling stock, using; heavy equipment and machineries found in said shops,
while the others only perform minor repairs. It is easy to understand, therefore, that the
workers in the Caloocan shops require special skill in the use of heavy equipment and
machinery sufficient to set them apart from the rest of the workers. In addition, the record
shows that the collective bargaining agreements negotiated by the appellant union have been
in existence for more than two (2) years; hence, such agreements can not constitute a bar to
the determination, by proper elections, of a new bargaining representative (PLDT Employees'
Union v. Philippine Long Distance Telephone Co., 51 Off. Gaz., 4519).
Same; Court of Industrial Relations; Grant to Court of Iqdustrial Relations of discretion in
matters concerning the determination of representation of employee groups; Reason
therefor.—Republic Act No. 875 has primarily entrusted the pros-ecution of its policies to the
Court of Industrial Relations, and, in view of its intimate knowledge concerning the facts and
circumstances surrounding the cases brought before it, this Court has repeatedly upheld the
exercise of discretion of the Court of Industrial Relations in matters concerning the
representation of employee groups (Manila Paper Mills Employees & Workers' Association v.
C.I.R., 104 Phil. 10; Benguet Consolidated v. Bobok Lumber Jack Association, 103 Phil. 1150).
PETITION for review of an order of the Court of Industrial Relations.
The facts are stated in the opinion of the Court.
REYES, J.B.L., J.:
Petition by the "Mechanical Department Labor Union sa PNR" for a review of an order of the
Court of Industrial Relations, in its Case No. 1475-MC, directing the holding of a plebiscite
election to determine whether the employees at the Caloocan Shops desire the respondent
union, "Samahan ng mga Manggagawa sa Caloocan Shops", to be separated from the
Mechanical Department Labor Union, with a view to the former being recognized as a
separate bargaining unit.
The case began on 13 February 1965 by a petition of the respondent "Samahan ng mga
Manggagawa, etc." calling attention to the fact that there were three unions in the Caloocan
shops of the Philippine National Railways: the "Samahan", the "Kapisanan ng Manggagawa sa
Manila Railroad Company", and the Mechanical Department Labor Union; that no certification
election had been held in the last 12 months in the Caloocan shops; that both the "Samahan"
and the Mechanical Department Labor Union had submitted different labor demands upon the
management for which reason a certification election was needed to determine the proper
.collective bargaining agency for the Caloocan shop workers.
The petition was opposed by the management .as well as by the Mechanical Department
Labor Union, the latter averring that it had been previously certified in two cases as sole and
exclusive bargaining agent of the employees and laborers of the PNR's mechanical
department, and had negotiated two bargaining agreements with management in 1961 and
1963; that before the expiration of the latter, a renewal thereof had been negotiated and the
contract remained to be signed; that the "Samahan" had been organized only in 21 January

1965; that the Caloocan shops unit was not established nor separated from the Mechanical
Depa-rtment unit; that the "Samahan" is composed mainly of supervisors who had filed a
pending case to be declared non-supervisors; and that the purpose of the petition was to
disturb the present smooth working labor management relations. By an order of 18 August
1967, Judge Arsenio Martinez, after receiving the evidence, made the following findings:
"The Court, after a cursory examination of the evidence presented made the following
findings: That petitioner union is composed of workers exclusively at the Caloocan shops of
the Philippine National Railways charged with the maintenance of rolling stocks for repairs;
major repairs of locomotive, engines, etc. are done in the Caloocan shops while minor ones in
the Manila sheds; workers in the Caloocan shops do not leave their station unlike Manila shop
workers who go out along the routes and lines for repairs; workers both in the Caloocan
shops and Manila sheds are exposed to hazards occasioned by the nature of their work; that
with respect to wages and salaries of employees, categories under the Job Classification and
Evaluation Plan of the company apply to all workers both in the Caloocan Shops and Manila
sheds; administration over employees, members of petitioner union as well as oppositor is,
under the Administrative Division of the company; that f rom the very nature of their work,
members of petitioner union and other workers of the Mechanical Department have been
under the coverage of the current collective bargaining agreement which was a result of a
certification by this Court of the Mechanical Department Labor union; first in 1960 and later
in 1963. Subsequently, when the latter contract expired, negotiations for its renewal were
had and at the time of the f iling of this petition was already consummated, the only act
remaining to be done was to affix the signatures of the parties thereto; that -during the
pendency of this petition, on June 14, 1965, the aforesaid collective bargaining agreement
was signed between the Philippine National Railways and the Mechanicai Department Labor
Union sa Philippine National Railways (Manila Railroad Company).
The main issue involved herein is: Whether or not a new unit should be established, the
Caloocan shops, separate and distinct from the rest of the workers under the Mechanical
Department now represented by the Mechanical Department Labor Union.
The Caloocan Shops, all located at Caloocan City have 360 workers more or less. It is part
and parcel of the whole Mechanical Department of the Philippine National Railways. The
department is composed of four main divisions or units, namely: Operations, Manila Area and
Lines; Locomotive Crew; Motor Car Crew; and the Shops Rolling Stocks Maintenance.
(Exhibits "D" and "D-l").
The Locomotive crew and Motor Car Crew, though part of the Mechanical Department, is a
separate unit, and is represented by the Union de Maquinistas, Fogoneros Y Motormen. The
workers under the other two main units of the departments are represented by the
Mechanical Department Labor Union. The workers of the Shops Rolling Stocks Maintenjance
Division or the Caloocan Shops now seek to be separated from the rest of the workers of the
department and to be represented by the "Samahan Ng Mga Manggagawa sa Caloocan
Shops."
There is certainly a community of interest among the workers of the Caloocan Shops. They
are grouped in one place. They work under one or same working condition, same working
time or schedule and are exposed to same occupational risk.
16
Though evidence on record shows that workers at the Caloocan Shops perform the same
nature of work as their counterparts in the Manila Shed, the difference lies in the fact that
workers at the Caloocan Shops perform major repairs of locomotives, rolling stocks, engines,
etc., while those in the Manila Shed, works on minor repairs. Heavy equipment and
machineries are found in the Caloocan Shops."
The trial judge then reviewed the collective bargaining history of the Philippine National
Railways, as follows:
"On several similar instances, this Court allowed the establishment of new and separate
bargaining units in one company, even in one department of the same company, despite the
existence of the same facts and circumstances as obtaining in the case at bar.
The history of the collective bargaining in the Manila Railroad Company, now the Philippine
National Railways shows that originally, there was only one bargaining unit in the com-pany,
represented by the Kapisanan Ng Manggagawa sa MRR. Under Case No. 237-MC, this Court
ordered the establishment of two additional units, the engine crew and the train crew to be
represented by the Union de Maquinistas, Fogoneros, Ayudante Y Motormen and Union de
Empleados de Trenes, respectively. Then in 1961, under Cases Nos. 491-MC, 494-MC and
507-MC three new separate units were established, namely, the yard crew unit, station
employees unit and engineering department employees unit, respectively, after the
employees concerned voted in a plebiscite conducted by the court for the separation from
existing bargaining units in the company. Then again, under Case No. 763-MC, a new unit,
composed of the Mechanical Department employees, was established to be represented by
the Mechanical Department Labor Union. Incidentally, the first attempt of the employees of
the Mechanical Department to be separated as a unit was dismissed by this Court of Case No.
488-MC.
In the case of the yard crew, station employees and the Engineering Department employees,
the Supreme Court sustained the order of this Court in giving the employees concerned the
right to vote and decide whether or not they desire to be separate units (See G.R. Nos. L-
16292-94, L-16309 and L-16317-18, November, 1965)."
In view of its findings and the history of union representation in the railway company,
indicating that bargaining units had been formed through separation of new units from
existing ones whenever plebiscites had shown the workers' desire to have their own
representatives, and relying on the "Globe doctrine" (Globe Machine & Stamping Co., 3 NLRB
294) applied in Democratic Labor Union vs. Cebu Stevedoring Co., L-10321, 28 February
1958, Judge Martinez held that the employees in the Caloocan Shops should be given a
chance to vote on whether their group should be separated from that represented by the
Mechanical Department Labor Union, and ordered a plebiscite held for the purpose. The
ruling was sustained by the Court en banc; wherefore, the Mechanical Department Labor
Union appealed to this Court, questioning the applicability under the circumstances of the
"Globe doctrine" of considering the will of the employees in determining what union should
represent them.

Technically, this appeal is premature, since the result of the ordered plebiscite among the
workers of the Caloocan shops may be adverse to the formation of a separate unit, in which
event, as stated in the appealed order, all questions raised in this case would be rendered
moot and academic. Apparently, however, the appellant Mechanical Department Labor Uiiion
takes it for granted that the plebiscite would favor separation.
We find no grave abuse of discretion in the issuance of the ruling under appeal as would
justify our interfering with it. Republic Act No. 875 has primarily entrusted the prosecution of
its policies to the Court of Industrial Relations, and, in view of its intimate knowledge
concerning the facts and circumstances surrounding the cases brought before it, this Court
has repeatedly upheld the exercise of discretion of the Court of Industrial Relations in matters
concerning the representation of employee groups (Manila Paper Mills Employees & Workers'
Association vs. C.I.R.. 104 Phil. 10; Benguet Consolidated vs. Bobok Lumber Jack Association,
103 Phil. 1150).
Appellant contends that the application of the "Globe doctrine" is not warranted because the
workers of the Caloocan shops do not require different skills from the rest of the workers in
the Mechanical Department of the Railway Company. This question is primarily one of facts.
The Industrial Court has found that there is a basic difference, in that those in the Caloocan
shops not only have a community of interest and working conditions but perform major
repairs of railway rolling stock, using heavy equipment and machineries found in said shops,
while the others only perform minor repairs. It is easy to understand, therefore, that the
workers in the Caloocan shops require special skill in the use of heavy equipment and
machinery sufficient to set them apart from the rest of the workers. In addition, the record
shows that the collective bargaining agreements negotiated by the appellant union have been
in existence for more than two (2) years; hence, such agreements can not constitute a bar to
the determination, by proper elections, of a new bargaining representative (PLDT Employees'
Union vs. Philippine Long Distance Telephone Co., 51 Off. Gaz., 4519).
As to the charge that some of the members of the appellee, "Samahan Ng Manggagawa", are
actually supervisors, it appears that the question of the status of such members is still
pending final decision; hence, it would not constitute a legal obstacle to the holding of the
plebiscite. At any rate, the appellant may later question whether the votes of those ultimately
declared to be supervisors should be counted.
Whether or not the agreement negotiated by the appellant union with the employer, during
the pendency of the original petition in the Court of Industrial Relations, should be
considered valid and binding on the workers of the Caloocan shops is a question that should
be first passed upon by the Industrial Court.
IN VIEW OF THE FOREGOING, the order appealed from is affirmed, with costs against
appellant Mechanical D-epartment Labor Union sa Philippine National Railways.
GR [Nos. L-16292-94, L-16309 and L-16317-18. October 31, 1960]
KAPISANAN NG MGA MANGGAGAWA SA MANILA RAILROAD COMPANY, petitioner,
vs. YARD CREW UNION, STATION EMPLOYEES UNION, RAILROAD ENGINEERING
17
DEPARTMENT UNION, MANILA RAILROAD COMPANY, and COURT OF INDUSTRIAL
RELATIONS, respondents.
MANILA RAILROAD COMPANY, petitioner, vs. COURT OF INDUSTRIAL RELATIONS,
MANILA RAILROAD CREW UNION, STATION EMPLOYEES UNION and KAPISANAN
NG MGA MANGGAGAWA SA MANILA RAILROAD COMPANY, respondents.
1.COURT OF INDUSTRIAL RELATIONS; CERTIFICATION ELECTION; DUTY OF COURT TO
CONDUCT PLEBISCITE.—Certainly, no one would deny the respondent court's right of full
investigation in arriving at a correct and conclusive finding of fact in order to deny or grant
the petitions for certification election, as it is the paramount duty of said court, or any court
for that matter, to investigate before acting, to do justice to the parties concerned. And one
way of determining the will or desire of the employees is what the respondent court had
suggested, that is, a plebiscite not to be conducted by the Department of Labor, as
contemplated in a certification election under Sec. 12 of the Magna Charta of Labor, R. A. No.
785, but by the Court itself.
2.APPEAL AND ERROR; TEST WHEN ORDER FINAL; ORDER TO HOLD PLEBISCITE
INTERLOCUTORY.—The test in determining whether an order or judgment is interlocutory or
final is: "Does it leave something to be done in the trial court with respect to the merits of
the case? If it does, it is interlocutory; if it does not, it is final" (Moran's Comments on the
Rules of Court, 1952 Ed., Vol. 1, p. 41). Having in view the avowed purpose of the order and
resolution in question "to determine by secret ballot the desire of the employees concerned"
as "a part of the investigatory power of the Court," one need not stretch his imagination far
to see that they are clearly interlocutory, as they leave something more to be done in the trial
court and do not decide one way or the other the petitions of the respondent unions.
Consequently, the present appeals or petitions for review by certiorari, are not authorized by
law and should, therefore, be dismissed (Sec. 2, Rule 44, Rules of Court).
PETITIONS for review by certiorari of decisions of the Court of Industrial Relations.
The facts are stated in the opinion of the Court.
PAREDES, J.:
In the Court of Industrial Relations, three separate petitions were registered: Case No. 491-
MC, by Yard Crew Union, Case No. 494-MC, by Station Employees' Union; and Case No. 507-
MC, by Railroad Engineering Department Union. The Kapisanan Ng Mga Manggagawa Sa
Manila Railroad Company, intervened. They were treated jointly by the respondent Court
because they involved identical questions. On appeal, three separate petitions for certiorari
were presented by the Kapisanan Ng Mga Mangagawa Sa Manila Railroad Company (G. R.
Nos. L-16292-94) and three separate petitions for certiorari by the Manila Railroad Company
(G. R. Nos. L-16309, L-16317 and L-16318.)
We glean from the record the following facts:
On March 7, 1955, the Kapisanan Ng Mga Manggagawa Sa Manila Railroad Company,
hereinafter called Kapisanan, filed a petition (Case No. 237-MC), praying that it be certified as
the exclusive bargaining agent in the Manila Railroad Company, hereinafter called Company.
A decision was promulgated on September 29, 1956, affirmed by the Court en banc on
January 16, 1957, in which the respondent Court found three unions appropriate for purposes

of collective bargaining, to wit: (1) The unit of locomotive drivers, firemen, assistant firemen
and motormen—otherwise known as the engine crew unit: (2) the unit of conductors,
assistant conductors, unit agents, assistant route agents and train posters, otherwise known
as the train crew unit, and (3) the unit of all the rest of the company personnel, except the
supervisors, temporary employees, the members of the Auditing Department, the members
of the security guard and professional and technical employees, referred to by the
respondent court as the unit of the rest of the employees. To these 3 units, the following
unions were respectively certified as the exclusive bargaining agents: (1) The Union de
Maquinistas, Fogoneros, Ayudantes y Motormen; (2) Union de Empleados de Trenes
(conductors); and (3) the Kapisanan Ng Mga Manggagawa Sa Manila .Railroad Company.
After the decision had become final, Case No. 491-MC was filed on September 20, 1957,
amended on August 13, 1958, by the Manila Railroad Yard Crew Union, praying that it be
defined as a separate unit; Case No. 494-MC, on September 25, 1957, amended on August
13, 1958, by the Station Employees' Union, praying that it be constituted as a separate
bargaining unit, and Case No. 507-MC, on November 30, 1957, by the Railroad Engineering
Department Union, praying that it be defined as a separate bargaining unit. All asked that
they be certified in the units sought to be separated. The respondent unions are legitimate
labor organizations with certificates of registration in the Department of Labor.
The Kapisanan and the Company opposed the separation of the said three units on the
following grounds:
(1)That the Kapisanan had been duly certified as the collective bargaining agent in the unit of
all of the rest of the employees and it had entered into a collective bargaining agreement on
November 4, 1957, and this agreement bars certification of a unit at least during the first 12
months after the finality of Case No. 237-MC (contract bar rule).
(2)That the Court had denied similar petitions for separation of unit as was ordered in Case
No. 488-MC, wherein the petition for the separation of Mechanical Department Labor Union
was dismissed by the respondent Court on April 25, 1958 and in the case of the Benguet
1147 Auto Lines Union, Case No. 4–MC–PANG) dismissed on July 18, 1958.
(3)That the three unions in question are barred from petitioning for separate units because
they are bound by the decision in Case No. 237-MC, for having been represented therein by
the Kapisanan.
After due hearing, the respondent Court, through the Hon. Arsenio Martinez, Associate
Judge, handed down an order, dated June 8, 1959, the dispositive portion of which recites as
follows:
"Wherefore, all the foregoing considered, and without passing upon the basic questions
raised herein and as part of its fact finding investigations, the Court orders a plebiscite to be
conducted among the employees in the three proposed groups, namely: the Engineering
Department, the Station Employees and the Yard Crew Personnel. The employee in the
proposed groups minus the supervisors, temporary employees, members of the Auditing
Department, members of the security group, professionals and technical employees, shall
vote, in a secret ballot to be conducted by this Court, on the question of whether or not they
desire to be separated from the unit of the rest of the employees being represented by the
Kapisanan. In this connection, the Court requests the cooperation of the Manila Railroad
18
Company to extend its facilities for the holding of this plebiscite, particularly the payrolls for
the month to be agreed upon by the parties. * * *."
The respondent Court also declared that the collective bargaining agreement could not be a
bar to another certification election because one of its signatories, the Kapisanan President,
Vicente K. Olazo, was a supervisor:
"In considering however such existing contract between the Kapisanan and the Company, the
Court cannot close its eyes and fail to observe that among the signatories thereto, on the
part of the Kapisanan, is the President of the Union, Vicente K. Olazo. "In Case No. 237-MC,
one of the important and fundamental questions raised was whether or not Vicente K. Olazo
is a supervisor within the meaning of Section 2(k) of Republic Act 875. The Trial Court, as
well as the majority of the Court en banc, reached the conclusion in same Case No. 237-MC
that he is a supervisor.
* * *. For this reason, the Court believes that his existing contract, though embodying terms
and conditions of employment and with a reasonable period to run, would not be a bar to a
certification proceeding."
A motion for reconsideration of the order of June 8, 1959, was presented by the Kapisanan,
and same was denied on August 20, 1959, in an order, concurred in by three Judges of the
Court, with two Judges dissenting, against which the Kapisanan on November 28, 1959, filed
its notice of appeal. Appeals by certiorari were filed by the Kapisanan and the Company. In
this Court, respondents presented motion to dismiss the petitions, on the ground that the
order of the respondent court on June 8, 1959 and the resolution of the respondent court en
banc dated August 20, 1959, to hold a plebiscite, were interlocutory, not subject to appeal.
They also allege the same in their answers, as one of the defenses. The case, therefore,
poses three questions, to wit:
1.Are the appealed orders interlocutory in nature?
2.Is the order of the respondent court, granting groups of employees to choose whether or
not they desire to be separated from the certified unit to which they belong, during the
existence of a valid bargaining contract entered into by a union close to the heels of its
certification, contrary to law?
3.Is it legal error for the respondent court to hold that the bargaining agreement in question
does not bar certification proceedings, only because one of the signatories for the union was
adjudged by the majority of such court to be a supervisor, in a previous case?
The pertinent portion of the order of the respondent Court, dated June 8, 1959, reads:
"Wherefore, all the foregoing considered, and without passing upon the basic question raised
herein and as part of its fact finding investigation, the Court orders a plebiscite to be
conducted among the employees in the three proposed groups, namely: the Engineering
Department, the Station Employees and the Yard Crew Personnel."
The resolution en banc, dated August 20, 1959, partially states:
"It will be further noted that it is just a part of the investigatory power of the Court to
determine by secret ballot the desire of the employees concerned. What has been ordered is

merely a plebiscite and not the certification election itself. * * *. Proceedings may still
continue and an order whether denying the petition or not would necessarily ensue. In a
word, something else has to be done within the premises and the order does not deny or
grant the petition in the above entitled case."
In the case of Democratic Labor Association vs. Cebu Stevedoring Co., G. R. No. L-10321,
February 28, 1958, we stated that because of the modern complexity of the relation between
both employer and union structure, it becomes difficult to determine from the evidence alone
which of the several claimant groups forms a proper bargaining unit; that it becomes
necessary to give consideration to the express will or desire of the employees—a practice
designated as the "Globe doctrine," which sanctions the holding of a series of elections, not
for the purpose of allowing the group receiving an over all majority of votes to represent all
employees, but for the specific purpose of permitting the employees in each of the several
categories to select the group which each chooses as a bargaining unit; that the factors
which may be considered and weighed in fixing appropriate units are: the history, extent and
type of organization of employees; the history of their collective bargaining; the history,
extent and type of organization of employees in other plants of the same employer, or other
employers in the same industry; the skill, wages, work and working conditions of the
employees; the desires of the employees; the eligibility of the employees for membership in
the union or unions involved; and the relationship between the unit or units proposed and
the employer's organization, management and operation, and the test in determining the
appropriate bargaining unit is that a unit must effect a grouping of employees who have
substantial, mutual interests in wages, hours, working conditions and other subjects of
collective bargaining.
It is manifest, therefore, that "the desires of the employees" is one of the factors in
determining the appropriate bargaining unit. The respondent Court was simply interested "in
the verification of the evidence already placed on record and submitted wherein the workers
have signed manifestations and resolutions of their desire to be separated from the
Kapisanan." Certainly, no one would deny the respondent court's right of full investigation in
arriving at a correct and conclusive finding of fact in order to deny or grant the petitions for
certification election. On the contrary, all should declare it a paramount duty of the said
respondent court, or any court for that matter, to investigate before acting, to do justice to
the parties concerned. And one way of determining the will or desire of the employees is
what the respondent court had suggested: a plebiscite—carried by secret ballot. A plebiscite
and not the certification election itself. A plebiscite not to be conducted by the Department of
Labor, as contemplated in a certification election under Sec. 12 of the Magna Charter of
Labor, R. A. No. 875, but by the respondent court itself. As well observed by the respondent
court, "the votes of the workers one way or the other, in these cases will not by any chance
choose the agent or unit which will represent them anew, for precisely that is a matter that is
within the issues raised in these petitions for certification".
The test in determining whether an order or judgment is interlocutory or final is "Does it
leave something to be done in the trial court with respect to the merits of the case? If it
does, it is interlocutory; if it does not, it is final" (Moran's Comments on the Rules of Court,
1952 Ed., Vol. I, p. 41). Having in view the avowed purpose of the orders in question, as
heretofore exposed, one should not stretch his imagination far to see that they are clearly
interlocutory, as they leave something more to be done in the trial court and do not decide
19
one way or the other the petitions of the respondent unions. We are, therefore, constrained
to hold, as we do hereby hold, that the present appeals or petitions for review by certiorari,
are not authorized by law and should be dismissed (Section 2, Rule 44, Rules of Court).
There is, moreover, nothing, under the facts obtaining in these cases and the law on the
subject, which would warrant this Court to declare the orders under consideration, illegal.
The herein petitioners contend that the collective bargaining agreement, executed on
November 4, 1957 (Case No. 237-MC), is a bar to the certification proceedings under
consideration. The respondents counter that it is not so, because one of the signatories in the
said agreement for the Kapisanan, Vicente K. Olazo, was found to be a supervisor under
section 2(k) R. A. 875, in Kapisanan, etc. vs. CIR, etc., 106 Phil., 607; 57 Off. Gaz. (2) 254.
Having, however, reached the conclusion that the orders in question are not appealable and
that the respondent court has not as yet decided on whether the said collective bargaining
agreement is a bar or not to the petitions for separate units and for certification election,
which could properly be determined after the result of the plebiscite shall have been known
by the respondent court, the consideration of this issue is premature.
In view hereof, the petitions or appeals for review by certiorari are dismissed, without costs.
GR No. L-26736. August 18, 1972.
FILOIL REFINERY CORPORATION, petitioner, vs. FILOIL SUPERVISORY &
CONFIDENTIAL EMPLOYEES ASSOCIATION AND COURT OF INDUSTRIAL R
ELATIONS,respondents.
Labor law; Right of supervisors ‘to form a union.—Section 3 of the Industrial Peace Act
explicitly provides that “employees”—and this term includes supervisors—“shall have the right
to self-organization, and to form, join or assist labor organizations of their own choosing for
the purpose of collective bargaining...” and that “individuals employed as supervisors... may
form separate organizations of their own.” Indeed, it is well settled that in relation to his
employer, a foreman or supervisor is an employee within the meaning of the Act. For this
reason, supervisors are entitled to engage in union activities and any discrimination against
them by reason thereof constitutes an unfair labor practice. (AG & P Co. of Manila vs. C.I.R.,
3 SCRA 672 [1961]).
Same; Same.—Supervisors and confidential employees, even though they may exercise the
prerogatives of management as regards the rank and file employees are indeed employees in
relation to their employer, the company which is owned by the stockholders and bondholders
(capital) and should therefore be entitled under the law to bargain collectively with the top
management with respect to their terms and conditions of employment.
Same; Where confidential employees are few in number.—Since the confidential employees
are very few in number and are by practice and tradition identified with the supervisors in
their role as representatives of management vis-a-vis the rank and file employees, such
identity of interest should allow their inclusion in the bargaining unit of supervisors-managers
for purposes of collective bargaining in turn as employees in relation to the company as their
employer. This will fulfill the law’s objective of insuring to them the full benefit of their right
to self-organization and to collective bargaining, which could hardly be accomplished if the

respondent association’s membership were to be broken up into five separate ineffective tiny
units as urged by the company.
Same; Court of Industrial Relations enjoys wide leeway in determining appropriate bargaining
unit.—The industrial court enjoys a wide discretion in determining the procedure necessary to
insure the fair and free choice of bargaining representations by employees.
APPEAL from the orders and resolution of the Court of Industrial Relations.
The facts are stated in the opinion of the Court.
TEEHANKEE, J .:
The present appeal questions the right of supei visors and confidential employees to organize
the respondent labor association and to bargain collectively with their employer, petitioner
corporation herein, as upheld by respondent court of industrial relations in its appealed
orders and resolution.
Respondent association is a labor organization duly registered with the Department of Labor.
It is composed exclusively of the supervisory and confidential employees of petitioner
corporation. There exists another entirely distinct labor association composed of the
corporation’s rankand-file employees, the Filoil Employees & Workers Association (FEWA)
with which petitioner executed a collective bargaining agreement. This collective bargaining
agreement expressly excluded from its coverage petitioner’s supervisory and confidential
employees, who in turn organized their own labor association respondent herein.
Respondent association filed on February 18, 1965 with the industrial court its petition for
certification as the sole and exclusive collective bargaining agent of all of petitioner’s
supervisory and confidential employees working at its refinery in Rosario, Cavite.
Petitioner corporation filed a motion to dismiss the petition on the grounds of lack of cause of
action and of respondent court’s lack of jurisdiction over the subject-matter, under its claim
that supervisors are not employees within the meaning of Republic Act 875, the Industrial
Peace Act, and that since they are part of management, they do not have the right to bargain
collectively although they may organize an organization of their own. Respondent court in its
order of May 26, 1965 denied the dismissal motion. It ruled that under the express provisions
of section 3 of the Industrial Peace Act, “(individuals employed as supervisors shall not be
eligible for membership in a labor organization of employees under their supervision but may
form separate organizations of their own.”1
It rejected petitioner’s claim against respondent association’s right to bargain collectively,
holding that such right was expressly granted under section 24 of the Industrial Peace Act,
and asserting that “if Congress deemed it wise for supervisors not to have the right to strike,
then it should have been so expressly stated as in the case of government employees.
Section 11 of the Industrial Peace Act gives to government employees the right to belong to
any labor organization provided no obligation to strike or join a strike is imposed by such
labor organization. The denial to government employees of the right to strike is significant in
the controversy before this Court because it manifests to all that Congress in enacting
Republic Act No. 875 was aware of the implications that when supervisors were given the
20
right to organize themselves into a labor organization, they have correlative right to declare a
strike. In the case of supervisors, they were enfranchised by Congress to organize
themselves into a labor organization and were not denied the right to strike. This means that
the right to strike was not denied them since no special reason obtains among the
supervisors as it does obtain among government employees.”2
The industrial court likewise dismissed petitioner’s objection against the composition of
respondent association in that it included as members technical men and confidential
employees in this wise: “(A)t this point, it may be stressed that supervisors as a general rule
should form an association of their own and should exclude all other types of personnel
unless a special consideration exists, like for example, that they are so few in number and
that there are other technical men or confidential men equally few in number. In the latter
case, the supervisors, technical men and confidential employees may be constituted into one
unit.”3
Petitioner’s motion for reconsideration of said order of May 26, 1965 was denied by
respondent court en banc per its resolution dated September 7, 1965 which affirmed the said
order. No appeal having been taken from the resolution, the petition was accordingly set for
hearing and the parties submitted their stipulation of facts, stipulating inter alia that
respondent association “has forty-seven (47) members among the supervisory, technical men
and confidential employees of the company” and that “all the forty seven (47) members of
the (respondent association) are being checked-off by the company for union dues pursuant
to the individual check-off authorization submitted to the company.” The parties could not
agree, however, on the composition of the appropriate bargaining unit with petitioner
corporation proposing that the 47 members of respondent association should be broken up
into five (5) separate collective bargaining units, viz, the supervisors should form a distinct
unit separate from the rest of the personnel who in turn would be divided into separate and
independent units or confidential employees, professional personnel, “fringe” employees
consisting of five firemen, and twelve (12) office and clerical employees. Evidence was
received by respondent court and it was satisfied that executive personnel handling personnel
matters for the employer were duly excluded from respondent association. Thus, per
respondent court’s order of July 23, 1966, it is noted that “not one of the employees listed
under Groups I and II including (their supervisor) Leonardo R. Santos under Group III, is a
member of (respondent association)”, since “(I)t appears that the personnel listed under
Groups I and Group II . . . . are in the category of executives who have supervision over the
supervisors who are members of (respondent association) and that Marcelo Bernardo handles
personnel matters of the employer
... All of them should, therefore, be excluded from the appropriate bargaining unit.”4
Respondent court in its said order of July 23, 1966 consequently cast aside petitioner’s
sedulous objections against the inclusion of the confidential employees in the supervisors’
respondent association, thus: “(F)rom the memorandum and manifestation of the company, a
persistent assault against the inclusion of the confidential employees with supervisors under
one bargaining unit would seem to be evident. Although this inclusion has already been
raised in the motion to dismiss filed by the company and which has already been resolved by
the Court en banc, with no appeal to the Supreme Court having been taken by the company,
we shall try once more to show why such inclusion. It is admitted by the company that

confidential employees are outside the coverage of the existing collective bargaining
agreement between the respondent company and the rank and file union (FEWA) by specific
agreement. Since the confidential employees are very few and are, by practice and tradition,
identified with management, the NLRB, because of such ‘identity of interest’ (Wilson & Co.,
68 NLRB 84), has allowed their inclusion in the bargaining unit of supervisors who are
likewise identified with management This Court, a counterpart of the NLRB, for the same
reason, should also allow the inclusion of the confidential employees in the bargaining unit of
supervisors, except of course Marcelo Bernardo who, pursuant to the Order of May 26, 1965,
as affirmed by the Court en banc, should be excluded because he handles personnel matters
for the employer.”5
Respondent court pointed out that “in fact, out of the forty-three (43), excluding the twelve
(12) executive personnel under Groups I and II, the company proposes five (5) bargaining
units or eight (8) employees per unit. This Court will be creating fragmentary units which
would not serve the interest of industrial peace, much less in an industry indispensable to the
national interest like the one at bar, as is now obtaining in the Philippine National Railways,
also an industry indispensable to the national interest (Union de Maquinistas, Fogoneros y
Motormen vs. Philippine National Railways, Case No. 67-IPA), with thirteen (13) unions, if it
breaks up the petitioner union into five (5) bargaining units. The Court is likewise aware of
the ineffectiveness of a small union with a scanty members as bargaining unit. The breaking
up of bargaining agents into tiny units will greatly impair their organizational value. It has
always been the policy of the United States National Labor Relations Board that, in deciding
upon whether to include or exclude a group of employees from a bargaining unit, the Board
has always allowed itself to be guided by the determination as to whether its action ‘will
insure to the employees of the Company the full benefit of their right to self-organization and
to collective bargaining and otherwise effectuate the policies of the Act’ (20 NLRB 705). We
see no reason why this Tribunal whose basic functions are the same as that of the NLRB,
should do less or otherwise depart from this sound policy.”6
Since respondent association “clearly represents the majority of the employees in the
appropriate bargaining unit,” respondent court therefore certified it as the sole and exclusive
bargaining agent for all the employees in the unit.
Respondent court per its resolution en banc dated September 15, 1966 dismissed petitioner’s
motion for reconsideration, holding that “as to the question of the right of supervisors and
confidential employees to compel their employer to bargain collectively, this has already been
passed upon by the Trial Court in its Order dated May 26, 1965 which Order was affirmed by
the Court en banc in a resolution dated September 7, 1965. The Company did not appeal this
resolution to the Supreme Court. Hence, this matter, as far as we are concerned, has already
been resolved. We find it, therefore, unnecessary to pass upon the same again,” and that it
found no sufficient justification to alter or modify the trial court’s order upholding the
appropriateness of the bargaining unit. On this latter point, Judge Salvador, while concurring
with the supervisors’ right of self-organization and collective bargaining, cast a dissenting
vote on the ground that the Industrial Peace Act did not contemplate nor provide for
supervisors and confidential employees to be under one bargaining unit and as to “executive
personnel” who have supervision over the supervisors being excluded from any
representation, urged that “another supervisors’ unit must be created for these executive
21
personnel.” The second point is not in contention at bar since the “executive personnel”
concerned have not appealed their exclusion.
In this appeal, petitioner pursues anew its contention that supervisors form part of
management and are not considered as employees entitled to bargain collectively, arguing
that “as supervisors form part and parcel of management, it is absurd for management to
bargain collectively with itself.” Petitioner further argues that under the American concept,
supervisors are not considered employees and that since our Congress copied verbatim the
Taft-Hartley Act’s definition of supervisor,7 its act of “incorporating the definition in the Taft-
Hartley Act” must be deemed an expression of its intention “to follow the intendment of said
Act.”
Petitioner’s contentions are untenable, prescinding from the fact of its failure to appeal in due
course respondent court’s en banc resolution of September 7, 1965 upholding the right of the
supervisors and confidential employees to organize respondent association and to compel
petitioner to negotiate and bargain collectively with it. Petitioner’s argument that since
supervisors form part of management, to allow them to bargain collectively would be
tantamount to management bargaining with itself may be a well-turned phrase but ignores
the dual status of a supervisor as a representative of management and as an employee. If
indeed the supervisor is absolutely undistinguishable from management, then he would be
beyond removal or dismissal, for as respondent association counters, “how can management
remove or dismiss itself?”
As stated for the Court by the now Chief Justice in AG & P Co. of Manila, Inc. vs. C.I.R.8
section 3 of the Industrial Peace Act “explicitly provides that ‘employees’—and this term
includes supervisors—‘shall have the right to self-organization, and to form, join or assist
labor organizations of their own choosing for the purpose of collective bargaining through
representations of their own choosing and to engage in concerted activities for the purpose
of collective bargaining and other mutual aid or protection’ and that ‘individuals employed as
supervisors xxx may form separate organizations of their own’. Indeed, it is well settled that
‘in relation to his employer,’ a foreman or supervisor ‘is an employee within the meaning of
the Act’ xxx For this reason, supervisors are entitled to engage in union activities and any
discrimination against them by reason thereof constitutes an unfair labor practice.”
Petitioner’s arguments go in reality to the wisdom and policy of the Industrial Peace Act
which expressly grants supervisors the right to organize and bargain collectively, which are
beyond the Court’s power of review. Thus, the argument that “it is axiomatic in the law of
self-interest that an employer must give a ‘better deal’ to those who act in his interest and in
whom he has trust and confidence. These are the supervisors and confidential employees”9
and that “In the United States there was a move to have a part of the supervisory group to
be aligned with labor. But the enactment of the Taft-Hartley Act put an end to this move.”10
So with petitioner’s thesis that “(T)o then give supervisors the right to compel employers to
bargain would in effect align labor and management together against stockholders and
bondholders (capital) and inexorably tilt the balance of power in favor of these hitherto
conflicting forces. This is contrary to the nature and philosophy of free enterprise.”11 This
further serves to point up the validity and rationale of the Industrial Peace Act’s provision,
since the supervisors and confidential employees, even though they may exercise the

prerogatives of management as regards the rank and file employees are indeed employees in
relation to their employer, the company which is owned by the “stockholders and
bondholders (capital)” in petitioner’s own words, and should therefore be entitled under the
law to bargain collectively with the top management with respect to their terms and
conditions of employment.
Petitioner’s argument that the express provisions of section 3 of our Industrial Peace Act
must give way to the intendment of the Taft-Hartley Act which exempts employers from the
legal obligation to recognize and negotiate with supervisors is tenuous and groundless. The
language of our own statute is plain and unambiguous and admits of no other interpretation.
The other principal ground of petitioner’s appeal questioning the confidential employees’
inclusion in the supervisors’ bargaining unit is equally untenable. Respondent court correctly
held that since the confidential employees are very few in number and are by practice and
tradition identified with the supervisors in their role as representatives of management vis-a-
vis the rank and file employees, such identity of interest has allowed their inclusion in the
bargaining unit of supervisors-managers for purposes of collective bargaining in turn as
employees in relation to the company as their employer.
No arbitrariness or grave abuse of discretion can be attributed against respondent court’s
allowing the inclusion of the confidential employees in the supervisors’ association for as
admitted by petitioner itself, supra, the supervisors and confidential employees enjoy its trust
and confidence. This identity of interest logically calls for their inclusion in the same
bargaining unit and at the same time fulfills the law’s objective of insuring to them the full
benefit of their right to self-organization and to collective bargaining, which could hardly be
accomplished if the respondent association’s membership were to be broken up into five
separate ineffective tiny units, as urged by petitioner.
Respondent court’s action not being vulnerable to challenge as being arbitrary or capricious is
therefore sustained, in line with the Court’s consistent rulings that the industrial court “enjoys
a wide discretion in determining the procedure necessary to insure the fair and free choice of
bargaining representations by employees,” and that its action “in deciding upon an
appropriate unit for collective bargaining purposes is discretionary . . . . and (that) its
judgment in this respect is entitled to almost complete finality, unless its action is arbitrary or
capricious”12 and that absent any grave abuse of discretion as to justify the Court’s
intervention, “this Court has repeatedly upheld the exercise of the Court of Industrial
Relations in matters concerning the representation of employee groups.”13
ACCORDINGLY, the orders and resolution appealed from are hereby affirmed and the petition
at bar is dismissed. No pronouncement as to costs.
   
G.R. No. 183810. January 21, 2010.*
FARLEY FULACHE, MANOLO JABONERO, DAVID CASTILLO, JEFFREY LAGUNZAD,
MAGDALENA MALIG-ON BIGNO, FRANCISCO CABAS, JR., HARVEY PONCE and
ALAN C. ALMENDRAS, petitioners, vs. ABS-CBN BROADCASTING CORPORATION,
respondent.
22
Remedial Law; Appeals; Questions of Law; Questions of Fact; Established distinctions
between questions of law and questions of fact.—To reiterate the established distinctions
between questions of law and questions of fact, we quote hereunder our ruling in New Rural
Bank of Guimba (N.E.) Inc. v. Fermina S. Abad and Rafael Susan, 562 SCRA 503 (2008): We
reiterate the distinction between a question of law and a question of fact. A question of law
exists when the doubt or controversy concerns the correct application of law or jurisprudence
to a certain set of facts; or when the issue does not call for an examination of the probative
value of the evidence presented, the truth or falsehood of the facts being admitted. A
question of fact exists when a doubt or difference arises as to the truth or falsehood of facts
or when the query invites calibration of the whole evidence considering mainly the credibility
of the witnesses, the existence and relevancy of specific surrounding circumstances, as well
as their relation to each other and to the whole, and the probability of the situation.
Same; Labor Law; National Labor Relations Commission; Motion for Reconsideration;
Petitioners’ second motion for reconsideration was a prohibited pleading under the National
Labor Relations Commission (NLRC) rules of procedure.—We also find no error in the CA’s
affirmation of the denial of the petitioners’ second motion for reconsideration of the March
24, 2006 resolution of the NLRC reinstating the labor arbiter’s twin decisions. The petitioners’
second motion for reconsideration was a prohibited pleading under the NLRC rules of
procedure.
Labor Law; Collective Bargaining Agreements; Petitioners, as regular rank-and-file employees
fall within Collective Bargaining Agreement (CBA) coverage under the CBA’s express terms
and are entitled to its benefits.—Under these terms, the petitioners are members of the
appropriate bargaining unit because they are regular rank-and-file employees and do not
belong to any of the excluded categories. Specifically, nothing in the records shows that they
are supervisory or confidential employees; neither are they casual nor probationary
employees. Most importantly, the labor arbiter’s decision of January 17, 2002—affirmed all
the way up to the CA level—ruled against ABS-CBN’s submission that they are independent
contractors. Thus, as regular rank-and-file employees, they fall within CBA coverage under
the CBA’s express terms and are entitled to its benefits.
Same; Same; Collective Bargaining Agreement (CBA) coverage is not only a question of fact
but of law and contract.—We see no merit in ABS-CBN’s arguments that the petitioners are
not entitled to CBA benefits because: (1) they did not claim these benefits in their position
paper; (2) the NLRC did not categorically rule that the petitioners were members of the
bargaining unit; and (3) there was no evidence of this membership. To further clarify what
we stated above, CBA coverage is not only a question of fact, but of law and contract. The
factual issue is whether the petitioners are regular rank-and-file employees of ABS-CBN. The
tribunals below uniformly answered this question in the affirmative. From this factual finding
flows legal effects touching on the terms and conditions of the petitioners’ regular
employment. This was what the labor arbiter meant when he stated in his decision that
“henceforth they are entitled to the benefits and privileges attached to regular status of their
employment.”
Same; Illegal Dismissal; Reinstatement; Illegally dismissed employees are entitled to
reinstatement without loss of seniority rights and other privileges and to full backwages
inclusive of allowances and to other benefits or their monetary equivalent.—By law, illegally

dismissed employees are entitled to reinstatement without loss of seniority rights and other
privileges and to full backwages, inclusive of allowances, and to other benefits or their
monetary equivalent from the time their compensation was withheld from them up to the
time of their actual reinstatement. The four dismissed drivers deserve no less.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
BRION, J.:
The petition for review on certiorari1 now before us seeks to set aside the decision2 and
resolution3 of the Court of Appeals, Nineteenth Division (CA) promulgated on March 25, 2008
and July 8, 2008, respectively, in CA-G.R. SP No. 01838.4  camera talents, and they were not entitled to regularization in these capacities.
The Antecedents
The Regularization Case.
In June 2001, petitioners Farley Fulache, Manolo Jabonero, David Castillo, Jeffrey Lagunzad,
Magdalena Malig-on Bigno, Francisco Cabas, Jr., Harvey Ponce and Alan C. Almendras
(petitioners) and Cresente Atinen (Atinen) filed two separate complaints for regularization,
unfair labor practice and several money claims (regularization case) against ABS-CBN
Broadcasting Corporation-Cebu (ABS-CBN). Fulache and Castillo were drivers/cameramen;
Atinen, Lagunzad and Jabonero were drivers; Ponce and Almendras were
cameramen/editors; Bigno was a PA/Teleprompter Operator-Editing, and Cabas was a VTR
man/editor. The complaints (RAB VII The petitioners alleged that on December 17, 1999,
ABS-CBN and the ABS-CBN Rank-and-File Employees Union (Union) executed a collective
bargaining agreement (CBA) effective December 11, 1999 to December 10, 2002; they only
became aware of the CBA when they obtained copies of the agreement; they learned that
they had been excluded from its coverage as ABS-CBN considered them temporary and not
regular employees, in violation of the Labor Code. They claimed they had already rendered
more than a year of service in the company and, therefore, should have been recognized as
regular employees entitled to security of tenure and to the privileges and benefits enjoyed by
regular employees. They asked that they be paid overtime, night shift differential, holiday,
rest day and service incentive leave pay. They also prayed for an award of moral damages
and attorney’s fees.
ABS-CBN explained the nature of the petitioners’ employment within the framework of its
operations. It claimed that: it operates in several divisions, one of which is the Regional
Network Group (RNG). The RNG exercises control and supervision over all the ABS-CBN local
stations to ensure that ABS-CBN programs are extended to the provinces. A local station, like
the Cebu station, can resort to cost-effective and cost-saving measures to remain viable;
local stations produced shows and programs that were constantly changing because of the
competitive nature of the industry, the changing public demand or preference, and the
seasonal nature of media broadcasting programs. ABS-CBN claimed, too, that the production
of programs per se is not necessary or desirable in its business because it could generate
profits by selling airtime to block-timers or through advertising.
23
ABS-CBN further claimed that to cope with fluctuating business conditions, it contracts on a
case-to-case basis the services of persons who possess the necessary talent, skills, training,
expertise or qualifications to meet the requirements of its programs and productions. These
contracted persons are called “talents” and are considered independent contractors who offer
their services to broadcasting companies.
Instead of salaries, ABS-CBN pointed out that talents are paid a pre-arranged consideration
called “talent fee” taken from the budget of a particular program and subject to a ten percent
(10%) withholding tax. Talents do not undergo probation. Their services are engaged for a
specific program or production, or a segment thereof. Their contracts are terminated once
the program, production or segment is completed. ABS-CBN alleged that the petitioners’
services were contracted on various dates by its Cebu station as independent contractors/off
On January 17, 2002, Labor Arbiter Rendoque rendered his decision5 holding that the
petitioners were regular employees of ABS-CBN, not independent contractors, and are
entitled to the benefits and privileges of regular employees.ABS-CBN appealed the ruling to
the National Labor Relations Commission (NLRC) Fourth Division, mainly contending that the
petitioners were independent contractors, not regular employees. 
The Illegal Dismissal Case.
While the appeal of the regularization case was pending, ABS-CBN dismissed Fulache,
Jabonero, Castillo, Lagunzad and Atinen (all drivers) for their refusal to sign up contracts of
employment with service contractor Able Services. The four drivers and Atinen responded by
filing a complaint for illegal dismissal (illegal dismissal case). The case (RAB VII Case No. 07-
1300-2002) was likewise handled by Labor Arbiter Rendoque.
In defense, ABS-CBN alleged that even before the labor arbiter rendered his decision of
January 17, 2002 in the regularization case, it had already undertaken a comprehensive
review of its existing organizational structure to address its operational requirements. It then
decided to course through legitimate service contractors all driving, messengerial, janitorial,
utility, make-up, wardrobe and security services for both the Metro Manila and provincial
stations, to improve its operations and to make them more economically viable. Fulache,
Jabonero, Castillo, Lagunzad and Atinen were not singled out for dismissal; as drivers, they
were dismissed because they belonged to a job category that had already been contracted
out. It argued that even if the petitioners had been found to have been illegally dismissed,
their reinstatement had become a physical impossibility because their employer-employee
relationships had been strained and that Atinen had executed a quitclaim and release.
In her April 21, 2003 decision in the illegal dismissal case,7 Labor Arbiter Rendoque upheld
the validity of ABS-CBN’s contracting out of certain work or services in its operations. The
labor arbiter found that petitioners Fulache, Jabonero, Castillo, Lagunzad and Atinen had
been dismissed due to redundancy, an authorized cause under the law.8 He awarded them
separation pay of one (1) month’s salary for every year of service. Again, ABS-CBN appealed
to the NLRC which rendered on December 15, 2004 a joint decision on the regularization and
illegal dismissal cases.9 The NLRC ruled that there was an employer-employee relationship
between the petitioners and ABS-CBN as the company exercised control over the petitioners
in the performance of their work; the petitioners were regular employees because they were

engaged to perform activities usually necessary or desirable in ABS-CBN’s trade or business;
they cannot be considered contractual employees since they were not paid for the result of
their work, but on a monthly basis and were required to do their work in accordance with the
company’s schedule. The NLRC thus affirmed with modification the labor arbiter’s
regularization decision of January 17, 2002, additionally granting the petitioners CBA benefits
and privileges.
The NLRC reversed the labor arbiter’s ruling in the illegal dismissal case; it found that
petitioners Fulache, Jabonero, Castillo, Lagunzad and Atinen had been illegally dismissed and
awarded them backwages and separation pay in lieu of reinstatement. Under both cases, the
petitioners were awarded CBA benefits and privileges from the time they became regular
employees up to the time of their dismissal.
The petitioners moved for reconsideration, contending that Fulache, Jabonero, Castillo and
Lagunzad are entitled to reinstatement and full backwages, salary increases and other CBA
benefits as well as 13th month pay, cash conversion of sick and vacation leaves, medical and
dental allowances, educational benefits and service awards. Atinen appeared to have been
excluded from the motion and there was no showing that he sought reconsideration on his
own.
ABS-CBN likewise moved for the reconsideration of the decision, reiterating that Fulache,
Jabonero, Castillo and Lagunzad were independent contractors, whose services had been
terminated due to redundancy; thus, no backwages should have been awarded. It further
argued that the petitioners were not entitled to the CBA benefits because they never claimed
these benefits in their position paper before the labor arbiter while the NLRC failed to make a
clear and positive finding that that they were part of the bargaining unit; neither was there
evidence to support this finding. The NLRC resolved the motions for reconsideration on March
24, 200610 by reinstating the two separate decisions of the labor arbiter dated January 17,
2002,11 and April 21, 2003,12 respectively. Thus, on the regularization issue, the NLRC stood
by the ruling that the petitioners were regular employees entitled to the benefits and
privileges of regular employees. On the illegal dismissal case, the petitioners, while
recognized as regular employees, were declared dismissed due to redundancy. The NLRC
denied the petitioners’ second motion for reconsideration in its order of May 31, 2006 for
being a prohibited pleading. 13
The CA Petition and Decision
The petitioners went to the CA through a petition for certiorari under Rule 65 of the Rules of
Court.14 They charged the NLRC with grave abuse of discretion in: (1) denying them the
benefits under the CBA; (2) finding no evidence that they are part of the company’s
bargaining unit; (3) not reinstating and awarding backwages to Fulache, Jabonero, Castillo
and Lagunzad; and (4) ruling that they are not entitled to damages and attorney’s fees. ABS-
CBN, on the other hand, questioned the propriety of the petitioners’ use of a certiorari
petition. It argued that the proper remedy for the petitioners was an appeal from the
reinstated decisions of the labor arbiter.
In its decision of March 25, 2008,15 the appellate court brushed aside ABS-CBN’s procedural
question, holding that the petition was justified because there is no plain, speedy or adequate
24
remedy from a final decision, order or resolution of the NLRC; the reinstatement of the labor
arbiter’s decisions did not mean that the proceedings reverted back to the level of the arbiter.
It likewise affirmed the NLRC ruling that the petitioners’ second motion for reconsideration is
a prohibited pleading under the NLRC rules.16
On the merits of the case, the CA ruled that the petitioners failed to prove their claim to CBA
benefits since they never raised the issue in the compulsory arbitration proceedings, and did
not appeal the labor arbiter’s decision which was silent on their entitlement to CBA benefits.
The CA found that the petitioners failed to show with specificity how Section 1 (Appropriate
Bargaining Unit) and the other provisions of the CBA applied to them.
On the illegal dismissal issue, the CA upheld the NLRC decision reinstating the labor arbiter’s
April 21, 2003 ruling.17 Thus, the drivers—Fulache, Jabonero, Castillo and Lagunzad—were
not illegally dismissed as their separation from the service was due to redundancy; they had
not presented any evidence that ABS-CBN abused its prerogative in contracting out the
services of drivers. Except for separation pay, the CA denied the petitioners’ claim for
backwages, moral and exemplary damages, and attorney’s fees.The petitioners moved for
reconsideration, but the CA denied the motion in a resolution promulgated on July 8, 2008.18
Hence, the present petition.
 
The Petition
The petitioners challenge the CA ruling on both procedural and substantive grounds. As
procedural questions, they submit that the CA erred in: (1) affirming the NLRC resolution
which reversed its own decision; (2) sustaining the NLRC ruling that their second motion for
reconsideration is a prohibited pleading; (3) not ruling that ABS-CBN admitted in its position
paper before the labor arbiter that they were members of the bargaining unit as the matter
was not raised in its appeal to the NLRC; and, (4) not ruling that notwithstanding their failure
to appeal from the first decision of the Labor Arbiter, they can still participate in the appeal
filed by ABS-CBN regarding their employment status.
On the substantive aspect, the petitioners contend that the CA gravely erred in: (1) not
considering the evidence submitted to the NLRC on appeal to bolster their claim that they
were members of the bargaining unit and therefore entitled to the CBA benefits; (2) not
ordering ABS-CBN to pay the petitioners’ salaries, allowances and CBA benefits after the
NLRC has declared that they were regular employees of ABS-CBN; (3) not ruling that under
existing jurisprudence, the position of driver cannot be declared redundant, and that the
petitioners-drivers were illegally dismissed; and, (4) not ruling that the petitioners were
entitled to damages and attorney’s fees.
The petitioners argue that the NLRC resolution of March 24, 200619 which set aside its joint
decision of December 15, 200420 and reinstated the twin decisions of the labor arbiter,21
had the effect of promulgating a new decision based on issues that were not raised in ABS-
CBN’s partial appeal to the NLRC. They submit that the NLRC should have allowed their
second motion for reconsideration so that it may be able to equitably evaluate the parties’
“conflicting versions of the facts” instead of denying the motion on a mere technicality. On

the question of their CBA coverage, the petitioners contend that the CA erred in not
considering that ABS-CBN admitted their membership in the bargaining unit, for nowhere in
its partial appeal from the labor arbiter’s decision in the regularization case did it allege that
the petitioners failed to prove that they are members of the bargaining unit; instead, the
company stood by its position that the petitioners were not entitled to the CBA benefits since
they were independent contractors/program employees.
The petitioners submit that while they did not appeal the labor arbiter’s decision in the
regularization case, ABS-CBN raised the employment status issue in its own appeal to the
NLRC; this appeal laid this issue open for review. They argue that they could still participate
in the appeal proceedings at the NLRC; pursue their position on the issue; and introduce
evidence as they did in their reply to the company’s appeal.22 They bewail the appellate
court’s failure to consider the evidence they presented to the NLRC (consisting of documents
and sworn statements enumerating the activities they are performing) clearly indicating that
they are part of the rank-and-file bargaining unit at ABS-CBN. The petitioners then proceeded
to describe the work they render for the company. Collectively, they claim that they work as
assistants in the production of the Cebuano news program broadcast daily over ABS-CBN
Channel 3, as follows: Fulache, Jabonero, Castillo and Lagunzad as production assistants to
drive the news team; Ponce and Almendras, to shoot scenes and events with the use of
cameras owned by ABS-CBN; Malig-on Bigno, as studio production assistant and assistant
editor/teleprompter operator; and Cabas, Jr., as production assistant for video editing and
operating the VTR machine recorder. As production assistants, the petitioners submit that
they are rank-and-file employees (citing in support of their position the Court’s ruling in ABS-
CBN Broadcasting Corp. v. Nazareno23) who are entitled to salary increases and other
benefits under the CBA. Relying on the Court’s ruling in New Pacific Timber and Supply
Company, Inc. v. NLRC,24 they posit that to exclude them from the CBA “would constitute
undue discrimination and would deprive them of monetary benefits they would otherwise be
entitled to.”
As their final point, the petitioners argue that even if they were not able to prove that they
were members of the bargaining unit, the CA should not have dismissed their petition. When
the CA affirmed the rulings of both the labor arbiter and the NLRC that they are regular
employees, the CA should have ordered ABS-CBN to recognize their regular employee status
and to give them the salaries, allowances and other benefits and privileges under the CBA.
On the dismissal of Fulache, Jabonero, Castillo and Lagunzad, the petitioners impute bad
faith on ABS-CBN when it abolished the positions of drivers claiming that the company failed
to comply with the requisites of a valid redundancy action. They maintain that ABS-CBN did
not present any evidence on the new staffing pattern as approved by the management of the
company, and did not even bother to show why it considered the positions of drivers
superfluous and unnecessary; it is not true that the positions of drivers no longer existed
because these positions were contracted out to an agency that, in turn, recruited four drivers
to take the place of Fulache, Jabonero, Castillo and Lagunzad. As further indication that the
redundancy action against the four drivers was done in bad faith, the petitioners call
attention to ABS-CBN’s abolition of the position of drivers after the labor arbiter rendered her
decision declaring Fulache, Jabonero, Castillo and Lagunzad regular company employees. The
petitioners object to the dismissal of the four drivers when they refused to sign resignation
letters and join Able Services, a contracting agency, contending that the four had no reason
25
to resign after the labor arbiter declared them regular company employees. Since their
dismissal was illegal and attended by bad faith, the petitioners insist that they should be
reinstated with backwages, and should likewise be awarded moral and exemplary damages,
and attorney’s fees.
The Case for ABS-CBN
In its Comment filed on January 28, 2009,25 ABS-CBN presents several grounds which may
be synthesized as follows:
1. The petition raises questions of fact and not of law.
2. The CA committed no error in affirming the resolution of the NLRC reinstating the
decisions of the labor arbiter.
ABS-CBN submits that the petition should be dismissed for having raised questions of fact
and not of law in violation of Rule 45 of the Rules of Court. It argues that the question of
whether the petitioners were covered by the CBA (and therefore entitled to the CBA benefits)
and whether the petitioners were illegally dismissed because of redundancy, are factual
questions that cannot be reviewed on certiorari because the Court is not a trier of facts. ABS-
CBN dismisses the petitioners’ issues and arguments as mere rehash of what they raised in
their pleadings with the CA and as grounds that do not warrant further consideration. It
further contends that because the petitioners did not appeal the labor arbiter decisions, these
decisions had lapsed to finality and could no longer be the subject of a petition for certiorari;
the petitioners cannot obtain from the appellate court affirmative relief other than those
granted in the appealed decision. It also argues that the NLRC did not commit any grave
abuse of discretion in reinstating the twin decisions of the labor arbiter, thereby affirming
that no CBA benefits can be awarded to the petitioners; in the absence of any illegal
dismissal, the petitioners were not entitled to reinstatement, backwages, damages, and
attorney’s fees.
The Court’s Ruling
We first resolve the parties’ procedural questions.
ABS-CBN wants the petition to be dismissed outright for its alleged failure to comply with the
requirement of Rule 45 of the Rules of Court that the petition raises only questions of law.
We find no impropriety in the petition from the standpoint of Rule 45. The petitioners do not
question the findings of facts of the assailed decisions. They question the misapplication of
the law and jurisprudence on the facts recognized by the decisions. For example, they
question as contrary to law their exclusion from the CBA after they were recognized as
regular rank-and-file employees of ABS-CBN. They also question the basis in law of the
dismissal of the four drivers and the legal propriety of the redundancy action taken against.
To reiterate the established distinctions between questions of law and questions of fact, we
quote hereunder our ruling in New Rural Bank of Guimba (N.E.) Inc. v. Fermina S. Abad and
Rafael Susan:27
“We reiterate the distinction between a question of law and a question of fact. A question of
law exists when the doubt or controversy concerns the correct application of law or

jurisprudence to a certain set of facts; or when the issue does not call for an examination of
the probative value of the evidence presented, the truth or falsehood of the facts being
admitted. A question of fact exists when a doubt or difference arises as to the truth or
falsehood of facts or when the query invites calibration of the whole evidence considering
mainly the credibility of the witnesses, the existence and relevancy of specific surrounding
circumstances, as well as their relation to each other and to the whole, and the probability of
the situation.”
We also find no error in the CA’s affirmation of the denial of the petitioners’ second motion
for reconsideration of the March 24, 2006 resolution of the NLRC reinstating the labor
arbiter’s twin decisions. The petitioners’ second motion for reconsideration was a prohibited
pleading under the NLRC rules of procedure.28
The parties’ other procedural questions directly bear on the merits of their positions and are
discussed and resolved below, together with the core substantive issues of: (1) whether the
petitioners, as regular employees, are members of the bargaining unit entitled to CBA
benefits; and (2) whether petitioners Fulache, Jabonero, Castillo and Lagunzad were illegally
dismissed.
The Claim for CBA Benefits
We find merit in the petitioners’ positions.
As regular employees, the petitioners fall within the coverage of the bargaining unit and are
therefore entitled to CBA benefits as a matter of law and contract. In the root decision (the
labor arbiter’s decision of January 17, 2002) that the NLRC and CA affirmed, the labor arbiter
declared:
“WHEREFORE, IN THE LIGHT OF THE FOREGOING, taking into account the factual scenario
and the evidence adduced by both parties, it is declared that complainants in these cases are
REGULAR EMPLOYEES of respondent ABS-CBN and not INDEPENDENT CONTRACTORS and
thus henceforth they are entitled to the benefits and privileges attached to regular status of
their employment.”
This declaration unequivocally settled the petitioners’ employment status: they are ABS-CBN’s
regular employees entitled to the benefits and privileges of regular employees. These
benefits and privileges arise from entitlements under the law (specifically, the Labor Code
and its related laws), and from their employment contract as regular ABS-CBN employees,
part of which is the CBA if they fall within the coverage of this agreement. Thus, what only
needs to be resolved as an issue for purposes of implementation of the decision is whether
the petitioners fall within CBA coverage.
The parties’ 1999-2002 CBA provided in its Article I (Scope of the Agreement) that:29
“Section 1. APPROPRIATE BARGAINING UNIT.—The parties agree that the appropriate
bargaining unit shall be regular rank-and-file employees of ABS-CBN BROADCASTING
CORPORATION but shall not include:
26
a) Personnel classified as Supervisor and Confidential employees;
b) Personnel who are on “casual” or “probationary” status as defined in Section 2 hereof;
c) Personnel who are on “contract” status or who are paid for specified units of work such as
writer-producers, talent-artists, and singers.
The inclusion or exclusion of new job classifications into the bargaining unit shall be subject
of discussion between the COMPANY and the UNION.”
Under these terms, the petitioners are members of the appropriate bargaining unit because
they are regular rank-and-file employees and do not belong to any of the excluded
categories. Specifically, nothing in the records shows that they are supervisory or confidential
employees; neither are they casual nor probationary employees. Most importantly, the labor
arbiter’s decision of January 17, 2002—affirmed all the way up to the CA level—ruled against
ABS-CBN’s submission that they are independent contractors. Thus, as regular rank-and-file
employees, they fall within CBA coverage under the CBA’s express terms and are entitled to
its benefits.
We see no merit in ABS-CBN’s arguments that the petitioners are not entitled to CBA benefits
because: (1) they did not claim these benefits in their position paper; (2) the NLRC did not
categorically rule that the petitioners were members of the bargaining unit; and (3) there was
no evidence of this membership. To further clarify what we stated above, CBA coverage is
not only a question of fact, but of law and contract. The factual issue is whether the
petitioners are regular rank-and-file employees of ABS-CBN. The tribunals below uniformly
answered this question in the affirmative. From this factual finding flows legal effects
touching on the terms and conditions of the petitioners’ regular employment. This was what
the labor arbiter meant when he stated in his decision that “henceforth they are entitled to
the benefits and privileges attached to regular status of their employment.” Significantly,
ABS-CBN itself posited before this Court that “the Court of Appeals did not gravely err nor
gravely abuse its discretion when it affirmed the resolution of the NLRC dated March 24,
2006 reinstating and adopting in toto the decision of the Labor Arbiter dated January 17,
2002 x x x.”30 This representation alone fully resolves all the objections—procedural or
otherwise—ABS-CBN raised on the regularization issue.
The Dismissal of Fulache, Jabonero, Castillo and Lagunza
 The termination of employment of the four drivers occurred under highly questionable
circumstances and with plain and unadulterated bad faith. The records show that the
regularization case was in fact the root of the resulting bad faith as this case gave rise and
led to the dismissal case. First, the regularization case was filed leading to the labor arbiter’s
decision31 declaring the petitioners, including Fulache, Jabonero, Castillo and Lagunzad, to
be regular employees. ABS-CBN appealed the decision and maintained its position that the
petitioners were independent contractors.
In the course of this appeal, ABS-CBN took matters into its own hands and terminated the
petitioners’ services, clearly disregarding its own appeal then pending with the NLRC.
Notably, this appeal posited that the petitioners were not employees (whose services
therefore could be terminated through dismissal under the Labor Code); they were

independent contractors whose services could be terminated at will, subject only to the terms
of their contracts. To justify the termination of service, the company cited redundancy as its
authorized cause but offered no justificatory supporting evidence. It merely claimed that it
was contracting out the petitioners’ activities in the exercise of its management prerogative.
ABS-CBN’s intent, of course, based on the records, was to transfer the petitioners and their
activities to a service contractor without paying any attention to the requirements of our
labor laws; hence, ABS-CBN dismissed the petitioners when they refused to sign up with the
service contractor.32 In this manner, ABS-CBN fell into a downward spiral of irreconcilable
legal positions, all undertaken in the hope of saving itself from the decision declaring its
“talents” to be regular employees.
By doing all these, ABS-CBN forgot labor law and its realities.
It forgot that by claiming redundancy as authorized cause for dismissal, it impliedly admitted
that the petitioners were regular employees whose services, by law, can only be terminated
for the just and authorized causes defined under the Labor Code.
Likewise ABS-CBN forgot that it had an existing CBA with a union, which agreement must be
respected in any move affecting the security of tenure of affected employees; otherwise, it
ran the risk of committing unfair labor practice—both a criminal and an administrative
offense.33 It similarly forgot that an exercise of management prerogative can be valid only if
it is undertaken in good faith and with no intent to defeat or circumvent the rights of its
employees under the laws or under valid agreements.34
Lastly, it forgot that there was a standing labor arbiter’s decision that, while not yet final
because of its own pending appeal, cannot simply be disregarded. By implementing the
dismissal action at the time the labor arbiter’s ruling was under review, the company
unilaterally negated the effects of the labor arbiter’s ruling while at the same time appealling
the same ruling to the NLRC. This unilateral move is a direct affront to the NLRC’s authority
and an abuse of the appeal process.
All these go to show that ABS-CBN acted with patent bad faith. A close parallel we can draw
to characterize this bad faith is the prohibition against forum-shopping under the Rules of
Court. In forum-shopping, the Rules characterize as bad faith the act of filing similar and
repetitive actions for the same cause with the intent of somehow finding a favorable ruling in
one of the actions filed.35 ABS-CBN’s actions in the two cases, as described above, are of the
same character, since its obvious intent was to defeat and render useless, in a roundabout
way and other than through the appeal it had taken, the labor arbiter’s decision in the
regularization case. Forum-shopping is penalized by the dismissal of the actions involved. The
penalty against ABS-CBN for its bad faith in the present case should be no less.
The errors and omissions do not belong to ABS-CBN alone. The labor arbiter himself who
handled both cases did not see the totality of the company’s actions for what they were. He
appeared to have blindly allowed what he granted the petitioners with his left hand, to be
taken away with his right hand, unmindful that the company already exhibited a badge of
bad faith in seeking to terminate the services of the petitioners whose regular status had just
been recognized. He should have recognized the bad faith from the timing alone of ABS-
27
CBN’s conscious and purposeful moves to secure the ultimate aim of avoiding the
regularization of its so-called “talents.”
The NLRC, for its part, initially recognized the presence of bad faith when it originally ruled
that:
“While notice has been made to the employees whose positions were declared redundant,
the element of good faith in abolishing the positions of the complainants appear to be
wanting. In fact, it remains undisputed that herein complainants were terminated when they
refused to sign an employment contract with Able Services which would make them appear
as employees of the agency and not of ABS-CBN. Such act by itself clearly demonstrates bad
faith on the part of the respondent in carrying out the company’s redundancy program x x
x.”36
On motion for reconsideration by both parties, the NLRC reiterated its “pronouncement that
complainants were illegally terminated as extensively discussed in our Joint Decision dated
December 15, 2004.”37 Yet, in an inexplicable turnaround, it reconsidered its joint decision
and reinstated not only the labor arbiter’s decision of January 17, 2002 in the regularization
case, but also his illegal dismissal decision of April 21, 2003.38 Thus, the NLRC joined the
labor arbiter in his error that we cannot but characterize as grave abuse of discretion.
The Court cannot leave unchecked the labor tribunals’ patent grave abuse of discretion that
resulted, without doubt, in a grave injustice to the petitioners who were claiming regular
employment status and were unceremoniously deprived of their employment soon after their
regular status was recognized. Unfortunately, the CA failed to detect the labor tribunals’ gross
errors in the disposition of the dismissal issue. Thus, the CA itself joined the same errors the
labor tribunals committed.
The injustice committed on the petitioners/drivers requires rectification. Their dismissal was
not only unjust and in bad faith as the above discussions abundantly show. The bad faith in
ABS-CBN’s move toward its illegitimate goal was not even hidden; it dismissed the petitioners
—already recognized as regular employees—for refusing to sign up with its service
contractor. Thus, from every perspective, the petitioners were illegally dismissed.
By law, illegally dismissed employees are entitled to reinstatement without loss of seniority
rights and other privileges and to full backwages, inclusive of allowances, and to other
benefits or their monetary equivalent from the time their compensation was withheld from
them up to the time of their actual reinstatement. The four dismissed drivers deserve no less.
Moreover, they are also entitled to moral damages since their dismissal was attended by bad
faith.40 For having been compelled to litigate and to incur expenses to protect their rights
and interest, the petitioners are likewise entitled to attorney’s fees.41
WHEREFORE, premises considered, we hereby GRANT the petition. The decision dated March
25, 2008 and the resolution dated July 8, 2008 of the Court of Appeals in CA-G.R. SP No.
01838 are hereby REVERSED and SET ASIDE. Accordingly, judgment is hereby rendered as
follows:

1. Confirming that petitioners FARLEY FULACHE, MANOLO JABONERO, DAVID CASTILLO,
JEFFREY LAGUNZAD, MAGDALENA MALIG-ON BIGNO, FRANCISCO CABAS, JR., HARVEY
PONCE and ALAN C. ALMENDRAS are regular employees of ABS-CBN BROADCASTING
CORPORATION, and declaring them entitled to all the rights, benefits and privileges,
including CBA benefits, from the time they became regular employees in accordance with
existing company practice and the Labor Code;
2. Declaring illegal the dismissal of Fulache, Jabonero, Castillo and Lagunzad, and ordering
ABS-CBN to immediately reinstate them to their former positions without loss of seniority
rights with full backwages and all other monetary benefits, from the time they were
dismissed up to the date of their actual reinstatement;
3. Awarding moral damages of P100,000.00 each to Fulache, Jabonero, Castillo and
Lagunzad; and,
4. Awarding attorney’s fees of 10% of the total monetary award decreed in this Decision.
Costs against the respondent. SO ORDERED.
GR No. L-74262. October 29, 1987.*
GENERAL RUBBER AND FOOTWEAR CORPORATION, petitioner, vs. BUREAU OF
LABOR RELATIONS, NATIONAL ASSOCIATION OF TRADE UNION OF MONTHLY
PAID EMPLOYEES—NATU, respondents.
Labor; Labor Unions; Right to self-organization; Members who are not managerial employees
but considered rank-and-file employees have every right to self-organization or be heard
through a duly certified collective bargaining union; Reason.—Thus, it can be readily seen
from the above findings of the Bureau of Labor Relations that the members of private
respondent are not managerial employees as claimed by petitioners but merely considered as
rank-and-file employees who have every right to self-organization or to be heard through a
duly certified collective bargaining union. The Supervisory power of the members of private
respondent union consists merely in recommending as to what managerial actions to take in
disciplinary cases. These members of private respondent union do not fit the definition of
managerial employees which We laid down in the case of Bulletin Publishing Corporation V.
Sanchez (144 SCRA 628). These members of private respondent union are therefore not
prohibited from forming their own collective bargaining unit since it has not been shown by
petitioner that “the responsibilities (of these monthly-paid-employees) inherently require the
exercise of discretion and independent judgment as supervisors” or that “they possess the
power and authority to lay down or exercise management policies.” Similarly, We held in the
same case that “Members of supervisory unions who do not fall within the definition of
managerial employees shall become eligible to join or assist the rank-and-file labor
organization, and if none exists, to form or assist in the forming of such rank-and-file
organizations.’’
Same; Same; Same; Where private respondents-employees were not privy to the agreement
between petitioner and the previous bargaining representatives as to their exclusion from the
bargaining union of the rank-and-file or from forming their own union, they can never bind
subsequent federations and unions; Reason.—Petitioner, in justification of its action,
maintained that the exclusion of the members of the private respondent from the bargaining
28
union of the rank-and-file or from forming their own union was agreed upon by petitioner
corporation with the previous bargaining representatives namely: the General “Rubber
Workers Union-PTGWO, the General Workers Union-NAFLU and the General Rubber Workers
Union (independent). Such posture has no leg to stand on. It has not been shown that
private respondent was privy to this agreement. And even if it were so, it can never bind
subsequent federations and unions particularly private respondent-union because it is a
curtailment of the right to self-organization guaranteed by the laber laws.
Same; Same; Same; Same; To avoid confusion and fulfill the policy of the Labor Code and to
be consistent with the ruling in the Bulletin case, the monthly-paid rank-and-file employees
should be allowed to join the union of daily paid rank-and-file employees or to form their own
rank-and-file union.—However, to prevent any difficulty and to avoid confusion to all
concerned and, more importantly, to fulfill the policy of the New Labor Code as well as to be
consistent with Our ruling in the Bulletin case, supra, the monthly-paid rank-and-file
employees should be allowed to join the union of the daily-paid-rank-and-file employees of
petitioner so that they can also avail of the CBA benefits or to form their own rank and file
union, without prejudice to the certification election that has been ordered.
PETITION to review the decision of the Bureau of Labor Relations.
The facts are stated in the opinion of the Court.
PARAS, J.:
Petitioner is a corporation engaged in the business of manufacturing rubber sandals and
other rubber products. In 1985, the Samahang Manggagawa sa General Rubber Corporation
—ANGLO was formed by the daily paid—rank and file employees as their union for collective
bargaining, after the expiration on October 15, 1985 of the collective bargaining agreement
previously executed by petitioner with General Rubber Workers Union (Independent) on
October 15, 1982. Be it noted however that on July 17, 1985, the monthly paid employees of
the petitioner-corporation, after forming their own collective bargaining unit—the National
Association of Trade Unions of Monthly Paid Employees-NATU, filed a petition for direct
certification with the Bureau of Labor Relations which petition was opposed by herein
petitioner. On September 2, 1985, the Med-Arbiter issued an Order for the holding of a
certification election after finding that a certification election is in order in this case and
observing that it is the fairest remedy to determine whether employees of petitioner desire to
have a union or not. On appeal, the Bureau of Labor Relations denied both the appeal and
motion for reconsideration interposed by petitioner and affirmed the ruling of the Med-
Arbiter. Hence, the present petition, imputing serious errors of law and grave abuse of
discretion on the part of the Bureau of Labor Relations in issuing the assailed order which
sanctioned the creation of two (2) bargaining units within petitioner-corporation with the
following:
GROUNDS FOR REVIEW
I. The Bureau of Labor Relations committed serious error of law and grave abuse
of discretion in ordering the creation of a new bargaining unit at petitioner,
notwithstanding that there is already an existing bargaining unit, whose

members are represented for collective bagaining purposes by Samahang
Manggagawa sa General Rubber Corporation-ANGLO.
II. The Bureau of Labor Relations committed serious error of law in holding that
managerial employees or those employees exercising managerial functions can
legally form and join a labor organization and be members of the new
bargaining unit.
III. The Bureau of Laber Relations committed grave abuse of discretion in holding
that supervisors, employees performing managerial, confidential and technical
functions and office personnel, who are negotiated by petitioner to be excluded
from the existing bargaining unit because they are performing vital functions to
management, can form and join a labor organization and be members of the
new bargaining unit.
Expounding on its position, petitioner argues that:
1. The order violates the thrust of the Labor Code insofar as formation of a bargaining unit is
concerned. A policy is in favor of a larger unit and not the creation of smaller units in one
establishment which might lead to formentation, thus impractical.
2. Article 246 of the Labor Code explicitly provides that managerial employees are ineligible
to join or form any labor organization. Since it has been shown by the petitioners that 30% of
the monthly-paid employees are managers or employees exercising managerial functions, it
was grave error for the Bureau of Labor Relations to allow these monthly paid employees to
form a union and/or a bargaining unit.
3. The Bureau of Labor Relations overlooked the fact that these monthly-paid-employees are
excluded from the first existing bargaining unit of the daily-paid rank and file employees
because in the year 1963, when the employees of petitioner initially started to exercise their
right to self-organization, herein petitioner bargained for the exclusion of the monthly-paid
employees from the existing bargaining unit because they are performing vital functions of
management. In view of this exclusion, petitioner took upon itself to take care of them and
directly gave them the benefits or privileges without having to bargain for them or without
the aid of the bargaining arm or force of a union.
Petitioner’s contentions are devoid of merit. Among other issues answered in the assailed
order are the following findings of fact:
“Regarding the second issue, we deem it necessary to examine the respective functions of
the employees. It appears therefrom that they perform supervisory functions. Verily they
make recommendations as to what Managerial actions to take in disciplinary cases. However,
that fact alone does not make them managerial employees already. It is more a question of
how effective are those recommendations which aspect has not been clearly established in
this case. As defined in the Labor Code, a ‘managerial employee is one who is vested with
powers or prerogatives to lay down and execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively
recommend such managerial actions.’ Thus, employees who do not fall within this definition
are considered rank-and-file employees. “Lastly, we find that the third issue has been raised
for the first time on appeal. It has been the policy of the Bureau to encourage the formation
29
of an employer unit ‘unless circumstances otherwise require. The proliferation of unions in an
employer unit is discouraged as a matter of policy unless there are compelling reasons which
would deny a certain class of employees the right to self-organization for purposes of
collective bargaining. This case does not fall squarely within the exception. It is undisputed
that the monthlies who are rank-and-file have been historically excluded from the bargaining
unit composed of daily-paid rank-and-filers that is, since 1963 when the existing rank-and-file
union was recognized. In fact, the collective bargaining agreement (CBA) which expired last
15 October 1985 provides as follows:
ARTICLE I SCOPE
‘Section 1. Appropriate bargaining unit.—This Agreement covers all regular employees and
workers employed by the company at its factory in Malabon, Metro Manila. The words
‘employee,’ ‘laborer’ and ‘workers’ when used in this Agreement shall be deemed to refer to
those employees within the bargaining unit. Employees who occupy managerial, confidential
or technical positions, supervisors, contract employees, monthly-paid employees, security as
well as office personnel are excluded from the appropriate bargaining unit (italics supplied).’
“In view of the above, the monthly-paid rank-and-file employees can form a union of their
own, separate and distinct from the existing rank-and-file union composed of daily-paid
workers.” (Rollo, pp. 19-20)
Thus, it can be readily seen from the above findings of the Bureau of Labor Relations that the
members of private respondent are not managerial employees as claimed by petitioners but
merely considered as rank-and-file employees who have every right to self-organization or to
be heard through a duly certified collective bargaining union. The Supervisory power of the
members of private respondent union consists merely in recommending as to what
managerial actions to take in disciplinary cases. These members of private respondent union
do not fit the definition of managerial employees which We laid down in the case of Bulletin
Publishing Corporation v. Sanchez (144 SCRA 628). These members of private respondent
union are therefore not prohibited from forming their own collective bargaining unit since it
has not been shown by petitioner that “the responsibilities (of these monthly-paid-
employees) inherently require the exercise of discretion and independent judgment as
supervisors” or that “they possess the power and authority to lay down or exercise
management policies.” Similarly, We held in the same case that “Members of supervisory
unions who do not fall within the definition of managerial employees shall become eligible to
join or assist the rank-and-file labor organization, and if none exists, to form or assist in the
forming of such rank-and-file organizations.”
Perhaps it is unusual for the petitioner to have to deal with two (2) collective bargaining
unions but there is no one to blame except petitioner itself for creating the situation it is in.
From the beginning of the existence in 1963 of a bargaining unit for the employees up to the
present, petitioner had sought to indiscriminately suppress the members of the private
respondent’s right to self-organization provided for by law. Petitioner, in justification of its
action, maintained that the exclusion of the members of the private respondent from the
bargaining union of the rank-and-file or from forming their own union was agreed upon by
petitioner corporation with the previous bargaining representatives namely: the General
“Rubber Workers Union-PTGWO, the General Workers Union-NAFLU and the General Rubber

Workers Union (independent). Such posture has no leg to stand on. It has not been shown
that private respondent was privy to this agreement. And even if it were so, it can never bind
subsequent federations and unions particularly private respondent-union because it is a
curtailment of the right to self-organization guaranteed by the labor laws. However, to
prevent any difficulty and to avoid confusion to all concerned and, more importantly, to fulfill
the policy of the New Labor Code as well as to be consistent with Our ruling in the Bulletin
case, supra, the monthly-paid rank-and-file employees should be allowed to join the union of
the daily-paid-rank-and-file employees of petitioner so that they can also avail of the CBA
benefits or to form their own rank-and-file union, without prejudice to the certification
election that has been ordered.
WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of merit. SO
ORDERED.
FRAMEWORK
BASIS OF RIGHT TO SELF ORGANIZATION
G.R. No. 161690. July 23, 2008.*
S.S. VENTURES INTERNATIONAL, INC., petitioner, vs. S.S. VENTURES LABOR
UNION (SSVLU) and DIR. HANS LEO CACDAC, in His capacity as Director of the
Bureau of Labor Relations (BLR), respondents.
Labor Law; Unions; Union Decertification; The right to form, join, or assist a union is
specifically protected by Art. XIII, Section 3 of the Constitution and such right, according to
Art. III, Sec. 8 of the Constitution and Art. 246 of the Labor Code, shall not be abridged; To
decertify a union, it is not enough to show that the union includes ineligible employees in its
membership—it must also be shown that there was misrepresentation, false statement, or
fraud in connection with the application for registration and the supporting documents, such
as the adoption or ratification of the constitution and by-laws or amendments thereto and the
minutes of ratification of the constitution or by-laws, among other documents.—The right to
form, join, or assist a union is specifically protected by Art. XIII, Section 3 of the Constitution
and such right, according to Art. III, Sec. 8 of the Constitution and Art. 246 of the Labor
Code, shall not be abridged. Once registered with the DOLE, a union is considered a
legitimate labor organization endowed with the right and privileges granted by law to such
organization. While a certificate of registration confers a union with legitimacy with the
concomitant right to participate in or ask for certification election in a bargaining unit, the
registration may be canceled or the union may be decertified as the bargaining unit, in which
case the union is divested of the status of a legitimate labor organization. Among the grounds
for cancellation is the commission of any of the acts enumerated in Art. 239(a) of the Labor
Code, such as fraud and misrepresentation in connection with the adoption or ratification of
the union’s constitution and like documents. The Court, has in previous cases, said that to
decertify a union, it is not enough to show that the union includes ineligible employees in its
membership. It must also be shown that there was misrepresentation, false statement, or
fraud in connection with the application for registration and the supporting documents, such
as the adoption or ratification of the constitution and by-laws or amendments thereto and the
minutes of ratification of the constitution or by-laws, among other documents.
30
Same; Same; Same; Presumptions; Employees’ withdrawal from a labor union made before
the filing of the petition for certification election is presumed voluntary, while withdrawal
after the filing of such petition is considered to be involuntary and does not affect the same.
—As aptly noted by both the BLR and CA, these mostly undated written statements
submitted by Ventures on March 20, 2001, or seven months after it filed its petition for
cancellation of registration, partake of the nature of withdrawal of union membership
executed after the Union’s filing of a petition for certification election on March 21, 2000. We
have in precedent cases said that the employees’ withdrawal from a labor union made before
the filing of the petition for certification election is presumed voluntary, while withdrawal
after the filing of such petition is considered to be involuntary and does not affect the same.
Now then, if a withdrawal from union membership done after a petition for certification
election has been filed does not vitiate such petition, is it not but logical to assume that such
withdrawal cannot work to nullify the registration of the union? Upon this light, the Court is
inclined to agree with the CA that the BLR did not abuse its discretion nor gravely err when it
concluded that the affidavits of retraction of the 82 members had no evidentiary weight.
Same; Same; Same; Same; The issuance to a labor union of a Certificate of Registration
necessarily implies that its application for registration and the supporting documents thereof
are prima facie free from any vitiating irregularities.—It cannot be over-emphasized that the
registration or the recognition of a labor union after it has submitted the corresponding
papers is not ministerial on the part of the BLR. Far from it. After a labor organization has
filed the necessary registration documents, it becomes mandatory for the BLR to check if the
requirements under Art. 234 of the Labor Code have been sedulously complied with. If the
union’s application is infected by falsification and like serious irregularities, especially those
appearing on the face of the application and its attachments, a union should be denied
recognition as a legitimate labor organization. Prescinding from these considerations, the
issuance to the Union of Certificate of Registration No. RO300-00-02-UR-0003 necessarily
implies that its application for registration and the supporting documents thereof are prima
facie free from any vitiating irregularities.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
VELASCO, JR., J.:
Petitioner S.S. Ventures International, Inc. (Ventures), a PEZA-registered export firm with
principal place of business at Phase I-PEZA-Bataan Export Zone, Mariveles, Bataan, is in the
business of manufacturing sports shoes. Respondent S.S. Ventures Labor Union (Union), on
the other hand, is a labor organization registered with the Department of Labor and
Employment (DOLE) under Certificate of Registration No. RO300-00-02-UR-0003. On March
21, 2000, the Union filed with DOLE-Region III a petition for certification election in behalf of
the rank-and-file employees of Ventures. Five hundred forty two (542) signatures, 82 of
which belong to terminated Ventures employees, appeared on the basic documents
supporting the petition.
On August 21, 2000, Ventures filed a Petition1 to cancel the Union’s certificate of registration
invoking the grounds set forth in Article 239(a) of the Labor Code.2 Docketed as Case No.
RO300-0008-CP-002 of the same DOLE regional office, the petition alleged the following:

(1) The Union deliberately and maliciously included the names of more or less 82 former
employees no longer connected with Ventures in its list of members who attended the
organizational meeting and in the adoption/ratification of its constitution and by-laws held on
January 9, 2000 in Mariveles, Bataan; and the Union forged the signatures of these 82 former
employees to make it appear they took part in the organizational meeting and adoption and
ratification of the constitution;
(2) The Union maliciously twice entered the signatures of three persons namely: Mara
Santos, Raymond Balangbang, and Karen Agunos;
(3) No organizational meeting and ratification actually took place; and
(4) The Union’s application for registration was not supported by at least 20% of the rank-
and-file employees of Ventures, or 418 of the total 2,197-employee complement. Since more
or less 82 of the 5003 signatures were forged or invalid, then the remaining valid signatures
would only be 418, which is very much short of the 439 minimum (2197 total employees x
20% = 439.4) required by the Labor Code.4
In its Answer with Motion to Dismiss,5 the Union denied committing the imputed acts of
fraud or forgery and alleged that: (1) the organizational meeting actually took place on
January 9, 2000 at the Shoe City basketball court in Mariveles; (2) the 82 employees
adverted to in Ventures’ petition were qualified Union members for, although they have been
ordered dismissed, the one-year prescriptive period to question their dismissal had not yet
lapsed; (3) it had complied with the 20%-member registration requirement since it had 542
members; and (4) the “double” signatures were inadvertent human error.
In its supplemental reply memorandum6 filed on March 20, 2001, with attachments, Ventures
cited other instances of fraud and misrepresentation, claiming that the “affidavits” executed
by 82 alleged Union members show that they were deceived into signing paper minutes or
were harassed to signing their attendance in the organizational meeting. Ventures added that
some employees signed the “affidavits” denying having attended such meeting.
In a Decision dated April 6, 2001, Regional Director Ana C. Dione of DOLE-Region III found
for Ventures, the dispositive portion of which reads:
“Viewed in the light of all the foregoing, this office hereby grants the petition. WHEREFORE,
this office resolved to CANCEL Certificate of Registration No. [RO300-00-02-UR-0003] dated
28 February 2000 of respondent S.S. Ventures Labor Union-Independent.
So Ordered.”7
Aggrieved, the Union interposed a motion for reconsideration, a recourse which appeared to
have been forwarded to the Bureau of Labor Relations (BLR). Although it would later find this
motion to have been belatedly filed, the BLR, over the objection of Ventures which filed a
Motion to Expunge, gave it due course and treated it as an appeal.
31
Despite Ventures’ motion to expunge the appeal,8 the BLR Director rendered on October 11,
2002 a decision9 in BLR-A-C-60-6-11-01, granting the Union’s appeal and reversing the
decision of Dione. The fallo of the BLR’s decision reads:
“WHEREFORE, the appeal is hereby GRANTED. The Decision of Director Ana C. Dione dated 6
April 2001 is hereby REVERSED and SET ASIDE. S.S. Ventures Labor Union-Independent shall
remain in the roster of legitimate labor organizations.
SO ORDERED.”10
Ventures sought reconsideration of the above decision but was denied by the BLR.
Ventures then went to the Court of Appeals (CA) on a petition for certiorari under Rule 65,
the recourse docketed as CA-G.R. SP No. 74749. On October 20, 2003, the CA rendered a
Decision,11 dismissing Ventures’ petition. Ventures’ motion for reconsideration met a similar
fate.12
Hence, this petition for review under Rule 45, petitioner Ventures raising the following
grounds:
I. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY
ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN
DISREGARDING THE SUBSTANTIAL AND OVERWHELMING EVIDENCE
ADDUCED BY THE PETITIONER SHOWING THAT RESPONDENT UNION
PERPETRATED FRAUD, FORGERY, MISREPRESENTATION AND
MISSTATEMENTS IN CONNECTION WITH THE ADOPTION AND RATIFICATION
OF ITS CONSTITUTION AND BY-LAWS, AND IN THE PREPARATION OF THE
LIST OF MEMBERS WHO TOOK PART IN THE ALLEGED ORGANIZATIONAL
MEETING BY HOLDING THAT:
A. THE 87 AFFIDAVITS OF ALLEGED UNION MEMBERS HAVE NO EVIDENTIARY
WEIGHT.
B. THE INCLUSION OF THE 82 EMPLOYEES IN THE LIST OF ATTENDEES TO THE
JANUARY 9, 2000 MEETING IS AN INTERNAL MATTER WITHIN THE AMBIT OF THE
WORKER’S RIGHT TO SELF-ORGANIZATION AND OUTSIDE THE SPHERE OF
INFLUENCE (OF) THIS OFFICE (PUBLIC RESPONDENT IN THIS CASE) AND THE
PETITIONER.
II. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY
ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN IGNORING
AND DISREGARDING THE BLATANT PROCEDURAL LAPSES OF THE
RESPONDENT UNION IN THE FILING OF ITS MOTION FOR RECONSIDERATION
AND APPEAL.
A. BY GIVING DUE COURSE TO THE MOTION FOR RECONSIDERATION FILED BY THE
RESPONDENT UNION DESPITE THE FACT THAT IT WAS FILED BEYOND THE
REGLEMENTARY PERIOD.

B. BY ADMITTING THE APPEAL FILED BY ATTY. ERNESTO R. ARELLANO AND
HOLDING THAT THE SAME DOES NOT CONSTITUTE FORUM SHOPPING UNDER
SUPREME COURT CIRCULAR NO. 28-91.
III. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY
ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN INVOKING
THE CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION AND ILO
CONVENTION NO. 87 TO JUSTIFY THE MASSIVE FRAUD,
MISREPRESENTATION, MISSTATEMENTS AND FORGERY COMMITTED BY THE
RESPONDENT UNION.13
The petition lacks merit.
The right to form, join, or assist a union is specifically protected by Art. XIII, Section 314 of
the Constitution and such right, according to Art. III, Sec. 8 of the Constitution and Art. 246
of the Labor Code, shall not be abridged. Once registered with the DOLE, a union is
considered a legitimate labor organization endowed with the right and privileges granted by
law to such organization. While a certificate of registration confers a union with legitimacy
with the concomitant right to participate in or ask for certification election in a bargaining
unit, the registration may be canceled or the union may be decertified as the bargaining unit,
in which case the union is divested of the status of a legitimate labor organization.15 Among
the grounds for cancellation is the commission of any of the acts enumerated in Art.
239(a)16 of the Labor Code, such as fraud and misrepresentation in connection with the
adoption or ratification of the union’s constitution and like documents. The Court, has in
previous cases, said that to decertify a union, it is not enough to show that the union
includes ineligible employees in its membership. It must also be shown that there was
misrepresentation, false statement, or fraud in connection with the application for registration
and the supporting documents, such as the adoption or ratification of the constitution and by-
laws or amendments thereto and the minutes of ratification of the constitution or by-laws,
among other documents.17
Essentially, Ventures faults both the BLR and the CA in finding that there was no fraud or
misrepresentation on the part of the Union sufficient to justify cancellation of its registration.
In this regard, Ventures makes much of, first, the separate hand-written statements of 82
employees who, in gist, alleged that they were unwilling or harassed signatories to the
attendance sheet of the organizational meeting.
We are not persuaded. As aptly noted by both the BLR and CA, these mostly undated written
statements submitted by Ventures on March 20, 2001, or seven months after it filed its
petition for cancellation of registration, partake of the nature of withdrawal of union
membership executed after the Union’s filing of a petition for certification election on March
21, 2000. We have in precedent cases18 said that the employees’ withdrawal from a labor
union made before the filing of the petition for certification election is presumed voluntary,
while withdrawal after the filing of such petition is considered to be involuntary and does not
affect the same. Now then, if a withdrawal from union membership done after a petition for
certification election has been filed does not vitiate such petition, is it not but logical to
assume that such withdrawal cannot work to nullify the registration of the union? Upon this
light, the Court is inclined to agree with the CA that the BLR did not abuse its discretion nor
32
gravely err when it concluded that the affidavits of retraction of the 82 members had no
evidentiary weight.
It cannot be over-emphasized that the registration or the recognition of a labor union after it
has submitted the corresponding papers is not ministerial on the part of the BLR. Far from it.
After a labor organization has filed the necessary registration documents, it becomes
mandatory for the BLR to check if the requirements under Art. 23419 of the Labor Code have
been sedulously complied with.20 If the union’s application is infected by falsification and like
serious irregularities, especially those appearing on the face of the application and its
attachments, a union should be denied recognition as a legitimate labor organization.
Prescinding from these considerations, the issuance to the Union of Certificate of Registration
No. RO300-00-02-UR-0003 necessarily implies that its application for registration and the
supporting documents thereof are prima facie free from any vitiating irregularities.
Second, Ventures draws attention to the inclusion of 82 individuals to the list of participants
in the January 9, 2000 organizational meeting. Ventures submits that the 82, being no longer
connected with the company, should not have been counted as attendees in the meeting and
the ratification proceedings immediately afterwards.
The assailed inclusion of the said 82 individuals to the meeting and proceedings adverted to
is not really fatal to the Union’s cause for, as determined by the BLR, the allegations of
falsification of signatures or misrepresentation with respect to these individuals are without
basis.21 The Court need not delve into the question of whether these 82 dismissed
individuals were still Union members qualified to vote and affix their signature on its
application for registration and supporting documents. Suffice it to say that, as aptly
observed by the CA, the procedure for acquiring or losing union membership and the
determination of who are qualified or disqualified to be members are matters internal to the
union and flow from its right to self-organization.
To our mind, the relevancy of the 82 individuals’ active participation in the Union’s
organizational meeting and the signing ceremonies thereafter comes in only for purposes of
determining whether or not the Union, even without the 82, would still meet what Art. 234(c)
of the Labor Code requires to be submitted, to wit:
“Art. 234. Requirements of Registration.—Any applicant labor organization x x x shall
acquire legal personality and shall be entitled to the rights and privileges granted by law to
legitimate labor organizations upon issuance of the certificate of registration based on the
following requirements:
xxxx
(c) The names of all its members comprising at least twenty percent (20%) of all the
employees in the bargaining unit where it seeks to operate.”
The BLR, based on its official records, answered the poser in the affirmative. Wrote the BLR:
“It is imperative to look into the records of respondent union with this Bureau pursuant to
our role as a central registry of union and CBA records under Article 231 of the Labor Code
and Rule XVII of the rules implementing Book V of the Labor Code, as amended x x x.

In its union records on file with this Bureau, respondent union submitted the names of [542]
members x x x. This number easily complied with the 20% requirement, be it 1,928 or 2,202
employees in the establishment. Even subtracting the 82 employees from 542 leaves 460
union members, still within 440 or 20% of the maximum total of 2,202 rank-and-file
employees.
Whatever misgivings the petitioner may have with regard to the 82 dismissed employees is
better addressed in the inclusion-exclusion proceedings during a pre-election conference x x
x. The issue surrounding the involvement of the 82 employees is a matter of membership or
voter eligibility. It is not a ground to cancel union registration.” (Emphasis added.)
The bare fact that three signatures twice appeared on the list of those who participated in
the organizational meeting would not, to our mind, provide a valid reason to cancel
Certificate of Registration No. RO300-00-02-UR-0003. As the Union tenably explained without
rebuttal from Ventures, the double entries are no more than “normal human error,” effected
without malice. Even the labor arbiter who found for Ventures sided with the Union in its
explanation on the absence of malice.22
The cancellation of a union’s registration doubtless has an impairing dimension on the right of
labor to self-organization. Accordingly, we can accord concurrence to the following apt
observation of the BLR: “[F]or fraud and misrepresentation [to be grounds for] cancellation
of union registration under Article 239 [of the Labor Code], the nature of the fraud and
misrepresentation must be grave and compelling enough to vitiate the consent of a majority
of union members.”23
In its Comment, the Union points out that for almost seven (7) years following the filing of its
petition, no certification election has yet been conducted among the rank-and-file employees.
If this be the case, the delay has gone far enough and can no longer be allowed to continue.
The CA is right when it said that Ventures should not interfere in the certification election by
actively and persistently opposing the certification election of the Union. A certification
election is exclusively the concern of employees and the employer lacks the legal personality
to challenge it.24 In fact, jurisprudence frowns on the employer’s interference in a
certification election for such interference unduly creates the impression that it intends to
establish a company union.25
Ventures’ allegations on forum shopping and the procedural lapse supposedly committed by
the BLR in allowing a belatedly filed motion for reconsideration need not detain us long.
Suffice it to state that this Court has consistently ruled that the application of technical rules
of procedure in labor cases may be relaxed to serve the demands of substantial justice.26 So
it must be in this case.
WHEREFORE, the petition is DENIED. The Decision and Resolution dated October 20, 2003
and January 19, 2004, respectively, of the CA are AFFIRMED. S.S. Ventures Labor Union shall
remain in the roster of legitimate labor organizations, unless it has in the meantime lost its
legitimacy for causes set forth in the Labor Code. Costs against petitioner. SO ORDERED.
xxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxx
33
Labor Code, Arts. 212 (m), 243 to 246, 269
G.R. No. 131235. November 16, 1999.*
UST FACULTY UNION (USTFU), GIL Y. GAMILLA, CORAZON QUI, NORMA
CALAGUAS, IRMA POTENCIANO, LUZ DE GUZMAN, REMEDIOS GARCIA, RENE
ARNEJO, EDITHA OCAMPO, CESAR REYES, CELSO NIERRA, GLICERIA BALDRES,
MA. LOURDES MEDINA, HIDELITA GABO, MAFEL YSRAEL, LAURA ABARA,
NATIVIDAD SANTOS, FERDINAND LIMOS, CARMELITA ESPINA, ZENAIDA
FAMORCA, PHILIP AGUINALDO, BENEDICTA ALAVA and LEONCIO CASAL,
petitioners, vs. Dir. BENEDICTO ERNESTO R. BITONIO, JR. of the Bureau of Labor
Relations, Med-Arbiter TOMAS F. FALCONITIN of The National Capital Region,
Department of Labor and Employment (DOLE), EDUARDO J. MARIÑO, JR., MA.
MELVYN ALAMIS, NORMA COLLANTES, URBANO ALABAGIA, RONALDO ASUNCION,
ZENAIDA BURGOS, ANTHONY CURA, FULVIO M. GUERRERO, MYRNA HILARIO,
TERESITA MEER, FERNANDO PEDROSA, NILDA REDOBLADO, RENE SISON, EVELYN
TIROL and ROSIE ALCANTARA, respondents.
Labor Law; Actions; Certiorari; Pleadings and Practice; Hierarchy of Courts; Challenges
against rulings of the labor secretary and those acting on his behalf, like the director of labor
relations, shall be acted upon by the Court of Appeals, which has concurrent jurisdiction with
the Supreme Court over petitions for certiorari.—At the outset, the Court stresses that
National Federation of Labor (NFL) v. Laguesma has held that challenges against rulings of
the labor secretary and those acting on his behalf, like the director of labor relations, shall be
acted upon by the Court of Appeals, which has concurrent jurisdiction with this Court over
petitions for certiorari. However, inasmuch as the memoranda in the instant case have been
filed prior to the promulgation and finality of our Decision in NFL, we deem it proper to
resolve the present controversy directly, instead of remanding it to the Court of Appeals.
Having disposed of the foregoing procedural matter, we now tackle the issues in the present
case seriatim.
Same; Right to Self-Organization; Unions; Employees have the right to form, join or assist
labor organizations for the purpose of collective bargaining or for their mutual aid and
protection.—Self-organization is a fundamental right guaranteed by the Philippine
Constitution and the Labor Code. Employees have the right to form, join or assist labor
organizations for the purpose of collective bargaining or for their mutual aid and protection.
Whether employed for a definite period or not, any employee shall be considered as such,
beginning on his first day of service, for purposes of membership in a labor union.
Same; Same; Same; To become a union member, an employee must, as a rule, not only
signify the intent to become one, but also to take some positive steps to realize that intent.—
Corollary to this right is the prerogative not to join, affiliate with or assist a labor union.
Therefore, to become a union member, an employee must, as a rule, not only signify the
intent to become one, but also take some positive steps to realize that intent. The procedure
for union membership is usually embodied in the union’s constitution and bylaws. An
employee who becomes a union member acquires the rights and the concomitant obligations
that go with this new status and becomes bound by the union’s rules and regulations.

Same; Same; Same; Members’ frustration over the performance of the union officers, as well
as their fears of a “fraudulent” election to be held under the latter’s supervision, could not
justify the disregard of the union’s constitution and by-laws.—Petitioners claim that the
numerous anomalies allegedly committed by the private respondents during the latter’s
incumbency impelled the October 4, 1996 election of the new set of USTFU officers. They
assert that such exercise was pursuant to their right to self-organization. Petitioners’
frustration over the performance of private respondents, as well as their fears of a
“fraudulent” election to be held under the latter’s supervision, could not justify the method
they chose to impose their will on the union. Director Bitonio aptly elucidated: “The
constitutional right to self-organization is better understood in the context of ILO Convention
No. 87 (Freedom of Association and Protection of Right to Organize), to which the Philippines
is signatory. Article 3 of the Convention provides that workers’ organizations shall have the
right to draw up their constitution and rules and to elect their representatives in full freedom,
free from any interference from public authorities. The freedom conferred by the provision is
expansive; the responsibility imposed on union members to respect the constitution and rules
they themselves draw up equally so. The point to be stressed is that the union’s CBL is the
fundamental law that governs the relationship between and among the members of the
union. It is where the rights, duties and obligations, powers, functions and authority of the
officers as well as the members are defined. It is the organic law that determines the validity
of acts done by any officer or member of the union. Without respect for the CBL, a union as a
democratic institution degenerates into nothing more than a group of individuals governed by
mob rule.”
Same; Same; Same; Words and Phrases; “Union Election” and “Certification Election,”
Distinguished; An employee belonging to the appropriate bargaining unit but who is not a
member of the union cannot vote in the union election, unless otherwise authorized by the
constitution and by-laws of the union—union affairs and elections cannot be decided in a
non-union activity.—A union election is held pursuant to the union’s constitution and by-laws,
and the right to vote in it is enjoyed only by union members. A union election should be
distinguished from a certification election, which is the process of determining, through secret
ballot, the sole and exclusive bargaining agent of the employees in the appropriate
bargaining unit, for purposes of collective bargaining. Specifically, the purpose of a
certification election is to ascertain whether or not a majority of the employees wish to be
represented by a labor organization and, in the affirmative case, by which particular labor
organization. In a certification election, all employees belonging to the appropriate bargaining
unit can vote. Therefore, a union member who likewise belongs to the appropriate bargaining
unit is entitled to vote in said election. However, the reverse is not always true; an employee
belonging to the appropriate bargaining unit but who is not a member of the union cannot
vote in the union election, unless otherwise authorized by the constitution and by-laws of the
union. Verily, union affairs and elections cannot be decided in a non-union activity.
Same; Same; Same; A union’s constitution and by-laws embody a covenant between a union
and its members and constitute the fundamental law governing the members’ rights and
obligations.—The importance of a union’s constitution and by-laws cannot be
overemphasized. They embody a covenant between a union and its members and constitute
the fundamental law governing the members’ rights and obligations. As such, the union’s
constitution and by-laws should be upheld, as long as they are not contrary to law, good
morals or public policy.
34
Same; Same; Same; Collective Bargaining Agreements; Ratification of a new Collective
Bargaining Agreement executed between the new officers of the union and management
does not have the effect of validating a void union election—the ratification refers only to the
terms of the new Collective Bargaining Agreement, not the issue of union leadership.—The
ratification of the new CBA executed between the petitioners and the University of Santo
Tomas management did not validate the void October 4, 1996 election. Ratified were the
terms of the new CBA, not the issue of union leadership—a matter that should be decided
only by union members in the proper forum at the proper time and after observance of
proper procedures.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
PANGANIBAN, J.:
There is a right way to do the right thing at the right time for the right reasons,1 and in the
present case, in the right forum by the right parties. While grievances against union leaders
constitute legitimate complaints deserving appropriate redress, action thereon should be
made in the proper forum at the proper time and after observance of proper procedures.
Similarly, the election of union officers should be conducted in accordance with the provisions
of the union’s constitution and by-laws, as well as the Philippine Constitution and the Labor
Code. Specifically, while all legitimate faculty members of the University of Santo Tomas
(UST) belonging to a collective bargaining unit may take part in a duly convened certification
election, only bona fide members of the UST Faculty Union (USTFU) may participate and vote
in a legally called election for union officers. Mob hysteria, however wellintentioned, is not a
substitute for the rule of law.
The Case
The Petition for Certiorari before us assails the August 15, 1997 Resolution2 of Director
Benedicto Ernesto R. Bitonio, Jr. of the Bureau of Labor Relations (BLR) in BLR Case No. A-8-
49-97, which affirmed the February 11, 1997 Decision of MedArbiter Tomas F. Falconitin. The
med-arbiter’s Decision disposed as follows:
“WHEREFORE, premises considered, judgment is hereby rendered declaring the election of
USTFU officers conducted on October 4, 1996 and its election results as null and void ab
initio.
“Accordingly, respondents Gil Gamilla, et al. are hereby ordered to cease and desist from
acting and performing the duties and functions of the legitimate officers of [the] University of
Santo UST Faculty Union vs. Bitonio, Jr. Tomas Faculty Union (USTFU) pursuant to [the]
union’s constitution and by-laws (CBL).
“The Temporary Restraining Order (TRO) issued by this Office on December 11, 1996 in
connection with the instant petition, is hereby made and declared permanent.”3

Likewise challenged is the October 30, 1997 Resolution4 of Director Bitonio, which denied
petitioners’ Motion for Reconsideration.
The Facts
The factual antecedents of the case are summarized in the assailed Resolution as follows:
“Petitioners-appellees [herein Private Respondents] Marino, et al. (appellees) are duly elected
officers of the UST Faculty Union (USTFU). The union has a subsisting five-year Collective
Bargaining Agreement with its employer, the University of Santo Tomas (UST). The CBA was
registered with the Industrial Relations Division, DOLE-NCR, on 20 February 1995. It is set to
expire on 31 May 1998.
“On 21 September 1996, appellee Collantes, in her capacity as Secretary General of USTFU,
posted a notice addressed to all USTFU members announcing a general assembly to be held
on 05 October 1996. Among others, the general assembly was called to elect USTFU’s next
set of officers. Through the notice, the members were also informed of the constitution of a
Committee on Elections (COMELEC) to oversee the elections. (Annex “B,” petition)
“On 01 October 1996, some of herein appellants filed a separate petition with the Med-
Arbiter, DOLE-NCR, directed against herein appellees and the members of the COMELEC.
Docketed as Case No. NCR-OD-M-9610-001, the petition alleged that the COMELEC was not
constituted in accordance with USTFU’s constitution and by-laws (CBL) and that no rules had
been issued to govern the conduct of the 05 October 1996 election.
“On 02 October 1996, the secretary general of UST, upon the request of the various UST
faculty club presidents (See paragraph VI, Respondents’ Comment and Motion to Dismiss),
issued notices allowing all faculty members to hold a convocation on 04 October 1996 (See
Annex ‘C’ Petition; Annexes ‘4’ to ‘10,’ Appeal). Denominated as [a] general faculty assembly,
the convocation was supposed to discuss the ‘state of the unratified UST-USTFU CBA’ and
‘status and election of USTFU officers’ (Annex ‘11,’ Appeal)
“On 04 October 1996, the med-arbiter in Case No. NCR-OD-M-9610-001 issued a temporary
restraining order against herein appellees enjoining them from conducting the election
scheduled on 05 October 1996.
“Also on 04 October 1996, and as earlier announced by the UST secretary general, the
general faculty assembly was held as scheduled. The general assembly was attended by
members of the USTFU and, as admitted by the appellants, also by ‘non-USTFU members
[who] are members in good standing of the UST Academic Community Collective Bargaining
Unit’ (See paragraph XI, Respondents’ Comment and Motion to Dismiss). On this occasion,
appellants were elected as USTFU’s new set of officers by acclamation and clapping of hands
(See paragraphs 40 to 50, Annex ‘12,’ Appeal).
“The election of the appellants came about upon a motion of one Atty. Lopez, admittedly not
a member of USTFU, that the USTFU CBL and ‘the rules of the election be suspended and
that the election be held [on] that day’ (See paragraph 39, Idem.)
35
“On 11 October 1996, appellees filed the instant petition seeking injunctive reliefs and the
nullification of the results of the 04 October 1996 election. Appellees alleged that the holding
of the same violated the temporary restraining order issued in Case No. NCR-OD-M-9610-
001. Accusing appellants of usurpation, appellees characterized the election as spurious for
being violative of USTFU’s CBL, specifically because the general assembly resulting in the
election of appellants was not called by the Board of Officers of the USTFU; there was no
compliance with the ten-day notice rule required by Section 1, Article VIII of the CBL; the
supposed elections were conducted without a COMELEC being constituted by the Board of
Officers in accordance with Section 1, Article IX of the CBL; the elections were not by secret
balloting as required by Section 1, Article V and Section 6, Article IX of the CBL, and, the
general assembly was convened by faculty members some of whom were not members of
USTFU, so much so that non-USTFU members were allowed to vote in violation of Section 1,
Article V of the CBL.
“On 24 October 1996, appellees filed another urgent ex-parte motion for a temporary
restraining order, this time alleging that appellants had served the former a notice to vacate
the union office. For their part, appellants moved to dismiss the original petition and the
subsequent motion on jurisdictional grounds. Both the petition and the motion were
captioned to be for “Prohibition, Injunction with Prayer for Preliminary Injunction and
Temporary Restraining Order.” According to the appellants, the med-arbiter has no
jurisdiction over petitions for prohibition, ‘including the ancillary remedies of restraining order
and/or preliminary injunction, which are merely incidental to the main petition for
PROHIBITION’ (Paragraph XVIII, Respondents’ Comment and Motion to Dismiss). Appellants
also averred that they now constituted the new set of union officers having been elected in
accordance with law after the term of office of appellees had expired. They further
maintained that appellees’ scheduling of the 5 October 1996 elections was illegal because no
rules and regulations governing the elections were promulgated as required by USTFU’s CBL
and that one of the members of the COMELEC was not a registered member of USTFU.
Appellants likewise noted that the elections called by the appellees should have been
postponed to allow the promulgation of rules and regulations and to ‘insure a free, clean,
honest and orderly elections and to afford at the same time the greater majority of the
general membership to participate’ (See paragraph V, Idem.). Finally, appellants contended
that the holding of the general faculty assembly on 04 October 1996 was under the control of
the Council of College/Faculty Club Presidents in cooperation with the USTFU Reformist
Alliance and that they received the Temporary Restraining Order issued in Case No. NCR-OD-
M-9610-001 only on 07 October 1996 and were not aware of the same on 04 October 1996.
“On 03 December 1996, appellants and UST allegedly entered into another CBA covering the
period from 01 June 1996 to 31 May 2001 (Annex 11, appellants’ Rejoinder to the Reply and
Opposition).
“Consequently, appellees again moved for the issuance of a temporary restraining order to
prevent appellants from making further representations that [they] had entered into a new
agreement with UST. Appellees also reiterated their earlier stand that appellants were
usurping the former’s duties and functions and should be stopped from continuing such acts.
“On 11 December 1996, over appellants’ insistence that the issue of jurisdiction should first
be resolved, the med-arbiter issued a temporary restraining order directing the respondents

to cease and desist from performing any and all acts pertaining to the duties and functions of
the officers and directors of USTFU.
“In the meantime, appellants claimed that the new CBA was purportedly ratified by an
overwhelming majority of UST’s academic community on 12 December 1996 (Annexes 1 to
10, Idem.). For this reason, appellants moved for the dismissal of what it denominated as
appellees’ petition for prohibition on the ground that this had become moot and academic.”5
Petitioners appealed the med-arbiter’s Decision to the labor secretary,6 who transmitted the
records of the case to the Bureau of Labor Relations which, under Department Order No. 9,
was authorized to resolve appeals of intra-union cases, consistent with the last paragraph of
Article 241 of the Labor Code.7
The Assailed Ruling
Agreeing with the med-arbiter that the USTFU officers’ purported election held on October 4,
1994 was void for having been conducted in violation of the union’s Constitution and By-laws
(CBL), Public Respondent Bitonio rejected petitioners’ contention that it was a legitimate
exercise of their right to self-organization. He ruled that the CBL, which constituted the
covenant between the union and its members, could not be suspended during the October 4,
1996 general assembly of all faculty members, since that assembly had not been convened or
authorized by the USTFU.
Director Bitonio likewise held that the October 4, 1996 election could not be legitimized by
the recognition of the newly “elected” set of officers by UST or by the alleged ratification of
the new CBA by the general membership of the USTFU. Ruled Respondent Bitonio:
“This submission is flawed. The issue at hand is not collective bargaining representation but
union leadership, a matter that should concern only the members of USTFU. As pointed out
by the appellees, the privilege of determining who the union officers will be belongs
exclusively to the members of the union. Said privilege is exercised in an election proceeding
in accordance with the union’s CBL and applicable law.
“To accept appellants’ claim to legitimacy on the foregoing grounds is to invest in appellants
the position, duties, responsibilities, rights and privileges of USTFU officers without the
benefit of a lawful electoral exercise as defined in USTFU’s CBL and Article 241(c) of the
Labor Code. Not to mention the fact that labor laws prohibit the employer from interfering
with the employees in the latter’s exercise of their right to self-organization. To allow
appellants to become USTFU officers on the strength of management’s recognition of them is
to concede to the employer the power of determining who should be USTFU’s leaders. This is
a clear case of interference in the exercise by USTFU members of their right to self-
organization.”8
Hence, this Petition.9
The Issues
The main issue in this case is whether the public respondent committed grave abuse of
discretion in refusing to recognize the officers “elected” during the October 4, 1996 general
36
assembly. Specifically, petitioners in their Memorandum urge the Court to resolve the
following questions:10
“(1)Whether the Collective Bargaining Unit of all the faculty members in that General Faculty
Assembly had the right in that General Faculty Assembly to suspend the provisions of the
Constitution and By-Laws of the USTFU regarding the elections of officers of the union[.]
“(2)Whether the suspension of the provisions of the Constitution and By-Laws of the USTFU
in that General Faculty Assembly is valid pursuant to the constitutional right of the Collective
Bargaining Unit to engage in “peaceful concerted activities” for the purpose of ousting the
corrupt regime of the private respondents[.]
“(3)Whether the overwhelming ratification of the Collective Bargaining Agreement executed
by the petitioners in behalf of the USTFU with the University of Santo Tomas has rendered
moot and academic the issue as to the validity of the suspension of the Constitution and By-
Laws and the elections of October 4, 1996 in the General Faculty Assembly[.]”
The Court’s Ruling
The petition is not meritorious. Petitioners fail to convince this Court that Director Bitonio
gravely abused his discretion in affirming the med-arbiter and in refusing to recognize the
binding effect of the October 4, 1996 general assembly called by the UST administration.
First Issue: Right to Self-Organization and Union Membership
At the outset, the Court stresses that National Federation of Labor (NFL) v. Laguesma11 has
held that challenges against rulings of the labor secretary and those acting on his behalf, like
the director of labor relations, shall be acted upon by the Court of Appeals, which has
concurrent jurisdiction with this Court over petitions for certiorari. However, inasmuch as the
memoranda in the instant case have been filed prior to the promulgation and finality of our
Decision in NFL, we deem it proper to resolve the present controversy directly, instead of
remanding it to the Court of Appeals. Having disposed of the foregoing procedural matter, we
now tackle the issues in the present case seriatim.
Self-organization is a fundamental right guaranteed by the Philippine Constitution and the
Labor Code. Employees have the right to form, join or assist labor organizations for the
purpose of collective bargaining or for their mutual aid and protection.12 Whether employed
for a definite period or not, any employee shall be considered as such, beginning on his first
day of service, for purposes of membership in a labor union.13
Corollary to this right is the prerogative not to join, affiliate with or assist a labor union.14
Therefore, to become a union member, an employee must, as a rule, not only signify the
intent to become one, but also take some positive steps to realize that intent. The procedure
for union membership is usually embodied in the union’s constitution and by-laws.15 An
employee who becomes a union member acquires the rights and the concomitant obligations
that go with this new status and becomes bound by the union’s rules and regulations.
“When a man joins a labor union (or almost any other democratically controlled group),
necessarily a portion of his individual freedom is surrendered for the benefit of all members.
He accepts the will of the majority of the members in order that he may derive the
advantages to be gained from the concerted action of all. Just as the enactments of the
legislature bind all of us, to the constitution and by-laws of the union (unless contrary to
good morals or public policy, or otherwise illegal), which are duly enacted through democratic

processes, bind all of the members. If a member of a union dislikes the provisions of the by-
laws, he may seek to have them amended or may withdraw from the union; otherwise, he
must abide by them. It is not the function of courts to decide the wisdom or propriety of
legitimate by-laws of a trade union.
“On joining a labor union, the constitution and by-laws become a part of the member’s
contract of membership under which he agrees to become bound by the constitution and
governing rules of the union so far as it is not inconsistent with controlling principles of law.
The constitution and by-laws of an unincorporated trade union express the terms of a
contract, which define the privileges and rights secured to, and duties assumed by, those
who have become members. The agreement of a member on joining a union to abide by its
laws and comply with the will of the lawfully constituted majority does not require a member
to submit to the determination of the union any question involving his personal rights.”16
Petitioners claim that the numerous anomalies allegedly committed by the private
respondents during the latter’s incumbency impelled the October 4, 1996 election of the new
set of USTFU officers. They assert that such exercise was pursuant to their right to self-
organization.
Petitioners’ frustration over the performance of private respondents, as well as their fears of
a “fraudulent” election to be held under the latter’s supervision, could not justify the method
they chose to impose their will on the union. Director Bitonio aptly elucidated:17
“The constitutional right to self-organization is better understood in the context of ILO
Convention No. 87 (Freedom of Association and Protection of Right to Organize), to which
the Philippines is signatory. Article 3 of the Convention provides that workers’ organizations
shall have the right to draw up their constitution and rules and to elect their representatives
in full freedom, free from any interference from public authorities. The freedom conferred by
the provision is expansive; the responsibility imposed on union members to respect the
constitution and rules they themselves draw up equally so. The point to be stressed is that
the union’s CBL is the fundamental law that governs the relationship between and among the
members of the union. It is where the rights, duties and obligations, powers, functions and
authority of the officers as well as the members are defined. It is the organic law that
determines the validity of acts done by any officer or member of the union. Without respect
for the CBL, a union as a democratic institution degenerates into nothing more than a group
of individuals governed by mob rule.”
Union Election vs. Certification Election
A union election is held pursuant to the union’s constitution and by-laws, and the right to
vote in it is enjoyed only by union members. A union election should be distinguished from a
certification election, which is the process of determining, through secret ballot, the sole and
exclusive bargaining agent of the employees in the appropriate bargaining unit, for pur-poses
of collective bargaining.18 Specifically, the purpose of a certification election is to ascertain
whether or not a majority of the employees wish to be represented by a labor organization
and, in the affirmative case, by which particular labor organization.19
In a certification election, all employees belonging to the appropriate bargaining unit can
vote.20 Therefore, a union member who likewise belongs to the appropriate bargaining unit
37
is entitled to vote in said election. However, the reverse is not always true; an employee
belonging to the appropriate bargaining unit but who is not a member of the union cannot
vote in the union election, unless otherwise authorized by the constitution and by-laws of the
union. Verily, union affairs and elections cannot be decided in a non-union activity.
In both elections, there are procedures to be followed. Thus, the October 4, 1996 election
cannot properly be called a union election, because the procedure laid down in the USTFU’s
CBL for the election of officers was not followed. It could not have been a certification
election either, because representation was not the issue, and the proper procedure for such
election was not followed. The participation of non-union members in the election aggravated
its irregularity.
Second Issue: USTFU’s Constitution and By-Laws Violated
The importance of a union’s constitution and by-laws cannot be overemphasized. They
embody a covenant between a union and its members and constitute the fundamental law
governing the members’ rights and obligations.21 As such, the union’s constitution and by-
laws should be upheld, as long as they are not contrary to law, good morals or public policy.
We agree with the finding of Director Bitonio and MedArbiter Falconitin that the October 4,
1996 election was tainted with irregularities because of the following reasons.
First, the October 4, 1996 assembly was not called by the USTFU. It was merely a
convocation of faculty clubs, as indicated in the memorandum sent to all faculty members by
Fr. Rodel Aligan, OP, the secretary general of the University of Santo Tomas.22 It was not
convened in accordance with the provision on general membership meetings as found in the
USTFU’s CBL, which reads:
“ARTICLE VIII—MEETINGS OF THE UNION
“Section 1. The Union shall hold regular general membership meetings at least once every
three (3) months. Notices of the meeting shall be sent out by the Secretary-General at least
ten (10) days prior to such meetings by posting in conspicuous places, preferably inside
Company premises, said notices. The date, time and place for the meetings shall be
determined by the Board of Officers.”23
Unquestionably, the assembly was not a union meeting. It was in fact a gathering that was
called and participated in by management and non-union members. By no legal fiat was such
assembly transformed into a union activity by the participation of some union members.
Second, there was no commission on elections to oversee the election, as mandated by
Sections 1 and 2 of Article IX of the USTFU’s CBL, which provide:
“ARTICLE IX—UNION ELECTION
Section 1. There shall be a Committee on Election (COMELEC) to be created by the Board of
Officers at least thirty (30) days before any regular or special election. The functions of the
COMELEC include the following:
a)Adopt and promulgate rules and regulations that will ensure a free, clean, honest and
orderly election, whether regular or special;

b)Pass upon qualifications of candidates;
c)Rule on any question or protest regarding the conduct of the election subject to the
procedure that may be promulgated by the Board of Officers; and
d)Proclaim duly elected officers.
Section 2. The COMELEC shall be composed of a chairman and two members all of whom
shall be appointed by the Board of Officers.
“x x x      x x x      x x x”24
Third, the purported election was not done by secret balloting, in violation of Section 6,
Article IX of the USTFU’s CBL, as well as Article 241 (c) of the Labor Code.
The foregoing infirmities considered, we cannot attribute grave abuse of discretion to
Director Bitonio’s finding and conclusion. In Rodriguez v. Director, Bureau of Labor
Relations,25 we invalidated the local union elections held at the wrong date without prior
notice to members and conducted without regard for duly prescribed ground rules. We held
that the proceedings were rendered void by the lack of due process—undue haste, lack of
adequate safeguards to ensure integrity of the voting, and the absence of the notice of the
dates of balloting.
Third Issue: Suspension of USTFU’s CBL
Petitioners contend that the October 4, 1996 assembly “suspended” the union’s CBL. They
aver that the suspension and the election that followed were in accordance with their
“constituent and residual powers as members of the collective bargaining unit to choose their
representatives for purposes of collective bargaining.” Again they cite the numerous
anomalies allegedly committed by the private respondents as USTFU officers. This argument
does not persuade.
First, as has been discussed, the general faculty assembly was not the proper forum to
conduct the election of USTFU officers. Not all who attended the assembly were members of
the union; some, apparently, were even disqualified from becoming union members, since
they represented management. Thus, Director Bitonio correctly observed:
“Further, appellants cannot be heard to say that the CBL was effectively suspended during
the 04 October 1996 general assembly. A union CBL is a covenant between the union and its
members and among members (Johnson and Johnson Labor Union-FFW, et al. v. Director of
Labor Relations, 170 SCRA 469). Where ILO Convention No. 87 speaks of a union’s full
freedom to draw up its constitution and rules, it includes freedom from interference by
persons who are not members of the union. The democratic principle that governance is a
matter for the governed to decide upon applies to the labor movement which, by law and
constitutional mandate, must be assiduously insulated against intrusions coming from both
the employer and complete strangers if the ‘protection to labor clause’ of the constitution is
to be guaranteed. By appellant’s own evidence, the general faculty assembly of 04 October
1996 was not a meeting of USTFU. It was attended by members and non-members alike, and
therefore was not a forum appropriate for transacting union matters. The person who moved
for the suspension of USTFU’s CBL was not a member of USTFU. Allowing a non-union
member to initiate the suspension of a union’s CBL, and non-union members to participate in
a union election on the premise that the union’s CBL had been suspended in the meantime, is
38
incompatible with the freedom of association and protection of the right to organize. “If there
are members of the so-called ‘academic community collective bargaining unit’ who are not
USTFU members but who would nevertheless want to have a hand in USTFU’s affairs, the
appropriate procedure would have been for them to become members of USTFU first. The
procedure for membership is very clearly spelled out in Article IV of USTFU’s CBL. Having
become members, they could then draw guidance from Ang Malayang Manggagawa Ng Ang
Tibay v. Ang Tibay, 103 Phil. 669. Therein the Supreme Court held that ‘if a member of the
union dislikes the provisions of the bylaws he may seek to have them amended or may
withdraw from the union; otherwise he must abide by them.’ Under Article XVII of USTFU’s
CBL, there is also a specific provision for constitutional amendments. What is clear therefore
is that USTFU’s CBL provides for orderly procedures and remedies which appellants could
have easily availed [themselves] of instead of resorting to an exercise of their so-called
‘residual power.’ ”
Second, the grievances of the petitioners could have been brought up and resolved in
accordance with the procedure laid down by the union’s CBL27 and by the Labor Code.28
They contend that their sense of desperation and helplessness led to the October 4, 1996
election. However, we cannot agree with the method they used to rectify years of inaction on
their part and thereby ease bottled-up frustrations, as such method was in total disregard of
the USTFU’s CBL and of due process. The end never justifies the means.
We agree with the solicitor general’s observation that “the act of suspending the constitution
when the questioned election was held is an implied admission that the election held on that
date [October 4, 1996] could not be considered valid under the existing USTFU constitution x
x x.”29
The ratification of the new CBA executed between the petitioners and the University of Santo
Tomas management did not validate the void October 4, 1996 election. Ratified were the
terms of the new CBA, not the issue of union leadership—a matter that should be decided
only by union members in the proper forum at the proper time and after observance of
proper procedures.
Epilogue
In dismissing this Petition, we are not passing upon the merits of the mismanagement
allegations imputed by the petitioners to the private respondents; these are not at issue in
the present case. Petitioners can bring their grievances and resolve their differences with
private respondents in timely and appropriate proceedings. Courts will not tolerate the unfair
treatment of union members by their own leaders. When the latter abuse and violate the
rights of the former, they shall be dealt with accordingly in the proper forum after the
observance of due process.
WHEREFORE, the Petition is hereby DISMISSED and the assailed Resolutions AFFIRMED.
Costs against petitioners. SO ORDERED.
G.R. No. 114974. June 16, 2004.*
STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE), petitioner, vs. The
Honorable MA. NIEVES R. CONFESOR, in her capacity as SECRETARY OF LABOR
AND EMPLOYMENT; and the STANDARD CHARTERED BANK, respondents.

Labor Law; Labor Code; Labor Union; Interference, restraints or coercion of employees by
the employer in the exercise of their right to self-organization or the right to form association
considered unfair labor practice; In order to show that the employer committed ULP under
the Labor Code, substantial evidence is required to support such claim.—Article 248(a) of the
Labor Code, considers it an unfair labor practice when an employer interferes, restrains or
coerces employees in the exercise of their right to self-organization or the right to form
association. The right to self-organization necessarily includes the right to collective
bargaining. Parenthetically, if an employer interferes in the selection of its negotiators or
coerces the Union to exclude from its panel of negotiators a representative of the Union, and
if it can be inferred that the employer adopted the said act to yield adverse effects on the
free exercise to right to self-organization or on the right to collective bargaining of the
employees, ULP under Article 248(a) in connection with Article 243 of the Labor Code is
committed. In order to show that the employer committed ULP under the Labor Code,
substantial evidence is required to support the claim. Substantial evidence has been defined
as such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. In the case at bar, the Union bases its claim of interference on the alleged
suggestions of Diokno to exclude Umali from the Union’s negotiating panel.
Same; Same; Same; Collective Bargaining Agreement; Words and Phrases; Surface
Bargaining Defined.—Surface bargaining is defined as “going through the motions of
negotiating” without any legal intent to reach an agreement. The resolution of surface
bargaining allegations never presents an easy issue. The determination of whether a party
has engaged in unlawful surface bargaining is usually a difficult one because it involves, at
bottom, a question of the intent of the party in question, and usually such intent can only be
inferred from the totality of the challenged party’s conduct both at and away from the
bargaining table. It involves the question of whether an employer’s conduct demonstrates an
unwillingness to bargain in good faith or is merely hard bargaining.
Same; Same; Same; Same; The duty to bargain “does not compel either party to agree to a
proposal or require the making of a concession.”—The Union has not been able to show that
the Bank had done acts, both at and away from the bargaining table, which tend to show
that it did not want to reach an agreement with the Union or to settle the differences
between it and the Union. Admittedly, the parties were not able to agree and reached a
deadlock. However, it is herein emphasized that the duty to bargain “does not compel either
party to agree to a proposal or require the making of a concession.” Hence, the parties’
failure to agree did not amount to ULP under Article 248(g) for violation of the duty to
bargain.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
CALLEJO, SR., J.:
This is a petition for certiorari under Rule 65 of the Rules of Court filed by the Standard
Chartered Bank Employees Union, seeking the nullification of the October 29, 1993 Order1 of
then Secretary of Labor and Employment Nieves R. Confesor and her resolutions dated
December 16, 1993 and February 10, 1994.
39
The Antecedents
Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation doing
business in the Philippines. The exclusive bargaining agent of the rank and file employees of
the Bank is the Standard Chartered Bank Employees Union (the Union, for brevity).
In August of 1990, the Bank and the Union signed a five-year collective bargaining
agreement (CBA) with a provision to renegotiate the terms thereof on the third year. Prior to
the expiration of the three-year period2 but within the sixty-day freedom period, the Union
initiated the negotiations. On February 18, 1993, the Union, through its President, Eddie L.
Divinagracia, sent a letter3 containing its proposals4 covering political provisions5 and thirty-
four (34) economic provisions.6 Included therein was a list of the names of the members of
the Union’s negotiating panel.7
In a Letter dated February 24, 1993, the Bank, through its Country Manager Peter H. Harris,
took note of the Union’s proposals. The Bank attached its counter-proposal to the non-
economic provisions proposed by the Union.8 The Bank posited that it would be in a better
position to present its counter-proposals on the economic items after the Union had
presented its justifications for the economic proposals.9 The Bank, likewise, listed the
members of its negotiating panel.10 The parties agreed to set meetings to settle their
differences on the proposed CBA.
Before the commencement of the negotiation, the Union, through Divinagracia, suggested to
the Bank’s Human Resource Manager and head of the negotiating panel, Cielito Diokno, that
the bank lawyers should be excluded from the negotiating team. The Bank acceded.11
Meanwhile, Diokno suggested to Divinagracia that Jose P. Umali, Jr., the President of the
National Union of Bank Employees (NUBE), the federation to which the Union was affiliated,
be excluded from the Union’s negotiating panel.12 However, Umali was retained as a
member thereof.
On March 12, 1993, the parties met and set the ground rules for the negotiation. Diokno
suggested that the negotiation be kept a “family affair.” The proposed non-economic
provisions of the CBA were discussed first.13 Even during the final reading of the
noneconomic provisions on May 4, 1993, there were still provisions on which the Union and
the Bank could not agree. Temporarily, the notation “DEFERRED” was placed therein.
Towards the end of the meeting, the Union manifested that the same should be changed to
“DEADLOCKED” to indicate that such items remained unresolved. Both parties agreed to
place the notation “DEFERRED/DEADLOCKED.”14
On May 18, 1993, the negotiation for economic provisions commenced. A presentation of the
basis of the Union’s economic proposals was made. The next meeting, the Bank made a
similar presentation. Towards the end of the Bank’s presentation, Umali requested the Bank
to validate the Union’s “guestimates,” especially the figures for the rank and file staff.15 In
the succeeding meetings, Umali chided the Bank for the insufficiency of its counter-proposal
on the provisions on salary increase, group hospitalization, death assistance and dental
benefits. He reminded the Bank, how the Union got what it wanted in 1987, and stated that if
need be, the Union would go through the same route to get what it wanted.16
 40

Upon the Bank’s insistence, the parties agreed to tackle the economic package item by item. From: P20,000.00
Upon the Union’s suggestion, the Bank indicated which provisions it would accept, reject,
retain and agree to discuss.17 The Bank suggested that the Union prioritize its economic To : P25,000.00
proposals, considering that many of such economic provisions remained unresolved. The
Union, however, demanded that the Bank make a revised itemized proposal. Dental Retainer—Original offer remains the same21

In the succeeding meetings, the Union made the following proposals: The Union, for its part, made the following counter-proposal:

Wage Increase: Wage Increase:

1st Year—Reduced from 45% to 40% 1st Year—40%

2nd Year—19.5%
2nd Year—Retain at 20%
Group Hospitalization Insurance
Total = 60%
From: P60,000.00 per year
Group Hospitalization Insurance: To: P50,000.00 per year
 
Maximum disability benefit reduced from P75,000.00 to P60,000.00 per illness annually Dental:
Temporary Filling—P150.00
Death Assistance: Tooth Extraction
Permanent Filling—200.00
For the employee—Reduced from P50,000.00 to P45,000.00 Prophylaxis—250.00
Root Canal—From P2,000 per tooth
For Immediate Family Member—Reduced from P30,000.00 to P25,000.00
To: 1,800.00 per tooth
Dental and all others—No change from the original demand.18
Death Assistance:
In the morning of the June 15, 1993 meeting, the Union suggested that if the Bank would For Employees: From P45,000.00 to P40,000.00
not make the necessary revisions on its counter-proposal, it would be best to seek a third For Immediate Family Member: From P25,000.00 to P20,000.00.22
party assistance.19 After the break, the Bank presented its revised counter-proposal20 as The Union’s original proposals, aside from the above-quoted, remained the same.
follows: Another set of counter-offer followed:
Management Union Wage Increase
Wage Increase: 1st Year—P1,050.00
40%
1st Year—from P1,000 to P1,050.00 2nd Year—850.00
19.0%23
 
Diokno stated that, in order for the Bank to make a better offer, the Union should clearly
2nd Year—P800.00—no change identify what it wanted to be included in the total economic package. Umali replied that it
Group Hospitalization Insurance was impossible to do so because the Bank’s counter-proposal was unacceptable. He furthered
asserted that it would have been easier to bargain if the atmosphere was the same as before,
From: P35,000.00 per illness where both panels trusted each other. Diokno requested the Union panel to refrain from
involving personalities and to instead focus on the negotiations.24 He suggested that in order
To : P35,000.00 per illness per year to break the impasse, the Union should prioritize the items it wanted to iron out. Divinagracia
stated that the Bank should make the first move and make a list of items it wanted to be
Death Assistance—For employee included in the economic package. Except for the provisions on signing bonus and uniforms,
the Union and the Bank failed to agree on the remaining economic provisions of the CBA. The
 41

Union declared a deadlock25 and filed a Notice of Strike before the National Conciliation and a) Hospitalization: P45,000.00
Mediation Board (NCMB) on June 21, 1993, docketed as NCMB-NCR-NS-06-380-93.26
b) Life: P130,000.00
On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP) and Damages c) Accident: P130,000.00
before the Arbitration Branch of the National Labor Relations Commission (NLRC) in Manila,
docketed as NLRC Case No. 00-06-04191-93 against the Union on June 28, 1993. The Bank 3. Medicine Allowance
alleged that the Union violated its duty to bargain, as it did not bargain in good faith. It Fourth year: P5,500.00
contended that the Union demanded “sky high economic demands,” indicative of blue-sky Fifth year: P6,000.00
bargaining.27 Further, the Union violated its no strike-no lockout clause by filing a notice of
strike before the NCMB. Considering that the filing of notice of strike was an illegal act, the 4. Dental Benefits Provision of dental retainer as proposed by the Bank, but without
Union officers should be dismissed. Finally, the Bank alleged that as a consequence of the diminishing existing benefits
illegal act, the Bank suffered nominal and actual damages and was forced to litigate and hire
the services of the lawyer. On July 21, 1993, then Secretary of Labor and Employment 5. Optical Allowance
(SOLE) Nieves R. Confesor, pursuant to Article 263(g) of the Labor Code, issued an Order Fourth year: P2,000.00
assuming jurisdiction over the labor dispute at the Bank. The complaint for ULP filed by the Fifth year: P2,500.00
Bank before the NLRC was consolidated with the complaint over which the SOLE assumed
jurisdiction. After the parties submitted their respective position papers, the SOLE issued an 6. Death Assistance
Order on October 29, 1993, the dispositive portion of which is herein quoted: a) Employee: P30,000.00
b) Immediate Family Member: P5,000.00
“WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank Employees
Union—NUBE are hereby ordered to execute a collective bargaining agreement incorporating 7. Emergency Leave—Five (5) days for each contingency
the dispositions contained herein. The CBA shall be retroactive to 01 April 1993 and shall
remain effective for two years thereafter, or until such time as a new CBA has superseded it. 8. Loans
All provisions in the expired CBA not expressly modified or not passed upon herein are a) Car Loan: P200,000.00
deemed retained while all new provisions which are being demanded by either party are b) Housing Loan: It cannot be denied that the costs attendant to having one’s own home
deemed denied, but without prejudice to such agreements as the parties may have arrived at have tremendously gone up. The need, therefore, to improve on this benefit cannot be
in the meantime. overemphasized. Thus, the management is urged to increase the existing and allowable
housing loan that the Bank extends to its employees to an amount that will give meaning and
“The Bank’s charge for unfair labor practice which it originally filed with the NLRC as NLRC- substance to this CBA benefit.30
NCR Case No. 00-06-04191-93 but which is deemed consolidated herein, is dismissed for lack
of merit. On the other hand, the Union’s charge for unfair labor practice is similarly The SOLE dimissed the chargesof ULP of both the Unoion and the Bank, explaining that both
dismissed. parties failed to substantiate their claims. Citing National Labor Union v. Insular-Yebana
Tobacco Corporation,31 the SOLE stated that ULP charges would prosper only if shown to
“Let a copy of this order be furnished the Labor Arbiter in whose sala NLRC-NCR Case No. have directly prejudiced the public interest. Dissatisfied, the Union filed a motion for
00-06-04191-93 is pending for his guidance and appropriate action.”29 reconsideration with clarification, while the Bank filed a motion for reconsideration. On
December 16, 1993, the SOLE issued a Resolution denying the motions. The Union filed a
The SOLE gave the following economic awards: second motion for reconsideration, which was, likewise, denied on February 10, 1994.

1. Wage Increase: On March 22, 1994, the Bank and the Union signed the CBA.32 Immediately thereafter, the
wage increase was effected and the signing bonuses based on the increased wage were
a) To be incorporated to present salary rates: distributed to the employees covered by the CBA.

 Fourth year: 7% of basic monthly salary The Present Petition

Fifth year: 5% of basic monthly salary based on the 4th year adjusted salary On April 28, 1994, the Union filed this petition for certiorari under Rule 65 of the Rules of
Additional fixed amount: Procedure alleging as follows:

2. Group Insurance A.RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE UNION’S CHARGE OF UNFAIR

LABOR PRACTICE IN VIEW OF THE CLEAR EVIDENCE OF RECORD AND ADMISSIONS
PROVING THE UNFAIR LABOR PRACTICES CHARGED.33
B.RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON OTHER UNFAIR LABOR
PRACTICES CHARGED.34
C.RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE CHARGES OF UNFAIR LABOR
PRACTICES ON THE GROUND THAT NO PROOF OF INJURY TO THE PUBLIC INTEREST WAS
PRESENTED.35
The Union alleges that the SOLE acted with grave abuse of discretion amounting to lack or
excess of jurisdiction when it found that the Bank did not commit unfair labor practice when
it interfered with the Union’s choice of negotiator. It argued that, Diokno’s suggestion that
the negotiation be limited as a “family affair” was tantamount to suggesting that Federation
President Jose Umali, Jr. be excluded from the Union’s negotiating panel. It further argued
that contrary to the ruling of the public respondent, damage or injury to the public interest
need not be present in order for unfair labor practice to prosper.
The Union, likewise, pointed out that the public respondent failed to rule on the ULP charges
arising from the Bank’s surface bargaining. The Union contended that the Bank merely went
through the motions of collective bargaining without the intent to reach an agreement, and
made bad faith proposals when it announced that the parties should begin from a clean slate.
It argued that the Bank opened the political provisions “up for grabs,” which had the effect of
diminishing or obliterating the gains that the Union had made.
The Union also accused the Bank of refusing to disclose material and necessary data, even
after a request was made by the Union to validate its “guestimates.”
In its Comment, the Bank prayed that the petition be dismissed as the Union was estopped,
considering that it signed the Collective Bargaining Agreement (CBA) on April 22, 1994. It
asserted that contrary to the Union’s allegations, it was the Union that committed ULP when
negotiator Jose Umali, Jr. hurled invectives at the Bank’s head negotiator, Cielito Diokno, and
demanded that she be excluded from the Bank’s negotiating team. Moreover, the Union
engaged in blue-sky bargaining and isolated the no strike-no lockout clause of the existing
CBA. The Office of the Solicitor General, in representation of the public respondent, prayed
that the petition be dismissed. It asserted that the Union failed to prove its ULP charges and
that the public respondent did not commit any grave abuse of discretion in issuing the
assailed order and resolutions.
The Issues
The issues presented for resolution are the following: (a) whether or not the Union was able
to substantiate its claim of unfair labor practice against the Bank arising from the latter’s
alleged “interference” with its choice of negotiator; surface bargaining; making bad faith non-
economic proposals; and refusal to furnish the Union with copies of the relevant data; (b)
whether or not the public respondent acted with grave abuse of discretion amounting to lack
or excess of jurisdiction when she issued the assailed order and resolutions; and, (c) whether
or not the petitioner is estopped from filing the instant action.
The Court’s Ruling
42
The petition is bereft of merit. “Interference” under Article 248 (a) of the Labor Code
The petitioner asserts that the private respondent committed ULP, i.e., interference in the
selection of the Union’s negotiating panel, when Cielito Diokno, the Bank’s Human Resource
Manager, suggested to the Union’s President Eddie L. Divinagracia that Jose P. Umali, Jr.,
President of the NUBE, be excluded from the Union’s negotiating panel. In support of its
claim, Divinagracia executed an affidavit, stating that prior to the commencement of the
negotiation, Diokno approached him and suggested the exclusion of Umali from the Union’s
negotiating panel, and that during the first meeting, Diokno stated that the negotiation be
kept a “family affair.”
Citing the cases of U.S. Postal Service36 and Harley Davidson Motor Co., Inc., AMF,37 the
Union claims that interference in the choice of the Union’s bargaining panel is tantamount to
ULP.
In the aforecited cases, the alleged ULP was based on the employer’s violation of Section
8(a)(1) and (5) of the National Labor Relations Act (NLRA),38 which pertain to the
interference, restraint or coercion of the employer in the employees’ exercise of their rights to
self-organization and to bargain collectively through representatives of their own choosing;
and the refusal of the employer to bargain collectively with the employees’ representatives.
In both cases, the National Labor Relations Board held that upon the employer’s refusal to
engage in negotiations with the Union for collective-bargaining contract when the Union
includes a person who is not an employee, or one who is a member or an official of other
labor organizations, such employer is engaged in unfair labor practice under Section 8(a)(1)
and (5) of the NLRA.
The Union further cited the case of Insular Life Assurance Co., Ltd. Employees Association—
NATU vs. Insular Life Assurance Co., Ltd.,39 wherein this Court said that the test of whether
an employer has interfered with and coerced employees in the exercise of their right to self-
organization within the meaning of subsection (a)(1) is whether the employer has engaged in
conduct which it may reasonably be said, tends to interfere with the free exercise of
employees’ rights under Section 3 of the Act.40 Further, it is not necessary that there be
direct evidence that any employee was in fact intimidated or coerced by statements of
threats of the employer if there is a reasonable inference that anti-union conduct of the
employer does have an adverse effect on self-organization and collective bargaining.41
Under the International Labor Organization Convention (ILO) No. 87 FREEDOM OF
ASSOCIATION AND PROTECTION OF THE RIGHT TO ORGANIZE to which the Philippines is a
signatory, “workers and employers, without distinction whatsoever, shall have the right to
establish and, subject only to the rules of the organization concerned, to job organizations of
their own choosing without previous authorization.”42 Workers’ and employers’ organizations
shall have the right to draw up their constitutions and rules, to elect their representatives in
full freedom to organize their administration and activities and to formulate their programs.43
Article 2 of ILO Convention No. 98 pertaining to the Right to Organize and Collective
Bargaining, provides:
Article 2

1.Workers’ and employers’ organizations shall enjoy adequate protection against any acts or
interference by each other or each other’s agents or members in their establishment,
functioning or administration.
2.In particular, acts which are designed to promote the establishment of workers’
organizations under the domination of employers or employers’ organizations or to support
workers’ organizations by financial or other means, with the object of placing such
organizations under the control of employers or employers’ organizations within the meaning
of this Article.
The aforcited ILO Conventions are incorporated in our Labor Code, particularly in Article 243
thereof, which provides:
ART. 243. COVERAGE AND EMPLOYEES’ RIGHT TO SELF-ORGANIZATION.—All persons
employed in commercial, industrial and agricultural enterprises and in religious, charitable,
medical or educational institutions whether operating for profit or not, shall have the right to
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.
and Articles 248 and 249 respecting ULP of employers and labor organizations.
The said ILO Conventions were ratified on December 29, 1953. However, even as early as
the 1935 Constitution,44 the State had already expressly bestowed protection to labor as part
of the general provisions. The 1973 Constitution,45 on the other hand, declared it as a policy
of the state to afford protection to labor, specifying that the workers’ rights to self-
organization, collective bargaining, security of tenure, and just and humane conditions of
work would be assured. For its part, the 1987 Constitution, aside from making it a policy to
“protect the rights of workers and promote their welfare,”46 devotes an entire section,
emphasizing its mandate to afford protection to labor, and highlights “the principle of shared
responsibility” between workers and employers to promote industrial peace.47
Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer
interferes, restrains or coerces employees in the exercise of their right to self-organization or
the right to form association. The right to self-organization necessarily includes the right to
collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators or coerces the
Union to exclude from its panel of negotiators a representative of the Union, and if it can be
inferred that the employer adopted the said act to yield adverse effects on the free exercise
to right to self-organization or on the right to collective bargaining of the employees, ULP
under Article 248(a) in connection with Article 243 of the Labor Code is committed.
In order to show that the employer committed ULP under the Labor Code, substantial
evidence is required to support the claim. Substantial evidence has been defined as such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion.48
In the case at bar, the Union bases its claim of interference on the alleged suggestions of
Diokno to exclude Umali from the Union’s negotiating panel. The circumstances that occurred
during the negotiation do not show that the suggestion made by Diokno to Divinagracia is an
43
anti-union conduct from which it can be inferred that the Bank consciously adopted such act
to yield adverse effects on the free exercise of the right to self-organization and collective
bargaining of the employees, especially considering that such was undertaken previous to the
commencement of the negotiation and simultaneously with Divinagracia’s suggestion that the
bank lawyers be excluded from its negotiating panel. The records show that after the
initiation of the collective bargaining process, with the inclusion of Umali in the Union’s
negotiating panel, the negotiations pushed through. The complaint was made only on August
16, 1993 after a deadlock was declared by the Union on June 15, 1993.
It is clear that such ULP charge was merely an afterthought. The accusation occurred after
the arguments and differences over the economic provisions became heated and the parties
had become frustrated. It happened after the parties started to involve personalities. As the
public respondent noted, passions may rise, and as a result, suggestions given under less
adversarial situations may be colored with unintended meanings.49 Such is what appears to
have happened in this case.
The Duty to Bargain Collectively
If at all, the suggestion made by Diokno to Divinagracia should be construed as part of the
normal relations and innocent communications, which are all part of the friendly relations
between the Union and Bank.
The Union alleges that the Bank violated its duty to bargain; hence, committed ULP under
Article 248(g) when it engaged in surface bargaining. It alleged that the Bank just went
through the motions of bargaining without any intent of reaching an agreement, as evident in
the Bank’s counter-proposals. It explained that of the 34 economic provisions it made, the
Bank only made 6 economic counterproposals. Further, as borne by the minutes of the
meetings, the Bank, after indicating the economic provisions it had rejected, accepted,
retained or were open for discussion, refused to make a list of items it agreed to include in
the economic package.
Surface bargaining is defined as “going through the motions of negotiating” without any legal
intent to reach an agreement.50 The resolution of surface bargaining allegations never
presents an easy issue. The determination of whether a party has engaged in unlawful
surface bargaining is usually a difficult one because it involves, at bottom, a question of the
intent of the party in question, and usually such intent can only be inferred from the totality
of the challenged party’s conduct both at and away from the bargaining table.51 It involves
the question of whether an employer’s conduct demonstrates an unwillingness to bargain in
good faith or is merely hard bargaining.52
The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that the Bank
had any intention of violating its duty to bargain with the Union. Records show that after the
Union sent its proposal to the Bank on February 17, 1993, the latter replied with a list of its
counter-proposals on February 24, 1993. Thereafter, meetings were set for the settlement of
their differences. The minutes of the meetings show that both the Bank and the Union
exchanged economic and non-economic proposals and counter-proposals.
The Union has not been able to show that the Bank had done acts, both at and away from
the bargaining table, which tend to show that it did not want to reach an agreement with the

Union or to settle the differences between it and the Union. Admittedly, the parties were not
able to agree and reached a deadlock. However, it is herein emphasized that the duty to
bargain “does not compel either party to agree to a proposal or require the making of a
concession.”53 Hence, the parties’ failure to agree did not amount to ULP under Article
248(g) for violation of the duty to bargain.
We can hardly dispute this finding, for it finds support in the evidence. The inference that
respondents did not refuse to bargain collectively with the complaining union because they
accepted some of the demands while they refused the others even leaving open other
demands for future discussion is correct, especially so when those demands were discussed
at a meeting called by respondents themselves precisely in view of the letter sent by the
union on April 29, 1960. . .54
In view of the finding of lack of ULP based on Article 248(g), the accusation that the Bank
made bad faith provisions has no leg to stand on. The records show that the Bank’s counter-
proposals on the non-economic provisions or political provisions did not put “up for grabs”
the entire work of the Union and its predecessors. As can be gleaned from the Bank’s
counter-proposal, there were many provisions which it proposed to be retained. The revisions
on the other provisions were made after the parties had come to an agreement. Far from
buttressing the Union’s claim that the Bank made bad-faith proposals on the non-economic
provisions, all these, on the contrary, disprove such allegations.
We, likewise, find that the Union failed to substantiate its claim that the Bank refused to
furnish the information it needed.
While the refusal to furnish requested information is in itself an unfair labor practice, and also
supports the inference of surface bargaining,55 in the case at bar, Umali, in a meeting dated
May 18, 1993, requested the Bank to validate its guestimates on the data of the rank and
file. However, Umali failed to put his request in writing as provided for in Article 242(c) of the
Labor Code:
Article 242. Rights of Legitimate Labor Organization . . .
(c) To be furnished by the employer, upon written request, with the annual audited financial
statements, including the balance sheet and the profit and loss statement, within thirty (30)
calendar days from the date of receipt of the request, after the union has been duly
recognized by the employer or certified as the sole and exclusive bargaining representatives
of the employees in the bargaining unit, or within sixty (60) calendar days before the
expiration of the existing collective bargaining agreement, or during the collective
negotiation;
The Union, did not, as the Labor Code requires, send a written request for the issuance of a
copy of the data about the Bank’s rank and file employees. Moreover, as alleged by the
Union, the fact that the Bank made use of the aforesaid guestimates, amounts to a validation
of the data it had used in its presentation.
No Grave Abuse of Discretion On the Part of the Public Respondent
44
The special civil action for certiorari may be availed of when the tribunal, board, or officer
exercising judicial or quasi-judicial functions has acted without or in excess of jurisdiction and
there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law
for the purpose of annulling the proceeding.56 Grave abuse of discretion implies such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or
where the power is exercised in an arbitrary or despotic manner by reason of passion or
personal hostility which must be so patent and gross as to amount to an invasion of positive
duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of
law. Mere abuse of discretion is not enough.57
While it is true that a showing of prejudice to public interest is not a requisite for ULP charges
to prosper, it cannot be said that the public respondent acted in capricious and whimsical
exercise of judgment, equivalent to lack of jurisdiction or excess thereof. Neither was it
shown that the public respondent exercised its power in an arbitrary and despotic manner by
reason of passion or personal hostility.
Estoppel not Applicable In the Case at Bar
The respondent Bank argues that the petitioner is estopped from raising the issue of ULP
when it signed the new CBA.
Article 1431 of the Civil Code provides:
Through estoppel an admission or representation is rendered conclusive upon the person
making it, and cannot be denied or disproved as against the person relying thereon.
A person, who by his deed or conduct has induced another to act in a particular manner, is
barred from adopting an inconsistent position, attitude or course of conduct that thereby
causes loss or injury to another.58
In the case, however, the approval of the CBA and the release of signing bonus do not
necessarily mean that the Union waived its ULP claim against the Bank during the past
negotiations. After all, the conclusion of the CBA was included in the order of the SOLE, while
the signing bonus was included in the CBA itself. Moreover, the Union twice filed a motion for
reconsideration respecting its ULP charges against the Bank before the SOLE.
The Union Did Not Engage In Blue-Sky Bargaining
We, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky bargaining
or making exaggerated or unreasonable proposals.59 The Bank failed to show that the
economic demands made by the Union were exaggerated or unreasonable. The minutes of
the meeting show that the Union based its economic proposals on data of rank and file
employees and the prevailing economic benefits received by bank employees from other
foreign banks doing business in the Philippines and other branches of the Bank in the Asian
region.
In sum, we find that the public respondent did not act with grave abuse of discretion
amounting to lack or excess of jurisdiction when it issued the questioned order and
resolutions. While the approval of the CBA and the release of the signing bonus did not estop

the Union from pursuing its claims of ULP against the Bank, we find that the latter did not
engage in ULP. We, likewise, hold that the Union is not guilty of ULP.
In light of the foregoing, the October 29, 1993 Order and December 16, 1993 and February
10, 1994 Resolutions of then Secretary of Labor Nieves R. Confesor are AFFIRMED. The
Petition is hereby DISMISSED. SO ORDERED.
GR No. L-33987. September 4, 1975.*
LIBERTY COTTON MILLS WORKERS UNION, RAFAEL NEPOMUCENO, MARIANO
CASTILLO, NELLY ACEVEDO, RIZALINO CASTILLO and RAFAEL COMBALICER
petitioners, vs. LIBERTY COTTON MILLS, INC., PHILIPPINE
ASSOCIATION OF FREE LABOR UNION (PAFLU) and the COURT OF INDUSTRIAL RELATIONS,
respondents.
Labor relations; Labor unions; Status of national union in relation to local union affiliated with
it; Case at bar.—In the Collective Bargaining Agreements, it appears that PAFLU has been
recognized as the sole bargaining agent for all the employees of the Company other than its
supervisors and security guards. The PAFLU, 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 including the freedom to disaffiliate when the
circumstances warrant. This is clearly provided in its Constitution and By-Laws, specifically
Article X on Union Affiliation.
Same; Same; Validity of disaffiliation by local union from national union where disaffiliation in
accordance with union’s Constitution and By-Laws; Case at bar.—Under the union’s
Constitution and By-Laws, the local union shall be affiliated with the PAFLU, and shall remain
an affiliate as long as ten or more of its members evidence their desire to continue the said
local unions affiliation. The record shows that only four out of its members remained for 32
out of the 36 members of the Union signed the resolution of disaffiliation. The disaffiliation
was, therefore, valid under the local’s Constitution and By-Laws which, taken together with
the Collective Bargaining Agreement, is controlling. The disaffiliation, coming as it did from
the greater majority of its members, is more than enough to show the collective desire of the
members of the local union to sever their relations from the mother federation. The right of
disaffiliation is inherent in the compact and such act should not have been branded as an act
of disloyalty, especially considering the cause which impelled the union to take such a step.
Same; Same; Dismissal of employees who signed resolution of disaffiliation; Where dismissal
at the instance of the national union, liability of company limited only to reinstatement of
employees dismissed; Case at bar.—Acting on the request of the mother federation the
Company sent notices of termination to the officers of the local union, heavily relying on the
Collective Bargaining Agreement. The stipulation in the Collective Bargaining Agreement does
not bind the courts much less released the Company from liability should a finding for unfair
labor practice be positive. `However, considering that the dispute revolved around the
mother federation and its local, “with the company dismissing the workers at the instance of
the mother federation, the Company’s liability should be limited to the immediate
reinstatement of the workers.
45
Same; Same; Same; Liability of national union to pay backwages of dismissed employees;
Payment of backwages equivalent to three years’ wages without deduction or qualification.—
Considering that the dismissal of the employees was effected without previous hearing, and
at the instance of PAFLU, this mother federation should be held liable to the dismissed
Employees for the payment of their back wages. Following the precedent of Mercury Drug
Co. vs. CIR, of fixing an amount of net backwages and doing away with the protracted
process of determining the complainants-workers’ earnings elsewhere during the period of
their illegal dismissal, the Court fixes the amount of backwages to be paid under this decision
to the complainants-workers at three (3) years backwages without deduction or qualification.
PETITION for certiorari to review the decision of the Court of Industrial Relations.
The facts are stated in the opinion of the Court.
ESGUERRA, J.:
Petition for Certiorari to review the decision dated March 30, 1971 of the Court of Industrial
Relations in Case No. 4216, dismissing petitioners’ complaint for unfair labor practice.
The factual background of this case is as follows:
The Liberty Cotton Mills Workers Union, hereinafter referred to as the Union, adopted its
Constitution and By-laws on January 1, 1959.1 Among other things, the said Constitution
provided:
ARTICLE I—NAME AND DOMICILE
“Section 1. The name of organization shall be Liberty Cotton Mills Workers Union-PAFLU.
“Section 2. This Union shall have its office at 1233 Tecson, Tindalo, Tondo, Manila.
xxxx
ARTICLE X—UNION AFFILIATION
“Section 1. The Liberty Cotton Mills Workers Union-Paflu shall be affiliated with the Philippine
Association of Free Labor Unions, otherwise known as PAFLU, and shall remain an affiliate as
long as ten or more of its members evidence their desire to continue the said local union’s
affiliation, in accordance with the Paflu Constitution, Article XI-Paragraph 11:15 thereof;
ARTICLE XIII—CHARGES, TRIALS, AND IMPEACHMENT OF OFFICERS AND MEMBERS:
APPEALS
“Section 1. Any member or officer of the Liberty Cotton Mills Workers Union-Paflu may be
charged, tried or impeached if an officer, in accordance with this and the PAFLU
CONSTITUTION.

On October 1, 1959, a Collective Bargaining Agreement2 was entered into by and between
the Company and the Union represented by PAFLU. Said Agreement contained these clear
and unequivocal provisions:
“This Agreement, made and entered into this 1st day of October, 1959, in the City of Manila,
by and between
The LIBERTY COTTON MILLS INC., a corporation duly organized and existing under the laws
of the Philippines, with principal office at 549 San Francisco Street, Karuhatan, Polo, Bulacan,
hereinafter referred to as the COMPANY, represented in this Act by its President, Mr. RAFAEL
GOSINGCO: AND
THE PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS, a legitimate labor organization
existing and operating under the laws of the Philippines, with postal address at 1233 Tecson,
Tindalo, Tondo, Manila, hereinafter referred to as the UNION, represented in this Act by its
National Treasurer and duly authorized representative, Mr. CATALINO G. LUZANO, herein
acting for and in behalf of its affiliate the LIBERTY COTTON MILLS WORKERS UNION-PAFLU,
and the employees of the Company in the appropriate bargaining unit hereinafter defined:
WITNESSETH:
I. UNION RECOGNITION
The COMPANY recognizes the UNION as the sole bargaining agent for all of its employees,
other than supervisors x x x consonant with the certification of the said UNION by the Court
of Industrial Relations in Case No. 627-MC, entitled “In re Petition for Certification Election,
Liberty Cotton Mills, Inc., petitioner.”
III. UNION SECURITY
All employees who, at the time of the signing of this Agreement, are members of
the UNION, or who, at any time during the effectivity of this Agreement, may join the
UNION, shall, as a condition for continued employment, remain members of the UNION while
this agreement remains in force; any such employee, who, at any time during the life of this
agreement, shall resign from the UNION or be expelled therefrom in accordance with its
Constitution and By-Laws for non-payment of union dues or other duly approved union
assessments, or for disloyalty to the UNION shall be dismissed from employment by the
COMPANY upon request in writing by the UNION, which shall hold the COMPANY free from
any liability arising from or caused by such dismissal.
XI. TERM
This Agreement shall be effective from October 1, 1959 to September 30, 1961,
during which time it shall be binding upon the parties hereto and all the employees of
COMPANY comprised within the appropriate bargaining unit defined above, and may not be
modified by court action, by concerted activities or by any other means. x x x Should either
party fail to give written notice to the other of its desire to amend or discontinue this
Agreement at least thirty (30) days from the expiry date set forth above, this Agreement shall
be continued in force for one (1) year, and thereafter for yearly terms; unless written notice
is given at least thirty (30) days from the expiration of the contract.
46
The above Collective Bargaining Agreement was amended on February 28, 1964, thus:3
“Article III. UNION SECURITY Additional Clause
The Company agrees to encourage casual workers and non-union members to join the Union
which is the sole and exclusive agent for all the employees covered by this Agreement.
“Article XI. DURATION
The Duration of this Agreement shall be for two (2) years, that is from November 2, 1963 up
to November, 1965.”
The Agreements aforementioned bore the signatures of representatives of both the Company
and the PAFLU, and the incumbent President of the local union.
On March 13, 1964, while the Collective Bargaining Agreement was in full force, Marciano
Castillo and Rafael Nepomuceno, President and Vice-President, respectively, of the local
union, wrote PAFLU, its mother federation, complaining about the legal counsel assigned by
the PAFLU to assist them in a ULP case (Case No. 4001) they filed against the Company. In
said letter, the local union expressed its dissatisfaction and loss of confidence in the PAFLU
lawyers, claiming that PAFLU never lifted a finger regarding this particular complaint.
On May 17, 1964 thirty two (32) out of the 36 members of the local union disaffiliated
themselves from respondent PAFLU pursuant to their local union’s Constitution and By-Laws,
specifically Article X thereof, supra (p. 12 Record). A copy of the signed resolution of
disaffiliation was furnished the Company as well as the Bureau of Labor Relations. The
following day, the local union wrote the Company and required the turn-over of the checked-
off dues directly to its Treasurer.
On May 27, 1964, PAFLU, thru its National Secretary wrote the Company this letter:
“This is to inform your good office that sometime last May 25, 1964, our federation was in
receipt of a letter signed by 32 persons and informing us of their desire to disaffiliate the
local union from the mother federation-PAFLU. The members and officers who made the
letter have no right to do the same under our existing contract and under the PAFLU’s
Constitution and By-Laws.
“We wish to make it clear with the management that the contractural union in our contract
which was signed a few months ago is the Philippine Association of Free Labor Union
(PAFLU). The actuation made by the supposed union members is inconsistent with the
present contract we have and under the provisions of “Maintenance of Union Membership”
they can all be dismissed. Under the PAFLU’s Constitution that is null and void. And in view of
the disloyalty shown by those members, the mother federation will take over the
administration of the Union in dealing with the management especially.
“We inform your goodself that the mother federation is not honoring the said letter and we
request you do the same under the circumstances.

“Hence, all the communications pertaining to union business and other relative matters be
coursed to the mother federation for prompt action.”
And on May 29, 1964, PAFLU wrote the Company again, this time quoting en toto Article III
of the Collective Bargaining Agreement on “Union Security” and requesting the termination of
the employment of Rafael Nepomuceno, Marciano Castillo, Nelly Acevedo, Enrique Managan,
Rizalino Castillo and Rafael Combalicer, all petitioners herein. PAFLU at the same time
expelled the aforementioned workers from their union membership in the mother federation
for allegedly “instigating union disaffiliation.”
On May 30, 1964, the Company terminated the employment of the members expelled by the
PAFLU (Exhs. “D”, “D-1” to “D-3” pp. 14-17 Record). On the last day of May, 1964, counsel
for the ousted workers wrote the Company requesting their reinstatement. This was denied
by the Company; hence the complaint for unfair labor practice filed with the Court of
Industrial Relations.
After due hearing, the Court rendered its decision dismissing the complaint, but with a strong
recommendation for the reinstatement of complainant workers in respondent Company. The
workers (petitioners herein) being unsatisfied with the decision, appealed to this Court and
raised the following questions:
1.Under the Collective Bargaining Agreement, who between the PAFLU and the local union is
the sole bargaining agent of the workers of the Company?
2.Was the disaffiliation of the local union from the PAFLU valid and justified under the
Constitution and By-laws of the Union?
3.Was the disaffiliation of the Union from the PAFLU an act of disloyalty of the petitioners
(workers) which could be a valid ground for their expulsion from their own union and their
dismissal from the Company?
4.Does the PAFLU as the mother federation of the union possess the power to expel the
officers and members of the union under the Constitution and By-Laws? And assuming it has
such powers, were the petitioner workers validly expelled from the Union in accordance with
the Constitution and By-Laws?
5.May the workers be summarily dismissed by the Company under the Collective Bargaining
Agreement even without valid proof of their valid expulsion from their own union?
6.Did not the dismissal of only the five (5) petitioner workers constitute discrimination,
considering that the disaffiliation was signed by more than the majority of the union
members?
All these questions boil down to the single issue of whether or not the dismissal of the
complaining employees, petitioners herein, was justified or not. The resolution of this
question hinges on a precise and careful analysis of the Collective Bargaining Agreements.
(Exhs. “H” and “I”) In these contracts it appears that PAFLU has been recognized as the sole
bargaining agent for all the employees of the Company other than its supervisors and
security guards. Moreover it likewise appears that “PAFLU, represented in this Act by its
National Treasurer, and duly authorized representative, x x x (was) acting for and in behalf of
its affiliate, the Liberty Cotton Mills Workers Union and the employees of the Company, etc.”
In other words, the PAFLU, 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 including the freedom to disaffiliate when the circumstances
47
warrant. This is clearly provided in its Constitution and By-Laws, specifically Article X on
Union Affiliation, supra. At this point, relevant is the ruling in an American case:4
“The locals are separate and distinct units primarily designed to secure and maintain an
equality of bargaining power between the employer and their employee-members in the
economic struggle for the fruits of the joint productive effort of labor and capital; and the
association of the locals into the national union (as PAFLU) was in furtherance of the same
end. These associations are consensual entities capable of entering into such legal relations
with their members. The essential purpose was the affiliation of the local unions into a
common enterprise to increase by collective action the common bargaining power in respect
of the terms and conditions of labor. Yet the locals remained the basic units of association,
free to serve their own and the common interest of all, subject to the restraints imposed by
the Constitution and By-Laws of the Association, and free also to renounce the affiliation for
mutual welfare upon the terms laid down in the agreement which brought it into existence.
“(Italics supplied)
This brings Us to the question of disaffiliation which was the root cause of the dismissal. It is
claimed by PAFLU that the local union could not have validly disaffiliated from it as the Union
Security Clause so provided. We have meticulously read the provision of the supposed union
security clause and We cannot agree with both the stand of PAFLU and the respondent court.
For while it is correct to say that a union security clause did exist, this clause was limited by
the provision in the Unions’ Constitution and By-Laws, which states:
“That the Liberty Cotton Mills Workers Union-PAFLU shall be affiliated with the PAFLU, and
shall remain an affiliate as long as ten (10) or more of its members evidence their desire to
continue the said local unions affiliation.”
Record shows that only four (4) out of its members remained for 32 out of the 36 members
of the Union signed the resolution of disaffiliation on May 17, 1964, triggered by the alleged
negligence of PAFLU in attending to the needs of its local union, particularly its failure to
assign a conscientious lawyer to the local to attend to the ULP case they filed against the
Company. The disaffiliation was, therefore, valid under the local’s Constitution and By-Laws
which, taken together with the Collective Bargaining Agreement, is controlling. The Court of
Industrial Relations likewise held in its decision that the act of disaffiliation did not have any
effect as the workers retracted from such act. As stated by the respondent court—
“x x x it is believed that the effect of their retraction obliterates their participation in the
resolution. Hence, under Article X of the said Constitution and By-Laws, complainant union
remained affiliated with respondent union at the time termination of the services of
complainant workers was requested and when they were dismissed by the Company on May
30, 1964.”
Although the fact of retraction is true, We find that the respondent court failed to notice the
fact that not all signatories to the resolution of disaffiliation dated May 17, 1964, took part in
the retraction. Only a number of employees, 16 to be exact, retracted. Also, and this is a
significant factor, the retraction is dated June 3, 1964, or four days after the petitioners
herein had been dismissed. There is no use in saying that the retraction obliterated the act of
disaffiliation when they were already out of the service when it was done. The disaffiliation,

coming as it did from the greater majority of its members, is more than enough to show the
collective desire of the members of the Liberty Cotton Mills Workers Union to sever their
relations from the mother federation. The right of disaffiliation is inherent in the compact and
such act should not have been branded as an act of disloyalty, especially considering the
cause which impelled the union to take such a step.
Lastly, We will take up the process by which the workers were dismissed. We find that it was
hastily and summarily done. The PAFLU received the resolution to disaffiliate on or about May
25, 1964, after which it wrote the Company about its stand, first on the 27th of May followed
by its letter of the 29th requesting for the termination of petitioners herein for ‘disloyalty in
having instigated disaffiliation’. The Company then acting on the request of the mother
federation sent notices of termination to the officers of the local union immediately on the
day following, or on May 30, 1964, heavily relying on the Collective Bargaining Agreement,
viz:
“x x x for disloyalty to the union shall be dismissed from employment by the Company upon
request in writing by the Union, which shall hold the COMPANY free from any liability arising
from or caused by such dismissal.”
While the above-quoted provision may have been the basis for the Company’s actuation, as
in fact it was alleged by the Company in its Brief, We are of the opinion that such a
stipulation does not bind the courts much less released the Company from liability should a
finding for unfair labor practice be positive. In the case at bar, however, considering that the
dispute revolved around the mother federation and its local, with the company dismissing the
workers at the instance of the mother federation, We believe that the Company’s liability
should be limited to the immediate reinstatement of the workers.
Considering, however, that their dismissal was effected without previous hearing, and at the
instance of PAFLU, this mother federation should be, as it is hereby, held liable to the
petitioners for the payment of their back wages. Following the precedent of Mercury Drug Co.
vs. CIR,5 of fixing an amount of net backwages and doing away with the protracted process
of determining the complainants-workers’ earnings elsewhere during the period of their illegal
dismissal, the Court fixes the amount of backwages to be paid under this decision to the
complainants-workers at three (3) years backwages without deduction or qualification.
WHEREFORE, the decision appealed from is reversed and set aside and the company is
hereby ordered to immediately reinstate complainant workers, within thirty (30) days from
notice of this decision and failure to so reinstate the workers without valid and just cause
shall make respondent company liable to the workers for the payment of their wages from
and after the expiration of such thirty-day period. The mother federation respondent PAFLU
is sentenced to pay complainants-workers the equivalent of three (3) years backwages
without deduction or qualification.
In view of the length of time that this dispute has been pending, this decision shall be
immediately executory upon promulgation and notice to the parties. Without pronouncement
as to costs. Decision reversed and set aside.
G.R. No. 164301. October 11, 2011.*
48
BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. BPI EMPLOYEES UNION-
DAVAO CHAPTER–FEDERATION OF UNIONS IN BPI UNIBANK, respondent.
Labor Law; Merger; Social Justice; It is more in keeping with the dictates of social justice and
the State policy of according full protection to labor to deem employment contracts as
automatically assumed by the surviving corporation in a merger, even in the absence of an
express stipulation in the articles of merger or the merger plan.—Taking a second look on
this point, we have come to agree with Justice Brion’s view that it is more in keeping with the
dictates of social justice and the State policy of according full protection to labor to deem
employment contracts as automatically assumed by the surviving corporation in a merger,
even in the absence of an express stipulation in the articles of merger or the merger plan.
Same; Same; Security of Tenure; By upholding the automatic assumption of the non-
surviving corporation’s existing employment contracts by the surviving corporation in a
merger, the Court strengthens judicial protection of the right to security of tenure of
employees affected by a merger and avoids confusion regarding the status of their various
benefits.—By upholding the automatic assumption of the non-surviving corporation’s existing
employment contracts by the surviving corporation in a merger, the Court strengthens judicial
protection of the right to security of tenure of employees affected by a merger and avoids
confusion regarding the status of their various benefits which were among the chief
objections of our dissenting colleagues. However, nothing in this Resolution shall impair the
right of an employer to terminate the employment of the absorbed employees for a lawful or
authorized cause or the right of such an employee to resign, retire or otherwise sever his
employment, whether before or after the merger, subject to existing contractual obligations.
Same; Same; Same; Even as we now recognize the right to continuous, unbroken
employment of workers who are absorbed into a new company pursuant to a merger, it is
but logical that their employment may be terminated for any causes provided for under the
law or in jurisprudence without violating their right to security of tenure.—The fundamental
guarantee of security of tenure and due process dictates that no worker shall be dismissed
except for a just and authorized cause provided by law and after due process is observed.
Even as we now recognize the right to continuous, unbroken employment of workers who are
absorbed into a new company pursuant to a merger, it is but logical that their employment
may be terminated for any causes provided for under the law or in jurisprudence without
violating their right to security of tenure.
MOTION FOR RECONSIDERATION of a decision of the Supreme Court.
   The facts are stated in the resolution of the Court.
LEONARDO-DE CASTRO, J.:
In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for
reconsideration1 of our Decision dated August 10, 2010, holding that former employees of
the Far East Bank and Trust Company (FEBTC) “absorbed” by BPI pursuant to the two banks’
merger in 2000 were covered by the Union Shop Clause in the then existing collective
bargaining agreement (CBA)2 of BPI with respondent BPI Employees Union-Davao Chapter–
Federation of Unions in BPI Unibank (the Union).

To recall, the Union Shop Clause involved in this long standing controversy provided, thus:
ARTICLE II
“x x x x
Section 2. Union Shop.—New employees falling within the bargaining unit as defined in
Article I of this Agreement, who may hereafter be regularly employed by the Bank shall,
within thirty (30) days after they become regular employees, join the Union as a condition of
their continued employment. It is understood that membership in good standing in the Union
is a condition of their continued employment with the Bank.”3 (Emphases supplied.)
The bone of contention between the parties was whether or not the “absorbed” FEBTC
employees fell within the definition of “new employees” under the Union Shop Clause, such
that they may be required to join respondent union and if they fail to do so, the Union may
request BPI to terminate their employment, as the Union in fact did in the present case.
Needless to state, BPI refused to accede to the Union’s request. Although BPI won the initial
battle at the Voluntary Arbitrator level, BPI’s position was rejected by the Court of Appeals
which ruled that the Voluntary Arbitrator’s interpretation of the Union Shop Clause was at war
with the spirit and rationale why the Labor Code allows the existence of such provision. On
review with this Court, we upheld the appellate court’s ruling and disposed of the case as
follows:
“WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30, 2003 of
the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement imposed
herein. Former FEBTC employees who opt not to become union members but who qualify for
retirement shall receive their retirement benefits in accordance with law, the applicable
retirement plan, or the CBA, as the case may be.”
Notwithstanding our affirmation of the applicability of the Union Shop Clause to former
FEBTC employees, for reasons already extensively discussed in the August 10, 2010 Decision,
even now BPI continues to protest the inclusion of said employees in the Union Shop Clause.
In seeking the reversal of our August 10, 2010 Decision, petitioner insists that the parties to
the CBA clearly intended to limit the application of the Union Shop Clause only to new
employees who were hired as non-regular employees but later attained regular status at
some point after hiring. FEBTC employees cannot be considered new employees as BPI
merely stepped into the shoes of FEBTC as an employer purely as a consequence of the
merger.5
Petitioner likewise relies heavily on the dissenting opinions of our respected colleagues,
Associate Justices Antonio T. Carpio and Arturo D. Brion. From both dissenting opinions,
petitioner derives its contention that “the situation of absorbed employees can be likened to
old employees of BPI, insofar as their full tenure with FEBTC was recognized by BPI and their
salaries were maintained and safeguarded from diminution” but such absorbed employees
“cannot and should not be treated in exactly the same way as old BPI employees for there
are substantial differences between them.”6 Although petitioner admits that there are
similarities between absorbed and new employees, they insist there are marked differences
49
between them as well. Thus, adopting Justice Brion’s stance, petitioner contends that the
absorbed FEBTC employees should be considered “a sui generis group of employees whose
classification will not be duplicated until BPI has another merger where it would be the
surviving corporation.”7 Apparently borrowing from Justice Carpio, petitioner propounds that
the Union Shop Clause should be strictly construed since it purportedly curtails the right of
the absorbed employees to abstain from joining labor organizations.8
Pursuant to our directive, the Union filed its Comment9 on the Motion for Reconsideration. In
opposition to petitioner’s arguments, the Union, in turn, adverts to our discussion in the
August 10, 2010 Decision regarding the voluntary nature of the merger between BPI and
FEBTC, the lack of an express stipulation in the Articles of Merger regarding the transfer of
employment contracts to the surviving corporation, and the consensual nature of
employment contracts as valid bases for the conclusion that former FEBTC employees should
be deemed new employees.10 The Union argues that the creation of employment relations
between former FEBTC employees and BPI (i.e., BPI’s selection and engagement of former
FEBTC employees, its payment of their wages, power of dismissal and of control over the
employees’ conduct) occurred after the merger, or to be more precise, after the Securities
and Exchange Commission’s (SEC) approval of the merger.11 The Union likewise points out
that BPI failed to offer any counterargument to the Court’s reasoning that:
“The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge
upon the individual employee’s right or freedom of association, is not to protect the union for
the union’s sake. Laws and jurisprudence promote unionism and afford certain protections to
the certified bargaining agent in a unionized company because a strong and effective union
presumably benefits all employees in the bargaining unit since such a union would be in a
better position to demand improved benefits and conditions of work from the employer.
x x x.
   x x x Nonetheless, settled jurisprudence has already swung the balance in favor of
unionism, in recognition that ultimately the individual employee will be benefited by that
policy. In the hierarchy of constitutional values, this Court has repeatedly held that the right
to abstain from joining a labor organization is subordinate to the policy of encouraging
unionism as an instrument of social justice.”12
While most of the arguments offered by BPI have already been thoroughly addressed in the
August 10, 2010 Decision, we find that a qualification of our ruling is in order only with
respect to the interpretation of the provisions of the Articles of Merger and its implications on
the former FEBTC employees’ security of tenure.
Taking a second look on this point, we have come to agree with Justice Brion’s view that it is
more in keeping with the dictates of social justice and the State policy of according full
protection to labor to deem employment contracts as automatically assumed by the surviving
corporation in a merger, even in the absence of an express stipulation in the articles of
merger or the merger plan. In his dissenting opinion, Justice Brion reasoned that:
“To my mind, due consideration of Section 80 of the Corporation Code, the constitutionally
declared policies on work, labor and employment, and the specific FEBTC-BPI situation—i.e.,
a merger with complete “body and soul” transfer of all that FEBTC embodied and possessed
and where both participating banks were willing (albeit by deed, not by their written

agreement) to provide for the affected human resources by recognizing continuity of
employment—should point this Court to a declaration that in a complete merger situation
where there is total takeover by one corporation over another and there is silence in the
merger agreement on what the fate of the human resource complement shall be, the latter
should not be left in legal limbo and should be properly provided for, by compelling the
surviving entity to absorb these employees. This is what Section 80 of the Corporation Code
commands, as the surviving corporation has the legal obligation to assume all the obligations
and liabilities of the merged constituent corporation.
Not to be forgotten is that the affected employees managed, operated and worked on the
transferred assets and properties as their means of livelihood; they constituted a basic
component of their corporation during its existence. In a merger and consolidation situation,
they cannot be treated without consideration of the applicable constitutional declarations and
directives, or, worse, be simply disregarded. If they are so treated, it is up to this Court to
read and interpret the law so that they are treated in accordance with the legal requirements
of mergers and consolidation, read in light of the social justice, economic and social
provisions of our Constitution. Hence, there is a need for the surviving corporation to take
responsibility for the affected employees and to absorb them into its workforce where no
appropriate provision for the merged corporation’s human resources component is made in
the Merger Plan.”13
By upholding the automatic assumption of the non-surviving corporation’s existing
employment contracts by the surviving corporation in a merger, the Court strengthens judicial
protection of the right to security of tenure of employees affected by a merger and avoids
confusion regarding the status of their various benefits which were among the chief
objections of our dissenting colleagues. However, nothing in this Resolution shall impair the
right of an employer to terminate the employment of the absorbed employees for a lawful or
authorized cause or the right of such an employee to resign, retire or otherwise sever his
employment, whether before or after the merger, subject to existing contractual obligations.
In this manner, Justice Brion’s theory of automatic assumption may be reconciled with the
majority’s concerns with the successor employer’s prerogative to choose its employees and
the prohibition against involuntary servitude.
Notwithstanding this concession, we find no reason to reverse our previous pronouncement
that the absorbed FEBTC employees are covered by the Union Shop Clause.
Even in our August 10, 2010 Decision, we already observed that the legal fiction in the law
on mergers (that the surviving corporation continues the corporate existence of the non-
surviving corporation) is mainly a tool to adjudicate the rights and obligations between and
among the merged corporations and the persons that deal with them.14 Such a legal fiction
cannot be unduly extended to an interpretation of a Union Shop Clause so as to defeat its
purpose under labor law. Hence, we stated in the Decision that:
“In any event, it is of no moment that the former FEBTC employees retained the regular
status that they possessed while working for their former employer upon their absorption by
petitioner. This fact would not remove them from the scope of the phrase “new employees”
as contemplated in the Union Shop Clause of the CBA, contrary to petitioner’s insistence that
50
the term “new employees” only refers to those who are initially hired as non-regular
employees for possible regular employment.
The Union Shop Clause in the CBA simply states that “new employees” who during the
effectivity of the CBA “may be regularly employed” by the Bank must join the union within
thirty (30) days from their regularization. There is nothing in the said clause that limits its
application to only new employees who possess non-regular status, meaning probationary
status, at the start of their employment. Petitioner likewise failed to point to any provision in
the CBA expressly excluding from the Union Shop Clause new employees who are “absorbed”
as regular employees from the beginning of their employment. What is indubitable from the
Union Shop Clause is that upon the effectivity of the CBA, petitioner’s new regular employees
(regardless of the manner by which they became employees of BPI) are required to join the
Union as a condition of their continued employment.”15
Although by virtue of the merger BPI steps into the shoes of FEBTC as a successor employer
as if the former had been the employer of the latter’s employees from the beginning it must
be emphasized that, in reality, the legal consequences of the merger only occur at a specific
date, i.e., upon its effectivity which is the date of approval of the merger by the SEC. Thus,
we observed in the Decision that BPI and FEBTC stipulated in the Articles of Merger that they
will both continue their respective business operations until the SEC issues the certificate of
merger and in the event no such certificate is issued, they shall hold each other blameless for
the non-consummation of the merger.16 We likewise previously noted that BPI made its
assignments of the former FEBTC employees effective on April 10, 2000, or after the SEC
approved the merger.17 In other words, the obligation of BPI to pay the salaries and benefits
of the former FEBTC employees and its right of discipline and control over them only arose
with the effectivity of the merger. Concomitantly, the obligation of former FEBTC employees
to render service to BPI and their right to receive benefits from the latter also arose upon the
effectivity of the merger. What is material is that all of these legal consequences of the
merger took place during the life of an existing and valid CBA between BPI and the Union
wherein they have mutually consented to include a Union Shop Clause.
From the plain, ordinary meaning of the terms of the Union Shop Clause, it covers employees
who (a) enter the employ of BPI during the term of the CBA; (b) are part of the bargaining
unit (defined in the CBA as comprised of BPI’s rank and file employees); and (c) become
regular employees without distinguishing as to the manner they acquire their regular status.
Consequently, the number of such employees may adversely affect the majority status of the
Union and even its existence itself, as already amply explained in the Decision. Indeed, there
are differences between (a) new employees who are hired as probationary or temporary but
later regularized, and (b) new employees who, by virtue of a merger, are absorbed from
another company as regular and permanent from the beginning of their employment with the
surviving corporation. It bears reiterating here that these differences are too insubstantial to
warrant the exclusion of the absorbed employees from the application of the Union Shop
Clause. In the Decision, we noted that:
“Verily, we agree with the Court of Appeals that there are no substantial differences between
a newly hired non-regular employee who was regularized weeks or months after his hiring
and a new employee who was absorbed from another bank as a regular employee pursuant
to a merger, for purposes of applying the Union Shop Clause. Both employees were

hired/employed only after the CBA was signed. At the time they are being required to join the
Union, they are both already regular rank and file employees of BPI. They belong to the
same bargaining unit being represented by the Union. They both enjoy benefits that the
Union was able to secure for them under the CBA. When they both entered the employ of
BPI, the CBA and the Union Shop Clause therein were already in effect and neither of them
had the opportunity to express their preference for unionism or not. We see no cogent
reason why the Union Shop Clause should not be applied equally to these two types of new
employees, for they are undeniably similarly situated.”18
Again, it is worthwhile to highlight that a contrary interpretation of the Union Shop Clause
would dilute its efficacy and put the certified union that is supposedly being protected
thereby at the mercy of management. For if the former FEBTC employees had no say in the
merger of its former employer with another bank, as petitioner BPI repeatedly decries on
their behalf, the Union likewise could not prevent BPI from proceeding with the merger which
undisputedly affected the number of employees in the bargaining unit that the Union
represents and may negatively impact on the Union’s majority status. In this instance, we
should be guided by the principle that courts must place a practical and realistic construction
upon a CBA, giving due consideration to the context in which it is negotiated and purpose
which it is intended to serve.19
We now come to the question: Does our affirmance of our ruling that former FEBTC
employees absorbed by BPI are covered by the Union Shop Clause violate their right to
security of tenure which we expressly upheld in this Resolution? We answer in the negative.
In Rance v. National Labor Relations Commission,20 we held that:
“It is the policy of the state to assure the right of workers to “security of tenure” (Article XIII,
Sec. 3 of the New Constitution, Section 9, Article II of the 1973 Constitution). The guarantee
is an act of social justice. When a person has no property, his job may possibly be his only
possession or means of livelihood. Therefore, he should be protected against any arbitrary
deprivation of his job. Article 280 of the Labor Code has construed security of tenure as
meaning that “the employer shall not terminate the services of an employee except for a just
cause or when authorized by” the Code. x x x” (Emphasis supplied.)
We have also previously held that the fundamental guarantee of security of tenure and due
process dictates that no worker shall be dismissed except for a just and authorized cause
provided by law and after due process is observed. Even as we now recognize the right to
continuous, unbroken employment of workers who are absorbed into a new company
pursuant to a merger, it is but logical that their employment may be terminated for any
causes provided for under the law or in jurisprudence without violating their right to security
of tenure. As Justice Carpio discussed in his dissenting opinion, it is well-settled that
termination of employment by virtue of a union security clause embodied in a CBA is
recognized in our jurisdiction.22 In Del Monte Philippines, Inc. v. Saldivar,23 we explained
the rationale for this policy in this wise:
“Article 279 of the Labor Code ordains that “in cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause or when authorized
by [Title I, Book Six of the Labor Code].” Admittedly, the enforcement of a closed-shop or
51
union security provision in the CBA as a ground for termination finds no extension within any
of the provisions under Title I, Book Six of the Labor Code. Yet jurisprudence has consistently
recognized, thus: “It is State policy to promote unionism to enable workers to negotiate with
management on an even playing field and with more persuasiveness than if they were to
individually and separately bargain with the employer. For this reason, the law has allowed
stipulations for ‘union shop’ and ‘closed shop’ as means of encouraging workers to join and
support the union of their choice in the protection of their rights and interests vis-a-vis the
employer.”24 (Emphasis supplied.)
Although it is accepted that non-compliance with a union security clause is a valid ground for
an employee’s dismissal, jurisprudence dictates that such a dismissal must still be done in
accordance with due process. This much we decreed in General Milling Corporation v.
Casio,25 to wit:
“The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos
that:
While respondent company may validly dismiss the employees expelled by the union for
disloyalty under the union security clause of the collective bargaining agreement upon the
recommendation by the union, this dismissal should not be done hastily and summarily
thereby eroding the employees’ right to due process, self-organization and security of tenure.
The enforcement of union security clauses is authorized by law provided such enforcement is
not characterized by arbitrariness, and always with due process. Even on the assumption that
the federation had valid grounds to expel the union officers, due process requires that these
union officers be accorded a separate hearing by respondent company.
The twin requirements of notice and hearing constitute the essential elements of procedural
due process. The law requires the employer to furnish the employee sought to be dismissed
with two written notices before termination of employment can be legally effected: (1) a
written notice apprising the employee of the particular acts or omissions for which his
dismissal is sought in order to afford him an opportunity to be heard and to defend himself
with the assistance of counsel, if he desires, and (2) a subsequent notice informing the
employee of the employer’s decision to dismiss him. This procedure is mandatory and its
absence taints the dismissal with illegality.
Irrefragably, GMC cannot dispense with the requirements of notice and hearing before
dismissing Casio, et al. even when said dismissal is pursuant to the closed shop provision in
the CBA. The rights 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 are not wiped away by a union security clause or a union shop clause in a
collective bargaining agreement. x x x”26 (Emphases supplied.)
In light of the foregoing, we find it appropriate to state that, apart from the fresh thirty (30)-
day period from notice of finality of the Decision given to the affected FEBTC employees to
join the Union before the latter can request petitioner to terminate the former’s employment,
petitioner must still accord said employees the twin requirements of notice and hearing on
the possibility that they may have other justifications for not joining the Union. Similar to our

August 10, 2010 Decision, we reiterate that our ruling presupposes there has been no
material change in the situation of the parties in the interim.
WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated August 10, 2010
is AFFIRMED, subject to the qualifications that:
(a) Petitioner is deemed to have assumed the employment contracts of the Far East Bank
and Trust Company (FEBTC) employees upon effectivity of the merger without break in the
continuity of their employment, even without express stipulation in the Articles of Merger;
and
(b) Aside from the thirty (30) days, counted from notice of finality of the August 10, 2010
Decision, given to former FEBTC employees to join the respondent, said employees shall be
accorded full procedural due process before their employment may be terminated.
SO ORDERED.
GR No. L-82914. June 20, 1988.*
KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS Local Chapter No. 1027),
petitioner, vs. THE HONORABLE BLR DIRECTOR PURA FERRER CALLEJA, MEAT
AND CANNING DIVISION UNIVERSAL ROBINA CORPORATION and MEAT AND
CANNING DIVISION NEW EMPLOYEES AND WORKERS UNITED LABOR
ORGANIZATION, respondents.
Labor; Labor Union; Right to self-organization; The right of members of the Iglesia ni Kristo
sect not to join a labor union for being contrary to their religious beliefs does not bar the
members of that sect from forming their own union; Reason.—After deliberating on the
petition and the documents annexed thereto, We find no merit in the petition. The public
respondent did not err in dismissing the petitioner’s appeal in BLR Case No. A-12-389-87.
This Court’s decision in Victoriano vs. Elizalde Rope Workers’ Union, 59 SCRA 54, upholding
the right of members of the IGLESIA NI KRISTO sect not to join a labor union for being
contrary to their religious beliefs, does not bar the members of that sect from forming their
own union. The public respondent correctly observed that the “recognition of the tenets of
the sect x x x should not infringe on the basic right of self-organization granted by the
constitution to workers, regardless of religious affilia-tion.”
Same; Same; Same; Fact that TUPAS was able to negotiate a new CBA with ROBINA does
not foreclose the right of the rival union NEW ULO to challenge TUPAS’ claim to majority
status.—The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-
day freedom period of the existing CBA, does not foreclose the right of the rival union, NEW
ULO, to challege TUPAS’ claim to majority status, by filing a timely petition for certification
election on October 13, 1987 before TUPAS’ old CBA expired on November 15, 1987 and
before it signed a new CBA with the company on December 3, 1987. As pointed out by Med-
Arbiter Abdullah, a “certification election is the best forum in ascertaining the majority status
of the contending unions wherein the workers themselves can freely choose their bargaining
representative thru secret ballot.” Since it has not been shown that this order is tainted with
unfairness, this Court will not thwart the holding of a certification election.
52
PETITION for certiorari to review the order of the Director of the Bureau of Labor Relations.
The facts are stated in the resolution of the Court.
RESOLUTION
GRIÑO-AQUINO, J.:
The petitioner, Kapatiran sa Meat and Canning Division (TUPAS Local Chapter No. 1027)
hereinafter referred to as “TUPAS,” seeks a review of the resolution dated January 27, 1988
(Annex D) of public respondent Pura Ferrer-Calleja, Director of the Bureau of Labor Relations,
dismissing its appeal from the Order dated November 17, 1987 (Annex C) of the Med-Arbiter
Rasidali C. Abdullah ordering a certification elec-tion to be conducted among the regular daily
paid rank and file employees/workers of Universal Robina Corporation-Meat and Canning
Division to determine which of the contending unions:
a)Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 (or “TUPAS” for
brevity);
b)Meat and Canning Division New Employees and Workers United Labor Organization (or
“NEW ULO” for brevity);
c)No union shall be the bargaining unit of the daily wage rank and file employees in the Meat
and Canning Division of the company.
From 1984 to 1987 TUPAS was the sole and exclusive collective bargaining representative of
the workers in the Meat and Canning Division of the Universal Robina Corporation, with a 3-
year collective bargaining agreement (CBA) which was to expire on November 15, 1987.
Within the freedom period of 60 days prior to the expiration of its CBA, TUPAS filed an
amended notice of strike on September 28, 1987 as a means of pressuring the company to
extend, renew, or negotiate a new CBA with it.
On October 8, 1987, the NEW ULO, composed mostly of workers belonging to the IGLESIA NI
KRISTO sect, registered as a labor union. On October 12, 1987, the TUPAS staged a strike.
ROBINA obtained an injunction against the strike, resulting in an agreement to return to work
and for the parties to negotiate a new CBA. The next day, October 13, 1987, NEW ULO,
claiming that it has “the majority of the daily wage rank and file employees numbering 191,”
filed a petition for a certification election at the Bureau of Labor Relations (Annex A). TUPAS
moved to dismiss the petition for being defective in form and that the members of the NEW
ULO were mostly members of the Iglesia ni Kristo sect which three (3) years previous refused
to affiliate with any labor union. It also accused the company of using the NEW ULO to defeat
TUPAS’ bargaining rights (Annex B). On November 17, 1987, the Med-Arbiter ordered the
holding of a certification election within 20 days (Annex C). TUPAS appealed to the Bureau of
Labor Relations (BLR). In the meantime, it was able to negotiate a new 3-year CBA with
ROBINA, which was signed on December 3, 1987 and to expire on November 15, 1990. On
January 27, 1988, respondent BLR Director Calleja dismissed the appeal (Annex D).
TUPAS’ motion for reconsideration (Annex E) was denied on March 17, 1988 (Annex F). On
April 30, 1988, it filed this petition alleging that the public respondent acted in excess of her
jurisdiction and with grave abuse of discretion in affirming the Med-Arbiter’s order for a
certification election.

After deliberating on the petition and the documents annexed thereto, We find no merit in
the petition. The public respondent did not err in dismissing the petitioner’s appeal in BLR
Case No. A-12-389-87. This Court’s decision in Victoriano vs. Elizalde Rope Workers’ Union,
59 SCRA 54, upholding the right of members of the IGLESIA NI KRISTO sect not to join a
labor union for being contrary to their religious beliefs, does not bar the members of that sect
from forming their own union. The public respondent correctly observed that the “recognition
of the tenets of the sect x x x should not infringe on the basic right of self-organization
granted by the constitution to workers, regardless of religious affiliation.”
The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day
freedom period of the existing CBA, does not foreclose the right of the rival union, NEW ULO,
to challenge TUPAS’ claim to majority status, by filing a timely petition for certification
election on October 13, 1987 before TUPAS’ old CBA expired on November 15, 1987 and
before it signed a new CBA with the company on December 3, 1987. As pointed out by Med-
Arbiter Abdullah, a “certification election is the best forum in ascertaining the majority status
of the contending unions wherein the workers themselves can freely choose their bargaining
representative thru secret ballot.” Since it has not been shown that this order is tainted with
unfairness, this Court will not thwart the holding of a certification election (Associated Trade
Unions [ATU] vs. Noriel, 88 SCRA 96).
WHEREFORE, the petition for certiorari is denied, with costs against the petitioner. SO
ORDERED.
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
53
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.
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.
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 1
TUEU-OLALIA 95
NO UNION 1
SPOILED 1 Guaranteed to all employees or workers is the "right to selforganization and to form, join, or
CHALLENGED 141
The challenged votes were those cast by the 141 INK members. They were segregated and
excluded from the final count in 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
54
and exclusive bargaining representtative." 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."
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 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 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 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."
55
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 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 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 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.
GRNo. L-25246. September 12, 1974.*
BENJAMIN VICTORIANO, plaintiff-appellee, vs. ELIZALDE ROPE WORKERS’ UNION
and ELIZALDE ROPE FACTORY, INC., defendants, ELIZALDE ROPE WORKERS’
UNION, defendant-appellant.
Constitutional law; Construction and integration; There is a presumption of constitutionality in
statutes.—All presumptions are indulged in favor of constitutionality; one who attacks a
statute, alleging unconstitutionally, must prove its invalidity beyond a reasonable doubt; that
a law may work hardship does not render it unconstitutional; that if any reasonable basis
may be conceived which supports the statute, it will be upheld, and the challenger must
negate all possible bases; that the courts are not concerned with the wisdom, justice, policy,
56
or expediency of a statute; and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted.
Same; Right to form or join associations; An employee has the right to join or not join a labor
union.—What the Constitution and the Industrial Peace Act recognize and guarantee is the
“right” to form or join associations. Notwithstanding the different theories propounded by the
different schools of jurisprudence regarding the nature and contents of a “right”, it can be
safely said that whatever theory one subscribes to, a right comprehends at least two broad
notions, namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an
employee may act for himself without being prevented by law; and second, power, whereby
an employee may, as he pleases, join or refrain from joining an association. It is, therefore,
the employee who should decide for himself whether he should join or not an association;
and should he choose to join, he himself makes up his mind as to which association he would
join; and even after he has joined, he still retains the liberty and the power to leave and
cancel his membership with said organization at any time. It is clear, therefore, that the right
to join a union includes the right to abstain from joining any union.
Same; Same; Labor laws; Unfair labor practice; Right to refrain from joining labor union
limited by the Industrial Peace Act.—The right to refrain from joining labor organizations
recognized by Section 3 of the Industrial Peace Act is, however, limited. The legal protection
granted to such right to refrain from joining is withdrawal by operation of law, where a labor
union and an employer have agreed on a closed shop, by virtue of which the employer may
employ only members of the collective bargaining union, and the employees must continue to
be members of the union for the duration of the contract in order to keep their jobs. Thus
Section 4 (a) (4) of the Industrial Peace Act, before its amendment by Republic Act No. 3350,
provides that although it would be an unfair labor practice for an employer “to discriminate in
regard to hire or tenure of employment or any term or condition of employment to encourage
or discourage membership in any labor organization” the employer is, however, not precluded
“from making an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the representative of the
employees.” By virtue, therefore, of a closed shop agreement, before the enactment of
Republic Act No. 3350, if any person regardless of his religious beliefs, wishes to be
employed or to keep his employment, he must become a member of the collective bargaining
union. Hence, the right of said employee not to join the labor union is curtailed and
withdrawn.
Same; Same; Same; Same; Exception to closed-shop agreement provided for employees
prohibited by their religion from joining any union.—To that all-embracing coverage of the
closed shop arrangement, Republic Act No. 3350 introduced an exception, when it added to
Section 4 (a) (4) of the Industrial Peace Act the following proviso: “but such agreement shall
not cover members of any religious sects which prohibit affiliation of their members in any
such labor organization”. Republic Act No. 3350 merely excludes ipso jure from the
application and coverage of the closed shop agreement the employees belonging to any
religious sects which prohibit affiliation of their members with any labor organization. What
the exception provides, therefore, is that members of said religious sects cannot be
compelled or coerced to join labor unions even when said unions have closed shop
agreements with the employers; that in spite of any closed shop agreement, members of said

religious sects cannot be refused employment or dismissed from their jobs on the sole
ground that they are not members of the collective bargaining union.
Same; Impairment of contracts; Prohibition against impairment of contracts is not absolute.—
It should not be over looked that the prohibition to impair the obligation of contracts is not
absolute and unqualified. The prohibition is not to be read with literal exactness like a
mathematical formula, for it prohibits unreasonable impairment only. In spite of the
constitutional prohibition, the State continues to possess authority to safeguard the vital
interests of its people. Legislation appropriate to safeguarding said interests may modify or
abrogate contracts already in effect. For not only are existing laws read into contracts in
order to fix the obligations as between the parties, but the reservation of essential attributes
of sovereign power is also read into contracts as a postulate pf the legal order. All contracts
made with reference to any matter that is subject to regulation under the police power must
be understood as made in reference to the possible exercise of that power. Otherwise,
important and valuable reforms may be precluded by the simple device of entering into
contracts for the purpose of doing that which otherwise may be prohibited.
Same; Same; Test for determining whether statute violates the impairment-of-contract
clause.—In order to determine whether legislation unconstitutionally impairs contract
obligations, no unchanging yardstick, applicable at all times and under all circumstances, by
which the validity of each statute may be measured or determined, has been fashioned, but
every case must be determined upon its own circumstances. Legislation impairing the
obligation of contracts can be sustained when it is enacted for the promotion of the general
good of the people, and when the means adopted to secure that end are reasonable. Both
the end sought and the means adopted must be legitimate, i.e., within the scope of the
reserved power of the state construed in harmony with the constitutional limitation of that
power.
Same; Same; Republic Act 3350 providing for exemption from closed shop agreements does
not violate the impairment-of-contract clause of the constitution.—What then was the
purpose sought to be achieved by Republic Act No. 3350? Its purpose was to insure freedom
of belief and religion, and to promote the general welfare by preventing discrimination
against those members of religious sects which prohibit their members from joining labor
unions, confirming thereby their natural, statutory and constitutional right to work, the fruits
of which work are usually the only means whereby they can maintain their own life and the
life of their dependents. It cannot be gainsaid that said purpose is legitimate. The questioned
Act also provides protection to members of said religious sects against two aggregates of
group strength from which the individual needs protection. The individual employee, at
various times in his working life, is confronted by two aggregates of power—collective labor,
directed by a union, and collective capital, directed by management. The union, an institution
developed to organize labor into a collective force and thus protect the individual employee
from the power of collective capital, is, paradoxically, both the champion of employee rights,
and a new source of their frustration. Moreover, when the Union interacts with management,
it produces yet a third aggregate of group strength from which the individual also needs
protection—the collective bargaining relationship. It cannot be denied, furthermore, that the
means adopted by the Act to achieve that purpose—exempting the members of said religious
sects from coverage of union security agreements—is reasonable.
57
Same; Same; Religious freedom; Freedom of religion takes precedence over the right against
the impairment of contracts.—It may not be amiss to point out here that the free exercise of
religious profession or belief is superior to contract rights. In case of conflict, the latter must,
therefore, yield to the former. The Supreme Court of the United States has also declared on
several occasions that the rights in the First Amendment, which include freedom of religion,
enjoy a preferred position in the constitutional system. Religious freedom, although not
unlimited, is a fundamental personal right and liberty, and has a preferred position in the
hierarchy of values. Contractual rights, therefore, must yield to freedom of religion. It is only
where unavoidably necessary to prevent an immediate and grave danger to the security and
welfare of the community that infringement of religious freedom may be justified, and only to
the smallest extent necessary to avoid the danger.
Same; Same; Same; Republic Act 3350 does not advance or diminish the interest of any
particular religion.—The primary effects of the exemption from closed shop agreements in
favor of members of religious sects that prohibit their members from affiliating with a labor
organization, is the protection of said employees against the aggregate force of the collective
bargaining agreement, and relieving certain citizens of a burden on their religious beliefs; and
by’ eliminating to a certain extent economic insecurity due to unemployment, which is a
serious menace to the health, morals, and welfare of the people of the State, the Act also
promotes the well-being of society. It is our view that the exemption from the effects of
closed shop agreement does not directly advance, or diminish, the interests of any particular
religion. Although the exemption may benefit those who are members of religious sects that
prohibit their members from joining labor unions, the benefit upon the religious sects is
merely incidental and indirect. The “establishment clause” (of religion) does not ban
regulation on conduct whose reason or effect merely happens to coincide or harmonize with
the tenets of some or all religions. The free exercise clause of the Constitution has been
interpreted to require that religious exercise be preferentially aided.
Same; Same; Same; Republic Act 3350 does not require religious test for the exercise of civil
or political right—The Act does not require as a qualification, or condition, for joining any
lawful association membership in any particular religion or in any religious sect; neither does
the Act require affiliation with a religious sect that prohibits its members from joining a labor
union as a condition or qualification for withdrawing from a labor union. Joining or
withdrawing from a labor union requires a positive act. Republic Act No. 3350 only exempts
members with such religious affiliation from the coverage of closed shop agreements. So,
under this Act, a religious objector is not required to do a positive act—to exercise the right
to join or to resign from the union. He is exempted ipso jure without need of any positive act
on his part.
Same; Equal protection of the law; Republic Act 3350 does not violate the equal protection of
the law clause of the constitution.—We believe that Republic Act No. 3350 satisfies the
aforementioned requirements. The Act classifies employees and workers, as to the effect and
coverage of union shop security agreements, into those who by reason of their religious
beliefs and convictions cannot sign up with a labor union, and those whose religion does not
prohibit membership in labor unions. The classification rests on real or substantial, not merely
imaginary or whimsical, distinction. The classification introduced by said Act is also germane
to its purpose. The purpose of the law is precisely to avoid those who cannot, because of

their religious belief, join labor unions, from being deprived of their right to work and from
being dismissed from their work because of union shop security agreements.
Same; Social justice; Republic Act 3350 does not violate the concept of social justice
contained in the Constitution.—Appellant’s further contention that Republic Act No. 3350
violates the constitutional provision on social justice is also baseless. Social justice is intended
to promote the welfare of all the people. Republic Act No. 3350 promotes that welfare insofar
as it looks after the welfare of those who, because of their religious belief, cannot join labor
unions; the Act prevents their being deprived of work and of the means of livelihood. In
determining whether any particular measure is for public advantage, it is not necessary that
the entire state be directly benefited—it is sufficient that a portion of the state be benefited
thereby.
Same; Construction and interpretation; Statute is not unconstitutional merely because it is
not proper, necessary or denimble.—Appellant contends that the amendment introduced by
Republic Act No. 3350 is not called for—in other words, the Act is not proper, necessary or
desirable. Anent this matter, it has been held that a statute which is not necessary is not, for
that reason, unconstitutional; that in determining the constitutional validity of legislation, the
courts are unconcerned with issues as to the necessity for the enactment of the legislation in
question. Courts do inquire into the wisdom of laws. Moreover, legislatures, being chosen by
the people, are presumed to understand and correctly appreciate the needs of the people,
and it may change the laws accordingly.
Labor law; Labor dispute; Attorney’s fees; Case at bar, labor union liable for attorney’s fees.
—That there was a labor dispute in the instant case cannot be disputed, for appellant sought
the discharge of respondent by virtue of the closed shop agreement and under Section 2 (j)
of Republic Act No. 875 a question involving tenure of employment is included in the term
“labor dispute”. The discharge or the act of seeking it is the labor dispute itself. It being the
labor dispute itself, that very same act of the Union in asking the employer to dismiss
Appellee cannot be “an act done x x x in furtherance of an industrial dispute”. The mere fact
that appellant is a labor union does not necessarily mean that all its acts are in furtherance of
an industrial dispute. Neither does Article 2208 of the Civil Code, invoked by the Union, serve
as its shield. The article provides that attorney’s fees and expenses of litigation may be
awarded “when the defendant’s act or omission has compelled the plaintiff x x x to incur
expenses to protect his interest”; and “in any other case where the court deems it just and
equitable that attorney’s fees and expenses of litigation should be recovered”. In the instant
case, it cannot be gainsaid that appellant Union’s act in demanding Appellee’s dismissal
caused Appellee to incur expenses to prevent his being dismissed from his job.
Fernando, J.: Concurring
Constitutional law; Religious freedom; Religious freedom stressed.—Religious freedom is
identified with the liberty every individual possesses to worship or not a Supreme Being, and
if a devotee of any sect, to any act in accordance with its creed. This is constitutionally
safeguarded, according to Justice Laurel, that “profession of faith to an active power that
binds and elevates man to his Creator * * *.” The choice of what a man wishes to believe in
is his and his alone. That is a domain left untouched, where intrusion is not allowed, a citadel
to which the law is denied entry, whatever be his thoughts or hopes. In that sphere, what he
58
wills reigns supreme. The doctrine to which he pays fealty may for some be unsupported by
evidence, devoid of rational foundation. No matter. There is no requirement as to its
conformity to what has found acceptance. It suffices that for him such a concept holds
undisputed sway. That is a recognition of man’s freedom. That for him is one of the ways of
self-realization. It would be to disregard the dignity that attaches to every human being to
deprive him of such an attribute. The “fixed star on our constitutional constellation,” to
borrow the felicitous phrase of Justice Jackson, is that no official, not excluding the highest,
has it in his power to prescribe what shall be orthodox in matters of conscience—or to
mundane affairs, for that matter.
Same; Same; Limitations on religious freedom cited.—One may believe in most anything,
however strange, bizarre and unreasonable the same may appear to others, even heretical
when weighed in the scales of orthodoxy or doctrinal standards. There was this qualification
though: “But between the freedom of belief and the exercise of said belief, there is quite a
stretch of road to travel. If the exercise of said religious belief clashes with the established
institutions of society and with the law, then the former must yield, and give way to the
latter. The Government steps in and either restrains said exercise or even prosecutes the one
exercising it.”
Same; Same; Republic Act 3350 does not diminish protection to labor.—There is, however,
the question of whether such an exception possesses an implication that lessens the
effectiveness of state efforts to protect labor, likewise, as noted, constitutionally ordained.
Such a view, on the surface, may not be lacking in plausibility, but upon closer analysis, it
cannot stand scrutiny. Thought must be given to the freedom of association, likewise an
aspect of intellectual liberty. For the late Professor Howe, a constitutionalist and in his lifetime
the biographer of the great Holmes, it even partakes of the political theory of pluralistic
sovereignty. So great is the respect for the autonomy accorded voluntary societies. Such a
right implies at the very least that one can determine for himself whether or not he should
join or refrain from joining a labor organization, an institutional device for promoting the
welfare of the working man. A closed shop, on the other hand, is inherently coercive. That is
why, as is unmistakably reflected in our decisions, the latest of which is Guijarno v. Court of
Industrial Relations, it is far from being a favorite of the law. For a statutory provision then to
further curtail its operation, is precisely to follow the dictates of sound public policy.
APPEAL from a decision of the Court of First Instance of Manila.
The facts are stated in the opinion of the Court.
ZALDIVAR, J.,:
Appeal to this Court on purely questions of law from the decision of the Court of First
Instance of Manila in its Civil Case No. 58894.
The undisputed facts that spawned the instant case follow: Benjamin Victoriano (hereinafter
referred to as Appellee), a member of the religious sect known as the “Iglesia ni Cristo”, had
been in the employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as Company)
since 1958. As such employee, he was a member of the Elizalde Rope Workers’ Union
(hereinafter referred to as Union) which had with the Company a collective bargaining
agreement containing a closed shop provision which reads as follows:

“Membership in the Union shall be required as a condition of employment for all permanent
employees workers covered by this Agreement.”
The collective bargaining agreement expired on March 3, 1964 but was renewed the
following day, March 4, 1964.
Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment by Republic
Act No. 3350, the employer was not precluded “from making an agreement with a labor
organization to require as a condition of employment membership therein, if such labor
organization is the representative of the employees.” On June 18, 1961, however, Republic
Act No. 3350 was enacted, introducing an amendment to paragraph (4) subsection (a) of
section 4 of Republic Act No. 875, as follows: xxx “but such agreement shall not cover
members of any religious sects which prohibit affiliation of their members in any such labor
organization”.
Being a member of a religious sect that prohibits the affiliation of its members with any labor
organization, Appellee presented his resignation to appellant Union in 1962, and when no
action was taken thereon, he reiterated his resignation on September 3, 1974. Thereupon,
the Union wrote a formal letter to the Company asking the latter to separate Appellee from
the service in view of the fact that he was resigning from the Union as a member. The
management of the Company in turn notified Appellee and his counsel that unless the
Appellee could achieve a satisfactory arrangement with the Union, the Company would be
constrained to dismiss him from the service. This prompted Appellee to file an action for
injunction, docketed as Civil Case No. 58894 in the Court of First Instance of Manila to enjoin
the Company and the Union from dismissing Appellee.1 In its answer, the Union invoked the
“union security clause” of the collective bargaining agreement; assailed the constitutionality
of Republic Act No. 3350; and contended that the Court had no jurisdiction over the case,
pursuant to Republic Act No. 875, Sections 24 and 9 (d) and (e).2 Upon the facts agreed
upon by the parties during the pre-trial conference, the Court a quo rendered its decision on
August 26,1965, the dispositive portion of which reads:
“IN VIEW OF THE FOREGOING, judgment is rendered enjoining the defendant Elizalde Rope
Factory, Inc. from dismissing the plaintiff from his present employment and sentencing the
defendant Elizalde Rope Workers’ Union to pay the plaintiff P500 for attorney’s fees and the
costs of this action.”3
From this decision, the Union appealed directly to this Court on purely questions of law,
assigning the following errors:
“I.That the lower court erred when it did not rule that Republic Act No. 3350 is
unconstitutional.
“II.That the lower court erred when it sentenced appellant herein to pay plaintiff the sum of
P500 as attorney’s fees and the cost thereof.”
In support of the alleged unconstitutionality of Republic Act No. 3350, the Union contented,
firstly, that the Act infringes on the fundamental right to form lawful associations; that “the
very phraseology of said Republic Act 3350, that membership in a labor organization is
banned to all those belonging to such religious sect prohibiting affiliation with any labor
59
organization”4, “prohibits all the members of a given religious sect from joining any labor
union if such sect prohibits affiliations of their members thereto”5; and, consequently,
deprives said members of their constitutional right to form or join lawful associations or
organizations guaranteed by the Bill of Rights, and thus becomes obnoxious to Article III,
Section 1 (6) of the 1935 Constitution.6
Secondly, the Union contended that Republic Act No. 3350 is unconstitutional for impairing
the obligation of contracts in that, while the Union is obliged to comply with its collective
bargaining agreement containing a “closed shop provision,” the Act relieves the employer
from its reciprocal obligation of cooperating in the maintenance of union membership as a
condition of employment; and that said Act, furthermore, impairs the Union’s rights as it
deprives the union of dues from members who, under the Act, are relieved from the
obligation to continue as such members.7
Thirdly, the Union contended that Republic Act No. 3350 discriminatorily favors those
religious sects which ban their members from joining labor unions, in violation of Article III,
Section 1 (7) of the 1935 Constitution; and while said Act unduly protects certain religious
sects, it leaves no rights or protection to labor organizations.8
Fourthly, Republic Act No. 3350, asserted the Union, violates the constitutional provision that
“no religious test shall be required for the exercise of a civil right,” in that the laborer’s
exercise of his civil right to join associations for purposes not contrary to law has to be
determined under the Act by his affiliation with a religious sect; that conversely, if a worker
has to sever his religious connection with a sect that prohibits membership in a labor
organization in order to be able to join a labor organization, said Act would violate religious
freedom.9
Fifthly, the Union contended that Republic Act No. 3350, violates the “equal protection of
laws” clause of the Constitution, it being a discriminatory legislation, inasmuch as by
exempting from the operation of closed shop agreement the members of the “Iglesia ni
Cristo”, it has granted said members undue advantages over their fellow workers, for while
the Act exempts them from union obligation and liability, it nevertheless entitles them at the
same time to the enjoyment of all concessions, benefits and other emoluments that the union
might secure from the employer.10
Sixthly, the Union contended that Republic Act No. 3350 violates the constitutional provision
regarding the promotion of social justice.11
Appellant Union, furthermore, asserted that a “closed shop provision” in a collective
bargaining agreement cannot be considered violative of religious freedom, as to call for the
amendment introduced by Republic Act No. 3350;12 and that unless Republic Act No. 3350 is
declared unconstitutional, trade unionism in this country would be wiped out as employers
would prefer to hire or employ members of the Iglesia ni Cristo in order to do away with
labor organizations.13
Appellee, assailing appellant’s arguments, contended that Republic Act No. 3350 does not
violate the right to form lawful associations, for the right to join associations includes the
right not to join or to resign from a labor organization, if one’s conscience does not allow his

membership therein, and the Act has given substance to such right by prohibiting the
compulsion of workers to join labor organizations;14 that said Act does not impair the
obligation of contracts for said law formed part of, and was incorporated into, the terms of
the closed shop agreement;15 that the Act does not violate the establishment of religion
clause or separation of Church and State, for Congress, in enacting said law, merely
accommodated the religious needs of those workers whose religion prohibits its members
from joining labor unions, and balanced the collective rights of organized labor with the
constitutional right of an individual to freely exercise his chosen religion; that the
constitutional right to the free exercise of one’s religion has primacy and preference over
union security measures which are merely contractual16; that said Act does not violate the
constitutional provision of equal protection, for the classification of workers under the Act
depending on their religious tenets is based on substantial distinction, is germane to the
purpose of the law, and applies to all the members of a given class;17 that said Act, finally,
does not violate the social justice policy of the Constitution, for said Act was enacted
precisely to equalize employment opportunities for all citizens in the midst of the diversities of
their religious beliefs.18
I. Before We proceed to the discussion of the first assigned error, it is necessary to premise
that there are some thoroughly established principles which must be followed in all cases
where questions of constitutionality as obtains in the instant case are involved. All
presumptions are indulged in favor of constitutionality; one who attacks a statute, alleging
unconstitutionality must prove its invalidity beyond a reasonable doubt; that a law may work
hardship does not render it unconstitutional; that if any reasonable basis may be conceived
which supports the statute, it will be upheld, and the challenger must negate all possible
bases; that the courts are not concerned with the wisdom, justice, policy, or expediency of a
statute; and that a liberal interpretation of the constitution in favor of the constitutionality of
legislation should be adopted.19
1. Appellant Union’s contention that Republic Act No. 3350 prohibits and bans the members
of such religious sects that forbid affiliation of their members with labor unions from joining
labor unions appears nowhere in the wording of Republic Act No. 3350; neither can the same
be deduced by necessary implication therefrom. It is not surprising, therefore, that appellant,
having thus misread the Act, committed the error of contending that said Act is obnoxious to
the constitutional provision on freedom of association.
Both the Constitution and Republic Act No. 875 recognize freedom of association. Section 1
(6) of Article III of the Constitution of 1935, as well as Section 7 of Article IV of the
Constitution of 1973, provide that the right to form associations or societies for purposes not
contrary to law shall not be abridged. Section 3 of Republic Act No. 875 provides that
employees shall have the right to self-organization and to form, join of assist labor
organizations of their own choosing for the purpose of collective bargaining and to engage in
concerted activities for the purpose of collective bargaining and other mutual aid or
protection. What the Constitution and the Industrial Peace Act recognize and guarantee is the
“right” to form or join associations. Notwithstanding the different theories propounded by the
different schools of jurisprudence regarding the nature and contents of a “right”, it can be
safely said that whatever theory one subscribes to, a right comprehends at least two broad
notions, namely: first, liberty or freedom, Le., the absence of legal restraint, whereby an
employee may act for himself without being prevented by law; and second, power, whereby
60
an employee may, as he pleases, join or refrain from joining an association. It is, therefore,
the employee who should decide for himself whether he should join or not an association;
and should he choose to join, he himself makes up his mind as to which association he would
join; and even after he has joined, he still retains the liberty and the power to leave and
cancel his membership with said organization at any time.20 It is clear, therefore, that the
right to join a union includes the right to abstain from joining any union.21 Inasmuch as what
both the Constitution and the Industrial Peace Act have recognized, and guaranteed to the
employee, is the “right” to join associations of his choice, it would be absurd to say that the
law also imposes, in the same breath, upon the employee the duty to join associations. The
law does not enjoin an employee to sign up with any association.
The right to refrain from joining labor organizations recognized by Section 3 of the Industrial
Peace Act is, however, limited. The legal protection granted to such right to refrain from
joining is withdrawn by operation of law, where a labor union and an employer have agreed
on a closed shop, by virtue of which the employer may employ only members of the
collective bargaining union, and the employees must continue to be members of the union for
the duration of the contract in order to keep their jobs. Thus Section 4 (a) (4) of the
Industrial Peace Act, before its amendment by Republic Act No. 3350, provides that although
it would be an unfair labor practice for an employer “to discriminate in regard to hire or
tenure of employment or any term or condition of employment to encourage or discourage
membership in any labor organization” the employer is, however, not precluded “from
making an agreement with a labor organization to require as a condition of employment
membership therein, if such labor organization is the representative of the employees”. By
virtue, therefore, of a closed shop agreement, before the enactment of Republic Act No.
3350, if any person, regardless of his religious beliefs, wishes to be employed or to keep his
employment, he must become a member of the collective bargaining union. Hence, the right
of said employee not to join the labor union is curtailed and withdrawn.
To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350
introduced an exception, when it added to Section 4 (a) (4) of the Industrial Peace Act the
following proviso: “but such agreement shall not cover members of any religious sects which
prohibit affiliation of their members in any such labor organization”. Republic Act No. 3350
merely excludes ipso jure from the application and coverage of the closed shop agreement
the employees belonging to any religious sects which prohibit affiliation of their members
with any labor organization. What the exception provides, therefore, is that members of said
religious sects cannot be compelled or coerced to join labor unions even when said unions
have closed shop agreements with the employers; that in spite of any closed shop
agreement, members of said religious sects cannot be refused employment or dismissed from
their jobs on the sole ground that they are not members of the collective bargaining union. It
is clear, therefore, that the assailed Act, far from infringing the constitutional provision on
freedom of association, upholds and reinforces it. It does not prohibit the members of said
religious sects from affiliating with labor unions. It still leaves to said members the liberty and
the power to affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious
beliefs, the members of said religious sects prefer to sign up with the labor union, they can
do so. If in deference and fealty to their religious faith, they refuse to sign up, they can do
so; the law does not coerce them to join; neither does the law prohibit them from joining;
and neither may the employer or labor union compel them to join. Republic Act No. 3350,
therefore, does not violate the constitutional provision on freedom of association.

2. Appellant Union also contends that the Act is unconstitutional for impairing the obligation
of its contract, specifically, the “union security clause” embodied in its Collective Bargaining
Agreement with the Company, by virtue of which “membership in the union was required as
a condition for employment for all permanent employees workers”. This agreement was
already in existence at the time Republic Act No. 3350 was enacted on June 18, 1961, and it
cannot, therefore, be deemed to have been incorporated into the agreement. But by reason
of this amendment, Appellee, as well as others similarly situated, could no longer be
dismissed from his job even if he should cease to be a member, or disaffiliate from the Union,
and the Company could continue employing him notwithstanding his disaffiliation from the
Union. The Act, therefore, introduced a change into the express terms of the union security
clause; the Company was partly absolved by law from the contractual obligation it had with
the Union of employing only Union members in permanent positions. It cannot be denied,
therefore, that there was indeed an impairment of said union security clause.
According to Black, any statute which introduces a change into the express terms of the
contract, or its legal construction, or its validity, or its discharge, or the remedy for its
enforcement, impairs the contract. The extent of the change is not material. It is not a
question of degree or manner or cause, but of encroaching in any respect on its obligation or
dispensing with any part of its force. There is an impairment of the contract if either party is
absolved by law from its performance.22 Impairment has also been predicated on laws
which, without destroying contracts, derogate from substantial contractual rights.23
It should not be overlooked, however, that the prohibition to impair the obligation of
contracts is not absolute and unqualified. The prohibition is general, affording a broad outline
and requiring construction to fill in the details. The prohibition is not to be read with literal
exactness like a mathematical formula, for it prohibits unreasonable impairment only.24 In
spite of the constitutional prohibition, the State continues to possess authority to safeguard
the vital interests of its people. Legislation appropriate to safeguarding said interests may
modify or abrogate contracts already in effect.25 For not only are existing laws read into
contracts in order to fix the obligations as between the parties, but the reservation of
essential attributes of sovereign power is also read into contracts as a postulate of the legal
order. All contracts made with reference to any matter that is subject to regulation under the
police power must be understood as made in reference to the possible exercise of that
power.26 Otherwise, important and valuable reforms may be precluded by the simple device
of entering into contracts for the purpose of doing that which otherwise may be prohibited.
The policy of protecting contracts against impairment presupposes the maintenance of a
government by virtue of which contractual relations are worthwhile—a government which
retains adequate authority to secure the peace and good order of society. The contract
clause of the Constitution must, therefore, be not only in harmony with, but also in
subordination to, in appropriate instances, the reserved power of the state to safeguard the
vital interests of the people. It follows that not all legislations, which have the effect of
impairing a contract, are obnoxious to the constitutional prohibition as to impairment, and a
statute passed in the legitimate exercise of police power, although it incidentally destroys
existing contract rights, must be upheld by the courts. This has special application to
contracts regulating relations between capital and labor which are not merely contractual,
and said labor contracts, for being impressed with public interest, must yield to the common
good.27
61
In several occasions this Court declared that the prohibition against impairing the obligations
of contracts has no application to statutes relating to public subjects within the domain of the
general legislative powers of the state involving public welfare.28 Thus, this Court also held
that the Blue Sunday Law was not an infringement of the obligation of a contract that
required the employer to furnish work on Sundays to his employees, the law having been
enacted to secure the well-being and happiness of the laboring class, and being, furthermore,
a legitimate exercise of the police power.29
In order to determine whether legislation unconstitutionally impairs contract obligations, no
unchanging yardstick, applicable at all times and under all circumstances, by which the
validity of each statute may be measured or determined, has been fashioned,, but every case
must be determined upon its own circumstances. Legislation impairing the obligation of
contracts can be sustained when it is enacted for the promotion of the general good of the
people, and when the means adopted to secure that end are reasonable. Both the end
sought and the means adopted must be legitimate, i.e., within the scope of the reserved
power of the state construed in harmony with the constitutional limitation of that power.30
What then was the purpose sought to be achieved by Republic Act No. 3350? Its purpose
was to insure freedom of belief and religion, and to promote the general welfare by
preventing discrimination against those members of religious sects which prohibit their
members from joining labor unions, confirming thereby their natural, statutory and
constitutional right to work, the fruits of which work are usually the only means whereby they
can maintain their own life and the life of their dependents. It cannot be gainsaid that said
purpose is legitimate.
The questioned Act also provides protection to members of said religious sects against two
aggregates of group strength from which the individual needs protection. The individual
employee, at various times in his working life, is confronted by two aggregates of power—
collective labor, directed by a union, and collective capital, directed by management. The
union, an institution developed to organize labor into a collective force and thus protect the
individual employee from the power of collective capital, is, paradoxically, both the champion
of employee rights, and a new source of their frustration. Moreover, when the Union interacts
with management, it produces yet a third aggregate of group strength from which the
individual also needs protection—the collective bargaining relationship.31
The aforementioned purpose of the amendatory law is clearly seen in the Explanatory Note to
House Bill No. 5859, which later became Republic Act No. 3350, as follows:
“It would be unthinkable indeed to refuse employing a person who, on account of his
religious beliefs and convictions, cannot accept membership in a labor organization although
he possesses all the qualifications for the job. This is tantamount to punishing such person
for believing in a doctrine he has a right under the law to believe in. The law would not allow
discrimination to flourish to the detriment of those whose religion discards membership in
any labor organization. Likewise, the law would not commend the deprivation of their right to
work and pursue a modest means of livelihood, without in any manner violating their
religious faith and/or belief.”32

It cannot be denied, furthermore, that the means adopted by the Act to achieve that purpose
—exempting the members of said religious sects from coverage of union security agreements
—is reasonable.
It may not be amiss to point out here that the free exercise of religious profession or belief is
superior to contract rights. In case of conflict, the latter must, therefore, yield to the former.
The Supreme Court of the United States has also declared on several occasions that the
rights in the First Amendment, which include freedom of religion, enjoy a preferred position
in the constitutional system.33 Religious freedom, although not unlimited, is a fundamental
personal right and liberty,34 and has a preferred position in the hierarchy of values.
Contractual rights, therefore, must yield to freedom of religion. It is only where unavoidably
necessary to prevent an immediate and grave danger to the security and welfare of the
community that infringement of religious freedom may be justified, and only to the smallest
extent necessary to avoid the danger.
3. In further support of its contention that Republic Act No. 3350 is unconstitutional,
appellant Union averred that said Act discriminates in favor of members of said religious sects
in violation of Section 1 (7) of Article III of the 1935 Constitution, and which is now Section 8
of Article IV of the 1973 Constitution, which provides:
“No law shall be made respecting an establishment of religion, or prohibiting the free exercise
thereof, and the free exercise and enjoyment of religious profession and worship, without
discrimination and preference, shall forever be allowed. No religious test shall be required for
the exercise of civil or political rights.”
The constitutional provision into only prohibits legislation for the support of any religious
tenets or the modes of worship of any sect, thus forestalling compulsion by law of the
acceptance of any creed or the practice of any form of worship,35 but also assures the free
exercise of one’s chosen form of religion within limits of utmost amplitude. It has been said
that the religion clauses of the Constitution are all designed to protect the broadest possible
liberty of conscience, to allow each man to believe as his conscience directs, to profess his
beliefs, and to live as he believes he ought to live, consistent with the liberty of others and
with the common good.36 Any legislation whose effect or purpose is to impede the
observance of one or all religions, or to discriminate invidiously between the religions, is
invalid, even though the burden may be characterized as being only indirect.37 But if the
stage regulates conduct by enacting, within its power, a general law which has for its
purpose and effect to advance the state’s secular goals, the statute is valid despite its indirect
burden on religious observance, unless the state can accomplish its purpose without imposing
such burden.38
In Aglipay v. Ruiz39, this Court had occasion to state that the government should not be
precluded from pursuing valid objectives secular in character even if the incidental result
would be favorable to a religion or sect. It has likewise been held that the statute, in order to
withstand the strictures of constitutional prohibition, must have a secular legislative purpose
and a primary effect that neither advances nor inhibits religion.40 Assessed by these criteria,
Republic Act No. 3350 cannot be said to violate the constitutional inhibition of the “no-
establishment” (of religion) clause of the Constitution.
62
The purpose of Republic Act No. 3350 is secular, worldly, and temporal, not spiritual or
religious or holy and eternal. It was intended to serve the secular purpose of advancing the
constitutional right to the free exercise of religion, by averting that certain persons be refused
work, or be dismissed from work, or be dispossessed of their right to work and of being
impeded to pursue a modest means of livelihood, by reason of union security agreements. To
help its citizens to find gainful employment whereby they can make a living to support
themselves and their families is a valid objective of the state. In fact, the state is enjoined, in
the 1935 Constitution, to afford protection to labor, and regulate the relations between labor
and capital and industry.41 More so now in the 1973 Constitution where it is mandated that
“the State shall afford protection to labor, promote full employment and equality in
employment, ensure equal work opportunities regardless of sex, race or creed and regulate
the relation between workers and employers.”42
The primary effects of the exemption from closed shop agreements in favor of members of
religious sects that prohibit their members from affiliating with a labor organization, is the
protection of said employees against the aggregate force of the collective bargaining
agreement, and relieving certain citizens of a burden on their religious beliefs; and by
eliminating to a certain extent economic insecurity due to unemployment, which is a serious
menace to the health, morals, and welfare of the people of the State, the Act also promotes
the well-being of society. It is our view that the exemption from the effects of closed shop
agreement does not directly advance, or diminish, the interests of any particular religion.
Although the exemption may benefit those who are members of religious sects that prohibit
their members from joining labor unions, the benefit upon the religious sects is merely
incidental and indirect. The “establishment clause” (of religion) does not ban regulation on
conduct whose reason or effect merely happens to coincide or harmonize with the tenets of
some or all religions.43 The free exercise clause of the Constitution has been interpreted to
require that religious exercise be preferentially aided.44
We believe that in enacting Republic Act No. 3350, Congress acted consistently with the spirit
of the constitutional provision. It acted merely to relieve the exercise of religion, by certain
persons, of a burden that is imposed by union security agreements. It was Congress itself
that imposed that burden when it enacted the Industrial Peace Act (Republic Act 875), and,
certainly, Congress, if it so deems advisable, could take away the same burden. It is certain
that not every conscience can be accommodated by all the laws of the land; but when
general laws conflict with scrupples of conscience, exemptions ought to be granted unless
some “compelling state interest” intervenes.45 In the instant case, We see no such
compelling state interest to withhold exemption.
Appellant bewails that while Republic Act No. 3350 protects members of certain religious
sects, it leaves no right to, and is silent as to the protection of, labor organizations. The
purpose of Republic Act No. 3350 was not to grant rights to labor unions. The rights of labor
unions are amply provided for in Republic Act No. 875 and the new Labor Code. As to the
lamented silence of the Act regarding the rights and protection of labor unions, suffice it to
say, first, that the validity of a statute is determined by its provisions, not by its silence46;
and, It would not be amiss to state, regarding this matter, that to compel persons to join and
remain members of a union to keep their jobs in violation of their religious scrupples, would
hurt, rather than help, labor unions. Congress has seen it fit to exempt religious objectors lest

their resistance spread to other workers, for religious objections have contagious
potentialities more than political and philosophic objections.
Furthermore, let it be noted that coerced unity and loyalty even to the country, and a fortiori
to a labor union—assuming that such unity and loyalty can be attained through coercion—is
not a goal that is constitutionally obtainable at the expense of religious liberty.48 A desirable
end cannot be promoted by prohibited means.
4. Appellants’ fourth contention, that Republic Act No. 3350 violates the constitutional
prohibition against requiring a religious test for the exercise of a civil right or a political right,
is not well taken. The Act does not require as a qualification, or condition, for joining any
lawful association membership in any particular religion or in any religious sect; neither does
the Act require affiliation with a religious sect that prohibits its members from joining a labor
union as a condition or qualification for withdrawing from a labor union. Joining or
withdrawing from a labor union requires a positive act. Republic Act No. 3350 only exempts
members with such religious affiliation from the coverage of closed shop agreements. So,
under this Act, a religious objector is not required to do a positive act—to exercise the right
to join or to resign from the union. He is exempted ipso jure without need of any positive act
on his part. A conscientious religious objector need not perform a positive act or exercise the
right of resigning from the labor union—he is exempted from the coverage of any closed
shop agreement that a labor union may have entered into. How then can there be a religious
test required for the exercise of a right when no right need be exercised?
We have said that it was within the police power of the State to enact Republic Act No. 3350,
and that its purpose was legal and in consonance with the Constitution. It is never an illegal
evasion of a constitutional provision or prohibition to accomplish a desired result, which is
lawful in itself, by discovering or following a legal way to do it.49
5. Appellant avers as its fifth ground that Republic Act No. 3350 is a discriminatory
legislation, inasmuch as it grants to the members of certain religious sects undue advantages
over other workers, thus violating Section 1 of Article III of the 1935 Constitution which
forbids the denial to any person of the equal protection of the laws.50
The guaranty of equal protection of the laws is not a guaranty of equality in the application of
the laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid
the constitutional prohibition against inequality, that every man, woman and child should be
affected alike by a statute. Equality of operation of statutes does not mean indiscriminate
operation on persons merely as such, but on persons according to the circumstances
surrounding them. It guarantees equality, not identity of rights. The Constitution does not
require that things which are different in fact be treated in law as though they were the
same. The equal protection clause does not forbid discrimination as to things that are
different.51 It does not prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows classification. Classification
in law, as in the other departments of knowledge or practice, is the grouping of things in
speculation or practice because they agree with one another in certain particulars. A law is
not invalid because of simple inequality.52 The very idea of classification is that of inequality,
so that it goes without saying that the mere fact of inequality in no manner determines the
63
matter of constitutionality.53 All that is required of a valid classification is that it be
reasonable, which means that the classification should be based on substantial distinctions
which make for real differences; that it must be germane to the purpose of the law; that it
must not be limited to existing conditions only; and that it must apply equally to each
member of the class.54 This Court has held that the standard is satisfied if the classification
or distinction is based on a reasonable foundation or rational basis and is not palpably
arbitrary.55
In the exercise of its power to make classifications for the purpose of enacting laws over
matters within its jurisdiction, the state is recognized as enjoying a wide range of
discretion.56 It is not necessary that the classification be based on scientific or marked
differences of things or in their relation.57 Neither is it necessary that the classification be
made with mathematical nicety.58 Hence legislative classification may in many cases properly
rest on narrow distinctions,59 for the equal protection guaranty does not preclude the
legislature from recognizing degrees of evil or harm, and legislation is addressed to evils as
they may appear.
We believe that Republic Act No. 3350 satisfies the aforementioned requirements. The Act
classifies employees and workers, as to the effect and coverage of union shop security
agreements, into those who by reason of their religious beliefs and convictions cannot sign
up with a labor union, and those whose religion does not prohibit membership in labor
unions. The classification rests on real or substantial, not merely imaginary or whimsical,
distinctions. There is such real distinction in the beliefs, feelings and sentiments of
employees. Employees do not believe in the same religious faith and different religions differ
in their dogmas and cannons.
Religious beliefs, manifestations and practices, though they are found in all places, and in all
times, take so many varied forms as to be almost beyond imagination. There are many views
that comprise the broad spectrum of religious beliefs among the people. There are diverse
manners in which beliefs, equally paramount in the lives of their possessors, may be
articulated. Today the country is far more heterogenous in religion than before, differences in
religion do exist, and these differences are important and should not be ignored.
Even from the phychological point of view, the classification is based on real and important
differences. Religious beliefs are not mere beliefs, mere ideas existing only in the mind, for
they carry with them practical consequences and are the motives of certain rules of human
conduct and the justification of certain acts.60 Religious sentiment makes a man view things
and events in their relation to his God. It gives to human life its distinctive character, its tone,
its happiness, or unhappiness, its enjoyment or irksomeness. Usually, a strong and
passionate desire is involved in a religious belief. To certain persons, no single factor of their
experience is more important to them than their religion, or their not having any religion.
Because of differences in religious belief and sentiments, a very poor person may consider
himself better than the rich, and the man who even lacks the necessities of life may be more
cheerful than the one who has all possible luxuries. Due to their religious beliefs people, like
the martyrs, became resigned to the inevitable and accepted cheerfully even the most painful
and excruciating pains. Because of differences in religious beliefs, the world has witnessed
turmoil, civil strife, persecution, hatred, bloodshed and war, generated to a large extent by

members of sects who were intolerant of other religious beliefs. The classification, introduced
by Republic Act No. 3350, therefore, rests on substantial distinctions.
The classification introduced by said Act is also germane to its purpose. The purpose of the
law is precisely to avoid those who cannot, because of their religious belief, join labor unions,
from being deprived of their right to work and from being dismissed from their work because
of union shop security agreements. Republic Act No. 3350, furthermore, is not limited in its
application to conditions existing at the time of its enactment. The law does not provide that
it is to be effective for a certain period of time only. It is intended to apply for all times as
long as the conditions to which the law is applicable exist. As long as there are closed shop
agreements between an employer and a labor union, and there are employees who are
prohibited by their religion from affiliating with labor unions, their exemption from the
coverage of said agreements continues.
Finally, the Act applies equally to all members of said religious sects; this is evident from its
provision.
The fact that the law grants a privilege to members of said religious sects cannot by itself
render the Act unconstitutional, for as We have adverted to, the Act only restores to them
their freedom of association which closed shop agreements have taken away, and puts them
in the same plane as the other workers who are not prohibited by their religion from joining
labor unions. The circumstance, that the other employees, because they are differently
situated, are not granted the same privilege, does not render the law unconstitutional, for
every classification allowed by the Constitution by its nature involves inequality.
The mere fact that the legislative classification may result in actual inequality is not violative
of the right to equal protection, for every classification of persons or things for regulation by
law produces inequality in some degree, but the law is not thereby rendered invalid. A
classification otherwise reasonable does not offend the constitution simply because in
practice it results in some inequality.61 Anent this matter, it has been said that whenever it is
apparent from the scope of the law that its object is for the benefit of the public and the
means by which the benefit is to be obtained are of public character, the law will be upheld
even though incidental advantage may occur to individuals beyond those enjoyed by the
general public.62
6. Appellant’s further contention that Republic Act No. 3350 violates the constitutional
provision on social justice is also baseless. Social justice is intended to promote the welfare of
all the people.63 Republic Act No. 3350 promotes that welfare insofar as it looks after the
welfare of those who, because of their religious belief, cannot join labor unions; the Act
prevents their being deprived of work and of the means of livelihood. In determining whether
any particular measure is for public advantage, it is not necessary that the entire state be
directly benefited—it is sufficient that a portion of the state be benefited thereby.
Social justice also means the adoption by the Government of measures calculated to insure
economic stability of all component elements of society, through the maintenance of a proper
economic and social equilibrium in the inter-relations of the members of the community.64
Republic Act No. 3350 insures economic stability to the members of a religious sect, like the
Iglesia ni Cristo, who are also component elements of society, for it insures security in their
64
employment, notwithstanding their failure to join a labor union having a closed shop
agreement with the employer. The Act also advances the proper economic and social
equilibrium between labor unions and employees who cannot join labor unions, for it exempts
the latter from the compelling necessity of joining labor unions that have closed shop
agreements, and equalizes, in so far as opportunity to work is concerned, those whose
religion prohibits membership in labor unions with those whose religion does not prohibit said
membership. Social justice does not imply social equality, because social inequality will
always exist as long as social relations depend on personal or subjective proclivities. Social
justice does not require legal equality because legal equality, being a relative term, is
necessarily premised on differentiations based on personal or natural conditions.65 Social
justice guarantees equality of opportunity66, and this is precisely what Republic Act No. 3350
proposes to accomplish—it gives laborers, irrespective of their religious scrupples, equal
opportunity for work.
7. As its last ground, appellant contends that the amendment introduced by Republic Act No.
3350 is not called for—in other words, the Act is not proper, necessary or desirable. Anent
this matter, it has been held that a statute which is not necessary is not, for that reason,
unconstitutional; that in determining the constitutional validity of legislation, the courts are
unconcerned with issues as to the necessity for the enactment of the legislation in
question.67 Courts do inquire into the wisdom of laws.68 Moreover, legislatures, being
chosen by the people, are presumed to understand and correctly appreciate the needs of the
people, and it may change the laws accordingly.69 The fear is entertained by appellant that
unless the Act is declared unconstitutional, employers will prefer employing members of
religious sects that prohibit their members from joining labor unions, and thus be a fatal blow
to unionism. We do not agree. The threat to unionism will depend on the number of
employees who are members of the religious sects that control the demands of the labor
market. But there is really no occasion now to go further and anticipate problems We cannot
judge with the material now before Us. At any rate, the validity of a statute is to be
determined from its general purpose and its efficacy to accomplish the end desired, not from
its effects on a particular case.70 The essential basis for the exercise of power, and not a
mere incidental result arising from its exertion, is the criterion by which the validity of a
statute is to be measured.71
II. We now pass on the second assignment of error, in support of which the Union argued
that the decision of the trial court ordering the Union to pay P500 for attorney’s fees directly
contravenes Section 24 of Republic Act No. 875, for the instant action involves an industrial
dispute wherein the Union was a party, and said Union merely acted in the exercise of its
rights under the union shop provision of its existing collective bargaining contract with the
Company; that said order also contravenes Article 2208 of the Civil Code; that, furthermore,
Appellee was never actually dismissed by the defendant Company and did not therefore
suffer any damage at all.72
In refuting appellant Union’s arguments, Appellee claimed that in the instant case there was
really no industrial dispute involved in the attempt to compel Appellee to maintain its
membership in the union under pain of dismissal, and that the Union, by its act, inflicted
intentional harm on Appellee; that since Appellee was compelled to institute an action to
protect his right to work, appellant could legally be ordered to pay attorney’s fees under
Articles 1704 and 2208 of the Civil Code.73

The second paragraph of Section 24 of Republic Act No. 875 which is relied upon by
appellant provides that:
“No suit, action or other proceedings shall be maintainable in any court against a labor
organization or any officer or member thereof for any act done by or on behalf of such
organization in furtherance of an industrial dispute to which it is a party, on the ground only
that such act induces some other person to break a contract of employment or that it is in
restraint of trade or interferes with the trade, business or employment of some other person
or with the right of some other person to dispose of his capital or labor.” (Emphasis supplied)
That there was a labor dispute in the instant case cannot be disputed for appellant sought
the discharge of respondent by virtue of the closed shop agreement and under Section 2 (j)
of Republic Act No. 875 a question involving tenure of employment is included in the term
“labor dispute”.74 The discharge or the act of seeking it is the labor dispute itself. It being
the labor dispute itself, that very same act of the Union in asking the employer to dismiss
Appellee cannot be “an act done xxx in furtherance of an industrial dispute”. The mere fact
that appellant is a labor union does not necessarily mean that all its acts are in furtherance of
an industrial dispute.75 Appellant Union, therefore, cannot invoke in its favor Section 24 of
Republic Act No. 875. This case is not intertwined with any unfair labor practice case existing
at the time when Appellee filed his complaint before the lower court.
Neither does Article 2208 of the Civil Code, invoked by the Union, serve as its shield. The
article provides that attorney’s fees and expenses of litigation may be awarded “when the
defendant’s act or omission has compelled the plaintiff x x x to incur expenses to protect his
interest’) and “in any other case where the court deems it just and equitable that attorney’s
fees and expenses of litigation should be recovered”. In the instant case, it cannot be
gainsaid that appellant Union’s act in demanding Appellee’s dismissal caused Appellee to
incur expenses to prevent his being dismissed from his job. Costs according to Section 1,
Rule 142, of the Rules of Court, shall be allowed as a matter of course to the prevailing party.
WHEREFORE, the instant appeal is dismissed, and the decision, dated August 26, 1965, of
the Court of First Instance of Manila, in its Civil Case No. 58894, appealed from is affirmed,
with costs against appellant Union. It is so ordered.
FERNANDO, J., concurring:
The decision arrived at unanimously by this Court that Republic Act No. 3350 is free from the
constitutional infirmities imputed to it was demonstrated in a manner well-nigh conclusive in
the learned, scholarly, and comprehensive opinion so typical of the efforts of the ponente,
Justice Zaldivar. Like the rest of my brethren, I concur fully. Considering moreover, the
detailed attention paid to each and every objection raised as to its validity and the clarity and
persuasiveness with which it was shown to be devoid of support in authoritative doctrines, it
would appear that the last word has been written on this particular subject. Nonetheless, I
deem it proper to submit this brief expression of my views on the transcendent character of
religious freedom1 and its primacy even as against the claims of protection to labor,2 also
one of the fundamental principles of the Constitution.
65
1. Religious freedom is identified with the liberty every individual possesses to worship or not
a Supreme Being, and if a devotee of any sect, to act in accordance with its creed. Thus is
constitutionally safeguarded, according to Justice Laurel, that “profession of faith to an active
power that binds and elevates man to his Creator * * *.”3 The choice of what a man wishes
to believe in is his and his alone. That is a domain left untouched, where intrusion is not
allowed, a citadel to which the law is denied entry, whatever be his thoughts or hopes. In
that sphere, what he wills reigns supreme. The doctrine to which he pays fealty may for
some be unsupported by evidence, devoid of rational foundation. No matter. There is no
requirement as to its conformity to what has found acceptance. It suffices that for him such a
concept holds undisputed sway. That is a recognition of man’s freedom. That for him is one
of the ways of self-realization. It would be to disregard the dignity that attaches to every
human being to deprive him of such an attribute. The “fixed star on our constitutional
constellation,” to borrow the felicitous phrase of Justice Jackson, is that no official, not
excluding the highest, has it in his power to prescribe what shall be orthodox in matters of
conscience—or to mundane affairs, for that matter.
xxxxxxx xxxxxxxx xxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxx
H. G.R. No. 91902. May 20, 1991.*
MANILA ELECTRIC COMPANY, petitioner, vs. THE HON. SECRETARY OF LABOR
AND EMPLOYMENT, STAFF AND TECHNICAL EMPLOYEES ASSOCIATION OF
MERALCO, and FIRST LINE ASSOCIATION OF MERALCO SUPERVISORY
EMPLOYEES, respondents.
Labor Relations; Unions; Rep. Act 6715; The implementing rules of RA 6715, insofar as they
disqualify security guards from joining a rank and file organization, are null and void, for
being not germane to the object and purposes of EO 111 and RA 6715.—As will be noted, the
second sentence of Art. 245 embodies an amendment disqualifying supervisory employees
from membership in a labor organization of the rank-and-file employees. It does not include
security guards in the disqualification. The implementing rules of RA 6715, therefore, insofar
as they disqualify security guards from joining a rank and file organization are null and void,
for being not germane to the object and purposes of EO 111 and RA 6715 upon which such
rules purportedly derive statutory moorings.
Same; Same; Same; Security guards may now freely join a labor organization of the rank and
file, or that of the supervisory union, depending on their rank.—While therefore under the old
rules, security guards were barred from joining a labor organization of the rank and file,
under RA 6715, they may now freely join a labor organization of the rank and file or that of
the supervisory union, depending on their rank. By accommodating supervisory employees,
the Secretary of Labor must likewise apply the provisions of RA 6715 to security guards by
favorably allowing them free access to a labor organization, whether rank and file or
supervisory, in recognition of their constitutional right to self-organization.
PETITION to review the decision of the Secretary of Labor and Employment.
The facts are stated in the opinion of the Court.
MEDIALDEA, J.:

This petition seeks to review the Resolution of respondent Secretary of Labor and
Employment Franklin M. Drilon dated November 3, 1989 which affirmed an Order of Med-
Arbiter Renato P. Parungo (Case No. NCR-O-D-M-1-70), directing the holding of a certification
election among certain employees of petitioner Manila Electric Company (hereafter
“MERALCO”) as well as the Order dated January 16, 1990 which denied the Motion for
Reconsideration of MERALCO.
The facts are as follows:
On November 22, 1988, the Staff and Technical Employees Association of MERALCO
(hereafter “STEAM-PCWF”) a labor organization of staff and technical employees of
MERALCO, filed a petition for certification election, seeking to represent regular employees of
MERALCO who are: (a) non-managerial employees with Pay Grades VII and above; (b) non-
managerial employees in the Patrol Division, Treasury Security Services Section, Secretaries
who are automatically removed from the bargaining unit; and (c) employees within the rank
and file unit who are automatically disqualified from becoming union members of any
organization within the same bargaining unit. Among others, the petition alleged that “while
there exists a duly-organized union for rank and file employees in Pay Grade I-VI, which is
the MERALCO Employees and Worker’s Association (MEWA) which holds a valid CBA for the
rank and file employees1 , there is no other labor organization except STEAM-PCWF claiming
to represent the MERALCO employees.
The petition was premised on the exclusion/disqualification of certain MERALCO employees
pursuant to Art. I, Secs. 2 and 3 of the existing MEWA CBA as follows:
“ARTICLE I SCOPE
xxx
SECTION 2. Excluded from the appropriate bargaining unit and therefore outside the scope of
this Agreement are:
(a)Employees in Patrol Division;
(b)Employees in Treasury Security Services Section;
(c)Managerial Employees; and
(d)Secretaries.
Any member of the Union who may now or hereafter be assigned or transferred to Patrol
Division or Treasury Security Services Section, or becomes Managerial Employee or a
Secretary, shall be considered automatically removed from the bargaining unit and excluded
from the coverage of this agreement. He shall thereby likewise be deemed automatically to
have ceased to be member of the union, and shall desist from further engaging in union
activity of any kind.
SECTION 3. Regular rank-and-file employees in the organization elements herein below listed
shall be covered within the bargaining unit, but shall be automatically disqualified from
becoming union members:
1.Office of the Corporate Secretary
2.Corporate Staff Services Department
3.Managerial Payroll Office
66
4.Legal Service Department
5.Labor Relations Division
6.Personnel Administration Division
7.Manpower Planning & Research Division
8.Computer Services Department
9.Financial Planning & Control Department
10.Treasury Department, except Cash Section
11.General Accounting Section
“x x x.” (p. 19, Rollo)
MERALCO moved for the dismissal of the petition on the following grounds:
I. The employees sought to be represented by petitioner are either 1) managerial
who are prohibited by law from forming or joining supervisory union; 2) security
services personnel who are prohibited from joining or assisting the rank-and-file
union; 3) secretaries who do not consent to the petitioner’s representation and
whom petitioner can not represent; and 4) rank-and-file employees represented
by the certified or duly recognized bargaining representative of the only rank-
and-file bargaining unit in the company, the Meralco Employees Workers
Association (MEWA), in accordance with the existing Collective Bargaining
Agreement with the latter.
II. The petition for certification election will disturb the administration of the
existing Collective Bargaining Agreement in violation of Art. 232 of the Labor
Code.
III. The petition itself shows that it is not supported by the written consent of at
least twenty percent (20%) of the alleged 2,500 employees sought to be
represented. (Resolution, Sec. of Labor, pp. 223-224, Rollo)
Before Med-Arbiter R. Parungo, MERALCO contended that employees from Pay Grades VII
and above are classified as managerial employees who, under the law, are prohibited from
forming, joining or assisting a labor organization of the rank and file. As regards those in the
Patrol Division and Treasury Security Service Section, MERALCO maintains that since these
employees are tasked with providing security to the company, they are not eligible to join the
rank and file bargaining unit, pursuant to Sec. 2(c), Rule V, Book V of the then Implementing
Rules and Regulations of the Labor Code (1988) which reads as follows:
“Sec. 2. Who may file petition.—The employer or any legitimate labor organization may file
the petition.
“The petition, when filed by a legitimate labor organization, shall contain, among others:
“x x x;
“(c) description of the bargaining unit which shall be the employer unit unless circumstances
otherwise require, and provided, further: that the appropriate bargaining unit of the rank and
file employees shall not include security guards (As amended by Sec. 6, Implementing Rules
of EO 111)

“x x x.” (p. 111, Labor Code, 1988 Ed.)
As regards those rank and file employees enumerated in Sec. 3, Art. I, MERALCO contends
that since they are already beneficiaries of the MEWA-CBA, they may not be treated as a
separate and distinct appropriate bargaining unit.
MERALCO raised the same argument with respect to employees sought to be represented by
STEAM-PCWF, claiming that these were already covered by the MEWA-CBA.
On March 15, 1989, the Med-Arbiter ruled that having been excluded from the existing
Collective Bargaining Agreement for rank and file employees, these employees have the right
to form a union of their own, except those employees performing managerial functions. With
respect to those employees who had resented their alleged involuntary membership in the
existing CBA, the Med-Arbiter stated that the holding of a certification election would allow
them to fully translate their sentiment on the matter, and thus directed the holding of a
certification election. The dispositive portion of the Resolution provides as follows:
“WHEREFORE, premises considered, a certification election is hereby ordered conducted
among the regular rank-and-file employees of MERALCO to wit:
“1.Non-managerial employees with Pay Grades VII and above;
“2.Non-managerial employees of Patrol Division, Treasury Security Services Section and
Secretaries; and
“3.Employees prohibited from actively participating as members of the union.
within 20 days from receipt hereof, subject to the usual pre-election conference with the
following choices:
“1.Staff and Technical Employees Association of MERALCO (STEAM-PCWF);
“2.No Union.
“SO ORDERED.” (p. 222, Rollo)
On April 4, 1989, MERALCO appealed, contending that “until such time that a judicial finding
is made to the effect that they are not managerial employee, STEAM-PCWF cannot represent
employees from Pay Grades VII and above, additionally reiterating the same reasons they
had advanced for disqualifying respondent STEAM-PCWF.
On April 7, 1989, MEWA filed an appeal-in-intervention, submitting as follows:
A.The Order of the Med-Arbiter is null and void for being in violation of Article 245 of the
Labor Code;
B.The Order of the Med-Arbiter violates Aticle 232 of the Labor Code; and
C.The Order is invalid because the bargaining unit it delineated is not an appropriated (sic)
bargaining unit.
On May 4, 1989, STEAM-PCWF opposed the appeal-in-intervention.
67
With the enactment of RA 6715 and the rules and regulations implementing the same,
STEAM-PCWF renounced its representation of the employees in Patrol Division, Treasury
Security Services Section and rank-and-file employees in Pay Grades I-VI.
On September 13, 1989, the First Line Association of Meralco
Supervisory Employees. (hereafter FLAMES) filed a similar petition (NCR-OD-M-9-731-89)
seeking to represent those employees with Pay Grades VII to XIV, since “there is no other
supervisory union at MERALCO.” (p. 266, Rollo). The petition was consolidated with that of
STEAM-PCWF.
On November 3, 1989, the Secretary of Labor affirmed with modification, the assailed order
of the Med-Arbiter, disposing as follows:
“WHEREFORE, premises considered, the Order appealed from is hereby affirmed but modified
as far as the employees covered by Section 3, Article I of the existing CBA in the Company
are concerned. Said employees shall remain in the unit of the rank-and-file already existing
and may exercise their right to self organization as above enunciated.
“Further, the First Line Association of Meralco Supervisory Employees (FLAMES) is included as
among the choices in the certification election.
“Let, therefore, the pertinent records of the case be immediately forwarded to the Office of
origin for the conduct of the certification election. “SO ORDERED.” (p. 7, Rollo)
MERALCO’s motion for reconsideration was denied on January 16, 1990. On February 9,
1990, MERALCO filed this petition, premised on the following ground:
“RESPONDENT SECRETARY ACTED WITH GRAVE ABUSE OF DISCRETION AND/OR IN
EXCESS OF JURISDICTION AMOUNTING TO LACK OF JURISDICTION IN RULING THAT:
“I.ANOTHER RANK-AND-FILE BARGAINING UNIT CAN BE ESTABLISHED INDEPENDENT,
DISTINCT AND SEPARATE FROM THE EXISTING RANK-AND-FILE BARGAINING UNIT.
“II.THE EMPLOYEES FROM PAY GRADES VII AND ABOVE ARE RANK-AND-FILE EMPLOYEES.
“III.THE SECURITY GUARDS OR PERSONNEL MAY BE LUMPED TOGETHER WITH THE RANK-
AND-FILE UNION AND/ OR THE SUPERVISORY UNION.” (p. 8, Rollo)
On February 26, 1990, We issued a temporary restraining order (TRO) against the
implementation of the disputed resolution. In its petition, MERALCO has relented and
recognized respondents STEAM-PCWF and FLAMES’ desired representation of supervisory
employees from Grades VII up. However, it believes that all that the Secretary of Labor has
to do is to establish a demarcation line between supervisory and managerial rank, and not to
classify outright the group of employees represented by STEAM-PCWF and FLAMES as rank
and file employees.
In questioning the Secretary of Labor’s directive allowing security guards (Treasury/Patrol
Services Section) to be represented by respondents, MERALCO contends that this
contravenes the provisions of the recently passed RA 6715 and its implementing rules

(specifically par. 2, Sec. 1, Rule II, Book V) which disqualifies supervisory employees and
security guards from membership in a labor organization of the rank and file (p. 11, Rollo).
The Secretary of Labor’s Resolution was obviously premised on the provisions of Art. 212,
then par. (k), of the 1988 Labor Code defining “managerial” and “rank and file” employees,
the law then in force when the complaint was filed. At the time, only two groups of
employees were recognized, the managerial and rank and file. This explains the absence of
evidence on job descriptions on who would be classified managerial employees. It is perhaps
also for this reason why the Secretary of Labor limited his classification of the Meralco
employees belonging to Pay Grades VII and up, to only two groups, the managerial and rank
and file.
However, pursuant to the Department of Labor’s goal of strenghthening the constitutional
right of workers to self-organization, RA 6715 was subsequently passed which reorganized
the employee-ranks by including a third group, or the supervisory employees, and laying
down the distinction between supervisory employees and those of managerial ranks in Art.
212, renumbered par. [m], depending on whether the employee concerned has the power to
lay down and execute management policies, in the case of managerial employees, or merely
to recommend them, in case of supervisory employees.
In this petition, MERALCO has admitted that the employees belonging to Pay Grades VII and
up are supervisory (p. 10, Rollo). The records also show that STEAM-PCWF had “renounced
its representation of the employees in Patrol Division, Treasury Security Service Section and
rank and file employees in Pay Grades I-VI” (p. 6, Rollo); while FLAMES, on the other hand,
had limited its representation to employees belonging to Pay Grades VII-XIV, generally
accepted as supervisory employees, as follows:
“It must be emphasized that private respondent First Line Association of Meralco Supervisory
Employees seeks to represent only the Supervisory Employees with Pay Grades VII to XIV.
“Supervisory Employees with Pay Grades VII to XIV are not managerial employees. In fact
the petition itself of petitioner Manila Electric Company on page 9, paragraph 3 of the petition
stated as follows, to wit:
     ‘There was no need for petitioner to prove that these employees are not rank-and-file. As
adverted to above, the private respondents admit that these are not the rank-and-file but the
supervisory employees, whom they seek to represent. What needs to be established is the
rank where supervisory ends and managerial begins.’ and First Line Association of Meralco
Supervisory Employees herein states that Pay Grades VII to XIV are not managerial
employees. In fact, although employees with Pay Grade XV carry the Rank of Department
Managers, these employees only enjoys (sic) the Rank Manager but their recommendatory
powers are subject to evaluation, review and final action by the department heads and other
higher executives of the company.” (FLAMES’ Memorandum, p. 305, Rollo)
Based on the foregoing, it is clear that the employees from Pay Grades VII and up have been
recognized and accepted as supervisory. On the other hand, those employees who have been
automatically disqualified have been directed by the Secretary of Labor to remain in the
existing labor organization for the rank and file, (the condition in the CBA deemed as not
68
having been written into the contract, as unduly restrictive of an employee’s exercise of the
right to self-organization). We shall discuss the rights of the excluded employees (or those
covered by Sec. 2, Art. I, MEWA-CBA later.
Anent the instant petition therefore, STEAM-PCWF, and FLAMES would therefore represent
supervisory employees only. In this regard, the authority given by the Secretary of Labor for
the establishment of two labor organizations for the rank and file will have to be disregarded
since We hereby uphold certification elections only for supervisory employees from Pay Grade
VII and up, with STEAM-PCWF and FLAMES as choices.
As to the alleged failure of the Secretary of Labor to establish a demarcation line for purposes
of segregating the supervisory from the managerial employees, the required parameter is
really not necessary since the law itself, Art. 212-m, (as amended by Sec. 4 of RA 6715) has
already laid down the corresponding guidelines:
“Art. 212. Definitions. x x x
“(m) ‘Managerial employee’ is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory employees are those who, in the interest of the
employer, effectively recommend such managerial actions if the exercise of such authority is
not merely routinary or clerical in nature but requires the use of independent judgment. All
employees not falling within any of the above definitions are considered rank-and-file
employees for purposes of this Book.”
In his resolution, the Secretary of Labor further elaborated:
“x x x. Thus, the determinative factor in classifying an employee as managerial, supervisory
or rank-and-file is the nature of the work of the employee concerned.
“In National Waterworks and Sewerage Authority vs. National Waterworks and Sewerage
Authority Consolidated Unions (11 SCRA 766) the Supreme Court had the occasion to come
out with an enlightening dissertation of the nature of the work of a managerial employees as
follows:
     ‘x x x that the employee’s primary duty consists of the management of the establishment
or of a customarily recognized department or subdivision thereof, that he customarily and
regularly directs the work of other employees therein, that he has the authority to hire or
discharge other employees or that his suggestions and recommendations as to the hiring and
discharging and or to the advancement and promotion or any other change of status of other
employees are given particular weight, that he customarily and regularly exercises
discretionary powers x x x (56 CJS, pp. 666-668.’ ” (p. 226, Rollo)
We shall now discuss the rights of the security guards to self-organize. MERALCO has
questioned the legality of allowing them to join either the rank and file or the supervisory
union, claiming that this is a violation of par. 2, Sec. 1, Rule II, Book V of the Implementing
Rules of RA 6715, which states as follows:

“Sec. 1. Who may join unions. x x x
“x x x.
“Supervisory employees and security guards shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form separate labor
organizations of their own;
xxx
Paragraph 2, Sec. 1, Rule II, Book V, is similar to Sec. 2 (c), Rule V, also of Book V of the
implementing rules of RA 6715:
“Rule V. REPRESENTATION CASES AND INTERNAL-UNION CONFLICTS
“Sec. 1. x x x.
“Sec. 2. Who may file.—Any legitimate labor organization or the employer, when requested to
bargain collectively, may file the petition.
“The petition, when filed by a legitimate labor-organization shall contain, among others:
“(a)x x x.
“(b)x x x.
“(c)description of the bargaining unit which shall be the employer unit unless circumstances
otherwise require; and provided further, that the appropriate bargaining unit of the rank-and-
file employees shall not include supervisory employees and/or security guards;
“x x x.” (emphasis ours)
Both rules, barring security guards from joining a rank and file organization, appear to have
been carried over from the old rules which implemented then Art. 245 of the Labor Code, and
which provided thus:
“Art. 245. Ineligibility of security personnel to join any labor organization.—Security guards
and other personnel employed for the protection and security of the person, properties and
premises of the employer shall not be eligible for membership in any labor organization.”
On December 24, 1986, Pres. Corazon C. Aquino issued E.O No. 111 which eliminated the
above-cited provision on the disqualification of security guards. What was retained was the
disqualification of managerial employees, renumbered as Art. 245 (previously Art. 246), as
follows:
“ART. 245. Ineligibility of managerial employees to joint any labor organization.—Managerial
employees are not eligible to join, assist or form any labor organization.”
With the elimination, security guards were thus free to join a rank and file organization.
On March 2, 1989, the present Congress passed RA 6715.
Section 18 thereof amended Art. 245, to read as follows:
69
“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
oganization of the rank-and-file employees but may join, assist, or form separate labor
organizations of their own.” (emphasis ours)
As will be noted, the second sentence of Art. 245 embodies an amendment disqualifying
supervisory employees from membership in a labor organization of the rank-and-file
employees. It does not include security guards in the disqualification. The implementing rules
of RA 6715, therefore, insofar as they disqualify security guards from joining a rank and file
organization are null and void, for being not germane to the object and purposes of EO 111
and RA 6715 upon which such rules purportedly derive statutory moorings. In Shell
Philippines, Inc. vs. Central Bank, G.R. No. 51353, June 27, 1988, 162 SCRA 628, We stated:
The rule-making power must be confined to details for regulating the mode or proceeding to
carry into effect the law as it has been enacted. The power cannot be extended to amending
or expanding the statutory requirements or to embrace matters not covered by the statute.
Rules that subvert the statute cannot be sanctioned.” (citing University of Sto. Tomas vs.
Board of Tax Appeals, 93 Phil. 376).
While therefore under the old rules, security guards were barred from joining a labor
organization of the rank and file, under RA 6715, they may now freely join a labor
organization of the rank and file or that of the supervisory union, depending on their rank. By
accommodating supervisory employees, the Secretary of Labor must likewise apply the
provisions of RA 6715 to security guards by favorably allowing them free access to a labor
organization, whether rank and file or supervisory, in recognition of their constitutional right
to self-organization.
We are aware however of possible consequences in the implementation of the law in allowing
security personnel to join labor unions within the company they serve. The law is apt to
produce divided loyalties in the faithful performance of their duties. Economic reasons would
present the employees concerned with the temptation to subordinate their duties to the
allegiance they owe the union of which they are members, aware as they are that it is usually
union action that obtains for them increased pecuniary benefits.
Thus, in the event of a strike declared by their union, security personnel may neglect or
outrightly abandon their duties, such as protection of property of their employer and the
persons of its officials and employees, the control of access to the employer’s premises, and
the maintenance of order in the event of emergencies and untoward incidents. It is hoped
that the corresponding amendatory and/or suppletory laws be passed by Congress to avoid
possible conflict of interest in security personnel.
ACCORDINGLY, the petition is hereby DISMISSED. We AFFIRM with modification the
Resolution of the Secretary of Labor dated November 3, 1989 upholding an employee’s right
to self-organization. A certification election is hereby ordered conducted among supervisory
employees of MERALCO, belonging to Pay Grades VII and above, using as guideliness an
employee’s power to either recommend or execute management policies, pursuant to Art.

212 (m), of the Labor Code, as amended by Sec. 4 of RA 6715, with respondents STEAM-
PCWF and FLAMES as choices.
Employees of the Patrol Division, Treasury Security Services Section and Secretaries may
freely join either the labor organization of the rank and file or that of the supervisory union
depending on their employee rank. Disqualified employees covered by Sec. 3, Art. I of the
MEWA-CBA, shall remain with the existing labor organization of the rank and file, pursuant to
the Secretary of Labor’s directive:
“By the parties’ own agreement, they find the bargaining unit, which includes the positions
enumerated in Section 3, Article I of their CBA, appropriate for purposes of collective
bargaining. The composition of the bargaining unit should be left to the agreement of the
parties, and unless there are legal infirmities in such agreement, this Office will not substitute
its judgment for that of the parties. Consistent with the history of collective bargaining in the
company, the membership of said group of employees in the existing rank-and-file unit
should continue, for it will enhance stability in that unit already well established. However, we
cannot approve of the condition set in Section 3, Article I of the CBA that the employees
covered are automatically disqualified from becoming union members. The condition unduly
restricts the exercise of the right to self organization by the employees in question. It is
contrary to law and public policy and, therefore, should be considered to have not been
written into the contract. Accordingly, the option to join or not to join the union should be left
entirely to the employees themselves.” (p. 229, Rollo)
The Temporary Restraining Order (TRO) issued on February 26, 1990 is hereby LIFTED.
Costs against petitioner. SO ORDERED.
G.R. No. 119675. November 21, 1996.*
REPUBLIC PLANTERS BANK GENERAL SERVICES EMPLOYEES UNION-NATIONAL
ASSOCIATION OF TRADE UNIONS, petitioner, vs. BIENVENIDO LAGUESMA and
REPUBLIC PLANTERS BANK, respondents.
Labor Law; Labor Unions; No petition for certification election shall be conducted outside the
sixty-day freedom period immediately before the expiry date of the CBA.—We start with the
restatement of the rule that no petition for certification election may be entertained if filed
outside the sixty-day period immediately before the expiration of the collective bargaining
agreement. The purpose of the prohibition against the filing of a petition for certification
election outside the so-called freedom period is to ensure industrial peace between the
employer and its employees during the existence of the CBA. Thus in Trade Unions of the
Philippines vs. Laguesma, we held that when a legitimate labor organization has been
certified as the sole and exclusive bargaining agent of the rank-and-file employees of a given
employer, it means that it shall remain as such during the existence of the CBA, to the
exclusion of other labor organizations, and no petition questioning the majority status of said
incumbent agent or any certification election be conducted outside the sixty-day freedom
period immediately before the expiry date of the CBA.
Same; Same; Since the persons involved are not employees of the company, they are not
entitled to the constitutional right to join or form a labor organization for purposes of
collective bargaining.—The more applicable case is Singer Sewing Machine Company vs.
Drilon, et al., where we ruled that if the union members are not employees, no right to
70
organize for purposes of bargaining, nor to be certified as bargaining agent can be
recognized. Since the persons involved are not employees of the company, we held that they
are not entitled to the constitutional right to join or form a labor organization for purposes of
collective bargaining.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
PUNO, J.:
Republic Planters Bank General Services Employees Union-National Association of Trade
Unions (petitioner) seeks to annul the resolution rendered by Undersecretary Bienvenido
Laguesma, dismissing its petition for certification election for lack of merit.
The facts show that on January 21, 1991, petitioner filed a petition for certification election to
determine the sole and exclusive bargaining representative of all regular employees outside
the bargaining unit of Republic Planters Bank.1 The proposed bargaining unit is composed of
clerks, messengers, janitors, plumbers, telex operators, mailing and printing personnel,
drivers, mechanics and computer personnel. Allegedly, these employees are regular
employees but are considered as contractual employees by private respondent bank. They
are excluded from the existing collective bargaining agreement between private respondent
and Republic Planters Bank Employees Union (RPBEU), the duly certified bargaining
representative of the regular employees of private respondent.
Private respondent filed its position paper and moved to dismiss the petition for certification
election. Firstly, it contended that petitioner union is comprised of some thirty (30)
employees of Superior Maintenance Services, Inc. (SMSI)2 who are assigned to the bank as
messengers and janitors under a Contract of Services. The other employees in the proposed
bargaining unit are employed on “contractual basis” and are not members of petitioner.
Secondly, it stressed the Republic Planters Bank General Services Employees Union-National
Association of Trade Unions vs. Laguesma existence of a bargaining unit represented by
Republic Planters Bank Employees Union (RPBEU). Thirdly, it alleged that the petition failed
to state the number of employees in the proposed bargaining unit and there is no prior
determination that the members of petitioner are employees of private respondent.
Petitioner opposed the motion to dismiss and averred that the proposed unit is not part of
the existing bargaining unit. Petitioner further argued that some of its members had been in
the employ of private respondent for more than six (6) months. Allegedly, they perform
services that are necessary and desirable to the usual business operations of private
respondent. As to its members performing janitorial and messengerial services for private
respondent, petitioner contended that Superior Maintenance Services, Inc. (SMSI) is engaged
in ‘labor-only’ contracting.
Med-Arbiter Anastacio Bactin dismissed the petition for certification election on the ground
that there is already a certified bargaining agent representing the appropriate bargaining unit
within private respondent. Thus, if qualified, the employees who were excluded from the
existing collective bargaining agreement may join the existing bargaining unit in accord with

the one-union, one-company policy of the Department of Labor and Employment. The
dispositive portion of the Med-Arbiter’s Order3 states:
“WHEREFORE, premises considered, the petition for certification election is hereby
DISMISSED for lack of legal basis. “The employees who are rendering services to the
respondent Bank as clerks, messengers, plumbers, telex operators, mailing and printing
personnel, drivers, mechanics, and computer personnel are hereby DECLARED as employees
of Republic Planters Bank. Since they are employees of the bank, they may join the existing
bargaining agent of the rank and file employees of the respondent bank. “However, the
janitors who are tasked to clean the premises of the bank are classified as employees of
Superior Maintenance Services, Incorporated since their job is not related to the main
business of the respondent bank.
“SO ORDERED.”
Private respondent interposed an appeal protesting the finding of employer-employee
relationship. On December 21, 1992, Undersecretary Bienvenido Laguesma reversed the
Order of the Med-Arbiter.4
Petitioner filed a Motion for Reconsideration.5 It submitted additional documentary evidence
prepared by some of the contractual employees, namely, Concepcion L. Garcia (messenger),
Noel Gavarra (machine operator), Consuelo David (clerk typist), Maria Trinita M. Samson
(clerk typist), and Rodelio Tabernilla (messenger).6
Private respondent opposed the motion for reconsideration on the ground that the
documents submitted for the first time on appeal are inadmissible in evidence. The
documents were also denounced as self-serving.
On May 10, 1993, Undersecretary Laguesma modified the December 21, 1992 Resolution,
thus:
“WHEREFORE, the questioned Order is hereby modified by declaring that Concepcion L.
Garcia, Noel Gavarra, Consuelo David, Maria Trinita M. Samson, and Rodelio Tabernilla are
regular employees of respondent bank and therefore, part of the existing rank and file unit.
“SO ORDERED.”
Both parties moved for reconsideration of the May 10, 1993 Order. Petitioner sought a ruling
that the other workers in the proposed bargaining unit should also be considered regular
employees of private respondent since they perform duties necessary to the bank’s business
operations. Petitioner
Republic Planters Bank General Services Employees Union-National Association of Trade
Unions vs. Laguesma submitted additional documents containing the job descriptions of
eleven (11) employees assigned at private respondent, most of whom were performing
messengerial services. Private respondent reiterated its objection to the admissibility of the
new evidence.
71
On February 24, 1995, Undersecretary Laguesma issued another Order, setting aside the May
10, 1993 Order and reinstating the Resolution dated December 21, 1992. The pertinent
portion of the Order states:
“Indeed, the documents submitted by petitioner, including those appended to its present
motion, which purportedly are the job descriptions of the subject workers, may not be given
weight for being self-serving. It is quite obvious that they were prepared by the workers
themselves and was not approved by their supposed employer. Being so, they are mere
scraps of paper having no evidentiary value.
“Moreover, respondent correctly pointed out that petitioner submitted the said documents for
the first time on a motion for reconsideration, after this Office ruled that the questioned
finding of the Med-Arbiter is not supported by any evidence. To our mind, such belated
submission should not be tolerated nor encouraged, otherwise there will be no end to the
proceedings.
“WHEREFORE, the motion for reconsideration of petitioner is hereby denied for lack of merit
while the motion of respondent is hereby granted. Accordingly, our Order dated 10 May 1993
is hereby set aside and our Order (Resolution) dated 10 [sic] December 1992, dismissing the
petition, is hereby reinstated.
“SO ORDERED.”
Hence, this petition for certiorari.
Petitioner contends grave abuse of discretion on the part of public respondent when (1) it
allowed private respondent to participate or intervene in the certification election, contrary to
our decision in Golden Farms, Inc. vs. Secretary of Labor; and (2) it did not give value to the
documents it submitted on appeal.
The petition lacks merit.
We start with the restatement of the rule that no petition for certification election may be
entertained if filed outside the sixty-day period immediately before the expiration of the
collective bargaining agreement.7 The purpose of the prohibition against the filing of a
petition for certification election outside the so-called freedom period is to ensure industrial
peace between the employer and its employees during the existence of the CBA.8 Thus in
Trade Unions of the Philippines vs. Laguesma,9 we held that when a legitimate labor
organization has been certified as the sole and exclusive bargaining agent of the rank-and-file
employees of a given employer, it means that it shall remain as such during the existence of
the CBA, to the exclusion of other labor organizations, and no petition questioning the
majority status of said incumbent agent or any certification election be conducted outside the
sixty-day freedom period immediately before the expiry date of the CBA.
In the case at bar, the petition for certification election was filed on January 21, 1991. The
collective bargaining agreement between the duly certified bargaining agent, Republic
Planters Bank Employees Union, and private respondent was effective from June 30, 1988 to

June 30, 1991.10It is crystal clear that the filing of the petition for certification election was
premature.
Petitioner tries to tilt the balance in its favor by assailing the legal standing of private
respondent in intervening in the certification election. The attempt is futile. To begin with,
petitioner did not raise this issue in the proceedings below. It is too late to litigate the issue
on appeal. Besides, our ruling Republic Planters Bank General Services Employees Union-
National Association of Trade Unions vs. Laguesma in Golden Farms, Inc. vs. Secretary of
Labor 11 cannot be invoked by petitioner. In Golden Farms, Inc., we upheld the general rule
that “an employer has no legal standing to question a certification election since this is the
sole concern of the workers.” Its facts, however, are different for in said case, the existence
of employer-employee relationship was not disputed. Likewise, the petition for certification
election was filed within the freedom period. The main issue involved therein was also
different, i.e., the propriety of forming a separate bargaining unit for the monthly paid office
employees despite the existence of a bargaining unit for the daily paid rank-and-file workers
assigned at the banana fields. Considering the dissimilarity of interests between the two
groups of employees in terms of duties and obligations, working conditions, salary rates and
skills, we allowed the formation of a separate and distinct bargaining unit for the monthly
paid employees of Golden Farms, Inc.
The more applicable case is Singer Sewing Machine Company vs. Drilon, et al.,12 where we
ruled that if the union members are not employees, no right to organize for purposes of
bargaining, nor to be certified as bargaining agent can be recognized. Since the persons
involved are not employees of the company, we held that they are not entitled to the
constitutional right to join or form a labor organization for purposes of collective bargaining.
Singer reiterated our earlier pronouncement in La Suerte Cigar and Cigarette Factory v.
Director of Labor Relations (123 SCRA 679 [1983]), thus:
“The question of whether employer-employee relationship exists is a primordial consideration
before extending labor benefits under the workmen’s compensation, social security,
medicare, termination pay and labor relations law. It is important in the determination of who
shall be included in the proposed bargaining unit because, it is the sine qua non, the
fundamental and essential condition that a bargaining unit be composed of employees.
Failure to establish this juridical relationship between the union members and the employer
affects the legality of the union itself. It means the ineligibility of the union members to
present a petition for certification election as well as to vote therein.”
Finally, the public respondent did not commit grave abuse of discretion when it rejected the
documents submitted by petitioner for the first time on appeal. Truly, technical rules of
procedure need not be strictly followed by the public respondent in rendering decisions if
they are impediments in giving justice and equity to the litigants. In the case at bar, the
public respondent rejected the documents defining the duties of the members of petitioner
union in question less because they were belatedly submitted only on appeal but more
because they were self-serving and did not bear the approval of their employer. The rejection
is based on sound reason and we are not free to modify the findings of respondent public
official.
72
IN VIEW WHEREOF, the present petition for certiorari is DISMISSED for lack of merit. SO
ORDERED.
GR No. L-25094. April 29, 1969.
PAN AMERICAN WORLD AIRWAYS, INC., petitioner, vs. PAN AMERICAN
EMPLOYEES ASSOCIATION, COURT OF INDUSTRIAL RELATIONS, respondents.
Labor laws; Court of Industrial Relations; Return-to-work order; Court can order return of
strikers pending resolution of dispute; Order not grave abuse of discretion.—Considering that
the case at bar was certified by the President, with respondent Court exercising its broad
authority of compulsory arbitration, the discretion it possesses cannot be so restricted and
emasculated that the mere f ailure to grant a plea to exclude f rom the returnto-work order
the union officials could be considered as tantamount to a grave abuse thereof. As f ar back
as 1957, the Supreme Court, speaking through Justice Labrador, categorically stated: “We
agree with counsel for the Philippine Marine Radio Off icers’ Association that upon
certification by the President under section 10 of Republic Act 875, the case comes under the
operation of Commonwealth Act 103, which enforces compulsory arbitration in cases of labor
disputes in industries indispensable to the national interest when the President certif ies the
case to the Court of Industrial Relations. The evident intention of the law is to empower the
Court of Industrial Relations to act in such cases, not only in the manner prescribed under
Commonwealth Act 103, but with the same broad powers and jurisdiction granted by that
Act. If the Court of Industrial Relations is granted authority to f ind a solution in an industrial
dispute and such solution consists in ordering of ‘employees to return back to work, it cannot
be contended that the Court of Industrial Relations does not have the power or jurisdiction to
carry that solution into effect. And of what use is its power of conciliation and arbitration if it
does not have the power and jurisdiction to carry into ef fect the-, solution it has adopted.
Lastly, if the said court has the power to fix the terms and conditions of employment, it
certainly can order the return of the workers with or without backpay as a term or condition
of the employment. (Phil. Marine Radio Officers’ Assn. vs. Court of Industrial Relations, 102
Phil. 374, 382–383.)
Same; Same; Same; Refusal of company to accept employees ment. (Phil. Marine Radio
Officers’ Assn. vs. Court of Industrial ment displays what in the case at bar appears to be a
grave but unwarranted distrust in the union officials discharging their functions just because
a strike was resorted to, then the integrity of the collective bargaining process itself is called
into question. It would have been different if there were a rational basis for such fears,
purely speculative in character. The record is bereft of ,the slightest indication that any
danger, much less one clear and present, is to be expected f rom their return to work.
Necessarily, the union officials have the right to feel offended by the fact that, while they will
be paid their salaries in the meanwhile, they would not be considered as fit persons to
perform the duties pertaining to the positions held by them. Far from being generous, such
an offer could rightfully be considered insulting.
Same; Same; Same; Right to form unions; Freedom would be nugatory if employees cannot
choose their own officials.—The greater offense is to the labor movement itself, more specif
ically to the right of self-organization. There is both a constitutional and statutory recognition
that laborers have the right to form unions to take care of their interests vis-a-vis their
employers. Their freedom to form organizations would be rendered nugatory if they could not
choose their own leaders to speak on their behalf and to bargain for them.

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
FERNANDO, J.:
The failure of the respondent Court of Industrial Relations to indulge petitioner Pan American
World Airways, Inc. in its plea to exclude from a return-to-work order five union officials of
respondent Pan American Employees Association on the ground of having led an illegal strike,
in itself, according to petitioner, a sufficient cause for dismissal thus resulting in their losing
their incentive and motivation for doing their jobs properly with the consequent fear that they
could cause grave injury to it, is challenged in this special civil action for certiorari as
constituting a grave abuse of discretion. Whatever may be said against such order
complained of respondent Court of Industrial Relations, the refusal to grant the prayer for
such exclusion cannot be characterized as an abuse of discretion, much less as one that
possesses an element of gravity.
So it must be unless we are prepared to restrict the broad scope of authority possessed by
respondent Court of Industrial Relations in discharging its power of compulsory arbitration in
cases certified to it by the President, and what is worse, unless an undeserved reflection on
the quality of leadership in the labor movement, indicative of management refusal to accord
to it the presumption of responsibility, is countenanced. The petition thus carries 011 its face
the seeds of its own infirmity. It cannot hope to succeed.
It was set forth in the petition, after the usual allegation as to the personality of the parties,
that on August 25, 1965, respondent union filed a notice of strike with the Department of
Labor and on August 28, 1965, the same respondent union declared and maintained a strike
against the herein petitioner.1 Then, on September 17, 1965, the President of the Philippines
certif ied the strike to the respondent Court of Industrial Relations as being an industrial
dispute affecting the national interest, the parties being called to a conference on September
20, 1965.2 Several conferences were held between petitioner and respondent Union before
the Honorable Amando C. Bugayong, Associate Judge of respondent Court on September 20,
21, 23, 24 and 25, 1965. It was the position of the Union that its members would not resume
the performance of their duties unless its officers were likewise included in the return-to-work
order. Petitioner was of a different mind. It was agreeable to having the workers return to
work but not the five officials of respondent Union. It alleged that the strike was illegal, being
offensive to a no-strike clause of an existing collective bargaining agreement the result being
that the officials could, as the responsible parties, be liable for dismissal. Consequently, it was
not agreeable to their being allowed to return to the positions held by them prior to the strike
as they would not be only lacking in “incentive and motivation for doing their work properly”
but would likewise have the opportunity to cause “grave and irreparable injury to
petitioner."3 Management did offer, however, to deposit their salaries even if they would not
be working, with the further promise that they would not even be required to refund any
amount should the right to remain in their positions be considered as legally terminated by
their calling the alleged illegal strike.
73
Nonetheless, on September 28, 1965, Judge Bugayong issued an order requiring petitioner to
accept the five union officers pending resolution on the merits of the dispute involved in the
strike.4 There was a motion for reconsideration which was denied by the court on October 8,
1965.5 Hence, this petition, alleging a grave abuse of discretion, consisting in the failure to
grant petitioner’s rather unorthodox demand.
As already noted, the inherent weakness of the petition cannot escape attention.
1. Considering that this is a case certified by the President, with respondent Court exercising
its broad authority of compulsory arbitration, the discretion it possesses cannot be so
restricted and emasculated that the mere failure to grant a plea to exclude from the return-
to-work order the union officials could be considered as tantamount to a grave abuse thereof.
The law is anything but that.
As far back as 1957, this Court, speaking through Justice Labrador, categorically stated: “We
agree with counsel for the Philippine Marine Radio Officers’ Association that upon certification
by the President under Section 10 of Republic Act 875, the case comes under the operation
of Commonwealth Act 103, which enforces compulsory arbitration in cases of labor disputes
in industries indispensable to the national interest when the President certifies the case to the
Court of Industrial Relations. The evident intention of the law is to empower the Court of
Industrial Relations to act in such cases, not only in the manner prescribed under
Commonwealth Act 103, but with the same broad powers and jurisdiction granted by that
Act. If the Court of Industrial Relations is granted authority to f ind a solution in an industrial
dispute and such solution consists in ordering of employees to return back to work, it cannot
be contended that the Court of Industrial Relations does not have the power or jurisdiction to
carry that solution into effect. And of what use is its power of conciliation and arbitration if it
does not have the power and jurisdiction to carry into effect the solution it has adopted.
Lastly, if the said court has the power to fix the terms and conditions of employment, it
certainly can order the return of the workers with or without backpay as a term or condition
of the employment."6
Only recently this Court, speaking through Justice Sanchez, emphasized: “The overwhelming
implication from the quoted text of Section 10 is that CIR is granted great breadth of
discretion in its quest for a solution to a labor problem so certified."7 Hence, as was
announced at the outset of this opinion, there can be no legal objection to the mode of
exercise of authority in such fashion by respondent Court of Industrial Relations. The
allegation as to the grave abuse of discretion is clearly devoid of merit.
2. That should conclude the matter except for the fact that the question presented possesses
an element of novelty which may require further reflection.
The situation thus presented is the validity of the returnto-work order insofar as five union
officers are affected, petitioner airline firm rather insistent on their being excluded, arguing
that since the strike called by them was illegal, and that in any event there was enough
ground for dismissal, there was present a factor which might make them “lose all their
incentive and motivation for doing their work properly” and which would furnish them “the
opportunity to cause grave and irreparable injury to petitioner.”

To be more specific, the apprehension entertained by petitioner was in the petition expressed
by it thus: “The five officers of the union consist of three (3) Passenger Traffic
Representatives and a reservation clerk who in the course of their duties could cause mix-ups
in the reservation and accommodation of passengers which could result in very many suits
for damages against petitioner such as the case of Nicolas Cuenca vs. Northwest Airlines,
G.R. No. L-22425 promulgated August 31, 1965 in which this Honorable Court required the
airline to pay P20,000.00 as nominal damages alone. The other union officer who is in the
cargo department could underweigh or overweigh cargo to the great detriment of the service
or even of the safety of petitioner’s aircraft."8
Petitioner would attempt to remove the sting from its objection to have the union officers
return to work by offering to deposit the salaries of the five officers with respondent Court to
be paid to them, coupled with what it considered to be a generous concession that if their
right to return to work be not recognized, there would be no need for refund.
Petitioner, perhaps without so intending it, betrayed an inexcusable lack of confidence in the
responsibility of union officials and ultimately in the validity of the collective bargaining
process itself. For it is the basic premise under which a regime of collective bargaining was
instituted by the Industrial Peace Act that through the process of industrial democracy, with
both union and management equally deserving of public trust, labor problems could be
susceptible of the just solution and industrial peace attained. Implicit in such a concept is the
confidence that must be displayed by management in the sense of responsibility of union
officials to assure that the two indispensable elements in industry and production could work
side by side, attending to the problems of each without neglecting the common welfare that
binds them together.
The moment management displays what in this case appears to be grave but unwarranted
distrust in the union officials discharging their functions just because a strike was resorted to,
then the integrity of the collective bargaining process itself is called into question. It would
have been different if there were a rational basis for such fears, purely speculative in
character. The record is bereft of the slightest indication that any danger, much less one
clear and present, is to be expected from their return to work. Necessarily, the union officials
have the right to feel offended by the fact that, while they will be paid their salaries in the
meanwhile, they would not be considered as fit persons to perform the duties pertaining to
the positions held by them. Far from being generous, such an offer could rightfully be
considered insulting.
The greater offense is to the labor movement itself, more specifically to the right of self-
organization. There is both a constitutional and statutory recognition that laborers have the
right to f orm unions to take care of their interests vis-a-vis their employers. Their freedom to
form organizations would be rendered nugatory if they could not choose their own leaders to
speak on their behalf and to bargain for them.
If petitioner were to succeed in their unprecedented demand, the laborers in this particular
union would thus be confronted with the sad spectacle of the leaders of their choice
condemned as irresponsible, possibly even constituting a menace to the operations of the
enterprise. That is an indictment of the gravest character, devoid of any factual basis. What
is worse, the result, even if not intended, would be to call into question their undeniable right
74
to choose their leaders, who must be treated as such with all the respect to which they are
legitimately entitled. The fact that they would be paid but not be allowed to work is, to
repeat, to add to the infamy that would thus attach, to them necessarily, but to respondent
union equally.
Apparently, respondent Court was alive to the implication of such an unwarranted demand,
the effect of which would have been to deprive effectively the rank and file of their freedom
of choice as to who should represent them. For what use are leaders so undeserving of the
minimum confidence. To that extent then, their constitutional and statutory right to freedom
of association suffers an impairment hardly to be characterized as inconsequential.
Fortunately, respondent Court was of a different mind. It acted according to law. It had a
realistic concept of what was in store for labor if its decision were otherwise. Nor did it in
the.process disregard the rights of management. There is no occasion then for the
supervisory authority of this Court coming into play.
WHEREFORE, this petition for a writ of certiorari is denied. With costs against petitioner.
II. Covered Employees
GR No. L-76273. July 31, 1987.*
FEU-DR. NICANOR REYES MEDICAL FOUNDATION, INC., petitioner, vs. HON.
CRESENCIANO TRAJANO and RICARDO C. CASTRO, FAR EASTERN UNIVERSITYDR.
NICANOR REYES MEDICAL FOUNDATION, INC. ALLIANCE OF FILIPINO WORKERS
(AFW), respondents.
Labor, Labor Unions; Certification Election; Under Art 244 of the Labor Code, as amended by
B.P. 70, rank and file employees of non-profit medical institutions are now permitted to form,
organize or join labor unions of their choice for purposes of collective bargaining; Certification
election should be considered when respondent union had complied with the legal requisites
for calling a certification election.—Under the aforequoted provision (Art. 244, as amended),
there is no doubt that rank and file employees of non-profit medical institutions (as herein
petitioner) are now permitted to form, organize or join labor unions of their choice for
purposes of collective bargaining. Since private respondent had complied with the requisites
provided by law for calling a certification election (p. 15, Rollo), it was incumbent upon
respondent Director to conduct such certification election to ascertain the bargaining
representative of petitioner's employees (Samahang Manggagawa Ng Pacific Mills, Inc. vs.
Noriel, 134 SCRA 152).
Same; Same; Same; Res Judicata; Requirements for pendency of another action between the
same parties for the same cause can be availed of as a ground to dismiss a case.—As held in
Quimpo v. Dela Victoria, 46 SCRA 139, in order that the pendency of another action between
the same parties for the same cause may be availed of as a ground to dismiss a case, there
must be, between the action under consideration and the other action: (1) identity of parties,
or at least such as representing the same interest in both actions; (2) identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (3) the
identity on the two preceding particulars should be such that any judgment which may be
rendered on the other action will, regardless of which party is successful, amount to res
judicata in the action under consideration.

Same; Same; Same; Same; No res judicata in case at bar where in the petition for certiorari
the union questioned before the Supreme Court the constitutionality of Art. 244 of the Labor
Code before its amendment, while in the petition for certification election the union invokes
the same article as already amended.—In the instant case, any judgment which may be
rendered in the petition for certiorari pending before the Supreme Court (G.R. No. L-49771)
will not constitute res judicata in the petition for certification election under consideration, for
while in the former, private respondent questioned the constitutionality of Article 244 of the
Labor Code before its amendment, in the latter, private respondent invokes the same article
as already amended.
PETITION for certiorari to review the decision of the Director of the Bureau of Labor
Relations.
The facts are stated in the opinion of the Court.
PARAS, J.:
This is a petition for certiorari seeking to annul and set aside the decision of the respondent
Director which affirmed the Order of the Med-Arbiter in the petition for certification election
(NCR-LRD-N-2-050-86) filed by private respondent, thus ordering the holding of a
certification election among the rank and file employees of the herein petitioner.
The facts of the case are as follows:
The petitioner, Far Eastern University-Dr. Nicanor Reyes Memorial Foundation, Inc., has a
work force of about 350 rank and file employees, majority of whom are members of private
respondent Alliance of Filipino Workers.
On February 13, 1986, private respondent filed a Petition for Consent and/or Certification
Election with The Ministry of Labor and Employment. The petitioner opposed the petition on
the ground that a similar petition involving the same issues and the same parties is pending
resolution before the Supreme Court, docketed as G.R. No. L-49771.
In its position paper, private respondent admitted: that as early as May 10, 1976, private
respondent filed a similar petition for certification election with the Ministry of Labor and
Employment but the petition was denied by the MED Arbiter and the Secretary of Labor on
appeal, on the ground that the petitioner was a non-stock, non-profit medical institution,
therefore, its employees may not form, join, or organize a union pursuant to Article 244 of
the Labor Code; that private respondent filed a petition for certiorari with the Supreme Court
(docketed as G.R. No. L-49771) assailing the constitutionality of Article 244 of the Labor
Code; that pending resolution of the aforesaid petition, or on May 1, 1980, Batas Pambansa
Bilang 70 was enacted amending Article 244 of the Labor Code, thus granting even
employees of non-stock, nonprofit institutions the right to form, join and organize labor
unions of their choice; and that in the exercise of such right, private respondent filed another
petition for certification election with the Ministry of Labor and Employment (NCR-LRDN-2-
050-86).
75
On April 17, 1986, the Med Arbiter issued an Order granting the petition, declaring that a
certification election be conducted to determine the exclusive bargaining representative of all
the rank and file employees of the petitioner (p. 4, Rollo).
Respondent Director affirmed said Order on appeal. In dismissing the appeal, however,
respondent Director said that:
"x x x respondent's (petitioner herein, reliance on the petition with the Supreme Court
involving as it does the provisions of Article 244 of the Labor Code vis-a-vis the character of
the hospital, which has been alleged as a non-profit medical foundation, has been rendered
moot and academic by virtue of the amendatory BP #70, which allows employees of non-
profit medical institutions to unionize.
Whatever doubt there may be on the right of the workers in a medical institution has been
laid to rest by BP#70.
WHEREFORE, premises considered, the present appeal is hereby dismissed for lack of merit
and the Order of the Med-Arbiter dated 17 April 1986 affirmed x x x." (p. 19, Rollo)
Hence, this petition, raising the issue of whether or not respondent Director gravely abused
his discretion in granting the petition for certification election, despite the pendency of a
similar petition before the Supreme Court (G.R. No. 49771) which involves the same parties
for the same cause.
The Petition is devoid of merit.
At the time private respondent filed its petition for certification election on February 13, 1986,
Article 244 of the Labor Code was already amended by Batas Pambansa Bilang 70, to wit:
"Art. 244. Coverage and employees' right to self-organization.—All persons employed in
commercial, industrial and charitable, medical, or educational institutions whether operating
for profit or not, shall have the right to self-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 the
purpose of enhancing and defending their interests and for their mutual aid and protection."
(underscoring supplied).
Under the aforequoted provision, there is no doubt that rank and file employees of non-profit
medical institutions (as herein petitioner) are now permitted to form, organize or join labor
unions of their choice for purposes of collective bargaining. Since private respondent had
complied with the requisites provided by law for calling a certification election (p. 15, Rollo),
it was incumbent upon respondent Director to conduct such certification election to ascertain
the bargaining representative of petitioner's employees (Samahang Manggagawa Ng Pacific
Mills, Inc. vs. Noriel, 134 SCRA 152).
As held in Quimpo v. Dela Victoria, 46 SCRA 139, in order that the pendency of another
action between the same parties for the same cause may be availed of as a ground to
dismiss a case, there must be, between the action under consideration and the other action:

(1) identity of parties, or at least such as representing the same interest in both actions; (2)
identity of rights asserted and relief prayed for, the relief being founded on the same facts;
and (3) the identity on the two preceding particulars should be such that any judgment which
may be rendered on the other action will, regardless of which party is successful, amount to
res judicata in the action under consideration.
In the instant case, any judgment which may be rendered in the petition for certiorari
pending before the Supreme Court (G.R. No. L-49771) will not constitute res judicata in the
petition for certification election under consideration, for while in the former, private
respondent questioned the constitutionality of Article 244 of the Labor Code before its
amendment, in the latter, private respondent invokes the same article as already amended.
Petitioner, however, has pointed out that respondent Director should not have arrogated
upon himself the power to declare the aforesaid petition for certiorari (G.R. No. L-49771)
moot and academic, as the same is sub-judice and only the Supreme Court can decide the
matter. The Director cannot be f aulted f or he had to make a decision.
WHEREFORE, this petition is DISMISSED, and the decision appealed from is hereby
AFFIRMED.
SO ORDERED. Petition dismissed and decision affirmed.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
3. Supervisory Employees
G.R. No. 121084. February 19, 1997.*
TOYOTA MOTOR PHILIPPINES CORPORATION, petitioner, vs. TOYOTA MOTOR
PHILIPPINES CORPORATION LABOR UNION AND THE SECRETARY OF LABOR AND
EMPLOYMENT, respondents.
Labor Law; Labor Unions; Collective Bargaining; Certification Elections; Purpose of every
certification election is to determine the exclusive representative of employees in an
appropriate bargaining unit for the purpose of collective bargaining.—The purpose of every
certification election is to determine the exclusive representative of employees in an
appropriate bargaining unit for the purpose of collective bargaining. A certification election for
the collective bargaining process is one of the fairest and most effective ways of determining
which labor organization can truly represent the working force. In determining the labor
organization which represents the interests of the workforce, those interests must be, as far
as reasonably possible, homogeneous, so as to genuinely reach the concerns of the individual
members of a labor organization.
Same; Same; Same; Same; Labor Code has made it a statutory policy to prevent supervisory
employees from joining labor organizations consisting of rank-and-file employees as the
concerns which involve members of either group are normally disparate and contradictory.—
According to Rothenberg, an appropriate bargaining unit is a group of employees of a given
employer, composed of all or less than the entire body of employees, which the collective
interests of all the employees, consistent with equity to the employer indicate to be best
suited to serve reciprocal rights and duties of the parties under the collective bargaining
provisions of law. In Belyca Corporation v. Ferrer-Calleja, we defined the bargaining unit as
“the legal collectivity for collective bargaining purposes whose members have substantially
76
mutual bargaining interests in terms and conditions of employment as will assure to all
employees their collective bargaining rights.” This in mind, the Labor Code has made it a
clear statutory policy to prevent supervisory employees from joining labor organizations
consisting of rank-and-file employees as the concerns which involve members of either group
are normally disparate and contradictory. Article 245 provides: 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.
Same; Same; Same; Same; A labor organization composed of both rank-and-file and
supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be
a legitimate labor organization.—Clearly, based on this provision, a labor organization
composed of both rank-and-file and supervisory employees is no labor organization at all. It
cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an
organization which carries a mixture of rank-and-file and supervisory employees cannot
possess any of the rights of a legitimate labor organization, including the right to file a
petition for certification election for the purpose of collective bargaining. It becomes
necessary, therefore, anterior to the granting of an order allowing a certification election, to
inquire into the composition of any labor organization whenever the status of the labor
organization is challenged on the basis of Article 245 of the Labor Code.
Same; Same; Same; Same; Supervisory employees are those who, in the interest of the
employer, effectively recommend managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but require the use of independent judgment.—While
there may be a genuine divergence of opinion as to whether or not union members
occupying Level 4 positions are supervisory employees, it is fairly obvious, from a reading of
the Labor Code’s definition of the term that those occupying Level 5 positions are
unquestionably supervisory employees. Supervisory employees, as defined above, are those
who, in the interest of the employer, effectively recommend managerial actions if the
exercise of such authority is not merely routinary or clerical in nature but require the use of
independent judgment. Under the job description for level five employees, such personnel—
all engineers—having a number of personnel under them, not only oversee production of new
models but also determine manpower requirements, thereby influencing important hiring
decisions at the highest levels. This determination is neither routine nor clerical but involves
the independent assessment of factors affecting production, which in turn affect decisions to
hire or transfer workers. The use of independent judgment in making the decision to hire, fire
or transfer in the identification of manpower requirements would be greatly impaired if the
employee’s loyalties are torn between the interests of the union and the interests of
management. A supervisory employee occupying a level five position would therefore find it
difficult to objectively identify the exact manpower requirements dictated by production
demands.
Same; Same; Same; Same; The rationale behind the Code’s exclusion of supervisors from
unions of rank-and-file employees is that such employees, while in the performance of
supervisory functions, become the alter ego of management in the making and the
implementing of key decisions at the sub-managerial level.—This is precisely what the Labor

Code, in requiring separate unions among rank-and-file employees on one hand, and
supervisory employees on the other, seeks to avoid. The rationale behind the Code’s
exclusion of supervisors from unions of rank-and-file employees is that such employees, while
in the performance of supervisory functions, become the alter ego of management in the
making and the implementing of key decisions at the sub-managerial level. Certainly, it would
be difficult to find unity or mutuality of interests in a bargaining unit consisting of a mixture
of rank-and-file and supervisory employees. And this is so because the fundamental test of a
bargaining unit’s acceptability is whether or not such a unit will best advance to all employees
within the unit the proper exercise of their collective bargaining rights. The Code itself has
recognized this, in preventing supervisory employees from joining unions of rank-and-file
employees.
Same; Same; Same; Same; Not being a legitimate labor organization, it cannot possess the
requisite personality to file a petition for certification election.—In the case at bar, as
respondent union’s membership list contains the names of at least twenty-seven (27)
supervisory employees in Level Five positions, the union could not, prior to purging itself of
its supervisory employee members, attain the status of a legitimate labor organization. Not
being one, it cannot possess the requisite personality to file a petition for certification
election.
Same; Same; Same; Same; The union’s composition being in violation of the Labor Code’s
prohibition of unions composed of supervisory and rank-and-file employees, it could not
possess the requisite personality to file for recognition as a legitimate labor organization.—
The foregoing discussion, therefore, renders entirely irrelevant, the technical issue raised as
to whether or not respondent union was in possession of the status of a legitimate labor
organization at the time of filing, when, as petitioner vigorously claims, the former was still at
the stage of processing of its application for recognition as a legitimate labor organization.
The union’s composition being in violation of the Labor Code’s prohibition of unions
composed of supervisory and rank-and-file employees, it could not possess the requisite
personality to file for recognition as a legitimate labor organization. In any case, the factual
issue, albeit ignored by the public respondent’s assailed Resolution, was adequately threshed
out in the Med-Arbiter’s September 28, 1994 Order.
Same; Same; Same; Same; Workers of an appropriate bargaining unit must be allowed to
freely express their choice in an election where everything is open to sound judgment and
the possibility for fraud and misrepresentation is absent.—The holding of a certification
election is based on clear statutory policy which cannot be circumvented. Its rules, strictly
construed by this Court, are designed to eliminate fraud and manipulation. As we emphasized
in Progressive Development Corporation v. Secretary, Department of Labor and Employment,
the Court’s conclusion should not be interpreted as impairing any union’s right to be certified
as the employees’ bargaining agent in the petitioner’s establishment. Workers of an
appropriate bargaining unit must be allowed to freely express their choice in an election
where everything is open to sound judgment and the possibility for fraud and
misrepresentation is absent.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
77
KAPUNAN, J.:
On November 26, 1992, the Toyota Motor Philippines Corporation Labor Union (TMPCLU)
filed a petition for certification election with the Department of Labor, National Capital. In
response, petitioner filed a Position Paper on February 23, 1993 seeking the denial of the
issuance of an Order directing the holding of a certification election on two grounds: first,
that the respondent union, being “in the process of registration” had no legal personality to
file the same as it was not a legitimate labor organization as of the date of the filing of the
petition; and second, that the union was composed of both rank-and-file and supervisory
employees in violation of law.2 Attached to the position paper was a list of union members
and their respective job classifications, indicating that many of the signatories to the petition
for certification election occupied supervisory positions and were not in fact rank-and-file
employees.3
The Med-Arbiter, Paterno D. Adap, dismissed respondent union’s petition for certification
election for lack of merit. In his March 8, 1993 Order, the Med-Arbiter found that the labor
organization’s membership was composed of supervisory and rank-and-file employees in
violation of Article 245 of the Labor Code,4 and that at the time of the filing of its petition,
respondent union had not even acquired legal personality yet.5
On appeal, the Office of the Secretary of Labor, in a Resolution6 dated November 9, 1993
signed by Undersecretary Bienvenido E. Laguesma, set aside the Med-Arbiter’s Order of
March 3, 1993, and directed the holding of a certification election among the regular rank-
and-file employees of Toyota Motor Corporation. In setting aside the questioned Order, the
Office of the Secretary contended that:
Contrary to the allegation of herein respondent-appellee, petitioner-appellant was already a
legitimate labor organization at the time of the filing of the petition on 26 November 1992.
Records show that on 24 November 1992 or two (2) days before the filing of the said
petition, it was issued a certificate of registration.
We also agree with petitioner-appellant that the Med-Arbiter should have not dismissed the
petition for certification election based on the ground that the proposed bargaining unit is a
mixture of supervisory and rank-and-file employees, hence, violative of Article 245 of the
Labor Code as amended.
A perusal of the petition and the other documents submitted by petitioner-appellant will
readily show that what the former really seeks to represent are the regular rank-and-file
employees in the company numbering about 1,800 more or less, a unit which is obviously
appropriate for bargaining purposes. This being the case, the mere allegation of respondent-
appellee that there are about 42 supervisory employees in the proposed bargaining unit
should have not caused the dismissal of the instant petition. Said issue could very well be
taken cared of during the pre-election conference where inclusion/exclusion proceedings will
be conducted to determine the list of eligible voters.7
Not satisfied with the decision of the Office of the Secretary of Labor, petitioner filed a Motion
for Reconsideration of the Resolution of March 3, 1993, reiterating its claim that as of the
date of filing of petition for certification election, respondent TMPCLU had not yet acquired

the status of a legitimate labor organization as required by the Labor Code, and that the
proposed bargaining unit was inappropriate.
Acting on petitioner’s motion for reconsideration, the public respondent, on July 13, 1994 set
aside its earlier resolution and remanded the case to the Med-Arbiter concluding that the
issues raised by petitioner both on appeal and in its motion for reconsideration were factual
issues requiring further hearing and production of evidence.8 The Order stated:
We carefully re-examined the records vis-a-vis the arguments raised by the movant, and we
note that movant correctly pointed out that petitioner submitted a copy of its certificate of
registration for the first time on appeal and that in its petition, petitioner alleges that it is an
independent organization which is in the process of registration. “Movant strongly argues that
the foregoing only confirms what it has been pointing out all along, that at the time the
petition was filed petitioner is (sic) not yet the holder of a registration certificate; that what
was actually issued on 24 November 1992 or two (2) days before the filing of the petition
was an official receipt of payment for the application fee; and, that the date appearing in the
Registration certificate which is November 24, 1992 is not the date when petitioner was
actually registered, but the date when the registration certificate was prepared by the
processor. Movant also ratiocinates that if indeed petitioner has been in possession of the
registration certificate at the time this petition was filed on November 26, 1992, it would have
attached the same to the petition.
The foregoing issues are factual ones, the resolution of which is crucial to the petition. For if
indeed it is true that at the time of filing of the petition, the said registration certificate has
not been approved yet, then, petitioner lacks the legal personality to file the petition and the
dismissal order is proper. Sadly, we can not resolve the said questions by merely perusing the
records. Further hearing and introduction of evidence are required. Thus, there is a need to
remand the case to the Med-Arbiter solely for the purpose.
WHEREFORE, the motion is hereby granted and our Resolution is hereby set aside. Let the
case be remanded to the Med-Arbiter for the purpose aforestated.
SO ORDERED.9
Pursuant to the Order, quoted above, Med-Arbiter Brigida C. Fodrigon submitted her findings
on September 28, 1994, stating the following:10
[T]he controvertible fact is that petitioner could not have been issued its Certificate of
Registration on November 24, 1992 when it applied for registration only on November 23,
1992 as shown by the official receipt of payment of filing fee. As Enrique Nalus, Chief LEO,
this office, would attest in his letter dated September 8, 1994 addressed to Mr. Porfirio T.
Reyes, Industrial Relations Officer of Respondent company, in response to a query posed by
the latter, “It is unlikely that an application for registration is approved on the date that it is
filed or the day thereafter as the processing course has to pass through routing, screening,
and assignment, evaluation, review and initialing, and approval/disapproval procedure,
among others, so that a 30-day period is provided for under the Labor Code for this purpose,
let alone opposition thereto by interested parties which must be also given due course.”
78
Another evidence which petitioner presented . . . is the “Union Registration 1992 Logbook of
IRD” . . . and the entry date November 25, 1992 as allegedly the date of the release of the
registration certificate . . . On the other hand, respondent company presented . . . a certified
true copy of an entry on page 265 of the Union Registration Logbook showing the pertinent
facts about petitioner but which do not show the petitioner’s registration was issued on or
before November 26, 1992.11
Further citing other pieces of evidence presented before her, the Med-Arbiter concluded that
respondent TMPCLU could not have “acquire[d] legal personality at the time of the filing of
(its) petition.”12
On April 20, 1996, the public respondent issued a new Resolution, “directing the conduct of a
certification election among the regular rank-and-file employees of the Toyota Motor
Philippines Corporation.13 Petitioner’s motion for reconsideration was denied by public
respondent in his Order dated July 14, 1995.14
Hence, this special civil action for certiorari under Rule 65 of the Revised Rules of Court,
where petitioner contends that “the Secretary of Labor and Employment committed grave
abuse of discretion amounting to lack or excess of jurisdiction in reversing, contrary to law
and facts the findings of the Med-Arbiters to the effect that: 1) the inclusion of the prohibited
mix of rank-and-file and supervisory employees in the roster of members and officers of the
union cannot be cured by a simple inclusion-exclusion proceeding; and that 2) the
respondent union had no legal standing at the time of the filing of its petition for certification
election.15
We grant the petition.
The purpose of every certification election is to determine the exclusive representative of
employees in an appropriate bargaining unit for the purpose of collective bargaining. A
certification election for the collective bargaining process is one of the fairest and most
effective ways of determining which labor organization can truly represent the working
force.16 In determining the labor organization which represents the interests of the
workforce, those interests must be, as far as reasonably possible, homogeneous, so as to
genuinely reach the concerns of the individual members of a labor organization.
According to Rothenberg,17 an appropriate bargaining unit is a group of employees of a
given employer, composed of all or less than the entire body of employees, which the
collective interests of all the employees, consistent with equity to the employer indicate to be
best suited to serve reciprocal rights and duties of the parties under the collective bargaining
provisions of law. In Belyca Corporation v. Ferrer-Calleja,18 we defined the bargaining unit as
“the legal collectivity for collective bargaining purposes whose members have substantially
mutual bargaining interests in terms and conditions of employment as will assure to all
employees their collective bargaining rights.” This in mind, the Labor Code has made it a
clear statutory policy to prevent supervisory employees from joining labor organizations
consisting of rank-and-file employees as the concerns which involve members of either group
are normally disparate and contradictory. Article 245 provides:

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.
Clearly, based on this provision, a labor organization composed of both rank-and-file and
supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be
a legitimate labor organization. Not being one, an organization which carries a mixture of
rank-and-file and supervisory employees cannot possess any of the rights of a legitimate
labor organization, including the right to file a petition for certification election for the
purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of
an order allowing a certification election, to inquire into the composition of any labor
organization whenever the status of the labor organization is challenged on the basis of
Article 245 of the Labor Code.
It is the petitioner’s contention that forty-two (42) of the respondent union’s members,
including three of its officers, occupy supervisory positions.19 In its position paper dated
February 22, 1993, petitioner identified fourteen (14) union members occupying the position
of Junior Group Chief II20 and twenty-seven (27) members in level five positions. Their
respective job-descriptions are quoted below:
LEVEL 4 (JUNIOR GROUP CHIEF II)—He is responsible for all operators and assigned
stations, prepares production reports related to daily production output. He oversees smooth
flow of production, quality of production, availability of manpower, parts and
LEVEL 5—He is responsible for overseeing initial production of new models, prepares and
monitors construction schedules for new models, identifies manpower requirements for
production, facilities and equipment, and lay-out processes. He also oversees other sections
in the production process (e.g., assembly, welding, painting).” (Annex “V” of Respondent
TMP’s Position Paper, which is the Job Description for an Engineer holding Level 5 position in
the Production Engineering Section of the Production Planning and Control Department).
While there may be a genuine divergence of opinion as to whether or not union members
occupying Level 4 positions are supervisory employees, it is fairly obvious, from a reading of
the Labor Code’s definition of the term that those occupying Level 5 positions are
unquestionably supervisory employees. Supervisory employees, as defined above, are those
who, in the interest of the employer, effectively recommend managerial actions if the
exercise of such authority is not merely routinary or clerical in nature but require the use of
independent judgment.21 Under the job description for level five employees, such personnel
—all engineers—having a number of personnel under them, not only oversee production of
new models but also determine manpower requirements, thereby influencing important hiring
decisions at the highest levels. This determination is neither routine nor clerical but involves
the independent assessment of factors affecting production, which in turn affect decisions to
hire or transfer workers. The use of independent judgment in making the decision to hire, fire
or transfer in the identification of manpower requirements would be greatly impaired if the
employee’s loyalties are torn between the interests of the union and the interests of
management. A supervisory employee occupying a level five position would therefore find it
79
difficult to objectively identify the exact manpower requirements dictated by production
demands.
This is precisely what the Labor Code, in requiring separate unions among rank-and-file
employees on one hand, and supervisory employees on the other, seeks to avoid. The
rationale behind the Code’s exclusion of supervisors from unions of rank-and-file employees
is that such employees, while in the performance of supervisory functions, become the alter
ego of management in the making and the implementing of key decisions at the sub-
managerial level. Certainly, it would be difficult to find unity or mutuality of interests in a
bargaining unit consisting of a mixture of rank-and-file and supervisory employees. And this
is so because the fundamental test of a bargaining unit’s acceptability is whether or not such
a unit will best advance to all employees within the unit the proper exercise of their collective
bargaining rights.22 The Code itself has recognized this, in preventing supervisory employees
from joining unions of rank-and-file employees.
In the case at bar, as respondent union’s membership list contains the names of at least
twenty-seven (27) supervisory employees in Level Five positions, the union could not, prior to
purging itself of its supervisory employee members, attain the status of a legitimate labor
organization. Not being one, it cannot possess the requisite personality to file a petition for
certification election.
The foregoing discussion, therefore, renders entirely irrelevant, the technical issue raised as
to whether or not respondent union was in possession of the status of a legitimate labor
organization at the time of filing, when, as petitioner vigorously claims, the former was still at
the stage of processing of its application for recognition as a legitimate labor organization.
The union’s composition being in violation of the Labor Code’s prohibition of unions
composed of supervisory and rank-and-file employees, it could not possess the requisite
personality to file for recognition as a legitimate labor organization. In any case, the factual
issue, albeit ignored by the public respondent’s assailed Resolution, was adequately threshed
out in the Med-Arbiter’s September 28, 1994 Order.
The holding of a certification election is based on clear statutory policy which cannot be
circumvented.23 Its rules, strictly construed by this Court, are designed to eliminate fraud
and manipulation. As we emphasized in Progressive Development Corporation v. Secretary,
Department of Labor and Employment,24 the Court’s conclusion should not be interpreted as
impairing any union’s right to be certified as the employees’ bargaining agent in the
petitioner’s establishment. Workers of an appropriate bargaining unit must be allowed to
freely express their choice in an election where everything is open to sound judgment and
the possibility for fraud and misrepresentation is absent.25
WHEREFORE, the petition is GRANTED. The assailed Resolution dated April 20, 1995 and
Order dated July 14, 1995 of respondent Secretary of Labor are hereby SET ASIDE. The
Order dated September 28, 1994 of the Med-Arbiter is REINSTATED.
SO ORDERED.
G.R. No. 142000. January 22, 2003.*

TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INCORPORATED, petitioner,
vs. TAGAYTAY HIGHLANDS EMPLOYEES UNION-PTGWO, respondent.
Labor Law; Labor Unions; Certification Elections; After a certificate of registration is issued to
a union, its legal personality cannot be subject to collateral attack.—The petition fails. After a
certificate of registration is issued to a union, its legal personality cannot be subject to
collateral attack. It may be questioned only in an independent petition for cancellation in
accordance with Section 5 of Rule V, Book IV of the “Rules to Implement the Labor Code”
(Implementing Rules) which section reads: Sec. 5. Effect of registration. The labor
organization or workers’ association shall be deemed registered and vested with legal
personality on the date of issuance of its certificate of registration. Such legal personality
cannot thereafter be subject to collateral attack, but may be questioned only in an
independent petition for cancellation in accordance with these Rules.
Same; Same; Same; The inclusion in a union of disqualified employees is not among the
grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or
fraud.—The inclusion in a union of disqualified employees is not among the grounds for
cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under
the circumstances enumerated in Sections (a) and (c) of Article 239 of above-quoted Article
239 of the Labor Code. THEU, having been validly issued a certificate of registration, should
be considered to have already acquired juridical personality which may not be assailed
collaterally.
Same; Same; Same; Where the employer alleges that some signatures in the petition for
certification election were obtained through fraud, false statement and misrepresentation, the
proper procedure is for said employer to file a petition for cancellation of the certificate of
registration, and not to intervene in a petition for certification election.—As for petitioner’s
allegation that some of the signatures in the petition for certification election were obtained
through fraud, false statement and misrepresentation, the proper procedure is, as reflected
above, for it to file a petition for cancellation of the certificate of registration, and not to
intervene in a petition for certification election.
Same; Same; Same; The best forum for determining whether there were indeed retractions
from some of the laborers is in the certification election itself wherein the workers can freely
express their choice in a secret ballot.—Regarding the alleged withdrawal of union members
from participating in the certification election, this Court’s following ruling is instructive: “
‘[T]he best forum for determining whether there were indeed retractions from some of the
laborers is in the certification election itself wherein the workers can freely express their
choice in a secret ballot.’ Suffice it to say that the will of the rank-and-file employees should
in every possible instance be determined by secret ballot rather than by administrative or
quasi-judicial inquiry. Such representation and certification election cases are not to be taken
as contentious litigations for suits but as mere investigations of a non-adversary, fact-finding
character as to which of the competing unions represents the genuine choice of the workers
to be their sole and exclusive collective bargaining representative with their employer.”
Same; Same; Same; Designation should be reconciled with the actual job description of the
employees—the mere fact that an employee is designated manager does not necessarily
make him one.—While petitioner submitted a list of its employees with their corresponding
job titles and ranks, there is nothing mentioned about the supervisors’ respective duties,
powers and prerogatives that would show that they can effectively recommend managerial
80
actions which require the use of independent judgment. As this Court put it in Pepsi-Cola
Products Philippines, Inc. v. Secretary of Labor: Designation should be reconciled with the
actual job description of subject employees x x x The mere fact that an employee is
designated manager does not necessarily make him one. Otherwise, there would be an
absurd situation where one can be given the title just to be deprived of the right to be a
member of a union. In the case of National Steel Corporation vs. Laguesma (G.R. No.
103743, January 29, 1996), it was stressed that: What is essential is the nature of the
employee’s function and not the nomenclature or title given to the job which determines
whether the employee has rank-and-file or managerial status or whether he is a supervisory
employee. (Italics supplied).
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
CARPIO-MORALES, J.:
Before this Court on certiorari under Rule 45 is the petition of the Tagaytay Highlands
International Golf Club Incorporated (THIGCI) assailing the February 15, 2002 decision of the
Court of Appeals denying its petition to annul the Department of Labor and Employment
(DOLE) Resolutions of November 12, 1998 and December 29, 1998.
On October 16, 1997, the Tagaytay Highlands Employees Union (THEU)-Philippine Transport
and General Workers Organization (PTGWO), Local Chapter No. 776, a legitimate labor
organization said to represent majority of the rank-and-file employees of THIGCI, filed a
petition for certification election before the DOLE Mediation-Arbitration Unit, Regional Branch
No. IV.
THIGCI, in its Comment1 filed on November 27, 1997, opposed THEU’s petition for
certification election on the ground that the list of union members submitted by it was
defective and fatally flawed as it included the names and signatures of supervisors, resigned,
terminated and absent without leave (AWOL) employees, as well as employees of The
Country Club, Inc., a corporation distinct and separate from THIGCI; and that out of the 192
signatories to the petition, only 71 were actual rank-and-file employees of THIGCI.
THIGCI thus submitted a list of the names of its 71 actual rankand-file employees which it
annexed2 to its Comment to the petition for certification election. And it therein incorporated
the following tabulation3 showing the number of signatories to said petition whose
membership in the union was being questioned as disqualified and the reasons for
disqualification:
# of Signatures Reasons for Disqualification
13 Supervisors of THIGCI
6 Resigned employees of THIGCI
2 AWOL employees of THIGCI
53 Rank-and-file employees of The
Country Club at Tagaytay Highlands, Inc.
14 Supervisors of The Country Club at
Tagaytay Highlands, Inc.

6 Resigned employees of The Country
Club at Tagaytay Highlands, Inc.
3 Terminated employees of The Country
Club at Tagaytay Highlands, Inc.
1 AWOL employees of The Country Club
at Tagaytay Highlands, Inc.
4 Signatures that cannot be deciphered
16 Names in list that were erased
2 Names with first names only
THIGCI also alleged that some of the signatures in the list of union members were secured
through fraudulent and deceitful means, and submitted copies of the handwritten denial and
withdrawal of some of its employees from participating in the petition.4
Replying to THIGCI’s Comment, THEU asserted that it had complied with all the requirements
for valid affiliation and inclusion in the roster of legitimate labor organizations pursuant to
DOLE Department Order No. 9, series of 1997,5 on account of which it was duly granted a
Certification of Affiliation by DOLE on October 10, 1997;6 and that Section 5, Rule V of said
Department Order provides that the legitimacy of its registration cannot be subject to
collateral attack, and for as long as there is no final order of cancellation, it continues to
enjoy the rights accorded to a legitimate organization.
THEU thus concluded in its Reply7 that under the circumstances, the Med-Arbiter should,
pursuant to Article 257 of the Labor Code and Section 11, Rule XI of DOLE Department Order
No. 09, automatically order the conduct of a certification election.
By Order of January 28, 1998,8 DOLE Med-Arbiter Anastacio Bactin ordered the holding of a
certification election among the rank-and-file employees of THIGCI in this wise, quoted
verbatim:
We evaluated carefully this instant petition and we are of the opinion that it is complete in
form and substance. In addition thereto, the accompanying documents show that indeed
petitioner union is a legitimate labor federation and its local/chapter was duly reported to this
Office as one of its affiliate local/chapter. Its due reporting through the submission of all the
requirements for registration of a local/chapter is a clear showing that it was already included
in the roster of legitimate labor organizations in this Office pursuant to Department Order No.
9 Series of 1997 with all the legal right and personality to institute this instant petition.
Pursuant therefore to the provisions of Article 257 of the Labor Code, as amended, and its
Implementing Rules as amended by Department Order No. 9, since the respondent’s
establishment is unorganized, the holding of a certification election is mandatory for it was
clearly established that petitioner is a legitimate labor organization. Giving due course to this
petition is therefore proper and appropriate.9 (Emphasis supplied)
Passing on THIGCI’s allegation that some of the union members are supervisory, resigned
and AWOL employees or employees of a separate and distinct corporation, the Med-Arbiter
held that the same should be properly raised in the exclusion-inclusion proceedings at the
pre-election conference. As for the allegation that some of the signatures were secured
through fraudulent and deceitful means, he held that it should be coursed through an
81
independent petition for cancellation of union registration which is within the jurisdiction of
the DOLE Regional Director. In any event, the MedArbiter held that THIGCI failed to submit
the job descriptions of the questioned employees and other supporting documents to bolster
its claim that they are disqualified from joining THEU.
THIGCI appealed to the Office of the DOLE Secretary which, by Resolution of June 4, 1998,
set aside the said Med-Arbiter’s Order and accordingly dismissed the petition for certification
election on the ground that there is a “clear absence of community or mutuality of interests,”
it finding that THEU sought to represent two separate bargaining units (supervisory
employees and rank-and-file employees) as well as employees of two separate and distinct
corporate entities.
Upon Motion for Reconsideration by THEU, DOLE Undersecretary Rosalinda Dimalipis-Baldoz,
by authority of the DOLE Secretary, issued DOLE Resolution of November 12, 199810 setting
aside the June 4, 1998 Resolution dismissing the petition for certification election. In the
November 12, 1998 Resolution, Undersecretary Dimapilis-Baldoz held that since THEU is a
local chapter, the twenty percent (20%) membership requirement is not necessary for it to
acquire legitimate status, hence, “the alleged retraction and withdrawal of support by 45 of
the 70 remaining rank-and-file members . . . cannot negate the legitimacy it has already
acquired before the petition;” that rather than disregard the legitimate status already
conferred on THEU by the Bureau of Labor Relations, the names of alleged disqualified
supervisory employees and employees of the Country Club, Inc., a separate and distinct
corporation, should simply be removed from the THEU’s roster of membership; and that
regarding the participation of alleged resigned and AWOL employees and those whose
signatures are illegible, the issue can be resolved during the inclusion-exclusion proceedings
at the pre-election stage.
The records of the case were thus ordered remanded to the Office of the Med-Arbiter for the
conduct of certification election.
THIGCI’s Motion for Reconsideration of the November 12, 1998 Resolution having been
denied by the DOLE Undersecretary by Resolution of December 29, 1998,11 it filed a petition
for certiorari before this Court which, by Resolution of April 14, 1999,12 referred it to the
Court of Appeals in line with its pronouncement in National Federation of Labor (NFL) v. Hon.
Bienvenido E. Laguesma,et al.,13 and in strict observance of the hierarchy of courts, as
emphasized in the case of St. Martin Funeral Home v. National Labor Relations
Commission.14
By Decision of February 15, 2000,15 the Court of Appeals denied THIGCI’s Petition for
Certiorari and affirmed the DOLE Resolution dated November 12, 1998. It held that while a
petition for certification election is an exception to the innocent bystander rule, hence, the
employer may pray for the dismissal of such petition on the basis of lack of mutuality of
interests of the members of the union as well as lack of employer-employee relationship
following this Court’s ruling in Toyota Motor Philippines Corporation v. Toyota Motor
Philippines Corporation Labor Union, et al.16 and Dunlop Slazenger [Phils.] v. Hon. Secretary
of Labor and Employment, et al.,17 petitioner failed to adduce substantial evidence to
support its allegations.
Hence, the present petition for certiorari, raising the following:

ISSUES/ASSIGNMENT OF ERRORS:
THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE RESOLUTION DATED 12
NOVEMER 1998 HOLDING THAT SUPERVISORY EMPLOYEES AND NON-EMPLOYEES COULD
SIMPLY BE REMOVED FROM APPELLEES ROSTER OF RANK-AND-FILE MEMBERSHIP INSTEAD
OF RESOLVING THE LEGITIMACY OF RESPONDENT UNION’S STATUS
THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE RESOLUTION DATED 12
NOVEMBER 1998 HOLDING THAT THE DISQUALIFIED EMPLOYEES’ STATUS COULD READILY
BE RESOLVED DURING THE INCLUSION AND EXCLUSION PROCEEDINGS
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT HOLDING THAT THE ALLEGATIONS
OF PETITIONER HAD BEEN DULY PROVEN BY FAILURE OF RESPONDENT UNION TO DENY
THE SAME AND BY THE SHEER WEIGHT OF EVIDENCE INTRODUCED BY PETITIONER AND
CONTAINED IN THE RECORDS OF THE CASE”18
The statutory authority for the exclusion of supervisory employees in a rank-and-file union,
and vice-versa, is Article 245 of the Labor Code, to wit:
Article 245. Ineligibility of managerial employees to join any labor organization; right of
supervisory employees.—Managerial employees are not eligible to join, assist or form any
labor organization. Supervisory employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form separate labor
organizations of their own.
While above-quoted Article 245 expressly prohibits supervisory employees from joining a
rank-and-file union, it does not provide what would be the effect if a rank-and-file union
counts supervisory employees among its members, or vice-versa.
Citing Toyota19 which held that “a labor organization composed of both rank-and-file and
supervisory employees is no labor organization at all,” and the subsequent case of
Progressive Development Corp.-Pizza Hut v. Ledesma20 which held that:
“The Labor Code requires that in organized and unorganized establishments, a petition for
certification election must be filed by a legitimate labor organization. The acquisition, of rights
by any union or labor organization, particularly the right to file a petition for certification
election, first and foremost, depends on whether or not the labor organization has attained
the status of a legitimate labor organization.
In the case before us, the Med-Arbiter summarily disregarded the petitioner’s prayer that the
former look into the legitimacy of the respondent Union by a sweeping declaration that the
union was in the possession of a charter certificate so that ‘for all intents and purposes,
Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate organization,’21 (Italics and
bold supplied), petitioner contends that, quoting Toyota, “[i]t becomes necessary . . .,
anterior to the granting of an order allowing a certification election, to inquire into the
composition of any labor organization whenever the status of the labor organization is
challenged on the basis of Article 245 of the Labor Code.”22
82
Continuing, petitioner argues that without resolving the status of THEU, the DOLE
Undersecretary “conveniently deferred the resolution on the serious infirmity in the
membership of [THEU] and ordered the holding of the certification election” which is frowned
upon as the following ruling of this Court shows:
We also do not agree with the ruling of the respondent Secretary of Labor that the infirmity
in the membership of the respondent union can be remedied in “the pre-election conference
thru the exclusion-inclusion proceedings wherein those employees who are occupying rank-
and-file positions will be excluded from the list of eligible voters.” Public respondent gravely
misappreciated the basic antipathy between the interest of supervisors and the interest of
rank-and-file employees. Due to the irreconcilability of their interest we held in Toyota Motor
Philippines v. Toyota Motors Philippines Corporation Labor Union, viz:
‘x x x
“Clearly, based on this provision [Article 2451, a labor organization composed of both rank-
and-file and supervisory employees is no labor organization at all. It cannot, for any guise or
purpose, be a legitimate labor organization. Not being one, an organization which carries a
mixture of rank-and-file and supervisory employees cannot posses any of the rights of a
legitimate labor organization, including the right to file a petition for certification election for
the purpose of collective bargaining. It becomes necessary, therefore, anterior to the
granting of an order allowing a certification election to inquire into the composition of any
labor organization whenever the status of the labor organization is challenged on the basis of
Article 245 of the Labor Code.” (Emphasis by petitioner) (Dunlop Slazenger (Phils.) v.
Secretary of Labor, 300 SCRA 120 [1998]; Italics and bold supplied by petitioner.)
The petition fails. After a certificate of registration is issued to a union, its legal personality
cannot be subject to collateral attack. It may be questioned only in an independent petition
for cancellation in accordance with Section 5 of Rule V, Book IV of the “Rules to Implement
the Labor Code” (Implementing Rules) which section reads:
Sec. 5. Effect of registration.—The labor organization or workers’ association shall be deemed
registered and vested with legal personality on the date of issuance of its certificate of
registration. Such legal personality cannot thereafter be subject to collateral attack, but may
be questioned only in an independent petition for cancellation in accordance with these
Rules. (Italics supplied)
The grounds for cancellation of union registration are provided for under Article 239 of the
Labor Code, as follows:
Art. 239. Grounds for cancellation of union registration.—The following shall constitute
grounds for cancellation of union registration:
(a)Misrepresentation, false statement or fraud in connection with the adoption or ratification
of the constitution and by-laws or amendments thereto, the minutes of ratification, and the
list of members who took part in the ratification;
(b)Failure to submit the documents mentioned in the preceding paragraph within thirty (30)
days from adoption or ratification of the constitution and by-laws or amendments thereto;

(c)Misrepresentation, false statements or fraud in connection with the election of officers,
minutes of the election of officers, the list of voters, or failure to subject these documents
together with the list of the newly elected/appointed officers and their postal addresses
within thirty (30) days from election;
(d)Failure to submit the annual financial report to the Bureau within thirty (30) days after the
closing of every fiscal year and misrepresentation, false entries or fraud in the preparation of
the financial report itself;
(e)Acting as a labor contractor or engaging in the “cabo” system, or otherwise engaging in
any activity prohibited by 1aw;
(f)Entering into collective bargaining agreements which provide terms and conditions of
employment below minimum standards established by law;
(g)Asking for or accepting attorney’s fees or negotiation fees from employers;
(h)Other than for mandatory activities under this Code, checking off special assessments or
any other fees without duly signed individual written authorizations of the members;
(i)Failure to submit list of individual members to the Bureau once a year or whenever
required by the Bureau; and
(j)Failure to comply with the requirements under Articles 237 and 238, (Italics supplied),
while the procedure for cancellation of registration is provided forin Rule VIII, Book V of the
Implementing Rules.
The inclusion in a union of disqualified employees is not among the grounds for cancellation,
unless such inclusion is due to misrepresentation, false statement or fraud under the
circumstances enumerated in Sections (a) and (c) of Article 239 of above-quoted Article 239
of the Labor Code.
THEU, having been validly issued a certificate of registration, should be considered to have
already acquired juridical personality which may not be assailed collaterally.
As for petitioner’s allegation that some of the signatures in the petition for certification
election were obtained through fraud, false statement and misrepresentation, the proper
procedure is, as reflected above, for it to file a petition for cancellation of the certificate of
registration, and not to intervene in a petition for certification election.
Regarding the alleged withdrawal of union members from participating in the certification
election, this Court’s following ruling is instructive:
“ ‘[T]he best forum for determining whether there were indeed retractions from some of the
laborers is in the certification election itself wherein the workers can freely express their
choice in a secret ballot.’ Suffice it to say that the will of the rank-and-file employees should
in every possible instance be determined by secret ballot rather than by administrative or
quasi-judicial inquiry. Such representation and certification e lection cases are n of to be
taken as contentious litigations for suits but as mere investigations of a non-adversary, fact-
finding character as to which of the competing unions represents the genuine choice of the
workers to be their sole and exclusive collective bargaining representative with their
employer.”23
As for the lack of mutuality of interest argument of petitioner, it, at all events, does not lie
given, as found by the court a quo, its failure to present substantial evidence that the
assailed employees are actually occupying supervisory positions.
83
While petitioner submitted a list of its employees with their corresponding job titles and
ranks,24 there is nothing mentioned about the supervisors’ respective duties, powers and
prerogatives that would show that they can effectively recommend managerial actions which
require the use of independent judgment.25
As this Court put it in Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor:26
Designation should be reconciled with the actual job description of subject employees x x x
The mere fact that an employee is designated manager does not necessarily make him one.
Otherwise, there would be an absurd situation where one can be given the title just to be
deprived of the right to be a member of a union. In the case of National Steel Corporation vs.
Laguesma (G.R. No. 103743, January 29, 1996), it was stressed that:
What is essential is the nature of the employee’s function and not the nomenclature or title
given to the job which determines whether the employee has rank-and-file or managerial
status or whether he is a supervisory employee. (Italics supplied).27
WHEREFORE, the petition is hereby DENIED. Let the records of the case be remanded to the
office of origin, the Mediation-Arbitration Unit, Regional Branch No. IV, for the immediate
conduct of a certification election subject to the usual pre-election conference. SO ORDERED.
G.R. No. 142000 January 22, 2003
III.Excluded Employees
Managerial Employees
G.R. No. 113638.November 16, 1999.*
A. D. GOTHONG MANUFACTURING CORPORATION EMPLOYEES UNION-ALU,
petitioner, vs. HON. NIEVES CONFESOR, SECRETARY, DEPARTMENT OF LABOR
AND EMPLOYMENT and A. D. GOTHONG MANUFACTURING CORPORATION,
Subangdaku, Mandaue City, respondents.
Labor Law; Employer-Employee Relationship; Words and Phrases; The Labor Code recognizes
two (2) principal groups of employees, namely, the managerial and the rank and file groups.
—The Labor Code recognizes two (2) principal groups of employees, namely, the managerial
and the rank and file groups. Article 212 (m) of the Code provides: “(m) ‘Managerial
employee’ is one who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees. Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. All employees
not falling within any of the above definitions are considered rank-and-file employees for
purposes of this Book.”
Same; Same; Same; Managerial Staff; Elements.—Under Rule I, Section 2 (c), Book III of the
Implementing Rules of the Labor Code, to be a member of managerial staff, the following
elements must concur or co-exist, to wit: (1) that his primary duty consists of the
performance of work directly related to management policies; (2) that he customarily and
regularly exercises discretion and independent judgment in the performance of his functions;
(3) that he regularly and directly assists in the management of the establishment; and (4)

that he does not devote more than twenty percent of his time to work other than those
described above.
Same; Same; Same; Administrative Law; In determining whether or not certain employees
are managerial employees, the Supreme Court accords due respect and therefore sustains
the findings of fact made by quasi-judicial agencies which are supported by
substantial evidence considering their expertise in their respective fields.—In the case of
Franklin Baker Company of the Philippines vs. Trajano, this Court stated: “The test of
‘supervisory’ or ‘managerial status’ depends on whether a person possess authority to act in
the interest of his employer in the matter specified in Article 212 (k) of the Labor Code and
Section 1 (m) of its Implementing Rules and whether such authority is not merely routinary
or clerical in nature, but requires the use of independent judgment. Thus, where such
recommendatory powers as in the case at bar, are subject to evaluation, review and final
action by the department heads and other higher executives of the company, the same,
although present, are not exercise of independent judgment as required by law. It has also
been established that in the determination of whether or not certain employees are
managerial employees, this Court accords due respect and therefore sustains the findings of
fact made by quasi-judicial agencies which are supported by substantial evidence considering
their expertise in their respective fields.
Same; Same; Same; Same; It is inappropriate to review that factual findings of the Med-
Arbiter regarding the issue whether certain employees are or are not rank-and-file employees
considering that these are matters within their technical expertise.—This Court is not a trier
of facts. As earlier stated, it is not the function of this Court to examine and evaluate the
probative value of all evidence presented to the concerned tribunal which formed the basis of
its impugned decision or resolution. Following established precedents, it is inappropriate to
review that factual findings of the Med-Arbiter regarding the issue whether Romulo Plaza and
Paul Michael Yap are or are not rank-and-file employees considering that these are matters
within their technical expertise. They are binding on this Court as we are satisfied that they
are supported by substantial evidence, and we find no capricious exercise of judgment
warranting reversal by certiorari.
PETITION for review on certiorari of a decision of the Secretary of Labor and Employment.
The facts are stated in the opinion of the Court.
GONZAGA-REYES, J.:
Petitioner A.D. Gothong Manufacturing Corporation Employees Union-ALU seeks to reverse
and set aside the decision of the Secretary of Labor promulgated on September 30, 1993
affirming in toto the Resolution of Mediator-Arbiter, Achilles V. Manit declaring Romulo Plaza
and Paul Michael Yap as rank-and-file employees of A. D. Gothong Manufacturing
Corporation.
On May 12, 1993, petitioner A.D. Gothong Manufacturing Corporation Employees Union-ALU
(“Union”) filed a petition for certification election in its bid to represent the unorganized
regular rank-and-file employees of respondent A. D. Gothong Manufacturing Corporation
(“Company”) excluding its office staff and personnel. Respondent Company opposed the
84
petition as it excluded office personnel who are rank and file employees. In the inclusion-
exclusion proceedings, the parties agreed to the inclusion of Romulo Plaza and Paul Michael
Yap in the list of eligible voters on condition that their votes are considered challenged on the
ground that they were supervisory employees.
The certification election was conducted as scheduled and yielded the following results:
YES.............................................................20
NO..............................................................19
Spoiled........................................................0
Challenged.................................................2
Total votes cast..........................................41
Both Plaza and Yap argued that they are rank-and-file employees. Plaza claimed that he was
a mere salesman based in Cebu, and Yap argued that he is a mere expediter whose job
includes the facilitation of the processing of the bills of lading of all intended company
shipments.
Petitioner Union maintains that both Plaza and Yap are supervisors who are disqualified to
join the proposed bargaining unit for rank-and-file employees. In support of its position
paper, the petitioner Union submitted the following:
1.Joint affidavit of Ricardo Cañete, et al. which alleges that Michael Yap is a supervisory
employee of A.D. Gothong Manufacturing Corporation and can effectively recommend for
their suspension/dismissal;
2.Affidavit of Pedro Diez which alleges that the affiant is a supervisor in the production
department of A. D. Gothong Manufacturing Corporation; that the affiant knows the
challenged voters because they are also supervisory employees of the same corporation; that
the challenged voters used to attend the quarterly meeting of the staff employees of A.D.
Gothong Manufacturing Corporation;
3.Photocopy of the memorandum dated January 4, 1991 regarding the compulsory
attendance of department heads/supervisors to the regular quarterly meeting of all regular
workers of A.D. Gothong Manufacturing Corporation on January 13, 1991. Appearing therein
are the names ROMULO PLAZA and MICHAEL YAP;
4.A not-so-legible photocopy of a memorandum dated March 1, 1989 wherein the name
“ROMY PLAZA” is mentioned as the acting OIC of GT Marketing in Davao; and
5.Photocopy of the minutes of the regular quarterly staff meeting on August 13, 1989 at
Mandaue City wherein Michael Yap is mentioned as a shipping assistant and a newly hired
member of the staff.1
The Med-Arbiter declared that the challenged voters Yap and Plaza are rank-and-file
employees.
Petitioner Union appealed to the Secretary of Labor insisting that Yap and Plaza are
supervisor and manager respectively of the corporation and are prohibited from joining the
proposed bargaining unit of rank-and-file employees. In an attempt to controvert the
arguments of petitioner, respondent Company stressed that Pacita Gothong is the company’s
corporate secretary and not Baby L. Siador, who signed the minutes of the meeting

submitted in evidence. Respondent also argued that Romulo Plaza could not qualify as a
manager of the Davao Branch the opening of which branch never materialized.
Respondent Secretary of Labor affirmed the finding of the Med-Arbiter. Motion for
Reconsideration of the above resolution having been denied, petitioner Union appeals to this
Court by petition for review on certiorari alleging the following grounds:
I.THAT THE SECRETARY OF LABOR AND EMPLOYMENT CLEARLY COMMITTED
MISAPPREHENSION OF FACTS/ EVIDENCE AND IF IT WERE NOT FOR SUCH
MISAPPREHENSION IT WOULD HAVE ARRIVED AT DIFFERENT CONCLUSION FAVORABLE TO
PETITIONER.
II.THAT THE SECRETARY OF LABOR AND EMPLOYMENT ACTED WITH GRAVE ABUSE OF
DISCRETION AND CONTRARY TO LAW IN AFFIRMING IN TOTO THE DECISION OF
HONORABLE ACHILLES V. MANIT, DEPARTMENT OF LABOR AND EMPLOYMENT, REGIONAL
OFFICE No. 7, CEBU CITY IN DENYING PETITIONER’S MOTION FOR RECONSIDERATION.2
We find no merit in the instant petition.
The Labor Code recognizes two (2) principal groups of employees, namely, the managerial
and the rank and file groups. Article 212 (m) of the Code provides:
     “(m) ‘Managerial employee’ is one who is vested with powers or prerogatives to lay down
and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory employees are those who, in the interest of the
employer, effectively recommend such managerial actions if the exercise of such authority is
not merely routinary or clerical in nature but requires the use of independent judgment. All
employees not falling within any of the above definitions are considered rank-and-file
employees for purposes of this Book.”
Under Rule I, Section 2 (c), Book III of the Implementing Rules of the Labor Code, to be a
member of managerial staff, the following elements must concur or co-exist, to wit: (1) that
his primary duty consists of the performance of work directly related to management policies;
(2) that he customarily and regularly exercises discretion and independent judgment in the
performance of his functions; (3) that he regularly and directly assists in the management of
the establishment; and (4) that he does not devote more than twenty percent of his time to
work other than those described above.
In the case of Franklin Baker Company of the Philippines vs. Trajano,3 this Court stated:
“The test of ‘supervisory’ or ‘managerial status’ depends on whether a person possess
authority to act in the interest of his employer in the matter specified in Article 212 (k) of the
Labor Code and Section 1 (m) of its Implementing Rules and whether such authority is not
merely routinary or clerical in nature, but requires the use of independent judgment. Thus,
where such recommendatory powers as in the case at bar, are subject to evaluation, review
and final action by the department heads and other higher executives of the company, the
same, although present, are not exercise of independent judgment as required by law.4
It has also been established that in the determination of whether or not certain employees
are managerial employees, this Court accords due respect and therefore sustains the findings
of fact made by quasi-judicial agencies which are supported by substantial evidence
considering their expertise in their respective fields.5
85
The petition has failed to show reversible error in the findings of the Med-Arbiter and the
Secretary of the Department of Labor.
In ruling against petitioner Union, the Med-Arbiter ruled that the petitioner Union failed to
present concrete and substantial evidence to establish the fact that challenged voters are
either managerial or supervising employees; the MedArbiter evaluated the evidence as
follows:
“The said joint affidavit of Ricardo Cañete, et al. and that of Pedro Diez merely tagged the
challenged voters as supervisors, but nothing is mentioned about their respective duties,
powers and prerogatives as employees which would have indicated that they are indeed
supervisory employees. There is no statement about an instance where the challenged voters
effectively recommended such managerial action which required the use of independent
judgment.
The aforementioned documents have not been properly identified which renders them
inadmissible in evidence. But, granting that they are the exact replica of a genuine and
authentic original copy, there is nothing in them which specifically and precisely tells that the
challenged voters can exercise the powers and prerogatives to effectively recommended such
managerial actions which require the use of independent judgment.”6
In upholding the above findings, the respondent Secretary of Labor rationalized:
“Based on the foregoing, Romulo Plaza and Paul Michael Yap can not qualify as managerial
and supervisory employees, respectively, because there is nothing in the documentary
evidence offered by herein petitioner-appellant showing that they are actually conferred or
actually exercising the said managerial/supervisory attributes.
In the case of Romul Plaza, we note that indeed there is nothing in the minutes of the staff
meeting held on 05 Mar och 1993, particularly on the report of the Sales Department,
indicating that said appellee had been exercising managerial prerogatives by hiring workers
and issuing a check for the payment of rentals of a warehouse, relative to the company
branch in Davao City. The imputation on the exercise of the said prerogative is misleading if
not malicious because a plain reading of that portion of the report shows in clear and simple
language that one who made the said hiring and payment was no other than Mr. John Chua,
the Sales Manager. The only instance when the name of Romy Plaza was mentioned in the
said report was in reference to his designation as an OIC of the Davao City Branch while all
the aspect of the creation of the said branch is awaiting final approval by the Company
president and general manager (p. 197, last paragraph, records). The setting up of said
branch however, did not materialize, as evidenced by the certification issued by the Revenue
District Office and Office of the Mayor in Davao City (pp. 198-199, records).
Likewise, evidence pinpointing that Paul Michael Yap is a supervisory employee is altogether
lacking. The fact that he was designated as shipping assistant/expediter is of no moment,
because titles or nomenclatures attached to the position is not controlling.

Finally, the job descriptions extant on records vividly exhibit no trace of the performance of
managerial or supervisory functions (pp. 124-126, records).”7
In this petition, petitioner Union claims that the documentary evidence was
“misapprehended” by public respondent. Petitioner Union reiterates that: (1) in minutes of
the staff meeting of respondent Company on August 13, 1989, duly signed by the President
Albino Gothong and attested by Jose F. Loseo presiding officer/VP and Gertrudo Lao,
Assistant General Manager, Paul Michael Yap was listed as one of the staff; (2) in the regular
quarterly meeting on January 4, 1991, the names of Yap and Plaza are listed under the
heading Department Heads/Supervisors duly signed by President/ General Manager Albino
Gothong and Asst. General Manager Gertrudo Lao; and (3) in the staff meeting of March 5,
1993, Plaza was assigned as officer-in-charge of the company’s branch in Davao.
We find no cogent reason to disturb the finding of the MedArbiter and the Secretary of Labor
that the copies of the minutes presented in evidence do not prove that Yap and Plaza were
managerial or supervisory employees. We have examined the documentary evidence, and
nowhere is there a statement therein about any instance where the challenged voters
effectively recommended any managerial action which would require the use of independent
judgment. The last piece of evidence was not discussed by the Med-Arbiter; however a
perusal thereof would show that while one J. Chua of the Sales Department reported that
“Romy Plaza was in Davao right now acting as OIC,” the same document states that the
Davao operations still had to be finalized. On the other hand, the claim of respondent
Company that Plaza is the head of the Davao branch is belied by the certification of the City
Treasurer of Davao and of the Bureau of Internal Revenue of Mandaue City that the plan to
open a branch in Davao City did not materialize.8
The reliance of petitioner on the affidavit of Jose Loseo, Personnel Manager, that Plaza and
Yap were hired by him as department head and supervisor of the respondent Company
cannot be sustained in light of the affidavit of said Loseo dated September 28, 1993,
attesting that he was “forced to sign” the earlier memorandum on the job assignment of Yap
and Plaza. This affidavit is sought to be discarded by respondent Company for being
perjurious and ill-motivated.9 Petitioner Union however reiterates that Loseo’s affidavit is
corroborated by the other public documents indicating that Plaza and Yap are not rank-and-
file employees.10
The issue raised herein is basically one of fact: whether in the light of the evidence submitted
by both parties, Plaza and Yap are managerial employees or rank-and-file employees.
This Court is not a trier of facts. As earlier stated, it is not the function of this Court to
examine and evaluate the probative value of all evidence presented to the concerned tribunal
which formed the basis of its impugned decision or resolution. Following established
precedents, it is inappropriate to review that factual findings of the Med-Arbiter regarding the
issue whether Romulo Plaza and Paul Michael Yap are or are not rank-and-file employees
considering that these are matters within their technical expertise.11 They are binding on this
Court as we are satisfied that they are supported by substantial evidence, and we find no
capricious exercise of judgment warranting reversal by certiorari.
86
WHEREFORE, the petition is denied for lack of merit. No pronouncement as to costs. SO
ORDERED.
Confidential Employees
G.R. No. 101738. April 12, 2000.*
PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES, petitioner, vs. HON.
BIENVENIDO E. LAGUESMA, Undersecretary of Labor and Employment, HON.
HENRY PABEL, Director of the Department of Labor and Employment Regional
Office No. XI and/or the Representation Officer of the Industrial Relations
Division who will act for and in his behalf, PCOP-BISLIG SUPERVISORY AND
TECHNICAL STAFF EMPLOYEES UNION, ASSOCIATED LABOR UNION and
FEDERATION OF FREE WORKERS, respondents.
Labor Law; Certification Elections; Managerial Employees; Words and Phrases; Managerial
employees are ranked as Top Managers, Middle Managers and First Line Managers; The mere
fact that an employee is designated “manager” does not ipso facto make him one—
designation should be reconciled with the actual job description of the employee, for it is the
job description that determines the nature of employment.—In United Pepsi-Cola Supervisory
Union (UPSU) v. Laguesma, we had occasion to elucidate on the term “managerial
employees.” Managerial employees are ranked as Top Managers, Middle Managers and First
Line Managers. Top and Middle Managers have the authority to devise, implement and
control strategic and operational policies while the task of First-Line Managers is simply to
ensure that such policies are carried out by the rank-and-file employees of an organization.
Under this distinction, “managerial employees” therefore fall in two (2) categories, namely,
the “managers” per se composed of Top and Middle Managers, and the “supervisors”
composed of First-Line Managers. Thus, the mere fact that an employee is designated
“manager” does not ipso facto make him one. Designation should be reconciled with the
actual job description of the employee, for it is the job description that determines the nature
of employment.
Same; Same; Same; Authority to Hire and Fire; Where the power to hire and fire is subject to
evaluation, review and final action by the department heads and other higher executives of
the company, the same, although present, is not effective and not an exercise of
independent judgment as required by law.—In the petition before us, a thorough dissection
of the job description of the concerned supervisory employees and section heads indisputably
show that they are not actually managerial but only supervisory employees since they do not
lay down company policies. PICOP’s contention that the subject section heads and unit
managers exercise the authority to hire and fire is ambiguous and quite misleading for the
reason that any authority they exercise is not supreme but merely advisory in character.
Theirs is not a final determination of the company policies inasmuch as any action taken by
them on matters relative to hiring, promotion, transfer, suspension and termination of
employees is still subject to confirmation and approval by their respective superior. Thus,
where such power, which is in effect recommendatory in character, is subject to evaluation,
review and final action by the department heads and other higher executives of the company,
the same, although present, is not effective and not an exercise of independent judgment as
required by law.
Same; Administrative Law; Due Process; No denial of due process can be ascribed to quasi-
judicial official when he refuses to allow a party to present additional evidence where said

party, in the appeal before the said official, even then had already submitted voluminous
supporting documents.—No denial of due process can be ascribed to public respondent
Undersecretary Laguesma for the latter’s denial to allow PICOP to present additional evidence
on the implementation of its program inasmuch as in the appeal before the said public
respondent, PICOP even then had already submitted voluminous supporting documents. The
record of the case is replete with position papers and exhibits that dealt with the main thesis
it relied upon. What the law prohibits is the lack of opportunity to be heard. PICOP has long
harped on its contentions and these were dealt upon and resolved in detail by public
respondent Laguesma. We see no reason or justification to deviate from his assailed
resolutions for the reason that law and jurisprudence aptly support them.
Same; Certification Elections; No obstacle must be placed to the holding of certification
elections, for it is a statutory policy that should not be circumvented.—Considering all the
foregoing, the fact that PICOP voiced out its objection to the holding of certification election,
despite numerous opportunities to ventilate the same, only after respondent Undersecretary
of Labor affirmed the holding thereof, simply bolstered the public respondents’ conclusion
that PICOP raised the issue merely to prevent and thwart the concerned section heads and
supervisory employees from exercising a right granted them by law. Needless to stress,, no
obstacle must be placed to the holding of certification elections, for it is a statutory policy
that should not be circumvented.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
DE LEON, JR., J.:
Before us is a petition for certiorari seeking to annul the Resolution1 and the Order2 dated
April 17, 1991 and August 7, 1991, respectively, of public respondent Bienvenido E.
Laguesma, acting then as Undersecretary, now the Secretary, of the Department of Labor
and Employment (DOLE), which reversed the Order dated March 27, 19903 of Med-Arbiter
Phibun D. Pura declaring that supervisors and section heads of petitioner under its new
organizational structure are managerial employees and should be excluded from the list of
voters for the purpose of a certification election among supervisory and technical staff
employees of petitioner.4
The facts of the case are the following:
Petitioner Paper Industries Corporation of the Philippines (PICOP) is engaged in the
manufacture of paper and timber products, with principal place of operations at Tabon, Bislig,
Surigao del Sur. It has over 9,0005 employees, 9446 of whom are supervisory and technical
staff employees. More or less 487 of these supervisory and technical staff employees are
members of the private respondent PICOP-Bislig Supervisory and Technical Staff Employees
Union (PBSTSEU).7
On August 9, 1989, PBSTSEU instituted a Petition8 for Certification Election to determine the
sole and exclusive bargaining agent of the supervisory and technical staff employees of
PICOP for collective bargaining agreement (CBA) purposes.
87
In a Notice9 dated August 10, 1989, the initial hearing of the petition was set on August 18,
1989 but it was reset to August 25, 1989, at the instance of PICOP, as it requested a fifteen
(15) day period within which to file its comments and/or position paper. But PICOP failed to
file any comment or position paper. Meanwhile, private respondents Federation of Free
Workers (FFW) and Associated Labor Union (ALU) filed their respective petitions for
intervention.
On September 14, 1989, Med-Arbiter Arturo L. Gamolo issued an Order10 granting the
petitions for interventions of the FFW and ALU. Another Order11 issued on the same day set
the holding of a certification election among PICOP’s supervisory and technical staff
employees in Tabon, Bislig, Surigao del Sur, with four (4) choices, namely: (1) PBSTSEU; (2)
FFW; (3) ALU; and (4) no union.
On September 21, 1989, PICOP appealed12 the Order which set the holding of the
certification election contending that the Med-Arbiter committed grave abuse of discretion in
deciding the case without giving PICOP the opportunity to file its comments/answer, and that
PBSTSEU had no personality to file the petition for certification election.
After PBSTSEU filed its Comments13 to petitioner’s appeal, the Secretary of the Labor14
issued a Resolution15 dated November 17, 1989 which upheld the Med-Arbiter’s Order dated
September 17, 1989, with modification allowing the supervising and staff employees in Cebu,
Davao and Iligan City to participate in the certification election.
During the pre-election conference on January 18, 1990, PICOP questioned and objected to
the inclusion of some section heads and supervisors in the list of voters whose positions it
averred were reclassified as managerial employees in the light of the reorganization effected
by it.16 Under the Revised Organizational Structure of the PICOP, the company was divided
into four (4) main business groups, namely: Paper Products Business, Timber Products
Business, Forest Resource Business and Support Services Business. A vice-president or
assistant vice-president heads each of these business groups. A division manager heads the
divisions comprising each business group. A department manager heads the departments
comprising each division. Section heads and supervisors, now called section managers and
unit managers, head the sections and independent units, respectively, comprising each
department.17 PICOP advanced the view that considering the alleged present authority of
these section managers and unit managers to hire and fire, they are classified as managerial
employees, and hence, ineligible to form or join any labor organization.18
Following the submission by the parties of their respective position papers19 and evidence20
on this issue, Med-Arbiter Phibun D. Pura issued an Order21 dated March 27, 1990, holding
that supervisors and section heads of the petitioner are managerial employees and therefore
excluded from the list of voters for purposes of certification election.
PBSTSEU appealed22 the Order of the Med-Arbiter to the Office of the Secretary, DOLE. ALU
likewise appealed.23 PICOP submitted evidence militating against the appeal.24 Public
respondent Bienvenido E. Laguesma, acting as the then Undersecretary of Labor, issued the
assailed Order25 dated April 17, 1991 setting aside the Order dated March 27, 1990 of the
Med-Arbiter and declaring that the subject supervisors and section heads are supervisory
employees eligible to vote in the certification election.

PICOP sought26 reconsideration of the Order dated April 7, 1991. However, public
respondent in his Order27 dated August 7, 1991 denied PICOP’s motion for reconsideration.
Hence, this petition.
PICOP anchors its petition on two (2) grounds, to wit:
I. THE PUBLIC RESPONDENT HONORABLE BIENVENIDO E. LAGUESMA,
UNDERSECRETARY OF LABOR AND EMPLOYMENT, IN A CAPRICIOUS,
ARBITRARY AND WHIMSICAL EXERCISE OF POWER ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION, TANTAMOUNT TO ACTING WITHOUT OR IN
EXCESS OF JURISDICTION WHEN HE DENIED YOUR PETITIONER’S PLEA TO
PRESENT ADDITIONAL EVIDENCE TO PROVE THAT SOME OF ITS MANAGERIAL
EMPLOYEES ARE DISQUALIFIED FROM JOINING OR FORMING A UNION
REPRESENTED BY CO-RESPONDENT PBSTSEU, IN VIEW OF A SUPERVENING
EVENT BROUGHT ABOUT BY THE CHANGES IN THE ORGANIZATIONAL
STRUCTURE OF YOUR PETITIONER WHICH WAS FULLY IMPLEMENTED IN
JANUARY 1991 AFTER THE CASE WAS ELEVATED ON APPEAL AND SUBMITTED
FOR DECISION.
II. THE PUBLIC RESPONDENT, HONORABLE BIENVENIDO E. LAGUESMA, ALSO
ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION, TANTAMOUNT TO
ARBITRARILY ACTING WITHOUT OR IN EXCESS OF JURISDICTION WHEN HE
TOTALLY DISREGARDED THE DOCUMENTARY EVIDENCE SO FAR SUBMITTED
BY YOUR PETITIONER AND RELIED MAINLY ON THE UNSUBSTANTIATED
CLAIM AND MERE ALLEGATIONS OF PRIVATE RESPONDENT, PBSTSEU, THAT
THE REORGANIZATION OF YOUR PETITIONER WAS A SHAM AND CALCULATED
MERELY TO FRUSTRATE THE UNIONIZATION OF YOUR PETITIONER’S
SUPERVISORY PERSONNEL; AND SOLELY ON THIS BASIS, DENIED YOUR
PETITIONER’S URGENT MOTION FOR RECONSIDERATION.28
PICOP’s main thesis is that the positions Section Heads and Supervisors, who have been
designated as Section Managers and Unit Managers, as the case maybe, were converted to
managerial employees under the decentralization and reorganization program it implemented
in 1989. Being managerial employees, with alleged authority to hire and fire employees, they
are ineligible for union membership under Article 24529 of the Labor Code. Furthermore,
PICOP contends that no malice should be imputed against it for implementing its
decentralization program only after the petition for certification election was filed inasmuch as
the same is a valid exercise of its management prerogative, and that said program has long
been in the drawing boards of the company, which was realized only in 1989 and fully
implemented in 1991. PICOP emphatically stresses that it could not have conceptualized the
decentralization program only for the purpose of “thwarting the right of the concerned
employees to self-organization.”
The petition, not being meritorious, must fail and the same should be as it is hereby
dismissed.
88
First. In United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma,30 we had occasion to
elucidate on the term “managerial employees.” Managerial employees are ranked as Top
Managers, Middle Managers and First Line Managers. Top and Middle Managers have the
authority to devise, implement and control strategic and operational policies while the task of
First-Line Managers is simply to ensure that such policies are carried out by the rank-and-file
employees of an organization. Under this distinction, “managerial employees” therefore fall in
two (2) categories, namely, the “managers” per se composed of Top and Middle Managers,
and the “supervisors” composed of First-Line Managers.31 Thus, the mere fact that an
employee is designated “manager” does not ipso facto make him one. Designation should be
reconciled with the actual job description of the employee,32 for it is the job description that
determines the nature of employment.33
In the petition before us, a thorough dissection of the job description34 of the concerned
supervisory employees and section heads indisputably show that they are not actually
managerial but only supervisory employees since they do not lay down company policies.
PICOP’s contention that the subject section heads and unit managers exercise the authority
to hire and fire35 is ambiguous and quite misleading for the reason that any authority they
exercise is not supreme but merely advisory in character. Theirs is not a final determination
of the company policies inasmuch as any action taken by them on matters relative to hiring,
promotion, transfer, suspension and termination of employees is still subject to confirmation
and approval by their respective superior.36 Thus, where such power, which is in effect
recommendatory in character, is subject to evaluation, review and final action by the
department heads and other higher executives of the company, the same, although present,
is not effective and not an exercise of independent judgment as required by law.37
Second. No denial of due process can be ascribed to public respondent Undersecretary
Laguesma for the latter’s denial to allow PICOP to present additional evidence on the
implementation of its program inasmuch as in the appeal before the said public respondent,
PICOP even then had already submitted voluminous supporting documents.38 The record of
the case is replete with position papers and exhibits that dealt with the main thesis it relied
upon. What the law prohibits is the lack of opportunity to be heard.39 PICOP has long harped
on its contentions and these were dealt upon and resolved in detail by public respondent
Laguesma. We see no reason or justification to deviate from his assailed resolutions for the
reason that law and jurisprudence aptly support them.
Finally, considering all the foregoing, the fact that PICOP voiced out its objection to the
holding of certification election, despite numerous opportunities to ventilate the same, only
after respondent Undersecretary of Labor affirmed the holding thereof, simply bolstered the
public respondents’ conclusion that PICOP raised the issue merely to prevent and thwart the
concerned section heads and supervisory employees from exercising a right granted them by
law. Needless to stress, no obstacle must be placed to the holding of certification elections,
for it is a statutory policy that should not be circumvented.40
WHEREFORE, the petition is hereby DISMISSED, and the Resolution and Order of public
respondent Bienvenido E. Laguesma dated April 17, 1991 and August 17, 1991, respectively,
finding the subject supervisors and section heads as supervisory employees eligible to vote in
the certification election are AFFIRMED. Costs against petitioner. SO ORDERED.

    
G.R. No. 162025. August 3, 2010.*
TUNAY NA PAGKAKAISA NG MANGGAGAWA SA ASIA BREWERY, petitioner, vs.
ASIA BREWERY, INC., respondent.
Labor Law; Labor Unions; Although Article 245 of the Labor Code limits the ineligibility to
join, form and assist any labor organization to managerial employees, jurisprudence has
extended this prohibition to confidential employees or those who by reason of their positions
or nature of work are required to assist or act in a fiduciary manner to managerial
employees; Confidential employees are thus excluded from the rank-and-file bargaining unit.
—Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any
labor organization to managerial employees, jurisprudence has extended this prohibition to
confidential employees or those who by reason of their positions or nature of work are
required to assist or act in a fiduciary manner to managerial employees and hence, are
likewise privy to sensitive and highly confidential records. Confidential employees are thus
excluded from the rank-and-file bargaining unit. The rationale for their separate category and
disqualification to join any labor organization is similar to the inhibition for managerial
employees because if allowed to be affiliated with a Union, the latter might not be assured of
their loyalty in view of evident conflict of interests and the Union can also become company-
denominated with the presence of managerial employees in the Union membership. Having
access to confidential information, confidential employees may also become the source of
undue advantage. Said employees may act as a spy or spies of either party to a collective
bargaining agreement.
Same; Same; Confidential Employees; Definition of Confidential Employees; The confidential
relationship must exist between the employee and his supervisor and the supervisor must
handle the prescribed responsibilities relating to labor relations.—Confidential employees are
defined as those who (1) assist or act in a confidential capacity, (2) to persons who
formulate, determine, and effectuate management policies in the field of labor relations. The
two (2) criteria are cumulative, and both must be met if an employee is to be considered a
confidential employee—that is, the confidential relationship must exist between the employee
and his supervisor, and the supervisor must handle the prescribed responsibilities relating to
labor relations. The exclusion from bargaining units of employees who, in the normal course
of their duties, become aware of management policies relating to labor relations is a principal
objective sought to be accomplished by the “confidential employee rule.”
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
   The facts are stated in the opinion of the Court.
VILLARAMA, JR., J.:
For resolution is an appeal by certiorari filed by petitioner under Rule 45 of the 1997 Rules of
Civil Procedure, as amended, assailing the Decision1 dated November 22, 2002 and
Resolution2 dated January 28, 2004 rendered by the Court of Appeals (CA) in CA-G.R. SP No.
55578, granting the petition of respondent company and reversing the Voluntary Arbitrator’s
Decision3 dated October 14, 1999.
The facts are:
89
Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and distribution of
beer, shandy, bottled water and glass products. ABI entered into a Collective Bargaining
Agreement (CBA),4 effective for five (5) years from August 1, 1997 to July 31, 2002, with
Bisig at Lakas ng mga Manggagawa sa Asia-Independent (BLMA-INDEPENDENT), the
exclusive bargaining representative of ABI’s rank-and-file employees. On October 3, 2000,
ABI and BLMA-INDEPENDENT signed a renegotiated CBA effective from August 1, 2000 to 31
July 2003.5
Article I of the CBA defined the scope of the bargaining unit, as follows:
“Section 1. Recognition.—The COMPANY recognizes the UNION as the sole and exclusive
bargaining representative of all the regular rank-and-file daily paid employees within the
scope of the appropriate bargaining unit with respect to rates of pay, hours of work and
other terms and conditions of employment. The UNION shall not represent or accept for
membership employees outside the scope of the bargaining unit herein defined.
Section 2. Bargaining Unit.—The bargaining unit shall be comprised of all regular rank-and-
file daily-paid employees of the COMPANY. However, the following jobs/positions as herein
defined shall be excluded from the bargaining unit, to wit:
 1. Managers
 2. Assistant Managers
 3. Section Heads
 4. Supervisors
 5. Superintendents
 6. Confidential and Executive Secretaries
 7. Personnel, Accounting and Marketing Staff
 8. Communications Personnel
 9. Probationary Employees
10. Security and Fire Brigade Personnel
11. Monthly Employees
12. Purchasing and Quality Control Staff”6
             [EMPHASIS SUPPLIED.]
Subsequently, a dispute arose when ABI’s management stopped deducting union dues from
eighty-one (81) employees, believing that their membership in BLMA-INDEPENDENT violated
the CBA. Eighteen (18) of these affected employees are QA Sampling
Inspectors/Inspectresses and Machine Gauge Technician who formed part of the Quality

Control Staff. Twenty (20) checkers are assigned at the Materials Department of the
Administration Division, Full Goods Department of the Brewery Division and Packaging
Division. The rest are secretaries/clerks directly under their respective division managers.7
BLMA-INDEPENDENT claimed that ABI’s actions restrained the employees’ right to self-
organization and brought the matter to the grievance machinery. As the parties failed to
amicably settle the controversy, BLMA-INDEPENDENT lodged a complaint before the National
Conciliation and Mediation Board (NCMB). The parties eventually agreed to submit the case
for arbitration to resolve the issue of “[w]hether or not there is restraint to employees in the
exercise of their right to self-organization.”8
In his Decision, Voluntary Arbitrator Bienvenido Devera sustained the BLMA-INDEPENDENT
after finding that the records submitted by ABI showed that the positions of the subject
employees qualify under the rank-and-file category because their functions are merely
routinary and clerical. He noted that the positions occupied by the checkers and
secretaries/clerks in the different divisions are not managerial or supervisory, as evident from
the duties and responsibilities assigned to them. With respect to QA Sampling
Inspectors/Inspectresses and Machine Gauge Technician, he ruled that ABI failed to establish
with sufficient clarity their basic functions as to consider them Quality Control Staff who were
excluded from the coverage of the CBA. Accordingly, the subject employees were declared
eligible for inclusion within the bargaining unit represented by BLMA-INDEPENDENT.9
On appeal, the CA reversed the Voluntary Arbitrator, ruling that:
“WHEREFORE, foregoing premises considered, the questioned decision of the Honorable
Voluntary Arbitrator Bienvenido De Vera is hereby REVERSED and SET ASIDE, and A NEW
ONE ENTERED DECLARING THAT:
a)  the 81 employees are excluded from and are not eligible for inclusion in the bargaining
unit as defined in Section 2, Article I of the CBA;
b) the 81 employees cannot validly become members of respondent and/or if already
members, that their membership is violative of the CBA and that they should disaffiliate from
respondent; and
c) petitioner has not committed any act that restrained or tended to restrain its employees
in the exercise of their right to self-organization.
NO COSTS. SO ORDERED.”10
BLMA-INDEPENDENT filed a motion for reconsideration. In the meantime, a certification
election was held on August 10, 2002 wherein petitioner Tunay na Pagkakaisa ng
Manggagawa sa Asia (TPMA) won. As the incumbent bargaining representative of ABI’s rank-
and-file employees claiming interest in the outcome of the case, petitioner filed with the CA
an omnibus motion for reconsideration of the decision and intervention, with attached
petition signed by the union officers.11 Both motions were denied by the CA.12
The petition is anchored on the following grounds:
90
(1) THE COURT OF APPEALS ERRED IN RULING THAT THE 81 EMPLOYEES ARE EXCLUDED
FROM AND ARE NOT ELIGIBLE FOR INCLUSION IN THE BARGAINING UNIT AS
DEFINED IN SECTION 2, ARTICLE 1 OF THE CBA[;]
(2) THE COURT OF APPEALS ERRED IN HOLDING THAT THE 81 EMPLOYEES CANNOT
VALIDLY BECOME UNION MEMBERS, THAT THEIR MEMBERSHIP IS VIOLATIVE OF THE
CBA AND THAT THEY SHOULD DISAFFILIATE FROM RESPONDENT;
(3) THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT PETITIONER (NOW
PRIVATE RESPONDENT) HAS NOT COMMITTED ANY ACT THAT RESTRAINED OR
TENDED TO RESTRAIN ITS EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO SELF-
ORGANIZATION.13 
Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor
organization to managerial employees, jurisprudence has extended this prohibition to
confidential employees or those who by reason of their positions or nature of work are
required to assist or act in a fiduciary manner to managerial employees and hence, are
likewise privy to sensitive and highly confidential records.14 Confidential employees are thus
excluded from the rank-and-file bargaining unit. The rationale for their separate category and
disqualification to join any labor organization is similar to the inhibition for managerial
employees because if allowed to be affiliated with a Union, the latter might not be assured of
their loyalty in view of evident conflict of interests and the Union can also become company-
denominated with the presence of managerial employees in the Union membership.15 Having
access to confidential information, confidential employees may also become the source of
undue advantage. Said employees may act as a spy or spies of either party to a collective
bargaining agreement.16 
In Philips Industrial Development, Inc. v. NLRC,17 this Court held that petitioner’s “division
secretaries, all Staff of General Management, Personnel and Industrial Relations Department,
Secretaries of Audit, EDP and Financial Systems” are confidential employees not included
within the rank-and-file bargaining unit.18 Earlier, in Pier 8 Arrastre & Stevedoring Services,
Inc. v. Roldan-Confesor,19 we declared that legal secretaries who are tasked with, among
others, the typing of legal documents, memoranda and correspondence, the keeping of
records and files, the giving of and receiving notices, and such other duties as required by
the legal personnel of the corporation, fall under the category of confidential employees and
hence excluded from the bargaining unit composed of rank-and-file employees.20
 Also considered having access to “vital labor information” are the executive secretaries of the
General Manager and the executive secretaries of the Quality Assurance Manager, Product
Development Manager, Finance Director, Management System Manager, Human Resources
Manager, Marketing Director, Engineering Manager, Materials Manager and Production
Manager.21 
In the present case, the CBA expressly excluded “Confidential and Executive Secretaries”
from the rank-and-file bargaining unit, for which reason ABI seeks their disaffiliation from
petitioner. Petitioner, however, maintains that except for Daisy Laloon, Evelyn Mabilangan
and Lennie Saguan who had been promoted to monthly paid positions, the following
secretaries/clerks are deemed included among the rank-and-file employees of ABI:22
 91

Maintenance Mr. Ernesto Ang

NAME DEPARTMENT IMMEDIATE 2. Velez, Carmelito A. Bottling
SUPERIOR Maintenance Mr. Ernesto Ang
C1 ADMIN DIVISION          
1. Angeles, Cristina C. Transportation Mr. Melito K. Tan 1. Bordamonte, Rhumela D. Bottled Water Mr. Faustino Tetonche
2. Barraquio, Carina P. Transportation Mr. Melito K. Tan 2. Deauna, Edna R. Bottled Water Mr. Faustino Tetonche
3. Cabalo, Marivic B. Transportation Mr. Melito K. Tan 3. Punongbayan, Marylou F. Bottled Water Mr. Faustino Tetonche
4. Fameronag, Leodigario C. Transportation Mr. Melito K. Tan 4. Saguan, Lennie Y. Bottled Water Mr. Faustino Tetonche
           
1. Abalos, Andrea A. MaterialsMr. Andres G. Co 1. Alcoran, Simeon A. Full Goods Mr. Tsoi Wah Tung
2. Algire, Juvy L. MaterialsMr. Andres G. Co 2. Cervantes, Ma. Sherley Y. Full Goods Mr. Tsoi Wah Tung
3. Anoñuevo, Shirley P. MaterialsMr. Andres G. Co 3. Diongco, Ma. Teresa M. Full Goods Mr. Tsoi Wah Tung
4. Aviso, Rosita S.MaterialsMr. Andres G. Co 4. Mabilangan, Evelyn M. Full Goods Mr. Tsoi Wah Tung
5. Barachina, Pauline C. MaterialsMr. Andres G. Co 5. Rivera, Aurora M. Full Goods Mr. Tsoi Wah Tung
6. Briones, Catalina P. MaterialsMr. Andres G. Co 6. Salandanan, Nancy G. Full Goods Mr. Tsoi Wah Tung
7. Caralipio, Juanita P. MaterialsMr. Andres G. Co      
8. Elmido, Ma. Rebecca S. MaterialsMr. Andres G. Co 1. Magbag, Ma. Corazon C.
9. Giron, Laura P. MaterialsMr. Andres G. Co Tank Farm/
10. Mane, Edna A. MaterialsMr. Andres G. Co
      Cella Services
xxxx    
      Mr. Manuel Yu Liat
C2 BREWERY      
     DIVISION     1. Capiroso, Francisca A. Quality
      Assurance Ms. Regina Mirasol
1. Laloon, Daisy S. Brewhouse Mr. William Tan      
      1. Alconaba, Elvira C. Engineering Mr. Clemente Wong
1. Arabit, Myrna F. Bottling 2. Bustillo, Bernardita E. ElectricalMr. Jorge Villarosa
Production Mr.Julius Palmares 3. Catindig, Ruel A. Civil Works Mr. Roger Giron
_______________ 4. Sison, Claudia B. Utilities Mr. Venancio Alconaba
     
22 CA Rollo, pp. 62-63. xxxx    
C3 PACKAGING DIVISION      
384 1. Alvarez, Ma. Luningning L.
384
GP Admin-
SUPREME COURT REPORTS ANNOTATED istration Ms. Susan Bella
2. Cañiza, Alma A. GP Technical Mr. Chen Tsai Tyan
Tunay ns Pagkakisa ng Manggagawa sa Asia Brewery vs. Asia Brewery, Inc. 3. Cantalejo, Aida S. GP Engineering Mr. Noel Fernandez
4. Castillo, Ma. Riza R. GP Production Mr. Tsai Chen Chih
2. Burgos, Adelaida D. Bottling 5. Lamadrid, Susana C. GP Production Mr. Robert Bautista
Production Mr. Julius Palmares 6. Mendoza, Jennifer L. GP Technical Mr. Mel Oña
3. Menil, Emmanuel S. Bottling As can be gleaned from the above listing, it is rather curious that there would be several
Production Mr. Julius Palmares secretaries/clerks for just one (1) department/division performing tasks which are mostly
4. Nevalga, Marcelo G. Bottling routine and clerical. Respondent insisted they fall under the “Confidential and Executive
Production Mr. Julius Palmares Secretaries” expressly excluded by the CBA from the rank-and-file bargaining unit. However,
      perusal of the job descriptions of these secretaries/clerks reveals that their assigned duties
1. Mapola, Ma. Esraliza T. Bottling and responsibilities involve routine activities of recording and monitoring, and other paper

works for their respective departments while secretarial tasks such as receiving telephone
calls and filing of office correspondence appear to have been commonly imposed as
additional duties.23 Respondent failed to indicate who among these numerous
secretaries/clerks have access to confidential data relating to management policies that could
give rise to potential conflict of interest with their Union membership. Clearly, the rationale
under our previous rulings for the exclusion of executive secretaries or division secretaries
would have little or no significance considering the lack of or very limited access to
confidential information of these secretaries/clerks. It is not even farfetched that the job
category may exist only on paper since they are all daily-paid workers. Quite understandably,
petitioner had earlier expressed the view that the positions were just being “reclassified” as
these employees actually discharged routine functions.
We thus hold that the secretaries/clerks, numbering about forty (40), are rank-and-file
employees and not confidential employees.
With respect to the Sampling Inspectors/Inspectresses and the Gauge Machine Technician,
there seems no dispute that they form part of the Quality Control Staff who, under the
express terms of the CBA, fall under a distinct category. But we disagree with respondent’s
contention that the twenty (20) checkers are similarly confidential employees being “quality
control staff” entrusted with the handling and custody of company properties and sensitive
information.
Again, the job descriptions of these checkers assigned in the storeroom section of the
Materials Department, finishing section of the Packaging Department, and the decorating and
glass sections of the Production Department plainly showed that they perform routine and
mechanical tasks preparatory to the delivery of the finished products.24 While it may be
argued that quality control extends to post-production phase—proper packaging of the
finished products—no evidence was presented by the respondent to prove that these daily-
paid checkers actually form part of the company’s Quality Control Staff who as such “were
exposed to sensitive, vital and confidential information about [company’s] products” or “have
knowledge of mixtures of the products, their defects, and even their formulas” which are
considered ‘trade secrets’. Such allegations of respondent must be supported by evidence.25
Consequently, we hold that the twenty (20) checkers may not be considered confidential
employees under the category of Quality Control Staff who were expressly excluded from the
CBA of the rank-and-file bargaining unit.
Confidential employees are defined as those who (1) assist or act in a confidential capacity,
(2) to persons who formulate, determine, and effectuate management policies in the field of
labor relations. The two (2) criteria are cumulative, and both must be met if an employee is
to be considered a confidential employee—that is, the confidential relationship must exist
between the employee and his supervisor, and the supervisor must handle the prescribed
responsibilities relating to labor relations. The exclusion from bargaining units of employees
who, in the normal course of their duties, become aware of management policies relating to
labor relations is a principal objective sought to be accomplished by the “confidential
employee rule.”26 There is no showing in this case that the secretaries/clerks and checkers
assisted or acted in a confidential capacity to managerial employees and obtained confidential
information relating to labor relations policies. And even assuming that they had exposure to
92
internal business operations of the company, respondent claimed, this is not per se ground
for their exclusion in the bargaining unit of the daily-paid rank-and-file employees.27
Not being confidential employees, the secretaries/clerks and checkers are not disqualified
from membership in the Union of respondent’s rank-and-file employees. Petitioner argues
that respondent’s act of unilaterally stopping the deduction of union dues from these
employees constitutes unfair labor practice as it “restrained” the workers’ exercise of their
right to self-organization, as provided in Article 248 (a) of the Labor Code. Unfair labor
practice refers to “acts that violate the workers’ right to organize.” The prohibited acts are
related to the workers’ right to self organization and to the observance of a CBA. For a
charge of unfair labor practice to prosper, it must be shown that ABI was motivated by ill will,
“bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals,
good customs, or public policy, and, of course, that social humiliation, wounded feelings or
grave anxiety resulted x x x”28 from ABI’s act in discontinuing the union dues deduction from
those employees it believed were excluded by the CBA. Considering that the herein dispute
arose from a simple disagreement in the interpretation of the CBA provision on excluded
employees from the bargaining unit, respondent cannot be said to have committed unfair
labor practice that restrained its employees in the exercise of their right to self-organization,
nor have thereby demonstrated an anti-union stance.
WHEREFORE, the petition is GRANTED. The Decision dated November 22, 2002 and
Resolution dated January 28, 2004 of the Court of Appeals in CA-G.R. SP No. 55578 are
hereby REVERSED and SET ASIDE. The checkers and secretaries/clerks of respondent
company are hereby declared rank-and-file employees who are eligible to join the Union of
the rank-and-file employees.
No costs. SO ORDERED.
G.R. No. 161933. April 22, 2008.*
STANDARD CHARTERED BANK EMPLOYEES UNION (SCBEU-NUBE), petitioner, vs.
STANDARD CHARTERED BANK and ANNEMARIE DURBIN, in her capacity as Chief
Executive Officer, Philippines, Standard Chartered Bank, respondents.
Labor Law; Managerial Employees; Labor Unions; The disqualification of managerial and
confidential employees from joining a bargaining unit for rank and file employees is already
well-entrenched in jurisprudence.—The disqualification of managerial and confidential
employees from joining a bargaining unit for rank and file employees is already well-
entrenched in jurisprudence. While Article 245 of the Labor Code limits the ineligibility to join,
form and assist any labor organization to managerial employees, jurisprudence has extended
this prohibition to confidential employees or those who by reason of their positions or nature
of work are required to assist or act in a fiduciary manner to managerial employees and
hence, are likewise privy to sensitive and highly confidential records.
Same; Confidential Employees; Labor Unions; Qualifications of Bank Cashiers as Confidential
Employees.—As regards the qualification of bank cashiers as confidential employees, National
Association of Trade Unions (NATU)—Republic Planters Bank Supervisors Chapter v. Torres,
239 SCRA 546 (1994) declared that they are confidential employees having control, custody
and/or access to confidential matters, e.g., the branch’s cash position, statements of financial
condition, vault combination, cash codes for telegraphic transfers, demand drafts and other

negotiable instruments, pursuant to Sec. 1166.4 of the Central Bank Manual regarding joint
custody, and therefore, disqualified from joining or assisting a union; or joining, assisting or
forming any other labor organization.
Same; Same; Confidential employees such as accounting personnel, radio and telegraph
operators who, having access to confidential information, may become the source of undue
advantage.—Golden Farms, Inc. v. Ferrer-Calleja, 175 SCRA 471 (1989), meanwhile stated
that “confidential employees such as accounting personnel, radio and telegraph operators
who, having access to confidential information, may become the source of undue advantage.
Said employee(s) may act as spy or spies of either party to a collective bargaining
agreement.” Finally, in Philips Industrial Development, Inc. v. National Labor Relations
Commission, 210 SCRA 339 (1992), the Court designated personnel staff, in which human
resources staff may be qualified, as confidential employees because by the very nature of
their functions, they assist and act in a confidential capacity to, or have access to confidential
matters of, persons who exercise managerial functions in the field of labor relations.
Same; Compensation; We uphold the public respondent’s Order that no employee should be
temporarily placed in a position (acting capacity) for more than one month without the
corresponding adjustment in salary.—We uphold the public respondent’s Order that no
employee should be temporarily placed in a position (acting capacity) for more than one
month without the corresponding adjustment in the salary. Such order of the public
respondent is not in violation of the “equal pay for equal work” principle, considering that
after one (1) month, the employee performing the job in an acting capacity will be entitled to
salary corresponding to such position.
x x x x In arriving at its Order, the public respondent took all the relevant evidence into
account and weighed both parties arguments extensively. Thus, public respondent concluded
that a restrictive provision with respect to employees being placed in an acting capacity may
curtail management’s valid exercise of its prerogative. At the same time, it recognized that
employees should not be made to perform work in an acting capacity for extended periods of
time without being adequately compensated. x x x
Appeals; Judicial review of labor cases does not go so far as to evaluate the sufficiency of
evidence on which the labor official’s findings rest.—[T]he office of a petition for review on
certiorari under Rule 45 of the Rules of Court requires that it shall raise only questions of law.
The factual findings by quasi-judicial agencies, such as the Department of Labor and
Employment, when supported by substantial evidence, are entitled to great respect in view of
their expertise in their respective fields. Judicial review of labor cases does not go so far as to
evaluate the sufficiency of evidence on which the labor official’s findings rest. It is not our
function to assess and evaluate all over again the evidence, testimonial and documentary,
adduced by the parties to an appeal, particularly where the findings of both the trial court
(here, the DOLE Secretary) and the appellate court on the matter coincide, as in this case at
bar. The Rule limits that function of the Court to the review or revision of errors of law and
not to a second analysis of the evidence. x x x Thus, absent any showing of whimsical or
capricious exercise of judgment, and unless lack of any basis for the conclusions made by the
appellate court be amply demonstrated, we may not disturb such factual findings.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
AUSTRIA-MARTINEZ, J.:
93
For resolution is an appeal by certiorari filed by petitioner under Rule 45 of the Rules of
Court, assailing the Decision1 dated October 9, 2002 and Resolution2 dated January 26, 2004
issued by the Court of Appeals (CA), dismissing their petition and affirming the Secretary of
Labor and Employment’s Orders dated May 31, 2001 and August 30, 2001.
Petitioner and the Standard Chartered Bank (Bank) began negotiating for a new Collective
Bargaining Agreement (CBA) in May 2000 as their 1998-2000 CBA already expired. Due to a
deadlock in the negotiations, petitioner filed a Notice of Strike prompting the Secretary of
Labor and Employment to assume jurisdiction over the labor dispute.
On May 31, 2001, Secretary Patricia A. Sto. Tomas of the Department of Labor and
Employment (DOLE) issued an Order with the following dispositive portion:
“WHEREFORE, PREMISES CONSIDERED, the Standard Chartered Bank and the Standard
Chartered Bank Employees Union are directed to execute their collective bargaining
agreement effective 01 April 2001 until 30 March 2003 incorporating therein the foregoing
dispositions and the agreements they reached in the course of negotiations and conciliation.
All other submitted issues that were not passed upon are dismissed.
The charge of unfair labor practice for bargaining in bad faith and the claim for damages
relating thereto are hereby dismissed for lack of merit.
Finally, the charge of unfair labor practice for gross violation of the economic provisions of
the CBA is hereby dismissed for want of jurisdiction.
SO ORDERED.”3
Both petitioner and the Bank filed their respective motions for reconsideration, which were
denied by the Secretary per Order dated August 30, 2001.4
Petitioner sought recourse with the CA via a petition for certiorari, and in the assailed
Decision dated October 9, 20025 and Resolution dated January 26, 2004,6 the CA dismissed
their petition and affirmed the Secretary’s Orders.
Hence, herein petition based on the following grounds:
I. THE COURT A QUO ERRED IN DECIDING THAT THERE WAS NO BASIS FOR
REVISING THE SCOPE OF EXCLUSIONS FROM THE APPROPRIATE BARGAINING
UNIT UNDER THE CBA.
II. THE COURT A QUO ERRED IN DECIDING THAT A ONE-MONTH OR LESS
TEMPORARY OCCUPATION OF A POSITION (ACTING CAPACITY) DOES NOT
MERIT ADJUSTMENT IN REMUNERATION.7
The resolution of this case has been overtaken by the execution of the parties’ 2003-2005
CBA. While this would render the case moot and academic, nevertheless, the likelihood that

the same issues will come up in the parties’ future CBA negotiations is not far-fetched, thus
compelling its resolution.
C. The Chief Cashiers and Assistant Cashiers in Manila, Cebu and Iloilo, and in any other
branch that the BANK may establish in the country.
D. Personnel of the Telex Department
E. All Security Guards
F. Probationary employees, without prejudice to Article 277 (c) of the Labor Code, as
amended by R.A. 6715, casuals or emergency employees; and
G. One (1) HR Staff11
The Secretary, however, maintained the previous exclusions because petitioner failed to show
that the employees sought to be removed from the list qualify for exclusion.12
With regard to the remuneration of employees working in an acting capacity, it was
petitioner’s position that additional pay should be given to an employee who has been
serving in a temporary/acting capacity for one week. The Secretary likewise rejected
petitioner’s proposal and instead, allowed additional pay for those who had been working in
such capacity for one month. The Secretary agreed with the Bank’s position that a restrictive
provision would curtail management’s prerogative, and at the same time, recognized that
employees should not be made to work in an acting capacity for long periods of time without
adequate compensation.
The Secretary’s disposition of the issues raised by petitioner were affirmed by the CA.13 The
Court sustains the CA.
Whether or not the employees sought to be excluded from the appropriate bargaining unit
are confidential employees is a question of fact, which is not a proper issue in a petition for
review under Rule 45 of the Rules of Court.14 This holds more true in the present case in
which petitioner failed to controvert with evidence the findings of the Secretary and the CA.
The disqualification of managerial and confidential employees from joining a bargaining unit
for rank and file employees is already well-entrenched in jurisprudence. While Article 245 of
the Labor Code limits the ineligibility to join, form and assist any labor organization to
managerial employees, jurisprudence has extended this prohibition to confidential employees
or those who by reason of their positions or nature of work are required to assist or act in a
fiduciary manner to managerial employees and hence, are likewise privy to sensitive and
highly confidential records.15
In this case, the question that needs to be answered is whether the Bank’s Chief Cashiers
and Assistant Cashiers, personnel of the Telex Department and HR staff are confidential
employees, such that they should be excluded.
As regards the qualification of bank cashiers as confidential employees, National Association
of Trade Unions (NATU)
94
—Republic Planters Bank Supervisors Chapter v. Torres16 declared that they are confidential
employees having control, custody and/or access to confidential matters, e.g., the branch’s
cash position, statements of financial condition, vault combination, cash codes for telegraphic
transfers, demand drafts and other negotiable instruments, pursuant to Sec. 1166.4 of the
Central Bank Manual regarding joint custody, and therefore, disqualified from joining or
assisting a union; or joining, assisting or forming any other labor organization.17
Golden Farms, Inc. v. Ferrer-Calleja18 meanwhile stated that “confidential employees such as
accounting personnel, radio and telegraph operators who, having access to confidential
information, may become the source of undue advantage. Said employee(s) may act as spy
or spies of either party to a collective bargaining agreement.”19
Finally, in Philips Industrial Development, Inc. v. National Labor Relations Commission,20 the
Court designated personnel staff, in which human resources staff may be qualified, as
confidential employees because by the very nature of their functions, they assist and act in a
confidential capacity to, or have access to confidential matters of, persons who exercise
managerial functions in the field of labor relations.
Petitioner insists that the foregoing employees are not confidential employees; however, it
failed to buttress its claim. Aside from its generalized arguments, and despite the Secretary’s
finding that there was no evidence to support it, petitioner still failed to substantiate its claim.
Petitioner did not even bother to state the nature of the duties and functions of these
employees, depriving the Court of any basis on which it may be concluded that they are
indeed confidential employees. As aptly stated by the CA:
“While We agree that petitioner’s proposed revision is in accordance with the law, this does
not necessarily mean that the list of exclusions enumerated in the 1998-2000 CBA is contrary
to law. As found by public respondent, petitioner failed to show that the employees sought to
be removed from the list of exclusions are actually rank and file employees who are not
managerial or confidential in status and should, accordingly, be included in the appropriate
bargaining unit.
Absent any proof that Chief Cashiers and Assistant Cashiers, personnel of the Telex
department and one (1) HR Staff have mutuality of interest with the other rank and file
employees, then they are rightfully excluded from the appropriate bargaining unit. x x x”21
(Emphasis supplied). Petitioner cannot simply rely on jurisprudence without explaining how
and why it should apply to this case. Allegations must be supported by evidence. In this case,
there is barely any at all.
There is likewise no reason for the Court to disturb the conclusion of the Secretary and the
CA that the additional remuneration should be given to employees placed in an acting
capacity for one month. The CA correctly stated:
“Likewise, We uphold the public respondent’s Order that no employee should be temporarily
placed in a position (acting capacity) for more than one month without the corresponding
adjustment in the salary. Such order of the public respondent is not in violation of the “equal
pay for equal work” principle, considering that after one (1) month, the employee performing
the job in an acting capacity will be entitled to salary corresponding to such position.

xxxx
In arriving at its Order, the public respondent took all the relevant evidence into account and
weighed both parties arguments extensively. Thus, public respondent concluded that a
restrictive provision with respect to employees being placed in an acting capacity may curtail
management’s valid exercise of its prerogative. At the same time, it recognized that
employees should not be made to perform work in an acting capacity for extended periods of
time without being adequately compensated. x x x”22
Thus, the Court reiterates the doctrine that:
“[T]he office of a petition for review on certiorari under Rule 45 of the Rules of Court requires
that it shall raise only questions of law. The factual findings by quasi-judicial agencies, such
as the Department of Labor and Employment, when supported by substantial evidence, are
entitled to great respect in view of their expertise in their respective fields. Judicial review of
labor cases does not go so far as to evaluate the sufficiency of evidence on which the labor
official’s findings rest. It is not our function to assess and evaluate all over again the
evidence, testimonial and documentary, adduced by the parties to an appeal, particularly
where the findings of both the trial court (here, the DOLE Secretary) and the appellate court
on the matter coincide, as in this case at bar. The Rule limits that function of the Court to the
review or revision of errors of law and not to a second analysis of the evidence. x x x Thus,
absent any showing of whimsical or capricious exercise of judgment, and unless lack of any
basis for the conclusions made by the appellate court be amply demonstrated, we may not
disturb such factual findings.”23
WHEREFORE, the petition is DENIED. SO ORDERED.
Workers and members of cooperative
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 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
95
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 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.
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 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 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.
96
Petitioner CENECO argues that respondent Secretary committed a grave abuse of discretion
in not applying to the present case the doctrine enunciated in the BATANGAS case that
employees of an electric cooperative who at the same time are members of the electric
cooperative are prohibited from forming or joining labor unions for purposes of a collective
bargaining agreement. While CENECO recognizes the employees’ right to self-organization, it
avers that this is not absolute. Thus, it opines that employees of an electric cooperative who
at the same time are members thereof are not allowed to form or join labor unions for
purposes of collective bargaining. However, petitioner does not hesitate to admit that the
prohibition does not extend to employees of an electric cooperative who are not members of
the cooperative.
The issue, therefore, actually involves a determination of whether or not the employees of
CENECO who withdrew their membership from the cooperative are entitled to form or join
CURE for purposes of the negotiations for a collective bargaining agreement proposed by the
latter.
As culled from the records, it is the submission of CENECO that the withdrawal from
membership in the cooperative and, as a consequence, the employees’ acquisition of
membership in the union cannot be allowed for the following reasons:
1.It was made as a subterfuge or to subvert the ruling in the BATANGAS case:
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.

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
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.
97
Membership in an electric cooperative which merely vests in the member a right to vote
during the annual meeting becomes too trivial and insubstantial vis-a-vis the primordial and
more important constitutional right of an employee to join a union of his choice. Besides, the
390 employees of CENECO, some of whom have never been members of the cooperative,
represent a very small percentage of the cooperative’s total membership of 44,000. It is
inconceivable how the withdrawal of a negligible number of members could adversely affect
the business concerns and operations of CENECO.
We rule, however, that the direct certification ordered by respondent Secretary is not proper.
By virtue of Executive Order No. 111, which became effective on March 4, 1987, the direct
certification originally allowed under Article 257 of the Labor Code has apparently been
discontinued as a method of selecting the exclusive bargaining agent of the workers. This
amendment affirms the superiority of the certification election over the direct certification
;which is no longer available now under the change in said provision.8
We have said that where a union has filed a petition for certification election, the mere fact
that no opposition is made does not warrant a direct certification.9 In said case which has
similar features to that at bar, wherein the respondent Minister directly certified the union,
we held that:
“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 CENECO with CURE and No Union as the choices therein.
SO ORDERED.
Employees of International Org.
G.R. No. 85750. September 28, 1990.*

INTERNATIONAL CATHOLIC MIGRATION COMMISSION, petitioner, vs. HON. PURA
CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR RELATIONS
AND TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS) WFTU,
respondents.
G.R. NO. 89331. September 28, 1990.*
KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-ORGANIZED LABOR
ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE, petitioner, vs.
SECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL RICE RESEARCH
INSTITUTE, INC., respondents.
Political Law; Public International Law; Nature of Specialized Agencies; Specialized agencies
are international organizations.—"Specialized agencies" are international organizations having
functions in particular fields. The term appears in Articles 57 and 63 of the Charter of the
United Nations: "The Charter, while it invests the United Nations with the general task of
promoting progress and international cooperation in economic, social, health, cultural,
educational and related matters, contemplates that these tasks will be mainly fulfilled not by
organs of the United Nations itself but by autonomous international organizations established
by inter-governmental agreements outside the United Nations. There are now many such
international agencies having functions in many different fields, e.g. in posts,
telecommunications, railways, canals, rivers, sea transport, civil aviation, meteorology, atomic
energy, finance, trade, education and culture, health and refugees. Some are virtually world-
wide in their membership, some are regional or otherwise limited in their membership. The
Charter provides that those agencies which have 'wide international responsibilities' are to be
brought into relationship with the United Nations by agreements entered into between them
and the Economic and Social Council, are then to be known as 'specialized agencies.'"
Same; Same; Grant of lmmunity. Immunity to ICMC and IRRI is granted to avoid interference
by the host country in their internal workings.—The grant of immunity from local jurisdiction
to ICMC and IRRI is clearly necessitated by their international character and respective
purposes. The objective is to avoid the danger of partiality and interference by the host
country in their internal workings. The exercise of jurisdiction by the Department of Labor in
these instances would defeat the very purpose of immunity, which is to shield the affairs of
international organizations, in accordance with international practice, from political pressure
or control by the host country to the prejudice of member States of the organization, and to
ensure the unhampered performance of their functions.
Same; Same; Convention on the Privileges and Immunities of the Specialized Agencies of the
United Nations. ICMC employees are not without recourse whenever there are disputes to be
settled.—Section 31 of the Convention on the Privileges and Immunities of the Specialized
Agencies of the United Nations provides that "each specialized agency shall make provision
for appropriate modes of settlement of: (a) disputes arising out of contracts or other disputes
of private character to which the specialized agency is a party." Moreover, pursuant to Article
IV of the Memorandum of Agreement between ICMC and the Philippine Government,
whenever there is any abuse of privilege by ICMC, the Government is free to withdraw the
privileges and immunities accorded. Thus: "Article IV. Cooperation with Government
Authorities.—1. The Commission shall cooperate at all times with the appropriate authorities
of the Government to ensure the observance of Philippine laws, rules and regulations,
facilitate the proper administration of justice and prevent the occurrences of any abuse of the
privileges and immunities granted its officials and alien employees in Article III of this
98
Agreement to the Commission. "2. In the event that the Government determines that there
has been an abuse of the privileges and immunities granted under this Agreement,
consultations shall be held between the Government and the Commission to determine
whether any such abuse has occurred and, if so, the Government shall withdraw the
privileges and immunities granted the Commission and its officials."
Same; Same; IRRI employees have recourse to the Council of lRRI Employees and
Management (CIEM) in cases affecting employer-employee relations.—Neither are the
employees of IRRI without remedy in case of dispute with management as, in fact, there had
been organized a forum for better management-employee relationship as evidenced by the
formation of the Council of IRRI Employees and Management (CIEM) wherein "both
management and employees were and still are represented for purposes of maintaining
mutual and beneficial cooperation between IRRI and its employees." The existence of this
Union factually and tellingly belies the argument that Pres. Decree No. 1620, which grants to
IRRI the status, privileges and immunities of an international organization, deprives its
employees of the right to self-organization.
PETITIONS to review the decisions of the Bureau of Labor Relations and the Secretary of
Labor and Employment.
The facts are stated in the opinion of the Court.
MELENCIO-HERRERA, J.:
Consolidated on 11 December 1989, these two cases involve the validity of the claim of
immunity by the International Catholic Migration Commission (ICMC) and the International
Rice Research Institute, Inc. (IRRI) from the application of Philippine labor laws.
I Facts and Issues
A. G.R. No. 85750—the International Catholic Migration Commission (ICMC) Case.
As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South
Vietnam's communist rule confronted the international community.
In response to this crisis, on 23 February 1981, an Agreement was forged between the
Philippine Government and the United Nations High Commissioner for Refugees whereby an
operating center for processing Indo-Chinese refugees for eventual resettlement to other
countries was to be established in Bataan (Annex "A," Rollo, pp. 22-32).
ICMC was one of those accredited by the Philippine Government to operate the refugee
processing center in Morong, Bataan. It was incorporated in New York, USA, at the request of
the Holy See, as a non-profit agency involved in international humanitarian and voluntary
work. It is duly registered with the United Nations Economic and Social Council (ECOSOC)
and enjoys Consultative Status, Category II. As an international organization rendering
voluntary and humanitarian services in the Philippines, its activities are parallel to those of
the International Committee for Migration (ICM) and the International Committee of the Red
Cross (ICRC) [DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol. I]. On 14 July
1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then Ministry

of Labor and Employment a Petition for Certification Election among the rank and file
members employed by ICMC. The latter opposed the petition on the ground that it is an
international organization registered with the United Nations and, hence, enjoys diplomatic
immunity.
On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the
petition for lack of jurisdiction.
On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed
the Med-Arbiter's Decision and ordered the immediate conduct of a certification election. At
that time, ICMC's request for recognition as a specialized agency was still pending with the
Department of Foreign Affairs (DEFORAF).
Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF,
granted ICMC the status of a specialized agency with corresponding diplomatic privileges and
immunities, as evidenced by a Memorandum of Agreement between the Government and
ICMC (Annex "E", Petition, Rollo, pp. 41-43), infra.
ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election
invoking the immunity expressly granted but the same was denied by respondent BLR
Director who, again, ordered the immediate conduct of a preelection conference. ICMC's two
Motions for Reconsideration were denied despite an opinion rendered by DEFORAF on 17
October 1988 that said BLR Order violated ICMC's diplomatic immunity.
Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary
Injunction assailing the BLR Order.
On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding
of the certification election.
On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia
of the Court of Appeals, filed a Motion for Intervention alleging that, as the highest executive
department with the competence and authority to act on matters involving diplomatic
immunity and privileges, and tasked with the conduct of Philippine diplomatic and consular
relations with foreign governments and UN organizations, it has a legal interest in the
outcome of this case.
Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention.
On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the
submittal of memoranda by the parties, which has been complied with.
As initially stated, the issue is whether or not the grant of diplomatic privileges and
immunites to ICMC extends to immunity from the application of Philippine labor laws.
ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement
with the Philippine Government giving it the status of a specialized agency, (infra); (2) the
Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN
99
General Assembly on 21 November 1947 and concurred in by the Philippine Senate through
Resolution No. 91 on 17 May 1949 (the Philippine Instrument of Ratification was signed by
the President on 30 August 1949 and deposited with the UN on 20 March 1950) infra; and (3)
Article II, Section 2 of the 1987 Constitution, which declares that the Philippines adopts the
generally accepted principles of international law as part of the law of the land.
Intervenor DEFORAF upholds ICMC's claim of diplomatic immunity and seeks an affirmance of
the DEFORAF determination that the BLR Order for a certification election among the ICMC
employees is violative of the diplomatic immunity of said organization.
Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites
State policy and Philippine labor laws to justify its assailed Order, particularly, Article II,
Section 18 and Article III, Section 8 of the 1987 Constitution, infra; and Articles 243 and 246
of the Labor Code, as amended, ibid. In addition, she contends that a certification election is
not a litigation but a mere investigation of a non-adversary, factfinding character. It is not a
suit against ICMC, its property, funds or assets, but is the sole concern of the workers
themselves.
B. G.R. No. 89331—(The International Rice Research Institute [IRRI] Case).
Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December
1989, resolved to consolidate G.R. No. 89331 pending before it with G.R. No. 85750, the
lower-numbered case pending with the Second Division, upon manifestation by the Solicitor
General that both cases involve similar issues.
The facts disclose that on 9 December 1959, the Philippine Government and the Ford and
Rockefeller Foundations signed a Memorandum of Understanding establishing the
International Rice Research Institute (IRRI) at Los Baños, Laguna. It was intended to be an
autonomous, philanthropic, tax-free, non-profit, non-stock organization designed to carry out
the principal objective of conducting "basic research on the rice plant, on all phases of rice
production, management, distribution and utilization with a view to attaining nutritive and
economic advantage or benefit for the people of Asia and other major rice-growing areas
through improvement in quality and quantity of rice."
Initially, IRRI was organized and registered with the Securities and Exchange Commission as
a private corporation subject to all laws and regulations. However, by virtue of Pres. Decree
No. 1620, promulgated on 19 April 1979, IRRI was granted the status, prerogatives,
privileges and immunities of an international organization.
The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate
labor organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa
IRRI (Kapisanan, for short) in respondent IRRI.
On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region
IV, Regional Office of the Department of Labor and Employment (DOLE).

IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an
international organization and granting it immunity from all civil, criminal and administrative
proceedings under Philippine laws.
On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres.
Decree No. 1620 and dismissed the Petition for Direct Certification. On appeal, the BLR
Director, who is the public respondent in the ICMC Case, set aside the Med-Arbiter's Order
and authorized the calling of a certification election among the rank-andfile employees of
IRRI. Said Director relied on Article 243 of the Labor Code, as amended, infra, and Article
XIII, Section 3 of the 1987 Constitution,1 and held that "the immunities and privileges
granted to IRRI do not include exemption from coverage of our Labor Laws." Reconsideration
sought by IRRI was denied. On appeal, the Secretary of Labor, in a Resolution of 5 July 1989,
set aside the BLR Director's Order, dismissed the Petition for Certification Election, and held
that the grant of specialized agency status by the Philippine Government to the IRRI bars
DOLE from assuming and exercising jurisdiction over IRRI. Said Resolution reads in part as
follows:
"Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives, privileges
and immunities of an international organization is clear and explicit. It provides in categorical
terms that:
"Art. 3—The Institute shall enjoy immunity from any penal, civil and administrative
proceedings, except insofar as immunity has been expressly waived by the Director-General
of the Institution or his authorized representative.
"Verily, unless and until the Institute expressly waives its immunity, no summons, subpoena,
orders, decisions or proceedings ordered by any court or administrative or quasi-judicial
agency are enforceable as against the Institute. In the case at bar there was no such waiver
made by the Director-General of the Institute. Indeed, the Institute, at the very first
opportunity already vehemently questioned the jurisdiction of this Department by filing an ex-
parte motion to dismiss the case."
Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion
by respondent Secretary of Labor in upholding IRRI's diplomatic immunity.
The Third Division, to which the case was originally assigned, required the respondents to
comment on the petition. In a Manifestation filed on 4 August 1990, the Secretary of Labor
declared that it was "not adopting as his own" the decision of the BLR Director in the ICMC
Case as well as the Comment of the Solicitor General sustaining said Director. The last
pleading was filed by IRRI on 14 August 1990.
Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he
be excused from filing a comment "it appearing that in the earlier case of lnternational
Catholic Migration Commission v. Hon. Pura Calleja, G.R. No. 85750, the Office of the
Solicitor General had sustained the stand of Director Calleja on the very same issue now
before it, which position has been superseded by respondent Secretary of Labor in G.R. No.
89331," the present case. The Court acceded to the Solicitor General's prayer.
100
The Court is now asked to rule upon whether or not the Secretary of Labor committed grave
abuse of discretion in dismissing the Petition for Certification Election filed by Kapisanan.
Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status,
privileges, prerogatives and immunities of an international organization, invoked by the
Secretary of Labor, is unconstitutional in so far as it deprives the Filipino workers of their
fundamental and constitutional right to form trade unions for the purpose of collective
bargaining as enshrined in the 1987 Constitution.
A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for
entertaining IRRI's appeal from the Order of the Director of the Bureau of Labor Relations
directing the holding of a certification election. Kapisanan contends that pursuant to Sections
7, 8, 9 and 10 of Rule V2 of the Omnibus Rules Implementing the Labor Code, the Order of
the BLR Director had become final and unappeable and that, therefore, the Secretary of
Labor had no more jurisdiction over the said appeal.
On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of
Rep. Act. No. 6715, which took effect on 21 March 1989, providing for the direct filing of
appeal from the Med-Arbiter to the Office of the Secretary of Labor and Employment instead
of to the Director of the Bureau of Labor Relations in cases involving certification election
orders.
III Findings in Both Cases.
There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI.
Article II of the Memorandum of Agreement between the Philippine Government and ICMC
provides that ICMC shall have a status "similar to that of a specialized agency." Article III,
Sections 4 and 5 of the Convention on the Privileges and Immunities of Specialized Agencies,
adopted by the UN General Assembly on 21 November 1947 and concurred in by the
Philippine Senate through Resolution No. 19 on 17 May 1949, explicitly provides:
"Article III, Section 4. The specialized agencies, their property and assets, wherever located
and by whomsoever held, shall enjoy immunity from every form of legal process except
insofar as in any particular case they have expressly waived their immunity. It is, however,
understood that no waiver of immunity shall extend to any measure of execution."
Sec. 5.—The premises of the specialized agencies shall be inviolable. The property and assets
of the specialized agencies, wherever located and by whomsoever held shall be immune from
search, requisition, confiscation, expropriation and any other form of interference, whether
by executive, administrative, judicial or legislative action." (Emphasis ours).
IRRI is similarly situated. Pres. Decree No. 1620, Article 3, is explicit in its grant of immunity,
thus:
"Article 3. Immunity from Legal Process.—The Institute shall enjoy immunity from any penal,
civil and administrative proceedings, except insofar as that immunity has been expressly
waived by the Director-General of the Institute or his authorized representatives.'"

Thus it is that the DEFORAF, through its Legal' Adviser, sustained ICMC's invocation of
immunity when in a Memorandum, dated 17 October 1988, it expressed the view that "the
Order of the Director of the Bureau of Labor Relations dated 21 September 1988 for the
conduct of Certification Election within ICMC violates the diplomatic immunity of the
organization." Similarly, in respect of IRRI, the DEFORAF speaking through The Acting
Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to the Secretary
of Labor, maintained that "IRRI enjoys immunity from the jurisdiction of DOLE in this
particular instance."
The foregoing opinions constitute a categorical recognition by the Executive Branch of the
Government that ICMC and IRRI enjoy immunities accorded to international organizations,
which determination has been held to be a political question conclusive upon the Courts in
order not to embarrass a political department of Government.
"It is a recognized principle of international law and under our system of separation of
powers that diplomatic immunity is essentially a political question and courts should refuse to
look beyond a determination by the executive branch of the government, and where the plea
of diplomatic immunity is recognized and affirmed by the executive branch of the government
as in the case at bar, it is then the duty of the courts to accept the claim of immunity upon
appropriate suggestion by the principal law officer of the government. . . or other officer
acting under his direction. Hence, in adherence to the settled principle that courts may not so
exercise their jurisdiction . . . as to embarrass the executive arm of the government in
conducting foreign relations, it is accepted doctrine that in such cases the judicial department
of (this) government follows the action of the political branch and will not embarrass the
latter by assuming an antagonistic jurisdiction."3
A brief look into the nature of international organizations and specialized agencies is in order.
The term "international organization" is generally used to describe an organization set up by
agreement between two or more states.4 Under contemporary international law, such
organizations are endowed with some degree of international legal personality5 such that
they are capable of exercising specific rights, duties and powers.6 They are organized mainly
as a means for conducting general international business in which the member states have
an interest.7 The United Nations, for instance, is an international organization dedicated to
the propagation of world peace. "Specialized agencies" are international organizations having
functions in particular fields. The term appears in Articles 578 and 639 of the Charter of the
United Nations: .
'The Charter, while it invests the United Nations with the general task of promoting progress
and international cooperation in economic, social, health, cultural, educational and related
matters, contemplates that these tasks will be mainly fulfilled not by organs of the United
Nations itself but by autonomous international organizations established by inter-
governmental agreements outside the United Nations. There are now many such
international agencies having functions in many different fields, e.g. in posts,
telecommunications, railways, canals, rivers, sea transport, civil aviation, meteorology, atomic
energy, finance, trade, education and culture, health and refugees. Some are virtually world-
wide in their membership, some are regional or otherwise limited in their membership. The
Charter provides that those agencies which have 'wide international responsibilities' are to be
101
brought into relationship with the United Nations by agreements entered into between them
and the Economic and Social Council, are then to be known as 'specialized agencies.' "10
The rapid growth of international organizations under contemporary international law has
paved the way for the development of the concept of international immunities.
"It is now usual for the constitutions of international organizations to contain provisions
conferring certain immunities on the organizations themselves, representatives of their
member states and persons acting on behalf of the organizations. A series of conventions,
agreements and protocols defining the immunities of various international organizations in
relation to their members generally are now widely in force; x x x"11
There are basically three propositions underlying the grant of international immunities to
international organizations. These principles, contained in the ILO Memorandum are stated
thus: 1) international institutions should have a status which protects them against control or
interference by any one government in the performance of functions for the effective
discharge of which they are responsible to democratically constituted international bodies in
which all the nations concerned are represented; 2) no country should derive any national
financial advantage by levying fiscal charges on common international funds; and 3) the
international organization should, as a collectivity of States members, be accorded the
facilities for the conduct of its official business customarily extended to each other by its
individual member States.12 The theory behind all three propositions is said to be essentially
institutional in character. "It is not concerned with the status, dignity or privileges of
individuals, but with the elements of functional independence necessary to free international
institutions from national control and to enable them to discharge their responsibilities
impartially on behalf of all their members."13 The raison d'etre for these immunities is the
assurance of unimpeded performance of their functions by the agencies concerned.
The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their
international character and respective purposes. The objective is to avoid the danger of
partiality and interference by the host country in their internal workings. The exercise of
jurisdiction by the Department of Labor in these instances would defeat the very purpose of
immunity, which is to shield the affairs of international organizations, in accordance with
international practice, from political pressure or control by the host country to the prejudice
of member States of the organization, and to ensure the unhampered performance of their
functions.
ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic
rights, which are guaranteed by Article II, Section 18,14 Article III, Section 8,15 and Article
XIII, Section 3 (supra), of the 1987 Constitution; and implemented by Articles 243 and 246 of
the Labor Code,16 relied on by the BLR Director and by Kapisanan.
For, ICMC employees are not without recourse whenever there are disputes to be settled.
Section 31 of the Convention on the Privileges and Immunities of the Specialized Agencies of
the United Nations17 provides that "each specialized agency shall make provision for
appropriate modes of settlement of: (a) disputes arising out of contracts or other disputes of
private character to which the specialized agency is a party." Moreover, pursuant to Article IV
of the Memorandum of Agreement between ICMC and the Philippine Government, whenever

there is any abuse of privilege by ICMC, the Government is free to withdraw the privileges
and immunities accorded. Thus:
"Article IV. Cooperation with Government Authorities.—1. The Commission shall cooperate at
all times with the appropriate authorities of the Government to ensure the observance of
Philippine laws, rules and regulations, facilitate the proper administration of justice and
prevent the occurrences of any abuse of the privileges and immunities granted its officials
and alien employees in Article III of this Agreement to the Commission.
"2. In the event that the Government determines that there has been an abuse of the
privileges and immunities granted under this Agreement, consultations shall be held between
the Government and the Commission to determine whether any such abuse has occurred
and, if so, the Government shall withdraw the privileges and immunities granted the
Commission and its officials."
Neither are the employees of IRRI without remedy in case of dispute with management as, in
fact, there had been organized a forum for better management-employee relationship as
evidenced by the formation of the Council of IRRI Employees and Management (CIEM)
wherein "both management and employees were and still are represented for purposes of
maintaining mutual and beneficial cooperation between IRRI and its employees." The
existence of this Union factually and tellingly belies the argument that Pres. Decree No. 1620,
which grants to IRRI the status, privileges and immunities of an international organization,
deprives its employees of the right to self-organization.
The immunity granted being "from every form of legal process except in so far as in any
particular case they have expressly waived their immunity," it is inaccurate to state that a
certification election is beyond the scope of that immunity for the reason that it is not a suit
against ICMC. A certification election cannot be viewed as an independent or isolated
process. It could trigger off a series of events in the collective bargaining process together
with related incidents and/or concerted activities, which could inevitably involve ICMC in the
"legal process," which includes "any penal, civil and administrative proceedings." The
eventuality of Court litigation is neither remote and from which international organizations are
precisely shielded to safeguard them from the disruption of their functions. Clauses on
jurisdictional immunity are said to be standard provisions in the constitutions of international
organizations. "The immunity covers the organization concerned, its property and its assets.
It is equally applicable to proceedings in personam and proceedings in rem."18
We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo),
wherein TUPAS calls attention to the case entitled "International Catholic Migration
Commission v. NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims
that, having taken cognizance of that dispute (on the issue of payment of salary for the
unexpired portion of a six-month probationary employment), the Court is now estopped from
passing upon the question of DOLE jurisdiction over ICMC.
We find no merit to said submission. Not only did the facts of said controversy occur between
1983-1985, or before the grant to ICMC on 15 July 1988 of the status of a specialized agency
with corresponding immunities, but also because ICMC in that case did not invoke its
102
immunity and, therefore, may be deemed to have waived it, assuming that during that period
(1983-1985) it was tacitly recognized as enjoying such immunity.
Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the
BLR Director, dated 15 February 1989; had not become final because of a Motion for
Reconsideration filed by IRRI. Said Motion was acted upon only on 30 March 1989 when Rep.
Act No. 6715, which provides for direct appeals from the Orders of the Med-Arbiter to the
Secretary of Labor in certification election cases either from the order or the results of the
election itself, was already in effect, specifically since 21 March 1989. Hence, no grave abuse
of discretion may be imputed to respondent Secretary of Labor in his assumption of appellate
jurisdiction, contrary to Kapisanan's allegations. The pertinent portion of that law provides:
"Article 259.—Any party to an election may appeal the order or results of the election as
determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the
ground that the rules and regulations or parts thereof established by the Secretary of Labor
and Employment for the conduct of the election have been violated. Such appeal shall be
decided within 15 calendar days" (Emphasis ours).
En passant, the Court is gratified to note that the heretofore antagonistic positions assumed
by two departments of the executive branch of government have been rectified and the
resultant embarrassment to the Philippine Government in the eyes of the international
community now, hopefully, effaced.
WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order of the
Bureau of Labor Relations for certification election is SET ASIDE, and the Temporary
Restraining Order earlier issued is made PERMANENT.
In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of discretion
having been committed by the Secretary of Labor and Employment in dismissing the Petition
for Certification Election.
No pronouncement as to costs. SO ORDERED.
G.R. No. 91307. January 24, 1991.*
SINGER SEWING MACHINE COMPANY, petitioner, vs. HON. FRANKLIN M. DRILON,
MED-ARBITER FELIX B. CHAGUILE, JR., and SINGER MACHINE COLLECTORS
UNION-BAGUIO (SIMACUB), respondents.
Labor Law; Employer-Employee Relationship; The following elements are generally
considered in the determination of employer-employee relationship: (1) selection and
engagement of the employee; (2) payment of wages; (3) the power of dismissal; and (4) the
power to control the employee’s conduct.—The present case mainly calls for the application
of the control test, which if not satisfied, would lead us to conclude that no employer-
employee relationship exists. Hence, if the union members are not employees, no right to
organize for purposes of bargaining, nor to be certified as such bargaining agent can ever be
recognized. The following elements are generally considered in the determination of the
employer-employee relationship; “(1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s
conduct—although the latter is the most important element” (Mafinco Trading Corporation v.

Ople, 70 SCRA 139 [1976]; Development Bank of the Philippines v. National Labor Relations
Commission, 175 SCRA 537 [1989]; Rosario Brothers, Inc. v. Ople, 131 SCRA 72 [1984];
Broadway Motors Inc. v. NLRC, 156 SCRA 522 [1987]; Brotherhood Labor Unity Movement in
the Philippines v. Zamora, 147 SCRA 49 [1986]).
Same; Same; Same; Control-test; Independent Contractors; Employer-employee relationship
does not exist between petitioner-company and its collecting agents considering that
petitioner-company exercises control only with respect to the result or amount of collection
and not with respect to the means and method of collection.—The Agreement confirms the
status of the collecting agent in this case as an independent contractor not only because he is
explicitly described as such but also because the provisions permit him to perform collection
services for the company without being subject to the control of the latter except only as to
the result of his work. After a careful analysis of the contents of the agreement, we rule in
favor of the petitioner. The requirement that collection agents utilize only receipt forms and
report forms issued by the Company and that reports shall be submitted at least once a week
is not necessarily an indication of control over the means by which the job of collection is to
be performed. The agreement itself specifically explains that receipt forms shall be used for
the purpose of avoiding a co-mingling of personal funds of the agent with the money
collected on behalf of the Company. Likewise, the use of standard report forms as well as the
regular time within which to submit a report of collection are intended to facilitate order in
office procedures. Even if the report requirements are to be called control measures, any
control is only with respect to the end result of the collection since the requirements regulate
the things to be done after the performance of the collection job or the rendition of the
service.
Same; Same; Same; Same; Same; The language of the agreement reveals that the
designation as collection agent does not create an employment relationship and that the
applicant is to be considered at all times as an independent contractor.—A thorough
examination of the facts of the case leads us to the conclusion that the existence of an
employer-employee relationship between the Company and the collection agents cannot be
sustained. The plain language of the agreement reveals that the designation as collection
agent does not create an employment relationship and that the applicant is to be considered
at all times as an independent contractor. This is consistent with the first rule of
interpretation that the literal meaning of the stipulations in the contract controls (Article
1370, Civil Code; La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor
Relations, 123 SCRA 679 [1983]). No such words as “to hire and employ” are present.
Moreover, the agreement did not fix an amount for wages nor the required working hours.
Compensation is earned only on the basis of the tangible results produced, i.e., total
collections made (Sarra v. Agarrado, 166 SCRA 625 [1988]). In Investment Planning Corp. of
the Philippines v. Social Security System, 21 SCRA 924 [1967] which involved commission
agents, this Court had the occasion to rule, thus: “We are convinced from the facts that the
work of petitioner’s agents or registered representatives more nearly approximates that of an
independent contractor than that of an employee. The latter is paid for the labor he
performs, that is, for the acts of which such labor consists; the former is paid for the result
thereof x x x. xxx xxx xxx Even if an agent of petitioner should devote all of his time and
effort trying to sell its investment plans he would not necessarily be entitled to compensation
103
therefor. His right to compensation depends upon and is measured by the tangible results he
produces.”
Same; Same; Same; Art. 280 of the Labor Code is not the yardstick for determining the
existence of an employment relationship because it merely distinguishes between regular and
casual employees.—The Court finds the contention of the respondents that the union
members are employees under Article 280 of the Labor Code to have no basis. The definition
that regular employees are those who perform activities which are desirable and necessary
for the business of the employer is not determinative in this case. Any agreement may
provide that one party shall render services for and in behalf of another for a consideration
(no matter how necessary for the latter’s business) even without being hired as an employee.
This is precisely true in the case of an independent contractorship as well as in an agency
agreement. The Court agrees with the petitioner’s argument that Article 280 is not the
yardstick for determining the existence of an employment relationship because it merely
distinguishes between two kinds of employees, i.e., regular employees and casual employees,
for purposes of determining the right of an employee to certain benefits, to join or form a
union, or to security of tenure. Article 280 does not apply where the existence of an
employment relationship is in dispute.
Same; Same; Unions; Since private respondents are not employees of the company, they are
not entitled to the constitutional right to join or form a labor organization for purposes of
collective bargaining.—The Court finds that since private respondents are not employees of
the Company, they are not entitled to the constitutional right to join or form a labor
organization for purposes of collective bargaining. Accordingly, there is no constitutional and
legal basis for their “union” to be granted their petition for direct certification. This Court
made this pronouncement in La Suerte Cigar and Cigarette Factory v. Director of Bureau of
Labor Relations, supra: “x x x The question of whether employer-employee relationship exists
is a primordial consideration before extending labor benefits under the workmen’s
compensation, social security, medicare, termination pay and labor relations law. It is
important in the determination of who shall be included in a proposed bargaining unit
because it is the sine qua non, the fundamental and essential condition that a bargaining unit
be composed of employees. Failure to establish this juridical relationship between the union
members and the employer affects the legality of the union itself. It means the ineligibility of
the union members to present a petition for certification election as well as to vote therein x
x x.” (At p. 689)
PETITION for certiorari to review the order and resolution of the Department of Labor and
Employment.
The facts are stated in the opinion of the Court.
GUTIERREZ, JR., J.:
This is a petition for certiorari assailing the order of MedArbiter Designate Felix B. Chaguile,
Jr., the resolution of then Labor Secretary Franklin M. Drilon affirming said order on appeal
and the order denying the motion for reconsideration in the case entitled “In Re: Petition for
Direct Certification as the Sole and Exclusive Collective Bargaining Agent of Collectors of

Singer Sewing Machine Company-Singer Machine Collectors Union-Baguio (SIMACUB)”
docketed as OS-MA-A-7-119-89 (IRD Case No. 02-89 MED).
On February 15, 1989, the respondent union filed a petition for direct certification as the sole
and exclusive bargaining agent of all collectors of the Singer Sewing Machine Company,
Baguio City branch (hereinafter referred to as “the Company”).
The Company opposed the petition mainly on the ground that the union members are
actually not employees but are independent contractors as evidenced by the collection
agency agreement which they signed. The respondent Med-Arbiter, finding that there exists
an employer-employee relationship between the union members and the Company, granted
the petition for certification election. On appeal, Secretary of Labor Franklin M. Drilon
affirmed it. The motion for reconsideration of the Secretary’s resolution was denied. Hence,
this petition in which the Company alleges that public respondents acted in excess of
jurisdiction and/or committed grave abuse of discretion in that:
a)the Department of Labor and Employment (DOLE) has no jurisdiction over the case since
the existence of employer-employee relationship is at issue;
b)the right of petitioner to due process was denied when the evidence of the union members’
being commission agents was disregarded by the Labor Secretary;
c)the public respondents patently erred in finding that there exists an employer-employee
relationship;
d)the public respondents whimsically disregarded the well-settled rule that commission
agents are not employees but are independent contractors.
The respondents, on the other hand, insist that the provisions of the Collection Agency
Agreement belie the Company’s position that the union members are independent
contractors. To prove that union members are employees, it is asserted that they “perform
the most desirable and necessary activities for the continuous and effective operations of the
business of the petitioner Company” (citing Article 280 of the Labor Code). They add that the
termination of the agreement by the petitioner pending the resolution of the case before the
DOLE “only shows the weakness of petitioner’s stand” and was “for the purpose of frustrating
the constitutionally mandated rights of the members of private respondent union to self-
organization and collective organization.” They also contend that under Section 8, Rule 8,
Book No. III of the Omnibus Rules Implementing the Labor Code, which defines job-
contracting, they cannot legally qualify as independent contractors who must be free from
control of the alleged employer, who carry independent businesses and who have substantial
capital or investment in the form of equipment, tools, and the like necessary in the conduct
of the business.
The present case mainly calls for the application of the control test, which if not satisfied,
would lead us to conclude that no employer-employee relationship exists. Hence, if the union
members are not employees, no right to organize for purposes of bargaining, nor to be
certified as such bargaining agent can ever be recognized. The following elements are
generally considered in the determination of the employer-employee relationship; “(1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee’s conduct—although the latter is the
most important element” (Mafinco Trading Corporation v. Ople, 70 SCRA 139 [1976];
Development Bank of the Philippines v. National Labor Relations Commission, 175 SCRA 537
104
[1989]; Rosario Brothers, Inc. v. Ople, 131 SCRA 72 [1984]; Broadway Motors Inc. v. NLRC,
156 SCRA 522 [1987]; Brotherhood Labor Unity Movement in the Philippines v. Zamora, 147
SCRA 49 [1986]).
The Collection Agency Agreement defines the relationship between the Company and each of
the union members who signed a contract. The petitioner relies on the following stipulations
in the agreements: (a) a collector is designated as a “collecting agent” who is to be
considered at all times as an independent contractor and not employee of the Company; (b)
collection of all payments on installment accounts are to be made monthly or oftener; (c) an
agent is paid his compensation for service in the form of a commission of 6% of all
collections made and turned over plus a bonus on said collections; (d) an agent is required to
post a cash bond of three thousand pesos (P3,000.00) to assure the faithful performance and
observance of the terms and conditions under the agreement; (e) he is subject to all the
terms and conditions in the agreement; (f) the agreement is effective for one year from the
date of its execution and renewable on a yearly basis; and (g) his services shall be
terminated in case of failure to satisfy the minimum monthly collection performance required,
failure to post a cash bond, or cancellation of the agreement at the instance of either party
unless the agent has a pending obligation or indebtedness in favor of the Company.
Meanwhile, the respondents rely on other features to strengthen their position that the
collectors are employees. They quote paragraph 2 which states that an agent shall utilize
only receipt forms authorized and issued by the Company. They also note paragraph 3 which
states that an agent has to submit and deliver at least once a week or as often as required a
report of all collections made using report forms furnished by the Company. Paragraph 4 on
the monthly collection quota required by the Company is deemed by respondents as a control
measure over the means by which an agent is to perform his services.
The nature of the relationship between a company and its collecting agents depends on the
circumstances of each particular relationship. Not all collecting agents are employees and
neither are all collecting agents independent contractors. The collectors could fall under
either category depending on the facts of each case.
The Agreement confirms the status of the collecting agent in this case as an independent
contractor not only because he is explicitly described as such but also because the provisions
permit him to perform collection services for the company without being subject to the
control of the latter except only as to the result of his work. After a careful analysis of the
contents of the agreement, we rule in favor of the petitioner.
The requirement that collection agents utilize only receipt forms and report forms issued by
the Company and that reports shall be submitted at least once a week is not necessarily an
indication of control over the means by which the job of collection is to be performed. The
agreement itself specifically explains that receipt forms shall be used for the purpose of
avoiding a co-mingling of personal funds of the agent with the money collected on behalf of
the Company. Likewise, the use of standard report forms as well as the regular time within
which to submit a report of collection are intended to facilitate order in office procedures.
Even if the report requirements are to be called control measures, any control is only with
respect to the end result of the collection since the requirements regulate the things to be
done after the performance of the collection job or the rendition of the service.

The monthly collection quota is a normal requirement found in similar contractual agreements
and is so stipulated to encourage a collecting agent to report at least the minimum amount of
proceeds. In fact, paragraph 5, section b gives a bonus, aside from the regular commission
every time the quota is reached. As a requirement for the fulfillment of the contract, it is
subject to agreement by both parties. Hence, if the other contracting party does not accede
to it, he can choose not to sign it. From the records, it is clear that the Company and each
collecting agent intended that the former take control only over the amount of collection,
which is a result of the job performed.
The respondents’ contention that the union members are employees of the Company is based
on selected provisions of the Agreement but ignores the following circumstances which
respondents never refuted either in the trial proceedings before the labor officials nor in its
pleadings filed before this Court.
“1.The collection agents are not required to observe office hours or report to Singer’s office
everyday except, naturally and necessarily, for the purpose of remitting their collections.
“2.The collection agents do not have to devote their time exclusively for SINGER. There is no
prohibition on the part of the collection agents from working elsewhere. Nor are these agents
required to account for their time and submit a record of their activity.
“3.The manner and method of effecting collections are left solely to the discretion of the
collection agents without any interference on the part of Singer.
“4.The collection agents shoulder their transportation expenses incurred in the collections of
the accounts assigned to them.
“5.The collection agents are paid strictly on commission basis. The amounts paid to them are
based solely on the amounts of collection each of them make. They do not receive any
commission if they do not effect any collection even if they put a lot of effort in collecting.
They are paid commission on the basis of actual collections.
“6.The commissions earned by the collection agents are directly deducted by them from the
amount of collections they are able to effect. The net amount is what is then remitted to
Singer.” (Rollo, pp. 7-8)
If indeed the union members are controlled as to the manner by which they are supposed to
perform their collections, they should have explicitly said so in detail by specifically denying
each of the facts asserted by the petitioner. As there seems to be no objections on the part
of the respondents, the Court finds that they miserably failed to defend their position.
A thorough examination of the facts of the case leads us to the conclusion that the existence
of an employer-employee relationship between the Company and the collection agents
cannot be sustained.
The plain language of the agreement reveals that the designation as collection agent does
not create an employment relationship and that the applicant is to be considered at all times
as an independent contractor. This is consistent with the first rule of interpretation that the
literal meaning of the stipulations in the contract controls (Article 1370, Civil Code; La Suerte
Cigar and Cigarette Factory v. Director of Bureau of Labor Relations, 123 SCRA 679 [1983]).
No such words as “to hire and employ” are present. Moreover, the agreement did not fix an
amount for wages nor the required working hours. Compensation is earned only on the basis
of the tangible results produced, i.e., total collections made (Sarra v. Agarrado, 166 SCRA
105
625 [1988]). In Investment Planning Corp. of the Philippines v. Social Security System, 21
SCRA 924 [1967] which involved commission agents, this Court had the occasion to rule,
thus:
“We are convinced from the facts that the work of petitioner’s agents or registered
representatives more nearly approximates that of an independent contractor than that of an
employee. The latter is paid for the labor he performs, that is, for the acts of which such
labor consists; the former is paid for the result thereof x x x.
xxx     xxx     xxx
“Even if an agent of petitioner should devote all of his time and effort trying to sell its
investment plans he would not necessarily be entitled to compensation therefor. His right to
compensation depends upon and is measured by the tangible results he produces.”
Moreover, the collection agent does his work “more or less at his own pleasure” without a
regular daily time frame imposed on him (Investment Planning Corporation of the Philippines
v. Social Security System, supra; See also Social Security System v. Court of Appeals, 30
SCRA 210 [1969]).
The grounds specified in the contract for termination of the relationship do not support the
view that control exists “for the causes of termination thus specified have no relation to the
means and methods of work that are ordinarily required of or imposed upon employees.”
(Investment Planning Corp. of the Phil. v. Social Security System, supra)
The last and most important element of the control test is not satisfied by the terms and
conditions of the contracts. There is nothing in the agreement which implies control by the
Company not only over the end to be achieved but also over the means and methods in
achieving the end (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]).
The Court finds the contention of the respondents that the union members are employees
under Article 280 of the Labor Code to have no basis. The definition that regular employees
are those who perform activities which are desirable and necessary for the business of the
employer is not determinative in this case. Any agreement may provide that one party shall
render services for and in behalf of another for a consideration (no matter how necessary for
the latter’s business) even without being hired as an employee. This is precisely true in the
case of an independent contractorship as well as in an agency agreement. The Court agrees
with the petitioner’s argument that Article 280 is not the yardstick for determining the
existence of an employment relationship because it merely distinguishes between two kinds
of employees, i.e., regular employees and casual employees, for purposes of determining the
right of an employee to certain benefits, to join or form a union, or to security of tenure.
Article 280 does not apply where the existence of an employment relationship is in dispute.
Even Section 8, Rule 8, Book III of the Omnibus Rules Implementing the Labor Code does
not apply to this case. Respondents assert that the said provision on job contracting requires
that for one to be considered an independent contractor, he must have “substantial capital or
investment in the form of tools, equipment, machineries, work premises, and other materials
which are necessary in the conduct of his business.” There is no showing that a collection

agent needs tools and machineries. Moreover, the provision must be viewed in relation to
Article 106 of the Labor Code which provides:
“Art. 106. Contractor or subcontractor.—Whenever an employer enters into a contract with
another person for the performance of the former’s work, the employees of the contractor
and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this
Code.
“In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed under the
contract, in the same manner and extent that he is liable to employees directly employed by
him.
xxx     xxx     xxx
“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 persons are
performing activities 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. 20)
It can readily be seen that Section 8, Rule 8, Book III and Article 106 are relevant in
determining whether the employer is solidarily liable to the employees of an alleged
contractor and/or sub-contractor for unpaid wages in case it is proven that there is a job-
contracting situation.
The assumption of jurisdiction by the DOLE over the case is justified as the case was brought
on appeal by the petitioner itself which prayed for the reversal of the Order of the MedArbiter
on the ground that the union members are not its employees. Hence, the petitioner
submitted itself as well as the issue of existence of an employment relationship to the
jurisdiction of the DOLE which was faced with a dispute on an application for certification
election.
The Court finds that since private respondents are not employees of the Company, they are
not entitled to the constitutional right to join or form a labor organization for purposes of
collective bargaining. Accordingly, there is no constitutional and legal basis for their “union”
to be granted their petition for direct certification. This Court made this pronouncement in La
Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations, supra:
“x x x The question of whether employer-employee relationship exists is a primordial
consideration before extending labor benefits under the workmen’s compensation, social
security, medicare, termination pay and labor relations law. It is important in the
determination of who shall be included in a proposed bargaining unit because, it is the sine
qua non, the fundamental and essential condition that a bargaining unit be composed of
employees. Failure to establish this juridical relationship between the union members and the
106
employer affects the legality of the union itself. It means the ineligibility of the union
members to present a petition for certification election as well as to vote therein x x x.” (At p.
689)
WHEREFORE, the Order dated June 14, 1989 of Med-Arbiter Designate Felix B. Chaguile, Jr.,
the Resolution and Order of Secretary Franklin M. Drilon dated November 2, 1989 and
December 14, 1989, respectively are hereby REVERSED and SET ASIDE. The petition for
certification election is ordered dismissed and the temporary restraining order issued by the
Court on December 21, 1989 is made permanent.
SO ORDERED.
IV. Labor Org.
G.R. No. 157117. November 20, 2006.*
COASTAL SUBIC BAY TERMINAL, INC., petitioner, vs. DEPARTMENT OF LABOR and
EMPLOYMENT—OFFICE OF THE SECRETARY, COASTAL SUBIC BAY TERMINAL, INC.
SUPERVISORY UNION-APSOTEU, and COASTAL SUBIC BAY TERMINAL, INC.
RANK-AND-FILE UNIONALU-TUCP, respondents.
Labor Law; Labor Unions; Jurisdictions; The Regional Offices of the Department of Labor and
Employment and the Bureau of Labor Relations have jurisdiction over applications for
registration by labor organizations.—Even after the amendments, the rules did not divest the
Regional Office and the BLR of their jurisdiction over applications for registration by labor
organizations. The amendments to the implementing rules merely specified that when the
application was filed with the Regional Office, the application would be acted upon by the
BLR.
Same; Same; A legitimate labor organization has authority to issue charters to its affiliates.—
APSOTEU is a legitimate labor organization and has authority to issue charter to its affiliates.
It may issue a local charter certificate to CSBTI-SU and correspondingly, CSBTI-SU is
legitimate.
Same; Same; Once a labor union attains the status of a legitimate labor organization, it
continues as such until its certificate of registration is cancelled or revoked in an independent
action for cancellation; When the personality of the labor organization is questioned in the
same manner the veil of corporate fiction is pierced, the action partakes the nature of a
collateral attack.—The petitioner contends that applying by analogy, the doctrine of piercing
the veil of corporate fiction, APSOTEU and ALU are the same federation. Private respondents
disagree. First, as earlier discoursed, once a labor union attains the status of a legitimate
labor organization, it continues as such until its certificate of registration is cancelled or
revoked in an independent action for cancellation. In addition, the legal personality of a labor
organization cannot be collaterally attacked. Thus, when the personality of the labor
organization is questioned in the same manner the veil of corporate fiction is pierced, the
action partakes the nature of a collateral attack. Hence, in the absence of any independent
action for cancellation of registration against either APSOTEU or ALU, and unless and until
their registrations are cancelled, each continues to possess a separate legal personality. The
CSBTI-RFU and CSBTI-SU are therefore affiliated with distinct and separate federations,
despite the commonalities of APSOTEU and ALU.

Same; Same; A local union does not owe its existence to the federation with which it is
affiliated—it is a separate and distinct voluntary association owing its creation to the will of its
members; Local unions are considered principals while the federation is deemed to be merely
their agent.—Under the rules implementing the Labor Code, a chartered local union acquires
legal personality through the charter certificate issued by a duly registered federation or
national union, and reported to the Regional Office in accordance with the rules implementing
the Labor Code. A local union does not owe its existence to the federation with which it is
affiliated. It is a separate and distinct voluntary association owing its creation to the will of its
members. Mere affiliation does not divest the local union of its own personality, neither does
it give the mother federation the license to act independently of the local union. It only gives
rise to a contract of agency, where the former acts in representation of the latter. Hence,
local unions are considered principals while the federation is deemed to be merely their
agent. As such principals, the unions are entitled to exercise the rights and privileges of a
legitimate labor organization, including the right to seek certification as the sole and exclusive
bargaining agent in the appropriate employer unit.
Same; Same; Supervisory employees are allowed to form their own union but they are not
allowed to join the rank-and-file union Coastal Subic Bay Terminal, Inc. vs. Department of
Labor and Employment—Office of the Secretary because of potential conflicts of interest;
Further, a local supervisors’ union should not be allowed to affiliate with the national
federation of unions of rank-and-file employees where the federation actively participates in
the union activity within the company.—A word of caution though, under Article 245 of the
Labor Code, supervisory employees are not eligible for membership in a labor union of
rankand-file employees. The supervisory employees are allowed to form their own union but
they are not allowed to join the rank-and-file union because of potential conflicts of interest.
Further, to avoid a situation where supervisors would merge with the rank-and-file or where
the supervisors’ labor union would represent conflicting interests, a local supervisors’ union
should not be allowed to affiliate with the national federation of unions of rank-and-file
employees where that federation actively participates in the union activity within the
company. Thus, the limitation is not confined to a case of supervisors wanting to join a rank-
and-file union. The prohibition extends to a supervisors’ local union applying for membership
in a national federation the members of which include local unions of rank-and-file
employees. In De La Salle University Medical Center and College of Medicine v. Laguesma,
294 SCRA 141 (1998), we reiterated the rule that for the prohibition to apply, it is not enough
that the supervisory union and the rank-and-file union are affiliated with a single federation.
In addition, the supervisors must have direct authority over the rank-and-file employees.
Same; Same; When there is a commingling of officers of a rankand-file union with a
supervisory union, the constitutional policy on labor is circumvented.—In the instant case, the
national federations that exist as separate entities to which the rank-and-file and supervisory
unions are separately affiliated with, do have a common set of officers. In addition,
APSOTEU, the supervisory federation, actively participates in the CSBTI-SU while ALU, the
rank-and-file federation, actively participates in the CSBTI-RFU, giving occasion to possible
conflicts of interest among the common officers of the federation of rank-and-file and the
federation of supervisory unions. For as long as they are affiliated with the APSOTEU and
ALU, the supervisory and rank-and-file unions both do not meet the criteria to attain the
status of legitimate labor organizations, and thus could not separately petition for certification
elections. The purpose of affiliation of the local unions into a common enterprise is to
107
increase the collective bargaining power in respect of the terms and conditions of labor.
When there is commingling of officers of a rank-andfile union with a supervisory union, the
constitutional policy on labor is circumvented. Labor organizations should ensure the freedom
of employees to organize themselves for the purpose of leveling the bargaining process but
also to ensure the freedom of workingmen and to keep open the corridor of opportunity to
enable them to do it for themselves.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
QUISUMBING, J.:
For review on certiorari is the Court of Appeals’ Decision1 dated August 31, 2001, in CA-G.R.
SP No. 54128 and the Resolution2 dated February 5, 2003, denying petitioner’s motion for
reconsideration. The Court of Appeals had affirmed the Decision3 dated March 15, 1999 of
the Secretary of the Department of Labor and Employment (DOLE) reversing the Mediator
Arbiter’s dismissal of private respondents’ petitions for certification election.
The facts are as follows:
On July 8, 1998, private respondents Coastal Subic Bay Terminal, Inc. Rank-and-File Union
(CSBTI-RFU) and Coastal Subic Bay Terminal, Inc. Supervisory Union (CSBTISU) filed
separate petitions for certification election before Med-Arbiter Eladio de Jesus of the Regional
Office No. III. The rank-and-file union insists that it is a legitimate labor organization having
been issued a charter certificate by the Associated Labor Union (ALU), and the supervisory
union by the Associated Professional, Supervisory, Office and Technical Employees Union
(APSOTEU). Private respondents also alleged that the establishment in which they sought to
operate was unorganized.
Petitioner Coastal Subic Bay Terminal, Inc. (CSBTI) opposed both petitions for certification
election alleging that the rank-and-file union and supervisory union were not legitimate labor
organizations, and that the proposed bargaining units were not particularly described.
Without ruling on the legitimacy of the respondent unions, the Med-Arbiter dismissed,
without prejudice to refiling, both petitions which had been consolidated. The Med-Arbiter
held that the ALU and APSOTEU are one and the same federation having a common set of
officers. Thus, the supervisory and the rank-and-file unions were in effect affiliated with only
one federation.4
The Med-Arbiter ruled as follows:
“Viewed in the light of all the foregoing, this Office finds the simultaneous filing of the instant
petitions to be invalid and unwarranted. Consequently, this Office has no recourse but to
dismiss both petitions without prejudice to the refiling of either.
WHEREFORE, PREMISES CONSIDERED, let the instant petitions be, as they are hereby
DISMISSED.

SO ORDERED.”5
Both parties appealed to the Secretary of Labor and Employment, who reversed the decision
of the Med-Arbiter. The Secretary thru Undersecretary R. Baldoz, ruled that CSBTISU and
CSBTI-RFU have separate legal personalities to file their separate petitions for certification
election. The Secretary held that APSOTEU is a legitimate labor organization because it was
properly registered pursuant to the 1989 Revised Rules and Regulations implementing
Republic Act No. 6715, the rule applicable at the time of its registration. It further ruled that
ALU and APSOTEU are separate and distinct labor unions having separate certificates of
registration from the DOLE. They also have different sets of locals. The Secretary declared
CSBTI-RFU and CSBTI-SU as legitimate labor organizations having been chartered
respectively by ALU and APSOTEU after submitting all the requirements with the Bureau of
Labor Relations (BLR). Accordingly, the Secretary ordered the holding of separate certification
election, viz.:
“WHEREFORE, the decision of the Med-Arbiter, Regional Office No. III is hereby REVERSED.
Let separate certification elections be conducted immediately among the appropriate
employees of CSBTI, after the usual pre-election conference, with the following choices:
I. For all rank and file employees of CSBTI:
1. COASTAL SUBIC BAY TERMINAL, INC. RANKAND-FILE UNION-ALU-TUCP; and
2.NO UNION.
II. For all supervisory employees of CSBTI:
1.COASTAL SUBIC BAY TERMINAL, INC. SUPERVISORY EMPLOYEES UNION-APSOTEU; and
2.NO UNION.
The latest payroll of the employer, including its payrolls for the last three months immediately
preceding the issuance of this decision, shall be the basis for determining the qualified list of
voters.
SO DECIDED.”6
The motion for reconsideration was also denied.7
On appeal, the Court of Appeals affirmed the decision of the Secretary.8 It held that there
was no grave abuse of discretion on the part of the Secretary; its findings are supported by
evidence on record; and thus should be accorded with respect and finality.9
The motion for reconsideration was likewise denied.10 Hence, the instant petition by the
company anchored on the following grounds:
I THE HONORABLE COURT OF APPEALS ERRED IN RELYING ON THE “1989 REVISED RULES
AND REGULATIONS IMPLEMENTING RA 6715” AS BASIS TO RECOGNIZE PRIVATE
RESPONDENT APSOTEU’S REGISTRATION BY THE DOLE REGIONAL DIRECTOR.
108
II THE HONORABLE COURT OF APPEALS ERRED WHEN IT AFFIRMED PUBLIC
RESPONDENT’S APPLICATION OF THE PRINCIPLE OF STARE DECISIS TO HASTILY DISPOSE
OF THE LEGAL PERSONALITY ISSUE OF APSOTEU.
III THE HONORABLE COURT OF APPEALS DID NOT DECIDE IN ACCORD WITH LAW AND
JURISPRUDENCE WHEN IT AFFIRMED PUBLIC RESPONDENT’S APPLICATION OF THE
“UNION AUTONOMY” THEORY.
IV IN AFFIRMING PUBLIC RESPONDENT’S FINDING THAT PRIVATE RESPONDENTS ARE
“SEPARATE FEDERATIONS,” THE HONORABLE COURT OF APPEALS:
(1)IGNORED JURISPRUDENCE RECOGNIZING THE BINDING NATURE OF A MED-ARBITER’S
FACTUAL FINDINGS; AND
(2)DISREGARDED EVIDENCE ON RECORD OF “ILLEGAL COMMINGLING.”11
Plainly, the issues are (1) Can the supervisory and the rank-and-file unions file separate
petitions for certification election?; (2) Was the Secretary’s decision based on stare decisis
correct?; and (3) Were private respondents engaged in commingling?
The issue on the status of the supervisory union CSBTI-SU depends on the status of
APSOTEU, its mother federation. Petitioner argues that APSOTEU improperly secured its
registration from the DOLE Regional Director and not from the BLR; that it is the BLR that is
authorized to process applications and issue certificates of registration in accordance with our
ruling in Phil. Association of Free Labor Unions v. Secretary of Labor;12 that the certificates
of registration issued by the DOLE Regional Director pursuant to the rules are questionable,
and possibly even void ab initio for being ultra vires; and that the Court of Appeals erred
when it ruled that the law applicable at the time of APSOTEU’s registration was the 1989
Revised Implementing Rules and Regulations of Rep. Act No. 6715.
Petitioner insists that APSOTEU lacks legal personality, and its chartered affiliate CSBTI-SU
cannot attain the status of a legitimate labor organization to file a petition for certification
election. It relies on Villar v. Inciong,13 where we held therein that Amigo Employees Union
was not a duly registered independent union absent any record of its registration with the
Bureau.
Pertinent is Article 23514 of the Labor Code which provides that applications for registration
shall be acted upon by the Bureau. “Bureau” as defined under the Labor Code means the BLR
and/or the Labor Relations Division in the Regional Offices of the Department of Labor.15
Further, Section 2, Rule II, Book V of the 1989 Revised Implementing Rules of the Labor
Code (Implementing Rules) provides that:
“Section 2. Where to file application; procedure.—Any national labor organization or labor
federation or local union may file an application for registration with the Bureau or the
Regional Office where the applicant’s principal offices is located. The Bureau or the Regional
Office shall immediately process and approve or deny the application. In case of approval,
the Bureau or the Regional Office shall issue the registration certificate within thirty (30)
calendar days from receipt of the application, together with all the requirements for
registration as hereinafter provided.”16
The Implementing Rules specifically Section 1, Rule III of Book V, as amended by
Department Order No. 9, thus:

“SECTION 1. Where to file applications.—The application for registration of any federation,
national or industry union or trade union center shall be filed with the Bureau. Where the
application is filed with the Regional Office, the same shall be immediately forwarded to the
Bureau within forty-eight (48) hours from filing thereof, together with all the documents
supporting the registration.
The applications for registration of an independent union shall be filed with and acted upon
by the Regional Office where the applicant’s principal office is located ….
x x x x”
The DOLE issued Department Order No. 40-03, which took effect on March 15, 2003, further
amending Book V of the above implementing rules. The new implementing rules explicitly
provide that applications for registration of labor organizations shall be filed either with the
Regional Office or with the BLR.17
Even after the amendments, the rules did not divest the Regional Office and the BLR of their
jurisdiction over applications for registration by labor organizations. The amendments to the
implementing rules merely specified that when the application was filed with the Regional
Office, the application would be acted upon by the BLR.
The records in this case showed that APSOTEU was registered on March 1, 1991.
Accordingly, the law applicable at that time was Section 2, Rule II, Book V of the
Implementing Rules, and not Department Order No. 9 which took effect only on June 21,
1997. Thus, considering further that APSOTEU’s principal office is located in Diliman, Quezon
City, and its registration was filed with the NCR Regional Office, the certificate of registration
is valid.
The petitioner misapplied Villar v. Inciong.18 In said case, there was no record in the BLR
that Amigo Employees Union was registered.19
Did the Court of Appeals err in its application of stare decisis when it upheld the Secretary’s
ruling that APSOTEU is a legitimate labor organization and its personality cannot be assailed
unless in an independent action for cancellation of registration certificate?20
We think not.
Section 5, Rule V, Book V of the Implementing Rules states:
“Section 5. Effect of registration.—The labor organization or workers’ association shall be
deemed registered and vested with legal personality on the date of issuance of its certificate
of registration. Such legal personality cannot thereafter be subject to collateral attack, but
maybe questioned only in an independent petition for cancellation in accordance with these
Rules.”21
109
Thus, APSOTEU is a legitimate labor organization and has authority to issue charter to its
affiliates.22 It may issue a local charter certificate to CSBTI-SU and correspondingly, CSBTI-
SU is legitimate.
Are ALU, a rank-and-file union and APSOTEU, a supervisory union one and the same because
of the commonalities between them? Are they commingled?
The petitioner contends that applying by analogy, the doctrine of piercing the veil of
corporate fiction, APSOTEU and ALU are the same federation. Private respondents disagree.
First, as earlier discoursed, once a labor union attains the status of a legitimate labor
organization, it continues as such until its certificate of registration is cancelled or revoked in
an independent action for cancellation.23 In addition, the legal personality of a labor
organization cannot be collaterally attacked.24 Thus, when the personality of the labor
organization is questioned in the same manner the veil of corporate fiction is pierced, the
action partakes the nature of a collateral attack. Hence, in the absence of any independent
action for cancellation of registration against either APSOTEU or ALU, and unless and until
their registrations are cancelled, each continues to possess a separate legal personality. The
CSBTIRFU and CSBTI-SU are therefore affiliated with distinct and separate federations,
despite the commonalities of APSOTEU and ALU.
Under the rules implementing the Labor Code, a chartered local union acquires legal
personality through the charter certificate issued by a duly registered federation or national
union, and reported to the Regional Office in accordance with the rules implementing the
Labor Code.25 A local union does not owe its existence to the federation with which it is
affiliated. It is a separate and distinct voluntary association owing its creation to the will of its
members. Mere affiliation does not divest the local union of its own personality, neither does
it give the mother federation the license to act independently of the local union. It only gives
rise to a contract of agency, where the former acts in representation of the latter.26 Hence,
local unions are considered principals while the federation is deemed to be merely their
agent.27 As such principals, the unions are entitled to exercise the rights and privileges of a
legitimate labor organization, including the right to seek certification as the sole and exclusive
bargaining agent in the appropriate employer unit.
A word of caution though, under Article 245 of the Labor Code,28 supervisory employees are
not eligible for membership in a labor union of rank-and-file employees. The supervisory
employees are allowed to form their own union but they are not allowed to join the rank-and-
file union because of potential conflicts of interest.29 Further, to avoid a situation where
supervisors would merge with the rank-and-file or where the supervisors’ labor union would
represent conflicting interests, a local supervisors’ union should not be allowed to affiliate
with the national federation of unions of rank-and-file employees where that federation
actively participates in the union activity within the company.30 Thus, the limitation is not
confined to a case of supervisors wanting to join a rank-and-file union. The prohibition
extends to a supervisors’ local union applying for membership in a national federation the
members of which include local unions of rank-and-file employees.31 In De La Salle
University Medical Center and College of Medicine v. Laguesma, we reiterated the rule that
for the prohibition to apply, it is not enough that the supervisory union and the rank-and-file

union are affiliated with a single federation. In addition, the supervisors must have direct
authority over the rank-and-file employees.32
In the instant case, the national federations that exist as separate entities to which the rank-
and-file and supervisory unions are separately affiliated with, do have a common set of
officers. In addition, APSOTEU, the supervisory federation, actively participates in the CSBTI-
SU while ALU, the rankand-file federation, actively participates in the CSBTI-RFU, giving
occasion to possible conflicts of interest among the common officers of the federation of
rank-and-file and the federation of supervisory unions. For as long as they are affiliated with
the APSOTEU and ALU, the supervisory and rank-and-file unions both do not meet the criteria
to attain the status of legitimate labor organizations, and thus could not separately petition
for certification elections.
The purpose of affiliation of the local unions into a common enterprise is to increase the
collective bargaining power in respect of the terms and conditions of labor.33 When there is
commingling of officers of a rank-and-file union with a supervisory union, the constitutional
policy on labor is circumvented. Labor organizations should ensure the freedom of employees
to organize themselves for the purpose of leveling the bargaining process but also to ensure
the freedom of workingmen and to keep open the corridor of opportunity to enable them to
do it for themselves.
WHEREFORE, the petition is GRANTED. The Court of Appeals’ Decision dated August 31,
2001, in CA-G.R. SP No. 54128 and the Resolution dated February 5, 2003 are SET ASIDE.
The decision of the Med-Arbiter is hereby AFFIRMED.
SO ORDERED.
G.R. No. 83190. August 4, 1992.*
CEBU SEAMEN’S ASSOCIATION, INC., petitioner, vs. HON. PURA FERRER-CALLEJA,
SEAMEN’S ASSOCIATION OF THE PHILS./ DOMINICA C. NACUA, respondent.
Labor Law; Corporation Law; Jurisdiction; The Med-Arbiter and the BLR, on appeal, not the
Securities and Exchange Commission, have jurisdiction over release of union dues by
different officers claiming to represent a union.—There is no doubt that the controversy
between the aforesaid two sets of officers is an intra-union dispute. Both sets of officers
claim to be entitled to the release of the union dues collected by the company with whom it
had an existing CBA. The controversy involves claims of different members/officers to certain
rights granted under the labor code. Article 226 of the Labor Code vests upon the Bureau of
Labor Relations and Labor Relations Division the original and exclusive authority and
jurisdiction to act on all inter-union and intra-union disputes. Therefore, the Med-Arbiter
originally, and the Director on appeal, correctly assumed jurisdiction over the controversy.
Same; Same; It is the registration with BLR, not with SEC that makes a union a legitimate
labor organization.—As stated in the findings of fact in the questioned resolution of Director
Pura Ferrer-Calleja, on October 23, 1950, a group of deck officers organized the Cebu
Seamen’s Association, Inc., (CSAI), a non-stock corporation and registered it with the
Securities and Exchange Commission (SEC). The same group registered the organization with
the Bureau of Labor Relations (BLR) as Seamen’s Association of the Philippines (SAPI). It is
110
the registration of the organization with the BLR and not with the SEC which made it a
legitimate labor organization with rights and privileges granted under the Labor Code.
Same; Same; Expulsion of an individual from the moribund corporate parent of a registered
labor union does not affect her membership from the latter.—The expulsion of Nacua from
the corporation, of which she denied being a member, has however, not affected her
membership with the labor union. In fact, in the elections of officers for 1987-1989, she was
re-elected as the president of the labor union that Nacua was already expelled from the
union. Whatever acts their group had done in the corporation do not bind the labor union.
Moreover, Gabayoyo cannot claim leadership of the labor group by virtue of his having been
elected as a president of the dormant corporation CSAI.
Same; Same; Same.—Public respondent Bureau of Labor Relations correctly ruled on the
basis of the evidence presented by the parties that SAPI, the legitimate labor union,
registered with its office, is not the same association as CSAI, the corporation, insofar as their
rights under the Labor Code are concerned. Hence, the former and not the latter association
is entitled to the release and custody of union fees with Aboitiz Shipping and other shipping
companies with whom it had an existing CBA.
PETITION to review the resolution of the Bureau of Labor Relations.
The facts are stated in the opinion of the Court.
MEDIALDEA, J.:
This petition seeks the reversal of the resolution of the Bureau of Labor Relations1 which
affirmed the decision of the Med-Arbiter holding that the set of officers of Seamen’s
Association of the Philippines headed by Dominica C. Nacua, as president, was the lawful set
of officers entitled to the release and custody of the union dues as well as agency fees of said
association. The dispositive portion of the resolution reads:
“WHEREFORE, premises considered, the Order of the MedArbiter dated 13 July 1987 is
hereby affirmed and the appeal therefrom DISMISSED for lack of merit.” (p. 39, Rollo)
The facts surroundings the controversy in this case, as stated in the questioned resolution, is
as follows:
“The records show that sometime on 23 October 1950, a group of deck officers and marine
engineers on board vessels plying Cebu and other ports of the Philippines organized
themselves into an association and registered the same as a non-stock corporation known as
Cebu Seamen’s Association, Inc. (CSAI), with the Securities and Exchange Commission (SEC).
Later, on 23 June 1969, the same group registered its association with this Bureau as a labor
union known as the Seamen’s Association of the Philippines, Incorporated (SAPI).
“SAPI has an existing collective bargaining agreement (CBA) with the Aboitiz Shipping
Corporation which will expire on 31 December 1988. In consonance with the CBA said
company has been remitting checked-off union dues to said union until February, 1987 when
a group composed of members of said union, introducing itself to be its new set of officers,

went to the company and claimed that they are entitled to the remittance and custody of
such union dues. This group, headed by Manuel Gabayoyo claims that they were elected as
such on January 20, 1987 under the supervision of the SEC.
“On 26 May 1987, another group headed by Dominica C. Nacua, claiming as the duly elected
set of officers of the union in an election held on 20 December 1986, filed a complaint, for
and on behalf of the union, against the Cebu Seamen’s Association, Inc. (CSAI) as
represented by Manuel Gabayoyo for the security of the aforementioned CBA, seeking such
relief, among others, as an order restraining the respondent from acting on behalf of the
union and directing the Aboitiz Shipping Corp. to remit the checked-off union dues for the
months of March and April 1987.
“On 10 June 1987, respondent CSAI filed its Answer/Position Paper alleging that the
complainant union and CSAI are one and the same union; that Dominica C. Nacua and Atty.
Prospero Paradilla who represented the union had been expelled as members/officers as of
November 1984 for lawful causes; and, that its set of officers headed by Manuel Gabayoyo
has the lawful right to the remittance and custody of the corporate funds (otherwise known
as union dues) in question pursuant to the resolution of the SEC dated 22 April 1987.
“To bolster further its posture, on the following day, 11 June 1987, the respondent also filed
a Motion to Dismiss the Complaint on the grounds, among others, that the SEC, not the Med-
Arbiter, has jurisdiction over the dispute as provided under P.D. No. 902-A; that there can
neither be a complainant nor respondent in the instant case as the parties involved are one
and the same labor union, and that legality to represent the union as they had already been
expelled as members/officers thereof in two resolutions of the Board of Directors dated
November 1984 and January 17, 1987.
“On 19 June 1987, the Med-Arbiter issued an Order denying said motion but directing the
Aboitiz Shipping Corporation to remit the already checked-off union dues to the complainant
union through its officers end to continue remitting any checked-off union dues until further
notice. The Med-Arbiter also set further hearing of the complaint on July 1, 1987.
“On 19 June 1987, the respondent filed a motion for reconsideration of said order of 19 June
1987, reiterating its previous position. Thereafter, the Med-Arbiter issued the assailed Order.
x x x.” (pp. 34-35, Rollo)
From the decision of the Med-Arbiter, Cebu Seamen’s Association headed by Capt. Gabayoyo
filed an appeal with the Bureau of Labor Relations (BLR).
The BLR, as already stated, affirmed the decision of the Med-Arbiter in a resolution dated
February 19, 1988. The Gabayoyo group appealed to the Office of the Secretary, Department
of Labor, which appeal was considered as a motion for reconsideration of the BLR’s decision.
The said appeal/motion for consideration was denied for lack of merit on April 11, 1988 (p.
42, Rollo) by the BLR.
Hence, this petition.
There are three issues presented for resolution in this petition, to wit:
111
1. WHETHER OR NOT THE MED-ARBITER OF REGION VII HAS JURISDICTION OVER THE
CASE AT BAR.
2. WHETHER OR NOT THE COMPLAINANT-APPELLEE THE SEAMEN’S ASSOCIATION OF THE
PHILIPPINES WAS REGISTERED AS A LABOR FEDERATION WITH THE BUREAU OF LABOR
RELATIONS.
3. WHETHER OR NOT DOMINICA C. NACUA AND PROSPERO PARADIL(L)A HAVE (THE)
PERSONALITY TO REPRESENT THE HEREIN COMPLAINANT-APPELLEE, CONSIDERING THAT
BOTH OF THEM HAVE BEEN EXPELLED FROM THE ASSOCIATION “SEAMEN’S ASSOCIATION
OF THE PHILIPPINES, INC.” (FORMERLY THE CEBU SEAMEN’S ASSOCIATION, INC.).
There is no doubt that the controversy between the aforesaid two sets of officers is an intra-
union dispute. Both sets of officers claim to be entitled to the release of the union dues
collected by the company with whom it had an existing CBA. The controversy involves claims
of different members/officers to certain rights granted under the labor code.
Article 226 of the Labor Code vests upon the Bureau of Labor Relations and Labor Relations
Division the original and exclusive authority and jurisdiction to act on all inter-union and intra-
union disputes. Therefore, the Med-Arbiter originally, and the Director on appeal, correctly
assumed jurisdiction over the controversy.
The determinative issue in this case is who is entitled to the collection and custody of the
union dues? Cebu Seamen’s Association headed by Gabayoyo or Seamen’s Association of the
Philippines headed by Nacua.
As stated in the findings of fact in the questioned resolution of Director Pura Ferrer-Calleja,
on October 23, 1950, a group of deck officers organized the Cebu Seamen’s Association, Inc.,
(CSAI), a non-stock corporation and registered it with the Securities and Exchange
Commission (SEC). The same group registered the organization with the Bureau of Labor
Relations (BLR) as Seamen’s Association of the Philippines (SAPI). It is the registration of the
organization with the BLR and not with the SEC which made it a legitimate labor organization
with rights and privileges granted under the Labor Code.
We gathered from the records that CSAI, the corporation was already inoperational before
the controversy in this case arose. In fact, on August 24, 1984, the SEC ordered the CSAI to
show cause why its certificate of registration should not be revoked for continuous
inoperation (p. 343, Rollo). There is nothing in the records which would show that CSAI
answered said showcause order.
Also, before the controversy, private respondent Dominica Nacua was elected president of
the labor union, SAPI. It had an existing CBA with Aboitiz Shipping Corporation. Before the
end of the term of private respondent Nacua, some members of the union which included
Domingo Machacon and petitioner Manuel Gabayoyo showed signs of discontentment with
the leadership of Nacua. This break-away group revived the moribund corporation and issued
an undated resolution expelling Nacua from the association (pp. 58-59, Rollo). Sometime in
February, 1987, it held its own election of officers supervised by the Securities and Exchange

Commission. It also filed a case of estafa against Nacua sometime in May, 1986 (p. 52,
Rollo).
The expulsion of Nacua from the corporation, of which she denied being a member, has
however, not affected her membership with the labor union. In fact, in the elections of
officers for 1987-1989, she was re-elected as the president of the labor union. In this
connections, We cannot agree with the contention of Gabayoyo that Nacua was already
expelled from the union. Whatever acts their group had done in the corporation do not bind
the labor union. Moreover, Gabayoyo cannot claim leadership of the labor group by virtue of
his having been elected as a president of the dormant corporation CSAI.
Under the principles of administrative law in force in this jurisdiction, decisions of
administrative officers shall not be disturbed by courts, except when the former acted without
or in excess of their jurisdiction or with grave abuse of discretion.
Public respondent Bureau of Labor Relations correctly ruled on the basis of the evidence
presented by the parties that SAPI, the legitimate labor union, registered with its office, is not
the same association as CSAI, the corporation, insofar as their rights under the Labor Code
are concerned. Hence, the former and not the latter association is entitled to the release and
custody of union fees with Aboitiz Shipping and other shipping companies with whom it had
an existing CBA. As correctly held by public respondent:
“It is undisputed from the records that the election of the so-called set of officers headed by
Manuel Gabayoyo was conducted under the supervision of the SEC, presumably in
accordance with its constitution and by-laws as well as the articles of incorporation of
respondent CSAI, and the Corporation Code. That had been so precisely on the honest belief
of the participants therein that they were acting in their capacity as members of the said
corporation. That being the case, the aforementioned set of officers is of the respondent
corporation and not of the complainant union. It follows, then, that any proceedings and
actions taken by said set of officers can not, in any manner, affect the union and its
members.
“On the other hand, we rule and so hold that the other set of officers headed by Dominica C.
Nacua is the lawful set of officers of SAPI and therefore, is entitled to the release and custody
of the union dues as well as the agency fees, if any, there be. A record check with the Labor
Organizations (LOD), this Bureau, shows that SAPI has submitted to it for file the list of this
new set of officers, in compliance with the second paragraph of Article 242(c) of the Labor
Code. This list sufficiently sustains the view that said officers were lawfully elected, in the
absence of clear and convincing proof to the contrary.” (pp. 9-10, Rollo)
ACCORDINGLY, the petition is DISMISSED. The questioned resolution of the Bureau of Labor
Relations is AFFIRMED.
SO ORDERED.
112
G.R. No. 169940. September 18, 2009.*
UNIVERSITY OF SANTO TOMAS, petitioner, vs. SAMAHANG MANGGAGAWA NG UST
(SM-UST), respondent.
Labor Law; To the question of whether respondent’s member’s individual acceptance of the
award and the resulting payments made by petitioner operate as a ratification of the
Department of Labor and Employment (DOLE) secretary’s award which renders CA-G.R. SP
No. 72965 moot, we find that such do not operate as a ratification of the DOLE Secretary’s
award; nor a waiver of their right to receive further benefits, or what they may be entitled
under the law.—The question of whether respondent’s members’ individual acceptance of the
award and the resulting payments made by petitioner operate as a ratification of the DOLE
Secretary’s award which renders CA-G.R. SP No. 72965 moot, we find that such do not
operate as a ratification of the DOLE Secretary’s award; nor a waiver of their right to receive
further benefits, or what they may be entitled to under the law. The appellate court correctly
ruled that the respondent’s members were merely constrained to accept payment at the time.
Christmas was then just around the corner, and the union members were in no position to
resist the temptation to accept much-needed cash for use during the most auspicious
occasion of the year. Time and again, we have held that necessitous men are not, truly
speaking, free men; but to answer a present emergency, will submit to any terms that the
crafty may impose upon them.
Same; Labor Unions; A labor union exists in whole or in part for the purpose of collective
bargaining or of dealing with employers concerning terms and conditions of employment.—As
individual components of a union possessed of a distinct and separate corporate personality,
respondent’s members should realize that in joining the organization, they have surrendered
a portion of their individual freedom for the benefit of all the other members; they submit to
the will of the majority of the members in order that they may derive the advantages to be
gained from the concerted action of all. Since the will of the members is personified by its
board of directors or trustees, the decisions it makes should accordingly bind them. Precisely,
a labor union exists in whole or in part for the purpose of collective bargaining or of dealing
with employers concerning terms and conditions of employment. What the individual
employee may not do alone, as for example obtain more favorable terms and conditions of
work, the labor organization, through persuasive and coercive power gained as a group, can
accomplish better.
Same; Since it abides by the Department of Labor and Employment (DOLE) Secretary’s award
which it finds “fair and equitable” it must raise the said amount through sources other than
incremental tuition fee proceeds.—Regarding petitioner’s assertion that it was unlawful for
the Court of Appeals to have required it to source the award of fringe benefits (in the amount
of P28,837,780.00) from the school’s other income, since R.A. 6728 does not compel or
require schools to allocate more than 70% of the incremental tuition fee increase for the
salaries and benefits of its employees, we find it unnecessary to rule on this matter. These
fringe benefits are included in the DOLE Secretary’s award—an award which petitioner seeks
to affirm in toto; this being so, it cannot now argue otherwise. Since it abides by the DOLE
Secretary’s award, which it finds “fair and equitable,” it must raise the said amount through
sources other than incremental tuition fee proceeds.

Same; Collective Bargaining Agreements; A signing bonus is a grant motivated by the
goodwill generated when a Collective Bargaining Agreement (CBA) is successfully negotiated
and signed between the employer and the union.—We come to the appellate court’s award of
additional signing bonus, which we find to be unwarranted under the circumstances. A
signing bonus is a grant motivated by the goodwill generated when a CBA is successfully
negotiated and signed between the employer and the union. In the instant case, no CBA was
successfully negotiated by the parties. It is only because petitioner prays for this Court to
affirm in toto the DOLE Secretary’s May 31, 2002 Order that we shall allow an award of
signing bonus. There would have been no other basis to grant it if petitioner had not so
prayed. We shall take it as a manifestation of petitioner’s liberality, which we cannot now
allow it to withdraw. A bonus is a gratuity or act of liberality of the giver; when petitioner
filed the instant petition seeking the affirmance of the DOLE Secretary’s Order in its entirety,
assailing only the increased amount of the signing bonus awarded, it is considered to have
unqualifiedly agreed to grant the original award to the respondent union’s members.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
   The facts are stated in the opinion of the Court.
YNARES-SANTIAGO, J.:
Assailed in this petition for review on certiorari is the January 31, 2005 Decision1 of the Court
of Appeals in CA-G.R. SP No. 72965, which affirmed the May 31, 2002 Order of the Secretary
of the Department of Labor and Employment (DOLE) directing the parties to execute a
Collective Bargaining Agreement incorporating the terms in said Order with modification that
the signing bonus is increased to P18,000.00. Also assailed is the September 23, 2005
Resolution2 denying the motion for reconsideration.
Respondent Samahang Manggagawa ng U.S.T. (SM-UST) was the authorized bargaining
agent of the non-academic/non-teaching rank-and-file daily- and monthly-paid employees
(numbering about 619) of petitioner, the Pontifical and Royal University of Santo Tomas, The
Catholic University of the Philippines (or UST), a private university in the City of Manila run by
the Order of Preachers. In October 2001, during formal negotiations for a new collective
bargaining agreement (CBA) for the academic year 2001 through 2006, petitioner submitted
its “2001-2006 CBA Proposals” which, among others, contained the following economic
provisions:
A.    ACADEMIC YEAR 2001-2002
1. Salary increase of P800.00 per month
2. Signing bonus of P10,000.00
3. Additional Christmas bonus of P2,000.00
B.    ACADEMIC YEAR 2002-2003
1. Salary increase of P1,500.00 per month
2. Additional Christmas bonus of P2,000.00
3. P6,000,000.00 for salary restructuring
C.    ACADEMIC YEAR 2003-2004
1. Salary increase of P1,700.00 per month
113
2. Additional Christmas bonus of P2,000.00
In November 2001, the parties agreed in principle on all non-economic provisions of the
proposed CBA, except those pertaining to Agency Contract or contractualization (Art. III, Sec.
3 of the proposed CBA), Union Leave of the SM-UST President (No. 4 of the Addendum to the
proposed CBA), and hiring preference.
In December 2001, petitioner submitted its final offer on the economic provisions, thus:
A.  ACADEMIC YEAR 2001-2002
1. Salary increase of P1,000.00 per month
2. Signing bonus of P10,000.00
3. Additional Christmas bonus of P2,000.00
B.  ACADEMIC YEAR 2002-2003
1. Salary increase of P1,700.00 per month
2. Additional Christmas bonus of P2,000.00
3. P6,190,000.00 to be distributed in the form of salary restructuring
C.  ACADEMIC YEAR 2003-2004
1. Salary increase of P2,000.00 per month
2. Additional Christmas bonus of P2,000.00
On the other hand, respondent reduced its demands for the first year from P8,000.00
monthly salary increase per employee to P7,000.00, and from P75,000.00 signing bonus to
P60,000.00 for each employee, but petitioner insisted on its final offer. As a result,
respondent declared a deadlock and filed a notice of strike with the National Conciliation and
Mediation Board -National Capital Region (NCMB-NCR).
Conciliation and mediation proved to be futile, such that in January 2002, majority of
respondent’s members voted to stage a strike. However, the DOLE Secretary timely assumed
jurisdiction over the dispute, and the parties were summoned and heard on their respective
claims, and were required to submit their respective position papers.
On May 31, 2002, the DOLE Secretary issued an Order,3 the pertinent portions of which read,
as follows:
“x x x In arguing on the reasonableness of its demands, it cites the income of the school from
tuition fee increases and the allocation of this amount to the faculty and non-teaching
employees of the School x x x. According to the Union, the School’s estimate of the tuition fee
increase for the school year 2003-2004 at P76,410,000.00 is erroneous. The Union argues
that the total income of the School from tuition fee increases for school year 2003-2004 is
P101,000,000.00 more or less, or a net of P98,252,187.36, after deducting adjustments for
additional charges, allowances and discounts. This is based on the computation of the
School’s Assistant Chief Accountant x x x.
xxxx

The Union feels that the members of the bargaining unit are the least favored. On the wage
increases alone, the Union points out that a comparison of the average monthly salary of the
non-academic personnel from school year 1995-1996 up to school year 1999-2000 shows a
declining relative percentage. For this period, the bargaining unit enjoyed an average
monthly salary increase of 14.234%, the lowest being 8.9% in school year 1998-1999 and
the highest being 15.38% in school year 1995-1996. The School’s offer for this CBA cycle
translates to an increase of only 8.23%, specified as follows: (1) 5.69% increase in school
year 2000-2001 (P1,000.00); (2) 9.15% increase in school year 2001-2002 (P1,700.00); and
(3) 9.86% increase in 2002-2003 (P2,000.00).
The Union also submits a comparative chart of the allocation to non-academic personnel of
the 70% increase in tuition fees from school year 1996-1997 to 1999-2000 x x x. The
average percentage allocation to non-academic personnel during this period is 32.8% of the
total 70% of total tuition fee increases, the lowest being 20.83% for the school year 1999-
2000 and the highest being 43.11% of the total allocation in 1997-1998. Using
P101,036,330.37 as the estimated increase in tuition fee, 70% of this amount, net of
adjustment, is P68,775,831.15 x x x. The Union argues that it is entitled to at least the
average percentage of allocation to it for the past four (4) school years which is at 32.85%,
or P22,592,860.53 of the total allocation of P68,775,831.15.
It maintains, however, that it is entitled to more than the average percentage of its allocation
of the total 70% because it is School practice to allocate more than 70% of the total tuition
fee increases for the salaries and benefits of School employees. Comparing the employees’
share in the tuition fee increases from school year 1996-1997 to 1999-2000, the School
allocated an average percentage of 76.75% for the benefits and salaries of its personnel, or
from a low of 72% in 1998-1999 to a high of 84.4% in 1996-1997 x x x. If the average is
applied this year, the Union argues that the available amount is P75,407,786.29. Because of
this practice, the Union maintains that the School is already estopped from arguing that the
allocation for employee wages and benefits should not exceed 70% of tuition fee increases.
Aside from this amount, the Union maintains that it is entitled to an additional
P15,475,000.00, sourced from other income, for the signing bonus or one-time grant of
P25,000.00 per member x x x. The Union alleges that it is school practice to appropriate
other funds for the wages and benefits of its employees. For the school year 1996-1997, the
School used funds from other sources to fund the P2,000,000.00 hospitalization fund and
50% of the signing bonus for the academic personnel; in 1997-1998 and 1998-1999, it used
additional funds for the P1,000,000.00 hospitalization fund of the academic personnel; and in
1999-2000, it used other funds to finance the one-time grant of P10,000.00 each to the non-
academic personnel and additional P4,000,000.00 for the hospitalization fund of the academic
employees or a total of P17,592,500.00 for the past four (4) academic years x x x.
The School cannot claim that the funds are insufficient to cover the expenses for the CBA
because for the fiscal year 2000-2001 alone, the accumulated excess of revenues over
expenses at the end of the year totaled P148,881,678.00 x x x. The Statement of Revenues
and Expenses from School Operations collated from the audited Financial Statements of the
School for the school years 1996-1997 up to 2000-2001 shows that except for school years
1996-1997 and 2000-2001, the School posted a net income from school operations. Its
average annual net income from school operations alone is P7,956,187.00 and the net loss in
114
2000-2001 was a result of the revaluation of the Main Building as part of the assets from its
fully depreciated value so that a new depreciation cost was reported and charged to general
expenses.
From the foregoing arguments, the Union demands that an amount should be allocated to it
annually to finance its demands as follows:
1st Year—P38,067,860.00 distributed as follows: P22,592,860.53 (share from tuition fee
increases) for the economic benefits with sliding effect on the succeeding years; plus
P15,475,000.00 for the one-time signing bonus of P25,000.00 for each employee sourced
from other funds.
2nd Year—P33,568,970.00 to apply to its demand for salary increase, Christmas bonus, rice
subsidy and clothing/uniform allowance.
3rd Year—P46,653,295.37 to apply to its demand for salary increase, Christmas bonus,
medicine allowance, mid-year bonus allowance and meal allowance.
Based on the Union’s computation, its demands will cost the School a total of
P133,765,125.37 for the entire three (3) year period.
xxxx
Given all the foregoing, we cannot follow the Union’s formula and in effect disregard the
School’s two other bargaining units; to do so is a distortion of economic reality that will not
bring about long term industrial peace. We cannot simply adopt the School’s proposal in light
of the parties’ bargaining history, particularly the pattern of increases in the last cycle.
Considering all these, we believe the following to be a fair and reasonable resolution of the
wage issue.
1st Year—P1,000.00/month
2nd Year—P2,000.00/month
3rd Year—P2,200.00/month
These increases, at a three-year total of P68,337,600, are less than the three (3)-year
increases in the last CBA cycle to accommodate the School’s proven lack of capacity to afford
a higher increase, but are still substantial enough to accommodate the workers’ needs while
taking into account the symmetry that must be maintained with the wages of the other
bargaining units. On a straight line aggregate of P5,200.00, the non-academic personnel will
receive P498.48 less than an Instructor I (member of the faculty union) who received an
aggregate of P5,698.48, thus maintaining the gap between the teaching and non-teaching
personnel. The salary difference will as well be maintained over the three (3)-year period of
the CBA. An RFI employee (member of the union’s bargaining unit) will receive a monthly
salary of P21,695.95 while an Instructor I (faculty union member) will have a salary of
P22,948.00; while an RF5-5/A (member of the union’s bargaining unit) will receive a salary of
P23,462.97 compared to an Asst. Prof. 1 (faculty) who will receive P29,250.96. From a total
cost of salary increases for the first year at P7,428,000, these costs will escalate to

P22,284,000 in the second year, and to P38,625,000 at the third year. Given these figures,
the amounts available for distribution and the member of groups sharing these amounts,
these increases are by no means minimal.
Signing Bonus
A review of the past bargaining history of the parties shows that the School as a matter of
course grants a signing bonus. This ranged from P8,000.00 during the first three (3) years of
the last CBA to P10,000.00 during the remaining two (2) years of the re-negotiated term. In
this instance, the School’s offer of P10,000.00 signing bonus is already reasonable
considering that the School could have taken the position that no signing bonus is due on
compulsory arbitration in line with the ruling in Meralco v. Quisumbing et al., G.R. No.
127598, 27 January 1999.
Christmas Bonus
We note that the members of the bargaining unit receive a P6,500.00 Christmas bonus.
Considering this current level, we believe that the School’s offer of P2,000.00 for each of the
next three (3) years of the CBA is already reasonable. Under this grant, the workers’
Christmas bonus will stand at a total of P12,500 at the end of the third year.
Hospitalization Benefit
We believe that the current practice is already reasonable and should be maintained.
Meal Allowance
The Union failed to show any justification for its demand on this item, hence its demand on
the increase of meal allowance is denied.
Rice Allowance
We believe an additional 2 sacks of rice on top of the existing 6 sacks of rice is reasonable
and is hereby granted, effective on the second year.
Medical Allowance
In the absence of any clear justification for an improvement of this benefit, we find the
existing practice to be already reasonable and should be maintained.
Uniform/Clothing
The Union has not established why the School should grant the benefit; hence this demand is
denied.
Mid-year Bonus
The P3,000.00 bonus is already fair and should be maintained.
115
Hazard Pay
There is no basis to increase this benefit, the current level being fair and reasonable.
Educational Benefit
The existing provision is already generous and should be maintained.
Retirement Plan
We are convinced that the 100% of basic salary per year of service is already reasonable and
should be maintained.
Hiring Preference
Based on the Minutes of Meeting on 18 October 2001 and 8 November 2001, the parties
agreed to retain the existing provision; hence, our ruling on this matter is no longer called
for.
Contractualization
The Union’s proposed amendments are legal prohibitions which need not be incorporated in
the CBA. The Union has alternative remedies if it desires to assail the School’s contracts with
agencies.
Full-time Union Leave of Union President
The Union failed to provide convincing reasons why this demand should be favorably
granted; hence, the same is denied.
Other Demands
All other demands not included in the defined deadlock issues are deemed abandoned,
except for existing benefits which the School shall continue to grant at their current levels
consistent with the principle of non-diminution of benefits.
WHEREFORE, premises considered, the parties are hereby directed to execute within ten (10)
days from receipt of this Order a Collective Bargaining Agreement incorporating the terms
and conditions of this Order as well as other agreements made in the course of negotiations
and on conciliation.”4
Respondent filed a motion for reconsideration but it was denied by the Secretary of Labor.
Thus, respondent filed an original petition for certiorari with the Court of Appeals, claiming
that the awards made by the DOLE Secretary are not supported by the evidence on record
and are contrary to law and jurisprudence.

On January 31, 2005, the appellate court rendered the assailed Decision, the dispositive
portion of which reads, as follows:
“WHEREFORE, premises considered, the petition is partially GRANTED. The assailed Order of
May 31, 2002 of Secretary Patricia Sto. Tomas is hereby AFFIRMED with the modification that
the P10,000.00 signing bonus awarded is increased to P18,000.00. SO ORDERED.”5
In arriving at the foregoing disposition, the appellate court noted that:
“Based on UST Chief Accountant Antonio J. Dayag’s Certification, the tuition fee increment for
the SY 2001-2002 amounted to P101,036,330.37. From this amount, the tuition fee
adjustment amounting to P2,785,143.00 was deducted leaving a net tuition fee increment of
P98,251,189.36.
Pursuant to Section 5 (2) RA 6728, seventy percent (70%) of P98,251,187.36 or
P68,775,831.15 is the amount UST has to allocate for salaries, wages, allowances and other
benefits of its 2,290 employees, categorized as follows: 619 non-teaching personnel
represented by herein petitioner SM-UST; 1,452 faculty members represented by UST-Faculty
Union (UST-FU) and 219 academic/administrative officials. The last group of employees is
excluded from the coverage of the two bargaining units.
Public respondent, taking into consideration the bargaining history of the parties, the needs
of the members of Union in relation to the capability of its employer, UST, to grant its
demands, the impact of the award on the UST-Faculty Union members (UST-FU), and how
the present salary and benefits of the non-academic personnel compare with the
compensation of the employees of other learning institutions, arrived at the following “fair
and reasonable” resolution to the wage issue:
1st year—P1,000.00/month
2nd year—P2,000.00/month
3rd year—P2,000.00/month
Based on public respondent’s arbitral award for the first year (AY 2001-2002), We determine
the allocation that SM-UST would get from the 70% of the tuition fee increment for AY 2001-
2002 by approximating UST’s expense on the increment of salaries/wages, allowances and
benefits of the non-teaching personnel:
1.  Increment on Salaries/Wages                   P 8,047,000.00
+ 13th month pay
(P1,000 x 13 months x 619 employees)
2.  Signing Bonus                                           6,190,000.00
(P10,000/employee)
3. P2,000 Christmas Bonus                            1,238,000.00
116
                                    Total                        P15,475,000.00
The amount of P15,475,000.00 represents 22.50% of the allocated P68,775,831.00 (70% of
the tuition fee increment for AY 2001-2002). UST has allocated P45 million or 65.43% of the
P68,775,831 to UST-Faculty Union.
Is the distribution equitable? If the share from the allocated P68,775,831.00 for each
bargaining unit would be based on the union’s membership, then the distribution appears fair
and reasonable:
xxxx
 Academic  1,452 employees  awarded P45 million
 Non-academic  619 employees   awarded P15.475 million
 Academic &   
 Administrative  219 employees awarded P8 million_____
    Total awarded   P68,475,000.00
                            
511
VOL. 600, SEPTEMBER 18, 2009
511
University of Santo Tomas vs. Samahang Manggagawa ng UST (SM-UST)
The difference between P68,775,831 (70% of incremental tuition fee proceeds) and
P68,475,000 (total actual allocation or award to the two bargaining units and the school
officials) is P300,831.00, which is only .437% of the 70% mandatory allocation
(P68,775,831.00).
The Supreme Court in the case of Cebu Institute of Medicine v. Cebu Institute of Medicine
Employees’ Union National Federation of Labor held that SSS, Medicare and Pag-Ibig
employer’s share may be charged against the “seventy percent (70%) incremental tuition fee
increase (sic)” as they are, after all, for the benefit of the University’s teaching and non-
teaching personnel. The High Court further ruled that “the private educational institution
concerned has the discretion on the disposition of the seventy percent (70%) incremental
tuition fee increase (sic). It enjoys the privilege of determining how much increase in salaries
to grant and the kind and amount of allowances and other benefits to give. The only
precondition is that seventy percent (70%) of the incremental tuition fee increase (sic) goes
to the payment of salaries, wages, allowances and other benefits of teaching and non-
teaching personnel.”
In the (sic) light of the foregoing jurisprudence, the University, in order to comply with R.A.
6728, must fully allocate the 70% of the tuition fee increases to salaries, wages, allowances
and other benefits of the teaching and non-teaching personnel. The amount of P300,831.00
must therefore be allocated either as salary increment or fringe benefits of the non-teaching
personnel.
 117

Less:
We noted that UST’s non-teaching employees enjoy several fringe benefits. Other Benefits of Non-Teaching Personnel                         28,837,780.00
                                 Balance                               P120,043,898.00
We listed them down and estimated their costs for AY 2001-2002:
Even if the other benefits of the faculty members were to be charged from the remaining
balance of the Accumulated Excess of Revenues Over Expenses, there would still be sufficient
1. P3,000.00 mid-year bonus P1,857,000.00   amount to fund the other benefits of the non-teaching personnel.
2.  6 sacks of rice/employee   @ P1,000.00/sack   3,714,000.00
3. Hospitalization benefit   2,476,000.00   xxxx
4.  Meal allowance   (P600/month/employee) 4,456,800.00
5. Hazard pay (P200/month for 198 entitled employees) 8,430,780.00 However, while We subscribe to UST’s position on “salary distortion”, Our earlier findings
6. Medicine Allowance (P1,000/month/employee)   7,428,000.00 20,407,000.00 support the petitioner’s contention that the UST has substantial accumulated income and
7. SSS (P910.00 employer’s share per employee) 6,759,480.00 thus, We deem it proper to award an increase, not in salary, to prevent any salary distortion,
8.  Pag-Ibig (2% of the basic pay) 742,800.00   but in signing bonus. The arbitral award of P10,000 signing bonus per employee awarded by
9.   Phil Health  (P125.00/employee) 928,500.00_ public respondent is hereby increased to P18,000.00.
Total   P28,837,780.00
     We are well aware of the need for the University to maintain a sound and viable financial
The allocation for salary increases, 13th month pay, signing bonus and Christmas bonus for condition in the light of the decreasing number of its enrollees and the increasing costs of
UST’s teaching and non-teaching employees, as well as the school officials, amount to construction of buildings and modernization of equipment, libraries, laboratories and other
P68.475 million. This represents almost 70% of the UST incremental tuition fee proceeds for similar facilities. To balance this concern of the University with the need of its non-academic
AY 2001-2002. Considering the fringe benefits being extended to UST employees, it is safe to employees, the additional award, which We deem reasonable, and to be funded from the
assume that the funds for such benefits need to be sourced from the University’s other University’s accumulated income, is thus limited to the increase in signing bonus.”6
revenues. We looked into UST’s financial statements to determine its financial standing. The
financial statements duly audited by independent and credible external auditors constitute Petitioner filed a motion for reconsideration, which the appellate court denied in its
the normal method of proof of profit and loss performance of a company. We examined UST September 23, 2005 Resolution. Hence, the instant petition which raises the following issues:
audited financial statements from 1997 to 2001 and found that the University’s “other
incomes” come from parking fees, rent income and interest income. It, likewise, derives I. THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF
income from school operations: SUBSTANCE WHEN IT RULED THAT THE MEMBERS OF PRIVATE RESPONDENT
    1999  2000  2001 DID NOT VOLUNTARILY AND KNOWINGLY ACCEPT THE ARBITRAL AWARD OF
Income from THE SECRETARY OF DOLE.
Operations P19,874,937.00 (24,222,602)
(40,905,598) II. THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF
Other Income SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT
Excess of Revenues Over 85,995,039.00 77,335,032.00 78,358,303 INCREASED THE SIGNING BONUS AWARDED BY THE SECRETARY OF DOLE TO
ExpensesBefore EACH OF THE MEMBERS OF PRIVATE RESPONDENT FROM P10,000.00 TO
Income Tax 96,869,976.00 53,112,480.00 P18,000.00.
(29,726,651)
Provision for Income Tax 2,122,518.00 2,602,305.00   III. THE HONORABLE COURT OF APPEALS HAS COMPLETELY IGNORED THE CLEAR
Excess of Revenues Over Expenses 94,747,458.00 50,510,175.00 MANDATE AND INTENTION OF R.A. 6728 OTHERWISE KNOWN AS THE
(32,115,272) GOVERNMENT ASSISTANCE TO STUDENTS AND TEACHERS IN PRIVATE
ACCUMULATED EXCESS OF REVENUES OVER EXPENSES AT END OF YEAR EDUCATION ACT.
 P180,996,950.00 P130,486,775.00 P148,881,678
IV. THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF
Thus, if We charge the employees’ other benefits from the accumulated excess of revenues, SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT RULED
We will come up with the following: THAT THE FRINGE BENEFITS BEING ENJOYED BY THE ACADEMIC AND NON-
ACADEMIC EMPLOYEES OF PETITIONER WERE SOURCED OUT FROM ITS
Accumulated Excess of Revenues OTHER INCOME.
Over Expenses (2001)P                                                     148,881,678.00

V. THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF
SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT
IGNORED THE TIME HONORED PRINCIPLES GOVERNING PETITION FOR
CERTIORARI INVOLVING LABOR CASES.7
Petitioner alleges that, as of December 11, 2002, 526 regular non-academic employees—out
of a total of 619 respondent’s members—have decided to unconditionally abide by the May
31, 2002 Order of the DOLE Secretary.8 A letter signed by the 526 non-academic employees
allegedly reads:
                                                        December 3, 2002
TO: REV. FR. TAMERLANE R. LANA, O.P.
         Rector
REV. FR. JUAN V. PONCE, O.P.
         Vice-Rector
KAMI NA NAKALAGDA SA IBABA AY NAGPAPAABOT NG AMING TAHASANG PAGTANGGAP SA
AWARD NG SECRETARY OF LABOR SA AMING (CBA) DEADLOCK CASE.
SANA PO AY MA-RELEASE ANG AMING MGA WAGE ADJUSTMENTS AT IBA PANG BENEPISYO
BAGO MAG DECEMBER 15, 2002.
x x x x”9
Petitioner claims that it began paying the wage adjustment and other benefits pursuant to
the May 31, 2002 Order of the DOLE Secretary; and that to date, 572 out of the 619
members of respondent have been paid. It now argues that by their acceptance of the award
and the resulting payments made to them, the said union members have ratified its offer and
thus rendered moot the case before the Court of Appeals (CA-G.R. SP No. 72965).
Petitioner also argues that the Court of Appeals erred in ordering it to source part of its
judgment award from the school’s other income, claiming that Republic Act 672810 does not
compel or require schools to allocate more than 70% of the incremental tuition fee increase
for the salaries and benefits of its employees. Citing an authority in education law, it stresses
that—
“Clearly, only 70% may be used for the “payment of salaries, wages, allowances and other
benefits of teaching and non-teaching personnel,” since 20% “shall go to the improvement or
modernization of buildings, equipment, libraries, laboratories, gymnasia and similar facilities
and the payment of other costs of operation.”
A school does not exist solely for the benefit of its teachers and non-teaching personnel. A
school is principally established to deliver quality education at all levels, as the Constitution
requires. Therefore, any tuition fee increase authorized by either the DepEd Secretary, the
CHED or the Director General of the TESDA for private schools should not solely benefit the
teaching and non-teaching personnel but should rather be used for the welfare of the entire
school community, particularly the students. The students are entitled as a matter of right to
the improvement and modernization of the school “buildings, equipment,” as this is
fundamental to the maintenance or improvement of the quality of education they receive.
118
Thus, if schools use any part of the 20% reserved for the upgrading of school facilities to
supplement the salaries of their academic and non-academic personnel, they would not only
be violating the students’ constitutional right to quality education through “improvement and
modernization” but also committing a serious infraction of the mandatory provisions of RA
6728.
The law is silent, however, on the remaining ten percent of the tuition fee increase. The
DepEd has referred to it as the “return of investment” for proprietary schools and the “free
portion” for non-stock, non-profit educational institutions. This ten percent (10%) is the only
portion of the tuition fee increase which schools may use as they wish.”11
Petitioner thus concedes liability only up to P300,831.00, which is the remaining balance of
the undistributed amount of P68,775,831.00, which represents 70% of the incremental
tuition fee proceeds for the period in question.
Petitioner contends further that the appellate court’s award of additional signing bonus (from
P10,000.00 to P18,000.00) is contrary to the nature and principle behind the grant of such
benefit, which is one given as a matter of discretion and cannot be demanded by right,12 a
consideration paid for the goodwill that existed in the negotiations, which culminate in the
signing of a CBA.13 Petitioner claims that since this condition is absent in the parties’ case, it
was erroneous to have rewarded respondent with an increased signing bonus.
Finally, petitioner endorses the original award of the DOLE Secretary, calling her disposition
of the case “fair and equitable”14 and deserving of our attention, in light of the principle that
—
“The conclusions reached by public respondent (Secretary of Labor) in the discharge of her
statutory duty as compulsory arbitrator, demand the high respect of this Court. The study
and settlement of these disputes fall within public respondent’s distinct administrative
expertise. She is especially trained for this delicate task, and she has within her cognizance
such data and information as will assist her in striking the equitable balance between the
needs of management, labor, and the public. Unless there is clear showing of grave abuse of
discretion, this Court cannot and will not interfere with the labor expertise of public
respondent x x x.”15
On the other hand, respondent seeks to sustain the appellate court’s disposition, echoing its
ruling that even though majority of the non-teaching employees agreed to petitioner’s offer
and accepted payment thereupon, they are not precluded from receiving additional benefits
that the courts may award later on, bearing in mind that—
“the employer and the employee do not stand on the same footing. Considering the country’s
prevailing economic conditions, the employee oftentimes finds himself in no position to resist
money proffered, thus, his case becomes one of adherence and not of choice. This being the
case, they are deemed not to have waived any of their rights.”16
As regards petitioner’s assertion that the funds to cover for the cost of the other benefits
awarded by the DOLE Secretary may not be sourced from its other income pursuant to R.A.

6728 as these benefits should only be paid out from the 70% tuition fee increment,
respondent argues that R.A. 6728—
“does not provide that the increase or improvement of the salaries and fringe benefits of the
employees should be exclusively funded from the income of the University which is derived
from the increase in tuition fees. In fact, the statute has no application with respect to the
manner of disposition of the other incomes (as distinguished from income derived from
tuition fee increases) of the University, nor does it preclude or exempt the latter from using
its other income or part thereof to fund the cost of increases or improvements in the salaries
and benefits of its employees. x x x
15. Contrary to the assertion of Petitioner, it is very clear that the funds used by the
University to cover the cost of other fringe benefits (under the existing CBA) granted to the
non-academic employees for AY 2001-2002 in the amount of P28,837,780.00 as observed by
the Court of Appeals, came from the other income of the University and not from the share of
the said employees in the income derived from the tuition fee increases during the same
period. Logically, the grant of the said fringe benefits could not have come from the amount
of P15,475,000.00 which was already allocated by the University to cover the total cost of the
increases in the salaries, grant of signing bonus, and increase in the Christmas bonus to the
non-academic employees for AY 2001-2002.”17
On the appellate court’s award of additional signing bonus, respondent argues that since no
strike or any untoward incident occurred, goodwill between the parties remained, which
entitles respondent’s members to receive their signing bonus. Besides, respondent asserts
that since petitioner did not appeal the DOLE Secretary’s award, it may not now argue
against its grant, the issue remaining being the propriety of the awarded amount; that is,
whether or not it was proper forthe appellate court to have raised it from P10,000.00 to
P18,000.00.
We resolve to PARTIALLY GRANT the petition.
To put matters in their proper context, we must first simplify the facts.
Although the parties were negotiating on the CBA for academic years 2001 through 2006
(2001-2006 CBA Proposals), we are here concerned only with the economic provisions for the
academic year (AY) 2001-2002, specifically the appellate court’s increased award of signing
bonus, from P10,000.00 as originally granted by the DOLE Secretary, to P18,000.00; the
parties do not appear to question any other disposition made by the DOLE Secretary.
Thus, it has been determined that from the tuition fees for the academic year in question,
petitioner earned an increment of P101,036,330.37. Under R.A. 6728, 70% of that amount—
or the net18 amount of P68,775,831.15—should be allotted for payment of salaries, wages,
allowances and other benefits of teaching and non-teaching personnel except administrators
who are principal stockholders of the school.
Of this amount (P68,775,831.15), an aggregate of P15,475,000.00 (or 22.5 %) was allocated
to the university’s non-teaching or non-academic personnel, by way of the following:
119
Increment on Salaries/Wages              P 8,047,000.00
plus 13th month pay
(P1,000 x 13 months x 619 non-academic personnel)
Signing Bonus                                       6,190,000.00
(P10,000 per employee)
P2,000 Christmas Bonus                       1,238,000.00
                   TOTAL                      15,475,000.00
On the other hand, the amount of P45 million (or 65.43% of P68,775,831.15) was allocated
to the teaching personnel.
After distribution of the respective shares of the teaching and non-teaching personnel, there
remained a balance of P300,831.00 from the P68,775,831.15.
In addition to the salary increase, signing and Christmas bonuses, the Court of Appeals
extended to respondent’s members the following fringe benefits for AY 2001-2002, which
benefits petitioner has been giving its non-teaching employees in the past, and which are
included in the DOLE Secretary’s award—an award which petitioner prays for this Court to
affirm in toto:
1. P3,000.00 mid-year bonusP  1,857,000.00
2. 6 sacks of rice/employee
  @ P1,000/sack                     3,714,000.00
3. Hospitalization benefit          2,476,000.00
4. Meal allowance
  (P600/month/employee)        4,456,800.00
5. Hazard pay (P200/month for
  198 entitled employees)                         8,430,780.00
6. Medicine Allowance
  (P1,000/month/employee)  7,428,000.00   20,407,000.00
7. SSS (P910.00 employer’s
  share per employee)              6,759,480.00
8. Pag-Ibig (2% of the basic pay)  742,800.00
9. Philhealth (P125.00/employee)  928,500.00________
                                  Total                    P28,837,780.00
Clearly, these fringe benefits would have to be obtained from sources other than the
incremental tuition fee proceeds (P68,775,831.15), since only P15,475,000.00 thereof was
set aside for the non-teaching personnel; the rest was allocated to the teaching personnel.
The appellate court, moreover, granted an increase in the signing bonus, that is, from the
DOLE Secretary’s award of P10,000.00, to P18,000.00. This, exactly, is the parties’ point of
contention.

Going now to the question of whether respondent’s members’ individual acceptance of the
award and the resulting payments made by petitioner operate as a ratification of the DOLE
Secretary’s award which renders CA-G.R. SP No. 72965 moot, we find that such do not
operate as a ratification of the DOLE Secretary’s award; nor a waiver of their right to receive
further benefits, or what they may be entitled to under the law. The appellate court correctly
ruled that the respondent’s members were merely constrained to accept payment at the time.
Christmas was then just around the corner, and the union members were in no position to
resist the temptation to accept much-needed cash for use during the most auspicious
occasion of the year. Time and again, we have held that necessitous men are not, truly
speaking, free men; but to answer a present emergency, will submit to any terms that the
crafty may impose upon them.19
Besides, as individual components of a union possessed of a distinct and separate corporate
personality, respondent’s members should realize that in joining the organization, they have
surrendered a portion of their individual freedom for the benefit of all the other members;
they submit to the will of the majority of the members in order that they may derive the
advantages to be gained from the concerted action of all.20 Since the will of the members is
personified by its board of directors or trustees, the decisions it makes should accordingly
bind them. Precisely, a labor union exists in whole or in part for the purpose of collective
bargaining or of dealing with employers concerning terms and conditions of employment.21
What the individual employee may not do alone, as for example obtain more favorable terms
and conditions of work, the labor organization, through persuasive and coercive power
gained as a group, can accomplish better.
Regarding petitioner’s assertion that it was unlawful for the Court of Appeals to have required
it to source the award of fringe benefits (in the amount of P28,837,780.00) from the school’s
other income, since R.A. 6728 does not compel or require schools to allocate more than 70%
of the incremental tuition fee increase for the salaries and benefits of its employees, we find
it unnecessary to rule on this matter. These fringe benefits are included in the DOLE
Secretary’s award—an award which petitioner seeks to affirm in toto; this being so, it cannot
now argue otherwise. Since it abides by the DOLE Secretary’s award, which it finds “fair and
equitable,” it must raise the said amount through sources other than incremental tuition fee
proceeds.
Finally, we come to the appellate court’s award of additional signing bonus, which we find to
be unwarranted under the circumstances. A signing bonus is a grant motivated by the
goodwill generated when a CBA is successfully negotiated and signed between the employer
and the union.22 In the instant case, no CBA was successfully negotiated by the parties. It is
only because petitioner prays for this Court to affirm in toto the DOLE Secretary’s May 31,
2002 Order that we shall allow an award of signing bonus. There would have been no other
basis to grant it if petitioner had not so prayed. We shall take it as a manifestation of
petitioner’s liberality, which we cannot now allow it to withdraw. A bonus is a gratuity or act
of liberality of the giver;23 when petitioner filed the instant petition seeking the affirmance of
the DOLE Secretary’s Order in its entirety, assailing only the increased amount of the signing
bonus awarded, it is considered to have unqualifiedly agreed to grant the original award to
the respondent union’s members.
120
WHEREFORE, the petition is PARTIALLY GRANTED. The signing bonus of EIGHTEEN
THOUSAND PESOS (P18,000.00) per member of respondent Samahang Manggagawa ng
U.S.T. as awarded by the Court of Appeals is REDUCED to TEN THOUSAND PESOS
(P10,000.00). All other findings and dispositions made by the Court of Appeals in its January
31, 2005 Decision and September 23, 2005 Resolution in CA-G.R. SP No. 72965 are
AFFIRMED. SO ORDERED.
GR 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, 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 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 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
121
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 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 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.
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.
122
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 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.
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
123
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 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 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 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:
124
“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 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 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
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,
125
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 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 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 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
126
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 (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 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 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
127
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 Air Line Pilots
Association of the Philippines vs. Court of Industrial Relations 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 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 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
128
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 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.
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 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.
G.R. No. 162355. August 14, 2009.*
129
STA. LUCIA EAST COMMERCIAL CORPORATION, petitioner, vs. HON. SECRETARY
OF LABOR AND EMPLOYMENT and STA. LUCIA EAST COMMERCIAL CORPORATION
WORKERS ASSOCIATION (CLUP LOCAL CHAPTER), respondents.
Labor Law; Collective Bargaining; Labor Unions; Words and Phrases; Article 212(g) of the
Labor Code defines a labor organization 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”; Any applicant labor organization 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.—Article 212(g)
of the Labor Code defines a labor organization 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.” Upon compliance with all the
documentary requirements, the Regional Office or Bureau shall issue in favor of the applicant
labor organization a certificate indicating that it is included in the roster of legitimate labor
organizations. Any applicant labor organization 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.
Same; Same; Same; Same; The concepts of a union and of a legitimate labor organization
are different from, but related to, the concept of a bargaining unit; A bargaining unit is a
“group of employees of a given employer, comprised of all or less than all of the entire body
of employees, consistent with equity to the employer, indicated to be the best suited to serve
the reciprocal rights and duties of the parties under the collective bargaining provisions of the
law”; Employees in two corporations cannot be treated as a single bargaining unit even if the
businesses of the two corporations are related.—
The concepts of a union and of a legitimate labor organization are different from, but related
to, the concept of a bargaining unit. We explained the concept of a bargaining unit in San
Miguel Corporation v. Laguesma (236 SCRA 595 [1994]), where we stated that: A bargaining
unit is a “group of employees of a given employer, comprised of all or less than all of the
entire body of employees, consistent with equity to the employer, indicated to be the best
suited to serve the reciprocal rights and duties of the parties under the collective bargaining
provisions of the law.” The fundamental factors in determining the appropriate collective
bargaining unit are: (1) the will of the employees (Globe Doctrine); (2) affinity and unity of
the employees’ interest, such as substantial similarity of work and duties, or similarity of
compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective
bargaining history; and (4) similarity of employment status. Contrary to petitioner’s assertion,
this Court has categorically ruled that the existence of a prior collective bargaining history is
neither decisive nor conclusive in the determination of what constitutes an appropriate
bargaining unit. However, employees in two corporations cannot be treated as a single
bargaining unit even if the businesses of the two corporations are related.
Same; Same; Same; The inclusion in the union of disqualified employees is not among the
grounds for cancellation of registration, unless such inclusion is due to misrepresentation,
false statement or fraud under the circumstances enumerated in Sections (a) to (c) of Article
239 of the Labor Code, and the proper procedure is for the employer to file a petition for
cancellation of certificate of registration of such union and not to immediately commence
voluntary recognition proceedings with another labor organization.—The inclusion in the

union of disqualified employees is not among the grounds for cancellation of registration,
unless such inclusion is due to misrepresentation, false statement or fraud under the
circumstances enumerated in Sections (a) to (c) of Article 239 of the Labor Code. Thus,
CLUP-SLECC and its Affiliates Workers Union, having been validly issued a certificate of
registration, should be considered as having acquired juridical personality which may not be
attacked collaterally. The proper procedure for SLECC is to file a petition for cancellation of
certificate of registration of CLUP-SLECC and its Affiliates Workers Union and not to
immediately commence voluntary recognition proceedings with SMSLEC.
Same; Same; Same; The employer may voluntarily recognize the representation status of a
union in unorganized establishments.—The employer may voluntarily recognize the
representation status of a union in unorganized establishments. SLECC was not an
unorganized establishment when it voluntarily recognized SMSLEC as its exclusive bargaining
representative on 20 July 2001. CLUP-SLECC and its Affiliates Workers Union filed a petition
for certification election on 27 February 2001 and this petition remained pending as of 20 July
2001. Thus, SLECC’s voluntary recognition of SMSLEC on 20 July 2001, the subsequent
negotiations and resulting registration of a CBA executed by SLECC and SMSLEC are void and
cannot bar CLUP-SLECCWA’s present petition for certification election.
Same; Same; Same; Certification Elections; In petitions for
certification election, the employer is a mere bystander and cannot oppose the petition or
appeal the Med-Arbiter’s decision; Exception.—We find it strange that the employer itself,
SLECC, filed a motion to oppose CLUP-SLECCWA’s petition for certification election. In
petitions for certification election, the employer is a mere bystander and cannot oppose the
petition or appeal the Med-Arbiter’s decision. The exception to this rule, which happens when
the employer
is requested to bargain collectively, is not present in the case before us.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
   The facts are stated in the opinion of the Court.
CARPIO, J.:
The Case
This is a petition for review1 assailing the Decision2 promulgated on 14 August 2003 as well
as the Resolution3 promulgated on 24 February 2004 of the Court of Appeals (appellate
court) in CA-G.R. SP No. 77015. The appellate court denied Sta. Lucia East Commercial
Corporation’s (SLECC) petition for certiorari with prayer for writ of preliminary injunction and
temporary restraining order. The appellate court further ruled that the Secretary of Labor and
Employment (Secretary) was correct when she held that the subsequent negotiations and
registration of a collective bargaining agreement (CBA) executed by SLECC with Samahang
Manggagawa sa Sta. Lucia East Commercial (SMSLEC) could not bar Sta. Lucia East
Commercial Corporation Workers Association’s (SLECCWA) petition for direct certification.
The Facts
The Secretary narrated the facts as follows:
130
“On 27 February 2001, Confederated Labor Union of the Philippines (CLUP), in behalf of its
chartered local, instituted a petition for certification election among the regular rank-and-file
employees of Sta. Lucia East Commercial Corporation and its Affiliates, docketed as Case No.
RO400-0202-RU-007. The affiliate companies included in the petition were SLE Commercial,
SLE Department Store, SLE Cinema, Robsan East Trading, Bowling Center, Planet Toys,
Home Gallery and Essentials.
On 21 August 2001, Med-Arbiter Bactin ordered the dismissal of the petition due to
inappropriateness of the bargaining unit. CLUP-Sta. Lucia East Commercial Corporation and
its Affiliates Workers Union appealed the order of dismissal to this Office on 14 September
2001. On 20 November 2001, CLUP-Sta. Lucia East Commercial Corporation and its Affiliates
Workers Union [CLUP-SLECC and its Affiliates Workers Union] moved for the withdrawal of
the appeal. On 31 January 2002, this Office granted the motion and affirmed the dismissal of
the petition.
In the meantime, on 10 October 2001, [CLUP-SLECC and its Affiliates Workers Union]
reorganized itself and re-registered as CLUP-Sta. Lucia East Commercial Corporation Workers
Association (herein appellant CLUP-SLECCWA), limiting its membership to the rank-and-file
employees of Sta. Lucia East Commercial Corporation. It was issued Certificate of Creation of
a Local Chapter No. RO400-0110-CC-004.
On the same date, [CLUP-SLECCWA] filed the instant petition. It alleged that [SLECC]
employs about 115 employees and that more than 20% of employees belonging to the rank-
and-file category are its members. [CLUP-SLECCWA] claimed that no certification election has
been held among them within the last 12 months prior to the filing of the petition, and while
there is another union registered with DOLE-Regional Office No. IV on 22 June 2001 covering
the same employees, namely [SMSLEC], it has not been recognized as the exclusive
bargaining agent of [SLECC’s] employees.
On 22 November 2001, SLECC filed a motion to dismiss the petition. It averred that it has
voluntarily recognized [SMSLEC] on 20 July 2001 as the exclusive bargaining agent of its
regular rank-and-file employees, and that collective bargaining negotiations already
commenced between them. SLECC argued that the petition should be dismissed for violating
the one year and negotiation bar rules under pars. (c) and (d), Section 11, Rule XI, Book V of
the Omnibus Rules Implementing the Labor Code.
On 29 November 2001, a CBA between [SMSLEC] and [SLECC] was ratified by its rank-and-
file employees and registered with DOLE-Regional Office No. IV on 9 January 2002.
In the meantime, on 19 December 2001, [CLUP-SLECCWA] filed its Opposition and Comment
to [SLECC’S] Motion to Dismiss. It assailed the validity of the voluntary recognition of
[SMSLEC] by [SLECC] and their consequent negotiations and execution of a CBA.
According to [CLUP-SLECCWA], the same were tainted with malice, collusion and conspiracy
involving some officials of the Regional Office. Appellant contended that Chief LEO Raymundo
Agravante, DOLE Regional Office No. IV, Labor Relations Division should have not approved
and recorded the voluntary recognition of [SMSLEC] by [SLECC] because it violated one of
the major requirements for voluntary recognition, i.e., non-existence of another labor

organization in the same bargaining unit. It pointed out that the time of the voluntary
recognition on 20 July 2001, appellant’s registration as [CLUP-SLECC and its Affiliates
Workers Union], which covers the same group of employees covered by Samahang
Manggagawa sa Sta. Lucia East Commercial, was existing and has neither been cancelled or
abandoned. [CLUP-SLECCWA] also accused Med-Arbiter Bactin of malice, collusion and
conspiracy with appellee company when he dismissed the petition for certification election
filed by [SMSLEC] for being moot and academic because of its voluntary recognition, when he
was fully aware of the pendency of [CLUP-SLECCWA’s] earlier petition for certification
election.
Subsequent pleadings filed by [CLUP-SLECCWA] and [SLECC] reiterated their respective
positions on the validity and invalidity of the voluntary recognition. On 29 July 2002, Med-
Arbiter Bactin issued the assailed Order.4
The Med-Arbiter’s Ruling
In his Order dated 29 July 2002, Med-Arbiter Anastacio L. Bactin dismissed CLUP-SLECCWA’s
petition for direct certification on the ground of contract bar rule. The prior voluntary
recognition of SMSLEC and the CBA between SLECC and SMSLEC bars the filing of CLUP-
SLECCWA’s petition for direct certification. SMSLEC is entitled to enjoy the rights, privileges,
and obligations of an exclusive bargaining representative from the time of the recording of
the voluntary recognition. Moreover, the duly registered CBA bars the filing of the petition for
direct certification.
CLUP-SLECCWA filed a Memorandum of Appeal of the Med-Arbiter’s Order before the
Secretary.
The Ruling of the Secretary of Labor and Employment
In her Decision promulgated on 27 December 2002, the Secretary found merit in CLUP-
SLECCWA’s appeal. The Secretary held that the subsequent negotiations and registration of a
CBA executed by SLECC with SMSLEC could not bar CLUP-SLECCWA’s petition. CLUP-SLECC
and its Affiliates Workers Union constituted a registered labor organization at the time of
SLECC’s voluntary recognition of SMSLEC. The dispositive portion of the Secretary’s Decision
reads:
“WHEREFORE, the appeal is hereby GRANTED and the Order of the Med-Arbiter dated 29
July 2002 is REVERSED and SET ASIDE. Accordingly, let the entire records of the case be
remanded to the Regional Office of origin for the immediate conduct of a certification
election, subject to the usual pre-election conference, among the regular rank-and-file
employees of [SLECC], with the following choices:
1. Sta. Lucia East Commercial Corporation Workers’ Association – CLUP Local Chapter;
2. Samahang Manggagawa sa Sta. Lucia East Commercial; and
3. No Union.
131
Pursuant to Rule XI, Section II.1 of Department Order No. 9, appellee corporation is hereby
directed to submit to the office of origin, within ten (10) days from receipt hereof, the
certified list of its employees in the bargaining unit or when necessary a copy of its payroll
covering the same employees for the last three (3) months preceding the issuance of this
Decision.
Let a copy of this Decision be furnished the Bureau of Labor Relations and Labor Relations
Division of Regional Office No. IV for the cancellation of the recording of voluntary
recognition in favor of Samahang Manggagawa sa Sta. Lucia East Commercial and the
appropriate annotation of re-registration of CLUP-Sta. Lucia East Commercial Corporation and
its Affiliates Workers Union to Sta. Lucia East Commercial Corporation Workers Association-
CLUP Local Chapter.
SO DECIDED.”5
SLECC filed a motion for reconsideration which the Secretary denied for lack of merit in a
Resolution dated 27 March 2003. SLECC then filed a petition for certiorari before the
appellate court.
The Ruling of the Appellate Court
The appellate court affirmed the ruling of the Secretary and quoted extensively from the
Secretary’s decision. The appellate court agreed with the Secretary’s finding that the workers
sought to be represented by CLUP-SLECC and its Affiliates Workers Union included the same
workers in the bargaining unit represented by SMSLEC. SMSLEC was not the only legitimate
labor organization operating in the subject bargaining unit at the time of SMSLEC’s voluntary
recognition on 20 July 2001. Thus, SMSLEC’s voluntary recognition was void and could not
bar CLUP-SLECCWA’s petition for certification election.
The Issue
SLECC raised only one issue in its petition. SLECC asserted that the appellate court commited
a reversible error when it affirmed the Secretary’s finding that SLECC’s voluntary recognition
of SMSLEC was done while a legitimate labor organization was in existence in the bargaining
unit.
The Ruling of the Court
The petition has no merit. We see no reason to overturn the rulings of the Secretary and of
the appellate court.
Legitimate Labor Organization
Article 212(g) of the Labor Code defines a labor organization 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.” Upon compliance
with all the documentary requirements, the Regional Office or Bureau shall issue in favor of
the applicant labor organization a certificate indicating that it is included in the roster of

legitimate labor organizations.6 Any applicant labor organization 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.7
Bargaining Unit
The concepts of a union and of a legitimate labor organization are different from, but related
to, the concept of a bargaining unit. We explained the concept of a bargaining unit in San
Miguel Corporation v. Laguesma,8 where we stated that:
“A bargaining unit is a “group of employees of a given employer, comprised of all or less than
all of the entire body of employees, consistent with equity to the employer, indicated to be
the best suited to serve the reciprocal rights and duties of the parties under the collective
bargaining provisions of the law.”
The fundamental factors in determining the appropriate collective bargaining unit are: (1) the
will of the employees (Globe Doctrine); (2) affinity and unity of the employees’ interest, such
as substantial similarity of work and duties, or similarity of compensation and working
conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4)
similarity of employment status.
Contrary to petitioner’s assertion, this Court has categorically ruled that the existence of a
prior collective bargaining history is neither decisive nor conclusive in the determination of
what constitutes an appropriate bargaining unit.”
However, employees in two corporations cannot be treated as a single bargaining unit even if
the businesses of the two corporations are related.9
A Legitimate Labor Organization Representing
An Inappropriate Bargaining Unit
CLUP-SLECC and its Affiliates Workers Union’s initial problem was that they constituted a
legitimate labor organization representing a non-appropriate bargaining unit. However, CLUP-
SLECC and its Affiliates Workers Union subsequently re-registered as CLUP-SLECCWA, limiting
its members to the rank-and-file of SLECC. SLECC cannot ignore that CLUP-SLECC and its
Affiliates Workers Union was a legitimate labor organization at the time of SLECC’s voluntary
recognition of SMSLEC. SLECC and SMSLEC cannot, by themselves, decide whether CLUP-
SLECC and its Affiliates Workers Union represented an appropriate bargaining unit.
The inclusion in the union of disqualified employees is not among the grounds for
cancellation of registration, unless such inclusion is due to misrepresentation, false statement
or fraud under the circumstances enumerated in Sections (a) to (c) of Article 239 of the
Labor Code.10 Thus, CLUP-SLECC and its Affiliates Workers Union, having been validly issued
a certificate of registration, should be considered as having acquired juridical personality
which may not be attacked collaterally. The proper procedure for SLECC is to file a petition
for cancellation of certificate of registration11 of CLUP-SLECC and its Affiliates Workers Union
and not to immediately commence voluntary recognition proceedings with SMSLEC.
132
SLECC’S Voluntary Recognition of SMSLEC
The employer may voluntarily recognize the representation status of a union in unorganized
establishments.12 SLECC was not an unorganized establishment when it voluntarily
recognized SMSLEC as its exclusive bargaining representative on 20 July 2001. CLUP-SLECC
and its Affiliates Workers Union filed a petition for certification election on 27 February 2001
and this petition remained pending as of 20 July 2001. Thus, SLECC’s voluntary recognition of
SMSLEC on 20 July 2001, the subsequent negotiations and resulting registration of a CBA
executed by SLECC and SMSLEC are void and cannot bar CLUP-SLECCWA’s present petition
for certification election.
Employer’s Participation in a Petition for Certification Election. We find it strange
that the employer itself, SLECC, filed a motion to oppose CLUP-SLECCWA’s petition for
certification election. In petitions for certification election, the employer is a mere bystander
and cannot oppose the petition or appeal the Med-Arbiter’s decision. The exception to this
rule, which happens when the employer is requested to bargain collectively, is not present in
the case before us.13
WHEREFORE, we DENY the petition. We AFFIRM the Decision promulgated on 14 August
2003 as well as the Resolution promulgated on 24 February 2004 of the Court of Appeals in
CA-G.R. SP No. 77015. SO ORDERED.
Petition denied, judgment and resolution affirmed.
Notes.—Only the labor organization designated or selected by the majority of the employees
in an appropriate bargaining unit is the exclusive representative of the employees in such unit
for the purpose of collective bargaining. Not every legitimate labor organization possesses the
rights mentioned in Article 242 of the Labor Code—Article 242 (a) must be read in Sta. Lucia
East Commercial Corporation vs. Secretary of Labor and Employment, 596 SCRA 92, G.R. No.
162355 August 14, 2009
G.R. No. 131248. December 11, 1998.*
DUNLOP SLAZENGER (PHILS.), INC., petitioner, vs. HON. SECRETARY OF LABOR
AND EMPLOYMENT and DUNLOP SLAZENGER STAFF ASSOCIATION-APSOTEU,
respondents.
Labor Law; Unions; Certification Elections; Appropriate Bargaining Units; Words and Phrases;
A unit to be appropriate must effect a grouping of employees who have substantial, mutual
interests in wages, hours, working conditions and other subjects of collective bargaining.—
We agree with the public respondent that supervisors can be an appropriate bargaining unit.
This is in accord with our repeated ruling that “[a]n appropriate bargaining unit is a group of
employees of a given employer, composed of all or less than the entire body of employees,
which the collective interests of all the employees, consistent with equity to the employer,
indicate to be best suited to serve reciprocal rights and duties of the parties under the
collective bargaining provisions of law. Otherwise stated, it is a legal collectivity for collective
bargaining purposes whose members have substantially mutual bargaining interests in terms
and conditions of employment as will assure to all employees their collective bargaining
rights. A unit to be appropriate must effect a grouping of employees who have substantial,

mutual interests in wages, hours, working conditions and other subjects of collective
bargaining.”
Same; Same; Same; Same; Supervisory Employees; Rank-and-File Employees; The test of
supervisory status is whether an employee possesses authority to act in the interest of his
employer, which authority should not be merely routinary or clerical in nature but requires
the use of independent judgment.—Determining the status of supervisory and rank-and-file
employees is not a hard row to hoe in labor law. The test of supervisory status as we have
repeatedly ruled is whether an employee possesses authority to act in the interest of his
employer, which authority should not be merely routinary or clerical in nature but requires
the use of independent judgment. Corrollarily, what determines the nature of employment is
not the employee’s title, but his job description.
Same; Same; Same; Same; Same; Same; Wages; The mode of compensation is usually a
matter of convenience and does not necessarily determine the nature and character of the
job.—The list reveals that the positions occupied by the twenty six (26) office and technical
employees are in fact rank-and-file positions, i.e., A/C mechanic, draftsmen, storemen,
motorpool mechanic, secretaries, accounts clerk, company nurses, industrial mechanic, boiler
men, laboratory technicians, payroll clerk, welder, purchasing clerk, company drivers and
electricians. It is fairly obvious that these positions cannot be considered as supervisory
positions for they do not carry the authority to act in the interest of the employer or to
recommend managerial actions. It is not decisive that these employees are monthly paid
employees. Their mode of compensation is usually a matter of convenience and does not
necessarily determine the nature and character of their job.
Same; Same; Same; Same; Same; Same; An organization which carries a mixture of rank-
and-file and supervisory employees cannot possess any of the rights of a legitimate labor
organization, including the right to file a petition for certification election; A union has no
legal right to file a petition for certification election to represent a bargaining unit composed
of supervisors for so long as it counts rank-and-file employees among its members.—We also
do not agree with the ruling of the respondent Secretary of Labor that the infirmity in the
membership of the respondent union can be remedied in “the pre-election conference thru
the exclusion-inclusion proceedings wherein those employees who are occupying rank-and-
file positions will be excluded from the list of eligible voters.” Public respondent gravely
misappreciates the basic antipathy between the interest of supervisors and the interest of
rank-and-file employees. Due to the irreconcilability of their interests we held in Toyota Motor
Philippines v. Toyota Motors Philippines Corporation Labor Union, viz.: “x x x “Clearly, based
on this provision [Article 245, Labor Code], a labor organization composed of both rank-and-
file and supervisory employees is no labor organization at all. It cannot, for any guise or
purpose, be a legitimate labor organization. Not being one, an organization which carries a
mixture of rank-and-file and supervisory employees cannot possess any of the rights of a
legitimate labor organization, including the right to file a petition for certification election for
the purpose of collective bargaining. It becomes necessary, therefore, anterior to the
granting of an order allowing a certification election, to inquire into the composition of any
labor organization whenever the status of the labor organization is challenged on the basis of
Article 245 of the Labor Code.” Needless to stress, the respondent union has no legal right to
file a certification election to represent a bargaining unit composed of supervisors for so long
as it counts rank-and-file employees among its members.
133
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
PUNO, J.:
In this petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, petitioner
seeks the annulment of the Resolution and Order, dated July 19, 1997 and October 16,
1997,1 of the public respondent Secretary of Labor and Employment calling for a certification
election in its company.
It appears that on September 15, 1995, the respondent union filed a Petition for Certification
Election among the supervisory, office and technical employees of the petitioner company
before the Department of Labor and Employment, Regional Office No. III, San Fernando,
Pampanga. It alleged that it is a legitimate labor organization, a duly chartered local of the
Associated Professional, Supervisory, Office & Technical Employees Union (APSOTEU); that
petitioner is a domestic corporation engaged in the manufacture of tennis balls and other
allied products; that petitioner is an unorganized establishment and there is no certified
bargaining agreement that will bar the filing of its petition for certification election; and that
no certification election has been conducted within one (1) year prior to the filing of its
petition for certification election.
On October 9, 1995, the petitioner company filed its Answer with Motion to Dismiss based on
three (3) grounds, namely: (1) that the respondent union is comprised of supervisory and
rank-and-file employees and cannot act as bargaining agent for the proposed unit; (2) that a
single certification election cannot be conducted jointly among supervisory and rank-and-file
employees; and (3) that the respondent union lacks legal standing since it failed to submit its
books of accounts.2
In its Reply filed on December 5, 1995, the respondent union alleged that its members are
supervisors and not rank-and-file employees. It averred that all its members are paid monthly
by the petitioner company. It alleged that the bargaining unit it seeks to represent is made
up of the monthly paid supervisory employees and other personnel who cannot be classified
as belonging to the rank-and-file. It further contended that it has no obligation to attach its
books of accounts since it is a legitimate labor organization. It urged that the certification
election proceeding cannot be used to question the legal personality of a labor organization.3
On March 4, 1996, however, respondent union submitted its new books of accounts
consisting of the Cash Receipts Journal, Cash Disbursements Journal and two (2) ledgers.4
On July 15, 1996, Mediator Arbiter Ma. Carmen A. Espinosa granted the petition for
certification election. Respondent Secretary of Labor and Employment affirmed the Arbiter’s
decision ruling as follows:
“x x x
“The order of the Med-Arbiter directing the conduct of a certification elections is well and
proper.

“A perusal of the records shows that the bargaining unit that the petitioner seeks to
represent has been properly defined and this is composed of all the supervisory employees of
the respondent company. We wish to emphasize that the right of supervisory employees to
form their own labor organization separate from that of the rank-and-file union has been
recognized by law. This is quite clear from the provisions of Article 245 of the Labor Code, as
amended, which states:
‘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.’
“As to the contention of the respondent that the petitioning union is composed of both
supervisory and rank and file employees, suffice it to stress that the same is not a sufficient
reason that would warrant the dismissal of the present petition. The same can be taken care
(sic) of during the pre-election conference thru the exclusion-inclusion proceedings wherein
those employees who are occupying rank and file positions will be excluded from the list of
eligible voters.
“Anent the issue on the legitimacy of the petitioner, we agree with the findings of the Med-
Arbiter that the petitioner has acquired the requisite legal personality to file the present
petition for certification elections. This is shown by the fact that the petitioner has sufficiently
complied with the mandatory reportorial requirements provided for under Section 3, Rule II,
Book V of the Rules and Regulations Implementing the Labor Code, as amended and as
enunciated by the Supreme Court in the cases of Progressive Development Corporation vs.
Secretary of Labor, et al., 205 SCRA 802 and Protection Technology, Inc. vs. Secretary of
Labor, G.R. 11711, March 1, 1995.”5
Respondent Secretary of Labor denied petitioner’s motion for reconsideration; hence, this
petition.
It is petitioner’s submission that:
“I “Respondent Secretary acted arbitrarily and with grave abuse of discretion amounting to
lack or excess of jurisdiction in holding that the respondent union is composed of all the
supervisory employees of the [petitioner] company.
“II “Respondent Secretary acted arbitrarily and with grave abuse of discretion amounting to
lack or excess of jurisdiction in finding that even if the respondent union is composed of both
supervisory and rank-and-file employees such can be taken cared of during the pre-election
conference thru the exclusion-inclusion proceedings.
“III “Respondent Secretary acted contrary to law and with grave abuse of discretion
amounting to lack or excess of jurisdiction in upholding the findings of the Med-Arbiter that
the respondent union has complied with all the requirements for it to attain the legal
personality to file the petition for certification election.”6
The petition is meritorious.
134
We agree with the public respondent that supervisors can be an appropriate bargaining unit.
This is in accord with our repeated ruling that “[a]n appropriate bargaining unit is a group of
employees of a given employer, composed of all or less than the entire body of employees,
which the collective interests of all the employees, consistent with equity to the employer,
indicate to be best suited to serve reciprocal rights and duties of the parties under the
collective bargaining provisions of law. Otherwise stated, it is a legal collectivity for collective
bargaining purposes whose members have substantially mutual bargaining interests in terms
and conditions of employment as will assure to all employees their collective bargaining
rights. A unit to be appropriate must effect a grouping of employees who have substantial,
mutual interests in wages, hours, working conditions and other subjects of collective
bargaining.”7
The critical issue, however, is whether or not the respondent union can file a petition for
certification election to represent the supervisory employees of the petitioner company. The
resolution of this issue depends on whether the respondent union is composed solely of
supervisory employees or of both supervisory and rank-and-file employees. Article 245 of the
Labor Code clearly provides that “supervisory employees shall not be eligible for membership
in a labor organization of the rank-and-file employees x x x.”
To determine who are supervisory and rank-and-file employees reference has to be made to
Article 212(m) of the Labor Code, as amended, as well as Section 1(t), Rule I, Book V of the
Omnibus Rules Implementing the Labor Code, as amended, viz.:
“ ‘Managerial employee is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge,
assign or discipline employees. Supervisory employees are those who, in the interest of the
employer, effectively recommend such managerial actions if the exercise of such authority is
not merely routinary or clerical in nature but requires the use of independent judgment. All
employees not falling within any of the above definitions are considered rank-and-file
employees for purposes of this Book [these Rules].’ ”
Determining the status of supervisory and rank-and-file employees is not a hard row to hoe
in labor law. The test of supervisory status as we have repeatedly ruled is whether an
employee possesses authority to act in the interest of his employer, which authority should
not be merely routinary or clerical in nature but requires the use of independent judgment.
Corrollarily, what determines the nature of employment is not the employee’s title, but his job
description.8
In the instant case, the list of monthly paid employees submitted by the petitioner company
contains the names of about twenty seven (27) supervisory employees, six (6) managerial
employees, one (1) confidential employee and twenty six (26) office and technical employees
holding various positions. The list reveals that the positions occupied by the twenty six (26)
office and technical employees are in fact rank-and-file positions, i.e., A/C mechanic,
draftsmen, storemen, motorpool mechanic, secretaries, accounts clerk, company nurses,
industrial mechanic, boiler men, laboratory technicians, payroll clerk, welder, purchasing
clerk, company drivers and electricians. It is fairly obvious that these positions cannot be
considered as supervisory positions for they do not carry the authority to act in the interest of

the employer or to recommend managerial actions. It is not decisive that these employees
are monthly paid employees. Their mode of compensation is usually a matter of convenience
and does not necessarily determine the nature and character of their job.
We also do not agree with the ruling of the respondent Secretary of Labor that the infirmity
in the membership of the respondent union can be remedied in “the pre-election conference
thru the exclusion-inclusion proceedings wherein those employees who are occupying rank-
and-file positions will be excluded from the list of eligible voters.” Public respondent gravely
misappreciates the basic antipathy between the interest of supervisors and the interest of
rank-and-file employees. Due to the irreconcilability of their interests we held in Toyota Motor
Philippines v. Toyota Motors Philippines Corporation Labor Union,9 viz.:
“x x x
“Clearly, based on this provision [Article 245, Labor Code], a labor organization composed of
both rank-and-file and supervisory employees is no labor organization at all. It cannot, for
any guise or purpose, be a legitimate labor organization. Not being one, an organization
which carries a mixture of rank-and-file and supervisory employees cannot possess any of the
rights of a legitimate labor organization, including the right to file a petition for certification
election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to
the granting of an order allowing a certification election, to inquire into the composition of
any labor organization whenever the status of the labor organization is challenged on the
basis of Article 245 of the Labor Code.”
Needless to stress, the respondent union has no legal right to file a certification election to
represent a bargaining unit composed of supervisors for so long as it counts rank-and-file
employees among its members.
IN VIEW WHEREOF, the Resolution and Order dated July 19, 1997 and October 16, 1997, in
OS-A-10-171-96 of the public respondent are annulled and set aside. No costs.
SO ORDERED.
Notes.—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. (San Miguel Foods, Inc.-Cebu B-Meg Feed Plant vs. Laguesma, 263 SCRA 68
[1996])
2. 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
135
SCRA 749 [1989]; Belyca Corporation v. Ferrer-Calleja, 168 SCRA 184 [1988]; George and
Peter Lines, Inc.
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
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 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.
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
136
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 bargaining 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, 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. 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
137
(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."
"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 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.
x x x      x x x      x x x
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:
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.
138
The employer naturally needs assurance that the union it is dealing with is a bona-fide
organization, one which has not submitted 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.
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 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
139
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 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.
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.)
xxxxxxxxxxx xxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxx
GR. No. L-28791-93. August 27, 1973.
VALENTIN GUIJARNO, HERMINIGILDO DE JUAN, NICOLAS CASUMPANG,
ELEUTERIO BOBLO, BENITO GUAVEZ, ARSENIO JEMENA, DIMAS BOCBOCILA,
NICOLAS ALAMON, ISMAEL BILLONES, RAYMUNDO ALAMON, SANTIAGO BAÑES,
SO-FRONIO CONCLARA, ADRIANO BlÑAS, AURELIO ALAMON, SIMEON BERNIL,
RESURRECION DIAZ, FELICIANO BELGIRA, FEDERICO BOSQUE, and AGOSTO
PULMONES, petitioners, vs. COURT OF INDUSTRIAL RELATIONS, CENTRAL
SANTOS LOPEZ Co., INC. and UNITED SUGAR WORKERS UNlON-lLO, respondents.
Labor; Closed-shop agreement; Non-retroactivity thereof.—A closed-shop provision in a
collective bargaining agreement is not to be given a retroactive effect so as to preclude its
being applied to employees already in the service.
Same; Same; Same; Reasons therefor.—To further increase the effectiveness of labor
organizations, a closed-shop has been allowed. It could happen, though, that such a
stipulation which assures further weight to a labor union at the bargaining table could be
utilized against minority groups or individual members thereof. It is a basic fact in life that
power in a collectivity could be the means of crushing opposition and stifling the voices of
those who are in dissent. The right to join others of life persuasion is indeed valuable. It
could happen though that whatever group may be in control of the organization may simply
ignore an individual's most-cherished desires and treat him as if he counts for naught. The
antogonism between him and the group becomes marked. Dissatisfaction if given expression

may be labeled disloyalty. In the labor field, the union under such circumstances may no
longer be a haven of refuge, but indeed as much of a potential foe as management itself.
Precisely with the Anakan doctrine, such an undesirable eventuality has been sought to be
minimized, if not entirely avoided.
Same; Same; Remedy of employees unlawfully dismissed.—Clearly, they should be reinstated
with backpay. In Salunga vs. Court of Industrial Relations, reinstatement was ordered but it
was the labor union that was held liable for the back wages. That is a rule dictated by
fairness because management would not have taken the action it did had it not been for the
insistence of the labor union seeking to give effect to its interpretation of a closed-shop
provision,
APPEAL by certiorari from a decision of the Court of Industrial Relations.
The facts are stated in the opinion of the Court.
FERNANDO, J.:
The failure of respondent Court of Industrial Relations to order the reinstatement of
petitioners to their employment gave rise to this appeal by way of certiorari. The need for
resort to this Court could have been obviated had there been no such marked inattention to
the authoritative principle that a closed-shop provision of a collective bargaining contract is
not to be applied retroactively for, at the time the decision was rendered on November 2,
1967 and its affirmance by a resolution of respondent Court en banc on January 22, 1968,
such a doctrine was controlling and did call for application. So it was indicated in the leading
case of Confederated Sons of Labor v. Anakan Lumber Co.,1 a 1960 decision. As a matter of
law then, the stand of petitioners is well-nigh impregnable. It would follow that their appeal
must be sustained and respondent Court must be reversed.
Three unfair labor practice cases for unlawful dismissal allegedly based on legitimate union
activity were filed against respondent Central Santos Lopez Co., Inc. and respondent United
Sugar Workers Union-ILO, with eight of the present petitioners as complainants in the first,2
six of them in the second,3 and five, in the third.4 There was a consolidated hearing and a
consolidated decision not only for convenience, but also due to there being hardly any
difference as to the nature of the alleged grievance and the defense of management. There
was no question about the expulsion from respondent labor union of the former. In view of a
closed-shop provision in the then existing collective bargaining contract, respondent Central
Santos Lopez Co., Inc. assumed it had to dismiss them. So it was noted in the decision of the
then associate Judge Joaquin M. Salvador of respondent Court. Thus: "The respondent
company, in its answer, alleged that the only reason for the dismissal of the complainants
herein is because their said dismissal was asked by the USWU-ILO of which union respondent
company has a valid and existing collective bargaining contract with a closed-shop provision
to the effect that those laborers who are no longer members of good standing in the union
may be dismissed by the respondent company if their dismissal is sought by the union; that
respondent company has never committed acts of unfair labor practice against its employees
or workers much less against the complainants herein but that it has a solemn obligation to
comply with the terms and conditions of the contract; and that a closed-shop agreement is
sanctioned under this jurisdiction for such kind of agreement is expressly allowed under the
provisions of Republic Act 875 known as the Industrial Peace Act and the dismissal of
complainants is merely an exercise of a right allowed by said law."5 There was no question,
140
however, as to petitioners having been employed by such respondent Company long before
the collective bargaining contract, the
first instance noted being that of Resurrecion Diaz, who was in the service as far back as
1928;6 Santiago Bañez, as far back as 1929;7 Dimas Bocbocila, as far back as 1933;8 Simeon
Bernil, as far back as 1935;9 Aurelio Alamon, as far back as 1936;10 Valentin Guijarno, as far
back as 1937;11 Benito Guavez, as far back as 1938;12 Raymundo Alamon, as far back as
1939;13 Eleuterio Boblo, Nicolas Alamon, Sofronio Conclara, Adriano Biñas and Federico
Bosque, as far back as 1947;14 Herminigildo de Juan and Nicolas Casumpang, as far back as
1948;15 Agosto Pulmones, as far back as 1949;16 and Feliciano Belgira, as far back as
1954.17
In the decision of respondent Court, there was an acknowledgment of the prior existence of
such employment relationship. Nonetheless, the conclusion reached, both by the trial judge
and then by respondent Court en banc was that the dismissal was justifiable under the
closed-shop provision of the collective bargaining agreement. Hence, this petition for review,
which, as noted at the outset, is impressed with merit.
1. The authoritative doctrine that a closed-shop provision in a collective bargaining
agreement is not to be given a retroactive effect so as to preclude its being applied to
employees already in the service, is traceable, as set forth in the opening paragraph of this
opinion, to the leading case of Confederated Sons of Labor v. Anakan Lumber Co.18 decided
in April of 1960. In discussing the particular stipulation in the contract, it was made clear in
the opinion of the then Justice, later Chief Justice, Concepcion: "In order that an employer
may be deemed bound, under a collective bargaining agreement, to dismiss employees for
non-union membership, the stipulation to this effect must be so clear and unequivocal as to
leave no room for doubt thereon. An undertaking of this nature is so harsh that it must be
strictly construed, and doubts must be resolved against the existence of 'closed shop'."19
Less than a year later, to be more precise, on January 28,1961, in Freeman Shirt
Manufacturing Co., Inc. v. Court of Industrial Relations,20 this Court, speaking through
Justice Gutierrez David, went further. Thus: "The closed-shop agreement authorized under
sec. 4, subsec. a(4) of the Industrial Peace Act above quoted should however, apply to
persons to be hired or to employees who are not yet members of any labor organization. It is
inapplicable to those already in the service who are members of another union. To hold
otherwise, i. e., that the employees in a company who are members of a minority union may
be compelled to disaffiliate from their union and join the majority or contracting union, would
render nugatory the right of all employees to self-organization and to form, join or assist
labor organizations of their own choosing, a right guaranteed by the Industrial Peace Act
(sec. 3, Rep. Act No. 875) as well as by the Constitution (Art. III, sec. 1[6])."21 Thereafter,
in Kapisanan Ng Mga Mangagagawa Ng Alak v. Hamilton Distillery Company,22 this Court,
again speaking through the former, minced no words in characterizing a stipulation that
would allow a dismissal of those already employed as "null and void."23 In 1967, this time
already elevated to his position as head of the Court, Chief Justice Concepcion in Salunga v.
Court of Industrial Relations24 did stress that while "generally, a state may not compel
ordinary voluntary associations to admit thereto any given individual, because membership
-therein may be accorded or withheld as a matter of privilege, the rule is qualified in respect
of labor unions holding a monopoly in the supply of labor, either in a given locality, or as
regards a particular employer with which it has a closed-shop agreement. * * *."25 He
continued: "Consequently, it is well settled that such unions are not entitled to arbitrarily

exclude qualified applicants for membership, and a closed-shop provision would not justify
the employer in discharging, or a union in insisting upon the discharge of, an employee
whom the union thus refuses to admit to membership, without any reasonable ground
therefor. Needless to say, if said unions may be compelled to admit new members, who have
the requisite qualifications, with more reason may the law and the courts exercise the
coercive power when the employee involved is a long standing union member, who, owing to
provocations of union officers, was impelled to tender his resignation, which he forthwith
withdrew or revoked. Surely, he may, at least, invoke the rights of those who seek admission
for the first time, and can not arbitrarily be denied readmission."26 Nothing can be clearer
therefore than that this Court looks with disfavor on a provision of this character being
utilized as an excuse for the termination of employment. To complete the picture, mention
should be made of Elegance, Inc. v. Court of Industrial Relations,27 where this Court,
through the present Acting Chief Justice Makalintal, harked back to Freeman Shirt
Manufacturing Co., Inc. v. Court of Industrial Relations28 to stress the point of non-
retroactivity. What should be immediately apparent, but unfortunately respondent Court
seemed to have closed its eyes to it, is that when the decision was rendered by the trial
judge on November 2, 1967 and affirmed with the Court sitting en banc on January 22, 1968,
the controlling doctrine to which deference ought to have been paid was that petitioners
should not have been dismissed. 2. Nor is there anything unusual in this Court's adherence
with remarkable consistency to such a basic doctrine. The obligation was categorically
imposed on the State, under the 1935 Constitution, to "afford protection to labor, especially
to working women and minors * * *."29 That is to carry out the purpose implicit in one of
the five declared principles, namely, the promotion of social justice "to insure the well-being
and economic security of all the people * * *."30 It is then the individual employee, as a
separate, finite human being, with his problems and his needs, who must be attended to. He
is the beneficiary of the concern thus made manifest by the fundamental law. The present
Constitution is even more explicit on the matter. The principle that the State shall promote
social justice is categorically based on the concept of insuring "the dignity, welfare, and
security of all the people."31 Insofar as the provision on the State affording protection to
labor is concerned, it is further required to "promote full employment and equality in
employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate
the relations between workers and employers. The State shall assure the rights of workers to
self-organization, collective bargaining, security of tenure, and just and humane conditions of
work."32 Where does that leave a labor union, it may be asked. Correctly understood, it is
nothing but the means of assuring that such fundamental objectives would be achieved. It is
the instrumentality through which an individual laborer who is helpless as against a powerful
employer may, through concerted effort and activity, achieve the goal of economic wellbeing.
That is the philosophy underlying the Industrial Peace Act.33 For, rightly has it been said that
workers unorganized are weak; workers organized are strong. Necessarily then, they join
labor unions. To further increase the effectiveness of such organizations, a closed-shop has
been allowed.34 It could happen, though, that such a stipulation which assures further
weight to a labor union at the bargaining table could be utilized against minority groups or
individual members thereof. There are indications that such a deplorable situation did so
manifest itself here. Respondent Court, it would appear, was not sufficiently alert to such a
danger. What is worse, it paid no heed to the controlling doctrine which is merely a
recognition of a basic fact in life, namely, that power in a collectivity could be the means of
crushing opposition and stifling the voices of those who are in dissent. The right to join
others of like persuasion is indeed valuable. An individual by himself may feel inadequate to
141
meet the exigencies of life or even to express his personality without the right to association
being vitalized. It could happen though that whatever group may be in control of the
organization may simply ignore his most-cherished desires and treat him as if he counts for
naught. The antagonism between him and the group becomes marked. Dissatisfaction if
given expression may be labeled disloyalty. In the labor field, the union under such
circumstances may no longer be a haven of refuge, but indeed as much of a potential foe as
management itself. Precisely with the Anakan doctrine, such an undesirable eventuality has
been sought to be minimized, if not entirely avoided. There is no justification then, both as a
matter of precedent and as a matter of principle, for the decision reached by respondent
Court.
3. Now as to the remedy to which petitioners are entitled. Clearly, they should be reinstated
with back pay. In Salunga v. Court of Industrial Relations,35 reinstatement was ordered but it
was the labor union that was held liable for the back wages. That is a rule dictated by
fairness because management, in this case respondent Central Santos Lopez Company, Inc.,
would not have taken the action it did had it not been for the insistence of the labor union
seeking to give effect to its interpretation of a closedshop provision. As we decided then, so
do we now. These words of the Chief Justice in Salunga carry persuasion: "Just the same,
having been denied readmission into the Union and having been dismissed from the service
owing to an unfair labor practice on the part of the Union, petitioner is entitled to
reinstatement as member of the Union and to his former or substantially equivalent position
in the Company, without prejudice to his seniority and/or rights and privileges, and with back
pay, which back pay shall be borne exclusively by the Union. In the exercise of its sound
judgment and discretion, the lower court may, however, take such measures as it may deem
best, including the power to authorize the Company to make deductions, for petitioner's
benefit, from the sums due to the Union, by way of check off or otherwise, with a view to
executing this decision, and, at the same time effectuating the purposes of the Industrial
Peace Act."36
WHEREFORE, the decision of respondent Court of November 2, 1967 and the resolution of
respondent Court en banc sustaining the same of January 2, 1968 are hereby reversed.
Respondent Central Lopez Co., Inc. is hereby ordered to reinstate petitioners to the positions
they occupied prior to their illegal dismissal, with back wages to be paid by respondent
United Sugar Workers Union-ILO, deducting therefrom whatever wages they may have
earned in the of the employees as provided in Section twelve, but such agreement shall not
cover members of any religious sects which prohibit affiliation of their members in any such
labor organization." As amended by Republic Act No. 3350 (1961).
Notes.—a) Closed-shop agreement explained.—A stipulation in a collective bargaining
agreement whereby the employer agreed "not to have in its employ or to hire any new
employee or laborer unless he is a member of good standing of the union" establishes a
"closed shop" in a very limited sense, namely, that laborers, employees, and workers
engaged by the company after the signing of the agreement must be members of the union.
The agreement does not affect the right of the company to retain those already working on
or before the signing of the agreement or those hired or employed subsequently thereto
while they were members of said union but who, thereafter, resigned or were expelled
therefrom (Rizal Labor Union vs. Rizal Cement Co., Inc., L-19779, July 30, 1966). A closed-
shop agreement is a form of union security whereby only union members as a condition for
employment redounds to the benefit and advantage of the said employees because by

holding out to loyal members a promise of employment in the closed-shop, the union wields
group solidarity. In fact, the closed-shop contract is the most prized achievement of unionism
(Juat vs. Court of Industrial Relations, L-20764 November 29, 1965).
GR No. L-22228. February 27, 1969.
PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU), SOCIAL SECURITY
SYSTEM EMPLOYEES ASSOCIATION-PAFLU, ALFREDO FAJARDO AND ALL THE
OTHER MEMBERS AND OFFICERS OF THE SOCIAL SECURITY EMPLOYEES
ASSOCIATION-PAFLU, petitioners, vs. THE SECRETARY OF LABOR, THE DIRECTOR
OF LABOR RELATIONS, and THE REGISTRAR OF LABOR ORGANIZATIONS,
respondents.
Constitutional law; Freedom of assembly and association; Labor laws; Section 23 of Rep. Act
875 does not curtail freedom of assembly and association.—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.
Labor laws; Labor unions; Obligation to submit financial statement is a reasonable regulation.
—The obligation to submit financial statements, as a condition for the non-cancellation of a
certificate of registration, is a reasonable regulation for the benefit of the members of the
organization, considering that the same generally solicits funds or membership, as well as
oftentimes collects, on behalf of its members, huge amounts of money due to them or to the
organization.
Same; Same; Registration of labor organization; Requirements.—Pursuant to Sec. 23(b) of
Republic Act 875, a labor organization, association or union of workers, to be registered must
file with the Department of Labor the following requirements: (1) copy of the constitution and
by-laws; (2) sworn statement of the officers that they are not members of the Communist
Party, and (3) the years of existence of the union and last annual financial report.
Constitutional law; Statute; Statute specifying time is directory only as to the time, and not
mandatory; Exceptions.—When a statute specif ies the time at or within which an act is to be
done by a public officer or body, it is generally held to be directory only as to the time, and
not mandatory, unless time is of the essence of the thing to be done, or the language of the
statute contains negative words, or shows that the designation of the time was intended as a
limitation of power, authority or right. (Black on the Construction and Interpretation of Laws,
p. 545)
142
ORIGINAL PETITION in the Supreme Court. Certiorari and prohibition with preliminary
injunction.
The facts are stated in the opinion of the Court.
CONCEPCION, C.J.:
Petitioners pray for writs of certiorari and prohibition to restrain respondents, the Secretary of
Labor, the Director of Labor Relations and the Registrar of Labor Organizations, from
enforcing an order of cancellation of the registration certificate of the Social Security System
Employees Association—hereinafter referred to as the SSSEA—which is affiliated to the
Philippine Association of Free Labor Unions—hereinafter referred to as PAFLU—as well as to
annul all proceedings in connection with said cancellation and to prohibit respondents from
enforcing Section 23 of Republic Act No. 875. Petitioners, likewise, pray for a writ of
preliminary injunction pending the final determination of this case. In their answer,
respondents traversed some allegations of fact and the legal conclusions made in the
petition. No writ of preliminary injunction pendente lite has been issued.
It appears that on September 25, 1963, the Registrar of Labor Organizations—hereinafter
referred to as the Registrar—issued a notice of hearing, on October 17, 1963, of the matter
of cancellation of the registration of the SSSEA, because of:
“1. Failure to furnish the Bureau of Labor Relations with copies of the reports on the finances
of that union duly verified by affidavits which its treasurer or treasurers rendered to said
union and its members covering the periods from September 24, 1960 to September 23,
1961 and September 24, 1961 to September 23, 1962, inclusive, within sixty days of the 2
respective latter dates, which are the end of its fiscal year; and
“2.Failure to submit to this office the names, postal addresses and non-subversive affidavits
of the officers of that union within sixty days of their election in October (1st Sunday), 1961
and 1963, in conformity with Article IV(1) of its constitution and by-laws.”
in violation of Section 23 of Republic Act No. 875. Counsel for the SSSEA moved to postpone
the hearing to October 21, 1963, and to submit then a memorandum, as well as the
documents specified in the notice. The motion was granted, but, nobody appeared for the
SSSEA on the date last mentioned. The next day, October 22, 1963, Manuel Villagracia,
Assistant Secretary of the SSSEA, filed with the Office of the Registrar, a letter dated October
21, 1963, enclosing the following:
1.Joint non-subversive affidavit of the officers of the SSS Employees’ Association-PAFLU;
2.List of newly-elected officers of the Association in its general elections held on April 29,
1963; and
3.Copy of the amended constitution and by-laws of the Association.
Holding
“1.That the joint non-subversive affidavit and the list of officers mentioned in the letter of Mr.
Manuel Villagracia were not the documents ref erred to in the notice of hearing and made the
subject matter of the present proceeding; and

“2.That there is no ota of evidence on records to show and/or warrant the dismissal of the
present proceeding.”
on October 23, 1963, the Registrar rendered a decision cancelling the SSSEA’s Registration
Certificate No. 1-IP169, issued on September 30, 1960. Soon later, or on October 28, 1963,
Alfredo Fajardo, president of the SSSEA moved for a reconsideration of said decision and
prayed for time, up to November 15, within which to submit the requisite papers and data.
An opposition thereto having been f led by one Paulino Escueta, a member of the SSSEA,
upon the ground that the latter had never submitted any financial statement to its members,
said motion was heard on November 27, 1963. Subsequently, or on December 4, 1963, the
Registrar issued an order declaring that the SSSEA had “failed to submit the following
requirements to wit:
“1.Non-subversive affidavits of Messrs. Teodoro Sison, Alfonso Atienza, Rodolfo Zalameda,
Raymundo Sabino and Napoleon Pefianco who were elected along with others on January 30,
1962.
“2.Names, postal addresses and non-subversive affidavits of all the officers who were
supposedly elected on October (1st Sunday), of its constitution and by-laws.”
and granting the SSSEA 15 days from notice to comply with said requirements, as well as
meanwhile holding in abeyance the resolution of its motion for reconsideration.
Pending such resolution, or on December 16, the PAFLU, the SSSEA, Alfredo Fajardo “and all
the officers and members” of the SSSEA commenced the present action, for the purpose
stated at the beginning of this decision, upon the ground that Section 23 of Republic Act No.
875 violates their freedom of assembly and association, and is inconsistent with the Universal
Declaration of Human Rights; that it unduly delegates judicial power to an administrative
agency; that said Section 23 should be deemed repealed by ILO-Convention No. 87; that
respondents have acted without or in excess of jurisdiction and with grave abuse of discretion
in promulgating, on November 19, 1963, its decision dated October 22, 1963, beyond the 30-
day period provided in Section 23 (c) of Republic Act No. 875; that “there is no appeal or any
other plain, speedy and adequate remedy in the ordinary course of law”; that the decision
complained of had not been approved by the Secretary of Labor; and that the cancellation of
the SSSEA’s certificate of registration would cause irreparable injury.
The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the freedom
of assembly and association guaranteed in the Bill of Rights is devoid of factual basis. The
registration prescribed in paragraph (b) of said section1 is not a limitation to the right of
assembly or association, which may be exercised with or without said registration.2 The latter
is merely a condition sine qua non for the acquisition of legal personality by labor
organizations, associations or unions and the possession of the “rights and privileges granted
by law to legitimate labor organizations”. The Constitution does not guarantee these rights
and privileges, much less said personality, which are mere statutory creations, for the
possession and exercise of which registration is required to protect both labor and the public
against abuses, fraud, or impostors who pose as organizers, although not truly accredited
agents of the union they purport to represent. Such requirement is a valid exercise of the
police power, because the activities in which labor organizations, associations and union of
workers are engaged affect public interest, which should be protected.3 Furthermore, the
obligation to submit financial statements, as a condition for the non-cancellation of a
certificate of registration, is a reasonable regulation for the benefit of the members of the
143
organization, considering that the same generally solicits funds or membership, as well as
oftentimes collects, on behalf of its members, huge amounts of money due to them or to the
organization.4
For the same reasons, said Section 23 does not impinge upon the right of organization
guaranteed in the Declaration of Human Rights, or run counter to Articles 2, 4, 7 and Section
2 of Article 8 of the ILO-Convention No. 87, which provide that “workers and employers, x x x
shall have the right to establish and x x x join organizations of their own choosing, without
previous authorization”; that “workers and employers organizations shall not be liable to be
dissolved or suspended by administrative authority”; that “the acquisition of legal personality
by workers’ and employers’ organizations, x x x shall not be made subject to conditions of
such a character as to restrict the application of the provisions” above mentioned; and that
“the guarantees provided for in” said Convention shall not be impaired by the law of the land.
In B.S.P. v. Araos,5 we held that there is no incompatibility between Republic Act No. 875
and the Universal Declaration of Human Rights. Upon the other hand, the cancellation of the
SSSEA’s registration certificate would not entail a dissolution of said association or its
suspension. The existence of the SSSEA would not be affected by said cancellation, although
its juridical personality and its statutory rights and privileges—as distinguished from those
conferred by the Constitution—would be suspended thereby.
To be registered, pursuant to Section 23 (b) of Republic Act No. 875, a labor organization,
association or union of workers must file with the Department of Labor the following
documents:
"(1)A copy of the constitution and by-laws of the organization together with a list of all
officers of the association, their addresses and the address of the principal office of the
organization;
"(2)A sworn statement of all the officers of the said organization, association or union to the
effect that they are not members of the Communist Party and that they are not members of
any organization which teaches the overthrow of the Government by force or by any illegal or
unconstitutional method; and
"(3)If the applicant organization has been in existence for one or more years, a copy of its
last annual financial report.”
Moreover, paragraph (d) of said Section ordains that:
“The registration and permit of a legitimate labor organization shall be cancelled by the
Department of Labor, if the Department has reason to believe that the labor organization no
longer meets one or more of the requirements of paragraph (b) above; or fails to file with the
Department Labor either its financial report within the sixty days of the end of its fiscal year
or the names of its new officers along with their non-subversive affidavits as outlined in
paragraph (b) above within sixty days of their election; however, the Department of Labor
shall not order the cancellation of the registration and permit without due notice and hearing,
as provided under paragraph (c) above and the affected labor organization shall have the
same right of appeal to the courts as previously provided."6
The determination of the question whether the requirements of paragraph (b) have been
met, or whether or not the requisite financial report or non-subversive affidavits have been

filed within the period above stated, is not judicial power. Indeed, all officers of the
government, including those in the executive department, are supposed to act on the basis of
facts, as they see the same. This is specially true as regards administrative agencies given by
law the power to investigate and render decisions concerning details related to the execution
of laws the enforcement of which is entrusted thereto. Hence, speaking for this Court, Mr.
Justice Reyes (J.B.L.) had occasion to say:
“The objections of the appellees to the constitutionality of Republic Act No. 2056, not only as
an undue delegation of judicial power to the Secretary of Public Works but also for being
unreasonable and arbitrary, are not tenable. It will be noted that the Act (R.A. 2056) merely
empowers the Secretary to remove unauthorized obstructions or encroachments upon public
streams, constructions that no private person was anyway entitled to make, because the bed
of navigable streams is public property, and ownership thereof is not acquirable by adverse
possession (Palanca vs. Commonwealth, 69 Phil. 449).
“It is true that the exercise of the Secretary’s power under the Act necessarily involves the
determination of some questions of fact, such as the existence of the stream and its previous
navigable character; but these functions, whether judicial or quasi-judicial, are merely
incidental to the exercise of the power granted by law to clear navigable streams of
unauthorized obstructions or encroachments, and authorities are clear that they are validly
conferable upon executive officials provided the party affected is given opportunity to be
heard, as is expressly required by Republic Act No. 2056, section 2."7
It should be noted also, that, admittedly, the SSSEA had not filed the non-subversive
affidavits of some of its officers—“Messrs. Sison, Tolentino, Atienza, Zalameda, Sabino and
Pefianca”—although said organization avers that these persons “were either resigned or out
on leave as directors or officers of the union”, without specifying who had resigned and who
were on leave. This averment is, moreover, controverted by respondents herein.
Again, the 30-day period invoked by the petitioners is inapplicable to the decision complained
of. Said period is prescribed in paragraph (c)8 of Section 23, which refers to the proceedings
for the “registration” of labor organizations, associations or unions not to the “cancellation” of
said registration, which is governed by the abovequoted paragraph (d) of the same section.
Independently of the foregoing, we have repeatedly held that legal provisions prescribing the
period within which a decision should be rendered are directory, not mandatory in nature—in
the sense that, a judgment promulgated after the expiration of said period is not null and
void, although gh the officer who f ailed to comply with law may be dealt with
administratively, in consequence of his delay9—unless the intention to the contrary is
manifest. Such, however, is not the import of said paragraph (c), In the language of Black:
“When a statute specifies the time at or within which an act is to be done by a public officer
or body, it is generally held to be directory only as to the time, and not mandatory, unless
time is of the essence of the thing to be done, or the language of the statute contains
negative words, or shows that the designation of the time was intended as a limitation of
power, authority or right."10
144
Then, again, there is no law requiring the approval, by the Secretary of Labor, of the decision
of the Registrar decreeing the cancellation of a registration certificate. In fact, the language
of paragraph (d) of Section 23 suggests that, once the conditions therein specified are
present, the office concerned “shall” have no choice but to issue the order of cancellation.
Moreover, in the case at bar, there is nothing, as yet, for the Secretary of Labor to approve
or disapprove, since petitioners’ motion for reconsideration of the Registrar’s decision of
October 23, 1963, is still pending resolution. In fact, this circumstance shows, not only that
the present action is premature,11 but, also, that petitioners have failed to exhaust the
administrative remedies available to them.12 Indeed, they could ask the Secretary of Labor
to disapprove the Registrar’s decision or object to its execution or enforcement, in the
absence of approval of the f ormer, if the same were necessary, on which we need not and
do not express any opinion.
IN VIEW OF THE FOREGOING, the petition herein should be, as it is hereby dismissed, and
the writs prayed for denied, with costs against the petitioners. It is so ordered.
Notes.—(a) Registration of labor organizations.—Registration is not a prerequisite to the right
of a labor organization to appeal and litigate a case before the Court of Industrial Relations
(Cebu Portland Cement Company vs. CIR, 94 Phil. 509, citing Kapisanan Timbulan ng mga
Manggagawa, 44 O.G. 182, 184–185).
G.R. No. 172699. July 27, 2011.*
ELECTROMAT MANUFACTURING and RECORDING CORPORATION, petitioner, vs.
HON. CIRIACO LAGUNZAD, in his capacity as Regional Director, National Capital
Region, Department of Labor and Employment; and HON. HANS LEO J. CACDAC, in
his capacity as Director of Bureau of Labor Relations, Department of Labor and
Employment, public respondents.
NAGKAKAISANG SAMAHAN NG MANGGAGAWA NG ELECTROMAT-WASTO, private
respondent.
Labor Law; Labor Unions; The adoption by the Secretary of Labor and Employment of D.O.
40-03 is consistent with the intent of the government to encourage the affiliation of a local
union with a federation or national union to enhance the local’s bargaining power.—D.O. 40-
03 represents an expression of the government’s implementing policy on trade unionism. It
builds upon the old rules by further simplifying the requirements for the establishment of
locals or chapters. As in D.O. 9, we see nothing contrary to the law or the Constitution in the
adoption by the Secretary of Labor and Employment of D.O. 40-03 as this department order
is consistent with the intent of the government to encourage the affiliation of a local union
with a federation or national union to enhance the local’s bargaining power. If changes were
made at all, these were those made to recognize the distinctions made in the law itself
between federations and their local chapters, and independent unions; local chapters
seemingly have lesser requirements because they and their members are deemed to be
direct members of the federation to which they are affiliated, which federations are the ones
subject to the strict registration requirements of the law.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
   The facts are stated in the opinion of the Court.

  M.M. Lazaro & Associates for petitioner.
BRION, J.:
We resolve the present petition for review on certiorari1 assailing the decision2 and the
resolution3 of the Court of Appeals (CA) dated February 3, 2006 and May 11, 2006,
respectively, rendered in CA G.R. SP No. 83847.
The Antecedents
The private respondent Nagkakaisang Samahan ng Manggagawa ng Electromat-Wasto
(union), a charter affiliate of the Workers Advocates for Struggle, Transformation and
Organization (WASTO), applied for registration with the Bureau of Labor Relations (BLR).
Supporting the application were the following documents: (1) copies of its ratified
constitution and by-laws (CBL); (2) minutes of the CBL’s adoption and ratification; (3)
minutes of the organizational meetings; (4) names and addresses of the union officers; (5)
list of union members; (6) list of rank-and-file employees in the company; (7) certification of
non-existence of a collective bargaining agreement (CBA) in the company; (8) resolution of
affiliation with WASTO, a labor federation; (9) WASTO’s resolution of acceptance; (10)
Charter Certificate; and (11) Verification under oath.
The BLR thereafter issued the union a Certification of Creation of Local Chapter (equivalent to
the certificate of registration of an independent union), pursuant to Department Order No.
(D.O.) 40-03.4
On October 1, 2003, the petitioner Electromat Manufacturing and Recording Corporation
(company) filed a petition for cancellation of the union’s registration certificate, for the
union’s failure to comply with Article 234 of the Labor Code. It argued that D.O. 40-03 is an
unconstitutional diminution of the Labor Code’s union registration requirements under Article
234.
On November 27, 2003, Acting Director Ciriaco A. Lagunzad of the Department of Labor and
Employment (DOLE)-National Capital Region dismissed the petition.5
In the appeal by the company, BLR Director Hans Leo J. Cacdac affirmed the dismissal.6 The
company thereafter sought relief from the CA through a petition for certiorari, contending
that the BLR committed grave abuse of discretion in affirming the union’s registration despite
its non-compliance with the requirements for registration under Article 234 of the Labor
Code. It assailed the validity of D.O. 40-03 which amended the rules of Book V (Labor
Relations) of the Labor Code. It posited that the BLR should have strictly adhered to the
union registration requirements under the Labor Code, instead of relying on D.O. 40-03 which
it considered as an invalid amendment of the law since it reduced the requirements under
Article 234 of the Labor Code. It maintained that the BLR should not have granted the union’s
registration through the issuance of a Certification of Creation of Local Chapter since the
union submitted only the Charter Certificate issued to it by WASTO.
The CA Decision
145
In its decision rendered on February 3, 2006,7 the CA Tenth Division dismissed the petition
and affirmed the assailed BLR ruling. It brushed aside the company’s objection to D.O. 40-03,
and its submission that D.O. 40-03 removed the safety measures against the commission of
fraud in the registration of unions. It noted that “there are sufficient safeguards found in
other provisions of the Labor Code to prevent the same.”8 In any event, it pointed out that
D.O. 40-03 was issued by the DOLE pursuant to its rule-making power under the law.9
The company moved for reconsideration, arguing that the union’s registration certificate was
invalid as there was no showing that WASTO, the labor federation to which the union is
affiliated, had at least ten (10) locals or chapters as required by D.O. 40-03. The CA denied
the motion,10 holding that no such requirement is found under the rules. Hence, the present
petition.
The Case for the Petitioner
The company seeks a reversal of the CA rulings, through its submissions (the petition11 and
the memorandum12), on the ground that the CA seriously erred and gravely abused its
discretion in affirming the registration of the union in accordance with D.O. 40-03.
Specifically, it assails as unconstitutional Section 2(E), Rule III of D.O. 40-03 which provides:
“The report of creation of a chartered local shall be accompanied by a charter certificate
issued by the federation or national union indicating the creation or establishment of the
chartered local.”
The company points out that D.O. 40-03 delisted some of the requirements under Article 234
of the Labor Code for the registration of a local chapter. Article 234 states:
“ART. 234. Requirements of Registration.13—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.”

The company contends that the enumeration of the requirements for union registration under
the law is exclusive and should not be diminished, and that the same requirements should
apply to all labor unions whether they be independent labor organizations, federations or
local chapters. It adds that in making a different rule for local chapters, D.O. 40-03 expanded
or amended Article 234 of the Labor Code, resulting in an invalid exercise by the DOLE of its
delegated rule-making power. It thus posits that the union’s certificate of registration which
was issued “in violation of the letters of Article 234 of the Labor Code”14 is void and of no
effect, and that the CA committed grave abuse of discretion when it affirmed the union’s
existence.
The Case for the Union
In a Resolution dated January 16, 2008,15 the Court directed union board member Alex
Espejo, in lieu of union President Roberto Beltran whose present address could not be
verified, to furnish the Court a copy of the union comment/opposition to the company’s
motion for reconsideration dated February 22, 2006 in CA G.R. SP No. 83847, which the
union adopted as its comment on the present petition.16
Through this comment/opposition,17 the union submits that the company failed to show that
the CA committed reversible error in upholding the registration certificate issued to it by the
BLR. Citing Castillo v. National Labor Relations Commission,18 it stressed that the issuance of
the certificate by the DOLE agencies was supported by substantial evidence, which should be
entitled to great respect and even finality.
The Court’s Ruling
We resolve the core issue of whether D.O. 40-03 is a valid exercise of the rule-making power
of the DOLE.
We rule in the affirmative. Earlier in Progressive Development Corporation v. Secretary,
Department of Labor and Employment,19 the Court encountered a similar question on the
validity of the old Section 3, Rule II, Book V of the Rules Implementing the Labor Code20
which stated:
“Union affiliation; direct membership with a national union.—The 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.
xxxx
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.”
146
Interpreting these provisions of the old rules, the Court said that by force of law,21 the local
or chapter of a labor federation or national union becomes a legitimate labor organization
upon compliance with Section 3, Rule II, Book V of the Rules Implementing the Labor Code,
the only requirement being the submission of the charter certificate to the BLR. Further, the
Court noted that Section 3 omitted several requirements which are otherwise required for
union registration, as follows:
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 organization 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.22
Notwithstanding these omissions, the Court upheld the government’s implementing policy
expressed in the old rules when it declared in Progressive Development—
“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.”23
It was this same Section 3 of the old rules that D.O. 40-03 fine-tuned when the DOLE
amended the rules on Book V of the Labor Code, thereby modifying the government’s
implementing policy on the registration of locals or chapters of labor federations or national
unions. The company now assails this particular amendment as an invalid exercise of the
DOLE’s rule-making power.
We disagree. As in the case of D.O. 9 (which introduced the above-cited Section 3 of the old
rules) in Progressive Development, D.O. 40-03 represents an expression of the government’s
implementing policy on trade unionism. It builds upon the old rules by further simplifying the
requirements for the establishment of locals or chapters. As in D.O. 9, we see nothing
contrary to the law or the Constitution in the adoption by the Secretary of Labor and
Employment of D.O. 40-03 as this department order is consistent with the intent of the
government to encourage the affiliation of a local union with a federation or national union to
enhance the local’s bargaining power. If changes were made at all, these were those made to
recognize the distinctions made in the law itself between federations and their local chapters,
and independent unions; local chapters seemingly have lesser requirements because they
and their members are deemed to be direct members of the federation to which they are
affiliated, which federations are the ones subject to the strict registration requirements of the
law.
In any case, the local union in the present case has more than satisfied the requirements the
petitioner complains about; specifically, the union has submitted: (1) copies of the ratified

CBL; (2) the minutes of the CBL’s adoption and ratification; (3) the minutes of the
organizational meetings; (4) the names and addresses of the union officers; (5) the list of
union members; (6) the list of rank-and-file employees in the company; (7) a certification of
non-existence of a CBA in the company; (8) the resolution of affiliation with WASTO and the
latter’s acceptance; and (9) their Charter Certificate. These submissions were properly
verified as required by the rules. In sum, the petitioner has no factual basis for questioning
the union’s registration, as even the requirements for registration as an independent local
have been substantially complied with.
We, thus, find no compelling justification to nullify D.O. 40-03. Significantly, the Court
declared in another case:24
“Pagpalain cannot also allege that Department Order No. 9 is violative of public policy. x x x
[T]he sole function of our courts is to apply or interpret the laws. It does not formulate public
policy, which is the province of the legislative and executive branches of government. It
cannot, thus, be said that the principles laid down by the Court in Progressive and Protection
Technology constitute public policy on the matter. They do, however, constitute the Court’s
interpretation of public policy, as formulated by the executive department through its
promulgation of rules implementing the Labor Code. However, this public policy has itself
been changed by the executive department, through the amendments introduced in Book V
of the Omnibus Rules by Department Order No. 9. It is not for us to question this change in
policy, it being a well-established principle beyond question that it is not within the province
of the courts to pass judgments upon the policy of legislative or executive action.”
This statement is as true then as it is now.
In light of the foregoing, we find no merit in the appeal.
WHEREFORE, premises considered, we DENY the petition for lack of merit. The assailed
decision and resolution of the Court of Appeals are AFFIRMED. Costs against the petitioner
Electromat Manufacturing and Recording Corporation.
SO ORDERED.
Petition denied, judgment and resolution affirmed.
Note.—Registration requirements are intended to 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 use the labor organization for illegitimate
ends. (San Miguel Corporation Employees Union-Phil. Transport and General Workers Org. vs.
San
G.R. No. 183317. December 21, 2009.*
MARIWASA SIAM CERAMICS, INC., petitioner, vs. THE SECRETARY OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT, CHIEF OF THE BUREAU OF LABOR
RELATIONS, DEPARTMENT OF LABOR AND EMPLOYMENT, REGIONAL DIRECTOR
OF DOLE REGIONAL OFFICE NUMBER IV-A & SAMAHAN NG MGA MANGGAGAWA
SA MARIWASA SIAM CERAMICS, INC. (SMMSC-INDEPENDENT), respondents.
147
Labor Law; Labor Unions; Affidavits of Recantation; Where the purported withdrawal of
support for the registration of the union was made after the documents were submitted to
the Department of Labor and Employment (DOLE), the logical conclusion is that the
employees were not totally free from the employer’s pressure, and so the voluntariness of
the employees’ execution of the affidavits becomes suspect.—In the instant case, the
affidavits of recantation were executed after the identities of the union members became
public, i.e., after the union filed a petition for certification election on May 23, 2005, since the
names of the members were attached to the petition. The purported withdrawal of support
for the registration of the union was made after the documents were submitted to the DOLE,
Region IV-A. The logical conclusion, therefore, following jurisprudence, is that the employees
were not totally free from the employer’s pressure, and so the voluntariness of the
employees’ execution of the affidavits becomes suspect.
Same; Same; Same; A retraction does not necessarily negate an earlier declaration.—A
retraction does not necessarily negate an earlier declaration. For this reason, retractions are
looked upon with disfavor and do not automatically exclude the original statement or
declaration based solely on the recantation. It is imperative that a determination be first
made as to which between the original and the new statements should be given weight or
accorded belief, applying the general rules on evidence. In this case, inasmuch as they
remain bare allegations, the purported recantations should not be upheld.
Same; Same; Same; Article 234 of the Labor Code merely requires a 20% minimum
membership during the application for union registration—it does not mandate that a union
must maintain the 20% minimum membership requirement all throughout its existence.—
Even assuming the veracity of the affidavits of recantation, the legitimacy of respondent as a
labor organization must be affirmed. While it is true that the withdrawal of support may be
considered as a resignation from the union, the fact remains that at the time of the union’s
application for registration, the affiants were members of respondent and they comprised
more than the required 20% membership for purposes of registration as a labor union. Article
234 of the Labor Code merely requires a 20% minimum membership during the application
for union registration. It does not mandate that a union must maintain the 20% minimum
membership requirement all throughout its existence.
708
Same; Same; Same; For fraud and misrepresentation to be grounds for cancellation of union
registration under the Labor Code, the nature of the fraud and misrepresentation must be
grave and compelling enough to vitiate the consent of a majority of union members.—For the
purpose of de-certifying a union such as respondent, it must be shown that there was
misrepresentation, false statement or fraud in connection with the adoption or ratification of
the constitution and by-laws or amendments thereto; the minutes of ratification; or, in
connection with the election of officers, the minutes of the election of officers, the list of
voters, or failure to submit these documents together with the list of the newly elected-
appointed officers and their postal addresses to the BLR. The bare fact that two signatures
appeared twice on the list of those who participated in the organizational meeting would not,
to our mind, provide a valid reason to cancel respondent’s certificate of registration. The
cancellation of a union’s registration doubtless has an impairing dimension on the right of
labor to self-organization. For fraud and misrepresentation to be grounds for cancellation of

union registration under the Labor Code, the nature of the fraud and misrepresentation must
be grave and compelling enough to vitiate the consent of a majority of union members.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
   The facts are stated in the opinion of the Court.
NACHURA, J.:
This is a petition for review on certiorari1 under Rule 45 of the Rules of Court, seeking to
annul the Decision2 dated De-
The antecedent facts are as follows—
On May 4, 2005, respondent Samahan Ng Mga Manggagawa Sa Mariwasa Siam Ceramics,
Inc. (SMMSC-Independent) was issued a Certificate of Registration4 as a legitimate labor
organization by the Department of Labor and Employment (DOLE), Region IV-A.
On June 14, 2005, petitioner Mariwasa Siam Ceramics, Inc. filed a Petition for Cancellation of
Union Registration against respondent, claiming that the latter violated Article 2345 of the
Labor Code for not complying with the 20% requirement, and that it committed massive
fraud and misrepresentation in violation of Article 2396 of the same code. The case was
docketed as Case No. RO400-0506-AU-004.
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:
xxxx
(c) The names of all its members comprising at least twenty percent (20%) of all the
employees in the bargaining unit where it seeks to operate. (Emphasis supplied.)
6 ART. 239. GROUNDS FOR CANCELLATION OF UNION REGISTRATION
The following shall constitute grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto, the minutes of
ratification, and the list of members who took part in the ratification;
710
On August 26, 2005, the Regional Director of DOLE IV-A issued an Order granting the
petition, revoking the registration of respondent, and delisting it from the roster of active
labor unions.
148
Aggrieved, respondent appealed to the Bureau of Labor Relations (BLR).
In a Decision7 dated June 14, 2006, the BLR granted respondent’s appeal and disposed as
follows—
“WHEREFORE, premises considered, the appeal by Samahan ng Manggagawa sa Mariwasa
Siam Ceramics, Inc. (SMMSC-Independent) is hereby GRANTED, and the Decision dated 26
August 2005 by DOLE-Region-IV-A Director Maximo B. Lim is hereby REVERSED and SET
ASIDE. Samahan ng Manggagawa sa Mariwasa Siam Ceramics, Inc. (SMMSC-Independent),
under Registration Certificate No. RO400-200505-UR-002, remains in the roster of legitimate
labor organizations.
SO DECIDED.”8
Petitioner filed a Motion for Reconsideration but the BLR denied it in a Resolution9 dated
February 2, 2007. Petitioner sought recourse with the Court of Appeals (CA) through a
Petition for Certiorari; but the CA denied the petition for lack of merit.
Petitioner’s motion for reconsideration of the CA Decision was likewise denied, hence, this
petition based on the following grounds—
“Review of the Factual Findings of the Bureau of Labor Relations, adopted and confirmed by
the Honorable Court of Appeals is warranted[;] The Honorable Court of Appeals seriously
erred in ruling that the affidavits of recantation cannot be given credence[;] The Honorable
Court of Appeals seriously erred in ruling that private respondent union complied with the
20% membership requirement[; and]
The Honorable Court of Appeals seriously erred when it ruled that private respondent union
did not commit misrepresentation, fraud or false statement.”10
The petition should be denied. The petitioner insists that respondent failed to comply with the
20% union membership requirement for its registration as a legitimate labor organization
because of the disaffiliation from the total number of union members of 102 employees who
executed affidavits recanting their union membership.
It is, thus, imperative that we peruse the affidavits appearing to have been executed by
these affiants.
The affidavits uniformly state—
“Ako, _____________, Pilipino, may sapat na gulang, regular na empleyado bilang Rank &
File sa Mariwasa Siam Ceramics, Inc., Bo. San Antonio, Sto. Tomas, Batangas, matapos na
makapanumpa ng naaayon sa batas ay malaya at kusang loob na nagsasaad ng mga
sumusunod:
1. Ako ay napilitan at nilinlang sa pagsapi sa Samahan ng mga Manggagawa sa Mariwasa
Siam Ceramics, Inc. o SMMSC-Independent sa kabila ng aking pag-aalinlangan[;]

2. Aking lubos na pinagsisihan ang aking pagpirma sa sipi ng samahan, at handa ako[ng]
tumalikod sa anumang kasulatan na aking nalagdaan sa kadahilanan na hindi angkop sa
aking pananaw ang mga mungkahi o adhikain ng samahan.
SA KATUNAYAN NANG LAHAT, ako ay lumagda ng aking pangalan ngayong ika-____ ng
______, 2005 dito sa Lalawigan ng Batangas, Bayan ng Sto. Tomas.
                                                ____________________
                                                          Nagsasalaysay
Evidently, these affidavits were written and prepared in advance, and the pro forma affidavits
were ready to be filled out with the employees’ names and signatures.
The first common allegation in the affidavits is a declaration that, in spite of his hesitation,
the affiant was forced and deceived into joining the respondent union. It is worthy to note,
however, that the affidavit does not mention the identity of the people who allegedly forced
and deceived the affiant into joining the union, much less the circumstances that constituted
such force and deceit. Indeed, not only was this allegation couched in very general terms and
sweeping in nature, but more importantly, it was not supported by any evidence whatsoever.
The second allegation ostensibly bares the affiant’s regret for joining respondent union and
expresses the desire to abandon or renege from whatever agreement he may have signed
regarding his membership with respondent.
Simply put, through these affidavits, it is made to appear that the affiants recanted their
support of respondent’s application for registration.
In appreciating affidavits of recantation such as these, our ruling in La Suerte Cigar and
Cigarette Factory v. Director of the Bureau of Labor Relations11 is enlightening, viz.—
“On the second issue—whether or not the withdrawal of 31 union members from NATU
affected the petition for certification election insofar as the 30% requirement is concerned,
We reserve the Order of the respondent Director of the Bureau of Labor Relations, it
appearing undisputably that the 31 union members had withdrawn their support to the
petition before the filing of said petition. It would be otherwise if the withdrawal was made
after the filing of the petition for it would then be presumed that the withdrawal was not free
and voluntary. The presumption would arise that the withdrawal was procured through
duress, coercion or for valuable consideration. In other words, the distinction must be that
withdrawals made before the filing of the petition are presumed voluntary unless there is
convincing proof to the contrary, whereas withdrawals made after the filing of the petition
are deemed involuntary.
The reason for such distinction is that if the withdrawal or retraction is made before the filing
of the petition, the names of employees supporting the petition are supposed to be held
secret to the opposite party. Logically, any such withdrawal or retraction shows voluntariness
in the absence of proof to the contrary. Moreover, it becomes apparent that such employees
had not given consent to the filing of the petition, hence the subscription requirement has
not been met.
149
When the withdrawal or retraction is made after the petition is filed, the employees who are
supporting the petition become known to the opposite party since their names are attached
to the petition at the time of filing. Therefore, it would not be unexpected that the opposite
party would use foul means for the subject employees to withdraw their support.”12
In the instant case, the affidavits of recantation were executed after the identities of the
union members became public, i.e., after the union filed a petition for certification election on
May 23, 2005, since the names of the members were attached to the petition. The purported
withdrawal of support for the registration of the union was made after the documents were
submitted to the DOLE, Region IV-A. The logical conclusion, therefore, following
jurisprudence, is that the employees were not totally free from the employer’s pressure, and
so the voluntariness of the employees’ execution of the affidavits becomes suspect.
It is likewise notable that the first batch of 25 pro forma affidavits shows that the affidavits
were executed by the individual affiants on different dates from May 26, 2005 until June 3,
2005, but they were all sworn before a notary public on June 8, 2005.
There was also a second set of standardized affidavits executed on different dates from May
26, 2005 until July 6, 2005. While these 77 affidavits were notarized on different dates, 56 of
these were notarized on June 8, 2005, the very same date when the first set of 25 was
notarized.
Considering that the first set of 25 affidavits was submitted to the DOLE on June 14, 2005, it
is surprising why petitioner was able to submit the second set of affidavits only on July 12,
2005.
Accordingly, we cannot give full credence to these affidavits, which were executed under
suspicious circumstances, and which contain allegations unsupported by evidence. At best,
these affidavits are self-serving. They possess no probative value.
A retraction does not necessarily negate an earlier declaration. For this reason, retractions
are looked upon with disfavor and do not automatically exclude the original statement or
declaration based solely on the recantation. It is imperative that a determination be first
made as to which between the original and the new statements should be given weight or
accorded belief, applying the general rules on evidence. In this case, inasmuch as they
remain bare allegations, the purported recantations should not be upheld.13
Nevertheless, even assuming the veracity of the affidavits of recantation, the legitimacy of
respondent as a labor organization must be affirmed. While it is true that the withdrawal of
support may be considered as a resignation from the union, the fact remains that at the time
of the union’s application for registration, the affiants were members of respondent and they
comprised more than the required 20% membership for purposes of registration as a labor
union. Article 234 of the Labor Code merely requires a 20% minimum membership during the
application for union registration. It does not mandate that a union must maintain the 20%
minimum membership requirement all throughout its existence.14

Respondent asserts that it had a total of 173 union members at the time it applied for
registration. Two names were repeated in respondent’s list and had to be deducted, but the
total would still be 171 union members. Further, out of the four names alleged to be no
longer connected with petitioner, only two names should be deleted from the list since Diana
Motilla and T.W. Amutan resigned from petitioner only on May 10, 2005 and May 17, 2005,
respectively, or after respondent’s registration had already been granted. Thus, the total
union membership at the time of registration was 169. Since the total number of rank-and-
file employees at that time was 528, 169 employees would be equivalent to 32% of the total
rank-and-file workers complement, still very much above the minimum required by law.
For the purpose of de-certifying a union such as respondent, it must be shown that there was
misrepresentation, false statement or fraud in connection with the adoption or ratification of
the constitution and by-laws or amendments thereto; the minutes of ratification; or, in
connection with the election of officers, the minutes of the election of officers, the list of
voters, or failure to submit these documents together with the list of the newly elected-
appointed officers and their postal addresses to the BLR.15
The bare fact that two signatures appeared twice on the list of those who participated in the
organizational meeting would not, to our mind, provide a valid reason to cancel respondent’s
certificate of registration. The cancellation of a union’s registration doubtless has an impairing
dimension on the right of labor to self-organization. For fraud and misrepresentation to be
grounds for cancellation of union registration under the Labor Code, the nature of the fraud
and misrepresentation must be grave and compelling enough to vitiate the consent of a
majority of union members.
In this case, we agree with the BLR and the CA that respondent could not have possibly
committed misrepresentation, fraud, or false statements. The alleged failure of respondent to
indicate with mathematical precision the total number of employees in the bargaining unit is
of no moment, especially as it was able to comply with the 20% minimum membership
requirement. Even if the total number of rank-and-file employees of petitioner is 528, while
respondent declared that it should only be 455, it still cannot be denied that the latter would
have more than complied with the registration requirement.
WHEREFORE, the petition is DENIED. The assailed December 20, 2007 Decision and the June
6, 2008 Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. 115077. April 18, 1997.*
PROGRESSIVE DEVELOPMENT CORPORATION-PIZZA HUT, petitioner, vs. HON.
BIENVENIDO LAGUESMA, in his capacity as Undersecretary of Labor, and
NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)-KATIPUNAN, respondents.
Labor Law; Labor Organizations; Certification Elections; After a labor organization has filed
the necessary papers and documents for registration, it becomes mandatory for the Bureau
150
of Labor Relations to check if the requirements under Article 234 of the Labor Code have
been sedulously complied with. After a certificate of recognition has been issued, the
propriety of the labor organization’s registration could be assailed directly through
cancellation of registration proceedings in accordance with Articles 238 and 239 of the Labor
Code, or indirectly, by challenging its petition for the issuance of an order for certification
election.—In the public respondent’s assailed Resolution dated December 29, 1993, the
suggestion is made that once a labor organization has filed the necessary documents and
papers and the same have been certified under oath and attested to, said organization
necessarily becomes clothed with the character of a legitimate labor organization. In essence,
therefore, the real controversy in this case centers on the question of whether or not, after
the necessary papers and documents have been filed by a labor organization, recognition by
the Bureau of Labor Relations merely becomes a ministerial function. We do not agree. In the
first place, the public respondent’s views as expressed in his December 29, 1993 Resolution
miss the entire point behind the nature and purpose of proceedings leading to the recognition
of unions as legitimate labor organizations. A more than cursory reading of the aforecited
provisions clearly indicates that the requirements embodied therein are intended as
preventive measures against the commission of fraud. After a labor organization has filed the
necessary papers and documents for registration, it becomes mandatory for the Bureau of
Labor Relations to check if the requirements under Article 234 have been sedulously complied
with. If its application for registration is vitiated by falsification and serious irregularities,
especially those appearing on the face of the application and the supporting documents, a
labor organization should be denied recognition as a legitimate labor organization. And if a
certificate of recognition has been issued, the propriety of the labor organization’s registration
could be assailed directly through cancellation of registration proceedings in accordance with
Articles 238 and 239 of the Labor Code, or indirectly, by challenging its petition for the
issuance of an order for certification election.
Same; Same; Same; Registration requirements specifically 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 dues or use the labor organization for illegitimate
ends.—These measures are necessary—and may be undertaken simultaneously—if the spirit
behind the Labor Code’s requirements for registration are to be given flesh and blood.
Registration requirements specifically 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 use the labor organization for illegitimate ends. Such
requirements are a valid exercise of the police power, because the activities in which labor
organizations, associations and unions of workers are engaged directly affect the public
interest and should be protected.
Same; Same; Same; The Med-Arbiter should look into the merits of the petition for
cancellation of a union’s registration before issuing an order calling for certification election—
registration based on false and fraudulent statements and documents confer no legitimacy
upon a labor organization irregularly recognized, which, at best, holds on to a mere scrap of
paper.—The grounds ventilated in cancellation proceedings in accordance with Article 239 of
the Labor Code constitute a grave challenge to the right of respondent Union to ask for
certification election. The Med-Arbiter should have looked into the merits of the petition for
cancellation before issuing an order calling for certification election. Registration based on
false and fraudulent statements and documents confer no legitimacy upon a labor

organization irregularly recognized, which, at best, holds on to a mere scrap of paper. Under
such circumstances, the labor organization, not being a legitimate labor organization,
acquires no rights, particularly the right to ask for certification election in a bargaining unit.
Same; Same; Same; The invalidity of a union’s registration would negate its legal personality
to participate in certification election.—As we laid emphasis in Progressive Development
Corporation vs. Secretary of Labor, “[t]he employer needs the assurance that the union it is
dealing with is a bona fide organization, one which has not submitted false statements or
misrepresentations to the Bureau.” Clearly, fraud, falsification and misrepresentation in
obtaining recognition as a legitimate labor organization are contrary to the Med-Arbiter’s
conclusion not merely collateral issues. The invalidity of respondent Union’s registration
would negate its legal personality to participate in certification election.
Same; Same; Same; Where the legal personality of a union is seriously challenged, it would
be more prudent for the Med-Arbiter to grant the request for suspension of proceedings in
the certification election case until the issue of the legality of the union’s registration shall
have been resolved.—Inasmuch as the legal personality of respondent Union had been
seriously challenged, it would have been more prudent for the Med-Arbiter and public
respondent to have granted petitioner’s request for the suspension of proceedings in the
certification election case, until the issue of the legality of the Union’s registration shall have
been resolved. Failure of the Med-Arbiter and public respondent to heed the request
constituted a grave abuse of discretion.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
KAPUNAN, J.:
On July 9, 1993, Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan (respondent Union)
filed a petition for certification election with the Department of Labor (National Capital
Region) in behalf of the rank and file employees of the Progressive Development Corporation
(Pizza Hut) docketed as NCR Case No. NCR-OD-M-9307-020.1
Petitioner filed on August 20, 1993, a verified Motion to Dismiss the petition alleging fraud,
falsification and misrepresentation in the respondent Union’s registration making it void and
invalid. The motion specifically alleged that : a) respondent Union’s registration was tainted
with false, forged, double or multiple signatures of those who allegedly took part in the
ratification of the respondent Union’s constitution and by-laws and in the election of its
officers that there were two sets of supposed attendees to the alleged organizational meeting
that was alleged to have taken place on June 26, 1993; that the alleged chapter is claimed to
have been supported by 318 members when in fact the persons who actually signed their
names were much less; and b) while the application for registration of the charter was
supposed to have been approved in the organizational meeting held on June 27, 1993, the
charter certification issued by the federation KATIPUNAN was dated June 26, 1993 or one (1)
day prior to the formation of the chapter, thus, there were serious falsities in the dates of the
issuance of the charter certification and the organization meeting of the alleged chap-ter.
151
Citing other instances of misrepresentation and fraud, petitioner, on August 29, 1993, filed a
Supplement to its Motion to Dismiss,2 claiming that:
1)Respondent Union alleged that the election of its officers was held on June 27, 1993;
however, it appears from the documents submitted by respondent union to the BIR-DOLE
that the Union’s constitution and by-laws were adopted only on July 7, 1993, hence, there
was no bases for the supposed election of officers on June 27, 1993 because as of this date,
there existed no positions to which the officers could be validly elected;
2)Voting was not conducted by secret ballot in violation of Article 241, section (c) of the
Labor Code;
3)The Constitution and by Laws submitted in support of its petition were not properly
acknowledged and notarized.3
On August 30, 1993, petitioner filed a Petition4 seeking the cancellation of the Union’s
registration on the grounds of fraud and falsification, docketed as BIR Case No. 8-21-83.5
Motion was likewise filed by petitioner with the Med-Arbiter requesting suspension of
proceedings in the certification election case until after the prejudicial question of the Union’s
legal personality is determined in the proceedings for cancellation of registration.
However, in an Order dated September 29, 1993,6 MedArbiter Rasidali C. Abdullah directed
the holding of a certification election among petitioner’s rank and file employees. The Order
explained:
x x x Sumasaklaw sa Manggagawa ng Pizza Hut is a legitimate labor organization in
contemplation of law and shall remain as such until its very charter certificate is canceled or
otherwise revoked by competent authority. The alleged misrepresentation, fraud and false
statement in connection with the issuance of the charter certificate are collateral issues which
could be properly ventilated in the cancellation proceedings.7
On appeal to the office of the Secretary of Labor, Labor Undersecretary Bienvenido E.
Laguesma in a Resolution dated De-cember 29, 19938 denied the same.
A motion for reconsideration of the public respondent’s resolution was denied in his Order9
dated January 27, 1994, hence, this special civil action for certiorari under Rule 65 of the
Revised Rules of Court where the principal issue raised is whether or not the public
respondent committed grave abuse of discretion in affirming the Med-Arbiter’s order to
conduct a certification election among petitioner’s rank and file employees, considering that:
(1) respondent Union’s legal personality was squarely put in issue; (2) allegations of fraud
and falsification, supported by documentary evidence were made; and (3) a petition to cancel
respondent Union’s registration is pending with the regional office of the Department of Labor
and Employment.10
We grant the petition.
In the public respondent’s assailed Resolution dated December 29, 1993, the suggestion is
made that once a labor organization has filed the necessary documents and papers and the
same have been certified under oath and attested to, said organization necessarily becomes
clothed with the character of a legitimate labor organization. The resolution declares:

Records show that at the time of the filing of the subject petition on 9 July 1993 by the
petitioner NLM-KATIPUNAN, for and in behalf of its local affiliate Sumasaklaw sa
Manggagawa ng Pizza Hut, the latter has been clothed with the status and/or character of a
legitimate labor organization. This is so, because on 8 July 1993, petitioner submitted to the
Bureau of Labor Relations (BLR), this Department, the following documents: Charter
Certificate, Minutes of the Organizational Meeting, List of Officers, and their respective
addresses, financial statement, Constitution and By-Laws (CBL, and the minutes of the
ratification of the CBL). Said documents (except the charter certificate) are certified under
oath and attested to by the local union’s Secretary/Treasurer and President, respectively.
As to the contention that the certification election proceedings should be suspended in view
of the pending case for the cancellation of the petitioner’s certificate of registration, let it be
stressed that the pendency of a cancellation case is not a ground for the dismissal or
suspension of a representation proceedings considering that a registered labor organization
continues to be a legitimate one entitled to all the rights appurtenant thereto until a final
valid order is issued canceling such registration.11
In essence, therefore, the real controversy in this case centers on the question of whether or
not, after the necessary papers and documents have been filed by a labor organization,
recognition by the Bureau of Labor Relations merely becomes a ministerial function.
We do not agree.
In the first place, the public respondent’s views as expressed in his December 29, 1993
Resolution miss the entire point behind the nature and purpose of proceedings leading to the
recognition of unions as legitimate labor organizations. Article 234 of the Labor Code
provides:
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.
A more than cursory reading of the aforecited provisions clearly indicates that the
requirements embodied therein are intended as preventive measures against the commission
of fraud. After a labor organization has filed the necessary papers and documents for
registration, it becomes mandatory for the Bureau of Labor Relations to check if the
requirements under Article 234 have been sedulously complied with. If its application for
registration is vitiated by falsification and serious irregularities, especially those appearing on
152
the face of the application and the supporting documents, a labor organization should be
denied recognition as a legitimate labor organization. And if a certificate of recognition has
been issued, the propriety of the labor organization’s registration could be assailed directly
through cancellation of registration proceedings in accordance with Articles 238 and 239 of
the Labor Code, or indirectly, by challenging its petition for the issuance of an order for
certification election.
These measures are necessary—and may be undertaken simultaneously—if the spirit behind
the Labor Code’s requirements for registration are to be given flesh and blood. Registration
requirements specifically 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 use the labor organization for illegitimate ends.12 Such requirements are a
valid exercise of the police power, because the activities in which labor organizations,
associations and unions of workers are engaged directly affect the public interest and should
be protected.13
Thus, in Progressive Development Corporation vs. Secretary of Labor and Employment,14 we
held:
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.
xxx
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. x x x.
xxx
x x x. The employer naturally needs assurance that the union it is dealing with is a bona-fide
organization, one which has not submitted 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.
xxx
x x x. 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.

xxx
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.
Furthermore, the Labor Code itself grants the Bureau of Labor Relations a period of thirty
(30) days within which to review all applications for registration. Article 235 provides:
Art. 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.
The thirty-day period in the aforecited provision ensures that any action taken by the Bureau
of Labor Relations is made in consonance with the mandate of the Labor Code, which, it
bears emphasis, specifically requires that the basis for the issuance of a certificate of
registration should be compliance with the requirements for recognition under Article 234.
Since, obviously, recognition of a labor union or labor organization is not merely a ministerial
function, the question now arises as to whether or not the public respondent committed
grave abuse of discretion in affirming the Med-Arbiter’s order in spite of the fact that the
question of the Union’s legitimacy was squarely put in issue and that the allegations of fraud
and falsification were adequately supported by documentary evidence.
The Labor Code requires that in organized and unorganized15 establishments, a petition for
certification election must be filed by a legitimate labor organization. The acquisition of rights
by any union or labor organization, particularly the right to file a petition for certification
election, first and foremost, depends on whether or not the labor organization has attained
the status of a legitimate labor organization.
In the case before us, the Med-Arbiter summarily disregarded the petitioner’s prayer that the
former look into the legitimacy of the respondent Union by a sweeping declaration that the
union was in the possession of a charter certificate so that “for all intents and purposes,
Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate labor organization.”16 Glossing
over the transcendental issue of fraud and misrepresentation raised by herein petitioner,
Med-Arbiter Rasidali Abdullah held that:
The alleged misrepresentation, fraud and false statement in connection with the issuance of
the charter certificate are collateral issues which could be ventilated in the cancellation
proceedings.17
153
It cannot be denied that the grounds invoked by petitioner for the cancellation of respondent
Union’s registration fall under paragraphs (a) and (c) of Article 239 of the Labor Code, to wit:
(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification
of the constitution and by-laws or amendments thereto, the minutes of ratification, the list of
members who took part in the ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification, the list of members who took part in the ratification;
xxx
(c) Misrepresentation, false statements or fraud in connection with the election of officers,
minutes of the election of officers, the list of voters, or failure to submit these documents
together with the list of the newly elected-appointed officers and their postal addresses
within thirty (30) days from election
x x x.
The grounds ventilated in cancellation proceedings in accordance with Article 239 of the
Labor Code constitute a grave challenge to the right of respondent Union to ask for
certification election. The Med-Arbiter should have looked into the merits of the petition for
cancellation before issuing an order calling for certification election. Registration based on
false and fraudulent statements and documents confer no legitimacy upon a labor
organization irregularly recognized, which, at best, holds on to a mere scrap of paper. Under
such circumstances, the labor organization, not being a legitimate labor organization,
acquires no rights, particularly the right to ask for certification election in a bargaining unit.
As we laid emphasis in Progressive Development Corporation vs. Secretary of Labor and
Employment,18 “[t]he employer needs the assurance that the union it is dealing with is a
bona fide organization, one which has not submitted false statements or misrepresentations
to the Bureau.” Clearly, fraud, falsification and misrepresentation in obtaining recognition as a
legitimate labor organization are contrary to the Med-Arbiter’s conclusion not merely
collateral issues. The invalidity of respondent Union’s registration would negate its legal
personality to participate in certification election.
Once a labor organization attains the status of a legitimate labor organization it begins to
possess all of the rights and privileges granted by law to such organizations. As such rights
and privileges ultimately affect areas which are constitutionally protected, the activities in
which labor organizations, associations and unions are engaged directly affect the public
interest and should be zealously protected. A strict enforcement of the Labor Code’s
requirements for the acquisition of the status of a legitimate labor organization is in order.
Inasmuch as the legal personality of respondent Union had been seriously challenged, it
would have been more prudent for the Med-Arbiter and public respondent to have granted
petitioner’s request for the suspension of proceedings in the certification election case, until
the issue of the legality of the Union’s registration shall have been resolved. Failure of the
MedArbiter and public respondent to heed the request constituted a grave abuse of
discretion.
 154

WHEREFORE, PREMISES CONSIDERED, the instant petition is GRANTED and the Resolution
and Order of the public respondent dated December 29, 1993 and January 24, 1994,
respectively, are hereby SET ASIDE.

The case is REMANDED to the Med-Arbiter to resolve with reasonable dispatch petitioner’s
petition for cancellation of respondent Union’s registration.

SO ORDERED.

    

Petition granted, resolution and order set aside.

Notes.—Certification election is the most effective and expeditious way to determine which
labor organization truly represents the working force in the appropriate bargaining unit.
(National Mines and Allied Workers Union vs. Secretary of Labor, 227 SCRA 821 [1993])

An employer that involves itself in a certification election lends suspicion to the fact that it
wants to create a company union. (San Miguel Foods, Inc.-Cebu B-Meg Feed Plant vs.
Laguesma, 263 SCRA 68 [1996])

The defeat suffered by a Union in its bid to be certified as the sole bargaining agent of truck
drivers who claimed to be employees of the petitioner made irrelevant the findings of both
the Med-Arbiter-Designate and the Secretary of Labor that an employer-employee
relationship existed. (Gancho-on vs. Secretary of Labor and Employment, 271 SCRA 204
[1997])

——o0o—— Progressive Development Corp.-Pizza Hut vs. Laguesma, 271 SCRA 593, G.R. No.
115077 April 18, 1997