G.R. No.

142000            January 22, 2003

TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INCORPORATED, petitioner,
vs.
TAGAYTAY HIGHLANDS EMPLOYEES UNION-PGTWO, respondent.
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 rank-and-file employees which it annexed 2 to its Comment to
the petition for certification election. And it therein incorporated the following tabulation 3 showing the number of
signatories to said petition whose membership in the union was being questioned as disqualified and the reasons for
disqualification:

# of
Reasons for Disqualification
Signatures

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.4Replying 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 independent petition for
cancellation of union registration which is within the jurisdiction of the DOLE Regional Director. In any event, the Med-
Arbiter 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, 1998 10 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 (Underscoring and emphasis 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
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 245], 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]; Underscoring and emphasis 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. (Emphasis 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 losing 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 law;
(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, (Emphasis supplied),
while the procedure for cancellation of registration is provided for in 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 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." 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.

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. (Emphasis 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.
SAN MIGUEL CORPORATION EMPLOYEES G.R. No. 171153
UNIONPHILIPPINE TRANSPORT AND GENERAL
WORKERS ORGANIZATION (SMCEUPTGWO), Present:

Petitioner, YNARES-SANTIAGO, J.,

-         versus - Chairperson,

SAN MIGUEL PACKAGING PRODUCTS AUSTRIA-MARTINEZ,

EMPLOYEES UNIONPAMBANSANG DIWA NG
MANGGAGAWANG PILIPINO (SMPPEUPDMP),
CHICO-NAZARIO,

Respondent.[ 1]
NACHURA, and

REYES, JJ.

Promulgated:

September 12, 2007

x-------------------------------------------------x
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, petitioner SAN MIGUEL
CORPORATION EMPLOYEES UNION-PHILIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATION
(SMCEU-PTGWO) prays that this Court reverse and set aside the (a) Decision[2] dated 9 March 2005 of the Court of
Appeals in CA-G.R. SP No. 66200, affirming the Decision[3] dated 19 February 2001 of the Bureau of Labor Relations
(BLR) of the Department of Labor and Employment (DOLE) which upheld the Certificate of Registration of respondent
SAN MIGUEL PACKAGING PRODUCTS EMPLOYEES UNIONPAMBANSANG DIWA NG MANGGAGAWANG PILIPINO
(SMPPEUPDMP); and (b) the Resolution[4] dated 16 January 2006 of the Court of Appeals in the same case, denying
petitioners Motion for Reconsideration of the aforementioned Decision.
The following are the antecedent facts:
Petitioner is the incumbent bargaining agent for the bargaining unit comprised of the regular monthly-paid rank and file
employees of the three divisions of San Miguel Corporation (SMC), namely, the San Miguel Corporate Staff Unit
(SMCSU), San Miguel Brewing Philippines (SMBP), and the San Miguel Packaging Products (SMPP), in all offices and
plants of SMC, including the Metal Closure and Lithography Plant in Laguna. It had been the certified bargaining agent for
20 years from 1987 to 1997.
Respondent is registered as a chapter of Pambansang Diwa ng Manggagawang Pilipino (PDMP). PDMP issued Charter
Certificate No. 112 to respondent on 15 June 1999.[5] In compliance with registration requirements, respondent submitted
the requisite documents to the BLR for the purpose of acquiring legal personality.[6] Upon submission of its charter
certificate and other documents, respondent was issued Certificate of Creation of Local or Chapter PDMP-01 by the BLR
on 6 July 1999.[7] Thereafter, respondent filed with the Med-Arbiter of the DOLE Regional Officer in the National Capital
Region (DOLE-NCR), three separate petitions for certification election to represent SMPP, SMCSU, and SMBP. [8] All
three petitions were dismissed, on the ground that the separate petitions fragmented a single bargaining unit.[9]
On 17 August 1999, petitioner filed with the DOLE-NCR a petition seeking the cancellation of respondents registration and
its dropping from the rolls of legitimate labor organizations. In its petition, petitioner accused respondent of committing
fraud and falsification, and non-compliance with registration requirements in obtaining its certificate of registration. It
raised allegations that respondent violated Articles 239(a), (b) and (c)[10] and 234(c)[11] of the Labor Code. Moreover,
petitioner claimed that PDMP is not a legitimate labor organization, but a trade union center, hence, it cannot directly
create a local or chapter. The petition was docketed as Case No. NCR-OD-9908-007-IRD.[12]
On 14 July 2000, DOLE-NCR Regional Director Maximo B. Lim issued an Order dismissing the allegations of fraud and
misrepresentation, and irregularity in the submission of documents by respondent. Regional Director Lim further ruled that
respondent is allowed to directly create a local or chapter. However, he found that respondent did not comply with the
20% membership requirement and, thus, ordered the cancellation of its certificate of registration and removal from the
rolls of legitimate labor organizations.[13] Respondent appealed to the BLR. In a Decision dated 19 February 2001, it
declared:
As a chartered local union, appellant is not required to submit the number of employees and names of all its members
comprising at least 20% of the employees in the bargaining unit where it seeks to operate. Thus, the revocation of its
registration based on non-compliance with the 20% membership requirement does not have any basis in the rules.
Further, although PDMP is considered as a trade union center, it is a holder of Registration Certificate No. FED-11558-LC
issued by the BLR on 14 February 1991, which bestowed upon it the status of a legitimate labor organization with all the
rights and privileges to act as representative of its members for purposes of collective bargaining agreement. On this
basis, PDMP can charter or create a local, in accordance with the provisions of Department Order No. 9.
WHEREFORE, the appeal is hereby GRANTED. Accordingly, the decision of the Regional Director dated July 14, 2000,
canceling the registration of appellant San Miguel Packaging Products Employees Union-Pambansang Diwa ng
Manggagawang Pilipino (SMPPEU-PDMP) is REVERSED and SET ASIDE. Appellant shall hereby remain in the roster of
legitimate labor organizations.[14]
While the BLR agreed with the findings of the DOLE Regional Director dismissing the allegations of fraud and
misrepresentation, and in upholding that PDMP can directly create a local or a chapter, it reversed the Regional Directors
ruling that the 20% membership is a requirement for respondent to attain legal personality as a labor organization.
Petitioner thereafter filed a Motion for Reconsideration with the BLR. In a Resolution rendered on 19 June 2001 in BLR-A-
C-64-05-9-00 (NCR-OD-9908-007-IRD), the BLR denied the Motion for Reconsideration and affirmed its Decision dated
19 February 2001.[15]
Invoking the power of the appellate court to review decisions of quasi-judicial agencies, petitioner filed with the Court of
Appeals a Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure docketed as CA-G.R. SP No. 66200.
The Court of Appeals, in a Decision dated 9 March 2005, dismissed the petition and affirmed the Decision of the BLR,
ruling as follows:
In Department Order No. 9, a registered federation or national union may directly create a local by submitting to the BLR
copies of the charter certificate, the locals constitution and by-laws, the principal office address of the local, and the
names of its officers and their addresses. Upon complying with the documentary requirements, the local shall be issued a
certificate and included in the roster of legitimate labor organizations. The [herein respondent] is an affiliate of a registered
federation PDMP, having been issued a charter certificate. Under the rules we have reviewed, there is no need for
SMPPEU to show a membership of 20% of the employees of the bargaining unit in order to be recognized as a legitimate
labor union.
xxxx
In view of the foregoing, the assailed decision and resolution of the BLR are AFFIRMED, and the petition is DISMISSED.
[16]
Subsequently, in a Resolution dated 16 January 2006, the Court of Appeals denied petitioners Motion for Reconsideration
of the aforementioned Decision.
Hence, this Petition for Certiorari under Rule 45 of the Revised Rules of Court where petitioner raises the sole issue of:
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT
PRIVATE RESPONDENT IS NOT REQUIRED TO SUBMIT THE NUMBER OF EMPLOYEES AND NAMES OF ALL ITS
MEMBERS COMPRISING AT LEAST 20% OF THE EMPLOYEES IN THE BARGAINING UNIT WHERE IT SEEKS TO
OPERATE.
The present petition questions the legal personality of respondent as a legitimate labor organization.
Petitioner posits that respondent is required to submit a list of members comprising at least 20% of the employees in the
bargaining unit before it may acquire legitimacy, citing Article 234(c) of the Labor Code which stipulates that 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.[17]
Petitioner also insists that the 20% requirement for registration of respondent must be based not on the number of
employees of a single division, but in all three divisions of the company in all the offices and plants of SMC since they are
all part of one bargaining unit. Petitioner refers to Section 1, Article 1 of the Collective Bargaining Agreement (CBA), [18]
quoted hereunder:
ARTICLE 1
SCOPE
Section 1. Appropriate Bargaining Unit. The appropriate bargaining unit covered by this Agreement consists of all regular
rank and file employees paid on the basis of fixed salary per month and employed by the COMPANY in its Corporate Staff
Units (CSU), San Miguel Brewing Products (SMBP) and San Miguel Packaging Products (SMPP) and in different
operations existing in the City of Manila and suburbs, including Metal Closure and Lithography Plant located at
Canlubang, Laguna subject to the provisions of Article XV of this Agreement provided however, that if during the term of
this Agreement, a plant within the territory covered by this Agreement is transferred outside but within a radius of fifty (50)
kilometers from the Rizal Monument, Rizal Park, Metro Manila, the employees in the transferred plant shall remain in the
bargaining unit covered by this Agreement. (Emphasis supplied.)
Petitioner thus maintains that respondent, in any case, failed to meet this 20% membership requirement since it based its
membership on the number of employees of a single division only, namely, the SMPP.
There is merit in petitioners contentions.
A legitimate labor organization[19] is defined as any labor organization duly registered with the Department of Labor and
Employment, and includes any branch or local thereof.[20] The mandate of the Labor Code is to ensure strict compliance
with the requirements on registration because a legitimate labor organization is entitled to specific rights under the Labor
Code,[21] and are involved in activities directly affecting matters of public interest. 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.[22] Legitimate
labor organizations have exclusive rights under the law which cannot be exercised by non-legitimate unions, one of which
is the right to be certified as the exclusive representative[23] of all the employees in an appropriate collective bargaining
unit for purposes of collective bargaining.[24] 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.[25]
A perusal of the records reveals that respondent is registered with the BLR as a local or chapter of PDMP and was issued
Charter Certificate No. 112 on 15 June 1999. Hence, respondent was directly chartered by PDMP.
The procedure for registration of a local or chapter of a labor organization is provided in Book V of the Implementing Rules
of the Labor Code, as amended by Department Order No. 9 which took effect on 21 June 1997, and again by Department
Order No. 40 dated 17 February 2003.  The Implementing Rules as amended by D.O. No. 9 should govern the resolution
of the petition at bar since respondents petition for certification election was filed with the BLR in 1999; and that of
petitioner on 17 August 1999.[26]
The applicable Implementing Rules enunciates a two-fold procedure for the creation of a chapter or a local. The first
involves the affiliation of an independent union with a federation or national union or industry union. The second, finding
application in the instant petition, involves the direct creation of a local or a chapter through the process of chartering.[27]
A duly registered federation or national union may directly create a local or chapter by submitting to the DOLE Regional
Office or to the BLR two copies of the following:
(a)       A charter certificate issued by the federation or national union indicating the creation or establishment of the
local/chapter;
(b)      The names of the local/chapters officers, their addresses, and the principal office of the local/chapter; and
 
(c)       The local/chapters constitution and by-laws; Provided, That where the local/chapters constitution and by-laws is
the same as that of the federation or national union, this fact shall be indicated accordingly.
 
All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the
local/chapter and attested to by its President.[28]
The Implementing Rules stipulate that a local or chapter may be directly created by a federation or national union. A duly
constituted local or chapter created in accordance with the foregoing shall acquire legal personality from the date of filing
of the complete documents with the BLR.[29] The issuance of the certificate of registration by the BLR or the DOLE
Regional Office is not the operative act that vests legal personality upon a local or a chapter under Department Order No.
9. Such legal personality is acquired from the filing of the complete documentary requirements enumerated in Section 1,
Rule VI.[30]
Petitioner insists that Section 3 of the Implementing Rules, as amended by Department Order No. 9, violated Article 234
of the Labor Code when it provided for less stringent requirements for the creation of a chapter or local. This Court
disagrees.
Article 234 of the Labor Code provides that an independent labor organization acquires legitimacy only upon its
registration with the BLR:
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. (Italics supplied.)
It is emphasized that the foregoing pertains to the registration of an independent labor organization, association or group
of unions or workers.
However, the creation of a branch, local or chapter is treated differently. This Court, in the landmark case of Progressive
Development Corporation v. Secretary, Department of Labor and Employment,[31] declared that when an unregistered
union becomes a branch, local or chapter, some of the aforementioned requirements for registration are no longer
necessary or compulsory. Whereas an applicant for registration of an independent union is mandated to submit, among
other things, the number of employees and names of all its members comprising at least 20% of the employees in the
bargaining unit where it seeks to operate, as provided under Article 234 of the Labor Code and Section 2 of Rule III, Book
V of the Implementing Rules, the same is no longer required of a branch, local or chapter.[32] The intent of the law in
imposing less 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 unions bargaining powers
respecting terms and conditions of labor.[33]
Subsequently, in Pagpalain Haulers, Inc. v. Trajano[34] where the validity of Department Order No. 9 was directly put in
issue, this Court was unequivocal in finding that there is no inconsistency between the Labor Code and Department Order
No. 9.
As to petitioners claims that respondent obtained its Certificate of Registration through fraud and misrepresentation, this
Court finds that the imputations are not impressed with merit. In the instant case, proof to declare that respondent
committed fraud and misrepresentation remains wanting. This Court had, indeed, on several occasions, pronounced that
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.[35]
This Court emphasizes, however, that a direct challenge to the legitimacy of a labor organization based on fraud and
misrepresentation in securing its certificate of registration is a serious allegation which deserves careful scrutiny.
Allegations thereof should be compounded with supporting circumstances and evidence. The records of the case are
devoid of such evidence. Furthermore, this Court is not a trier of facts, and this doctrine applies with greater force in labor
cases.  Findings of fact of administrative agencies and quasi-judicial bodies, such as the BLR, which have acquired
expertise because their jurisdiction is confined to specific matters, are generally accorded not only great respect but even
finality.[36]
Still, petitioner postulates that respondent was not validly and legitimately created, for PDMP cannot create a local or
chapter as it is not a legitimate labor organization, it being a trade union center.
Petitioners argument creates a predicament as it hinges on the legitimacy of PDMP as a labor organization. Firstly, this
line of reasoning attempts to predicate that a trade union center is not a legitimate labor organization. In the process, the
legitimacy of PDMP is being impugned, albeit indirectly. Secondly, the same contention premises that a trade union center
cannot directly create a local or chapter through the process of chartering.
Anent the foregoing, as has been held in a long line of cases, the legal personality of a legitimate labor organization, such
as PDMP, cannot be subject to a collateral attack. The law is very clear on this matter. Article 212 (h) of the Labor Code,
as amended, defines a legitimate labor organization[37] as any labor organization duly registered with the DOLE, and
includes any branch or local thereof.[38] On the other hand, a trade union center is any group of registered national
unions or federations organized for the mutual aid and protection of its members; for assisting such members in collective
bargaining; or for participating in the formulation of social and employment policies, standards, and programs, and is duly
registered with the DOLE in accordance with Rule III, Section 2 of the Implementing Rules.[39]
The Implementing Rules stipulate that a labor organization shall be deemed registered and vested with legal personality
on the date of issuance of its certificate of registration. Once a certificate of registration is issued to a union, its legal
personality cannot be subject to collateral attack.[40] It may be questioned only in an independent petition for cancellation
in accordance with Section 5 of Rule V, Book V of the Implementing Rules. The aforementioned provision is enunciated in
the following:
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.
PDMP was registered as a trade union center and issued Registration Certificate No. FED-11558-LC by the BLR on 14
February 1991. Until the certificate of registration of PDMP is cancelled, its legal personality as a legitimate labor
organization subsists. Once a union acquires legitimate status as a labor organization, it continues to be recognized as
such until its certificate of registration is cancelled or revoked in an independent action for cancellation.[41] It bears to
emphasize that what is being directly challenged is the personality of respondent as a legitimate labor organization and
not that of PDMP. This being a collateral attack, this Court is without jurisdiction to entertain questions indirectly
impugning the legitimacy of PDMP.
Corollarily, PDMP is granted all the rights and privileges appurtenant to a legitimate labor organization, [42] and continues
to be recognized as such until its certificate of registration is successfully impugned and thereafter cancelled or revoked in
an independent action for cancellation.
We now proceed to the contention that PDMP cannot directly create a local or a chapter, it being a trade union center.
This Court reverses the finding of the appellate court and BLR on this ground, and rules that PDMP cannot directly create
a local or chapter.
After an exhaustive study of the governing labor law provisions, both statutory and regulatory,[43] we find no legal
justification to support the conclusion that a trade union center is allowed to directly create a local or chapter through
chartering. Apropos, we take this occasion to reiterate the first and fundamental duty of this Court, which is to apply the
law. The solemn power and duty of the Court to interpret and apply the law does not include the power to correct by
reading into the law what is not written therein.[44]
Presidential Decree No. 442, better known as the Labor Code, was enacted in 1972. Being a legislation on social justice,
[45] the provisions of the Labor Code and the Implementing Rules have been subject to several amendments, and they
continue to evolve, considering that labor plays a major role as a socio-economic force. The Labor Code was first
amended by Republic Act No. 6715, and recently, by Republic Act No. 9481. Incidentally, the term trade union center was
never mentioned under Presidential Decree No. 442, even as it was amended by Republic Act No. 6715. The term trade
union center was first adopted in the Implementing Rules, under Department Order No. 9.
Culling from its definition as provided by Department Order No. 9, a trade union center is any group of registered national
unions or federations organized for the mutual aid and protection of its members; for assisting such members in collective
bargaining; or for participating in the formulation of social and employment policies, standards, and programs, and is duly
registered with the DOLE in accordance with Rule III, Section 2 of the Implementing Rules.[46] The same rule provides
that the application for registration of an industry or trade union center shall be supported by the following:
(a)                             The list of its member organizations and their respective presidents and, in the case of an industry
union, the industry where the union seeks to operate;
(b)                            The resolution of membership of each member organization, approved by the Board of Directors of
such union;
(c)                             The name and principal address of the applicant, the names of its officers and their addresses, the
minutes of its organizational meeting/s, and the list of member organizations and their representatives who attended such
meeting/s; and
(d)                            A copy of its constitution and by-laws and minutes of its ratification by a majority of the presidents of
the member organizations, provided that where the ratification was done simultaneously with the organizational meeting, it
shall be sufficient that the fact of ratification be included in the minutes of the organizational meeting.[47]
Evidently, while a national union or federation is a labor organization with at least ten locals or chapters or affiliates, each
of which must be a duly certified or recognized collective bargaining agent;[48] a trade union center, on the other hand, is
composed of a group of registered national unions or federations.[49]
The Implementing Rules, as amended by Department Order No. 9, provide that a duly registered federation or national
union may directly create a local or chapter. The provision reads:
Section 1. Chartering and creation of a local/chapter. A duly registered federation or national union may directly create a
local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following:
(a) A charter certificate issued by the federation or national union indicating the creation or establishment of the
local/chapter;
(b) The names of the local/chapters officers, their addresses, and the principal office of the local/chapter; and
(c) The local/chapters constitution and by-laws; provided that where the local/chapters constitution and by-laws is the
same as that of the federation or national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the
local/chapter and attested to by its President.[50]
Department Order No. 9 mentions two labor organizations either of which is allowed to directly create a local or chapter
through chartering a duly registered federation or a national union. Department Order No. 9 defines a "chartered local" as
a labor organization in the private sector operating at the enterprise level that acquired legal personality through a charter
certificate, issued by a duly registered federation or national union and reported to the Regional Office in accordance with
Rule III, Section 2-E of these Rules.[51]
Republic Act No. 9481 or An Act Strengthening the Workers Constitutional Right to Self-Organization, Amending for the
Purpose Presidential Decree No. 442, As Amended, Otherwise Known as the Labor Code of the Philippines lapsed[52]
into law on 25 May 2007 and became effective on 14 June 2007.[53] This law further amends the Labor Code provisions
on Labor Relations.
Pertinent amendments read as follows:
SECTION 1. Article 234 of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the , is
hereby further amended to read as follows:
ART. 234. Requirements of Registration. A federation, national union or industry or trade
union center or an independent union 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) In case the applicant is an independent union, 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 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.
SECTION 2. A new provision is hereby inserted into the Labor Code as Article 234-A to
read as follows:
ART. 234-A. Chartering and Creation of a Local Chapter. A duly registered federation or
national union may directly create a local chapter by issuing a charter certificate
indicating the establishment of the local chapter. The chapter shall acquire legal
personality only for purposes of filing a petition for certification election from the date it
was issued a charter certificate.
The chapter shall be entitled to all other rights and privileges of a legitimate labor
organization only upon the submission of the following documents in addition to its
 charter certificate:
(a) The names of the chapter's officers, their addresses, and the principal office of the
chapter; and
(b) The chapter's constitution and by-laws: Provided, That where the chapter's
constitution and by-laws are the same as that of the federation or the national union, this
fact shall be indicated accordingly.
The additional supporting requirements shall be certified under oath by the secretary or
treasurer of the chapter and attested by its president. (Emphasis ours.)
Article 234 now includes the term trade union center, but interestingly, the provision
indicating the procedure for chartering or creating a local or chapter, namely Article 234-
A, still makes no mention of a trade union center.
Also worth emphasizing is that even in the most recent amendment of the implementing rules, [54] there was no mention
of a trade union center as being among the labor organizations allowed to charter.
This Court deems it proper to apply the Latin maxim expressio unius est exclusio alterius. Under this maxim of statutory
interpretation, the expression of one thing is the exclusion of another. When certain persons or things are specified in a
law, contract, or will, an intention to exclude all others from its operation may be inferred. If a statute specifies one
exception to a general rule or assumes to specify the effects of a certain provision, other exceptions or effects are
excluded.[55] Where the terms are expressly limited to certain matters, it may not, by interpretation or construction, be
extended to other matters.[56] Such is the case here. If its intent were otherwise, the law could have so easily and
conveniently included trade union centers in identifying the labor organizations allowed to charter a chapter or local.
Anything that is not included in the enumeration is excluded therefrom, and a meaning that does not appear nor is
intended or reflected in the very language of the statute cannot be placed therein.[57] The rule is restrictive in the sense
that it proceeds from the premise that the legislating body would not have made specific enumerations in a statute if it had
the intention not to restrict its meaning and confine its terms to those expressly mentioned. [58] Expressium facit cessare
tacitum.[59] What is expressed puts an end to what is implied. Casus omissus pro omisso habendus est. A person, object
or thing omitted must have been omitted intentionally.
Therefore, since under the pertinent status and applicable implementing rules, the power granted to labor organizations to
directly create a chapter or local through chartering is given to a federation or national union, then a trade union center is
without authority to charter directly.
The ruling of this Court in the instant case is not a departure from the policy of the law to foster the free and voluntary
organization of a strong and united labor movement,[60] and thus assure the rights of workers to self-organization.[61]
The mandate of the Labor Code in ensuring strict compliance with the procedural requirements for registration is not
without reason. It has been observed that 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.[62] As a legitimate labor organization is entitled to specific
rights under the Labor Code and involved in activities directly affecting public interest, it is necessary that the law afford
utmost protection to the parties affected.[63] However, as this Court has enunciated in Progressive Development
Corporation v. Secretary of Department of Labor and Employment, it is not this Court's function to augment the
requirements prescribed by law. Our only recourse, as previously discussed, is to exact strict compliance with what the
law provides as requisites for local or chapter formation.[64]
In sum, although PDMP as a trade union center is a legitimate labor organization, it has no power to directly create a local
or chapter. Thus, SMPPEU-PDMP cannot be created under the more lenient requirements for chartering, but must have
complied with the more stringent rules for creation and registration of an independent union, including the 20%
membership requirement.
WHEREFORE, the instant Petition is GRANTED. The Decision dated 09 March 2005 of the Court of Appeals in CA-GR
SP No. 66200 is REVERSED and SET ASIDE. The Certificate of Registration of San Miguel Packaging Products
Employees UnionPambansang Diwa ng Manggagawang Pilipino is ORDERED CANCELLED, and SMPPEU-PDMP
DROPPED from the rolls of legitimate labor organizations.
Costs against petitioner.
SO ORDERED.
 [G.R. No. 127374. January 31, 2002]
PHILIPPINE SKYLANDERS, INC., MARILES C. ROMULO and FRANCISCO DAKILA, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION, LABOR ARBITER EMERSON TUMANON, PHILIPPINE ASSOCIATION OF FREE
LABOR UNIONS (PAFLU) SEPTEMBER (now UNIFIED PAFLU) and SERAFIN AYROSO, respondents.
[G.R. No. 127431. January 31, 2002]
PHILIPPINE SKYLANDERS AND WORKERS ASSOCIATION-NCW, MACARIO CABANIAS, PEPITO RODILLAS,
SHARON CASTILLO, DANILO CARBONEL, MANUEL EDA, ROLANDO FELIX, JOCELYN FRONDA, RICARDO
LUMBA, JOSEPH MARISOL, NERISA MORTEL, TEOFILO QUIRONG, LEONARDO REYES, MANUEL CADIENTE
and HERMINIA RIOSA, petitioners, vs. PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU)
SEPTEMBER (now UNIFIED PAFLU) and NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION,
respondents.
DECISION
BELLOSILLO, J.:
This is a petition for certiorari[1] seeking to set aside the 31 July 1996 Decision[2] of the National Labor Relations
Commission affirming the 30 June 1995 Decision of the Labor Arbiter holding petitioners Philippine Skylanders, Inc.,
Mariles C. Romulo[3] and Francisco Dakila as well as the elected officers of the Philippine Skylanders Employees and
Workers Association-PAFLU[4] guilty of unfair labor practice and ordering them to pay private respondent Philippine
Association of Free Labor Union (PAFLU) September[5] P150,000.00 as damages. Petitioners likewise seek the reversal
of the 31 October 1996 Resolution of the NLRC denying their Motion for Reconsideration.
In November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with the
Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won in the certification election conducted
among the rank and file employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders Employees
Association-WATU (PSEA-WATU) immediately protested the result of the election before the Secretary of Labor.
Several months later, pending settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason
PAFLU's supposed deliberate and habitual dereliction of duty toward its members. Attached to the notice was a copy of
the resolution adopted and signed by the officers and members of PSEA authorizing their local union to disaffiliate from its
mother federation.
PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to Philippine
Skylanders Employees Association - National Congress of Workers (PSEA-NCW), and to maintain continuity within the
organization, allowed the former officers of PSEA-PAFLU to continue occupying their positions as elected officers in the
newly-forged PSEA-NCW.
On 17 March 1994 PSEA-NCW entered into a collective bargaining agreement with PSI which was immediately registered
with the Department of Labor and Employment.
Meanwhile, apparently oblivious to PSEA's shift of allegiance, PAFLU Secretary General Serafin Ayroso wrote Mariles C.
Romulo requesting a copy of PSI's audited financial statement. Ayroso explained that with the dismissal of PSEA-WATUs
election protest the time was ripe for the parties to enter into a collective bargaining agreement.
On 30 July 1994 PSI through its personnel manager Francisco Dakila denied the request citing as reason PSEA's
disaffiliation from PAFLU and its subsequent affiliation with NCW.
Agitated by PSI's recognition of PSEA-NCW, PAFLU through Serafin Ayroso filed a complaint for unfair labor practice
against PSI, its president Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside from PSIs
refusal to bargain collectively with its workers, the company through its president and personnel manager, was also liable
for interfering with its employees' union activities.[6]
Two (2) days later or on 6 October 1994 Ayroso filed another complaint in behalf of PAFLU for unfair labor practice
against Francisco Dakila. Through Ayroso PAFLU claimed that Dakila was present in PSEA's organizational meeting
thereby confirming his illicit participation in union activities. Ayroso added that the members of the local union had
unwittingly fallen into the manipulative machinations of PSI and were lured into endorsing a collective bargaining
agreement which was detrimental to their interests.[7] The two (2) complaints were thereafter consolidated.
On 1 February 1995 PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional party
respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito Rodillas, Sharon
Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa Mortel,
Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia Riosa, were equally guilty of unfair labor practice since
they brazenly allowed themselves to be manipulated and influenced by petitioner Francisco Dakila.[8]
PSI, its president Mariles C. Romulo, and its personnel manager Dakila moved for the dismissal of the complaint on the
ground that the issue of disaffiliation was an inter-union conflict which lay beyond the jurisdiction of the Labor Arbiter. On
the other hand, PSEA-NCW took the cudgels for its officers who were being sued in their capacities as former officers of
PSEA-PAFLU and asserted that since PSEA was no longer affiliated with PAFLU, Ayroso or PAFLU for that matter had
no personality to file the instant complaint. In support of this assertion, PSEA-NCW submitted in evidence a Katunayan
signed by 111 out of 120 rank and file employees of PSI disauthorizing Ayroso or PAFLU from instituting any action in
their behalf.[9]
In a Decision rendered on 30 June 1995 the Labor Arbiter declared PSEA's disaffiliation from PAFLU invalid and held PSI,
PSEA-PAFLU and their respective officers guilty of unfair labor practice. The Decision explained that despite PSEA-
PAFLU's status as the sole and exclusive bargaining agent of PSI's rank and file employees, the company knowingly
sanctioned and confederated with Dakila in actively assisting a rival union. This, according to the Labor Arbiter, was a
classic case of interference for which PSI could be held responsible. As PSEA-NCW's personality was not accorded
recognition, its collective bargaining agreement with PSI was struck down for being invalid. Ayroso's legal personality to
file the complaint was sustained on the ratiocination that under the Labor Code no petition questioning the majority status
of the incumbent bargaining agent shall be entertained outside of the sixty (60)-day period immediately before the expiry
date of such five (5)-year term of the collective bargaining agreement that the parties may enter into. Accordingly,
judgment was rendered ordering PSI, PSEA-PAFLU and their officers to pay PAFLU P150,000.00 in damages.[10]
PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC). But the NLRC
upheld the Decision of the Labor Arbiter and conjectured that since an election protest questioning PSEA-PAFLU's
certification as the sole and exclusive bargaining agent was pending resolution before the Secretary of Labor, PSEA could
not validly separate from PAFLU, join another national federation and subsequently enter into a collective bargaining
agreement with its employer-company.[11]
Petitioners separately moved for reconsideration but both motions were denied. Hence, these petitions for certiorari filed
by PSI and PSEA-NCW together with their respective officers pleading for a reversal of the NLRC's Decision which they
claimed to have been rendered in excess of jurisdiction. In due time, both petitions were consolidated.
In these petitions, petitioner PSEA together with its officers argued that by virtue of their disaffiliation PAFLU as a mere
agent had no authority to represent them before any proceedings. They further asserted that being an independent labor
union PSEA may freely serve the interest of all its members and readily disaffiliate from its mother federation when
circumstances so warrant. This right, they averred, was consistent with the constitutional guarantee of freedom of
association.[12]
For their part, petitioners PSI, Romulo and Dakila alleged that their decision to bargain collectively with PSEA-NCW was
actuated, to a large extent, by PAFLU's behavior. Having heard no objections or protestations from PAFLU relative to
PSEA's disaffiliation, they reckoned that PSEA's subsequent association with NSW was done bona fide.[13]
The Solicitor General filed a Manifestation in Lieu of Comment recommending that both petitions be granted. In his
Manifestation, the Solicitor General argued against the Labor Arbiter's assumption of jurisdiction citing the following as
reasons: first, there was no employer-employee relationship between complainant Ayroso and PSI over which the Labor
Arbiter could rightfully assert his jurisdiction; second, since the case involved a dispute between PAFLU as mother
federation and PSEA as local union, the controversy fell within the jurisdiction of the Bureau of Labor Relations; and lastly,
the relationship of principal-agent between PAFLU and PSEA had been severed by the local union through the lawful
exercise of its right of disaffiliation.[14]
Stripped of non-essentials, the fundamental issue tapers down to the legitimacy of PSEA's disaffiliation. To be more
precise, may PSEA, which is an independent and separate local union, validly disaffiliate from PAFLU pending the
settlement of an election protest questioning its status as the sole and exclusive bargaining agent of PSI's rank and file
employees?
At the outset, let it be noted that the issue of disaffiliation is an inter-union conflict the jurisdiction of which properly lies
with the Bureau of Labor Relations (BLR) and not with the Labor Arbiter.[15] Nonetheless, with due recognition of this fact,
we deem it proper to settle the controversy at this instance since to remand the case to the BLR would only mean
intolerable delay for the parties.
The right of a local union to disaffiliate from its mother federation is not a novel thesis unillumined by case law. In the
landmark case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.[16] we upheld the right of local unions to
separate from their mother federation on the ground that as separate and voluntary associations, local unions do not owe
their creation and existence to the national federation to which they are affiliated but, instead, to the will of their members.
The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the
effective enhancement and protection of their interests. Admittedly, there are times when without succor and support local
unions may find it hard, unaided by other support groups, to secure justice for themselves.
Yet the local unions remain the basic units of association, free to serve their own interests subject to the restraints
imposed by the constitution and by-laws of the national federation, and free also to renounce the affiliation upon the terms
laid down in the agreement which brought such affiliation into existence.
Such dictum has been punctiliously followed since then.[17]
Upon an application of the aforecited principle to the issue at hand, the impropriety of the questioned Decisions becomes
clearly apparent. There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly
forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway. As such, the
pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid
disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local union, or an
equivalent of 92.5% of the total union membership supported the claim of disaffiliation and had in fact disauthorized
PAFLU from instituting any complaint in their behalf. Surely, this is not a case where one (1) or two (2) members of the
local union decided to disaffiliate from the mother federation, but it is a case where almost all local union members
decided to disaffiliate.
It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. As PSEA had
validly severed itself from PAFLU, there would be no restrictions which could validly hinder it from subsequently affiliating
with NCW and entering into a collective bargaining agreement in behalf of its members.
There is a further consideration that likewise argues for the granting of the petitions. It stands unchallenged that PAFLU
instituted the complaint for unfair labor practice against the wishes of workers whose interests it was supposedly
protecting. The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the license to
act independently of the local union. Recreant to its mission, PAFLU cannot simply ignore the demands of the local
chapter and decide for its welfare. PAFLU might have forgotten that as an agent it could only act in representation of and
in accordance with the interests of the local union. The complaint then for unfair labor practice lodged by PAFLU against
PSI, PSEA and their respective officers, having been filed by a party which has no legal personality to institute the
complaint, should have been dismissed at the first instance for failure to state a cause of action.
Policy considerations dictate that in weighing the claims of a local union as against those of a national federation, those of
the former must be preferred. Parenthetically though, the desires of the mother federation to protect its locals are not
altogether to be shunned. It will however be to err greatly against the Constitution if the desires of the federation would be
favored over those of its members. That, at any rate, is the policy of the law. For if it were otherwise, instead of protection,
there would be disregard and neglect of the lowly workingmen.
WHEREFORE, the petitions of Philippine Skylanders, Inc. and of Philippine Skylanders and Workers Association-NCW,
together with their respective officers, are GRANTED. The Decision of the National Labor Relations Commission of 31
July 1996 affirming the Decision of the Labor Arbiter of 30 June 1995 holding petitioners Philippine Skylanders and
Workers Association-NCW, Philippine Skylanders, Inc. and their respective officers, guilty of unfair labor practice and
ordering them to pay damages to private respondent Philippine Association of Free Labor Unions (PAFLU) September
(now UNIFIED PAFLU) as well as the Resolution of 31 October 1996 denying reconsideration is REVERSED and SET
ASIDE. No costs.
SO ORDERED.
G.R. 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.
Carlos E. Santiago for petitioners.
Paredes, Poblador, Nazareno, Azada, Tomacuz & Paredes for respondent Liberty Cotton Mills, Inc. Ernesto D. Llaguno
for respondent Union.
Jose K. Manguiat, Jr. for respondent 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 this organization shall be Liberty Cotton Mills Workers Union-PAFLU.
Section 2. This Union shall have its office at l233 Tecson, Tindalo, Tondo, Manila.
xxx xxx xxx
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 Agreement 2 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 ... 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 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. ... 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.

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 PAFLUs 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 an be dismissed. Under the PAFLUs
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, ...
(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 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 also to renounce the affiliation for mutual welfare
upon the terms laid down in the agreement which brought it into existence. (Emphasis 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 —
... 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 the 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:
... 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 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.
G.R. No. 100485 September 21, 1994
SAN MIGUEL CORPORATION, petitioner,
vs.
THE HONORABLE BIENVENIDO E. LAGUESMA and NORTH LUZON MAGNOLIA SALES LABOR UNION-
INDEPENDENT, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
E.N.A. Cruz & Associates for private respondent.
 
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. 1

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 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. 8

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 he 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

. . . 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 respondents certification of
respondent union as the sole and exclusive bargaining agent of all the regular Magnolia sales personnel of the north
Luzon sales area.
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. 110399 August 15, 1997
SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT 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.
 
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-2-70-91 1 entitled "In Re: Petition for Certification Election Among the Supervisory
and Exempt Employees of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernando and Otis, San
Miguel Corporation Supervisors and Exempt Union, Petitioner." The Order excluded the employees under supervisory
levels 3 and 4 and the so-called 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 supervisory 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. NLRC 2 case. Said Order reads in part:
. . . 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 245 4
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." 8
There have been precedents in this regards, 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 employee's necessary
access to confidential labor relations information. 13

It is the contention of respondent corporation that Supervisor 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." 15
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 information 18 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.
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 Westinghouse 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. 25

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 employee 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.
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,
respondent.
 
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 . . rank-and-file employees . . ;" 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 . . that he is not opposing the petition . . ." 2

The case 3 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 Professional 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 . . 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.:
xxx xxx xxx
For purposes of registration, an appropriate organizational unit may refer to:
xxx xxx xxx
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:
. . 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 . . . . . . 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 pre-election conference . . ."
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-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 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 . . 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 . . (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 or 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 . .
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.
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 recommendation 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 effective and not an
exercise of independent judgment as 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, . . . 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

Sec. 2. 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.
Sec. 3. 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 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. Section 6
(f) and 9 of the UP Charter respectively provide: 26

Sec. 6. The Board of Regents shall have the following powers and duties . . . ;
xxx xxx xxx
 (f) To approve the courses of study and rules of discipline drawn up by the University Council as
hereinafter provided; . . .
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 mattes 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. 28

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

Sec. 12. 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" . . . "is novel in this jurisdiction; however, American precedents on the matter abound . . (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:
. . . 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 probationary employees. . . .
xxx xxx xxx
An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in the 10th
Annual Report of the National Labor Relations Board wherein it is emphasized that the factors which said
board may consider and weigh in fixing appropriate units are: the history, 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. . . .
. . 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). . . .
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
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 Unit 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 units 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 non-academic, 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.
 
ST. JAMES SCHOOL OF QUEZON CITY, Petitioner, - versus - SAMAHANG MANGGAGAWA SA ST. JAMES
SCHOOL OF QUEZON CITY, Respondent.
G.R. No. 151326 November 23, 2005
DECISION
 
CARPIO, J.:
 
The Case

Before the Court is a petition for review[1] assailing the 5 September 2001 Decision and 3 January 2002 Resolution of the
Court of Appeals[2] in CA-G.R. SP No. 60197. The Court of Appeals sustained the Decision of the Department of Labor
and Employment (DOLE) directing the opening of the challenged ballots cast during the certification election.
 
 
The Antecedent Facts
 
The Samahang Manggagawa sa St. James School of Quezon City (Samahang Manggagawa) filed a petition for
certification election to determine the collective bargaining representative of the motor pool, construction and
transportation employees of St. James School of Quezon City (St. James). On 26 June 1999, the certification election was
held at the DOLE office in Intramuros, Manila. There were 149 eligible voters and 84 voters cast their votes. St. James
filed a certification election protest challenging the 84 votes. St. James alleged that it had 179 rank and file employees,
none of whom voted in the certification election. St. James argued that those who voted were not its regular employees
but construction workers of an independent contractor, Architect Conrado Bacoy (Architect Bacoy).
 
In an Order dated 6 January 2000,[3] Med-Arbiter Tomas F. Falconitin (Med-Arbiter Falconitin) ruled that at the time of the
certification election, the 84 voters were no longer working at St. James. Med-Arbiter Falconitin supported his ruling using
the roster of rank and file employees submitted by St. James, which did not include the names of the 84 voters. Med-
Arbiter Falconitin also ruled that since the construction projects have ceased, some of the workers were no longer entitled
to vote in the certification election. Finally, Med-Arbiter Falconitin ruled that even if the 84 workers were to be included in
the 179 rank and file employees of St. James, the total number of voters would be 263. Thus, the 84 votes cast would not
be sufficient to constitute a majority of all eligible voters to have a valid certification election. The dispositive portion of the
Order reads:
 
WHEREFORE, premises considered, the certification election protest is hereby given due course.
 
Accordingly, judgment is hereby rendered, declaring the certification election for the rank and file employees of
respondent/protestant St. James School of Quezon City conducted on June 26, 1999, a failure; and null and void ab initio.
 
SO ORDERED.[4]
 
 
Samahang Manggagawa appealed to the Secretary of Labor. In its Decision[5] dated 5 May 2000, the DOLE[6] reversed
the ruling of Med-Arbiter Falconitin. The DOLE ruled that Samahang Manggagawa seeks to represent the non-academic
personnel or the rank and file employees from the motor pool, construction and transportation departments, and not all the
rank and file employees of St. James. According to the DOLE, Med-Arbiter Falconitin erred in including all the rank and
file employees of St. James, whether teaching or non-teaching personnel, in the computation of the total number of
employees. The DOLE ruled that the list submitted by St. James contained only the administrative, teaching and office
personnel of the school. The dispositive portion of the Decision reads:
 
WHEREFORE, the appeal is hereby GRANTED and the order dated 06 January 2000 of the Med-Arbiter is REVERSED
and SET ASIDE. In lieu thereof, an order is hereby issued directing the Election Officer, Lilibeth Cagara, DOLE-National
Capital Region to open and canvass the 84 challenged ballots within ten (10) days from receipt hereof, subject to usual
notice and representation by the parties and thereafter to issue the corresponding certification of the results.
 
SO DECIDED.[7]
 
 
St. James filed a motion for reconsideration. The DOLE[8] denied the motion in its 19 June 2000 Resolution.[9] St. James
filed a special civil action before the Court of Appeals.
 
In a Decision[10] dated 5 September 2001, the Court of Appeals dismissed the petition and ruled that the DOLE did not
commit grave abuse of discretion in reversing the ruling of Med-Arbiter Falconitin. In its 3 January 2002 Resolution,[11]
the Court of Appeals denied St. James motion for reconsideration.
Hence, the petition before this Court.
 
The Issues
 
St. James questions the validity of the formation of the labor union and the validity of the certification election.[12]
 
 
The Ruling of the Court
 
The petition has no merit.
 
The Validity of the Formation of the Labor Union
 
St. James argues that majority of the members of Samahang Manggagawa are not its employees but employees of
Architect Bacoy, an independent contractor.

St. James may no longer question the validity of the formation of the labor union.
 
The records[13] show that prior to the holding of the certification election, St. James filed a petition for cancellation of
Samahang Manggagawas union registration. Among the grounds cited in the petition was the lack of employer-employee
relationship between St. James and Samahang Manggagawas members. The Med-Arbiter recommended the cancellation
of the union registration. DOLE Regional Director IV Romeo Young (Director Young) adopted the Med-Arbiters
recommendation and cancelled Samahang Manggagawas union registration. Samahang Manggagawa filed an appeal
before the Bureau of Labor Relations (BLR). In its Decision[14] dated 22 January 1998, the BLR[15] reversed Director
Youngs Decision. In its Resolution[16] of 12 February 1998, the BLR denied St. James motion for reconsideration. St.
James filed a special civil action before the Court of Appeals. The case was docketed as CA-G.R. SP No. 50918. In its 9
February 2001 Decision,[17] the Court of Appeals dismissed St. James petition and affirmed the BLRs Decision. The
Court of Appeals ruled that the construction workers are actually St. James regular employees in its motor pool,
construction and transportation departments. The Court of Appeals also ruled that Architect Bacoy is a labor-only
contractor and thus an agent of St. James, which is the real employer.
 
St. James filed a petition for certiorari before this Court. The case was docketed as G.R. No. 149648. In a Resolution
dated 10 October 2001, this Court denied the petition for St. James error in the choice or mode of appeal.[18] The Courts
10 October 2001 Resolution closed any issue on the validity of the formation of the labor union.
 
The Validity of the Certification Election
 
Section 13, Rule XII, Book V of the Omnibus Rules Implementing the Labor Code (Omnibus Rules) provides:
 
Section 13. Proclamation and certification of results by election officer; when proper. Upon completion of the canvass
there being a valid election, the election officer shall proclaim and certify as winner the union which obtained a majority of
the valid votes cast under any of the following conditions:
 
a)      No protest had been filed or, even if one was filed, the same was not perfected within the five-day period for
perfection of the protest;
 
b)      No challenge of eligibility issue was raised or even if one was raised, the resolution of the same will not materially
change the result.
 
For this purpose, the election officer shall immediately issue the corresponding certification, copy furnished all parties,
which shall form part of the records of the case. The winning union shall have the rights, privileges and obligations of a
duly certified collective bargaining representative from the time the certification is issued. The proclamation and
certification so issued shall not be appealable.
According to St. James, the certification election was conducted without quorum. St. James alleges that it has 179 rank
and file employees in its Quezon City Campus. When the certification election was held, none of these qualified rank and
file employees cast their votes because they were all on duty in the school premises. The 84 voters who cast their votes
are employees of Architect Bacoy. St. James also alleges that it has 570 rank and file employees in all its campuses.
Even if the 84 voters are its employees, the votes do not constitute a majority vote of its rank and file employees because
the quorum should be based on its 570 rank and file employees.
 
We cannot sustain the argument.
 
St. James has five campuses the Philamlife and Scout Alcaraz, Quezon City campuses which are pre-schools; the
Paraaque City and Calamba, Laguna campuses which offer elementary, secondary and college education; and the
Tandang Sora, Quezon City campus which offers elementary and secondary education.[19]
 
The members of Samahang Manggagawa are employees in the Tandang Sora campus. Under its constitution and by-
laws, Samahang Manggagawa seeks to represent the motor pool, construction and transportation employees of the
Tandang Sora campus.[20] Thus, the computation of the quorum should be based on the rank and file motor pool,
construction and transportation employees of the Tandang Sora campus and not on all the employees in St. James five
campuses.
 
Section 2, Rule XII, Book V of the Omnibus Rules provides:

Section 2. Qualification of voters; inclusion-exclusion proceedings. All employees who are members of the appropriate
bargaining unit sought to be represented by the petitioner at the time of the certification or consent election shall be
qualified to vote. A dismissed employee whose dismissal is being contested in a pending case shall be allowed to vote in
the election.
In case of disagreement over the voters list or over the eligibility of voters, all contested voters shall be allowed to vote.
However, their votes shall be segregated and sealed in individual envelopes in accordance with Section 9 of these Rules.
The motor pool, construction and transportation employees of the Tandang Sora campus had 149 qualified voters at the
time of the certification election. Hence, the 149 qualified voters should be used to determine the existence of a quorum.
Since a majority or 84 out of the 149 qualified voters cast their votes, a quorum existed in the certification election.
St. James further alleges that the names of the 84 voters are not on the list of its rank and file employees. On this score,
we sustain the factual finding of the DOLE that the list submitted by St. James consists of its administrative, teaching and
office personnel. These administrative, teaching and office personnel are not members of Samahang Manggagawa. They
do not belong to the bargaining unit that Samahang Manggagawa seeks to represent. Hence, the list submitted by St.
James may not be used as basis to determine the members of Samahang Manggagawa.
 
WHEREFORE, we DENY the petition. We AFFIRM the 5 September 2001 Decision and the 3 January 2002 Resolution of
the Court of Appeals in CA-G.R. SP No. 60197.
 
SO ORDERED.
G.R. No. L-14656           November 29, 1960
PHILIPPINE LAND-AIR-SEA LABOR UNION (PLASLU), petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ET AL., respondents.
Emilio Lumontad for petitioner.
Simeon S. Andres for respondent CIR.
Severino, Ferrer, Revira and Benigno for respondent AWA.
Hilado and Hilado for respondent San Carlos Milling Co.
GUTIERREZ DAVID, J.:
This is a petition to review on certiorari an order of the Court of Industrial Relations in Case No. 38 MC-Cebu certifying the
Allied Workers' Association of the Philippines, San Carlos Chapter, as the sole collective bargaining representative of the
employees of the San Carlos Milling Co., Inc.
The record shows that in said Case No. 38 MC-Cebu the Industrial Court on May 25, 1956 ordered the holding of a
certification election to determine which of the two contending labor unions therein, herein petitioner Philippine Land-Air-
Sea Labor Union (PLASLU)or respondent Allied Workers' Association of the Philippines (AWA), shall be the sole
collective bargaining agent to the employees of the San Carlos Milling Co. The pertinent portions of the court's order read
as follows:
Considering the history of bargaining relations in this case where there has only been one bargaining unit, and for
purposes of effectuating the policies of the Act, the same should be maintained. In other words, the appropriate
bargaining unit is the Employer unit composed of 602 employees including some 200 piece work (pakiao) workers
and stevedores appearing in the Employer's payrolls during the milling and off the season minus the alleged
laborers and operators of farm tractors who are hired and paid by the sugar cane planters. (Emphasis supplied.)
All the foregoing considered, the Court hereby directs the Department of Labor to conduct a certification election
in the premises of the San Carlos Milling Company, Ltd. at San Carlos, Negros Occidental for the purpose of
determining, under existing rules and regulations on the matter, which of the two (2) contending labor unions
herein, the PLASLU or the AWA shall be the sole collective bargaining agent in accordance with the provisions of
the Act. The Employer is hereby ordered to submit a list of employees appearing in its payroll during milling
season for the year 1955 to the Department of Labor which, together with the "Exhibit X-Court" now part of the
records of this case shall be used as the list of eligible voters minus employees who are performing functions of
supervisors and security guards who are excluded from participating in said election. (Emphasis supplied.)
SO ORDERED.
Prior to the holding of the election, respondent AWA filed an urgent motion to exclude 144 employees from participating in
the election. The motion, however, was denied, the Industrial Court holding that the workers sought to be excluded were
eligible to vote since they were actual employees of good standing of the respondent company during the milling season
of 1955 and were included in the company's payroll as of that date.
On September 21, 1956, the certification election was held in the premises of the San Carlos Milling Co., PLASLU
receiving 88 votes while AWA garnered 149, with 390 ballots recorded as challenged, 242 of them by the petitioner
PLASLU and 148 by the respondent AWA filed with the Industrial Court a petition contesting the election on the ground of
the ineligibility of the voters cast the 148 ballots is challenged by PLASLU were cast by legitimate employee of the
company, as they were the votes of "piece work (pakiao) workers and stevedores appearing in the employer's payroll
during the milling and off-season" of 1955. PLSLU, on the other hand, in an urgent motion filed on October 4, 1956,
questioned the validity of the 242 ballots cast by stevedores and piece workers. The motion was opposed by AWA on the
ground that as a protest of the election it was filed late. The Industrial Court, however, considered the same as an answer
to AWA'S petition, and on September 4, 1957, after hearing the arguments of the parties, ordered that all the 390
challenged ballots were opened. After the canvass, 148 votes challenged by AWA were counted in favor of PLASLU. Of
the 242 votes challenged by PLASLU, 3 were counted in its favor, 228 credited in favor of AWA, and 11 declared either
for no union or spoiled ballots. Adding the votes to the results of the certification election, the final count showed that
respondent AWA garnered a total of 377 votes as against 239 for PLASLU. Accordingly, said respondent was certified by
the Industrial Court in its order dated March 12, 1958 as the sole collective bargaining agent of the employees of the San
Carlos Milling Co. As its motion for reconsideration of the order was denied by the court en banc — with Judge Feliciano
Tabigne dissenting -- the petitioner PLASLU filed the present petition for review, contending that Industrial Court erred in
not excluding the 242 votes challenged by it from the total number of votes credited to respondent AWA.
We find petitioner's contention to be meritorious.
In order of May 25, 1956 authorizing the certification election, the trial judge of the Industrial Court directed the "list of
employees appearing in its payroll during milling season for the year 1955 ... together with the Exhibit "X-Court" now part
of the records of this case shall be used as the list of eligible voters minus employees who are performing functions of
supervisors and security guards who are excluded from participating in said election." It being undisputed that the
challenged votes were cast by casual employees consisting of stevedores and piece workers who — as stated by Judge
Tabigne in his dissent — "were not included in the list of employees appearing in the payroll of the company during the
milling season for the year 1955 nor did they appear in the Exhibit "X-Court" which formed portion of the list of personnel
allowed to vote in this certification election", the said challenged votes should have been excluded. Citing that the
appropriate bargaining unit is the employer's unit composed of 602 employees, including the piece workers and
stevedores whose votes were challenged by PLASLU, the respondent AWA argues that the challenged votes were cast
by employees eligible to vote. It will be noted, however, that these employees whose votes were challenged were hired on
temporary or casual basis and had work of a different nature from those of the laborers permitted to vote in the
certification election. In the case of Democratic Labor Union vs. Cebu Stevedoring Co., Inc., et al. (G.R. No. L-10321,
February 28, 1958) this Court had occasion to rule that in the determination of the proper constituency of a collective
bargaining unit, certain factors must be considered, among them, the employment status of the employees to be affected,
that is to say, the positions and categories of work to which they belong, and the unity of the employees' interest. And this
is so because the basic test of a bargaining unit's acceptability is whether it will best assure to all employees is whether it
will be assure to all employees the exercise of their collective bargaining rights. (See also Alhambra Cigar & Cigarette
Manufacturing Co. vs. Alhambra Employee's Association, 107 Phil., 23.) It appearing that the 242 stevedores and piece
workers, whose votes have been challenged, were employed on casual or day to day basis and have no reasonable basis
for continued or renewed employment for any appreciable substantial time — not to mention the nature of work they
perform — they cannot be considered to have such mutuality of interest as to justify their inclusion in a bargaining unit
composed of permanent or regular employees.
There is nothing to the contention that the order complained of is merely complementary to the order of the Industrial
Court dated September 4, 1957, which has become final and executory the same not having been appealed. It will be
observed that the said order of September 4, 1957, merely ordered the opening and canvassing of the challenged ballots.
Any appeal taken from said order would therefore have been premature.
Disregarding the votes cast by stevedores and piece workers which were counted in favor of the respondent AWA, the
final results of the certification election show that the petitioner PLASLU garnered a majority of the votes cast by eligible
voters. Consequently, said petitioner should be certified as the sole collective bargaining representative of the employees
of the San Carlos Milling Co.
Wherefore, the order complained of is reversed and the petitioner PLASLU is hereby certified as the collective bargaining
agent of the employees of the San Carlos Milling Company. Without costs.
G.R. No. 77395 November 29, 1988
BELYCA CORPORATION, petitioner,
vs.
DIR. PURA FERRER CALLEJA, LABOR RELATIONS, MANILA, MINISTRY OF LABOR AND EMPLOYMENT; MED-
ARBITER, RODOLFO S. MILADO, MINISTRY OF LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 10 AND
ASSOCIATED LABOR UNION (ALU-TUCP), MINDANAO REGIONAL OFFICE, CAGAYAN DE ORO CITY,
respondents.
Soriano and Arana Law Offices for petitioner.
The Solicitor General for public respondent.
Francisco D. Alas for respondent Associated Labor Unions-TUCP.
 
PARAS, J.:
This is a petition for certiorari and prohibition with preliminary injunction seeking to annul or to set aside the resolution of
the Bureau of Labor Relations dated November 24, 1986 and denying the appeal, and the Bureau's resolution dated
January 13, 1987 denying petitioner's motion for reconsideration.
The dispositive portion of the questioned resolution dated November 24, 1986 (Rollo, p. 4) reads as follows:
WHEREFORE, in view of all the foregoing considerations, the Order is affirmed and the appeal therefrom
denied.
Let, therefore, the pertinent records of the case be remanded to the office of origin for the immediate
conduct of the certification election.
The dispositive portion of the resolution dated January 13, 1987 (Rollo, p. 92) reads, as follows:
WHEREFORE, the Motion for Reconsideration filed by respondent Belyca Corporation (Livestock Agro-
Division) is hereby dismissed for lack of merit and the Bureau's Resolution dated 24 November 1986 is
affirmed. Accordingly, let the records of this case be immediately forwarded to the Office of origin for the
holding of the certification elections.
No further motion shall hereafter be entertained.
The antecedents of the case are as follows:
On June 3, 1986, private respondent Associated Labor Union (ALU)-TUCP, a legitimate labor organization duly registered
with the Ministry of Labor and Employment under Registration Certificate No. 783-IP, filed with the Regional Office No. 10,
Ministry of Labor and Employment at Cagayan de Oro City, a petition for direct certification as the sole and exclusive
bargaining agent of all the rank and file employees/workers of Belyca Corporation (Livestock and Agro-Division), a duly
organized, registered and existing corporation engaged in the business of poultry raising, piggery and planting of
agricultural crops such as corn, coffee and various vegetables, employing approximately 205 rank and file
employees/workers, the collective bargaining unit sought in the petition, or in case of doubt of the union's majority
representation, for the issuance of an order authorizing the immediate holding of a certification election (Rollo, p. 18).
Although the case was scheduled for hearing at least three times, no amicable settlement was reached by the parties.
During the scheduled hearing of July 31, 1986 they, however, agreed to submit simultaneously their respective position
papers on or before August 11, 1986 (rollo. p. 62).
Petitioner ALU-TUCP, private respondent herein, in its petition and position paper alleged, among others, (1) that there is
no existing collective bargaining agreement between the respondent employer, petitioner herein, and any other existing
legitimate labor unions; (2) that there had neither been a certification election conducted in the proposed bargaining unit
within the last twelve (12) months prior to the filing of the petition nor a contending union requesting for certification as the.
sole and exclusive bargaining representative in the proposed bargaining unit; (3) that more than a majority of respondent
employer's rank-and-file employees/workers in the proposed bargaining unit or one hundred thirty-eight (138) as of the
date of the filing of the petition, have signed membership with the ALU-TUCP and have expressed their written consent
and authorization to the filing of the petition; (4) that in response to petitioner union's two letters to the proprietor/ General
Manager of respondent employer, dated April 21, 1986 and May 8, 1 986, requesting for direct recognition as the sole and
exclusive bargaining agent of the rank-and-file workers, respondent employer has locked out 119 of its rank-and-file
employees in the said bargaining unit and had dismissed earlier the local union president, vice-president and three other
active members of the local unions for which an unfair labor practice case was filed by petitioner union against respondent
employer last July 2, 1986 before the NLRC in Cagayan de Oro City (Rollo, pp. 18; 263).<äre||anº•1àw>
Respondent employer, on the other hand, alleged in its position paper, among others, (1) that due to the nature of its
business, very few of its employees are permanent, the overwhelming majority of which are seasonal and casual and
regular employees; (2) that of the total 138 rank-and-file employees who authorized, signed and supported the filing of the
petition (a) 14 were no longer working as of June 3, 1986 (b) 4 resigned after June, 1986 (c) 6 withdrew their membership
from petitioner union (d) 5 were retrenched on June 23, 1986 (e) 12 were dismissed due to malicious insubordination and
destruction of property and (f) 100 simply abandoned their work or stopped working; (3) that the 128 incumbent
employees or workers of the livestock section were merely transferred from the agricultural section as replacement for
those who have either been dismissed, retrenched or resigned; and (4) that the statutory requirement for holding a
certification election has not been complied with by the union (Rollo, p. 26).
The Labor Arbiter granted the certification election sought for by petitioner union in his order dated August 18, 1986
(Rollo, p. 62).
On February 4, 1987, respondent employer Belyca Corporation, appealed the order of the Labor Arbiter to the Bureau of
Labor Relations in Manila (Rollo, p. 67) which denied the appeal (Rollo, p. 80) and the motion for reconsideration (Rollo,
p. 92). Thus, the instant petition received in this Court by mail on February 20, 1987 (Rollo, p. 3).
In the resolution of March 4, 1987, the Second Division of this Court required respondent Union to comment on the
petition and issued a temporary restraining order (,Rollo, p. 95).
Respondent union filed its comment on March 30, 1987 (Rollo, p. 190); public respondents filed its comment on April 8,
1987 (Rollo, p. 218).
On May 4, 1987, the Court resolved to give due course to the petition and to require the parties to submit their respective
memoranda within twenty (20) days from notice (Rollo, p. 225).
The Office of the Solicitor General manifested on June 11, 1987 that it is adopting the comment for public respondents as
its memorandum (Rollo, p. 226); memorandum for respondent ALU was filed on June 30, 1987 (Rollo, p. 231); and
memorandum for petitioner, on July 30, 1987 (Rollo, p. 435).
The issues raised in this petition are:
I
WHETHER OR NOT THE PROPOSED BARGAINING UNIT IS AN APPROPRIATE BARGAINING UNIT.
II
WHETHER OR NOT THE STATUTORY REQUIREMENT OF 30% (NOW 20%) OF THE EMPLOYEES IN
THE PROPOSED BARGAINING UNIT, ASKING FOR A CERTIFICATION ELECTION HAD BEEN
STRICTLY COMPLIED WITH.
In the instant case, respondent ALU seeks direct certification as the sole and exclusive bargaining agent of all the rank-
and-file workers of the livestock and agro division of petitioner BELYCA Corporation (Rollo, p. 232), engaged in piggery,
poultry raising and the planting of agricultural crops such as corn, coffee and various vegetables (Rollo, p. 26). But
petitioner contends that the bargaining unit must include all the workers in its integrated business concerns ranging from
piggery, poultry, to supermarts and cinemas so as not to split an otherwise single bargaining unit into fragmented
bargaining units (Rollo, p. 435).<äre||anº•1àw>
The Labor Code does not specifically define what constitutes an appropriate collective bargaining unit. Article 256 of the
Code provides:
Art. 256. Exclusive bargaining representative.—The labor organization designated or
selected by the majority of the employees in an appropriate collective bargaining unit shall
be exclusive representative of the employees in such unit for the purpose of collective
bargaining. However, an individual employee or group of employee shall have the right at
any time to present grievances to their employer.
According to Rothenberg, a proper bargaining unit maybe said to be a group of employees of a given employer,
comprised of all or less than all of 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 the law (Rothenberg in Labor Relations, p. 482).
This Court has already taken cognizance of the crucial issue of determining the proper constituency of a collective
bargaining unit.
Among the factors considered in Democratic Labor Association v. Cebu Stevedoring Co. Inc. (103 Phil 1103 [1958]) are:
"(1) will of employees (Glove Doctrine); (2) affinity and unity of employee's 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".
Under the circumstances of that case, the Court stressed the importance of the fourth factor and sustained the trial court's
conclusion that two separate bargaining units should be formed in dealing with respondent company, one consisting of
regular and permanent employees and another consisting of casual laborers or stevedores. Otherwise stated, temporary
employees should be treated separately from permanent employees. But more importantly, this Court laid down the test of
proper grouping, which is community and mutuality of interest.
Thus, in a later case, (Alhambra Cigar and Cigarette Manufacturing Co. et al. v. Alhambra Employees' Association 107
Phil. 28 [1960]) where the employment status was not at issue but the nature of work of the employees concerned; the
Court stressed the importance of the second factor otherwise known as the substantial-mutual-interest test and found no
reason to disturb the finding of the lower Court that the employees in the administrative, sales and dispensary
departments perform work which has nothing to do with production and maintenance, unlike those in the raw leaf, cigar,
cigarette and packing and engineering and garage departments and therefore community of interest which justifies the
format or existence as a separate appropriate collective bargaining unit.
Still later in PLASLU v. CIR et al. (110 Phil. 180 [1960]) where the employment status of the employees concerned was
again challenged, the Court reiterating the rulings, both in Democratic Labor Association v. Cebu Stevedoring Co. Inc.
supra and Alhambra Cigar and Cigarette Co. et al. v. Alhambra Employees' Association (supra) held that among the
factors to be considered are: employment status of the employees to be affected, that is the positions and categories of
work to which they belong, and the unity of employees' interest such as substantial similarity of work and duties.
In any event, whether importance is focused on the employment status or the mutuality of interest of the employees
concerned "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 (Democratic Labor
Association v. Cebu Stevedoring Co. Inc. supra)
Hence, still later following the substantial-mutual interest test, the Court ruled that there is a substantial difference
between the work performed by musicians and that of other persons who participate in the production of a film which
suffice to show that they constitute a proper bargaining unit. (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA
132 [1961]).
Coming back to the case at bar, it is beyond question that the employees of the livestock and agro division of petitioner
corporation perform work entirely different from those performed by employees in the supermarts and cinema. Among
others, the noted difference are: their working conditions, hours of work, rates of pay, including the categories of their
positions and employment status. As stated by petitioner corporation in its position paper, due to the nature of the
business in which its livestock-agro division is engaged very few of its employees in the division are permanent, the
overwhelming majority of which are seasonal and casual and not regular employees (Rollo, p. 26). Definitely, they have
very little in common with the employees of the supermarts and cinemas. To lump all the employees of petitioner in its
integrated business concerns cannot result in an efficacious bargaining unit comprised of constituents enjoying a
community or mutuality of interest. Undeniably, the rank and file employees of the livestock-agro division fully constitute a
bargaining unit that satisfies both requirements of classification according to employment status and of the substantial
similarity of work and duties which will ultimately assure its members the exercise of their collective bargaining rights.
II
It is undisputed that petitioner BELYCA Corporation (Livestock and Agro Division) employs more or less two hundred five
(205) rank-and-file employees and workers. It has no existing duly certified collective bargaining agreement with any
legitimate labor organization. There has not been any certification election conducted in the proposed bargaining unit
within the last twelve (12) months prior to the filing of the petition for direct certification and/or certification election with the
Ministry of Labor and Employment, and there is no contending union requesting for certification as the sole and exclusive
bargaining representative in the proposed bargaining unit.
The records show that on the filing of the petition for certification and/or certification election on June 3, 1986; 124
employees or workers which are more than a majority of the rank-and-file employees or workers in the proposed
bargaining unit had signed membership with respondent ALU-TUCP and had expressed their written consent and
authorization to the filing of the petition. Thus, the Labor Arbiter ordered the certification election on August 18, 1986 on a
finding that 30% of the statutory requirement under Art. 258 of the Labor Code has been met.
But, petitioner corporation contends that after June 3, 1986 four (4) employees resigned; six (6) subsequently withdrew
their membership; five (5) were retrenched; twelve (12) were dismissed for illegally and unlawfully barricading the
entrance to petitioner's farm; and one hundred (100) simply abandoned their work.
Petitioner's claim was however belied by the Memorandum of its personnel officer to the 119 employees dated July 28,
1986 showing that the employees were on strike, which was confirmed by the finding of the Bureau of Labor Relations to
the effect that they went on strike on July 24, 1986 (Rollo, p. 419). Earlier the local union president, Warrencio Maputi; the
Vice-president, Gilbert Redoblado and three other active members of the union Carmen Saguing, Roberto Romolo and
Iluminada Bonio were dismissed and a complaint for unfair labor practice, illegal dismissal etc. was filed by the Union in
their behalf on July 2, 1986 before the NLRC of Cagayan de Oro City (Rollo, p. 415).<äre||anº•1àw> The complaint was
amended on August 20, 1986 for respondent Union to represent Warrencio Maputi and 137 others against petitioner
corporation and Bello Casanova President and General Manager for unfair labor practice, illegal dismissal, illegal lockout,
etc. (Rollo, p. 416).
Under Art. 257 of the Labor Code once the statutory requirement is met, the Director of Labor Relations has no choice but
to call a certification election (Atlas Free Workers Union AFWU PSSLU Local v. Noriel, 104 SCRA 565 [1981]; Vismico
Industrial Workers Association (VIWA) v. Noriel, 131 SCRA 569 [1984]) It becomes in the language of the New Labor
Code "Mandatory for the Bureau to conduct a certification election for the purpose of determining the representative of the
employees in the appropriate bargaining unit and certify the winner as the exclusive bargaining representative of all
employees in the unit." (Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas v. Noriel, 72
SCRA 24 [1976]; Kapisanan Ng Mga Manggagawa v. Noriel, 77 SCRA 414 [1977]); more so when there is no existing
collective bargaining agreement. (Samahang Manggagawa Ng Pacific Mills, Inc. v. Noriel, 134 SCRA 152 [1985]); and
there has not been a certification election in the company for the past three years (PLUM Federation of Industrial and
Agrarian Workers v. Noriel, 119 SCRA 299 [1982]) as in the instant case.
It is significant to note that 124 employees out of the 205 employees of the Belyca Corporation have expressed their
written consent to the certification election or more than a majority of the rank and file employees and workers; much
more than the required 30% and over and above the present requirement of 20% by Executive Order No. 111 issued on
December 24, 1980 and applicable only to unorganized establishments under Art. 257, of the Labor Code, to which the
BELYCA Corporation belong (Ass. Trade Unions (ATU) v. Trajano, G.R. No. 75321, June 20, 1988).) More than that, any
doubt cast on the authenticity of signatures to the petition for holding a certification election cannot be a bar to its being
granted (Filipino Metals Corp. v. Ople 107 SCRA 211 [1981]). Even doubts as to the required 30% being met warrant
holding of the certification election (PLUM Federation of Industrial and Agrarian Workers v. Noriel, 119 SCRA 299 [1982]).
In fact, once the required percentage requirement has been reached, the employees' withdrawal from union membership
taking place after the filing of the petition for certification election will not affect said petition. On the contrary, the
presumption arises that the withdrawal was not free but was procured through duress, coercion or for a valuable
consideration (La Suerte Cigar and Cigarette Factory v. Director of the Bureau of Labor Relations, 123 SCRA 679 [1983]).
Hence, the subsequent disaffiliation of the six (6) employees from the union will not be counted against or deducted from
the previous number who had signed up for certification elections Vismico Industrial Workers Association (VIWA) v. Noriel
131 SCRA 569 [1984]).<äre||anº•1àw> Similarly, until a decision, final in character, has been issued declaring the strike
illegal and the mass dismissal or retrenchment valid, the strikers cannot be denied participation in the certification election
notwithstanding, the vigorous condemnation of the strike and the fact that the picketing were attended by violence. Under
the foregoing circumstances, it does not necessarily follow that the strikers in question are no longer entitled to participate
in the certification election on the theory that they have automatically lost their jobs. (Barrera v. CIR, 107 SCRA 596
[1981]). For obvious reasons, the duty of the employer to bargain collectively is nullified if the purpose of the dismissal of
the union members is to defeat the union in the consent requirement for certification election. (Samahang Manggagawa
Ng Via Mare v. Noriel, 98 SCRA 507 [1980]). As stressed by this Court, the holding of a certification election is a statutory
policy that should not be circumvented. (George and Peter Lines Inc. v. Associated Labor Unions (ALU), 134 SCRA 82
[1986]).
Finally, as a general rule, a certification election is the sole concern of the workers. The only exception is where the
employer has to file a petition for certification election pursuant to Art. 259 of the Labor Code because the latter was
requested to bargain collectively. But thereafter the role of the employer in the certification process ceases. The employer
becomes merely a bystander (Trade Union of the Phil. and Allied Services (TUPAS) v. Trajano, 120 SCRA 64 [1983]).
There is no showing that the instant case falls under the above mentioned exception. However, it will be noted that
petitioner corporation from the outset has actively participated and consistently taken the position of adversary in the
petition for direct certification as the sole and exclusive bargaining representative and/or certification election filed by
respondent Associated Labor Unions (ALU)-TUCP to the extent of filing this petition for certiorari in this Court.
Considering that a petition for certification election is not a litigation but a mere investigation of a non-adversary character
to determining the bargaining unit to represent the employees (LVN Pictures, Inc. v. Philippine Musicians Guild, supra;
Bulakena Restaurant & Caterer v. Court of Industrial Relations, 45 SCRA 88 [1972]; George Peter Lines, Inc. v.
Associated Labor Union, 134 SCRA 82 [1986]; Tanduay Distillery Labor Union v. NLRC, 149 SCRA 470 [1987]), and its
only purpose is to give the employees true representation in their collective bargaining with an employer (Confederation of
Citizens Labor Unions CCLU v. Noriel, 116 SCRA 694 [1982]), there appears to be no reason for the employer's objection
to the formation of subject union, much less for the filing of the petition for a certification election.
PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit (b) resolution of the Bureau of Labor Relations
dated Nov. 24, 1986 is AFFIRMED; and the temporary restraining order issued by the Court on March 4, 1987 is LIFTED
permanently.
SO ORDERED.
G.R. No. L-20044             April 30, 1964
NATIONAL UNION OF RESTAURANT WORKERS (PTUC), petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ET AL., respondents.
Alejandro C. Villavieja for petitioner.
Padilla Law Office for respondents.
BAUTISTA ANGELO, J.:
On June 9, 1960, a complaint for unfair labor practice was lodged against the owners of Tres Hermanas Restaurant,
particularly Mrs. Felisa Herrera, on the ground, among others, that respondents refused to bargain collectively with the
complaining union; respondents made a counter-proposal in the sense that they would bargain with said union and would
accept its demands if the same would become a company union, and one Martin Briones, an employee, was separated
from the service because he was found to be the organizer and adviser of the complaining union.
After respondents had filed their answer, wherein they denied the charges of unfair labor practice filed against them,
Judge Emiliano C. Tabigne, who was assigned to act on the complaint, received the evidence, and on July 28, 1961,
rendered decision exonerating respondents. He found that the charges were not proven and dismissed the complaint.
The case was taken to the court en banc, where in a split decision the court affirmed the decision of Judge Tabigne. The
case is now before us on a petition for review.
The important findings of the court a quo which are now disputed by the union are: (1) respondents did not refuse to
bargain collectively with the union as in fact they met its members with the only particularity that they were not able to
accept all the demands of the union; (2) respondents did not interfere, coerce or restrain their employees in the exercise
of their right to join the complaining union; and (3) the dismissal of Martin Briones was due to the concern of Mrs. Herrera
for her life on account of the hatred that Briones had entertained against her, she being always with him in the car he used
to drive during their business routine. It is claimed that Judge Tabigne committed a grave abuse of discretion in making
the above findings.
Anent the first issue, the court a quo found that in the letter sent by the union to respondents containing its demands
marked in the case as Exhibit 1, there appears certain marks, opposite each demand, such as a check for those demands
to which Mrs. Felisa Herrera was agreeable, a cross signifying the disapproval of Mrs. Herrera, and a circle regarding
those demands which were left open for discussion on some future occasion that the parties may deem convenient. Such
markings were made during the discussion of the demands in the meeting called by respondents on May 3, 1960 at their
restaurant in Quezon City. The court a quo concluded that the fact that respondent Herrera had agreed to some of the
demands shows that she did not refuse to bargain collectively with the complaining union.
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. It is true that under Section 14 of Republic Act 875 whenever a party serves a written notice upon the employer
making some demands the latter shall reply thereto not later than 10 days from receipt thereof, but this rendition is merely
procedural and as such its non-compliance cannot be deemed to be an act of unfair labor practice. The fact is that
respondents did not ignore the letter sent by the union so much so that they called a meeting to discuss its demands, as
already stated elsewhere.
It is contended that respondents refused to bargain with the complaining union as such even if they called a meeting of its
officers and employees thereby concluding that they did not desire to enter into a bargaining agreement with said union.
This conclusion has no rational relation with the main premise of the union for it is belied by the fact that respondents did
actually agree and bargain with the representatives of the union. While it is true that respondents denied the capacity of
the complaining union to bargain collectively with the respondents this is because they were of the impression that before
a union could have that capacity it must first be certified by the Court of Industrial Relations as the duly authorized
bargaining unit, in fact this is what they stated in their answer to the petition for certification filed by said union before the
Court of Industrial Relations (See Case No. 763-MC). In said case, another union known as the International Labor and
Marine Union of the Philippines claimed to represent the majority of the employees of respondent restaurant, and this is
what it alleged in a letter sent to the manager of respondents dated May 25, 1962.
Anent the second issue, the claim of the complaining union has also no basis. This is premised on a document marked
Exhibit C which contains certain alleged counter-proposals tendered to complainant union the nature of which would
apparently indicate that respondents made use of coercion which interferes with the right of the employees to self-
organization. On this document certain notations were made by one Ernesto Tan which are indeed derogatory and which
were allegedly made by him upon instructions of respondent Felisa Herrera. Thus, the pertinent notation on which the
union relies is one which states that respondent Herrera would be willing to recognize the union "if union would be willing
to recognize the union", which would indeed show that Mrs. Herrera interfered with the employees' right to self-
organization. But respondents denied that they ever authorized Ernesto Tan to make such notation or to represent them in
the negotiations, for he was merely a bookkeeper whose duties were confined to the keeping and examination of their
books of accounts and sales invoices. It appears that he was not even invited to the meeting but merely volunteered to be
present and made those notations on his own account and initiative. The court a quo gave credence to this stand of
respondents, as can be seen in the following finding: "There is no evidence to show that Ernesto Tan was authorized to
represent management in the meeting held on May 3, 1960, and that Ernesto Tan, being a mere bookkeeper of
respondents, he is not a part of management although he is the nephew of Mrs. Herrera." We are not prepared to disturb
this finding of the court a quo.
Finally, it is alleged in connection with the third issue that respondent Herrera dismissed Martin Briones without sufficient
cause other than his being the organizer and adviser of the complaining union. It however appears from the very
testimony of Martin Briones that he is not the only one who organized the complaining union but together with Galicano
Apiz, Pablo Cabreros and Juan Morales, with the particularity that, as Briones himself had intimated, Apiz, Cabreros and
Morales were more active than himself in organizing the union so much so that they were appointed officers of that union.
And yet, Apiz, Cabreros and Morales were never touched and continued to be employed in respondents' restaurant. For
this reason, the court a quo discredited the claim that Briones was dismissed because of union activities but rather
because of the threats he made on Mrs. Herrera, as communicated to her by her sister Aureata. The following is the
finding made by the court a quo on this point: "If it is the union activities of complainant's members that Mrs. Herrera did
not like, Apiz, Cabreros and Morales should have been dismissed by her also, because said persons were more active
than Briones in the organization of the union. Verily, it was not the union activities of Martin Briones that prompted Mrs.
Herrera to dismiss him, but her fear for the safety of her life on account of the smouldering members of hatred that the
former had against the latter, the said persons being always together in her car driven by Briones, during business
routine." This finding finds support in the evidence.
On the strength of the foregoing considerations, we find no justification for disturbing the findings of the court a quo which
led to the dismissal of the complaint under consideration.
WHEREFORE, the decision appealed from is affirmed. No costs.
[G.R. No. 141471. September 18, 2000]
COLEGIO DE SAN JUAN DE LETRAN, petitioner, vs. ASSOCIATION OF EMPLOYEES AND FACULTY OF LETRAN
and ELEONOR AMBAS, respondents.
DECISION
KAPUNAN, J.:
This is a petition for review on certiorari seeking the reversal of the Decision of the Court of Appeals, promulgated on 9
August 1999, dismissing the petition filed by Colegio de San Juan de Letran (hereinafter, "petitioner") and affirming the
Order of the Secretary of Labor, dated December 2, 1996, finding the petitioner guilty of unfair labor practice on two (2)
counts.
The facts, as found by the Secretary of Labor and affirmed by the Court of Appeals, are as follows:
"On December 1992, Salvador Abtria, then President of respondent union, Association of Employees and Faculty of
Letran, initiated the renegotiation of its Collective Bargaining Agreement with petitioner Colegio de San Juan de Letran for
the last two (2) years of the CBA's five (5) year lifetime from 1989-1994. On the same year, the union elected a new set of
officers wherein private respondent Eleanor Ambas emerged as the newly elected President (Secretary of Labor and
Employment's Order dated December 2, 1996, p. 12).
Ambas wanted to continue the renegotiation of the CBA but petitioner, through Fr. Edwin Lao, claimed that the CBA was
already prepared for signing by the parties. The parties submitted the disputed CBA to a referendum by the union
members, who eventually rejected the said CBA (Ibid, p. 2).
Petitioner accused the union officers of bargaining in bad faith before the National Labor Relations Commission (NLRC).
Labor Arbiter Edgardo M. Madriaga decided in favor of petitioner. However, the Labor Arbiter's decision was reversed on
appeal before the NLRC (Ibid, p. 2).
On January 1996, the union notified the National Conciliation and Mediation Board (NCMB) of its intention to strike on the
grounds (sic) of petitioner's: non-compliance with the NLRC (1) order to delete the name of Atty. Federico Leynes as the
union's legal counsel; and (2) refusal to bargain (Ibid, p. 1).
On January 18, 1996, the parties agreed to disregard the unsigned CBA and to start negotiation on a new five-year CBA
starting 1994-1999. On February 7, 1996, the union submitted its proposals to petitioner, which notified the union six days
later or on February 13, 1996 that the same had been submitted to its Board of Trustees. In the meantime, Ambas was
informed through a letter dated February 15, 1996 from her superior that her work schedule was being changed from
Monday to Friday to Tuesday to Saturday. Ambas protested and requested management to submit the issue to a
grievance machinery under the old CBA (Ibid, p. 2-3).
Due to petitioner's inaction, the union filed a notice of strike on March 13, 1996. The parties met on March 27, 1996 before
the NCMB to discuss the ground rules for the negotiation. On March 29, 1996, the union received petitioner's letter
dismissing Ambas for alleged insubordination. Hence, the union amended its notice of strike to include Ambas' dismissal.
(Ibid, p. 2-3).
On April 20, 1996, both parties again discussed the ground rules for the CBA renegotiation. However, petitioner stopped
the negotiations after it purportedly received information that a new group of employees had filed a petition for certification
election (Ibid, p. 3).
On June 18, 1996, the union finally struck. On July 2, 1996, public respondent the Secretary of Labor and Employment
assumed jurisdiction and ordered all striking employees including the union president to return to work and for petitioner to
accept them back under the same terms and conditions before the actual strike. Petitioner readmitted the striking
members except Ambas. The parties then submitted their pleadings including their position papers which were filed on
July 17, 1996 ( Ibid, pp. 2-3).
On December 2, 1996, public respondent issued an order declaring petitioner guilty of unfair labor practice on two counts
and directing the reinstatement of private respondent Ambas with backwages. Petitioner filed a motion for reconsideration
which was denied in an Order dated May 29, 1997 (Petition, pp. 8-9)."[1]
Having been denied its motion for reconsideration, petitioner sought a review of the order of the Secretary of Labor and
Employment before the Court of Appeals. The appellate court dismissed the petition and affirmed the findings of the
Secretary of Labor and Employment. The dispositive portion of the decision of the Court of Appeals sets forth:
WHEREFORE, foregoing premises considered, this Petition is DISMISSED, for being without merit in fact and in law.
With cost to petitioner.
SO ORDERED.[2]
Hence, petitioner comes to this Court for redress.
Petitioner ascribes the following errors to the Court of Appeals:
I
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION IN
AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND EMPLOYMENT WHICH DECLARES PETITIONER
LETRAN GUILTY OF REFUSAL TO BARGAIN (UNFAIR LABOR PRACTICE) FOR SUSPENDING THE COLLECTIVE
BARGAINING NEGOTIATIONS WITH RESPONDENT AEFL, DESPITE THE FACT THAT THE SUSPENSION OF THE
NEGOTIATIONS WAS BROUGHT ABOUT BY THE FILING OF A PETITION FOR CERTIFICATION ELECTION BY A
RIVAL UNION WHO CLAIMED TO COMMAND THE MAJORITY OF THE EMPLOYEES WITHIN THE BARGAINING
UNIT.
II
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION IN
AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND EMPLOYMENT WHICH DECLARES PETITIONER
LETRAN GUILTY OF UNFAIR LABOR PRACTICE FOR DISMISSING RESPONDENT AMBAS, DESPITE THE FACT
THAT HER DISMISSAL WAS CAUSED BY HER INSUBORDINATE ATTITUDE, SPECIFICALLY, HER REFUSAL TO
FOLLOW THE PRESCRIBED WORK SCHEDULE.[3]
The twin questions of law before this Court are the following: (1) whether petitioner is guilty of unfair labor practice by
refusing to bargain with the union when it unilaterally suspended the ongoing negotiations for a new Collective Bargaining
Agreement (CBA) upon mere information that a petition for certification has been filed by another legitimate labor
organization? (2) whether the termination of the union president amounts to an interference of the employees' right to self-
organization?
The petition is without merit.
After a thorough review of the records of the case, this Court finds that petitioner has not shown any compelling reason
sufficient to overturn the ruling of the Court of Appeals affirming the findings of the Secretary of Labor and Employment. It
is axiomatic that the findings of fact of the Court of Appeals are conclusive and binding on the Supreme Court and will not
be reviewed or disturbed on appeal. In this case, the petitioner failed to show any extraordinary circumstance justifying a
departure from this established doctrine.
As regards the first issue, Article 252 of the Labor Code defines the meaning of the phrase "duty to bargain collectively,"
as follows:
Art. 252. Meaning of duty to bargain collectively. - The duty to bargain collectively means the performance of a mutual
obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with
respect to wages, hours of work and all other terms and conditions of employment including proposals for adjusting any
grievances or questions arising under such agreement and executing a contract incorporating such agreements if
requested by either party but such duty does not compel any party to agree to a proposal or to make any concession.
Noteworthy in the above definition is the requirement on both parties of the performance of the mutual obligation to meet
and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. Undoubtedly,
respondent Association of Employees and Faculty of Letran (AEFL) (hereinafter, "union") lived up to this requisite when it
presented its proposals for the CBA to petitioner on February 7, 1996. On the other hand, petitioner devised ways and
means in order to prevent the negotiation.
Petitioner's utter lack of interest in bargaining with the union is obvious in its failure to make a timely reply to the proposals
presented by the latter. More than a month after the proposals were submitted by the union, petitioner still had not made
any counter-proposals. This inaction on the part of petitioner prompted the union to file its second notice of strike on
March 13, 1996. Petitioner could only offer a feeble explanation that the Board of Trustees had not yet convened to
discuss the matter as its excuse for failing to file its reply. This is a clear violation of Article 250 of the Labor Code
governing the procedure in collective bargaining, to wit:
Art. 250. Procedure in collective bargaining. - The following procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of
its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice.
[4]
xxx
As we have held in the case of Kiok Loy vs. NLRC,[5] the company's refusal to make counter-proposal to the union's
proposed CBA is an indication of its bad faith. Where the employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively.[6] In the case at bar,
petitioner's actuation show a lack of sincere desire to negotiate rendering it guilty of unfair labor practice.
Moreover, the series of events that transpired after the filing of the first notice of strike in January 1996 show petitioner's
resort to delaying tactics to ensure that negotiation would not push through. Thus, on February 15, 1996, or barely a few
days after the union proposals for the new CBA were submitted, the union president was informed by her superior that her
work schedule was being changed from Mondays to Fridays to Tuesdays to Saturdays. A request from the union
president that the issue be submitted to a grievance machinery was subsequently denied. Thereafter, the petitioner and
the union met on March 27, 1996 to discuss the ground rules for negotiation. However, just two days later, or on March
29, 1996, petitioner dismissed the union president for alleged insubordination. In its final attempt to thwart the bargaining
process, petitioner suspended the negotiation on the ground that it allegedly received information that a new group of
employees called the Association of Concerned Employees of Colegio (ACEC) had filed a petition for certification election.
Clearly, petitioner tried to evade its duty to bargain collectively.
Petitioner, however, argues that since it has already submitted the union's proposals to the Board of Trustees and that a
series of conferences had already been undertaken to discuss the ground rules for negotiation such should already be
considered as acts indicative of its intention to bargain. As pointed out earlier, the evidence on record belie the assertions
of petitioner.
Petitioner, likewise, claims that the suspension of negotiation was proper since by the filing of the petition for certification
election the issue on majority representation of the employees has arose. According to petitioner, the authority of the
union to negotiate on behalf of the employees was challenged when a rival union filed a petition for certification election.
Citing the case of Lakas Ng Manggagawang Makabayan v. Marcelo Enterprises,[7] petitioner asserts that in view of the
pendency of the petition for certification election, it had no duty to bargain collectively with the union.
We disagree. In order to allow the employer to validly suspend the bargaining process there must be a valid petition for
certification election raising a legitimate representation issue. Hence, the mere filing of a petition for certification election
does not ipso facto justify the suspension of negotiation by the employer. The petition must first comply with the provisions
of the Labor Code and its Implementing Rules. Foremost is that a petition for certification election must be filed during the
sixty-day freedom period. The "Contract Bar Rule" under Section 3, Rule XI, Book V, of the Omnibus Rules Implementing
the Labor Code, provides that: " . If a collective bargaining agreement has been duly registered in accordance with Article
231 of the Code, a petition for certification election or a motion for intervention can only be entertained within sixty (60)
days prior to the expiry date of such agreement." The rule is based on Article 232,[8] in relation to Articles 253, 253-A and
256 of the Labor Code. No petition for certification election for any representation issue may be filed after the lapse of the
sixty-day freedom period. The old CBA is extended until a new one is signed. The rule is that despite the lapse of the
formal effectivity of the CBA the law still considers the same as continuing in force and effect until a new CBA shall have
been validly executed.[9] Hence, the contract bar rule still applies.[10] The purpose is to ensure stability in the relationship
of the workers and the company by preventing frequent modifications of any CBA earlier entered into by them in good
faith and for the stipulated original period.[11]
In the case at bar, the lifetime of the previous CBA was from 1989-1994. The petition for certification election by ACEC,
allegedly a legitimate labor organization, was filed with the Department of Labor and Employment (DOLE) only on May 26,
1996. Clearly, the petition was filed outside the sixty-day freedom period. Hence, the filing thereof was barred by the
existence of a valid and existing collective bargaining agreement. Consequently, there is no legitimate representation
issue and, as such, the filing of the petition for certification election did not constitute a bar to the ongoing negotiation.
Reliance, therefore, by petitioner of the ruling in Lakas Ng Manggagawang Makabayan v. Marcelo Enterprises[12] is
misplaced since that case involved a legitimate representation issue which is not present in the case at bar.
Significantly, the same petition for certification election was dismissed by the Secretary of Labor on October 25, 1996. The
dismissal was upheld by this Court in a Resolution, dated April 21, 1997.[13]
In view of the above, there is no doubt that petitioner is guilty of unfair labor practice by its stern refusal to bargain in good
faith with respondent union.
Concerning the issue on the validity of the termination of the union president, we hold that the dismissal was effected in
violation of the employees' right to self-organization.
To justify the dismissal, petitioner asserts that the union president was terminated for cause, allegedly for insubordination
for her failure to comply with the new working schedule assigned to her, and pursuant to its managerial prerogative to
discipline and/or dismiss its employees. While we recognize the right of the employer to terminate the services of an
employee for a just or authorized cause, nevertheless, the dismissal of employees must be made within the parameters of
law and pursuant to the tenets of equity and fair play.[14] The employer's right to terminate the services of an employee
for just or authorized cause must be exercised in good faith.[15] More importantly, it must not amount to interfering with,
restraining or coercing employees in the exercise of their right to self-organization because it would amount to, as in this
case, unlawful labor practice under Article 248 of the Labor Code.
The factual backdrop of the termination of Ms. Ambas leads us to no other conclusion that she was dismissed in order to
strip the union of a leader who would fight for the right of her co-workers at the bargaining table. Ms. Ambas, at the time of
her dismissal, had been working for the petitioner for ten (10) years already. In fact, she was a recipient of a loyalty award.
Moreover, for the past ten (10) years her working schedule was from Monday to Friday. However, things began to change
when she was elected as union president and when she started negotiating for a new CBA. Thus, it was when she was
the union president and during the period of tense and difficult negotiations when her work schedule was altered from
Mondays to Fridays to Tuesdays to Saturdays. When she did not budge, although her schedule was changed, she was
outrightly dismissed for alleged insubordination.[16] We quote with approval the following findings of the Secretary of
Labor on this matter, to wit:
"Assuming arguendo that Ms. Ambas was guilty, such disobedience was not, however, a valid ground to teminate her
employment. The disputed management action was directly connected with Ms. Ambas' determination to change the
complexion of the CBA. As a matter of fact, Ms. Ambas' unflinching position in faithfully and truthfully carrying out her
duties and responsibilities to her Union and its members in getting a fair share of the fruits of their collective endeavors
was the proximate cause for her dismissal, the charge of insubordination being merely a ploy to give a color of legality to
the contemplated management action to dismiss her. Thus, the dismissal of Ms. Ambas was heavily tainted with and
evidently done in bad faith. Manifestly, it was designed to interfere with the members' right to self-organization.
Admittedly, management has the prerogative to discipline its employees for insubordination. But when the exercise of
such management right tends to interfere with the employees' right to self-organization, it amounts to union-busting and is
therefore a prohibited act. The dismissal of Ms. Ambas was clearly designed to frustrate the Union in its desire to forge a
new CBA with the College that is reflective of the true wishes and aspirations of the Union members. Her dismissal was
merely a subterfuge to get rid of her, which smacks of a pre-conceived plan to oust her from the premises of the College.
It has the effect of busting the Union, stripping it of its strong-willed leadership. When management refused to treat the
charge of insubordination as a grievance within the scope of the Grievance Machinery, the action of the College in finally
dismissing her from the service became arbitrary, capricious and whimsical, and therefore violated Ms. Ambas' right to
due process."[17]
In this regard, we find no cogent reason to disturb the findings of the Court of Appeals affirming the findings of the
Secretary of Labor and Employment. The right to self-organization of employees must not be interfered with by the
employer on the pretext of exercising management prerogative of disciplining its employees. In this case, the totality of
conduct of the employer shows an evident attempt to restrain the employees from fully exercising their rights under the
law. This cannot be done under the Labor Code.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED.
G.R. No. L-54334 January 22, 1986
KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN),
respondents.
Ablan and Associates for petitioner.
Abdulcadir T. Ibrahim for private respondent.
 
CUEVAS, J.:

Petition for certiorari to annul the decision 1 of the National Labor Relations Commission (NLRC) dated July 20, 1979
which found petitioner Sweden Ice Cream guilty of unfair labor practice for unjustified refusal to bargain, in violation of par.
(g) of Article 249 2 of the New Labor Code, 3 and declared the draft proposal of the Union for a collective bargaining
agreement as the governing collective bargaining agreement between the employees and the management.
The pertinent background facts are as follows:
In a certification election held on October 3, 1978, the Pambansang Kilusang Paggawa (Union for short), a legitimate late
labor federation, won and was subsequently certified in a resolution dated November 29, 1978 by the Bureau of Labor
Relations as the sole and exclusive bargaining agent of the rank-and-file employees of Sweden Ice Cream Plant
(Company for short). The Company's motion for reconsideration of the said resolution was denied on January 25, 1978.

Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the Company with two copies of its
proposed collective bargaining agreement. At the same time, it requested the Company for its counter proposals. Eliciting
no response to the aforesaid request, the Union again wrote the Company reiterating its request for collective bargaining
negotiations and for the Company to furnish them with its counter proposals. Both requests were ignored and remained
unacted upon by the Company.
Left with no other alternative in its attempt to bring the Company to the bargaining table, the Union, on February 14, 1979,
filed a "Notice of Strike", with the Bureau of Labor Relations (BLR) on ground of unresolved economic issues in collective
bargaining. 5
Conciliation proceedings then followed during the thirty-day statutory cooling-off period. But all attempts towards an
amicable settlement failed, prompting the Bureau of Labor Relations to certify the case to the National Labor Relations
Commission (NLRC) for compulsory arbitration pursuant to Presidential Decree No. 823, as amended. The labor arbiter,
Andres Fidelino, to whom the case was assigned, set the initial hearing for April 29, 1979. For failure however, of the
parties to submit their respective position papers as required, the said hearing was cancelled and reset to another date.
Meanwhile, the Union submitted its position paper. The Company did not, and instead requested for a resetting which was
granted. The Company was directed anew to submit its financial statements for the years 1976, 1977, and 1978.
The case was further reset to May 11, 1979 due to the withdrawal of the Company's counsel of record, Atty. Rodolfo dela
Cruz. On May 24, 1978, Atty. Fortunato Panganiban formally entered his appearance as counsel for the Company only to
request for another postponement allegedly for the purpose of acquainting himself with the case. Meanwhile, the
Company submitted its position paper on May 28, 1979.
When the case was called for hearing on June 4, 1979 as scheduled, the Company's representative, Mr. Ching, who was
supposed to be examined, failed to appear. Atty. Panganiban then requested for another postponement which the labor
arbiter denied. He also ruled that the Company has waived its right to present further evidence and, therefore, considered
the case submitted for resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National Labor Relations Commission. On July
20, 1979, the National Labor Relations Commission rendered its decision, the dispositive portion of which reads as
follows:
WHEREFORE, the respondent Sweden Ice Cream is hereby declared guilty of unjustified refusal to
bargain, in violation of Section (g) Article 248 (now Article 249), of P.D. 442, as amended. Further, the
draft proposal for a collective bargaining agreement (Exh. "E ") hereto attached and made an integral part
of this decision, sent by the Union (Private respondent) to the respondent (petitioner herein) and which is
hereby found to be reasonable under the premises, is hereby declared to be the collective agreement
which should govern the relationship between the parties herein.
SO ORDERED. (Emphasis supplied)
Petitioner now comes before Us assailing the aforesaid decision contending that the National Labor Relations
Commission acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction
in rendering the challenged decision. On August 4, 1980, this Court dismissed the petition for lack of merit. Upon motion
of the petitioner, however, the Resolution of dismissal was reconsidered and the petition was given due course in a
Resolution dated April 1, 1981.
Petitioner Company now maintains that its right to procedural due process has been violated when it was precluded from
presenting further evidence in support of its stand and when its request for further postponement was denied. Petitioner
further contends that the National Labor Relations Commission's finding of unfair labor practice for refusal to bargain is
not supported by law and the evidence considering that it was only on May 24, 1979 when the Union furnished them with
a copy of the proposed Collective Bargaining Agreement and it was only then that they came to know of the Union's
demands; and finally, that the Collective Bargaining Agreement approved and adopted by the National Labor Relations
Commission is unreasonable and lacks legal basis.
The petition lacks merit. Consequently, its dismissal is in order.

Collective bargaining which is defined as negotiations towards a collective agreement, 6 is one of the democratic
frameworks under the New Labor Code, designed to stabilize the relation between labor and management and to create a
climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the Union and is
characterized as a legal obligation. So much so that Article 249, par. (g) of the Labor Code makes it an unfair labor
practice for an employer to refuse "to meet and convene promptly and expeditiously in good faith for the purpose of
negotiating an agreement with respect to wages, hours of work, and all other terms and conditions of employment
including proposals for adjusting any grievance or question arising under such an agreement and executing a contract
incorporating such agreement, if requested by either party.
While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty to initiate
contract negotiation. 7 The mechanics of collective bargaining is set in motion only when the following jurisdictional
preconditions are present, namely, (1) possession of the status of majority representation of the employees'
representative in accordance with any of the means of selection or designation provided for by the Labor Code; (2) proof
of majority representation; and (3) a demand to bargain under Article 251, par. (a) of the New Labor Code . ... all of which
preconditions are undisputedly present in the instant case.
From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no doubt that the Union
has a valid cause to complain against its (Company's) attitude, the totality of which is indicative of the latter's disregard of,
and failure to live up to, what is enjoined by the Labor Code — to bargain in good faith.
We are in total conformity with respondent NLRC's pronouncement that petitioner Company is GUILTY of unfair labor
practice. It has been indubitably established that (1) respondent Union was a duly certified bargaining agent; (2) it made a
definite request to bargain, accompanied with a copy of the proposed Collective Bargaining Agreement, to the Company
not only once but twice which were left unanswered and unacted upon; and (3) the Company made no counter proposal
whatsoever all of which conclusively indicate lack of a sincere desire to negotiate. 8 A Company's refusal to make counter
proposal if considered in relation to the entire bargaining process, may indicate bad faith and this is specially true where
the Union's request for a counter proposal is left unanswered. 9 Even during the period of compulsory arbitration before
the NLRC, petitioner Company's approach and attitude-stalling the negotiation by a series of postponements, non-
appearance at the hearing conducted, and undue delay in submitting its financial statements, lead to no other conclusion
except that it is unwilling to negotiate and reach an agreement with the Union. Petitioner has not at any instance, evinced
good faith or willingness to discuss freely and fully the claims and demands set forth by the Union much less justify its
opposition thereto. 10
The case at bar is not a case of first impression, for in the Herald Delivery Carriers Union (PAFLU) vs. Herald Publications
11 the rule had been laid down that "unfair labor practice is committed when it is shown that the respondent employer,
after having been served with a written bargaining proposal by the petitioning Union, did not even bother to submit an
answer or reply to the said proposal This doctrine was reiterated anew in Bradman vs. Court of Industrial Relations 12
wherein it was further ruled that "while the law does not compel the parties to reach an agreement, it does contemplate
that both parties will approach the negotiation with an open mind and make a reasonable effort to reach a common
ground of agreement
As a last-ditch attempt to effect a reversal of the decision sought to be reviewed, petitioner capitalizes on the issue of due
process claiming, that it was denied the right to be heard and present its side when the Labor Arbiter denied the
Company's motion for further postponement.
Petitioner's aforesaid submittal failed to impress Us. Considering the various postponements granted in its behalf, the
claimed denial of due process appeared totally bereft of any legal and factual support. As herein earlier stated, petitioner
had not even honored respondent Union with any reply to the latter's successive letters, all geared towards bringing the
Company to the bargaining table. It did not even bother to furnish or serve the Union with its counter proposal despite
persistent requests made therefor. Certainly, the moves and overall behavior of petitioner-company were in total
derogation of the policy enshrined in the New Labor Code which is aimed towards expediting settlement of economic
disputes. Hence, this Court is not prepared to affix its imprimatur to such an illegal scheme and dubious maneuvers.
Neither are WE persuaded by petitioner-company's stand that the Collective Bargaining Agreement which was approved
and adopted by the NLRC is a total nullity for it lacks the company's consent, much less its argument that once the
Collective Bargaining Agreement is implemented, the Company will face the prospect of closing down because it has to
pay a staggering amount of economic benefits to the Union that will equal if not exceed its capital. Such a stand and the
evidence in support thereof should have been presented before the Labor Arbiter which is the proper forum for the
purpose.
We agree with the pronouncement that it is not obligatory upon either side of a labor controversy to precipitately accept or
agree to the proposals of the other. But an erring party should not be tolerated and allowed with impunity to resort to
schemes feigning negotiations by going through empty gestures. 13 More so, as in the instant case, where the
intervention of the National Labor Relations Commission was properly sought for after conciliation efforts undertaken by
the BLR failed. The instant case being a certified one, it must be resolved by the NLRC pursuant to the mandate of P.D.
873, as amended, which authorizes the said body to determine the reasonableness of the terms and conditions of
employment embodied in any Collective Bargaining Agreement. To that extent, utmost deference to its findings of
reasonableness of any Collective Bargaining Agreement as the governing agreement by the employees and management
must be accorded due respect by this Court.
WHEREFORE, the instant petition is DISMISSED. The temporary restraining order issued on August 27, 1980, is
LIFTED and SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
[G.R. No. 104624. ]
SAN PEDRO HOSPITAL OF DIGOS, INC., petitioner, vs. SECRETARY OF LABOR, THE SAN PEDRO HOSPITAL
EMPLOYEES UNION - NATIONAL FEDERATION OF LABOR, respondents.
DECISION
PANGANIBAN, J.:
When is temporary suspension of business considered not done in good faith? Can the Secretary of Labor compel
management to enter into a new collective bargaining agreement with the union while the business enterprise is
undergoing a temporary suspension of operations? Can the Secretary grant backwages without deciding the legality of a
strike?
These questions are addressed by the Court in resolving this Petition for Certiorari, which seeks nullification of the Orders
dated [1] and January 31, 1992[2] of the Secretary of Labor and Employment[3] rendered in DOLE Case No. NCMB-
RBXI-NS-03-017-91 entitled "In Re: Labor Dispute at San Pedro Hospital of Digos". Said orders directed herein petitioner
hospital to pay backwages for the period from June 21, 1991, to December 15, 1991 to returning workers who are
members of San Pedro Hospital Employees Union and to enter into a new collective bargaining agreement with the union.
The Facts
Petitioner San Pedro Hospital of Digos, Inc. is a charitable, non-stock, non-profit medical and educational training
corporation. Petitioner had a three-year collective bargaining agreement (CBA) covering the period December 15, 1987
until December 15, 1990,[4] with herein private respondent, Nagkahiusang Mamumuo sa San Pedro Hospital of Digos -
National Federation of Labor (NAMASAP-NFL), the exclusive bargaining agent of the hospital's rank-and-file workers.
On , the parties formally commenced negotiations for the renewal of their CBA, and presented their respective proposals.
The union's demands included wage increases and inclusion in the CBA of a provision for union shop.[5]
Respondent union proposed a cumulative salary increase of sixty pesos per day for three years, broken down as follows:
(a) thirty pesos per day for the first year; (b) twenty pesos per day for the second year; and (c) ten pesos per day for the
third year. Petitioner, claiming it was incurring losses on account of a serious financial crisis, counter-offered an increase
of two pesos per day for each of the three years of the new CBA, with a wage reopening clause. Petitioner also adamantly
opposed the proposal for a union security clause.
After the parties failed to reach agreement on the issues, the union during the meeting of declared a deadlock.
On , respondent union saturated petitioner's premises with streamers and picketed the hospital. The operations of the
hospital having come to a grinding halt, the hospital management considered the union actions as tantamount to a strike.
However, it was only on that respondent union filed a Notice of Strike with the National Conciliation and Mediation Board
(NCMB). On April 10, 11, and 18, 1991, the NCMB held conciliation conferences but failed to settle the deadlock, as the
parties remained adamant in their positions.[6]
On , respondent union struck. Despite the NCMB's call for a conciliation conference, nurses and nurse aides who were
members of the union abandoned their respective departments and joined the picket line a week later. Doctors began
leaving the hospital and the number of patients dwindled. The last patient was discharged on .
On , a "Notice of Temporary Suspension of Operations" was issued by petitioner hospital and submitted to the local office
of the NCMB on . Similar notices were individually delivered to union members, but only fourteen out of the seventy-four
rank-and-file employees/union members acknowledged receipt thereof. Petitioner also alleged that on , the
resident/consultant physicians abandoned the hospital because there were no more patients.[7]
On the same day, , then Secretary of Labor Nieves Confesor assumed jurisdiction over the labor dispute and issued an
order[8] providing that:
"WHEREFORE, ABOVE PREMISES CONSIDERED, this Office hereby assumes jurisdiction over the entire labor dispute
at the San Pedro Hospital of Digos.
Accordingly, all striking workers are hereby directed to return to work within twenty-four (24) hours from receipt of a copy
of this Order and for the Hospital to accept all returning workers under the same terms and conditions of employment
existing prior to the work stoppage.
The parties are likewise directed to cease and desist from committing any act that may aggravate the prevailing
precarious situation.
To expedite the resolution of this dispute, the partes are directed to submit their respective position papers and evidence
within ten (10) days from receipt of this Order."
However, this order was received by petitioner only on . In the meantime, it had already notified the DOLE via its letter
dated , which was received by the DOLE on , that it would temporarily suspend operations for six (6) months effective , or
up to . Petitioner thus refused the return of its striking workers on account of such suspension of operations.
Several conferences were held by the NCMB Conciliator where petitioner stated it would submit the necessary documents
showing its serious financial condition "should the need be in earnest".[9]
On , respondent union through its legal counsel wrote the Executive conciliator/Mediator of the NCMB in informing the
latter that the union members were willing to return to their former work assignments at the hospital in compliance with the
order of the Labor Secretary.
On , petitioner filed its position paper in which it maintained that the aforementioned order to accept all returning workers
had become moot and academic in view of the suspension of its operations. Moreover, said order could not substitute for
(and override) the decision of the petitioner hospital's Board of Trustees to suspend operations for six months, such
decision being purely a management prerogative.[10]
Respondent union filed its own position paper on July 13, 1991 alleging that its very existence was threatened because
management was convincing new employees not to join respondent union; that the union shop provision was
necessitated precisely because of management's actuations; that petitioner was not in serious financial condition; and that
petitioner acted in bad faith and circumvented the return-to-work order when it suspended operations.[11]
On , DOLE Secretary Ruben D. Torres went to Digos, Davao del Sur and met respondent union's officers and members in
a restaurant; petitioner was not represented in that meeting. The Secretary also visited the hospital without notice to
petitioner.
Shortly thereafter, on , Secretary Torres resolved the labor dispute and issued the questioned Order, wherein he ruled
that the suspension of operations was not for a valid or justifiable cause but was actually for the purpose of defeating the
worker's right to self-organization. But because the hospital had actually ceased operations, he held that it would be unjust
and a sheer abuse of discretion to compel the hospital to continue operations and accept the returning workers, as it
would infringe on petitioner's inherent right to manage and conduct its own business affairs. He thus decided to grant, by
way of penalty, backwages for the workers from , the date they were refused admittance by petitioner, until , the expiration
of the temporary suspension of the hospital's operation.[12]
Sec. Torres also enjoined petitioner to enter into a new CBA with respondent union and to adopt and incorporate therein a
union shop provision because it was proven that petitioner had intervened in the workers' right to join or not to join a labor
organization of their own choosing.[13] Petitioner was also directed to grant a wage increase of P3.00 each for the first
three years of the new CBA. This last directive was prompted by the finding that petitioner's Financial Statements for the
years 1989 and 1990 (copies of which, incidentally, were submitted not by petitioner but by respondent union) showed
that although petitioner incurred a loss of some P200,000 in 1990, its Balance Sheet revealed that it had a Fund Balance
(Retained Earnings) of P3,159,791.00 as of year-end 1990, and therefore, it was financially capable of granting an
increase in its employees' wages.[14]
The dispositive portion of Secretary Torres' Order reads:[15]
"WHEREFORE, judgment is hereby rendered:
1. Ordering the hospital to pay the wages of the returning workers who are members of the Union covering the period 21
June 1991 to 15 December 1991; and,
2. Ordering the parties to enter and formalize a new collective bargaining agreement (CBA) embodying therein the
dispositions hereinabove set forth as well as the provisions of the old CBA not otherwise touched upon by this Order."
On November 4, 1991, petitioner filed a Motion for Reconsideration of the abovequoted Order alleging that: (1) the Office
of the Secretary of Labor had no jurisdiction to resolve the issue of the legality or illegality of the union's strike [since, in
ordering the payment of backwages, he in effect ruled on the legality of the strike, which he was not authorized to do,
jurisdiction therefor pertaining only to labor arbiters]; (2) the union members were not entitled to backwages because the
temporary cessation of petitioner's operation suspended the employer-employee relationship between the union members
and petitioner; and (3) petitioner could not be obligated to enter into a new CBA because said employer-employee
relationship no longer existed.
On December 15, 1991, petitioner formally ceased operations. Notices of its permanent closure were sent to NCMB and
individual rank-and-file employees.
On January 31, 1992, the Secretary denied the Motion for Reconsideration, holding among other things that his Order of
October 16, 1991 did not rule on the legality of the strike. Hence, this petition filed under Rule 65 of the Revised Rules of
Court.
The Issues
Petitioner alleges that the Secretary of Labor gravely abused his discretion thus:[16]
"1. xxx when he issued the two orders, subject of this case, without affording the hospital the opportunity to present
evidence on its behalf.
2. xxx in ordering the hospital to execute a new collective bargaining agreement with the union knowing fully well, as
he himself conceded, that the hospital had actually ceased operations.
3. xxx in ordering the hospital to pay backwages to the members of the union; for in doing so, said public respondent
to all intents and purposes ruled that the strike staged by the union was legal."
The main question is whether the Secretary of Labor and Employment acted correctly in issuing the Orders of October 16,
1991 and January 31, 1992.
The Court's Ruling

First issue: Petitioner Was Afforded Opportunity to Present Evidence

Petitioner alleges that it was never given an opportunity to present its evidence, and that the Order of October 16, 1991
was influenced by the Secretary of Labor's meeting with the officers and members of respondent union when the former
went to Digos, Davao del Sur on October 11, 1991.
Admittedly, Secretary Torres did visit petitioner's premises without notice to see for himself the actual situation therein
obtaining. However, the evidence on record clearly shows that, contrary to petitioner's allegation, it was afforded
opportunity to present its evidence, and that the Secretary's visit and meeting were not the reasons for the ruling in favor
of respondent union, nor did they affect said Order. One, the assumption order of Secretary Confessor inter alia directed
the parties to submit their respective position papers and evidence to enable the Secretary to resolve the dispute.[17]
Two, petitioner submitted its position paper where it questioned the authenticity of the said order claiming that it
(petitioner) received only an uncertified photocopy, and informed the Secretary of its suspension of operations.[18] It did
not bother to prove its serious financial condition and thereby justify its suspension of operations and its refusal to accede
to the demanded wage increases. Respondent union, on the other hand, attached a copy of petitioner's financial
statements to its position paper to show that petitioner was not in dire financial straits as it had a significant fund balance
in 1990. Respondent union further alleged that petitioner could have afforded the wage increases since it had previously
proposed an increase of P2.00 every year for each year of the new CBA which it later reduced to just P2.00 for three
years. Also attached were the affidavits of Armand Anthony Gallardo, staff nurse, and Evangeline Montues, pharmacist, to
show that petitioner had been persuading the new regular workers not to join respondent union.[19]
(In its Supplemental Position Paper, respondent union also alleged that when it struck, it complied fully with the law on
strikes because a skeletal force was left to man the hospital and the gate was left open and not barricaded, and that it was
petitioner that refused to admit patients and hired replacements for the strikers. It also alleged that the doctors did not
withdraw from the hospital because it happened to be the best equipped in the locality.[20])
Three, based on these pleadings and supporting papers, the Secretary noted that petitioner hospital did not discuss and
support its claim of serious financial crisis on account of losses incurred, necessitating temporary suspension of
operations. He thus found that the temporary suspension was to avoid compliance with the return-to-work order, and not
due to the supposed financial hemorrhage. His October 16, 1991 Order stated as follows:[21]
"In the case under consideration, the Hospital failed to meet the conditional requirements that would justify the temporary
cessation of its operations. To be sure, the facts and circumstances attendant to this case do not warrant a finding that the
temporary suspension of the hospital's operations was for a valid or justifiable cause, and not for the purpose of defeating
the rights of the workers to self-organization. This conclusion finds support from the following undisputed facts:
First, during the CBA negotiation and immediately prior to the closure, the Hospital never brought the issue of its alleged
financial losses necessitating the temporary suspension of its operations;
Secondly, the notice of temporary suspension dated 13 June 1991 filed by the Hospital made mention of its intention to
submit the necessary documents of its alleged financial losses (Annex "A", Hospital's position paper). Until the present,
however, the Hospital has not submitted these documents thereby creating serious doubts on the validity of the
suspension of its operations. Be that as it may, a copy of the Financial Statements of the Hospital for the years 1989 and
1990, submitted by the Union, reveals that it (hospital) was not actually losing in its operations. While the Hospital may
have incurred losses of P200,942.00 in 1990, its Balance Sheet reveals a Fund Balance (Retained Earnings) of P3, 159,
791.00 for the year 1990 (Annex "G-2" Union's Position Paper dated 4 July 1991); and,
Thirdly, the Union was not furnished a copy of the notice of temporary suspension. Worse still, the notice was filed on 14
June 1991 and was made effective the following day or on 15 June 1991, leaving the Union without sufficient time to
adjust to the sudden and unexpected cessation of the hospital's operations, much less the opportunity to controvert the
same.
In the light of the undisputed facts narrated above, we are more inclined to sustain the view that the temporary suspension
of the hospital's operations (was done) by the hospital, not because it is in financial crisis, but merely for the purpose of
avoiding compliance with our Order dated 13 June 1991, directing it to accept all returning workers under the same terms
and conditions of employment existing prior to the work stoppage. This being the case, we cannot give imprimatur to the
actuation exhibited herein by the Hospital. For indeed, the Hospital had shown scant regard to the constitutional right of
the members of the Union to self-organization and to negotiate for better terms and conditions of employment."
The foregoing excerpt clearly shows that Secretary Torres' visit was not the turning point insofar as his Order was
concerned. On the contrary, said Order is clearly based on substantial evidence on record.
Petitioner also attacks Secretary Torres' conclusion that its temporary cessation of operations was not legitimate but for
the purpose of circumventing the return-to-work order previously issued.
We are not persuaded. Temporary suspension of operations is reorganized as a valid exercise of management
prerogative provided it is not carried out in order to circumvent provisions of the Labor Code or to defeat the rights of the
employees under the Code.[22] The determination to cease or suspend operations is a prerogative of management that
the State usually does not interfere with, as no business can be required to continue operating at a loss simply to maintain
the workers in employment. Such an act would be tantamount to a taking of property without due process of law, which
the employer has a right to resist. But where it is shown that the closure is motivated not by a desire to prevent further
losses, but to discourage the workers from organizing themselves into a union for more effective negotiations with
management, the State is bound to intervene.[23]
The burden of proving that such a temporary suspension is bona fide falls upon the employer. In this instance, petitioner
had to establish the fact of its precarious financial health, that its cessation of operations was really necessitated by its
financial condition, and that said condition would probably be alleviated or improved, or its losses abated, by undertaking
such suspension of operation. Petitioner could have at least partly met the foregoing requirements by submitting its
financial statements or records as proof of its financial crisis, since the purported financial hemorrhage would definitely
have been reflected therein. Thus, petitioner's unexplained and continued failure to submit its financial statements could
not but raise grave doubts as to the truth of the claimed financial crisis and the real purpose of the suspension of
operations. It is not enough to merely raise this issue nor to discuss it only in passing. The precarious financial condition
must be established by evidence, e.g., balance sheets and income statements, and the figures therein must be
interpreted and discussed at length. Petitioner was recklessly pushing its luck when it believed that the Secretary could be
convinced without first obtaining and examining petitioner's financial statements and the notes thereto. The fact that the
conciliator never asked for them is no sufficient excuse for not presenting the same, as such was petitioner's duty. Neither
is it acceptable for petitioner to allege that the latest financial statements (for the year 1991) were still being prepared by
its accountants and not yet ready for submission, since the financial statements for the prior years 1989 and 1990 would
have sufficed.
It is a hornbook rule that employers who contemplate terminating the services of their workers must base their decisions
on more than just flimsy excuses,[24] considering that the dismissal of an employee from work involves not only the loss
of his position but, what is more important, his means of livelihood. The same principle applies in temporary suspension of
operations, as in this case, considering that it involves laying off employees for a period of six months.
Petitioner, having wretchedly failed to justify by even the most rudimentary proof its temporary suspension of operations,
must bear the consequences thereof. We thus hold that the Secretary of Labor and Employment did not act with grave
abuse of discretion in finding the temporary suspension unjustified and illegal.
Second Issue: New CBA Despite Temporary Suspension?
Petitioner alleges that respondent Secretary acted in grave abuse of discretion when he ordered petitioner to enter into a
new CBA despite his knowledge that it had actually ceased operations. As proof thereof, petitioner cites the portion of the
assailed Order which reads that:
"It must be noted, however, that the hospital had actually ceased operations. It would thus be sheer abuse of discretion on
our part to compel the hospital to continue its operations and admit the returning workers, xxx."
We disagree. Clearly, the respondent Secretary was of the impression that petitioner would operate again after the lapse
of the six- month suspension of operations on December 16, 1991, and so ordered the parties to enter into and formalize
a new CBA to govern their relations upon resumption of operations. On the other hand, the aforequoted portion of the
Order must be understood in the context of the Secretary's finding that the temporary suspension was only for
circumventing the return-to-work order, but in spite of which he held that he could not order petitioner to continue
operations as "this would infringe on its inherent right to manage and conduct its own business affairs"; he thus ordered
instead the payment of backwages to the returning workers who were refused admittance by petitioner on June 21, 1991.
And as above adverted to, he also ordered the parties to execute a new CBA to govern their relations upon the expiry of
the period of suspension and the resumption of normal operations.
Art. 286 of the Labor code provides: "The bona fide suspension of the operation of a business or undertaking for a period
not exceeding six (6) months x x x shal not terminate employment." Section 12, Rule 1, Book VI of the Omnibus Rules
Implementing the Labor Code provides that the employer-employee relationship shall be deemed suspended in case of
the suspension of operation referred to above; it being implicitly assumed that once operations are resumed, the
employer-employee relationship is revived and restored.
If a legitimate, valid and legal suspension of operations does not terminate but merely suspends the employee-employer
relationship, with more reason will an invalid and illegal suspension of operations, as in this case, not affect the
employment relationship.
The foregoing premises considered, it is clear that there is no basis for petitioner to claim that a new CBA should not be
entered into or that collective bargaining should not be conducted during the effectivity of a temporary suspension of
operations. In this instance, petitioner expressly represented that the suspension was to be for six months only. In the
absence of any other information, the plain and natural presumption will be that petitioner would resume operations after
six months, and therefore, it follows that a new CBA will be needed to govern the employment relations of the parties, the
old one having already expired. Clearly then, under the circumstances, the respondent Secretary cannot be faulted nor
considered to have gravely abused his discretion for ordering the parties to enter into a new CBA.
Did the Secretary act in excess of jurisdiction in imposing the wage increases and union shop provision on the petitioner?
We hold that he did not. While petitioner cannot be forced to abandon its suspension of operations even if said
suspension be declared unjustified, illegal and invalid, neither can petitioner evade its obligation to bargain with the union,
using the cessation of its business as reason therefor. For, as already indicated above, the employer-employee
relationship was merely suspended (and not terminated) for the duration of the temporary suspension. Using the
suspension as an excuse to evade the duty to bargain is further proof of its illegality. It shows abuse of this option and bad
faith on the part of petitioner. And since it refused to bargain, without valid and sufficient cause, the Secretary in the
exercise of his powers under Article 263(i) of the Labor Code to decide and resolve labor disputes, properly granted the
wage increase and imposed the union shop provision.
Considering that after the lapse of the six-month period on December 16, 1991, petitioner did not resume operations, it
would border on the ridiculous to still try to enforce the October 16, 1991 Order and require the parties to negotiate the
terms and conditions of employment. It goes without saying that the said Order directing the parties to enter into a new
CBA is already moot and academic. We shall delve more into the complete cessation of business when discussing the
fourth issue below.
Third Issue: Grant of Backwages Is Not An Adjudication on the Legality of the Strike
Petitioner charges the respondent Secretary with having gravely abused his discretion in ordering it to pay backwages to
the union members because it is tantamount to ruling that the union's strike was legal -- jurisdiction over which question
pertains to the labor arbiter.
As support, petitioner cites Philippine Airlines, Inc. vs. Secretary of Labor and Employment,[25] where this Court ruled
that:
"Under Art. 263 of the Labor Code, the Labor Secretary's authority to resolve a labor dispute within 30 days from the date
of assumption of jurisdiction, encompasses only the issues in the dispute, not the legality or illegality of any strike that may
have been resorted to in the meantime (Binamira vs. Ogan-Occena, 148 SCRA 677, 685 [1987]).
xxx xxx xxx
In ruling on the legality of the PALEA strike, the Secretary of Labor acted without or in excess of his jurisdiction.
There is merit in PAL's contention that the Labor Secretary erred in declaring the strike valid and in prohibiting PAL from
taking retaliatory or disciplinary action against the strikers for the damages suffered by the Airline as a result of the illegal
work stoppage.
xxx xxx xxx
The Labor Secretary exceeded his jurisdiction when he restrained PAL from taking disciplinary action against its guilty
employees, for, under Art. 263 of the Labor Code, all that the Secretary may enjoin is the holding of the strike, but not the
company's right to take action against union officers who participated in the illegal strike and committed illegal acts. The
prohibition which the Seretary issued to PAL constitutes an unlawful deprivation of property and denial of due process for
it prevents PAL from seeking redress for the huge property losses that it suffered as a result of the union's illegal mass
action."
We disagree. As pointed out by the Solicitor General, the said case is not in point because in this case the Secretary did
not rule on the legality of the strike.
Respondent union struck before the Secretary of Labor assumed jurisdiction over the dispute. Thus, at first glance, the
grant of backwages was not only dependent on the legality of the temporary suspension of operations by petitioner but
also on the legality of the strike of respondent union.
However, it is undisputed that petitioner never questioned the legality of the strike. When Secretary Confessor assumed
jurisdiction over the labor dispute, she ordered the immediate return to work of the striking employees in order to restore
the conditions of employment prior to the strike. The legality of the strike was not in question as far as Secretary Torres
was concerned, when he assumed the office, and was not within the ambit of the jurisdiction conferred upon by him by
law. His concern was the the labor dispute, i.e., the deadlock and the temporary suspension of operations. Thus, he ruled
only on these matters, and not, as claimed by petitioner, on the legality or illegality of the strike. On the other hand, the
grant of backwages was due to the illegality of the temporary suspension, not the illegality of the strike.
Under Article 263 (g) of the Labor Code, the Secretary is authorized to penalize an erring employer who refuses to accept
returning employees by ordering such employer to pay backwages. This is within his jurisdiction and is warranted by his
finding as to the invalidity of the temporary suspension.
In fine, the respondent Secretary of Labor did not act with grave abuse of discretion in ordering petitioner to pay
backwages because it is not an adjudication on the legality of the strike.
Fourth Issue: Supervening Event
Notwithstanding that respondent Secretary did not act with grave abuse of discretion in issuing the challenged Orders, we
cannot ignore the supervening event which occurred after December 15, 1991, i.e., the subsequent permanent cessation
of operation of petitioner on account of losses.
Business reverses or losses are recognized by law as a just cause for terminating employment. This Court held in
Columbia Development Corporation vs. Minister of Labor and Employment[26] that:
"Precisely because reverses in a business venture are expected, the law recognizes the same as a just cause for
terminating an employment [Art. 283(a) of the Labor Code] and in many instances, this Court has 'affirmed the right of an
employer to lay off or dismiss employees because of losses in the operation of its business, lack of work and considerable
reduction in the volume of his business.' [LVN Pictures and Workers Asso. vs. LVN Pictures, Inc., 35 SCRA 147 and the
cases cited therein]."
Since this ground can be abused by scheming employers feigning business losses to ease out employees, substantive
and procedural requirements are imposed before it can be resorted to. The Labor Code provides that:
"Art. 283. Closure of establishment and reduction of personnel. -- The employer may also terminate the employment of
any employee due to the x x x cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this title, by serving a written notice on the workers and the Department of
Labor and Employment at least one (1) month before the intended date thereof. x x x."
Further, it is necessary that business reverses or losses be serious, actual and real.[27] The burden of establishing the
truth as to these losses or reverses falls upon the employer.
Petitioner finally submitted its financial statements for 1990 as an annex to its petition.[28]
And attached to its Reply to Comment were its financial statements for 1991.[29] The Statements of Revenues and
Expenses revealed that in 1989, petitioner had a net profit of P106,102.00, but this was due to other income of
P202,772.00, which offset losses from operations of P96, 670.00.[30] In the following years, operating losses could not be
offset by other income. In 1990, petitioner sustained a net loss of P200,942.00 despite other income of P203,092.00. In
1991, net loss mounted to P3,180,268.00,[31] completely wiping out its entire Fund Balance (retained earnings) of
P3,159,791.00 from the previous year, and leaving a negative figure of P20,477.00. This means that nothing was left of
the entire capital of petitioner, which is why petitioner contends that it is not in any position to resume operations.
Furthermore, petitioner's external auditors reported that the 1991 financial statements have not yet made any provisions
for petitioner's liability resulting from this and other labor disputes.[32]
In both 1989 and 1990, the hospital's costs and operating expenses exceeded gross revenues, signaling serious financial
trouble. When petitioner suspended operations in the second half of 1991, its gross revenues covered only 56% of
operating expenses. The decrease in expenses to about half the prior years' was still too small to offset the revenues fore-
gone. It seems that the temporary suspension turned out to have been more costly rather than beneficial. Eventually, its
financial troubles resulted in the demise of petitioner as a going concern.
Petitioner's total assets in 1991 registered a drop of about P2.5 million from the previous year's P7.8 million, a staggering
decline.[33] it had exhausted its Fund Balance completely. Considering that it had been operating mainly on the revenues
it generated, the high risks of continuing operations were enough to make petitioner bail out.
We should mention that his case is different from Union of Filipino Workers vs. National Labor Relations Commission[34]
because in the case at bar, financial trouble is reflected in petitioner's financial statements since 1989 and the cessation of
operations was total.
The losses registered in 1989, 1990 and 1991 cannot be deemed paltry.[35] Consider also the loss of doctors and
patients prior to the temporary suspension. It is beyond cavil then that petitioner suffered serious and actual business
reverses. In such a case, management has the final say as to whether it will continue to risk its capital in its business or
not. This is properly its prerogative. Since there is basis for the permanent closure of the business, we cannot read into it
any attempt to defeat the rights of its employees under the law, nor any oppressive and high-handed motives.
Thus, despite the absence of grave abuse of discretion on the part of the respondent Secretary, this Court cannot impose
upon petitioner the directive to enter into a new CBA with the union for the very simple reason that to do so would be to
compel petitioner to continue its business when it had already decided to close shop, and that would be judicial tyranny on
our part.
Epilogue
It will be noted that while the Court ruled as improper the temporary suspension of petitioners operation, it nonetheless
sustained its permanent closure thereafter. To resolve this seeming contradiction, we repeat: we found no arbitrariness in
the ruling of the then Secretary of Labor finding the suspension of operations as unwarranted because petitioner failed to
adduce evidence before the conciliator to show that the hospitals financial condition at that time justified such suspension.
On the other hand, before us, by presenting its later financial statements, petitioner was able to prove conclusively a
supervening event, i.e., that its financial health had deteriorated to such an extent as to justify the complete cessation of
its operations, and its permanent closure. Ironically, it was petitioners temporary suspension of operations that made
inevitable and irreversible (as well as legally tenable) its subsequent permanent closure.
The Court is grieved by the closure of the petitioner hospital, and what such closure meant, not only to petitioner, but to
the public and especially patients and those in need of medical attention. It is even more sad that, by reason of such
closure, petitioners employees and staff, including doctors, nurses and other hospital workers, have had to be laid off. We
would have wanted to see the parties amicably settle their differences and patch things up, in view of the crucial public
service they rendered, particularly since, up to the time of its suspension of operation, the hospital was the best equipped
in the locality. However, all that is water under the bridge now, and there is really not much that this Court can do in the
premises and at this time except to decide the instant case on the basis of the legal issues raised.
WHEREFORE, the petition is partially GRANTED. The assailed Orders, insofar as they grant backwages from June 21,
1991 until December 15, 1991, are AFFIRMED. However, they are MODIFIED insofar as they directed the parties to enter
into a new collective bargaining agreement, which directives are hereby SET ASIDE for being moot and academic.
SO ORDERED.
G.R. No. 106830 November 16, 1993
R. TRANSPORT CORPORATION, petitioner,
vs.
HON. BIENVIENIDO E. LAGUESMA. in his capacity as Undersecretary of the Department of Labor and
Employment, CHRISTIAN LABOR ORGANIZATION OF THE PHILIPPINES (CLOP), NATIONAL FEDERATION OF
LABOR UNIONS (NAFLU), and ASSOCIATED LABOR UNIONS (ALU-TUCP), respondents.
Gaspar V. Tagalo for petitioner.
Jose Torregoza for Christian Labor Organization of the Philippines.
Joji Barrios for intervenor ALU-TUCP.
Villy Cadiz for National Federation of Labor Unions.
 
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court which seeks to set aside the Resolutions of the
Undersecretary of the Department of Labor and Employment (DOLE) dated July 22, 1992, affirming the order of the Med-
Arbiter calling for the conduct of the certification election, and August 25, 1992, denying petitioner's motion for
reconsideration.
On January 4, 1991, respondent Christian Labor Organization of the Philippines (CLOP), filed with the Med-Arbitration
Unit of the DOLE a petition for certification election among the rank and file employees of the petitioner (NCR-OD-M-91-
01-002).
On April 8, 1991, Med-Arbiter A. Dizon dismissed the petition on the ground that the bargaining unit sought to be
represented by respondent did not include all the eligible employees of petitioner but only the drivers, conductors and
conductresses to the exclusion of the inspectors, inspectresses, dispatchers, mechanics and washerboys.
On May 10, 1991, respondent. CLOP rectified its mistake and filed a second petition for certification election,which
included all the rank and file employees of the company, who hold non-managerial. and non-supervisorial positions.
Petitioner filed a motion to dismiss the second petition and contended that the dismissal of the first petition constituted res
judicata. Petitioner argued that respondent CLOP should have interposed an appeal to the dismissal of the first petition
and its failure to do so barred it from filing another petition for certification election.
On July 3, 1991, Med-Arbiter R. Parungo rendered a decision, which ordered that a certification election among the
regular rank and file workers of petitioner company be conducted (Rollo, pp. 87-91).
On October 16, 1991, the Associated Labor Unions (ALU-TUCP) filed a motion for intervention (NCR OD-M-91-01-002)
and alleged that it has members in the proposed bargaining unit. Subsequently, the National Federation of Labor Unions
(NAFLU) filed a separate petition for certification election (NCR-OD-M-91-10-058) and a motion to consolidate related
cases to avoid confusion.
Dissatisfied with the Decision dated July 3, 1991 rendered by Med-Arbiter R. Parungo, petitioner appealed to the DOLE
Secretary, who, through Undersecretary Bienvenido E. Laguesma, affirmed the Med-Arbiter in its Resolution dated July
22, 1992 calling for the conduct of the certification election (Rollo, pp. 25-28). The Resolution, in pertinent part, reads as
follows:
xxx xxx xxx
The defense of res judicata is not obtaining in the present petition for certification election. It is settled that
for res judicata to apply there must be a final judgment on the merits on matters put in issue. In the instant
case, it could not be said that there is a final judgment on the merits of the petition simply because the
composition of the present proposed bargaining unit is different from that in the first petition. Moreover,
there are now other parties involved, and therefore, it would not be correct to say that the parties in the
said two cases are identical.
xxx xxx xxx
With regard however, to the question on propriety of consolidation, there is merit in the argument of
respondent-appellant on the need to consolidate the separate petitions for certification election because
they involve the same bargaining unit. Case No. NCR-OD-M-91-10-058 should be consolidated with that
of Case No. NCR- OD-M-91-05-062, where the petition of NAFLU should be treated as an intervention
and resolved by the Med-Arbiter together with the intervention of ALU-TUCP.
 PREMISES CONSIDERED, the Order of the Med-Arbiter calling for the conduct of the certification
election is hereby affirmed subject to the resolution of the Med-Arbiter of the motions for intervention
aforementioned (Rollo, pp. 27-28; emphasis supplied).
On July 31, 1992, petitioner filed a Motion for Reconsideration, again stressing the principle of res judicata. Petitioner
further argued that the second petition for a certification election by respondent CLOP, NAFLU and ALU-TUCP were
barred at least for a period of one year from the time the first petition of CLOP was dismissed pursuant to Section Rule V,
Book V of the Omnibus Rules Implementing the Labor Code as amended.
On August 25, 1991, Undersecretary Laguesma denied the motion for reconsideration (Rollo, pp. 32-34).
On September 3, 1992, petitioner filed a Motion to Suspend Proceedings based on Prejudicial Questions as an
Addendum to the Motion for Reconsideration filed on July 31, 1992. Petitioner argued that the present case must be
indefinitely suspended until the following cases are resolved by the NLRC and the Supreme Court: a) NLRC-NCR Case
No. 00-08-04708-91 entitled "R". Transport Corporation v. Jose S. Torregaza, et. al., wherein Labor Arbiter de Castro
declared the strike staged by respondent CLOP illegal and ordered the strikers to pay petitioner the amount of P10,000.00
as exemplary damages; b) NLRC-NCR Case No. 06-03415092 filed by respondent CLOP and its members for illegal
dismissal; and NLRC-NCR Case No. 00-08-04389-92 filed by respondent CLOP in behalf of its affected members for
illegal dismissal (Rollo, pp. 139-145).
On September 29, 1992, Undersecretary Laguesma in a resolution denied the motion to suspend the conduct of the
certification election. The pertinent portion of said resolution reads as follows:
The pendency of NLRC-NCR Cases Nos. 00-08- 04708-91, 06-03415092 and 00-08-04389-92 before the
NLRC is not a valid ground for the suspension of the already stalled petition for certification election which
must be resolved with dispatch.
This must be so, because the employees subject of the pending cases before the NLRC legally remain as
employees of respondent until the motion to declare them as having lost their employment status by
reason of the illegal strike or their complaint for illegal dismissal is finally resolved . (Rollo, pp. 181-182;
emphasis supplied)
On October 14, 1992, petitioner filed a motion for reconsideration of the Resolution dated September 29, 1992 which was
subsequently denied by Undersecretary Laguesma on October 29, 1992 (Rollo, pp. 29-31).
Petitioner filed a Comment and Objection to the Order dated October 29, 1992 with Urgent Motion to Dismiss the Petition
for Certification Election. Without waiting for the resolution of the motion to dismiss, petitioner resorted to this Court by
way of the instant special civil action.
This petition is without merit.
Before the principle of res judicata can be operative, the following requisites must be present: a) the former judgment or
order must be final; b) it must be a judgment ororder on the merits; c) it must have been rendered by a court having
jurisdiction over the subject-matter and the parties; and d) there must be, between the first and second actions, identity of
parties (Nabus v. Court of Appeals, 193 SCRA 732 [1991]).
In the case at bench, it cannot be said that the parties in the first and second actions were identical. The first action was
dismissed by the Med-Arbiter because it excluded parties essential to the bargaining unit such as inspectors,
inspectresses, dispatchers and washer boys. The second petition included all the employees who were excluded in the
first petition. Therefore, the Med-Arbiter was correct when he gave due course to the second petition for certification
election after respondent CLOP corrected its mistake.
Likewise untenable is petitioner's contention that the second petition for certification election should have been filed after
one year from the dismissal of the first petition certification election under Section 3, Rule V, Book V of the Omnibus Rules
Implementing the Labor Code as amended. Said section provides as follows:
When to file — In the absence of collective bargaining agreement duly registered in accordance with
Article 231 of the Code, a petition for certification election may be filed any time. However, no certification
election may be held within one year from the date of the issuance of a final certification election result
(Emphasis supplied).
Apparently, petitioner misread the above-mentioned provision of law. The phrase "final certification election result" means
that there was an actual conduct of election i.e. ballots were cast and there was a counting of votes. In this case, there
was no certification election conducted precisely because the first petition was dismissed, on the ground of a defective
petition which did not include all the employees who should be properly included in the collective bargaining unit.
Devoid of merit is petitioner's contention that the employment status of the members of respondent CLOP who joined the
strike must first be resolved before a certification election can be conducted.
As held in the case of Philippine Fruits and Vegetables Industries, Inc. v. Torres, 211 SCRA 95 (1992):
At any rate, it is now well-settled that employees who have been improperly laid-off but who have a
present, unabandoned right to or expectation of re-employment, are eligible to vote in certification
elections (Rothenberg on Labor Relations, p. 548). Thus, and to repeat, if the dismissal is under question,
as in the case now at bar whereby a case of illegal dismissal and/or unfair labor practices was filed, the
employees concerned could still qualify to vote in the elections.
Therefore, the employees of petitioner who participated in the strike, legally remain as such, until either the motion to
declare their employment status legally terminated or their complaint for illegal dismissal is resolved by the NLRC.
It should be noted that it is the petitioner, the employer, which has offered the most tenacious resistance to the holding of
a certification election. This must not be so for the choice of a collective bargaining agent is the sole concern of the
employees. The employer has no right to interfere in the election and is merely regarded as a bystander (Divine Word
University of Tacloban v. Secretary of Labor and Employment, 213 SCRA 759 [1992]).
Finally, petitioner's Comment and Objection to the Order dated October 29, 1992 with Urgent Motion to Dismiss the
Petition for Certification Election is still pending with the Undersecretary of Labor. The resort to judicial action by petitioner
is premature. Hence, it is also guilty of forum-shopping in pursuing the same cause of action involving the same issue,
parties and subject matter before two different fora.
WHEREFORE, the Court Resolved to DISMISS the petition.
SO ORDERED.
[G.R. No. 146728. February 11, 2004]
GENERAL MILLING CORPORATION, petitioner, vs. HON. COURT OF APPEALS, GENERAL MILLING CORPORATION
INDEPENDENT LABOR UNION (GMC-ILU), and RITO MANGUBAT, respondents.
DECISION
QUISUMBING, J.:
Before us is a petition for certiorari assailing the decision[1] dated July 19, 2000, of the Court of Appeals in CA-G.R. SP
No. 50383, which earlier reversed the decision[2] dated January 30, 1998 of the National Labor Relations Commission
(NLRC) in NLRC Case No. V-0112-94.
The antecedent facts are as follows:
In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling Corporation (GMC) employed 190
workers. They were all members of private respondent General Milling Corporation Independent Labor Union (union, for
brevity), a duly certified bargaining agent.
On April 28, 1989, GMC and the union concluded a collective bargaining agreement (CBA) which included the issue of
representation effective for a term of three years. The CBA was effective for three years retroactive to December 1, 1988.
Hence, it would expire on November 30, 1991.
On November 29, 1991, a day before the expiration of the CBA, the union sent GMC a proposed CBA, with a request that
a counter-proposal be submitted within ten (10) days.
As early as October 1991, however, GMC had received collective and individual letters from workers who stated that they
had withdrawn from their union membership, on grounds of religious affiliation and personal differences. Believing that the
union no longer had standing to negotiate a CBA, GMC did not send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the unions officers, Rito Mangubat and Victor Lastimoso. The letter stated
that it felt there was no basis to negotiate with a union which no longer existed, but that management was nonetheless
always willing to dialogue with them on matters of common concern and was open to suggestions on how the company
may improve its operations.
In answer, the union officers wrote a letter dated December 19, 1991 disclaiming any massive disaffiliation or resignation
from the union and submitted a manifesto, signed by its members, stating that they had not withdrawn from the union.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the ground of incompetence. The union
protested and requested GMC to submit the matter to the grievance procedure provided in the CBA. GMC, however,
advised the union to refer to our letter dated December 16, 1991.[3]
Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration Division, Cebu City. The
complaint alleged unfair labor practice on the part of GMC for: (1) refusal to bargain collectively; (2) interference with the
right to self-organization; and (3) discrimination. The labor arbiter dismissed the case with the recommendation that a
petition for certification election be held to determine if the union still enjoyed the support of the workers.
The union appealed to the NLRC.
On January 30, 1998, the NLRC set aside the labor arbiters decision. Citing Article 253-A of the Labor Code, as amended
by Rep. Act No. 6715,[4] which fixed the terms of a collective bargaining agreement, the NLRC ordered GMC to abide by
the CBA draft that the union proposed for a period of two (2) years beginning December 1, 1991, the date when the
original CBA ended, to November 30, 1993. The NLRC also ordered GMC to pay the attorneys fees.[5]
In its decision, the NLRC pointed out that upon the effectivity of Rep. Act No. 6715, the duration of a CBA, insofar as the
representation aspect is concerned, is five (5) years which, in the case of GMC-Independent Labor Union was from
December 1, 1988 to November 30, 1993. All other provisions of the CBA are to be renegotiated not later than three (3)
years after its execution. Thus, the NLRC held that respondent union remained as the exclusive bargaining agent with the
right to renegotiate the economic provisions of the CBA. Consequently, it was unfair labor practice for GMC not to enter
into negotiation with the union.
The NLRC likewise held that the individual letters of withdrawal from the union submitted by 13 of its members from
February to June 1993 confirmed the pressure exerted by GMC on its employees to resign from the union. Thus, the
NLRC also found GMC guilty of unfair labor practice for interfering with the right of its employees to self-organization.
With respect to the unions claim of discrimination, the NLRC found the claim unsupported by substantial evidence.
On GMCs motion for reconsideration, the NLRC set aside its decision of January 30, 1998, through a resolution dated
October 6, 1998. It found GMCs doubts as to the status of the union justified and the allegation of coercion exerted by
GMC on the unions members to resign unfounded. Hence, the union filed a petition for certiorari before the Court of
Appeals. For failure of the union to attach the required copies of pleadings and other documents and material portions of
the record to support the allegations in its petition, the CA dismissed the petition on February 9, 1999. The same petition
was subsequently filed by the union, this time with the necessary documents. In its resolution dated April 26, 1999, the
appellate court treated the refiled petition as a motion for reconsideration and gave the petition due course.
On July 19, 2000, the appellate court rendered a decision the dispositive portion of which reads:
WHEREFORE, the petition is hereby GRANTED. The NLRC Resolution of October 6, 1998 is hereby SET ASIDE, and its
decision of January 30, 1998 is, except with respect to the award of attorneys fees which is hereby deleted,
REINSTATED.[6]
A motion for reconsideration was seasonably filed by GMC, but in a resolution dated October 26, 2000, the CA denied it
for lack of merit.
Hence, the instant petition for certiorari alleging that:
I
THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL RULE THAT NO DECISION SHALL BE
RENDERED BY ANY COURT WITHOUT EXPRESSING THEREIN CLEARLY AND DISTINCTLY THE FACTS AND
THE LAW ON WHICH IT IS BASED.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING THE DECISION OF
THE NATIONAL LABOR RELATIONS COMMISSION IN THE ABSENCE OF ANY FINDING OF SUBSTANTIAL
ERROR OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION.
III
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT APPRECIATING THAT THE NLRC HAS NO
JURISDICTION TO DETERMINE THE TERMS AND CONDITIONS OF A COLLECTIVE BARGAINING
AGREEMENT.[7]
Thus, in the instant case, the principal issue for our determination is whether or not the Court of Appeals acted with grave
abuse of discretion amounting to lack or excess of jurisdiction in (1) finding GMC guilty of unfair labor practice for violating
the duty to bargain collectively and/or interfering with the right of its employees to self-organization, and (2) imposing upon
GMC the draft CBA proposed by the union for two years to begin from the expiration of the original CBA.
On the first issue, Article 253-A of the Labor Code, as amended by Rep. Act No. 6715, states:
ART. 253-A. Terms of a collective bargaining agreement. Any Collective Bargaining Agreement that the parties may
enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning
the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted
by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such
five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall
be renegotiated not later than three (3) years after its execution....
The law mandates that the representation provision of a CBA should last for five years. The relation between labor and
management should be undisturbed until the last 60 days of the fifth year. Hence, it is indisputable that when the union
requested for a renegotiation of the economic terms of the CBA on November 29, 1991, it was still the certified collective
bargaining agent of the workers, because it was seeking said renegotiation within five (5) years from the date of effectivity
of the CBA on December 1, 1988. The unions proposal was also submitted within the prescribed 3-year period from the
date of effectivity of the CBA, albeit just before the last day of said period. It was obvious that GMC had no valid reason to
refuse to negotiate in good faith with the union. For refusing to send a counter-proposal to the union and to bargain anew
on the economic terms of the CBA, the company committed an unfair labor practice under Article 248 of the Labor Code,
which provides that:
ART. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the following unfair
labor practice:
...
(g) To violate the duty to bargain collectively as prescribed by this Code;
...
Article 252 of the Labor Code elucidates the meaning of the phrase duty to bargain collectively, thus:
ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively means the performance of a mutual
obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement....
We have held that the crucial question whether or not a party has met his statutory duty to bargain in good faith typically
turn$ on the facts of the individual case.[8] There is no per se test of good faith in bargaining.[9] Good faith or bad faith is
an inference to be drawn from the facts.[10] The effect of an employers or a unions actions individually is not the test of
good-faith bargaining, but the impact of all such occasions or actions, considered as a whole.[11]
Under Article 252 abovecited, both parties are required to perform their mutual obligation to meet and convene promptly
and expeditiously in good faith for the purpose of negotiating an agreement. The union lived up to this obligation when it
presented proposals for a new CBA to GMC within three (3) years from the effectivity of the original CBA. But GMC failed
in its duty under Article 252. What it did was to devise a flimsy excuse, by questioning the existence of the union and the
status of its membership to prevent any negotiation.
It bears stressing that the procedure in collective bargaining prescribed by the Code is mandatory because of the basic
interest of the state in ensuring lasting industrial peace. Thus:
ART. 250. Procedure in collective bargaining. The following procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of
its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice.
(Underscoring supplied.)
GMCs failure to make a timely reply to the proposals presented by the union is indicative of its utter lack of interest in
bargaining with the union. Its excuse that it felt the union no longer represented the workers, was mainly dilatory as it
turned out to be utterly baseless.
We hold that GMCs refusal to make a counter-proposal to the unions proposal for CBA negotiation is an indication of its
bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a
clear evasion of the duty to bargain collectively.[12]
Failing to comply with the mandatory obligation to submit a reply to the unions proposals, GMC violated its duty to bargain
collectively, making it liable for unfair labor practice. Perforce, the Court of Appeals did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction in finding that GMC is, under the circumstances, guilty of unfair labor
practice.
Did GMC interfere with the employees right to self-organization? The CA found that the letters between February to June
1993 by 13 union members signifying their resignation from the union clearly indicated that GMC exerted pressure on its
employees. The records show that GMC presented these letters to prove that the union no longer enjoyed the support of
the workers. The fact that the resignations of the union members occurred during the pendency of the case before the
labor arbiter shows GMCs desperate attempts to cast doubt on the legitimate status of the union. We agree with the CAs
conclusion that the ill-timed letters of resignation from the union members indicate that GMC had interfered with the right
of its employees to self-organization. Thus, we hold that the appellate court did not commit grave abuse of discretion in
finding GMC guilty of unfair labor practice for interfering with the right of its employees to self-organization.
Finally, did the CA gravely abuse its discretion when it imposed on GMC the draft CBA proposed by the union for two
years commencing from the expiration of the original CBA?
The Code provides:
ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. ....It shall be the duty of
both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing
agreement during the 60-day period [prior to its expiration date] and/or until a new agreement is reached by the parties.
(Underscoring supplied.)
The provision mandates the parties to keep the status quo while they are still in the process of working out their respective
proposal and counter proposal. The general rule is that when a CBA already exists, its provision shall continue to govern
the relationship between the parties, until a new one is agreed upon. The rule necessarily presupposes that all other
things are equal. That is, that neither party is guilty of bad faith. However, when one of the parties abuses this grace
period by purposely delaying the bargaining process, a departure from the general rule is warranted.
In Kiok Loy vs. NLRC,[13] we found that petitioner therein, Sweden Ice Cream Plant, refused to submit any counter
proposal to the CBA proposed by its employees certified bargaining agent. We ruled that the former had thereby lost its
right to bargain the terms and conditions of the CBA. Thus, we did not hesitate to impose on the erring company the CBA
proposed by its employees union - lock, stock and barrel. Our findings in Kiok Loy are similar to the facts in the present
case, to wit:
petitioner Companys approach and attitude stalling the negotiation by a series of postponements, non-appearance at the
hearing conducted, and undue delay in submitting its financial statements, lead to no other conclusion except that it is
unwilling to negotiate and reach an agreement with the Union. Petitioner has not at any instance, evinced good faith or
willingness to discuss freely and fully the claims and demands set forth by the Union much less justify its objection
thereto.[14]
Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and Employment,[15] petitioner therein, Divine
Word University of Tacloban, refused to perform its duty to bargain collectively. Thus, we upheld the unilateral imposition
on the university of the CBA proposed by the Divine Word University Employees Union. We said further:
That being the said case, the petitioner may not validly assert that its consent should be a primordial consideration in the
bargaining process. By its acts, no less than its action which bespeak its insincerity, it has forfeited whatever rights it could
have asserted as an employer.[16]
Applying the principle in the foregoing cases to the instant case, it would be unfair to the union and its members if the
terms and conditions contained in the old CBA would continue to be imposed on GMCs employees for the remaining two
(2) years of the CBAs duration. We are not inclined to gratify GMC with an extended term of the old CBA after it resorted
to delaying tactics to prevent negotiations. Since it was GMC which violated the duty to bargain collectively, based on
Kiok Loy and Divine Word University of Tacloban, it had lost its statutory right to negotiate or renegotiate the terms and
conditions of the draft CBA proposed by the union.
We carefully note, however, that as strictly distinguished from the facts of this case, there was no pre-existing CBA
between the parties in Kiok Loy and Divine Word University of Tacloban. Nonetheless, we deem it proper to apply in this
case the rationale of the doctrine in the said two cases. To rule otherwise would be to allow GMC to have its cake and eat
it too.
Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately accept or agree to
the proposals of the other. But an erring party should not be allowed to resort with impunity to schemes feigning
negotiations by going through empty gestures.[17] Thus, by imposing on GMC the provisions of the draft CBA proposed
by the union, in our view, the interests of equity and fair play were properly served and both parties regained equal
footing, which was lost when GMC thwarted the negotiations for new economic terms of the CBA.
The findings of fact by the CA, affirming those of the NLRC as to the reasonableness of the draft CBA proposed by the
union should not be disturbed since they are supported by substantial evidence. On this score, we see no cogent reason
to rule otherwise. Hence, we hold that the Court of Appeals did not commit grave abuse of discretion amounting to lack or
excess of jurisdiction when it imposed on GMC, after it had committed unfair labor practice, the draft CBA proposed by the
union for the remaining two (2) years of the duration of the original CBA. Fairness, equity, and social justice are best
served in this case by sustaining the appellate courts decision on this issue.
WHEREFORE, the petition is DISMISSED and the assailed decision dated July 19, 2000, and the resolution dated
October 26, 2000, of the Court of Appeals in CA-G.R. SP No. 50383, are AFFIRMED. Costs against petitioner.
SO ORDERED.