G.R. No.

172132               July 23, 2014

THE HERITAGE HOTEL MANILA, ACTING THROUGH ITS OWNER, GRAND PLAZA HOTEL
CORPORATION,Petitioner, 
vs.
SECRETARY OF LABOR AND EMPLOYMENT; MED-ARBITER TOMAS F. FALCONITIN; and
NATIONAL UNION OF WORKERS IN THE HOTEL, RESTAURANT and ALLIED INDUSTRIES-
HERITAGE HOTEL MANILA SUPERVISORS CHAPTER (NUWHRAINHHMSC), Respondents.

DECISION

BERSAMIN, J.:

Although case law has repeatedly held that the employer was but a bystander in respect of the
conduct of the certification election to decide the labor organization to represent the employees in
the bargaining unit, and that the pendency of the cancellation of union registration brought against
the labor organization applying for the certification election should not prevent the conduct of the
certification election, this review has to look again at the seemingly never-ending quest of the
petitioner employer to stop the conduct of the certification election on the ground of the pendency of
proceedings to cancel the labor organization's registration it had initiated on the ground that the
membership of the labor organization was a mixture of managerial and supervisory employees with
the rank-and-file employees.

Under review at the instance ofthe employer is the decision promulgated on December 13,
2005,  whereby the Court of Appeals (CA) dismissed its petition for certiorari to assail the resolutions
1

of respondent Secretary of Labor and Employment sanctioning the conduct of the certification
election initiated by respondent labor organization.2

Antecedents

On October 11, 1995, respondent National Union of Workers in Hotel Restaurant and Allied
Industries-HeritageHotel Manila Supervisors Chapter (NUWHRAIN-HHMSC) filed a petition for
certification election,  seeking to represent all the supervisory employees of Heritage Hotel Manila.
3

The petitioner filed its opposition, but the opposition was deemed denied on February 14, 1996 when
Med-Arbiter Napoleon V. Fernando issued his order for the conduct of the certification election.

The petitioner appealed the order of Med-Arbiter Fernando, but the appeal was also denied. A pre-
election conference was then scheduled. On February 20, 1998, however, the pre-election
conference was suspended until further notice because of the repeated non-appearance of
NUWHRAIN-HHMSC. 4

On January 29, 2000, NUWHRAIN-HHMSC moved for the conduct of the pre-election conference.
The petitioner primarily filed its comment on the list of employees submitted by NUWHRAIN-
HHMSC, and simultaneously sought the exclusion ofsome from the list of employees for occupying
either confidential or managerial positions.  The petitioner filed a motion to dismiss on April 17,
5

2000,  raising the prolonged lack of interest of NUWHRAIN-HHMSC to pursue its petition for
6

certification election.

On May 12, 2000, the petitioner filed a petition for the cancellation of NUWHRAIN-HHMSC’s
registration as a labor union for failing to submit its annual financial reports and an updated list of
members as required by Article 238 and Article 239 of the Labor Code, docketed as Case No.
NCROD-0005-004-IRD entitled The Heritage Hotel Manila, acting through its owner, Grand Plaza
Hotel Corporation v. National Union of Workers in the Hotel, Restaurant and Allied Industries-
Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHSMC).  It filed another motion on June
7

1, 2000 to seek either the dismissal or the suspension of the proceedings on the basis of its pending
petition for the cancellation of union registration.
8

The following day, however, the Department of Labor and Employment (DOLE) issued a notice
scheduling the certification elections on June 23, 2000. 9

Dissatisfied, the petitioner commenced in the CA on June 14, 2000 a special civil action for
certiorari,  alleging that the DOLE gravely abused its discretion in not suspending the certification
10

election proceedings. On June 23, 2000, the CA dismissed the petition for certiorarifor
nonexhaustion of administrative remedies. 11

The certification election proceeded as scheduled, and NUWHRAINHHMSC obtained the majority
vote of the bargaining unit.  The petitioner filed a protest (with motion to defer the certification of the
12

election results and the winner),  insisting on the illegitimacy of NUWHRAIN-HHMSC.

13

Ruling of the Med-Arbiter

On January 26, 2001, Med-Arbiter Tomas F. Falconitin issued an order,  ruling that the petition for
14

the cancellation of union registration was not a bar to the holding of the certification election, and
disposing thusly:

WHEREFORE, premises considered, respondent employer/protestant’s protest with motion to defer

certification of results and winner is hereby dismissed for lack of merit.

Accordingly, this Office hereby certify pursuant to the rules that petitioner/protestee, National Union
of Workers in Hotels, Restaurants and Allied Industries-Heritage Hotel Manila Supervisory Chapter
(NUWHRAIN-HHSMC) is the sole and exclusive bargaining agent of all supervisory employees of
the Heritage Hotel Manila acting through its owner, Grand Plaza Hotel Corporation for purposes of
collective bargaining with respect to wages, and hours of work and other terms and conditions of
employment.

SO ORDERED.

The petitioner timely appealed to the DOLE Secretary claiming that: (a) the membership of
NUWHRAIN-HHMSC consisted of managerial, confidential, and rank-and-file employees; (b)
NUWHRAIN-HHMSC failed to comply with the reportorial requirements; and (c) Med-Arbiter
Falconitin simply brushed aside serious questions on the illegitimacy of NUWHRAINHHMSC.  It 15

contended that a labor union of mixed membership of supervisory and rank-and-file employees had
no legal right to petition for the certification election pursuant to the pronouncements in Toyota Motor
Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union  (Toyota Motor) and
16

Dunlop Slazenger (Phils.) v. Secretary of Labor and Employment  (Dunlop Slazenger).

17

Ruling of the DOLE Secretary

On August 21, 2002, then DOLE Secretary Patricia A. Sto. Tomas issued a resolution denying the
appeal,  and affirming the order of MedArbiter Falconitin, viz:
18
WHEREFORE, the appeal is DENIED. The order of the Med- Arbiter dated 26 January 2001 is
hereby AFFIRMED.

SO RESOLVED.

DOLE Secretary Sto. Tomas observed that the petitioner’s reliance on Toyota Motor and Dunlop
Slazenger was misplaced because both rulings were already overturned by SPI Technologies, Inc.
v. Department of Labor and Employment,  to the effect that once a union acquired a legitimate
19

status as a labor organization, it continued as such until its certificate of registration was cancelled or
revoked in an independent action for cancellation.

The petitioner moved for reconsideration.

In denying the motion on October 21, 2002, the DOLE Secretary declared that the mixture or co-
mingling of employees in a union was not a ground for dismissing a petition for the certification
election under Section 11, par. II, Rule XI of Department Order No. 9; that the appropriate remedy
was to exclude the ineligible employees from the bargaining unit during the inclusion-exclusion
proceedings;  that the dismissal of the petition for the certification election based on the legitimacy of
20

the petitioning union would be inappropriate because it would effectively allow a collateral attack
against the union’s legal personality; and that a collateral attack against the personality of the labor
organization was prohibited under Section 5, Rule V of Department Order No. 9, Series of 1997. 21

Upon denial of its motion for reconsideration, the petitioner elevated the matter to the CA by petition
for certiorari.
22

Ruling of the CA

On December 13, 2005,  the CA dismissed the petition for certiorari, giving its following disquisition:
23

The petition for certiorari filed by the petitioner is, in essence, a continuation of the debate on the
relevance of the Toyota Motor, Dunlop Slazenger and Progressive Developmentcases to the issues
raised.

Toyota Motor and Dunlop Slazengerare anchored on the provisions of Article 245 of the Labor Code
which prohibit managerial employees from joining any labor union and permit supervisory employees
to form a separate union oftheir own. The language naturally suggests that a labor organization
cannot carry a mixture of supervisory and rank-and-file employees. Thus, courts have held that a
union cannot become a legitimate labor union if it shelters under its wing both types of employees.
But there are elements of an elliptical reasoning in the holding of these two cases that a petition for
certification election may not prosper until the composition of the union is settled therein. Toyota
Motor, in particular, makes the blanket statement that a supervisory union has no right to file a
certification election for as long asit counts rank-and-file employees among its ranks. More than four
years after Dunlop Slazenger, the Court clarified in Tagaytay Highlands International Golf Club Inc
vs Tagaytay Highlands Employees Union-PTGWO that while Article 245 prohibits supervisory
employees from joining a rank-and-file union, it does not provide what the effect is if a rank-and-
fileunion takes in supervisory employees as members, or vice versa. Toyota Motorand Dunlop
Slazenger jump into an unnecessary conclusion when they foster the notion that Article 245 carries
with it the authorization to inquire collaterally into the issue wherever it rears its ugly head.

Tagaytay Highlands proclaims, in the light of Department Order 9, that after a certificate of
registration is issued to a union, its legal personality cannot be subject to a collateral attack. It may
be questioned only in an independent petition for cancellation. In fine, Toyota and Dunlop
Slazengerare a spent force. Since Tagaytay Highlands was handed down after these two cases, it
constitutes the latest expression of the will of the Supreme Court and supersedes or overturns
previous rulings inconsistent with it. From this perspective, it is needless to discuss whether SPI
Technologiesas a mere resolution of the Court may prevail over a full-blown decision that Toyota
Motor or Dunlop Slazenger was. The ruling in SPI Technologies has been echoed in Tagaytay
Highlands, for which reason it is with Tagaytay Highlands, not SPI Technologies,that the petitioner
must joust.

The fact that the cancellation proceeding has not yet been resolved makes it obvious that the legal
personality of the respondent union is still very much in force. The DOLE has thus every reason to
proceed with the certification election and commits no grave abuse of discretion in allowing it to
prosper because the right to be certified as collective bargaining agent is one of the legitimate
privileges of a registered union. It is for the petitioner to expedite the cancellation case if it wants to
put an end to the certification case, but it cannot place the issue of the union’s legitimacy in the
certification case, for that would be tantamount to making the collateral attack the DOLE has
staunchly argued to be impermissible.

The reference made by the petitioner to another Progressive Development case that it would be
more prudent for the DOLE to suspend the certification case until the issue of the legality of the
registration is resolved, has also been satisfactorily answered. Section 11, Rule XI of Department
Order 9 provides for the grounds for the dismissal of a petition for certification election, and the
pendency of a petition for cancellation of union registration is not one of them. Like Toyota Motor
and Dunlop Slazenger, the second Progressive case came before Department Order 9.

IN VIEW OF THE FOREGOING, the disputed resolutions of the Secretary of Labor and Employment
are AFFIRMED, and the petition is DISMISSED.

SO ORDERED.

The petitioner sought reconsideration,  but its motion was denied.

24

Issues

Hence, this appeal, with the petitioner insisting that:

THE COURT OF APPEALS ERRED IN RULING THAT TAGAYTAY HIGHLANDSAPPLIES TO THE

CASE AT BAR

II

[THE HONORABLE COURT OF APPEALS] SERIOUSLY ERRED WHEN IT DISREGARDED

PROGRESSIVE DEVELOPMENT CORPORATION – PIZZA HUT V. LAGUESMA WHICH HELD
THAT IT WOULD BE MORE PRUDENT TO SUSPEND THE CERTIFICATION CASE UNTIL THE
ISSUE OF THE LEGALITY OF THE REGISTRATION OF THE UNION IS FINALLY RESOLVED

III
BECAUSE OF THE PASSAGE OFTIME, RESPONDENT UNION NO LONGER POSSESSES THE
MAJORITY STATUS SUCH THAT A NEW CERTIFICATION ELECTION IS IN ORDER 25

The petitioner maintains that the ruling in Tagaytay Highlands International Golf Club Inc v. Tagaytay
Highlands Employees Union PTGWO  (Tagaytay Highlands) was inapplicable because it involved
26

the co-mingling of supervisory and rank-and-file employees in one labor organization, while the issue
here related to the mixture of membership between two employee groups — one vested with the
right to selforganization (i.e., the rank-and-file and supervisory employees), and the other deprived of
such right (i.e., managerial and confidential employees); that suspension of the certification election
was appropriate because a finding of "illegal mixture" of membership during a petition for the
cancellation of union registration determined whether or not the union had met the 20%
representation requirement under Article 234(c) of the Labor Code;  and that in holding that mixed
27

membership was not a ground for canceling the union registration, except when such was done
through misrepresentation, false representation or fraud under the circumstances enumerated in
Article 239(a) and (c) of the Labor Code, the CA completely ignored the 20% requirement under
Article 234(c) of the Labor Code.

The petitioner posits that the grounds for dismissing a petition for the certification election under
Section 11, Rule XI of Department Order No. 9, Series of 1997, were not exclusive because the
other grounds available under the Rules of Courtcould be invoked; that in Progressive Development
Corporation v. Secretary, Department of Labor and Employment,  the Court ruled that prudence
28

could justify the suspension of the certification election proceedings until the issue of the legality of
the union registration could be finally resolved; that the non-submission of the annual financial
statements and the list of members in the period from 1996 to 1999 constituted a serious challenge
to NUWHRAIN-HHMSC’s right to file its petition for the certification election; and that from the time
of the conduct of the certification election on June 23, 2000, the composition of NUWHRAINHHMSC
had substantially changed, thereby necessitating another certification election to determine the true
will of the bargaining unit.

In short, should the petition for the cancellation of union registration based on mixed membership of
supervisors and managers in a labor union, and the non-submission of reportorial requirements to
the DOLE justify the suspension of the proceedings for the certification elections or even the denial
of the petition for the certification election?

Ruling

We deny the petition for review on certiorari.

Basic in the realm of labor unionrights is that the certification election is the sole concern of the
workers,  and the employer is deemed an intruder as far as the certification election is
29

concerned.  Thus, the petitioner lacked the legal personality to assail the proceedings for the
30

certification election,  and should stand aside as a mere bystander who could not oppose the
31

petition, or even appeal the Med-Arbiter’s orders relative to the conduct of the certification
election.  As the Court has explained in Republic v. Kawashima Textile Mfg., Philippines,
32

Inc. (Kawashima):
33

Except when it is requested to bargain collectively, an employer is a mere bystander to any petition
for certification election; such proceeding is non-adversarial and merely investigative, for the
purpose thereof is to determine which organization will represent the employees in their collective
bargaining with the employer. The choice of their representative is the exclusive concern of the
employees; the employer cannot have any partisan interest therein; it cannot interfere with, much
less oppose, the process by filing a motion to dismiss or an appeal from it; not even a mere
allegation that some employees participating in a petition for certification election are actually
managerial employees will lend an employer legal personality to block the certification election. The
employer's only right in the proceeding is to be notified or informed thereof.

The petitioner’s meddling in the conduct of the certification election among its employees unduly
gave rise to the suspicion that it intended to establish a company union.  For that reason, the
34

challenges it posed against the certification election proceedings were rightly denied.

Under the long established rule, too, the filing of the petition for the cancellation of NUWHRAIN-
HHMSC’s registration should not bar the conduct of the certification election.  In that respect, only a
35

final order for the cancellation of the registration would have prevented NUWHRAINHHMSC from
continuing to enjoy all the rights conferred on it as a legitimate labor union, including the rightto the
petition for the certification election.  This rule is now enshrined in Article 238-A of the Labor Code,
36

as amended by Republic Act No. 9481,  which reads:

37

Article 238-A. Effect of a Petition for Cancellation of Registration. – A petition for cancellation of
union registration shall not suspend the proceedings for certification election nor shall it prevent the
filing of a petition for certification election.

xxxx

Still, the petitioner assails the failure of NUWHRAIN-HHMSC to submit its periodic financial reports
and updated list of its members pursuant to Article 238 and Article 239 of the Labor Code. It
contends that the serious challenges against the legitimacy of NUWHRAIN-HHMSC as a union
raised in the petition for the cancellation of union registration should have cautioned the Med-Arbiter
against conducting the certification election.

The petitioner does not convince us.

In The Heritage Hotel Manila v. National Union of Workers in the Hotel, Restaurant and Allied
Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC),  the Court declared
38

that the dismissal of the petition for the cancellation of the registration of NUWHRAIN-HHMSC was
proper when viewed against the primordial right of the workers to self organization, collective
bargaining negotiations and peaceful concerted actions, viz:

xxxx

[Articles 238 and 239 of the Labor Code] give the Regional Director ample discretion in dealing with
a petition for cancellation of a union's registration, particularly, determining whether the union still
meets the requirements prescribed by law. It is sufficient to give the Regional Director license to
treat the late filing of required documents as sufficient compliance with the requirements of the law.
After all, the law requires the labor organization to submit the annual financial report and list of
members in order to verify if it is still viable and financially sustainable as an organization so as to
protect the employer and employees from fraudulent or fly-by-night unions. With the submission of
the required documents by respondent, the purpose of the law has been achieved, though belatedly.

We cannot ascribe abuse of discretion to the Regional Director and the DOLE Secretary in denying
the petition for cancellation of respondent's registration. The union members and, in fact, all the
employees belonging to the appropriate bargaining unit should not be deprived of a bargaining
agent, merely because of the negligence of the union officers who were responsible for the
submission of the documents to the BLR.
Labor authorities should, indeed, act with circumspection in treating petitions for cancellation ofunion
registration, lest they be accused of interfering withunion activities. In resolving the petition,
consideration must be taken of the fundamental rights guaranteed by Article XIII, Section 3 of the
Constitution, i.e., the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities. Labor authorities should bear in mind that registration confers
upon a union the status of legitimacy and the concomitant right and privileges granted by law to a
legitimate labor organization, particularly the right to participate inor ask for certification election in a
bargaining unit. Thus, the cancellation of a certificate of registration is the equivalent of snuffing out
the lifeof a labor organization. For without such registration, it loses - as a rule - its rights under the
Labor Code.

It is worth mentioning that the Labor Code's provisions on cancellation of union registration and on
reportorial requirements have been recently amended by Republic Act (R.A.) No. 9481, 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,
which lapsed into law on May 25, 2007 and became effective on June 14, 2007. The amendment
sought to strengthen the workers’ right to self-organization and enhance the Philippines' compliance
with its international obligations as embodied in the International Labor Organization (ILO)
Convention No. 87, pertaining to the non-dissolution of workers’ organizations by administrative
authority. Thus, R.A. No. 9481 amended Article 239 to read:

ART. 239. Grounds for Cancellation of Union Registration.--The following may 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) Misrepresentation, false statements or fraud in connection with the election of officers,
minutes of the election of officers, and the list of voters;

(c) Voluntary dissolution by the members.

R.A. No. 9481 also inserted inthe Labor Code Article 242-A, which provides:

ART. 242-A. Reportorial Requirements.--The following are documents required to be submitted to

the Bureau by the legitimate labor organization concerned:

(a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the
list of members who took part in the ratification of the constitution and by-laws within thirty
(30) days from adoption or ratification of the constitution and by-laws or amendments
thereto;

(b) Its list of officers, minutesof the election of officers, and list of voters within thirty (30) days
from election;

(c) Its annual financial report within thirty (30) days after the close of every fiscal year; and

(d) Its list of members at least once a year or whenever required by the Bureau.
Failure to comply with the above requirements shall not be a ground for cancellation of union
registration but shall subject the erring officers or members to suspension, expulsion from
membership, or any appropriate penalty.

xxxx

The ruling thereby wrote finisto the challenge being posed by the petitioner against the illegitimacy of
NUWHRAIN-HHMSC.

The remaining issue to be resolved is which among Toyota Motor, Dunlop Slazenger and Tagaytay
Highlands applied in resolving the dispute arising from the mixed membership in NUWHRAIN-
HHMSC.

This is not a novel matter. In Kawashima,  we have reconciled our rulings in Toyota Motor, Dunlop
39

Slazengerand Tagaytay Highlands by emphasizing on the laws prevailing at the time of filing of the
petition for the certification election.

Toyota Motorand Dunlop Slazenger involved petitions for certification election filed on November 26,
1992 and September 15, 1995, respectively. In both cases, we applied the Rules and Regulations
Implementing R.A. No. 6715 (also known as the 1989 Amended Omnibus Rules), the prevailing rule
then.

The 1989 Amended Omnibus Ruleswas amended on June 21, 1997 by Department Order No. 9,
Series of 1997. Among the amendments was the removal of the requirement of indicating in the
petition for the certification election that there was no co-mingling of rank-and-fileand supervisory
employees in the membership of the labor union. This was the prevailing rule when the Court
promulgated Tagaytay Highlands, declaring therein that mixed membership should have no bearing
on the legitimacy of a registered labor organization, unless the co-mingling was due to
misrepresentation, false statement or fraud as provided in Article 239 of the Labor Code.  Presently,
40

then, the mixed membership does not result in the illegitimacy of the registered labor union unless
the same was done through misrepresentation, false statement or fraud according to Article 239 of
the Labor Code. In Air Philippines Corporation v. Bureau of Labor Relations,  we categorically
41

explained that—

Clearly, then, for the purpose of de-certifying a union, it is not enough to establish that the rank-and-
file union includes ineligible employees in its membership. Pursuantto Article 239 (a) and (c) of the
Labor Code, it must be shown that there was misrepresentation, false statement or fraud in
connection withthe adoption or ratification of the constitution and by-laws or amendments thereto,
the minutes of ratification, or in connection with the election of officers, minutes of the election of
officers, the list of voters, or failure to submit these documents together with the list of the newly
elected-appointed officers and their postal addresses to the BLR.

We note that NUWHRAIN-HHMSC filed its petition for the certification election on October 11, 1995.
Conformably with Kawashima, the applicable law was the 1989 Amended Omnibus Rules, and the
prevailing rule was the pronouncement in Toyota Motorand Dunlop Slazenger to the effect that a
labor union of mixed membership was not possessed with the requisite personality to file a petition
for the certification election.

Nonetheless, we still rule in favor of NUWHRAIN-HHMSC. We expound.

In both Toyota Motorand Dunlop Slazenger, the Court was convinced that the concerned labor
unions were comprised by mixed rank-and-file and supervisory employees. In Toyota Motor, the
employer submitted the job descriptions of the concerned employees to prove that there were
supervisors in the petitioning union for rank-and-file employees. In Dunlop Slazenger, the Court
observed that the labor union of supervisors included employees occupying positions that apparently
belonged to the rank-and-file. In both Toyota Motorand Dunlop Slazenger, the employers were able
to adduce substantial evidence to prove the existence of the mixed membership. Based on the
records herein, however, the petitioner failed in that respect. To recall, it raised the issue of the
mixed membership in its comment on the list of members submitted by NUWHRAIN-HHMSC, and in
its protest. In the comment, it merely identified the positions that were either confidential or
managerial, but did not present any supporting evidence to prove or explain the identification. In the
protest, it only enumerated the positions that were allegedly confidential and managerial, and
identified two employees that belonged to the rank-and-file, but did notoffer any description to show
that the positions belonged to different employee groups.

Worth reiterating is that the actualfunctions of an employee, not his job designation, determined
whether the employee occupied a managerial, supervisory or rank-and-file position.  As to 42

confidential employees who were excluded from the right to self-organization, they must (1) assist or
act in a confidential capacity, in regard(2) to persons who formulated, determined, and effectuated
management policies in the field of labor relations.  In that regard, mere allegations sanssubstance
43

would not be enough, most especially because the constitutional right of workers to selforganization
would be compromised.

At any rate, the members of NUWHRAIN-HHSMC had already spoken, and elected it as the
bargaining agent.  As between the rigid application of Toyota Motorsand Dunlop Slazenger, and the
1âwphi1

right of the workers to self-organization, we preferthe latter. For us, the choice is clear and settled.
"What is important is that there is an unmistakeable intent of the members of [the] union to exercise
their right to organize. We cannot impose rigorous restraints on such right if we are to give meaning
to the protection to labor and social justice clauses of the Constitution."
44

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision
promulgated on December 13, 2005 by the Court of Appeals; and ORDERS the petitioner to pay the
costs of suit.

SO ORDERED.

G.R. No. 164301               October 19, 2011

BANK OF THE PHILIPPINE ISLANDS, Petitioner, 

vs.
BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI
UNIBANK, Respondent.

RESOLUTION

LEONARDO-DE CASTRO, J.:

In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for reconsideration1 of
our Decision dated August 10, 2010, holding that former employees of the Far East Bank and Trust
Company (FEBTC) "absorbed" by BPI pursuant to the two banks’ merger in 2000 were covered by
the Union Shop Clause in the then existing collective bargaining agreement (CBA)2 of BPI with
respondent BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank (the Union).
To recall, the Union Shop Clause involved in this long standing controversy provided, thus:

ARTICLE II

xxxx

Section 2. Union Shop - New employees falling within the bargaining unit as defined in Article I of
this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30) days
after they become regular employees, join the Union as a condition of their continued employment. It
is understood that membership in good standing in the Union is a condition of their continued
employment with the Bank.3 (Emphases supplied.)

The bone of contention between the parties was whether or not the "absorbed" FEBTC employees
fell within the definition of "new employees" under the Union Shop Clause, such that they may be
required to join respondent union and if they fail to do so, the Union may request BPI to terminate
their employment, as the Union in fact did in the present case. Needless to state, BPI refused to
accede to the Union’s request. Although BPI won the initial battle at the Voluntary Arbitrator level,
BPI’s position was rejected by the Court of Appeals which ruled that the Voluntary Arbitrator’s
interpretation of the Union Shop Clause was at war with the spirit and rationale why the Labor Code
allows the existence of such provision. On review with this Court, we upheld the appellate court’s
ruling and disposed of the case as follows:

WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30, 2003 of the
Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement imposed herein.
Former FEBTC employees who opt not to become union members but who qualify for retirement
shall receive their retirement benefits in accordance with law, the applicable retirement plan, or the
CBA, as the case may be.4

Notwithstanding our affirmation of the applicability of the Union Shop Clause to former FEBTC
employees, for reasons already extensively discussed in the August 10, 2010 Decision, even now
BPI continues to protest the inclusion of said employees in the Union Shop Clause.

In seeking the reversal of our August 10, 2010 Decision, petitioner insists that the parties to the CBA
clearly intended to limit the application of the Union Shop Clause only to new employees who were
hired as non-regular employees but later attained regular status at some point after hiring. FEBTC
employees cannot be considered new employees as BPI merely stepped into the shoes of FEBTC
as an employer purely as a consequence of the merger.5

Petitioner likewise relies heavily on the dissenting opinions of our respected colleagues, Associate
Justices Antonio T. Carpio and Arturo D. Brion. From both dissenting opinions, petitioner derives its
contention that "the situation of absorbed employees can be likened to old employees of BPI, insofar
as their full tenure with FEBTC was recognized by BPI and their salaries were maintained and
safeguarded from diminution" but such absorbed employees "cannot and should not be treated in
exactly the same way as old BPI employees for there are substantial differences between
them."6 Although petitioner admits that there are similarities between absorbed and new employees,
they insist there are marked differences between them as well. Thus, adopting Justice Brion’s
stance, petitioner contends that the absorbed FEBTC employees should be considered "a sui
generis group of employees whose classification will not be duplicated until BPI has another merger
where it would be the surviving corporation."7 Apparently borrowing from Justice Carpio, petitioner
propounds that the Union Shop Clause should be strictly construed since it purportedly curtails the
right of the absorbed employees to abstain from joining labor organizations.8
Pursuant to our directive, the Union filed its Comment9 on the Motion for Reconsideration. In
opposition to petitioner’s arguments, the Union, in turn, adverts to our discussion in the August 10,
2010 Decision regarding the voluntary nature of the merger between BPI and FEBTC, the lack of an
express stipulation in the Articles of Merger regarding the transfer of employment contracts to the
surviving corporation, and the consensual nature of employment contracts as valid bases for the
conclusion that former FEBTC employees should be deemed new employees.10 The Union argues
that the creation of employment relations between former FEBTC employees and BPI (i.e., BPI’s
selection and engagement of former FEBTC employees, its payment of their wages, power of
dismissal and of control over the employees’ conduct) occurred after the merger, or to be more
precise, after the Securities and Exchange Commission’s (SEC) approval of the merger.11 The Union
likewise points out that BPI failed to offer any counterargument to the Court’s reasoning that:

The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge upon
the individual employee's right or freedom of association, is not to protect the union for the union's
sake. Laws and jurisprudence promote unionism and afford certain protections to the certified
bargaining agent in a unionized company because a strong and effective union presumably benefits
all employees in the bargaining unit since such a union would be in a better position to demand
improved benefits and conditions of work from the employer. x x x.

x x x Nonetheless, settled jurisprudence has already swung the balance in favor of unionism, in
recognition that ultimately the individual employee will be benefited by that policy. In the hierarchy of
constitutional values, this Court has repeatedly held that the right to abstain from joining a labor
organization is subordinate to the policy of encouraging unionism as an instrument of social justice.12

While most of the arguments offered by BPI have already been thoroughly addressed in the August
10, 2010 Decision, we find that a qualification of our ruling is in order only with respect to the
interpretation of the provisions of the Articles of Merger and its implications on the former FEBTC
employees’ security of tenure.

Taking a second look on this point, we have come to agree with Justice Brion’s view that it is more in
keeping with the dictates of social justice and the State policy of according full protection to labor to
deem employment contracts as automatically assumed by the surviving corporation in a merger,
even in the absence of an express stipulation in the articles of merger or the merger plan. In his
dissenting opinion, Justice Brion reasoned that:

To my mind, due consideration of Section 80 of the Corporation Code, the constitutionally declared
policies on work, labor and employment, and the specific FEBTC-BPI situation — i.e., a merger with
complete "body and soul" transfer of all that FEBTC embodied and possessed and where both
participating banks were willing (albeit by deed, not by their written agreement) to provide for the
affected human resources by recognizing continuity of employment — should point this Court to a
declaration that in a complete merger situation where there is total takeover by one corporation over
another and there is silence in the merger agreement on what the fate of the human resource
complement shall be, the latter should not be left in legal limbo and should be properly provided for,
by compelling the surviving entity to absorb these employees. This is what Section 80 of the
Corporation Code commands, as the surviving corporation has the legal obligation to assume all the
obligations and liabilities of the merged constituent corporation.

Not to be forgotten is that the affected employees managed, operated and worked on the transferred
assets and properties as their means of livelihood; they constituted a basic component of their
corporation during its existence. In a merger and consolidation situation, they cannot be treated
without consideration of the applicable constitutional declarations and directives, or, worse, be
simply disregarded. If they are so treated, it is up to this Court to read and interpret the law so that
they are treated in accordance with the legal requirements of mergers and consolidation, read in
light of the social justice, economic and social provisions of our Constitution. Hence, there is a need
for the surviving corporation to take responsibility for the affected employees and to absorb them into
its workforce where no appropriate provision for the merged corporation's human resources
component is made in the Merger Plan.13

By upholding the automatic assumption of the non-surviving corporation’s existing employment

contracts by the surviving corporation in a merger, the Court strengthens judicial protection of the
right to security of tenure of employees affected by a merger and avoids confusion regarding the
status of their various benefits which were among the chief objections of our dissenting colleagues.
However, nothing in this Resolution shall impair the right of an employer to terminate the
employment of the absorbed employees for a lawful or authorized cause or the right of such an
employee to resign, retire or otherwise sever his employment, whether before or after the merger,
subject to existing contractual obligations. In this manner, Justice Brion’s theory of automatic
assumption may be reconciled with the majority’s concerns with the successor employer’s
prerogative to choose its employees and the prohibition against involuntary servitude. 1avvphi1

Notwithstanding this concession, we find no reason to reverse our previous pronouncement that the
absorbed FEBTC employees are covered by the Union Shop Clause.

Even in our August 10, 2010 Decision, we already observed that the legal fiction in the law on
mergers (that the surviving corporation continues the corporate existence of the non-surviving
corporation) is mainly a tool to adjudicate the rights and obligations between and among the merged
corporations and the persons that deal with them.14 Such a legal fiction cannot be unduly extended to
an interpretation of a Union Shop Clause so as to defeat its purpose under labor law. Hence, we
stated in the Decision that:

In any event, it is of no moment that the former FEBTC employees retained the regular status that
they possessed while working for their former employer upon their absorption by petitioner. This fact
would not remove them from the scope of the phrase "new employees" as contemplated in the
Union Shop Clause of the CBA, contrary to petitioner's insistence that the term "new employees"
only refers to those who are initially hired as non-regular employees for possible regular
employment.

The Union Shop Clause in the CBA simply states that "new employees" who during the effectivity of
the CBA "may be regularly employed" by the Bank must join the union within thirty (30) days from
their regularization. There is nothing in the said clause that limits its application to only new
employees who possess non-regular status, meaning probationary status, at the start of their
employment. Petitioner likewise failed to point to any provision in the CBA expressly excluding from
the Union Shop Clause new employees who are "absorbed" as regular employees from the
beginning of their employment. What is indubitable from the Union Shop Clause is that upon the
effectivity of the CBA, petitioner's new regular employees (regardless of the manner by which they
became employees of BPI) are required to join the Union as a condition of their continued
employment.15

Although by virtue of the merger BPI steps into the shoes of FEBTC as a successor employer as if
the former had been the employer of the latter’s employees from the beginning it must be
emphasized that, in reality, the legal consequences of the merger only occur at a specific date, i.e.,
upon its effectivity which is the date of approval of the merger by the SEC. Thus, we observed in the
Decision that BPI and FEBTC stipulated in the Articles of Merger that they will both continue their
respective business operations until the SEC issues the certificate of merger and in the event no
such certificate is issued, they shall hold each other blameless for the non-consummation of the
merger.16We likewise previously noted that BPI made its assignments of the former FEBTC
employees effective on April 10, 2000, or after the SEC approved the merger.17 In other words, the
obligation of BPI to pay the salaries and benefits of the former FEBTC employees and its right of
discipline and control over them only arose with the effectivity of the merger. Concomitantly, the
obligation of former FEBTC employees to render service to BPI and their right to receive benefits
from the latter also arose upon the effectivity of the merger. What is material is that all of these legal
consequences of the merger took place during the life of an existing and valid CBA between BPI and
the Union wherein they have mutually consented to include a Union Shop Clause.

From the plain, ordinary meaning of the terms of the Union Shop Clause, it covers employees who
(a) enter the employ of BPI during the term of the CBA; (b) are part of the bargaining unit (defined in
the CBA as comprised of BPI’s rank and file employees); and (c) become regular employees without
distinguishing as to the manner they acquire their regular status. Consequently, the number of such
employees may adversely affect the majority status of the Union and even its existence itself, as
already amply explained in the Decision.

Indeed, there are differences between (a) new employees who are hired as probationary or
temporary but later regularized, and (b) new employees who, by virtue of a merger, are absorbed
from another company as regular and permanent from the beginning of their employment with the
surviving corporation. It bears reiterating here that these differences are too insubstantial to warrant
the exclusion of the absorbed employees from the application of the Union Shop Clause. In the
Decision, we noted that:

Verily, we agree with the Court of Appeals that there are no substantial differences between a newly
hired non-regular employee who was regularized weeks or months after his hiring and a new
employee who was absorbed from another bank as a regular employee pursuant to a merger, for
purposes of applying the Union Shop Clause. Both employees were hired/employed only after the
CBA was signed. At the time they are being required to join the Union, they are both already regular
rank and file employees of BPI. They belong to the same bargaining unit being represented by the
Union. They both enjoy benefits that the Union was able to secure for them under the CBA. When
they both entered the employ of BPI, the CBA and the Union Shop Clause therein were already in
effect and neither of them had the opportunity to express their preference for unionism or not. We
see no cogent reason why the Union Shop Clause should not be applied equally to these two types
of new employees, for they are undeniably similarly situated.18

Again, it is worthwhile to highlight that a contrary interpretation of the Union Shop Clause would
dilute its efficacy and put the certified union that is supposedly being protected thereby at the mercy
of management. For if the former FEBTC employees had no say in the merger of its former
employer with another bank, as petitioner BPI repeatedly decries on their behalf, the Union likewise
could not prevent BPI from proceeding with the merger which undisputedly affected the number of
employees in the bargaining unit that the Union represents and may negatively impact on the
Union’s majority status. In this instance, we should be guided by the principle that courts must place
a practical and realistic construction upon a CBA, giving due consideration to the context in which it
is negotiated and purpose which it is intended to serve.19

We now come to the question: Does our affirmance of our ruling that former FEBTC employees
absorbed by BPI are covered by the Union Shop Clause violate their right to security of tenure which
we expressly upheld in this Resolution? We answer in the negative.

In Rance v. National Labor Relations Commission,20 we held that:

It is the policy of the state to assure the right of workers to "security of tenure" (Article XIII, Sec. 3 of
the New Constitution, Section 9, Article II of the 1973 Constitution). The guarantee is an act of social
justice. When a person has no property, his job may possibly be his only possession or means of
livelihood. Therefore, he should be protected against any arbitrary deprivation of his job. Article 280
of the Labor Code has construed security of tenure as meaning that "the employer shall not
terminate the services of an employee except for a just cause or when authorized by" the
Code. x x x (Emphasis supplied.)

We have also previously held that the fundamental guarantee of security of tenure and due process
dictates that no worker shall be dismissed except for a just and authorized cause provided by law
and after due process is observed.21 Even as we now recognize the right to continuous, unbroken
employment of workers who are absorbed into a new company pursuant to a merger, it is but logical
that their employment may be terminated for any causes provided for under the law or in
jurisprudence without violating their right to security of tenure. As Justice Carpio discussed in his
dissenting opinion, it is well-settled that termination of employment by virtue of a union security
clause embodied in a CBA is recognized in our jurisdiction.22 In Del Monte Philippines, Inc. v.
Saldivar,23 we explained the rationale for this policy in this wise:

Article 279 of the Labor Code ordains that "in cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by [Title I, Book
Six of the Labor Code]." Admittedly, the enforcement of a closed-shop or union security
provision in the CBA as a ground for termination finds no extension within any of the
provisions under Title I, Book Six of the Labor Code. Yet jurisprudence has consistently
recognized, thus: "It is State policy to promote unionism to enable workers to negotiate with
management on an even playing field and with more persuasiveness than if they were to individually
and separately bargain with the employer. For this reason, the law has allowed stipulations for 'union
shop' and 'closed shop' as means of encouraging workers to join and support the union of their
choice in the protection of their rights and interests vis-a-vis the employer."24 (Emphasis supplied.)

Although it is accepted that non-compliance with a union security clause is a valid ground for an
employee’s dismissal, jurisprudence dictates that such a dismissal must still be done in accordance
with due process. This much we decreed in General Milling Corporation v. Casio,25 to wit:

The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos that:

While respondent company may validly dismiss the employees expelled by the union for disloyalty
under the union security clause of the collective bargaining agreement upon the recommendation by
the union, this dismissal should not be done hastily and summarily thereby eroding the employees'
right to due process, self-organization and security of tenure. The enforcement of union security
clauses is authorized by law provided such enforcement is not characterized by arbitrariness, and
always with due process. Even on the assumption that the federation had valid grounds to expel the
union officers, due process requires that these union officers be accorded a separate hearing by
respondent company.

The twin requirements of notice and hearing constitute the essential elements of procedural due
process. The law requires the employer to furnish the employee sought to be dismissed with two
written notices before termination of employment can be legally effected: (1) a written notice
apprising the employee of the particular acts or omissions for which his dismissal is sought in order
to afford him an opportunity to be heard and to defend himself with the assistance of counsel, if he
desires, and (2) a subsequent notice informing the employee of the employer's decision to dismiss
him. This procedure is mandatory and its absence taints the dismissal with illegality.
Irrefragably, GMC cannot dispense with the requirements of notice and hearing before dismissing
Casio, et al. even when said dismissal is pursuant to the closed shop provision in the CBA. The
rights of an employee to be informed of the charges against him and to reasonable opportunity to
present his side in a controversy with either the company or his own union are not wiped away by a
union security clause or a union shop clause in a collective bargaining agreement. x x x26 (Emphases
supplied.)

In light of the foregoing, we find it appropriate to state that, apart from the fresh thirty (30)-day period
from notice of finality of the Decision given to the affected FEBTC employees to join the Union
before the latter can request petitioner to terminate the former’s employment, petitioner must still
accord said employees the twin requirements of notice and hearing on the possibility that they may
have other justifications for not joining the Union. Similar to our August 10, 2010 Decision, we
reiterate that our ruling presupposes there has been no material change in the situation of the
parties in the interim.

WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated August 10, 2010 is
AFFIRMED, subject to the qualifications that:

(a) Petitioner is deemed to have assumed the employment contracts of the Far East Bank
and Trust Company (FEBTC) employees upon effectivity of the merger without break in the
continuity of their employment, even without express stipulation in the Articles of Merger; and

(b) Aside from the thirty (30) days, counted from notice of finality of the August 10, 2010
Decision, given to former FEBTC employees to join the respondent, said employees shall be
accorded full procedural due process before their employment may be terminated.

SO ORDERED.

G.R. No. 149552               March 10, 2010

GENERAL MILLING CORPORATION, Petitioner, 

vs.
ERNESTO CASIO, ROLANDO IGOT, MARIO FAMADOR, NELSON LIM, FELICISIMO BOOC,
PROCOPIO OBREGON, JR., and ANTONIO ANINIPOK, Respondents,

and

VIRGILIO PINO, PAULINO CABREROS, MA. LUNA P. JUMAOAS, DOMINADOR BOOC, FIDEL
VALLE, BARTOLOME AUMAN, REMEGIO CABANTAN, LORETO GONZAGA, EDILBERTO
MENDOZA and ANTONIO PANILAG, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of
the Decision1dated March 30, 2001 and Resolution2 dated July 18, 2001 of the Court of Appeals in
CA-G.R. SP No. 40280, setting aside the Voluntary Arbitration Award3 dated August 16, 1995 of the
National Conciliation and Mediation Board (NCMB), Cebu City, in VA Case No. AC 389-01-01-95.
Voluntary Arbitrator Alice K. Canonoy-Morada (Canonoy-Morada) dismissed the Complaint filed by
respondents Ernesto Casio, Rolando Igot, Mario Famador, Nelson Lim, Felicisimo Booc, Procopio
Obregon, Jr. and Antonio Aninipok (Casio, et al.) against petitioner General Milling Corporation
(GMC) for unfair labor practice, illegal suspension, illegal dismissal, and payment of moral and
exemplary damages. 

The labor union Ilaw at Buklod ng Mangagawa (IBM)-Local 31 Chapter (Local 31) was the sole and
exclusive bargaining agent of the rank and file employees of GMC in Lapu-Lapu City. On November
30, 1991, IBM-Local 31, through its officers and board members, namely, respondents Virgilio
Pino,4 Paulino Cabreros, Ma. Luna P. Jumaoas, Dominador Booc, Bartolome Auman, Remegio
Cabantan, Fidel Valle, Loreto Gonzaga, Edilberto Mendoza and Antonio Panilag (Pino, et al.),
entered into a Collective Bargaining Agreement (CBA) with GMC. The effectivity of the said CBA
was retroactive to August 1, 1991.5

The CBA contained the following union security provisions:

Section 3. MAINTENANCE OF MEMBERSHIP – All employees/workers employed by the Company

with the exception of those who are specifically excluded by law and by the terms of this Agreement
must be members in good standing of the Union within thirty (30) days upon the signing of this
agreement and shall maintain such membership in good standing thereof as a condition of their
employment or continued employment.

Section 6. The Company, upon written request of the Union, shall terminate the services of any
employee/worker who fails to fulfill the conditions set forth in Sections 3 and 4 thereof, subject
however, to the provisions of the Labor Laws of the Philippines and their Implementing Rules and
Regulations. The Union shall absolve the Company from any and all liabilities, pecuniary or
otherwise, and responsibilities to any employee or worker who is dismissed or terminated in
pursuant thereof.6

Casio, et al. were regular employees of GMC with daily earnings ranging from ₱173.75 to ₱201.50,
and length of service varying from eight to 25 years.7 Casio was elected IBM-Local 31 President for
a three-year term in June 1991, while his co-respondents were union shop stewards. 

In a letter8 dated February 24, 1992, Rodolfo Gabiana (Gabiana), the IBM Regional Director for
Visayas and Mindanao, furnished Casio, et al. with copies of the Affidavits of GMC employees
Basilio Inoc and Juan Potot, charging Casio, et al. with "acts inimical to the interest of the union."
Through the same letter, Gabiana gave Casio, et al. three days from receipt thereof within which to
file their answers or counter-affidavits. However, Casio, et al. refused to acknowledge receipt of
Gabiana’s letter. 

Subsequently, on February 29, 1992, Pino, et al., as officers and members of the IBM-Local 31,
issued a Resolution9 expelling Casio, et al. from the union. Pertinent portions of the Resolution are
reproduced below:

Whereas, Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio Aninipok, Mario Famador,
Nelson Lim and Ernesto Casio, through Ernesto Casio have refused to acknowledge receipt of the
letter-complaint dated February 24, 1992, requiring them to file their answer[s] or counter-affidavits
as against the charge of "acts inimical to the interest of the union" and that in view of such refusal to
acknowledge receipt, a copy of said letter complaint was dropped or left in front of E. Casio;

Whereas, the three (3)[-]day period given to file their answer or counter-affidavit have already lapsed
prompting the union Board to investigate the charge ex parte;
Whereas, after such ex parte investigation the said charge has been more than adequately
substantiated by the affidavits/witnesses and documentary exhibits presented.

NOW, THEREFORE, RESOLVED as it is hereby RESOLVED, that Ernesto Casio, Felicisimo Booc,
Rolando Igot, Procopio Obregon, Jr., Antonio Aninipok, Mario Famador and Nelson Lim be expelled
as union member[s] of good standing effectively immediately. 

RESOLVED FURTHER, to furnish copy of this Resolution to the GMC Management for their
information and guidance with the recommendation as it is hereby recommended to dismiss the
above-named employees from work.

Gabiana then wrote a letter10 dated March 10, 1992, addressed to Eduardo Cabahug (Cabahug),
GMC Vice-President for Engineering and Plant Administration, informing the company of the
expulsion of Casio, et al. from the union pursuant to the Resolution dated February 29, 1992 of IBM-
Local 31 officers and board members. Gabiana likewise requested that Casio, et al. "be immediately
dismissed from their work for the interest of industrial peace in the plant." 

Gabiana followed-up with another letter11 dated March 19, 1992, inquiring from Cabahug why Casio,
et al. were still employed with GMC despite the request of IBM-Local 31 that Casio, et al. be
immediately dismissed from service pursuant to the closed shop provision in the existing CBA.
Gabiana reiterated the demand of IBM-Local 31 that GMC dismiss Casio, et al., with the warning
that failure of GMC to do so would constitute gross violation of the existing CBA and constrain the
union to file a case for unfair labor practice against GMC. 

Pressured by the threatened filing of a suit for unfair labor practice, GMC acceded to Gabiana’s
request to terminate the employment of Casio, et al. GMC issued a Memorandum dated March 24,
1992 terminating the employment of Casio, et al. effective April 24, 1992 and placing the latter under
preventive suspension for the meantime.

On March 27, 1992, Casio, et al., in the name of IBM-Local 31, filed a Notice of Strike with the
NCMB-Regional Office No. VII (NCMB-RO). Casio, et al. alleged as bases for the strike the illegal
dismissal of union officers and members, discrimination, coercion, and union busting. The NCMB-
RO held conciliation proceedings, but no settlement was reached among the parties.12

Casio, et al. next sought recourse from the National Labor Relations Commission (NLRC) Regional
Arbitration Branch VII by filing on August 3, 1992 a Complaint against GMC and Pino, et al. for unfair
labor practice, particularly, the termination of legitimate union officers, illegal suspension, illegal
dismissal, and moral and exemplary damages. Their Complaint was docketed as NLRC Case No.
RAB-VII-08-0639-92.13

Finding that NLRC Case No. RAB-VII-08-0639-92 did not undergo voluntary arbitration, the Labor
Arbiter dismissed the case for lack of jurisdiction, but endorsed the same to the NCMB-RO. Prior to
undergoing voluntary arbitration before the NCMB-RO, however, the parties agreed to first submit
the case to the grievance machinery of IBM-Local 31. On September 7, 1994, Casio, et al. filed their
Complaint with Pino, the Acting President of IBM-Local 31. Pino acknowledged receipt of the
Complaint and assured Casio, et al. that they would be "seasonably notified of whatever decision
and/or action the Board may have in the instant case."14 When the IBM-Local 31 Board failed to hold
grievance proceedings on the Complaint of Casio, et al., NCMB Voluntary Arbitrator Canonoy-
Morada assumed jurisdiction over the same. The Complaint was docketed as VA Case No. AC 389-
01-01-95.
Based on the Position Papers and other documents submitted by the parties,15 Voluntary Arbitrator
Canonoy-Morada rendered on August 16, 1995 a Voluntary Arbitration Award dismissing the
Complaint in VA Case No. AC 389-01-01-95 for lack of merit, but granting separation pay and
attorney’s fees to Casio, et al. The Voluntary Arbitration Award presented the following findings: (1)
the termination by GMC of the employment of Casio, et al. was in valid compliance with the closed
shop provision in the CBA; (2) GMC had no competence to determine the good standing of a union
member; (3) Casio, et al. waived their right to due process when they refused to receive Gabiana’s
letter dated February 24, 1992, which required them to submit their answer to the charges against
them; (4) the preventive suspension of Casio, et al. by GMC was an act of self-defense; and (5) the
IBM-Local 31 Resolution dated February 29, 1992 expelling Casio, et al. as union members, also
automatically ousted them as union officers.16 The dispositive portion of the Voluntary Arbitration
Award reads:

WHEREFORE, above premises considered, this case filed by [Casio, et al.] is hereby ordered
DISMISSED for lack of merit.

Since the dismissal is not for a cause detrimental to the interest of the company, respondent General
Milling Corporation is, nonetheless, ordered to pay separation pay to all [Casio, et al.] within seven
(7) calendar days upon receipt of this order at the rate of one-half month per year of service
reckoned from the time of their employment until the date of their separation on March 24, 1992,
thus:

Employee Date Hired Rate/Month Service Total

(1/2 mo/yr
of service)

Casio April 24/74 ₱2,636.29 x 18 years = ₱47,453.22

Igot May 1980 ₱2,472.75 x 12 years = ₱29,673.00

Famador Feb. 1977 ₱2,498.92 x 15 years = ₱37,483.80

Lim Aug. 1975 ₱2,466.21 x 17 years = ₱41,925.57 

Booc Aug. 1978 ₱2,498.92 x 14 years = ₱34,984.88

Obregon May 1984 ₱2,273.23 x 08 years = ₱18,185.84

Aninipok Sept. 1967 ₱2,616.01 x 25 years = ₱65,400.25

The attorney’s fees for [Casio, et al.’s] counsel shall be ten percent (10%) of the total amount due
them; and shall be shared proportionately by all of the same [Casio, et al.].

All other claims are hereby denied.17

Dissatisfied with the Voluntary Arbitration Award, Casio, et al. went to the Court of Appeals by way of
a Petition for Certiorari under Rule 65 of the Rules of Court to have said Award set aside.

The Court of Appeals granted the writ of certiorari and set aside the Voluntary Arbitration Award. The
appellate court ruled that while the dismissal of Casio, et al., was made by GMC pursuant to a valid
closed shop provision under the CBA, the company, however, failed to observe the elementary rules
of due process in implementing the said dismissal. Consequently, Casio, et al. were entitled to
reinstatement with backwages from the time of their dismissal up to the time of their reinstatement.
Nevertheless, the Court of Appeals did not hold GMC liable to Casio, et al. for moral and exemplary
damages and attorney’s fees, there being no showing that their dismissal was attended by bad faith
or malice, or that the dismissal was effected in a wanton, oppressive, or malevolent manner, given
that GMC merely accommodated the request of IBM-Local 31. The appellate court, instead, made
Pino, et al. liable to Casio, et al., for moral and exemplary damages and attorney’s fees, since it was
on the basis of the imputations and actuations of Pino, et al. that Casio, et al. were illegally
dismissed from employment. The Court of Appeals thus decreed:

WHEREFORE, the assailed award is hereby SET ASIDE, and private respondent General Milling
Corporation is hereby ordered to reinstate [Casio, et al.] to their former positions without loss of
seniority rights, and to pay their full backwages, solidarily with [Pino, et al.]. Further, [Pino, et al.] are
ordered to indemnify each of [Casio, et al.] in the form of moral and exemplary damages in the
amounts of ₱50,000.00 and ₱30,000.00, respectively, and to pay attorney’s fees.18

The Motion for Reconsideration of GMC was denied by the Court of Appeals in the Resolution dated
July 18, 2001.

Hence, GMC filed the instant Petition for Review, arguing that:

THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION WHEN IT SET ASIDE THE AWARD
OF THE VOLUNTARY ARBITRATOR, AND IN AWARDING REINSTATEMENT AND FULL
BACKWAGES TO [Casio, et al.].

II

THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT SAID THAT PETITIONER
GMC FAILED TO ACCORD DUE PROCESS TO [Casio, et al.].

III

THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION WHEN IT DID NOT ABSOLVE
PETITIONER GMC OF ANY LIABILITY AND INSTEAD RULED THAT IT WAS SOLIDARILY LIABLE
WITH THE UNION OFFICERS FOR THE PAYMENT OF FULL BACKWAGES TO [Casio, et al.].

At this point, we take note that Pino, et al. did not appeal from the decision of the Court of Appeals.

GMC avers that in reviewing and reversing the findings of the Voluntary Arbitrator, the Court of
Appeals departed from the principle of conclusiveness of the trial judge’s findings. GMC also claims
that the findings of the Voluntary Arbitrator as to the legality of the termination from employment of
Casio, et al. are well supported by evidence. GMC further insists that before IBP-Local 31 expelled
Casio, et al. from the union and requested GMC to dismiss Casio, et al. from service pursuant to the
closed shop provision in the CBA, IBP-Local 31 already accorded Casio, et al. due process, only that
Casio, et al. refused to avail themselves of such opportunity. GMC additionally maintains that Casio,
et al. were expelled by IBP-Local 31 for "acts inimical to the interest of the union," and GMC had no
authority to inquire into or rule on which employee-member is or is not loyal to the union, this being
an internal affair of the union. Thus, GMC had to rely on the presumption that Pino, et al. regularly
performed their duties and functions as IBP-Local 31 officers and board members, when the latter
investigated and ruled on the charges against Casio, et al.19 GMC finally asserts that Pino, et al., the
IBP-Local 31 officers and board members who resolved to expel Casio, et al. from the union, and not
GMC, should be held liable for the reinstatement of and payment of full backwages to Casio, et al.
for the company had acted in good faith and merely complied with the closed shop provision in the
CBA. 

On the other hand, Casio, et al. counters that GMC failed to identify the specific pieces of evidence
supporting the findings of the Voluntary Arbitrator. Casio, et al. contends that to accord them due
process, GMC itself, as the employer, should have held proceedings distinct and separate from
those conducted by IBM-Local 31. GMC cannot justify its failure to conduct its own inquiry using the
argument that such proceedings would constitute an intrusion by the company into the internal
affairs of the union. The claim of GMC that it had acted in good faith when it dismissed Casio, et al.
from service in accordance with the closed shop provision of the CBA is inconsistent with the failure
of the company to accord the dismissed employees their right to due process. 

In general, in a "petition for review on certiorari as a mode of appeal under Rule 45 of the Rules of
Court, the petitioner can raise only questions of law - the Supreme Court is not the proper venue to
consider a factual issue as it is not a trier of facts. A departure from the general rule may be
warranted where the findings of fact of the Court of Appeals are contrary to the findings and
conclusions of the trial court [or quasi-judicial agency, as the case may be], or when the same is
unsupported by the evidence on record."20

Whether Casio, et al. were illegally dismissed without any valid reason is a question of fact better left
to quasi-judicial agencies to determine. In this case, the Voluntary Arbitrator was convinced that
Casio, et al. were legally dismissed; while the Court of Appeals believed the opposite, because even
though the dismissal of Casio, et al. was made by GMC pursuant to a valid closed shop provision in
the CBA, the company still failed to observe the elementary rules of due process. The Court is
therefore constrained to take a second look at the evidence on record considering that the factual
findings of the Voluntary Arbitrator and the Court of Appeals are contradictory.

There are two aspects which characterize the concept of due process under the Labor Code: one is
substantive – whether the termination of employment was based on the provision of the Labor Code
or in accordance with the prevailing jurisprudence; the other is procedural – the manner in which the
dismissal was effected.21

After a thorough review of the records, the Court agrees with the Court of Appeals. The dismissal of
Casio, et al. was indeed illegal, having been done without just cause and the observance of
procedural due process. 

In Alabang Country Club, Inc. v. National Labor Relations Commission,22 the Court laid down the
grounds for which an employee may be validly terminated, thus:

Under the Labor Code, an employee may be validly terminated on the following grounds: (1) just
causes under Art. 282; (2) authorized causes under Art. 283; (3) termination due to disease under
Art. 284, and (4) termination by the employee or resignation under Art. 285.

Another cause for termination is dismissal from employment due to the enforcement of the union
security clause in the CBA. x x x. (Emphasis ours.)
"Union security" is a generic term, which is applied to and comprehends "closed shop," "union shop,"
"maintenance of membership," or any other form of agreement which imposes upon employees the
obligation to acquire or retain union membership as a condition affecting employment. There is union
shop when all new regular employees are required to join the union within a certain period as a
condition for their continued employment. There is maintenance of membership shop when
employees, who are union members as of the effective date of the agreement, or who thereafter
become members, must maintain union membership as a condition for continued employment until
they are promoted or transferred out of the bargaining unit or the agreement is terminated. A closed
shop, on the other hand, may be defined as an enterprise in which, by agreement between the
employer and his employees or their representatives, no person may be employed in any or certain
agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a union entirely comprised of or of which the
employees in interest are a part.23

Union security clauses are recognized and explicitly allowed under Article 248(e) of the Labor Code,
which provides that:

Art. 248. Unfair Labor Practices of Employers. x x x 

xxxx

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment
in order to encourage or discourage membership in any labor organization. Nothing in this Code or
in any other law shall stop the parties from requiring membership in a recognized collective
bargaining agent as a condition for employment, except those employees who are already members
of another union at the time of the signing of the collective bargaining agreement. (Emphasis
supplied.)

It is State policy to promote unionism to enable workers to negotiate with management on an even
playing field and with more persuasiveness than if they were to individually and separately bargain
with the employer. For this reason, the law has allowed stipulations for "union shop" and "closed
shop" as means of encouraging workers to join and support the union of their choice in the
protection of their rights and interest vis-à-vis the employer.24

Moreover, a stipulation in the CBA authorizing the dismissal of employees are of equal import as the
statutory provisions on dismissal under the Labor Code, since "a CBA is the law between the
company and the union and compliance therewith is mandated by the express policy to give
protection to labor."25

In terminating the employment of an employee by enforcing the union security clause, the employer
needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is
requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient
evidence to support the decision of the union to expel the employee from the union. These requisites
constitute just cause for terminating an employee based on the union security provision of the CBA.26

There is no question that in the present case, the CBA between GMC and IBM-Local 31 included a
maintenance of membership and closed shop clause as can be gleaned from Sections 3 and 6 of
Article II. IBM-Local 31, by written request, can ask GMC to terminate the employment of the
employee/worker who failed to maintain its good standing as a union member. 
It is similarly undisputed that IBM-Local 31, through Gabiana, the IBM Regional Director for Visayas
and Mindanao, twice requested GMC, in the letters dated March 10 and 19, 1992, to terminate the
employment of Casio, et al. as a necessary consequence of their expulsion from the union. 

It is the third requisite – that there is sufficient evidence to support the decision of IBM-Local 31 to
expel Casio, et al. – which appears to be lacking in this case. 

The full text of the individual but identical termination letters,27 served by GMC on Casio, et al., is
very revealing. They read:

To: [Employee’s Name]

From: Legal Counsel

Subject: Dismissal Upon Union Request Thru

CBA Closed Shop Provision

The company is in receipt of two letters dated March 10, 1992 and March 19, 1992 respectively from
the union at the Mill in Lapulapu demanding the termination of your employment pursuant to the
closed shop provision of our existing Collective Bargaining Agreement. It appears from the attached
resolutions that you have been expelled from union membership and has thus ceased to become a
member in good standing. The resolutions are signed by the same officers who executed and signed
our existing CBA, copies of the letters and resolutions are enclosed hereto for your reference.

The CBA in Article II provides the following:

Section 3. MAINTENANCE OF MEMBERSHIP – All employees/workers employed by the Company

with the exception of those who are specifically excluded by law and by the terms of this Agreement
must be members in good standing of the Union within thirty (30) days upon the signing of this
agreement and shall maintain such membership in good standing thereof as a condition of their
employment or continued employment.

Section 6. The Company, upon written request of the Union, shall terminate the services of any
employee/worker who fails to fulfill the conditions set forth in Sections 3 and 4 thereof, subject
however, to the provisions of the Labor Laws of the Philippines and their Implementing Rules and
Regulations. The Union shall absolve the Company from any and all liabilities, pecuniary or
otherwise, and responsibilities to any employee or worker who is dismissed or terminated in
pursuant thereof.

The provisions of the CBA are clear enough. The termination of employment on the basis of the
closed shop provision of the CBA is well recognized in law and in jurisprudence.

There is no valid ground to refuse to terminate. On the other hand as pointed out in the union’s
strongly demanding letter dated March 19, 1992, the company could be sued for unfair labor
practice. While we would have wanted not to accommodate the union’s request, we are left with no
other option. The terms of the CBA should be respected. To refuse to enforce the CBA would result
in the breakdown of industrial peace and the end of harmonious relations between the union and
management. The company would face the collective anger and enmity of its employees who are
union members.
In the light of the union’s very insistent demand, verbal and in writing and to avoid the union
accusation of "coddling" you, and considering the explicitly mandatory language of the closed shop
provision of the CBA, the company is constrained to terminate your employment, to give you ample
time to look and find another employment, and/or exert efforts to become again a member of good
standing of your union, effective April 24, 1992.

In the meantime, to prevent serious danger to the life and property of the company and of its
employees, we are placing you under preventive suspension beginning today. 

It is apparent from the aforequoted letter that GMC terminated the employment of Casio, et al.
relying upon the Resolution dated February 29, 1992 of Pino, et al. expelling Casio, et al. from IBM-
Local 31; Gabiana’s Letters dated March 10 and 19, 1992 demanding that GMC terminate the
employment of Casio, et al. on the basis of the closed shop clause in the CBA; and the threat of
being sued by IBM-Local 31 for unfair labor practice. The letter made no mention at all of the
evidence supporting the decision of IBM-Local 31 to expel Casio, et al. from the union. GMC never
alleged nor attempted to prove that the company actually looked into the evidence of IBM-Local 31
for expelling Casio, et al. and made a determination on the sufficiency thereof. Without such a
determination, GMC cannot claim that it had terminated the employment of Casio, et al. for just
cause. 

The failure of GMC to make a determination of the sufficiency of evidence supporting the decision of
IBM-Local 31 to expel Casio, et al. is a direct consequence of the non-observance by GMC of
procedural due process in the dismissal of employees. 

As a defense, GMC contends that as an employer, its only duty was to ascertain that IBM-Local 31
accorded Casio, et al. due process; and, it is the finding of the company that IBM-Local 31 did give
Casio, et al. the opportunity to answer the charges against them, but they refused to avail
themselves of such opportunity. 

This argument is without basis. 

The Court has stressed time and again that allegations must be proven by sufficient evidence
because mere allegation is definitely not evidence.28 Once more, in Great Southern Maritime
Services Corporation. v. Acuña,29 the Court declared:

Time and again we have ruled that in illegal dismissal cases like the present one, the onus of
proving that the employee was not dismissed or if dismissed, that the dismissal was not illegal, rests
on the employer and failure to discharge the same would mean that the dismissal is not justified and
therefore illegal. Thus, petitioners must not only rely on the weakness of respondents’ evidence but
must stand on the merits of their own defense. A party alleging a critical fact must support his
allegation with substantial evidence for any decision based on unsubstantiated allegation cannot
stand as it will offend due process. x x x. (Emphasis supplied.)

The records of this case are absolutely bereft of any supporting evidence to substantiate the bare
allegation of GMC that Casio, et al. were accorded due process by IBM-Local 31. There is nothing
on record that would indicate that IBM-Local 31 actually notified Casio, et al. of the charges against
them or that they were given the chance to explain their side. All that was stated in the IBM-Local 31
Resolution dated February 29, 1992, expelling Casio, et al. from the union, was that "a copy of the
said letter complaint [dated February 24, 1992] was dropped or left in front of E. Casio."30 It was not
established that said letter-complaint charging Casio, et al. with acts inimical to the interest of the
union was properly served upon Casio, that Casio willfully refused to accept the said letter-notice, or
that Casio had the authority to receive the same letter-notice on behalf of the other employees
similarly accused. It’s worthy to note that Casio, et al. were expelled only five days after the issuance
of the letter-complaint against them. The Court cannot find proof on record when the three-day
period, within which Casio, et al. was supposed to file their answer or counter-affidavits, started to
run and had expired. The Court is likewise unconvinced that the said three-day period was sufficient
for Casio, et al. to prepare their defenses and evidence to refute the serious charges against them. 

Contrary to the position of GMC, the acts of Pino, et al. as officers and board members of IBM-Local
31, in expelling Casio, et al. from the union, do not enjoy the presumption of regularity in the
performance of official duties, because the presumption applies only to public officers from the
highest to the lowest in the service of the Government, departments, bureaus, offices, and/or its
political subdivisions.31

More importantly, in Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc.,32 the Court
issued the following reminder to employers:

The power to dismiss is a normal prerogative of the employer. However, this is not without
limitations. The employer is bound to exercise caution in terminating the services of his employees
especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining
Agreement. x x x. Dismissals must not be arbitrary and capricious. Due process must be observed in
dismissing an employee because it affects not only his position but also his means of livelihood.
Employers should therefore respect and protect the rights of their employees, which include the right
to labor. x x x.
1avvphi1

The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos33 that:

While respondent company may validly dismiss the employees expelled by the union for disloyalty
under the union security clause of the collective bargaining agreement upon the recommendation by
the union, this dismissal should not be done hastily and summarily thereby eroding the employees’
right to due process, self-organization and security of tenure. The enforcement of union security
clauses is authorized by law provided such enforcement is not characterized by arbitrariness, and
always with due process. Even on the assumption that the federation had valid grounds to expel the
union officers, due process requires that these union officers be accorded a separate hearing by
respondent company. (Emphases supplied.)

The twin requirements of notice and hearing constitute the essential elements of procedural due
process. The law requires the employer to furnish the employee sought to be dismissed with two
written notices before termination of employment can be legally effected: (1) a written notice
apprising the employee of the particular acts or omissions for which his dismissal is sought in order
to afford him an opportunity to be heard and to defend himself with the assistance of counsel, if he
desires, and (2) a subsequent notice informing the employee of the employer’s decision to dismiss
him. This procedure is mandatory and its absence taints the dismissal with illegality.34

Irrefragably, GMC cannot dispense with the requirements of notice and hearing before dismissing
Casio, et al. even when said dismissal is pursuant to the closed shop provision in the CBA. The
rights of an employee to be informed of the charges against him and to reasonable opportunity to
present his side in a controversy with either the company or his own union are not wiped away by a
union security clause or a union shop clause in a collective bargaining agreement. An employee is
entitled to be protected not only from a company which disregards his rights but also from his own
union the leadership of which could yield to the temptation of swift and arbitrary expulsion from
membership and hence dismissal from his job.35
In the case at bar, Casio, et al. did not receive any other communication from GMC, except the
written notice of termination dated March 24, 1992. GMC, by its own admission, did not conduct a
separate and independent investigation to determine the sufficiency of the evidence supporting the
expulsion of Casio, et al. by IBP-Local 31. It straight away acceded to the demand of IBP-Local 31 to
dismiss Casio, et al. 

The very same circumstances took place in Liberty Cotton Mills, wherein the Court held that the
employer-company acted in bad faith in dismissing its workers without giving said workers an
opportunity to present their side in the controversy with their union, thus:

While respondent company, under the Maintenance of Membership provision of the Collective
Bargaining Agreement, is bound to dismiss any employee expelled by PAFLU for disloyalty, upon its
written request, this undertaking should not be done hastily and summarily. The company acted in
bad faith in dismissing petitioner workers without giving them the benefit of a hearing. It did not even
bother to inquire from the workers concerned and from PAFLU itself about the cause of the
expulsion of the petitioner workers. Instead, the company immediately dismissed the workers on
May 30, 1964 after its receipt of the request of PAFLU on May 29, 1964 – in a span of only one day
– stating that it had no alternative but to comply with its obligation under the Security Agreement in
the Collective Bargaining Agreement, thereby disregarding the right of the workers to due process,
self-organization and security of tenure.36 (Emphasis ours.)

In sum, the Court finds that GMC illegally dismissed Casio, et al. because not only did GMC fail to
make a determination of the sufficiency of evidence to support the decision of IBM-Local 31 to expel
Casio, et al., but also to accord the expelled union members procedural due process, i.e., notice and
hearing, prior to the termination of their employment 

Consequently, GMC cannot insist that it has no liability for the payment of backwages and damages
to Casio, et al., and that the liability for such payment should fall only upon Pino, et al., as the IBP-
Local 31 officers and board members who expelled Casio, et al. GMC completely missed the point
that the expulsion of Casio, et al. by IBP-Local 31 and the termination of employment of the same
employees by GMC, although related, are two separate and distinct acts. Despite a closed shop
provision in the CBA and the expulsion of Casio, et al. from IBP-Local 31, law and jurisprudence
imposes upon GMC the obligation to accord Casio, et al. substantive and procedural due process
before complying with the demand of IBP-Local 31 to dismiss the expelled union members from
service. The failure of GMC to carry out this obligation makes it liable for illegal dismissal of Casio, et
al. 

In Malayang Samahan ng mga Manggagawa sa M. Greenfield,37 the Court held that notwithstanding

the fact that the dismissal was at the instance of the federation and that the federation undertook to
hold the company free from any liability resulting from the dismissal of several employees, the
company may still be held liable if it was remiss in its duty to accord the would-be dismissed
employees their right to be heard on the matter.

An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and
reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In awarding
separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be
awarded shall be equivalent to one month salary for every year of service. Under Republic Act No.
6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances
and other benefits or their monetary equivalent, computed from the time their actual compensation
was withheld from them up to the time of their actual reinstatement but if reinstatement is no longer
possible, the backwages shall be computed from the time of their illegal termination up to the finality
of the decision. Thus, Casio, et al. are entitled to backwages and separation pay considering that
reinstatement is no longer possible because the positions they previously occupied are no longer
existing, as declared by GMC.38

Casio, et al., having been compelled to litigate in order to seek redress for their illegal dismissal, are
entitled to the award of attorney’s fees equivalent to 10% of the total monetary award.39

WHEREFORE, the instant petition is hereby DENIED. The assailed decision of the Court of Appeals

dated March 30, 2001 in CA-G.R. SP No. 40280 is AFFIRMED.

SO ORDERED.

G.R. No. 160828               August 9, 2010

PICOP RESOURCES, INCORPORATED (PRI), Petitioner, 

vs.
ANACLETO L. TAÑECA, GEREMIAS S. TATO, JAIME N. CAMPOS, MARTINIANO A.
MAGAYON, JOSEPH B. BALGOA, MANUEL G. ABUCAY, MOISES M. ALBARAN, MARGARITO
G. ALICANTE, JERRY ROMEO T. AVILA, LORENZO D. CANON, RAUL P. DUERO, DANILO Y.
ILAN, MANUEL M. MATURAN, JR., LUISITO R. POPERA, CLEMENTINO C. QUIMAN,
ROBERTO Q. SILOT, CHARLITO D. SINDAY, REMBERT B. SUZON ALLAN J. TRIMIDAL, and
NAMAPRI-SPFL, Respondents.

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of
the Decision1dated July 25, 2003 and Resolution2 dated October 23, 2003 of the Court of Appeals in
CA-G.R. SP No. 71760, setting aside the Resolutions dated October 8, 20013 and April 29, 20024 of
the National Labor Relations Commission in NLRC CA No. M-006309-2001 and reinstating the
Decision5 dated March 16, 2001 of the Labor Arbiter.

The facts, as culled from the records, are as follows:

On February 13, 2001, respondents Anacleto Tañeca, Loreto Uriarte, Joseph Balgoa, Jaime
Campos, Geremias Tato, Martiniano Magayon, Manuel Abucay and fourteen (14) others filed a
Complaint for unfair labor practice, illegal dismissal and money claims against petitioner PICOP
Resources, Incorporated (PRI), Wilfredo Fuentes (in his capacity as PRI's Vice President/Resident
Manager), Atty. Romero Boniel (in his capacity as PRI's Manager of Legal/Labor), Southern
Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes (in his capacity as Secretary
General of SPFL), Pascasio Trugillo (in his capacity as Local President of Nagkahiusang Mamumuo
sa PICOP Resources, Inc.- SPFL [NAMAPRI-SPFL]) and Atty. Proculo Fuentes, Jr.6 (in his capacity
as National President of SPFL).

Respondents were regular rank-and-file employees of PRI and bona fide members of Nagkahiusang

Mamumuo saPRI Southern Philippines Federation of Labor (NAMAPRI-SPFL), which is the
collective bargaining agent for the rank-and-file employees of petitioner PRI.

PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a period of five (5) years
from May 22, 1995 until May 22, 2000.
The CBA contained the following union security provisions:

Article II- Union Security and Check-Off

Section 6. Maintenance of membership.

6.1 All employees within the appropriate bargaining unit who are members of
the UNION at the time of the signing of this AGREEMENT shall, as a condition
of continued employment by the COMPANY, maintain their membership in the
UNION in good standing during the effectivity of this AGREEMENT.

6.2 Any employee who may hereinafter be employed to occupy a position covered by
the bargaining unit shall be advised by the COMPANY that they are required to file
an application for membership with the UNION within thirty (30) days from the date
his appointment shall have been made regular.

6.3 The COMPANY, upon the written request of the UNION and after
compliance with the requirements of the New Labor Code, shall give notice of
termination of services of any employee who shall fail to fulfill the condition
provided in Section 6.1 and 6.2 of this Article, but it assumes no obligation to
discharge any employee if it has reasonable grounds to believe either that
membership in the UNION was not available to the employee on the same terms and
conditions generally applicable to other members, or that membership was denied or
terminated for reasons other than voluntary resignation or non-payment of regular
union dues. Separation under the Section is understood to be for cause,
consequently, the dismissed employee is not entitled to separation benefits provided
under the New Labor Code and in this AGREEMENT."7

On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the management of PRI
demanding the termination of employees who allegedly campaigned for, supported and signed the
Petition for Certification Election of the Federation of Free Workers Union (FFW) during the
effectivity of the CBA. NAMAPRI-SPFL considered said act of campaigning for and signing the
petition for certification election of FFW as an act of disloyalty and a valid basis for termination for a
cause in accordance with its Constitution and By-Laws, and the terms and conditions of the CBA,
specifically Article II, Sections 6.1 and 6.2 on Union Security Clause.

In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the management of PRI to
investigate those union members who signed the Petition for Certification Election of FFW during the
existence of their CBA. NAMAPRI-SPFL, likewise, furnished PRI with machine copy of the
authorization letters dated March 19, 20 and 21, 2000, which contained the names and signatures of
employees.

Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty. Romero A. Boniel
issued a memorandum addressed to the concerned employees to explain in writing within 72 hours
why their employment should not be terminated due to acts of disloyalty as alleged by their Union.

Within the period from May 26 to June 2, 2000, a number of employees who were served
"explanation memorandum" submitted their explanation, while some did not.

In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of the employees to Atty.
Fuentes for evaluation and final disposition in accordance with the CBA. 
After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the management of PRI that
the Union found the member's explanations to be unsatisfactory. He reiterated the demand for
termination, but only of 46 member-employees, including respondents.

On October 16, 2000, PRI served notices of termination for causes to the 31 out of the 46
employees whom NAMAPRIL-SPFL sought to be terminated on the ground of "acts of disloyalty"
committed against it when respondents allegedly supported and signed the Petition for Certification
Election of FFW before the "freedom period" during the effectivity of the CBA. A Notice dated
October 21, 2000 was also served on the Department of Labor and Employment Office (DOLE),
Caraga Region. 

Respondents then accused PRI of Unfair Labor Practice punishable under Article 248 (a), (b), (c),
(d) and (e) of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes and Pascasio Trujillo were
accused of violating Article 248 (a) and (b) of the Labor Code.

Respondents alleged that none of them ever withdrew their membership from NAMAPRI-SPFL or
submitted to PRI any union dues and check-off disauthorizations against NAMAPRI-SPFL. They
claimed that they continue to remain on record as bona fide members of NAMAPRI-SPFL. They
pointed out that a patent manifestation of one’s disloyalty would have been the explicit resignation or
withdrawal of membership from the Union accompanied by an advice to management to discontinue
union dues and check-off deductions. They insisted that mere affixation of signature on such
authorization to file a petition for certification election was not per se an act of disloyalty. They
claimed that while it may be true that they signed the said authorization before the start of the
freedom period, the petition of FFW was only filed with the DOLE on May 18, 2000, or 58 days after
the start of the freedom period. 

Respondents maintained that their acts of signing the authorization signifying support to the filing of
a Petition for Certification Election of FFW was merely prompted by their desire to have a
certification election among the rank-and-file employees of PRI with hopes of a CBA negotiation in
due time; and not to cause the downfall of NAMAPRI-SPFL.

Furthermore, respondents contended that there was lack of procedural due process. Both the letter
dated May 16, 2000 of Atty. Fuentes and the follow-up letter dated May 23, 2000 of Trujillo
addressed to PRI did not mention their names. Respondents stressed that NAMAPRI-SPFL merely
requested PRI to investigate union members who supported the Petition for Certification Election of
FFW. Respondents claimed that they should have been summoned individually, confronted with the
accusation and investigated accordingly and from where the Union may base its findings of
disloyalty and, thereafter, recommend to management the termination for causes. 1avvphi1

Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded their termination, it was
no longer the bargaining representative of the rank-and-file workers of PRI, because the CBA had
already expired on May 22, 2000. Hence, there could be no justification in PRI’s act of dismissing
respondents due to acts of disloyalty. 

Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in giving in to the
wishes of the Union in discharging them on the ground of disloyalty to the Union amounted to
interference with, restraint or coercion of respondents’ exercise of their right to self-organization. The
act indirectly required petitioners to support and maintain their membership with NAMAPRI-SPFL as
a condition for their continued employment. The acts of NAMAPRI-SPFL, Atty. Fuentes and Trujillo
amounted to actual restraint and coercion of the petitioners in the exercise of their rights to self-
organization and constituted acts of unfair labor practice. 
In a Decision8 dated March 16, 2001, the Labor Arbiter declared the respondents’ dismissal to be
illegal and ordered PRI to reinstate respondents to their former or equivalent positions without loss of
seniority rights and to jointly and solidarily pay their backwages. The dispositive portion of which
reads:

WHEREFORE, premises considered, judgment is hereby entered:

1. Declaring complainants’ dismissal illegal; and

2. Ordering respondents Picop Resources Inc. (PRI) and NAMAPRI-SPFL to reinstate

complainants to their former or equivalent positions without loss of seniority rights and to
jointly and solidarily pay their backwages in the total amount of ₱420,339.30 as shown in the
said Annex "A" plus damages in the amount of ₱10,000.00 each, or a total of ₱210,000.00
and attorney’s fees equivalent to 10% of the total monetary award.

SO ORDERED.9

PRI and NAMAPRI-SPFL appealed to the National Labor Relations Commission (NLRC), which
reversed the decision of the Labor Arbiter; thus, declaring the dismissal of respondents from
employment as legal.

Respondents filed a motion for reconsideration, but it was denied on April 29, 2001 for lack of merit.

Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the Court of Appeals and
sought the nullification of the Resolution of the NLRC dated October 8, 2001 which reversed the
Decision dated March 16. 2001 of Labor Arbiter and the Resolution dated April 29, 2002, which
denied respondent’s motion for reconsideration.

On July 25, 2003, the Court of Appeals reversed and set aside the assailed Resolutions of the NLRC
and reinstated the Decision dated March 16, 2001 of the Labor Arbiter.

Thus, before this Court, PRI, as petitioner, raised the following issues:

WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING AGREEMENT (CBA) CAN BE

GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITION INCLUDING ITS
UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS
YET BEEN ENTERED INTO.

II

WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF

LAW FALL WITHIN THE AMBIT OF THE EXTRAORDINARY REMEDY OF CERTIORARI UNDER
RULE 65, REVISED RULES OF COURT.10

We will first delve on the technical issue raised.

PRI perceived a patent error in the mode of appeal elected by respondents for the purpose of
assailing the decision of the NLRC. It claimed that assuming that the NLRC erred in its judgment on
the legal issues, its error, if any, is not tantamount to abuse of discretion falling within the ambit of
Rule 65.

Petitioner is mistaken.

The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition
for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National
Labor Relations Commission.11 This Court held that the proper vehicle for such review was a Special
Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in
the Court of Appeals in strict observance of the doctrine of the hierarchy of courts.12 Moreover, it is
already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No.
7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of
Section Nine of Batas Pambansa Blg. 129 as amended, known as the  Judiciary Reorganization Act
of 1980), the Court of Appeals – pursuant to the exercise of its original jurisdiction over Petitions
for Certiorari – is specifically given the power to pass upon the evidence, if and when necessary, to
resolve factual issues. 13

We now come to the main issue of whether there was just cause to terminate the employment of
respondents.

PRI argued that the dismissal of the respondents was valid and legal. It claimed to have acted in
good faith at the instance of the incumbent union pursuant to the Union Security Clause of the CBA.

Citing Article 253 of the Labor Code,14 PRI contends that as parties to the CBA, they are enjoined to
keep the status quo and continue in full force and effect the terms and conditions of the existing CBA
during the 60-day period and/or until a new agreement is reached by the parties.

Petitioner's argument is untenable.

"Union security" is a generic term, which is applied to and comprehends "closed shop," "union shop,"
"maintenance of membership," or any other form of agreement which imposes upon employees the
obligation to acquire or retain union membership as a condition affecting employment. There is union
shop when all new regular employees are required to join the union within a certain period as a
condition for their continued employment. There is maintenance of membership shop when
employees, who are union members as of the effective date of the agreement, or who thereafter
become members, must maintain union membership as a condition for continued employment until
they are promoted or transferred out of the bargaining unit, or the agreement is terminated. A closed
shop, on the other hand, may be defined as an enterprise in which, by agreement between the
employer and his employees or their representatives, no person may be employed in any or certain
agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a union entirely comprised of or of which the
employees in interest are a part.15

However, in terminating the employment of an employee by enforcing the union security clause, the
employer needs to determine and prove that: (1) the union security clause is applicable; (2) the
union is requesting for the enforcement of the union security provision in the CBA; and (3) there is
sufficient evidence to support the decision of the union to expel the employee from the union. These
requisites constitute just cause for terminating an employee based on the union security provision of
the CBA.16

As to the first requisite, there is no question that the CBA between PRI and respondents included a
union security clause, specifically, a maintenance of membership as stipulated in Sections 6 of
Article II, Union Security and Check-Off. Following the same provision, PRI, upon written request
from the Union, can indeed terminate the employment of the employee who failed to maintain its
good standing as a union member.

Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2) occasions demanded from PRI,
in their letters dated May 16 and 23, 2000, to terminate the employment of respondents due to their
acts of disloyalty to the Union.

However, as to the third requisite, we find that there is no sufficient evidence to support the decision
of PRI to terminate the employment of the respondents.

PRI alleged that respondents were terminated from employment based on the alleged acts of
disloyalty they committed when they signed an authorization for the Federation of Free Workers
(FFW) to file a Petition for Certification Election among all rank-and-file employees of PRI. It
contends that the acts of respondents are a violation of the Union Security Clause, as provided in
their Collective Bargaining Agreement.

We are unconvinced.

We are in consonance with the Court of Appeals when it held that the mere signing of the
authorization in support of the Petition for Certification Election of FFW on March 19, 20 and 21, or
before the "freedom period," is not sufficient ground to terminate the employment of respondents
inasmuch as the petition itself was actually filed during the freedom period. Nothing in the records
would show that respondents failed to maintain their membership in good standing in the Union.
Respondents did not resign or withdraw their membership from the Union to which they belong.
Respondents continued to pay their union dues and never joined the FFW. 

Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an
authorization letter to file a petition for certification election as they signed it outside the freedom
period. However, we are constrained to believe that an "authorization letter to file a petition for
certification election" is different from an actual "Petition for Certification Election." Likewise, as per
records, it was clear that the actual Petition for Certification Election of FFW was filed only on May
18, 2000.17 Thus, it was within the ambit of the freedom period which commenced from March 21,
2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for certification
election outside the 60-day freedom period.18 This is not the situation in this case. If at all, the signing
of the authorization to file a certification election was merely preparatory to the filing of the petition
for certification election, or an exercise of respondents’ right to self-organization. 

Moreover, PRI anchored their decision to terminate respondents’ employment on Article 253 of the
Labor Code which states that "it shall be the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of the existing agreement during
the 60-day period and/or until a new agreement is reached by the parties." It claimed that they
are still bound by the Union Security Clause of the CBA even after the expiration of the CBA; hence,
the need to terminate the employment of respondents.

Petitioner's reliance on Article 253 is misplaced.

The provision of Article 256 of the Labor Code is particularly enlightening. It reads:

Article 256. Representation issue in organized establishments. - In organized establishments, when

a verified petition questioning the majority status of the incumbent bargaining agent is filed before
the Department of Labor and Employment within the sixty-day period before the expiration of a
collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret
ballot when the verified petition is supported by the written consent of at least twenty-five percent
(25%) of all the employees in the bargaining unit to ascertain the will of the employees in the
appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the
unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be
certified as the exclusive bargaining agent of all the workers in the unit. When an election which
provides for three or more choices results in no choice receiving a majority of the valid votes cast, a
run-off election shall be conducted between the labor unions receiving the two highest number of
votes: Provided, That the total number of votes for all contending unions is at least fifty per cent
(50%) of the number of votes cast.

At the expiration of the freedom period, the employer shall continue to recognize the majority
status of the incumbent bargaining agent where no petition for certification election is filed. 19

Applying the same provision, it can be said that while it is incumbent for the employer to continue to
recognize the majority status of the incumbent bargaining agent even after the expiration of the
freedom period, they could only do so when no petition for certification election was filed. The reason
is, with a pending petition for certification, any such agreement entered into by management with a
labor organization is fraught with the risk that such a labor union may not be chosen thereafter as
the collective bargaining representative.20 The provision for status quo is conditioned on the fact that
no certification election was filed during the freedom period. Any other view would render nugatory
the clear statutory policy to favor certification election as the means of ascertaining the true
expression of the will of the workers as to which labor organization would represent them.21

In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for
certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23,
2000.22 Therefore, following Article 256, at the expiration of the freedom period, PRI's obligation to
recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when petitions for
certification election were filed, as in this case.

Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the
economic provisions of the CBA, and does not include representational aspect of the CBA. An
existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a
representational issue, the status quo provision in so far as the need to await the creation of a new
agreement will not apply. Otherwise, it will create an absurd situation where the union members will
be forced to maintain membership by virtue of the union security clause existing under the CBA and,
thereafter, support another union when filing a petition for certification election. If we apply it, there
will always be an issue of disloyalty whenever the employees exercise their right to self-organization.
The holding of a certification election is a statutory policy that should not be circumvented,23 or
compromised. 1avvphi

Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers.
Their freedom to choose who should be their bargaining representative is of paramount importance.
The fact that there already exists a bargaining representative in the unit concerned is of no moment
as long as the petition for certification election was filed within the freedom period. What is
imperative is that by such a petition for certification election the employees are given the opportunity
to make known of who shall have the right to represent them thereafter. Not only some, but all of
them should have the right to do so. What is equally important is that everyone be given a
democratic space in the bargaining unit concerned.24
We will emphasize anew that the power to dismiss is a normal prerogative of the employer. This,
however, is not without limitations. The employer is bound to exercise caution in terminating the
services of his employees especially so when it is made upon the request of a labor union pursuant
to the Collective Bargaining Agreement. Dismissals must not be arbitrary and capricious. Due
process must be observed in dismissing an employee, because it affects not only his position but
also his means of livelihood. Employers should, therefore, respect and protect the rights of their
employees, which include the right to labor.25

An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and
reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In awarding
separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be
awarded shall be equivalent to one month salary for every year of service. Under Republic Act No.
6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances
and other benefits, or their monetary equivalent, computed from the time their actual compensation
was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer
possible, the backwages shall be computed from the time of their illegal termination up to the finality
of the decision. Moreover, respondents, having been compelled to litigate in order to seek redress
for their illegal dismissal, are entitled to the award of attorney’s fees equivalent to 10% of the total
monetary award.26

WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and the Resolution dated
October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, which set aside the Resolutions
dated October 8, 2001 and April 29, 2002 of the National Labor Relations Commission in NLRC CA
No. M-006309-2001, are AFFIRMED accordingly. Respondents are hereby awarded full backwages
and other allowances, without qualifications and diminutions, computed from the time they were
illegally dismissed up to the time they are actually reinstated. Let this case be remanded to the Labor
Arbiter for proper computation of the full backwages due respondents, in accordance with Article 279
of the Labor Code, as expeditiously as possible.

SO ORDERED. 

G.R. No. L-25246 September 12, 1974

BENJAMIN VICTORIANO, Plaintiff-Appellee, vs. ELIZALDE ROPE

WORKERS' UNION and ELIZALDE ROPE FACTORY, INC., defendants,
ELIZALDE ROPE WORKERS' UNION, Defendant-Appellant.

Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee.

Cipriano Cid & Associates for defendant-appellant.

ZALDIVAR, J.:

Appeal to this Court on purely questions of law from the decision of the
Court of First Instance of Manila in its Civil Case No. 58894. chanroblesvirtualawlibrary chanrobles virtual law library

The undisputed facts that spawned the instant case follow: chanrobles virtual law library
Benjamin Victoriano (hereinafter referred to as Appellee), a member of the
religious sect known as the "Iglesia ni Cristo", had been in the employ of the
Elizalde Rope Factory, Inc. (hereinafter referred to as Company) since 1958.
As such employee, he was a member of the Elizalde Rope Workers' Union
(hereinafter referred to as Union) which had with the Company a collective
bargaining agreement containing a closed shop provision which reads as
follows:

Membership in the Union shall be required as a condition of employment for

all permanent employees workers covered by this Agreement.

The collective bargaining agreement expired on March 3, 1964 but was

renewed the following day, March 4, 1964. chanroblesvirtualawlibrary chanrobles virtual law library

Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its
amendment by Republic Act No. 3350, the employer was not precluded
"from making an agreement with a labor organization to require as a
condition of employment membership therein, if such labor organization is
the representative of the employees." On June 18, 1961, however, Republic
Act No. 3350 was enacted, introducing an amendment to - paragraph (4)
subsection (a) of section 4 of Republic Act No. 875, as follows: ... "but such
agreement shall not cover members of any religious sects which prohibit
affiliation of their members in any such labor organization". chanroblesvirtualawlibrary chanrobles virtual law library

Being a member of a religious sect that prohibits the affiliation of its

members with any labor organization, Appellee presented his resignation to
appellant Union in 1962, and when no action was taken thereon, he
reiterated his resignation on September 3, 1974. Thereupon, the Union
wrote a formal letter to the Company asking the latter to separate Appellee
from the service in view of the fact that he was resigning from the Union as
a member. The management of the Company in turn notified Appellee and
his counsel that unless the Appellee could achieve a satisfactory
arrangement with the Union, the Company would be constrained to dismiss
him from the service. This prompted Appellee to file an action for injunction,
docketed as Civil Case No. 58894 in the Court of First Instance of Manila to
enjoin the Company and the Union from dismissing Appellee.  1In its answer,
the Union invoked the "union security clause" of the collective bargaining
agreement; assailed the constitutionality of Republic Act No. 3350; and
contended that the Court had no jurisdiction over the case, pursuant to
Republic Act No. 875, Sections 24 and 9 (d) and (e).  2Upon the facts agreed
upon by the parties during the pre-trial conference, the Court a
quo rendered its decision on August 26, 1965, the dispositive portion of
which reads:
IN VIEW OF THE FOREGOING, judgment is rendered enjoining the defendant
Elizalde Rope Factory, Inc. from dismissing the plaintiff from his present
employment and sentencing the defendant Elizalde Rope Workers' Union to
pay the plaintiff P500 for attorney's fees and the costs of this action.  3 chanrobles virtual law library

From this decision, the Union appealed directly to this Court on purely
questions of law, assigning the following errors:

I. That the lower court erred when it did not rule that Republic Act No. 3350
is unconstitutional. chanroblesvirtualawlibrary chanrobles virtual law library

II. That the lower court erred when it sentenced appellant herein to pay
plaintiff the sum of P500 as attorney's fees and the cost thereof.

In support of the alleged unconstitutionality of Republic Act No. 3350, the

Union contented, firstly, that the Act infringes on the fundamental right to
form lawful associations; that "the very phraseology of said Republic Act
3350, that membership in a labor organization is banned to all those
belonging to such religious sect prohibiting affiliation with any labor
organization" 4, "prohibits all the members of a given religious sect from
joining any labor union if such sect prohibits affiliations of their members
thereto" 5; and, consequently, deprives said members of their constitutional
right to form or join lawful associations or organizations guaranteed by the
Bill of Rights, and thus becomes obnoxious to Article III, Section 1 (6) of the
1935 Constitution. 6 chanrobles virtual law library

Secondly, the Union contended that Republic Act No. 3350 is

unconstitutional for impairing the obligation of contracts in that, while the
Union is obliged to comply with its collective bargaining agreement
containing a "closed shop provision," the Act relieves the employer from its
reciprocal obligation of cooperating in the maintenance of union membership
as a condition of employment; and that said Act, furthermore, impairs the
Union's rights as it deprives the union of dues from members who, under the
Act, are relieved from the obligation to continue as such members.  7 chanrobles virtual law library

Thirdly, the Union contended that Republic Act No. 3350 discriminatorily
favors those religious sects which ban their members from joining labor
unions, in violation of Article Ill, Section 1 (7) of the 1935 Constitution; and
while said Act unduly protects certain religious sects, it leaves no rights or
protection to labor organizations. 8 chanrobles virtual law library

Fourthly, Republic Act No. 3350, asserted the Union, violates the
constitutional provision that "no religious test shall be required for the
exercise of a civil right," in that the laborer's exercise of his civil right to join
associations for purposes not contrary to law has to be determined under the
Act by his affiliation with a religious sect; that conversely, if a worker has to
sever his religious connection with a sect that prohibits membership in a
labor organization in order to be able to join a labor organization, said Act
would violate religious freedom.9 chanrobles virtual law library

Fifthly, the Union contended that Republic Act No. 3350, violates the "equal
protection of laws" clause of the Constitution, it being a discriminately
legislation, inasmuch as by exempting from the operation of closed shop
agreement the members of the "Iglesia ni Cristo", it has granted said
members undue advantages over their fellow workers, for while the Act
exempts them from union obligation and liability, it nevertheless entitles
them at the same time to the enjoyment of all concessions, benefits and
other emoluments that the union might secure from the employer. 10 chanrobles virtual law library

Sixthly, the Union contended that Republic Act No. 3350 violates the
constitutional provision regarding the promotion of social justice. 11 chanrobles virtual law library

Appellant Union, furthermore, asserted that a "closed shop provision" in a

collective bargaining agreement cannot be considered violative of religious
freedom, as to call for the amendment introduced by Republic Act No.
3350; 12and that unless Republic Act No. 3350 is declared unconstitutional,
trade unionism in this country would be wiped out as employers would prefer
to hire or employ members of the Iglesia ni Cristo in order to do away with
labor organizations. 13chanrobles virtual law library

Appellee, assailing appellant's arguments, contended that Republic Act No.

3350 does not violate the right to form lawful associations, for the right to
join associations includes the right not to join or to resign from a labor
organization, if one's conscience does not allow his membership therein, and
the Act has given substance to such right by prohibiting the compulsion of
workers to join labor organizations; 14that said Act does not impair the
obligation of contracts for said law formed part of, and was incorporated
into, the terms of the closed shop agreement; 15that the Act does not violate
the establishment of religion clause or separation of Church and State, for
Congress, in enacting said law, merely accommodated the religious needs of
those workers whose religion prohibits its members from joining labor
unions, and balanced the collective rights of organized labor with the
constitutional right of an individual to freely exercise his chosen religion;
that the constitutional right to the free exercise of one's religion has primacy
and preference over union security measures which are merely
contractual 16; that said Act does not violate the constitutional provision of
equal protection, for the classification of workers under the Act depending on
their religious tenets is based on substantial distinction, is germane to the
purpose of the law, and applies to all the members of a given class; 17that
said Act, finally, does not violate the social justice policy of the Constitution,
for said Act was enacted precisely to equalize employment opportunities for
all citizens in the midst of the diversities of their religious beliefs." 18 chanrobles virtual law library

I. Before We proceed to the discussion of the first assigned error, it is

necessary to premise that there are some thoroughly established principles
which must be followed in all cases where questions of constitutionality as
obtains in the instant case are involved. All presumptions are indulged in
favor of constitutionality; one who attacks a statute, alleging
unconstitutionality must prove its invalidity beyond a reasonable doubt, that
a law may work hardship does not render it unconstitutional; that if any
reasonable basis may be conceived which supports the statute, it will be
upheld, and the challenger must negate all possible bases; that the courts
are not concerned with the wisdom, justice, policy, or expediency of a
statute; and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. 19 chanrobles virtual law library

1. Appellant Union's contention that Republic Act No. 3350 prohibits and

bans the members of such religious sects that forbid affiliation of their
members with labor unions from joining labor unions appears nowhere in the
wording of Republic Act No. 3350; neither can the same be deduced by
necessary implication therefrom. It is not surprising, therefore, that
appellant, having thus misread the Act, committed the error of contending
that said Act is obnoxious to the constitutional provision on freedom of
association.chanroblesvirtualawlibrary chanrobles virtual law library

Both the Constitution and Republic Act No. 875 recognize freedom of
association. Section 1 (6) of Article III of the Constitution of 1935, as well as
Section 7 of Article IV of the Constitution of 1973, provide that the right to
form associations or societies for purposes not contrary to law shall not be
abridged. Section 3 of Republic Act No. 875 provides that employees shall
have the right to self-organization and to form, join of assist labor
organizations of their own choosing for the purpose of collective bargaining
and to engage in concerted activities for the purpose of collective bargaining
and other mutual aid or protection. What the Constitution and the Industrial
Peace Act recognize and guarantee is the "right" to form or join associations.
Notwithstanding the different theories propounded by the different schools of
jurisprudence regarding the nature and contents of a "right", it can be safely
said that whatever theory one subscribes to, a right comprehends at least
two broad notions, namely: first, liberty or freedom, i.e., the absence of
legal restraint, whereby an employee may act for himself without being
prevented by law; and second, power, whereby an employee may, as he
pleases, join or refrain from Joining an association. It is, therefore, the
employee who should decide for himself whether he should join or not an
association; and should he choose to join, he himself makes up his mind as
to which association he would join; and even after he has joined, he still
retains the liberty and the power to leave and cancel his membership with
said organization at any time. 20It is clear, therefore, that the right to join a
union includes the right to abstain from joining any union. 21Inasmuch as
what both the Constitution and the Industrial Peace Act have recognized,
and guaranteed to the employee, is the "right" to join associations of his
choice, it would be absurd to say that the law also imposes, in the same
breath, upon the employee the duty to join associations. The law does not
enjoin an employee to sign up with any association. chanroblesvirtualawlibrary chanrobles virtual law library

The right to refrain from joining labor organizations recognized by Section 3

of the Industrial Peace Act is, however, limited. The legal protection granted
to such right to refrain from joining is withdrawn by operation of law, where
a labor union and an employer have agreed on a closed shop, by virtue of
which the employer may employ only member of the collective bargaining
union, and the employees must continue to be members of the union for the
duration of the contract in order to keep their jobs. Thus Section 4 (a) (4) of
the Industrial Peace Act, before its amendment by Republic Act No. 3350,
provides that although it would be an unfair labor practice for an employer
"to discriminate in regard to hire or tenure of employment or any term or
condition of employment to encourage or discourage membership in any
labor organization" the employer is, however, not precluded "from making
an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the
representative of the employees". By virtue, therefore, of a closed shop
agreement, before the enactment of Republic Act No. 3350, if any person,
regardless of his religious beliefs, wishes to be employed or to keep his
employment, he must become a member of the collective bargaining union.
Hence, the right of said employee not to join the labor union is curtailed and
withdrawn. chanroblesvirtualawlibrary chanrobles virtual law library

To that all-embracing coverage of the closed shop arrangement, Republic

Act No. 3350 introduced an exception, when it added to Section 4 (a) (4) of
the Industrial Peace Act the following proviso: "but such agreement shall not
cover members of any religious sects which prohibit affiliation of their
members in any such labor organization". Republic Act No. 3350 merely
excludes ipso jure from the application and coverage of the closed shop
agreement the employees belonging to any religious sects which prohibit
affiliation of their members with any labor organization. What the exception
provides, therefore, is that members of said religious sects cannot be
compelled or coerced to join labor unions even when said unions have closed
shop agreements with the employers; that in spite of any closed shop
agreement, members of said religious sects cannot be refused employment
or dismissed from their jobs on the sole ground that they are not members
of the collective bargaining union. It is clear, therefore, that the assailed Act,
far from infringing the constitutional provision on freedom of association,
upholds and reinforces it. It does not prohibit the members of said religious
sects from affiliating with labor unions. It still leaves to said members the
liberty and the power to affiliate, or not to affiliate, with labor unions. If,
notwithstanding their religious beliefs, the members of said religious sects
prefer to sign up with the labor union, they can do so. If in deference and
fealty to their religious faith, they refuse to sign up, they can do so; the law
does not coerce them to join; neither does the law prohibit them from
joining; and neither may the employer or labor union compel them to join.
Republic Act No. 3350, therefore, does not violate the constitutional
provision on freedom of association. chanroblesvirtualawlibrary chanrobles virtual law library

2. Appellant Union also contends that the Act is unconstitutional for

impairing the obligation of its contract, specifically, the "union security
clause" embodied in its Collective Bargaining Agreement with the Company,
by virtue of which "membership in the union was required as a condition for
employment for all permanent employees workers". This agreement was
already in existence at the time Republic Act No. 3350 was enacted on June
18, 1961, and it cannot, therefore, be deemed to have been incorporated
into the agreement. But by reason of this amendment, Appellee, as well as
others similarly situated, could no longer be dismissed from his job even if
he should cease to be a member, or disaffiliate from the Union, and the
Company could continue employing him notwithstanding his disaffiliation
from the Union. The Act, therefore, introduced a change into the express
terms of the union security clause; the Company was partly absolved by law
from the contractual obligation it had with the Union of employing only Union
members in permanent positions, It cannot be denied, therefore, that there
was indeed an impairment of said union security clause. chanroblesvirtualawlibrary chanrobles virtual law library

According to Black, any statute which introduces a change into the express
terms of the contract, or its legal construction, or its validity, or its
discharge, or the remedy for its enforcement, impairs the contract. The
extent of the change is not material. It is not a question of degree or
manner or cause, but of encroaching in any respect on its obligation or
dispensing with any part of its force. There is an impairment of the contract
if either party is absolved by law from its performance. 22Impairment has
also been predicated on laws which, without destroying contracts, derogate
from substantial contractual rights. 23 chanrobles virtual law library

It should not be overlooked, however, that the prohibition to impair the

obligation of contracts is not absolute and unqualified. The prohibition is
general, affording a broad outline and requiring construction to fill in the
details. The prohibition is not to be read with literal exactness like a
mathematical formula, for it prohibits unreasonable impairment only. 24In
spite of the constitutional prohibition, the State continues to possess
authority to safeguard the vital interests of its people. Legislation
appropriate to safeguarding said interests may modify or abrogate contracts
already in effect. 25For not only are existing laws read into contracts in order
to fix the obligations as between the parties, but the reservation of essential
attributes of sovereign power is also read into contracts as a postulate of the
legal order. All contracts made with reference to any matter that is subject
to regulation under the police power must be understood as made in
reference to the possible exercise of that power. 26Otherwise, important and
valuable reforms may be precluded by the simple device of entering into
contracts for the purpose of doing that which otherwise may be prohibited.
The policy of protecting contracts against impairment presupposes the
maintenance of a government by virtue of which contractual relations are
worthwhile a government which retains adequate authority to secure the
peace and good order of society. The contract clause of the Constitution
must, therefore, be not only in harmony with, but also in subordination to, in
appropriate instances, the reserved power of the state to safeguard the vital
interests of the people. It follows that not all legislations, which have the
effect of impairing a contract, are obnoxious to the constitutional prohibition
as to impairment, and a statute passed in the legitimate exercise of police
power, although it incidentally destroys existing contract rights, must be
upheld by the courts. This has special application to contracts regulating
relations between capital and labor which are not merely contractual, and
said labor contracts, for being impressed with public interest, must yield to
the common good. 27 chanrobles virtual law library

In several occasions this Court declared that the prohibition against

impairing the obligations of contracts has no application to statutes relating
to public subjects within the domain of the general legislative powers of the
state involving public welfare. 28Thus, this Court also held that the Blue
Sunday Law was not an infringement of the obligation of a contract that
required the employer to furnish work on Sundays to his employees, the law
having been enacted to secure the well-being and happiness of the laboring
class, and being, furthermore, a legitimate exercise of the police power. 29 chanrobles virtual law library

In order to determine whether legislation unconstitutionally impairs contract

obligations, no unchanging yardstick, applicable at all times and under all
circumstances, by which the validity of each statute may be measured or
determined, has been fashioned, but every case must be determined upon
its own circumstances. Legislation impairing the obligation of contracts can
be sustained when it is enacted for the promotion of the general good of the
people, and when the means adopted to secure that end are reasonable.
Both the end sought and the means adopted must be legitimate, i.e., within
the scope of the reserved power of the state construed in harmony with the
constitutional limitation of that power. 30 chanrobles virtual law library

What then was the purpose sought to be achieved by Republic Act No. 3350?
Its purpose was to insure freedom of belief and religion, and to promote the
general welfare by preventing discrimination against those members of
religious sects which prohibit their members from joining labor unions,
confirming thereby their natural, statutory and constitutional right to work,
the fruits of which work are usually the only means whereby they can
maintain their own life and the life of their dependents. It cannot be gainsaid
that said purpose is legitimate. chanroblesvirtualawlibrary chanrobles virtual law library

The questioned Act also provides protection to members of said religious

sects against two aggregates of group strength from which the individual
needs protection. The individual employee, at various times in his working
life, is confronted by two aggregates of power - collective labor, directed by
a union, and collective capital, directed by management. The union, an
institution developed to organize labor into a collective force and thus
protect the individual employee from the power of collective capital, is,
paradoxically, both the champion of employee rights, and a new source of
their frustration. Moreover, when the Union interacts with management, it
produces yet a third aggregate of group strength from which the individual
also needs protection - the collective bargaining relationship. 31 chanrobles virtual law library

The aforementioned purpose of the amendatory law is clearly seen in the

Explanatory Note to House Bill No. 5859, which later became Republic Act
No. 3350, as follows:

It would be unthinkable indeed to refuse employing a person who, on

account of his religious beliefs and convictions, cannot accept membership in
a labor organization although he possesses all the qualifications for the job.
This is tantamount to punishing such person for believing in a doctrine he
has a right under the law to believe in. The law would not allow
discrimination to flourish to the detriment of those whose religion discards
membership in any labor organization. Likewise, the law would not commend
the deprivation of their right to work and pursue a modest means of
livelihood, without in any manner violating their religious faith and/or
belief. 32
chanrobles virtual law library

It cannot be denied, furthermore, that the means adopted by the Act to

achieve that purpose - exempting the members of said religious sects from
coverage of union security agreements - is reasonable. chanroblesvirtualawlibrary chanrobles virtual law library
It may not be amiss to point out here that the free exercise of religious
profession or belief is superior to contract rights. In case of conflict, the
latter must, therefore, yield to the former. The Supreme Court of the United
States has also declared on several occasions that the rights in the First
Amendment, which include freedom of religion, enjoy a preferred position in
the constitutional system. 33Religious freedom, although not unlimited, is a
fundamental personal right and liberty, 34and has a preferred position in the
hierarchy of values. Contractual rights, therefore, must yield to freedom of
religion. It is only where unavoidably necessary to prevent an immediate
and grave danger to the security and welfare of the community that
infringement of religious freedom may be justified, and only to the smallest
extent necessary to avoid the danger. chanroblesvirtualawlibrary chanrobles virtual law library

3. In further support of its contention that Republic Act No. 3350 is

unconstitutional, appellant Union averred that said Act discriminates in favor
of members of said religious sects in violation of Section 1 (7) of Article Ill of
the 1935 Constitution, and which is now Section 8 of Article IV of the 1973
Constitution, which provides:

No law shall be made respecting an establishment of religion, or prohibiting

the free exercise thereof, and the free exercise and enjoyment of religious
profession and worship, without discrimination and preference, shall forever
be allowed. No religious test shall be required for the exercise of civil or
political rights.

The constitutional provision into only prohibits legislation for the support of
any religious tenets or the modes of worship of any sect, thus forestalling
compulsion by law of the acceptance of any creed or the practice of any form
of worship, 35but also assures the free exercise of one's chosen form of
religion within limits of utmost amplitude. It has been said that the religion
clauses of the Constitution are all designed to protect the broadest possible
liberty of conscience, to allow each man to believe as his conscience directs,
to profess his beliefs, and to live as he believes he ought to live, consistent
with the liberty of others and with the common good. 36Any legislation whose
effect or purpose is to impede the observance of one or all religions, or to
discriminate invidiously between the religions, is invalid, even though the
burden may be characterized as being only indirect. 37But if the stage
regulates conduct by enacting, within its power, a general law which has for
its purpose and effect to advance the state's secular goals, the statute is
valid despite its indirect burden on religious observance, unless the state can
accomplish its purpose without imposing such burden. 38 chanrobles virtual law library

In Aglipay v. Ruiz 39, this Court had occasion to state that the government
should not be precluded from pursuing valid objectives secular in character
even if the incidental result would be favorable to a religion or sect. It has
likewise been held that the statute, in order to withstand the strictures of
constitutional prohibition, must have a secular legislative purpose and a
primary effect that neither advances nor inhibits religion. 40Assessed by
these criteria, Republic Act No. 3350 cannot be said to violate the
constitutional inhibition of the "no-establishment" (of religion) clause of the
Constitution.chanroblesvirtualawlibrary chanrobles virtual law library

The purpose of Republic Act No. 3350 is secular, worldly, and temporal, not
spiritual or religious or holy and eternal. It was intended to serve the secular
purpose of advancing the constitutional right to the free exercise of religion,
by averting that certain persons be refused work, or be dismissed from
work, or be dispossessed of their right to work and of being impeded to
pursue a modest means of livelihood, by reason of union security
agreements. To help its citizens to find gainful employment whereby they
can make a living to support themselves and their families is a valid
objective of the state. In fact, the state is enjoined, in the 1935 Constitution,
to afford protection to labor, and regulate the relations between labor and
capital and industry. 41More so now in the 1973 Constitution where it is
mandated that "the State shall afford protection to labor, promote full
employment and equality in employment, ensure equal work opportunities
regardless of sex, race or creed and regulate the relation between workers
and employers. 42 chanrobles virtual law library

The primary effects of the exemption from closed shop agreements in favor
of members of religious sects that prohibit their members from affiliating
with a labor organization, is the protection of said employees against the
aggregate force of the collective bargaining agreement, and relieving certain
citizens of a burden on their religious beliefs; and by eliminating to a certain
extent economic insecurity due to unemployment, which is a serious menace
to the health, morals, and welfare of the people of the State, the Act also
promotes the well-being of society. It is our view that the exemption from
the effects of closed shop agreement does not directly advance, or diminish,
the interests of any particular religion. Although the exemption may benefit
those who are members of religious sects that prohibit their members from
joining labor unions, the benefit upon the religious sects is merely incidental
and indirect. The "establishment clause" (of religion) does not ban regulation
on conduct whose reason or effect merely happens to coincide or harmonize
with the tenets of some or all religions. 43The free exercise clause of the
Constitution has been interpreted to require that religious exercise be
preferentially aided. 44 chanrobles virtual law library

We believe that in enacting Republic Act No. 3350, Congress acted

consistently with the spirit of the constitutional provision. It acted merely to
relieve the exercise of religion, by certain persons, of a burden that is
imposed by union security agreements. It was Congress itself that imposed
that burden when it enacted the Industrial Peace Act (Republic Act 875),
and, certainly, Congress, if it so deems advisable, could take away the same
burden. It is certain that not every conscience can be accommodated by all
the laws of the land; but when general laws conflict with scrupples of
conscience, exemptions ought to be granted unless some "compelling state
interest" intervenes. 45In the instant case, We see no such compelling state
interest to withhold exemption. chanroblesvirtualawlibrary chanrobles virtual law library

Appellant bewails that while Republic Act No. 3350 protects members of
certain religious sects, it leaves no right to, and is silent as to the protection
of, labor organizations. The purpose of Republic Act No. 3350 was not to
grant rights to labor unions. The rights of labor unions are amply provided
for in Republic Act No. 875 and the new Labor Code. As to the lamented
silence of the Act regarding the rights and protection of labor unions, suffice
it to say, first, that the validity of a statute is determined by its provisions,
not by its silence 46; and, second, the fact that the law may work hardship
does not render it unconstitutional. 47 chanrobles virtual law library

It would not be amiss to state, regarding this matter, that to compel persons
to join and remain members of a union to keep their jobs in violation of their
religious scrupples, would hurt, rather than help, labor unions, Congress has
seen it fit to exempt religious objectors lest their resistance spread to other
workers, for religious objections have contagious potentialities more than
political and philosophic objections. chanroblesvirtualawlibrary chanrobles virtual law library

Furthermore, let it be noted that coerced unity and loyalty even to the
country, and a fortiori to a labor - union assuming that such unity and
loyalty can be attained through coercion - is not a goal that is
constitutionally obtainable at the expense of religious liberty. 48A desirable
end cannot be promoted by prohibited means. chanroblesvirtualawlibrary chanrobles virtual law library

4. Appellants' fourth contention, that Republic Act No. 3350 violates the
constitutional prohibition against requiring a religious test for the exercise of
a civil right or a political right, is not well taken. The Act does not require as
a qualification, or condition, for joining any lawful association membership in
any particular religion or in any religious sect; neither does the Act require
affiliation with a religious sect that prohibits its members from joining a
labor union as a condition or qualification for withdrawing from a labor
union. Joining or withdrawing from a labor union requires a positive act.
Republic Act No. 3350 only exempts members with such religious affiliation
from the coverage of closed shop agreements. So, under this Act, a religious
objector is not required to do a positive act - to exercise the right to join or
to resign from the union. He is exempted ipso jure without need of any
positive act on his part. A conscientious religious objector need not perform
a positive act or exercise the right of resigning from the labor union - he is
exempted from the coverage of any closed shop agreement that a labor
union may have entered into. How then can there be a religious test
required for the exercise of a right when no right need be exercised? chanrobles virtual law library

We have said that it was within the police power of the State to enact
Republic Act No. 3350, and that its purpose was legal and in consonance
with the Constitution. It is never an illegal evasion of a constitutional
provision or prohibition to accomplish a desired result, which is lawful in
itself, by discovering or following a legal way to do it. 49 chanrobles virtual law library

5. Appellant avers as its fifth ground that Republic Act No. 3350 is a
discriminatory legislation, inasmuch as it grants to the members of certain
religious sects undue advantages over other workers, thus violating Section
1 of Article III of the 1935 Constitution which forbids the denial to any
person of the equal protection of the laws. 50 chanrobles virtual law library

The guaranty of equal protection of the laws is not a guaranty of equality in

the application of the laws upon all citizens of the state. It is not, therefore,
a requirement, in order to avoid the constitutional prohibition against
inequality, that every man, woman and child should be affected alike by a
statute. Equality of operation of statutes does not mean indiscriminate
operation on persons merely as such, but on persons according to the
circumstances surrounding them. It guarantees equality, not identity of
rights. The Constitution does not require that things which are different in
fact be treated in law as though they were the same. The equal protection
clause does not forbid discrimination as to things that are different. 51It does
not prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate. chanroblesvirtualawlibrary chanrobles virtual law library

The equal protection of the laws clause of the Constitution allows

classification. Classification in law, as in the other departments of knowledge
or practice, is the grouping of things in speculation or practice because they
agree with one another in certain particulars. A law is not invalid because of
simple inequality. 52The very idea of classification is that of inequality, so
that it goes without saying that the mere fact of inequality in no manner
determines the matter of constitutionality. 53All that is required of a valid
classification is that it be reasonable, which means that the classification
should be based on substantial distinctions which make for real differences;
that it must be germane to the purpose of the law; that it must not be
limited to existing conditions only; and that it must apply equally to each
member of the class. 54This Court has held that the standard is satisfied if
the classification or distinction is based on a reasonable foundation or
rational basis and is not palpably arbitrary. 55 chanrobles virtual law library

In the exercise of its power to make classifications for the purpose of

enacting laws over matters within its jurisdiction, the state is recognized as
enjoying a wide range of discretion. 56It is not necessary that the
classification be based on scientific or marked differences of things or in their
relation. 57Neither is it necessary that the classification be made with
mathematical nicety. 58Hence legislative classification may in many cases
properly rest on narrow distinctions, 59for the equal protection guaranty does
not preclude the legislature from recognizing degrees of evil or harm, and
legislation is addressed to evils as they may appear. chanroblesvirtualawlibrary chanrobles virtual law library

We believe that Republic Act No. 3350 satisfies the aforementioned

requirements. The Act classifies employees and workers, as to the effect and
coverage of union shop security agreements, into those who by reason of
their religious beliefs and convictions cannot sign up with a labor union, and
those whose religion does not prohibit membership in labor unions. Tile
classification rests on real or substantial, not merely imaginary or whimsical,
distinctions. There is such real distinction in the beliefs, feelings and
sentiments of employees. Employees do not believe in the same religious
faith and different religions differ in their dogmas and cannons. Religious
beliefs, manifestations and practices, though they are found in all places,
and in all times, take so many varied forms as to be almost beyond
imagination. There are many views that comprise the broad spectrum of
religious beliefs among the people. There are diverse manners in which
beliefs, equally paramount in the lives of their possessors, may be
articulated. Today the country is far more heterogenous in religion than
before, differences in religion do exist, and these differences are important
and should not be ignored. chanroblesvirtualawlibrary chanrobles virtual law library

Even from the phychological point of view, the classification is based on real
and important differences. Religious beliefs are not mere beliefs, mere ideas
existing only in the mind, for they carry with them practical consequences
and are the motives of certain rules. of human conduct and the justification
of certain acts. 60Religious sentiment makes a man view things and events in
their relation to his God. It gives to human life its distinctive character, its
tone, its happiness or unhappiness its enjoyment or irksomeness. Usually, a
strong and passionate desire is involved in a religious belief. To certain
persons, no single factor of their experience is more important to them than
their religion, or their not having any religion. Because of differences in
religious belief and sentiments, a very poor person may consider himself
better than the rich, and the man who even lacks the necessities of life may
be more cheerful than the one who has all possible luxuries. Due to their
religious beliefs people, like the martyrs, became resigned to the inevitable
and accepted cheerfully even the most painful and excruciating pains.
Because of differences in religious beliefs, the world has witnessed turmoil,
civil strife, persecution, hatred, bloodshed and war, generated to a large
extent by members of sects who were intolerant of other religious beliefs.
The classification, introduced by Republic Act No. 3350, therefore, rests on
substantial distinctions. chanroblesvirtualawlibrary chanrobles virtual law library

The classification introduced by said Act is also germane to its purpose. The
purpose of the law is precisely to avoid those who cannot, because of their
religious belief, join labor unions, from being deprived of their right to work
and from being dismissed from their work because of union shop security
agreements. chanroblesvirtualawlibrary chanrobles virtual law library

Republic Act No. 3350, furthermore, is not limited in its application to

conditions existing at the time of its enactment. The law does not provide
that it is to be effective for a certain period of time only. It is intended to
apply for all times as long as the conditions to which the law is applicable
exist. As long as there are closed shop agreements between an employer
and a labor union, and there are employees who are prohibited by their
religion from affiliating with labor unions, their exemption from the coverage
of said agreements continues. chanroblesvirtualawlibrary chanrobles virtual law library

Finally, the Act applies equally to all members of said religious sects; this is
evident from its provision. The fact that the law grants a privilege to
members of said religious sects cannot by itself render the Act
unconstitutional, for as We have adverted to, the Act only restores to them
their freedom of association which closed shop agreements have taken
away, and puts them in the same plane as the other workers who are not
prohibited by their religion from joining labor unions. The circumstance, that
the other employees, because they are differently situated, are not granted
the same privilege, does not render the law unconstitutional, for every
classification allowed by the Constitution by its nature involves inequality.
virtual law library
chanroblesvirtualawlibrary chanrobles

The mere fact that the legislative classification may result in actual
inequality is not violative of the right to equal protection, for every
classification of persons or things for regulation by law produces inequality in
some degree, but the law is not thereby rendered invalid. A classification
otherwise reasonable does not offend the constitution simply because in
practice it results in some inequality. 61Anent this matter, it has been said
that whenever it is apparent from the scope of the law that its object is for
the benefit of the public and the means by which the benefit is to be
obtained are of public character, the law will be upheld even though
incidental advantage may occur to individuals beyond those enjoyed by the
general public. 62 chanrobles virtual law library

6. Appellant's further contention that Republic Act No. 3350 violates the
constitutional provision on social justice is also baseless. Social justice is
intended to promote the welfare of all the people. 63Republic Act No. 3350
promotes that welfare insofar as it looks after the welfare of those who,
because of their religious belief, cannot join labor unions; the Act prevents
their being deprived of work and of the means of livelihood. In determining
whether any particular measure is for public advantage, it is not necessary
that the entire state be directly benefited - it is sufficient that a portion of
the state be benefited thereby. chanroblesvirtualawlibrary chanrobles virtual law library

Social justice also means the adoption by the Government of measures

calculated to insure economic stability of all component elements of society,
through the maintenance of a proper economic and social equilibrium in the
inter-relations of the members of the community. 64Republic Act No. 3350
insures economic stability to the members of a religious sect, like the Iglesia
ni Cristo, who are also component elements of society, for it insures security
in their employment, notwithstanding their failure to join a labor union
having a closed shop agreement with the employer. The Act also advances
the proper economic and social equilibrium between labor unions and
employees who cannot join labor unions, for it exempts the latter from the
compelling necessity of joining labor unions that have closed shop
agreements and equalizes, in so far as opportunity to work is concerned,
those whose religion prohibits membership in labor unions with those whose
religion does not prohibit said membership. Social justice does not imply
social equality, because social inequality will always exist as long as social
relations depend on personal or subjective proclivities. Social justice does
not require legal equality because legal equality, being a relative term, is
necessarily premised on differentiations based on personal or natural
conditions. 65Social justice guarantees equality of opportunity 66, and this is
precisely what Republic Act No. 3350 proposes to accomplish - it gives
laborers, irrespective of their religious scrupples, equal opportunity for
work.chanroblesvirtualawlibrary chanrobles virtual law library

7. As its last ground, appellant contends that the amendment introduced by

Republic Act No. 3350 is not called for - in other words, the Act is not
proper, necessary or desirable. Anent this matter, it has been held that a
statute which is not necessary is not, for that reason, unconstitutional; that
in determining the constitutional validity of legislation, the courts are
unconcerned with issues as to the necessity for the enactment of the
legislation in question. 67Courts do inquire into the wisdom of
laws. 68Moreover, legislatures, being chosen by the people, are presumed to
understand and correctly appreciate the needs of the people, and it may
change the laws accordingly. 69The fear is entertained by appellant that
unless the Act is declared unconstitutional, employers will prefer employing
members of religious sects that prohibit their members from joining labor
unions, and thus be a fatal blow to unionism. We do not agree. The threat to
unionism will depend on the number of employees who are members of the
religious sects that control the demands of the labor market. But there is
really no occasion now to go further and anticipate problems We cannot
judge with the material now before Us. At any rate, the validity of a statute
is to be determined from its general purpose and its efficacy to accomplish
the end desired, not from its effects on a particular case. 70The essential
basis for the exercise of power, and not a mere incidental result arising from
its exertion, is the criterion by which the validity of a statute is to be
measured. 71 chanrobles virtual law library

II. We now pass on the second assignment of error, in support of which the
Union argued that the decision of the trial court ordering the Union to pay
P500 for attorney's fees directly contravenes Section 24 of Republic Act No.
875, for the instant action involves an industrial dispute wherein the Union
was a party, and said Union merely acted in the exercise of its rights under
the union shop provision of its existing collective bargaining contract with
the Company; that said order also contravenes Article 2208 of the Civil
Code; that, furthermore, Appellee was never actually dismissed by the
defendant Company and did not therefore suffer any damage at all . 72 chanrobles virtual law library

In refuting appellant Union's arguments, Appellee claimed that in the instant

case there was really no industrial dispute involved in the attempt to compel
Appellee to maintain its membership in the union under pain of dismissal,
and that the Union, by its act, inflicted intentional harm on Appellee; that
since Appellee was compelled to institute an action to protect his right to
work, appellant could legally be ordered to pay attorney's fees under Articles
1704 and 2208 of the Civil Code. 73 chanrobles virtual law library

The second paragraph of Section 24 of Republic Act No. 875 which is relied
upon by appellant provides that:

No suit, action or other proceedings shall be maintainable in any court

against a labor organization or any officer or member thereof for any act
done by or on behalf of such organization in furtherance of an industrial
dispute to which it is a party, on the ground only that such act induces some
other person to break a contract of employment or that it is in restraint of
trade or interferes with the trade, business or employment of some other
person or with the right of some other person to dispose of his capital or
labor. (Emphasis supplied)
That there was a labor dispute in the instant case cannot be disputed for
appellant sought the discharge of respondent by virtue of the closed shop
agreement and under Section 2 (j) of Republic Act No. 875 a question
involving tenure of employment is included in the term "labor dispute". 74The
discharge or the act of seeking it is the labor dispute itself. It being the labor
dispute itself, that very same act of the Union in asking the employer to
dismiss Appellee cannot be "an act done ... in furtherance of an industrial
dispute". The mere fact that appellant is a labor union does not necessarily
mean that all its acts are in furtherance of an industrial dispute. 75Appellant
Union, therefore, cannot invoke in its favor Section 24 of Republic Act No.
875. This case is not intertwined with any unfair labor practice case existing
at the time when Appellee filed his complaint before the lower court. chanroblesvirtualawlibrary chanrobles virtual law library

Neither does Article 2208 of the Civil Code, invoked by the Union, serve as
its shield. The article provides that attorney's fees and expenses of litigation
may be awarded "when the defendant's act or omission has compelled the
plaintiff ... to incur expenses to protect his interest"; and "in any other case
where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered". In the instant case, it cannot be
gainsaid that appellant Union's act in demanding Appellee's dismissal caused
Appellee to incur expenses to prevent his being dismissed from his job.
Costs according to Section 1, Rule 142, of the Rules of Court, shall be
allowed as a matter of course to the prevailing party. chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, the instant appeal is dismissed, and the decision, dated August
26, 1965, of the Court of First Instance of Manila, in its Civil Case No.
58894, appealed from is affirmed, with costs against appellant Union. It is so
ordered.

G.R. No. 82914 June 20, 1988

KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS Local Chapter No. 1027), petitioner, 
vs.
THE HONORABLE BLR DIRECTOR PURA FERRER CALLEJA, MEAT AND CANNING DIVISION
UNIVERSAL ROBINA CORPORATION and MEAT AND CANNING DIVISION NEW EMPLOYEES
AND WORKERS UNITED LABOR ORGANIZATION, respondents. 

Alar, Comia, Manalo and Associates for petitioner. 

Danilo Bolos for respondent Robina Corporation. 

R E S O L U T I O N 

GRIÑO-AQUINO, J.:
The petitioner, Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027) hereinafter referred to as "TUPAS," seeks a review
of the resolution dated January 27, 1988 (Annex D) of public respondent Pura Ferrer-Calleja, Director of the Bureau of Labor Relations,
dismissing its appeal from the Order dated November 17, 1987 (Annex C) of the Med-Arbiter Rasidali C. Abdullah ordering a certification
election to be conducted among the regular daily paid rank and file employees/workers of Universal Robina Corporation-Meat and Canning
Division to determine which of the contending unions: 

a) Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 (or
"TUPAS" for brevity); 

b) Meat and Canning Division New Employees and Workers United Labor
Organization (or "NEW ULO" for brevity); 

c) No union. 

shall be the bargaining unit of the daily wage rank and file employees in the Meat and Canning
Division of the company. 

From 1984 to 1987 TUPAS was the sole and exclusive collective bargaining representative of the
workers in the Meat and Canning Division of the Universal Robina Corporation, with a 3-year
collective bargaining agreement (CBA) which was to expire on November 15, 1987. 

Within the freedom period of 60 days prior to the expiration of its CBA, TUPAS filed an amended
notice of strike on September 28, 1987 as a means of pressuring the company to extend, renew, or
negotiate a new CBA with it. 

On October 8, 1987, the NEW ULO, composed mostly of workers belonging to the IGLESIA NI
KRISTO sect, registered as a labor union. 

On October 12, 1987, the TUPAS staged a strike. ROBINA obtained an injunction against the strike,
resulting in an agreement to return to work and for the parties to negotiate a new CBA. 

The next day, October 13, 1987, NEW ULO, claiming that it has "the majority of the daily wage rank
and file employees numbering 191," filed a petition for a certification election at the Bureau of Labor
Relations (Annex A). 

TUPAS moved to dismiss the petition for being defective in form and that the members of the NEW
ULO were mostly members of the Iglesia ni Kristo sect which three (3) years previous refused to
affiliate with any labor union. It also accused the company of using the NEW ULO to defeat TUPAS'
bargaining rights (Annex B). 

On November 17, 1987, the Med-Arbiter ordered the holding of a certification election within 20 days
(Annex C). 

TUPAS appealed to the Bureau of Labor Relations BLR. In the meantime, it was able to negotiate a
new 3-year CBA with ROBINA, which was signed on December 3, 1987 and to expire on November
15, 1990. 

On January 27, 1988, respondent BLR Director Calleja dismissed the appeal (Annex D). 

TUPAS' motion for reconsideration (Annex E) was denied on March 17, 1988 (Annex F). On April 30,
1988, it filed this petition alleging that the public respondent acted in excess of her jurisdiction and
with grave abuse of discretion in affirming the Med-Arbiter's order for a certification election. 
After deliberating on the petition and the documents annexed thereto, We find no merit in the
Petition. The public respondent did not err in dismissing the petitioner's appeal in BLR Case No. A-
12-389-87. This Court's decision in Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54,
upholding the right of members of the IGLESIA NI KRISTO sect not to join a labor union for being
contrary to their religious beliefs, does not bar the members of that sect from forming their own
union. The public respondent correctly observed that the "recognition of the tenets of the sect ...
should not infringe on the basic right of self-organization granted by the constitution to workers,
regardless of religious affiliation." 

The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom
period of the existing CBA, does not foreclose the right of the rival union, NEW ULO, to challenge
TUPAS' claim to majority status, by filing a timely petition for certification election on October 13,
1987 before TUPAS' old CBA expired on November 15, 1987 and before it signed a new CBA with
the company on December 3, 1987. As pointed out by Med-Arbiter Abdullah, a "certification election
is the best forum in ascertaining the majority status of the contending unions wherein the workers
themselves can freely choose their bargaining representative thru secret ballot." Since it has not
been shown that this order is tainted with unfairness, this Court will not thwart the holding of a
certification election (Associated Trade Unions [ATU] vs. Noriel, 88 SCRA 96). 

WHEREFORE, the petition for certiorari is denied, with costs against the petitioner. 

SO ORDERED.

G.R. No. 167141               March 13, 2009

SAMAHAN NG MGA MANGGAGAWA SA SAMMA-LAKAS SA INDUSTRIYA NG KAPATIRANG

HALIGI NG ALYANSA (SAMMA-LIKHA), Petitioner, 
vs.
SAMMA CORPORATION, Respondent.

DECISION

This is a petition for review on certiorari1 of the August 31, 2004 decision2 and February 15, 2005
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 77156.

Petitioner Samahan ng mga Manggagawa sa Samma– Lakas sa Industriya ng Kapatirang Haligi ng

Alyansa (SAMMA-LIKHA) filed a petition for certification election on July 24, 2001 in the Department
of Labor and Employment (DOLE), Regional Office IV.4 It claimed that: (1) it was a local chapter of
the LIKHA Federation, a legitimate labor organization registered with the DOLE; (2) it sought to
represent all the rank-and-file employees of respondent Samma Corporation; (3) there was no other
legitimate labor organization representing these rank-and-file employees; (4) respondent was not a
party to any collective bargaining agreement and (5) no certification or consent election had been
conducted within the employer unit for the last 12 months prior to the filing of the petition.

Respondent moved for the dismissal of the petition arguing that (1) LIKHA Federation failed to
establish its legal personality; (2) petitioner failed to prove its existence as a local chapter; (3) it
failed to attach the certificate of non-forum shopping and (4) it had a prohibited mixture of
supervisory and rank-and-file employees.5

In an order dated November 12, 2002, med-arbiter Arturo V. Cosuco ordered the dismissal of the
petition on the following grounds: (1) lack of legal personality for failure to attach the certificate of
registration purporting to show its legal personality; (2) prohibited mixture of rank-and-file and
supervisory employees and (3) failure to submit a certificate of non-forum shopping.6

Petitioner moved for reconsideration on November 29, 2001. The Regional Director of DOLE
Regional Office IV forwarded the case to the Secretary of Labor. Meanwhile, on December 14, 2002,
respondent filed a petition for cancellation of petitioner’s union registration in the DOLE Regional
Office IV.7

On January 17, 2003, Acting Secretary Manuel G. Imson, treating the motion for reconsideration as
an appeal, rendered a decision reversing the order of the med-arbiter. He ruled that the legal
personality of a union cannot be collaterally attacked but may only be questioned in an independent
petition for cancellation of registration. Thus, he directed the holding of a certification election among
the rank-and-file employees of respondent, subject to the usual pre-election conference and
inclusion-exclusion proceedings.8

On January 23, 2003 or six days after the issuance of said decision, respondent filed its comment on
the motion for reconsideration of petitioner, asserting that the order of the med-arbiter could only be
reviewed by way of appeal and not by a motion for reconsideration pursuant to Department Order
(D.O.) No. 9, series of 1997.9

On February 6, 2003, respondent filed its motion for reconsideration of the January 17, 2003
decision. In a resolution dated April 3, 2003, Secretary Patricia A. Sto. Tomas denied the motion.10

Meanwhile, on April 14, 2003, Crispin D. Dannug, Jr., Officer-in-Charge/Regional Director of DOLE
Regional Office IV, issued a resolution revoking the charter certificate of petitioner as local chapter of
LIKHA Federation on the ground of prohibited mixture of supervisory and rank-and-file employees
and non-compliance with the attestation clause under paragraph 2 of Article 235 of the Labor
Code.11 On May 6, 2003, petitioner moved for the reconsideration of this resolution.12

Respondent filed a petition for certiorari13 in the CA assailing the January 17, 2003 decision and April
3, 2003 resolution of the Secretary of Labor. In a decision dated August 31, 2004, the CA reversed
the same.14 It denied reconsideration in a resolution dated February 15, 2005. It held that
Administrative Circular No. 04-94 which required the filing of a certificate of non-forum shopping
applied to petitions for certification election. It also ruled that the Secretary of Labor erred in granting
the appeal despite the lack of proof of service on respondent. Lastly, it found that petitioner had no
legal standing to file the petition for certification election because its members were a mixture of
supervisory and rank-and-file employees.15

Hence, this petition.

The issues for our resolution are the following: (1) whether a certificate for non-forum shopping is
required in a petition for certification election; (2) whether petitioner’s motion for reconsideration
which was treated as an appeal by the Secretary of Labor should not have been given due course
for failure to attach proof of service on respondent and (3) whether petitioner had the legal
personality to file the petition for certification election.

Requirement of Certificate
Of Non-Forum Shopping
Is Not Required in a Petition
For Certification Election
In ruling against petitioner, the CA declared that under Administrative Circular No. 04-94,16 a
certificate of non-forum shopping was required in a petition for certification election. The circular
states:

The complaint and other initiatory pleadings referred to and subject of this Circular are the original
civil complaint, counterclaim, cross-claim, third (fourth, etc.) party complaint, or complaint-in-
intervention, petition, or application wherein a party asserts his claim for relief. (Emphasis
supplied)

According to the CA, a petition for certification election asserts a claim, i.e., the conduct of a
certification election. As a result, it is covered by the circular.17

We disagree.

The requirement for a certificate of non-forum shopping refers to complaints, counter-claims, cross-
claims, petitions or applications where contending parties litigate their respective positions regarding
the claim for relief of the complainant, claimant, petitioner or applicant. A certification proceeding,
even though initiated by a "petition," is not a litigation but an investigation of a non-adversarial and
fact-finding character.18

Such proceedings are not predicated upon an allegation of misconduct requiring relief, but,
rather, are merely of an inquisitorial nature. The Board's functions are not judicial in nature, but
are merely of an investigative character. The object of the proceedings is not the decision of any
alleged commission of wrongs nor asserted deprivation of rights but is merely the determination of
proper bargaining units and the ascertainment of the will and choice of the employees in respect of
the selection of a bargaining representative. The determination of the proceedings does not entail
the entry of remedial orders to redress rights, but culminates solely in an official designation of
bargaining units and an affirmation of the employees' expressed choice of bargaining
agent.19(Emphasis supplied)

In Pena v. Aparicio,20 we ruled against the necessity of attaching a certification against forum
shopping to a disbarment complaint. We looked into the rationale of the requirement and concluded
that the evil sought to be avoided is not present in disbarment proceedings.

… [The] rationale for the requirement of a certification against forum shopping is to apprise the Court
of the pendency of another action or claim involving the same issues in another court, tribunal or
quasi-judicial agency, and thereby precisely avoid the forum shopping situation. Filing multiple
petitions or complaints constitutes abuse of court processes, which tends to degrade the
administration of justice, wreaks havoc upon orderly judicial procedure, and adds to the congestion
of the heavily burdened dockets of the courts. Furthermore, the rule proscribing forum shopping
seeks to promote candor and transparency among lawyers and their clients in the pursuit of their
cases before the courts to promote the orderly administration of justice, prevent undue
inconvenience upon the other party, and save the precious time of the courts. It also aims to prevent
the embarrassing situation of two or more courts or agencies rendering conflicting resolutions or
decisions upon the same issue.

It is in this light that we take a further look at the necessity of attaching a certification against forum
shopping to a disbarment complaint. It would seem that the scenario sought to be avoided, i.e.,
the filing of multiple suits and the possibility of conflicting decisions, rarely happens in
disbarment complaints considering that said proceedings are either "taken by the Supreme
Court motu proprio, or by the Integrated Bar of the Philippines (IBP) upon the verified complaint of
any person." Thus, if the complainant in a disbarment case fails to attach a certification against
forum shopping, the pendency of another disciplinary action against the same respondent may still
be ascertained with ease.21 (Emphasis supplied)

The same situation holds true for a petition for certification election. Under the omnibus rules
implementing the Labor Code as amended by D.O. No. 9,22 it is supposed to be filed in the Regional
Office which has jurisdiction over the principal office of the employer or where the bargaining unit is
principally situated.23 The rules further provide that where two or more petitions involving the same
bargaining unit are filed in one Regional Office, the same shall be automatically
consolidated.24 Hence, the filing of multiple suits and the possibility of conflicting decisions will rarely
happen in this proceeding and, if it does, will be easy to discover.

Notably, under the Labor Code and the rules pertaining to the form of the petition for certification
election, there is no requirement for a certificate of non-forum shopping either in D.O. No. 9, series
of 1997 or in D.O. No. 40-03, series of 2003 which replaced the former.25

Considering the nature of a petition for certification election and the rules governing it, we therefore
hold that the requirement for a certificate of non-forum shopping is inapplicable to such a petition.

Treatment of Motion for Reconsideration as an Appeal

The CA ruled that petitioner’s motion for reconsideration, which was treated as an appeal by the
Secretary of Labor, should not have been given due course for lack of proof of service in accordance
with the implementing rules as amended by D.O. No. 9:

Section 12. Appeal; finality of decision. – The decision of the Med-Arbiter may be appealed to the
Secretary for any violation of these Rules. Interloculory orders issued by the Med-Arbiter prior to the
grant or denial of the petition, including order granting motions for intervention issued after an order
calling for a certification election, shall not be appealable. However, any issue arising therefrom may
be raised in the appeal on the decision granting or denying the petition.

The appeal shall be under oath and shall consist of a memorandum of appeal specifically stating the
grounds relied upon by the appellant with the supporting arguments and evidence. The appeal shall
be deemed not filed unless accompanied by proof of service thereof to appellee.26 (Emphasis
supplied)

In accepting the appeal, the Secretary of Labor stated:

[Petitioner’s] motion for reconsideration of the Med-Arbiter’s Order dated November 12, 2002
was verified under oath by [petitioner’s] president Gil Dispabiladeras before Notary Public Wilfredo
A. Ruiz on 29 November 2002, and recorded in the Notarial Register under Document No. 186,
Page No. 38, Book V, series of 2002. On page 7 of the said motion also appears the notation "copy
of respondent to be delivered personally with the name and signature of one Rosita Simon,
11/29/02." The motion contained the grounds and arguments relied upon by [petitioner] for the
reversal of the assailed Order. Hence, the motion for reconsideration has complied with the formal
requisites of an appeal.

The signature of Rosita Simon appearing on the last page of the motion can be considered
as compliance with the required proof of service upon respondent. Rosita Simon’s employment
status was a matter that should have been raised earlier by [respondent]. But [respondent] did not
question the same and slept on its right to oppose or comment on [petitioner’s] motion for
reconsideration. It cannot claim that it was unaware of the filing of the appeal by [petitioner],
because a copy of the indorsement of the entire records of the petition to the Office of the Secretary
"in view of the memorandum of appeal filed by Mr. Jesus B. Villamor" was served upon the employer
and legal counsels Atty. Ismael De Guzman and Atty. Anatolio Sabillo at the Samma Corporation
Office, Main Avenue, PEZA, Rosario, Cavite on December 5, 2002.27 (Emphasis supplied)

The motion for reconsideration was properly treated as an appeal because it substantially complied
with the formal requisites of the latter. The lack of proof of service was not fatal as respondent had
actually received a copy of the motion. Consequently, it had the opportunity to oppose the same.
Under these circumstances, we find that the demands of substantial justice and due process were
satisfied.

We stress that rules of procedure are interpreted liberally to secure a just, speedy and inexpensive
disposition of every action. They should not be applied if their application serves no useful purpose
or hinders the just and speedy disposition of cases. Specifically, technical rules and objections
should not hamper the holding of a certification election wherein employees are to select their
bargaining representative. A contrary rule will defeat the declared policy of the State 1avvphi1 .zw+

to promote the free and responsible exercise of the right to self-organization through the
establishment of a simplified mechanism for the speedy registration of labor organizations and
workers’ associations, determination of representation status, and resolution of intra and inter-
union disputes.28 xxx (Emphasis supplied)

Legal Personality of Petitioner 

Petitioner argues that the erroneous inclusion of one supervisory employee in the union of rank-and-
file employees was not a ground to impugn its legitimacy as a legitimate labor organization which
had the right to file a petition for certification election.

We agree.

LIKHA was granted legal personality as a federation under certificate of registration no. 92-1015-
032-11638-FED-LC. Subsequently, petitioner as its local chapter was issued its charter certificate
no. 2-01.29 With certificates of registration issued in their favor, they are clothed with legal personality
as legitimate labor organizations:

Section 5. Effect of registration. – The labor organization or workers’ association shall be deemed
registered and vested with legal personality on the date of issuance of its certificate of registration.
Such legal personality cannot thereafter be subject to collateral attack, but may be questioned only
in an independent petition for cancellation in accordance with these Rules.30

-0-

Section 3. Acquisition of legal personality by local chapter. - A local/chapter constituted in

accordance with Section 1 of this Rule shall acquire legal personality from the date of filing of the
complete documents enumerated therein. Upon compliance with all the documentary requirements,
the Regional Office or Bureau of Labor Relations shall issue in favor of the local/chapter a certificate
indicating that it is included in the roster of legitimate labor organizations.31

Such legal personality cannot thereafter be subject to collateral attack, but may be questioned only
in an independent petition for cancellation of certificate of registration.32 Unless petitioner’s union
registration is cancelled in independent proceedings, it shall continue to have all the rights of a
legitimate labor organization, including the right to petition for certification election.

Furthermore, the grounds for dismissal of a petition for certification election based on the lack of
legal personality of a labor organization are the following: (a) petitioner is not listed by the Regional
Office or the Bureau of Labor Relations in its registry of legitimate labor organizations or (b) its legal
personality has been revoked or cancelled with finality in accordance with the rules.33

As mentioned, respondent filed a petition for cancellation of the registration of petitioner on

December 14, 2002. In a resolution dated April 14, 2003, petitioner’s charter certificate was revoked
by the DOLE. But on May 6, 2003, petitioner moved for the reconsideration of this resolution. Neither
of the parties alleged that this resolution revoking petitioner’s charter certificate had attained finality.
However, in this petition, petitioner prayed that its charter certificate be "reinstated in the roster of
active legitimate labor [organizations]."34 This cannot be granted here. To repeat, the proceedings on
a petition for cancellation of registration are independent of those of a petition for certification
election. This case originated from the latter. If it is shown that petitioner’s legal personality had
already been revoked or cancelled with finality in accordance with the rules, then it is no longer a
legitimate labor organization with the right to petition for a certification election.

A Final Note

Respondent, as employer, had been the one opposing the holding of a certification election among
its rank-and-file employees. This should not be the case. We have already declared that, in
certification elections, the employer is a bystander; it has no right or material interest to assail the
certification election.35

[This] Court notes that it is petitioner, the employer, which has offered the most tenacious resistance
to the holding of a certification election among its monthly-paid rank-and-file employees. This must
not be so, for the choice of a collective bargaining agent is the sole concern of the employees. The
only exception to this rule is where the employer has to file the petition for certification election
pursuant to Article 258 of the Labor Code because it was requested to bargain collectively, which
exception finds no application in the case before us. Its role in a certification election has aptly been
described in Trade Unions of the Philippines and Allied Services (TUPAS) v. Trajano, as that of a
mere bystander. It has no legal standing in a certification election as it cannot oppose the petition or
appeal the Med-Arbiter's orders related thereto. . .36

WHEREFORE, the petition is hereby GRANTED. Let the records of the case be remanded to the
office of origin, the Regional Office IV of the Department of Labor and Employment, for
determination of the status of petitioner’s legal personality. If petitioner is still a legitimate labor
organization, then said office shall conduct a certification election subject to the usual pre-election
conference.

SO ORDERED.

G.R. No. 183317               December 21, 2009

MARIWASA SIAM CERAMICS, INC., Petitioner, 

vs.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, CHIEF OF THE
BUREAU OF LABOR RELATIONS, DEPARTMENT OF LABOR AND EMPLOYMENT, REGIONAL
DIRECTOR OF DOLE REGIONAL OFFICE NUMBER IV-A & SAMAHAN NG MGA
MANGGAGAWA SA MARIWASA SIAM CERAMICS, INC. (SMMSC-
INDEPENDENT), Respondents.

DECISION

NACHURA, J.:

This is a petition for review on certiorari1 under Rule 45 of the Rules of Court, seeking to annul the
Decision2 dated December 20, 2007 and the Resolution3 dated June 6, 2008 of the Court of Appeals
in CA-G.R. SP No. 98332.

The antecedent facts are as follows—

On May 4, 2005, respondent Samahan Ng Mga Manggagawa Sa Mariwasa Siam Ceramics, Inc.
(SMMSC-Independent) was issued a Certificate of Registration4 as a legitimate labor organization by
the Department of Labor and Employment (DOLE), Region IV-A. 

On June 14, 2005, petitioner Mariwasa Siam Ceramics, Inc. filed a Petition for Cancellation of Union
Registration against respondent, claiming that the latter violated Article 2345 of the Labor Code for
not complying with the 20% requirement, and that it committed massive fraud and misrepresentation
in violation of Article 2396 of the same code. The case was docketed as Case No. RO400-0506-AU-
004. 

On August 26, 2005, the Regional Director of DOLE IV-A issued an Order granting the petition,
revoking the registration of respondent, and delisting it from the roster of active labor unions.

Aggrieved, respondent appealed to the Bureau of Labor Relations (BLR).

In a Decision7 dated June 14, 2006, the BLR granted respondent’s appeal and disposed as follows—

WHEREFORE, premises considered, the appeal by Samahan ng Manggagawa sa Mariwasa Siam

Ceramics, Inc. (SMMSC-Independent) is hereby GRANTED, and the Decision dated 26 August 2005
by DOLE-Region-IV-A Director Maximo B. Lim is hereby REVERSED and SET ASIDE. Samahan ng
Manggagawa sa Mariwasa Siam Ceramics, Inc. (SMMSC-Independent), under Registration
Certificate No. RO400-200505-UR-002, remains in the roster of legitimate labor organizations.

SO DECIDED.8

Petitioner filed a Motion for Reconsideration but the BLR denied it in a Resolution9 dated February 2,
2007.

Petitioner sought recourse with the Court of Appeals (CA) through a Petition for Certiorari; but the
CA denied the petition for lack of merit.

Petitioner’s motion for reconsideration of the CA Decision was likewise denied, hence, this petition
based on the following grounds—

Review of the Factual Findings of the Bureau of Labor Relations, adopted and confirmed by the
Honorable Court of Appeals is warranted[;]
The Honorable Court of Appeals seriously erred in ruling that the affidavits of recantation cannot be
given credence[;]

The Honorable Court of Appeals seriously erred in ruling that private respondent union complied with
the 20% membership requirement[; and]

The Honorable Court of Appeals seriously erred when it ruled that private respondent union did not
commit misrepresentation, fraud or false statement.10

The petition should be denied.

The petitioner insists that respondent failed to comply with the 20% union membership requirement
for its registration as a legitimate labor organization because of the disaffiliation from the total
number of union members of 102 employees who executed affidavits recanting their union
membership. 

It is, thus, imperative that we peruse the affidavits appearing to have been executed by these
affiants. 

The affidavits uniformly state—

Ako, _____________, Pilipino, may sapat na gulang, regular na empleyado bilang Rank & File sa
Mariwasa Siam Ceramics, Inc., Bo. San Antonio, Sto. Tomas, Batangas, matapos na makapanumpa
ng naaayon sa batas ay malaya at kusang loob na nagsasaad ng mga sumusunod:

1. Ako ay napilitan at nilinlang sa pagsapi sa Samahan ng mga Manggagawa sa Mariwasa

Siam Ceramics, Inc. o SMMSC-Independent sa kabila ng aking pag-aalinlangan[;]

2. Aking lubos na pinagsisihan ang aking pagpirma sa sipi ng samahan, at handa ako[ng]
tumalikod sa anumang kasulatan na aking nalagdaan sa kadahilanan na hindi angkop sa
aking pananaw ang mga mungkahi o adhikain ng samahan.

SA KATUNAYAN NANG LAHAT, ako ay lumagda ng aking pangalan ngayong ika-____ ng ______,
2005 dito sa Lalawigan ng Batangas, Bayan ng Sto. Tomas.

____________________
Nagsasalaysay

Evidently, these affidavits were written and prepared in advance, and the pro forma affidavits were
ready to be filled out with the employees’ names and signatures. 

The first common allegation in the affidavits is a declaration that, in spite of his hesitation, the affiant
was forced and deceived into joining the respondent union. It is worthy to note, however, that the
affidavit does not mention the identity of the people who allegedly forced and deceived the affiant
into joining the union, much less the circumstances that constituted such force and deceit. Indeed,
not only was this allegation couched in very general terms and sweeping in nature, but more
importantly, it was not supported by any evidence whatsoever.

The second allegation ostensibly bares the affiant’s regret for joining respondent union and
expresses the desire to abandon or renege from whatever agreement he may have signed regarding
his membership with respondent. 
Simply put, through these affidavits, it is made to appear that the affiants recanted their support of
respondent’s application for registration.

In appreciating affidavits of recantation such as these, our ruling in La Suerte Cigar and Cigarette
Factory v. Director of the Bureau of Labor Relations11 is enlightening, viz.—

On the second issue—whether or not the withdrawal of 31 union members from NATU affected the
petition for certification election insofar as the 30% requirement is concerned, We reserve the Order
of the respondent Director of the Bureau of Labor Relations, it appearing undisputably that the 31
union members had withdrawn their support to the petition before the filing of said petition. It would
be otherwise if the withdrawal was made after the filing of the petition for it would then be presumed
that the withdrawal was not free and voluntary. The presumption would arise that the withdrawal was
procured through duress, coercion or for valuable consideration. In other words, the distinction must
be that withdrawals made before the filing of the petition are presumed voluntary unless there is
convincing proof to the contrary, whereas withdrawals made after the filing of the petition are
deemed involuntary.

The reason for such distinction is that if the withdrawal or retraction is made before the filing of the
petition, the names of employees supporting the petition are supposed to be held secret to the
opposite party. Logically, any such withdrawal or retraction shows voluntariness in the absence of
proof to the contrary. Moreover, it becomes apparent that such employees had not given consent to
the filing of the petition, hence the subscription requirement has not been met.

When the withdrawal or retraction is made after the petition is filed, the employees who are
supporting the petition become known to the opposite party since their names are attached to the
petition at the time of filing. Therefore, it would not be unexpected that the opposite party would use
foul means for the subject employees to withdraw their support.12

In the instant case, the affidavits of recantation were executed after the identities of the union
members became public, i.e., after the union filed a petition for certification election on May 23,
2005, since the names of the members were attached to the petition. The purported withdrawal of
support for the registration of the union was made after the documents were submitted to the DOLE,
Region IV-A. The logical conclusion, therefore, following jurisprudence, is that the employees were
not totally free from the employer’s pressure, and so the voluntariness of the employees’ execution
of the affidavits becomes suspect.

It is likewise notable that the first batch of 25 pro forma affidavits shows that the affidavits were
executed by the individual affiants on different dates from May 26, 2005 until June 3, 2005, but they
were all sworn before a notary public on June 8, 2005. 

There was also a second set of standardized affidavits executed on different dates from May 26,
2005 until July 6, 2005. While these 77 affidavits were notarized on different dates, 56 of these were
notarized on June 8, 2005, the very same date when the first set of 25 was notarized. 

Considering that the first set of 25 affidavits was submitted to the DOLE on June 14, 2005, it is
surprising why petitioner was able to submit the second set of affidavits only on July 12, 2005.

Accordingly, we cannot give full credence to these affidavits, which were executed under suspicious
circumstances, and which contain allegations unsupported by evidence. At best, these affidavits are
self-serving. They possess no probative value.
A retraction does not necessarily negate an earlier declaration. For this reason, retractions are
looked upon with disfavor and do not automatically exclude the original statement or declaration
based solely on the recantation. It is imperative that a determination be first made as to which
between the original and the new statements should be given weight or accorded belief, applying the
general rules on evidence. In this case, inasmuch as they remain bare allegations, the purported
recantations should not be upheld.13

Nevertheless, even assuming the veracity of the affidavits of recantation, the legitimacy of
respondent as a labor organization must be affirmed. While it is true that the withdrawal of support
may be considered as a resignation from the union, the fact remains that at the time of the union’s
application for registration, the affiants were members of respondent and they comprised more than
the required 20% membership for purposes of registration as a labor union. Article 234 of the Labor
Code merely requires a 20% minimum membership during the application for union registration. It
does not mandate that a union must maintain the 20% minimum membership requirement all
throughout its existence.14 1avvphi1

Respondent asserts that it had a total of 173 union members at the time it applied for registration.
Two names were repeated in respondent’s list and had to be deducted, but the total would still be
171 union members. Further, out of the four names alleged to be no longer connected with
petitioner, only two names should be deleted from the list since Diana Motilla and T.W. Amutan
resigned from petitioner only on May 10, 2005 and May 17, 2005, respectively, or after respondent’s
registration had already been granted. Thus, the total union membership at the time of registration
was 169. Since the total number of rank-and-file employees at that time was 528, 169 employees
would be equivalent to 32% of the total rank-and-file workers complement, still very much above the
minimum required by law.

For the purpose of de-certifying a union such as respondent, it must be shown that there was
misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto; the minutes of ratification; or, in connection with
the election of officers, the minutes of the election of officers, the list of voters, or failure to submit
these documents together with the list of the newly elected-appointed officers and their postal
addresses to the BLR.15

The bare fact that two signatures appeared twice on the list of those who participated in the
organizational meeting would not, to our mind, provide a valid reason to cancel respondent’s
certificate of registration. The cancellation of a union’s registration doubtless has an impairing
dimension on the right of labor to self-organization. For fraud and misrepresentation to be grounds
for cancellation of union registration under the Labor Code, the nature of the fraud and
misrepresentation must be grave and compelling enough to vitiate the consent of a majority of union
members.

In this case, we agree with the BLR and the CA that respondent could not have possibly committed
misrepresentation, fraud, or false statements. The alleged failure of respondent to indicate with
mathematical precision the total number of employees in the bargaining unit is of no moment,
especially as it was able to comply with the 20% minimum membership requirement. Even if the total
number of rank-and-file employees of petitioner is 528, while respondent declared that it should only
be 455, it still cannot be denied that the latter would have more than complied with the registration
requirement.

WHEREFORE, the petition is DENIED. The assailed December 20, 2007 Decision and the June 6,
2008 Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.
SO ORDERED.

G.R. No. 178296               January 12, 2011

THE HERITAGE HOTEL MANILA, acting through its owner, GRAND PLAZA HOTEL
CORPORATION,Petitioner, 
vs.
NATIONAL UNION OF WORKERS IN THE HOTEL, RESTAURANT AND ALLIED INDUSTRIES-
HERITAGE HOTEL MANILA SUPERVISORS CHAPTER (NUWHRAIN-HHMSC), Respondent.

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA)
dated May 30, 2005 and Resolution dated June 4, 2007. The assailed Decision affirmed the
dismissal of a petition for cancellation of union registration filed by petitioner, Grand Plaza Hotel
Corporation, owner of Heritage Hotel Manila, against respondent, National Union of Workers in the
Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-
HHMSC), a labor organization of the supervisory employees of Heritage Hotel Manila.

The case stemmed from the following antecedents:

On October 11, 1995, respondent filed with the Department of Labor and Employment-National
Capital Region (DOLE-NCR) a petition for certification election.2 The Med-Arbiter granted the petition
on February 14, 1996 and ordered the holding of a certification election.3 On appeal, the DOLE
Secretary, in a Resolution dated August 15, 1996, affirmed the Med-Arbiter’s order and remanded
the case to the Med-Arbiter for the holding of a preelection conference on February 26, 1997.
Petitioner filed a motion for reconsideration, but it was denied on September 23, 1996.

The preelection conference was not held as initially scheduled; it was held a year later, or on
February 20, 1998. Petitioner moved to archive or to dismiss the petition due to alleged repeated
non-appearance of respondent. The latter agreed to suspend proceedings until further notice. The
preelection conference resumed on January 29, 2000.

Subsequently, petitioner discovered that respondent had failed to submit to the Bureau of Labor
Relations (BLR) its annual financial report for several years and the list of its members since it filed
its registration papers in 1995. Consequently, on May 19, 2000, petitioner filed a Petition for
Cancellation of Registration of respondent, on the ground of the non-submission of the said
documents. Petitioner prayed that respondent’s Certificate of Creation of Local/Chapter be cancelled
and its name be deleted from the list of legitimate labor organizations. It further requested the
suspension of the certification election proceedings.4

On June 1, 2000, petitioner reiterated its request by filing a Motion to Dismiss or Suspend the
[Certification Election] Proceedings,5 arguing that the dismissal or suspension of the proceedings is
warranted, considering that the legitimacy of respondent is seriously being challenged in the petition
for cancellation of registration. Petitioner maintained that the resolution of the issue of whether
respondent is a legitimate labor organization is crucial to the issue of whether it may exercise rights
of a legitimate labor organization, which include the right to be certified as the bargaining agent of
the covered employees.
Nevertheless, the certification election pushed through on June 23, 2000. Respondent emerged as
the winner.6

On June 28, 2000, petitioner filed a Protest with Motion to Defer Certification of Election Results and
Winner,7stating that the certification election held on June 23, 2000 was an exercise in futility
because, once respondent’s registration is cancelled, it would no longer be entitled to be certified as
the exclusive bargaining agent of the supervisory employees. Petitioner also claimed that some of
respondent’s members were not qualified to join the union because they were either confidential
employees or managerial employees. It then prayed that the certification of the election results and
winner be deferred until the petition for cancellation shall have been resolved, and that respondent’s
members who held confidential or managerial positions be excluded from the supervisors’
bargaining unit.

Meanwhile, respondent filed its Answer8 to the petition for the cancellation of its registration. It
averred that the petition was filed primarily to delay the conduct of the certification election, the
respondent’s certification as the exclusive bargaining representative of the supervisory employees,
and the commencement of bargaining negotiations. Respondent prayed for the dismissal of the
petition for the following reasons: (a) petitioner is estopped from questioning respondent’s status as
a legitimate labor organization as it had already recognized respondent as such during the
preelection conferences; (b) petitioner is not the party-in-interest, as the union members are the
ones who would be disadvantaged by the non-submission of financial reports; (c) it has already
complied with the reportorial requirements, having submitted its financial statements for 1996, 1997,
1998, and 1999, its updated list of officers, and its list of members for the years 1995, 1996, 1997,
1998, and 1999; (d) the petition is already moot and academic, considering that the certification
election had already been held, and the members had manifested their will to be represented by
respondent.

Citing National Union of Bank Employees v. Minister of Labor, et al.9 and Samahan ng Manggagawa
sa Pacific Plastic v. Hon. Laguesma,10 the Med-Arbiter held that the pendency of a petition for
cancellation of registration is not a bar to the holding of a certification election. Thus, in an
Order11 dated January 26, 2001, the Med-Arbiter dismissed petitioner’s protest, and certified
respondent as the sole and exclusive bargaining agent of all supervisory employees.

Petitioner subsequently appealed the said Order to the DOLE Secretary.12 The appeal was later
dismissed by DOLE Secretary Patricia A. Sto. Tomas (DOLE Secretary Sto. Tomas) in the
Resolution of August 21, 2002.13Petitioner moved for reconsideration, but the motion was also
denied.14

In the meantime, Regional Director Alex E. Maraan (Regional Director Maraan) of DOLE-NCR finally
resolved the petition for cancellation of registration. While finding that respondent had indeed failed
to file financial reports and the list of its members for several years, he, nonetheless, denied the
petition, ratiocinating that freedom of association and the employees’ right to self-organization are
more substantive considerations. He took into account the fact that respondent won the certification
election and that it had already been certified as the exclusive bargaining agent of the supervisory
employees. In view of the foregoing, Regional Director Maraan—while emphasizing that the non-
compliance with the law is not viewed with favor—considered the belated submission of the annual
financial reports and the list of members as sufficient compliance thereof and considered them as
having been submitted on time. The dispositive portion of the decision15 dated December 29, 2001
reads:
WHEREFORE, premises considered, the instant petition to delist the National Union of Workers in
the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter from the roll
of legitimate labor organizations is hereby DENIED.

SO ORDERED.16

Aggrieved, petitioner appealed the decision to the BLR.17 BLR Director Hans Leo Cacdac inhibited
himself from the case because he had been a former counsel of respondent.

In view of Director Cacdac’s inhibition, DOLE Secretary Sto. Tomas took cognizance of the appeal.
In a resolution18dated February 21, 2003, she dismissed the appeal, holding that the constitutionally
guaranteed freedom of association and right of workers to self-organization outweighed
respondent’s noncompliance with the statutory requirements to maintain its status as a legitimate
labor organization.

Petitioner filed a motion for reconsideration,19 but the motion was likewise denied in a
resolution20 dated May 30, 2003. DOLE Secretary Sto. Tomas admitted that it was the BLR which
had jurisdiction over the appeal, but she pointed out that the BLR Director had voluntarily inhibited
himself from the case because he used to appear as counsel for respondent. In order to maintain the
integrity of the decision and of the BLR, she therefore accepted the motion to inhibit and took
cognizance of the appeal.

Petitioner filed a petition for certiorari with the CA, raising the issue of whether the DOLE Secretary
acted with grave abuse of discretion in taking cognizance of the appeal and affirming the dismissal
of its petition for cancellation of respondent’s registration.

In a Decision dated May 30, 2005, the CA denied the petition. The CA opined that the DOLE
Secretary may legally assume jurisdiction over an appeal from the decision of the Regional Director
in the event that the Director of the BLR inhibits himself from the case. According to the CA, in the
absence of the BLR Director, there is no person more competent to resolve the appeal than the
DOLE Secretary. The CA brushed aside the allegation of bias and partiality on the part of the DOLE
Secretary, considering that such allegation was not supported by any evidence.

The CA also found that the DOLE Secretary did not commit grave abuse of discretion when she
affirmed the dismissal of the petition for cancellation of respondent’s registration as a labor
organization. Echoing the DOLE Secretary, the CA held that the requirements of registration of labor
organizations are an exercise of the overriding police power of the State, designed for the protection
of workers against potential abuse by the union that recruits them. These requirements, the CA
opined, should not be exploited to work against the workers’ constitutionally protected right to self-
organization.

Petitioner filed a motion for reconsideration, invoking this Court’s ruling in Abbott Labs. Phils., Inc. v.
Abbott Labs. Employees Union,21 which categorically declared that the DOLE Secretary has no
authority to review the decision of the Regional Director in a petition for cancellation of union
registration, and Section 4,22 Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code.

In its Resolution23 dated June 4, 2007, the CA denied petitioner’s motion, stating that the BLR
Director’s inhibition from the case was a peculiarity not present in the Abbott case, and that such
inhibition justified the assumption of jurisdiction by the DOLE Secretary.

In this petition, petitioner argues that:

 I.

The Court of Appeals seriously erred in ruling that the Labor Secretary properly assumed jurisdiction
over Petitioner’s appeal of the Regional Director’s Decision in the Cancellation Petition x x x.

A. Jurisdiction is conferred only by law. The Labor Secretary had no jurisdiction to review the
decision of the Regional Director in a petition for cancellation. Such jurisdiction is conferred
by law to the BLR.

B. The unilateral inhibition by the BLR Director cannot justify the Labor Secretary’s exercise
of jurisdiction over the Appeal.

C. The Labor Secretary’s assumption of jurisdiction over the Appeal without notice violated
Petitioner’s right to due process.

II.

The Court of Appeals gravely erred in affirming the dismissal of the Cancellation Petition despite the
mandatory and unequivocal provisions of the Labor Code and its Implementing Rules.24

The petition has no merit.

Jurisdiction to review the decision of the Regional Director lies with the BLR. This is clearly provided
in the Implementing Rules of the Labor Code and enunciated by the Court in Abbott. But as pointed
out by the CA, the present case involves a peculiar circumstance that was not present or covered by
the ruling in Abbott. In this case, the BLR Director inhibited himself from the case because he was a
former counsel of respondent. Who, then, shall resolve the case in his place?

In Abbott, the appeal from the Regional Director’s decision was directly filed with the Office of the
DOLE Secretary, and we ruled that the latter has no appellate jurisdiction. In the instant case, the
appeal was filed by petitioner with the BLR, which, undisputedly, acquired jurisdiction over the case.
Once jurisdiction is acquired by the court, it remains with it until the full termination of the case.25

Thus, jurisdiction remained with the BLR despite the BLR Director’s inhibition. When the DOLE
Secretary resolved the appeal, she merely stepped into the shoes of the BLR Director and
performed a function that the latter could not himself perform. She did so pursuant to her power of
supervision and control over the BLR.26

Expounding on the extent of the power of control, the Court, in Araneta, et al. v. Hon. M. Gatmaitan,
et al.,27pronounced that, if a certain power or authority is vested by law upon the Department
Secretary, then such power or authority may be exercised directly by the President, who exercises
supervision and control over the departments. This principle was incorporated in the Administrative
Code of 1987, which defines "supervision and control" as including the authority to act directly
whenever a specific function is entrusted by law or regulation to a subordinate.28 Applying the
foregoing to the present case, it is clear that the DOLE Secretary, as the person exercising the
power of supervision and control over the BLR, has the authority to directly exercise the quasi-
judicial function entrusted by law to the BLR Director.

It is true that the power of control and supervision does not give the Department Secretary unbridled
authority to take over the functions of his or her subordinate. Such authority is subject to certain
guidelines which are stated in Book IV, Chapter 8, Section 39(1)(a) of the Administrative Code of
1987.29 However, in the present case, the DOLE Secretary’s act of taking over the function of the
BLR Director was warranted and necessitated by the latter’s inhibition from the case and the
objective to "maintain the integrity of the decision, as well as the Bureau itself."30

Petitioner insists that the BLR Director’s subordinates should have resolved the appeal, citing the
provision under the Administrative Code of 1987 which states, "in case of the absence or disability of
the head of a bureau or office, his duties shall be performed by the assistant head."31 The provision
clearly does not apply considering that the BLR Director was neither absent nor suffering from any
disability; he remained as head of the BLR. Thus, to dispel any suspicion of bias, the DOLE
Secretary opted to resolve the appeal herself.

Petitioner was not denied the right to due process when it was not notified in advance of the BLR
Director’s inhibition and the DOLE Secretary’s assumption of the case. Well-settled is the rule that
the essence of due process is simply an opportunity to be heard, or, as applied to administrative
proceedings, an opportunity to explain one’s side or an opportunity to seek a reconsideration of the
action or ruling complained of.32 Petitioner had the opportunity to question the BLR Director’s
inhibition and the DOLE Secretary’s taking cognizance of the case when it filed a motion for
reconsideration of the latter’s decision. It would be well to state that a critical component of due
process is a hearing before an impartial and disinterested tribunal, for all the elements of due
process, like notice and hearing, would be meaningless if the ultimate decision would come from a
partial and biased judge.33 It was precisely to ensure a fair trial that moved the BLR Director to inhibit
himself from the case and the DOLE Secretary to take over his function.

Petitioner also insists that respondent’s registration as a legitimate labor union should be cancelled.
Petitioner posits that once it is determined that a ground enumerated in Article 239 of the Labor
Code is present, cancellation of registration should follow; it becomes the ministerial duty of the
Regional Director to cancel the registration of the labor organization, hence, the use of the word
"shall." Petitioner points out that the Regional Director has admitted in its decision that respondent
failed to submit the required documents for a number of years; therefore, cancellation of its
registration should have followed as a matter of course.

We are not persuaded.

Articles 238 and 239 of the Labor Code read:

ART. 238. CANCELLATION OF REGISTRATION; APPEAL

The certificate of registration of any legitimate labor organization, whether national or local, shall be
canceled by the Bureau if it has reason to believe, after due hearing, that the said labor organization
no longer meets one or more of the requirements herein prescribed.34

ART. 239. GROUNDS FOR CANCELLATION OF UNION REGISTRATION.

The following shall constitute grounds for cancellation of union registration:

xxxx

(d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the closing
of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial
report itself;
xxxx

(i) Failure to submit list of individual members to the Bureau once a year or whenever required by
the Bureau.35

These provisions give the Regional Director ample discretion in dealing with a petition for
cancellation of a union’s registration, particularly, determining whether the union still meets the
requirements prescribed by law. It is sufficient to give the Regional Director license to treat the late
filing of required documents as sufficient compliance with the requirements of the law. After all, the
law requires the labor organization to submit the annual financial report and list of members in order
to verify if it is still viable and financially sustainable as an organization so as to protect the employer
and employees from fraudulent or fly-by-night unions. With the submission of the required
documents by respondent, the purpose of the law has been achieved, though belatedly.

We cannot ascribe abuse of discretion to the Regional Director and the DOLE Secretary in denying
the petition for cancellation of respondent’s registration. The union members and, in fact, all the
employees belonging to the appropriate bargaining unit should not be deprived of a bargaining
agent, merely because of the negligence of the union officers who were responsible for the
submission of the documents to the BLR.

Labor authorities should, indeed, act with circumspection in treating petitions for cancellation of
union registration, lest they be accused of interfering with union activities. In resolving the petition,
consideration must be taken of the fundamental rights guaranteed by Article XIII, Section 3 of the
Constitution, i.e., the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities. Labor authorities should bear in mind that registration confers
upon a union the status of legitimacy and the concomitant right and privileges granted by law to a
legitimate labor organization, particularly the right to participate in or ask for certification election in a
bargaining unit.36 Thus, the cancellation of a certificate of registration is the equivalent of snuffing out
the life of a labor organization. For without such registration, it loses - as a rule - its rights under the
Labor Code.37

It is worth mentioning that the Labor Code’s provisions on cancellation of union registration and on
reportorial requirements have been recently amended by Republic Act (R.A.) No. 9481, 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,
which lapsed into law on May 25, 2007 and became effective on June 14, 2007. The amendment
sought to strengthen the workers’ right to self-organization and enhance the Philippines’ compliance
with its international obligations as embodied in the International Labour Organization (ILO)
Convention No. 87,38 pertaining to the non-dissolution of workers’ organizations by administrative
authority.39 Thus, R.A. No. 9481 amended Article 239 to read:

ART. 239. Grounds for Cancellation of Union Registration.—The following may 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) Misrepresentation, false statements or fraud in connection with the election of officers,
minutes of the election of officers, and the list of voters;

(c) Voluntary dissolution by the members.

R.A. No. 9481 also inserted in the Labor Code Article 242-A, which provides:

ART. 242-A. Reportorial Requirements.—The following are documents required to be submitted to

the Bureau by the legitimate labor organization concerned:

(a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the
list of members who took part in the ratification of the constitution and by-laws within thirty
(30) days from adoption or ratification of the constitution and by-laws or amendments
thereto;

(b) Its list of officers, minutes of the election of officers, and list of voters within thirty (30)
days from election;

(c) Its annual financial report within thirty (30) days after the close of every fiscal year; and

(d) Its list of members at least once a year or whenever required by the Bureau.

Failure to comply with the above requirements shall not be a ground for cancellation of union
registration but shall subject the erring officers or members to suspension, expulsion from
membership, or any appropriate penalty.

ILO Convention No. 87, which we have ratified in 1953, provides that "workers’ and employers’
organizations shall not be liable to be dissolved or suspended by administrative authority." The ILO
has expressed the opinion that the cancellation of union registration by the registrar of labor unions,
which in our case is the BLR, is tantamount to dissolution of the organization by administrative
authority when such measure would give rise to the loss of legal personality of the union or loss of
advantages necessary for it to carry out its activities, which is true in our jurisdiction. Although the
ILO has allowed such measure to be taken, provided that judicial safeguards are in place, i.e., the
right to appeal to a judicial body, it has nonetheless reminded its members that dissolution of a
union, and cancellation of registration for that matter, involve serious consequences for occupational
representation. It has, therefore, deemed it preferable if such actions were to be taken only as a last
resort and after exhausting other possibilities with less serious effects on the organization.40

The aforesaid amendments and the ILO’s opinion on this matter serve to fortify our ruling in this
case. We therefore quote with approval the DOLE Secretary’s rationale for denying the petition,
thus:

It is undisputed that appellee failed to submit its annual financial reports and list of individual
members in accordance with Article 239 of the Labor Code. However, the existence of this ground
should not necessarily lead to the cancellation of union registration. Article 239 recognizes the
regulatory authority of the State to exact compliance with reporting requirements. Yet there is more
at stake in this case than merely monitoring union activities and requiring periodic documentation
thereof.

The more substantive considerations involve the constitutionally guaranteed freedom of association
and right of workers to self-organization. Also involved is the public policy to promote free trade
unionism and collective bargaining as instruments of industrial peace and democracy.  An overly 1avvphi1

stringent interpretation of the statute governing cancellation of union registration without regard to
surrounding circumstances cannot be allowed. Otherwise, it would lead to an unconstitutional
application of the statute and emasculation of public policy objectives. Worse, it can render nugatory
the protection to labor and social justice clauses that pervades the Constitution and the Labor Code.
Moreover, submission of the required documents is the duty of the officers of the union. It would be
unreasonable for this Office to order the cancellation of the union and penalize the entire union
membership on the basis of the negligence of its officers. In National Union of Bank Employees vs.
Minister of Labor, L-53406, 14 December 1981, 110 SCRA 296, the Supreme Court ruled:

As aptly ruled by respondent Bureau of Labor Relations Director Noriel: "The rights of workers to
self-organization finds general and specific constitutional guarantees. x x x Such constitutional
guarantees should not be lightly taken much less nullified. A healthy respect for the freedom of
association demands that acts imputable to officers or members be not easily visited with capital
punishments against the association itself."

At any rate, we note that on 19 May 2000, appellee had submitted its financial statement for the
years 1996-1999. With this submission, appellee has substantially complied with its duty to submit
its financial report for the said period. To rule differently would be to preclude the union, after having
failed to meet its periodic obligations promptly, from taking appropriate measures to correct its
omissions. For the record, we do not view with favor appellee’s late submission. Punctuality on the
part of the union and its officers could have prevented this petition.41

WHEREFORE, premises considered, the Court of Appeals Decision dated May 30, 2005 and
Resolution dated June 4, 2007 are AFFIRMED.

SO ORDERED.