73.

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its President

RAYMUNDO HIPOLITO, JR., petitioner, vs. HON. MA. NIEVES D. CONFESOR, Secretary of Labor,
Dept. of Labor & Employment, SAN MIGUEL CORPORATION, MAGNOLIA CORPORATION
(Formerly, Magnolia Plant) and SAN MIGUEL FOODS, INC. (Formerly, B-Meg Plant),
respondents.
G.R. No. 111262. September 19, 1996
Justice Kapunan

DOCTRINE:

In determining an appropriate bargaining unit, the test of grouping is mutuality or

commonality of interests. The employees sought to be represented by the collective
bargaining agent must have substantial mutual interests in terms of employment and
working conditions as evinced by the type of work they performed. Considering the spin-
offs, the companies would consequently have their respective and distinctive concerns in
terms of the nature of work, wages, hours of work and other conditions of employment.

FACTS:

Petitioner-Union entered into a CBA with private respondent SMC to take effect upon the
expiration of the previous CBA or June 30, 1989. The CBA provided, among others, that “the
term of this Agreement insofar as the representation aspect is concerned, shall be for five
(5) years from July 1, 1989 to June 30, 1994. Hence, the freedom period for purposes of such
representation shall be sixty (60) days prior to June 30, 1994 (Section 2) and Sixty (60) days
prior to June 30, 1992 either party may initiate negotiations of all provisions of this
Agreement, except insofar as the representation aspect is concerned. If no agreement is
reached in such negotiations, this Agreement shall nevertheless remain in force up
to the time a subsequent agreement is reached by the parties (Section 3).

SMC management then informed its employees that the company was composed of four
operating divisions - (1) Beer, (2) Packaging, (3) Feeds and Livestocks, (4) Magnolia and
Agribusiness would undergo a restructuring.

Magnolia and Feeds and Livestock Division were spun-off and became two separate and
distinct corporations: Magnolia Corp. and San Miguel Foods, Inc (SMFI), while the CBA still
remained.

The CBA was then renegotiated. During the negotiations, petitioner-union, insisted that the
bargaining unit of SMC should still include the employees of the spun-off corporations and
that the CBA shall be effective only for 2 years or until June 30, 1994.
SMC contends that the members/employees who had moved to Magnolia and SMFI,
automatically ceased to be part of the bargaining unit at the SMC and that the CBA should
be effective for 3 years in accordance with Art. 253-A of the Labor Code.

Petitioner-union declared deadlock due to inability of the parties to agree on the issues as
regards bargaining unit and duration of the CBA. Notice of Strike was filed against SMC.

SMC requested the NCMB to conduct preventive mediation. No settlement was arrived at
despite several meetings held between the parties.

The Secretary of Labor assumed jurisdiction upon request of SMC, which rendered an Order
stating that the renegotiated terms of the CBA shall be effective for the period of 3 years
and that such CBA shall cover only the employees of SMC and not of Magnolia and SMFI.

ISSUE:

Whether the duration of the renegotiated terms of the CBA is to be effective for 3 years or 2
years. 3 years.

Whether the bargaining unit of SMC includes also the employees of Magnolia and SMFI. No.

HELD:

Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No.
6715 (the Herrera-Veloso Law) which took effect on March 21, 1989. This new provision states
that the CBA has a term of five (5) years instead of three years, before the amendment of
the law as far as the representation aspect is concerned. All other provisions of the CBA
shall be negotiated not later than three (3) years after its execution. The “representation
aspect” refers to the identity and majority status of the union that negotiated the CBA as
the exclusive bargaining representative of the appropriate bargaining unit concerned. “All
other provisions” simply refers to the rest of the CBA, economic as well as non-economic
provisions, except representation.

As the Secretary of Labor herself observed in the instant case, the law is clear and definite
on the duration of the CBA insofar as the representation aspect is concerned, but is quite
ambiguous with the terms of the other provisions of the CBA.

The legislators were more inclined to have the period of effectivity for three (3) years insofar
as the economic as well as non- economic provisions are concerned, except
representation.

Obviously, the framers of the law wanted to maintain industrial peace and stability by
having both management and labor work harmoniously together without any disturbance.
Thus, no outside union can enter the establishment within five (5) years and challenge the
status of the incumbent union as the exclusive bargaining agent. Likewise, the terms and
conditions of employment (economic and non-economic) can not be questioned by the
employers or employees during the period of effectivity of the CBA. The CBA is a contract
between the parties and the parties must respect the terms and conditions of the
agreement.

In the instant case, it is not difficult to determine the period of effectivity for the non-
representation provisions of the CBA. Taking it from the history of their CBAs, SMC intended
to have the terms of the CBA effective for three (3) years reckoned from the expiration of
the old or previous CBA which was on
June 30, 1989.

With respect to the second issue, there is, likewise, no merit in petitioner-union’s assertion
that the employees of Magnolia and SMFI should still be considered part of the bargaining
unit of SMC.

Magnolia and SMFI were spun-off to operate as distinct companies. Undeniably, the
transformation of the companies was a management prerogative and business judgment
which the courts can not look into unless it is contrary to law, public policy or morals. Neither
can we impute any bad faith on the part of SMC so as to justify the application of the
doctrine of piercing the corporate veil. Ever mindful of the employees’ interests,
management has assured the concerned employees that they will be absorbed by the
new corporations without loss of tenure and retaining their present pay and benefits
according to the existing CBAs. They were advised that upon the expiration of the CBAs,
new agreements will be negotiated between the management of the new corporations
and the bargaining representatives of the employees concerned.

Magnolia and SMFI became distinct entities with separate juridical personalities. Thus, they
can not belong to a single bargaining unit.

Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or

commonality of interests. The employees sought to be represented by the collective
bargaining agent must have substantial mutual interests in terms of employment and
working conditions as evinced by the type of work they performed. Considering the spin-
offs, the companies would consequently have their respective and distinctive concerns in
terms of the nature of work, wages, hours of work and other conditions of employment.
Interests of employees in the different companies perforce differ.

The employees of the different companies see the need to group themselves together and
organize themselves into distinctive and different groups. It would then be best to have
separate bargaining units for the different companies where the employees can bargain
separately according to their needs and according to their own working conditions.
(78) Juat v. CIR, G.R. No. L-20764

SANTOS JUAT, PETITIONER, VS. COURT OF INDUSTRIAL RELATIONS, ET AL., RESPONDENTS.

G.R. No. L-20764, November 29, 1965

ZALDIVAR. J.:

DOCTRINE: It should be declared, therefore, as a settled doctrine, that the closed-shop

proviso of a collective bargaining agreement entered into between an employer and a
duly authorized labor union applies, and should be applied, to old employees or workers
who are non-members of any labor union at the time the collective bargaining agreement
was entered into. In other words, the old employees or workers can be obliged by his
employer to join the labor union which had entered into a collective bargaining agreement
that provides for a closed-shop as a condition for his continuance in his employment,
otherwise his refusal to join the contracting labor union would constitute a justifiable basis for
his dismissal.

FACTS:

On December 1, 1959, a collective bargaining agreement was entered into between the
Bulaklak Publications and the BUSOCOPE LABOR UNION, to remain in effect for 3 years, and
renewable for another term of 3 year.

Section 4 of said agreement contains a closed shop proviso, On December 27, 1960, said
Section 4 of said agreement was amended to read as follows:

'All employees and/or workers who on January 1, 1960 are members of the Union in good
standing in accordance with its Constitution and By-Laws and all members who become
members after that date shall, as a condition of employment, maintain their membership in
the Union for the duration of this Agreement. All employees and/or worker who on January
1, 1961 are not yet members of the Union shall, as a condition of maintaining their
employment, become members of such union.'

It is clear that it was by virtue of the above-mentioned closed shop provision of the
collective bargaining agreement between the Busocope Labor Union and the Bulaklak
Publications that the management of the latter required Santos Juat to become a member
of the former. In requiring Santos Juat to become a member of said Union, it was only
obeying the law between the parties, which is their collective bargaining agreement.

Because of the refusal of Juat to join the Union, the executive officer of respondent
company suspended him for 15 days. After expiration of suspension the company sent a
letter ordering him to report back for duty. In spite of said letter, Juat did not report for work.
The refusal of Juat to become a member of the Busocope Labor Union as well as his refusal
to report for work when ordered shows lack of respect toward his superior officer. With such
attitude, the continuation in the service of the company of Santos Juat is indeed inimical to
the interest of his employer. Consequently, he was dropped from the service of the
company.

Juat filed complaints for unfair labor practice and for payment of wages for overtime work
and work on Sundays and holidays. He averred that respondent employer dismissed him
from the service without justifiable cause and that from the time of his dismissal up to the
filing of the complaint he had not found any substantial employment for himself.

ISSUE: Is the dismissal of Juat valid?

RULING:
Yes. Court of Industrial Relations did not err, nor did it commit a grave abuse of
discretion, when it decided that the respondent Buaklak Publications did not commit unfair
labor practice when it dismissed petitioner because of his refusal to join the Busocope labor
union. Moreover, as found by the respondent Court of Industrial Relations, petitioner Santos
Juat had furnished another ground for his dismissal and that was because he refused to
return to work after the end of his suspension even when he was ordered to do so by his
employer, the respondent Bulaklak Publications. The respondent Court of Industrial Relations
further found that the reason why the petitioner did not want to return to work was because
he was already working in his own establishment known as the "Juat Printing Press Co. Inc."
of which he was a stockholder and the treasurer.

It should be declared, therefore, as a settled doctrine, that the closed-shop proviso of a

collective bargaining agreement entered into between an employer and a duly authorized
labor union applies, and should be applied, to old employees or workers who are non-
members of any labor union at the time the collective bargaining agreement was entered
into. In other words, the old employees or workers can be obliged by his employer to join
the labor union which had entered into a collective bargaining agreement that provides for
a closed-shop as a condition for his continuance in his employment, otherwise his refusal to
join the contracting labor union would constitute a justifiable basis for his dismissal.

79. Ferrer v. NLRC, G.R. No. 100898

(80) MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD VS. RAMOS

G.R. No. 113907. February 28, 2000.
PURISIMA, J.

DOCTRINES: Although union security clauses embodied in the collective bargaining

agreement may be validly enforced and dismissals pursuant thereto may likewise be valid,
this does not erode the fundamental requirement of due process.

The right of an employee to be informed of the charges against him and to reasonable
opportunity to present his side in a controversy with either the company or his own union is
not wiped away by a union security clause or a union shop clause in a collective
bargaining agreement. Even assuming that a federation had valid grounds to expel union
officers, due process requires that these union officers be accorded a separate hearing by
the company. 

Dismissals pursuant to union security clauses are valid and legal subject only to the
requirement of due process, and dismissal of an employee by the company pursuant to a
labor union’s demand in accordance with a union security agreement does not constitute
unfair labor practice.

FACTS:
Petitioner MSMG, (local union) is an affiliate of ULGWP (the federation). A local union
election was held under the action of the federation. The defeated candidates filed a
petition for impeachment.

The local union held a general membership meeting. Several union members failed to
attend the meeting, so, the local union requested the company to deduct the union fines
from the wage of those union members who failed to attend the general membership
meeting. The Secretary General of the federation disapproved the resolution imposing the
P50.00 fine. The company then sent a reply to petitioner’s request stating it cannot deduct
fines without going against certain laws. The imposition of the fine became the subject of a
bitter disagreement between the Federation and the local union culminating to the latter’s
declaration of general autonomy from the former. 
The federation asked the company to stop the remittance of the local union’s share in the
education funds. With this, the company led a complaint of interpleader before the DOLE.
The federation called a meeting placing the local union under trusteeship and appointing
an administrator. Petitioner union officers received letters from the administrator requiring
them to explain why they should not be removed from the office and expelled from union
membership. Thereafter, they were expelled from the federation. 

The federation then advised the company to expel the 30 union officers and demanded
their separation pursuant to the Union Security Clause in the CBA. The Federation filed a
notice of strike with the NCMB to compel the company to effect the immediate termination
of the expelled union officers. Under the pressure of a strike, the company terminated the 30
union officers from employment. 

The petitioners filed a notice of strike on the grounds of discrimination, interference, mass
dismissal of union officers and shop stewards, threats, coercion and intimidation, and union
busting. They also prayed for the suspension of the effects of their termination. 

Secretary Drilon dismissed the petition stating it was an intra-union matter. Later, union shop
stewards were placed under preventive suspension. The union members staged a walk-out
and officially declared a strike that afternoon. The strike was attended by violence.

ISSUE/S: Was respondent company justified in dismissing petitioners employees merely upon
the labor federation’s demand for the enforcement of the union security clause embodied
in their collective bargaining agreement?

RULING:
NO. Respondent company dismissed the petitioners-employees without cause and due
process.

The charges against respondent company proceeds from one main issue the termination of
several employees upon the demand of the federation pursuant to the union security
clause. Although the union security clause may be validly enforced, such must comply with
due process. The reason behind the enforcement of union security clauses which is the
sanctity and inviolability of contracts cannot override one’s right to due process.

In Cariño vs. National Labor Relations Commission, this Court pronounced that while the
company, under a maintenance of membership provision of the collective bargaining
agreement, is bound to dismiss any employee expelled by the union for disloyalty upon its
written request, this undertaking should not be done hastily and summarily. The company
acts in bad faith in dismissing a worker without giving him the benefit of a hearing.

In this case, petitioner union officers were expelled for allegedly committing acts of
disloyalty to the federation. The company did not inquire into the cause of the expulsion
and merely relied upon the federation’s allegations. There is no disloyalty to speak of,
neither is there any violation of the federation’s constitution because there is nothing in the
said constitution which specifically prohibits disaffiliation or declaration of autonomy.
Hence, there cannot be any valid dismissal because Article II. Section 4 of the union security
clause in the CBA limits the dismissal to only three (3) grounds, to wit: failure to maintain
membership in the union (1) for non-payment of union dues, (2) for resignation; and (3) for
violation of the union’s Constitution and By-Laws.

The issue is not a purely intra-union matter as it was later on converted into a termination
dispute when the company dismissed the petitioners from work without the benefit of a
separate notice and hearing. Although it started as an intra-union dispute within the
exclusive jurisdiction of the BLR, to remand the same to the BLR would intolerably delay the
case and the Labor Arbiter could rule upon it. As to the act of disaffiliation by the local
union; it is settled that a local union has the right to disaffiliate from its mother union in the
absence of specific provisions in the federation’s constitution prohibiting such. There was no
such provision in federation ULGWP’s constitution.

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.

Wherefore, petition granted. 

81. METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO V.
BALINANG vs. NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and METROPOLITAN
BANK & TRUST COMPANY Vitug, J.: GR No. 102636 – September 10, 1993

DOCTRINE:

The “intentional quantitative differences” in wage among employees of the bank has been
set by the CBA to about P900 per month as of 01 January 1989. It is intentional as it has been
arrived at through the collective bargaining process to which the parties are thereby
concluded. The Solicitor General, in recommending the grant of due course to the petition,
has correctly emphasized that the intention of the parties, whether the benefits under a
collective bargaining agreement should be equated with those granted by law or not,
unless there are compelling reasons otherwise, must prevail and be given effect.
FACTS:

Metropolitan Bank & rust Co. entered into a collective bargaining agreement with the
MBTCEU, granting a monthly P900 wage increase effective 01 January 1989, P600 wage
increase effective 01 January 1990, and P200 wage increase effective 01 January 1991. The
MBTCEU had also bargained for the inclusion of probationary employees in the list of
employees who would benefit from the first P900 increase but the bank had adamantly
refused to accede thereto. Consequently, only regular employees as of 01 January 1989
were given the increase to the exclusion of probationary employees.

Barely a month later, or on 01 July 1989, Republic Act 6727, "an act to rationalize wage
policy determination by establishing the mechanism and proper standards therefor, . . .
fixing new wage rates, providing wage incentives for industrial dispersal to the countryside,
and for other purposes," took effect. Pursuant thereto, the bank gave the P25 increase per
day, or P750 a month, to its probationary employees and to those who had been promoted
to regular or permanent status before 01 July 1989 but whose daily rate was P100 and
below. The bank refused to give the same increase to its regular employees who were
receiving more than P100 per day and recipients of the P900 CBA increase.

Contending that the bank's implementation of Republic Act 6727 resulted in the
categorization of the employees into (a) the probationary employees as of 30 June 1989
and regular employees receiving P100 or less a day who had been promoted to permanent
or regular status before 01 July 1989, and (b) the regular employees as of 01 January 1989,
whose pay was over P100 a day, and that, between the two groups, there emerged a
substantially reduced salary gap, the MBTCEU sought from the bank the correction of the
alleged distortion in pay.

In order to avert an impending strike, the bank petitioned the Secretary of Labor to assume
jurisdiction over the case or to certify the same to the National Labor Relations Commission
(NLRC) under Article 263 (g) of the Labor Code. The parties ultimately agreed to refer the
issue for compulsory arbitration to the NLRC.

Labor Arbiter: ruled in favor of the union as there was a wage distortion.

NLRC: reversed the LA; a wage distortion can arise only in a situation where the salary
structure is characterized by intentional quantitative differences among employee groups
determined or fixed on the basis of skills, length of service, or other logical basis of
differentiation and such differences or distinctions are obliterated or contracted by
subsequent wage increases. As applied in this case, We noted that in the new wage salary
structure, the wage gaps between Levels 6 and 7 levels 5 and 6, and level 6 and 7 (sic)
were maintained. While there is a noticeable decrease in the wage gap between Levels 2
and 3, Levels 3 and 4, and Levels 4 and 5, the reduction in the wage gaps between said
levels is not significant as to obliterate or result in severe contraction of the intentional
quantitative differences in salary rates between the employee groups. For this reason, the
basic requirement for a wage distortion to exist does not appear in this case. Moreover,
there is nothing in the law which would justify an across-the-board adjustment of P750.00 as
ordered by the Labor Arbiter.

ISSUES:

Whether or not there was a wage distortion.

RULING:

Yes. In this case, the majority of the members of the NLRC, as well as its dissenting member,
agree that there is a wage distortion arising from the bank's implementation of the P25
wage increase; they do differ, however, on the extent of the distortion that can warrant the
adoption of corrective measures required by the law. The "intentional quantitative
differences" in wage among employees of the bank has been set by the CBA to about P900
per month as of 01 January 1989. It is intentional as it has been arrived at through the
collective bargaining process to which the parties are thereby concluded. The Solicitor
General, in recommending the grant of due course to the petition, has correctly
emphasized that the intention of the parties, whether the benefits under a collective
bargaining agreement should be equated with those granted by law or not, unless there
are compelling reasons otherwise, must prevail and be given effect. In keeping then with
the intendment of the law and the agreement of the parties themselves, along with the
often repeated rule that all doubts in the interpretation and implementation of labor laws
should be resolved in favor of labor, we must approximate an acceptable quantitative
difference between and among the CBA agreed work levels.

HELD: WHEREFORE, finding merit in the instant petition for certiorari, the same is GRANTED
DUE COURSE, the questioned NLRC decision is hereby SET ASIDE and the decision of the
labor arbiter is REINSTATED subject to the MODIFICATION that the wage distortion in question
be corrected in accordance with the formula expressed in the dissenting opinion of
Presiding Commissioner Edna Bonto-Perez. This decision is immediately executory.

NOTE/S:
WAGE DISTORTION; DEFINED
The term "wage distortion", under the Rules Implementing Republic Act 6727, is defined,
thus:
"(p)Wage Distortion means a situation where an increase in prescribed wage rates results in
the elimination or severe contraction of intentional quantitative differences in wage or
salary rates between and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills, length of
service, or other logical bases of differentiation."
FORMULA
As opined by Presiding Commissioner Edna Bonto-Perez the formula offered and
incorporated in Wage Order No. IV-02 issued on 21 May 1991 by the Regional Tripartite
Wages and Productivity Commission for correction of pay scale structures in cases of wage
distortion as in the case at bar which is:
Minimum Wage = % xPrescribed =Distortion
Actual SalaryIncreaseAdjustment. would be the most equitable and fair under the
circumstances obtaining in this case.

82. E. Razon v. Secretary of Labor, G.R. No. 85867

Facts: Petitioner E. Razon, Inc. (ERI) is a corporation organized in 1962 principally to bid for
the right tooperate arrastre services in Manila. They acquired rights to operate Manila’s
south harbor starting 1974. (The company was later renamed MPSI)

On July 19, 1986 or two years before the expiration of the eight-year term, the PPA
cancelled the management contract for alleged violations thereof. PPA took over the
cargo-handling operations as well as all the equipment of MPSI

Two days later or on July 21, 1986, the PPA issued Permit No. 104286 for cargo-handling
services to Marina Port Services, Inc. (MARINA). The latter began the arrastre services and
required all workers of ERI/MPSI to accomplish individual information sheets. Weeks later, the
bulk of the 2,700 employees concerned discovered that they had been hired by MARINA as
new employees effective July 21, 1986. Hence, they clamored for the payment of their
separation pay but both the MARINA and ERI/MPSI refused to be liable therefor.

Secretary took jurisdiction. He held that it was MPSI’s liability to pay the separation pay,
even if MARINA assumed the liabilities of MPSI. This was because such liability was personal
(in personam), hence not enforceable against a successor-emloyer.

Issue: WON MARINA assumed liability for paying the employees’ separation pay

Held: No. Separation or severance pay is an allowance usually based on length or service
that is payable to an employee on severance except usually in case of disciplinary
discharge, or as compensation due an employee upon the severance of his employment
status with the employer.

Under Article 283 of the Labor Code, separation pay is required where the termination of
employment relationship is occasioned by the "cessation of operations" of an establishment.
The said article, therefore, puts the burden of paying separation pay on ERI/MPSI, the
employer for whom services had been rendered by the employees who were separated
from employment in view of the cessation of its business operations by the cancellation of its
management contract with the PPA.

By absorbing ERI/MPSI employees and honoring the terms and conditions in the collective
bargaining agreement between ERI/MPSI and the employees, MARINA did not assume the
responsibility of ERI/MPSI to pay separation pay to its employees. The fact that a couple of
days later, the PPA, without public bidding, issued to MARINA, permit to operate, does not
imply that MARINA stepped into the shoes of ERI/MPSI as if there were absolute identity
between them.

There is no privity of contract between ERI/MPSI and MARINA so as to make the latter a
common or even substitute employer that it should be burdened with the obligations of the
former.

Admittedly, the consequent separation from the employment of its employees was not of
the ERI/MPSI’s own making. However, it may not validly lay such consequence on the lap of
MARINA which, like itself, had no hand in the termination of the management contract by
the PPA.

Paragraph 7, insofar as it refers to employees’ benefits, should be applied prospectively with

respect to MARINA. This conclusion is supported by Paragraph 14 of Permit No. 104286
granted to MARINA which states:

Grantee shall be responsible for all obligations, liabilities or claims arising out of any
transactions or undertakings in connections with their cargo handling operations as of the
actual date of transfer thereof to grantee.

83. BENGUET CONSOLIDATED, INC. v. BCI EMPLOYEES and WORKERS UNION-PAFLU, PHILIPPINE
ASSOCIATION OF FREE LABOR UNIONS, CIPRIANO CID and JUANITO GARCIA
G.R. No. L-24711, April 30, 1968
BENGZON, J.P., J.:

DOCTRINE: The "substitutionary" doctrine only provides that the employees cannot revoke
the validly executed collective bargaining contract with their employer by the simple
expedient of changing their bargaining agent. And it is in the light of this that the phrase
"said new agent would have to respect said contract" must be understood. It only means
that the employees, thru their new bargaining agent, cannot renege on their collective
bargaining contract, except of course to negotiate with management for the shortening
thereof.

The "substitutionary" doctrine, therefore, cannot be invoked to support the contention that a
newly certified collective bargaining agent automatically assumes all the personal
undertakings — like the no-strike stipulation here — in the collective bargaining agreement
made by the deposed union. When BBWU bound itself and its officers not to strike, it could
not have validly bound also all the other rival unions existing in the bargaining units in
question. BBWU was the agent of the employees, not of the other unions which possess
distinct personalities. To consider UNION contractually bound to the no-strike stipulation
would therefore violate the legal maxim that res inter alios nec prodest nec nocet.

FACTS: Benguet-Balatoc Workers Union (“BBWU”), for and in behalf of all Benguet
Consolidated, Inc (BENGUET) employees in its mines and milling establishment entered into
a Collective Bargaining Contract (CONTRACT) with BENGUET. The CONTRACT was stipulated
to be effective for a period of 4-1/2 years. It likewise embodied a No-Strike, No-Lockout
clause. After 3 years, a certification election was conducted by the DOLE among all the
rank and file employees of BENGUET in the same collective bargaining units. BCI EMPLOYEES
& WORKERS UNION (BCI UNION) obtained more than 50% of the total number of votes,
defeating BBWU. The Court of Industrial Relations certified the BCI UNION as the sole and
exclusive collective bargaining agent of all BENGUET employees as regards rates of pay,
wages, hours of work and such other terms and conditions of employment allowed them by
law or contract.

Later on, the BCI UNION filed a notice of strike against BENGUET. BCI UNION members who
were BENGUET employees in the mining camps went on strike. The strike was attended by
violence, some of the workers and executives of the BENGUET were prevented from
entering the premises and some of the properties of the BENGUET were damaged as a
result of the strike. Eventually, the parties agreed to end the dispute. BENGUET and BCI
UNION executed the AGREEMENT. About a year later, a collective bargaining contract was
finally executed between BCI UNION-PAFLU and BENGUET.

Meanwhile, BENGUET sued BCI UNION, PAFLU and their Presidents to recover the amount
the former incurred for the repair of the damaged properties resulting from the strike.
BENGUET also argued that the BCI UNION violated the CONTRACT which has a stipulation
not to strike during the effectivity thereof. Defendants unions and their presidents defended,
among others, that: (1) they were not bound by the CONTRACT which BBWU, the defeated
union, had executed with BENGUET. The trial court dismissed the complaint on the ground
that the CONTRACT, particularly the No-Strike clause, did not bind defendants. BENGUET
interposed the present appeal.

ISSUE: Did the Collective Bargaining Contract executed between Benguet and BBWU
automatically bind BCI UNION-PAFLU upon its certification as sole bargaining representative
of all BENGUET employees?

RULING: NO. BENGUET erroneously invokes the so-called “Doctrine of Substitution” referred
to in General Maritime Stevedore’s Union v. South Sea Shipping Lines. BENGUET’s reliance
upon the Principle of Substitution is totally misplaced. This principle, formulated by the NLRB
as its initial compromise solution to the problem facing it when there occurs a shift in
employees’ union allegiance after the execution of a bargaining contract with their
employer, merely states that even during the effectivity of a collective bargaining
agreement executed between employer and employees thru their agent, the employees
can change said agent but the contract continues to bind them up to its expiration date.
They may bargain however for the shortening of said expiration date.

In formulating the “substitutionary” doctrine, the only consideration involved was the
employees‘ (principal) interest in the existing bargaining agreement. The agent’s (union)
interest never entered the picture. The majority of the employees, as an entity under the
statute, is the true party in interest to the contract, holding rights through the agency of the
union representative. Thus, any exclusive interest claimed by the agent is defeasible at the
will of the principal. The “substitutionary” doctrine only provides that the employees cannot
revoke the validly executed collective bargaining contract with their employer by the
simple expedient of changing their bargaining agent. And it is in the light of this that the
phrase “said new agent would have to respect said contract” must be understood. It only
means that the employees, thru their new bargaining agent, cannot renege on their
collective bargaining contract, except of course to negotiate with management for the
shortening thereof.

The “substitutionary” doctrine cannot be invoked to support the contention that a newly
certified collective bargaining agent automatically assumes all the personal undertakings
— like the no-strike stipulation here — in the collective bargaining agreement made by the
deposed union. When BBWU bound itself and its officers not to strike, it could not have
validly bound also all the other rival unions existing in the bargaining units in question. BBWU
was the agent of the employees, not of the other unions which possess distinct personalities.

BCI UNION, as the newly certified bargaining agent, could always voluntarily assume all the
personal undertakings made by the displaced agent. But as the lower court found, there
was no showing at all that, prior to the strike, BCI UNION formally adopted the existing
CONTRACT as its own and assumed all the liabilities imposed by the same upon BBWU.
Defendants were neither signatories nor participants in the CONTRACT. Everything binding
on a duly authorized agent, acting as such, is binding on the principal; not vice-versa, unless
there is mutual agency, or unless the agent expressly binds himself to the party with whom
he contracts. Here, it was the previous agent who expressly bound itself to the other party,
BENGUET. BCI UNION, the new agent, did not assume this undertaking of BBWU. Since
defendants were not contractually bound by the no-strike clause in the CONTRACT, for the
simple reason that they were not parties thereto, they could not be liable for breach of
contract to plaintiff.

84. SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO. 109 AND/OR ANTONIO
DIAZ, PSSLU NATIONAL PRESIDENT, petitioners, vs.HON. POTENCIANO S. CANIZARES, in his
capacity as Labor Arbiter, BERNARDO YAP, RENATO BAYBON, SALVADOR SOLIBEL, ALLAN
MISTERIO, EDGARDO TANGKAY, LEONARDO DIONISIO, ARNEL SALVO, REYNALDO
RICOHERMOSO, BENITO VALENCIA, GERARDO LASALA AND ALEXANDER ATANASIO,
respondents. 
G.R. No. 101619. July 8, 1992. Medialdea, J.
DOCTRINE:

The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment or
resolution of grievances arising from the interpretation or implementation of their CBA and
those arising from the interpretation or enforcement of company personnel policies is
mandatory. The law grants to voluntary arbitrators the original and exclusive jurisdiction to
hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies (Art. 261, Labor Code). The
failure of the parties to the CBA to establish the grievance machinery and its unavailability is
not an excuse for the Labor Arbiter to assume jurisdiction over disputes arising from the
implementation and enforcement of a provision in the CBA. In the existing CBA between
PSSLU and Sanyo, the procedure and mechanics of its establishment had been clearly laid
out. All that needs to be done to set the machinery into motion is to call for the convening
thereof. If the parties to the CBA had not designated their representatives yet, they should
be ordered to do so. 

The procedure introduced in RA 6715 of referring certain grievances originally and

exclusively to the grievance machinery and when not settled at this level, to a panel of
voluntary arbitrators outlined in CBA's does not only include grievances arising from the
interpretation or implementation of the CBA but applies as well to those arising from the
implementation of company personnel policies. No other body shall take cognizance of
these cases. The last paragraph of Article 261 enjoins other bodies from assuming
jurisdiction. 

FACTS:

PSSLU had an existing CBA with Sanyo Philippines containing a union security clause. In a
letter, PSSLU informed the management of Sanyo that some employees were notified that
their membership with PSSLU were cancelled for anti-union, activities, economic sabotage,
threats, coercion and intimidation, disloyalty and for joining another union. The same letter
informed Sanyo that the same employees refused to submit themselves to the union's
grievance investigation committee. It appears that many of these employees were not
members of PSSLU but of another union, KAMAO. Officers of KAMAO, executed a pledged
of cooperation with PSSLU promising cooperation with the latter union and among others,
respecting, accepting and honoring the CBA between Sanyo, but still engaged in anti-
union activities and willfully violated the pledge of cooperation with PSSLU as they were still
threatening with bodily harm and even death the officers of the union. This prompted a
recommendation from PSSLU for the dismissal of the employees concerned. The company
sent a memorandum to the same workers and placing them under preventive suspension.
The company received no information on whether or not said employees appealed to
PSSLU, thus it considered them dismissed. 
The dismissed employees filed a complaint with the NLRC for illegal dismissal. 

PSSLU filed a motion to dismiss the complaint alleging that the Labor Arbiter was without
jurisdiction over the case, since cases arising from the interpretation or implementation of
the collective bargaining agreements shall be disposed of by the labor arbiter by referring
the same to the grievance machinery and voluntary arbitration. 

Labor Arbiter: assumed jurisdiction over the complaint of private respondents 

ISSUE:

WON the termination cases fall under the jurisdiction of the Labor Arbiter. 

RULING:

YES. It is clear that termination cases fall under the jurisdiction of the Labor Arbiter. It was
provided in the CBA executed between PSSLU and Sanyo that a member's voluntary
resignation from membership, willful refusal to pay union dues and his/her forming,
organizing, joining, supporting, affiliating or aiding directly or indirectly another labor union
shall be a cause for it to demand his/her dismissal from the company. The demand for the
dismissal and the actual dismissal by the company on any of these grounds is an
enforcement of  the union security clause in the CBA. This act is authorized by law provided
that enforcement should not be characterized by arbitrariness and always with due
process. 

In the instant case, however, the SC held that the Labor Arbiter and not the Grievance
Machinery provided for in the CBA has the jurisdiction to hear and decide the complaints of
the private respondents. While it appears that the dismissal of the private respondents was
made upon the recommendation of PSSLU pursuant to the union security clause provided in
the CBA, We are of the opinion that these facts do not come within the phrase "grievances
arising from the interpretation or implementation of (their) Collective Bargaining Agreement
and those arising from the interpretation or enforcement of company personnel policies,"
the jurisdiction of which pertains to the Grievance Machinery or thereafter, to a voluntary
arbitrator or panel of voluntary arbitrators. 

In the instant case, both the union and the company are united or have come to an
agreement regarding the dismissal of private respondents. No grievance between them
exists which could be brought to a grievance machinery. The problem or dispute in the
present case is between the union and the company on the one hand and some union
and non-union members who were dismissed, on the other hand. The dispute has to be
settled before an impartial body. The grievance machinery with members designated by
the union and the company cannot be expected to be impartial against the dismissed
employees. Due process demands that the dismissed workers grievances be ventilated
before an impartial body. Since there has already been an actual termination, the matter
falls within the jurisdiction of the Labor Arbiter.

85. CELESTINO VIVERO vs. CA, HAMMONIA MARINE SERVICES & HANSEATIC SHIPPING CO.,
LTD.
G.R. No. 138938 – OCTOBER 24, 2000

BELLOSILLO

DOCTRINE: A dismissal of an employee MAY constitute a "grievance between the

parties," as defined under the provisions of the CBA, and consequently, within the exclusive
original jurisdiction of the Voluntary Arbitrators. However, it is not sufficient to merely say that
parties to the CBA agree on the principle that "all disputes" should first be submitted to a
Voluntary Arbitrator. There is a need for an express stipulation in the CBA that illegal
termination disputes should be resolved by a Voluntary Arbitrator or Panel of Voluntary
Arbitrators, since the same fall within a special class of disputes that are generally within the
exclusive original jurisdiction of Labor Arbiters by express provision of law.

Absent such express stipulation, the phrase "all disputes" should be construed as limited to
the areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators, i.e., disputes
relating to contract-interpretation, contract-implementation, or interpretation or
enforcement of company personnel policies. Illegal termination disputes - not falling within
any of these categories - should then be considered as a special area of interest governed
by a specific provision of law.

FACTS:
Petitioner Vivero, a licensed seaman, is a member of the Associated Marine Officers and
Seamen's Union of the Philippines (AMOSUP) with an existing Collective Bargaining
Agreement with private respondents. He was hired by respondent as Chief Officer of the
vessel "M.V. Sunny Prince, but on grounds of very poor performance and conduct, refusal to
perform his job; refusal to report to the Captain or the vessel’s Engineers or cooperate with
other ship officers about the problem in cleaning the cargo holds; of the shipping pump
and his dismal relations with the Captain of the vessel, complainant was repatriated. 

Complainant filed a complaint for illegal dismissal at AMOSUP of which complainant was a
member. Grievance proceedings were conducted; however, parties failed to reach and
settle the dispute amicably, thus, complainant filed a complaint with the POEA. Private
respondents filed a Motion to Dismiss on the ground that the POEA had no jurisdiction over
the case considering petitioner Vivero's failure to refer it to a Voluntary Arbitration
Committee in accordance with the CBA between the parties.
Labor Arbiter: dismissed the Complaint for want of jurisdiction grounded on the fact that
since the CBA of the parties provided for the referral to a Voluntary Arbitration Committee
should the Grievance Committee fail to settle the dispute, and considering the mandate of
Art. 261 of the Labor Code on the original and exclusive jurisdiction of Voluntary Arbitrators,
the Labor Arbiter clearly had no jurisdiction over the case. 

NLRC: set aside the decision of the Labor Arbiter on the ground that the record was clear
that petitioner had exhausted his remedy by submitting his case to the Grievance
Committee of AMOSUP; and that the contested portion in the CBA providing for the
intercession of a Voluntary Arbitrator was not binding upon petitioner since both petitioner
and private respondents had to agree voluntarily to submit the case before a Voluntary
Arbitrator or Panel of Voluntary Arbitrators. 

CA: ruled in favor of private respondents, and held that the CBA "is the law between the
parties and compliance therewith is mandated by the express policy of the law." 

ISSUE: WON the dismissal of a VIVERO constitute a "grievance between the parties," as
defined under the provisions of the CBA, and consequently, within the exclusive original
jurisdiction of the Voluntary Arbitrators, thereby rendering the NLRC without jurisdiction to
decide the case? -NO

RULING:
In this case, however, while the parties did agree to make termination disputes the proper
subject of voluntary arbitration, such submission remains discretionary upon the parties. A
perusal of the CBA provisions shows that Sec. 6, Art. XII (Grievance Procedure) of the CBA is
the general agreement of the parties to refer grievances, disputes or misunderstandings to
a grievance committee, and henceforth, to a voluntary arbitration committee. The
requirement of specificity is fulfilled by Art. XVII (Job Security). 

The use of the word "may" shows the intention of the parties to reserve the right to submit
the illegal termination dispute to the jurisdiction of the Labor Arbiter, rather than to a
Voluntary Arbitrator. Petitioner validly exercised his option to submit his case to a Labor
Arbiter when he filed his Complaint before the proper government agency. The use of the
word "may" shows the intention of the parties to reserve the right of recourse to Labor
Arbiters. The CBA clarifies the proper procedure to be followed in situations where the
parties expressly stipulate to submit termination disputes to the jurisdiction of a Voluntary
Arbitrator or Panel of Voluntary Arbitrators.

After the grievance proceedings have failed to bring about a resolution, AMOSUP, as agent
of petitioner, should have informed him of his option to settle the case through voluntary
arbitration. Private respondents, on their part, should have also timely invoked the provision
of their CBA requiring the referral of their unresolved disputes to a Voluntary Arbitrator once
it became apparent that the grievance machinery failed to resolve it prior to the filing of
the case before the proper tribunal. The private respondents should not have waited for (9)
months from the filing of their Position Paper with the POEA before it moved to dismiss the
case purportedly for lack of jurisdiction. As it is, private respondents are deemed to have
waived their right to question the procedure followed by petitioner, assuming that they
have the right to do so.

Under their CBA, both Union and respondent companies are responsible for selecting an
impartial arbitrator or for convening an arbitration committee; yet, it is apparent that neither
made a move towards this end. Consequently, petitioner should not be deprived of his
legitimate recourse because of the refusal of both Union and respondent companies to
follow the grievance procedure.

86. LUDO & LUYM CORPORATION V SAORNIDO G. R. No. 140960 - January 20, 2003 

Doctrine:

1. Basic is the rule that findings of fact of administrative and quasi-judicial bodies, which
have acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only great respect but even finality. 

2. Compulsory arbitration has been defined both as "the process of settlement of labor
disputes by a government agency which has the authority to investigate and to make an
award which is binding on all the parties, and as a mode of arbitration where the parties
are compelled to accept the resolution of their dispute through arbitration by a third party.

Facts:

Petitioner LUDO & LUYM CORPORATION is a domestic corporation engaged in the

manufacture of coconut oil, corn starch, glucose and related products. In the course of its
business operations, LUDO engaged the arrastre services of Cresencio Lu Arrastre Services
for the loading and unloading of its finished products at the wharf. Accordingly, several
arrastre workers were deployed by CLAS to perform the services needed by LUDO. These
arrastre workers were subsequently hired, on different dates, as regular rank-and-file
employees of LUDO every time the latter needed additional manpower services. Said
employees thereafter joined respondent union, the LUDO Employees Union (LEU), which
acted as the exclusive bargaining agent of the rank-and-file employees.

On April 13, 1992, respondent union entered into a collective bargaining agreement with
LUDO which provides certain benefits to the employees, the amount of which vary
according to the length of service rendered by the availing employee. Thereafter, the
union requested LUDO to include in its members period of service the time during which
they rendered arrastre services to LUDO through the CLAS so that they could get higher
benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary
arbitration. The parties accordingly executed a submission agreement raising the sole issue
of the date of regularization of the workers for resolution by the Voluntary Arbitrator. 
In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1) the respondent
employees were engaged in activities necessary and desirable to the business of petitioner,
and (2) CLAS is a labor-only contractor of petitioner. 

Issue:

1. Whether or not benefits for the years 1977 to 1987 are already barred by prescription
when private respondents filed their case in january 1995; and 

2. Whether or not a voluntary arbitrator can award benefits not claimed in the submission
agreement 

Ruling: 

1. We hold that this contention is without merit. So is petitioners stance that the benefits
claimed by the respondents, i.e., sick leave, vacation leave and 13th-month pay, had
already prescribed, considering the three-year period for the institution of monetary
claims.15 Such determination is a question of fact which must be ascertained based on the
evidence, both oral and documentary, presented by the parties before the Voluntary
Arbitrator. In this case, the Voluntary Arbitrator found that prescription has not as yet set in
to bar the respondents claims for the monetary benefits awarded to them. Basic is the rule
that findings of fact of administrative and quasi-judicial bodies, which have acquired
expertise because their jurisdiction is confined to specific matters, are generally accorded
not only great respect but even finality. Here, the Voluntary Arbitrator received the
evidence of the parties first-hand. No compelling reason has been shown for us to diverge
from the findings of the Voluntary Arbitrator, especially since the appellate court affirmed
his findings, that it took some time for respondent employees to ventilate their claims
because of the repeated assurances made by the petitioner that it would review the
company records and determine therefrom the validity of the claims, without expressing a
categorical denial of their claims. 

2. We held in San Jose vs. NLRC, that the jurisdiction of the Labor Arbiter and the Voluntary
Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in the Labor Code,
Articles 217, 261 and 262, can possibly include money claims in one form or another.
Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC, compulsory arbitration has
been defined both as "the process of settlement of labor disputes by a government agency
which has the authority to investigate and to make an award which is binding on all the
parties, and as a mode of arbitration where the parties are compelled to accept the
resolution of their dispute through arbitration by a third party (emphasis supplied)." While a
voluntary arbitrator is not part of the governmental unit or labor departments personnel,
said arbitrator renders arbitration services provided for under labor laws. Generally, the
arbitrator is expected to decide only those questions expressly delineated by the submission
agreement. Nevertheless, the arbitrator can assume that he has the necessary power to
make a final settlement since arbitration is the final resort for the adjudication of disputes.
87. Sime Darby Pilipinas, Inc. vs. Magsalin G.R. No. 90426. December 15, 1989. * FELICIANO,
J.: 

Doctrine

Jurisdiction; Performance Bonus; The voluntary arbitrator had plenary jurisdiction and
authority to interpret the agreement, to arbitrate and to determine the scope of his own
authority. 

Facts:

On 13 June 1989, petitioner Sime Darby Pilipinas, Inc. and private respondent Sime Darby
Employees Association executed a Collective Bargaining Agreement (CBA) which includes
performance of the members of respondent union. During the year, petitioner claims
employees was below the production goals or targets set by Sime Darby for 1988-1989 and
below previous years’ levels for which reason the performance bonus could not be
granted. However, before petitioner could submit its Reply to the union’s Position Paper, the
Voluntary Arbitrator on 17 August 1989 issued an award which declared respondent union
entitled to a performance bonus equivalent to 75% of the monthly basic pay of its
members. In that award, the Voluntary Arbitrator held that a reading of the CBA provision
on the performance bonus.

Issue: 

Whether or not the Voluntary Arbitrator acted with grave abuse of discretion or without or in
excess of jurisdiction in passing upon both the question of whether or not a performance
bonus is to be granted by petitioner Sime Darby to the private respondents and the further
question of the amount thereof. 

Ruling: 

NO grave abuse and not in excess of jurisdiction, the Voluntary Arbitrator had plenary
jurisdiction and authority to interpret the agreement to arbitrate and to determine the
scope of his own authority; and YEs the performance bonus should be granted because the
Court considers that it is the performance of the company as a whole, and not merely the
production or manufacturing performance of its employees, which is relevant in that
determination.

It is essential to stress that the Voluntary Arbitrator had plenary jurisdiction and authority to
interpret the agreement to arbitrate and to determine the scope of his own authority
subject only, in a proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as
already indicated, viewed his authority as embracing not merely the determination of the
abstract question of whether or not a performance bonus was to be granted but also, in
the affirmative case, the amount thereof.  The noted that in their agreement to arbitrate,
the parties submitted to the Voluntary Arbitrator “the issue of performance bonus.” The
language of the agreement to arbitrate may be seen to be quite cryptic. There is no
indication at all that the parties to the arbitration agreement regarded “the issue of
performance bonus” as a two- tiered issue, only one tier of which was being submitted to
arbitration. Possibly, Sime Darby’s counsel considered that issue as having dual aspects and
intended in his own mind to submit only one of those aspects to the Arbitrator; if he did,
however, he failed to reflect his thinking and intent in the arbitration agreement. 

Analysis of the relevant provisions of the CBA between the parties and examination of the
record of the instant case lead us to the conclusion that the Arbitrator’s reading of the
scope of his own authority must be sustained. Petitioner’s counsel (Sime Darby) failed to
discuss at all before the Voluntary Arbitrator the rate of return on stockholders’ investment
achieved by Sime Darby for the year 1988-1989; as earlier noted, counsel confined his
argument and the evidence submitted by him to the number of tires produced, the
decrease in the rate of wastage of manufacturing materials, and the productivity of the
work force measured in terms of the number of tires produced per man hour. The Voluntary
Arbitrator, upon the other hand, explicitly considered the net earnings of petitioner Sime
Darby in 1988 (P100,000,000.00) and in the first semester of 1989 (P95,377,507.00) as well as
the increase in the company’s retained earnings fromP265,729,826.00 in 1988 to
P324,370,372.00 as of 30 June 1989. Thus, the Arbitrator impliedly or indirectly took into
account the return on stockholders’ investment realized for the fiscal year 1988-1989. It
should also be noted that the relevant CBA provision does not specify a minimum rate of
return on investment (ROI) which must be realized before any particular amount of bonus
may or should be declared by the company. 

88. Luzon Development Bank vs. Association of Luzon Development Bank Employees G.R.
No. 120319. October 6, 1995.*ROMERO, J.: 

Doctrine

Collective Bargaining Agreements; In the Philippine context, the parties to a Collective

Bargaining Agreement are required to include therein provisions for a machinery for the
resolution of grievances arising from the interpretation or implementation of the CBA or
company personnel policies. 

The voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a
quasi-judicial agency but independent of, and apart from, the NLRC since his decisions are
not appealable to the latter. The voluntary arbitrator performs a state function pursuant to a
governmental power delegated to him under the provisions therefor in the Labor Code and
he falls, therefore, within the contemplation of the term “instrumentality” in Sec. 9 of B.P. 129
.
Under the Arbitration Law, the award or decision of the voluntary arbitrator is equated with
that of the Regional Trial Courts. The decision or award of the voluntary arbitrator or panel
of arbitrators should be appealed to the Court of Appeals. 

Facts:

The parties, Luzon Development Bank (LDB) and the Association of Luzon Development
Bank Employees (ALDBE), agreed on the submission of their respective Position Papers on
December 1-15, 1994 to Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator.
ALDBE’s Position Paper was submitted on January 18, 1995. LDB, on the other hand, failed to
submit its Position Paper despite a letter from the Voluntary Arbitrator reminding them to do
so. Arbiter decided that the Bank has not adhered to the Collective Bargaining Agreement
provision nor the Memorandum of Agreement on promotion. A petition for certiorari and
prohibition seeking to set aside the decision of the Voluntary Arbitrator and to prohibi from
enforcing the same was filed in the Supreme Court.

Issue: 

Whether or not it is proper to file to the Supreme Court, the Special Civil Action for Certiorari
and Prohibition on the decided case by the Voluntary Arbitrator?

Ruling: 

No, because the Court of Appeals must be deemed to have concurrent jurisdiction with the
Supreme Court on on petition for certiorari from award or decision by Voluntary Arbitrator.

Compulsory arbitration is a system whereby the parties to a dispute are compelled by the
government to forego their right to strike and are compelled to accept the resolution of
their dispute through arbitration by a third party.1 The essence of arbitration remains since a
resolution of a dispute is arrived at by resort to a disinterested third party whose decision is
final and binding on the parties, but in compulsory arbitration, such a third party is normally
appointed by the government. Under voluntary arbitration, on the other hand, referral of a
dispute by the parties is made, pursuant to a voluntary arbitration clause in their collective
agreement, to an impartial third person for a final and binding resolution.2Ideally, arbitration
awards are supposed to be complied with by both parties without delay, such that once an
award has been rendered by an arbitrator, nothing is left to be done by both parties but to
comply with the same. In the Philippine context, the parties to a Collective Bargaining
Agreement (CBA) are required to include therein provisions for a machinery for the
resolution of grievances arising from the interpretation or implementation of the CBA or
company personnel policies 

In Volkschel Labor Union, et al. v. NLRC, et al.,on the settled premise that the judgments of
courts and awards of quasi-judicial agencies must become final at some definite time, this
Court ruled that the awards of voluntary arbitrators determine the rights of parties; hence,
their decisions have the same legal effect as judgments of a court. In Oceanic Bic Division
(FFW), et al. v. Romero, et al.,9 this Court ruled that “a voluntary arbitrator by the nature of
her functions acts in a quasi-judicial capacity.” Under these rulings, it follows that the
voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-
judicial agency but independent of, and apart from, the NLRC since his decisions are not
appealable to the latter. Also under Section 22 of Republic Act No. 876, also known as the
Arbitration Law, arbitration is deemed a special proceeding of which the court specified in
the contract or submission, or if none be specified, the Regional Trial Court for the province
or city in which one of the parties resides or is doing business, or in which the arbitration is
held, shall have jurisdiction. 

The award or decision of the voluntary arbitrator is equal with that of the regional trial court.
Consequently, in a petition for certiorari from that award or decision, the Court of Appeals
must be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of
policy, the Supreme Court shall henceforth remand to the Court of Appeals petitions of this
nature for proper disposition. 

89. INSULAR LIFE ASSURANCE CO v. INSULAR LIFE, 37 SCRA 244

90. PHILIPPINE STEAM NAVIGATION CO. vs. PHILIPPINE OFFICERS GUILD, ET AL.
G. R. Nos. L-20667 and 20669, BENGZON, J.P.)    
DOCTRINE: Subjection by the company of its employees to a series of questionings
regarding their membership in the union or their union activities, in such a way as to hamper
the exercise of free choice on their part, constitutes unfair labor practice    
FACTS:
The Philippine Steam Navigation Co., Inc. (PHILSTEAM) is engaged in inter-island shipping. In
the year 1954 it had 16 vessels, with 8 officers to a vessel, or a total of 128 officers.
Philippine Marine Officers Guild (PMOG) is a labor union affiliated with the Federation of
Free Workers (FFW), representing, and which represented in 1954, some of PHILSTEAM's
officers.
The Cebu Seamen's Association (CSA) is another labor union that represents and likewise
represented in 1954 some of PHILSTEAM's officers.
PMOG sent PHILSTEAM a set of demands with a request for collective bargaining. PHILSTEAM
received the letter, and transmitted its answer to PMOG, requiring the latter to first prove its
representation of a majority of PHILSTEAM's employees before its demands will be
considered as requested. PHILSTEAM, interrogated and investigated its captains, deck
officers, and engineers, to find out directly from them if they had joined PMOG or
authorized PMOG to represent them. Thereafter sent a reply insisting that PHILSTEAM
consider its requests and demands first before requiring proof of majority representation.
PMOG filed a notice of intention to strike for PHILSTEAM's alleged refusal to bargain and
unspecified unfair labor practices.
The CSA also transmitted its own set of demands to PHILSTEAM. PHILSTEAM recognized CSA
as representing the majority of its employees and proceeded to consider CSA's demands.
Thereafter, PHILSTEAM and CSA signed a collective bargaining agreement.
PMOG declared a strike against PHILSTEAM.
The President of the Philippines, certified the dispute as involving national interest, pursuant
to Section 10 of Republic Act 875.
The Court of Industrial Relations ruled in Case 618-ULP that PHILSTEAM interfered with,
coerced, and restrained employees in their rights to self-organization. The court found that
there is unfair labor practice which are: (1) the interrogation and investigation by
PHILSTEAM's supervisory officials of its captains, deck officers and engineers, to determine
whether they had authorized PMOG to act as their bargaining agent; (2) the subjection of
PMOG to vilification; and (3) the participation of PHILSTEAM's pier superintendent in soliciting
membership for a competing union.
ISSUE:
Is PHILSTEAM guilty of Unfair Labor Practice?
HELD:
Yes. PHILSTEAM is guilty of Unfair labor practice. An employer is not denied the privilege of
interrogating its employees as to their union affiliation, provided the same is for a legitimate
purpose and assurance is given by the employer that no reprisals would be taken against
unionists. Nonetheless, any employer who engages in interrogation does so with notice that
he risks a finding of unfair labor practice if the circumstances are such that his interrogation
restrains or interferes with employees in the exercise of their rights to self-organization. (Blue
Flash Express Co., Inc., 109 NLRB 591.)
The rule in this jurisdiction is that subjection by the company of its employees to a series of
questionings regarding their membership in the union or their union activities, in such a way
as to hamper the exercise of free choice on their part, constitutes unfair labor practice
(Scoty's Department Store vs. Micaller, 52 O.G. 5119). PHILSTEAM's aforestated interrogation
squarely falls under this rule.

91. Judric Canning vs. Inciong

Gr. No. L-51494 (1982), J. Conception Jr.

Doctrine:

Article 248(a) of the Labor Code of the Philippines, "to interfere with, restrain, or coerce
employees in their exercise of the right to self-organization" is an unfair labor practice on the
pan of the employer. Paragraph (d) of said Article also considers it an unfair labor practice
for an employer "to initiate, dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial or other support to
it. In this particular case, the private respondents were dismissed, or their services were
terminated, because they were soliciting signatures in order to form a union within the plant.
For sure, the petitioner corporation is guilty of unfair labor practice in interfering with the
formation of a labor union and retaliating against the employee’s exercise of their right to
self-organization.

Facts:
The records show that the herein private respondents are employees of the petitioner
corporation and are members of the United Lumber and General Workers of the Philippines
(ULGWP). On August 19, 1978, the said complainants were allegedly not allowed to report
for work due to their union activities in soliciting membership in a union yet to be organized
in the company and their time cards were removed from the rack. As a result, the said
complainants and their labor union filed a complaint for unfair labor practice against the
petitioner with Region IV of the Ministry of Labor, seeking the reinstatement of the
complainants with full backwages. 

The herein petitioner denied having locked out the complainants and claims that the said
complainants failed to report for work and abandoned their positions. The petitioner also
denied having knowledge of the union activities of the complainants until August 30, 1978,
when it was served notice of a petition for direct certification filed by the complainant
union. 

After hearing the parties, or on November 15, 1978, the Regional Director of Region IV of the
Ministry of Labor, after finding that the petitioner had dismissed the complainants without
valid cause, ordered the petitioner to immediately reinstate the complainants to their
former positions with fun backwages from the date of their dismissal up to their actual
reinstatement. 

The petitioner corporation appealed to the Ministry of Labor,  but its appeal was dismissed
for lack of merit on August 3, 1979. Thereafter, a writ of execution was issued on September
24, 1979. 

Issues:
1. W/N the Regional Director's finding that the petitioner is guilty of unfair labor practice for
terminating the services of the respondent union members due to their alleged union
activities is not supported by the evidence of record.

2. W/N it could not have committed the unfair labor practice charge for dismissing some of
its employees due to their alleged union activities because the alleged dismissal took place
more than four (4) months before the organizational meeting of the union and more than
one (1) year before actual registration of said union with the Labor Organization Division of
the Bureau of Labor Relations.
3. W/N the "respondent Regional Director's finding, which was affirmed by respondent
Deputy Minister of Labor that the 'dismissal' of respondent union members 'is conclusively
presumed to be without a valid cause' because petitioner failed to apply for clearance is
contrary to the applicable Rules and Regulations Implementing the Labor Code and is at
variance with jurisprudence on the matter.

Held:
Untenable because the record shows that after the parties had submitted their respective
position papers, a hearing was held, at the conclusion of which, the respondent Regional
Director found that the private respondents did not abandon their jobs but were dismissed
because of their union activities. This is a finding of fact which may not now be disturbed.

Contention is without merit. Under Article 248(a) of the Labor Code of the Philippines, "to
interfere with, restrain, or coerce employees in their exercise of the right to self-organization"
is an unfair labor practice on the part of the employer. Paragraph (d) of said Article also
considers it an unfair labor practice for an employer "to initiate, dominate, assist or
otherwise interfere with the formation or administration of any labor organization, including
the giving of financial or other support to it. In this particular case, the private respondents
were dismissed or their services were terminated, because they were soliciting signatures in
order to form a union within the plant. For sure, the petitioner corporation is guilty of unfair
labor practice in interfering with the formation of a labor union and retaliating against the
employees' exercise of their right to self-organization.

Petitioner refers to the following portion of the Order of the Regional Director dated
November 15, 1978: 

The record shows that complainants Norma Pineda, Vicky Penalosa, Leonila Morales,
Teresita Balmaceda, Adelina Valenzuela and Juanita Reposar were employed by
respondent in January, 1978, up to August, 1978. They worked continuously up to the time
that their services were terminated by respondent on the ground of abandonment.
However, respondent did not apply for clearance with this Office to terminate the services
of complainants. Hence, their dismissal is conclusively presumed to be without a valid
cause.
Indeed, prior clearance with the Ministry of Labor for the termination of the private
respondents is not necessary in this case since the private respondents have been
employed with the petitioner corporation for less than one (1) year. Section 1, Rule XIV, Book
V of the Implementing Rules and Regulations provides as follows: 

Section 1. Requirement for shutdown or dismissal. — No employer may shut down his
establishment or dismiss any of his employees with at least one year during the last two
years, whether the service is broken or continuous, without prior clearance issued therefor in
accordance with this Rule. Any provision in a collective agreement dispensing with the
clearance requirement shall be null and void.
However, the questioned order finding the dismissal of the private respondents to be
without just cause is not based upon such absence of prior clearance alone. The
respondent Regional Director also found that the private respondents were dismissed
because of their union activities and for the failure of the petitioners to file a report in lieu of
prior clearance, as provided for in Section 11, Rule XIV, Book V of the Implementing Rules
and Regulations. The questioned order further reads, as follows:

Moreover, we find that complainants did not abandon their job. They were terminated due
to the fact that they actively campaigned and assisted in the organization of their union.
Therefore, the dismissal of complainants is without valid cause, considering that respondent
failed to justify their action and report as required under the Labor Code.

The error of the Regional Director in stating that the dismissal of the private respondents was
without just cause in view of the absence of prior clearance from the Ministry of Labor is,
thus, not sufficient to warrant a reversal of the questioned order.

92. WISE AND CO., INC. vs. WISE & CO., INC. EMPLOYEES UNION-NATU

G.R. No. L-87672, October 13, 1989, GANCAYCO, J.:

DOCTRINE: There can be no discrimination committed by petitioner thereby as the situation

of the union employees are different and distinct from the non-union employees. Indeed,
discrimination per se is not unlawful. There can be no discrimination where the employees
concerned are not similarly situated. Wise and Co., Inc. vs. Wise & Co., Inc. Employees
Union, 178 SCRA 536, G.R. No. 87672 October 13, 1989

FACTS: In 1987, the management issued a memorandum circular introducing a profit

sharing scheme for its managers and supervisors the initial distribution. The respondent union
wrote petitioner asking for participation in this scheme but it was denied by petitioner on
the ground that it had to adhere strictly to the CBA. Petitioner distributed the profit sharing
benefit not only to managers and supervisors but also to all other rank and file employees
not covered by the CBA. This caused the respondent union to file a notice of strike alleging
that petitioner was guilty of ULP because the union members were discriminated against in
the grant of the profit sharing benefits.

Management refused to proceed with the CBA negotiations unless the last notice of strike
was first resolved. The union agreed to postpone discussions on the profit sharing demand
until a new CBA was concluded. After a series of conciliation conferences, the parties
agreed to settle the dispute through voluntary arbitration. The voluntary arbitrator issued an
award ordering petitioner to likewise extend the benefits of the 1987 profit sharing scheme
to the members of respondent union. Hence, this petition.
ISSUE: Whether or not the grant by management of profit sharing benefits to its non-union
member employees is discriminatory against its workers who are union members

HELD: No. Under the CBA between the parties, there is a clause where the employees are
classified into those who are members of the union and those who are not. The grant by
petitioner of profit-sharing benefits to the employees outside the “bargaining unit” falls
under the ambit of its managerial prerogative. It appears to have been done in good faith
and without ulterior motive. More so when as in this case there is a clause in the CBA where
the employees are classified into those who are members of the union and those who are
not.

In the case of the union members, they derive their benefits from the terms and conditions
of the CBA contract which constitute the law between the contracting parties. Both the
employer and the union members are bound by such agreement. There can be no
discrimination committed by petitioner thereby as the situation of the union employees are
different and distinct from the non-union employees. Indeed, discrimination per se is not
unlawful. There can be no discrimination where the employees concerned are not similarly
situated.

94. Alhambra Industries Inc. vs Court of Industrial Relations and Alhambra Employees
Association, G.R. No. L-25984 dated October 30, 1970

Doctrine:

Employer’s refusal to bargain collectively constitutes an unfair labor practice.

Facts:

A complaint for unfair labor practice was filed against the petitioner due to the reason that
fifteen (15) of the union members, employed as drivers and helpers of petitioner were being
discriminated against by petitioner’s not affording them the benefits and privileges enjoyed
by all the other employees for no justifiable reason other than their union membership.
Petitioner denied the unfair labor practice and countered that the 15 drivers and helpers
were not its employees, but separate and independent employees of its salesmen and
propagandists who exercised discretion and control over their selection, employment,
compensation, suspension and dismissal.

Issue:
Whether or not the acts of petitioner constituted unfair labor practice

Held:

Yes. In accordance with the “memorandum of instructions” which the corporation issues to
the salesman or propagandist, the latter is authorized by the former to engage the services
of a driver or helper. It is therefore apparent in truth and in fact that the corporation is the
employer of the driver or helper and not the salesman or propagandist who is merely
expressly authorized by the former to engage such services. The salary of the driver or
helper also comes from the corporation in the form of driver allowance which is
appropriated for the purpose. This allowance is given to the salesman or propagandist who
in turn pays the same to the driver or helper for salaries or wages. The duties and obligations
of the driver or helper do not come from the salesman or propagandist but are expressly
stated by the corporation in the “memorandum of instructions.” It is therefore clear that the
terms and conditions of employment of the driver of helper are those fixed and determined
by the corporation. From all the foregoing consideration, the Court is convinced that the
driver or helper is an employee of the corporation.

Failure on petitioner’s part to live up in good faith to the terms of its collective bargaining
agreement by denying the privileges and benefits thereof to the fifteen drivers and helpers
through its device of trying to pass them off as ‘employees’ of its salesmen and
propagandists were serious violation of petitioner’s duty to bargain collectively and
constituted unfair labor practice in any language.

95. SALUNGA V. CIR 21 SCRA 216

DOCTRINE: Generally, a state may not compel ordinary voluntary associations to admit thereto any given
individual because membership therein may be accorded or withheld as a matter of privilege, the rule is
qualified in respect of labor unions holding a monopoly in the supply of labor, either in a given locality, or
as regards a particular employer with which it has a closed-shop agreement.

FACTS:

San Miguel Brewery, Inc (Company) entered with the Union, of which respondent John de Castillo is the
president, into a CBA.

Section 3 of the CBA reads: The company agrees to require as a condition of employment of those
workers covered by this agreement who either are members of the UNION on the date of the signing of
this agreement, or may join the UNION during the effectivity of this agreement, that they shall not
voluntarily resign from the UNION earlier than thirty (30) days before the expiry date of this agreement as
provided in Article XIII hereof, provided, however, that nothing herein contained shall be construed to
require the company to enforce any sanction whatsoever against any employee or worker who fails to
retain his membership in the UNION as hereinbefore stated, for any cause other than voluntary
resignation or non-payment of regular union dues on the part of said employee or worker.

Petitioner Francisco Salunga was a member of the National Brewery and Allied Industries Labor Union of
the Philippines (PAFLU) since 1953. On August 18, 1961, he tendered his resignation from the Union.
The Union accepted the resignation, and transmitted it to the Company, with a request for the immediate
implementation of said Section 3.

The Company informed petitioner that his resignation would result in the termination of his employment, in
view of Section 3.

Petitioner wrote to the Union a letter withdrawing or revoking his resignation and advising the Union to
continue deducting his monthly union dues.

The Union told the Company that petitioner's membership could not be reinstated and insisted on his
separation from the service, conformably with the stipulation above-quoted. The Company replied: Mr.
Salunga told us that he did not realize that he would be losing his job if he were to resign from the Union.
We did not at any time ask or urge him to withdraw his resignation; neither are we now asking or insisting
that you readmit him into your membership. We thought that informing him of the consequences of his
resignation from the Union, was the only humane thing to do under the circumstances. Nevertheless, if
notwithstanding our foregoing clarification you still consider him as having actually resigned from your
organization, and you insist that we dismiss him from the service in accordance with Sec. 3, Article II of
our agreement, we will have no alternative but to do so. The Company notified petitioner that, in view of
said letter and the aforementioned section, "we regret we have to terminate your employment for cause.”
Petitioner was discharged from the employment of the Company.

A prosecutor of the Court of Industrial Relations commenced the present proceedings for unfair labor
practice against the Union, its president, respondent John de Castillo, respondent Cipriano Cid, as
PAFLU president, the Company, and its aforementioned Vice-President Miguel Noel.

The trial Judge rendered a decision directing them to readmit and to continue the membership of Salunga
in the membership rolls of the union after paying all union dues

This decision was reversed by the CIR — sitting en banc. Hence, this appeal by the petitioner.

ISSUE: Should petitioner be readmitted?

RULING: YES. Having been denied readmission into the Union and having been dismissed from
the service owing to an unfair labor practice on the part of the Union, petitioner is entitled to
reinstatement as member of the Union.
The appeal is well taken, for, although petitioner had resigned from the Union and the latter had accepted
the resignation, the former had, soon later upon learning that his withdrawal from the Union would result
in his separation from the Company, owing to the closed-shop provision above referred to revoked or
withdrawn said resignation, and the Union refused to consent thereto without any just cause therefor.

The Union had not only acted arbitrarily in not allowing petitioner to continue his membership. The trial
Judge found said refusal of the Union officers to be due to his critical attitude towards certain measures
taken or sanctioned by them. As set forth in the decision of the trial Judge: Prior to August, 1961, he had
been criticizing and objecting to what he believed were illegal or irregular disbursements of union funds.
Salunga was later removed by the union from his position as steward without his knowledge, and that the
union did not honor the of attorney executed in his favor by Alejandro Miranda, a co-worker, for the
collection of Miranda's indebtedness of P60.00 to him.

The officers of the Union tried to justify themselves by characterizing said criticisms as acts of disloyalty to
the Union, which, of course, is not true, not only because the criticism assailed, not the Union, but certain
acts of its officers, and, indirectly, the officers themselves, but also because the Constitution and By-laws
of the Union explicitly recognize the right of its members to give their views on "all transactions made by
the Union."

Although, generally, a state may not compel ordinary voluntary associations to admit thereto any given
individual, because membership therein may be accorded or withheld as a matter of privilege, the rule is
qualified in respect of labor unions holding a monopoly in the supply of labor, either in a given locality, or
as regards a particular employer with which it has a closed-shop agreement. The reason is that The
closed shop and the union shop cause the admission requirements of trade union to become affected
with the public interest. Likewise, a closed shop, a union shop, or maintenance of membership clauses
cause the administration of discipline by unions to be affected with the public interest.

Consequently, it is well settled that such unions are not entitled to arbitrarily exclude qualified applicants
for membership, and a closed-shop provision would not justify the employer in discharging, or a union in
insisting upon the discharge of, an employee whom the union thus refuses to admit to membership,
without any reasonable ground therefor. Needless to say, if said unions may be compelled to admit new
members, who have the requisite qualifications, with more reason may the law and the courts exercise
the coercive power when the employee involved is a long standing union member, who, owing to
provocations of union officers, was impelled to tender his resignation, which he forthwith withdrew or
revoked. Surely, he may, at least, invoke the rights of those who seek admission for the first time, and can
not arbitrarily he denied readmission.

We cannot agree, however, with the finding of the trial Judge to the effect that the Company was guilty of
unfair labor practice. The Company was reluctant if not unwilling to discharge the petitioner. When the
Union first informed the Company of petitioner's resignation and urged implementation of Section 3 of the
bargaining contract, the Company advised petitioner of the provision thereof, thereby intimating that he
had to withdraw his resignation in order to keep his employment. Besides, the Company notified the
Union that it (the Company) would not take any action on the case and would consider the petitioner, "still
a member" of the Union. When the latter, thereafter, insisted on petitioner's discharge, the Company still
demurred and explained it was not taking sides and that its stand was prompted merely by "humane"
considerations, springing from the belief that petitioner had resigned from the Union without realizing its
effect upon his employment. And, as the Union reiterated its demand, the Company notified petitioner that
it had no other alternative but to terminate his employment, and dismissed him from the service, although
with "regret".

Under these circumstances, the Company was not "unfair" to the petitioner. At the same time, the
Company could not safely inquire into the motives of the Union officers, in refusing to allow the petitioner
to withdraw his resignation. The arbitrary nature of the decision of said officers was not such as to be
apparent and to justify the company in regarding said decision unreasonable. Moreso, the petitioner had
appealed to the National Officers of the PAFLU and the latter had sustained the Union. The Company
was justified in presuming that the PAFLU had inquired into all relevant circumstances, including the
motives of the Union Officers.

Having been denied readmission into the Union and having been dismissed from the service owing to an
unfair labor practice on the part of the Union, petitioner is entitled to reinstatement as member of the
Union and to his former or substantially equivalent position in the Company, without prejudice to his
seniority and/or rights and privileges, and with back pay, which back pay shall be borne exclusively by the
Union.

96. UNITED RESTAUROR'S EMPLOYEES & LABOR UNION-PAFLU vs. HON. GUILLERMO E. TORRES,
as Presiding Judge of Branch VIII, Court of First Instance of Rizal, 7th Judicial District, and the
DELTA DEVELOPMENT CORPORATION4

GR No. L-24993. December 18, 1968. SANCHEZ, J.:

Doctrine: After the proper bargaining representative is certified, a strike by a minority union
to compel an employer to bargain with it is unlawful. No labor dispute can exist between a
minority union and an -employer in such case.

Facts: Delta Development Corporation (Delta is the owner of the Makati commercial center
engaged in the business of leasing portions thereof. On the other hand, the United
Restauror's Employees & Labor Union-PAFLU is an association of some employees of Suló
Restaurant, a lessee of Delta.

On January 8, 1965, the Union sought permission from Delta to conduct picketing activities
on the private property of plaintiff surrounding Suló Restaurant. Delta denied the request
because it may be held liable for any incident that may happen in the picket lines. Despite
the denial, the Union picketed on January 16 on Delta's property surrounding Suló
Restaurant.

Thus, Delta filed a verified complaint for injunction with prayer for preliminary injunction
against Unin+on, alleging that the act of the Union is violative of the property rights and that
no employer-employee relationship exists between Delta and the Union members.
Respondent judge issued a writ of preliminary injunction. Union’s motion to reconsider was
denied thus, they filed a motion to dismiss.
Without awaiting resolution of its motion to dismiss, the Union commenced in the Supreme
Court the present original petition for certiorari claiming that respondent judge acted
without or in excess of his jurisdiction in issuing the injunctive writ as it was issued in violation
of Section 9 (d) of Republic Act 875; and that jurisdiction over the case rests with the CIR for
the same involves acts of unfair labor practice under Sec. 4 (a) of Republic Act 875 in
connection with Sec. 5 (a) thereof.

The SC issued a writ of preliminary injunction upon the Union's bond. In its answer, Delta
alleged, among others, that respondent judge validly issued the injunctive writ in question
because the same "never enjoined petitioner from picketing against the Suló-D & E, Inc. but
only from doing their picketing on the private property of respondent who is not in any way
privy to the relationship between Suló-D & E, Inc. and petitioner".

Delta moved to dismiss the proceeding at bar on the ground that it has become moot and
academic. It averred that the Union lost in the consent election conducted by the
Department of Labor in CIR Cases 1455-MC and 1464-MC, and thereby also lost its right to
picket. The Union opposed arguing that the picketing was conducted 8 months before the
consent election; and that the issues that triggered the Union's labor strike are entirely
distinct and foreign to the issues in Cases 1455-MC and 1464-MC.

ISSUE: Whether the Union may continue to picket despite its defeat in the consent election
as the collective bargaining representative?

RULING: No.

The petition must be dismissed. Really, the case before us has become moot and
academic.

It is not disputed that on October 4, 1965, i.e., shortly after this case was filed on September
18, 1965, a consent election was held and that SELU defeated the petitioner Union. As such,
SELU was certified to the Suló management as the collective bargaining representative of
the employees.

Verily, the Union can no longer demand collective bargaining. For, it became the minority
union. SELU, therefore, has the right as well as the obligation seek remedies for the
grievances of all Suló employees, including employees who are members of petitioner
Union, regarding terms and conditions of employment." Indeed, collective bargaining
cannot be the appropriate objective of petitioning Union's continuation of their concerted
activities.

To allow said Union to continue picketing for the purpose of drawing the employer to the
collective bargaining table would obviously be to disregard the results of the consent
election. To further permit the Union's picketing activities would be to flaunt at the will of the
majority.
Adherence to the methods laid down by statute for the settlement of industrial strife is one
way of achieving industrial peace; one such method is certification election. It is the intent
and purpose of the law that this procedure, when adopted and availed of by parties to
labor controversies, should end industrial disputes, not continue them.

Pertinent is the following observation to which the Court fully concur: "Before an election is
held by the Board to determine which of two rival unions represents a majority of the
employees, one of the unions may call a strike and demand that the employer bargain with
it. A labor dispute will then exist. Nothing in the statute makes it illegal for a minority to strike
and thereby seek to obtain sufficient strength so as to become the sole bargaining agent.
But after the Board certifies the bargaining representative, a strike by a minority union to
compel an employer to bargain with it is unlawful. No labor dispute can exist between a
minority union and an employer in such a case."

Upon the law then, the Union's right to strike and consequently to picket ceased by its
defeat in the consent election. That election occurred during the pendency before the
Court of this original petition for certiorari lodged by the Union the thrust of which is to
challenge the power of the Court of First Instance to enjoin its picketing activities. The Union
may not continue to picket.

97. MANILA MANDARIN EMPLOYEES UNION v. NLRC and MELBA C. BELONCIO

G.R. No. 76989, 1987 Sep 29

GUTIERREZ, JR., J.

DOCTRINE:

Union security clauses cannot be used by union officials against an employer, much less
their own members, except with a high sense of responsibility and fairness.—The Court
stresses, however, that union security clauses are also governed by law and by principles of
justice, fair play, and legality. Union security clauses cannot be used by union officials
against an employer, much less their own members, except with a high sense of
responsibility, fairness, prudence, and judiciousness.

Same; Same; Same, Same; A union member may not be expelled from her union and from
her job for personal reasons or for causes foreign to the closed-shop agreement— A union
member may not be expelled from her union, and consequently from her job, for personal
or impetuous reasons or for causes foreign to the closed-shop agreement and in a manner
characterized by arbitrariness and whimsicality.

Same; Same; Same; Same; Union membership does not entitle hotel workers to be sloppy in
their work and inattentive to customers and disrespectful to supervisors.— This is particularly
true in this case where Ms. Beloncio was trying her best to make a hotel bus boy do his work
promptly and courteously so as to serve hotel customers in the coffee shop expeditiously
and cheerfully. Union membership does not entitle waiters, janitors, and other workers to be
sloppy in their work, inattentive to customers, and disrespectful to supervisors. The Union
should have disciplined its erring and troublesome members instead of causing so much
hardship to a member who was only doing her work for the best interests of the employer,
all its employees, and the general public whom they serve,

FACTS: Private respondent, Melba C. Beloncio, assistant head waitress at the hotel's coffee
shop, was expelled from the Manila Mandarin Employees Union for acts allegedly inimical to
the interests of the union. The charge of disloyalty against Beloncio arose from her
emotional remark to a waitress who happened to be a union steward, "Wala akong tiwala
sa Union ninyo." The remark was made in the course of a heated discussion regarding
Beloncio's efforts to make a lazy and recalcitrant waiter adopt a better attitude towards his
work. The union demanded the dismissal from employment of Beloncio on the basis of the
union security clause of their collective bargaining agreement and the Hotel acceded by
placing Beloncio on forced leave. the Labor Arbiter held that the union was guilty of unfair
labor practice when it demanded the separation of Beloncio and the employer was
ordered to reinstate her.

ISSUES: Is petitioner union is guilty of ULP by reason of the arbitrary use of the union security
clause in the CBA?

HELD: Yes. The Hotel would not have compelled Beloncio to go on forced leave were it not
for the union's insistence and demand to the extent that because of the failure of the hotel
to dismiss Beloncio as requested, the union filed a notice of strike with the Ministry of Labor
and Employment on the issue of unfair labor practice. Although the CBA contained a union
security clause or closed-shop agreement, it is, however, stressed that such are also
governed by law and by principles of justice, fair play, and legality. Union security clauses
cannot be used by union officials against an employer, much less their own members,
except with a high sense of responsibility, fairness, prudence, and judiciousness.

A union member may not be expelled from her union, and consequently from her job, for
personal or impetuous reasons or for causes foreign to the closed-shop agreement and in a
manner characterized by arbitrariness and whimsicality. Beloncio was merely trying her best
to make a hotel bus boy do his work promptly and courteously so as to serve hotel
customers in the coffee shop expeditiously and cheerfully. Union membership does not
entitle waiters, janitors, and other workers to be sloppy in their work, inattentive to
customers, and disrespectful to supervisors. The Union should have disciplined its erring and
troublesome members instead of causing so much hardship to a member who was only
doing her work for the best interests of the employer, all its employees, and the general
public whom they serve.

98. Ilaw at Buklod ng Manggagawa v National Labor Relations Commission

GR. No. 91980

DOCTRINE:

Among the rights guaranteed to employees by the Labor Code is that of engaging
in concerted activities in order to attain their legitimate objectives.

The more common of these concerted activities as far as employees are concerned
are: strikes — the temporary stoppage of work as a result of an industrial or labor dispute;
picketing — the marching to and fro at the employer's premises, usually accompanied by
the display of placards and other signs making known the facts involved in a labor dispute;
and boycotts — the concerted refusal to patronize an employer's goods or services and to
persuade others to a like refusal.

On the other hand, the counterpart activity that management may licitly undertake
is the lockout — the temporary refusal to furnish work on account of a labor dispute, In this
connection, the same Article 263 provides that the "right of legitimate labor organizations to
strike and picket and of employer to lockout, consistent with the national interest, shall
continue to be recognized and respected."

The legality of these activities is usually dependent on the legality of the purposes
sought to be attained and the means employed therefor.

FACTS:

Ilaw at Buklod ng Manggagawa representing 4500 employees of SMC working at

various plants, offices and warehouses in NCR presented to the company a demand for
correction of the significant distortion in the workers’ wages pursuant to the Wage
Rationalization Act.

SMC ignored the demand of the workers hence the union members refused to
render overtime services until the distortion has been corrected by SMC.

The employees’ working hours/schedule are on different time scheme and they
have been observing such schedule for the past 5 years and due to such abandonment of
the longstanding schedule of work and reversion to the eight-hour shift, substantial losses
were incurred by SMC. The company filed a complaint with arbitration branch of NLRC then
before the NLRC for the latter to declare the strike illegal with TRO.
 The union members contented that their refusal to work beyond 8 hours was a
legitimate means of compelling SMC to correct distortion and thus legal. The SMC however
contended that the coordinated reduction by the Union’s members of the work time in
order to compel SMC to yield to the demand was an illegal and unprotected activity.

The NLRC granted the temporary restraining order by SMC and ordered the workers
to cease and desist from further committing the acts.

ISSUE: Whether or not the strike was legal

HELD:

Among the rights guaranteed to employees by the Labor Code is that of engaging
in concerted activities in order to attain their legitimate objectives.

The more common of these concerted activities as far as employees are concerned
are: strikes — the temporary stoppage of work as a result of an industrial or labor dispute;
picketing — the marching to and fro at the employer's premises, usually accompanied by
the display of placards and other signs making known the facts involved in a labor dispute;
and boycotts — the concerted refusal to patronize an employer's goods or services and to
persuade others to a like refusal.

On the other hand, the counterpart activity that management may licitly undertake
is the lockout — the temporary refusal to furnish work on account of a labor dispute, In this
connection, the same Article 263 provides that the "right of legitimate labor organizations to
strike and picket and of employer to lockout, consistent with the national interest, shall
continue to be recognized and respected."

The legality of these activities is usually dependent on the legality of the purposes
sought to be attained and the means employed therefor.

It goes without saying that these joint or coordinated activities may be forbidden or
restricted by law or contract.

In the particular instance of "distortions of the wage structure within an

establishment" resulting from "the application of any prescribed wage increase by virtue of
a law or wage order," Section 3 of Republic Act No. 6727 prescribes a specific, detailed and
comprehensive procedure for the correction thereof, thereby implicitly excluding strikes or
lockouts or other concerted activities as modes of settlement of the issue.

Moreover, the collective bargaining agreement between the SMC and the Union,
contains a stipulation that “The UNION agrees that there shall be no strikes, walkouts,
stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any
merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any
other interference with any of the operations of the COMPANY during the terms of this
agreement”

The Union was thus prohibited to declare and hold a strike or otherwise engage in
non-peaceful concerted activities for the settlement of its controversy with SMC in respect
of wage distortions, or for that matter; any other issue "involving or relating to wages, hours
of work, conditions of employment and/or employer-employee relations."

The partial strike or concerted refusal by the Union members to follow the five-year-
old work schedule which they had therefore been observing, resorted to as a means of
coercing correction of "wage distortions," was therefore forbidden by law and contract
and, on this account, illegal.

99. Gold City Integrated Port Service, Inc (INPORT) vs. NLRC

GR No. 103560 July 6, 1995

Doctrine: A union officer who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of illegal acts during a strike may
be declared to have lost their employment status. An ordinary striking worker cannot be
terminated for mere participation in an illegal strike. There must be proof that he committed
illegal acts during a strike. A union officer, on the other hand, may be terminated from work
when he knowingly participates in an illegal strike, and like other workers, when he commits
an illegal act during a strike.

Facts: Petitioner’s employees stopped working and gathered in a mass action to express
their grievances regarding wages, thirteenth month pay and hazard pay. Said employees
were all members of the Macajalar Labor Union — Federation of Free Workers (MLU-FFW)
with whom petitioner had an existing collective bargaining agreement.

Petitioner was engaged in stevedoring and arrastre services at the port of Cagayan de Oro.
The strike paralyzed operations at said port. The strikers filed individual notices of strike
(“Kaugalingon nga Declarasyon sa Pag-Welga”) with the then Ministry of Labor and
Employment. With the failure of conciliation conferences between petitioner and the
strikers, INPORT filed a complaint before the Labor Arbiter for Illegal Strike with prayer for a
restraining order/preliminary injunction.
The National Labor Relations Commission issued a temporary restraining order. Thereafter,
majority of the strikers returned to work, leaving herein private respondents who continued
their protest.

For not having complied with the formal requirements in Article 264 of the Labor Code,the
strike staged by petitioner’s workers on April 30, 1985 was found by the Labor Arbiter to be
illegal. The workers who participated in the illegal strike did not, however, lose their
employment, since there was no evidence that they participated in illegal acts. After noting
that petitioner accepted the other striking employees back to work, the Labor Arbiter held
that the private respondents should similarly be allowed to return to work without having to
undergo the required screening to be undertaken by their union (MLU-FFW).

As regards the six private respondents who were union officers, the Labor Arbiter ruled that
they could not have possibly been “duped or tricked” into signing the strike notice for they
were active participants in the conciliation meetings and were thus fully aware of what was
going on. Hence, said union officers should be accepted back to work after seeking
reconsideration from herein petitioner.

The NLRC affirmed with modification the Arbiter’s decision. It held that the concerted action
by the workers was more of a “protest action” than a strike. Private respondents, including
the six union officers, should also be allowed to work unconditionally to avoid discrimination.
However, in view of the strained relations between the parties, separation pay was
awarded in lieu of reinstatement.

Upon petitioner’s motion for reconsideration, public respondent modified the above
resolution.

The Commission ruled that since private respondents were not actually terminated from
service, there was no basis for reinstatement. However, it awarded six months’ salary as
separation pay or financial assistance in the nature of “equitable relief.” The award for
backwages was also deleted for lack of factual and legal basis. In lieu of backwages,
compensation equivalent to P1,000.00 was given.

Issue: Whether separation pay and backwages be awarded by public respondent NLRC to
participants of an illegal strike.

Held: Reinstatement and backwages or, if no longer feasible, separation pay, can only be
granted if sufficient bases exist under the law, particularly after a showing of illegal dismissal.
However, while the union members may thus be entitled under the law to be reinstated or
to receive separation pay, their expulsion from the union in accordance with the collective
bargaining agreement renders the same impossible.

Private respondents and their co-workers stopped working and held the mass action on
April 30, 1985 to press for their wages and other benefits. What transpired then was clearly a
strike, for the cessation of work by concerted action resulted from a labor dispute. The
complaint before the Labor Arbiter involved the legality of said strike. The Arbiter correctly
ruled that the strike was illegal for failure to comply with the requirements of Article 264 (now
Article 263) paragraphs (c) and (f) of the Labor Code.

The individual notices of strike filed by the workers did not conform to the notice required by
the law to be filed since they were represented by a union (MLU-FFW) which even had an
existing collective bargaining agreement with INPORT. Neither did the striking workers
observe the strike vote by secret ballot, cooling-off period and reporting requirements.

In the case at bench, INPORT accepted the majority of the striking workers, including union
officers, back to work. Private respondents were left to continue with the strike after they
refused to submit to the “screening” required by the company.

Under Article 264 of the Labor Code, a worker merely participating in an illegal strike may
not be terminated from his employment. It is only when he commits illegal acts during a
strike that he may be declared to have lost his employment status. Since there appears no
proof that these union members committed illegal acts during the strike, they cannot be
dismissed. The striking union members among private respondents are thus entitled to
reinstatement, there being no just cause for their dismissal.

However, considering that a decade has already lapsed from the time the disputed strike
occurred, we find that to award separation pay in lieu of reinstatement would be more
practical and appropriate.No backwages will be awarded to private respondent-union
members as a penalty for their participation in the illegal strike. Their continued participation
in said strike, even after most of their co-workers had returned to work, can hardly be
rewarded by such an award.

The fate of private respondent-union officers is different. Their insistence on unconditional

reinstatement or separation pay and backwages is unwarranted and unjustified. For
knowingly participating in an illegal strike, the law mandates that a union officer may be
terminated from employment.

Notwithstanding the fact that INPORT previously accepted other union officers and that the
screening required by it was uncalled for, still it cannot be gainsaid that it possessed the
right and prerogative to terminate the union officers from service. The law, in using the word
may, grants the employer the option of declaring a union officer who participated in an
illegal strike as having lost his employment.

Moreover, an illegal strike which, more often than not, brings about unnecessary economic
disruption and chaos in the workplace should not be countenanced by a relaxation of the
sanctions prescribed by law. The union officers are, therefore, not entitled to any relief.
102. Association of Independent Unions in the Phils. (AIUP) vs. NLRC
G.R. No. 120505, March 25, 1999
PURISIMA, J.

A strike is a legitimate weapon in the universal struggle for existence. It is considered as the
most effective weapon in protecting the rights of the employees to improve the terms and
conditions of their employment. But to be valid, a strike must be pursued within legal
bounds.

Facts: Joel Densing, Henedino Mirafuentes, Christopher Patentes, and Andres Tejana, the
petitioner herein, were casual employees of respondent CENAPRO Chemicals Corporation.
In the said company, the collective bargaining representative of all rank and file employees
was CENAPRO Employees Association (CCEA), with which respondent company had a
collective bargaining agreement (CBA). Their CBA excluded casual employees from
membership in the incumbent union.

The casual employees who have rendered at least one to six years of service sought
regularization of their employment. When their demand was denied, they formed
themselves into an organization and affiliated with the Association of Independent unions in
the Philippines (AIUP). Thereafter, AIUP filed a petition for certification election, which
petition was opposed by the respondent company. The CCEA anchored its opposition on
the contract bar rule.

The union filed a notice of strike, minutes of strike vote, and the needed documentation,
with the Department of Labor and Employment cited as grounds the acts of respondent
company constituting unfair labor practice, more specifically coercion of employees and
systematic union busting. On July 23, 1992, the union proceeded to stage a strike, in the
course of which, the union perpetrated illegal acts. The strikers padlocked the gate of the
company. The areas fronting the gate of the company were barricaded and blocked by
union strikers. The strikers also prevented and coerced other non-striking employees from
reporting for work. Because of such illegal activities, the respondent company filed a
petition for injunction with the NLRC, which granted a Temporary Restraining Order (TRO),
enjoining the strikers from doing further acts of violence, coercion, or intimidation and from
blocking free ingress and egress to the company premises.

Subsequently, the respondent company filed a complaint for illegal strike. The day before,
petitioners filed a complaint for unfair labor practice and illegal lockout* against the
respondent company. In a consolidated Decision, the Labor Arbiter declared as illegal the
strike staged by the petitioners, and dismissed the charge of illegal lockout and unfair labor
practice.

Issue: Whether or not the strike staged by the petitioners was illegal.
Ruling: Yes. The NLRC correctly ruled that the strike staged by petitioners was in the nature
of a union-recognition-strike. A union-recognition-strike, as its legal designation implies, is
calculated to compel the employer to recognize one's union and not other contending
group, as the employees' bargaining representative to work out a collective bargaining
agreement despite the striking union's doubtful majority status to merit voluntary recognition
and lack of formal certification as the exclusive representative in the bargaining unit. It is
undisputed that at the time the petition for certification election was filed by AIUP, the
petitioner union, there was an existing CBA between the respondent company and CCEA,
the incumbent bargaining representative of all rank and file employees. The petition should
have not been entertained because of the contract bar rule.

A strike is a legitimate weapon in the universal struggle for existence. It is considered as the
most effective weapon in protecting the rights of the employees to improve the terms and
conditions of their employment. But to be valid, a strike must be pursued within legal
bounds. The right to strike as a means for the attainment of social justice is never meant to
oppress or destroy the employer. The law provides limits for its exercise. Among such limits
are the prohibited activities under Article 264 of the Labor Code, particularly paragraph (e),
which states that no person engaged in picketing shall: a) commit any act of violence,
coercion, or intimidation or b) obstruct the free ingress to or egress from the employer's
premises for lawful purposes or c) obstruct public thoroughfares. Even if the strike is valid
because its objective or purpose is lawful, the strike may still be declared invalid where the
means employed are illegal.

It follows therefore that the dismissal of the officers of the striking union was justified and
valid. Their dismissal as a consequence of the illegality of the strike staged by them finds
support in Article 264 (a) of the Labor Code, pertinent portion of which provides: " x x Any
union officer who knowingly participates in an illegal strike and any x x union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to
have lost his employment status.

*Lockout means temporary refusal of the employer to furnish work as a result of an industrial
or labor dispute.

103. SAN MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
SECOND DIVISION, AND SAN MIGUEL CORPORATION EMPLOYEES UNION (SMCEU)-PTGWO,
respondents.
G.R. No. 99266. March 2, 1999.
JUSTICE PURISIMA

DOCTRINE:

For failing to exhaust all the steps in the grievance machinery and arbitration proceedings
provided in the Collective Bargaining Agreement, the notice of strike should have been
dismissed by the NLRC and private respondent union ordered to proceed with the
grievance and arbitration proceedings.

FACTS:

San Miguel Corporation (SMC), alleging the need to streamline its operations due to
financial losses, shut down some of its plants and declared 55 positions as redundant - 17 in
Business Logistics Division, 17 in Ayala Operations Center, 18 in Magnolia Manila Buying
Station.

The private respondent, Union, filed several grievance cases for the said retrenched
employees, praying for redeployment of the said employees to the other divisions of the
company.

The grievance proceedings were conducted pursuant to Sections 5 and 8, Article VIII of the
parties’ 1990 CBA.

During the grievance proceedings, however, most of the employees were redeployed,
while others accepted early retirement. As a result only 17 employees remained when the
parties proceeded to the third level of the grievance procedure.

In a meeting on October 26, 1990, petitioner informed private respondent union that if by
October 30, 1990, the remaining 17 employees could not yet be redeployed, their services
would be terminated on November 2, 1990. The said meeting adjourned when Mr. Daniel S.
L. Borbon II, a representative of the union, declared that there was nothing more to discuss
in view of the deadlock.

Private respondent then filed with the National Conciliation and Mediation Board (NCMB) of
DOLE a notice to strike for (a) bargaining deadlock, (b) union busting, (c) gross violation of
the CBA, (d) failure to the union with a list of vacant positions, and (e) defiance of voluntary
arbitration award.

Petitioner moved to dismiss, but the NCMB failed to act on the motion.

SMC then filed a complaint with the NLRC, which the NLRC dismissed for lack of merit.

ISSUE:

Whether NLRC erred in not compelling arbitration and to enjoin a strike in violation of a no
strike clause.

HELD:
Yes, the NLRC erred in not compelling arbitration and not enjoining the strike.

The grounds for strike and lockout are laid down in Rule XXII, Section I, of the Rules and
Regulations Implementing Book V of the Labor Code - to wit: a) bargaining deadlock; and,
b) ULP. However, violation of the CBA shall not be considered ULP and shall not be
strikeable.

In this case, the grounds relied upon by the private respondent union are non- strikeable.
The issues which may lend substance to the notice of strike filed by the private respondent
union are: collective bargaining deadlock and petitioner’s alleged violation of the
collective bargaining agreement. These grounds, however, appear more illusory than real.

Collective Bargaining Deadlock is defined as “the situation between the labor and the
management of the company where there is failure in the collective bargaining
negotiations resulting in a stalemate.”11 This situation, is non-existent in the present case
since there is a Board assigned on the third level (Step 3) of the grievance machinery to
resolve the conflicting views of the parties. Instead of asking the Conciliation Board
composed of five representatives each from the company and the union, to decide the
conflict, petitioner declared a deadlock, and thereafter, filed a notice of strike. For failing to
exhaust all the steps in the grievance machinery and arbitration proceedings provided in
the Collective Bargaining Agreement, the notice of strike should have been dismissed by
the NLRC and private respondent union ordered to proceed with the grievance and
arbitration proceedings.

As to the alleged violation of the CBA, the Court held that such a violation is chargeable
against the private respondent union. In abandoning the grievance proceedings and
stubbornly refusing to avail of the remedies under the CBA, private respondent violated the
mandatory provisions of the collective bargaining agreement.