39.

PHILIPPINE SINGAPORE TRANSPORT vs NLRC

GR No. 95449 August 18, 1997
Torre, Jr., J.:

DOCTRINE:

Management prerogatives are not absolute prerogatives but are subject to legal
limits, collective bargaining agreements, and the general principles of fair play and justice.

The dismissal of employees must be made within the parameters of the law and
pursuant to the basic tenets of equity, justice and fair play. 

Security of tenure has been construed to mean that “the employer shall not
terminate the services of an employee except for a just cause or when authorized” by the
Code. 

FACTS: Petitioner, Philippine Singapore Transport (PSTS), is a manning agency that hired
Estrada as captain of the Sea Carrier I for Intra Oil, a foreign principal engaged in oil drilling
in high seas of Bombay, India. Barely two months of being employed, Estrada was relieved
from his job and was repatriated back to the Philippines while someone immediately took
over as captain of the ship. Estrada went to PSTS and asked about his dismissal as well as
corresponding claims for sums of money related to his terminated contract. He was
informed by PSTS that his termination was due to his incompetence. His claims for sums of
money were likewise denied.

Aggrieved, Estrada filed with the POEA Adjudication Department a complaint

against PSTS and Intra-Oil for illegal dismissal. PSTS allege that the termination of Estrada was
based on a valid cause of incompetency and that Intra Oil was in the best position to
determine the qualification of Estrada. In his position paper, Estrada revealed that his
termination was an offshoot of his justified refusal to obey the charterer to tow another of its
vessel because the ropes on board had already suffered extreme wear and tear. The
inadequacy of ropes were communicated by Estrada to Essar Shipping. Relationship
between him and the charterer degraded rapidly from then on. POEA ruled in favor of
Estrada, holding PSTS and Intra Oil liable for his illegal dismissal. Thus, PSTS appealed to NLRC.

ISSUE: Whether respondent Estrada was validly dismissed from the service on account of his
alleged incompetence as captain of Sea Carrier I 

RULING: No. Whereas an employer is free to manage and regulate, according to his
own discretion and judgment, all phases of employment, these prerogatives are not
absolute prerogatives but are subject to legal limits, collective bargaining agreements, and
the general principles of fair play and justice.
 Dismissal of the private respondent is done without just cause in violation of Art. 279 in
relation to Art 282 of the Labor Code and without due process in contravention to Art 277
(b) of the said Code. 

The petitioner’s imputation of incompetence on the part of the private respondent

due to his lack of foresight to anticipate the number of mooring ropes to be used is
unworthy of being given credence. His refusal to carry out the towing order was on the
basis of his professional opinion that there was a shortage in towing ropes. It would have
been a different story had Estrada refused the towing order simply because he didn’t know
how to, in which case he could be said to be incompetent in that area of expertise. 

Similarly, there was no written notice containing a statement of the causes of the
termination of private respondent in order to afford him to defend himself if he desires to do
so. There was also no written notice from the employer of its decision to terminate the
private respondent stating clearly the reasons thereof. The petitioner’s defense of using the
contractual provision that termination of employment could be done without notice in
cases on serious misconduct is not applicable in this case. Estrada was not found guilty of
any serious misconduct.    

ACCORDINGLY, the instant petition is hereby DISMISSED for lack of merit. The
Resolution of the NLRC dated August 17, 1990 and its Resolution dated September 25, 1990
are hereby AFFIRMED. 

40. Phil. Telegraph and Telephone Corp. vs. Laplana, et al. G.R. No. 76645

NARVASA, J.:

Doctrine: The Arbiter acknowledges “the inherent right of an employer to transfer or assign
an employee in the pursuit of its legitimate business interests” subject only to the condition
that it be not “motivated by discrimination or (made) in bad faith, or xx effected as a form
of punishment or demotion without sufficient cause.” This is a principle uniformly adhered to
by this Court. 

An employee’s right to security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogative to change his assignment or
transfer him.—“It is the employer’s prerogative, based on its assessment and perception of
its employees’ qualifications, aptitudes, and competence, to move them around in the
various areas of its business operations in order to ascertain where they will function with
maximum benefit to the company. An employee’s right to security of tenure does not give
him such a vested right in his position as would deprive the company of its prerogative to
change his assignment or transfer him where he will be most useful. When his transfer is not
unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion
in rank or diminution of his salaries, benefits, and other privileges, the employee may not
complain that it amounts to a constructive dismissal. 
Facts:

Laplana was a cashier of the Baguio City Branch Office of the Philippine Telegraph and
Telephone Corporation (PT & T). PT & T's treasurer, Mrs. Alicia A. Arogo, directed Laplana to
transfer to the company's branch office at Laoag City. Laplana refused the reassignment
reasoning that: (a) she has already established her permanent residence in Baguio city and
in view of said reassignment, her salary alone will not be enough; (b) she will be away from
my family which will affect her efficiency; (c) the reassignment would require a long
adjustment period which would affect performance of her job.

PT & T's treasurer reiterated her directive for Laplana's transfer to the Laoag Branch stating
that if she does not report, it shall be considered as her abandonment of her job.
Subsequently, Laplana manifested that she cannot accept the job offer and that she be
retrenched instead. Hence, termination of Laplana's employment on account of
retrenchment thereupon followed.

Laplana filed with the Labor Arbiters' Office insisting that when she refused to be transferred,
the Defendants made good its warning by terminating her services on the ground of
"retrenchment," although the truth is, she was forced to be terminated and that there was
no ground at all for the retrenchment company's "act of transferring is baseless and was
only meant to harass and force her to resign eventually. In response, PT&T alleged that it
was exercising management prerogatives and their directive to transfer Laplana was in
good faith, more so that Laplana was terminated on her explicit declaration that "she was
willing to be retrenched rather than be assigned.

LA ruled in Laplana’s favor stating that transferring an employee, as practice of

management prerogatives, is not by itself unlawful. However, such right is not absolute as it
must not be motivated by discrimination or in bad faith, or is effected as a form of
punishment or demonition without sufficient cause. The LA stated that in the instant case,
the transfer of Laplana is patently a demotion and a form of punishment without just cause
and would cause untold suffering on her part. NLRC affirmed the LA’s judgment.

Issue:

Whether an employee’s reason of personal inconvenience or hardship in opposition to

employer's decision to transfer him to another work place is justified and overrules
management prerogative even in the absence of bad faith or underhanded motives on
the latter’s part.

Held:

There can be no quarrel with the Arbiter's formulation of the general principle governing an
employer's prerogative to transfer his employees from place to place or from one position
to another subject only to the condition that it be not "motivated by discrimination or
(made) in bad faith, or effected as a form of punishment or demotion without sufficient
cause.

The difficulty lies in the situation where no such illicit, improper or underhanded purpose can
be ascribed to the employer, the objection to the transfer being ground solely upon the,
personal inconvenience or hardship that will be caused to the employee by reason of the
transfer. What then?
In this case, the employee had to all intents and purposes resigned from her position. She
had unequivocally asked that she be considered dismissed, herself suggesting the reason
therefor –– retrenchment. She accepted separation pay. On the other hand, the employer
has not been shown to be acting otherwise than in good faith, and in the legitimate pursuit
of what it considered its best interests, in deciding to transfer her to another office. There is
no showing whatever that the employer was transferring Laplana to another work place,
not because she would be more useful there, but merely "as a subterfuge to rid itself of an
undesirable worker," or "to penalize an employee for union activities. 

Certainly, the Court cannot accept the proposition that when an employee opposes his
employer's decision to transfer him to another work place, there being no bad faith or
underhanded motives on the part of either party, it is the employee's wishes that should be
made to prevail.

41. YUCO CHEMICAL INDUSTRY v. MINISTRY OF LABOR

G.R. No. L-75656 May 28, 1990
Justice Fernan

Doctrine:

In a number of cases, the Court has recognized and upheld the prerogative of
management to transfer an employee from one office to another within the business
establishment provided that there is no demotion in rank or a diminution of his salary,
benefits and other privileges. This is a privilege inherent in the employer's right to control and
manage its enterprise effectively. Even as the law is solicitous of the employees' welfare, it
cannot ignore the right of the employer to exercise what are clearly and obviously
management prerogatives. The freedom of management to conduct its business
operations to achieve its purpose cannot be denied. 

Facts: 

In 1978, private respondents (complainants) George Halili and Amado Magno were
employed by petitioner company which is engaged in the manufacture/assembly of ice
boxes in Barangay Matatalaib, Tarlac, Tarlac. They were assigned to make aluminum
handles for the ice boxes. 
On August 12,1981, after obtaining a favorable legal opinion from the Tarlac provincial
office of MOLE concerning the legality of moving the production of aluminum handles from
Tarlac to Manila, petitioner addressed a memorandum to private respondents directing
them to report for work within one week from notice at their new place of work at Felix
Huertas Street, Sta. Cruz, Manila. The memorandum further stated that private respondents
would be paid with a salary of P27.00 and an additional allowance of P2.00 "to meet the
higher cost of living in Manila. 2 

A day after or on August 13, 1981, instead of complying with the memorandum, private
respondents filed a complaint with the provincial labor office for illegal dismissal, 13th month
pay and service incentive leave pay. 3 

As a countermove, on August 21, 1981, petitioner filed an application for clearance to

terminate the two employees on the ground of abandonment. On September 25,1981, the
OIC of the Tarlac labor office issued an order directing petitioner to give private
respondents their separation pay within ten (10) days from receipt of notice.

Issue: Whether or not the transfer of the place of work at such a distant place as Manila
without the consent of the employees concerned can no longer be construed as a
reasonable exercise of management prerogative in the assignment of personnel dictated
by business exigencies.

Held: 

 But like all other rights, there are limits. The managerial prerogative to transfer personnel
must be exercised without grave abuse of discretion and putting to mind the basic
elements of justice and fair play. 5 Having the right should not be confused with the manner
in which that right must be exercised. Thus it cannot be used as a subterfuge by the
employer to rid himself of an undesirable worker. Nor when the real reason is to penalize an
employee for his union activities and thereby defeat his right to self- organization. But the
transfer can be upheld when there is no showing that it is unnecessary, inconvenient and
prejudicial to the displaced employee. 

The reassignment of Halili and Magno to Manila is legally indefensible on several grounds.
Firstly, it was grossly inconvenient to private respondents. They are working students. When
they received the transfer memorandum directing their relocation to Manila within seven
days from notice, classes had already started. The move from Tarlac to Manila at such time
would mean a disruption of their studies. Secondly, there appears to be no genuine business
urgency that necessitated their transfer. As well pointed out by private respondents'
counsel, the fabrication of aluminum handles for ice boxes does not require special
dexterity. Many workers could be contracted right in Manila to perform that particular line
of work. 
Altogether, there is a strong basis for public respondent's conclusion that the controversial
transfer was not prompted by legitimate reasons. Petitioner company had indeed
discriminated against Magno and Halili when the duo was selected for reassignment to
Manila. The transfer was timed at the height of union concerted activities in the firm,
deliberately calculated to demoralize the other union members. Under such questionable
circumstances, private respondents had a valid reason to refuse the Manila re- assignment.
7
Public respondent did not err or abuse his discretion in upholding the employees' cause. 

WHEREFORE, the questioned order dated April 8, 1986 of Deputy Minister Leogardo, Jr. is
hereby AFFIRMED.

42 ALMODIEL VS. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 100641. June 14, 1993.
NOCON, J.

DOCTRINE: The determination of the qualification and fitness of workers for hiring and firing,
promotion or reassignment are exclusive prerogatives of management.

FACTS: Petitioner Farle P. Almodiel, a Certified Public Accountant, was hired as Cost
Accounting Manager of Private Respondent Raytheon Philippines, Inc. in a probationary or
temporary capacity. After a few months, he was regularized. However, Respondent
adopted and installed a standard cost of accounting system in their operation which
Raytheon plants and subsidiaries worldwide used. As a consequence, the submission of
periodic written reports was no longer needed. Petitioner was notified about the abolition of
his position on the ground of redundancy constraining him to file a complaint for illegal
dismissal. 

The Labor Arbiter ruled in his favor declaring that complainant's termination on the ground
of redundancy is highly irregular and without legal and factual basis. On appeal. NLRC
reversed the decision and directed Respondent to pay Petitioner separation pay/financial
assistance. 

Hence, the petition by herein Petitioner claiming his very function was absorbed by the
Payroll/Mis/Finance Department under the management of a certain Danny Ang Tan Chai,
a resident alien who had no working permit issued by the Department of Labor and
Employment. Respondent insists that Petitioner's functions and duties had not been
absorbed by Ang Tan Chai, a permanent resident born in this country because they are
occupying entirely different and distinct positions requiring different sets of expertise or
qualifications and discharging functions altogether different and foreign from that of
Petitioner's abolished position. 
ISSUE/S: Can the Court invalidate the Respondent’s act of promoting Ang Tan Chai instead
of the Petitioner?

RULING: NO. The Court cannot invalidate the Respondent’s act of promoting Ang Tan Chai
instead of the Petitioner.

Petitioner also assails Respondent’s choice of Ang Tan Chai to head the Payroll/Mis/Finance
Department, claiming that he is better qualified for the position. It should be noted,
however, that Ang Tan Chai was promoted to the position during the middle part of 1988 or
before the abolition of Petitioner’s position in early 1989. Besides the fact that Ang Tan
Chai’s promotion thereto is a settled matter, it has been consistently held that an objection
founded on the ground that one has better credentials over the appointee is frowned upon
so long as the latter possesses the minimum qualifications for the position. 

In the case at bar, since Petitioner does not allege that Ang Tan Chai does not qualify for
the position, the Court cannot substitute its discretion and judgment for that which is clearly
and exclusively management prerogative. To do so would take away from the employer
what rightly belongs to him as aptly explained in National Federation of Labor Unions v.
NLRC: “It is a well-settled rule that labor laws do not authorize interference with the
employer’s judgment in the conduct of his business. The determination of the qualification
and fitness of workers for hiring and firing, promotion or reassignment are exclusive
prerogatives of management. The Labor Code and its implementing Rules do not vest in the
Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts) managerial
authority. The employer is free to determine, using his own discretion and business judgment,
all elements of employment, “from hiring to firing” except in cases of unlawful discrimination
or those which may be provided by law. There is none in the instant case.”
Wherefore, petition dismissed. 

43. Caltex Refinery Employees Association (CREA) v NLRC

G.R. No. 102993. July 14, 1995

DOCTRINE:
The prerogative of employers to regulate all aspects of employment subject to the
limitation of special laws is recognized. A valid exercise of management prerogative
encompasses hiring, work assignments, working methods, time, place and manner of work,
tools to be used, procedure to be followed, supervision of workers, working regulations,
transfer of employees, discipline, dismissal and recall of workers 

This prerogative must, however, be exercised in good faith for the advancement of the
employer’s interest and not for the purpose of defeating the rights of the employees
granted by law or contract.
FACTS: 
Petitioner Arnelio M. Clarete was hired by respondent Caltex Philippines, Inc. (Caltex) as
Mechanic C. He was later promoted to the position of Mechanic B and assigned to the
Mechanical/Metal Grades Section of respondent Caltex’s refinery in San Pascual,
Batangas.

According to Clarete, when he was on his way to the refinery’s main gate after completing
a day’s work at the Maintenance Area IV, he saw on a pile of rubbish a bottle of lighter
fluid, which mechanics use to remove grease from their hands. He picked up the bottle and
placed it in the basket attached to the handlebar of his bicycle with the intention of asking
the security guard at the gate to allow him to bring it home.

Upon reaching the gate, he took the bottle of lighter fluid from the basket, punched out his
time card at the bundy clock and then asked Juan de Villa, the security guard on duty,
permission to take home the bottle. Replying that he was not authorized to grant the
permission sought, de Villa referred Clarete to Dominador Castillo, the security supervisor.
When so approached, however, Castillo told Clarete to leave the bottle in his office.
Clarete complied and left for home.

Respondent Caltex gave a different version of the incident: On said date, de Villa noticed a
black bag which Clarete did not submit for inspection. When requested by de Villa to open
the same for inspection, Clarete retorted that it was not necessary to inspect the bag as it
contained only dirty clothes. Unconvinced, de Villa opened the bag and found a one-liter
sample bottle filled with lighter fluid surreptitiously hidden inside in the sleeves of Clarete’s
working clothes, which, in turn, were covered by other clothes. When asked if he had a
gate pass to bring the bottle out of the premises, Clarete replied that he did not secure a
gate pass as the lighter fluid was for his personal use.

Clarete received a letter from his immediate supervisor, requiring him to explain in writing
why he should not be subjected to disciplinary action for violation of company rules and
regulations. In his written explanation of April 20, 1989, Clarete stated: (1) that he had no
intention of bringing the bottle of lighter fluid out of the company premises without the
guard’s permission; (2) that he did seek permission but was denied; and (3) that he left the
bottle behind with the guard when told to do so.

Clarete was charged with the crime of theft before the Municipal Trial Court of San Pascual,
Batangas. Subsequently, a decision was rendered in Criminal Case No. 3331, acquitting
Clarete of the crime charged based on the insufficiency of the evidence to establish his
guilt beyond reasonable doubt. 

However, Clarete was informed that his services were being terminated effective August 24,
1990 for “serious misconduct and loss of trust and confidence resulting from your having
violated a lawful order of the Company.
ISSUE: Whether there was valid dismissal.  -- NO

RULING: 
The prerogative of employers to regulate all aspects of employment subject to the limitation
of special laws is recognized. A valid exercise of management prerogative encompasses
hiring, work assignments, working methods, time, place and manner of work, tools to be
used, procedure to be followed, supervision of workers, working regulations, transfer of
employees, discipline, dismissal and recall of workers

There are restrictions to guide the employers in the exercise of management prerogatives,
particularly the right to discipline or dismiss employees, for both the Constitution and the law
guarantee employees’ security of tenure. Thus, employees may be dismissed only in the
manner provided by law. The right of the employer must not be exercised arbitrarily and
without just cause. Otherwise, the constitutional mandate of security of tenure of the
workers would be rendered nugatory.   

But while Clarete may be guilty of violation of company rules, we find the penalty of
dismissal imposed upon him by respondent Caltex too harsh and unreasonable. Penalty of
dismissal must be commensurate with the act, conduct or omission imputed to the
employee and imposed in connection with the employer’s disciplinary authority. Even when
there exist some rules agreed upon between the employer and employee on the subject of
dismissal the same cannot preclude the State from inquiring on whether its rigid application
would work too harshly on the employee.  

The penalty of dismissal imposed on Clarete is unduly harsh and grossly disproportionate to
the reason for terminating his employment. Clarete  has no previous record in his eight years
of service; that respondent Caltex did not lose anything as the bottle of lighter fluid was
retrieved on time; and that there was no showing that Clarete’s retention in the service
would work undue prejudice to the viability of employer’s operations .

44. Firestone Tire and Rubber Company of the Philippines,

vs. Carlos Lariosa and National Labor Relations Commission,
148 SCRA 187 (GR No. 70479 [1987])
FERNAN, J:

Doctrine: Under Article 283 of the Labor Code, an employer may terminate an employee
for serious misconduct. ‘If there is sufficient evidence that an employee has been guilty of a
breach of trust/ that his employer has ample reason to distrust him, the Labor tribunal
cannot justly deny to the employer the authority to dismiss such employee.’
 
Facts: 
Carlos Lariosa, worked in Firestone Tire and Rubber Company for 11 years as a tire builder. 

On July 27, 1983, on his way out the company premises, he was frisked by security Lizo and
Olvez. They found 16 wool flannel swabs inside his bag tucked underneath his soiled clothes,
all belonging to the company.

He was then dismissed effective on August 2, 1983 through letter of Ms. Villavicani, company
president, based on “stealing company property and loss of trust”. Lariosa on the otherhand
filed with the Labor and Employment a case for illegal dismissal.

The Labor Arbiter found Laniosa’s dismissal justified but was reversed by the NLRC on appeal
and held that Lianosa be reinstated but without backwages.

Issue:
Whether the act of Firestone Tire and Rubber Company was within the realm on laws on
Protection to Labor Law

Held:
From the records, it is likewise clear that Firestone did not act arbitrarily in terminating
Linasosa’s services. Based on records, an investigation of the incident was conducted in the
presence of Lianosa, the Union President, and the Security Guards who witnessed the
attempted asportation.

Thus, we cannot agree with the NLRC’s conclusion that even if Firestone has substantial
proof, it did not observe statutory requirements of due process.

Under Article 283 of the Labor Code, an employer may terminate an employee for serious
misconduct. ‘If there is sufficient evidence that an employee has been guilty of a breach of
trust/ that his employer has ample reason to distrust him, the Labor tribunal cannot justly
deny to the employer the authority to dismiss such employee.’
 

45. Farrol v. CA and Radio Communications of the Philippines, Inc.

325 SCRA 331
G.R. No. 133259, February 10, 2000

Doctrine: Although the employer has the prerogative to discipline or dismiss its employee,
such prerogative cannot be exercised wantonly, but must be controlled by substantive due
process and tempered by the fundamental policy of protection to labor enshrined in the
Constitution. Infractions committed by an employee should merit only the corresponding
sanction demanded by the circumstances. The penalty must be commensurate with the
act, conduct or omission imputed to the employee and imposed in connection with the
employer’s disciplinary authority. Employer’s rules cannot preclude the State from inquiring
whether the strict and rigid application or interpretation thereof would be harsh to the
employee.

Facts: Wenifredo Farrol was employed as station cashier at RCPI’s Cotabato City station.
There was a shortage of P50, 985.37 in their branch’s Peragram, Petty and General Cash.
Farrol was required by the Field Auditor to explain the cash shortage within 24 hours from
notice. The next day, Farrol paid to RCPI P25,000.00 of the cash shortage. RCPI required
Farrol to explain why he should not be dismissed from employment. Two days thereafter,
Farrol wrote a letter to the Field Auditor stating that the missing funds were used for the
payment of the retirement benefits earlier referred to by the branch manager and that he
had already paid P25,000.00 to RCPI. After making two more payments of the cash
shortage to RCPI, Farrol was informed by the district manager that he is being placed under
preventive suspension. RCPI sent a letter to Farrol informing him of the termination of his
services and the reasons for such termination. Unaware of the termination letter, Farrol
requested that he be reinstated considering that the period of his preventive suspension
had expired.

Farrol manifested to RCPI his willingness to settle his case provided he is given his retirement
benefits. However, RCPI informed Farrol that his employment had already been terminated
earlier as contained in the termination letter sent to Farrol. It further mentioned that the
position of cashier requires utmost trust and confidence and that Farrol’s infraction is
punishable by dismissal.

Issue: Was Farrol illegally dismissed?

Held: Yes. In cases involving the illegal termination of employment, the employer has the
burden of proving that the dismissal is for a cause provided by the law and that it afforded
the employee an opportunity to be heard and to defend himself. The employer must
comply with the twin requirements of two notices and hearing. The first notice is that which
apprises the employee of the particular acts or omissions for which his dismissal is sought,
and after affording the employee an opportunity to be heard, a subsequent notice
informing the latter of the employer’s decision to dismiss him from work.

Although the employer has the prerogative to discipline or dismiss its employee, such
prerogative cannot be exercised wantonly, but must be controlled by substantive due
process and tempered by the fundamental policy of protection to labor enshrined in the
Constitution. Infractions committed by an employee should merit only the corresponding
sanction demanded by the circumstances. The penalty must be commensurate with the
act, conduct or omission imputed to the employee and imposed in connection with the
employer’s disciplinary authority. Employer’s rules cannot preclude the State from inquiring
whether the strict and rigid application or interpretation thereof would be harsh to the
employee. Petitioner has no previous record in his twenty-four long years of service—this
would have been his first offense. The dismissal imposed on petitioner is unduly harsh and
grossly disproportionate to the infraction which led to the termination of his services. A
lighter penalty would have been more just, if not humane. In any case, petitioner paid back
the cash shortage in his accounts. Considering, however, that the latter is about to retire or
may have retired from work, it would no longer be practical to order his reinstatement.

46. PHILIPPINE AIRLINES, INC vs. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 85985 August 13, 1993, Melo, J.

Doctrine: 

The exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations

found in law, a collective bargaining agreement, or the general principles of fair play and
justice. Moreover, it must be duly established that the prerogative being invoked is clearly a
managerial one. 

Facts: 

On March 15, 1985, PAL completely revised its 1966 Code of Discipline. The Code was
circulated among the employees and was immediately implemented, and some
employees were forthwith subjected to the disciplinary measures embodied therein. 

Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a
complaint before the NLRC for unfair labor practice with the following remarks: "ULP with
arbitrary implementation of PAL's Code of Discipline without notice and prior discussion with
Union by Management". In its position paper, PALEA contended that PAL, by its unilateral
implementation of the Code, was guilty of unfair labor practice. PALEA alleged that copies
of the Code had been circulated in limited numbers; that being penal in nature the Code
must conform with the requirements of sufficient publication, and that the Code was
arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that
implementation of the Code be held in abeyance; that PAL should discuss the substance of
the Code with PALEA; that employees dismissed under the Code be reinstated and their
cases subjected to further hearing; and that PAL be declared guilty of unfair labor practice
and be ordered to pay damages. 

PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to
prescribe rules and regulations regarding employees' conduct in carrying out their duties
and functions, and alleging that by implementing the Code, it had not violated the CBA or
any provision of the Labor Code. 

The LA rendered finding no bad faith on the part of PAL in adopting the Code and ruling
that no unfair labor practice had been committed. 
The NLRC found no evidence of unfair labor practice committed by PAL and affirmed the
dismissal of PALEA's charge. 

Issue: 

Whether or not the formulation of a Code of Discipline among employees is a shared

responsibility of the employer and the employees. 

Ruling: 

Industrial peace cannot be achieved if the employees are denied their just participation in
the discussion of matters affecting their rights. Thus, even before Article 211 of the labor
Code (P.D. 442) was amended by Republic Act No. 6715, it was already declared a policy
of the State, "(d) To promote the enlightenment of workers concerning their rights and
obligations as employees." This was, of course, amplified by Republic Act No 6715 when it
decreed the "participation of workers in decision and policy making processes affecting
their rights, duties and welfare." PAL's position that it cannot be saddled with the "obligation"
of sharing management prerogatives as during the formulation of the Code, Republic Act
No. 6715 had not yet been enacted (Petitioner's Memorandum, p. 44; Rollo, p. 212), cannot
thus be sustained. 

While such "obligation" was not yet founded in law when the Code was formulated, the
attainment of a harmonious labor-management relationship and the then already existing
state policy of enlightening workers concerning their rights as employees demand no less
than the observance of transparency in managerial moves affecting employees' rights. 

Petitioner's assertion that it needed the implementation of a new Code of Discipline

considering the nature of its business cannot be overemphasized. In fact, its being a local
monopoly in the business demands the most stringent of measures to attain safe travel for its
patrons. Nonetheless, whatever disciplinary measures are adopted cannot be properly
implemented in the absence of full cooperation of the employees. Such cooperation
cannot be attained if the employees are restive on account, of their being left out in the
determination of cardinal and fundamental matters affecting their employment.

47. STAR PAPER CORP. v. SIMBOL

48. DUNCAN ASSOCIATION OF DETAILMAN VS GLAXO WELLCOME PHIL., INC.

G.R. No.162994 - September 17, 2004
TINGA

DOCTRINE: Glaxo’s policy prohibiting an employee from having a relationship with an

employee of a competitor company is a valid exercise of management prerogative . 

While our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor of
the workers; The law also recognizes that management has rights which are also entitled to
respect and enforcement in the interest of fair play. 

FACTS: Petitioner Tecson signed a contract of employment as a medical representative 

with Respondent Glaxo which stipulates, among others, that he agrees to study and abide
by existing company rules; to disclose to management any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing drug companies
and should management find that such relationship poses a possible conflict of interest, to
resign from the company. 

The Employee Code of Conduct of Glaxo similarly provides that an employee is expected
to inform management of any existing or future relationship by consanguinity or affinity with
co-employees or employees of competing drug companies. If management perceives a
conflict of interest or a potential conflict between such relationship and the employee’s
employment with the company, the management and the employee will explore the
possibility of a “transfer to another department in a non-counterchecking position” or
preparation for employment outside the company after six months. Tecson was initially
assigned to market Glaxo’s products in the Camarines Sur-Camarines Norte sales area. 

Tecson entered into a romantic relationship with Bettsy, an employee of Astra

Pharmaceuticals3 (Astra), a competitor of Glaxo. She was Astra’s branch coordinator in
Albay who supervised the district managers and medical representatives of her company
and prepared marketing strategies for Astra in that area. Even before getting married,
Tecson received several reminders from his District Manager regarding the conflict of
interest which his relationship with Bettsy might engender. Still, love prevailed, and Tecson
married Bettsy in September 1998. 

Tecson’s superiors informed him that his marriage to Bettsy gave rise to a conflict of interest.
Tecson’s superiors reminded him that he and Bettsy should decide which one of them
would resign from their jobs. Tecson requested for more time to comply. He explained that
Astra was planning to merge with another drug company, Zeneca, and Bettsy was planning
to avail of the redundancy package offered by Astra, and with that it will be the separation
of Bettsy with a competitor company, the conflict would be elimanted with regards to the
policy. 
Tecson asked for more time, and later asked to be transferred to the Milk division of Glaxo
since Astra does not have a milk division. This was denied, and on November 1999, he was
transferred to the Butuan City Sales area. Tecson asked respondent to reconsider but was
denied. Tecson went to the Grievance committee with his concern but Glaxo remained
firm. Tecson defied the order and continued acting as a medrep in the camarines area. 

During the pendency of the grievance proceedings, Tecson was paid his salary, but was not
issued samples of products which were competing with similar products manufactured by
Astra. He was also not included in product conferences regarding such products. 

Because the parties failed to resolve the issue at the grievance machinery level, they
submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of
onehalf (1⁄2) month pay for every year of service, or a total of P50,000.00 but he declined
the offer. On November 15, 2000, the National Conciliation and Mediation Board (NCMB)
rendered its Decision declaring as valid Glaxo’s policy on relationships between its
employees and persons employed with competitor companies, and affirming Glaxo’s right
to transfer Tecson to another sales territory. 

Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the NCMB
Decision. 

On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition for
Review on the ground that the NCMB did not err in rendering its Decision. 

ISSUE: W/N the MANAGEMENT POLICY was valid.

RULING: YES

According to Glaxo, Tecson’s marriage to Bettsy, an employee of Astra, posed a real and
potential conflict of interest. Astra’s products were in direct competition with 67% of the
products sold by Glaxo. Hence, Glaxo’s enforcement of the foregoing policy in Tecson’s
case was a valid exercise of its management prerogatives.12 In any case, Tecson was given
several months to remedy the situation, and was even encouraged not to resign but to ask
his wife to resign from Astra instead 

No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s
policy prohibiting an employee from having a relationship with an employee of a
competitor company is a valid exercise of management prerogative. 

Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies
and other confidential programs and information from competitors, especially so that it and
Astra are rival companies in the highly competitive pharmaceutical industry. 
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxo’s employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying down
the assailed company policy, Glaxo only aims to protect its interests against the possibility
that a competitor company will gain access to its secrets and procedures. 

That Glaxo possesses the right to protect its economic interests cannot be denied. No less
than the Constitution recognizes the right of enterprises to adopt and enforce such a policy
to protect its right to reasonable returns on investments and to expansion and growth.
Indeed, while our laws endeavor to give life to the constitutional policy on social justice and
the protection of labor, it does not mean that every labor dispute will be decided in favor of
the workers. The law also recognizes that management has rights which are also entitled to
respect and enforcement in the interest of fair play. 

49. G.R. No. 148303 October 17, 2002

UNION OF NESTLE WORKERS CAGAYAN DE ORO FACTORY (UNWCF for brevity), vs. NESTLE
PHILPPINES, INC

FACTS: 

On August 1, 1999, Nestle Philippines, Inc. (Nestle) adopted Policy No. HRM 1.8, otherwise
known as the "Drug Abuse Policy." Pursuant to this policy, the management shall conduct
simultaneous drug tests on all employees from different factories and plants. Thus, on August
17, 1999, drug testing commenced at the Lipa City factory, then followed by the other
factories and plants. However, there was resistance to the policy in the Nestle Cagayan de
Oro factory. Out of 496 employees, only 141 or 28.43% submitted themselves to drug testing.
On August 20, 1999, the Union of Nestle Workers Cagayan de Oro Factory and its officers,
petitioners, wrote Nestle challenging the implementation of the policy and branding it as a
mere subterfuge to defeat the employees’ constitutional rights. 

Nestle claimed that the policy is in keeping with the government’s thrust to eradicate the
proliferation of drug abuse, explaining that the company has the right: (a) to ensure that its
employees are of sound physical and mental health and (b) to terminate the services of an
employee who refuses to undergo the drug test. 

ToR was promulgated by the RTC but was later invalidated for it lacked jurisdiction
according to RTC itself via MR. Appeal was taken under Rule 65 to the CA. 

On December 28, 2000, the Appellate Court rendered its Decision dismissing the petition. 

ISSUE: WoN the RTC has jurisdiction over issues relating to management policy. 
RULE: NO The fact that the complaint was denominated as one for injunction does not
necessarily mean that the RTC has jurisdiction. Well-settled is the rule that jurisdiction is
determined by the allegations in the complaint. 

The pertinent allegations of petitioners’ amended complaint read: "x x x x x x x x x 5. Plaintiffs

are aggrieved employees of the Nestle Philippines, Inc. who are subjected to the new
policy of the management for compulsory Drug Test, without their consent and approval; x
x x x x x x x x 8. That the said policy was implemented last August 1, 1999, and the Union was
only informed last August 20, 1999, during a meeting held on that day, that all employees
who are assigned at the CDO Factory will be compulsorily compelled to undergo drug test,
whether they like it or not, without even informing the Union on this new policy adopted by
the Management and no guidelines was set pertaining to this drug test policy. 9. That there
was no consultation made by the management or even consultation from the employees
of this particular policy, as the nature of the policy is punitive in character, as refusal to
submit yourself to drug test would mean suspension from work for four (4) to seven (7) days,
for the first refusal to undergo drug test and dismissal for second refusal to undergo drug
test, hence, they were not afforded due process x x x; x x x x x x x x x 12. That it is not the
question of whether or not the person will undergo the drug test but it is the manner how the
drug test policy is being implemented by the management which is arbitrary in character. x
x x x x x x x x 16. That the exercise of management prerogative to implement the said drug
test, even against the will of the employees, is not absolute but subject to the limitation
imposed by law x x x;"

It is indubitable from the foregoing allegations that petitioners are not per se questioning
"whether or not the person will undergo the drug test" or the constitutionality or legality of
the Drug Abuse Policy. They are assailing the manner by which respondents are
implementing the policy. According to them, it is "arbitrary in character" because: (1) the
employees were not consulted prior to its implementation; (2) the policy is punitive
inasmuch as an employee who refuses to abide with the policy may be dismissed from the
service; and (3) such implementation is subject to limitations provided by law which were
disregarded by the management. Is the complaint, on the basis of its allegations,
cognizable by the RTC? Respondent Nestle’s Drug Abuse Policy states that "(i)llegal drugs
and use of regulated drugs beyond the medically prescribed limits are prohibited in the
workplace. Illegal drug use puts at risk the integrity of Nestle operations and the safety of
our products. It is detrimental to the health, safety and work-performance of employees
and is harmful to the welfare of families and the surrounding community."This
pronouncement is a guiding principle adopted by Nestle to safeguard its employees’
welfare and ensure their efficiency and well-being. To our minds, this is a company
personnel policy. In San Miguel Corp. vs. NLRC, this Court held: "Company personnel policies
are guiding principles stated in broad, long-range terms that express the philosophy or
beliefs of an organization’s top authority regarding personnel matters. They deal with matter
affecting efficiency and well-being of employees and include, among others, the
procedure in the administration of wages, benefits, promotions, transfer and other
personnel movements which are usually not spelled out in the collective agreement."
Considering that the Drug Abuse Policy is a company personnel policy, it is the Voluntary
Arbitrators or Panel of Voluntary Arbitrators, not the RTC, which exercises jurisdiction over this
case.

Article 261 of the Labor Code, as amended, pertinently provides: Art. 261. Jurisdiction of
Voluntary Arbitrators or Panel of Voluntary Arbitrators. – The Voluntary Arbitrator or panel of
Voluntary Arbitrators shall have 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 x x x." 

50. GTE DIRECTORIES CORPORATION, petitioner, vs. HON. AUGUSTO S. SANCHEZ and GTE
DIRECTORIES CORPORATION EMPLOYEES UNION (G.R. No. 76219. May 27, 1991; NARVASA, J.:

Deliberate disregard or disobedience of rules, defiance o f management authority by the

employees cannot be countenanced, until and unless the rules or orders imposed by the
employers are declared to be illegal or improper by competent authority, the employees
ignore or disobey them at their peril. The filing of the strike notice, and the commencement
of conciliation activities by the Bureau of Labor Relations did not operate to make GTE’s
orders illegal and unenforceable so as to excuse continued non-compliance therewith.

Facts: GTE informed all its sales representatives of the new policy as an improvement over
the previous Sales Production Policy, which solely considered quota attainment and
handling in the Sales Report for the purpose of evaluating performance. However GTE’s
Sales Manager observed that most of its sales representatives had omitted to submit reports
regarding “the target of P20,000.00 revenue handled. GTE Directories Corporation
Employees Union, sent a letter to the Sales Manager dated August 5, 1985. The letter stated
that in fact “only one out of nineteen sales representatives met the P20,000 revenue
handled”. The following day, on August 6, 1985, the union filed in behalf of the sales
representatives, a notice of strike grounded on alleged unfair labor practices of GTE’s
refusal to bargain on unjust sales policies particularly on the failure to meet the 75% of the
average sales production. The Union contended that GTE’s so-called “bottom-third” policy,
as well as all sales and administrative practices related thereto, should have been held
illegal. The Minister accordingly annulled and set aside his order for the Bureau of Labor
Relations to conduct hearings on said issues since he had already resolved them, and
affirmed his Order of March 31, 1986, directing Union and Management to negotiate a
voluntary settlement on the company sales policies and reinstating the fourteen employees
with full backwages from the time they were dismissed up to the time they were on forced
leave with pay, but with the modification that management was directed to give the
striking workers strike duration pay for the whole period of the strike less earnings. Thus GTE
instituted the special civil action of certiorari at bar praying for invalidation, because
rendered with grave abuse of discretion, of the Labor Minister.

Issue: Whether or not Sales Evaluation and Production Policy was within its management
prerogative?

Ruling: Yes, adoption of a new “Sales Evaluation and Production Policy” was within its
management prerogative to regulate, according to its own discretion and judgment, all
aspects of employment, including the manner, procedure and processes by which
particular work activities should be done. GTE had cause to dismiss the fourteen (14)
premise sales representatives who had repeatedly and deliberately, not to say defiantly,
refused to comply with its directive for submission of individual reports on specified matters.

“‘Except as limited by special laws, an employer is free to regulate, according to his own
discretion and judgment, all aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, tools to be used, processes to be
followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of work. *** (NLU vs.
Insular La Yebana Co., 2 SCRA 924; Republic Savings Bank vs. CIR, 21 SCRA 226, 235.) The
overt, direct, deliberate and continued defiance and disregard by the employees of the
authority of their employer left the latter with no alternative except to impose sanctions. The
sanction of suspension having proved futile, termination of employment was the only option
left to the employer.

The record shows that GTE addressed no less than (six) written official communications to
said premise sales representatives embodying this requirement. Sales Evaluation and
Production Policy” was within its management prerogative to regulate, according to its own
discretion and judgment, all aspects of employment, including the manner, procedure and
processes by which particular work activities should be done. 

It would be dangerous doctrine indeed to allow employees to refuse to comply with rules
and regulations, policies and procedures laid down by their employer by the simple
expedient of formally challenging their reasonableness or the motives which inspired them,
or filing a strike notice with the Department of Labor and Employment, or, what amounts to
t h e same thing, to give the employees the power to suspend compliance with company
rules or policies by requesting that they be first subject of collective bargaining. It would be
well nigh impossible under these circumstances for any employer to maintain discipline in its
establishment. This is, of course, intolerable. 

51. UST FACULTY UNION v. BITONIO

Doctrine: "When a man joins a labor union (or almost any other democratically controlled
group), necessarily a portion of his individual freedom is surrendered for the benefit of all
members. He accepts the will of the majority of the members in order that he may derive
the advantages to be gained from the concerted action of all. Just as the enactments of
the legislature bind all of us, to the constitution and by-laws of the union (unless contrary to
good morals or public policy, or otherwise illegal), which are duly enacted through
democratic processes, bind all of the members. If a member of a union dislikes the
provisions of the by-laws, he may seek to have them amended or may withdraw from the
union; otherwise, he must abide by them. It is not the function of courts to decide the
wisdom or propriety of legitimate by-laws of a trade union.

Facts: During the General Faculty Assembly, an election was conducted where both union
members as well as non-union members elected union officers. The said election was
assailed for being violative of USTFU’s CBL, specifically because the general assembly
resulting in the election of appellants was not called by the Board of Officers of the USTFU;
there was no compliance with the ten-day notice rule required by Section 1, Article VIII of
the CBL; the supposed elections were conducted without a COMELEC being constituted by
the Board of Officers in accordance with Section 1, Article IX of the CBL; the elections were
not by secret balloting as required by Section 1, Article V and Section 6, Article IX of the
CBL, and, the general assembly was convened by faculty members some of whom were
not members of USTFU, so much so that non-USTFU members were allowed to vote in
violation of Section 1, Article V of the CBL.

Appellants claimed that the new CBA was purportedly ratified by an overwhelming majority
of UST’s academic community during a subsequent assembly.

Issues: Whether the union election conducted contrary to the union’s constitution and by-
laws is valid
Whether an invalid union election may be ratified
Held:
A union’s constitution and bylaws embody a covenant between a union and its members
and constitute the fundamental law governing the members’ rights and obligations. As
such, the union’s constitution and bylaws should be upheld, as long as they are not contrary
to law, good morals or public policy.

An employee who becomes a union member acquires the rights and the concomitant
obligations that go with this new status and becomes bound by the union’s rules and
regulations.

The general faculty assembly of 04 October 1996 was not a meeting of USTFU. It was
attended by members and non-members alike, and therefore was not a forum appropriate
for transacting union matters. The person who moved for the suspension of USTFU’s CBL was
not a member of USTFU. Allowing a non-union member to initiate the suspension of a union’s
CBL, and non-union members to participate in a union election on the premise that the
union’s CBL had been suspended in the meantime, is incompatible with the freedom of
association and protection of the right to organize.

The ratification of the new CBA executed between the petitioners and the University of
Santo Tomas management did not validate the void October 4, 1996 election. Ratified
were the terms of the new CBA, not the issue of union leadership — a matter that should be
decided only by union members in the proper forum at the proper time and after
observance of proper procedures.
 

52. ALEXANDER REYES, ALBERTO M. NERA, EDGARDO M. GECA, and 138 others, petitioners, vs.
CRESENCIANO B. TRAJANO, as Officer-in-Charge, Bureau of Labor Relations, Med. Arbiter
PATERNO ADAP, and TRI-UNION EMPLOYEES UNION, et al., respondent.

Doctrine: The right to form or join a labor organization necessarily includes the right to refuse
or refrain from exercising said right. It is self-evident that just as no one should be denied the
exercise of a right granted by law, so also, no one should be compelled to exercise such a
conferred right. The fact that a person has opted to acquire membership in a labor union
does not preclude his subsequently opting to renounce such membership.

Facts: In the certification election it was contended that the INK members should not be
allowed to vote "because they are not members of any union and refused to participate in
the previous certification elections."

As such, the INK members filed a petition to cancel the election alleging that it "was not fair"
and the result thereof did "not reflect the true sentiments of the majority of the employees."
TUEU-OLALIA opposed the petition. It contended that the petitioners "do not have legal
personality to protest the results of the election," because "they are not members of either
contending unit, but . . . of the INK" which prohibits its followers, on religious grounds, from
joining or forming any labor organization . . . ."

Issue: Whether INK employees who are not members of any union may be prohibited to
vote in a certification election

Held: The right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign from
a labor organization, is subsumed in the right to join, affiliate with, or assist any union, and to
maintain membership therein. The right to form or join a labor organization necessarily
includes the right to refuse or refrain from exercising said right. It is self-evident that just as no
one should be denied the exercise of a right granted by law, so also, no one should be
compelled to exercise such a conferred right. The fact that a person has opted to acquire
membership in a labor union does not preclude his subsequently opting to renounce such
membership.

That the INK employees, as employees in the same bargaining unit in the true sense of the
term, do have the right of self-organization, is also in truth beyond question, as well as the
fact that when they voted that the employees in their bargaining unit should be
represented by "NO UNION," they were simply exercising that right of self-organization, albeit
in its negative aspect.

The respondents' argument that the petitioners are disqualified to vote because they "are
not constituted into a duly organized labor union" — "but members of the INK which
prohibits its followers, on religious grounds, from joining or forming any labor organization" —
and "hence, not one of the unions which vied for certification as sole and exclusive
bargaining representative," is specious. Neither law, administrative rule nor jurisprudence
requires that only employees affiliated with any labor organization may take part in a
certification election. On the contrary, the plainly discernible intendment of the law is to
grant the right to vote to all bona fide employees in the bargaining unit, whether they are
members of a labor organization or not.

1. NATIVIDAD SAMPANG vs. HON. AMADO G. INCIONG and INSULAR YEBANA

TOBACCO CORPORATION

(GR. No. L-50992, June 19, 1985)

FERNANDO, CJ.
DOCTRINE:
The Constitutional guarantee of security of tenure accorded labor under the present
Constitution points the way to the the dismissal of petitioner. According to Article II, Section
9 of the Constitution: "The State shall afford protection to labor, promote full employment
and equality in employment, ensure equal work opportunities regardless of sex, race, or
creed, and regulate the relations between workers and employers. The State shall assure
the rights of workers to self-organization, collective bargaining, security of tenure, and just
and humane conditions of work. ... "

FACTS:
Petitioner Natividad Sampang was the president of the labor union of the employees of
respondent Insular Yebana Tobacco Corporation. She works for the Corporation as cajista
or cigar packer since 1948 or for more than 30 years. She was dismissed for instigating a
strike that lasted for two days and caused company loss for the unpacked cigarettes which
were spoiled.
Deputy Minister of Labor, Amado G. Inciong, sustained the Regional Director’s decision to
grant her dismissal for initiating a concerted action among the rank and file workers not to
perform overtime work amounting to gross insubordination.

Petitioner alleged that she made several representations with management, upon request
of the members of the union, to cut-off overtime work, as this would mean more days of
work and additional living allowance for the workers; that the overtime work was a device
of management to avoid compliance with P.D. 112; that there is no exigency for the
rendering of overtime work; that the concerted refusal to work overtime cannot be recalled
a strike.

Respondent La Yebana Tobacco Corporation alleged that the Gabay ng Manggagawa

thru petitioner Natividad Sampang requested for the cancellation of overtime work and
limit the work to 8 hours only; that the strike on January 12, 1978 was unexpected,  without
awaiting the results of the study program being prepared and undertaken by its
management's staff so that work schedule could finally be set to mutual satisfaction of both
parties. However, the strike continued the following day. 

The Solicitor General on its comment contended that there was authority both of the
Regional Director as well as of the Deputy Minister of Labor to issue the assailed orders; there
was no denial of procedural due process, as there were position papers filed with the
Regional Director; that petitioner having was afforded all the opportunity to present and
support her case.

ISSUE:
Is the dismissal of Petitioner Sampang proper?

HELD: 
No. The dismissal of petitioner Sampang is improper. There is here a case of an employee,
with more than thirty years service, having been dismissed for instigating a strike that lasted
for two days and caused the loss in the amount of P2,716.00. It is quite obvious then that the
constitutional mandate on security of tenure was violated. For even if her denial that she
did not instigate such two-day strike be disregarded, still the penalty imposed was grossly
disproportionate to the offense imputed to her.

In Almira v. B.F. Goodrich Philippines, Inc .: "It would imply at the very least that where a
penalty less punitive would suffice, whatever missteps may be committed by labor ought
not to be visited with a consequence so severe. It is not only because of the law's concern
for the workingman. There is, in addition, his family to consider. Unemployment brings untold
hardships and sorrows on those dependent on the wage-earner. The misery and pain
attendant on the loss of jobs then could be avoided if there be acceptance of the view
that under all the circumstances of this case, petitioners should not be deprived of their
means of livelihood.
54. San Miguel Corp. Supervisors and Exempt Employees vs. Laguesma
Gr. No. 110399 (1997), J. Romero

Doctrine:
Confidential employees are those who (1) assist or act in a confidential capacity, (2)
to persons who formulate, determine, and effectuate management policies in the field of
labor relations. The two criteria are cumulative, and both must be met if an employee is to
be considered a confidential employee that is, the confidential relationship must exist
between the employees and his supervisor, and the supervisor must handle the prescribed
responsibilities relating to labor relations.

Access to information which is regarded by the employer to be confidential from the

business standpoint, such as financial information or technical trade secrets, will not render
an employee a confidential employee.

FACTS:
On October 5, 1990, petitioner union filed before the Department of Labor and
Employment (DOLE) a Petition for District Certification or Certification Election among the
supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of
Cabuyao, San Fernando and Otis.

Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification

among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants
of Cabuyao, San Fernando and Otis as one bargaining unit.

San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal,

pointing out, among others, the Med-Arbiters error in grouping together all three (3)
separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in
including supervisory levels 3 and above whose positions are confidential in nature.

Respondent, Undersecretary Laguesma, granted respondent companys Appeal and

ordered the remand of the case to the Med-Arbiter of origin for determination of the true
classification of each of the employees sought to be included in the appropriate
bargaining unit  and directed the conduct of separate certification elections among the
supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each
of the three plants at Cabuyao, San Fernando and Otis.

ISSUE/S:
1.WON Supervisory employees 3 and 4 and the exempt employees of the company
are considered confidential employees, hence ineligible from joining a union.
 2. If they are not confidential employees, do the employees of the three plants
constitute an appropriate single bargaining unit?

RULING:
1. NO, the said employees do not fall within the term confidential employees who may be
prohibited from joining a union.

There is no question that the said employees, supervisors and the exempt
employees, are not vested with the powers and prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss
employees. They are, therefore, not qualified to be classified as managerial employees
who, under Article 245 of the Labor Code, are not eligible to join, assist or form any labor
organization. In the very same provision, they are not allowed membership in a labor
organization of the rank-and-file employees but may join, assist or form separate labor
organizations of their own. The only question that need be addressed is whether these
employees are properly classified as confidential employees or not.

Confidential employees are those who (1) assist or act in a confidential capacity, (2)
to persons who formulate, determine, and effectuate management policies in the field of
labor relations. The two criteria are cumulative, and both must be met if an employee is to
be considered a confidential employee that is, the confidential relationship must exist
between the employees and his supervisor, and the supervisor must handle the prescribed
responsibilities relating to labor relations.

Access to information which is regarded by the employer to be confidential from the

business standpoint, such as financial information or technical trade secrets, will not render
an employee a confidential employee.

Herein listed are the functions of supervisors 3 and higher:

1. To undertake decisions to discontinue/temporarily stop shift operations when situations
require.
2. To effectively oversee the quality control function at the processing lines in the storage of
chicken and other products.
3. To administer efficient system of evaluation of products in the outlets.
4. To be directly responsible for the recall, holding and rejection of direct manufacturing
materials.
5. To recommend and initiate actions in the maintenance of sanitation and hygiene
throughout the plant.

It is evident that whatever confidential data the questioned employees may handle will
have to relate to their functions. From the foregoing functions, it can be gleaned that the
confidential information said employees have access to concern the employers internal
business operations.

The exclusion from bargaining units of employees who, in the normal course of their
duties, become aware of management policies relating to labor relations is a principal
objective sought to be accomplished by the confidential employee rule. The broad
rationale behind this rule is that employees should not be placed in a position involving a
potential conflict of interests. Management should not be required to handle labor relations
matters through employees who are represented by the union with the company is required
to deal and who in the normal performance of their duties may obtain advance
information of the company’s position with regard to contract negotiations, the disposition
of grievances, or other labor relations matters

2. YES, it can be a single bargaining unit.

An appropriate bargaining unit may be defined as a group of employees of a given

employer, comprised of all or less than all of the entire body of employees, which the
collective interest of all the employees, consistent with equity to the employer, indicate to
be best suited to serve the reciprocal rights and duties of the parties under the collective
bargaining provisions of the law.

A unit to be appropriate must effect a grouping of employees who have substantial,

mutual interests in wages, hours, working conditions and other subjects of collective
bargaining.

It is readily seen that the employees in the instant case have community or mutuality
of interest, which is the standard in determining the proper constituency of a collective
bargaining unit. It is undisputed that they all belong to the Magnolia Poultry Division of San
Miguel Corporation. This means that, although they belong to three different plants, they
perform work of the same nature, receive the same wages and compensation, and most
importantly, share a common stake in concerted activities.

55. Benguet Electric Cooperative v. Calleja

180 SCRA 740

56. INTERNATIONAL CATHOLIC MIGRATION COMMISSION V. FERRER-CALLEJA

G.R. No. 85750 September 28, 1990 MELENCIO-HERRERRA, J.
DOCTRINE: A certification election cannot be viewed as an independent or isolated
process. It could trigger off a series of events in the collective bargaining process together
with related incidents and/or concerted activities, which could inevitably involve ICMC in
the "legal process," which includes "any penal, civil and administrative proceedings." The
eventuality of Court litigation is neither remote and from which international organizations
are precisely shielded to safeguard them from the disruption of their functions.

FACTS: Consolidation of 2 cases – [GR # 85750: The Catholic Migration Commission (ICMC)
case] ICMC was one of those accredited by the government to operate the refugee
processing center in Morong, Bataan as a response to the aftermath of the Vietnam War
and the plight of Vietnamese refugees. It is duly registered with the United Nations
Economic and Social Council (ECOSOC) and enjoys Consultative status II. It has the
activities parallel to those of the International Committee for Migration (ICM) and the
International Committee of the Red Cross (ICRC). On July 14, 1986, Trade Union of the
Philippines and Allied Services (TUPAS) filed with the then Ministry of Labor and Employment
a Petition for Certification Election among the rank and file members employed by the
ICMC. The latter opposed the petition on the ground that it enjoys diplomatic immunity. The
Med-Arbiter sustained ICMC and dismissed the petition of TUPAS for lack of jurisdiction. On
appeal, The Director of the Bureau of Labor Relations reversed the Med-Arbiter’s Decision
and ordered the immediate conduct of a certification election.

[GR # 89331- the IRRI case] The International Rice Research Institute was a fruit of
memorandum of understanding between the Philippine government and the Ford and
Rochefeller Foundations. It was intended to be an autonomous, philanthropic tax-free, non-
profit, non-stock organization designed to carry out the principal objective of conducting
“basic research on the rice plant.” It was organized and registered with the SEC as a private
corporation subject to all laws and regulations. However, by virtue of P.D no. 1620, IRRI was
granted the status, prerogatives, privileges and immunities of an international organization.

The Kapisanan filed a petition for direct certification election with regional office of the
Department of Labor and Employment. IRRI opposed the petition invoking Pres. Decree
no.1620 conferring upon it the status of an international organization and granting it
immunity from all civil, criminal, and administrative proceedings under Philippine laws. The
Med-Arbiter upheld the opposition on the basis of PD 1620 and dismissed the petition for
direct certification. On appeal by BLR Director, set aside the med-arbiter’s decision and
contends that immunities and privileges granted to IRRI do not include exemption from
coverage of our labor laws.

ISSUE: Whether or not the grant of diplomatic privileges and immunities extend to immunity
from the application of Philippine Labor Laws 

HELD: Yes. The grant of diplomatic privileges and immunities to ICMC and IRRI extends to
immunity from the application of Philippine Labor Laws, because it is clearly necessitated by
their international character and respective purposes which is to avoid the danger of
partiality and interference by the host country in their internal workings. The exercise of
jurisdiction by the Department of Labor in these instances would defeat the very purpose of
immunity, which is to shield the affairs of international organizations, in accordance with
international practice, from political pressure or control by the host country to the prejudice
of member States of the organization, and to ensure the unhampered performance of their
functions.

However, employees are not without recourse whenever there are disputes to be settled.
Section 31 of the Convention on the Privileges and Immunities of the Specialized Agencies
of the United Nations provides that, “Each specialized agency shall make provision for
appropriate modes of settlement of disputes out of contracts or other disputes of private
character to which the specialized agency is a party.” Moreover, pursuant to article IV of
memorandum of agreement between the government and ICMC, whenever there is abuse
of privilege by ICMC, the government is free to withdraw the privileges and immunities
accorded.

Neither are the employees of IRRI without remedy in case of dispute with management as,
in fact, there had been organized a forum for better management-employee relationship
as evidenced by the formation of the Council of IRRI Employees and Management (CIEM)
wherein "both management and employees were and still are represented for purposes of
maintaining mutual and beneficial cooperation between IRRI and its employees." The
existence of this Union factually and tellingly belies the argument that Pres. Decree No.
1620, which grants to IRRI the status, privileges and immunities of an international
organization, deprives its employees of the right to self-organization.

The immunity granted being "from every form of legal process except in so far as in any
particular case they have expressly waived their immunity," it is inaccurate to state that a
certification election is beyond the scope of that immunity for the reason that it is not a suit
against ICMC. A certification election cannot be viewed as an independent or isolated
process. It could trigger off a series of events in the collective bargaining process together
with related incidents and/or concerted activities, which could inevitably involve ICMC in
the "legal process," which includes "any penal, civil and administrative proceedings." The
eventuality of Court litigation is neither remote and from which international organizations
are precisely shielded to safeguard them from the disruption of their functions. Clauses on
jurisdictional immunity are said to be standard provisions in the constitutions of international
Organizations. The immunity covers the organization concerned, its property and its assets. It
is equally applicable to proceedings in personam and proceedings in rem.

57. GOLDEN FARMS, INC. vs. THE HONORABLE SECRETARY OF LABOR and THE PROGRESSIVE
FEDERATION OF LABOR

G.R. No. 102130. July 26, 1994

Doctrine:
A “bargaining unit” has been defined as a group of employees of a given employer,
comprised of all or less than all of the entire body of employees, which the collective
interest of all the employees, consistent with equity to the employer, indicate to be the best
suited to serve the reciprocal rights and duties of the parties under the collective bargaining
provisions of the law.

Facts:
Petitioner Golden Farms, Inc., is a corporation engaged in the production and marketing of
bananas for export. Private respondent Progressive Federation of Labor (PFL) filed a petition
before the Med-Arbiter praying for the holding of a certification election among the
monthly paid office and technical rank-and-file employees of petitioner.

Petitioner moved to dismiss the petition on three (3) grounds. First, respondent PFL failed to
show that it was organized as a chapter within petitioner’s establishment. Second, there
was already an existing collective bargaining agreement between the rank-and-file
employees represented by the National Federation of Labor (NFL) and petitioner. And third,
the employees represented by PFL had allegedly been disqualified by this Court from
bargaining with management in Golden Farms, Inc. vs. Honorable Director Pura Ferrer-
Calleja. Respondent countered that the monthly paid office and technical employees
should be allowed to form a separate bargaining unit because they were expressly
excluded from coverage in the Collective Bargaining Agreement (CBA) between petitioner
and NFL.

The Med-Arbiter granted the petition and ordered that a certification election be
conducted. Petitioner seasonably appealed to public respondent Secretary of Labor which
denied the petition for lack of merit.

Issue:
Whether or not petitioner’s monthly paid rank-and-file employees can constitute a
bargaining unit separate from the existing bargaining unit of its daily paid rank-and-file
employees

Held:
The monthly paid office and technical rank-and-file employees of petitioner Golden Farms
enjoy the constitutional right to self-organization and collective bargaining. A “bargaining
unit” has been defined as a group of employees of a given employer, comprised of all or
less than all of the
entire body of employees, which the collective interest of all the employees, consistent with
equity to the employer, indicate to be the best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining provisions of the law. The community or
mutuality of interest is therefore the essential criterion in the grouping. And this is so because
‘the basic test of an asserted bargaining unit’s acceptability is whether or not it is
fundamentally the combination which will best assure to all employees the exercise of their
collective bargaining rights.

In the case at bench, the evidence established that the monthly paid rank-and-file
employees of petitioner primarily perform administrative or clerical work. In
contradistinction, the petitioner’s daily paid rank-and-file employees mainly work in the
cultivation of bananas in the fields. It is crystal clear the monthly paid rank-and-file
employees of petitioner have very little in common with its daily paid rank-and-file
employees in terms of duties and obligations, working conditions, salary rates, and skills. To
be sure, the said monthly paid rank-and-file employees have even been excluded from the
bargaining unit of the daily paid rank-and-file employees. This dissimilarity of interests
warrants the formation of a separate and distinct bargaining unit for the monthly paid rank-
and-file employees of the petitioner. To rule otherwise would deny this distinct class of
employees the right to self-organization for purposes of collective bargaining. Without the
shield of an organization, it will also expose them to the exploitations of management.

58. PAFLU v. SECRETARY OF LABOR, 27 SCRA 40

59. G.R. No. 96425 February 4, 1992

PROGRESSIVE DEVELOPMENT CORPORATION, petitioner,
vs.
THE HONORABLE SECRETARY, DEPARTMENT OF LABOR AND EMPLOYMENT, MED-ARBITER
EDGARDO DELA CRUZ and PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN)-TUCP,
respondents.
Doctrine:
Article 212 defines a legitimate labor organization as "any labor organization duly registered
with the DOLE and includes any branch or local thereof."

Ordinarily, a labor organization acquires legitimacy only upon registration with the BLR. A
local or chapter therefore becomes a legitimate labor organization only upon submission of
the following to the BLR:
1) A charter certificate, within 30 days from its issuance by the labor federation or national
union, and
2) The constitution and by-laws, a statement on the set of officers, and the books of
accounts all of which are certified under oath by the secretary or treasurer, as the case
may be, of such local or chapter, and attested to by its president.
Absent compliance with these mandatory requirements, the local or chapter does not
become a legitimate labor organization.
The certification and attestation requirements are preventive measures against the
commission of fraud. They likewise afford a measure of protection to unsuspecting
employees who may be lured into joining unscrupulous or fly-by-night unions whose sole
purpose is to control union funds or to use the union for dubious ends.

Facts:
Respondent Pambansang Kilusan ng Paggawa (KILUSAN) -TUCP filed with the Department
of Labor and Employment (DOLE) a petition for certification election among the rank-and-
file employees of the petitioner alleging that it is a legitimate labor federation and its local
chapter, Progressive Development Employees Union, was issued charter certificate No. 90-6-
1-153.

KILUSAN -TUCP claimed that there was no existing collective bargaining agreement and
that no other legitimate labor organization existed in the bargaining unit.

Petitioner PDC filed its motion to dismiss contending that the local union failed to comply
with the Labor Code which requires the submission of: (a) the constitution and by-laws; (b)
names, addresses and list of officers and/or members; and (c) books of accounts.

KILUSAN-TUCP submitted a rejoinder to PDC's motion to dismiss claiming that it had

submitted the necessary documentary requirements for registration, such as the constitution
and by-laws of the local union, and the list of officers/members with their addresses. Kilusan
further averred that no books of accounts could be submitted as the local union was only
recently organized.

However the alleged minutes of the organizational meeting was unauthenticated, the list of
members did not bear the corresponding signatures of the purported members, and the
constitution and by-laws did not bear the signature of the members and was not duly
subscribed.

Issue:
Whether or not the petitioner was correct that a labor organization such as the respondent
(KILUSAN)-TUCP may not validly invest the status of legitimacy upon a local or chapter
through the mere expedient of issuing a charter certificate and submitting such certificate
to the BLR and as such local or chapter must at the same time comply with the requirement
of submission of duly subscribed constitution and by-laws, list of officers and books of
accounts

Ruling:
Yes the petition has merit.
The failure of PDEU-Kilusan to certify the required documents under oath is fatal to its
acquisition of a legitimate status.

In the case of union registration, the rationale for requiring that the submitted documents
and papers be certified under oath by the secretary or treasurer, as the case may be, and
attested to by president is apparent.

The submission of the required documents and payment of P50.00 registration fee becomes
the Bureau's basis for approval of the application for registration. Upon approval, the labor
union acquires legal personality and is entitled to all the rights and privileges granted by law
to a legitimate labor organization. The employer naturally needs assurance that the union it
is dealing with is a bona fide organization, one which has not submitted false statements or
misrepresentations to the Bureau. The inclusion of the certification and attestation
requirements will in a marked degree allay these apprehensions of management. Not only
is the issuance of any false statement and misrepresentation a ground for cancellation of
registration, it is also a ground for a criminal charge of perjury.

In the case of the union affiliation with a federation, the documentary requirements are
found in Rule II, Section 3(e), Book V of the Implementing Rules, which we again quote as
follows:
(c) The local chapter of a labor federation or national union shall have and maintain a
constitution and by-laws, set of officers and books of accounts. For reporting purposes, the
procedure governing the reporting of independently registered unions, federations or
national unions shall be observed.

Since the "procedure governing the reporting of independently registered unions" refers to
the certification and attestation requirements contained in Article 235, paragraph 2, it
follows that the constitution and by-laws, set of officers and books of accounts submitted by
the local and chapter must likewise comply with these requirements. The same rationale for
requiring the submission of duly subscribed documents upon union registration exists in the
case of union affiliation.

Moreover, there is greater reason to exact compliance with the certification and
attestation requirements because, as previously mentioned, several requirements
applicable to independent union registration are no longer required in the case of
formation of a local or chapter. The policy of the law in conferring greater bargaining
power upon labor unions must be balanced with the policy of providing preventive
measures against the commission of fraud.
60. PAGPALAIN HAULERS, INC., petitioner, vs. The HONORABLE CRESENCIANO B. TRAJANO, in
his official capacity as Secretary of Labor and Employment, the HONORABLE RENATO D.
PARUNGO, in his official capacity as the MedArbiter in DOLE Case No. NCR-OD-M9705-006,
and the INTEGRATED LABOR ORGANIZATION (ILO-PHILS) PAGPALAIN WORKERS UNION-ILO-
PHILS., respondents.

G.R. No. 133215. July 15, 1999.*

ROMERO, J.:

Doctrine: The Labor Code does not require the submission of books of account in order for a
labor organization to be registered as a legitimate labor organization.— As can be gleaned
from the above, the Labor Code does not require the submission of books of account in
order for a labor organization to be registered as a legitimate labor organization. The
requirement that books of account be submitted as a requisite for registration can be found
only in Book V of the Omnibus Rules Implementing the Labor Code, prior to its amendment
by Department Order No. 9, Series of 1997. Specifically, the old Section 3(e), Rule II, of Book
V provided that “[t]he local or chapter of a labor federation or national union shall have
and maintain a constitution and by-laws, set of officers and books of accounts. For
reporting purposes, the procedure governing the reporting of independently registered
unions, federations or national unions shall be observed.”

Facts:

Respondent ILO-PHILS, in a bid to represent the rank-and-file drivers and helpers of petitioner
Pagpalain Haulers, Inc. filed a petition for certification election with the DOLE. ILO-PHILS
attached to the petition copies of its charter certificate, its constitution and by-laws, its
books of account, and a list of its officers and their addresses. Pagpalain filed a motion to
dismiss the petition, alleging that ILO-PHILS was not a legitimate labor organization due to its
failure to comply with the requirements for registration under the Labor Code. Specifically, it
claimed that the books of account submitted by ILO-PHILS were not verified under oath by
its treasurer and attested to by its president. 

In a reply, ILO-PHILS dismissed Pagpalain’s claims, saying that Department Order No. 9,
Series of 1997 had dispensed with the requirement that a local or chapter of a national
union submit books of account in order to be registered with the DOLE. 

The Med-Arbiter ruled in favor of ILO-PHILS and ordered the holding of certification
elections. Pagpalain promptly appealed the decision to the Secretary of Labor and
Employment claiming that the Med-Arbiter had gravely abused his discretion in allowing
Department Order No. 9 to take precedence over a ruling of the Supreme Court. The
Secretary issued a resolution dismissing Pagpalain’s appeal. It held that with the issuance of
Department Order No. 09 amending the rules implementing Book V of the Code, the
requirement on books of account no longer exists.
ISSUE: Whether respondent union, ILO-PHILS, is a legitimate union despite their books f
account were not verified under oath?

RULING: Yes.

Pagpalain’s contentions are without merit. The requirements for registration of a labor
organization are laid down in Article 234 of the Labor Code. In the said article, the Labor
Code does not require the submission of books of account in order for a labor organization
to be registered as a legitimate labor organization. The requirement that books of account
be submitted as a requisite for registration can be found only in Book V of the Omnibus
Rules Implementing the Labor Code, prior to its amendment by Department Order No. 9,
Series of 1997. 

Specifically, the old Section 3(e), Rule II, of Book V provided that “[t]he local or chapter of a
labor federation or national union shall have and maintain a constitution and by-laws, set of
officers and books of accounts. For reporting purposes, the procedure governing the
reporting of independently registered unions, federations or national unions shall be
observed.” 

By virtue of Department Order No. 9, Series of 1997, however, the documents needed to be
submitted by a local or chapter have been reduced to the following: 

“(a) A charter certificate issued by the federation or national union indicating the creation
or establishment of the local/chapter; 

(b) The names of the local/chapter’s officers, their addresses, and the principal office of the
local/chapter;

(c) The local/chapter’s constitution and by-laws; provided that where the local/chapter’s
constitution and by-laws is the same as that of the federation or national union, this fact
shall be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or
Treasurer of the local/chapter and attested by its President.”

Since Department Order No. 9 has done away with the submission of books of account as a
requisite for registration, Pagpalain’s only recourse now is to have said order declared null
and void. Pagpalain premises its case on the principles laid down in Progressive and
Protection Technology. It maintains that Department Order No. 9 is illegal, allegedly
because it contravenes the above-mentioned rulings of this Court, citing Article 8 of the
Civil Code.

However, Progressive and Protection Technology are not to be deemed as laws on the
registration of unions. They merely interpret and apply the implementing rules of the Labor
Code as to registration of unions. The two cases applied and interpreted the then existing
Book V of the Omnibus Rules Implementing the Labor Code. Since Book V of the Omnibus
Rules, as amended by Department Order No. 9, no longer requires a local or chapter to
submit books of accounts as a prerequisite for registration, the doctrines enunciated in the
above-mentioned cases, with respect to books of account, are already passé and
therefore, no longer applicable. Hence, Pagpalain cannot insist that ILOPHILS comply with
the requirements prescribed in said rulings, for the current implementing rules have deleted
the same.

Furthermore, Pagpalain has failed to show that Department Order No. 9 is contrary to the
law or the Constitution. At the risk of being repetitious, the Labor Code does not require a
local or chapter to submit books of account in order for it to be registered as a legitimate
labor organization. There is, thus, no inconsistency between the Labor Code and
Department Order No. 9. 

In addition, the controlling intention in requiring the submission of books of account is the
protection of labor through the minimization of the risk of fraud and diversion in the handling
of union funds. As correctly pointed out by the Solicitor General, this intention can still be
realized through other provisions of the Labor Code, specifically, Article 241.

Lastly, Department Order No. 9 only dispenses with books of account as a requirement for
registration of a local or chapter of a national union or federation. As provided by Article
241 (h) and (j), a labor organization must still maintain books of account, but it need not
submit the same as a requirement for registration. Given the foregoing disquisition, the Court
find no cogent reason to declare Department Order No. 9 null and void, as well as to
reverse the assailed resolution of the Secretary of Labor.

61. Tagaytay Highlands International Golf Club Incorporated vs. Tagaytay Highlands
Employees Union-PTGWO

G.R. No. 142000. January 22, 2003

CARPIO-MORALES, J.:

DOCTRINE:

Labor Law; Labor Unions; Certification Elections; After a certificate of registration is issued to
a union, its legal personality cannot be subject to collateral attack.—The petition fails. After
a certificate of registration is issued to a union, its legal personality cannot be subject to
collateral attack. It may be questioned only in an independent petition for cancellation in
accordance with Section 5 of Rule V, Book IV of the “Rules to Implement the Labor Code”
(Implementing Rules) which section reads: Sec. 5. Effect of registration. The labor
organization or workers’ association shall be deemed registered and vested with legal
personality on the date of issuance of its certificate of registration. Such legal personality
cannot thereafter be subject to collateral attack, but may be questioned only in an
independent petition for cancellation in accordance with these Rules. 
The inclusion in a union of disqualified employees is not among the grounds for
cancellation, unless such inclusion is due to misrepresentation, false statement or fraud.—
The inclusion in a union of disqualified employees is not among the grounds for
cancellation, unless such inclusion is due to misrepresentation, false statement or fraud
under the circumstances enumerated in Sections (a) and (c) of Article 239 of above-quoted
Article 239 of the Labor Code. THEU, having been validly issued a certificate of registration,
should be considered to have already acquired juridical personality which may not be
assailed collaterally. 

FACTS:

Tagaytay Highlands Employees Union (THEU), Philippine Transport and General

Workers Organization (PTGWO), Local Chapter No. 776, a legitimate labor organization said
to represent majority of the rank-and-file employees of THIGCI, filed a petition for
certification election before the DOLE Mediation-Arbitration. THIGCI opposed said petition
for certification election because the list of union members submitted by THEU was
defective and fatally flawed as it included the names and signatures of supervisors,
resigned, terminated and absent without leave (AWOL) employees, as well as employees of
The Country Club, Inc., a corporation distinct and separate from THIGCI; and that out of the
192 signatories to the petition, only 71 were actual rank-and-file employees of THIGCI. Also,
some of the signatures in the list of union members were secured through fraudulent and
deceitful means, and submitted copies of the handwritten denial and withdrawal of some
of its employees from participating in the petition.

THEU asserted that it complied with all the requirements for valid affiliation and
inclusion in the roster of legitimate labor organizations pursuant to DOLE Department Order
No. 9, series of 1997, on account of which it was duly granted a Certification of Affiliation by
DOLE; and that Section 5, Rule V of said Department Order provides that the legitimacy of
its registration cannot be subject to collateral attack, and for as long as there is no final
order of cancellation, it continues to enjoy the rights accorded to a legitimate organization.
Therefore, the Med-Arbiter should, pursuant to Article 257 of the Labor Code and Section
11, Rule XI of DOLE Department Order No. 09, automatically order the conduct of a
certification election.

DOLE Med-Arbiter: ordered the holding of a certification election. 

MR was filed and DOLE Resolution of November 12, 19981 setting aside the June 4, 1998
Resolution dismissing the petition for certification election. MFR denied.

CA: denied THIGCI’s Petition for Certiorari and affirmed the DOLE Resolution dated
November 12, 1998. It held that while a petition for certification election is an exception to
the innocent bystander rule, hence, the employer may pray for the dismissal of such petition
on the basis of lack of mutuality of interests of the members of the union as well as lack of
employer-employee relationship and petitioner failed to adduce substantial evidence to
support its allegations.

ISSUE:

1. Whether or not managerial and supervisory employees can form union with rank and
file employees.

1. Whether or not the certificate of registration can be attacked collaterally after

having its juridical personality.

HELD:

1. No.
The statutory authority for the exclusion of supervisory employees in a rank-and-file
union, and 
vice-versa, is Article 245 of the Labor Code, to wit: Article 245. Ineligibility of
managerial employees to join any labor organization; right of supervisory
employees.—Managerial employees are not eligible to join, assist or form any labor
organization. Supervisory employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form separate
labor organizations of their own. 
While above-quoted Article 245 expressly prohibits supervisory employees from
joining a rank-and-file union, it does not provide what would be the effect if a rank-
and-file union counts supervisory employees among its members, or vice-versa. 

Petitioner contends, quoting Toyota, it becomes necessary, therefore, anterior to the

granting of an order allowing a certification election to inquire into the composition
of any labor organization whenever the status of the labor organization is
challenged on the basis of Article 245 of the Labor Code. The case of Toyota held
thata labor organization composed of both rank and fie employees is no labor
organization at all. 
The petition fails. After a certificate of registration is issued to a union, its legal
personality cannot be subject to collateral attack. It may be questioned only in an
independent petition for cancellation in accordance with Section 5 of Rule V, Book
IV of th “Rules to Implement the Labor Code” (Implementing Rules) which section
reads: 
The inclusion in a union of disqualified employees is not among the grounds for
cancellation, unless such inclusion is due to misrepresentation, false statement or
 fraud under the circumstances enumerated in Sections (a) and (c) of Article 239 of
above-quoted Article 239 of the Labor Code. 
THEU, having been validly issued a certificate of registration, should be considered to
have already acquired juridical personality which may not be assailed collaterally. 

1. No
THEU, having been validly issued a certificate of registration, should be considered to
have already acquired juridical personality which may not be assailed collaterally. 

As for petitioner’s allegation that some of the signatures in the petition for
certification election were obtained through fraud, false statement and
misrepresentation, the proper procedure is, as reflected above, for it to file a petition
for cancellation of the certificate of registration, and not to intervene in a petition for
certification election. 

62. FOITAF – ASSOCIATED ANGLO AMERICAN CHAPTER v. NORIEL, 72 SCRA 24

DOCTRINE:

(1) There is both constitutional and statutory recognition that laborers have the right to form
unions to take care of their interest vis-a-vis their employees. Their freedom to form
organizations would be rendered nugatory if they could not choose their own leaders to
speak on their behalf and to bargain for them. It cannot be otherwise, for the freedom to
choose which labor organization to join is an aspect of the constitutional mandate of
protection to labor.

(2) There is in the Industrial Peace Act this categorical provision on the right of employees
to self-organization: "Employees shall have the right to self-organization and to form, join or
assist labor organization of their own choosing for the purpose of collective bargaining
through representatives of their own choosing and to engage in concerted activities for the
purpose of collective bargaining and other mutual aid or protection." (Section 3 of Republic
Act No. 875) The new Labor Code (Presidential Decree No. 442, 1974) is equally explicit on
the matter. Thus: "The State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure and just and humane condition of work."cralaw virtua1aw
library

FACTS:

Federation of Free Workers union filed a verified petition for certification election
among the employees and workers of the Company alleging that more than thirty percent
of its rank and file workers support the same. The med-arbiter assigned to the case ordered
that an election be conducted.

The FOITAF-ASSOCIATED union appealed from said order on the sole ground that
there was failure to comply with the thirty percent requirement alleging that there had
been retractions of some employees without however presenting proofs of the same.

The Bureau of Labor Relations issued a resolution sustaining the previous order of the
med-arbiter for a certification election. A motion for reconsideration of said resolution was
filed, opposed and denied.

Hence the petition for certiorari labeling respondent Director’s order for the holding
of a certification election, despite the alleged failure to comply with the thirty percent
requirement of the New Labor Code, as arbitrary and improvident exercise of authority.

ISSUE: Whether or not the order was arbitrary

HELD:

No grave abuse of discretion, much less arbitrariness, could be imputed to the

rejection of the plea of petitioner to set aside the challenged order.

There is persuasiveness, likewise, to the submission of Solicitor General Mendoza in

the comment filed, that the thirteen employees who allegedly retracted were not even
present before the med-arbiter and that the alleged additional forty-five employees who
supposedly likewise changed their minds, were also not called to testify to that effect,
petitioner satisfying itself with their being named in an affidavit executed by its president.

The Supreme Court held that there was no arbitrariness in the issuance of the
challenged order inspire of the alleged failure to comply with the thirty percent requirement
of the New Labor Code for the alleged retraction is highly dubious in character.

To prevent the holding of a certification election to determine the representative

union for the purpose of collective bargaining would go contrary to authoritative doctrines
involving the constitutional right of freedom of association.

Their freedom to form organizations would be rendered nugatory if they could not
choose their own leaders to speak on their behalf and to bargain for them. It cannot be
otherwise, for the freedom to choose which labor organization to join is an aspect of the
constitutional mandate of protection to labor.

63. PHILIPPINE FRUITS AND VEGETABLE INDUSTRIES, INC. v. HON. RUBEN D. TORRES,

G.R. No. 92391 July 3, 1992

DOCTRINE: It is now well-settled that employees who have been improperly laid off but who
have a present, unabandoned right to or expectation of re-employment, are eligible to
vote in certification elections.

FACTS: On October 13, 1988, Med-Arbiter Basa issued an Order granting the petition for
Certification election filed by the Trade Union of the Philippines and Allied Services (TUPAS).
Said order directed the holding of a certification election among the regular and seasonal
workers of the Philippine Fruits and Vegetables, Inc. After a series of pre-election
conferences, all issues relative to the conduct of the certification election were threshed
out except that which pertains to the voting qualifications of the hundred ninety four (194)
workers enumerated in the lists of qualified voters submitted by TUPAS. A Certification
Election (CE) was held for the selection of PFVI’s employee’s exclusive bargaining
representative. Out of the 291 votes cast in the election, 168 were challenged votes—i.e.
their voters still had an illegal dismissal or ULP case against the Company. The 60 yes votes
failed to obtain the majority of the votes cast in the certification election, hence, the
necessity of opening the 168 challenged votes to determine the true will of the employees.

Company opposed the opening of the yes votes and their inclusion in the tally since
said voters are not regular employees nor seasonal workers for having allegedly rendered
work for less than 180 days. The Med-Arbiter ordered the opening of said 168 challenged
votes upon his observation that said employees were illegally dismissed in accordance with
the decision of a Labor Arbiter. 165 of the challenged votes were yes votes, increasing the
number of yes votes to 225. The Court dismissed the Company’s petition, and ruled in favor
of the Union. The Company also pointed out that the notice of certification election was
posted only 4 days before the election, instead of the 5 days required by the Implementing
Rules. December 12, 1988 the notice of certification election was duly posted, the
certification election was held on December 16, 1989. 

On February 23, 1989, petitioner formally filed a Protest claiming that the required
five day posting of notice was not allegedly complied with and that the list of qualified
voters so posted failed to include fifty five regular workers agreed upon by the parties as
qualified to vote. The Protest further alleged that voters who were ineligible to vote were
allowed to vote. 

ISSUE: 

1. Whether the protest by PFVI was seasonably filed 

2. Whether employees who have been improperly laid off can vote in a CE 

3. Whether the lack of one day of notice of the Certification Election warrants the
nullification of the election

HELD: 

1. NO. Sec. 4. Protest to be decided in twenty (20) working days. — Where the protest is
formalized before the med-arbiter with five (5) days after the close of the election
proceedings, the med-arbiter shall decide the same within twenty (20) working days from
the date of formalization. If not formalized within the prescribed period, the protest shall be
deemed dropped. The decision may be appealed to the Bureau in the same manner and
on the same grounds as provided under Rule V would readily yield, as a matter of
procedure, the following requirements in order that a protest filed thereunder would
prosper, to wit: (1) The protest must be filed with the representation officer and made of
record in the minutes of the proceedings before the close of election proceedings, and (2)
The protest must be formalized before the Med-Arbiter within five (5) days after the close of
the election proceedings. The records before Us quite clearly disclose the fact that
petitioner, after filing a manifestation of protest on December 16, 1988, election day, only
formalized the same on February 20, 1989, or more than two months after the close of
election proceedings (i.e., December 16, 1988). We are not persuaded by petitioner's
arguments that election proceedings include not only casting of votes but necessarily
includes canvassing and appreciation of votes cast and considering that the canvassing
and appreciation of all the votes cast were terminated only on February 16, 1989, it was
only then that the election proceedings are deemed closed, and thus, when the formal
protest was filed on February 20, 1989, the five-day period within which to file the formal
protest still subsisted and its protest was therefore formalized within the reglementary
period. 

2. YES. It is now well-settled that employees who have been improperly laid off but who
have a present, unabandoned right to or expectation of re-employment, are eligible to
vote in certification elections. Thus, and to repeat, if the dismissal is under question, as in the
case now at bar whereby a case of illegal dismissal and/or unfair labor practice was filed,
the employees concerned could still qualify to vote in the elections. And finally, the Court
would wish to stress once more the rule which it has consistently pronounced in many earlier
cases that a certification election is the sole concern of the workers and the employer is
regarded as nothing more than a bystander with no right to interfere at all in the election. 

3. NO. It is not disputed that a substantial number, or 291 of 322 qualified voters, of the
employees concerned were informed, thru the notices thus posted, of the elections to be
held on December 16, 1988, and that such employees had in fact voted accordingly on
election day. Viewed thus in the light of the substantial participation in the elections by
voter-employees, and further in the light of the all-too settled rule that in interpreting the
Constitution's protection to labor and social justice provisions and the labor laws and rules
and regulations implementing the constitutional mandate, the Supreme Court adopts the
liberal approach which favors the exercise of labor rights, We find the lack of one day in the
posting of notices insignificant, and hence, not a compelling reason at all in nullifying the
elections.

64. SANDOVAL SHIPYARDS, INC. AND VICENTE SANDOVAL VS PRISCO PEPITO, ET. AL.
G.R. NO. 143428
JUNE 25, 2001
KAPUNAN, J.

DOCTRINE:
A certification proceeding is not a litigation in the sense in which this term is commonly
understood, but a mere investigation of a non-adversary, fact-finding character, in which
the investigating agency plays the part of a disinterested investigator seeking merely to
ascertain the desires of the employees as to the matter of their representation. The court
enjoys a wide discretion in determining the procedure necessary to insure the fair and free
choice of bargaining representatives by the employees.

FACTS:
The National Federation of Labor (NFL) filed with the Department of Labor and
Employment (DOLE) a petition for certification election, alleging that its members, which
included private respondent Pepito were regular employees of petitioner Sandoval
Shipyards Inc. (SSI)  

Finding that the NFL members were rank – and – file employees of SSI, the Med –
Arbiter issued an order directing that a certification election be held. However,
Undersecretary Laguesma reversed the Med – Arbiter’s decision and ruled that there was
a valid subcontracting agreement between SSI and its subcontractors and no
employee – employer relationship existed between SSI and Pepito, et. al since the latter
were the employees of the subcontractors. 

Thus, several cases of illegal dismissal were filed by private respondent Pepito against
SSI and its President. 

Labor Arbiter Decision - while private respondent were illegally dismissed, they were not
entitled to reinstatement with backwages, damages and attorney’s fees. There was no
employer – employee relationship between SSI and private respondent reasoning that the
said issue has been laid to rest in the decision of Undersecretary Laguesma in the
certification election case.

NLRC Decision – Affirmed the decision of the Labor Arbiter. 

Court of Appeals Decision – reversed the decision of the NLRC and held that SSI is the direct
employer of private respondents. 

Sandoval Shipyards Inc.  contend -  that the CA erred in reasoning that ¬a decision in a
certification election case regarding the existence of an employer – employee relationship
does not foreclose all further dispute between the parties as to existence or non – existence
such relationship.
ISSUE:
Whether or not a decision in a certification election case regarding the existence of
an employer – employee relationship foreclose all further dispute between the parties as to
existence or non – existence of such relationship?

HELD:
No. The decision in a certification election case, by the very nature of such
proceeding, is not such as to foreclose all further dispute as to the existence, or non-
existence of an employer-employee relationship” between SSI and private respondents
herein.

It is an established doctrine that for res judicata to apply, the following requisites
must concur: 
1. The former judgement must be final 
2. The court which rendered said judgement must have jurisdiction over the
subject matter and the parties 
3. Said judgement must be on the merits 
4. There must be between the first and the second actions identity of parties,
subject matter and cause of action.

In the case of Manila Golf vs CA- the action or proceedings in which is issued the
“prior Judgment” that would operate in bar of a subsequent action between the same
parties for the same cause, be adversarial, or contentious, “one having opposing parties;
(is) contested, as distinguished from an ex parte hearing or proceeding of which the party
seeking relief has given legal notice to the other party and afforded the latter an
opportunity to contest it, and a certification case is not such a proceeding.

  A certification proceeding is not a litigation in the sense in which this term is

commonly understood, but a mere investigation of a non-adversary, fact-finding character,
in which the investigating agency plays the part of a disinterested investigator seeking
merely to ascertain the desires of the employees as to the matter of their representation.  

Thus, the LA and the NLRC erred in relying on the pronouncement of Undersecretary
Laguesma in the certification proceeding because such decision given by the very nature
of the proceeding does not foreclose further dispute regarding existence or non - existence
of an employer – employee relationship, was not an obiter dictum (decision), but was part
of the resolution of the main issue in said case.

65. CONFEDERATION OF CITIZENS LABOR UNION VS. NORIEL

G.R. No. . L-56902, 116 SCRA 694
Aquino, J.
DOCTRINE/S:

The purpose of a certification election is to give employees „true representation in their

collective bargaining with an employer. 

FACTS:
Petitioner Confederation of Labor Unions (CCLU) was one of the four unions wanting to be
certified as the collective bargaining representative of the employees in the Redson Textile
Manufacturing Corporation. Its co-petitioner, the Redson Employees and Laborers
Association, is a CCLU local in the said corporation. 

The other unions aspiring to become the collective bargaining representative were the
National Union of Garments Textile and General Workers of the Philippines (GATCORD) the
National Trade Union (NATU) and the Associated Labor Unions (ALU). 

A certification election was held in the premises of the corporation. As no union obtained a
majority vote, CCLU and ALU, which had the two largest number of votes, agreed that a
run-off election would be held on November 6, 1980 from six o'clock in the morning to six
o'clock in the evening. 

At that day, three election supervisors from the Ministry of Labor and Employment, arrived at
around seven o'clock in the morning near the Redson Textile compound but they were not
allowed by the security guard to enter the company premises in spite of the heavy rain. So,
after consulting through the phone with their chief. The said election supervisors decided to
hold the certification election "outside the premises of the company in a small store outside
of the annex building”. They used as ballot box "an improvised carton box." The union
representatives did not object to the improvised polling place and ballot box. 

Voting started at eleven o'clock. During the election and just before it was closed at six-
thirty in the evening, the ALU representative, executed a written protest or manifestation,
alleging that the management did not allow the run-off election to be held within its
premises. 

At around seven-thirty in the evening, the votes cast were canvassed. There were 1,010
voters but only 692 votes cast. ALU won. Its representative, Taneo, withdrew his protest
before the close of the proceedings. 

On the other hand, the CCLU representatives refused to sign the minutes of the election.
CCLU through its representative, filed with the Bureau of Labor Relations a protest wherein
he prayed that the November 6 certification election as well as the "continuation of the
election" on November 7 be annulled. Alleging that the previous day's certification election
was irregular and disorderly because (a) no booths were provided for by the company; (b)
the election started much later than the hour agreed upon by the parties, and (c) ALU
distributed white T-shirts printed with "ALU TAYO", gave free tricycle rides to ALU voters and
hired around fifteen husky men and around twenty-five women who "forced" voters to vote
for ALU. 

CCLU informed the Bureau of Labor Relations that the election was conducted without
regard to the provisions of section 6, Rule VI, Book V of the Rules and Regulations
Implementing the Labor Code. 

Carmelo C. Noriel, Officer-in-Charge of the Bureau of Labor Relations, dismissed CCLU's

protest for lack of merit. He observed that CCLU failed to submit the pleadings and
evidences required in the hearing and that CCLU failed to file a protest either "before or
during the election proceeding" and, therefore, pursuant to section 3, Rule VI, Book V of the
aforementioned rules, CCLU is deemed to have waived its right to protest. 

CCLU and RELA-CCLU filed the instant petition for certiorari and prohibition to annul the
certification election. The Solicitor General in his comment contends that the certification
election should be upheld because CCLU, by not filing a protest with the election supervisor
before the close of the election proceeding, waived its right to protest. 

ISSUE:
Whether or not the circumstances showing irregularities in the holding of the certification
election sufficient to invalidate the same 

RULING:
Yes, the certification is invalid. 

We hold that the certification election is invalid because of certain irregularities such as that
(1) the workers on the night shift (ten p.m. to six a.m.) and some of those in the afternoon
shift were not able to vote, so much so that out of 1,010 voters only 692 voted and about
318 failed to vote; (2) the secrecy of the ballot was not safeguarded; (3) the election
supervisors were remiss in their duties and were apparently "intimidated" by a union
representative and (4) the participating unions were overzealous in wooing the employees
to vote in their favor by resorting to such tactics as giving free tricycle rides and T-shirts. 

The purpose of a certification election is to give the employees "true representation in their
collective bargaining with an employer" . That purpose was not achieved in the run-off
election because many employees or union members were not able to vote and the
employer, through apathy or deliberate intent, did not render assistance in the holding of
the election. It should be noted that ALU's written protest (later withdrawn) was based on
the same grounds invoked by CCLU in its protest. That fact alone should have alerted Noriel
to disregard the technicality that CCLU's protest was not filed on time. 
The resolutions of the Officer-in-Charge of the Bureau of Labor Relations dated February 26
and March 19, 1981 are hereby set aside. Another run-off certification election should be
conducted inside the premises of Redson Textile Manufacturing Corporation. The
management is ordered to allow all its employees to participate in the certification election
and to assist in the holding of an orderly election. The election supervisors or representation
officers are also enjoined to fulfill their duties under the Labor Code and the rules and
regulations implementing the same. 
 
 
66. National Congress of Unions in the Sugar Industry of the Philippines vs. Trajano
G.R. No. 67485. April 10, 1992
Medialdea, J.

The Deadlock Bar Rule provides that a petition for certification election can only be
entertained if there is no pending bargaining deadlock submitted to conciliation or
arbitration or had become the subject of a valid notice of strike or lockout. The principal
purpose is to ensure stability in the relationship of the workers and the management.

Facts:  Petitioner National Congress of Unions in the Sugar Industry of the Philippines
(NACUSIP)-TUCP is the certified exclusive bargaining representative of the rank and file
workers of Calinog Refinery Corporation.  On June 21, 1982, petitioner union filed a petition
for deadlock in collective bargaining with the Ministry of Labor and Employment (now
Department of Labor and Employment). In order to obviate friction and tension, the parties
agreed to submit the petition for deadlock to compulsory arbitration.  

During the pendency of the petition for deadlock to compulsory arbitration, another
certified labor organization of private respondent company, Federation of Unions of Rizal
(FUR-TUCP) also filed a petition for certification election among the rank and file
employees.  The petition was dismissed but on appeal Bureau of Labor Relations Director
Cresenciano B. Trajano set aside the order and remanded back the case to the Regional
Office.  Therefore, Med-Arbiter Correa gave due course to the petition of FUR- TUCP and
ordered that an election be held within 20 days from receipt of the order.  

Petitioner interposed an appeal to the Bureau of Labor Relations. During the pendency of
the appeal, a collective bargaining agreement was finally entered and executed by the
management of the National Sugar Refineries Co., Inc. and petitioner union and was
subsequently ratified by a majority of the rank and file employees.  

Despite of this development, respondent Director Trajano affirmed the earlier order of
MedArbiter Correa to conduct a certification election on the ground that NACUSIP-TUCP no
longer commands the support of the majority employees since almost 75% of the workers
have disaffiliated and joined the ranks of FUR-TUCP; hence, NACUSIP-TUCP’s status as sole
and exclusive bargaining representative is now of doubtful validity.  
Issue:  Whether or not a petition for certification election may be filed during the pendency
of a bargaining deadlock submitted to arbitration or conciliation.

Ruling:  No.  A petition for certification election may be filed at any time, in the absence of
a collective bargaining agreement. Otherwise put, the rule prohibits the filing of a petition
for certification election in the following cases: 1. during the existence of a collective
bargaining agreement except within the freedom period; 2. within one (1) year from the
date of issuance of declaration of a final certification election result; or 3. during the
existence of a bargaining deadlock to which an incumbent or certified bargaining agent is
a party and which had been submitted.  The Deadlock Bar Rule simply provides that a
petition for certification election can only be entertained if there is no pending bargaining
deadlock submitted to conciliation or arbitration or had become the subject of a valid
notice of strike or lockout. The principal purpose is to ensure stability in the relationship of the
workers and the management.

In the case at bar, a bargaining deadlock was already submitted to arbitration when
private respondent FUR-TUCP filed a petition for certification election. The same petition was
dismissed for lack of merit by the Acting Med-Arbiter in an order dated July 23, 1982 on the
sole ground that the petition is barred by a pending bargaining deadlock. However,
respondent Director set aside the same order and subsequently affirmed an order giving
due course to the petition for certification election and ordering that an election be held. 
However, the law demands that the petition for certification election should fail in the
presence of a then pending bargaining deadlock.

67. ABS-CBN Supervisors Employees Union Members v. 

ABS-CBN Broadcasting Corporation, et. al.
G.R. No. 106518. March 11, 1999
Justice Purisima

DOCTRINE(s):

A check-off is a process or device whereby the employer, on agreement with the Union,
recognized as the proper bargaining representative, or on prior authorization from its
employees, deducts union dues or agency fees from the latter’s wages and remits them
directly to the union; The system of check- off is primarily for the benefit of the Union and
only indirectly, for the individual employees. 

The legal basis of check-off is found in statutes or in contracts. 

The amount of check-off to be deducted is uncertain where although not fixed, it is

determinable. 
No deductions may be taken from the workers who did not sign any check-off
authorization. 

FACTS:

ABS-CBN Supervisors Employees Union (“Union”) and ABS-CBN Broadcasting Corporation

(“Corporation”) signed and concluded a CBA with the following check-off provision:

“Article XII - The Company agrees to advance to the Union a sum equivalent to 10% of the
sum total of all the salary increase and signing bonuses granted to the Supervisors under this
CBA …”

The Union then filed with the BLR a Complaint against the Corporation, praying that (1) the
special assessment of 10% of the sum total of all salary increases and signing bonuses
granted by respondent Company to the members of the Union be declared illegal for
failure to comply with the Labor Code, particularly Article 241 (g), (n), and (o). 

Respondent Union Officers and Corporation filed an Answer arguing that the check-off
provision is in accordance with the law as majority of the Union members individually
executed a written authorization giving the Union Officers and the Company a blanket
authority to deduct subject amount. 

The Med-Arbiter Abdullah declared that the special assessment of 10% of the sum total of
CBA benefits as illegal, to refund to the complainants and other union members the amount
of PhP 500,000.00 advanced by the Company as part of the 10% sum total of CBA benefits,
among others. 

On appeal, DOLE USec. Laguesma denied such appeal. Union Officers and Company filed
for an MR stating, inter alia, that the questioned 10% special assessment is valid pursuant to
the ruling in BPI Employees Union-ALI v. NLRC. Thus, USec. Laguesma reversed its own
decision and dismissed the complaint of petitioner Union for lack of merit. 

ISSUE:

Whether the check-off provision contained in the CBA is illegal.  

HELD:

Petitioners also argued that the check-off provision in question is illegal because it was
never submitted for consideration and approval to “all the members at a general
membership meeting called for the purpose”; and further alleged that the formalities
mandated by Art. 241, paragraphs (n) and (o) of the Labor Code, as amended, were not
complied with. 

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

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

“Rights and conditions of membership in a labor organization—The following

are the rights and conditions of membership in a labor organization: x x x 
(g) No officer, agent, or member of a labor organization shall collect any
fees, dues, or other contributions in its behalf or make any disbursement of its
money or funds unless he is duly authorized pursuant to its constitution and
by-laws. 
xxx 
(n) No special assessment or other extraordinary fees may be levied upon
the members of a labor organization unless authorized by a written resolution
of a majority of all the members of a general membership meeting duly
called for the purpose. The secretary of the organization shall record the
minutes of the meeting including the list of all members present, the votes
cast, the purpose of the special assessment or fees and the recipient of such
assessment or fees. The record shall be attested to by the president. 
(o) Other than for mandatory activities under the Code, no special
assessments, attorney’s fees, negotiation fees or any other extraordinary fees
may be checked off from any amount due to an employee without an
individual written authorization duly signed by the employee. The
authorization should specifically state the amount, purpose and beneficiary
of the deductions. [Italics supplied] 

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

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

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

The three (3) requisites for the validity of the ten percent (10%) special assessment for
Union’s incidental expenses, attorney’s fees and representation expenses were met. 

85 members of the same Union executed individual written authorizations for check-off. 

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

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

68. ASSOCIATED WORKERS UNION-PTGWO v. NLRC

GR Nos. 87266-69, Jul 30, 1990 FELICIANO, J.

Doctrine:
Generally, a labor union may disaffiliate from the mother union to form a local or
independent union only during the 60-day freedom period immediately preceding the
expiration of the CBA.  Even before the onset of the freedom period (and despite the
closed-shop provision in the CBA between the mother union and management)
disaffiliation may still be carried out, but such disaffiliation must be effected by a majority of
the members in the bargaining unit.  This happens when there is a substantial shift in
allegiance on the part of the majority of the members of the union. In such a case,
however, the CBA continues to bind the members of the new or disaffiliated and
independent union up to the CBA's expiration date.  

Facts:
Petitioner Associated Workers Union ("AWU") - PTGWO, the then bargaining representative of
the dockworkers at South Harbor, Port Area, Manila, filed a Notice of Strike against
respondent Metro Port Service, Inc. ("Metro"), the then arrastre contractor in the South
Harbor, on the issues, among others, of unfilled vacancies and union busting.

An Order by the then Minister of Labor and Employment to the NLRC for compulsory
arbitration; the Order also forbade the holding of strikes or lockouts. 

One of the demands raised by AWU was that Metro terminate the employment of

respondents Adriano Yumul and ten (10) others (individual respondents), for having
organized, on 26 October 1984, the Associated Workers Union in Metroport ("AWUM")
among the rank-and-file employees of Metro, ostensibly as a local or chapter of AWU. AWU
had earlier expelled individual respondents from membership in AWU for disloyalty and,
pursuant to the closed-shop provision of the existing AWU-Metro collective bargaining
agreement ("CHA"), sought the termination of their employment.

Metro initially resisted AWU's request to terminate the employment of individual

respondents, contending that the termination would be premature as individual
respondents had not been afforded due process, and that the termination would
be violative of the status quo agreement in the NLRC. However, eventually, Metro relented
and suspended individual respondents after AWU despite the express prohibition in the
Order and staged a strike against it. Metro then executed a Compromise Agreement with
AWU to end the strike.

LA- order to provisionally reinstate the individual respondents

NLRC -directed Metro to comply with the Agreement, and Metro complied and re-
suspended individual respondents.

Both AWU and Metro filed separate motions for reconsideration of the consolidated
Decision. Meanwhile, on 21 July 1986, petitioner Marina Port Services, Inc. ("Marina"), by
virtue of a Special Permit issued by the Philippine Ports Authority, started operations as the
arrastre operator at the Manila South Harbor vice Metro. On November 1986, individual
respondents in a Motion/Manifestation prayed that Marina be included as party-
respondent as sanctioned by Par. "7" of the Special Permit granted to Marina which states
that "Labor and personnel of previous operator, except those positions of trust and
confidence, shall be absorbed by the grantee."

NLRC rendered decision that Metro/Marina and AWU will be held solidarily liable with AWU
except as to the time that respondent NLRC ordered it to re- suspend the private
respondents and the case to be remanded to LA of origin for writ of execution.

LA- issued MARINA to reinstate these individuals.

Issue: WON the expulsion made by AWU with these involved individuals is valid. (Yes)

Held:
While it is true that AWUM as a local union, being an entity separate and distinct from AWU,
is free to serve the interest of all its members and enjoys the freedom to disaffiliate, such
right to disaffiliate may be exercised, and is thus considered a protected labor activity, only
when warranted by circumstances.

Generally, a labor union may disaffiliate from the mother union to form a local or
independent union only during the 60-day freedom period immediately preceding the
expiration of the CBA.  Even before the onset of the freedom period (and despite the
closed-shop provision in the CBA between the mother union and management)
disaffiliation may still be carried out, but such disaffiliation must be effected by a majority of
the members in the bargaining unit.  This happens when there is a substantial shift in
allegiance on the part of the majority of the members of the union. In such a case,
however, the CBA continues to bind the members of the new or disaffiliated and
independent union up to the CBA's expiration date.  

The record does not show that individual respondents had disaffiliated during the freedom
period. The record does, however, show that only eleven (11) members of AWU (individual
respondents) had decided to disaffiliate from AWU and form AWUM. Respondent Metro had
about 4,000 employees, and around 2,000 of these were members of AWU. It is evident that
individual respondents had failed to muster the necessary majority in order to justify their
disaffiliation. So the expulsion was justified and therefore valid.