G.R. Nos.

174040-41               September 22, 2010

INSULAR HOTEL EMPLOYEES UNION-NFL, Petitioner,

vs.
WATERFRONT INSULAR HOTEL DAVAO, Respondent.

respondent Waterfront Insular Hotel Davao sent the Department of Labor and Employment (DOLE) a Notice that it
will suspend its operations for a period of six months due to severe and serious business losses. In said notice,
respondent assured the DOLE that if the company could not resume its operations within the period, the company
would pay the affected employees all the benefits legally due to them.

During the period of the suspension, Domy R. Rojas (Rojas), the President of Davao Insular Hotel Free Employees
Union (DIHFEU-NFL), the recognized labor organization in Waterfront Davao, sent respondent a number of letters
asking management to reconsider its decision.Rojas further intimated their intention to suspend the re-
negotiations of the CBA. And that they could talk on possible adjustments on economic benefits

After series of negotiations, respondent and DIHFEU-NFL signed a Memorandum of Agreement 14 (MOA) wherein
respondent agreed to re-open the hotel subject to certain concessions offered by DIHFEU-NFL in its
Manifesto.Accordingly, respondent downsized its manpower structure to 100 rank-and-file employees as set forth
in the terms of the MOA and, a new pay scale was also prepared by respondent..

respondent resumed its business operations, Darius Joves (Joves) and Debbie Planas, claiming to be local officers of
the National Federation of Labor (NFL), filed a Notice of Mediation16 before the National Conciliation and
Mediation Board (NCMB). Raising the issue of "Diminution of wages and other benefits through unlawful
Memorandum of Agreement."

the NCMB called Joves and respondent to a conference wherein respondent and petitioner Insular Hotel
Employees Union-NFL (IHEU-NFL), represented by Joves, signed a Submission Agreement 17. In support of his
authority to file the complaint, Joves, assisted by Atty. Danilo Cullo (Cullo), presented several Special Powers of
Attorney (SPA).

respondent filed with the NCMB a Manifestation with Motion for a Second Preliminary Conference, 18 raising the
ground The persons who filed the instant complaint in the name of the Insular Hotel Employees Union-NFL have no
authority to represent the Union; Cullo, however, confirmed that the case was filed not by the IHEU-NFL but by the
NFL. When asked to present his authority from NFL, Cullo admitted that the case was, in fact, filed by individual
employees named in the SPAs

Respondent again raised its objections, specifically arguing that the persons who signed the complaint were not
the authorized representatives of the Union indicated in the Submission Agreement nor were they parties to the
MOA. Respondent then filed its Motion to Withdraw which was subsequently denied, respondent filed a Motion
for Reconsideration25 where it stressed that the Submission Agreement was void because the Union did not
consent thereto. Respondent pointed out that the Union had not issued any resolution duly authorizing the
individual employees or NFL to file the notice of mediation with the NCMB but the same was denied

In a letter addressed to the NCMB, respondent reiterated its position that the individual union members have no
standing to file the notice of mediation before the NCMB. Respondent stressed that the complaint should have
been filed by the Union.

The acting voluntary arbitrator however rendered a Decision Declaring the Memorandum of Agreement in
question as invalid as it is contrary to law and public policy and that the diminution of the wages and other benefits
of the Union members and officers are invalid
Both parties appealed to the CA. the CA rendered a Decision39  declaring the Memorandum of Agreement VALID
and ENFORCEABLE.

ISSUE: WHETHER OR NOT THE ARBITRATOR HAS NO JURISDICTION OVER THE CASE SIMPLY BECAUSE THE NOTICE
OF MEDIATION DOES NOT MENTION THE NAME OF THE LOCAL UNION BUT ONLY THE AFFILIATE FEDERATION
THEREBY DISREGARDING THE SUBMISSION AGREEMENT DULY SIGNED BY THE PARTIES AND THEIR LEGAL
COUNSELS THAT MENTIONS THE NAME OF THE LOCAL UNION.

NO. Waterfront contents that the Notice of Mediation does not mention the name of the Union but merely
referred to the National Federation of Labor (NFL) with which the Union is affiliated. In the subsequent pleadings,
NFL's legal counsel even confirmed that the case was not filed by the union but by NFL and the individual
employees named in the SPAs which were not even dated nor notarized.

Even granting that petitioner Union was affiliated with NFL, still the relationship between that of the local union
and the labor federation or national union with which the former was affiliated is generally understood to be that
of agency, where the local is the principal and the federation the agency. Being merely an agent of the local union,
NFL should have presented its authority to file the Notice of Mediation.

As provided under the NCMB Manual of Procedures, only a certified or duly recognized bargaining representative
and an employer may file a notice of mediation, declare a strike or lockout or request preventive mediation. The
Collective Bargaining Agreement (CBA), on the other, recognizes that DIHFEU-NFL is the exclusive bargaining
representative of all permanent employees. The inclusion of the word "NFL" after the name of the local union
merely stresses that the local union is NFL's affiliate. It does not, however, mean that the local union cannot stand
on its own. The local union owes its creation and continued existence to the will of its members and not to the
federation to which it belongs.

SIDE ISSUE:

ISSUE1, do the individual members of the Union have the requisite standing to question the MOA before the
NCMB?

No, Pursuant to Article 260 of the Labor Code, the parties to a CBA shall name or designate their respective
representatives to the grievance machinery and if the grievance is unsettled in that level, it shall automatically be
referred to the voluntary arbitrators designated in advance by parties to a CBA. Consequently, only disputes
involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators .

ISSUE (2) If the individual members of the Union have no authority to file the case, does the federation to which
the local union is affiliated have the standing to do so?

NO. A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct
voluntary association owing its creation to the will of its members. Mere affiliation does not divest the local union
of its own personality, neither does it give the mother federation the license to act independently of the local
union. It only gives rise to a contract of agency, where the former acts in representation of the latter. Hence, local
unions are considered principals while the federation is deemed to be merely their agent. x x x57
G.R. No. 75037 April 30, 1987

TANDUAY DISTILLERY LABOR UNION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LAMBERTO SANTOS, PEDRO ESTERAL, ROMAN CHICO, JOSELITO
ESTANISLAO, JOSE DELGADO, JUANITO ARGUELLES, RICARDO CAJOLES, and JOSEFINO PAGUYO, respondents.

No. 75055 April 30, 1987

TANDUAY DISTILLERY, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), LAMBERTO SANTOS, PEDRO ESTERAL, ROMAN CHICO,
JOSELITO ESTANISLAO, JOSE DELGADO, JUANITO ARGUELLES, RICARDO CAJOLES, and JOSEFINO
PAGUYO, respondents.

GUTIERREZ, JR.:

Private respondents were all employees of Tanduay Distillery, Inc., (TDI) and members of the Tanduay Distillery
Labor Union (TDLU), a duly organized and registered labor organization and the exclusive bargaining agent of the
rank and file employees of the petitioner company.

a Collective Bargaining Agreement (CBA), was executed between TDI and TDLU and was filed with the Ministry of
Labor and Employment (MOLE) on October 29, 1980 for certification. The CBA had a term of three (3) years from
July 1, 1979 to June 30, 1982. It also contained a union security clause. which provides:

All workers who are or may during the effectivity of this Contract, become members of the Union in accordance
with its Constitution and By-Laws shall, as a condition of their continued employment, maintain membership in
good standing in the Union for the duration of the agreement.

while the CBA was in effect and within the contract bar period the private respondents joined another union, the
Kaisahan Ng Manggagawang Pilipino KAMPIL) and organized its local chapter in TDI,

On November 7, 1980, KAMPIL filed a petition for certification election to determine union representation in TDI,
which development compelled TDI to file a grievance with TDLU.

TDLU, expelled the private respondents for disloyalty to the Union,and demanded that TDI terminate the
employment of private, respondents because they had lost their membership with TDLU.

Acting on the demand of TDLU, TDI filed with the MOLE its application for clearance to terminate the employment
of private respondents. The private respondents then filed with the MOLE a complaint for illegal dismissal against
TDI and Benjamin Agaloos, in his capacity as President of TDLU,.

However, on January 26, 1981, the Med-Arbiter granted the private respondents' petition calling for a certification
election among the rank and file employees of TDI. The Med-Arbiter's Order stated, inter-alia that the existence of
an uncertified CBA cannot be availed of as a bar to the holding of a certification election On appeal to the Bureau
of Labor Relations (BLR), the order for the holding of a certification election was reversed and set aside

TDLU filed a petition for review argued that KAMPIL did not have a cause of action when the petition for
certification was filed on November 7, 1980 because the freedom period was not yet in effect. The fact that the
BLR issued its order when the 60-day freedom period had supervened, did not cure this defect. Moreover, the BLR
decision completely overlooked or ignored the fact that on September 21, 1982, a new CBA had been executed
between the TDLU and TDI so that when the BLR allowed a certification election in its order dated December 3,
1982, the contract bar rule was applicable again.

Moreober Labor Arbiter rendered a decision denying TDI's application to terminate the private respondents and
ordering TDI to reinstate the complainants with backwages.TDI and TDLU moved for reconsideration alleging that
NLRC failed to consider the fact that at the time the private respondents were expelled by TDLU and consequently
terminated by TDI, the union security clause of the CBA was in full force and effect, binding TDI and TDLU.

TDLU said that the decision of the Supreme Court in the certification case could not be used by respondent NLRC
to justify its decision in the dismissal case because the issues on the cases are entirely different and miles apart

(a) whether or not TDI was justified in terminating private respondents' employment in the company on the basis
of TDLU's demand for the enforcement of the Union Security Clause of the CBA between TDI and TDLU;

YES . dismissal of an employee pursuant to a demand of the majority union in accordance with a union security
agreement following the loss of seniority rights is valid and privileged and does not constitute an unfair labor
practice.

Article 249 (e) of the Labor Code as amended specifically recognizes the closed shop arrangement as a form of
union security. The closed shop, the union shop, the maintenance of membership shop, the preferential shop, the
maintenance of treasury shop, and check-off provisions are valid forms of union security and strength. They do not
constitute unfair labor practice nor are they violations of the freedom of association clause of the Constitution.

In the instant case, the CBA in question provides for a Union Security Clause requiring:

(c) All workers who are or may during the effectivity of this contract become members of the union in accordance
with its constitution and by-laws shall as a condition of their continued employment, maintain membership in good
standing in the union for the duration of the agreement. (Emphasis supplied)

Having ratified that CBA and being then members of the TDLU, the private respondents owe fealty and are
required under the Union Security Clause to maintain their membership in good standing with it during the term
thereof, a requirement which ceases to be binding only during the 60-day freedom period immediately preceding
the expiration of the CBA. When the private respondents organized and joined the KAMPIL Chapter in TDI and filed
the corresponding petition for certification election in November 1980, there was no freedom period to speak of
yet. For under Presidential Decree No. 1391, promulgated May 29, 1978, the law applicable in this instance
provides:

No petition for certification election for intervention disaffiliation shall be entertained or given due course except
within the 60 day freedom period immediately preceding the execution of the Collective Bargaining Agreement.

and under Section 21, Rule 3 of the Rules Implementing PD 1391 "... pending certification of a duly filed collective
bargaining  agreement no petition for certification election in the same bargaining unit shall be entertained or
processed." (promulgated September 19, 1978). The Labor Code further mandates that "no certification election
shall be entertained if a Collective Bargaining Agreement which has been submitted in accordance with Article 231
of the Code exists between the employer and a legitimate labor organization except within sixty (60) days prior to
the expiration of the life of such collective agreement (Art. 257).
The fact, therefore, that the Bureau of Labor Relations (BLR) failed to certify or act on TDLU's request for
certification of the CBA in question is of no moment to the resolution of the issues presented in this case.

the BLR ordered the holding of a certification election because the CBA in question had already expired, its expiry
date being June 30, 1982. Consequently, there appears to be no more obstacle in allowing a certification election.
"... [T]he contract bar rule will not apply in view of the supervening event, that is, the expiration of the CBA."

But the fact that the CBA had expired on June 30, 1982 and the BLR, because of such supervening event, ordered
the holding of a certification election could not and did not wipe out or cleanse private respondents from the acts
of disloyalty committed in October 1980 when they organized KAMPIL's local chapter in TDI while still members of
TDLU. The ineluctable fact is that private respondents committed acts of disloyalty against TDLU while the CBA was
in force and existing for which they have to face the necessary sanctions lawfully imposed by TDLU.

In Villar v. Inciong (121 SCRA 444), we held that "petitioners, although entitled to disaffiliation from their union and
to form a new organization of their own must however, suffer the consequences of their separation from the union
under the security clause of the CBA: "

Inherent in every labor union, or any organization for that matter, is the right of self-preservation. When members
of a labor union, therefore, sow the seeds of dissension and strife within the union; when they seek the
disintegration and destruction of the very union to which they belong; they thereby forfeit their rights to remain as
members of the union which they seek to destroy. Prudence and equity, as well as the dictates of law and justice,
therefore, compelling mandate the adoption by the labor union of such corrective and remedial measures, in
keeping with its laws and regulations, for its preservation and continued existence; lest by its folly and inaction, the
labor union crumble and fall. (Idem., p. 458)

The private respondents cannot, therefore, escape the effects of the security clause of their own applicable
collective bargaining agreement.