[G.R. No. L-69188. September 23, 1986.

]
MIGUEL J. VILLAOR and CECILIO V. BAUTISTA, Petitioners,
v. HON. CRESENCIANO B. TRAJANO, in his capacity as
Director, Bureau of Labor Relations of the Ministry of Labor
and Employment; OCTAVIO A. PINEDA, RAFAEL SAMSON,
EDUARDO C. FLORA, MARIO S. SANTOS and CARLOS
BANDALAN, Respondents.
Wenceslao C. Laureta, for Petitioners.
Bernardino Julve for Private Respondents.
Porter Puguon for public Respondent.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; BUREAU OF LABOR
RELATIONS; ORIGINAL AND EXCLUSIVE AUTHORITY TO ACT
ON INTRA-UNION CASES. Article 226 of the Labor Code and
supplemented by Policy Instruction No. 6 relating to the
distribution of jurisdiction over labor cases, it is safe to conclude
that the freedom of the unions from interference from the
government presupposes that there is no inter-union or intra-union
conflict. In the instant case, there is no question that there is an
intra-union conflict.
2. ID.; ID.; ID.; PIECE MEAL ELECTION FOR UNION
OFFICERS; NOT ALLOWED. The May 4, 1984 special election
in Cebu and Mactan is without factual and legal justification. As
aptly observed by the Solicitor General, the same was resorted to
only to accommodate the herein other private respondents
"There is absolutely no justification for calling the said May 4, 1984
elections. Obviously, such move was resorted by the PALEA
Comelec to accommodate defeated candidates for president and
vice-president in the February 20, 1984 election, Mario and Carlos
Bandalan (respondent herein), and enable them to overcome the
winning margin of winning candidates therein, Villaor and Bautista
(herein petitioners), who won by only 145 and 44 votes
respectively.
3. ID.; ID.; RIGHT OF UNION MEMBERS TO VOTE; NOT
DEPRIVED IN CASE AT BAR. It is the contention of the
protestants that a great number of PALEA members were deprived
of their right to vote because it had been tradition since 1969 to
hold elections in Cebu and Mactan for two days; and that the
holding of elections for only one day was done without notice to all
PALEA members in said station. On the other hand, it is the
contention of the petitioners that the change was agreed upon by
all the candidates concerned in a conference held at SM CD
Office, Nichols Fields, on February 20, 1982. On said controversy,
while public respondent found for the protestants, the Solicitor
General is for the petitioners. Be that as it may, it is a fact that the
PALEA COMELEC issued on February 15, 1984 a bulletin
announcing that the elections in the area would be only on
February 20, 1984. Hence, it cannot be said that the voters therein
were not duly notified. In addition to this, worth mentioning is the
comment of the Solicitor General, which reads: ". . . . Besides, we
do not see how these 193 members could have failed to know
about the one-day election. It was held within the office premises,
and, surely, they must have been told of such fact by the other
members who voted in the election. It would appear that these 193
members simply did not bother to vote for one reason for another.
And we do not see the necessity of holding a two-day election in
said areas with only 500 members, and hold a one-day election in
Metro Manila area which has about 4,000 members. That it is the
tradition to hold a two-day election in said areas is not a valid

argument. Tradition can always be overturned, as what happened

in the instant case."
DECISION
PARAS, J.:
This is a petition to review on certiorari the November 14, 1984
decision of respondent BLR Director Cresenciano B. Trajano in
BLR Case No. A-182-84, entitled "Miguel J. Villaor, Et Al.,
Petitioners v. Octavio Pineda, Et Al., Respondents, and Mario S.
Santos, Et Al., Intervenors," setting aside the Med-Arbiters Orders
of June 27, 1984 and August 1, 1984.
The Philippine Air Lines Employees Association (PALEA) is the
bargaining agent of the workers in the Philippine Air Lines (PAL).
The union has a Board of Directors composed of the president,
vice-president, secretary, treasurer and 17 directors elected for a
term of three (3) years by members in "good standing" on the last
Thursday of February of the election year. It has also a
Commission on Election (COMELEC) whose members sit for a
term of three (3) years. At present, the COMELEC is composed of
herein respondents Octavio Pineda, as chairman, and Rafael
Samson and Eduardo Flora, as members. The then incumbent
president and vice-president were herein respondents Mario S.
Santos and Carlos Bandalan, respectively.
On February 17-23, 1984, in Metro Manila and on February 20,
1984 in Cebu/Mactan area, PALEA held its election for National
Officers. Herein petitioner Miguel J. Villaor won the election over
respondent Mario S. Santos for the presidency, Villaor obtaining
1,954 votes to Santos 1,809 votes, or a difference of 145 votes.
Likewise, herein petitioner Cecilio V. Bautista won against Carlos
V. Bandalan for the position of vice-president, Bautista garnering
1,264 votes as against Bandalans 1,220 votes, or a difference of
44 votes. They were proclaimed on February 25, 1984.
Subsequently, the defeated candidates - respondent Mario S.
Santos, for president; respondent Carlos V. Bandalan, for vicepresident; and Antonio Josue, for secretary, filed their election
protests with the PALEA COMELEC within the 30 day
reglementary period, as provided under the Constitution and ByLaws of the Association, on the grounds that (1) a number of votes
in precincts 1, 4 and 4-A were segregated and not counted; and (2)
a substantial number of PALEA members in Cebu/Mactan area
were not able to vote on February 20, 1984 by reason of the voting
days having been reduced from two (February 20-21, 1984) to just
one day (February 20, 1984). Respondent Mario S. Santos filed his
protest on March 12, 1984; respondent Carlos Bandalan filed his
protest on February 27, 1984; and Antonio Josue on March 14,
1984, before PALEA COMELEC composed of the herein other
respondents.chanrobles.com.ph : virtual law library
Meanwhile, on March 6, 1984, respondent Mario S. Santos sent
petitioner Miguel J. Villaor a letter, the body of which reads
"We formally turnover to you PALEAs CBA proposals in the
ongoing PAL-PALEA CBA negotiations. Other pertinent records
are either accompanying these proposals or on file with the office.
"Other PALEA properties, including the Presidents car and
another vehicle, shall also be turned over to you at the appropriate
time.
"On the CBA negotiation, we would like to inform you that we are
filing a manifestation with the Director-Bureau of Labor Relations in
order to withdraw PALEAs declaration of deadlock. This will give

you and the other officers-elect a free hand to continue with the
PAL-PALEA CBA negotiation.
"As we have the common objective of protecting and promoting the
interests of our members, we wish yon all the luck and best of
everything for our members and our union."cralaw virtua1aw library
On April 17, 1984, petitioners filed their joint Comment/Answer to
the election protests cases, and two (2) basic issues were joined,
to wit:chanrob1es virtual 1aw library
1. Whether or not the more than 40 to 47 ballots cast by alleged
qualified PALEA members in Precincts 1, 4 and 4-A which were
segregated and invalidated actually resulted in the
disenfranchisement of said PALEA voters; and
2. Whether or not the qualified PALEA voters in the Cebu/Mactan
areas were deprived of their right to vote as a result of the sudden
change from the two day traditional election days in previous years
to just one day.
On the basis of the election protests and the Comment/Answer
thereto, respondent PALEA COMELEC members, in a letter dated
April 25, 1984, informed the parties that the ballot boxes in the
questioned precincts would be opened and their voters list
retrieved on April 25, 1984 at 10:00 in the morning.
On April 24, 1984, herein petitioners Miguel J. Villaor and Cecilio
V. Bautista, and Ernesto P. Galang filed a complaint/petition with
the Regional Office of the Ministry of Labor and Employment
(MOLE) against the PALEA COMELEC members, seeking their
disqualification from their positions as such on the ground of
alleged partiality for the protestants. The Regional Office
summoned the parties to appear before Med-Arbiter Renato D.
Parungao "on the 25th of April at 9:30 a.m."cralaw virtua1aw
library
On April 25, 1984, herein petitioners Miguel J. Villaor and Cecilio
V. Bautista, and respondent PALEA COMELEC member Edwardo
C. Flora appeared before the Med-Arbiter who issued an Order
"enjoining the respondents from opening the ballot boxes subject
of the controversy." On the same day, at 10:30 a.m., respondents
Octavio Pineda and Rafael Samson proceeded to open the ballot
boxes.chanroblesvirtualawlibrary
On April 27, 1984, Respondents, sitting en banc, resolved the
election protests, the dispositive portion of which reads
"WHEREFORE, AND IN VIEW OF ALL THE FOREGOING, THE
PALEA COMELEC HEREBY RESOLVES, AS IT HEREBY
RESOLVED.
"1. To set aside the proclamation dated February 25, 1984 of
Miguel J. Villaor as PALEA President, Cecilio V. Bautista as VicePresident and Ernesto P. Galang as Secretary;
"2. To count the segregated votes of qualified PALEA members, as
verified, in Precincts 1, 4 and 4-A. The counting shall be held on
May 4, 1984 at 1300 H at the PALEA COMELEC Office;
"3. To hold a special election on May 4, 1984 from 0500 H to 1700
H, in Cebu/Mactan to allow PALEA members, not able to vote on
February 20, 1984, to cast their votes for the positions of
President, Vice President and Secretary; and
"4. To proclaim the winning candidates for PALEA President, VicePresident and Secretary immediately after the election, counting

and canvassing of votes as hereinabove indicated.

SO RESOLVED."cralaw virtua1aw library
On May 3, 1984, petitioners filed a motion with the Med-Arbiter to
cite COMELEC members for contempt, to suspend them from
office, and to annul their Resolution of April 27, 1984 "for being
issued without jurisdiction." On the same day, a notice was issued
directing the parties and the petitioners counsel to appear for
hearing at 1:30 p.m. on May 3 and 4, 1984, On the May 3, 1984
scheduled hearing, none of the parties appeared, and on the May
4, 1984 scheduled hearing, only the petitioners counsel
appeared.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
In conformity with the Resolution of April 27, 1984, respondents
PALEA COMELEC members counted the segregated ballots in
precincts 1, 4 and 4-A on May 4, 1984 and likewise held on said
date a special election in Cebu/Mactan area. As a result of the
election of May 4, 1984, Mario S. Santos, Carlos V. Bandalan and
Ernesto Galang, were proclaimed on May 5, 1984 as the duly
elected President, Vice-President and Secretary respectively by
PALEA COMELEC.
On May 8, 1984, Petitioner Miguel J. Villaor filed a motion to annul
the May 4, 1984 election and the proclamation of the winners
contending that these were "premature" as no action had yet been
taken on the motion to declare the April 27, 1984 Resolution void.
On May 31, 1984, the respondents filed their omnibus answer to
the petition and the subsequent motions filed by the petitioners.
On the same date, May 31, 1984, herein respondents Mario S.
Santos and Carlos V. Bandalan filed their Notice To Admit
Intervention (Record, p. 128) in the case filed by Villaor, Et. Al.
against the PALEA COMELEC members. The intervention was
allowed when therein petitioners withdrew their opposition thereto.
The intervenors likewise manifested that they were adopting the
position paper filed by the respondents therein as their own.
On June 5, 1984, petitioners filed a motion for injunction alleging
that Mario S. Santos and "his cohorts" had inveigled the Board of
Directors to adopt a resolution including Santos in the union panel
and that as a result thereof, the PAL refused to continue
negotiating with the union.
On June 8, 1984, herein respondents Mario S. Santos and Carlos
V. Bandalan filed their answer in intervention alleging that they
were duly proclaimed officers of the union and the ones recognized
by the Board of Directors.
On the same day, June 8, 1984, the Med-Arbiter issued a
temporary restraining order "enjoining the respondents and the
intervenors to cease and desist from acting as PALEA President,
Vice-President and Secretary in order to maintain the status quo
prevailing prior to the filing of the instant petition." The Med-Arbiter
furthermore directed them to show cause why injunction should not
be granted in favor of the petitioners. The intervenors filed an
opposition on June 19, 1984.
On June 27, 1984, the Med-Arbiter issued a writ of preliminary
injunction (Ibid., pp. 116-117) "enjoining both the respondents and
intervenors to cease and desist from further committing the acts
complained of until the intra-union conflict and all its attendant
incidents are finally resolved." Moreover, the Med-Arbiter declared
that "Miguel J. Villaor remains as President of the Philippine
Airlines Employees Association (PALEA) unless ordered

otherwise."cralaw virtua1aw library

The Med-Arbiter, after hearing, issued an Order dated August 1,
1984, (Ibid, pp. 119-127) the dispositive portion of which reads
"WHEREFORE, premises considered the petition is hereby
granted and let an order issue, as it is hereby
issued:jgc:chanrobles.com.ph
"a) Declaring respondents Octavio Pineda, Rafael Samson and
Edwardo Flora as disqualified from their office as chairman and
members, respectively, of the PALEA Commission on Elections
and ordering them to desist from further performing their functions
as Comelec officers;
"b) Declaring as null and void Resolution dated 27 April 1984,
promulgated ex-parte in complete violation of Sec. 6, Article XIX of
the PALEA Constitution and By-laws;

Public respondent, in compliance with the June 16, 1985

Resolution of the First Division of this Court, filed his comment
(Ibid., pp. 327-374) on August 8, 1985.
The First Division of this Court, in a Resolution dated August 26,
1985 (Ibid., p. 374-a) resolved (a) to give due course to the
petition; and (b) to require the parties to submit simultaneous
memoranda within thirty (30) days from notice.
Petitioners filed their memorandum (Ibid., pp. 391-435) on October
28, 1985; Private respondents filed their memorandum (Ibid., pp.
438-464) on November 5, 1985; and public respondent, in a
"Motion" dated November 19, 1985 (Ibid., pp. 462-464),
respectfully moved that the comment he has filed be treated and
considered as memorandum. Said motion was granted by the First
Division of this Court in its Resolution of January 13, 1986 (Ibid., p.
476).
The sole issue in this case is

"c) Declaring the special election conducted by the respondents

(PALEA Comelec) on 4 May 1984 as invalid and that the results
thereof, proclaiming Mario S. Santos, Carlos V. Bandalan, as
President and Vice-President, respectively, as likewise declared
null and void;
"d) The writ of preliminary injunction dated 27 June 1984, enjoining
intervenors Mario S. Santos and Carlos V. Bandalan as President
and Vice-President, of PALEA, but, also from interfering with the
on-going CBA negotiations between the PAL Management and
PALEA and also from interfering in any manner with the operation
of the activities of PALEA, shall continue to remain binding and
effective until this intra-union conflict and its attendant aspects are
finally resolved and terminated, in which case the said injunctive
writ shall likewise be dissolved."cralaw virtua1aw library
Therein respondent PALEA COMELEC members and intervenors
Mario S. Santos and Carlos V. Bandalan appealed the said Order
of the Med-Arbiter to the Bureau of Labor Relations
(BLR).chanrobles.com : virtual law library
BLR Director Cresenciano B. Trajano, in a decision dated
November 14, 1984, (Ibid., pp. 33-42) set aside the Med-Arbiters
Orders of June 27, 1984 and August 1, 1984, and at the same time
dismissed the petition of Miguel J. Villaor and Cecilio V. Bautista
for lack of merit. Hence, the instant petition (Ibid., pp. 56-115).
The First Division of this Court, in a Resolution dated January 16,
1985, resolved without giving due course to the petition to require
the respondents to comment within ten (10) days from notice
thereof (Ibid., p. 203).
In compliance with the said Resolution, private respondents filed
their comment (Ibid., pp. 237-247) on March 18, 1985.
On March 28, 1985, petitioners filed their "Reply" to the comment
filed by the private respondents.
On March 29, 1985, the Solicitor General filed his comment. In the
same, the Solicitor General concluded that it is his opinion that
respondent BLR Director committed reversible error in setting
aside the Med-Arbiters Orders, and recommended that the instant
petition be given due course.
Petitioners, in compliance with the Resolution of the First Division
of this Court dated April 22, 1985 (Ibid., p. 273) filed on May 17,
1985 their "Reply" to the "Comment" filed by the Solicitor General.

Whether or not the decision of public respondent Bureau of Labor

Relations Director issued on November 14, 1984 was promulgated
with grave abuse of discretion amounting to lack of jurisdiction.
In his Decision of November 14, 1984 (p. 7, Ibid., p. 39), Public
respondent BLR Director Cresenciano B. Trajano, in reversing
Med-Arbiter Renato D. Parungos ruling disqualifying therein
respondents as members of the PALEA COMELEC, stressed that
the Philippine Constitution assures the right of workers to selforganization and this right implies the freedom of unions from
interference by employers and the government; that it includes the
right of unions to elect their officers in full freedom and guarantee
that the government refrains from any interference which would
restrict this right or impede its lawful exercise; and that "It shall be
unlawful for any person," Article 247 of the Labor Code states, "to
unduly interfere with employees and workers in their exercise of
the right to self-organization." With the foregoing as his premise,
he opined that the right of self-organization is impaired when the
government dissolves a union COMELEC and proceeds to resolve
an election protest pending before it.chanrobles.com:cralaw:red
In this connection, attention is invited to Article 226 of the Labor
Code, which reads
"ART. 226. Bureau of Labor Standards. The Bureau of Labor
Relations and the Labor Code relations divisions of the regional
offices of the Department of Labor (now the Ministry of Labor and
Employment) shall have original and exclusive authority to act, at
their own initiative or upon request of either or both parties, on all
inter-union and intra-union conflicts and all disputes arising from or
affecting labor-management relations in all workplaces whether
agricultural or non-agricultural, except those arising from the
implementation of collective bargaining agreements which shall be
the subject of grievance procedure and or voluntary
arbitration."cralaw virtua1aw library
as supplemented by Policy Instruction No. 6 relating to the
distribution of jurisdiction over labor cases "x

"3. The following cases are under the exclusive original jurisdiction
of the Med-Arbiter Section of the Regional Office:chanrob1es
virtual 1aw library
x

"b) Intra-union cases."cralaw virtua1aw library

From the aforequoted provisions, it is safe to conclude that the
freedom of the unions from interference from the government
presupposes that there is no inter-union or intra-union conflict. In
the instant case, there is no question that there is an intra-union
conflict.
Public respondent further opined that the COMELEC should have
been allowed to discharge its functions without prejudice to the
right of petitioners to apply for relief from the Board of Directors.
He averred that under the union constitution, the Board has the
power to remove or discipline, by three-fourths votes, any union
officer including the president himself or the members of the
COMELEC, and accordingly concluded that only after the remedy
failed could the petitioners be allowed to bring their case to the
Med-Arbiter. In short, the petitioners should first exhaust
administrative remedies before bringing their case to the MedArbiter.
Anent this opinion of public respondent, petitioners averred that
pursuant to Section 4 of Article VII of the PALEA Constitution and
By-Laws, which reads:jgc:chanrobles.com.ph
"Section 4 As a fact-finding body, the Chairman and members
of the Board of Inquiry (created by the President) shall have the
sole power to conduct investigation on involving an act specified
under Article 18, Section of this Constitution committed by any
officer, member of the board or members of the Association and
submit thereto reports and recommendations based on their
findings to the Board of Directors who shall have the sole power to
render decisions and impose penalty to howsoever is guilty."cralaw
virtua1aw library
The Board of Inquiry, created by the President, has the sole power
to investigate cases involving acts committed by any officer,
member of the Board or member of the Association that the power
of the Board to remove or discipline any union officer, including the
President himself or the COMELEC members cannot be exercised
until the Board of Inquiry submits its report and recommendation
based on their findings on the acts complained of after due
investigation. With this as a premise, petitioners claim that in their
Reply and Opposition dated September 14, 1984, in connection
with the three (3) consolidated cases before Med-Arbiter Napoleon
V. Fernando, Nos, NLR-LRD-M-6-185-184, NLR-LRD-M6-156-84
and NLR-LRD-N-6-204-84, they called attention to the fact that
they have exhausted administrative remedies provided in the
PALEA Charter On May 17, 1984, PALEA President Miguel J.
Villaor created the Special Board of Inquiry and appointed Rey
Taggueg, as chairman, Ildefonso Medina and Rodolfo de Guzman,
as members, however, the Board refused to approve the newly
created Special Board of Inquiry for fear that they themselves may
be the first to be subjected to investigation for the acts complained
of in Case No. NCR-LRD M-6-156-84. This claim of petitioners was
never denied by the private respondents.
Accordingly, there is no question that the Med-Arbiter rightly
exercised jurisdiction over the case.
Section 6 of Article XIX of the PALEA Constitution
provides:chanrobles.com.ph : virtual law library
"Sec. 6. In cases where a situation arises, whereby the losing
candidate does not concede to the result of the election, he may, if
he so desires, submit in writing, his protest to the Commission on

Election within 30 days after the proclamation of the winning

candidates and the Commission on Election, sitting en banc, shall
hear and decide such protest . . .
From the aforequoted provision, as opined by the Solicitor
General, "once a candidate concedes the election, he is precluded
from filing a protest." Private respondent Mario S. Santos, prior to
filing his election protest, in his letter of March 6, 1984 to herein
petitioner Miguel J. Villaor, had already unequivocably conceded
the position of president to the latter.
Likewise, from the aforequoted provision, it is mandatory for the
PALEA COMELEC to set the election protest for appropriate
hearing on the issues raised before it could finally resolve the
case. In the instant case, it is undisputed that the PALEA
COMELEC, without conducting any formal hearing on the issues
raised, on the basis of the pleadings of the parties, informed the
parties in a letter dated April 23, 1984 that the ballot boxes in the
questioned precincts would be opened and their voters list
retrieved on April 25, 1984 at 10:00 in the morning. Likewise, on
April 27, 1984, the PALEA COMELEC, without the benefit of formal
hearing resolved the election protest by setting aside the
proclamation dated February 25, 1984 of Miguel J. Villaor as
PALEA President, Cecilio V. Bautista as Vice-President, and
Ernesto P. Galang as Secretary; directing the canvassing of the
segregated ballots in precincts 1, 4, and 4-A; and directing the
holding of a special election in Cebu and Mactan on May 4, 1984.
Besides, it appears that respondents Octavio Pineda and Rafael
Samson intentionally disregarded the summons of Med-Arbiter
Renato D. Parungo to appear before him at 9:00 a.m. on April 25,
1984 so that they can carry out their plan to open the ballot boxes.
Please note that the herein petitioners alleged that Med-Arbiter
Parungo issued a restraining order enjoining the respondents, as
PALEA COMELEC members, to refrain from proceeding with their
plan to open the ballot boxes. Said restraining order was
personally served on respondent Edwardo Flora who immediately
called the PALEA office and after respondent Octavio Pineda was
on the phone, Flora informed him, in the presence of Med-Arbiter
Parungo, about the restraining order served upon them.
Notwithstanding said information, respondents Pineda and
Samson went ahead and opened the ballot boxes as planned. This
allegation of petitioners was never denied by the respondents.
Respondent PALEA COMELEC members, likewise disregarded
Med-Arbiter Renato D. Parungos notice for them to appear for
hearing at 1:30 p.m. on May 3 and 4, 1984.
The May 4, 1984 special election in Cebu and Mactan is without
factual and legal justification. As aptly observed by the Solicitor
General, the same was resorted to only to accommodate the
herein other private respondents
"There is absolutely no justification for calling the said May 4, 1984
election. There is no law which allows piece meal elections.
Obviously, such move was resorted to by the PALEA Comelec to
accommodate defeated candidates for president and vicepresident in the February 20, 1984 election, Mario and Carlos
Bandalan (respondent herein), and enable them to overcome the
winning margin of winning candidates therein, Villaor and Bautista
(herein petitioners), who won by only 145 and 44 votes,
respectively,
It is the contention of the protestants that a great number of
PALEA members were deprived of their right to vote because it
had been the tradition since 1969 to hold election in Cebu and
Mactan for two days; and that the holding of elections for only one
day was done without notice to all PALEA members in said station.

On the other hand, it is the contention of the petitioners that the

change was agreed upon by all the candidates concerned in a
conference held at SMCD Office, Nichols Field, on February 20,
1982. On said controversy, while public respondent found for the
protestants, the Solicitor General is for the petitioners. Be that as it
may, it is a fact that the PALEA COMELEC issued on February 15,
1984 a bulletin announcing that the elections in that area would be
only on February 20, 1984. Hence, it cannot be said that the voters
therein were not duly notified. In addition to this, worth mentioning
is the comment of the Solicitor General, which
reads:jgc:chanrobles.com.ph
". . . Besides, we do not see how these 103 members could have
failed to know about the one-day election. It was held within the
office premises, and, surely, they must have been told of such fact
by the other members who voted in the election. It would appear
that these 193 members simply did not bother to vote for one
reason or another. And we do not see the necessity of holding a
two-day election in said areas with only 500 members, and hold a
one-day election in Metro Manila area which has about 4,000
members. That it is the tradition to hold a two-day election in said
areas is not a valid argument. Tradition can always be overturned,
as what happened in the instant case."cralaw virtua1aw library
The holding of the May 4, 1984 special election, when its legality is
still pending determination by the Med-Arbiter, therefore, further
shows the partiality of the respondent PALEA COMELEC
members.
WHEREFORE, the assailed decision of respondent BLR Director
is hereby SET ASIDE and the Orders of June 27, 1984 and August
1, 1984 of Med-Arbiter Renato D. Parungo are hereby REVIVED.
SO ORDERED.
Feria, Fernan, Alampay and Gutierrez, Jr., JJ., concur.

G.R. Nos. 76579-82 August 31, 1988

BENEDICTO RODRIGUEZ, etc., petitioner,
vs.
HON. DIRECTOR, BUREAU OF LABOR RELATIONS, CARLOS
GALVADORES and LIVI MARQUEZ,respondents.
G.R. No. 80504 August 31, 1988
REY C. SUMANGIL, VIRGILIO V. HERNANDEZ, et
al., petitioners,
vs.
MANOLITO PARAN, ROSALINDA DE GUZMAN, FREE
TELEPHONE WORKERS UNION, PHILIPPINE LONG
DISTANCE TELEPHONE CO., and HON. PURA FERRERCALLEJA, respondents.
Conrado Leao for petitioner in G.R No. 76579-82 and private
respondent in G.R. No. 80504.
King Adorio Law Offices for petitioners in G.R. No. L-80504.
Potenciano Flores for private respondent Marquez in G.R. No.
76579-82.
The Solicitor General for public respondent.
NARVASA, J.:
The above entitled special civil actions of certiorari were separately
instituted but have been consolidated because they involve
disputes among employees of the Philippines Long Distance
Telephone Company (PLDT), who are members of the same
union, the Free Telephone Workers Union (FTWU). The disputes
concern the validity of the general elections for union officers in
1986, and the increase of union dues adopted and put into effect
by the incumbent officers subsequent to said elections.
G.R. Nos. 76579-82: Controversy Respecting Elections of Officers
Assailed by the petitioners in G.R. No. 76579-82 are (1) the
decision dated October 10, 1986 of the Director of Labor Relations
(BLR) annulling the elections of officers of the labor union above
mentioned, FTWU, and (2) the resolution dated October 30, 1986,
denying their motion for reconsideration of the decision.
The union's by-laws provide for the election of officers every three
(3) years, in the month of July. Pursuant thereto, the union's
Legislative Council set the provincial elections for its officers on
July 14 to 18, 1986, and those for Metro Manila on July 25, 1986.
The same Council also quite drastically raised the fees for the filing
of certificates of candidates which had therefore ranged from
P75.00 to P100.00. The filing fee for each candidate for president
of the labor organization was increased to P3,000; that for each
candidate for vice-president, secretary general, treasurer and
auditor, to P2,000.00; and that for assistant secretary, assistant
treasurer and assistant auditor, to P1,000.00 each.
Bureau of Labor Relations Cases: Nos. LRD-M-7-503-86 & LRDM-7-504-86

Although the increased fees were paid in due course by the

candidates, no less than two complaints were filed with the Bureau
of Labor Relations for their invalidation as excessive, prohibitive
and arbitrary. One, docketed asCase No. LRD-M7-503-86, was
presented by Rey Sumangil, a candidate for president, and the
members of his slate. The other, Case No. LRD-M- 7-504-86, was
filed by Carlos Galvadores, also a presidential candidate, and his
group. Impleaded as respondents in both complaints were
Benedicto Rodriguez, the Chairman of the Commission on
Elections of the union, and the incumbent union officers, headed
by the president, Manolito Paran. Acting on the complaints, the
Med-Arbiter issued on July 8, 1986 a restraining order against the
enforcement of the new rates of fees.
Other BLR Cases: Nos. LRD-M-7-557-86 and LRD-M-7-55986
It appears that notwithstanding the cases questioning the
candidates' fees, the elections for the provinces of Visayas and
Mindanao and certain areas of Luzon were nevertheless held on
July 21 and 22, 1986, which are dates different from those
specified by the Legislative Council (i.e., July 14 to 18, 1986). The
validity of the elections was very shortly challenged on the ground
of lack of (1) due notice and (2) adequate ground rules. Carlos
Galvadores and his fellow candidates filed on July 22, 1986 a
petition with the BLR, docketed as Case No. LRD-M-7557-86,
praying that the Union's COMELEC be directed to promulgate
ground rules for the conduct of the provincial elections. On the day
following, Livi Marquez, a candidate for vice-president, together
with other candidates in his ticket, filed another petition against the
same Union COMELEC and Manolito Paran, the union president
docketed as Case No. LRD-M-7-559-86 seeking to restrain
the holding of the elections scheduled on July 25, 1986 in the
Metro Manila are until (1) ground rules therefor had been
formulated and made known to all members of the labor
organization, and (2) the issue of the filing fees had been finally
decided. In connection with these complaints, a temporary
restraining order was issued on July 23, 1986 prohibiting the
holding of elections on July 25, 1986.
The restraining order notwithstanding, the Union COMELEC
proceeded with the general elections in all the PLDT branches in
Metro Manila on July 25, 1986. It then reported that as of July 15,
1986 the number of qualified voters was 9,429 of which 6,903
actually voted, the percentage of turn-out being 73%, and that
those who obtained the highest number of votes for the various
elective positions were:
Manolito Paran President 3,030 votes Eduardo de Leon 1st VicePresident 2,185 votes Efren de Lima 2nd Vice-President 2,806
votes Roger Rubio Secretary General 2,462 votes Virgilio Tulay
Asst. Sec. General 2,924 votes Rosalinda de Guzman Treasurer
2,659 votes Filmore Dalisay Asst. Treasurer 2,525 votes Damiana
Yalung Auditor 2,942 votes Jaime Pineda Asst. Auditor 3,082
votes
Livi Marquez and Carlos Galvadores, and their respective groups,
forthwith filed separate motions praying that the COMELEC be
declared guilty of contempt for defying the temporary restraining
order, and for the nullification not only of the Metro Manila
elections of July 25, 1986 but also the provincial elections of July
21 and 22, 1986.
The four (4) cases were jointly decided by Med-Arbiter Rasidali
Abdullah on August 28,1986. His judgment denied the petitions to
nullify the elections, as well as the motion for contempt, but

invalidated the increase in rates of filing fees for certificates of

candidacies. The judgment accorded credence to the Union
COMELEC's averment that it had not received the restraining order
on time. It took account, too, of the fact that the turn-out of voters
was 73%, much higher than the turn-out of 62% to 63% in prior
elections, which fact, in the Med-Arbiter's view was a clear
manifestation of the union members' desire to go ahead with the
elections and express their will therein.

elections, the 2,056 qualified voters, if they

were able to cast their votes, could have
drastically altered the results of the elections.
But more important, the disenfranchisement of
the remaining 27% qualified voters is a
curtailment of Trade Unionism implicitly
ordained the worker's right to self-organization
explicitly protected by the Constitution.

This judgment was however overturned by the Officer-in-Charge of

Labor Relations, on appeal seasonably taken. The OIC's decision,
dated October 10, 1986 nullified the general elections in the
provinces and Metro Manila on the ground of (1) lack of notice to
the candidates and voters, (2) failure to disseminate the election
ground rules to all parties concerned, and (3) disregard of the
temporary restraining order of the Med-Arbiter. The decision
stressed the following points: 1

xxx xxx xxx

The undue haste with which the questioned

general elections were held raises doubts as to
its validity. In its desire to conduct the elections
as scheduled, the respondents unwittingly
disregarded mandatory procedural
requirements. The respondents' pretensions
that the appellants were duly furnished with the
ground rules/guidelines of the general
elections and that the same were properly
disseminated to the qualified voters of the
union are not supported by the records.
xxx xxx xxx
Moreover, the Union's Comelec did not follow
the schedule of election outlined in the
guidelines. Specifically, the guidelines fixed the
elections in Visayas-Mindanao on July 14, 16
and 18, 1986, in Northern Luzon, on July 16,
17, 18 and 21, 1986 and in Southern Luzon on
July 16, 17 and 18, 1986 (records, pp. 67-70).
Surprisingly, however, the Union's Comelec
conducted the elections in Northern and
Southern Luzon on July 21, and 22, 1986 and
in Visayas Mindanao on July 25, 1986 without
proper notice to the appellants.
Accordingly, the unwarranted failure of the
Union's Comelec to duly furnish the appellants
the guidelines and properly disseminate the
same to the voters, and the holding of the
elections not in accordance with the schedule
set by the guidelines and ill open defiance of
the July 23, 1986 Restraining Order,
precipitated an uncalled for confusion among
the appellants' supporters andunduly
prevented them from adopting the appropriate
electoral safeguards to protect their interests.
Under the circumstances, this Office is
constrained to invalidate the general elections
held on July 21, 22 and 25, 1986 and declare
the results thereof null and void.
Furthermore, only 6,903 out of the 9,426
qualified voters trooped to the polls during the
July 21, 22 and 25, 1986 general elections.
Considering the closeness of the result of the

The submission of the respondents that they

did not receive a copy of the injunctive order is
completely rebuffed by the records. It appears
that the same was received and signed by a
certain Cenidoza for respondent Manolito
Paran at 4:30 P.M. of July 23, 1986 and by
respondent Benedicto Rodriguez himself, also
on July 23, 1986 at 4:30 P.M. In the case of
Manolitao Paran, the restraining order in
question was served at his office/postal
address at Rm. 310 Regina Bldg., Escolta,
Manila.
It is this decision of the BLR Officer-in-Charge which is the subject
of the certiorari actions filed in this Court by Benedicto Rodriguez,
the chairman of the Union COMELEC, and docketed as G.R. Nos.
76579-82. He claims the decision was rendered with grave abuse
of discretion considering that (a) the Med-Arbiter had found no
fraud or irregularity in the elections; (b) the election was
participated in by more than 73% of the entire union membership;
and (e) the petition for nullity was not supported by 30% of the
general membership.
G.R. No. 80504: Controversy Respecting Labor-Union Dues
The terms of office of the old officers (Manolito Paran, et al.) ended
in August, 1986. However, the new set of officers (headed by the
same Manolito Paran) apparently could not assume office under a
new term because of the proceedings assailing the validity of the
elections pending before the Bureau of Labor Relations. What
happened was that the old officers continued to exercise the
functions of their respective offices under the leadership of
Manolito Paran.
On January 17, 1987, the Legislative Council of the union passed
a resolution which generated another controversy. That resolution
increased the amount of the union dues from P21.00 to P50.00 a
month. It was then presented to the general membership for
ratification at a referendum called for the purpose. Rey Sumangil
and his followers objected to the holding of the referendum. When
their objection went unheeded, they and their supporters, all
together numbering 829 or so, boycotted the referendum and
formally reiterated their protest against it. Subsequently the union
officers announced that the referendum has resulted in a
ratification of the increased union dues.
On March 1, 1987 Manolito Paran requested the PLDT to deduct
the union dues at the new, increased rates, from the salaries of all
union members and dispense with their individual written
authorizations therefor. PLDT acceded to the request and effected
the check-off of the increased dues for the payroll period from
March 1 to March 15, 1987.
BLR Case No. NCR-OD-M- 7-3-206-87

Once again Rey Sumangil and his followers hide themselves off to
the Bureau of Labor Relations. They filed a petition on March 26,
1987 challenging the resolution for the increase in union dues,
docketed as BLR Case No. NCR-OD-M-73-206-87. They
contended that since the terms of the members of the Legislative
Council who approved the resolution had already expired in
August, 1986, and their reelection had been nullified by the
Bureau, they had no authority to act as members of the council;
consequently, it could not be said that the resolution for the
increase of union dues had been approved by 2/3 vote of the
Council members, as provided by the union constitution and by
laws; hence, the resolution was void. They further contended that
there had been no valid ratification of the resolution because the
plebiscite had been "rigged,"
Once again Rey Sumangil and his group were unsuccessful in
proceedings at the level of the Med-Arbiter. The latter denied their
petition on the ground of lack of support of at least 30% of all
members of the union, citing Article 242 of the Labor Code which
reads as follows:
Art. 242. Rights and conditions of
membership in a labor organization. ... Any
violation of the above rights and conditions of
membership shall be a ground for cancellation
of union registration and expulsion of officer
from office, whichever is appropriate. At least
thirty percent (30%) of all the members of a
union or any member or members specially
concerned may report such violation to the
Bureau. The Bureau shall have the power to
hear and decide any reported violation to mete
the appropriate penalty.
Again Sumangil and his group went up on appeal to the Director of
Labor Relations, before whom they raised the issue of whether or
not the petition in fact had the support of at least 30% of the
members, and said 30%-support was indeed a condition sine qua
non for acquisition by the Med-Arbiters (in the Labor Relations
Division in a Regional Office of the MOLE) of jurisdiction over the
case. Again Sumangil and his followers were successful in their
appeal.
On July 1, 1987 the Director of Labor Relations rendered a
decision reversing that of the Med-Arbiter. The Director ordered
the cessation of the collection of the twenty-nine peso increase
and the return of the amounts already collected. In the first place,
according to her, the petition was supported by 6,022 signatures, a
number comprising more than 30% of the total membership of the
union (10,413). In the second place, the Director ruled, even
assuming the contrary, the lack of 30%-support will not preclude
the BLR from taking cognizance of the petition where there is a
clear violation of the rights and conditions of union membership
because Article 226 of the Labor Code, expressly confers on it the
authority to act on all intra-union and inter-union conflicts and
grievances affecting labor and management relations, at the
instance of either or both parties. The provision cited reads as
follows:
Art. 226. Bureau of Labor Relations. The
Bureau of Labor Relations and the Labor
Relations division in the Regional Offices of the
Department of Labor shall have original and
exclusive authority to act, at their own initiative
or upon request of either or both parties, on all

inter-union and intra-union conflicts, and all

disputes, grievances or problems arising from
or affecting labor management
relations ...
As regards Article 242 of the Labor Code, relied upon by the MedArbiter, the Director expressed the view that the 30% support
therein provided is not mandatory, and is not a condition precedent
to the valid presentation of a grievance before the Bureau of Labor
Relations. The Director ruled, finally, that Sumangil and the other
union members had a valid grievance calling for redress, since the
record disclosed no compliance with the requirement that the
resolution for the increase of union dues be passed by at least 2/3
vote of the members of the Legislative Council and be ratified by a
majority of the entire membership at a plebiscite.
But not long afterwards, the Director reversed herself.
The Manggagawa sa Komunikasyon sa Pilipinas (MKP) with
which Paran's Union, the FTWU, is affiliated, intervened in the
case and moved for reconsideration of her decision. By resolution
dated October 1, 1987, the Director set aside her decision of July
1, 1987 and entered a new one dismissing the petition of Sumangil
and company, in effect affirming the Med-Arbiter's order. The
Director opined that the intervenor (MKP) was correct in its
contention that there was no 30%-membership support for the
petition, since only 829 members had signed their support therefor,
as correctly found by the Med-Arbiter, and because of this, the
BLR never acquired jurisdiction over the case. According to her: 2
The rationale for such requirement is not
difficult to discern. It is to make certain that
there is a primafacie case against prospective
respondents whether it be the union or its
officers and thus forestall nuisance or
harassment petitions/complaints. The
requirement was intended to shield the union
from destabilization and paralyzation coming
from adventurous and ambitious members or
non-members engaged in union politics under
the guise of working for the union welfare.
... As found out by the Med-Arbiter in the Office
of origin all signatures except that of 829 were
obtained without the knowledge of the
signatories. At this point we cannot permit 829
members to "rock the boat." so to speak, of a
union which has at present ten thousand four
hundred and thirteen (10,413) passengers.
In an effort to set aside this reversing resolution of the Labor
Relations Director, Rey Sumangil and his group have come to this
Court via the instant special civil action of certiorari. In their petition
they insist that the support of 30% of the union membership is not
a jurisdictional requirement for the ventilation of their grievance
before the BLR-1 and assuming the contrary, they have proven
that 3,501 workers had in fact joined in the petition, constituting
33% of the total membership. They also emphasize the validity of
their grievance, drawing attention to the absence of the requisite
2/3 vote essential for validity of any resolution increasing the rates
of union dues, and the doubtful result of the referendum at which
the resolution had allegedly been ratified.
Three issues are thus presented to the Court in these cases. The
first involves the validity of the 1986 general elections for union
officers; the second, whether or not 30%-membership support is

indispensable for acquisition of jurisdiction by the Bureau of Labor

Relations of a complaint for alleged violation of rights and
conditions of union members; and third, the validity of the increase
in union dues.
The General Elections of 1986
A review of the record fails to disclose any grave abuse of
discretion tainting the adjudgment of respondent Director of Labor
Relations that the general elections for union officers held in 1986
were attended by grave irregularities, rendering the elections
invalid. That finding must thus be sustained.
The dates for provincial elections were set for July 14 to 18, 1986.
But they were in fact held on July 21 to 22, 1986, without prior
notice to all voting members, and without ground rules duly
prescribed therefor. The elections in Metro Manila were conducted
under no better circumstances. It was held on July 25, 1986 in
disregard and in defiance of the temporary restraining order
properly issued by the Med-Arbiter on July 23, 1986, notice of
which restraining order had been regularly served on the same
date, as the proofs adequately show, on both the Union, President,
Manolito Paran, and the Chairman of the Union COMELEC,
Benedicto Rodriguez. Moreover, as in the case of the provincial
elections, there were no ground rules or guidelines set for the
Metro Manila elections. Undue haste, lack of adequate safeguards
to ensure integrity of the voting, and absence of notice of the dates
of balloting, thus attended the elections in the provinces and in
Metro Manila. They cannot but render the proceedings void.
The claim that there had been a record-breaking voter turnout of
73%, even if true, cannot purge the elections of their grave
infirmities. The elections were closely contested. For example, in
the presidential contest, Manolito Paran appeared to have won
over Rey Sumangil by only 803 votes, and in the vice-presidential
race, Eduardo de Leon won over Dominador Munar by only 204
votes. These results would obviously have been affected by the
ballots of the 2,056 voters who had been unable to cast their votes
because of lack of notice of actual dates of the elections.
It goes without saying that free and honest elections are
indispensable to the enjoyment by employees and workers of their
constitutionally protected right to self-organization. That right
"would be diluted if in the choice of the officials to govern ... (union)
affairs, the election is not fairly and honestly conducted," and the
labor officers concerned and the courts have the duty "to see to it
that no abuse is committed by any official of a labor organization in
the conduct of its affairs. 3
The Matter of 30%-Support for Complaints for Violations of Union
Membership Rights
The respondent Director's ruling, however, that the assent of 30%
of the union membership, mentioned in Article 242 of the Labor
Code, was mandatory and essential to the filing of a complaint for
any violation of rights and conditions of membership in a labor
organization (such as the arbitrary and oppressive increase of
union dues here complained of), cannot be affirmed and will be
reversed. The very article relied upon militates against the
proposition. It states that a report of a violation of rights and
conditions of membership in a labor organization maybe made by
"(a)t least thirty percent (30%) of all the members of a union or any
member or members specially concerned." 4 The use of the
permissive "may" in the provision at once negates the notion that
the assent of 30% of all the members is mandatory. More decisive

is the fact that the provision expressly declares that the report may
be made, alternatively by "any member or members specially
concerned." And further confirmation that the assent of 30% of the
union members is not a factor in the acquisition of jurisdiction by
the Bureau of Labor Relations is furnished by Article 226 of the
same Labor Code, which grants original and exclusive jurisdiction
to the Bureau, and the Labor Relations Division in the Regional
Offices of the Department of Labor, over "all inter-union and intraunion conflicts, and all disputes, grievances or problems arising
from or affecting labor management relations," making no
reference whatsoever to any such 30 % support requirement.
Indeed, the officials mentioned are given the power to act "on all
inter-union and intra-union conflicts (1) "upon request of either or
both parties" as well as (2) "at their own initiative." There can thus
be no question about the capacity of Rey Sumangil and his group
of more than eight hundred, to report and seek redress in an intraunion conflict involving a matter they are specially concerned, i.e.,
the rates of union dues being imposed on them.
These considerations apply equally well to controversies over
elections. In the cases at bar, the petition to nullify the 1986 union
elections could not be deemed defective because it did not have
the assent of 30% of the union membership. The petition clearly
involved an intra-union conflict one directly affecting the right of
suffrage of more than 800 union members and the integrity of the
union elections over which, as the law explicitly provides,
jurisdiction could be assumed by the Labor Relations Director or
the Med-Arbiters "at their own initiative" or "upon request of either
or both parties."
The assumption of jurisdiction by the Med-Arbiter and the Labor
Relations Director over the cases at bar was entirely proper. It was
in fact their duty to do so, given the facts presented to them. So
this Court has had occasion to rule: 5
The labor officials should not hesitate to
enforce strictly the law and regulations
governing trade unions even if that course of
action would curtail the so-called union
autonomy and freedom from government
interference.
For the protection of union members and in
order that the affairs of the union may be
administered honestly, labor officials should be
vigilant and watchful in monitoring and
checking the administration of union affairs.
Laxity, permissiveness, neglect and apathy in
supervising and regulating the activities of
union officials would result in corruption and
oppression. Internal safeguards within the
union can easily be ignored or swept aside by
abusive, arrogant and unscrupulous union
officials to the prejudice of the members.
It is necessary and desirable that the Bureau of
Labor Relations and the Ministry of Labor
should exercise close and constant supervision
over labor unions, particularly the handling of
their funds, so as to forestall abuses and
penalties.
As regards the final issue concerning the increase of union dues,
the respondent Director found that the resolution of the union's

Legislative Council to this effect 6 does not bear the signature of at

least two-thirds (2/3) of the members of the Council, contrary to the
requirement of the union constitution and by-laws; and that proof is
wanting of proper ratification of the resolution by a majority of the
general union membership at a plebiscite called and conducted for
that purpose, again in violation of the constitution and by-laws. The
resolution increasing the union dues must therefore be struck
down, as illegal and void, arbitrary and oppressive. The collection
of union dues at the increased rates must be discontinued; and the
dues thus far improperly collected must be refunded to the union
members or held in trust for disposition by them in accordance with
their charter and rules, in line with this Court's ruling in a parallel
situation, 7 viz:
... All amounts already collected must be
credited accordingly in favor of the respective
members either for their future legal dues or
other assessments or even delinquencies, if
any. And if this arrangement regarding the
actual refund of what might be excessive dues
is not acceptable to the majority of the
members, the matter may be decided in a
general meeting called for the purpose.
WHEREFORE, in G.R. Nos. 76579-82, the petition for certiorari is
DISMISSED, no grave abuse of discretion or other serious error
having been shown in the decision of the respondent Director of
Labor Relations, said decision ordering the holding of new
elections for officers of the Free Telephone Worker Union being
on the contrary in accord with the facts and the law, but in the G.R.
No. 80504, the petition for certiorari is granted, the challenged
order dated October 1, 1987 is set aside, and the decision of July
1, 1987 of the Labor Relations Director reinstated, modified only as
to the treatment of the excess collections which shall be disposed
of in the manner herein indicated. Costs against petitioner in G.R.
Nos. 7657982 and private respondents (except the PLDT) in G.R.
No. 80504.
Cruz, Gancayco, Grio Aquino and Medialdea, JJ., concur.

[G.R. No. 108951. March 7, 2000]

JESUS B. DIAMONON, petitioner, vs. DEPARTMENT OF
LABOR AND EMPLOYMENT; HON. BIENVENIDO E.
LAGUESMA, as the undersecretary of Labor; MANASES[1] T.
CRUZ, in his capacity as the Med-Arbiter; ATTY. ZOILO DE LA
CRUZ, JR., and MEMBERS OF THE NATIONAL CONGRESS OF
UNIONS IN THE SUGAR INDUSTRY OF THE PHILIPPINES
(NACUSIP) and PHILIPPINE AGRICULTURAL COMMERCIAL
AND INDUSTRIAL WORLERS UNION
(PACIWU),respondents. Misedp
DECISION
DE LEON, JR., J.:
Before us is a petition for certiorari seeking to annul the twin
Orders dated December 29, 1992[2] and January 25, 1993[3] of
public respondent Bienvenido E. Laguesma, acting then as
Undersecretary, now the secretary, of the Department of Labor
and Employment (DOLE), in his affirmance of the dismissal[4] by
the Med-Arbiter of the complaint for unauthorized and illegal
disbursement of union funds filed by petitioner Jesus B. Diamonon
against private respondent Atty. Zoilo V. de la Cruz and Sofia P.
Mana-ay.
The facts of the case are the following:
Petitioner served as the National Executive Vice President of the
National Congress of Unions in the Sugar Industry of the
Philippines (NACUSIP) and Vice President for Luzon of the
Philippine Agricultural, Commercial and Industrial Workers Union
(PACIWU). Misoedp

In view of the pendency of their appeal in the FIRST case, private

respondents filed a Motion to Dismiss[13] dated October 21, 1991 in
the SECOND case.
In an Order[14] dated November 5, 1991, the Med-Arbiter dismissed
the SECOND case on the ground of lack of personality of petitioner
to file the complaint in view of his removal from the offices he held.
On December 27, 1991, public respondent Laguesma, acting as
the then Undersecretary of DOLE, decided on the FIRST case on
appeal and issued a Resolution[15] which affirmed the assailed
Order dated August 2, 1991 declaring as null and void petitioners
removal from the positions he held. Jjsc
In view of the adverse Order dated November 5, 1991 dismissing
the SECOND case, petitioner appealed[16] to the public respondent
DOLE. Public respondent Laguesma, issued the assailed
Order[17] dated December 29, 1992, holding that petitioners failure
to show in his complaint that the administrative remedies provided
for in the constitution and by-laws of both unions, have been
exhausted or such remedies are not available, was fatal to
petitioners cause.[18] Resultantly, he affirmed[19] the dismissal of
the complaint.
Petitioner sought[20] reconsideration of the Order dated December
29, 1992. However, public respondent in his Order[21] dated
January 25, 1993 denied petitioners motion for reconsideration.
Hence, this petition.
Petitioner anchors his petition on two (2) grounds, to wit: Scjj
"I

In a letter dated March 23, 1991, petitioner learned[5] of his removal

from the positions he held in both unions in a resolution approved
during a meeting[6] of the National Executive Boards of both
unions.[7]
On April 22, 1991, petitioner sought[8] reconsideration of the
resolution on his removal. At the same time, he initiated a
complaint[9] (hereafter referred to as FIRST) before the DOLE
against the National President of NACUSIP and PACIWU, private
respondent Atty. Zoilo V. de la Cruz, Jr., and the members of the
National Executive Boards of NACUSIP and PACIWU questioning
the validity of his removal from the positions he held in the two
unions.
While the FIRST case was pending with the Med-Arbiter, petitioner
filed on May 16, 1991 a second complaint[10] (hereafter referred to
as SECOND) against private respondent Atty. Zoilo V. de la Cruz,
Jr., and the National Treasurer of NACUSIP and PACIWU, Sofia P.
Mana-ay. He accused them of three (3) offenses, namely: (a)
wanton violation of the Constitution and By-Laws of both
organizations, NACUSIP and PACIWU; (b) unauthorized and
illegal disbursement of union funds of both organizations; (c) and
abuse of authority as national officers of both
organizations. Edpmis
On August 2, 1991, an Order[11] was issued in the FIRST case
declaring that petitioners removal from the positions he held is null
and void. Private respondents appealed[12] this decision to the
public respondent DOLE.

PUBLIC RESPONDENT HONORABLE

BIENVENIDO V. LAGUESMA HAS ACTED
WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT DISMISS [sic] THE
APPEAL INTERPOSED FROM THE ORDER
OF THE MED ARBITER MENESIS [sic] T.
CRUZ, AND WHEN IT DENIED THE MOTION
FOR RECONSIDERATION ON FLIMSY
GROUNDS.
II.
THE CASE OF THE PETITIONER IS QUITE
MERITORIOUS AND TO DISREGARD THE
aSAME WOULD [sic] TANTAMOUNT TO
WILLFULLY [sic] CLOSING OUR EYES TO
AVOID SEEING AND REALIZING THE
NAKED TRUTH."[22]
Petitioner emphatically stresses that the only issue on appeal
before the DOLE was petitioners alleged lack of personality to file
the complaint. When public respondent "switched" the ground for
dismissal of the complaint from "lack of personality of the
[petitioner] to file the complaint" to "non-exhaustion of
administrative remedies," he staunchly claims that the latter
committed grave abuse of discretion amounting to lack or excess
of jurisdiction.[23] For, in doing so, the challenged orders "went
outside the issues and purported to adjudicate something upon
which the parties were not heard."[24]

The petition lacks merit. Sjcj

Generally, an appellate court may only pass upon errors
assigned.[25] However, this rule is not without exceptions.[26] In the
following instances,[27] the Supreme Court ruled that an appellate
court is accorded a broad discretionary power to waive the lack of
assignment of errors and consider errors not assigned:
(a) Grounds not assigned as errors but
affecting the jurisdiction of the court over the
subject matter;
(b) Matters not assigned as errors on appeal
but are evidently plain or clerical errors within
contemplation of law;
(c) Matters not assigned as errors on appeal
but consideration of which is necessary in
arriving at a just decision and complete
resolution of the case or to serve the interests
of a justice or to avoid dispensing piecemeal
justice;
(d) Matters not specifically assigned as errors
on appeal but raised in the trial court and are
matters of record having some bearing on the
issue submitted which the parties failed to
raise or which the lower court
ignored; Supreme
(e) Matters not assigned as errors on appeal
but closely related to an error assigned;
(f) Matters not assigned as errors on appeal
but upon which the determination of a question
properly assigned, is dependent.
There is no reason why this rule should not apply to administrative
bodies as well, like the case before us, for the instant controversy
falls squarely under the exceptions to the general rule.
In the instant case, not only did petitioner fail to comply with
Section 2, Rule VIII, Book V of the Implementing Rules and
Regulations of the Labor Code as amended[28] but also the record
reveals that neither did he exhaust the remedies[29] set forth by the
Constitution and by-laws of both unions. In the National
Convention of PACIWU and NACUSIP held on August 10 and 11,
1991, respectively, nothing was heard of petitioners complaint
against private respondents on the latters alleged unauthorized
and illegal disbursement of union funds. In fact, what the National
Convention resolved was to approve and adopt the resolution of
the National Executive Board removing petitioner from the
positions he held.[30] His failure to seek recourse before the
National convention on his complaint against private respondents
taints his action with prematurity. Court
When the Constitution and by-laws of both unions dictated the
remedy for intra-union dispute, such as petitioners complaint
against private respondents for unauthorized or illegal
disbursement of unions funds, this should be resorted to before
recourse can be made to the appropriate administrative or judicial
body, not only to give the grievance machinery or appeals body of
the union the opportunity to decide the matter by itself, but also to
prevent unnecessary and premature resort to administrative or

judicial bodies. Thus, a party with an administrative remedy must

not merely initiate the prescribed administrative procedure to
obtain relief, but also pursue it to its appropriate conclusion before
seeking judicial intervention.[31]This rule clearly applies to the
instant case. The underlying principle of the rule on exhaustion of
administrative remedies rests on the presumption that when the
administrative body, or grievance machinery, as in this case, is
afforded a chance to pass upon the matter, it will decide the same
correctly.[32] Petitioners premature invocation of public
respondents intervention is fatal to his cause of action. [33]Jlexj
Evidently, when petitioner brought before the DOLE his complaint
charging private respondents with unauthorized and illegal
disbursement of union funds, he overlooked or deliberately ignored
the fact that the same is clearly dismissible for non-exhaustion of
administrative remedies. Thus, public respondent Bienvenido E.
Laguesma, in dismissing petitioners complaint, committed no
grave abuse of discretion.
WHEREFORE, the petition is hereby DISMISSED, and the twin
Orders dated December 29, 1992 and January 25, 1993 by public
respondent Bienvenido E. Laguesma affirming dismissal of the
complaint dated May 15, 1991 filed by petitioner against private
respondents are AFFIRMED. No costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, and Buena, JJ., concur. Lexjuris
Quisumbing, J., no part, close relation to the party.

G.R. No. L-25291 January 30, 1971

THE INSULAR LIFE ASSURANCE CO., LTD., EMPLOYEES
ASSOCIATION-NATU, FGU INSURANCE GROUP WORKERS
and EMPLOYEES ASSOCIATION-NATU, and INSULAR LIFE
BUILDING EMPLOYEES ASSOCIATION-NATU, petitioners,
vs.
THE INSULAR LIFE ASSURANCE CO., LTD., FGU INSURANCE
GROUP, JOSE M. OLBES and COURT OF INDUSTRIAL
RELATIONS, respondents.
Lacsina, Lontok and Perez and Luis F. Aquino for petitioners.
Francisco de los Reyes for respondent Court of Industrial
Relations.
Araneta, Mendoza and Papa for other respondents.
CASTRO, J.:
Appeal, by certiorari to review a decision and a resolution en
banc of the Court of Industrial Relations dated August 17, 1965
and October 20, 1965, respectively, in Case 1698-ULP.
The Insular Life Assurance Co., Ltd., Employees AssociationNATU, FGU Insurance Group Workers & Employees AssociationNATU, and Insular Life Building Employees Association-NATU
(hereinafter referred to as the Unions), while still members of the
Federation of Free Workers (FFW), entered into separate
collective bargaining agreements with the Insular Life Assurance
Co., Ltd. and the FGU Insurance Group (hereinafter referred to as
the Companies).
Two of the lawyers of the Unions then were Felipe Enaje and
Ramon Garcia; the latter was formerly the secretary-treasurer of
the FFW and acting president of the Insular Life/FGU unions and
the Insular Life Building Employees Association. Garcia, as such
acting president, in a circular issued in his name and signed by
him, tried to dissuade the members of the Unions from disaffiliating
with the FFW and joining the National Association of Trade Unions
(NATU), to no avail.
Enaje and Garcia soon left the FFW and secured employment with
the Anti-Dummy Board of the Department of Justice. Thereafter,
the Companies hired Garcia in the latter part of 1956 as assistant
corporate secretary and legal assistant in their Legal Department,
and he was soon receiving P900 a month, or P600 more than he
was receiving from the FFW. Enaje was hired on or about
February 19, 1957 as personnel manager of the Companies, and
was likewise made chairman of the negotiating panel for the
Companies in the collective bargaining with the Unions.
In a letter dated September 16, 1957, the Unions jointly submitted
proposals to the Companies for a modified renewal of their
respective collective bargaining contracts which were then due to
expire on September 30, 1957. The parties mutually agreed and to
make whatever benefits could be agreed upon retroactively
effective October 1, 1957.
Thereafter, in the months of September and October 1957
negotiations were conducted on the Union's proposals, but these
were snagged by a deadlock on the issue of union shop, as a
result of which the Unions filed on January 27, 1958 a notice of
strike for "deadlock on collective bargaining." Several conciliation

conferences were held under the auspices of the Department of

Labor wherein the conciliators urged the Companies to make reply
to the Unions' proposals en toto so that the said Unions might
consider the feasibility of dropping their demand for union security
in exchange for other benefits. However, the Companies did not
make any counter-proposals but, instead, insisted that the Unions
first drop their demand for union security, promising money
benefits if this was done. Thereupon, and prior to April 15, 1958,
the petitioner Insular Life Building Employees Association-NATU
dropped this particular demand, and requested the Companies to
answer its demands, point by point, en toto. But the respondent
Insular Life Assurance Co. still refused to make any counterproposals. In a letter addressed to the two other Unions by the joint
management of the Companies, the former were also asked to
drop their union security demand, otherwise the Companies "would
no longer consider themselves bound by the commitment to make
money benefits retroactive to October 1, 1957." By a letter dated
April 17, 1958, the remaining two petitioner unions likewise
dropped their demand for union shop. April 25, 1958 then was set
by the parties to meet and discuss the remaining demands.
From April 25 to May 6, 1958, the parties negotiated on the labor
demands but with no satisfactory result due to a stalemate on the
matter of salary increases. On May 13, 1958 the Unions
demanded from the Companies final counter-proposals on their
economic demands, particularly on salary increases. Instead of
giving counter-proposals, the Companies on May 15, 1958
presented facts and figures and requested the Unions to submit a
workable formula which would justify their own proposals, taking
into account the financial position of the former. Forthwith the
Unions voted to declare a strike in protest against what they
considered the Companies' unfair labor practices.
Meanwhile, eighty-seven (87) unionists were reclassified as
supervisors without increase in salary nor in responsibility while
negotiations were going on in the Department of Labor after the
notice to strike was served on the Companies. These employees
resigned from the Unions.
On May 20, 1958 the Unions went on strike and picketed the
offices of the Insular Life Building at Plaza Moraga.
On May 21, 1958 the Companies through their acting manager and
president, the respondent Jose M. Olbes (hereinafter referred to as
the respondent Olbes), sent to each of the strikers a letter (exhibit
A) quoted verbatim as follows:
We recognize it is your privilege both to strike
and to conduct picketing.
However, if any of you would like to come back
to work voluntarily, you may:
1. Advise the nearest police officer or security
guard of your intention to do so.
2. Take your meals within the office.
3. Make a choice whether to go home at the
end of the day or to sleep nights at the office
where comfortable cots have been prepared.
4. Enjoy free coffee and occasional movies.

5. Be paid overtime for work performed in

excess of eight hours.

have not yet reported, we may be forced to

obtain your replacement.

6. Be sure arrangements will be made for your

families.

Before, the decisions was yours to make.

So it is now.

The decision to make is yours whether you

still believe in the motives of the strike or in the
fairness of the Management.
The Unions, however, continued on strike, with the exception of a
few unionists who were convinced to desist by the aforesaid letter
of May 21, 1958.
From the date the strike was called on May 21, 1958, until it was
called off on May 31, 1958, some management men tried to break
thru the Unions' picket lines. Thus, on May 21, 1958 Garcia,
assistant corporate secretary, and Vicente Abella, chief of the
personnel records section, respectively of the Companies, tried to
penetrate the picket lines in front of the Insular Life Building.
Garcia, upon approaching the picket line, tossed aside the placard
of a picketer, one Paulino Bugay; a fight ensued between them, in
which both suffered injuries. The Companies organized three busloads of employees, including a photographer, who with the said
respondent Olbes, succeeded in penetrating the picket lines in
front of the Insular Life Building, thus causing injuries to the
picketers and also to the strike-breakers due to the resistance
offered by some picketers.
Alleging that some non-strikers were injured and with the use of
photographs as evidence, the Companies then filed criminal
charges against the strikers with the City Fiscal's Office of Manila.
During the pendency of the said cases in the fiscal's office, the
Companies likewise filed a petition for injunction with damages
with the Court of First Instance of Manila which, on the basis of the
pendency of the various criminal cases against striking members
of the Unions, issued on May 31, 1958 an order restraining the
strikers, until further orders of the said court, from stopping,
impeding, obstructing, etc. the free and peaceful use of the
Companies' gates, entrance and driveway and the free movement
of persons and vehicles to and from, out and in, of the Companies'
building.
On the same date, the Companies, again through the respondent
Olbes, sent individually to the strikers a letter (exhibit B), quoted
hereunder in its entirety:
The first day of the strike was last 21 May
1958.
Our position remains unchanged and the strike
has made us even more convinced of our
decision.
We do not know how long you intend to stay
out, but we cannot hold your positions open for
long. We have continued to operate and will
continue to do so with or without you.
If you are still interested in continuing in the
employ of the Group Companies, and if there
are no criminal charges pending against you,
we are giving you until 2 June 1958 to report
for work at the home office. If by this date you

Incidentally, all of the more than 120 criminal charges filed against
the members of the Unions, except three (3), were dismissed by
the fiscal's office and by the courts. These three cases involved
"slight physical injuries" against one striker and "light coercion"
against two others.
At any rate, because of the issuance of the writ of preliminary
injunction against them as well as the ultimatum of the Companies
giving them until June 2, 1958 to return to their jobs or else be
replaced, the striking employees decided to call off their strike and
to report back to work on June 2, 1958.
However, before readmitting the strikers, the Companies required
them not only to secure clearances from the City Fiscal's Office of
Manila but also to be screened by a management committee
among the members of which were Enage and Garcia. The
screening committee initially rejected 83 strikers with pending
criminal charges. However, all non-strikers with pending criminal
charges which arose from the breakthrough incident were
readmitted immediately by the Companies without being required
to secure clearances from the fiscal's office. Subsequently, when
practically all the strikers had secured clearances from the fiscal's
office, the Companies readmitted only some but adamantly refused
readmission to 34 officials and members of the Unions who were
most active in the strike, on the ground that they committed "acts
inimical to the interest of the respondents," without however stating
the specific acts allegedly committed. Among those who were
refused readmission are Emiliano Tabasondra, vice president of
the Insular Life Building Employees' Association-NATU; Florencio
Ibarra, president of the FGU Insurance Group Workers &
Employees Association-NATU; and Isagani Du Timbol, acting
president of the Insular Life Assurance Co., Ltd. Employees
Association-NATU. Some 24 of the above number were ultimately
notified months later that they were being dismissed retroactively
as of June 2, 1958 and given separation pay checks computed
under Rep. Act 1787, while others (ten in number) up to now have
not been readmitted although there have been no formal dismissal
notices given to them.
On July 29, 1958 the CIR prosecutor filed a complaint for unfair
labor practice against the Companies under Republic Act 875. The
complaint specifically charged the Companies with (1) interfering
with the members of the Unions in the exercise of their right to
concerted action, by sending out individual letters to them urging
them to abandon their strike and return to work, with a promise of
comfortable cots, free coffee and movies, and paid overtime, and,
subsequently, by warning them that if they did not return to work
on or before June 2, 1958, they might be replaced; and (2)
discriminating against the members of the Unions as regards
readmission to work after the strike on the basis of their union
membership and degree of participation in the strike.
On August 4, 1958 the Companies filed their answer denying all
the material allegations of the complaint, stating special defenses
therein, and asking for the dismissal of the complaint.
After trial on the merits, the Court of Industrial Relations, through
Presiding Judge Arsenio Martinez, rendered on August 17, 1965 a

decision dismissing the Unions' complaint for lack of merit. On

August 31, 1965 the Unions seasonably filed their motion for
reconsideration of the said decision, and their supporting
memorandum on September 10, 1965. This was denied by the
Court of Industrial Relations en banc in a resolution promulgated
on October 20, 1965.
Hence, this petition for review, the Unions contending that the
lower court erred:
1. In not finding the Companies guilty of unfair
labor practice in sending out individually to the
strikers the letters marked Exhibits A and B;
2. In not finding the Companies guilty of unfair
labor practice for discriminating against the
striking members of the Unions in the matter of
readmission of employees after the strike;
3. In not finding the Companies guilty of unfair
labor practice for dismissing officials and
members of the Unions without giving them the
benefit of investigation and the opportunity to
present their side in regard to activities
undertaken by them in the legitimate exercise
of their right to strike; and
4. In not ordering the reinstatement of officials
and members of the Unions, with full back
wages, from June 2, 1958 to the date of their
actual reinstatement to their usual
employment.

Indeed, some such similar actions are illegal as constituting

unwarranted acts of interference. Thus, the act of a company
president in writing letters to the strikers, urging their return to work
on terms inconsistent with their union membership, was adjudged
as constituting interference with the exercise of his employees'
right to collective bargaining (Lighter Publishing, CCA 7th, 133 F2d
621). It is likewise an act of interference for the employer to send a
letter to all employees notifying them to return to work at a time
specified therein, otherwise new employees would be engaged to
perform their jobs. Individual solicitation of the employees or
visiting their homes, with the employer or his representative urging
the employees to cease union activity or cease striking, constitutes
unfair labor practice. All the above-detailed activities are unfair
labor practices because they tend to undermine the concerted
activity of the employees, an activity to which they are entitled free
from the employer's molestation.1
Moreover, since exhibit A is a letter containing promises of benefits
to the employees in order to entice them to return to work, it is not
protected by the free speech provisions of the Constitution (NLRB
v. Clearfield Cheese Co., Inc., 213 F2d 70). The same is true with
exhibit B since it contained threats to obtain replacements for the
striking employees in the event they did not report for work on
June 2, 1958. The free speech protection under the Constitution is
inapplicable where the expression of opinion by the employer or
his agent contains a promise of benefit, or threats, or reprisal (31
Am. Jur. 544; NLRB vs. Clearfield Cheese Co., Inc., 213 F2d 70;
NLRB vs. Goigy Co., 211 F2d 533, 35 ALR 2d 422).

I. The respondents contend that the sending of the letters, exhibits

A and B, constituted a legitimate exercise of their freedom of
speech. We do not agree. The said letters were directed to the
striking employees individually by registered special delivery
mail at that without being coursed through the Unions which
were representing the employees in the collective bargaining.

Indeed, when the respondents offered reinstatement and

attempted to "bribe" the strikers with "comfortable cots," "free
coffee and occasional movies," "overtime" pay for "work performed
in excess of eight hours," and "arrangements" for their families, so
they would abandon the strike and return to work, they were guilty
of strike-breaking and/or union-busting and, consequently, of unfair
labor practice. It is equivalent to an attempt to break a strike for an
employer to offer reinstatement to striking employees individually,
when they are represented by a union, since the employees thus
offered reinstatement are unable to determine what the
consequences of returning to work would be.

The act of an employer in notifying absent

employees individually during a strike following
unproductive efforts at collective bargaining
that the plant would be operated the next day
and that their jobs were open for them should
they want to come in has been held to be an
unfair labor practice, as an active interference
with the right of collective bargaining through
dealing with the employees individually instead
of through their collective bargaining
representatives. (31 Am. Jur. 563, citing NLRB
v. Montgomery Ward & Co. [CA 9th] 133 F2d
676, 146 ALR 1045)

Likewise violative of the right to organize, form and join labor

organizations are the following acts: the offer of a Christmas bonus
to all "loyal" employees of a company shortly after the making of a
request by the union to bargain; wage increases given for the
purpose of mollifying employees after the employer has refused to
bargain with the union, or for the purpose of inducing striking
employees to return to work; the employer's promises of benefits in
return for the strikers' abandonment of their strike in support of
their union; and the employer's statement, made about 6 weeks
after the strike started, to a group of strikers in a restaurant to the
effect that if the strikers returned to work, they would receive new
benefits in the form of hospitalization, accident insurance, profitsharing, and a new building to work in.2

Indeed, it is an unfair labor practice for an employer operating

under a collective bargaining agreement to negotiate or to attempt
to negotiate with his employees individually in connection with
changes in the agreement. And the basis of the prohibition
regarding individual bargaining with the strikers is that although the
union is on strike, the employer is still under obligation to bargain
with the union as the employees' bargaining representative (Melo
Photo Supply Corporation vs. National Labor Relations Board, 321
U.S. 332).

Citing paragraph 5 of the complaint filed by the acting prosecutor

of the lower court which states that "the officers and members of
the complainant unions decided to call off the strike and return to
work on June 2, 1958 by reason of the injunction issued by the
Manila Court of First Instance," the respondents contend that this
was the main cause why the strikers returned to work and not the
letters, exhibits A and B. This assertion is without merit. The
circumstance that the strikers later decided to return to work
ostensibly on account of the injunctive writ issued by the Court of
First Instance of Manila cannot alter the intrinsic quality of the
letters, which were calculated, or which tended, to interfere with

the employees' right to engage in lawful concerted activity in the

form of a strike. Interference constituting unfair labor practice will
not cease to be such simply because it was susceptible of being
thwarted or resisted, or that it did not proximately cause the result
intended. For success of purpose is not, and should not, be the
criterion in determining whether or not a prohibited act constitutes
unfair labor practice.
The test of whether an employer has interfered
with and coerced employees within the
meaning of subsection (a) (1) is whether the
employer has engaged in conduct which it may
reasonably be said tends to interfere with the
free exercise of employees' rights under
section 3 of the Act, and it is not necessary
that there be direct evidence that any
employee was in fact intimidated or coerced by
statements of threats of the employer if there is
a reasonable inference that anti-union conduct
of the employer does have an adverse effect
on self-organization and collective bargaining.
(Francisco, Labor Laws 1956, Vol. II, p.
323, citing NLRB v. Ford, C.A., 1948, 170 F2d
735).
Besides, the letters, exhibits A and B, should not be considered by
themselves alone but should be read in the light of the preceding
and subsequent circumstances surrounding them. The letters
should be interpreted according to the "totality of conduct doctrine,"
... whereby the culpability of an employer's
remarks were to be evaluated not only on the
basis of their implicit implications, but were to
be appraised against the background of and in
conjunction with collateral circumstances.
Under this "doctrine" expressions of opinion by
an employer which, though innocent in
themselves, frequently were held to be
culpable because of the circumstances under
which they were uttered, the history of the
particular employer's labor relations or antiunion bias or because of their connection with
an established collateral plan of coercion or
interference. (Rothenberg on Relations, p. 374,
and cases cited therein.)
It must be recalled that previous to the petitioners' submission of
proposals for an amended renewal of their respective collective
bargaining agreements to the respondents, the latter hired Felipe
Enage and Ramon Garcia, former legal counsels of the petitioners,
as personnel manager and assistant corporate secretary,
respectively, with attractive compensations. After the notice to
strike was served on the Companies and negotiations were in
progress in the Department of Labor, the respondents reclassified
87 employees as supervisors without increase in salary or in
responsibility, in effect compelling these employees to resign from
their unions. And during the negotiations in the Department of
Labor, despite the fact that the petitioners granted the respondents'
demand that the former drop their demand for union shop and in
spite of urgings by the conciliators of the Department of Labor, the
respondents adamantly refused to answer the Unions' demands en
toto. Incidentally, Enage was the chairman of the negotiating panel
for the Companies in the collective bargaining between the former
and the Unions. After the petitioners went to strike, the strikers
were individually sent copies of exhibit A, enticing them to abandon
their strike by inducing them to return to work upon promise of

special privileges. Two days later, the respondents, thru their

president and manager, respondent Jose M. Olbes, brought three
truckloads of non-strikers and others, escorted by armed men,
who, despite the presence of eight entrances to the three buildings
occupied by the Companies, entered thru only one gate less than
two meters wide and in the process, crashed thru the picket line
posted in front of the premises of the Insular Life Building. This
resulted in injuries on the part of the picketers and the strikebreakers.lwph1.t Then the respondents brought against the
picketers criminal charges, only three of which were not dismissed,
and these three only for slight misdemeanors. As a result of these
criminal actions, the respondents were able to obtain an injunction
from the court of first instance restraining the strikers from
stopping, impeding, obstructing, etc. the free and peaceful use of
the Companies' gates, entrance and driveway and the free
movement of persons and vehicles to and from, out and in, of the
Companies' buildings. On the same day that the injunction was
issued, the letter, Exhibit B, was sent again individually and by
registered special delivery mail to the strikers, threatening them
with dismissal if they did not report for work on or before June 2,
1958. But when most of the petitioners reported for work, the
respondents thru a screening committee of which Ramon
Garcia was a member refused to admit 63 members of the
Unions on the ground of "pending criminal charges." However,
when almost all were cleared of criminal charges by the fiscal's
office, the respondents adamantly refused admission to 34 officials
and union members. It is not, however, disputed that all-nonstrikers with pending criminal charges which arose from the
breakthrough incident of May 23, 1958 were readmitted
immediately by the respondents. Among the non-strikers with
pending criminal charges who were readmitted were Generoso
Abella, Enrique Guidote, Emilio Carreon, Antonio Castillo, Federico
Barretto, Manuel Chuidian and Nestor Cipriano. And despite the
fact that the fiscal's office found no probable cause against the
petitioning strikers, the Companies adamantly refused admission
to them on the pretext that they committed "acts inimical to the
interest of the respondents," without stating specifically the inimical
acts allegedly committed. They were soon to admit, however, that
these alleged inimical acts were the same criminal charges which
were dismissed by the fiscal and by the courts..
Verily, the above actuations of the respondents before and after
the issuance of the letters, exhibit A and B, yield the clear
inference that the said letters formed of the respondents scheme to
preclude if not destroy unionism within them.
To justify the respondents' threat to dismiss the strikers and secure
replacements for them in order to protect and continue their
business, the CIR held the petitioners' strike to be an economic
strike on the basis of exhibit 4 (Notice of Strike) which states that
there was a "deadlock in collective bargaining" and on the strength
of the supposed testimonies of some union men who did not
actually know the very reason for the strike. It should be noted that
exhibit 4, which was filed on January 27, 1958, states, inter alia:
TO: BUREAU OF LABOR
RELATIONS
DEPARTMENT OF
LABOR
MANILA
Thirty (30) days from receipt of this notice by
the Office, this [sic] unions intends to go on
strike against

THE INSULAR LIFE

ASSURANCE CO., LTD.
Plaza Moraga, Manila
THE FGU INSURANCE
GROUP
Plaza Moraga, Manila
INSULAR LIFE BUILDING
ADMINISTRATION
Plaza Moraga, Manila .
for the following reason: DEADLOCK IN
COLLECTIVE BARGAINING...
However, the employees did not stage the strike after the thirty-day
period, reckoned from January 27, 1958. This simply proves that
the reason for the strike was not the deadlock on collective
bargaining nor any lack of economic concessions. By letter dated
April 15, 1958, the respondents categorically stated what they
thought was the cause of the "Notice of Strike," which so far as
material, reads:
3. Because you did not see fit to agree with our
position on the union shop, you filed a notice of
strike with the Bureau of Labor Relations on 27
January 1958, citing `deadlock in collective
bargaining' which could have been for no other
issue than the union shop." (exhibit 8, letter
dated April 15, 1958.)
The strike took place nearly four months from the date the said
notice of strike was filed. And the actual and main reason for the
strike was, "When it became crystal clear the management double
crossed or will not negotiate in good faith, it is tantamount to
refusal collectively and considering the unfair labor practice in the
meantime being committed by the management such as the
sudden resignation of some unionists and [who] became
supervisors without increase in salary or change in responsibility,
such as the coercion of employees, decided to declare the strike."
(tsn., Oct. 14, 1958, p. 14.) The truth of this assertion is amply
proved by the following circumstances: (1) it took the respondents
six (6) months to consider the petitioners' proposals, their only
excuse being that they could not go on with the negotiations if the
petitioners did not drop the demand for union shop (exh. 7,
respondents' letter dated April 7, 1958); (2) when the petitioners
dropped the demand for union shop, the respondents did not have
a counter-offer to the petitioners' demands. Sec. 14 of Rep. Act
875 required the respondents to make a reply to the petitioners'
demands within ten days from receipt thereof, but instead they
asked the petitioners to give a "well reasoned, workable formula
which takes into account the financial position of the group
companies." (tsn., Sept. 8, 1958, p. 62; tsn., Feb. 26, 1969, p. 49.)
II. Exhibit H imposed three conditions for readmission of the
strikers, namely: (1) the employee must be interested in continuing
his work with the group companies; (2) there must be no criminal
charges against him; and (3) he must report for work on June 2,
1958, otherwise he would be replaced. Since the evidence shows
that all the employees reported back to work at the respondents'
head office on June 2, 1953, they must be considered as having
complied with the first and third conditions.
Our point of inquiry should therefore be directed at whether they
also complied with the second condition. It is not denied that when

the strikers reported for work on June 2, 1958, 63 members of the

Unions were refused readmission because they had pending
criminal charges. However, despite the fact that they were able to
secure their respective clearances 34 officials and union members
were still refused readmission on the alleged ground that they
committed acts inimical to the Companies. It is beyond dispute,
however, that non-strikers who also had criminal charges pending
against them in the fiscal's office, arising from the same incidents
whence the criminal charges against the strikers evolved, were
readily readmitted and were not required to secure clearances.
This is a clear act of discrimination practiced by the Companies in
the process of rehiring and is therefore a violation of sec. 4(a) (4)
of the Industrial Peace Act.
The respondents did not merely discriminate against all the strikers
in general. They separated the active from the less active unionists
on the basis of their militancy, or lack of it, on the picket lines.
Unionists belonging to the first category were refused readmission
even after they were able to secure clearances from the competent
authorities with respect to the criminal charges filed against them.
It is significant to note in this connection that except for one union
official who deserted his union on the second day of the strike and
who later participated in crashing through the picket lines, not a
single union officer was taken back to work. Discrimination
undoubtedly exists where the record shows that the union activity
of the rehired strikers has been less prominent than that of the
strikers who were denied reinstatement.
So is there an unfair labor practice where the
employer, although authorized by the Court of
Industrial Relations to dismiss the employees
who participated in an illegal strike, dismissed
only the leaders of the strikers, such dismissal
being evidence of discrimination against those
dismissed and constituting a waiver of the
employer's right to dismiss the striking
employees and a condonation of the fault
committed by them." (Carlos and Fernando,
Labor and Social Legislation, p. 62, citing Phil.
Air Lines, Inc. v. Phil. Air Lines Emloyees
Association, L-8197, Oct. 31, 1958.)
It is noteworthy that perhaps in an anticipatory effort to
exculpate themselves from charges of discrimination in the
readmission of strikers returning to work the respondents
delegated the power to readmit to a committee. But the respondent
Olbes had chosen Vicente Abella, chief of the personnel records
section, and Ramon Garcia, assistant corporate secretary, to
screen the unionists reporting back to work. It is not difficult to
imagine that these two employees having been involved in
unpleasant incidents with the picketers during the strike were
hostile to the strikers. Needless to say, the mere act of placing in
the hands of employees hostile to the strikers the power of
reinstatement, is a form of discrimination in rehiring.
Delayed reinstatement is a form of
discrimination in rehiring, as is having the
machinery of reinstatement in the hands of
employees hostile to the strikers, and
reinstating a union official who formerly worked
in a unionized plant, to a job in another mill,
which was imperfectly organized. (Morabe,
The Law on Strikes, p. 473, citing Sunshine
Mining Co., 7 NLRB 1252; Cleveland Worsted
Mills, 43 NLRB 545; emphasis supplied.)

Equally significant is the fact that while the management and the
members of the screening committee admitted the discrimination
committed against the strikers, they tossed back and around to
each other the responsibility for the discrimination. Thus, Garcia
admitted that in exercising for the management the authority to
screen the returning employees, the committee admitted the nonstrikers but refused readmission to the strikers (tsn., Feb. 6, 1962,
pp. 15-19, 23-29). Vicente Abella, chairman of the management's
screening committee, while admitting the discrimination, placed the
blame therefor squarely on the management (tsn., Sept. 20, 1960,
pp. 7-8, 14-18). But the management, speaking through the
respondent Olbes, head of the Companies, disclaimed
responsibility for the discrimination. He testified that "The decision
whether to accept or not an employee was left in the hands of that
committee that had been empowered to look into all cases of the
strikers." (tsn., Sept. 6, 1962, p. 19.)
Of course, the respondents through Ramon Garcia tried to
explain the basis for such discrimination by testifying that strikers
whose participation in any alleged misconduct during the picketing
was not serious in nature were readmissible, while those whose
participation was serious were not. (tsn., Aug. 4, 1961, pp. 48-49,
56). But even this distinction between acts of slight misconduct and
acts of serious misconduct which the respondents contend was the
basis for either reinstatement or discharge, is completely shattered
upon a cursory examination of the evidence on record. For with the
exception of Pascual Esquillo whose dismissal sent to the other
strikers cited the alleged commission by them of simple "acts of
misconduct."
III. Anent the third assignment of error, the record shows that not a
single dismissed striker was given the opportunity to defend
himself against the supposed charges against him. As earlier
mentioned, when the striking employees reported back for work on
June 2, 1958, the respondents refused to readmit them unless they
first secured the necessary clearances; but when all, except three,
were able to secure and subsequently present the required
clearances, the respondents still refused to take them back.
Instead, several of them later received letters from the respondents
in the following stereotyped tenor:
This will confirm the termination of your
employment with the Insular Life-FGU
Insurance Group as of 2 June 1958.
The termination of your employment was due
to the fact that you committed acts of
misconduct while picketing during the last
strike. Because this may not constitute
sufficient cause under the law to terminate
your employment without pay, we are giving
you the amount of P1,930.32 corresponding to
one-half month pay for every year of your
service in the Group Company.
Kindly acknowledge receipt of the check we
are sending herewith.
Very truly yours,
(Sgd.) JOSE M. OLBES
President, Insurance Life
Acting President, FGU.

The respondents, however, admitted that the alleged "acts of

misconduct" attributed to the dismissed strikers were the same
acts with which the said strikers were charged before the fiscal's
office and the courts. But all these charges except three were
dropped or dismissed.
Indeed, the individual cases of dismissed officers and members of
the striking unions do not indicate sufficient basis for dismissal.
Emiliano Tabasondra, vice-president of the petitioner FGU
Insurance Group Workers & Employees Association-NATU, was
refused reinstatement allegedly because he did not report for duty
on June 2, 1958 and, hence, had abandoned his office. But the
overwhelming evidence adduced at the trial and which the
respondents failed to rebut, negates the respondents' charge that
he had abandoned his job. In his testimony, corroborated by many
others, Tabasondra particularly identified the management men to
whom he and his group presented themselves on June 2, 1958.
He mentioned the respondent Olbes' secretary, De Asis, as the
one who received them and later directed them when Olbes
refused them an audience to Felipe Enage, the Companies'
personnel manager. He likewise categorically stated that he and
his group went to see Enage as directed by Olbes' secretary. If
Tabasondra were not telling the truth, it would have been an easy
matter for the respondents to produce De Asis and Enage who
testified anyway as witnesses for the respondents on several
occasions to rebut his testimony. The respondents did nothing
of the kind. Moreover, Tabasondra called on June 21, 1958 the
respondents' attention to his non-admission and asked them to
inform him of the reasons therefor, but instead of doing so, the
respondents dismissed him by their letter dated July 10, 1958.
Elementary fairness required that before being dismissed for
cause, Tabasondra be given "his day in court."
At any rate, it has been held that mere failure to report for work
after notice to return, does not constitute abandonment nor bar
reinstatement. In one case, the U.S. Supreme Court held that the
taking back of six of eleven men constituted discrimination
although the five strikers who were not reinstated, all of whom
were prominent in the union and in the strike, reported for work at
various times during the next three days, but were told that there
were no openings. Said the Court:
... The Board found, and we cannot say that its
finding is unsupported, that, in taking back six
union men, the respondent's officials
discriminated against the latter on account of
their union activities and that the excuse given
that they did not apply until after the quota was
full was an afterthought and not the true
reason for the discrimination against them.
(NLRB v. Mackay Radio & Telegraph Co., 304
U.S. 333, 58 Sup. Ct. 904, 82 L. Ed. 1381)
(Mathews, Labor Relations and the Law, p.
725, 728)
The respondents' allegation that Tabasondra should have returned
after being refused readmission on June 2, 1958, is not
persuasive. When the employer puts off reinstatement when an
employee reports for work at the time agreed, we consider the
employee relieved from the duty of returning further.
Sixto Tongos was dismissed allegedly because he revealed that
despite the fact that the Companies spent more than P80,000 for
the vacation trips of officials, they refused to grant union demands;

hence, he betrayed his trust as an auditor of the Companies. We

do not find this allegation convincing. First, this accusation was
emphatically denied by Tongos on the witness stand. Gonzales,
president of one of the respondent Companies and one of the
officials referred to, took a trip abroad in 1958. Exchange controls
were then in force, and an outgoing traveller on a combined
business and vacation trip was allowed by the Central Bank, per its
Circular 52 (Notification to Authorized Agent Banks) dated May 9,
1952, an allocation of $1,000 or only P2,000, at the official rate of
two pesos to the dollar, as pocket money; hence, this was the only
amount that would appear on the books of the Companies. It was
only on January 21, 1962, per its Circular 133 (Notification to
Authorized Agent Banks), that the Central Bank lifted the exchange
controls. Tongos could not therefore have revealed an amount
bigger than the above sum. And his competence in figures could
not be doubted considering that he had passed the board
examinations for certified public accountants. But
assuming arguendo that Tongos indeed revealed the true
expenses of Gonzales' trip which the respondents never denied
or tried to
disprove his statements clearly fall within the sphere of a
unionist's right to discuss and advertise the facts involved in a
labor dispute, in accordance with section 9(a)(5) of Republic Act
875 which guarantees the untramelled exercise by striking
employees of the right to give "publicity to the existence of, or the
fact involved in any labor dispute, whether by advertising,
speaking, patrolling or by any method not involving fraud or
violence." Indeed, it is not only the right, it is as well the duty, of
every unionist to advertise the facts of a dispute for the purpose of
informing all those affected thereby. In labor disputes, the
combatants are expected to expose the truth before the public to
justify their respective demands. Being a union man and one of the
strikers, Tongos was expected to reveal the whole truth on whether
or not the respondent Companies were justified in refusing to
accede to union demands. After all, not being one of the
supervisors, he was not a part of management. And his statement,
if indeed made, is but an expression of free speech protected by
the Constitution.
Free speech on both sides and for every
faction on any side of the labor relation is to
me a constitutional and useful right. Labor is
free ... to turn its publicity on any labor
oppression, substandard wages, employer
unfairness, or objectionable working
conditions. The employer, too, should be free
to answer and to turn publicity on the records
of the leaders of the unions which seek the
confidence of his men ... (Concurring opinion
of Justice Jackson in Thomas v. Collins, 323
U.S. 516, 547, 65 Sup. Ct. 315, 89 L. Ed. 430.)
(Mathews, Labor Relations and the Law, p.
591.)
The respondents also allege that in revealing certain confidential
information, Tongos committed not only a betrayal of trust but also
a violation of the moral principles and ethics of accountancy. But
nowhere in the Code of Ethics for Certified Public Accountants
under the Revised Rules and Regulations of the Board of
Accountancy formulated in 1954, is this stated. Moreover, the
relationship of the Companies with Tongos was that of an
employer and not a client. And with regard to the testimonies of
Juan Raymundo and Antolin Carillo, both vice-presidents of the
Trust Insurance Agencies, Inc. about the alleged utterances made
by Tongos, the lower court should not have given them much
weight. The firm of these witnesses was newly established at that

time and was still a "general agency" of the Companies. It is not

therefore amiss to conclude that they were more inclined to favor
the respondents rather than Tongos.
Pacifico Ner, Paulino Bugay, Jose Garcia, Narciso Dao, Vicente
Alsol and Hermenigildo Ramirez, opined the lower court, were
constructively dismissed by non-readmission allegedly because
they not only prevented Ramon Garcia, assistant corporate
secretary, and Vicente Abella, chief of the personnel records
section of the Companies, from entering the Companies' premises
on May 21, 1958, but they also caused bruises and abrasions on
Garcia's chest and forehead acts considered inimical to the
interest of the respondents. The Unions, upon the other hand,
insist that there is complete lack of evidence that Ner took part in
pushing Garcia; that it was Garcia who elbowed his way through
the picket lines and therefore Ner shouted "Close up," which the
picketers did; and that Garcia tossed Paulino Bugay's placard and
a fight ensued between them in which both suffered injuries. But
despite these conflicting versions of what actually happened on
May 21, 1958, there are grounds to believe that the picketers are
not responsible for what happened.lwph1.t The picketing on
May 21, 1958, as reported in the police blotter, was peaceful (see
Police blotter report, exh. 3 in CA-G.R. No. 25991-R of the Court of
Appeals, where Ner was acquitted). Moreover, although the
Companies during the strike were holding offices at the Botica Boie
building at Escolta, Manila; Tuason Building at San Vicente Street,
Manila; and Ayala, Inc. offices at Makati, Rizal, Garcia, the
assistant corporate secretary, and Abella, the chief of the
personnel records section, reported for work at the Insular Life
Building. There is therefore a reasonable suggestion that they
were sent to work at the latter building to create such an incident
and have a basis for filing criminal charges against the petitioners
in the fiscal's office and applying for injunction from the court of first
instance. Besides, under the circumstances the picketers were not
legally bound to yield their grounds and withdraw from the picket
lines. Being where the law expects them to be in the legitimate
exercise of their rights, they had every reason to defend
themselves and their rights from any assault or unlawful
transgression. Yet the police blotter, about adverted to, attests that
they did not resort to violence.
The heated altercations and occasional blows exchanged on the
picket line do not affect or diminish the right to strike. Persuasive
on this point is the following commentary: .
We think it must be conceded that some
disorder is unfortunately quite usual in any
extensive or long drawn out strike. A strike is
essentially a battle waged with economic
weapons. Engaged in it are human beings
whose feelings are stirred to the depths. Rising
passions call forth hot words. Hot words lead
to blows on the picket line. The transformation
from economic to physical combat by those
engaged in the contest is difficult to prevent
even when cool heads direct the fight. Violence
of this nature, however much it is to be
regretted, must have been in the contemplation
of the Congress when it provided in Sec. 13 of
Act 29 USCA Sec. 163, that nothing therein
should be construed so as to interfere with or
impede or diminish in any way the right to
strike. If this were not so, the rights afforded to
employees by the Act would indeed be illusory.
We accordingly recently held that it was not
intended by the Act that minor disorders of this

nature would deprive a striker of the possibility

of reinstatement. (Republic Steel Corp. v. N. L.
R. B., 107 F2d 472, cited in Mathews, Labor
Relations and the Law, p. 378)
Hence the incident that occurred between Ner, et al. and Ramon
Garcia was but a necessary incident of the strike and should not
be considered as a bar to reinstatement. Thus it has been held
that:
Fist-fighting between union and non-union employees in the midst
of a strike is no bar to reinstatement. (Teller, Labor Disputes and
Collective Bargaining, Vol. II, p. 855 citing Stackpole Carbon, Co. 6
NLRB 171, enforced 105 F2d 167.)
Furthermore, assuming that the acts committed by the strikers
were transgressions of law, they amount only to mere ordinary
misdemeanors and are not a bar to reinstatement.
In cases involving misdemeanors the board has generally held that
unlawful acts are not bar to reinstatement. (Teller, Labor Disputes
and Collective Bargaining, Id., p. 854, citing Ford Motor Company,
23 NLRB No. 28.)
Finally, it is not disputed that despite the pendency of criminal
charges against non-striking employees before the fiscal's office,
they were readily admitted, but those strikers who had pending
charges in the same office were refused readmission. The
reinstatement of the strikers is thus in order.
[W]here the misconduct, whether in reinstating
persons equally guilty with those whose
reinstatement is opposed, or in other ways,
gives rise to the inference that union activities
rather than misconduct is the basis of his
[employer] objection, the Board has usually
required reinstatement." (Teller, supra, p.
853, citing the Third Annual Report of NLRB
[1938], p. 211.)
Lastly, the lower Court justified the constructive dismissal of
Florencio Ibarra allegedly because he committed acts inimical to
the interest of the respondents when, as president of the FGU
Workers and Employees Association-NATU, he advised the
strikers that they could use force and violence to have a successful
picket and that picketing was precisely intended to prevent the
non-strikers and company clients and customers from entering the
Companies' buildings. Even if this were true, the record discloses
that the picket line had been generally peaceful, and that incidents
happened only when management men made incursions into and
tried to break the picket line. At any rate, with or without the advice
of Ibarra, picketing is inherently explosive. For, as pointed out by
one author, "The picket line is an explosive front, charged with the
emotions and fierce loyalties of the union-management dispute. It
may be marked by colorful name-calling, intimidating threats or
sporadic fights between the pickets and those who pass the line."
(Mathews, Labor Relations and the Law, p. 752). The picket line
being the natural result of the respondents' unfair labor practice,
Ibarra's misconduct is at most a misdemeanor which is not a bar to
reinstatement. Besides, the only evidence presented by the
Companies regarding Ibarra's participation in the strike was the
testimony of one Rodolfo Encarnacion, a former member of the
board of directors of the petitioner FGU Insurance Group Workers
and Employees Union-NATU, who became a "turncoat" and who
likewise testified as to the union activities of Atty. Lacsina, Ricardo

Villaruel and others (annex C, Decision, p. 27) another matter

which emphasizes the respondents' unfair labor practice. For
under the circumstances, there is good ground to believe that
Encarnacion was made to spy on the actvities of the union
members. This act of the respondents is considered unjustifiable
interference in the union activities of the petitioners and is unfair
labor practice.
It has been held in a great number of decisions
at espionage by an employer of union
activities, or surveillance thereof, are such
instances of interference, restraint or coercion
of employees in connection with their right to
organize, form and join unions as to constitute
unfair labor practice.
... "Nothing is more calculated to interfere with,
restrain and coerce employees in the exercise
of their right to self-organization than such
activity even where no discharges result. The
information obtained by means of espionage is
in valuable to the employer and can be used in
a variety of cases to break a union." The unfair
labor practice is committed whether the
espionage is carried on by a professional labor
spy or detective, by officials or supervisory
employees of the employer, or by fellow
employees acting at the request or direction of
the employer, or an ex-employee..." (Teller,
Labor Disputes and Collective Bargaining, Vol.
II, pp. 765-766, and cases cited.) .
IV. The lower court should have ordered the reinstatement of the
officials and members of the Unions, with full back wages from
June 2, 1958 to the date of their actual reinstatement to their usual
employment. Because all too clear from the factual and
environmental milieu of this case, coupled with settled decisional
law, is that the Unions went on strike because of the unfair labor
practices committed by the respondents, and that when the strikers
reported back for work upon the invitation of the respondents
they were discriminatorily dismissed. The members and officials of
the Unions therefore are entitled to reinstatement with back pay.
[W]here the strike was induced and provoked
by improper conduct on the part of an
employer amounting to an 'unfair labor
practice,' the strikers are entitled to
reinstatement with back pay. (Rothenberg on
Labor Relations, p. 418.)
[A]n employee who has been dismissed in
violation of the provisions of the Act is entitled
to reinstatement with back pay upon an
adjudication that the discharge was illegal."
(Id., citingWaterman S. S. Corp. v. N. L. R. B.,
119 F2d 760; N. L. R. B. v. Richter's Bakery,
140 F2d 870; N. L. R. B. v. Southern Wood
Preserving Co., 135 F. 2d 606; C. G. Conn,
Ltd. v. N. L. R. B., 108 F2d 390; N. L. R. B. v.
American Mfg. Co., 106 F2d 61; N. L. R. B. v.
Kentucky Fire Brick Co., 99 F2d 99.)
And it is not a defense to reinstatement for the respondents to
allege that the positions of these union members have already
been filled by replacements.

[W]here the employers' "unfair labor practice"

caused or contributed to the strike or where the
'lock-out' by the employer constitutes an "unfair
labor practice," the employer cannot
successfully urge as a defense that the striking
or lock-out employees position has been filled
by replacement. Under such circumstances, if
no job sufficiently and satisfactorily comparable
to that previously held by the aggrieved
employee can be found, the employer must
discharge the replacement employee, if
necessary, to restore the striking or locked-out
worker to his old or comparable position ... If
the employer's improper conduct was an initial
cause of the strike, all the strikers are entitled
to reinstatement and the dismissal of
replacement employees wherever necessary;
... . (Id., p. 422 and cases cited.)
A corollary issue to which we now address ourselves is, from what
date should the backpay payable to the unionists be computed? It
is now a settled doctrine that strikers who are entitled to
reinstatement are not entitled to back pay during the period of the
strike, even though it is caused by an unfair labor practice.
However, if they offer to return to work under the same conditions
just before the strike, the refusal to re-employ or the imposition of
conditions amounting to unfair labor practice is a violation of
section 4(a) (4) of the Industrial Peace Act and the employer is
liable for backpay from the date of the offer (Cromwell Commercial
Employees and Laborers Union vs. Court of Industrial Relations, L19778, Decision, Sept. 30, 1964, 12 SCRA 124; Id., Resolution on
motion for reconsideration, 13 SCRA 258; see also Mathews,
Labor Relations and the Law, p. 730 and the cited cases). We
have likewise ruled that discriminatorily dismissed employees must
receive backpay from the date of the act of discrimination, that is,
from the date of their discharge (Cromwell Commercial Employees
and Laborers Union vs. Court of Industrial Relations, supra).
The respondents notified the petitioner strikers to report back for
work on June 2, 1958, which the latter did. A great number of
them, however, were refused readmission because they had
criminal charges against them pending before the fiscal's office,
although non-strikers who were also facing criminal indictments
were readily readmitted. These strikers who were refused
readmission on June 2, 1958 can thus be categorized as
discriminatorily dismissed employees and are entitled to backpay
from said date. This is true even with respect to the petitioners
Jose Pilapil, Paulino Bugay, Jr. and Jose Garcia, Jr. who were
found guilty only of misdemeanors which are not considered
sufficient to bar reinstatement (Teller, Labor Disputes and
Collective Bargaining, p. 854), especially so because their unlawful
acts arose during incidents which were provoked by the
respondents' men. However, since the employees who were
denied readmission have been out of the service of the Companies
(for more than ten years) during which they may have found other
employment or other means of livelihood, it is only just and
equitable that whatever they may have earned during that period
should be deducted from their back wages to mitigate somewhat
the liability of the company, pursuant to the equitable principle that
no one is allowed to enrich himself at the expense of another
(Macleod & Co. of the Philippines v. Progressive Federation of
Labor, 97 Phil. 205 [1955]).
The lower court gave inordinate significance to the payment to and
acceptance by the dismissed employees of separation pay. This
Court has ruled that while employers may be authorized under

Republic Act 1052 to terminate employment of employees by

serving the required notice, or, in the absence thereof, by paying
the required compensation, the said Act may not be invoked to
justify a dismissal prohibited by law, e.g., dismissal for union
activities.
... While Republic Act No. 1052 authorizes a
commercial establishment to terminate the
employment of its employee by serving notice
on him one month in advance, or, in the
absence thereof, by paying him one month
compensation from the date of the termination
of his employment, such Act does not give to
the employer a blanket authority to terminate
the employment regardless of the cause or
purpose behind such termination. Certainly, it
cannot be made use of as a cloak to
circumvent a final order of the court or a
scheme to trample upon the right of an
employee who has been the victim of an unfair
labor practice. (Yu Ki Lam, et al. v. Nena
Micaller, et al., 99 Phil. 904 [1956].)
Finally, we do not share the respondents' view that the findings of
fact of the Court of Industrial Relations are supported by
substantial and credible proof. This Court is not therefore
precluded from digging deeper into the factual milieu of the case
(Union of Philippine Education Employees v. Philippine Education
Company, 91 Phil. 93; Lu Do & Lu Ym Corporation v. PhilippineLand-Air-Sea Labor Union, 11 SCRA 134 [1964]).
V. The petitioners (15 of them) ask this Court to cite for contempt
the respondent Presiding Judge Arsenio Martinez of the Court of
Industrial Relations and the counsels for the private respondents,
on the ground that the former wrote the following in his decision
subject of the instant petition for certiorari, while the latter quoted
the same on pages 90-91 of the respondents' brief: .
... Says the Supreme Court in the following
decisions:
In a proceeding for unfair
labor practice, involving a
determination as to
whether or not the acts of
the employees concerned
justified the adoption of the
employer of disciplinary
measures against them,
the mere fact that the
employees may be able to
put up a valid defense in a
criminal prosecution for the
same acts, does not erase
or neutralize the
employer's right to impose
discipline on said
employees. For it is settled
that not even the acquittal
of an employee of the
criminal charge against
him is a bar to the
employer's right to impose
discipline on its
employees, should the act

upon which the criminal

charged was based
constitute nevertheless an
activity inimical to the
employer's interest... The
act of the employees now
under consideration may
be considered as a
misconduct which is a just
cause for dismissal.
(Lopez, Sr., et al. vs.
Chronicle Publication
Employees Ass'n. et al.,
G.R. No. L-20179-81,
December 28, 1964.)
(emphasis supplied)
The two pertinent paragraphs in the above-cited decision * which
contained the underscored portions of the above citation read
however as follows:
Differently as regard the dismissal of Orlando
Aquino and Carmelito Vicente, we are inclined
to uphold the action taken by the employer as
proper disciplinary measure. A reading of the
article which allegedly caused their dismissal
reveals that it really contains an insinuation
albeit subtly of the supposed exertion of
political pressure by the Manila Chronicle
management upon the City Fiscal's Office,
resulting in the non-filing of the case against
the employer. In rejecting the employer's
theory that the dismissal of Vicente and Aquino
was justified, the lower court considered the
article as "a report of some acts and omissions
of an Assistant Fiscal in the exercise of his
official functions" and, therefore, does away
with the presumption of malice. This being a
proceeding for unfair labor practice, the matter
should not have been viewed or gauged in the
light of the doctrine on a publisher's culpability
under the Penal Code. We are not here to
determine whether the employees' act could
stand criminal prosecution, but only to find out
whether the aforesaid act justifies the adoption
by the employer of disciplinary measure
against them. This is not sustaining the ruling
that the publication in question is qualified
privileged, but even on the assumption that this
is so, the exempting character thereof under
the Penal Code does not necessarily erase or
neutralize its effect on the employer's interest
which may warrant employment of disciplinary
measure. For it must be remembered that not
even the acquittal of an employee, of the
criminal charges against him, is a bar to the
employer's right to impose discipline on its
employees, should the act upon which the
criminal charges was based constitute
nevertheless an activity inimical to the
employer's interest.
In the herein case, it appears to us that for an
employee to publish his "suspicion," which
actually amounts to a public accusation, that
his employer is exerting political pressure on a

public official to thwart some legitimate

activities on the employees, which charge, in
the least, would sully the employer's
reputation, can be nothing but an act inimical
to the said employer's interest. And the fact
that the same was made in the union
newspaper does not alter its deleterious
character nor shield or protect a reprehensible
act on the ground that it is a union activity,
because such end can be achieved without
resort to improper conduct or behavior. The act
of the employees now under consideration
may be considered as a misconduct which is a
just cause for dismissal.** (Emphasis ours)
It is plain to the naked eye that the 60 un-underscored words of the
paragraph quoted by the respondent Judge do not appear in the
pertinent paragraph of this Court's decision in L-20179-81.
Moreover, the first underscored sentence in the quoted paragraph
starts with "For it is settled ..." whereas it reads, "For it must be
remembered ...," in this Court's decision. Finally, the second and
last underlined sentence in the quoted paragraph of the
respondent Judge's decision, appears not in the same paragraph
of this Court's decision where the other sentence is, but in the
immediately succeeding paragraph.
This apparent error, however, does not seem to warrant an
indictment for contempt against the respondent Judge and the
respondents' counsels. We are inclined to believe that the
misquotation is more a result of clerical ineptitude than a deliberate
attempt on the part of the respondent Judge to mislead. We fully
realize how saddled with many pending cases are the courts of the
land, and it is not difficult to imagine that because of the pressure
of their varied and multifarious work, clerical errors may escape
their notice. Upon the other hand, the respondents' counsels have
the prima facie right to rely on the quotation as it appears in the
respondent Judge's decision, to copy it verbatim, and to
incorporate it in their brief. Anyway, the import of the underscored
sentences of the quotation in the respondent Judge's decision is
substantially the same as, and faithfully reflects, the particular
ruling in this Court's decision, i.e., that "[N]ot even the acquittal of
an employee, of the criminal charges against him, is a bar to the
employer's right to impose discipline on its employees, should the
act upon which the criminal charges were based constitute
nevertheless an activity inimical to the employer's interest."
Be that as it may, we must articulate our firm view that in citing this
Court's decisions and rulings, it is the bounden duty of courts,
judges and lawyers to reproduce or copy the same word-for-word
and punctuation mark-for-punctuation mark. Indeed, there is a
salient and salutary reason why they should do this. Only from this
Tribunal's decisions and rulings do all other courts, as well as
lawyers and litigants, take their bearings. This is because the
decisions referred to in article 8 of the Civil Code which reads,
"Judicial decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system of the
Philippines," are only those enunciated by this Court of last resort.
We said in no uncertain terms in Miranda, et al. vs. Imperial, et al.
(77 Phil. 1066) that "[O]nly the decisions of this Honorable Court
establish jurisprudence or doctrines in this jurisdiction." Thus, ever
present is the danger that if not faithfully and exactly quoted, the
decisions and rulings of this Court may lose their proper and
correct meaning, to the detriment of other courts, lawyers and the
public who may thereby be misled. But if inferior courts and
members of the bar meticulously discharge their duty to check and
recheck their citations of authorities culled not only from this

Court's decisions but from other sources and make certain that
they are verbatim reproductions down to the last word and
punctuation mark, appellate courts will be precluded from acting on
misinformation, as well as be saved precious time in finding out
whether the citations are correct.
Happily for the respondent Judge and the respondents' counsels,
there was no substantial change in the thrust of this Court's
particular ruling which they cited. It is our view, nonetheless, that
for their mistake, they should be, as they are hereby, admonished
to be more careful when citing jurisprudence in the future.
ACCORDINGLY, the decision of the Court of Industrial Relations
dated August 17, 1965 is reversed and set aside, and another is
entered, ordering the respondents to reinstate the dismissed
members of the petitioning Unions to their former or comparatively
similar positions, with backwages from June 2, 1958 up to the
dates of their actual reinstatements. Costs against the
respondents.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Fernando,
Teehankee, Barredo, Villamor and Makasiar, JJ., concur.
Zaldivar, J., took no part.

G.R. Nos. L-20667 and 20669

October 29, 1965

PHILIPPINE STEAM NAVIGATION CO., petitioner,

vs.
PHILIPPINE OFFICERS GUILD, ET AL., respondents.
Lichauco, Picazo and Agcaoili for petitioner.
Beltran and Lacson for respondent Philippine Marine Officers
Guild.
Mariano B. Tuason for respondent Court of Industrial Relations.

bargain and unspecified unfair labor practices. The Department of

Labor brought PHILSTEAM and PMOG to a conference on July
30, 1954, without any success.
The CSA had meanwhile also transmitted its own set of demands
to PHILSTEAM. On August 16, 1954 PHILSTEAM and CSA met.
PHILSTEAM therein recognized CSA as representing the majority
of its employees and proceeded to consider CSA's demands.
Another PHILSTEAM-PMOG conference at the Department of
Labor was held on August, 17, 1954, likewise to no avail.

BENGZON, J.P., J.:

The present century saw in its opening decades the struggle of
labor to attain equal footing with capital. Statute after statute was
passed in the Philippines to secure this end. The Philippine
Constitution, adopted in 1935, made it plain that the State can
regulate the relation between labor and capital to achieve social
justice.1 Following the modern trend, the Industrial Peace Act was
passed by our Congress to effect equality between labor and
capital as partners in industry.2 Special attention from all three
branches of the government was required on the problems arising
in their relation, a relation treated as sui generis. Nonetheless, as
was to be expected, it was not infrequent that capital would seek to
preserve and labor to advance its position; the management would
fight to retain old practices and the workers cry for progressive
measures; employers would desire superiority and employees
equality. Hence, the continuing disputes regarding the scope and
application of social and labor legislations covering the relations of
labor and capital. An instance is the dispute in the three cases at
bar.
The Philippine Steam Navigation Co., Inc., hereafter referred to as
PHILSTEAM, is a domestic corporation, with head offices in Cebu
City, engaged in inter-island shipping. In the year 1954 it had 16
vessels, with 8 officers to a vessel, or a total of 128 officers.
Philippine Marine Officers Guild, herein otherwise called PMOG, is
a labor union affiliated with the Federation of Free Workers (FFW),
representing, and which represented in 1954, some of
PHILSTEAM's officers.
The Cebu Seamen's Association, CSA for short, is another labor
union that represents and likewise represented in 1954 some of
PHILSTEAM's officers.
On June 15, 1954 PMOG sent PHILSTEAM a set of demands with
a request for collective bargaining. PHILSTEAM received the letter
embodying the same on June 18, 1954. Subsequently, or on June
29, 1954, PHILSTEAM transmitted its answer to PMOG, requiring
the latter to first prove its representation of a majority of
PHILSTEAM's employees before its demands will be considered
as requested. PHILSTEAM, on the same date, started
interrogating and investigating its captains, deck officers, and
engineers, to find out directly from them if they had joined PMOG
or authorized PMOG to represent them.
A reply was sent by PMOG to the answer of PHILSTEAM, insisting
that PHILSTEAM consider its requests and demands first before
requiring proof of majority representation. This reply was received
by PHILSTEAM on July 6, 1954.
PMOG thereafter filed on July 17, 1954 a notice of intention to
strike stating as reasons therefor PHILSTEAM's alleged refusal to

Subsequently, on August 24, 1954, PHILSTEAM and CSA signed

a collective bargaining agreement. On the same date, PMOG
declared a strike against PHILSTEAM. Although not the subject of
the present appeal, it should also be mentioned that the dispute
included two other shipping companies, namely, Compania
Maritima and Madrigal Shipping, and that PMOG simultaneously
struck against all three companies.
Around 46 officers of PHILSTEAM joined PMOG's strike; 15 of
these later returned to work, leaving 31 PHILSTEAM officers on
strike. Pier 4 of the North Harbor of the Port of Manila, where
PHILSTEAM vessels docked, was among the areas picketed
during the strike.
A final conference at the Department of Labor between
PHILSTEAM and PMOG on October 7, 1954 still failed to bring the
parties to an agreement.
The President of the Philippines, on January 14, 1955, certified the
dispute among the aforementioned shipping companies and their
employees to the Court of Industrial Relations, as involving
national interest, pursuant to Section 10 of Republic Act 875.
The Court of Industrial Relations held preliminary conferences and
on January 18, 1955 issued a return-to-work order. The same,
however, was not enforced in view of an injunction issued by this
Court in another case.3
Several formal complaints were accordingly docketed in the Court
of Industrial Relations, as follows:
(1) Case 6-IPA, the dispute certified to the CIR by the President;
(2) Case 617-ULP filed on February 25, 1955 by PMOG against
Maritima, et al., for unfair labor practice;
(3) Case 618-ULP filed on February 25, 1955 by PMOG against
PHILSTEAM and CSA, for unfair labor practice;
(4) Case 646-ULP filed on March 29, 1955 by PMOG against
Madrigal Shipping, for unfair labor practice;
(5) Case 672-ULP filed on April 30, 1955 by the Marine Officers
Association of the Philippines4 against PMOG, for unfair labor
practice;
(6) Case 1002-ULP filed on July 6, 1956 by PHILSTEAM against
PMOG, for unfair labor practice.
A joint trial was held of all the cases and on December 20, 1962
the Court of Industrial Relations rendered thereon a single

decision, finding in the cases pertinent to this appeal, i.e., where

PHILSTEAM is a party, as follows:
(1) Case 618-ULP, PHILSTEAM committed unfair labor practice in
having interfered with, restrained and coerced employees in the
exercise of their rights to self-organization;
(2) Case 1002-ULP, PMOG has not been shown to have
committed unfair labor practice; and,
(3) Case 6-IPA, the strike of PMOG against PHILSTEAM was
justified and lawfully carried out.
Accordingly, it stated in the dispositive portion relative to the
above-mentioned cases:
IN VIEW OF ALL THE FOREGOING, the Court hereby
orders:
xxx

xxx

xxx

2. Philippine Steam Navigation Company, its agents,

successors and assigns, to cease and desist from
interrogating and investigating their employees to
determine whether they have authorized Philippine
Marine Officers Guild or any other labor organization to
represent them for the purpose of collective bargaining,
discouraging or trying to discourage any of such
employees from remaining as a member of Philippine
Marine Officers Guild or any other labor organization,
and encouraging or trying to encourage any of such
employees to join Cebu Seamen's Association or any
other labor organization, and, in any manner, interfering
with, restraining, or coercing their employees in the
exercise of their right to self-organization and other rights
guaranteed in Section 3 of this Act; and offer all of their
striking employees immediate and full reinstatement to
their former or substantially equivalent positions, without
back salaries and without prejudice to their seniority or
other rights and privileges, unless they have found
substantially equivalent employment elsewhere during
the pendency of this case.
PHILSTEAM moved for reconsideration but the motion was denied
on May 18, 1962 by resolution of the Court of Industrial
Relations in banc. The present appeal by PHILSTEAM is from the
decision and resolution en banc in Case 6-IPA, Case 618-ULP and
Case 1002-ULP.
Petitioner would contend that the respondent court erred in
ordering it to reinstate the PMOG strikers. In support of this it
advances the argument that, first, PHILSTEAM did not commit acts
constituting unfair labor practice; and, second, PMOG's strike was
illegal.
The finding of respondent court in Case 618-ULP, as stated, is that
PHILSTEAM interfered with, coerced, and restrained employees in
their rights to self-organization. The same, if true, is unfair labor
practice (Section 4 [a] [1], Republic Act 875).
The acts found by respondent court constituting the foregoing
unfair labor practice are: (1) the interrogation and investigation by
PHILSTEAM's supervisory officials of its captains, deck officers
and engineers, to determine whether they had authorized PMOG

to act as their bargaining agent; (2) the subjection of PMOG to

vilification; and (3) the participation of PHILSTEAM's pier
superintendent in soliciting membership for a competing union.
PHILSTEAM admits that it initiated and carried out an investigation
of its officers as to their membership in PMOG and whether they
had given PMOG authority to represent them in collective
bargaining. The reason for this, PHILSTEAM would, however,
aver, was merely to ascertain for itself the existence of a duty to
bargain collectively with PMOG, a step allegedly justified by
PMOG's refusal to furnish proof of majority representation.
The asserted reason for the investigation cannot be sustained. The
record discloses that such investigation was started by
PHILSTEAM even before it received PMOG's reply stating a
refusal to submit proof of majority representation. Specifically, the
investigation was put under way on June 29, 1954 the same
day PHILSTEAM sent its request that PMOG submit proof of
majority representation whereas, PHILSTEAM knew of PMOG's
refusal to furnish said proof only on July 6, 1954, when it received
PMOG's reply letter. The respondent court, therefore, aptly
concluded that PMOG's refusal to submit evidence showing it
represented a majority had nothing to do with PHILSTEAM's
decision to carry out the investigation.
An employer is not denied the privilege of interrogating its
employees as to their union affiliation, provided the same is for a
legitimate purpose and assurance is given by the employer that no
reprisals would be taken against unionists. Nonetheless, any
employer who engages in interrogation does so with notice that he
risks a finding of unfair labor practice if the circumstances are such
that his interrogation restrains or interferes with employees in the
exercise of their rights to self-organization. (Blue Flash Express
Co., Inc., 109 NLRB 591.)
The respondent court has found that PHILSTEAM's interrogation of
its employees had in fact interfered with, restrained and coerced
the employees in the exercise of their rights to self-organization
(Petition, Annex A, p. 31). Such finding being upon questions of
fact, the same cannot be reversed herein, because it is fully
supported by substantial evidence.
The rule in this jurisdiction is that subjection by the company of its
employees to a series of questionings regarding their membership
in the union or their union activities, in such a way as to hamper
the exercise of free choice on their part, constitutes unfair labor
practice (Scoty's Department Store vs. Micaller, 52 O.G. 5119).
PHILSTEAM's aforestated interrogation squarely falls under this
rule.
PMOG's subjection to vilification is likewise borne out by
substantial evidence. Santiago Beliso, PHILSTEAM's purchasing
agent, told Luis Feliciano, on August 6, 1954, that PMOG was a
"money-asking union," that "all the members of the FFW are low
people" and that CSA "is a good union." Fernando Guerrero,
PHILSTEAM's inter-island manager, had authorized Beliso to
assist him in his investigation of PMOG membership. The
statement of Beliso was made in the presence of PHILSTEAM
office manager Ernesto Maeru and PHILSTEAM pier
superintendent Jose Perez, and these supervisory officials did
nothing to disavow Beliso's conduct as not intended to represent
PHILSTEAM's opinion. PHILSTEAM, through its supervisory
officials, obviously made it appear to Feliciano that Beliso was
speaking for or on behalf of the company, when he made the

remarks derogatory to PMOG and favorable to CSA. PHILSTEAM

thereby interfered with Feliciano's right to self-organization.

From the foregoing it follows that PMOG's strike was for a lawful
purpose and, therefore, justified.

Appellant would, however, assert an inconsistency on the part of

respondent court in finding that Beliso was made to appear by
PHILSTEAM supervisory officials as acting for them as testified to
by Feliciano, when said court elsewhere rejected a testimony to
this effect by Eugenio Obispo.

As to the question of reinstatement, we have already ruled,

in Cromwell Commercial Employees and Laborers Union (PTUG)
vs. C.I.R., et al., L-19778, September 30, 1964, that striking
employees are entitled to reinstatement, whether or not the strike
was the consequence of the employer's unfair labor practice,
unless, where the strike was not the consequence of any unfair
labor practice, the employer has hired others to take the place of
the strikers and has promised them continued employment (2
Teller, LABOR DISPUTES AND COLLECTIVE BARGAINING,
Sec. 371,. pp. 996-997).

Appellant refers to the testimony of Obispo, an engine officer, that

he signed up with CSA because sometime in July 1954 he was
intimidated by Santiago Beliso. Obispo's testimony, however,
referred to a different incident, wherein there was no showing that
Beliso acted in the presence and with the apparent approval of
high supervisory officials of PHILSTEAM. Furthermore, Obispo's
credibility, unlike that of Feliciano, was put in doubt because he
falsely stated that Beliso was an Assistant Manager of
PHILSTEAM. We find no inconsistency or discrimination in the
appreciation of the evidence by respondent court in giving
credence to Feliciano, as to one incident, while disbelieving
Obispo, as to another.
Finally, of record also stands the fact that PHILSTEAM pier
superintendent Valeriano Teves helped bring about the affiliation of
Diosdado Capilitan, a PMOG member, with CSA, by telling him
that his joining with CSA would not affect his PMOG affiliation. This
incident was testified to by PHILSTEAM witnesses themselves.
While such a statement, if considered as an isolated remark, may
be a harmless expression of opinion, it in reality amounted to
support of CSA's membership solicitation drive, in the light of the
circumstances in which it was made. For it in effect encouraged
membership in the competing, union and indorsed CSA's
solicitation, it least with respect to Capilitan.
The respondent court absolved PMOG from the charge of unfair
labor practice in Case 1002-ULP. The alleged threats and violence
on the part of PMOG strikers were found not sufficiently
established by the evidence. And PHILSTEAM in this appeal no
longer argues that said threats and violence were committed.
Nonetheless, PHILSTEAM, would contend that PMOG's strike was
illegal, for the reason that the purpose of the strike was illegal. It is
argued that PMOG staged a strike so as to compel PHILSTEAM to
bargain collectively with it notwithstanding that it was a minority
union. First of all, the statement that PMOG is a minority union is
not accurate. Respondent court precisely found that there has
been no proof as to which union, PMOG, CSA or any other,
represented the majority of PHILSTEAM employees. For lack of
showing that CSA represented the majority it declared the
PHILSTEAM-CSA collective bargaining agreement null and void. It
stated that the parties to the dispute were welcomed to file a
petition for certification election to decide this point.
Secondly, PMOG's strike was in retaliation to PHILSTEAM's unfair
labor practice rather than, as PHILSTEAM would picture it, an
attempt to undermine the PHILSTEAM-CSA agreement. For said
agreement was signed only on August 24, 1954 but PMOG filed its
notice of strike is early as July 17, 1954. PHILSTEAM's unfair labor
practice, consisting in its interference with the employees, rights to
self-organization started on June 29, 1954. It was because of said
unlawful act of the employer that the union struck. The notice of
strike in fact mentioned company unfair labor practices as reason
for the intended strike.

The present strike was the consequence of PHILSTEAM's unfair

labor practice. Reinstatement of the strikers, who have not found
substantially equivalent employment elsewhere, therefore follows
as a matter of right, notwithstanding that the employer has hired
others to take the place of the strikers for the purpose of continuing
the operation of the plant or the business of the industry (2 Teller,
op. cit., Sec. 277, p. 754).
Petitioner finally argues that reinstatement was forfeited due to the
failure of the strike to paralyze the company's business or the
failure of the employees to offer to return to work voluntarily and
without any condition. As adverted to above, even if the employer
hires others to replace the strikers, thereby avoiding paralysis of
his business, if the strike is against an unfair labor practice on its
part, the employer is bound to reinstate the strikers. As to the
matter of a voluntary offer to return to work without any condition
the same is relevant only to the question of payment of back
wages in addition to reinstatement. Since in these cases no back
wages were awarded, and the union has not appealed, said
question is not in point.
WHEREFORE, the decision and resolution appealed from are
hereby affirmed, with costs against petitioner. So ordered.
Bengzon, C.J., Bautista Angelo, Concepcion, Dizon, Regala,
Makalintal and Zaldivar, JJ., concur.
Reyes, J.B.L., J., is on leave.

G.R. No. L-19997

May 19, 1965

VISAYAN BICYCLE, MANUFACTURING CO., INC., petitioner,

vs.
NATIONAL LABOR UNION and COURT OF INDUSTRIAL
RELATIONS respondents.
Mascardo, Mintu and Lazaro Law Offices for petitioner.
Eulogio R. Lerum for respondent National Labor Union.
Mariano B. Tuason for respondent Court of Industrial Relations.
BENGZON, J.P., J.:
On November 3, 1958, workers in the Visayan Bicycle
Manufacturing Co., Inc. formed the Visayan Bicycle Employees
and Workers Union (VIBEMWU). Pedro Evangelista was its
president. On November 14, 1958, VIBEMWU and the company
signed a collective bargaining agreement. Among other things it
provided for union security, checkoff, wage increases, fifteen days
vacation leave and fifteen days sick leave.
On February 21, 1959, Pedro Evangelista was again elected
president, for 1959. Felicisimo Rodiel was elected board member.
For the year 1960 VIBEMWU, on December 12, 1959, re-elected
Pedro Evangelista president and elected Fulgencio Besana and
Felicisimo Rodiel, vice-president and secretary respectively.
On February 27, 1960, through its executive board headed by
Besana, acting as president, VIBEMWU affiliated with the National
Labor Union (NLU). Subsequently, on March 4, 1960, the
Constitution and By-laws of VIBEMWU were amended. On March
9, 1960, another election was held and Besana was chosen
president thereby replacing Evangelista.
On March 17, 1960, the national secretary of NLU, by a letter,
informed the company of VIBEMWU'S affiliation to NLU, and
demanded enforcement of the collective bargaining agreement.
The company, however, did not accede to the demand.
Consequently, on April 5, 1960, VIBEMWU filed a notice to
strike.1wph1.t
The Department of Labor's Conciliation Service held several
hearings on the union's demands and strike notice, but the
company still refused.
On April 25, 1960, the company dismissed Besana and Rodiel
after they figured, on the same day, in a fight with two other
employees, within the premises and during working hours. Alleging
unfair labor practice, NLU, on behalf of VIBEMWU, as well as of
Besana and Rodiel, filed on May 6, 1960 a complaint against the
company in the Court of Industrial Relations. The company
answered it on May 23, 1,960. It stated that the dismissal of
Besana and Rodiel was due to violation of a company rule that
penalizes "Inciting or provoking a fight or fighting during working
hours or on company premises".
The Presiding Judge of the Court of Industrial Relations, after
trying the case, rendered a decision on March 3, 1962 in favor of
the complainant union. An unfair labor practice, according to said
decision, was committed by the company in dismissing Besana
and Rodiel due to their union activities. The dispositive portion
reads:

This Court finds substantial evidence to sustain the

charge against respondent Company in violation of
Section 4(a), paragraphs 1 and 4 of the Industrial Peace
Act, and, therefore, orders respondent Company, its
official and/or agents to:
(1) Cease and desist from interfering, restraining or
coercing its employees in the exercise of their rights
guaranteed by Section 3 of the Act;
(2) Cease and desist from discriminating against
employees in regard to hire or tenure of employment or
any term or condition of employment to encourage or
discourage membership in any labor organization;
(3) Reinstate Fulgencio Besana and Felicisimo Rodiel to
their former or equivalent positions in respondent
Company with backwages from the time of their
dismissal on April 25, 1960, up to the time of their actual
reinstatement and with the rights and privileges formerly
appertaining thereto, including seniority;
To facilitate the proper payment of backwages due them,
the Chief of the Examining Division of this Court and or
his duly designated assistant is hereby directed to
examine the payrolls, daily time records and other
pertinent documents relative to complainants Besana's
and Rodiel's services with respondent Company, and to
submit a corresponding report for further disposition.
SO ORDERED.
After receipt of copy of the decision on March 13, 1962, the
company filed on March 15, 1962 a motion for reconsideration. It
contained no argument but reserved the "right" to file supporting
memorandum within ten days from March 18, 1962. A motion,
however, was filed on March 27, 1962, requesting for 15-day
extension of time to file the memorandum.
Adhering to a "no extension" policy thereon, the Court of Industrial
Relations en banc denied, on March 28, 1962, the aforesaid
motion for extension to file memorandum. Accordingly, on April 6,
1962, it further denied the motion for reconsideration.
Following its receipt on July 6, 1962 of the last resolution, the
company filed this petition for review on July 16, 1962.
Petitioner has raised two issues: First, did the Court of Industrial
Relations abuse its discretion in denying the motion for extension
of time to file memorandum in support of the motion for
reconsideration? Second, did the company's dismissal of Besana
and Rodiel constitute unfair labor practice?
The first issue has already been settled. The denial by the Court of
Industrial Relations of a motion to extend the 10-day period to file
arguments in support of a motion for reconsideration, pursuant to
its standing rule against such extension, does not constitute abuse
of discretion. 1
Regarding the second issue, the record shows that on April 25,
1960, Besana and Rodiel were provoked by Saturnino Reyes and
Silvestre Pacia into a pre-arranged fight pursuant to a strategy of
the company designed to provide an appparently lawful cause for
their dismissal. Reyes and Pacia were hired only within that

week. 2Besana and Rodiel were not shown to have previously

figured in similar incidents before or to have violated company
rules and regulations in their many years with the company. . 3 The
company did not investigate the incident, and its manager, Co
Hing, admitted that Besana was dismissed because he was a
"hard-headed leader of the union". It was this manager who had
warned VIBEMWU'S officers responsible for the affiliation that if
they will not withdraw VIBEMWU from theNLU, he would take "
steps in order to dismiss them from work."
The findings of the Court of Industrial Relations to the foregoing
effect are supported by substantial evidence. No reason obtains to
alter the conclusion that Besana and Rodiel were in reality
dismissed because of their union activities and not because of their
violation of a company rule against fights in the premises or during
working hours. Furthermore, the so-called violation of company
rules having been brought about by the company itself, thru the
recent employment of Saturnino Reyes and Silvestre Pacia
whoprovoked the fight as above indicated, the same cannot be
regarded as a ground to punish the aforementioned employees.
Such being the case, the dismissal of Besana and Rodiel
constituted unfair labor practice under Section 4(a) (1) and (4) of
Republic Act 875:
SEC.4. Unfair Labor Practices.
(a) It shall be unfair labor practice for an employer:
(1) To interfere with, restrain or coerce
employees in the exercise of their rights
guaranteed in Section three;4
xxx

xxx

xxx

(4) To discriminate in regard to hire or tenure of

employment or any term or condition of employment to
encourage or discourage membership in any labor
organization: ... .
Rothenberg has this to say:
... it can be established that the true and basic inspiration
for the employer's act is derived from the employee's
union affiliations or activities, the assignment by the
employer or another reason, whatever its semblance of
validity, is unavailing. Thus, it has been held that the
facts disclosed that the employer's acts in discharging
employees were actually prompted by the employers's
improper interest in the affected employee's improper
interest in the affected employee's union affiliations and
activities, even though the employer urged that his acts
were predicated on economic necessity, desire to give
employment to more needy persons, lack of work,
cessation of operations, refusal to work overtime, refusal
of non-union employees to work with union employees,
seasonal lay-off, libelous remarks against
management, violationof company rules. (Rothenberg on
Labor Relations, pp. 400-401; emphasis supplied.)
Since the only reason or basis for Besana and Rodiel's dismissal
was in fact their actuation as officers of VIBEMWU, the dismissal is
clearly discriminatory.

It is this inconsiderate act of power that makes a subordinate a

rebel; it is this malicious tactic that forces labor to dislike
management; this unjustifiable conduct that creates a gap between
management and labor; and this attitude that makes the laborer
hate the officials of the company to the detriment of all efforts to
harmonize management and labor for the benefit of both as
envisioned by the Industrial Peace Act. So plain from the record is
the bad faith that attended the company's deliberate and calculated
act of unfair labor practice that we find in the present appeal an
obvious attempt to delay and carry on a pretense which this Court
can ill afford to let go without stern disapproval.
WHEREFORE, the decision and resolutions appealed from are
hereby affirmed, with treble costs against petitioner. So ordered.
Bengzon, C.J., Bautista, Angelo, Reyes, J.B.L., Barrera, Paredes,
Dizon, Regala, Makalintal and Zaldivar, JJ., concur.
Concepcion, J., took no part.
Footnotes
1Luzon

Stevedoring Co., Inc. vs. CIR, L-16682, July 26,

1963; Manila Metal Caps and Tin Cans Manufacturing
Co. vs. CIR, L-17579, July 31, 1963.
2April

19, 1960 and April 18, 1960, respectively.

3Besana

was employed since October 4, 1956; Rodiel,

since November, 1957.
4"SEC.

3. Employee's Right to Self-Organization.

Employees shall have the right to self-organization and
to form, join or assist labor organzations 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. ... .

G.R. No. L-51494 August 19, 1982

JUDRIC CANNING CORPORATION, petitioner,
vs.
THE HONORABLE AMADO G. INCIONG, in his capacity as
Deputy Minister of Labor, THE HONORABLE FRANCISCO L.
ESTRELLA, in his capacity as Director of Region IV, Ministry
of Labor, UNITED LUMBER & GENERAL WORKERS OF THE
PHILIPPINES (ULGWP), NORMA PINEDA, LEONILA
MORALES, TERESITA BALMACEDA, VICKY PENALOSA,
ADELINA VALENZUELA and JUANITA REPOSAR, respondents.

their former positions with fun backwages from the date of their
dismissal up to their actual reinstatement. 3
The petitioner corporation appealed to the Ministry of Labor, 4 but
its appeal was dismissed for lack of merit on August 3,
1979. 5 Thereafter, a writ of execution was issued on September
24, 1979. 6
Hence, the present recourse. As prayed for, a temporary
restraining order, restraining the respondents from enforcing,
implementing and/or carrying out the writ of execution dated
September 24, 1979, was issued on November 12, 1979. 7

Florante A. Bautista for petitioner.

The Solicitor General for respondent Deputy Minister.
Eduardo G. Araulo for private respondents.
&
CONCEPCION JR., J.:1wph1.t
Petition for certiorari, with a prayer for the issuance of a writ of
preliminary injunction or restraining order, to annul and set aside
the Order issued by the Regional Director of the Ministry, of Labor
on November 15, 1978 in Case No. R4-STF 5515-78, entitled:
"United Lumber and General Workers of the Philippines (ULGWP),
et al., complainants, versus Judric Canning Corporation,
respondents," which ordered the herein petitioner to reinstate
immediately herein private respondents Norma Pineda, Vicky
Penalosa, Leonila Morales, Teresita Balmaceda, Adelina
Valenzuela, and Juanita Reposar to their former positions with full
backwages from the date of their dismissal up to their actual
reinstatement; the Order issued by the respondent Amado G.
Inciong on August 3, 1979, which affirmed the aforestated order of
the Regional Director and dismissed the appeal of the herein
petitioner; and the Writ of Execution issued in said case on
September 24, 1979.
The records show that the herein private respondents Norma
Pineda, Vicky Penalosa, Leonila Morales, Teresita Balmaceda,
Adelina Valenzuela, and Juanita Reposar are employees of the
petitioner corporation and are members of the United Lumber and
General Workers of the Philippines (ULGWP). On August 19,
1978, the said complainants were allegedly not allowed to report
for work due to their union activities in soliciting membership in a
union yet to be organized in the company and their time cards
were removed from the rack. As a result, the said complainants
and their labor union filed a complaint for unfair labor practice
against the petitioner with Region IV of the Ministry of Labor,
seeking the reinstatement of the complainants with full
backwages. 1
The herein petitioner denied having locked out the complainants
and claims that the said complainants failed to report for work and
abandoned their positions. The petitioner also denied having
knowledge of the union activities of the complainants until August
30, 1978, when it was served notice of a petition for direct
certification filed by the complainant union. 2
After hearing the parties, or on November 15, 1978, the Regional
Director of Region IV of the Ministry of Labor, after finding that the
petitioner had dismissed the complainants without valid cause,
ordered the petitioner to immediately reinstate the complainants to

1. The petitioner contends that the Regional Director's finding,

witch was affirmed by the respondent Deputy Minister of Labor,
that the petitioner is guilty of unfair labor practice for terminating
the services of the respondent union members due to their alleged
union activities, is not supported by the evidence of record.
This contention is untenable.t@lF The record shows that after
the parties had submitted their respective position papers, a
hearing was held, at the conclusion of which, the respondent
Regional Director found that the private respondents did not
abandon their jobs but were dismissed because of their union
activities. This is a finding of fact which may not now be disturbed.
Besides, the private respondents immediately filed a complaint for
illegal dismissal, seeking their reinstatement, on August 24, 1978,
soon after their services were terminated on August 19, 1978. it
would be illogical for the private respondents to abandon their work
and then immediately file an action seeking their reinstatement.
Moreover, there was no reason at all and none has been
suggested by the petitioner, for the private respondents to
abandon their work. No employee with a family to support, like the
private respondents, would abandon their work knowing fully well
of the acute unemployment and underemployment problem and
the difficulty of looking for a means of livelihood. As the Solicitor
General stated: "To get a job is difficult; to run from it is foolhardy."
But, most of all, the petitioner stated that in spite of its position that
the private respondents had abandoned their jobs, it "offered to
pay respondent union members severance pay of one (1)
month." 8 This is a clear admission of the charge of arbitrary
dismissal, for why should the petitioner offer to pay what it calls
"severance pay" if the private respondents were not, indeed,
dismissed, or if the petitioner sincerely believed in the
righteousness of its stance?
2. The petitioner further claims that it could not have committed the
unfair labor practice charge for dismissing some of its employees
due to their alleged union activities because the alleged dismissal
took place more than four (4) months before the organizational
meeting of the union and more than one (1) year before actual
registration of said union with the Labor Organization Division of
the Bureau of Labor Relations.
The contention is without merit. Under Article 248(a) of the Labor
Code of the Philippines, "to interfere with, restrain, or coerce
employees in their exercise of the right to self-organization" is an
unfair labor practice on the part of the employer. Paragraph (d) of
said Article also considers it an unfair labor practice for an
employer "to initiate, dominate, assist or otherwise interfere with
the formation or administration of any labor organization, including
the giving of financial or other support to it. In this particular case,

the private respondents were dismissed or their services were

terminated, because they were soliciting signatures in order to
form a union within the plant. In their affidavit, executed on
September 19, 1978, 9 the private respondents
stated: 1wph1.t
Na kami ay nagkampanya upang papirmahin
namin sa 'membership form' ng ULGWP ang
nakakarami (majority) sa mga empleyado at
nagharap kaming petisyon sa Ministri ng
Paggawa upang masertify ang aming unyon sa
Case No. R4-LRD-M-8-403- 78;

collective agreement dispensing with the

clearance requirement shall be null and void.
However, the questioned order finding the dismissal of the private
respondents to be without just cause is not based upon such
absence of prior clearance alone. The respondent Regional
Director also found that the private respondents were dismissed
because of their union activities and for the failure of the petitioners
to file a report in lieu of prior clearance, as provided for in Section
11, Rule XIV, Book V of the Implementing Rules and
Regulations.t@lF The questioned order further reads, as
follows: 1wph1.t

Na dahil sa aming pagreklamo sa

Pangasiwaan na ibigay sa amin ang mga
biyaya sa ilalim ng Kodigo ng Paggawa at dahil
sa pagtayo at pagkampaniya namin sa mga
empleyado na sumapi sa unyon ay kami ay
pinag-initan at tinanggal sa trabaho ng
Pangasiwaan.
For sure, the petitioner corporation is guilty of unfair labor practice
in interfering with the formation of a labor union and retaliating
against the employees' exercise of their right to self-organization.
3. Finally, the petitioner claims that the "respondent Regional
Director's finding, which was affirmed by respondent Deputy
Minister of Labor that the 'dismissal' of respondent union members
'is conclusively presumed to be without a valid cause' because
petitioner failed to apply for clearance is contrary to the applicable
Rules and Regulations Implementing the Labor Code and is at
variance with jurisprudence on the matter.
The petitioner obviously refers to the following portion of the Order
of the Regional Director dated November 15, 1978: 1wph1.t
The record shows that complainants Norma
Pineda, Vicky Penalosa, Leonila Morales,
Teresita Balmaceda, Adelina Valenzuela and
Juanita Reposar were employed by
respondent in January, 1978, up to August,
1978. They worked continuously up to the time
that their services were terminated by
respondent on the ground of abandonment.
However, respondent did not apply for
clearance with this Office to terminate the
services of complainants. Hence, their
dismissal is conclusively presumed to be
without a valid cause.
Indeed, prior clearance with the Ministry of Labor for the
termination of the private respondents is not necessary in this case
since the private respondents have been employed with the
petitioner corporation for less than one (1) year. Section 1, Rule
XIV, Book V of the Implementing Rules and Regulations provides
as follows: 1wph1.t
Section 1. Requirement for shutdown or
dismissal. No employer may shut down his
establishment or dismiss any of his employees
with at least one year during the last two years,
whether the service is broken or continuous,
without prior clearance issued therefor in
accordance with this Rule. Any provision in a

Moreover, we find that complainants did not

abandon their job. They were terminated due
to the fact that they actively campaigned and
assisted in the organization of their union.
Therefore, the dismissal of complainants is
without valid cause, considering that
respondent failed to justify their action and
report as required under the Labor Code.
The error of the Regional Director in stating that the dismissal of
the private respondents was without just cause in view of the
absence of prior clearance from the Ministry of Labor is, thus, not
sufficient to warrant a reversal of the questioned order.
WHEREFORE, the petition should be, as it is hereby, DISMISSED.
The temporary restraining order heretofore issued is hereby
LIFTED and set ASIDE. With costs against the petitioner.
SO ORDERED.
Barredo (Chairman), Aquino, Guerrero, Abad Santos, De Castro
and Escolin, JJ., concur.1wph1.t

G.R. No. L-30139 September 28, 1972

MANILA HOTEL COMPANY, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and PINES HOTEL
EMPLOYEES ASS'N. (CUGCO), respondents.
G.R. No. L-30755 September 28, 1972
MANILA HOTEL COMPANY and SOFRONIO G.
RIVERA, petitioners,
vs.
COURT OF INDUSTRIAL RELATIONS and PINES HOTEL
EMPLOYEES ASSOCIATION (CUGCO),respondents.
G.R. No. L-30818 September 28, 1972
MANILA HOTEL COMPANY, petitioner,
vs.
PINES HOTEL EMPLOYEES ASS'N. (CUGCO) and COURT OF
INDUSTRIAL RELATIONS, respondents.
Government Corporate Counsel Leopoldo M. Abellera and Trial
Attorney Vicente M. Constantino , Jr. for petitioners.
J. C. Espinas, B. C. Pineda & Associates and Ramon R.
Buenaventura for respondents Union.

TEEHANKEE, J.:p
These three appeals by certiorari filed on various dates in 1969
involve the same parties and various incidents between them,
commencing from an unfair labor practice charge originally filed by
respondent union against petitioner company and culminating in
supplemental proceedings to enjoin the abrupt dismissal and
termination of employment of all eighty-six employees at the Pines
Hotel with its sudden sale on March 28, 1968 to a third party.
Petitioner-employer has appealed from the cease-and-desist order
of respondent court of industrial relations in its decision in the
original unfair labor case as well as from the orders issued by it to
enforce the settlement of the supplemental dispute arising from the
sudden sale of the Pines Hotel and the abrupt dismissal of all its
eighty-six employees with the award and payment to them of
gratuities as agreed to by the company itself and embodied in a
formal resolution of its board of directors, and from the court's en
banc resolutions denying reconsideration thereof.
Hence, the Court in giving due course to the last appeal filed by
petitioner-employer on August 26, 1969, and docketed as Case L30818, ordered per its resolution therein of August 28, 1969 that all
the three cases at bar be jointly taken up and decided, in view of
their related nature.
In L-30755, upon proper complaint filed by respondent court's
prosecutor at the instance of the union and after preliminary
investigation, an unfair labor practice on six (6) counts was filed
against herein petitioner Manila Hotel Company then engaged in
the operation of the Pines Hotel in Baguio City and its co-petitioner
Sofronio G. Rivera as the hotel's then general manager. 1 After due
hearing, respondent court dismissed four (4) counts and found said
petitioners guilty of unfair labor practice on two (2) counts, viz, (1)

the charge of discrimination in the granting of the 1965 Christmas

bonus and (2) the charge of discrimination in the granting of salary
adjustments pursuant to the then newly enacted Minimum Wage
Law, Republic Act 4180, passed on April 21, 1965, and decreeing
a two-peso increase in the daily minimum wage for workers in
industrial and commercial establishments from four pesos (P4.00)
to six pesos (P6.00). Respondent court in its decision
dated December 16, 1968, accordingly ordered respondents
(1) To cease and desist from further
committing such unfair labor practice acts;
(2) To distribute the 1965 Christmas bonus on
a "pro-rata" basis as having been done in the
previous years; and
(3) To implement the salary adjustments of all
the employees, except the assistant manager
of the Pines Hotel, in accordance with their
salary scale in consonance with the minimum
monthly salary of P180.00 as provided for in
the New Minimum Wage Law, effective July 1,
1965 until the sale of the Pines Hotel to the
Resort Hotels Corporation.
Their motion for reconsideration having been denied by
respondent court's en banc resolution of May 20, 1969, petitioners
filed their present appeal on August 11, 1969.
Re L-30139 During the pendency of the unfair labor practice
case in the court below (subject of L-30755,supra), the eighty-six
employees of Pines Hotel were stunned when they abruptly
received on March 28, 1968 written notices that the National
Development Company as owner of the Pines Hotel had sold it to
the Resort Hotels Corporation on that same date, March 28, 1968,
and that since petitioner Manila Hotel Company's operation of the
hotel would cease effective the next day, "(their) services are
hereby terminated as of the close of business hours of March 28,
1968." 2
Since the unfair labor practice case, No. 4506-ULP, was still
pending before the industrial court, respondent union forthwith filed
with said court on the same date, March 28, 1968, an "Urgent
Petition with prayer for a temporary restraining order" 3 complaining
of petitioner's actions in bad faith in abruptly giving them their
termination papers (during the very pendency of their case for
other unfair labor practices on its part) in violation of the guarantee
of their tenure of employment in their subsisting collective
bargaining agreement while disclaiming at their latest conciliation
conference held only twelve (12) days earlier on March 16, 1968
any knowledge of a reported plan to sell the Pines Hotel.
The union accordingly prayed inter alia that "this case be
consolidated with CIR Case No. 4506-ULP" and that pending
consideration of the merits, an ex-parte restraining order be issued
against their abrupt dismissal or termination of services until further
orders of respondent court. The union also promptly established
picket lines in protest of the termination of their members without
due notice and despite their pending urgent petition for an
injunction or restraining order against such termination.
Respondent court took cognizance of the union's petition which
was docketed with the same number as the original unfair labor
practice case as "No. 4506-ULP (1)" and called the parties
immediately to a conference which it set on March 29, and April 2,

1968. 4 At the conference and hearing of the union's urgent

petition for injunction, petitioner-employer expressly manifested
that it was willing to grant retirement gratuity to all the employees,
and its board of directors met and deliberated on April 4, and April
8, 1968 to approve the corresponding resolutions.
Hence, petitioner's board expressly approved the payment of such
gratuity to "those who have served for 20 years or more (who) shall
be paid in accordance with law" and "(T)hat the basis of computing
the gratuity pay shall be the basic salary as of the day of
separation." 5 This expressly refers and applies to the sixteen (16)
[out of 86] employees who have twenty years or more of service
with petitioner company and whose gratuity pay has been ordered
paid as per respondent court's order of December 5, 1968 in the
amounts therein computed.
Notwithstanding petitioner's having deposited with respondent
court pursuant to its own offer the sum of P100,000.00 through its
check on which was written "for payment of gratuity and/or
separation pay and other money claims of the petitioner union,"
and the union in turn having withdrawn its picket line, petitioner
nevertheless questioned the issuance of said order on grounds of
alleged lack of jurisdiction and impropriety thereof. Its motion for
reconsideration having been denied per respondent court's en
banc resolution of January 9, 1969, it filed on February 22, 1969 its
appeal, which was docketed as L-30139.
Re L-30818 In connection with the same sale on March 28,
1968 of the Pines Hotel and the abrupt termination of all its
employees as of the same date, petitioner's board of directors had
likewise approved on April 8, 1968 the payment of retirement
gratuity to the greater remainder of seventy (70) [of a total 86]
employees who had not completed 20 years of service and were
not qualified under the Retirement Law, R.A. No. 186, at the rate of
"one month salary for every year of service, but not exceeding
twelve months." 6
Citing the various manifestations in the record of petitioner's
willingness to pay such gratuity, respondent court issued its order
of February 27, 1969 for the payment of such gratuity not
exceeding 12 months to the remaining seventy (70) employees
who have rendered one year to nineteen years of service to
petitioner company. Nevertheless, as in L-30139, petitioner raised
the same questions of jurisdiction and propriety of the industrial
court's issuance of said payment order. Its motion for
reconsideration having been denied by respondent court's en banc
resolution of May 3, 1969, petitioner filed on August 26, 1969 its
herein appeal, docketed as L-30818.
I
Re L-30755
1. In the original unfair labor practice case, respondent court found
petitioner guilty of discrimination and unfairness in the distribution
of the 1965 Christmas bonus in that it radically departed from its
adopted procedure of distributing pro-rata among all the
employees of the Manila Hotel, Taal Vista Lodge and the Pines
Hotel the traditional Christmas bonus (7% of the net profit of the
company) as approved by the Office of the Economic Coordinator
which it had followed for the past six or seven years prior to 1965.
The industrial court found that instead 'in the year 1965, the Manila
Hotel Company, thru its general manager, distributed the 7% from
the net profit as Christmas bonus in a way that 50% was allotted to

the Manila Hotel employees, 25% to the Taal Vista Lodge

employees and the remaining 25% to the Pines Hotel employees.
With this way of distributing the 7% of the net profit amounting to
P8,239.73, the share of the Manila Hotel amounting to P4,119.63,
when divided equally among its eight employees, each will receive
P500.00 more or less; the share of the Taal Vista Lodge
amounting to P2,060.05, when divided equally among its thirty
employees, each will receive P70.00, more or less; while the share
of the Pines Hotel amounting to P2,060.05, when divided equally
among its one hundred twenty employees, each will receive
P20.00, as their respective bonus." 7
The industrial court stressed that the Pines Hotel employees who
were the most numerous "would receive a lesser bonus than the
employees of the Manila Hotel and Taal Vista Lodge where neither
is there any existing labor organization nor the complainant union
has any member" and that "(T)wo employees of the Manila Hotel,
namely, Modesto Hilario and Margarita Reyes, were granted a
year-end bonus in the amount of P2,011.55 and P1,645.82,
respectively, despite the fact that the latter had been employed by
the company for over a year only, that is in September, 1964."
Petitioner's contention that the giving of the lion's share of the 1965
Christmas bonus to the eight administrative employees at its
Manila office was a valid exercise of discretion on the pretext that
"the head office of the petitioner Manila Hotel realized a net profit
for the year 1965 in the amount of P226,055.42 while the Pines
Hotel and the Taal Vista Lodge incurred heavy losses for the same
period." 8 is shown by the record to be bereft of factual basis. The
record clearly shows that the only income from petitioner's Manila
Hotel is derived from the lease of its hotel building and facilities to
a third party (Mrs. Esperanza Zamora) with the earning of which
petitioner's eight administrative employees at the head office in
Manila had nothing to do, whereas the Pines Hotel and the Taal
Vista Lodge were actually operated as such by petitioner company,
with the Pines Hotel at times making actual profits from operations
in contrast to the Taal Vista Lodge which always showed
operational losses.
Respondent court thus correctly held that: "(T)o the mind of the
Court, whether or not the Pines Hotel incurred losses is of no
moment. The fact that management granted Christmas bonus to its
employees, the same should have been divided equally as it has
been done before. Aside from the Christmas bonus of 50% that
was allocated to the Manila Hotel employees, some of them were
granted year-end bonus while the employees of the Pines Hotel
did not receive any year-end bonus. This is a clear case of
discrimination, it appearing that there is no union at the Manila
Hotel or the Taal Vista Lodge and considering further that lately
respondents had always been beset with demands for better living
conditions from the complainant union as well as strikes being
staged by the union."
The Court finds that petitioner has failed to show any error in
respondent court's decision that petitioner distribute the bonus pro
rata among all its employees regardless of their place of work, as
was consistently done in the previous years, and that respondent
court's order was but a proper exercise of its power under section
5 of Republic Act 875 to grant affirmative relief whenever it has
adjudged the existence of an unfair labor practice.
2. Respondent court also found petitioner guilty on a second count
in the granting of salary adjustments pursuant to the two-peso
increase in the daily minimum wage ordained by the then newly
enacted Republic Act 4180.

On this point, petitioner's contention is that it could not be held

guilty of unfair labor practice because "it is not the herein
petitioners who are not agreeable to paying the respondent union
members a minimum salary of P180.00, but the Office of the
Economic Coordination for the reason that the minimum monthly
salary for said employees, as prescribed by the Interpretative
Bulletin of the Bureau of Labor Standards of the Department of
Labor, is P157.00." 9
The Court finds no error in respondent court's rejection of
petitioner's claims, when it held that it "cannot agree to the
contentions of respondents that their failure to implement the New
Minimum Wage Law was due to the interpretative bulletin of the
Bureau of Labor Standards of the Department of Labor, which in
the opinion of the Office of the Economic Coordinator should apply
to the employees of the Pines Hotel because the said interpretative
bulletin refers to daily wage employees (prescribing a new
minimum monthly salary of P157.00 for daily workers) and not to
monthly paid ones (such as the Pines Hotel employees) and,
besides that, this is a mere opinion. Likewise, the contention that
the company finances do not warrant the revision of the salary
scales of the Pines Hotel employees is untenable considering that
the employees of the Manila Hotel and some employees of the
Taal Vista Lodge where there is no existing labor organization
were given salary adjustments beginning the fiscal period July 1,
1965, and that despite the alleged financial reverses suffered by
the company, the latter was able to grant year-end bonus to two of
its employees, which in effect belies the contention of the company
that they are in a financial strait. Furthermore, the Taal Vista Lodge
had always been losing in its operation while the Pines Hotel
makes profits at times. Yet, despite all these, the respondent
company granted salary adjustments to some employees of the
former without strictly adhering to the aforesaid interpretative
bulletin, which in the Court's opinion was purposely done to
discourage the members of the complainant union." 10
Respondent court's finding of unfair and unjust discrimination in the
granting of salary adjustments pursuant to the two-peso increase
ordained by the then new Minimum Wage Law is amply borne out
by the record, with the eight(8) employees at the Manila office
being granted a total of P18,000.00 in salary adjustments for the
fiscal year July 1, 1965 to June 30, 1966, whereas eighty (80)
regular employees of Pines Hotel received only an aggregate
salary adjustment in the lesser amount of P15,000.00. Stated in
another way, the total salary adjustments given every ten Pines
Hotel employees would not even equal the salary adjustment
given one single Manila office employee.
Hence, without in any way turning down or modifying the increases
and high salary adjustments which petitioner saw fit to grant to its
Manila office employees, respondent court correctly removed the
unfair discrimination by granting the corresponding affirmative
relief to the Pines Hotel employees through ordering the payment
to them by petitioner of the new minimum monthly salary of
P180.00 for monthly-paid employees to which they were entitled
under Republic Act 4180. 11

respondent court took cognizance thereof, permitted its docketing

as a supplemental case of the original unfair labor practice case as
"No. 4506-ULP (1)" and forthwith called the parties to a conference
on March 29, and April 2, 1968.
A settlement of such dispute was worked out at such conference
with petitioner agreeing to pay retirement gratuities to all 86 Pines
Hotel employees as above mentioned and the union in turn
withdrawing its picket line. Petitioner deposited with respondent
court the amount of P100,000.00 (per NDC-issued check dated
April 5, 1968) 12 on account of such gratuity and/or separation pay
and other money claims of the union. An advance equivalent to
one month's salary chargeable to any amount that may be due the
employees was given them therefrom in April, 1968. Much later, on
September 5, 1968, respondent court further issued in the same
case its order for the payment out of said deposit to the employees
of their accrued leaves. Such order was never questioned
challenged by petitioner.
On December 5, 1968, respondent court issued its order for the
payment of the full gratuity of the sixteen (16) Pines Hotel
employees with twenty (20) years or more of service, stating the
premises thereof as follows:
After the order dated September 5, 1968 in the
above-entitled case had been satisfied with the
actual payment of the accrued leaves of
absences of the members of the complainant
union, the other matter deemed by the Court
as the issue to be resolved is the subject of
gratuity. This order particularly refers to those
employees with twenty (20) years or above of
service.
The facts on this matter, are quite clear and to
the point. After the termination of employment
of individual claimants on March 28, 1968, the
Board of Directors of the Manila Hotel
Company, on April 4, 1968, met, deliberated
and decided to extend some monetary benefits
to the terminated employees. The deliberation
was formally reduced to writing in a
subsequent meeting of the same Board on
April 8, 1968. Pertinent portion of the
deliberation reads:
"Paragraph 2:
Those who have served for 20 years or more
shall be paid in accordance with law.
"Paragraph 3:
That the basis of computing the gratuity pay
shall be the basic salary as of the day of
separation. (Exhibit "1-B")

II
Re L-30139

The records is also rich with manifestations of

the Company's counsel reiterating willingness
to pay gratuity in accordance with law. ....

As above stated, upon filing on March 28, 1968 by the union of its
urgent petition with prayer to restrain their abrupt separation from
employment without prior notice by virtue of the sale on that same
date of the Pines Hotel to the Resort Hotels Corporation,

Indeed, the records as well as the evidence is

replete with the willingness of the Company to

pay gratuity to the members of the complainant

union.
The records also show that individual
claimants herein were extended sometime in
April, 1968 an advance equivalent to one
month's salary chargeable against any amount
that may be due them (Exhibit "5")
As to outstanding hotel bills totalling P1,847.23 which respondent
court held to be definitely deductible against the individual
employees who incurred the same, respondent court ruled that it
would hold in its custody the corresponding amount thereof, thus: "
(A)s a condition of the payment of the claims of complainant
members, it was resolved by the Board of Directors of the
Company that 'a) any amount due to the Company from any
employees shall be deducted before payments including their
personal accounts with the Company.' (Exhibit 'A'). The Company
submitted a list of hotel bills which unfortunately were unsupported
with the very evidence of indebtedness. Hence, said hotel bills,
though definitely a deduction from the claims of individual claimant,
for very obvious reasons, will not be disposed of in this order but
will be held in abeyance until after sufficient facts are in the Court's
possession for it to treat later on. Meanwhile, the Court will hold in
its custody the total amount of hotel bills."
Accordingly, respondent court ordered as follows:
IN VIEW OF ALL THE FOREGOING, as
manifested and agreed upon by the
respondents' counsel, the Cashier of the Court
is hereby ordered to issue, subject to the usual
accounting and auditing rules and regulations,
a check in favor of the Pines Hotel Employees
Association (CUGCO), complainant herein,
thru its counsel, Atty. Benjamin C. Pineda, in
the amount of P75,714.77 representing the net
gratuity of the hereunder named employees
who have to their credit twenty years of service
or above and another check in favor of J. C.
Espinas & B. C. Pineda & Associates, thru
Atty. Benjamin C. Pineda, in the amount of
P27,139.00 as attorney's fees.
For the proper guidance of the union president
and Atty. Pineda, who are authorized to make
individual distributions of the claims of the
employees and who must submit a report or
accounting thereafter within fifteen (15) days
from receipt of the total gratuity for those with
twenty (20) years of service or above, less
twenty-five per cent attorney's fees and one
month advance gratuity, the individual
distribution is as stated hereunder, to wit:
(Note: Follows a list of the
names of the sixteen (16)
employees, with five (5)
columns, giving the total
gratuity due each of them,
the 25% attorney's fee
deductible therefrom, hotel
bills deductible from five
(5) employees accountable
therefor, amount of one

month's advance gratuity

deductible from each
employee, and the net
gratuity due each of them.)
The total hotel bills of P1,847.23 shall remain
with the custody of the Court until its further
disposition. There is still a balance of
P78,415.57 remaining with the Court out of the
initial deposits. And so an additional amount of
P26,285.43 must still be deposited with the
Court in order that the full gratuity of those with
twenty years of service or above could be paid.
The Company is therefore ordered to deposit
the said amount of TWENTY-SIX THOUSAND
TWO HUNDRED EIGHTY-FIVE PESOS AND
FORTY-THREE CENTAVOS (P26,285.43)
plus the amount of SIXTY-TWO PESOS AND
EIGHTY-SIX CENTAVOS (P62.86)
representing the Court's deposit fee.
Petitioner bases its present appeal from respondent court's order
on the strength of the "Opposition and/or Motion to Dismiss" dated
April 28, 1968 that it filed with respondent court on May 2,
1968, 13 after the union had filed on April 3, 1968 its "Amended
Urgent Petition" of the same date 14 formally impleading the
National Development Company, owner-seller of Pines Hotel, as
party respondent. 15
Four grounds were stated by petitioner in said "opposition and/or
motion to dismiss," as follows:
(1) that the urgent petition states no valid
cause of action;
(2) that the respondent Court has no
jurisdiction over the subject matter of the
petition and over the respondent;
(3) that the claim set forth in the petition has
been paid, waived, abandoned or otherwise
extinguished; and
(4) that the injunction prayed for does not lie
against the Company.
The first two grounds are now re-assigned by petitioner as errors
on appeal, claiming that respondent court had no jurisdiction over
the case below because "there exists no longer employeremployee relationship notwithstanding that the case refers to acts
of unfair labor practice where no reinstatement is sought" and that
"the lawyer of the respondent union cannot file charge for unfair
labor practices directly with the court, because it is only the
prosecutor of the respondent CIR that can file the same pursuant
to sec. 5(b) of Republic Act 875" and that "respondent CIR cannot
just issue an order granting awards without first resolving a motion
to dismiss for lack of jurisdiction and/or granting (petitioner) its right
to file its answer to a complaint." 16
These alleged errors assigned now by petitioner are actually moot
and academic, for even as of the time petitioner had filed the same
with respondent court on May 2, 1968, it had already recognized
respondent court's valid jurisdiction over the unfair labor complaint
raised by the union over the abrupt termination of services of the
Pines Hotel employees and had come to a settlement of the

dispute as early as April, 1968 with its agreement to pay retirement

gratuity to the employees in two categories (those with 20 years of
service and above, and those with 1 to 19 years of service, supra)
and had deposited with respondent court the sum of P100,000.00
for the purpose. On the other hand, the union, accepting the
settlement, had lifted their picket line and no longer insisted on its
members' guarantee of tenure of employment under their
subsisting collective bargaining agreement.
Since the employees' claims had been settled with petitioner's
agreement to pay them retirement gratuity, respondent court
certainly had jurisdiction to issue its questioned payment order of
December 5, 1968 toimplement the very agreement and settlement
arrived at by the parties in the case before it.
As a matter of fact, the third-stated ground of petitioner's formal
opposition below which it completely ignores in the present
appeal was that the union's claim or demand has been paid,
waived, abandoned or otherwise extinguished, citing precisely the
policy adopted as early as April 5, 1968 by petitioner "regarding the
payment of gratuity and/or termination pay to said employees,"
submitting photostat copy of the board's resolution thereon,
recording petitioner's "good faith and earnest desire" and
resolution to deposit P200,000.00 for the purpose and citing
union's counsel's conformity to the settlement and to the proviso
"that all pending cases in relation to the present dispute against
MH Co, NDC and Resort Hotels Corporation and its officials shall
be withdrawn by the Pines Hotel Employees Association (Cugco)
and its members and to lift the picket lines at the Pines Hotel." 17
Such withdrawal of the case could not of course be literally
implemented, as petitioner would insinuate. The union, did
withdraw its complaint for continued employment of its members
despite the sale of the Pines Hotel and it did lift the picket line,
leaving the new owner to go freely about its business. The case
itself had to remain for implementation in turn of petitioner's
undertaking to pay retirement gratuity to all the 86 Pines Hotel
employees who had lost their jobs, and this is exactly what
respondent court has done through its December 5, 1968 payment
order. Respondent court having properly assumed jurisdiction over
the dispute and sanctioned the settlement thereof offered by
petitioner itself, certainly had unquestioned jurisdiction in all
incidents relating to the implementation and carrying out of the
settlement.

next day, March 29, 1968 and April 2, 1968. No prejudice could be
said to have been caused to petitioner thereby, for the very merit of
the union complaint is borne out by the fact that the parties
promptly arrived at a satisfactory settlement thereof upon
petitioner's undertaking to pay retirement gratuity to all eighty-six
affected employees. By the same token, respondent court no
longer had to formally rule on petitioner's "opposition and/or motion
to dismiss" of May 2, 1968 by virtue of the earlier settlement
reached by the parties in April, 1968, as already shown above.
Only one point apparently not raised by petitioner in its oppositionmotion below merits mention, and it is that payment of the
retirement gratuity to the employees directly through the
respondent court from the amount therein deposited by petitioner
(and not through the Government Service Insurance System in
accordance with the usual practice) might disregard and not take
into account "some accountabilities" and "outstanding obligations"
of said employees. 18 It is to be expected that respondent court will
take the necessary safeguard measures to avoid such
contingency, by properly calling in a GSIS representative in charge
of the GSIS accounts of said sixteen (16) employees to make the
proper verification before authorizing final payment of the amounts
due to them.
III
Re L-30818
This appeal involves the last order issued on February 27, 1969 by
respondent court for the payment to the greater remainder of
seventy (70) Pines Hotel employees with less than twenty (20)
years of service (and therefore not qualified for gratuity under the
Retirement Act, R.A. No. 186) of retirement gratuity of "one month
salary for every year of service, but not exceeding twelve months"
as offered and agreed to by petitioner itself, pursuant to its past
practice.
In said order, respondent court, after noting the previous payment
of the accrued leaves and one month's salary advance, and the
manifestations of record evidencing petitioner's reiterations of its
willingness to pay such gratuity, as in the case of the sixteen other
employees with 20 years or over of service (in Case L-30139),
noted that:

Prescinding from the foregoing nevertheless and dealing with the

alleged errors which petitioner has assigned on appeal, it is
obvious that its claim that the union members sought no
reinstatement has no factual basis in the record. The union
precisely sought an injunction against the abrupt termination of its
members and claimed that they were entitled to continued
employment as guaranteed by their collective bargaining
agreement.

After the order dated September 5, 1968 in the

above-entitled case had been satisfied with the
actual payments of the accrued leaves of
absences of the members of complainant
union, the remaining issue to be determined is
the subject of gratuity for those with services
ranging from one year to nineteen years.
Those with twenty or above years of service
were treated in a separate order.

Petitioner's claim that the union counsel could not file an unfair
labor practice charge directly with respondent court may be correct
as far as it goes. What the union had actually filed on March 28,
1968 was a separate "urgent petition with prayer for a restraining
order." Respondent court however in effect granted the union's
alternative prayer for consolidation of the new unfair labor practice
charge with the union's pending case No. 4506-ULP. Assuming
that a prior preliminary investigation was necessary to determine
the merit of the complaint, it cannot be gainsaid that in effect
respondent court undertook such preliminary investigation on its
own when it immediately called the parties to a conference on the

It appears that the facts are quite clear and not

controverted. After the termination of
employment of the individual complainants on
March 28, 1968, the Board of Directors of the
Manila Hotel Company, on April 4, 1968 met,
deliberated and decided to extend some
monetary benefits to the terminated employees
who are incidentally members of complainant
union. This deliberation was formally reduced
to writing in a subsequent meeting on April 8,

1968. Pertinent portions of the deliberation

reads:
"Paragraph 1
Employees who have
rendered one year to
nineteen years of services
with the Manila Hotel
Company should be paid
one month salary for every
year of service, but not
exceeding 12 months"
(Exh. 1-B).

ACCORDINGLY, the decision, orders and resolutions appealed

from are hereby affirmed. With reference to Case L-30139
involving payment of retirement gratuity to the sixteen (16)
qualified employees therein named, respondent court is directed to
make the corresponding verification that their accountabilities to
the Government Service Insurance System as such membersemployees are fully discharged before final payment of the
amounts found due to them under the appealed order, herein
affirmed, is made. No costs.
Concepcion, C.J., Zaldivar, Castro, Makasiar, Antonio and
Esguerra, JJ., concur.
Makalintal, J., is on leave.

xxx xxx xxx

Finally the company admitted that former
employees of the Manila Hotel Company in
Manila were given one month pay for every
year of service but not exceeding twelve (12)
months when their services were terminated as
a result of the relief of Mr. Zamora in 1954,
June 30, 1954, except those employees who
were transferred to the Pines Hotel. (t.s.n.,
page 122, Aug. 9, 1968)
Respondent court, as in L-30139, made the same reservation of
holding in abeyance settlement of outstanding hotel bills in the total
amount of P2,921.94 against the individual employees liable
therefor until after presentation by petitioner of the necessary
evidence.
Respondent court accordingly ordered the following:
From the evidence, testimonial and documentary, attached
herewith is a statement of the claims of the individual workers
including hotel bills, one-month advance pay, and 25% attorney's
fees. (Exh. B-2, B-3) 19
In view of the foregoing, the respondent,
Manila Hotel Company, is hereby ordered to
deposit with the Court the amount of
P103,856.30 in order to meet the total claims
of the workers less their one-month advance
pay," As already adverted to above, petitioner
assigns in this appeal the very same identical
errors assigned by it in Case L-30139, based
on its "opposition and/or motion to dismiss"
filed on May 2, 1968 with respondent court.
Accordingly, petitioner's appeal must perforce be rejected for the
very same grounds already stated above with reference to Case L30139. As in said case L-30139, petitioner has in no manner
questioned or disputed the factual bases and findings of
respondent court as to its undertaking and agreement in the record
to pay the retirement gratuity to the employees, by way of
settlement of their dispute arising from the protested abrupt
termination of their employment with the sudden sale of the Pines
Hotel to a third party.
Respondent court in issuing the appealed payment order was but
acting within its jurisdiction properly assumed ofimplementing the
very agreement and settlement for payment of retirement gratuity
arrived at by the parties in the case before it.

Fernando, J., concurs except as to the last paragraph in II -- re L30139.

Separate Opinions
BARREDO, J., concurring:
I agree fully with the judgment in this case. The only purpose of
this separate concurrence is to emphasize the fact that the appeals
in G.R. Nos. L-30139 and 30818 are completely devoid of merit
and should be declared as frivolous and dilatory. The attack
against the decision and orders of the Court of Industrial Relations
involved in said appeals for want of jurisdiction has absolutely no
basis.
The record shows that on March 28, 1968, when respondent union
filed with the Industrial Court its "Urgent Petition, with prayer for a
temporary restraining order" to enjoin the implementation of the
abrupt termination of the services of its members working at the
Pines Hotel, there was pending with said court an unfair labor
practice case, No. 4506-ULP, in which the matter involved was
discrimination in the payment of Christmas bonus and salary
adjustments. While it may be true that such abrupt termination of
the services of said union members could be considered
independently of the then pending unfair labor practice case, the
developments that swiftly took place after the filing of the union's
petition on March 28, 1968 made resort to the usual procedure in
unfair labor practice cases unnecessary insofar as the matter of
such abrupt termination of services was concerned, for the simple
reason that when the court tried to look into the union's grievance
in the conferences of March 29 and April 2, 1968, the question of
whether or not petitioner had committed an unfair labor practice in
relation to the termination of services just mentioned had become
moot and academic, considering that by resolving to grant
gratuities to the members concerned, and the latter agreeing
thereto, it is as if the said abrupt termination of services were
admitted to be improper and unjustified without granting the said
gratuities. Accordingly, there was no reason anymore for the court
to proceed any further.
The pertinent provision of the Industrial Peace Act, Section 5,
Paragraphs (a) and (b) read as follows:
(a) The Court shall have jurisdiction over the
prevention of unfair labor practices and is
empowered to prevent any person from
engaging in any unfair labor practice. This
power shall be exclusive and shall not be
affected by any other means of adjustment or
prevention that has been or may be

established by an agreement, code, law or

otherwise.
(b) The Court shall observe the following
procedure without resort to mediation and
conciliation as provided in section four of
Commonwealth Act Numbered One hundred
and three, as amended, or to any pre-trial
procedure. Whenever it is charged by an
offended party or his representative that any
person has engaged or is engaging in any
such unfair labor practice, the Court or any
agency or agent designated by the Court must
investigate such charge and shall have the
power to issue and cause to be served upon
such person a complaint stating the charges in
that respect and containing a notice of hearing
before the Court or a member thereof, or
before a designated Hearing Examiner at the
time and place fixed therein not less than five
nor more than ten days after serving the said
complaint. The person complained of shall
have the right to file an answer to the
complaint and to appear in person otherwise
(but if the Court shall so request, the
appearance shall be personal) and give
testimony at the place and time fixed in the
complaint. In the discretion of the Court, a
member thereof or a Hearing Examiner, any
other person may be allowed to intervene in
the said proceeding and to present testimony.
In any such proceeding, the rules of evidence
prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of
this Act that the Court and its members and
Hearing Examiners shall use every and all
reasonable means to ascertain the facts in
each case speedily and objectively and without
regard to technicalities of law or procedure. In
rendering its decisions, the Court shall not be
bound solely by the evidence presented during
the hearing but may avail itself of all other
means such as (but not limited to) ocular
inspections and questioning of well-informed
persons which results must be made a part of
the record. In the proceeding before the Court
or a Hearing Examiner thereof, the parties
shall not be required to be represented by legal
counsel and it shall be the duty and obligation
of the Court or Hearing Examiner to examine
and cross-examine witnesses on behalf of the
parties and to assist in the orderly presentation
of the evidence.
It is true that under these provisions, there is an indication that
mediation and conciliation as well as pre-trial procedure need not
be resorted to in unfair labor practice cases, but this is because
such procedures may unnecessarily delay the prevention of the
unfair labor practice complained of, contrary to the spirit of the law.
I take it, however, that the very provisions of the section
aforequoted to the effect that "In any such proceeding, the rules of
evidence prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of this Act that the Court
and its members and Hearing Examiners shall use all reasonable
means to ascertain the facts in each case speedily and objectively
without regard to technicalities of law or procedure" even to the

extent of allowing the Court to base its decision on matters beyond

those presented during the hearing and parties who are nonlawyers to appear without counsel, viewed properly, do not enjoin
the immediate termination of unfair labor practice case if, for one
reason or another, all the parties concerned happen to be before
the Court and after an exchange of views agree on how to fairly
settle the case without further proceedings, when by doing so, as
in these cases, the unfair labor practice charged is practically
assumed to be true and the complainants are granted relief which
appears to the Court just and consistent with the objective of the
law, under the circumstances obtaining. In other words, my view is
that the procedure for unfair labor practice cases outlined in
Paragraph (b) above should be generally followed, but it is not
violative of the law and subversive of the broad jurisdiction of the
Industrial Court conferred in Paragraph (a) above for said Court to
adopt in any given case a speedier and more practical procedure
for accomplishing the purpose of the law and rendering justice to
the parties.
Separate Opinions
BARREDO, J., concurring:
I agree fully with the judgment in this case. The only purpose of
this separate concurrence is to emphasize the fact that the appeals
in G.R. Nos. L-30139 and 30818 are completely devoid of merit
and should be declared as frivolous and dilatory. The attack
against the decision and orders of the Court of Industrial Relations
involved in said appeals for want of jurisdiction has absolutely no
basis.
The record shows that on March 28, 1968, when respondent union
filed with the Industrial Court its "Urgent Petition, with prayer for a
temporary restraining order" to enjoin the implementation of the
abrupt termination of the services of its members working at the
Pines Hotel, there was pending with said court an unfair labor
practice case, No. 4506-ULP, in which the matter involved was
discrimination in the payment of Christmas bonus and salary
adjustments. While it may be true that such abrupt termination of
the services of said union members could be considered
independently of the then pending unfair labor practice case, the
developments that swiftly took place after the filing of the union's
petition on March 28, 1968 made resort to the usual procedure in
unfair labor practice cases unnecessary insofar as the matter of
such abrupt termination of services was concerned, for the simple
reason that when the court tried to look into the union's grievance
in the conferences of March 29 and April 2, 1968, the question of
whether or not petitioner had committed an unfair labor practice in
relation to the termination of services just mentioned had become
moot and academic, considering that by resolving to grant
gratuities to the members concerned, and the latter agreeing
thereto, it is as if the said abrupt termination of services were
admitted to be improper and unjustified without granting the said
gratuities. Accordingly, there was no reason anymore for the court
to proceed any further.
The pertinent provision of the Industrial Peace Act, Section 5,
Paragraphs (a) and (b) read as follows:
(a) The Court shall have jurisdiction over the
prevention of unfair labor practices and is
empowered to prevent any person from
engaging in any unfair labor practice. This
power shall be exclusive and shall not be
affected by any other means of adjustment or

prevention that has been or may be

established by an agreement, code, law or
otherwise.
(b) The Court shall observe the following
procedure without resort to mediation and
conciliation as provided in section four of
Commonwealth Act Numbered One hundred
and three, as amended, or to any pre-trial
procedure. Whenever it is charged by an
offended party or his representative that any
person has engaged or is engaging in any
such unfair labor practice, the Court or any
agency or agent designated by the Court must
investigate such charge and shall have the
power to issue and cause to be served upon
such person a complaint stating the charges in
that respect and containing a notice of hearing
before the Court or a member thereof, or
before a designated Hearing Examiner at the
time and place fixed therein not less than five
nor more than ten days after serving the said
complaint. The person complained of shall
have the right to file an answer to the
complaint and to appear in person otherwise
(but if the Court shall so request, the
appearance shall be personal) and give
testimony at the place and time fixed in the
complaint. In the discretion of the Court, a
member thereof or a Hearing Examiner, any
other person may be allowed to intervene in
the said proceeding and to present testimony.
In any such proceeding, the rules of evidence
prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of
this Act that the Court and its members and
Hearing Examiners shall use every and all
reasonable means to ascertain the facts in
each case speedily and objectively and without
regard to technicalities of law or procedure. In
rendering its decisions, the Court shall not be
bound solely by the evidence presented during
the hearing but may avail itself of all other
means such as (but not limited to) ocular
inspections and questioning of well-informed
persons which results must be made a part of
the record. In the proceeding before the Court
or a Hearing Examiner thereof, the parties
shall not be required to be represented by legal
counsel and it shall be the duty and obligation
of the Court or Hearing Examiner to examine
and cross-examine witnesses on behalf of the
parties and to assist in the orderly presentation
of the evidence.
It is true that under these provisions, there is an indication that
mediation and conciliation as well as pre-trial procedure need not
be resorted to in unfair labor practice cases, but this is because
such procedures may unnecessarily delay the prevention of the
unfair labor practice complained of, contrary to the spirit of the law.
I take it, however, that the very provisions of the section
aforequoted to the effect that "In any such proceeding, the rules of
evidence prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of this Act that the Court
and its members and Hearing Examiners shall use all reasonable
means to ascertain the facts in each case speedily and objectively

without regard to technicalities of law or procedure" even to the

extent of allowing the Court to base its decision on matters beyond
those presented during the hearing and parties who are nonlawyers to appear without counsel, viewed properly, do not enjoin
the immediate termination of unfair labor practice case if, for one
reason or another, all the parties concerned happen to be before
the Court and after an exchange of views agree on how to fairly
settle the case without further proceedings, when by doing so, as
in these cases, the unfair labor practice charged is practically
assumed to be true and the complainants are granted relief which
appears to the Court just and consistent with the objective of the
law, under the circumstances obtaining. In other words, my view is
that the procedure for unfair labor practice cases outlined in
Paragraph (b) above should be generally followed, but it is not
violative of the law and subversive of the broad jurisdiction of the
Industrial Court conferred in Paragraph (a) above for said Court to
adopt in any given case a speedier and more practical procedure
for accomplishing the purpose of the law and rendering justice to
the parties.

[G.R. No. 119205. April 15, 1998]

SIME DARBY PILIPINAS, INC., petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION (2ND DIVISION)
and SIME DARBY SALARIED EMPLOYEES
ASSOCIATION (ALU-TUCP), respondents.
DECISION
BELLOSILLO, J.:
Is the act of management in revising the work schedule of its
employees and discarding their paid lunch break constitutive of
unfair labor practice?
Sime Darby Pilipinas, Inc., petitioner, is engaged in the
manufacture of automotive tires, tubes and other rubber
products. Sime Darby Salaried Employees Association (ALUTUCP), private respondent, is an association of monthly salaried
employees of petitioner at its Marikina factory. Prior to the present
controversy, all company factory workers in Marikina including
members of private respondent union worked from 7:45 a.m. to
3:45 p.m. with a 30 minute paid on call lunch break.
On 14 August 1992 petitioner issued a memorandum to all
factory-based employees advising all its monthly salaried
employees in its Marikina Tire Plant, except those in the
Warehouse and Quality Assurance Department working on shifts,
a change in work schedule effective 14 September 1992 thus
TO: ALL FACTORY-BASED EMPLOYEES
RE: NEW WORK SCHEDULE
Effective Monday, September 14, 1992, the new work
schedule factory office will be as follows:
7:45 A.M. 4:45 P.M. (Monday to Friday)
7:45 A.M. 11:45 P.M. (Saturday).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. 10:30 A.M. and
2:30 P.M. 3:30 P.M.
Lunch break will be between:
12:00 NN 1:00 P.M. (Monday to Friday).
Excluded from the above schedule are the Warehouse
and QA employees who are on shifting. Their work
and break time schedules will be maintained as it is
now.[1]
Since private respondent felt affected adversely by the
change in the work schedule and discontinuance of the 30-minute
paid on call lunch break, it filed on behalf of its members a
complaint with the Labor Arbiter for unfair labor practice,
discrimination and evasion of liability pursuant to the resolution of
this Court in Sime Darby International Tire Co., Inc. v.
NLRC.[2]However, the Labor Arbiter dismissed the complaint on the
ground that the change in the work schedule and the elimination of
the 30-mi nute paid lunch break of the factory workers constituted
a valid exercise of management prerogative and that the new work

schedule, break time and one-hour lunch break did not have the
effect of diminishing the benefits granted to factory workers as the
working time did not exceed eight (8) hours.
The Labor Arbiter further held that the factory workers would
be justly enriched if they continued to be paid during their lunch
break even if they were no longer on call or required to work
during the break. He also ruled that the decision in the
earlier Sime Darby case[3] was not applicable to the instant case
because the former involved discrimination of certain employees
who were not paid for their 30-minute lunch break while the rest of
the factory workers were paid; hence, this Court ordered that the
discriminated employees be similarly paid the additional
compensation for their lunch break.
Private respondent appealed to respondent National Labor
Relations Commission (NLRC) which sustained the Labor Arbiter
and dismissed the appeal.[4] However, upon motion for
reconsideration by private respondent, the NLRC, this time with
two (2) new commissioners replacing those who earlier retired,
reversed its arlier decision of 20 April 1994 as well as the decision
of the Labor Arbiter.[5] The NLRC considered the decision of this
Court in the Sime Darby case of 1990 as the law of the case
wherein petitioner was ordered to pay the money value of these
covered employees deprived of lunch and/or working time
breaks. The public respondent declared that the new work
schedule deprived the employees of the benefits of time-honored
company practice of providing its employees a 30-minute paid
lunch break resulting in an unjust diminution of company privileges
prohibited by Art. 100 of the Labor Code, as amended. Hence, this
petition alleging that public respondent committed grave abuse of
discretion amounting to lack or excess of jurisdiction: (a) in ruling
that petitioner committed unfair labor practice in the
implementation of the change in the work schedule of its
employees from 7:45 a.m. 3:45 p.m. to 7:45 a.m. 4:45 p.m.
with one-hour lunch break from 12:00 nn to 1:00 p.m.; (b) in
holding that there was diminution of benefits when the 30-minute
paid lunch break was eliminated; (c) in failing to consider that in
the earlier Sime Darby case affirming the decision of the NLRC,
petitioner was authorized to discontinue the practice of having a
30-minute paid lunch break should it decide to do so; and (d) in
ignoring petitioners inherent management prerogative of
determining and fixing the work schedule of its employees which is
expressly recognized in the collective bargaining agreement
between petitioner and private respondent.
The Office of the Solicitor General filed in lieu of comment a
manifestation and motion recommending that the petition be
granted, alleging that the 14 August 1992 memorandum which
contained the new work schedule was not discriminatory of the
union members nor did it constitute unfair labor practice on the part
of petitioner.
We agree, hence, we sustain petitioner. The right to fix the
work schedules of the employees rests principally on their
employer. In the instant case petitioner, as the employer, cites as
reason for the adjustment the efficient conduct of its business
operations and its improved production.[6] It rationalizes that while
the old work schedule included a 30-minute paid lunch break, the
employees could be called upon to do jobs during that period as
they were on call. Even if denominated as lunch break, this
period could very well be considered as working time because the
factory employees were required to work if necessary and were
paid accordingly for working. With the new work schedule, the
employees are now given a one-hour lunch break without any
interruption from their employer. For a full one-hour undisturbed
lunch break, the employees can freely and effectively use this hour
not only for eating but also for their rest and comfort which are

conducive to more efficiency and better performance in their

work. Since the employees are no longer required to work during
this one-hour lunch break, there is no more need for them to be
compensated for this period. We agree with the Labor Arbiter that
the new work schedule fully complies with the daily work period of
eight (8) hours without violating the Labor Code.[7] Besides, the
new schedule applies to all employees in the factory similarly
situated whether they are union members or not.[8]
Consequently, it was grave abuse of discretion for public
respondent to equate the earlier Sime Darby case[9] with the facts
obtaining in this case. That ruling in the former case is not
applicable here. The issue in that case involved the matter of
granting lunch breaks to certain employees while depriving the
other employees of such breaks. This Court affirmed in that case
the NLRCs finding that such act of management was
discriminatory and constituted unfair labor practice.
The case before us does not pertain to any controversy
involving discrimination of employees but only the issue of whether
the change of work schedule, which management deems
necessary to increase production, constitutes unfair labor
practice. As shown by the records, the change effected by
management with regard to working time is made to apply to all
factory employees engaged in the same line of work whether or
not they are members of private respondent union. Hence, it
cannot be said that the new scheme adopted by management
prejudices the right of private respondent to self-organization.
Every business enterprise endeavors to increase its
profits. In the process, it may devise means to attain that
goal. Even as the law is solicitous of the welfare of the employees,
it must also protect the right of an employer to exercise what are
clearly management prerogatives.[10] Thus, management is free to
regulate, according to its own discretion and judgment, all aspects
of employment, including hiring, work assignments, working
methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay off of workers and discipline,
dismissal and recall of workers.[11] Further, management retains
the prerogative, whenever exigencies of the service so require, to
change the working hours of its employees. So long as such
prerogative is exercised in good faith for the advancement of the
employers interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or
under valid agreements, this Court will uphold such exercise.[12]
While the Constitution is committed to the policy of social
justice and the protection of the working class, it should not be
supposed that every dispute will be automatically decided in favor
of labor. Management also has right which, as such, are entitled to
respect and enforcement in the interest of simple fair
play. Although this Court has inclined more often than not toward
the worker and has upheld his cause in his conflicts with the
employer, such as favoritism has not blinded the Court to the rule
that justice is in every case for the deserving, to be dispensed in
the light of the established facts and the applicable law and
doctrine.[13]
WHEREFORE, the Petition is GRANTED. The Resolution of
the National Labor Relations Commission dated 29 November
1994 is SET ASIDE and the decision of the Labor Arbiter dated 26
November 1993 dismissing the complaint against petitioner for
unfair labor practice is AFFIRMED.
SO ORDERED.
Davide, Jr., (Chairman), Vitug,
Panganiban, and Quisumbing, JJ., concur.

G.R. No. 73504 October 15, 1991

BALMAR FARMS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND
ASSOCIATED LABOR UNIONS (ALU), respondent.
Rudy G. Agravante for petitioner.
PARAS, J.:
This is a petition for certiorari which seeks to reverse and set
aside: (a) the resolution * datedJuly 31, 1985 by the respondent
commission in NLRC Case No. 1114-LR-XI-83 entitled "Associated
Labor Unions (ALU) v. Balmar Farms, Inc. (BALMAR)" which
dismissed the petition for lack of merit and affirmed the decision of
the Labor Arbiter dated March 13, 1984, and (b) the resolution
dated October 4, 1985 denying the motion for reconsideration.
Petitioner Balmar Farms, Inc. (BALMAR for short) is a corporation
duly organized and existing under and by virtue of the laws of the
Philippines, engaged in the planting of bananas with operation at
Kapalong, Davao and address at 60 V. Mapa St., Davao City;
while private respondent Associated Labor Union (ALU for short) is
a labor organization duly registered with the Ministry of Labor and
Employment (now Department of Labor and Employment) with
Regional Office at 96-B corner Roxas-Artiaga Sts., Davao City
(Rollo, pp. 5-6).
On October 27, 1982, Med-Arbiter Antonino G. Jolejole issued an
order certifying the ALU as the sole and exclusive bargaining
representative of the rank and file workers and employees of
BALMAR, Kapalong, Davao del Norte, it appearing that in the
certification election held at the premises of the employer Balmar
on October 19, 1982, the ALU obtained the majority of the votes
cast (Rollo, p. 26).
Sometime in November, 1982, BALMAR received a copy of the
letter dated November 12, 1982 signed by Johnny Y. Luces in his
capacity as President of the BALMAR Employees Association,
addressed to the Regional Director, Hon. Eugenio Sagmit, Jr. The
letter states that:
... after discussing this matter among
ourselves, it was agreed by more than a
majority of all that we disregard ALU in
representing us. We do not have any CBA at
present. We are in better position to negotiate
directly with management for our working
conditions being aware of what are our basic
needs.
We are filing this with your Office so that you
could help us in requesting BALMAR FARMS
to negotiate directly with us and not thru ALU.
(Rollo, p. 44).

Luces, president of the Balmar Farms Employees Association,

addressed to the Regional Director of the Ministry of Labor and
Employment (MOLE), about their "disaffiliation from ALU" (Rollo, p.
31).
In another letter dated March 1, 1983, ALU answered BALMAR's
letter of February 25, 1983 and requested that it be recognized as
the bargaining representative it being certified by the MOLE as the
sole and exclusive bargaining representative of BALMAR's rank
and file workers (Rollo, p. 32).
On March 10, 1983, BALMAR replied to ALU's letter of March 1,
1983, stating that the management was requested by Balmar
Farms Employees Association to negotiate with them directly and
not with ALU because ALU has been dis-authorized as the agent
of the BALMAR employees. BALMAR further contended that ALU
has to disprove the dis-authorization for only then can BALMAR
negotiate with ALU (Rollo, p. 33).
For alleged refusal to bargain, ALU filed a complaint for unfair
labor practice and damages against BALMAR docketed as NLRC
Case No. 1114-LR-XI-83 (Rollo, pp. 22-24).
The parties were required by the Labor Arbiter to submit their
position papers. ALU filed its position paper dated May 18, 1983
(Rollo, pp. 34-38), while BALMAR filed its position paper dated
May 20, 1983 (Rollo, pp. 40-42).
On the basis of the position papers submitted by the parties, Labor
Arbiter Potenciano S. Canizares, Jr. rendered a decision dated
March 13, 1984, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered:
1. Declaring the respondent Balmar Farms,
Inc. guilty of the unfair labor practice acts
complained of;
2. Ordering the respondent Balmar Farms, Inc.
to cease and desist from further committing
unfair labor practice acts; and
3. Ordering the respondent Balmar Farms, Inc.
to bargain collectively in good faith with the
complainant Associated Labor Union.
The claim for damages is hereby dismissed for
lack of merit. (Rollo, p. 49).
From the foregoing decision, BALMAR appealed to the National
Labor Relations Commission (NLRC) by filing a Memorandum on
Appeal (Rollo, pp. 50-55).
On July 31, 1985, the NLRC rendered its questioned resolution,
the dispositive part of which reads:

That on February 8, 1983, ALU sent a letter to BALMAR, attaching

therewith their proposals for collective bargaining agreement
(Rollo, pp. 27-30).

WHEREFORE, premises considered, the

appeal is as it is hereby DISMISSED for
obvious lack of merit and the appealed
Decision affirmed en toto.

On February 25, 1983, BALMAR made a reply to the effect that it

can not favorably act on their request for the reason, among
others, that it has been furnished a copy of the letter of Mr. Johnny

SO ORDERED. (Rollo, pp. 19-20).

On September 4, 1985, BALMAR moved for the reconsideration of

the resolution of the NLRC (Rollo, pp. 57-59). And on October 4,
1985, the NLRC issued a resolution denying the motion for
reconsideration (Rollo, p. 21).
Hence, this petition.
The pivotal issue in this case is whether or not petitioner BALMAR
is guilty of unfair labor practice for refusing to bargain collectively
with ALU.
The petition is devoid of merit.
The record shows that on October 27, 1982, Med-Arbiter Antonino
G. Jolejole issued an order certifying ALU as the sole and
exclusive bargaining representative of the rank and file workers
and employees of BALMAR, it appearing that in the certification
election held at the premises of the employer BALMAR on October
19, 1982, ALU obtained the majority of the votes cast.
The purpose of certification election is to give the employees true
representation in their collective bargaining with an employer
(Confederation of Citizens Labor Union (CCLU) v. Noriel, 116
SCRA 649 [1982]), because certification election is the most
democratic and expeditious method by which the laborers can
freely determine the union that shall act as their representative in
their dealing with the establishment where they are working
(National Assocation of Free Trade Union v. Bureau of Labor
Relations, 161 SCRA 246 [1988]). It is the most effective way of
determining which labor organization can truly represent the
working force (PLUM Federation of Industrial and Agrarian
Workers v. Noriel, 119 SCRA 299 [1982]).

more than a majority of them would like to negotiate directly with

their employer BALMAR. There is no showing, however, that said
letter was favorably acted upon, much less, is there an order
superseding the Med-Arbiter's order of October 27, 1982 certifying
ALU as the sole and exclusive bargaining representative of the
rank and file workerks of BALMAR.
BALMAR cannot also invoke good faith in refusing to negotiate
with ALU, considering that the latter has been certified as the
exclusive bargaining representative of BALMAR rank and file
employees. As observed by the Solicitor General, BALMAR'S
pretense that majority of its rank and file employees disaffiliated
simply because of a letter it received to that effect, all the more
sustains the finding of bad faith for it is not for the petitioner
BALMAR to question which group is the collective bargaining
representative of its rank and file employees.
Balmar's taking side with the rank and file employee who allegedly
disaffiliated, renders its stand on the matter highly suspicious
(Rollo, pp. 76-77).
It can, therefore, be inferred that BALMAR's refusal to bargain
collectively with ALU is a clear act of unfair labor practice. Article
248 (Labor Code, as amended), enumerates unfair labor practices
committed by employers such as for them:
(g) To violate the duty to bargain collectively as
prescribed by this Code;
PREMISES CONSIDERED, the petition is DISMISSED for lack of
merit and the assailed resolution is AFFIRMED.
SO ORDERED.

Employees (like the employees in the case at bar) have a

constitutional right to choose their own bargaining representative
(Phil. Airlines Employees' Association (PALEA) v. Ferrer-Calleja,
162 SCRA 246 [1988]) and it is only through certification election
that they can obtain this purpose.
In the bargaining process, the workers and employer shall be
represented by their exclusive bargaining representatives. The
labor organization designated or selected by the majority of
employees in an appropriate collective bargaining unit, shall be the
exclusive representative of the employees in such unit for the
purpose of collective bargaining. In the case at bar, it is the ALU
which is the exclusive bargaining representative of BALMAR
employees and as such it has the right and duty to bargain
collectively with BALMAR.
The duty to bargain collectively means the performance of a
mutual obligation to meet and convene promptly and expeditiously
in good faith for the purpose of negotiating an agreement with
respect to wages, hours of work and all other terms and conditions
or employment including proposals for adjusting any grievance or
questions arising under such agreement if requested by either
party but such duty does not compel any party to agree to a
proposal or to make any concession (Art. 252, Labor Code, as
amended).
Procedurally, ALU sent a letter to BALMAR, attaching therewith its
proposals for collective bargaining agreement. In reply, BALMAR
refused to negotiate with ALU allegedly because` it received a
copy of a letter purportedly written on November 12, 1982 by one
Johnny Luces, who claimed to be the president of Balmar Farms
Employees Association, informing the Labor Regional Director that

Padilla and Regalado, JJ., concur.

Melencio-Hererra, J., is on leave.
# Footnotes
* Penned by Presiding Commissioner Diego
Atienza and Commissioners Geronimo Q.
Quadra and Cleto T. Villatuya.

[G.R. No. 118506. April 18, 1997]

NORMA MABEZA, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, PETER NG/HOTEL
SUPREME, respondents.
DECISION
KAPUNAN, J.:
This petition seeking the nullification of a resolution of public
respondent National Labor Relations Commission dated April 28,
1994 vividly illustrates why courts should be ever vigilant in the
preservation of the constitutionally enshrined rights of the working
class. Without the protection accorded by our laws and the
tempering of courts, the natural and historical inclination of capital
to ride roughshod over the rights of labor would run unabated.
The facts of the case at bar, culled from the conflicting
versions of petitioner and private respondent, are illustrative.
Petitioner Norma Mabeza contends that around the first
week of May, 1991, she and her co-employees at the Hotel
Supreme in Baguio City were asked by the hotel's management to
sign an instrument attesting to the latter's compliance with
minimum wage and other labor standard provisions of law.[1] The
instrument provides:[2]
JOINT AFFIDAVIT
We, SYLVIA IGANA, HERMINIGILDO AQUINO,
EVELYN OGOY, MACARIA JUGUETA, ADELAIDA
NONOG, NORMA MABEZA, JONATHAN PICART and
JOSE DIZON, all of legal ages (sic), Filipinos and
residents of Baguio City, under oath, depose and say:
1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme
situated at No. 416 Magsaysay Ave., Baguio City;
2. That the said Hotel is separately operated from the Ivy's Grill
and Restaurant;
3. That we are all (8) employees in the hotel and assigned in each
respective shifts;
4. That we have no complaints against the management of the
Hotel Supreme as we are paid accordingly and that we are treated
well.
5. That we are executing this affidavit voluntarily without any force
or intimidation and for the purpose of informing the authorities
concerned and to dispute the alleged report of the Labor Inspector
of the Department of Labor and Employment conducted on the
said establishment on February 2, 1991.
IN WITNESS WHEREOF, we have hereunto set our
hands this 7th day of May, 1991 at Baguio City,
Philippines.
(Sgd.)
(Sgd.)
(Sgd.)
SYLVIA IGAMA
HERMINIGILDO
AQUINO
EVELYN OGOY
(Sgd)
(Sgd.)
MACARIA
JUGUETA
NONOG

(Sgd.)
ADELAIDA
NORMA MABEZA

PICART

(Sgd)
(Sgd.)
JONATHAN
JOSE DIZON

SUBSCRIBED AND SWORN to before me this 7th day

of May, 1991, at Baguio City, Philippines.

Asst. City Prosecutor

Petitioner signed the affidavit but refused to go to the City
Prosecutor's Office to swear to the veracity and contents of the
affidavit as instructed by management. The affidavit was
nevertheless submitted on the same day to the Regional Office of
the Department of Labor and Employment in Baguio City.
As gleaned from the affidavit, the same was drawn by
management for the sole purpose of refuting findings of the Labor
Inspector of DOLE (in an inspection of respondent's establishment
on February 2, 1991) apparently adverse to the private
respondent.[3]
After she refused to proceed to the City Prosecutor's Office on the same day the affidavit was submitted to the Cordillera
Regional Office of DOLE - petitioner avers that she was ordered by
the hotel management to turn over the keys to her living quarters
and to remove her belongings from the hotel premises.[4] According
to her, respondent strongly chided her for refusing to proceed to
the City Prosecutor's Office to attest to the affidavit.[5] She
thereafter reluctantly filed a leave of absence from her job which
was denied by management. When she attempted to return to
work on May 10, 1991, the hotel's cashier, Margarita Choy,
informed her that she should not report to work and, instead,
continue with her unofficial leave of absence. Consequently, on
May 13, 1991, three days after her attempt to return to work,
petitioner filed a complaint for illegal dismissal before the
Arbitration Branch of the National Labor Relations Commission CAR Baguio City. In addition to her complaint for illegal dismissal,
she alleged underpayment of wages, non-payment of holiday pay,
service incentive leave pay, 13th month pay, night differential and
other benefits. The complaint was docketed as NLRC Case No.
RAB-CAR-05-0198-91 and assigned to Labor Arbiter Felipe P.
Pati.
Responding to the allegations made in support of petitioner's
complaint for illegal dismissal, private respondent Peter Ng alleged
before Labor Arbiter Pati that petitioner "surreptitiously left (her job)
without notice to the management"[6] and that she actually
abandoned her work. He maintained that there was no basis for
the money claims for underpayment and other benefits as these
were paid in the form of facilities to petitioner and the hotel's other
employees.[7] Pointing to the Affidavit of May 7, 1991, the private
respondent asserted that his employees actually have no problems
with management. In a supplemental answer submitted eleven
(11) months after the original complaint for illegal dismissal was
filed, private respondent raised a new ground, loss of confidence,
which was supported by a criminal complaint for Qualified Theft he
filed before the prosecutor's office of the City of Baguio against
petitioner on July 4, 1991.[8]
On May 14, 1993, Labor Arbiter Pati rendered a decision
dismissing petitioner's complaint on the ground of loss of
confidence. His disquisitions in support of his conclusion read as
follows:
It appears from the evidence of respondent that
complainant carted away or stole one (1) blanket, 1
piece bedsheet, 1 piece thermos, 2 pieces towel

(Exhibits '9', '9-A,' '9-B,' '9-C' and '10' pages 12-14

TSN, December 1, 1992).

UNFAIR LABOR PRACTICE

COMMITTED BY THE RESPONDENT.

In fact, this was the reason why respondent Peter Ng

lodged a criminal complaint against complainant for
qualified theft and perjury. The fiscal's office finding
a prima facie evidence that complainant committed the
crime of qualified theft issued a resolution for its filing in
court but dismissing the charge of perjury (Exhibit '4' for
respondent and Exhibit 'B-7' for complainant). As a
consequence, complainant was charged in court for the
said crime (Exhibit '5' for respondent and Exhibit 'B-6'
for the complainant).

The Solicitor General, in a Manifestation in lieu of Comment

dated August 8, 1995 rejects private respondent's principal claims
and defenses and urges this Court to set aside the public
respondent's assailed resolution.[13]

With these pieces of evidence, complainant committed

serious misconduct against her employer which is one
of the just and valid grounds for an employer to
terminate an employee (Article 282 of the Labor Code
as amended).[9]

In the case at bar, the private respondent initially claimed

that petitioner abandoned her job when she failed to return to work
on May 8, 1991. Additionally, in order to strengthen his contention
that there existed sufficient cause for the termination of petitioner,
he belatedly included a complaint for loss of confidence,
supporting this with charges that petitioner had stolen a blanket, a
bedsheet and two towels from the hotel.[15] Appended to his last
complaint was a suit for qualified theft filed with the Baguio City
prosecutor's office.

On April 28, 1994, respondent NLRC promulgated its

assailed Resolution[10] affirming the Labor Arbiter's decision. The
resolution substantially incorporated the findings of the Labor
Arbiter.[11] Unsatisfied, petitioner instituted the instant special civil
action for certiorari under Rule 65 of the Rules of Court on the
following grounds:[12]
1.

2.

3.

WITH ALL DUE RESPECT, THE

HONORABLE NATIONAL LABOR
RELATIONS COMMISSION
COMMITTED A PATENT AND
PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN ITS
FAILURE TO CONSIDER THAT THE
ALLEGED LOSS OF CONFIDENCE IS A
FALSE CAUSE AND AN
AFTERTHOUGHT ON THE PART OF
THE RESPONDENT-EMPLOYER TO
JUSTIFY, ALBEIT ILLEGALLY, THE
DISMISSAL OF THE COMPLAINANT
FROM HER EMPLOYMENT;
WITH ALL DUE RESPECT, THE
HONORABLE NATIONAL LABOR
RELATIONS COMMISSION
COMMITTED A PATENT AND
PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN
ADOPTING THE RULING OF THE
LABOR ARBITER THAT THERE WAS
NO UNDERPAYMENT OF WAGES AND
BENEFITS ON THE BASIS OF EXHIBIT
"8" (AN UNDATED SUMMARY OF
COMPUTATION PREPARED BY
ALLEGEDLY BY RESPONDENT'S
EXTERNAL ACCOUNTANT) WHICH IS
TOTALLY INADMISSIBLE AS AN
EVIDENCE TO PROVE PAYMENT OF
WAGES AND BENEFITS;
WITH ALL DUE RESPECT, THE
HONORABLE NATIONAL LABOR
RELATIONS COMMISSION
COMMITTED A PATENT AND
PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN
FAILING TO CONSIDER THE
EVIDENCE ADDUCED BEFORE THE
LABOR ARBITER AS CONSTITUTING

We agree.
It is settled that in termination cases the employer bears the
burden of proof to show that the dismissal is for just cause, the
failure of which would mean that the dismissal is not justified and
the employee is entitled to reinstatement.[14]

From the evidence on record, it is crystal clear that the

circumstances upon which private respondent anchored his claim
that petitioner "abandoned" her job were not enough to constitute
just cause to sanction the termination of her services under Article
283 of the Labor Code. For abandonment to arise, there must be
concurrence of two things: 1) lack of intention to work;[16] and 2) the
presence of overt acts signifying the employee's intention not to
work.[17]
In the instant case, respondent does not dispute the fact that
petitioner tried to file a leave of absence when she learned that the
hotel management was displeased with her refusal to attest to the
affidavit. The fact that she made this attempt clearly indicates not
an intention to abandon but an intention to return to work after the
period of her leave of absence, had it been granted, shall have
expired.
Furthermore, while absence from work for a prolonged
period may suggest abandonment in certain instances, mere
absence of one or two days would not be enough to sustain such a
claim. The overt act (absence) ought to unerringly point to the fact
that the employee has no intention to return to work,[18] which is
patently not the case here. In fact, several days after she had
been advised to take an informal leave, petitioner tried to resume
working with the hotel, to no avail. It was only after she had been
repeatedly rebuffed that she filed a case for illegal
dismissal. These acts militate against the private respondent's
claim that petitioner abandoned her job. As the Solicitor General in
his manifestation observed:
Petitioner's absence on that day should not be
construed as abandonment of her job. She did not
report because the cashier told her not to report
anymore, and that private respondent Ng did not want
to see her in the hotel premises. But two days later or
on the 10th of May, after realizing that she had to clarify
her employment status, she again reported for
work. However, she was prevented from working by
private respondents.[19]
We now come to the second cause raised by private
respondent to support his contention that petitioner was validly
dismissed from her job.

Loss of confidence as a just cause for dismissal was never

intended to provide employers with a blank check for terminating
their employees. Such a vague, all-encompassing pretext as loss
of confidence, if unqualifiedly given the seal of approval by this
Court, could readily reduce to barren form the words of the
constitutional guarantee of security of tenure. Having this in mind,
loss of confidence should ideally apply only to cases involving
employees occupying positions of trust and confidence or to those
situations where the employee is routinely charged with the care
and custody of the employer's money or property. To the first
class belong managerial employees, i.e., those vested with the
powers or prerogatives to lay down management policies and/or to
hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees or effectively recommend such managerial
actions; and to the second class belong cashiers, auditors,
property custodians, etc., or those who, in the normal and routine
exercise of their functions, regularly handle significant amounts of
money or property. Evidently, an ordinary chambermaid who has
to sign out for linen and other hotel property from the property
custodian each day and who has to account for each and every
towel or bedsheet utilized by the hotel's guests at the end of her
shift would not fall under any of these two classes of employees for
which loss of confidence, if ably supported by evidence, would
normally apply. Illustrating this distinction, this Court, in Marina
Port Services, Inc. vs. NLRC,[20] has stated that:
To be sure, every employee must enjoy some degree
of trust and confidence from the employer as that is one
reason why he was employed in the first place. One
certainly does not employ a person he
distrusts. Indeed, even the lowly janitor must enjoy that
trust and confidence in some measure if only because
he is the one who opens the office in the morning and
closes it at night and in this sense is entrusted with the
care or protection of the employer's property. The keys
he holds are the symbol of that trust and confidence.
By the same token, the security guard must also be
considered as enjoying the trust and confidence of his
employer, whose property he is safeguarding. Like the
janitor, he has access to this property. He too, is
charged with its care and protection.
Notably, however, and like the janitor again, he is
entrusted only with the physical task of protecting that
property. The employer's trust and confidence in him is
limited to that ministerial function. He is not entrusted,
in the Labor Arbiter's words, 'with the duties of
safekeeping and safeguarding company policies,
management instructions, and company secrets such
as operation devices.' He is not privy to these
confidential matters, which are shared only in the
higher echelons of management. It is the persons on
such levels who, because they discharge these
sensitive duties, may be considered holding positions of
trust and confidence. The security guard does not
belong in such category.[21]
More importantly, we have repeatedly held that loss of
confidence should not be simulated in order to justify what would
otherwise be, under the provisions of law, an illegal dismissal. "It
should not be used as a subterfuge for causes which are illegal,
improper and unjustified. It must be genuine, not a mere
afterthought to justify an earlier action taken in bad faith." [22]
In the case at bar, the suspicious delay in private
respondent's filing of qualified theft charges against petitioner long
after the latter exposed the hotel's scheme (to avoid its obligations

as employer under the Labor Code) by her act of filing illegal

dismissal charges against the private respondent would hardly
warrant serious consideration of loss of confidence as a valid
ground for dismissal. Notably, the Solicitor General has himself
taken a position opposite the public respondent and has observed
that:
If petitioner had really committed the acts charged
against her by private respondents (stealing supplies of
respondent hotel), private respondents should have
confronted her before dismissing her on that
ground. Private respondents did not do so. In fact,
private respondent Ng did not raise the matter when
petitioner went to see him on May 9, 1991, and handed
him her application for leave. It took private
respondents 52 days or up to July 4, 1991 before finally
deciding to file a criminal complaint against petitioner,
in an obvious attempt to build a case against her.
The manipulations of private respondents should not be
countenanced.[23]
Clearly, the efforts to justify petitioner's dismissal - on top of
the private respondent's scheme of inducing his employees to sign
an affidavit absolving him from possible violations of the Labor
Code - taints with evident bad faith and deliberate malice
petitioner's summary termination from employment.
Having said this, we turn to the important question of
whether or not the dismissal by the private respondent of petitioner
constitutes an unfair labor practice.
The answer in this case must inevitably be in the affirmative.
The pivotal question in any case where unfair labor practice
on the part of the employer is alleged is whether or not the
employer has exerted pressure, in the form of restraint,
interference or coercion, against his employee's right to institute
concerted action for better terms and conditions of
employment. Without doubt, the act of compelling employees to
sign an instrument indicating that the employer observed labor
standards provisions of law when he might have not, together with
the act of terminating or coercing those who refuse to cooperate
with the employer's scheme constitutes unfair labor practice. The
first act clearly preempts the right of the hotel's workers to seek
better terms and conditions of employment through concerted
action.
We agree with the Solicitor General's observation in his
manifestation that "[t]his actuation... is analogous to the situation
envisaged in paragraph (f) of Article 248 of the Labor
Code"[24]which distinctly makes it an unfair labor practice "to
dismiss, discharge or otherwise prejudice or discriminate against
an employee for having given or being about to give
testimony"[25]under the Labor Code. For in not giving positive
testimony in favor of her employer, petitioner had reserved not only
her right to dispute the claim and proffer evidence in support
thereof but also to work for better terms and conditions of
employment.
For refusing to cooperate with the private respondent's
scheme, petitioner was obviously held up as an example to all of
the hotel's employees, that they could only cause trouble to
management at great personal inconvenience. Implicit in the act of
petitioner's termination and the subsequent filing of charges
against her was the warning that they would not only be deprived
of their means of livelihood, but also possibly, their personal liberty.
This Court does not normally overturn findings and
conclusions of quasi-judicial agencies when the same are ably

supported by the evidence on record. However, where such

conclusions are based on a misperception of facts or where they
patently fly in the face of reason and logic, we will not hesitate to
set aside those conclusions. Going into the issue of petitioner's
money claims, we find one more salient reason in this case to set
things right: the labor arbiter's evaluation of the money claims in
this case incredibly ignores existing law and jurisprudence on the
matter. Its blatant one-sidedness simply raises the suspicion that
something more than the facts, the law and jurisprudence may
have influenced the decision at the level of the Arbiter.
Labor Arbiter Pati accepted hook, line and sinker the private
respondent's bare claim that the reason the monetary benefits
received by petitioner between 1981 to 1987 were less than
minimum wage was because petitioner did not factor in the meals,
lodging, electric consumption and water she received during the
period in her computations.[26] Granting that meals and lodging
were provided and indeed constituted facilities, such facilities could
not be deducted without the employer complying first with certain
legal requirements. Without satisfying these requirements, the
employer simply cannot deduct the value from the employee's
wages. First, proof must be shown that such facilities are
customarily furnished by the trade. Second, the provision of
deductible facilities must be voluntarily accepted in writing by the
employee. Finally, facilities must be charged at fair and
reasonable value.[27]
These requirements were not met in the instant case. Private
respondent "failed to present any company policy or guideline to
show that the meal and lodging . . . (are) part of the salary;"[28] he
failed to provide proof of the employee's written authorization; and,
he failed to show how he arrived at the valuations.[29]
Curiously, in the case at bench, the only valuations relied
upon by the labor arbiter in his decision were figures furnished by
the private respondent's own accountant, without corroborative
evidence. On the pretext that records prior to the July 16, 1990
earthquake were lost or destroyed, respondent failed to produce
payroll records, receipts and other relevant documents, where he
could have, as has been pointed out in the Solicitor General's
manifestation, "secured certified copies thereof from the nearest
regional office of the Department of Labor, the SSS or the BIR."[30]
More significantly, the food and lodging, or the electricity and
water consumed by the petitioner were not facilities but
supplements. A benefit or privilege granted to an employee for the
convenience of the employer is not a facility. The criterion in
making a distinction between the two not so much lies in the kind
(food, lodging) but the purpose.[31] Considering, therefore, that
hotel workers are required to work different shifts and are expected
to be available at various odd hours, their ready availability is a
necessary matter in the operations of a small hotel, such as the
private respondent's hotel.
It is therefore evident that petitioner is entitled to the payment
of the deficiency in her wages equivalent to the full wage
applicable from May 13, 1988 up to the date of her illegal
dismissal.
Additionally, petitioner is entitled to payment of service
incentive leave pay, emergency cost of living allowance, night
differential pay, and 13th month pay for the periods alleged by the
petitioner as the private respondent has never been able to adduce
proof that petitioner was paid the aforestated benefits.
However, the claims covering the period of October 1987 up
to the time of filing the case on May 13, 1988 are barred by
prescription as P.D. 442 (as amended) and its implementing rules
limit all money claims arising out of employer-employee

relationship to three (3) years from the time the cause of action
accrues.[32]
We depart from the settled rule that an employee who is
unjustly dismissed from work normally should be reinstated without
loss of seniority rights and other privileges. Owing to the strained
relations between petitioner and private respondent, allowing the
former to return to her job would only subject her to possible
harassment and future embarrassment. In the instant case,
separation pay equivalent to one month's salary for every year of
continuous service with the private respondent would be proper,
starting with her job at the Belfront Hotel.
In addition to separation pay, backwages are in
order. Pursuant to R.A. 6715 and our decision in Osmalik
Bustamante, et al. vs. National Labor Relations
Commission,[33] petitioner is entitled to full backwages from the
time of her illegal dismissal up to the date of promulgation of this
decision without qualification or deduction.
Finally, in dismissal cases, the law requires that the
employer must furnish the employee sought to be terminated from
employment with two written notices before the same may be
legally effected. The first is a written notice containing a statement
of the cause(s) for dismissal; the second is a notice informing the
employee of the employer's decision to terminate him stating the
basis of the dismissal. During the process leading to the second
notice, the employer must give the employee ample opportunity to
be heard and defend himself, with the assistance of counsel if he
so desires.
Given the seriousness of the second cause (qualified theft)
of the petitioner's dismissal, it is noteworthy that the private
respondent never even bothered to inform petitioner of the charges
against her. Neither was petitioner given the opportunity to explain
the loss of the articles. It was only almost two months after
petitioner had filed a complaint for illegal dismissal, as an
afterthought, that the loss was reported to the police and added as
a supplemental answer to petitioner's complaint. Clearly, the
dismissal of petitioner without the benefit of notice and hearing
prior to her termination violated her constitutional right to due
process. Under the circumstances, an award of One Thousand
Pesos (P1,000.00) on top of payment of the deficiency in wages
and benefits for the period aforestated would be proper.
WHEREFORE, premises considered, the RESOLUTION of
the National Labor Relations Commission dated April 24, 1994 is
REVERSED and SET ASIDE, with costs. For clarity, the economic
benefits due the petitioner are hereby summarized as follows:
1)
Deficiency wages and the applicable ECOLA
from May 13, 1988 up to the date of petitioner's illegal
dismissal;
2)
Service incentive leave pay; night differential pay
and 13th month pay for the same period;
3)
Separation pay equal to one month's salary for
every year of petitioner's continuous service with the
private respondent starting with her job at the Belfront
Hotel;
4)
Full backwages, without qualification or
deduction, from the date of petitioner's illegal dismissal
up to the date of promulgation of this decision pursuant
to our ruling in Bustamante vs. NLRC.[34]
5)

P1.000.00.

SO ORDERED.

Padilla, Bellosillo and Vitug, JJ., concur.

Hermosisima, Jr., J., on leave.

[G.R. No. 112661. May 30, 2001]

SIMEON DE LEON, EFREN ABAD, JAIME ABAD, JESSIE
ABAY-ABAY, ROLANDO ABIOLA, ALICIO ABISO,
CELEDONIO ABSALON, JEREMIAS ADO, VICENTE
ADO, VICENTE AGGABAO, EFRAIN AGUIRRE,
ALEXANDER ALATA, ERNESTO ALCALDE,
LORENZO ALCOY, ALMARIO ALICIO, CESAR
AMADOR, JOSE AMANTE, ESTELITO AMBROSIO,
VICENTE ANAPI, ARNEL ANCHETA, ROGELIO
ANCHETA, WILFREDO ANONUEVO, DOMINGO
ANTIGRO, MARGARITO ANTIGRO, ROGELIO
ANZANO, ANTONIO APOSTOL, ORLANDO AQUINO,
JUAN ARCALAS, BONIFACIO ARIOLA, EDGAR
ARIOLA, BONIFACIO ARMASA, FERNANDO
BACCAY, MARIO BACUD, RUPERTO BACUDAN,
NILO BALAG, ARGEL BALTAZAR, DEMETRIO
BARAYOGA, FELIX BARNEDO, FLORENTINO
BARTE, SARRI BASIRUL, MARCELO BATANES,
RECTO BAYONA, VICTORIO BERMUNDO, ISMAEL
BERNAL, LERIO BERSABE, FIDEL BOSE, MARIANO
BOTACION, DANILO BRAZIL, REYNALDO BRUNIO,
MARIO BUENAVENTURA, ARSENIO BULATAO,
FRANCISCO BULATAO, CARLOS CAJARA,
ROSENDO CAMACHO, RUBEN CAMACHO, NESTOR
CAPILOS, DOMINGO CASTRO, MAXIMIANO DE
CASTO, EDINO CASTUERA, ZALDY CERDON,
ANTONIO DERUJANO, VICTOR CIPRIANO, JUANITO
CORPUZ, ALFREDO CRUZ, FERNANDO DELA CRUZ,
MARIO CUSTOPAY, ROSAURO CUSTODIO,
FRANKLIN CUSTODIO, ALFREDO DAPROZA,
RENATO DAVAG, NOEL DEMINGOY, GENE
DIESTRO, ESTEBAN DIONSON, RAMON DIZA,
JEREMIAS DOROMAL, MANUEL EDATO,
FERNANDO EDORA, CONRADO ENRIQUEZ,
NICOMEDEZ ENRIQUEZ, ROLITO ESPIEL, LAURO
ESPANOL, NONITO ESPLANA, ELPIDIO ESPANOL,
DIOLITO ESTOPEREZ, ODILON EUSTE, HENRY
FACTOR, VIRGILIO FAVORITO, ARISTOTLE
FERNANDEZ, RODOFLO FORMALEJO, JUNE
FULAY, RUIS FUTOL, JESUS GABA, RODRIGO
GABAT, ROSALIA GABAT, CLEMENTE GASPAR,
RODRIGO GAVIOLA, ELLEN GODELOSON,
SALVADOR GUELA, EDUARDO GUZMAN,
BALTAZAR DE GUZMAN, ZOSIMO DE GUZMAN,
REYANLDO HAGUIRING, CARLOS GINDAP,
BERNARDINO GIPIT, WILFREDO HERNANDEZ,
IMMANUEL IBRING, PEPITO IMPERIO,
MAGTANGGOL INSORIO, RODELYN JACUNTO,
MARIO JARAPAN, MAXIMO JIMENEZ, ALEJANDRO
JUDLOMAN, JUAN LAOAGAN, DANTE LARIOSA,
ELINO LASAGA, JOSEPH LEGASPINA, ZOSIMO
LEPALAM, BENJAMIN LIBAN, EFREN LIGUE, CLETO
LINGA, ROMEO LLAGAS, LUCIO LLARENA,
ALFREDO LOPEZ, FELIX LOPEZ, SANTOS LOPEZ,
RUBEN LORENZO, NILO LUGANA, CANCIO
MAATUBANG, ANTONIO MACASIO, ROBERTO
MACATUNGGAL, VIRGILIO MACALINAO, RAMON
MACOY, JOSE MAGALONA, ALEJO MANAGUELOD,
DOMINGO MANALO, EMILIANO MANALO, SULPICIO
MANTALABA, EDITO MANUEL, ROMULO MANUEL,
FELINO MARANA, CARLITO MARGAJA, ROMARES
MARIANO, CERMELO MARTINEZ, MODESTO
MASULIT, ALMA MATUSALEM, FLAVIANO MEDEL,
DOLCIANO MEDINA, DOLOROSA MEDINA,
NORLINDO MEJARITO, PEDRITO MENDOZA,
GUARDITO MERANO, ALBERTO DE MESA, CHARLIE

MINANO, JOSE MONTEROSO, ROSENDO MORALES,

CESAR NARDA, DOMINADOR NAGAL, EDEMIO
NARISMA, DINISIO NAVASCA, REGINO NEPICON,
JR., JESSIE CRIS NILO, JERWYN ORARIO, EUGENIO
ORBEGOZO, IRENEO ORGANISTA, CATALINO
OJENDRAS, WILLIAM OLIVARES, JUANITO ORIO,
WILLIAM ORTIZO, ROQUE PAL-PALLATOC,
ROGELIO PAEL, LORENZO PAMINTUAN, VIRGILIO
PANTALEON, ANTONIO PAPA, EMMANUEL
PASCUAL, FRANCISCO PECUNDO, RUFINO
PELICER, LEONARDO PEPITO, PABLITO PERALTA,
EDILBERTO PEREZ, LOLITO PEREZ, PELAGIO
PEREZ, JR., FERNANDO PINEDA, CARMEN PIO,
ALEJANDRO QUIAMCO, VIRGILIO QUILALANG,
JEREMEAS QUINES, ZENAIDA RAQUINE, DOMINGO
RANOLA, SABINO RANULO, EDDIE RAZONABE,
ALBERTO REBAULA, BENIGNO REGIS, PERFECTO
REBOYO, VITALIANO REYES, ZOSIMO REYES,
EDWIN ROBERTS, ROBERT ROJO, GODOFREDO
ROLIO, ANATALIA ROSANTO, DOMINADOR
ROSANTO, RAMON ROSANTO, SR., RODRIGO
ROSANTO, JULIO RUBIO, DANTE RUZOL, VENUS
RUZOL, ROMULO SABINO, CIPRIANO SACUILLES,
SR., PRIMO SALAZAR, GASPAR SAMUYA, ANTONIO
SANCHEZ, CLAUDIO SANCHEZ, YOLANDA SAN
LUIS, ROBERTO SANTOS, BENITO SEGUDIENTE,
EDGAR SIBAL, GREGORIO SIBAL, VALENTINO
SIBAL, SONNY SINGH, ROMEO SOMERA, EDGAR
TABAQUE, BENITO TACATA, MATILDE TACATA,
ANDRESITO TALAM, ANTOLIN TALISIC, PABLO
TAMAYO, JULIE TAMIEZA, ROGELIO TAYO, CELSO
TE, ENRIQUE TRIPULCA, ARMANDO TUIBEO,
NICANOR TUMAMAO, EDUARDO TUMBALE, RAMON
TURIRIT, LONGENIO UMACAM, TOLENTINO
UNDAUNDO, DIOLITO VALENCIA, ERNESTO
VARGAS, BILLY VASQUEZ, TOMAS VELINA,
MARCOS DE VERA, IRENEO VILELA, NICANDRO
VILLAFRANCA, DANNY VILLANUEVA, LOLITA
VITALICO, ALIPIO YGOT, AGOSTO YROMA, FELIX
ZAMBALES, and GUILLERMO ZIPANGAN, petioners,
vs. NATIONAL LABOR RELATIONS COMMISSION
(NLRC), and FORTUNE TOBACCO CORPORATION
and/or MAGNUM INTEGRATED SERVICES, INC.
(formerly FORTUNE INTEGRATED SERVICES,
INC.), respondents.
DECISION
PUNO, J.:
This case stemmed from a complaint for illegal dismissal,
unfair labor practice and refund of cash bond filed by petitioners
against respondents before the Arbitration Branch of the National
Labor Relations Commission (NLRC). The petition at bar seeks
the annulment of the resolution of the NLRC dated July 5, 1993
reversing the decision of the Labor Arbiter finding respondents
liable for the charges, and its resolution dated August 10, 1993
denying petitioners' motion for reconsideration.
The undisputed facts are as follows:
On August 23, 1980, Fortune Tobacco Corporation (FTC)
and Fortune Integrated Services, Inc. (FISI) entered into a contract
for security services where the latter undertook to provide security
guards for the protection and security of the former. The
petitioners were among those engaged as security guards
pursuant to the contract.

On February 1, 1991, the incorporators and stockholders of

FISI sold out lock, stock and barrel to a group of new stockholders
by executing for the purpose a "Deed of Sale of Shares of
Stock". On the same date, the Articles of Incorporation of FISI was
amended changing its corporate name to Magnum Integrated
Services, Inc. (MISI). A new by-laws was likewise adopted and
approved by the Securities and Exchange Commission on June 4,
1993.
On October 15, 1991, FTC terminated the contract for
security services which resulted in the displacement of some five
hundred eighty two (582) security guards assigned by FISI/MISI to
FTC, including the petitioners in this case. FTC engaged the
services of two (2) other security agencies, Asian Security Agency
and Ligalig Security Services, whose security guards were posted
on October 15, 1991 to replace FISI's security guards.
Sometime in October 1991, the Fortune Tobacco Labor
Union, an affiliate of the National Federation of Labor Unions
(NAFLU), and claiming to be the bargaining agent of the security
guards, sent a Notice of Strike to FISI/MISI. On November 14,
1991, the members of the union which include petitioners picketed
the premises of FTC. The Regional Trial Court of Pasig, however,
issued a writ of injunction to enjoin the picket.
On November 29, 1991, Simeon de Leon, together with
sixteen (16) other complainants instituted the instant case before
the Arbitration Branch of the NLRC. The complaint was later
amended to allow the inclusion of other complainants.
The parties submitted the following issues for resolution:
(1) Whether petitioners were illegally dismissed;
(2) Whether respondents are guilty of unfair labor
practice; and
(3) Whether petitioners are entitled to the refund of
their cash bond deposited with respondent FISI.
Petitioners alleged that they were regular employees of FTC
which was also using the corporate names Fortune Integrated
Services, Inc. and Magnum Integrated Services, Inc. They were
assigned to work as security guards at the company's main factory
plant, its tobacco redrying plant and warehouse. They averred that
they performed their duties under the control and supervision of
FTC's security supervisors. Their services, however, were severed
in October 1991 without valid cause and without due
process. Petitioners claimed that their dismissal was part of
respondents' design to bust their newly-organized union which
sought to enforce their rights under the Labor Standards law.[1]
Respondent FTC, on the other hand, maintained that there
was no employer-employee relationship between FTC and
petitioners. It said that at the time of the termination of their
services, petitioners were the employees of MISI which was a
separate and distinct corporation from FTC. Hence, petitioners
had no cause of action against FTC.[2]
Respondent FISI, meanwhile, denied the charge of illegal
dismissal and unfair labor practice. It argued that petitioners were
not dismissed from service but were merely placed on floating
status pending re-assignment to other posts. It alleged that the
temporary displacement of petitioners was not due to its fault but
was the result of the pretermination by FTC of the contract for
security services.[3]
The Labor Arbiter found respondents liable for the
charges. Rejecting FTC's argument that there was no employeremployee relationship between FTC and petitioners, he ruled that
FISI and FTC should be considered as a single employer. He

observed that the two corporations have common stockholders

and they share the same business address. In addition, FISI had
no client other than FTC and other corporations belonging to the
group of companies owned by Lucio Tan. The Labor Arbiter thus
found respondents guilty of union busting and illegal dismissal. He
observed that not long after the stockholders of FISI sold all their
stocks to a new set of stockholders, FTC terminated the contract of
security services and engaged the services of two other security
agencies. FTC did not give any reason for the termination of the
contract. The Labor Arbiter gave credence to petitioners' theory
that respondents' precipitate termination of their employment was
intended to bust their union. Consequently, the Labor Arbiter
ordered respondents to pay petitioners their backwages and
separation pay, to refund their cash bond deposit, and to pay
attorney's fees.[4]
On appeal, the NLRC reversed and set aside the decision of
the Labor Arbiter. First, it held that the Labor Arbiter erred in
applying the "single employer" principle and concluding that there
was an employer-employee relationship between FTC and FISI on
one hand, and petitioners on the other hand. It found that at the
time of the termination of the contract of security services on
October 15, 1991, FISI which, at that time, had been renamed
Magnum Integrated Services, Inc. had a different set of
stockholders and officers from that of FTC. They also had
separate offices. The NLRC held that the principle of "single
employer" and the doctrine of piercing the corporate veil could not
apply under the circumstances. It further ruled that the proximate
cause for the displacement of petitioners was the termination of the
contract for security services by FTC on October 15, 1991. FISI
could not be faulted for the severance of petitioners' assignment at
the premises of FTC. Consequently, the NLRC held that the
charge of illegal dismissal had no basis. As regards the charge of
unfair labor practice, the NLRC found that petitioners who had the
burden of proof failed to adduce any evidence to support their
charge of unfair labor practice against respondents. Hence, it
ordered the dismissal of petitioners' complaint.[5]
The petitioners filed a motion for reconsideration of the
resolution of the NLRC but the same was denied.[6] Hence, this
petition.
We gave due course to the petition on May 15, 1995. Thus,
the ruling in St. Martin Funeral Home vs. NLRC[7] remanding all
petitions for certiorari from the decision of the NLRC to the Court of
Appeals does not apply to the case at bar.
The petition is impressed with merit.
An examination of the facts of this case reveals that there is
sufficient ground to conclude that respondents were guilty of
interfering with the right of petitioners to self-organization which
constitutes unfair labor practice under Article 248 of the Labor
Code.[8] Petitioners have been employed with FISI since the 1980s
and have since been posted at the premises of FTC -- its main
factory plant, its tobacco redrying plant and warehouse. It appears
from the records that FISI, while having its own corporate identity,
was a mere instrumentality of FTC, tasked to provide protection
and security in the company premises. The records show that the
two corporations had identical stockholders and the same business
address. FISI also had no other clients except FTC and other
companies belonging to the Lucio Tan group of
companies. Moreover, the early payslips of petitioners show that
their salaries were initially paid by FTC.[9] To enforce their rightful
benefits under the laws on Labor Standards, petitioners formed a
union which was later certified as bargaining agent of all the
security guards. On February 1, 1991, the stockholders of FISI
sold all their participations in the corporation to a new set of

stockholders which renamed the corporation Magnum Integrated

Services, Inc. On October 15, 1991, FTC, without any
reason, preterminated its contract of security services with MISI
and contracted two other agencies to provide security services for
its premises. This resulted in the displacement of petitioners. As
MISI had no other clients, it failed to give new assignments to
petitioners. Petitioners have remained unemployed since then. All
these facts indicate a concerted effort on the part of respondents to
remove petitioners from the company and thus abate the growth of
the union and block its actions to enforce their demands in
accordance with the Labor Standards laws. The Court held
in Insular Life Assurance Co., Ltd., Employees Association-NATU
vs. Insular Life Assurance Co., Ltd.:[10]
The test of whether an employer has interfered with and coerced
employees within the meaning of section (a) (1) is whether the
employer has engaged in conduct which it may reasonably be said
tends to interfere with the free exercise of employees' rights under
section 3 of the Act, and it is not necessary that there be direct
evidence that any employee was in fact intimidated or coerced by
statements of threats of the employer if there is a reasonable
inference that anti-union conduct of the employer does have an
adverse effect on self-organization and collective bargaining.[11]
We are not persuaded by the argument of respondent FTC
denying the presence of an employer-employee relationship. We
find that the Labor Arbiter correctly applied the doctrine of piercing
the corporate veil to hold all respondents liable for unfair labor
practice and illegal termination of petitioners' employment. It is a
fundamental principle in corporation law that a corporation is an
entity separate and distinct from its stockholders and from other
corporations to which it is connected. However, when the concept
of separate legal entity is used to defeat public convenience, justify
wrong, protect fraud or defend crime, the law will regard the
corporation as an association of persons, or in case of two
corporations, merge them into one. The separate juridical
personality of a corporation may also be disregarded when such
corporation is a mere alter ego or business conduit of another
person.[12] In the case at bar, it was shown that FISI was a mere
adjunct of FTC. FISI, by virtue of a contract for security services,
provided FTC with security guards to safeguard its
premises. However, records show that FISI and FTC have the
same owners and business address, and FISI provided security
services only to FTC and other companies belonging to the Lucio
Tan group of companies. The purported sale of the shares of the
former stockholders to a new set of stockholders who changed the
name of the corporation to Magnum Integrated Services, Inc.
appears to be part of a scheme to terminate the services of FISI's
security guards posted at the premises of FTC and bust their
newly-organized union which was then beginning to become active
in demanding the company's compliance with Labor Standards
laws. Under these circumstances, the Court cannot allow FTC to
use its separate corporate personality to shield itself from liability
for illegal acts committed against its employees.
Thus, we find that the termination of petitioners' services was
without basis and therefore illegal. Under Article 279 of the Labor
Code, an employee who is unjustly dismissed from work is entitled
to reinstatement without loss of seniority rights and other
privileges, and to his full backwages, inclusive of allowances, and
to his other benefits or their monetary equivalent computed from
the time his compensation was witheld from him up to the time of
his actual reinstatement. However, if reinstatement is no longer
possible, the employer has the alternative of paying the employee
his separation pay in lieu of reinstatement.[13]

IN VIEW WHEREOF, the petition is GRANTED. The

assailed resolutions of the NLRC are SET ASIDE. Respondents
are hereby ordered to pay petitioners their full backwages, and to
reinstate them to their former position without loss of seniority
rights and privileges, or to award them separation pay in case
reinstatement is no longer feasible.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Pardo and Ynares-Santiago,
JJ., concur.
Kapunan J., on leave.

G.R. No. L-22456

September 27, 1967

FRANCISCO SALUNGA, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS; SAN MIGUEL
BREWERY, INC. and MIGUEL NOEL; NATIONAL BREWERY &
ALLIED INDUSTRIES LABOR UNION OF THE PHILIPPINES
(NABAILUP-PAFLU); JOHN DE CATILLO and CIPRIANO
CID, respondents.
C. Magat & Associates for petitioner.
Cipriano Cid & Associates and Ponce Enrile, S. Reyna, Montecillo
& Belo for respondents.
CONCEPCION, C.J.:
Appeal by petitioner Francisco Salunga from a resolution of the
Court of Industrial Relations, sitting en banc, dismissing unfair
labor practice charges against the National Brewery and Allied
Industries Labor Union of the Philippines (PAFLU) hereinafter
referred to as the Union John de Castillo, Cipriano Cid, San
Miguel Brewery, Inc. hereinafter referred to as the Company
and Miguel Noel.
Petitioner had, since 1948, been an employee of the Company,
which, on October 2, 1959, entered with the Union, of which
respondent John de Castillo is the president, into a collective
bargaining agreement, effective up to June 30, 1962. Section 3
thereof reads:
The company agrees to require as a condition of
employment of those workers covered by this agreement
who either are members of the UNION on the date of the
signing of this agreement, or may join the UNION during
the effectivity of this agreement, that they shall not
voluntarily resign from the UNION earlier than thirty (30)
days before the expiry date of this agreement as
provided in Article XIII hereof, provided, however, that
nothing herein contained shall be construed to require
the company to enforce any sanction whatsoever against
any employee or worker who fails to retain his
membership in the UNION as hereinbefore stated, for
any cause other than voluntary resignation or nonpayment of regular union dues on the part of said
employee or worker. (Exh. 4-A-Union.) .
Petitioner was a member of the Union since 1953. For reasons
later to be stated, on August 18, 1961, he tendered his resignation
from the Union, which accepted it on August 26, 1961, and
transmitted it to the Company on August 29, 1961, with a request
for the immediate implementation of said section 3. The Company
having informed him that his aforementioned resignation would
result in the termination of his employment, in view of said section,
petitioner wrote to the Union, on August 31, 1961, a letter
withdrawing or revoking his resignation and advising the Union to
continue deducting his monthly union dues. He, moreover,
furnished a copy of this communication to the Company. The latter,
in turn, notified the Union of the receipt of said copy and that "in
view thereof, we shall not take any action on this case and shall
consider Mr. Francisco Salunga still a member of your union and
continue deducting his union dues." On September 8, 1961, the
Union told the Company that petitioner's membership could not be
reinstated and insisted on his separation from the service,
conformably with the stipulation above-quoted. The Company
replied, on September 12, 1961, stating:

. . . We asked Mr. Salunga if he realized that by

resigning from the Union he would in effect be forfeiting
his position in the company. When he answered in the
negative, we showed him a copy of our Collective
Bargaining Agreement and called his attention to Sec. 3,
Art. II thereof. He then told us that he did not realize that
he would be losing his job if he were to resign from the
Union. We did not at any time ask or urge him to
withdraw his resignation; neither are we now asking or
insisting that you readmit him into your membership. We
thought that informing him of the consequences of his
resignation from the Union, was the only humane thing to
do under the circumstances.
Nevertheless, if notwithstanding our foregoing
clarification you still consider him as having actually
resigned from your organization, and you insist that we
dismiss him from the service in accordance with Sec. 3,
Article II of our agreement, we will have no alternative
but to do so. (Exh. E)
In a letter to the Company, dated September 20, 1961, the Union
reiterated its request for implementation of said section 3, for which
reason, on September 22, 1961, the Company notified petitioner
that, in view of said letter and the aforementioned section, "we
regret we have to terminate your employment for cause. You are,
therefore, hereby notified of your dismissal from the service
effective as of the close of business hours, September 30, 1961."
Meanwhile, petitioner had sought the intervention of PAFLU's
National President, respondent Cipriano Cid, to which the Union
was affiliated, for a review of the latter's action. The PAFLU gave
due course to petitioner's request for review and asked the
Company, on September 29, 1961, to defer his dismissal, for at
least two (2) weeks, so that its (PAFLU's) Executive Board could
act on his appeal. On October 6, 1961, respondent Cid advised
petitioner that the PAFLU had found no ground to review the action
taken by the Union and that, on the expiration of the 15-day grace
granted to him by the Company, the decision thereof to terminate
his services would take effect.
Thereupon, or on October 11, 1961, petitioner notified the PAFLU
that he was appealing to its supreme authority the PAFLU
National Convention and requested that action on his case be
deferred until such time as the Convention shall have acted on his
appeal. A letter of the same date and tenor was sent, also, by the
petitioner to the Union. Furthermore, he asked the Company to
maintain the status quo, in the meantime. This notwithstanding, at
the close of the business hours, on October 15, 1961, petitioner
was discharged from the employment of the Company, through its
assistant-secretary and vice-president, herein respondent Miguel
Noel.
At petitioner's behest, on or about December 7, 1961, a prosecutor
of the Court of Industrial Relations commenced, therefore, the
present proceedings, for unfair labor practice, against the Union,
its president, respondent John de Castillo, respondent Cipriano
Cid, as PAFLU president, the Company, and its aforementioned
Vice-President Miguel Noel. In due course, thereafter, the trial
Judge rendered a decision the dispositive part of which reads:
IN VIEW OF ALL THE FOREGOING, the San Miguel
Brewery, Inc. and Miguel Noel and National Brewery &
Allied Industrial Labor Union of the Philippines (PAFLU),
John de Castillo, and Cipriano Cid, are hereby declared

guilty of unfair labor practices as charged, and ordered to

cease and desist from further committing such unfair
labor practice acts complained of; and as affirmative
reliefs:
(a) The National Brewery & Allied Industries Labor Union
of the Philippines (PAFLU), John de Castillo and
Cipriano Cid, their officers and agents, are hereby
directed to readmit and to continue the membership of
Francisco Salunga in the membership rolls of the union
after paying all union dues, with all the rights and
privileges being enjoyed by bonafide members;
(b) The San Miguel Brewery, Inc., and Miguel Noel, their
officers and agents are hereby directed to immediately
reinstate Francisco Salunga to his former or substantially
equivalent position with one-half back wages, without
prejudice, however, to his seniority and/or other rights
and privileges; and
(c) Respondents Union and Company, their respective
officers and agents, are likewise directed to post two
copies of this decision in conspicuous places in their
respective offices or plants for a period of one month,
furnishing this Court with certificate of compliance after
the expiration of said period.
On motion for reconsideration of the respondents, this decision
was reversed by the Court of Industrial Relations sitting en
banc with two (2) judges concurring in the result and the trial judge
dissenting which dismissed the case. Hence, this appeal by the
petitioner.
The appeal is well taken, for, although petitioner had resigned from
the Union and the latter had accepted the resignation, the former
had, soon later upon learning that his withdrawal from the Union
would result in his separation from the Company, owing to the
closed-shop provision above referred to revoked or withdrawn
said resignation, and the Union refused to consent thereto without
any just cause therefor. The Union had not only acted arbitrarily in
not allowing petitioner to continue his membership. The trial Judge
found said refusal of the Union officers to be due to his critical
attitude towards certain measures taken or sanctioned by them. As
set forth in the decision of the trial Judge:
. . . Prior to August, 1961, he had been criticizing and
objecting to what he believed were illegal or irregular
disbursements of union funds, i.e., allowing Florencio
Tirad, a union official, to receive six months advanced
salaries when Tirad went to the United States, which
objection he openly manifested in a meeting of the board
of directors and stewards, but instead of receiving
favorable response, he (Salunga) was twitted and felt
insulted by the laughter of those present that he would
be the next man to be sent to America; second, granting
Ricardo Garcia, union secretary, two months advanced
salaries when preparing for the bar examinations, which
objection he broached to union officer Efren Meneses;
third, the union's additional monthly expense for the
salary of a counsel when the PAFLU, their mother union
is well staffed with a number of lawyers who could attend
to and handle their cases and other legal matters, and to
which mother union the NABAILUP has been paying a
monthly assessment of more than P1,000.00; and fourth,
giving salary to Charles Mitschek who was dismissed by

the company but denying the same privilege to other

similarly situated member-employees. Salunga was later
removed by the union from his position as steward
without his knowledge. It also appears that the power of
attorney executed in his favor by co-worker Alejandro
Miranda for the collection of Miranda's indebtedness of
P60.00 to him (the latter has certain amount in
possession of the Union) was not honored by the
union.1awphl.nt
xxx

xxx

xxx

The record is clear that feeling dejected by the inaction

of the union officials on his grievances and objections to
what he believed were illegal disbursements of union
funds, coupled with the fact that he was later removed
from his position as a union steward without his
knowledge, as well as the fact that the union did not
honor the power of attorney executed in his favor by
Alejandro Miranda, a co-worker, for the collection of
Miranda's indebtedness of P60.00 to him, he submitted
his letter of resignation from the union on August 18,
1961. It must be stated here that no evidence was
adduced by the respondent union to overcome
complainant's testimonies about his objections to the
disbursements of union funds but only tried to elicit from
him, on cross examination, that the funds of the union
are only disbursed upon authority of the Executive Board
of the union. . . .
It should be noted that the Court of Industrial Relations en banc did
not reverse these findings of fact or even question the accuracy
thereof. What is more, the officers of the Union have, in effect,
confirmed the fact that their refusal to allow the withdrawal of
petitioner's resignation had been due to his aforementioned
criticisms. Indeed said officers tried to justify themselves by
characterizing said criticisms as acts of disloyalty to the Union,
which, of course, is not true, not only because the criticism
assailed, not the Union, but certain acts of its officers, and,
indirectly, the officers themselves, but also because the
constitution and by-laws of the Union explicitly recognize the right
of its members to give their views on "all transactions made by the
Union." As a consequence, the resolution appealed from cannot be
affirmed without, in effect, nullifying said right which, independently
of the constitution and by-laws of the Union, is part and parcel of
the freedom of speech guaranteed in the Constitution of our
Republic, as a condition sine qua non to the sound growth and
development of labor organizations and democratic institutions.
Although, generally, a state may not compel ordinary voluntary
associations to admit thereto any given individual, because
membership therein may be accorded or withheld as a matter of
privilege,1 the rule is qualified in respect of labor unions holding a
monopoly in the supply of labor, either in a given locality, or as
regards a particular employer with which it has a closed-shop
agreement.2 The reason is that
. . . The closed shop and the union shop cause the
admission requirements of trade union to
becomeaffected with the public interest. Likewise, a
closed shop, a union shop, or maintenance of
membership clauses cause the administration of
discipline by unions to be affected with the public
interest.3

Consequently, it is well settled that such unions are not entitled to

arbitrarily exclude qualified applicants for membership, and a
closed-shop provision would not justify the employer in
discharging, or a union in insisting upon the discharge of, an
employee whom the union thus refuses to admit to membership,
without any reasonable ground therefor.4 Needless to say, if said
unions may be compelled to admit new members, who have the
requisite qualifications, with more reason may the law and the
courts exercise the coercive power when the employee involved is
a long standing union member, who, owing to provocations of
union officers, was impelled to tender his resignation, which he
forthwith withdrew or revoked. Surely, he may, at least, invoke the
rights of those who seek admission for the first time, and can not
arbitrarily he denied readmission.
We cannot agree, however, with the finding of the trial Judge to the
effect that the Company was guilty of unfair labor practice. The
Company was reluctant if not unwilling to discharge the
petitioner. When the Union first informed the Company of
petitioner's resignation and urged implementation of section 3 of
the bargaining contract, the Company advised petitioner of the
provision thereof, thereby intimating that he had to withdraw his
resignation in order to keep his employment. Besides, the
Company notified the Union that it (the Company) would not take
any action on the case and would consider the petitioner, "still a
member" of the Union. When the latter, thereafter, insisted on
petitioner's discharge, the Company still demurred and explained it
was not taking sides and that its stand was prompted merely by
"humane" considerations, springing from the belief that petitioner
had resigned from the Union without realizing its effect upon his
employment. And, as the Union reiterated its demand, the
Company notified petitioner that it had no other alternative but to
terminate his employment, and dismissed him from the service,
although with "regret".
Under these circumstances, the Company was not "unfair" to the
petitioner. On the contrary, it did not merely show a commendable
understanding of and sympathy for his plight. It even tried to help
him, although to such extent only as was consistent with its
obligation to refrain from interfering in purely internal affairs of the
Union. At the same time, the Company could not safely inquire into
the motives of the Union officers, in refusing to allow the petitioner
to withdraw his resignation. Inasmuch as the true motives were not
manifest, without such inquiry, and petitioner had concededly
tendered his resignation of his own free will, the arbitrary nature of
the decision of said officers was not such as to be apparent and to
justify the company in regarding said decision unreasonable. Upon
the other hand, the Company can not be blamed for assuming the
contrary, for petitioner had appealed to the National Officers of the
PAFLU and the latter had sustained the Union. The Company was
justified in presuming that the PAFLU had inquired into all relevant
circumstances, including the motives of the Union Officers.
In finding, this notwithstanding, that the Company is guilty of unfair
labor practice, the trial Judge seemed to have been unduly
influenced by the fact that the former had dismissed the petitioner
despite his announced intention to appeal from the decision of the
Union and that of the Officers of PAFLU to its "Supreme authority",
namely, the PAFLU's "National Convention". In other words, said
Judge felt that the Company should have waited for the action of
the national convention before issuing the notice of dismissal.
There is no evidence, however, that petitioner had really brought
this matter to said "Convention". Much less is there any proof that
the latter had sustained him and reversed the PAFLU officers and
the Union. Thus, the record does not show that petitioner was

prejudiced by the Company's failure to maintain the status quo,

after the Union had been sustained by said officers. In fact,
petitioner did not even try to establish that he had submitted to the
Company as he has not introduced in the lower court
satisfactory proof that an appeal had really been taken by him to
the aforementioned Convention. In short, it was error to hold the
Company guilty of unfair labor practice.
Just the same, having been denied readmission into the Union and
having been dismissed from the service owing to an unfair labor
practice on the part of the Union, petitioner is entitled to
reinstatement as member of the Union and to his former or
substantially equivalent position in the Company, without prejudice
to his seniority and/or rights and privileges, and with back pay,
which back pay shall be borne exclusively by the Union. In the
exercise of its sound judgment and discretion, the lower court may,
however, take such measures as it may deem best, including the
power to authorize the Company to make deductions, for
petitioner's benefit, from the sums due to the Union, by way of
check off or otherwise, with a view to executing this decision, and,
at the same time, effectuating the purposes of the Industrial Peace
Act.
With this modification, the aforementioned decision of the trial
Judge is hereby affirmed in all other respects, and the appealed
resolution of the Court of Industrial Relations en banc is reversed,
with costs against respondents, except the Company.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro,
Angeles and Fernando, JJ., concur.
Bengzon, J.P., J., is on leave.

G.R. No. L-24993

December 18, 1968

UNITED RESTAUROR'S EMPLOYEES & LABOR UNIONPAFLU, petitioner,

vs.
HON. GUILLERMO E. TORRES, as Presiding Judge of Branch
VIII, Court of First Instance of Rizal, 7th Judicial District, and
the DELTA DEVELOPMENT CORPORATION, respondents.
Leonardo C. Fernandez for petitioner.
Ponce Enrile Siguion Reyna, Montecillo and Belo for respondent
Delta Development Corporation.
SANCHEZ, J.:
Certiorari to annul the writ of preliminary injunction issued by the
Court of First Instance of Rizal ordering United Restauror's
Employees & Labor Union-PAFLU (Union, for short), its attorneys,
representatives, agents and any person assisting it to "REFRAIN
from picketing on the property of plaintiff Delta Development
Corporation within the Makati Commercial Center."
The case arose from a verified complaint for injunction with prayer
for preliminary injunction filed by Delta Development Corporation
(Delta), against the Union on January 16, 1965.1 It is there averred
that: Delta is the owner of the Makati Commercial Center situated
at Makati, Rizal. It is in the business of leasing portions thereof.
The center has its own thoroughfares, pedestrian lanes, parking
areas for the benefit of customers and clients of its lessees. On the
other hand, the Union is an association of some employees of Sulo
Restaurant, a lessee of Delta. On January 8, 1965, the Union
sought permission from Delta to conduct picketing activities "on the
private property of plaintiff surrounding Sulo Restaurant." On
January 11, Delta denied the request because it "may be held
liable for any incident that may happen in the picket lines, since the
picketing would be conducted on the private property owned by
plaintiff." Despite the denial, the Union picketed on Delta's property
surrounding Sulo Restaurant on January 16 and continued to
conduct said activity. Such act of the Union is violative of the
property rights of, and would cause great and irreparable injury to,
Delta. No employer-employee relationship exists between Delta
and the Union members. Delta then prayed that a writ of
preliminary injunction issue and that, after hearing, such injunction
be made permanent.
As aforesaid, respondent judge issued a writ of preliminary
injunction. The Union's move to reconsider was denied on January
26, 1965.
On January 19, 1965, the Union filed a motion to dismiss on the
ground, inter alia, that the court had no jurisdiction to try the case.
Without awaiting resolution of its motion to dismiss the Union
commenced in this Court the present original petition
for certiorari on September 18, 1965, claiming that respondent
judge acted without or in excess of his jurisdiction in issuing the
injunctive writ "as no restraining order could be validly issued
against the right to picket as part of freedom of speech"; that
respondent judge issued the questioned writ "without the benefit of
a previous hearing"; that it was issued in violation of Section 9(d) of
Republic Act 875; that jurisdiction over the case rests with the
Court of Industrial Relations (CIR) "for the same involves acts of
unfair labor practice under Sec. 4(a) of Republic Act 875 in
connection with Sec. 5(a) thereof"; and that there is no appeal nor

any plain, speedy and adequate remedy in the ordinary course of

law.
On September 29, 1965, this Court issued a writ of preliminary
injunction upon the Union's P1,000.00-bond.
On October 12, 1965, Delta answered. It alleged, amongst others,
that respondent judge validly issued the injunctive writ in question
because the same "never enjoined petitioner from picketing
against the Sulo-D & E, Inc. but only from doing their picketing on
the private property of respondent who is not in any way privy to
the relationship between Sulo-D & E, Inc. and petitioner"; that
Republic Act 875 is not applicable to the case involving as it does
an action to protect Delta's property rights; that it has no labor
relation or dispute of any kind with the Union; and that the
injunctive writ was issued after due hearing on January 19, 1965.
Delta asked that the present petition be denied.
After the submission of the parties' memoranda in lieu of oral
argument, Delta moved to dismiss the proceeding at bar on the
ground that it has become moot and academic. It averred that the
Union lost in the consent election conducted by the Department of
Labor on October 4, 1965 in CIR Cases 1455-MC and 1464-MC,
and thereby also lost its right to picket; and that in said election
cases, a rival union Sulo Employees Labor Union (SELU, for
short) was certified by CIR as the exclusive bargaining
representative of all the employees of Sulo Restaurant pursuant to
CIR's order of December 23, 1965.
The Union opposed. It argued that the picketing was conducted on
or about January 16, 1965, that is, around 8 months before the
consent election on October 4, 1965; and that the issues that
triggered the Union's labor strike of January 16, 1965 are entirely
distinct and foreign to the issues in Cases 1455-MC and 1464-MC.
The petition must be dismissed. Really, the case before us has
become moot and academic.
When the Union struck and picketed on January 16, 1965, it might
have been true that the Union commanded a majority of Sulo's
employees. Without need of certification, it could, under such
circumstances, conclude a collective bargaining agreement with
Sulo.2 But it is not disputed that on October 4, 1965, i.e., shortly
after this case was filed on September 18, 1965, a consent
election was held. Not controverted, too, is the fact that, in that
consent election, SELU defeated the Union, petitioner herein.
Because of this, SELU was certified to the Sulo management as
the "collective bargaining representative of the employees ... for
collective bargaining purposes as regards wages, hours of work,
rates of pay and/or such other terms and conditions of employment
allowed them by law."3
The consent election, it should be noted, was ordered by CIR
pursuant to the Union's petition for direct certification docketed as
Case 1455-MC and a similar petition for certification filed by SELU
docketed as Case 1464-MC. Verily, the Union can no longer
demand collective bargaining. For, it became the minority union.
As matters stand, said right properly belongs to SELU, which
commands the majority. By law, the right to be the exclusive
representative of all the employees in an appropriate collective
bargaining unit is vested in the labor union "designated or
selected" for such purpose "by the majority of the employees" in
the unit concerned.4 SELU has the right as well as the obligation to
hear, voice out and seek remedies for the grievances of all Sulo
employees, including employees who are members of petitioner

Union, regarding the "rates of pay, wages, hours of employment, or

other conditions of employment."

Footnotes
Civil Case 8524, Court of First Instance of Rizal
(Pasig), entitled "Delta Development Corporation,
Plaintiff, versus United (Restauror's) Employees and
Labor Union, Defendant."
1

Indeed, petitioner Union's concerted activities designed to be

recognized as the exclusive bargaining agent of Sulo employees
must come to a halt.5 Collective bargaining cannot be the
appropriate objective of petitioning Union's continuation of their
concerted activities. The record before us does not reveal any
other legitimate purpose. To allow said Union to continue picketing
for the purpose of drawing the employer to the collective
bargaining table would obviously be to disregard the results of the
consent election. To further permit the Union's picketing activities
would be to flaunt at the will of the majority.
The outcome of a consent election cannot be rendered
meaningless by a minority group of employees who had
themselves invoked the procedure to settle the dispute. Those who
voted in the consent election against the labor union that was
eventually certified are hidebound to the results thereof. Logic is
with this view. By their very act of participating in the election, they
are deemed to have acquiesced to whatever is the consequence of
the election. As to those who did not participate in the election, the
accepted theory is that they "are presumed to assent to the
expressed will of the majority of those voting."6
Adherence to the methods laid down by statute for the settlement
of industrial strife is one way of achieving industrial peace; one
such method is certification election.7 It is the intent and purpose of
the law that this procedure, when adopted and availed of by parties
to labor controversies, should end industrial disputes, not continue
them.8 Pertinent is the following observation to which we fully
concur: "Before an election is held by the Board9 to determine
which of two rival unions represents a majority of the employees,
one of the unions may call a strike and demand that the employer
bargain with it. A labor dispute will then exist. Nothing in the statute
makes it illegal for a minority to strike and thereby seek to obtain
sufficient strength so as to become the sole bargaining agent. But
after the Board certifies the bargaining representative, a strike by a
minority union to compel an employer to bargain with it is unlawful.
No labor dispute can exist between a minority union and an
employer in such a case."10
Upon the law then, the Union's right to strike and consequently to
picket ceased by its defeat in the consent election. That election
occurred during the pendency before this Court of this original
petition for certiorari lodged by the Union the thrust of which is to
challenge the power of the Court of First Instance to enjoin its
picketing activities. The Union may not continue to picket. The
object of the case before us is lost.
WE, ACCORDINGLY, vote to dismiss the petition for certiorari as
moot and academic, and to dissolve the writ of preliminary
injunction we heretofore issued herein, for being functus oficio.
No costs. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar,
Castro and Capistrano, JJ., concur.
Fernando, J., concurs in the, result.

Binalbagan-Isabela Sugar Co., Inc. (BISCOM) vs.

Philippine Association of Free Labor Unions (PAFLU), L18782, August 29, 1963.
2

December 23, 1965 order of Associate Judge Emiliano

C. Tabigne in Cases Nos. 1455-MC and 1464-MC,
Annex "A" of Delta's Motion to Dismiss.
3

Sec. 12(a), Republic Act 875, as amended.

"A labor union that is not the exclusive representative of

all the employees therefor, may not picket for closed
shop. And a contract provision for collective bargaining
governing all employees is valid only when the majority
of the employees have consented to it or have
authorized their agents to consent." Dangel and Shriber
Labor Unions, 1941 ed., p. 90.
5

Allied Workers' Association vs. Court of Industrial

Relations, 20 SCRA 364, 367, citing Virginia Ry. Co. vs.
System Federation No. 40 (1937) 300 U.S. 515, 81 L.
ed. 789.
6

See: Sec. 12, Republic Act 875, as amended.

Floresheim Shoe Store Co. vs. Retail Shoe Salesmen's

Union, 42 N.E. 2d 480, 484.
8

Referring to the National Labor Relations Board, the

American counterpart of our CIR.
9

Dangel and Shriber, op. cit., pp. 395-396, citing cases;

emphasis supplied.
10

G.R. No. L-38258 November 19, 1982

LAKAS NG MANGGAGAWANG MAKABAYAN
(LAKAS), petitioner,
vs.
MARCELO ENTERPRISES and MARCELO TIRE & RUBBER
CORP., MARCELO RUBBER AND LATEX PRODUCTS,
MARCELO STEEL, CORPORATION, MARCELO CHEMICAL &
PIGMENT CORP., POLARIS MARKETING CORPORATION and
THE COURT OF INDUSTRIAL RELATIONS, respondents,
G.R. No. L-38260 November 19, 1982
MARCELO TIRE & RUBBER CORPORATION, MARCELO
RUBBER & LATEX PRODUCTS, INC., MARCELO STEEL
CORPORATION, POLARIS MARKETING CORPORATION,
MARCELO CHEMICAL AND PIGMENT CORP., MARCELO
ENTERPRISES, under which name or style they are also
known, petitioners,
vs.
LAKAS NG MANGGAGAWANG MAKABAYAN (LAKAS) AND
THE HONORABLE COURT OF INDUSTRIAL
RELATIONS, respondents.

GUERRERO, J.:
Separate appeals by certiorari from the Decision of the Court of
Industrial Relations (Manila) dated July 20, 1973, as well as the
Resolution of the court en banc dated January 24, 1974 denying
the reconsideration thereof rendered in ULP Case No. 4951
entitled, "Lakas ng Manggagawang Makabayan, Petitioner, versus
Marcelo Enterprises and Marcelo Tire and Rubber Corporation,
Marcelo Rubber and Latex Products, Marcelo Steel Corporation,
Polaris Marketing Corporation, and Marcelo Chemical and Pigment
Corporation, Respondents. "
The antecedent facts as found by the respondent Court of
Industrial Relations embodied in the appealed Decision are
correct, supported as they are by the evidence on record.
Nevertheless, We find it necessary to make a re-statement of the
facts that are integrated and inter-related, drawn from the
voluminuous records of these cases which are herein jointly
decided, since it would only be from a statement of all the relevant
facts of the cases made in all fullness, collectively and
comprehensively, can the intricate issues posed in these appeals
be completely and judiciously resolved.
It appears that prior to May 23, 1967, the date which may be stated
as the start of the labor dispute between Lakas ng Manggagawang
Makabayan (hereinafter referred to as complainant LAKAS) and
the management of the Marcelo Tire and Rubber Corporation,
Marcelo Rubber and Latex Products, Inc., Polaris Marketing
Corporation, Marcelo Chemical and Pigment Corporation, and the
Marcelo Steel Corporation (Nail Plan) (hereinafter referred to as
respondent Marcelo Companies) the Marcelo Companies had
existing collective bargaining agreements (CBAs) with the local
unions then existing within the appropriate bargaining units, viz: (1)
the respondent Marcelo Tire and Rubber Corporation, with the
Marcelo Camelback Tire and Foam Union (MACATIFU); (2) the
respondent Marcelo Rubber and Latex Products, Inc., with the
Marcelo Free Workers Union (MFWU); and (3) the respondent
Marcelo Steel Corporation with the United Nail Workers Union
(UNWU). These existing CBAs were entered into by and between
the parties while the aforestated local unions were then affiliated

with a national federation, the Philippine Social Security Labor

Union (PSSLU).
It is well to note from the records that when the aforestated CBAs
of the said local unions were nearing their respective expiration
dates (March 15,1967) for MACATIFU and UNWU, and June 5,
1967 for MFWU), the general situation within the ranks of labor
was far from united. The MACATIFU in respondent Marcelo Tire
and Rubber Corporation, then headed by Augusto Carreon, did not
enjoy the undivided support of all the workers of the respondent
corporation, as there existed a rival union, the Marcelo United
Employees and Workers Association (MUEWA) whose president
was then Paulino Lazaro. As events would later develop, the
members of the MACATIFU of Augusto Carreon joined the
MUEWA of Paulino Lazaro, after the latter filed a petition for direct
certification which was granted by the industrial court's Order of
July 5, 1967 recognizing and certifying MUEWA as the sole and
exclusive bargaining representative of all the regular workers of the
respondent corporation. The union rivalry between MACATIFU and
MUEWA did not, however, end with the Order of July 5. 1967, but
more than ever developed into a more pressing problem of union
leadership because Augusto Carreon also claimed to be the
president of the MUEWA by virtue of the affiliation of his
MACATIFU members with MUEWA. The records also reveal that
even the ranks of MFWU in respondent Marcelo Rubber and Latex
Products, Inc. was divided between those supporting Ceferino
Ramos and Cornelio Dizon who both claimed the presidency in
said union. Only the UNWU in respondent Marcelo Steel
Corporation was then enjoying relative peace as Jose Roque was
solely recognized as the union's president. The events that
followed are hereinafter stated in chronological order for a clearer
understanding of the present situation.
On March 14, 1967, the management of respondent Marcelo Steel
Corporation received a letter requesting the negotiation of a new
CBA together with a draft thereof, from the PSSLU president,
Antonio Diaz, for and in behalf of UNWU whose CBA was to expire
the following day. Similar letters and proposals were, likewise, sent
to the management of respondent Marcelo Tire and Rubber
Corporation for and in behalf of MACATIFU, and to respondent
Marcelo Rubber and Latex Products for and in behalf of MFWU,
whose respective CBAs were both to expire on June 5, 1967.
However, on that very same day of March 14, 1967, the
management of respondent Marcelo Tire and Rubber Corporation
received a letter from the UNWU president, Jose Roque,
disauthorizing the PSSLU from representing his union.
Then, on April 14, 1967, Paulino Lazaro of MUEWA requested
negotiation of a new CBA with respondent Marcelo Tire and
Rubber Corporation, submitting therewith his union's own
proposals.
Again, on May 3, 1967, the management of respondents Marcelo
Tire and Rubber Corporation and Marcelo Rubber and Latex
Products, Inc., received another letter requesting negotiation of
new CBAs also for and in behalf of the MACATIFU and the MFWU
from J.C. Espinas & Associates.
Finally, on May 23, 1967, the management of all the respondent
Marcelo Companies received a letter from Prudencio Jalandoni,
the alleged president of the complainant LAKAS. In this letter of
May 23, 1967, the complainant LAKAS informed management of
the affiliation of the Marcelo United Labor Union (MULU) with it.

Included therein was a 17-points demand for purposes of the

requested collective bargaining with management.
Confronted with a problem of whom to recognize as the bargaining
representative of all its workers, the management of all the
respondent Marcelo Companies understandably dealt with the
problem in this wise, viz: (1) it asked proof of authority to represent
the MFWU and the MACATIFU from J.C. Espinas & Associates;
and (2) in a letter dated May 25, 1967, it apprised PSSLU, Paulino
Lazaro of MUEWA and complainant LAKAS of the fact of the
existing conflicting demands for recognition as the bargaining
representative in the appropriate units involved, consequently
suggesting to all to settle the question by filing a petition for
certification election before the Court of Industrial Relations, with
an assurance that the management will abide by whatever orders
the industrial court may issue thereon.
PSSLU demurred to management's stand and informed them of its
intention to file an unfair labor practice case because of
management's refusal to bargain with it, pointedly stating that it
was with the PSSLU that the existing CBAs were entered into.
Again, as events later developed, on or about the middle of August
1981, PSSLU filed a Notice of Strike which became the subject of
conciliation with the respondent companies. In the case of
MUEWA, Paulino Lazaro threatened that his union will declare a
strike against respondent Marcelo Tire and Rubber Corporation.
On the other hand, complainant LAKAS for MULU filed on June 13,
1967 before the Bureau of Labor Relations a Notice of Strike
against all the respondent Marcelo Companies, alleging as
reasons therefore harrassment of union officers and members due
to union affiliation and refusal to bargain. This aforestated Notice of
Strike was, however, withdrawn on July 14, 1967.
In the meantime, as stated earlier in this Decision, the MUEWA
filed a petition for direct certification before the industrial court.
There being no other union or interested person appearing before
the court except the MUEWA, and finding that MUEWA
represented more than the majority of the workers in respondent
Marcelo Tire and Rubber Corporation, the court granted the
petition and by Order of July 5, 1967, certified MUEWA of Paulino
Lazaro as the sole and exclusive bargaining representative of all
the regular workers in said respondent.
On July 11, 1967, Augusto Carreon of MACATIFU wrote the
management of respondent Marcelo Tire and Rubber Corporation
expressly stating that no one was yet authorized to submit
proposals for and in behalf of the union for the renewal of its CBA,
adding that "(a)ny group representing our Union is not authorized
and should not be entertained."
On July 14, 1967, as earlier stated, the Notice of Strike filed by
complainant LAKAS was withdrawn pursuant to a Memorandum
Agreement signed on the same day by management and LAKAS.
Thereafter, or on July 20, 1967, letters of proposal for collective
bargaining were sent by Prudencio Jalandoni of LAKAS to all the
respondent Marcelo companies. In answer thereto, management
wrote two (2) letters, both dated July 24, 1967, addressed to
Jalandoni, expressing their conformity to sit down in conference on
the points to be negotiated as soon as LAKAS can present
evidence of authority to represent the employees of respondent
corporations in said conference. The records disclose that it was in
the atmosphere of constant reservation on the part of management
as to the question of representation recognition that complainant
LAKAS and management sat down for CBA negotiations.

The first conference was held on August 14, 1967, followed by one
on August 16, 1967 whereby management, in formal reply to
union's economic demands, stated its willingness to give pay
adjustments and suggested renewal of other provisions of the old
CBAs. A third conference was set although no one from LAKAS or
the local unions appeared. On August 29, 1967, the fourth
conference was held where, from a letter dated August 30, 1967
from Jose Delfin of Management to Jose B. Roque of UNWU, can
be inferred that in the conference of August 29, 1967, the
management with respect to respondent Marcelo Steel
Corporation, agreed to give pay adjustments from P0.15 to P0.25
to meritorious cases only, and to increase its contribution to the
retirement fund from 1-1/2% to 3% provided the employees'
contribution will be increased from 1% to 2%. Management
likewise suggested the renewal of the other provisions of the
existing CBA. Management's offers were not accepted by
complainant LAKAS who insisted on the grant of all its economic
demands and in all of the Marcelo Companies.
As it would later appear during the trial of the ULP case below, and
as found as a fact by the respondent court, only the economic
proposals of complainant LAKAS were the matters taken up in all
these CBA conferences.
Less than a week after the fourth CBA conference, or on
September 4, 1967, the complainant LAKAS declared a strike
against all the respondent Marcelo Companies. Acts of violence
and vandalism attended the picketing. Ingress and egress at the
respondents' premises were successfully blocked. One worker,
Plaridel Tiangco, was manhandled by the strikers and was
hospitalized. Windows of the Chemical Plant were badly damaged.
As a consequence, ten (10) strikers were later charged before the
Municipal Court of Malabon, Rizal, four of whom were convicted
while the others were at large.
On September 13, 1967, the respondent Marcelo Companies
obtained a writ of preliminary injunction from the Court of First
Instance of Rizal enjoining the strikers from preventing the ingress
and egress at the respondents' premises. The following day, a
"Return to Work Agreement" (Exhibit "A") was executed by and
among the management, represented by Jose P. Marcelo and
Jose A. Delfin, and the local unions, together with complainant
LAKAS, represented by Prudencio Jalandoni for LAKAS, Jose B.
Roque for UNWU, Cornelio Dizon for MFWU and Augusto Carreon
for MUEWA, the representations of the latter two, however, being
expressly subjected by management to non-recognition. Aside
from providing for the immediate lifting of the picket lines, the
agreement, more pertinently provides, to wit,
4. The management agrees to accept all
employees who struck without discrimination or
harassment consistent with an orderly
operation of its various plants, provided it is
understood that management has not waived
and shall continue to exercise freely its rights
and prerogatives to punish, discipline and
dismiss its employees in accordance with law
and existing rules and regulations that cases
filed in court will be allowed to take their
normal course.
By virtue of this agreement, the respondent Marcelo Companies
resumed operations and the strikers went back to work. As found
by the respondent court, all strikers were admitted back to work,
except four (4) namely, Wilfredo Jarquio, Leonardo Sakdalan,

Jesus Lim and Arlington Glodeviza, who chose not to report for
work because of the criminal charges filed against them before the
municipal court of Malabon and because of the administrative
investigation conducted by management in connection with the
acts of violence and vandalism committed during the September 4
strike. Together with Jesus Lim, three other strikers who reported
for work and were admitted, namely, Jose Roque, Alfredo Cabel
and Ramon Bataycan, were convicted in said criminal case.
After the resumption of normal business, the management of the
respondent Marcelo Companies, the complainant LAKAS together
with the local unions resumed their bargaining negotiations subject
to the conditions earlier mentioned. On October 4, 1967, the
parties met and discussed the bargaining unit to be covered by the
CBA in case one is entered into, union shop arrangement, checkoff, waiver of the employer of the notice requirement in case of
employees' separation, separation pay in cash equivalent to 12days pay for every year of service, retirement plan, and one or two
years duration of the CBA. It was also agreed in that meeting not
to negotiate with respect to respondent Marcelo Tire and Rubber
Corporation inasmuch as a CBA had already been entered into by
management with the MUEWA of Paulino Lazaro, the recently
certified union in said respondent.
Finally, on October 13, 1967, the negotiations reached its final
stage when the management of respondents Marcelo Rubber and
Latex Products, Inc. and Marcelo Steel Corporation gave the
complainant LAKAS a copy of management's drafts of the
collective bargaining proposals for MFWU and UNWU,
respectively.
Unexpectedly and without filing a notice of strike, complainant
LAKAS declared another strike against the respondent Marcelo
Companies on November 7, 1967, resulting in the complete
paralyzation of the business of said respondents. Because of this
second strike, conciliation conferences were again set by the
Conciliation Service Division of the Department of Labor on
November 8, November 23, and December 4, 1967. On the last
aforementioned date, however, neither complainant LAKAS nor the
local unions appeared.
Instead, on December 13, 1967, Prudencio Jalandoni of
complainant LAKAS, in behalf of the striking unions, coursed a
letter (Exhibit "B") to Jose P. Marcelo of management advising
that, "on Monday, December 18, 1967, at 7:00 o'clock in the
morning, all your striking workers and employees will return to
work under the same terms and conditions of employment before
the strike." The letter was attested to by Cornelio Dizon for MFWU,
Jose Roque for UNWU and Augusto Carreon for MUEWA. On
December 15,1967, the Bureau of Labor Relations was informed
by the complainant LAKAS who requested for the Bureau's
representative to witness the return of the strikers to their jobs.
The records reveal that in the meantime, prior to December 13,
1967, some of the strikers started going back to work and were
admitted; and that as early as December 4, 1967, the management
started posting notices at the gates of the respective premises of
the respondents for strikers to return back to work, Similar notices
were also posted on December 18 and December 27, 1967.
Upon their return, the reporting strikers were requested to fill up a
certain form (Exhibit "49") wherein they were to indicate the date of
their availability for work in order that they may be scheduled.
According to the respondent Marcelo Companies, this requirement
was asked of the strikers for legitimate business reasons within

management prerogative. Several of the strikers filled up the

required form and were accordingly scheduled for work. The
remaining others, led and supported by complainant LAKAS,
refused and insisted that they be all admitted back to work without
complying with the aforestated requirement, alleging that the same
constituted a "screening" of the striking workers. As matters stood,
Management refused to forego the requirement; on the other hand,
the remaining strikers demanded to be readmitted without filing up
the form for scheduling.
These then constitute the factual background when the
complainant LAKAS, represented by its counsel, Atty. Benjamin C.
Pineda, on December 26, 1967 , filed before the respondent court
a charge for unfair labor practice against the respondent Marcelo
Companies, alleging non-readmission of the striking members of
the three (3) affiliated local unions despite the unconditional offer
to return to work after the strike of November 7, 1967. Based on
the allegations of the foregoing charge and after a preliminary
investigation conducted by the acting Prosecutor of said
respondent court, the acting Chief Prosecutor, Atty. Antonio Tria
Tirona, filed on February 12, 1968 the instant complaint under
authority of Section 5(b) of Republic Act 875, otherwise known as
the Industrial Peace Act.
The Complaint below alleges, among others, to wit:
1. That complainant is a legitimate labor
organization, with its affiliates, namely: Marcelo
Free Workers Union, United Nail Workers
Union, and Marcelo United Employees Unions,
whose members listed in Annexes "A", "B",
and "C" of this complaint are considered
employees of respondent within the meaning
of the Act;
2. ...
xxx xxx xxx
xxx xxx xxx
3. That individual complaints listed in Annexes
"A", "B", and "C" of this complaint are members
of the Marcelo United Employees and Workers
Association, Marcelo Free Workers Union, and
United Nail Workers Union, respectively; that
the members of the Marcelo United Employees
and Workers Union are workers of respondent
Marcelo Tire and Rubber Corporation; that the
members of the Marcelo Free Workers Union
compose the workers of the Marcelo Rubber
and Latex Products, Polaris Marketing
Corporation, and the members of the United
Nail Workers Union compose the workers of
the Marcelo Steel Corporation (Nail Plant);
4. That each of the aforesaid local unions,
before their affiliation with the complainant
union LAKAS, had a collective bargaining
agreement with respondents; that after the
expiration of the collective bargaining
agreement above-mentioned and after the
above-mentioned local unions affiliated with
the complainant LAKAS, the said federation
sent to respondents' president, Jose P.

Marcelo, on May 23, 1967, a letter, requesting

for a negotiation for collective bargaining,
together with union proposals thereof, but
respondents refused;
5. That after respondents knew of the affiliation
of the aforementioned local unions with the
LAKAS, the said respondents, thru their
officers and agents began harassing the union
members, discriminated against them by
transferring some of its officers and members
from one section to another in such a way that
their work was reduced to manual labor, and
by suspending them without justifiable cause.
in spite of long years of service with said
respondents;
6. That as a result of the abovementioned
unfair labor practice of respondents, and after
complainant sent communication thereto,
protesting against the acts of the abovementioned, complainant decided to stage a
strike on September 4, 1967, after filing a
notice of strike with the Department of Labor;
7. That on September 14, 1967, however, Jose
P. Marcelo, and Jose A. Delfin, president and
vice-president of the respondents, respectively,
on one hand and the presidents of the three
local unions above-mentioned and the national
president of complainant union on the other,
entered into a Return-to-Work Agreement.
providing among others, as follows:
4. The management
agrees to accept all
employees who struck
without discrimination or
harassment consistent with
an orderly operation of its
various plants provided it is
understood that
management has not
waived and shall continue
to exercise freely its rights
and prerogatives to punish,
discipline and dismiss its
employees in accordance
with law and existing rules
and regulations and that
cases filed in Court will be
allowed to take their
normal course.
8. That, contrary to the above Return-to-Work
agreement, and in violation thereof,
respondents refused to admit the members of
the three striking local unions; that in admitting
union members back to work, they were
screened in spite of their long employment with
respondent, but respondents gave preference
to the casual employees;
9. That, because of the refusal of the
respondents to accept some union members,

in violation of the above-mentioned Return-toWork agreement and refusal of respondents to

bargain in good faith with complainant, the
latter, together with the members of the three
local unions above-mentioned, again staged a
strike on November 7, 1967;
10. That on December 13, 1967, complainant
sent a letter to respondents that the members
of the striking unions abovementioned offered
to return to work on December 18, 1967
without any condition, but respondents likewise
refused, and still continue to refuse to reinstate
them up to the present;
11. That here to attached are the list of names
of the members of the three local unions
above-mentioned who were not admitted back
to work by respondents, marked as Annexes
"A ", "B ", and "C and made as an integral part
of this complaint;
12. That the union members listed in Annexes
"A", "B", and "C" hereof were not able to
secure substantial employment in spite of
diligent efforts exerted by them;
13. That the above unfair labor practice acts of
respondents are in violation of Section 4,
subsections 1, 4 and 6 in relation to Sections
13, 14 and 15 of Republic Act No. 875.
The complaint prayed "that after due hearing, judgment be
rendered, declaring respondents guilty of unfair labor practice, and
(a) Ordering respondents to cease and desist
from further committing the acts complained of;
(b) Ordering respondents to comply with the
Return-to-Work agreement dated September
14, 1967, and to admit back to work the
workers listed in annexes "A", "B " and "C"
hereof, with back wages, without loss of
seniority rights and privileges thereof;
(c) Ordering respondents to bargain in good
faith with complainant union; and
(d) Granting complainant and its complaining
members thereof such other affirmative reliefs
and remedies equitable and proper, in order to
effectuate the policies of the Industrial Peace
Act.
On March 16, 1968, after an Urgent Motion for Extension of Time
to File Answer, the respondents filed their Answer denying the
material allegations of the Complaint and alleging as affirmative
defenses,
I. That the Collective Bargaining Agreement
between respondent Marcelo Steel
Corporation and the United Nail Workers Union
expired on March 15, 1967; The Collective
Bargaining Agreement between the United

Rubber Workers Union (which eventually

became the Marcelo Free Workers Union) and
the respondent Marcelo Rubber and Latex
Products, Inc., expired on June 5, 1967; the
Collective Bargaining Agreement between
Marcelo Camelback Tire and Foam Union and
the Marcelo Tire and Rubber Corporation
expired on June 5, 1967;
II. That on May 23, 1967, one Mr. Prudencio
Jalandoni of complainant addressed a
communication to Mr. Jose P. Marcelo of
respondents informing him of the alleged
affiliation of the Marcelo United Labor Union
with complainant and submitting a set of
collective bargaining proposal to which counsel
for respondents replied suggesting that a
petition for certification election be filed with
the Court of Industrial Relations in view of the
several demands for representation
recognition;
III. That the transfers of workers from one job
to another were made in accordance with
needs of the service. Respondents afforded
union officers and members affected by the
transfers the privilege to watch out for
vacancies and select positions they prefer to
be in. No suspensions without justifiable cause
were made as alleged in the Complaint;
IV. That between May 23, 1967, the date of
their first demand for negotiations, and
September 4, 1967, the start of the first strike,
proposals and counter-proposals were had.
Respondents are not aware of whether or not a
notice of strike was filed with the Court of
Industrial Relations;
V. That Mr. Jose P. Marcelo is the President of
Marcelo Rubber and Latex Products, Inc.,
Marcelo Tire and Rubber Corporation, and
Marcelo Steel Corporation, while Mr. Jose A.
Delfin is the acting Personnel Manager of
respondent Marcelo Rubber and Latex
Products, Inc., Marcelo Tire and Rubber
Corporation, Marcelo Steel Corporation and
Marcelo Chemical and Pigment Corporation;
VI. That respondents did not refuse to admit
members of the striking union. Only four (4)
workers who had criminal cases filed against
them voluntarily failed to report to the
Personnel Department for administrative
investigation;
VII. That after September 14, 1967, all workers
of the different respondent corporations
returned to work except the four mentioned in
the preceding paragraph hereof who have
pending criminal cases; between September
14, 1967, and November 7, 1967 another
strike was declared without justifiable cause;

VIII. That on November 28, 1967, respondent

obtained an injunction from the Court of First
Instance of Rizal, Caloocan City Branch,
against the illegal picketing of the local unions;
in the first week of December, 1967, the
striking workers began returning to work; on
December 13, 1967, a letter was received from
complainant advising respondents that its
striking workers were calling off, lifting the
picket line and returning to work, that from the
first week of December, 1967, respondents
invited the striking workers desiring to return to
work to fill out an information sheet stating
therein their readiness to work and the exact
dates they were available so that proper
scheduling could be done; a number of
workers showed no interest in reporting to
work; management posted in the Checkpoint,
Bulletin Boards, and the gates notices calling
all workers to return to work but a number of
workers obviously were not interested in
returning anymore;
IX. That respondents posted several times lists
of names of workers who had not returned to
work with the invitation to return to work, but
they did not return to work;
X. That a number of workers in the list
Annexes "A", "B" and "C" have resigned after
they found more profitable employment
elsewhere;
XI. That the local unions referred to in the
Complaint if they ever had affiliated with
complainant union had subsequently
disaffiliated therefrom;
XII. That the strikes called and declared by the
striking unions were illegal;
XIII. That the local unions were bargaining in
bad faith with respondents,
and praying for the dismissal of the Complaint as well as for the
declaration of illegality of the two (2) strikes called by the striking
unions.
Thereafter, the trial commenced. Then on October 24, 1968, a
development occurred which gave a peculiar aspect to the case at
bar. A Manifestation and Motion signed by the respective officers
and members of the MUEWA, headed by Paulino Lazaro, was filed
by the said union, alleging, to wit,
l. That the above-entitled case purportedly
shows that the Marcelo United Employees and
Workers Association is one of the
Complainants being represented by the
Petitioner Lakas ng Manggagawang
Makabayan (LMM);
2. That it likewise appears in the above-entitled
case that the services of the herein Petitioner
was sought by a certain Augusto Carreon
together with his cohorts who are not members

of the Marcelo United Employees and Workers

Association much less connected with the
Marcelo Tire and Rubber Corporation wherein
the Marcelo United Employees and Workers
Association has an existing Collective
Bargaining Agreement;
3. That to set the records of this Honorable
Court straight, the undersigned officers and
members of the Marcelo United Employees
and Workers Association respectfully manliest
that the aforesaid organization has no
complaint whatsoever against any of the
Marcelo Enterprises;
4. ...
5. ..., the Complaint filed by the Petitioner in
the above-entitled case in behalf of the
Marcelo United Employees and Workers
Association is without authority from the latter
and therefore the officers and/or
representatives of the petitioning labor
organization should be cited for Contempt of
Court;
6. ...., the Complaint filed by the Petitioner in
the above-entitled case in behalf of the
Marcelo United and Employees and Workers
Association should be considered as
withdrawn;
xxx xxx xxx
This was followed by another Manifestation and Motion flied on
November 6, 1968 and signed by the officers and members of the
UNWU, headed by its President, Juan Balgos, alleging, to wit,
1. That the above-entitled case purportedly
shows that the United Nail Workers Union is
being represented by the Petitioner Lakas ng
Manggagawang Makabayan for the alleged
reason that the former is one of the affiliates of
the latter;
2. That on January 15, 1968, all the Officers
and members of the United Nail Workers
Union disaffiliated from the herein Petitioning
labor organization for the reason that
Petitioning labor organization could not serve
the best interest of the Officers and members
of the United Nail Workers Union and as such
is a stumbling block to a harmonious labormanagement relations within all the Marcelo
enterprises; ...
3. That the filing of the above-entitled case by
the herein Petitioning labor organization was
made over and above the objections of the
officers and members of the United Nail
Workers Union;
4. That in view of all the foregoing, the Officers
and members of the United Nail Workers

Union do hereby disauthorize the Petitioner of

the above-entitled case (Re:: Lakas ng
Manggagawang Makabayan) from further
representing the United Nail Workers Union in
the above-entitled case;
5. That in view further of the fact that the filing
of the above-entitled case was made over and
above the objections of the Officers and
members of the United Nail Workers Union,
the latter therefore manifest their intention to
cease and desist as they hereby ceased and
desisted from further prosecuting the aboveentitled case in the interest of a harmonius
labor-management relation within the Marcelo
Enterprises;
xxx xxx xxx
Likewise, a Manifestation and Motion signed by the Officers and
members of the MFWU, headed by its president, Benjamin
Maaol, dated October 28, 1968 and filed November 6, 1968,
stated the same allegations as the Manifestation and Motion filed
by the UNWU quoted above, except that the disaffiliation of the
MFWU from LAKAS was made effective January 25, 1968. The
Resolutions of Disaffiliation of both MFWU and UNWU were
attached to these Manifestations.
On November 19, 1968, complainant LAKAS filed an Opposition to
these Manifestations and Motions, materially alleging that, to wit:
1. That complainants respectfully stated that
when Charge No. 2265 was filed on December
26, 1967 in this case, giving rise to the instant
complaint, the alleged officers of the unionmovants were not yet officers on the filing of
said Charge No. 2265,...
2. That the alleged officers and members who
signed the three (3) Manifestations and
Motions are the very employees who were
accepted back to work by the respondents
during the strike by the complainants on
September 4, 1967 and November 7, 1967,
and the said alleged officers and members
who signed the said manifestations and
motions are still working up to the present in
the establishments of the respondents.
3. That precisely because of the acceptance
back to work of these alleged officers and
members of the union-movants, and the
refusal of respondents to accept back to work
all the individual complainants in this case
mentioned in Annexes "A", "B" and "C" of the
instant complaint, inspite of the offer to return
to work by the complainants herein made to
the respondents without any conditions at the
time of the strike, as per complainants' letter of
December 13, 1967 (Exh. "B", for the
complainants), which fact precisely gave rise to
the filing of this case.
xxx xxx xxx

On January 31, 1969, after the submission of their respective

Memoranda on the motions asking for the dismissal and
withdrawal of the complaint, the Court of Industrial Relations
issued an Order deferring the resolution of the Motions until after
the trial on the merits. To this Order, two separate Motions for
Reconsideration were filed by the respondent companies and the
movant-unions, which motions were, however, denied by the
court en banc by its Resolution dated March 5, 1969.
After the trial on the merits of the case, and after submission by the
parties of their respective memoranda, the respondent court
rendered on July 20, 1973 the Decision subject of these petitions.
On the motions for dismissal or withdrawal of the complaint as
prayed for by MUEWA, UNWU and MFWU, the respondent court
denied the same on the ground that the instant case was filed by
the Lakas ng Manggagawang Makabayan for and in behalf of the
individual employees concerned and not for the movants who were
not authorized by said individual complainants to ask for the
dismissal. On the merits of the case, while the Decision contained
opinions to the effect that the respondent Marcelo Companies
were not remiss in their obligation to bargain, and that the
September 4, 1967 strike as well as the November 7, 1967 strike,
were economic strikes, and were, therefore, illegal because of lack
of the required notices of strike before the strikes were declared in
both instances, the Decision, nevertheless, on the opinion that the
"procedure of scheduling adopted by the respondents was in effect
a screening of those who were to be readmitted," declared
respondent Marcelo Companies guilty of unfair labor practice in
discriminating against the employees named in Annexes "A", "B",
and "C" by refusing to admit them back to work other strikers were
admitted back to work after the strike of November 7, 1967. The
dispositive portion of the appealed Decision states, to wit,
WHEREFORE, in view of all the foregoing,
respondents should be, as they are hereby,
declared guilty of unfair labor practice only for
the discrimination on terms or conditions of
employment as hereinbefore discussed in
connection with the return of the strikers
complainants back to work after the second
strike, and, therefore, ordered to pay the
individual complainants appearing in Annexes
"A", "B" and "C" of the Complaint, except
Arlington Glodeviza, Jesus Lim, Wilfredo
Jarquio, Leonardo Sakdalan, Jose Roque,
Alfredo Cabel, and those still working, were
dismissed for cause, whose contracts expired
or who had resigned as above indicated,
their back wages from December l8, 1967but
only up to June 29, 1970 when this case was
submitted for decision, without reinstatement,
minus their earnings elsewhere for the same
period.
As to those who died without having been reemployed, the back wages shall be from
December 18, 1967 up to the date of their
demise, as indicated in the body of this
Decision, but not beyond June 20, 1970,
likewise less their earnings elsewhere.
The Chief Auditing Examiner of this Court, or
his duly authorized representative, is hereby
directed to proceed to the premises of
respondent companies to examine their books,
payrolls, vouchers and other pertinent papers

or documents as may be necessary to

compute the back wages due the individual
complainant in line with this Decision, and to
submit his Report thereon not later than twenty
(20) days after completion of such examination
for further disposition of the Court.
SO ORDERED.
On August 9, 1973, counsel for respondent Marcelo Companies
filed a Motion for Reconsideration of the above Decision assigning
as errors, to wit,
I. The trial court erred in not finding that
complainant Lakas ng Manggagawang
Makabayan (Lakas) has no authority to file
and/or to prosecute the Complaint against
respondents in representation of the local
unions and/or individual complainants and/or
members of local unions in their individual
capacities and in not dismissing the complaint
on that ground upon motions of the local
unions concerned and/or their members.
II. The trial court erred in finding that
respondent discriminated against individual
complainants who were not readmitted to work
after the November 7, 1967 strike while others
were able to return to their former employment
and in holding that the procedure adopted by
respondents was in effect a screening of those
who were readmitted and in finding
respondents guilty of unfair labor practice by
reason thereof. "
On August 14, 1973, the individual complainants who had earlier
disauthorized the counsel of record, Atty. Benjamin Pineda, from
further representing them and from amicably settling their claims,
on their own behalf filed their arguments in support of their Motion
for Reconsideration, through a newly retained counsel, Atty. Pablo
B. Castillon. Assigned as errors are, to wit,
I. The findings of the trial court excluding some
of the employees from the aforementioned
Decision as well as from the benefits resulting
therefrom is not in accordance with law and the
facts.
II. The findings of the trial court declaring the
strikes of September 4 and November 7, 1967
as illegal for being an economic strike is not in
accordance with law and the facts adduced in
this case.
III. The Honorable trial court in ordering the
reduction of the back wages, without
reinstatement, appears to have departed from
the substantial evidence rule and established
jurisprudence.
By Resolution of January 24, 1974, the Court en banc denied the
two (2) Motions for Reconsideration filed by both the respondent
Marcelo Companies and the individual complainants. On February
19, 1974 and on February 20, 1974, both parties filed their
respective Notices of Appeals. Hence, these petitions.

In L-38258, the petition filed by complainant Lakas ng

Manggagawang Makabayan (LAKAS), the following were assigned
as reversible errors, to wit,
I. The respondent court erred in finding the
strikes of September 4 and November 7, 1967
to be economic strikes and declaring the said
strikes illegal for non-compliance with the
procedural requirement of Section 14(d) of
Republic Act 875, although its illegality was
condoned or waived because of the Return-toWork agreement on the first strike, and the
discriminatory rehiring of the striking
employees after the second strike.
II. The respondent court erred in denying
reinstatement to the striking complainants in
Case No. 4951-ULP, and limiting the
computation of their backwages from
December 18, 1967 to June 29, 1970 only,
despite its findings of unfair labor practice
against private respondents herein as a
consequence of the discriminatory rehiring of
the striking employees after the November 7,
1967 strike.
III. The respondent court erred in excluding the
other individual complainants, except those
who are still working, those who resigned on or
before December 18, 1967, and those whose
employment contract expired, and denying to
these individual complainants the benefits
resulting therefrom.
On the other hand, in L-38260 which is the petition filed by
respondents Marcelo Enterprises, Marcelo Tire and Rubber
Corporation, Marcelo Rubber & Latex Products, Marcelo Steel
Corporation, Marcelo Chemical & Pigment Corporation, and
Polaris Marketing Corporation, the following is the alleged
assignment of errors, to wit,
I. Respondent court erred in not finding that
respondent Lakas ng Manggagawang
Makabayan (LAKAS) had no authority to file
and/or to prosecute the complaint against the
petitioners herein in representation of the local
unions and/or individual complainants and/or
members of local unions in their individual
capacities and in not dismissing the complaint
in Case No. 4951-ULP of respondent court on
that ground upon motions of the local unions
concerned and/or their officers and members.
II. Respondent court erred in finding that
petitioners herein discriminated against
individual complainants in Case No. 4951-ULP
of respondent court who were not readmitted
to work after the November 7, 1967 strike,
while others were able to return to their former
employment and in holding that the procedure
adopted by petitioners herein was in effect a
screening of those who were readmitted and in
finding petitioners herein guilty of unfair labor
practice by reasons thereof.

III. Respondent court erred in rendering

judgment ordering petitioners herein to pay
individual complainants in Case No. 4951-ULP
of respondent court backwages from
December 18, 1967, to June 29, 1970, minus
their earnings elsewhere, except those who
have resigned, those who have been
dismissed for cause, those whose contracts
have expired and those who are already
working.
IV. Respondent court erred in holding that
petitioners herein have waived their right to
declare the strikes of September 4, 1967 and
November 7, 1967, illegal.
From the aforecited assignments of errors respectively made in
both petitions before Us, We find that there are only two basic
issues posed for Our resolution, viz: (1) whether or not the
complaint filed by LAKAS against the Marcelo Companies can be
sustained, in view of the alleged fact that its authority to file and
prosecute the same has been squarely raised in issue at the first
instance before the respondent court; and (2) whether or not the
Marcelo Companies are guilty of unfair labor practice, for which
they should be made liable for backwages and be obliged to
reinstate the employees appearing in Annexes "A", "B", and "C " of
the complaint, taking into consideration the prayer of LAKAS anent
the correct payment of said backwages and the non-exclusion of
some employees from the benefits arising from the appealed
Decision.
The first issue poses a procedural question which We shall dwell
on after a resolution of the second issue, this latter issue being of
greater significance to the correct determination of the rights- of all
parties concerned as it treats of the merits of the present petitions.
Hence, anent the second issue of whether or not the complaint for
unfair labor practice can be sustained, this Court rules in favor of
the respondent Marcelo Companies and consequently, the
appealed Decision is reversed. This reversal is inevitable after this
Court has pored through the voluminuous records of the case as
well as after applying the established jurisprudence and the law on
the matters raised. We are not unmindful of the plight of the
employees in this case but We consider it oppressive to grant their
petition in G.R. No. L38258 for not only is there no evidence which
shows that the respondent Marcelo Companies were seeking for
an opportunity to discharge these employees for union activities, or
to discriminate against them because of such activities, but there is
affirmative evidence to establish the contrary conclusion.
The present controversy is a three-sided conflict, although focus
has been greatly placed upon an alleged labor dispute between
complainant LAKAS and the respondent Marcelo Companies. It
would bear emphasizing, however, that what had been patently
disregarded by the respondent industrial court and the parties
alike, is the fact that LAKAS had never been the bargaining
representative of any and an of the local unions then existing in the
respondent Marcelo Companies.
Contrary to the pretensions of complainant LAKAS, the respondent
Marcelo Companies did not ignore the demand for collective
bargaining contained in its letter of June 20, 1967. Neither did the
companies refuse to bargain at all. What it did was to apprise
LAKAS of the existing conflicting demands for recognition as the
bargaining representative in the appropriate units involved, and

suggested the settlement of the issue by means of the filing of a

petition for certification election before the Court of Industrial
Relations. This was not only the legally approved procedure but
was dictated by the fact that there was indeed a legitimate
representation issue. PSSLU, with whom the existing CBAs were
entered into, was demanding of respondent companies to
collectively bargain with it; so was Paulino Lazaro of MUEWA, J.C.
Espinas & Associates for MACATIFU and the MFWU, and the
complainant LAKAS for MULU which we understand is the
aggrupation of MACATIFU, MFWU and UNWU. On top of all of
these, Jose Roque of UNWU disauthorized the PSSLU from
representing his union; and similarly, Augusta Carreon of
MACATIFU itself informed management as late as July 11, 1967 or
after the demand of LAKAS that no group representing his Union
"is not authorized and should not be entertained. "
Indeed, what We said in Philippine Association of Free Labor
Unions (PAFLU) vs. The Bureau of Labor Relations,69 SCRA 132,
applies as well to this case.
..., in a situation like this where the issue of
legitimate representation in dispute is viewed
for not only by one legitimate labor
organization but two or more, there is every
equitable ground warranting the holding of a
certification election. In this way, the issue as
to who is really the true bargaining
representative of all the employees may be
firmly settled by the simple expedient of an
election.
The above-cited case gives the reason for the need of determining
once and for all the true choice of membership as to who should
be their bargaining representative, which is that, "(E)xperience
teaches us, one of the root causes of labor or industrial disputes is
the problem arising from a questionable bargaining representative
entering into CBA concerning terms and conditions of employment.
"
Respecting the issue of representation and the right of the
employer to demand reasonable proof of majority representation
on the part of the supposed or putative bargaining agent, the
commentaries in Rothenberg on Labor Relations, pp. 42943 1, are
forceful and persuasive, thus:
It is essential to the right of a putative
bargaining agent to represent the employees
that it be the delegate of a majority of the
employees and, conversely, an employer is
under duty to bargain collectively only when
the bargaining agent is representative of the
majority of the employees. A natural
consequence of these principles is that the
employer has the right to demand of the
asserted bargaining agent proof of its
representation of its employees. Having the
right to demonstration of this fact, it is not an
'unfair labor practice' for an employer to refuse
to negotiate until the asserted bargaining agent
has presented reasonable proof of majority
representation. It is necessary however, that
such demand be made in good faith and not
merely as a pretext or device for delay or
evasion. The employer's right is however to
reasonable proof. ...

... Although an employer has the undoubted

right to bargain with a bargaining agent whose
authority has been established, without the
requirement that the bargaining agent be
officially certified by the National Labor
Relations Board as such, if the informally
presented evidence leaves a real doubt as to
the issue, the employer has a right to demand
a certification and to refuse to negotiate until
such official certification is presented."
The clear facts of the case as hereinbefore restated indusputably
show that a legitimate representation issue confronted the
respondent Marcelo Companies. In the face of these facts and in
conformity with the existing jurisprudence.
We hold that there existed no duty to bargain collectively with The
complainant LAKAS on the part of said companies. And
proceeding from this basis, it follows that all acts instigated by
complainant LAKAS such as the filing of the Notice of strike on
June 13, 1967 (although later withdrawn) and the 'two strikes of
September 4, 1967 and November 7, 1967 were calculated ,
designed and intended to compel the respondent Marcelo
Companies to recognize or bargain with it notwithstanding that it
was an uncertified union, or in the case of respondent Marcelo Tire
and Rubber Corporation, to bargain with it despite the fact that the
MUEWA of Paulino Lazaro vas already certified as the sole
bargaining agent in said respondent company. These concerted
activities executed and carried into effect at the instigation and
motivation of LAKAS ire all illegal and violative of the employer's
basic right to bargain collectively only with the representative
supported by the majority of its employees in each of the
bargaining units. This Court is not unaware of the present
predicament of the employees involved but much as We
sympathize with those who have been misled and so lost their jobs
through hasty, ill-advised and precipitate moves, We rule that the
facts neither substantiate nor support the finding that the
respondent Marcelo Companies are guilty of unfair labor practice.
There are also other facts which this Court cannot ignore. the
complaint of LAKAS charge that after their first strike of September
4, 1967, management and the striking employees entered into a
Return-to-Work Agreement but that it was violated by the
respondent companies who "refused to admit the members of the
three striking local unions ... and gave reference to the casual
employees." (No. 8, Complaint). It is also alleged that the strike of
November 7, 1967 was staged "because of the refusal of the
respondents to accept some union members ... and refusal of
respondents to bargain in good faith with complainant" (No. 9,
Complaint). We find however, that in making these charges,
complainant LAKAS lacked candor, truth and fidelity towards the
courts.
It is a fact found by the respondent court, and as revealed by he
records of the case, that the respondent Marcelo Companies did
not violate the terms of the Return-to-Work Agreement negotiated
after the first strike. All of the strikers were admitted back to work
except four (4) who opted not to report for work because of the
administrative investigation conducted in connection with the acts
of violence perpetrated during the said strike.
It is also evident from the records that the charge of bargaining in
bad faith imputed to the respondent companies, is hardly credible.
In fact, such charge is valid as only against the complainant
LAKAS. The parties had a total of five (5) conferences for

purposes of collective bargaining. It is worth considering that the

first strike of September 4, 1967 was staged less than a week after
the fourth CBA conference and without any benefit of any previous
strike notice. In this connection, it must be stated that the notice of
strike filed on June 13, 1967 could not have been the strike notice
for the first strike because it was already withdrawn on July 14,
1967. Thus, from these stated facts can be seen that the first strike
was held while the parties were in the process of negotiating. Nor
can it be sustained that the respondent Marcelo Companies
bargained in bad faith since there were proposals offered by them,
but the complainant LAKAS stood pat on its position that all of their
economic demands should be met and that all of these demands
should be granted in all of the respondent Marcelo Companies.
The companies' refusal to accede to the demands of LAKAS
appears to be justified since there is no showing that these
companies were in the same state of financial and economic
affairs. There is reason to believe that the first strike was staged
only for the purpose of compelling the respondent Marcelo
Companies to accede to the inflexible demands of the complainant
LAKAS. The records further establish that after the resumption of
normal operations following the first strike and the consequent
Return-to-Work Agreement, the striking unions led by complainant
LAKAS and the management of the respondent Marcelo
Companies resumed their bargaining negotiations. And that on
October 13, 1967, complainant LAKAS sent the final drafts of the
collective bargaining proposals for MFWU and UNWU. The second
strike of November 7, 1967 was then staged immediately after
which strike, as before, was again lacking of a strike notice. All of
these facts show that it was complainant LAKAS, and not the
respondent Marcelo Companies, which refused to negotiate in the
pending collective bargaining process. AR that the facts show is
that the bargaining position of complainant LAKAS was inflexible
and that it was in line with this uncompromising attitude that the
strikes were declared, significantly after notice that management
did not or could not meet all of their 17-points demand.
Respondent court, upholding the contention of petitioner LAKAS
that after the second strike, the respondent Marcelo Companies,
despite the strikers' unconditional offer to return to work, refused to
readmit them without "screening" which LAKAS insists to be
"discriminatory hiring of the striking employees, " declared that
although the two strikes were illegal, being economic strikes held
in violation of the strike notice requirement, nevertheless held the
Marcelo Companies guilty of unfair labor practice in discriminating
against the complaining employees by refusing to readmit them
while other strikers were admitted back to work. We do not agree.
It is the settled jurisprudence that it is an unfair labor practice for
an employer not to reinstate, or refuse re-employment of members
of union who abandon their strike and make unconditional offer to
return to work. 1 As indeed Exhibit "B" presents an unconditional
offer of the striking employees to return to work under the same
terms and conditions of employment before the strike, the question
then confronting Us is whether or not on the part of the respondent
companies, there was refusal to reinstate or re-employ the strikers.
We find as a fact that the respondent Marcelo Companies did not
refuse to reinstate or re-employ the strikers, as a consequence of
which We overrule the finding of unfair labor practice against said
companies based on the erroneous conclusion )f the respondent
court. It is clear from the records that even before the unconditional
offer to return to work contained in , Exhibit "B" was made, the
respondent Marcelo Companies had already posted notices for the
strikers to return back to work.

It is true that upon their return, the strikers were required to fill up a
form (Exhibit "49") wherein they were to indicate the date of their
availability for work. But We are more impressed and are
persuaded to accept as true the contention of the respondent
Marcelo Companies that the aforestated requirement was only for
purposes of proper scheduling of the start of work for each
returning striker. It must be noted that as a consequence of the two
strikes which were both attended by widespread acts of violence
and vandalism, the businesses of the respondent companies were
completely paralyzed. It would hardly be justiciable to demand of
the respondent companies to readmit all the returning workers in
one big force or as each demanded readmission. There were
machines that were not in operating condition because of long
disuse during the strikes. Some of the machines needed more than
one worker to operate them so that in the absence of the needed
team of workers, the start of work by one without his teammates
would necessarily be useless, and the company would be paying
for his time spent doing no work. Finally, We take judicial
cognizance of the fact that companies whose businesses were
completely paralyzed by major strikes cannot resume operations at
once and in the same state or force as before the strikes.
But what strikes Us most in lending credence to respondents'
allegation that Exhibit "49" was not meant to screen the strikers, is
the fact that an of the returning strikers who filled up the form were
scheduled for work and consequently started with their jobs. It is
only those strikers who refused or failed to fill-up the required form,
like the herein complaining employees, who were not scheduled
for work and consequently have not been re- employed by the
respondent Marcelo Companies. Even if there was a sincere belief
on their part that the requirement of Exhibit "49" was a ruse at
"screening" them, this fear would have been dispelled upon notice
of the fact that each and all of their co-strikers who rued up the
required form were in fact scheduled for work and started to work.
The stoppage of their work was not, therefore, the direct
consequence of the respondent companies' complained act,
Hence, their economic loss should not be shifted to the employer. 2
It was never the state policy nor Our judicial pronouncement that
the employees' right to self-organization and to engage in
concerted activities for mutual aid and protection, are absolute or
be upheld under an circumstances. Thus, in the case of Royal
Interocean Lines, et al. vs. CIR, 3 We cited these authorities giving
adequate panoply to the rights of employer, to wit:
The protection of workers' right to selforganization in no way interfere with
employer's freedom to enforce such rules and
orders as are necessary to proper conduct of
his businesses, so long as employer's
supervision is not for the purpose of
intimidating or coercing his employees with
respect to their self-organization and
representation. (National Relations Board vs.
Hudson Motor Car Co., C.C.A., 1942, 123 F
2d. 528). "
It is the function of the court to see that the
rights of self-organization and collective
bargaining guaranteed by the Act are amply
secured to the employee, but in its effort to
prevent the prescribed unfair labor practice,
the court must be mindful of the welfare of the
honest employer (Martel Mills Corp. vs.
M.L.R.L., C.C.A., 1940,11471 F2d. 264)."

In Pagkakaisang Itinataguyod ng mga Manggagawa sa Ang Tibay

(PIMA), Eliseo Samson, et al., vs. Ang Tibay, Inc., et al., L-22273,
May 16, 1967, 20 SCRA 45, We held that the exaction, by the
employer, from the strikers returning to work, of a promise not to
destroy company property and not to commit acts of reprisal
against union members who did not participate in the strike, cannot
be considered an unfair labor practice because it was not intended
to discourage union membership. It was an act of a selfpreservation designed to insure peace and order in the employer's
premises. It was also held therein that what the Industrial Peace
Act regards as an unfair labor practice is the discrimination
committed by the employer in regard to tenure of employment for
the purpose of encouraging or discouraging union membership.
In the light of the above ruling and taking the facts and
circumstances of the case before Us in relation to the requirement
by the respondent companies in the filling up of Exhibit "49", We
hold and rule that the requirement was an act of self-preservation,
designed to effect cost-savings as well as to insure peace and
order within their premises. Accordingly, the petition in G. R. No. L38258 should be dismissed, it having failed to prove, substantiate
and justify the unfair labor practice charges against the respondent
Marcelo Companies.
Now to the procedural question posed in the first issue brought
about by the respondent court's denial of the motions to withdraw
the complaint respectively filed by MUEWA, UNWU and MFWU. In
their petition (G.R. L-38260) the respondent Marcelo Companies
maintain that the respondent court erred in not dismissing the
complaint even as it knew fully well that the very authority of
LAKAS to represent the labor unions who had precisely
disaffiliated from the LAKAS, was open to serious question and
was being ventilated before it. On the other hand, the respondent
court rationalized the denial of the aforestated motions to withdraw
by holding that the complaint was filed by LAKAS on behalf of the
individual employees whose names were attached to the complaint
and hence, that the local unions who were not so authorized by
these individual employees, cannot withdraw the said complaint.
The lower court's opinion is erroneous.
Firstly, LAKAS cannot bring any action for and in behalf of the
employees who were members of MUEWA because, as intimated
earlier in this Decision, the said local union was never an affiliate of
LAKAS. What appears clearly from the records is that it was
Augusto Carreon and his followers who joined LAKAS, but then
Augusto Carreon was not the recognized president of MUEWA and
neither he nor his followers can claim any legitimate representation
of MUEWA. Apparently, it is this split faction of MUEWA, headed
by Augusta Carreon, who is being sought to be represented by
LAKAS. However, it cannot do so because the members
constituting this split faction of MUEWA were still members of
MUEWA which was on its own right a duly registered labor union.
Hence, any suit to be brought for and in behalf of them can be
made only by MUEWA, and not LAKAS. It appearing then that
Augusta Carreon and his cohorts did not disaffiliate from MUEWA
nor signed any individual affiliation with LAKAS, LAKAS bears no
legal interest in representing MUEWA or any of its members.
Nor will the lower court's opinion be availing with respect to the
complaining employees belonging to UNWU and MFWU. Although
it is true, as alleged by LAKAS, that when it filed the charge on
December 26, 1967, the officers of the movant unions were not yet
then the officers thereof, nevertheless, the moment MFWU and
UNWU separated from and disaffiliated with 'LAKAS to again
exercise its rights as independent local unions, registered before
as such, they are no longer affiliates of LAKAS, as what transpired

here. Naturally, there would no longer be any reason or occasion

for LAKAS to continue representing them. Notable is the fact that
the members purportedly represented by LAKAS constitute the
mere minority of the movant unions, as may be inferred from the
allegations of the movant unions as well as the counter-allegations
of LAKAS filed below. As such, they cannot prevail or dictate upon
the will of the greater majority of the unions to which they still
belong, it appearing that they never disaffiliated from their unions;
or stated in another way, they are bound by the action of the
greater majority.4
In NARIC Workers' Union vs. CIR, 5 We ruled that, "(a) labor union
would go beyond the limits of its legitimate purposes if it is given
the unrestrained liberty to prosecute any case even for employees
who are not members of any union at all. A suit brought by another
in representation of a real party in interest is defective." Under the
uncontroverted facts obtaining herein, the aforestated ruling is
applicable, the only difference being that, here, a labor federation
seeks to represent members of a registered local union never
affiliated with it and members of registered local unions which, in
the course of the proceedings before the industrial court,
disaffiliated from it.
This is not to say that the complaining employees were without any
venue for redress. Under the aforestated considerations, the
respondent court should have directed the amendment of the
complaint by dropping LAKAS as the complainant and allowing the
suit to be further prosecuted in the individual names of those who
had grievances. A class suit under Rule 3, Section 12 of the Rules
of Court is authorized and should suffice for the purpose.
In fairness to the complaining employees, however, We treated
their Motion for Reconsideration of the Decision subject of appeal
as curing the defect of the complaint as the said motion expressly
manifested their collective desire to pursue the complaint for and in
their own behalves and disauthorizing LAKAS' counsel from further
representing them. And We have also treated their petition before
Us in the same manner, disregarding the fact that LAKAS
remained the petitioning party, as it appears from the verification
that the petition in L38258 was for and in behalf of the complaining
employees. The merits of their petition, however, fall short of
substantiating the charge of unfair labor practice against the
respondent Marcelo Companies. On the other hand, the appeal of
the Marcelo Companies in L-38260 must be upheld and sustained.
WHEREFORE, upon the foregoing considerations, the petition in
L-38258 is dismissed and the petition in L-38260 is granted. The
decision of the Court of Industrial Relations is hereby REVERSED
and SET ASIDE and a new judgment is rendered holding that the
respondent Marcelo Companies are not guilty of unfair labor
practice.
No costs.
SO ORDERED.
Makasiar (Chairman), Concepcion, Jr., Abad Santos, De Castro
and Escolin, JJ., concur.
Aquino, J., concur in the result.
Footnotes

1 People's Bank & Trust Company Employees

Union, et al., vs. CIR, et al., 69 SCRA 10;
Cromwell Commercial Employees and
Laborers Union (PTUC) vs. CIR, et al.,, 12
SCRA 124.
2 See Dinglasan vs. National Labor Union, L14183, November 28,1959.
3 109 Phil. 900 (1960).
4 National Labor Union vs. Ang Bisig ng
P.M.C., L-12575, May 13, 1959.
5 3 SCRA 804.

G.R. No. 58768-70 December 29, 1989

LIBERTY FLOUR MILLS EMPLOYEES, ANTONIO EVARISTO
and POLICARPIO BIASCAN, petitioners,
vs.
LIBERTY FLOUR MILLS, INC. PHILIPPINE LABOR ALLIANCE
COUNCIL (PLAC) and NATIONAL LABOR RELATIONS
COMMISSION, (NLRC), respondents.
Julius A. Magno for petitioners.
De Leon, Diokno & Associates for respondent Liberty Flour Mills,
Inc.
CRUZ, J.:
In this petition for certiorari, the resolution of the public respondent
dated August 3, 1978, is faulted for: (a) affirming the decision of
the labor arbiter dismissing the employees' claim for emergency
allowance for lack of jurisdiction; and (b) modifying the said
decision by disallowing the award of back wages to petitioners
Policarpio Biascan and Antonio Evaristo.
The basic facts are as follows:
On February 6, 1974, respondent Philippine Labor Alliance Council
(PLAC) and respondent Liberty Flour Mills, Inc. entered into a
three-year collective bargaining agreement effective January 1,
1974, providing for a daily wage increase of P2.00 for 1974, Pl.00
for 1975 and another Pl.00 for 1976. The agreement contained a
compliance clause, which will be explained later in this opinion.
Additionally, the parties agreed to establish a union shop by
imposing "membership in good standing for the duration of the
CBA as a condition for continued employment" of workers. 1
On October 18, 1974, PLAC filed a complaint against the
respondent company for non-payment of the emergency cost of
living allowance under P.D. No. 525. 2 A similar complaint was filed
on March 4, 1975, this time by the petitioners, who apparently
were already veering away from PLAC. 3
On March 20, 1975, petitioners Evaristo and Biascan, after
organizing a union caged the Federation of National Democratic
Labor Unions, filed with the Bureau of Labor Relations a petition
for certification election among the rank-and-file employees of the
respondent company 4 PLAC then expelled the two for disloyalty
and demanded their dismissal by the respondent company, which
complied on May 20, 1975. 5
The objection of Evaristo and Biascan to their termination were
certified for compulsory arbitration and assigned to Labor Arbiter
Apolinario N. Lomabao, Jr. Meanwhile, the claims for emergency
allowance were referred for voluntary arbitration to Edmundo
Cabal, who eventually dismissed the same on the ground that the
allowances were already absorbed by the wage increases. This
latter case was ultimately also certified for compulsory arbitration
and consolidated with the termination case being heard by
Lomabao. His decision was, on appeal, dealt with by the NLRC as
above stated, 6 and the motion for reconsideration was denied on
August 26, 1981. 7
At the outset, we note that the petitioners are taking an ambivalent
position concerning the CBA concluded in 1974. While claiming
that this was entered into in bad faith and to forestall the payment

of the emergency allowances expected to be decreed, they

nonetheless invoke the same agreement to support their
contention that their complaint for emergency allowances was
invalidly referred to voluntary arbitrator Cabal rather than Froilan
M. Bacungan.
We find there was no such violation as the choice of the voluntary
arbitrator was not limited to Bacungan although he was probably
the first preference. Moreover, the petitioners are estopped from
raising this objection now because they did not seasonably
interpose it and instead willingly submitted to Cabal's jurisdiction
when he undertook to hear their complaint.
In sustaining Labor Arbiter Lomabao, the NLRC agreed that the
decision of voluntary Arbiter Cabal was final and unappealable
under Article 262-A of the Labor Code and so could no longer be
reviewed by it. True enough. However, it is equally true that the
same decision is not binding on this Court, as we held in Oceanic
Bic Division (FFW) v. Romero 8 and reiterated in Mantrade/FMMC
Division Employees and Workers Union v. Bacungan. 9 The rule as
announced in these cases is reflected in the following statements:
In spite of statutory provisions making "final"
the decision of certain administrative agencies,
we have taken cognizance of petitions
questioning these decisions where want of
jurisdiction, grave abuse of discretion, violation
of due process, denial of substantial justice, or
erroneous interpretation of the law were
brought to our attention.
xxx xxx xxx
A voluntary arbitrator by the nature of her
functions acts in a quasi-judicial capacity.
There is no reason why her decisions involving
interpretation of law should be beyond this
Court's review. Administrative officials are
presumed to act in accordance with law and
yet we do not hesitate to pass upon their work
where a question of law is involved or where a
showing of abuse of authority or discretion in
their official acts is properly raised in petitions
for certiorari.
Accordingly, the validity of the voluntary arbiter's finding that the
emergency allowance sought by the petitioners are already
absorbed in the stipulated wage increases will now be examined
by the Court itself.
The position of the company is that the emergency allowance
required by P.D. No. 525 is already covered by the wage increases
prescribed in the said CBA. Furthermore, pursuant to its Article
VIII, such allowances also include all other statutory minimum
wage increases that might be decreed during the lifetime of the
said agreement.
That agreement provided in Section 2 thereof as follows:
Section 2. The wage increase in the amounts
and during the period above set forth shall, in
the event of any statutory increase of the
minimum wage, either as allowance or as
basic wage, during the life of this Agreement,
be considered compliance and payment of

such required statutory increase as far as it will

go and under no circumstances will it be
cumulative nor duplication to the differential
amount involved consequent to such statutory
wage increase.
The Court holds that such allowances are indeed absorbed by the
wage increases required under the agreement. This is because
Section 6 of the Interpretative Bulletin on LOI No. 174 specifically
provides:
Sec. 6. Allowances under LOI. -All
allowances, bonuses, wage adjustments and
other benefits given by employers to their
employees shall be treated by the Department
of Labor as in substantial compliance with the
minimum standards set forth in LOI No. 174 if:
(a) they conform with at
least the minimum
allowances scales
specified in the
immediately preceding
Section; and
(b) they are given in
response to the appeal of
the President in his speech
on 4 January 1974, or to
countervail the quantum
jump in the cost of living as
a result of the energy crisis
starting in November 1973,
or pursuant to Presidential
Decree No. 390; Provided,
That the payment is
retroactive to 18 February
1974 or earlier.
The allowances and other benefits may be
granted unilaterally by the employer or through
collective bargaining, and may be paid at the
same time as the regular wages of the
employees.
Allowances and other benefits which are not
given in substantial compliance with the LOI as
interpreted herein shall not be treated by the
Department of Labor as emergency
allowances in the contemplation of the LOI
unless otherwise shown by sufficient proof.
Thus, without such proof, escalation clauses in
collective bargaining agreements concluded
before the appeal of the President providing for
automatic or periodic wage increases shall not
be considered allowances for purposes of the
LOI. (Emphasis supplied.)
The "immediately preceding section" referred to above states:
SEC. 5. Determination of Amount of Allowances. In determining
the amount of allowances that should be given by employers to
meet the recommended minimum standards, the LOI has classified
employers into three general categories. As an implementation
policy, the Department of Labor shall consider as sufficient

compliance with the scales of allowances recommended by the

LOI if the following monthly allowances are given by employers:
(a) P50.00 or higher where
the authorized capital stock
of the corporation, or the
total assets in the case of
other undertakings,
exceeds P 1 million;
(b) P 30.00 or higher
where the authorized
capital stock of the
corporation, or the total
assets in the case of other
undertakings, is not less
than P100,000.00 but not
more than P1million; and
(c) P15.00 or higher where
the authorized capital stock
or total assets, as the case
may be, is less than
P100,000.00.
It is not denied that the company falls under paragraph (a), as it
has a capitalization of more than P l million, 10and so must pay a
minimum allowance of P50.00 a month. This amount is clearly
covered by the increases prescribed in the CBA, which required a
monthly increase (on the basis of 30 days) of P60.00 for 1974, to
be increased by P30.00 in 1975 (to P90.00) and another P 30.00 in
1976 (to P120.00). The first increase in 1974 was already above
the minimum allowance of P50.00, which was exceeded even
more with the increases of Pl.00 for each of the next two years.
Even if the basis used were 26 days a month (excluding Sundays),
the conclusion would remain unchanged as the raise in wage
would be P52.00 for 1974, which amount was increased to P78.00
in 1975 and to P104.00 in 1976.
But the petitioners contend that the wage increases were the result
of negotiation undertaken long before the promulgation of P.D. No.
525 and so should not be considered part of the emergency
allowance decreed. In support of this contention, they cite Section
15 of the Rules implementing P.D. No. 525, providing as follows:
Nothing herein shall prevent the employer and
his employees, from entering into any
agreement with terms more favorable to the
employees than those provided herein, or be
construed to sanction the diminution of any
benefits granted to the employees under
existing laws, agreements, and voluntary
practice.
Obviously, this section should not be read in isolation but must be
related to the other sections above-quoted, to give effect to the
intent and spirit of the decree. The meaning of the section simply is
that any benefit over and above the prescribed allowances may
still be agreed upon by the employees and the employer or, if
already granted, may no longer be withdrawn or diminished.
The petitioners also maintain that the above-quoted Section 2 of
CBA is invalid because it constitutes a waiver by the laborers of

future benefits that may be granted them by law. They contend this
cannot be done because it is contrary to public policy.
While the principle is correct, the application is not, for there are no
benefits being waived under the provision. The benefits are
already included in the wage increases. It is the law itself that
considers these increases, under the conditions prescribed in LOI
No. 174, as equivalent to, or in lieu of, the emergency allowance
granted by P.D. No. 525.
In fact, the company agreed to grant the emergency allowance
even before the obligation was imposed by the government. What
the petitioners claim they are being made to waive is the additional
P50.00 allowance but the truth is that they are not entitled to this
because they are already enjoying the stipulated increases. There
is no waiver of these increases.
Moreover, Section 2 provides that the wage increase shall be
considered payment of any statutory increase of the minimum
wage "as far as it will go," which means that any amount not
covered by such wage increase will have to be made good by the
company. In short, the difference between the stipulated wage
increase and the statutory minimum wage will have to be paid by
the company notwithstanding and, indeed, pursuant to the said
article. There is no waiver as to this.
Curiously, Article 2 was produced verbatim in the collective
bargaining agreement concluded by the petitioners with the
company in 1977 after PLAC had been replaced by the new labor
union formed by petitioners Evaristo and Biascan. 11 It is difficult to
understand the petitioners' position when they blow hot and cold
like this.
Coming now to the second issue, we find that it must also be
resolved against the petitioners.
Evaristo and Biascan claim they were illegally dismissed for
organizing another labor union opposed to PLAC, which they
describe as a company union. Arguing that they were only
exercising the right to self organization as guaranteed by the
Constitution, they insist they are entitled to the back wages which
the NLRC disallowed while affirming their reinstatement.
In its challenged decision, the public respondent held that in
demanding the dismissal of Evaristo and Biascan, PLAC had acted
prematurely because the 1974 CBA providing for union shop and
pursuant to which the two petitioners were dismissed had not yet
been certified. 12 The implication is that it was not yet in effect and
so could not be the basis of the action taken against the two
petitioners. This conclusion is erroneous. It disregards the ruling of
this Court in Tanduay Distillery Labor Union v. NLRC, 13 were we
held:
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
itself found in its order of July 8, 1982, that the
(un)certified CBA was duly filed and submitted
on October 29, 1980, to last until June 30,
1982 is certifiable for having complied with all
the requirements for certification. (Emphasis
supplied.)

The CBA concluded in 1974 was certifiable and was in fact

certified on April 11, 1975, It bears stressing that Evaristo and
Biascan were dismissed only on May 20, 1975, more than a month
after the said certification.
The correct view is that expressed by Commissioner Cecilio P.
Seno in his concurring and dissenting opinion, 14viz.:
I cannot however subscribe to the majority
view that the 'dismissal of complainants
Biascan and Evaristo, ... was, to say the least,
a premature action on the part of the
respondents because at the time they were
expelled by PLAC the contract containing the
union security clause upon which the action
was based was yet to be certified and the
representation status of the contracting union
was still in question.
Evidence on record show that after the
cancellation of the registration certificate of the
Federation of Democratic Labor Unions, no
other union contested the exclusive
representation of the Philippine Labor Alliance
Council (PLAC), consequently, there was no
more legal impediment that stood on the way
as to the validity and enforceability of the
provisions of the collective bargaining
agreement entered into by and between
respondent corporation and respondent union.
The certification of the collective bargaining
agreement by the Bureau of Labor Relations is
not required to put a stamp of validity to such
contract. Once it is duly entered into and
signed by the parties, a collective bargaining
agreement becomes effective as between the
parties regardless of whether or not the same
has been certified by the BLR.
To be fair, it must be mentioned that in the certification election
held at the Liberty Flour Mills, Inc. on December 27, 1976, the Ilaw
at Buklod ng Manggagawa, with which the union organized by
Biascan and Evaristo was affiliated, won overwhelmingly with 441
votes as against the 5 votes cast for PLAC. 15 However, this does
not excuse the fact that the two disaffiliated from PLAC as early as
March 1975 and thus rendered themselves subject to dismissal
under the union shop clause in the CBA.
The petitioners say that the reinstatement issue of Evaristo and
Biascan has become academic because the former has been
readmitted and the latter has chosen to await the resolution of this
case. However, they still insist on the payment of their back wages
on the ground that their dismissal was illegal. This claim must be
denied for the reasons already given. The union shop clause was
validly enforced against them and justified the termination of their
services.
It is the policy of the State to promote unionism to enable the
workers to negotiate with management on the same level and with
more persuasiveness than if they were to individually and
independently bargain for the improvement of their respective
conditions. To this end, the Constitution guarantees to them the
rights "to self-organization, collective bargaining and negotiations
and peaceful concerted actions including the right to strike in
accordance with law." There is no question that these purposes

could be thwarted if every worker were to choose to go his own

separate way instead of joining his co-employees in planning
collective action and presenting a united front when they sit down
to bargain with their employers. It is for this reason that the law has
sanctioned stipulations for the union shop and the closed shop as
a means of encouraging the workers to join and support the labor
union of their own choice as their representative in the negotiation
of their demands and the protection of their interest vis-a-vis the
employer.
The Court would have preferred to resolve this case in favor of the
petitioners, but the law and the facts are against them. For all the
concern of the State, for the well-being of the worker, we must at
all times conform to the requirements of the law as long as such
law has not been shown to be violative of the Constitution. No such
violation has been shown here.
WHEREFORE, the petition is DISMISSED, without any
pronouncement as to costs. It is so ordered.
Narvasa, Gancayco, Grio-Aquino Medialdea, JJ., concur.

[G.R. No. 141471. September 18, 2000]

COLEGIO DE SAN JUAN DE LETRAN, petitioner,
vs. ASSOCIATION OF EMPLOYEES AND FACULTY
OF LETRAN and ELEONOR AMBAS,respondents.
DECISION
KAPUNAN, J.:
This is a petition for review on certiorari seeking the reversal
of the Decision of the Court of Appeals, promulgated on 9 August
1999, dismissing the petition filed by Colegio de San Juan de
Letran (hereinafter, "petitioner") and affirming the Order of the
Secretary of Labor, dated December 2, 1996, finding the petitioner
guilty of unfair labor practice on two (2) counts.
The facts, as found by the Secretary of Labor and affirmed
by the Court of Appeals, are as follows:
"On December 1992, Salvador Abtria, then President of
respondent union, Association of Employees and Faculty of Letran,
initiated the renegotiation of its Collective Bargaining Agreement
with petitionerColegio de San Juan de Letran for the last two (2)
years of the CBA's five (5) year lifetime from 1989-1994. On the
same year, the union elected a new set of officers wherein private
respondent Eleanor Ambas emerged as the newly elected
President (Secretary of Labor and Employment's Order dated
December 2, 1996, p. 12).
Ambas wanted to continue the renegotiation of the CBA but
petitioner, through Fr. Edwin Lao, claimed that the CBA was
already prepared for signing by the parties. The parties submitted
the disputed CBA to a referendum by the union members, who
eventually rejected the said CBA (Ibid, p. 2).
Petitioner accused the union officers of bargaining in bad faith
before the National Labor Relations Commission (NLRC). Labor
Arbiter Edgardo M. Madriaga decided in favor of petitioner.
However, the Labor Arbiter's decision was reversed on appeal
before the NLRC (Ibid, p. 2).
On January 1996, the union notified the National Conciliation and
Mediation Board (NCMB) of its intention to strike on the grounds
(sic) of petitioner's: non-compliance with the NLRC (1) order to
delete the name of Atty. Federico Leynes as the union's legal
counsel; and (2) refusal to bargain (Ibid, p. 1).
On January 18, 1996, the parties agreed to disregard the unsigned
CBA and to start negotiation on a new five-year CBA starting 19941999. On February 7, 1996, the union submitted its proposals to
petitioner, which notified the union six days later or on February
13, 1996 that the same had been submitted to its Board of
Trustees. In the meantime, Ambas was informed through a letter
dated February 15, 1996 from her superior that her work schedule
was being changed from Monday to Friday to Tuesday to
Saturday. Ambas protested and requested management to submit
the issue to a grievance machinery under the old CBA (Ibid, p. 23).
Due to petitioner's inaction, the union filed a notice of strike on
March 13, 1996. The parties met on March 27, 1996 before the
NCMB to discuss the ground rules for the negotiation. On March
29, 1996, the union received petitioner's letter dismissing Ambas
for alleged insubordination. Hence, the union amended its notice of
strike to include Ambas' dismissal. (Ibid, p. 2-3).

On April 20, 1996, both parties again discussed the ground rules
for the CBA renegotiation. However, petitioner stopped the
negotiations after it purportedly received information that a new
group of employees had filed a petition for certification election
(Ibid, p. 3).
On June 18, 1996, the union finally struck. On July 2, 1996, public
respondent the Secretary of Labor and Employment assumed
jurisdiction and ordered all striking employees including the union
president to return to work and for petitioner to accept them back
under the same terms and conditions before the actual strike.
Petitioner readmitted the striking members except Ambas. The
parties then submitted their pleadings including their position
papers which were filed on July 17, 1996 ( Ibid, pp. 2-3).
On December 2, 1996, public respondent issued an order
declaring petitioner guilty of unfair labor practice on two counts and
directing the reinstatement of private respondent Ambas with
backwages. Petitioner filed a motion for reconsideration which was
denied in an Order dated May 29, 1997 (Petition, pp. 8-9)."[1]
Having been denied its motion for reconsideration, petitioner
sought a review of the order of the Secretary of Labor and
Employment before the Court of Appeals. The appellate court
dismissed the petition and affirmed the findings of the Secretary of
Labor and Employment. The dispositive portion of the decision of
the Court of Appeals sets forth:
WHEREFORE, foregoing premises considered, this Petition is
DISMISSED, for being without merit in fact and in law.
With cost to petitioner.
SO ORDERED.[2]
Hence, petitioner comes to this Court for redress.
Petitioner ascribes the following errors to the Court of
Appeals:
I
THE HONORABLE COURT OF APPEALS ERRED AND ACTED
WITH GRAVE ABUSE OF DISCRETION IN AFFIRMING THE
RULING OF THE SECRETARY OF LABOR AND EMPLOYMENT
WHICH DECLARES PETITIONER LETRAN GUILTY OF
REFUSAL TO BARGAIN (UNFAIR LABOR PRACTICE) FOR
SUSPENDING THE COLLECTIVE BARGAINING
NEGOTIATIONS WITH RESPONDENT AEFL, DESPITE THE
FACT THAT THE SUSPENSION OF THE NEGOTIATIONS WAS
BROUGHT ABOUT BY THE FILING OF A PETITION FOR
CERTIFICATION ELECTION BY A RIVAL UNION WHO CLAIMED
TO COMMAND THE MAJORITY OF THE EMPLOYEES WITHIN
THE BARGAINING UNIT.
II
THE HONORABLE COURT OF APPEALS ERRED AND
ACTED WITH GRAVE ABUSE OF DISCRETION IN AFFIRMING
THE RULING OF THE SECRETARY OF LABOR AND
EMPLOYMENT WHICH DECLARES PETITIONER LETRAN
GUILTY OF UNFAIR LABOR PRACTICE FOR DISMISSING
RESPONDENT AMBAS, DESPITE THE FACT THAT HER
DISMISSAL WAS CAUSED BY HER INSUBORDINATE

ATTITUDE, SPECIFICALLY, HER REFUSAL TO FOLLOW THE

PRESCRIBED WORK SCHEDULE.[3]
The twin questions of law before this Court are the following:
(1) whether petitioner is guilty of unfair labor practice by refusing to
bargain with the union when it unilaterally suspended the ongoing
negotiations for a new Collective Bargaining Agreement (CBA)
upon mere information that a petition for certification has been filed
by another legitimate labor organization? (2) whether the
termination of the union president amounts to an interference of
the employees' right to self-organization?
The petition is without merit.
After a thorough review of the records of the case, this Court
finds that petitioner has not shown any compelling reason sufficient
to overturn the ruling of the Court of Appeals affirming the findings
of the Secretary of Labor and Employment. It is axiomatic that the
findings of fact of the Court of Appeals are conclusive and binding
on the Supreme Court and will not be reviewed or disturbed on
appeal. In this case, the petitioner failed to show any extraordinary
circumstance justifying a departure from this established doctrine.
As regards the first issue, Article 252 of the Labor Code
defines the meaning of the phrase "duty to bargain collectively," as
follows:
Art. 252. Meaning of duty to bargain collectively. - The duty to
bargain collectively means the performance of a mutual obligation
to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect to wages,
hours of work and all other terms and conditions of employment
including proposals for adjusting any grievances or questions
arising under such agreement and executing a contract
incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to
make any concession.
Noteworthy in the above definition is the requirement on both
parties of the performance of the mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose
of negotiating an agreement. Undoubtedly, respondent Association
of Employees and Faculty of Letran (AEFL) (hereinafter,
"union") lived up to this requisite when it presented its proposals
for the CBA to petitioner on February 7, 1996. On the other hand,
petitioner devised ways and means in order to prevent the
negotiation.
Petitioner's utter lack of interest in bargaining with the union
is obvious in its failure to make a timely reply to the proposals
presented by the latter. More than a month after the proposals
were submitted by the union, petitioner still had not made any
counter-proposals. This inaction on the part of petitioner prompted
the union to file its second notice of strike on March 13,
1996. Petitioner could only offer a feeble explanation that the
Board of Trustees had not yet convened to discuss the matter as
its excuse for failing to file its reply. This is a clear violation of
Article 250 of the Labor Code governing the procedure in collective
bargaining, to wit:
Art. 250. Procedure in collective bargaining. - The following
procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve
a written notice upon the other party with a statement of its
proposals. The other party shall make a reply thereto not later than
ten (10) calendar days from receipt of such notice.[4]

xxx
As we have held in the case of Kiok Loy vs. NLRC,[5] the
company's refusal to make counter-proposal to the union's
proposed CBA is an indication of its bad faith. Where the employer
did not even bother to submit an answer to the bargaining
proposals of the union, there is a clear evasion of the duty to
bargain collectively.[6] In the case at bar, petitioner's actuation
show a lack of sincere desire to negotiate rendering it guilty of
unfair labor practice.
Moreover, the series of events that transpired after the filing
of the first notice of strike in January 1996 show petitioner's resort
to delaying tactics to ensure that negotiation would not push
through. Thus, on February 15, 1996, or barely a few days after
the union proposals for the new CBA were submitted, the union
president was informed by her superior that her work schedule was
being changed from Mondays to Fridays to Tuesdays to
Saturdays. A request from the union president that the issue be
submitted to a grievance machinery was subsequently
denied. Thereafter, the petitioner and the union met on March 27,
1996 to discuss the ground rules for negotiation. However, just two
days later, or on March 29, 1996, petitioner dismissed the union
president for alleged insubordination. In its final attempt to
thwart the bargaining process, petitioner suspended the
negotiation on the ground that it allegedly received information that
a new group of employees called the Association of Concerned
Employees of Colegio (ACEC) had filed a petition for certification
election. Clearly, petitioner tried to evade its duty to bargain
collectively.
Petitioner, however, argues that since it has already
submitted the union's proposals to the Board of Trustees and that
a series of conferences had already been undertaken to discuss
the ground rules for negotiation such should already be considered
as acts indicative of its intention to bargain. As pointed out earlier,
the evidence on record belie the assertions of petitioner.
Petitioner, likewise, claims that the suspension of negotiation
was proper since by the filing of the petition for certification election
the issue on majority representation of the employees has arose.
According to petitioner, the authority of the union to negotiate on
behalf of the employees was challenged when a rival union filed a
petition for certification election. Citing the case of Lakas Ng
Manggagawang Makabayan v. Marcelo Enterprises,[7] petitioner
asserts that in view of the pendency of the petition for certification
election, it had no duty to bargain collectively with the union.
We disagree. In order to allow the employer to validly
suspend the bargaining process there must be a valid petition for
certification election raising a legitimate representation issue.
Hence, the mere filing of a petition for certification election does
not ipso facto justify the suspension of negotiation by the
employer. The petition must first comply with the provisions of the
Labor Code and its Implementing Rules. Foremost is that a petition
for certification election must be filed during the sixty-day freedom
period. The "Contract Bar Rule" under Section 3, Rule XI, Book V,
of the Omnibus Rules Implementing the Labor Code, provides that:
" . If a collective bargaining agreement has been duly registered
in accordance with Article 231 of the Code, a petition for
certification election or a motion for intervention can only be
entertained within sixty (60) days prior to the expiry date of such
agreement." The rule is based on Article 232,[8] in relation to
Articles 253, 253-A and 256 of the Labor Code. No petition for
certification election for any representation issue may be filed
after the lapse of the sixty-day freedom period. The old CBA is
extended until a new one is signed. The rule is that despite the
lapse of the formal effectivity of the CBA the law still considers the

same as continuing in force and effect until a new CBA shall have
been validly executed.[9] Hence, the contract bar rule still
applies.[10] The purpose is to ensure stability in the relationship of
the workers and the company by preventing frequent modifications
of any CBA earlier entered into by them in good faith and for the
stipulated original period.[11]
In the case at bar, the lifetime of the previous CBA was from
1989-1994. The petition for certification election by ACEC,
allegedly a legitimate labor organization, was filed with the
Department of Labor and Employment (DOLE) only on May 26,
1996. Clearly, the petition was filed outside the sixty-day freedom
period. Hence, the filing thereof was barred by the existence of a
valid and existing collective bargaining agreement. Consequently,
there is no legitimate representation issue and, as such, the filing
of the petition for certification election did not constitute a bar to the
ongoing negotiation. Reliance, therefore, by petitioner of the ruling
in Lakas Ng Manggagawang Makabayan v. Marcelo
Enterprises[12] is misplaced since that case involved a legitimate
representation issue which is not present in the case at bar.
Significantly, the same petition for certification election was
dismissed by the Secretary of Labor on October 25, 1996. The
dismissal was upheld by this Court in a Resolution, dated April 21,
1997.[13]
In view of the above, there is no doubt that petitioner is guilty
of unfair labor practice by its stern refusal to bargain in good faith
with respondent union.
Concerning the issue on the validity of the termination of the
union president, we hold that the dismissal was effected in
violation of the employees' right to self-organization.
To justify the dismissal, petitioner asserts that the union
president was terminated for cause, allegedly for insubordination
for her failure to comply with the new working schedule assigned to
her, and pursuant to its managerial prerogative to discipline and/or
dismiss its employees. While we recognize the right of the
employer to terminate the services of an employee for a just or
authorized cause, nevertheless, the dismissal of employees must
be made within the parameters of law and pursuant to the tenets of
equity and fair play.[14] The employer's right to terminate the
services of an employee for just or authorized cause must be
exercised in good faith.[15] More importantly, it must not amount to
interfering with, restraining or coercing employees in the exercise
of their right to self-organization because it would amount to, as in
this case, unlawful labor practice under Article 248 of the Labor
Code.
The factual backdrop of the termination of Ms. Ambas leads
us to no other conclusion that she was dismissed in order to strip
the union of a leader who would fight for the right of her co-workers
at the bargaining table. Ms. Ambas, at the time of her dismissal,
had been working for the petitioner for ten (10) years already. In
fact, she was a recipient of a loyalty award.Moreover, for the past
ten (10) years her working schedule was from Monday to
Friday. However, things began to change when she was elected as
union president and when she started negotiating for a new
CBA. Thus, it was when she was the union president and during
the period of tense and difficult negotiations when her work
schedule was altered from Mondays to Fridays to Tuesdays to
Saturdays. When she did not budge, although her schedule was
changed, she was outrightly dismissed for alleged
insubordination.[16] We quote with approval the following findings of
the Secretary of Labor on this matter, to wit:
"Assuming arguendo that Ms. Ambas was guilty, such
disobedience was not, however, a valid ground to teminate her

employment. The disputed management action was directly

connected with Ms. Ambas' determination to change the
complexion of the CBA. As a matter of fact, Ms. Ambas' unflinching
position in faithfully and truthfully carrying out her duties and
responsibilities to her Union and its members in getting a fair share
of the fruits of their collective endeavors was the proximate cause
for her dismissal, the charge of insubordination being merely a ploy
to give a color of legality to the contemplated management action
to dismiss her. Thus, the dismissal of Ms. Ambas was heavily
tainted with and evidently done in bad faith. Manifestly, it was
designed to interfere with the members' right to self-organization.
Admittedly, management has the prerogative to discipline its
employees for insubordination. But when the exercise of such
management right tends to interfere with the employees' right to
self-organization, it amounts to union-busting and is therefore a
prohibited act. The dismissal of Ms. Ambas was clearly designed
to frustrate the Union in its desire to forge a new CBA with the
College that is reflective of the true wishes and aspirations of the
Union members. Her dismissal was merely a subterfuge to get rid
of her, which smacks of a pre-conceived plan to oust her from the
premises of the College. It has the effect of busting the Union,
stripping it of its strong-willed leadership. When management
refused to treat the charge of insubordination as a grievance within
the scope of the Grievance Machinery, the action of the College in
finally dismissing her from the service became arbitrary, capricious
and whimsical, and therefore violated Ms. Ambas' right to due
process."[17]
In this regard, we find no cogent reason to disturb the
findings of the Court of Appeals affirming the findings of the
Secretary of Labor and Employment. The right to self-organization
of employees must not be interfered with by the employer on the
pretext of exercising management prerogative of disciplining its
employees. In this case, the totality of conduct of the employer
shows an evident attempt to restrain the employees from fully
exercising their rights under the law. This cannot be done under
the Labor Code.
WHEREFORE, premises considered, the petition is DENIED
for lack of merit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Pardo, JJ., concur.
Ynares-Santiago, J., on leave.
[8] Article

232. Prohibition on Certification Election. -- The Bureau

shall not entertain any petition for certification election or any other
action which may disturb the administration of duly registered
existing collective bargaining agreements affecting the parties
except under Articles 253, 253-A and 256 of this Code.

[G.R. No. 111262. September 19, 1996]

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO,
represented by its President RAYMUNDO HIPOLITO,
JR., petitioner, vs. HON. MA. NIEVES D. CONFESOR,
Secretary of Labor, Dept. of Labor & Employment,
SAN MIGUEL CORPORATION, MAGNOLIA
CORPORATION (Formerly, Magnolia Plant) and SAN
MIGUEL FOODS, INC. (Formerly, B-Meg
Plant), respondents.
DECISION
KAPUNAN, J.:
This is a petition for certiorari assailing the Order of the
Secretary of Labor rendered on February 15, 1993 involving a
labor dispute at San Miguel Corporation.
The facts are as follows:
On June 28, 1990, petitioner-union San Miguel Corporation
Employees Union - PTGWO entered into a Collective Bargaining
Agreement (CBA) with private respondent San Miguel Corporation
(SMC) to take effect upon the expiration of the previous CBA or on
June 30, 1989.
This CBA provided, among others, that:

two parties submitting their respective proposals and

counterproposals.
During the negotiations, the petitioner-union insisted that the
bargaining unit of SMC should still include the employees of the
spun-off corporations: Magnolia and SMFI; and that the
renegotiated terms of the CBA shall be effective only for the
remaining period of two years or until June 30, 1994.
SMC, on the other hand, contended that the
members/employees who had moved to Magnolia and SMFI,
automatically ceased to be part of the bargaining unit at the
SMC. Furthermore, the CBA should be effective for three years in
accordance with Art. 253-A of the Labor Code.
Unable to agree on these issues with respect to the
bargaining unit and duration of the CBA, petitioner-union declared
a deadlock on September 29, 1990.
On October 2, 1992, a Notice of Strike was filed against
SMC.
In order to avert a strike, SMC requested the National
Conciliation and Mediation Board (NCMB) to conduct preventive
mediation. No settlement was arrived at despite several meetings
held between the parties.
On November 3, 1992, a strike vote was conducted which
resulted in a yes vote in favor of a strike.

DURATION OF AGREEMENT

On November 4, 1992, private respondents SMC, Magnolia

and SMFI filed a petition with the Secretary of Labor praying that
the latter assume jurisdiction over the labor dispute in a vital
industry.

SECTION 1. This Agreement which shall be binding upon the

parties hereto and their respective successors-in-interest, shall
become effective and shall remain in force and effect until June 30,
1992.

As prayed for, the Secretary of Labor assumed jurisdiction

over the labor dispute on November 10, 1992.[4] Several
conciliation meetings were held but still no agreement/settlement
was arrived at by both parties.

SEC. 2. In accordance with Article 253-A of the Labor Code as

amended, the term of this Agreement insofar as the representation
aspect is concerned, shall be for five (5) years from July 1,
1989 to June 30, 1994. Hence, the freedom period for purposes of
such representation shall be sixty (60) days prior to June 30, 1994.

After the parties submitted their respective position papers,

the Secretary of Labor issued the assailed Order on February 15,
1993 directing, among others, that the renegotiated terms of the
CBA shall be effective for the period of three (3) years from June
30, 1992; and that such CBA shall cover only the employees of
SMC and not of Magnolia and SMFI.

ARTICLE XIV

SEC. 3. Sixty (60) days prior to June 30, 1992 either party may
initiate negotiations of all provisions of this Agreement, except
insofar as the representation aspect is concerned. If no agreement
is reached in such negotiations, this Agreement shall nevertheless
remain in force up to the time a subsequent agreement is reached
by the parties.[1]
In keeping with their vision and long term strategy for
business expansion, SMC management informed its employees in
a letter dated August 13, 1991[2]that the company which was
composed of four operating divisions namely: (1) Beer, (2)
Packaging, (3) Feeds and Livestocks, (4) Magnolia and Agribusiness would undergo a restructuring.[3]
Effective October 1, 1991, Magnolia and Feeds and
Livestock Division were spun-off and became two separate and
distinct corporations: Magnolia Corporation (Magnolia) and San
Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs, the CBA
remained in force and effect.
After June 30, 1992, the CBA was renegotiated in
accordance with the terms of the CBA and Article 253-A of the
Labor Code. Negotiations started sometime in July, 1992 with the

Dissatisfied, petitioner-union now comes to this Court

questioning this Order of the Secretary of Labor.
Subsequently, on March 30, 1995,[5] petitioner-union filed a
Motion for Issuance of a Temporary Restraining Order or Writ of
Preliminary Injunction to enjoin the holding of the certification
elections in the different companies, maintaining that the
employees of Magnolia and SMFI fall within the bargaining unit of
SMC.
On March 29, 1995, the Court issued a resolution granting
the temporary restraining order prayed for.[6]
Meanwhile, an urgent motion for leave to intervene[7]in the
case was filed by the Samahan ng Malayang Manggagawa-San
Miguel Corporation-Federation of Free Workers (SMM-SMC-FFW)
through its authorized representiative, Elmer S. Armando, alleging
that it is one of the contending parties adversely effected by the
temporary restraining order.
The Intervenor cited the case of Daniel S.L. Borbon v. Hon.
Bienvenido B. Laguesma,[8] G.R. No. 101766, March 5, 1993,
where the Court recognized the separation of the employees of
Magnolia from the SMC bargaining unit. It then prayed for the
lifting of the temporary restraining order.

Likewise, Efren Carreon, Acting President of the SMCEUPTGWO, filed a petition for the withdrawal/dismissal of the petition
considering that the temporary restraining order jeopardized the
employees right to conclude a new CBA. At the same time, he
challenged the legal personality of Mr. Raymundo Hipolito, Jr. to
represent the Union as its president when the latter was already
officially dismissed from the company on October 4, 1994.
Amidst all these pleadings, the following primordial issues
arise:
1) Whether or not the duration of the renegotiated
terms of the CBA is to be effective for three years
or for only two years; and
2) Whether or not the bargaining unit of SMC includes
also the employees of Magnolia and SMFI.
Petitioner-union contends that the duration for the nonrepresentation provisions of the CBA should be coterminous with
the term of the bargaining agency which in effect shall be for the
remaining two years of the current CBA, citing a previous decision
of the Secretary of Labor on December 14, 1992 in the matter of
the labor dispute at Philippine Refining Company.[9]
However, the Secretary of Labor, in her questioned Order
of February 15, 1993 ruled that the renegotiated terms of the CBA
at SMC should run for a period of three (3) years.
We agree with the Secretary of Labor.
Pertinent to the first issue is Art. 253-A of the Labor Code as
amended which reads:
ART. 253-A. Terms of a Collective Bargaining Agreement. Any
Collective Bargaining Agreement that the parties may enter into
shall, insofar as the representation aspect is concerned, be for a
term of five (5) years. No petition questioning the majority status of
the incumbent bargaining agent shall be entertained and no
certification election shall be conducted by the Department of
Labor and Employment outside of the sixty-day period immediately
before the date of expiry of such five year term of the Collective
Bargaining Agreement. All other provisions of the Collective
Bargaining Agreement shall be renegotiated not later than three (3)
years after its execution. Any agreement on such other provisions
of the Collective Bargaining Agreement entered into within six (6)
months from the date of expiry of the term of such other provisions
as fixed in such Collective Bargaining Agreement, shall retroact to
the day immediately following such date. If any such agreement is
entered into beyond six months, the parties shall agree on the
duration of retroactivity thereof. In case of a deadlock in the
renegotiation of the collective bargaining agreement, the parties
may exercise their rights under this Code. (underlining supplied.)
Article 253-A is a new provision. This was incorporated by
Section 21 of Republic Act No. 6715 (the Herrera-Veloso Law)
which took effect on March 21, 1989. This new provision states
that the CBA has a term of five (5) years instead of three years,
before the amendment of the law as far as the representation
aspect is concerned. All other provisions of the CBA shall be
negotiated not later than three (3) years after its execution. The
representation aspect refers to the identity and majority status of
the union that negotiated the CBA as the exclusive bargaining
representative of the appropriate bargaining unit concerned. All
other provisions simply refers to the rest of the CBA, economic as
well as non-economic provisions, except representation.[10]
As the Secretary of Labor herself observed in the instant
case, the law is clear and definite on the duration of the CBA

insofar as the representation aspect is concerned, but is quite

ambiguous with the terms of the other provisions of the CBA. It is
a cardinal principle of statutory construction that the Court must
ascertain the legislative intent for the purpose of giving effect to
any statute. The history of the times and state of the things
existing when the act was framed or adopted must be followed and
the conditions of the things at the time of the enactment of the law
should be considered to determine the legislative intent. [11] We look
into the discussions leading to the passage of the law:
THE CHAIRMAN (REP. VELASCO): . . . the CBA, insofar
as the economic provisions are concerned . . .
THE CHAIRMAN (SEN. HERRERA): Maximum of three
years?
THE CHAIRMAN (SEN. VELOSO): Maximum of three
years.
THE CHAIRMAN (SEN. HERRERA): Present practice?
THE CHAIRMAN (REP. VELOSO): In other words, after
three years puwede nang magnegotiate in that CBA for
the remaining two years.
THE CHAIRMAN (REP. HERRERA): You can negotiate for
one year, two years or three years but assuming three
years which, I think, thats the likelihood. . . .
THE CHAIRMAN (REP. VELOSO): Yes.
THE CHAIRMAN (SEN. HERRERA): Three years, the new
union, assuming there will be a change of agent, at
least he has one year to administer and to adjust, to
develop rapport with the management. Yan ang
importante.
You know, for us na nagne-negotiate, and hazard
talaga sa negotiation, when we negotiate with
somebody na hindi natin kilala, then, we are governed
by our biases na ito ay destroyer ng Labor; ang mga
employer, ito bayaran ko lang ito okay na.
Yan ang nangyayari, but let us give that allowance for
one year to let them know.
Actually, ang thrust natin ay industrial peace, and there
can be no industrial peace if you encourage union to
fight each other. Yan ang problema.[12]
xxx

xxx

xxx

HON. ISIDRO: Madali iyan, kasi these two periods that are
mentioned in the CBA seem to provide some doubts
later on in the implementation. Sabi kasi rito, insofar
as representation issue is concerned, seven years ang
lifetime . . .
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Five years, all the others three years.
HON. CHAIRMAN HERRERA: No. Ang three years duon sa
terms and conditions, not later than three years.
HON. ISIDRO: Not later than three years, so within three
years you have to make a new CBA.
HON. CHAIRMAN HERRERA: Yes.
HON. ISIDRO: That is again for purposes of renewing the
terms, three years na naman iyan then, seven years
...

HON. CHAIRMAN HERRERA: Not later than three years.

ang representation. Iyon and nangyari. That is where

you have the gulo. Ganoon and nangyari. So, ang
nangyari diyan, pag-mayroon certification election,
expire ang contract, ano ang usual issue - company
union. I can you (sic) give you more what the
incumbent union is giving. So ang mangyayari diyan,
pag-negotiate mo hardline na agad.

HON. ISIDRO: Assuming that they usually follow the period

three years nang three years, but under this law
with respect to representation five years,
ano? Now, after three years, nagkaroon ng bagong
terms, tapos na iyong term, renewed na iyong terms,
ang karapatan noon sa representation issue mayroon
pang two years left.

HON. CHAIRMAN VELOSO: Mon, for four years?

HON. CHAIRMAN HERRERA: One year na lang because

six years nang lahat, three plus three.

HON. ISIDRO: Ang tingin ko lang dito, iyong distinction

between the terms and the representation aspect
why do we have to distinguish between three and
five? Whats wrong with having a uniform expiration
period?

HON ISIDRO: Hindi, two years pa rin ang natitira, eh. Three
years pa lang ang natatapos. So, another CBA was
formed and this CBA mayroon na naman siyang
bagong five years with respect to representation issue.

HON. CHAIRMAN HERRERA: Five years.

HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito

iyan. Iyong terms and conditions for three years.

HON. ISIDRO: Puro three years.

HON. CHAIRMAN HERRERA: That is what we are trying to
avoid because ang reality diyan, Mart, pagpasok mo
sa kumpanya, mag-ne-negotiate ka ng six months,
thats the average, aabot pa minsan ng one year.
Pagkatapos ng negotiation mo, signing kayo. There
will be an allowed period of one year. Third year na,
uumpisahan naman ang organizations, papasok na
ang ibang unyon because the reality in Trade Union
committee, they organize, we organize. So, actually,
you have only industrial peace for one year, effective
industrial peace. That is what we are trying to
change. Otherwise, we will continue to discourage the
investors and the union will never grow because every
other year it has to use its money for the certification
election. Ang grabe pang practice diyan, mag-aadvance ang federation for three years union dues
para panggastos lang sa certification election. That is
what we are trying to avoid.

HON. ISIDRO: Yes.

HON. CHAIRMAN HERRERA: On the third year you can
start negotiating to change the terms and conditions.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: Assuming you will follow the
practice . . .
HON. ISIDRO: Oo.
HON. CHAIRMAN HERRERA: But on the fifth year, ang
representation status now can be questioned, so baka
puwedeng magkaroon ng certification election. If the
incumbent union loses, then the new union administers
the contract for one year to give him time to know his
counterpart the employer, before he can negotiate
for a new term. Iyan ang advantage.

HON. JABAR: Although there are unions which really get

advances.

HON. ISIDRO: Kasi, when the CBA has only a three-year

lifetime with respect to the terms and conditions and
then, so you have to renew that in three years you
renew for another three years, mayroon na naman
another five years iyong ano . . .
HON. ANIAG: Hindi, ang natitira duon sa representation two
years na lang.

HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga

unyon, ganoon ang mangyayari. And I think our
responsibility here is to create a legal framework to
promote industrial peace and to develop responsible
and fair labor movement.

HON. CHAIRMAN HERRERA: Two years na lang sa

representation.

HON. CHAIRMAN VELOSO: In other words, the longer the

period of the effectivity . . .

HON. ANIAG: So that if they changed the union, iyong last

year. . . .
HON. CHAIRMAN HERRERA: Iyon lang, that you have to
administer the contract. Then, voluntary arbitration na
kayo and then mayroon ka nang probisyon retroact on
the date of the expiry date. Pagnatalo and incumbent
unyon, mag-aassume and new union, administer the
contract. As far as the term ang condition, for one year,
and that will give him time and the employer to know
each other.

xxx
HON. CHAIRMAN VELOSO. (continuing) . . in other words,
the longer the period of effectivity of the CBA, the
better for industrial peace.
HON. CHAIRMAN HERRERA: representation status.
HON. CHAIRMAN VELOSO: Only on
HON. CHAIRMAN HERRERA: the representations.
HON. CHAIRMAN VELOSO: But on the economic issues.

HON. JABAR: Boy, let us be realistic. I think if a new union

wins a certification election, it would not want to
administer a CBA which has not been negotiated by
the union itself.

HON. CHAIRMAN HERRERA: You have to review

that. The parties will have to review that.

HON. CHAIRMAN HERRERA: That is not true, Hon. This is

true because what is happening now in the country is
that the term ng contract natin, duon din mage-expire

HON. CHAIRMAN HERRERA: Not later than 3 years ang

karamihan ng mga, mag-negotiate when the company
is (interrupted)[13]

HON. CHAIRMAN VELOSO: At least on second year.

xxx
From the aforesaid discussions, the legislators were more
inclined to have the period of effectivity for three (3) years insofar
as the economic as well as non-economic provisions are
concerned, except representation.
Obviously, the framers of the law wanted to maintain
industrial peace and stability by having both management and
labor work harmoniously together without any disturbance. Thus,
no outside union can enter the establishment within five (5) years
and challenge the status of the incumbent union as the exclusive
bargaining agent. Likewise, the terms and conditions of
employment (economic and non-economic) can not be questioned
by the employers or employees during the period of effectivity of
the CBA. The CBA is a contract between the parties and the
parties must respect the terms and conditions of the
agreement.[14] Notably, the framers of the law did not give a fixed
term as to the effectivity of the terms and conditions of
employment. It can be gleaned from their discussions that it was
left to the parties to fix the period.
In the instant case, it is not difficult to determine the period of
effectivity for the non-representation provisions of the CBA. Taking
it from the history of their CBAs, SMC intended to have the terms
of the CBA effective for three (3) years reckoned from the
expiration of the old or previous CBA which was on June 30, 1989,
as it provides:
SECTION 1. This Agreement which shall be binding upon the
parties hereto and their respective successors-in-interest, shall
become effective and shall remain in force and effect until June 30,
1992.
The argument that the PRC case is applicable is indeed
misplaced. We quote with favor the Order of the Secretary of
Labor in the light of SMCs peculiar situation as compared with
PRCs company situation.
It is true that in the Philippine Refining Company case (OS-AJ0031-91 (sic), Labor Dispute at Philippine Refining Company), we
ruled that the term of the renegotiated provisions of the CBA
should coincide with the remaining term of the agency. In doing
so, we placed premium on the fact that PRC has only two (2)
unions and no other union had yet executed a renewed term of 3
years. Nonetheless, in ruling for a shortened term, we were guided
by our considered perception that the said term would improve,
rather than ruin, the general welfare of both the workers and the
company. It is equally true that once the economic provisions of
the CBA expire, the residual representative status of the union is
effective for only 2 more years. However, if circumstances warrant
that the contract duration which it is soliciting from the company for
the benefit of the workers, shall be a little bit longer than its
lifespan, then this Office cannot stand in the way of a more ideal
situation. We must not lose sight of the fact that the primordial
purpose of a collective contract is to promote industrial harmony
and stability in the terms and conditions of employment. To our
mind, this objective cannot be achieved without giving due
consideration to the peculiarities and unique characteristics of the
employer. In the case at bar, there is no dispute that the mother
corporation (SMC) spun-off two of its divisions and thereby gave
birth to two (2) other entities now known as Magnolia Corporation
and San Miguel Foods, Inc. In order to effect a smooth transition,
the companies concerned continued to recognize the existing
unions as the bargaining agents of their respective bargaining
units. In the meantime, the other unions in these companies
eventually concluded their CBA negotiations on the remaining term

and all of them agreed on a 3-year cycle. Notably, the following

CBAs were forged incorporating a term of 3-years on the
renegotiated provisions, to wit:
1. SMC -

daily-paid employees union (IBM)

2. SMF monthly-paid employees and daily-paid

employees at the Cabuyao Plant.
There is a direct link between the voluntary recognition by the
company of the continuing representative status of the unions after
the aforementioned spin-offs and the stand of the company for a 3year renegotiated cycle when the economic provisions of the
existing CBAs expired, i.e., to maintain stability and avoid
confusion when the umbilical cord of the two divisions were
severed from their parent. These two cannot be considered
independently of each other for they were intended to reinforce
one another. Precisely, the company conceded to face the same
union notwithstanding the spin-offs in order to preserve industrial
peace during the infancy of the two corporations. If the union
would insist on a shorter renegotiated term, then all the
advantages gained by both parties in this regard, would have gone
to naught. With this in mind, this office feels that it will betray its
mandate should we order the parties to execute a 2-year
renegotiated term for then chaos and confusion, rather than
tranquility, would be the order of the day. Worse, there is a strong
likelihood that such a ruling might spawn discontent and possible
mass actions against the company coming from the other unions
who had already agreed to a 3-year renegotiated terms. If this
happens, the purpose of this Offices intervention into the parties
controversy would have been defeated.[15]
The issue as to the term of the non-representation provisions
of the CBA need not belabored especially when we take note of
the Memorandum of the Secretary of Labor dated February 24,
1994 which was mentioned in the Resolution of Undersecretary
Bienvenido Laguesma on January 16, 1995 in the certification
election case involving the SMC employees.[16]In said
memorandum, the Secretary of Labor had occasion to clarify the
term of the renegotiated terms of the CBA vis-a-vis the term of the
bargaining agent, to wit:
As a matter of policy the parties are encourages (sic) to enter into
a renegotiated CBA with a term which would coincidde (sic) with
the aforesaid five (5) year term of the bargaining representative.
In the event however, that the parties, by mutual agreement, enter
into a renegotiated contract with a term of three (3) years or one
which does not coincide with the said 5-year term, and said
agreement is ratified by majority of the members in the bargaining
unit, the subject contract is valid and legal and therefore, binds the
contracting parties. The same will however not adversely affect
the right of another union to challenge the majority status of the
incumbent bargaining agent within sixty (60) days before the lapse
of the original five (5) year term of the CBA.
Thus, we do not find any grave abuse of discretion on the
part of the Secretary of Labor in ruling that the effectivity of the
renegotiated terms of the CBA shall be for three (3) years.
With respect to the second issue, there is, likewise, no merit
in petitioner-unions assertion that the employees of Magnolia and
SMFI should still be considered part of the bargaining unit of SMC.
Magnolia and SMFI were spun-off to operate as distinct
companies on October 1, 1991. Management saw the need for

these transformations in keeping with its vision and long term

strategy as it explained in its letter addressed to the employees
dated August 13, 1991:
x x x As early as 1986, we announced the decentralization
program and spoke of the need for structures that can react fast to
competition, a changing environment, shorter product life cycles
and shifts in consumer preference. We further stated in the 1987
Annual Report to Stockholders that San Miguels businesses will
be more autonomous and self sufficient so as to better acquire and
master new technologies, cope with a labor force with different
expertises and expectations, and master and satisfy the changing
needs of our customers and end-consumers. As subsidiaries,
Magnolia and FLD will gain better industry focus and flexibility,
greater awareness of operating results, and speedier, more
responsive decision making.
xxx
We only have to look at the experience of Coca-Cola Bottlers
Philippines, Inc., since this company was organized about ten
years ago, to see the benefits that arise from restructuring a
division of San Miguel into a more competitive organization. As a
stand-alone enterprise, CCBPI engineered a dramatic turnaround
and has sustained its sales and market share leadership ever
since.
We are confident that history will repeat itself, and the
transformation of Magnolia and FLD will be successful as that of
CCBPI.[17]
Undeniably, the transformation of the companies was a
management prerogative and business judgment which the courts
can not look into unless it is contrary to law, public policy or
morals. Neither can we impute any bad faith on the part of SMC
so as to justify the application of the doctrine of piercing the
corporate veil.[18] Ever mindful of the employees interests,
management has assured the concerned employees that they will
be absorbed by the new corporations without loss of tenure and
retaining their present pay and benefits according to the existing
CBAs.[19] They were advised that upon the expiration of the CBAs,
new agreements will be negotiated between the management of
the new corporations and the bargaining representatives of the
employees concerned. As a result of the spin-offs:
1. Each of the companies are run by, supervised and
controlled by different management teams
including separate human resource/personnel
managers.
2. Each Company enforces its own administrative and
operational rules and policies and are not
dependent on each other in their operations.
3. Each entity maintains separate financial statements
and are audited separately from each other.[20]
Indubitably, therefore, Magnolia and SMFI became distinct
entities with separate juridical personalities. Thus, they can not
belong to a single bargaining unit as held in the case ofDiatagon
Labor Federation Local 110 of the ULGWP v. Ople.[21] We
elucidate:
The fact that their businesses are related and that the 236
employees of Georgia Pacific International Corporation were
originally employees of Lianga Bay Logging Co., Inc. is not a
justification for disregarding their separate personalities. Hence,

the 236 employees, who are now attached to Georgia Pacific

International Corporation, should not be allowed to vote in the
certification election at the Lianga Bay Logging Co., Inc. They
should vote at a separate certification election to determine the
collective bargaining representative of the employees of Georgia
Pacific International Corporation.
Petitioner-unions attempt to include the employees of
Magnolia and SMFI in the SMC bargaining unit so as to have a
bigger mass base of employees has, therefore, no more valid
ground.
Moreover, in determining an appropriate bargaining unit, the
test of grouping is mutuality or commonality of interests. The
employees sought to be represented by the collective bargaining
agent must have substantial mutual interests in terms of
employment and working conditions as evinced by the type of work
they performed.[22] Considering the spin-offs, the companies would
consequently have their respective and distinctive concerns in
terms of the nature of work, wages, hours of work and other
conditions of employment. Interests of employees in the different
companies perforce differ. SMC is engaged in the business of
beer manufacturing. Magnolia is involved in the manufacturing
and processing of dairy products[23] while SMFI is involved in the
production of feeds and the processing of chicken.[24] The nature of
their products and scales of business may require different skills
which must necessarily be commensurated by different
compensation packages. The different companies may have
different volumes of work and different working conditions. For
such reason, the employees of the different companies see the
need to group themselves together and organize themselves into
distinctive and different groups. It would then be best to have
separate bargaining units for the different companies where the
employees can bargain separately according to their needs and
according to their own working conditions.
We reiterate what we have explained in the case
of University of the Philippines v. Ferrer-Calleja[25] that:
[T]here are various factors which must be satisfied and considered
in determining the proper constituency of a bargaining unit. No
one particular factor is itself decisive of the determination. The
weight accorded to any particular factor varies in accordance with
the particular question or questions that may arise in a given
case. What are these factors? Rothenberg mentions a good
number, but the most pertinent to our case are: (1) will of the
employees (Globe Doctrine); (2) affinity and unit of employees
interest, such as substantial similarity of work and duties, or
similarity of compensation and working conditions; (3) prior
collective bargaining history; and (4) employment status, such as
temporary, seasonal and probationary employees x x.
xxx
An enlightening appraisal of the problem of defining an appropriate
bargaining unit is given in the 10th Annual Report of the National
Labor Relations Board wherein it is emphasized that the factors
which said board may consider and weigh in fixing appropriate
units are: the history, extent and type of organization of
employees; the history of their collective bargaining; the history,
extent and type of organization of employees in other plants of the
same employer, or other employers in the same industry; the skill
wages, work, and working conditions of the employees; the desires
of the employees; the eligibility of the employees for membership
in the union or unions involved; and the relationship between the

unit or units proposed and the employers organization,

management, and operation x x.
x x In said report, it is likewise emphasized that the basic test in
determining the appropriate bargaining unit is that a unit, to be
appropriate, must affect a grouping of employees who have
substantial, mutual interests in wages, hours, working conditions
and other subjects of collective bargaining (citing Smith on Labor
Laws, 316-317; Francisco, Labor Laws, 162) x x.
Finally, we take note of the fact that the separate interests of
the employees of Magnolia and SMFI from those of SMC has been
recognized in the case of Daniel Borbon v. Laguesma.[26] We
quote:
Even assuming in gratia argumenti that at the time of the election
they were regular employees of San Miguel, nonetheless, these
workers are no longer connected with San Miguel Corporation in
any manner because Magnolia has ceased to be a division of San
Miguel Corporation and has been formed into a separate
corporation with a personality of its own (p. 305, Rollo). This
development, which was brought to our attention by private
respondents, necessarily renders moot and academic any further
discourse on the propriety of the elections which petitioners
impugn via the present recourse (p. 319, Rollo).
In view of all the foregoing, we do not find any grave abuse
of discretion on the part of the Secretary of Labor in rendering the
assailed Order.
WHEREFORE, the petition is DISMISSED for lack of
merit. The Temporary Restraining Order issued on March 29,
1995 is lifted.
SO ORDERED.
Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.
Padilla, J. (Chairman), took no part, in view of stock
investments in SMC.

[G.R. No. 127598. February 22, 2000]

MANILA ELECTRIC COMPANY, petitioner, vs. Hon. Secretary
of Labor Leonardo Quisumbing and Meralco Employees and
Workers Association (MEWA),respondents.
RESOLUTION

Union security -maintenance of membership

closed shop
Contracting out -no need to consult union
consult first
All benefits -existing terms and conditions all
terms

YNARES_SANTIAGO, J.:
In the Decision promulgated on January 27, 1999, the Court
disposed of the case as follows:
"WHEREFORE, the petition is granted and the
orders of public respondent Secretary of Labor
dated August 19, 1996 and December 28,
1996 are set aside to the extent set forth
above. The parties are directed to execute a
Collective Bargaining Agreement incorporating
the terms and conditions contained in the
unaffected portions of the Secretary of Labors
orders of August 19, 1996 and December 28,
1996, and the modifications set forth above.
The retirement fund issue is remanded to the
Secretary of Labor for reception of evidence
and determination of the legal personality of
the Meralco retirement fund."[1]
The modifications of the public respondents resolutions include
the following:
January 27, 1999 decision Secretarys
resolution
Wages -P1,900.00 for 1995-96 P2,200.00
Xmas bonus -modified to one month 2 months
Retirees -remanded to the Secretary granted
Loan to coops -denied granted
GHSIP, HMP
and Housing loans -granted up to P60,000.00
granted
Signing bonus -denied granted
Union leave -40 days (typo error) 30 days
High voltage/pole -not apply to those who are
members of a team
not exposed to the risk
Collectors -no need for cash bond, no
need to reduce quota and MAPL
CBU -exclude confidential employees include

Retroactivity -Dec 28, 1996-Dec 27, 199(9)

from Dec 1, 1995
Dissatisfied with the Decision, some alleged members of private
respondent union (Union for brevity) filed a motion for intervention
and a motion for reconsideration of the said Decision. A separate
intervention was likewise made by the supervisors union
(FLAMES[2]) of petitioner corporation alleging that it has bona
fide legal interest in the outcome of the case.[3] The Court required
the "proper parties" to file a comment to the three motions for
reconsideration but the Solicitor-General asked that he be excused
from filing the comment because the "petition filed in the instant
case was granted" by the Court.[4] Consequently, petitioner filed its
own consolidated comment. An "Appeal Seeking Immediate
Reconsideration" was also filed by the alleged newly elected
president of the Union.[5] Other subsequent pleadings were filed by
the parties and intervenors.
The issues raised in the motions for reconsideration had already
been passed upon by the Court in the January 27, 1999 decision.
No new arguments were presented for consideration of the Court.
Nonetheless, certain matters will be considered herein, particularly
those involving the amount of wages and the retroactivity of the
Collective Bargaining Agreement (CBA) arbitral awards.
Petitioner warns that if the wage increase of P2,200.00 per month
as ordered by the Secretary is allowed, it would simply pass the
cost covering such increase to the consumers through an increase
in the rate of electricity. This is a non sequitur. The Court cannot
be threatened with such a misleading argument. An increase in the
prices of electric current needs the approval of the appropriate
regulatory government agency and does not automatically result
from a mere increase in the wages of petitioners employees.
Besides, this argument presupposes that petitioner is capable of
meeting a wage increase. The All Asia Capital report upon which
the Union relies to support its position regarding the wage issue
can not be an accurate basis and conclusive determinant of the
rate of wage increase. Section 45 of Rule 130 Rules of Evidence
provides:
"Commercial lists and the like. - Evidence of
statements of matters of interest to persons
engaged in an occupation contained in a list,
register, periodical, or other published
compilation is admissible as tending to prove
the truth of any relevant matter so stated if that
compilation is published for use by persons
engaged in that occupation and is generally
used and relied upon by them therein."
Under the afore-quoted rule, statement of matters contained in a
periodical may be admitted only "if that compilation is published for
use by persons engaged in that occupation and is generally used
and relied upon by them therein." As correctly held in our Decision
dated January 27, 1999, the cited report is a mere newspaper
account and not even a commercial list. At most, it is but an

analysis or opinion which carries no persuasive weight for

purposes of this case as no sufficient figures to support it were
presented. Neither did anybody testify to its accuracy. It cannot be
said that businessmen generally rely on news items such as this in
their occupation. Besides, no evidence was presented that the
publication was regularly prepared by a person in touch with the
market and that it is generally regarded as trustworthy and reliable.
Absent extrinsic proof of their accuracy, these reports are not
admissible.[6] In the same manner, newspapers containing stock
quotations are not admissible in evidence when the source of the
reports is available.[7] With more reason, mere analyses or
projections of such reports cannot be admitted. In particular, the
source of the report in this case can be easily made available
considering that the same is necessary for compliance with certain
governmental requirements.
Nonetheless, by petitioners own allegations, its actual total net
income for 1996 was P5.1 billion.[8] An estimate by the All Asia
financial analyst stated that petitioners net operating income for
the same year was about P5.7 billion, a figure which the Union
relies on to support its claim. Assuming without admitting the truth
thereof, the figure is higher than the P4.171 billion allegedly
suggested by petitioner as its projected net operating income. The
P5.7 billion which was the Secretarys basis for granting the
P2,200.00 is higher than the actual net income of P5.1 billion
admitted by petitioner. It would be proper then to increase this
Courts award of P1,900.00 to P2,000.00 for the two years of the
CBA award. For 1992, the agreed CBA wage increase for rankand-file was P1,400.00 and was reduced to P1,350.00, for 1993;
further reduced to P1,150.00 for 1994. For supervisory employees,
the agreed wage increase for the years 1992-1994 are P1,742.50,
P1,682.50 and P1,442.50, respectively. Based on the foregoing
figures, the P2,000.00 increase for the two-year period awarded to
the rank-and-file is much higher than the highest increase granted
to supervisory employees.[9] As mentioned in the January 27, 1999
Decision, the Court does "not seek to enumerate in this decision
the factors that should affect wage determination" because
collective bargaining disputes particularly those affecting the
national interest and public service "requires due consideration
andproper balancing of the interests of the parties to the dispute
and of those who might be affected by the dispute."[10] The Court
takes judicial notice that the new amounts granted herein are
significantly higher than the weighted average salary currently
enjoyed by other rank-and-file employees within the community. It
should be noted that the relations between labor and capital is
impressed with public interest which must yield to the common
good.[11] Neither party should act oppressively against the other or
impair the interest or convenience of the public.[12] Besides,
matters of salary increases are part of management prerogative.[13]
On the retroactivity of the CBA arbitral award, it is well to recall that
this petition had its origin in the renegotiation of the parties 19921997 CBA insofar as the last two-year period thereof is concerned.
When the Secretary of Labor assumed jurisdiction and granted the
arbitral awards, there was no question that these arbitral awards
were to be given retroactive effect. However, the parties dispute
the reckoning period when retroaction shall commence. Petitioner
claims that the award should retroact only from such time that the
Secretary of Labor rendered the award, invoking the 1995 decision
in Pier 8 case[14] where the Court, citing Union of Filipino
Employees v. NLRC,[15] said:
"The assailed resolution which incorporated
the CBA to be signed by the parties was
promulgated on June 5, 1989, the expiry date
of the past CBA. Based on the provision of

Section 253-A, its retroactivity should be

agreed upon by the parties. But since no
agreement to that effect was made, public
respondent did not abuse its discretion in
giving the said CBA a prospective effect. The
action of the public respondent is within the
ambit of its authority vested by existing law."
On the other hand, the Union argues that the award should
retroact to such time granted by the Secretary, citing the 1993
decision of St Lukes.[16]
"Finally, the effectivity of the Order of January
28, 1991, must retroact to the date of the
expiration of the previous CBA, contrary to the
position of petitioner. Under the circumstances
of the case, Article 253-A cannot be properly
applied to herein case. As correctly stated by
public respondent in his assailed Order of April
12, 1991 dismissing petitioners Motion for
Reconsideration--Anent the alleged lack of
basis for the retroactivity
provisions awarded, we
would stress that the
provision of law invoked by
the Hospital, Article 253-A
of the Labor Code, speaks
of agreements by and
between the parties, and
not arbitral awards . . .
"Therefore, in the absence of a specific
provision of law prohibiting retroactivity of the
effectivity of arbitral awards issued by the
Secretary of Labor pursuant to Article 263(g) of
the Labor Code, such as herein involved,
public respondent is deemed vested with
plenary and discretionary powers to determine
the effectivity thereof."
In the 1997 case of Mindanao Terminal,[17] the Court applied
the St. Lukes doctrine and ruled that:
"In St. Lukes Medical Center v. Torres, a
deadlock also developed during the CBA
negotiations between management and the
union. The Secretary of Labor assumed
jurisdiction and ordered the retroaction of the
CBA to the date of expiration of the previous
CBA. As in this case, it was alleged that the
Secretary of Labor gravely abused its
discretion in making his award retroactive. In
dismissing this contention this Court held:
"Therefore, in the absence
of a specific provision of
law prohibiting retroactive
of the effectivity of arbitral
awards issued by the
Secretary of Labor
pursuant to Article 263(g)
of the Labor Code, such as
herein involved, public

respondent is deemed
vested with plenary and
discretionary powers to
determine the effectivity
thereof."
The Court in the January 27, 1999 Decision, stated that the CBA
shall be "effective for a period of 2 years counted from December
28, 1996 up to December 27, 1999." Parenthetically, this actually
covers a three-year period. Labor laws are silent as to when an
arbitral award in a labor dispute where the Secretary had assumed
jurisdiction by virtue of Article 263 (g) of the Labor Code shall
retroact. In general, a CBA negotiated within six months after the
expiration of the existing CBA retroacts to the day immediately
following such date and if agreed thereafter, the effectivity depends
on the agreement of the parties.[18] On the other hand, the law is
silent as to the retroactivity of a CBA arbitral award or that granted
not by virtue of the mutual agreement of the parties but by
intervention of the government. Despite the silence of the law, the
Court rules herein that CBA arbitral awards granted after six
months from the expiration of the last CBA shall retroact to such
time agreed upon by both employer and the employees or their
union. Absent such an agreement as to retroactivity, the award
shall retroact to the first day after the six-month period following
the expiration of the last day of the CBA should there be one. In
the absence of a CBA, the Secretarys determination of the date of
retroactivity as part of his discretionary powers over arbitral awards
shall control.
It is true that an arbitral award cannot per se be categorized as an
agreement voluntarily entered into by the parties because it
requires the interference and imposing power of the State thru the
Secretary of Labor when he assumes jurisdiction. However, the
arbitral award can be considered as an approximation of a
collective bargaining agreement which would otherwise have been
entered into by the parties.[19] The terms or periods set forth in
Article 253-A pertains explicitly to a CBA. But there is nothing that
would prevent its application by analogy to an arbitral award by the
Secretary considering the absence of an applicable law. Under
Article 253-A: "(I)f any such agreement is entered into beyond six
months, the parties shal! agree on the duration of retroactivity
thereof." In other words, the law contemplates retroactivity whether
the agreement be entered into before or after the said six-month
period. The agreement of the parties need not be categorically
stated for their acts may be considered in determining the duration
of retroactivity. In this connection, the Court considers the letter of
petitioners Chairman of the Board and its President addressed to
their stockholders, which states that the CBA "for the rank-and-file
employees covering the period December 1, 1995 to November
30, 1997 is still with the Supreme Court,"[20] as indicative of
petitioners recognition that the CBA award covers the said period.
Earlier, petitioners negotiating panel transmitted to the Union a
copy of its proposed CBA covering the same period inclusive.[21] In
addition, petitioner does not dispute the allegation that in the past
CBA arbitral awards, the Secretary granted retroactivity
commencing from the period immediately following the last day of
the expired CBA. Thus, by petitioners own actions, the Court sees
no reason to retroact the subject CBA awards to a different date.
The period is herein set at two (2) years from December 1, 1995 to
November 30, 1997.
On the allegation concerning the grant of loan to a cooperative,
there is no merit in the unions claim that it is no different from
housing loans granted by the employer. The award of loans for
housing is justified because it pertains to a basic necessity of life. It
is part of a privilege recognized by the employer and allowed by

law. In contrast, providing seed money for the establishment of the

employees cooperative is a matter in which the employer has no
business interest or legal obligation. Courts should not be utilized
as a tool to compel any person to grant loans to another nor to
force parties to undertake an obligation without justification. On the
contrary, it is the government that has the obligation to render
financial assistance to cooperatives and the Cooperative Code
does not make it an obligation of the employer or any private
individual.[22]
Anent the 40-day union leave, the Court finds that the same is a
typographical error. In order to avoid any confusion, it is herein
declared that the union leave is only thirty (30) days as granted by
the Secretary of Labor and affirmed in the Decision of this Court.
The added requirement of consultation imposed by the Secretary
in cases of contracting out for six (6) months or more has been
rejected by the Court. Suffice it to say that the employer is allowed
to contract out services for six months or more. However, a line
must be drawn between management prerogatives regarding
business operations per se and those which affect the rights of
employees, and in treating the latter, the employer should see to it
that its employees are at least properly informed of its decision or
modes of action in order to attain a harmonious labor-management
relationship and enlighten the workers concerning their
rights.[23] Hiring of workers is within the employers inherent
freedom to regulate and is a valid exercise of its management
prerogative subject only to special laws and agreements on the
matter and the fair standards of justice.[24] The management
cannot be denied the faculty of promoting efficiency and attaining
economy by a study of what units are essential for its operation. It
has the ultimate determination of whether services should be
performed by its personnel or contracted to outside agencies.
While there should be mutual consultation, eventually deference is
to be paid to what management decides.[25] Contracting out of
services is an exercise of business judgment or management
prerogative.[26] Absent proof that management acted in a malicious
or arbitrary manner, the Court will not interfere with the exercise of
judgment by an employer.[27] As mentioned in the January 27, 1999
Decision, the law already sufficiently regulates this
matter.[28] Jurisprudence also provides adequate limitations, such
that the employer must be motivated by good faith and the
contracting out should not be resorted to circumvent the law or
must not have been the result of malicious or arbitrary
actions.[29]These are matters that may be categorically determined
only when an actual suit on the matter arises.
WHEREFORE, the motion for reconsideration is partially granted
and the assailed Decision is modified as follows: (1) the arbitral
award shall retroact from December 1, 1995 to November 30,
1997; and (2) the award of wage is increased from the original
amount of One Thousand Nine Hundred Pesos (P1,900.00) to Two
Thousand Pesos (P2,000.00) for the years 1995 and 1996. This
Resolution is subject to the monetary advances granted by
petitioner to its rank-and-file employees during the pendency of
this case assuming such advances had actually been distributed to
them. The assailed Decision is AFFIRMED in all other respects.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Melo, Kapunan, and Pardo,
JJ., concur.

SPECIAL FIRST DIVISION

[G.R. No. 127598. August 1, 2000]
MANILA ELECTRIC COMPANY, petitioner, vs. HON.
SECRETARY OF LABOR LEONARDO QUISUMBING
and MERALCO EMPLOYEES AND WORKERS
ASSOCIATION (MEWA), respondents.
RESOLUTION
YNARES-SANTIAGO, J.:
On February 22, 2000, this Court promulgated a
Resolution with the following decretal portion:
WHEREFORE, the motion for reconsideration
is PARTIALLY GRANTED and the assailed
Decision is MODIFIED as follows: (1) the
arbitral award shall retroact from December 1,
1995 to November 30, 1997; and (2) the award
of wage is increased from the original amount
of One Thousand Nine Hundred Pesos
(P1,900.00) to Two Thousand Pesos
(P2,000.00) for the years 1995 and 1996. This
Resolution is subject to the monetary
advances granted by petitioner to its rank-andfile employees during the pendency of this
case assuming such advances had actually
been distributed to them. The assailed
Decision is AFFIRMED in all other respects.
SO ORDERED.
Petitioner Manila Electric Company filed with this Court,
on March 17, 2000, a "Motion for Partial Modification
(Re: Resolution Dated 22 February 2000)" anchored on
the following grounds:
I
With due respect, this Honorable Courts ruling on the
retroactivity issue: (a) fails to account for previous rulings
of the Court on the same issue; (b) fails to indicate the
reasons for reversing the original ruling in this case on
the retroactivity issue; and (c) is internally inconsistent.
II
With due respect, the Honorable Courts ruling on the
retroactivity issue does not take into account the huge
cost that this award imposes on petitioner, estimated at
no less than P800 Million.
In the assailed Resolution, it was held:
Labor laws are silent as to when an arbitral
award in a labor dispute where the Secretary
(of Labor and Employment) had assumed
jurisdiction by virtue of Article 263 (g) of the
Labor Code shall retroact. In general, a CBA
negotiated within six months after the
expiration of the existing CBA retroacts to the

day immediately following such date and if

agreed thereafter, the effectivity depends on
the agreement of the parties. On the other
hand, the law is silent as to the retroactivity of
a CBA arbitral award or that granted not by
virtue of the mutual agreement of the parties
but by intervention of the government. Despite
the silence of the law, the Court rules herein
that CBA arbitral awards granted after six
months from the expiration of the last CBA
shall retroact to such time agreed upon by both
employer and the employees or their union.
Absent such an agreement as to retroactivity,
the award shall retroact to the first day after the
six-month period following the expiration of the
last day of the CBA should there be one. In the
absence of a CBA, the Secretarys
determination of the date of retroactivity as part
of his discretionary powers over arbitral awards
shall control.
Petitioner specifically assails the foregoing portion of the
Resolution as being logically flawed, arguing, first, that
while it alludes to the Secretarys discretionary powers
only in the absence of a CBA, Article 253-A of the Labor
Code always presupposes the existence of a prior or
subsisting CBA; hence the exercise by the Secretary of
his discretionary powers will never come to
pass. Second, petitioner claims that the Resolution
contravenes the jurisprudential rule laid down in the
cases of Union of Filipro Employees v. NLRC,[1] Pier 8
Arrastre and Stevedoring Services v. RoldanConfesor[2] and St. Luke s Medical Center v.
Torres.[3] Third, petitioner contends that this Court erred
in holding that the effectivity of CBA provisions are
automatically retroactive. Petitioner invokes, rather, this
Courts ruling in the Decision dated January 27, 1999,
which was modified in the assailed Resolution, that in the
absence of an agreement between the parties, an
arbitrated CBA takes on the nature of any judicial or
quasi-judicial award; it operates and may be executed
only prospectively unless there are legal justifications for
its retroactive application. Fourth, petitioner assigns as
error this Courts interpretation of certain acts of
petitioner as consent to the retroactive application of the
arbitral award. Fifth, petitioner contends that the
Resolution is internally flawed because when it held that
the award shall retroact to the first day after the sixmonth period following the expiration of the last day of
the CBA, the reckoning date should have been June 1,
1996, not December 1, 1995, which is the last day of the
three-year lifetime of the economic provisions of the
CBA.
Anent the second ground, petitioner alleges that the
retroactive application of the arbitral award will cost it no
less than P800 Million. Thus, petitioner prays that the
two-year term of the CBA be fixed from December 28,
1996 to December 27, 1998. Petitioner also seeks this
Courts declaration that the award of P2,000.00 be paid
to petitioners rank-and-file employees during this twoyear period. In the alternative, petitioner prays that the
award of P2,000.00 be made to retroact to June 1, 1996
as the effectivity date of the CBA.

Private respondent MEWA filed its Comment on May 19,

2000, contending that the Motion for Partial Modification
was unauthorized inasmuch as Mr. Manuel M. Lopez,
President of petitioner corporation, has categorically
stated in a memorandum to the rank-and-file employees
that management will comply with this Courts ruling and
will not file any motion for reconsideration; and that the
assailed Resolution should be modified to conform to
the St. Lukes ruling, to the effect that, in the absence of
a specific provision of law prohibiting retroactivity of the
effectivity of arbitral awards issued by the Secretary of
Labor pursuant to Article 263(g) of the Labor Code, he is
deemed vested with plenary and discretionary powers to
determine the effectivity thereof.
This Court has re-examined the assailed portion of the
Resolution in this case vis--vis the rulings cited by
petitioner. Invariably, these cases involve Articles 253-A
in relation to Article 263 (g)[4]of the Labor Code. Article
253-A is hereunder reproduced for ready reference:
ART. 253-A. Terms of a collective
bargaining agreement. --- Any Collective
Bargaining Agreement that the parties may
enter into shall, insofar as the representation
aspect is concerned, be for a term of five (5)
years. No petition questioning the majority
status of the incumbent bargaining agent shall
be entertained and no certification election
shall be conducted by the Department of Labor
and Employment outside of the sixty-day
period immediately before the date of expiry of
such five year term of the Collective Bargaining
Agreement. All other provisions of the
Collective Bargaining Agreement shall be
renegotiated not later than three (3) years after
its execution. Any agreement on such other
provisions of the Collective Bargaining
Agreement entered into within six (6) months
from the date of expiry of the term of such
other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day
immediately following such date. If any such
agreement is entered into beyond six months,
the parties shall agree on the duration of
retroactivity thereof. In case of a deadlock in
the renegotiation of the collective bargaining
agreement, the parties may exercise their
rights under this Code.[5]
The parties respective positions are both well supported
by jurisprudence. For its part, petitioner invokes the
ruling in Union of Filipro Employees[6], wherein this Court
upheld the NLRCs act of giving prospective effect to the
CBA, and argues that the two-year arbitral award in the
case at bar should likewise be applied prospectively,
counted from December 28, 1996 to December 27,
1998. Petitioner maintains that there is nothing in Article
253-A of the Labor Code which states that arbitral
awards or renewals of a collective bargaining agreement
shall always have retroactive effect. The Filipro case was
applied more recently in Pier 8 Arrastre & Stevedoring
Services, Inc. v. Roldan-Confesor[7] thus:

In Union of Filipro Employees v. NLRC, 192

SCRA 414 (1990), this Court interpreted the
above law as follows:
"In light of the foregoing,
this Court upholds the
pronouncement of the
NLRC holding the CBA to
be signed by the parties
effective upon the
promulgation of the
assailed resolution. It is
clear and explicit from
Article 253-A that any
agreement on such other
provisions of the CBA shall
be given retroactive effect
only when it is entered into
within six (6) months from
its expiry date. If the
agreement was entered
into outside the six (6)
month period, then the
parties shall agree on the
duration of the retroactivity
thereof.
"The assailed resolution
which incorporated the
CBA to be signed by the
parties was promulgated
June 5, 1989, and hence,
outside the 6 month period
from June 30, 1987, the
expiry date of the past
CBA. Based on the
provision of Section 253-A,
its retroactivity should be
agreed upon by the
parties. But since no
agreement to that effect
was made, public
respondent did not abuse
its discretion in giving the
said CBA a prospective
effect. The action of the
public respondent is within
the ambit of its authority
vested by existing laws."
In the case of Lopez Sugar Corporation v.
Federation of Free Workers, 189 SCRA 179
(1991), this Court reiterated the rule that
although a CBA has expired, it continues to
have legal effects as between the parties until
a new CBA has been entered into. It is the duty
of both parties to the CBA to keep the status
quo, and to continue in full force and effect the
terms and conditions of the existing agreement
during the 60-day freedom period and/or until a
new agreement is reached by the
parties (National Congress of Unions in the
Sugar Industry of the Philippines v. FerrerCalleja, 205 SCRA 478 [1992]). Applied to the
case at bench, the legal effects of the
immediate past CBA between petitioner and

private respondent terminated, and the

effectivity of the new CBA began, only on
March 4, 1993, when public respondent
resolved their dispute.[8]
On the other hand, respondent MEWA invokes the ruling
in St. Lukes Medical Center, Inc. v. Torres,[9] which held
that the Secretary of Labor has plenary and discretionary
powers to determine the effectivity of arbitral
awards.[10] Thus, respondent maintains that the arbitral
award in this case should be made effective from
December 1, 1995 to November 30, 1997. The ruling in
the St. Lukes case was restated in the 1998 case of
Manila Central Line Corporation v. Manila Central Line
Free Workers Union-National Federation of Labor, et
al.,[11] where it was held that:
Art. 253-A refers to collective bargaining
agreements entered into by the parties as a
result of their mutual agreement. The CBA in
this case, on the other hand, is part of an
arbitral award. As such, it may be made
retroactive to the date of expiration of the
previous agreement. As held in St. Lukes
Medical Center, Inc. v. Torres:
Finally, the effectivity of the
Order of January 28, 1991,
must retroact to the date of
the expiration of the
previous CBA, contrary to
the position of petitioner.
Under the circumstances
of the case, Article 253-A
cannot be properly applied
to herein case. As correctly
stated by public
respondent in his assailed
Order of April 12, 1991
dismissing petitioners
Motion for Reconsideration

Anent the
alleged lack of
basis for the
retroactivity
provisions
awarded, we
would stress that
the provision of
law invoked by
the Hospital,
Article 253-A of
the Labor Code,
speaks of
agreements by
and between the
parties, and not
arbitral awards . .
. (p. 818 Rollo).
Therefore, in the absence
of a specific provision of
law prohibiting retroactivity

of the effectivity of arbitral

awards issued by the
Secretary of Labor
pursuant to Article 263(g)
of the Labor Code, such as
herein involved, public
respondent is deemed
vested with plenary and
discretionary powers to
determine the effectivity
thereof (223 SCRA 779,
792-793 [1993]; reiterated
in Philippine Airlines, Inc.
v. Confessor 231 SCRA 41
[1994]).
Indeed, petitioner has not shown that the
question of effectivity was not included in the
general agreement of the parties to submit
their dispute for arbitration. To the contrary, as
the order of the labor arbiter states, this
question was among those submitted for
arbitration by the parties:
As regards the "Effectivity
and Duration" clause, the
company proposes that the
collective bargaining
agreement shall take effect
only upon its signing and
shall remain in full force
and effect for a period of
five years. The union
proposes that the
agreement shall take effect
retroactive to March 15,
1989, the expiration date of
the old CBA.
And after an evaluation of
the parties respective
contention and argument
thereof, it is believed that
that of the union is fair and
reasonable. It is the
observation of this
Arbitrator that in almost
subsequent CBAs, the
effectivity of the
renegotiated CBA, usually
and most often is made
effective retroactive to the
date when the immediately
preceding CBA expires so
as to give a semblance of
continuity. Hence, for this
particular case, it is
believed that there is
nothing wrong adopting the
stand of the union, that is
that this CBA be made
retroactive effective March
15, 1989.[12]
Parenthetically, the Decision rendered in the case at bar
on January 27, 1999[13] ordered that the CBA should be

effective for a term of two years counted from December

28, 1996 (the date of the Secretary of Labors disputed
Order on the parties motion for reconsideration) up to
December 27, 1998.[14] That is to say, the arbitral award
was given prospective effect.
Upon a reconsideration of the Decision, this Court issued
the assailed Resolution which ruled that where an
arbitral award granted beyond six months after the
expiration of the existing CBA, and there is no
agreement between the parties as to the date of
effectivity thereof, the arbitral award shall retroact to the
first day after the six-month period following the
expiration of the last day of the CBA. In the dispositive
portion, however, the period to which the award shall
retroact was inadvertently stated as beginning on
December 1, 1995 up to November 30, 1997.
In resolving the motions for reconsideration in this case,
this Court took into account the fact that petitioner
belongs to an industry imbued with public interest. As
such, this Court can not ignore the enormous cost that
petitioner will have to bear as a consequence of the full
retroaction of the arbitral award to the date of expiry of
the CBA, and the inevitable effect that it would have on
the national economy. On the other hand, under the
policy of social justice, the law bends over backward to
accommodate the interests of the working class on the
humane justification that those with less privilege in life
should have more in law.[15] Balancing these two
contrasting interests, this Court turned to the dictates of
fairness and equitable justice and thus arrived at a
formula that would address the concerns of both sides.
Hence, this Court held that the arbitral award in this case
be made to retroact to the first day after the six-month
period following the expiration of the last day of the
CBA, i.e., from June 1, 1996 to May 31, 1998.
This Court, therefore, maintains the foregoing rule in the
assailed Resolution pro hac vice. It must be clarified,
however, that consonant with this rule, the two-year
effectivity period must start from June 1, 1996 up to May
31, 1998, not December 1, 1995 to November 30, 1997.
During the interregnum between the expiration of the
economic provisions of the CBA and the date of
effectivity of the arbitral award, it is understood that the
hold-over principle shall govern, viz:
"[I]t shall be the duty of both parties to keep the
status quo and to continue in full force and
effect the terms and conditions of the existing
agreement during the 60-day freedom period
and/or until a new agreement is reached by the
parties." Despite the lapse of the formal
effectivity of the CBA the law still considers the
same as continuing in force and effect until a
new CBA shall have been validly executed.[16]
Finally, this Court finds that petitioners prayer, that the
award of Two Thousand Pesos shall be paid to rankand-file employees during the two-year period, is welltaken. The award does not extend to supervisory
employees of petitioner.

WHEREFORE, the Motion for Partial Modification is

GRANTED. The Resolution of February 22, 2000 is
PARTIALLY MODIFIED as follows: (a) the arbitral award
shall retroact to the two-year period from June 1, 1996 to
May 31, 1998; (b) the increased wage award of Two
Thousand Pesos (P2,000.00) shall be paid to the rankand-file employees during the said two-year period. This
Resolution is subject to the monetary advances granted
by petitioner to said employees during the pendency of
this case, assuming such advances had actually been
distributed to them.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Melo,
Kapunan, and Pardo, JJ., concur.

[G.R. No. 127598. January 27, 1999]

MANILA ELECTRIC COMPANY, petitioner, vs. THE
HONORABLE SECRETARY OF LABOR LEONARDO
QUISUMBING AND MERALCO EMPLOYEES AND
WORKERS ASSOCIATION (MEWA), respondents.
DECISION
SYNOPSIS
This is petition for certiorari filed by petitioner Manila Electric
Company (MERALCO) seeking to annul the orders of the
Secretary of Labor dated August 19 1996 and December 28, 1996
wherein the Secretary, after assuming jurisdiction, required
MERALCO and its rank and file union - the Meralco Workers
Association (MEWA) to execute a collective bargaining agreement
(CBA) for the remainder of the parties, 1992-1997 CBA cycle, and
to incorporate in this new CBA the Secretarys dispositions in the
disputed economic and non-economic issues.
The Court ruled that, after considering the parties position
and the evidence on record, the Secretary of Labor disregarded
and misappreciated evidence, particularly with respect to the wage
award. The Secretary of Labor apparently also acted arbitrarily
and even whimsically in ordering the inclusion of benefits, terms
and conditions that the law and the parties did not intended to be
reflected in thier CBA; even the Solicitor General himself
considered that the Secretary gravely abused his discretion on at
least three major points: (a) on the signing bonus; (b) on the
inclusion of confidential employees in the rank and file bargaining
unit; and (c) in mandating a union security closed shop regime in
the bargaining agreement. The petition is granted and the orders
of the public respondent Secretary of Labor dated August 19 1996
and December 28, 1996 were set aside. The parties were directed
to execute a Collective Bargaining Agreement incorporating the
terms and conditions contained in the unaffected portions of the
Secretary of Labors orders and the modifications set forth in the
instant case. The retirement issue is remanded to the Secretary of
Labor for reception of evidence and determination of the legal
personality of the MERALCO retirement fund.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; CONDITIONS OF
EMPLOYMENT; BONUS; NOT A DEMANDABLE AND
ENFORCEABLE OBLIGATION. As a rule, a bonus is not
a demandable and enforceable obligation; it may
nevertheless be granted on equitable considerations as
when the giving of such bonus has been the companys long
and regular practice. To be considered a regular practice,
the giving of the bonus should have been done over a long
period of time, and must be shown to have been consistent
and deliberate. Thus we have ruled in National Sugar
Refineries Corporation vs. NLRC: The test or rationale of
this rule on long practice requires an indubitable showing
that the employer agreed to continue giving the benefits
knowing fully well that said employees are not covered by
the law requiring payment thereof. In the case at bar, the
record shows that MERALCO, aside from complying with the
regular 13th month bonus, has further been giving its
employees an additional Christmas bonus at the tail-end of
the year since 1988. While the special bonuses differed in
amount and bore different titles, it can not be denied that
these were given voluntarily and continuously on or about
Christmas time. The considerable length of time MERALCO
has been giving the special grants to its employees indicates
a unilateral and voluntary act on its part, to continue giving
said benefits knowing that such act was not required by

law. Indeed, a company practice favorable to the employees

has been established and the payments made by MERALCO
pursuant thereto ripened into benefits enjoyed by the
employees. Consequently, the giving of the special bonus
can no longer be withdrawn by the company as this would
amount to a diminution of the employees existing benefits.
2. ID.; ID.; THE COOPERATIVE LAW DOES NOT REQUIRE
THE EMPLOYERS TO PROVIDE FUNDS THAT
EMPLOYEES CAN USE TO FORM COOPERATIVE. The
Secretarys disputed ruling requires MERALCO to provide
the employees covered by the bargaining unit with a loan of
1.5 Million as seed money for the employees formation of a
cooperative under the Cooperative Law, R.A. 6938. We see
nothing in this law whether expressed or implied that
requires employers to provide funds, by loan or otherwise,
that employees can use to form a cooperative. The formation
of a cooperative is a purely voluntary act under this law, and
no party in any context or relationship is required by law to
set up a cooperative or to provide the funds therefor. In the
absence of such legal requirement, the Secretary has no
basis to order the grant of a 1.5 million loan to MERALCO
employees for the formation of a cooperative, Furthermore,
we do not see the formation of an employees cooperative, in
the absence of an agreement by the collective bargaining
parties that this is a bargainable term or condition of
employment, to be a term or condition of employment that
can be imposed on the parties on compulsory arbitration.
3. ID.; ID.; SIGNING BONUS; DEFINED; WITHOUT THE
GOODWILL, THE SIGNING BONUS CANNOT BE
JUSTIFIED. On the signing bonus issue, we agree with
the positions commonly taken by MERALCO and by the
Office of the Solicitor General that the signing bonus is a
grant motivated by the goodwill generated when a CBA is
successfully negotiated and signed between the employer
and the union. In the present case, this goodwill does not
exist. In the words of the Solicitor General: When
negotiations for the last two years of the 1992-1997 CBA
broke down and the parties sought the assistance of the
NCMB, but which failed to reconcile their differences, and
when petitioner MERALCO bluntly invoked the jurisdiction of
the Secretary of Labor in the resolution of the labor dispute,
whatever goodwill existed between petitioner MERALCO and
respondent union disappeared. xxx. In contractual terms, a
signing bonus is justified by and is the consideration paid for
the goodwill that existed in the negotiations that culminated
in the signing of a CBA. Without the goodwill, the payment of
a signing bonus cannot be justified and any order for such
payment, to our mind, constitutes grave abuse of
discretion. This is more so where the signing bonus is in the
not insignificant total amount of P16 million.
4. ID.; LABOR RELATIONS; CONFIDENTIAL EMPLOYEES;
EXCLUDED FROM RANK AND FILE BARGAINING UNIT.
We have established on the exclusion of confidential
employees from the rank and file bargaining unit. In Pier 8
Arrastre vs. Confesor and General Maritime and Stevedore
Union, we ruled that: Put another way, the confidential
employee does not share in the same community of
interests that might otherwise make him eligible to join his
rank and file co-workers, precisely because of a conflict in
those interest. Thus, in Metrolab Industries vs. RoldanConfesor, We ruled: ...that the Secretarys order should
exclude the confidential employees from the regular rank and
file employees qualified to become members of the MEWA
bargaining unit. From the foregoing disquisition, it is clear

that employees holding a confidential position are prohibited

from joining the union of the rank and file employees.

MEWA is the duly recognized labor organization of the rankand-file employees of MERALCO.

5. ID.; ID.; CONTRACTING OUT OF WORK IS A

PROPRIETARY RIGHT OF THE EMPLOYER IN THE
EXERCISE OF AN INHERENT MANAGEMENT
PREROGATIVE. This issue is limited to the validity of the
requirement that the union be consulted before the
implementation of any contracting out that would last for 6
months or more. Proceeding from our ruling in San Miguel
Employees Union-PTGWO vs. Bersamira,(where we
recognized that contracting out of work is a propriety right of
the employer in the exercise of an inherent management
prerogative) the issue we see is whether the Secretarys
consultation requirement is reasonable or unduly restrictive
of the companys management prerogative. We note that
the Secretary himself has considered that management
should not be hampered in the operations of its business
when he said that: We feel that the limitations imposed by
the union advocates are too specific and may not be
applicable to the situations that the company and the union
may face in the future. To our mind, the greater risk with this
type of limitation is that it will tend to curtail rather than allow
the business growth that the company and the union must
aspire for. Hence, we are for the general limitations we have
stated above because they will allow a calibrated response
to specific future situations the company and the union may
face.

On September 7, 1995, MEWA informed MERALCO of its

intention to re-negotiate the terms and conditions of their existing
1992-1997 Collective Bargaining Agreement (CBA) covering the
remaining period of two years starting from December 1, 1995 to
November 30, 1997.[1] MERALCO signified its willingness to renegotiate through its letter dated October 17, 1995[2] and formed a
CBA negotiating panel for the purpose. On November 10, 1995,
MEWA submitted its proposal[3] to MERALCO, which, in turn,
presented a counter-proposal. Thereafter, collective bargaining
negotiations proceeded. However, despite the series of meetings
between the negotiating panels of MERALCO and MEWA, the
parties failed to arrive at terms and conditions acceptable to both
of them.

6. ID.; ID.; THE SECRETARY OF LABOR ACTED IN EXCESS

OF ITS JURISDICTION WHEN HE ORDERED THE
INCLUSION OF BENEFITS, TERMS AND CONDITIONS
THAT THE LAW AND THE PARTIES DID NOT INTEND TO
BE REFLECTED IN THE CBA. The Secretary acted in
excess of the discretion allowed him by law when he ordered
the inclusion of benefits, terms and conditions that the law
and the parties did not intend to be reflected in their CBA. To
avoid the possible problems that the disputed orders may
bring, we are constrained to rule that only the terms and
conditions already existing in the current CBA and was
granted by the Secretary (subject to the modifications
decreed in this decision) should be incorporated in the CBA,
and that the Secretarys disputed orders should accordingly
be modified.
APPEARNCES OF COUNSEL
Siguion Reyna Montecillo Ongsingco for petitioner.
Rolando R. Arbues, Atilano S. Guevarra, Jr. and Marianito
D. Miranda for petitioner.
Perfecto V. Fernandez, Jose P. Fernancez and Cristobal P.
Fernandez for private respondents.

MARTINEZ, J.:
In this petition for certiorari, the Manila Electric Company
(MERALCO) seeks to annul the orders of the Secretary of labor
dated August 19, 1996 and December 28, 1996, wherein the
Secretary required MERALCO and its rank and file union- the
Meralco Workers Association (MEWA) to execute a collective
bargaining agreement (CBA) for the remainder of the parties
1992-1997 CBA cycle, and to incorporate in this new CBA the
Secretarys dispositions on the disputed economic and noneconomic issues.

On April 23, 1996, MEWA filed a Notice of Strike with the

National Capital Region Branch of the National Conciliation and
Mediation Board (NCMB) of the Department of Labor and
Employment (DOLE) which was docketed as NCMB-NCR-NS-04152-96, on the grounds of bargaining deadlock and unfair labor
practices. The NCMB then conducted a series of conciliation
meetings but the parties failed to reach an amicable
settlement. Faced with the imminence of a strike, MERALCO on
May 2, 1996, filed an Urgent Petition[4] with the Department of
Labor and Employment which was docketed as OS-AJ No.
0503[1]96 praying that the Secretary assume jurisdiction over the
labor dispute and to enjoin the striking employees to go back to
work.
The Labor Secretary granted the petition through its
Order[5] of May 8, 1996, the dispositive portion of which reads:
WHEREFORE, premises considered, this Office now assumes
jurisdiction over the labor dispute obtaining between the parties
pursuant to Article 263 (g) of the Labor Code. Accordingly, the
parties are here enjoined from committing any act that may
exacerbate the situation. To speed up the resolution of the
dispute, the parties are also directed to submit their respective
Position Papers within ten (10) days from receipt.
Undersecretary Jose M. Espanol, Jr. is deputized to conduct
conciliation conferences between the parties to bridge their
differences and eventually hammer out a solution that is mutually
acceptable. He shall be assisted by the Legal Service.
SO ORDERED.
Thereafter, the parties submitted their respective
memoranda and on August 19, 1996, the Secretary resolved the
labor dispute through an Order,[6] containing the following awards:
ECONOMIC DEMANDS
Wage increase - P2,300.00 for the first year covering the
period from December 1, 1995 to November
30, 1996
- P2,200.00 for the second year covering
the period December 1, 1996 to November 30,
1997.
Red Circle Rate (RCR) Allowance- all RCR allowances
(promotional increases that go beyond the maximum range of a job
classification salary) shall be integrated into the basic salary of
employees effective December 1, 1995.

Longevity Allowance- the integration of the longevity allowance into

the basic wage is denied; the present policy is maintained.
Longevity Increase- the present longevity bonus is maintained but
the bonus shall be incorporated into the new CBA.

b.

one cavan of rice per month is granted to retirees;

c.
special retirement leave and allowance-present policy is
maintained;
d.

Sick Leave- MEWAs demand for upgrading is denied; the

companys present policy is maintained. However, those who
have not used the sick leave benefit during a particular year shall
be entitled to a one-day sick leave incentive.
Sick leave reserve- the present reserve of 25 days shall be
reduced to 15 days; the employee has the option either to convert
the excess of 10 days to cash or let it remain as long as he
wants. In case he opts to let it remain, he may later on convert it to
cash at his retirement or separation.
Vacation Leave - MEWAs demand for upgrading denied & the
companys present policy is maintained which must be
incorporated into the new CBA but scheduled vacation leave may
be rounded off to one full day at a time in case of a benefit
involving a fraction of a day.
Union Leave- of MEWAs officers, directors or stewards assigned
to perform union duties or legitimate union activity is increased
from 30 to 40 Mondays per month.
Maternity, Paternity and Funeral leaves- the existing policy is to be
maintained and must be incorporated in the new CBA unless a
new law granting paternity leave benefit is enacted which is
superior to what the company has already granted.
Birthday Leave - unions demand is granted. If birthday falls on the
employees rest day or on a non-working holiday, the worker shall
be entitled to go on leave with pay on the next working day.
Group Hospitalization & Surgical Insurance Plan (GHSIP) and
Health Maintenance Plan (HMP)- present policy is maintained
insofar as the cost sharing is concerned- 70% for the Company
and 30% for MEWA.
Health Maintenance Plan (HMP) for dependents - subsidized
dependents increased from three to five dependents.
Longevity Bonus- is increased from P140.00 to P200.00 for every
year of service to be received by the employee after serving the
Company for 5 years.
Christmas Bonus and Special Christmas Grant- MEWAs demand
of one month salary as Christmas Bonus and two months salary
as Special Christmas Grant is granted and to be incorporated in
the new CBA.
Midyear Bonus- one months pay to be included in the CBA.
Anniversary Bonus - unions demand is denied.
Christmas Gift Certificate - company has the discretion as to
whether it will give it to its employees.
Retirement Benefits:
a.

Full retirement-present policy is maintained;

HMP coverage for retirees- HMP coverage is

granted to retirees who have not reached the
age of 70, with MERALCO subsidizing 100% of
the monthly premium; those over 70 are
entitled to not more than 30 days of
hospitalization at the J.F. Cotton Hospital with
the company shouldering the entire cost.

e.

HMP coverage for retirees dependents is denied

f.

Monthly pension of P3,000.00 for each retiree is denied.

g.

Death benefit for retirees beneficiaries is denied.

Optional retirement - unions demand is denied; present policy is

maintained; employee is eligible for optional retirement if he has
rendered at least 18 years of service.
Dental, Medical and Hospitalization Benefits- grant of all the
allowable medical, surgical, dental and annual physical
examination benefits, including free medicine whenever the same
is not available at the JFCH.
Resignation benefits- unions demand is denied.
Night work- union demand is denied but present policy must be
incorporated in CBA.
Shortswing- work in another shift within the same day shall be
considered as the employees work for the following day and the
employee shall be given additional four (4) hours straight time and
the applicable excess time premium if he works beyond 8 hours in
the other shift.
High Voltage allowance- is increased from P45.00 to P55.00 to be
given to any employee authorized by the Safety Division to perform
work on or near energized bare lines & bus including stockman
drivers & crane operators and other crew members on ground.
High Pole Allowance- is increased from P30.00 to P40.00 to be
given to those authorized to climb poles up to at least 60 ft. from
the ground. Members of the team including stockman drivers,
crane operators and other crew members on the ground, are
entitled to this benefit.
Towing Allowance- where stockmen drive tow trailers with long
poles and equipment on board, they shall be entitled to a towing
allowance of P20.00 whether they perform the job on regular shift
or on overtime.
Employees Cooperative- a loan of P3 M seed money is granted to
the proposed establishment of a cooperative, payable in twenty
(20) years starting one year from the start of operations.
Holdup Allowance- the union demand is denied; the present policy
shall be maintained.

Meal and Lodging Allowance- shall be increased effective

December 1, 1995 as follows:
Breakfast - from P25.00 to P35.00
Lunch
- from P35.00 to P45.00
Dinner - from P35.00 to P45.00
Lodging - from P135.00 to P180.00 a night in all MERALCO
franchise areas

employ by reason of expansion, reorganization

or as a result of operational exigencies.
b.

Union recognition and security i. The union shall be recognized by the

Company as sole and exclusive bargaining
representative of the rank-and-file
employees included in the bargaining
unit. The Company shall agree to meet only
with Union officers and its authorized
representatives on all matters involving the
Union and all issues arising from the
implementation and interpretation of the new
CBA.

Payroll Treatment for Accident while on Duty- an employee shall

be paid his salary and allowance if any is due plus average excess
time for the past 12 months from the time of the accident up to the
time of full recovery and placing of the employee back to normal
duty or an allowance of P2,000.00, whichever is higher.
Housing and Equity Assistance Loan- is increased to P60,000.00;
those who have already availed of the privilege shall be allowed to
get the difference.

ii. The union shall meet with the newly

regularized employees for a period not to
exceed four (4) hours, on company time, to
acquaint the new regular employees of the
rights, duties and benefits of Union
membership.

Benefits for Collectors:

a.

b.

c.

d.

Company shall reduce proportionately the quota

and monthly average product level (MAPL) in
terms of equivalent bill assignment when an
employee is on sick leave and paid vacation
leave.
When required to work on Saturdays, Sundays
and holidays, an employee shall
receive P60.00 lunch allowance and applicable
transportation allowance as determined by the
Company and shall also receive an additional
compensation to one day fixed portion in
addition to lunch and transportation allowance.

c.

Transfer of assignment and job securityi. No transfer of an employee from one position
to another shall be made if motivated by
considerations of sex, race, creed, political
and religious belief, seniority or union
activity.

The collector shall be entitled to an incentive pay

of P25.00 for every delinquent account
disconnected.

ii. If the transfer is due to the reorganization or

decentralization, the distance from the
employees residence shall be considered
unless the transfer is accepted by the
employee. If the transfer is extremely
necessary, the transfer shall be made within
the offices in the same district.

When a collector voluntarily performs other work

on regular shift or overtime, he shall be entitled
to remuneration based on his computed hourly
compensation and the reimbursement of
actually incurred transportation expenses.

e.

Collectors shall be provided with bobcat belt

bags every year

f.

Collectors cash bond shall be deposited under

his capital contribution to MESALA.

g.

Collectors quota and MAPL shall be

proportionately reduced during typhoons,
floods, earthquakes and other similar force
majeure events when it is impossible for a
collector to perform collection work.

Political Demands:
a.

iii. The right of all rank-and-file employees to join

the union shall be recognized in accordance
with the maintenance of membership
principle as a form of union security.

Scope of the collective bargaining unit- the

collective bargaining unit shall be composed of
all regular rank-and-file employees hired by the
company in all its offices and operative centers
throughout its franchise area and those it may

iii. Personnel hired through agencies or

contractors to perform the work done by
covered employees shall not exceed one
month. If extension is necessary, the union
shall be informed. But the Company shall
not permanently contract out regular or
permanent positions that are necessary in
the normal operation of the Company.
d.

Check off Union Dues- where the union

increases its dues as approved by the Board of
Directors, the Company shall check off such
increase from the salaries of union members
after the union submits check off authorizations
signed by majority of the members. The
Company shall honor only those individual
authorizations signed by the majority of the
union members and collectively submitted by
the union to the Companys Salary
Administration.

e.

Payroll Reinstatement- shall be in accordance

with Article 223, p. 3 of the Labor Code.

1) Effectivity of Agreement - December 1, 1995 to November 30,

1997.

f.

Union Representation in Committees- the union

is allowed to participate in policy formulation
and in the decision-making process on matters
affecting their rights and welfare, particularly in
the Uniform Committee, the Safety Committee
and other committees that may be formed in
the future.

Economic Demands

Signing Bonus- P4,000.00 per member of the bargaining unit for

the conclusion of the CBA
Existing benefits already granted by the Company but which are
not expressly or impliedly repealed in the new agreement shall
remain subsisting and shall be included in the new agreement to
be signed by the parties effective December 1, 1995.
On August 30, 1996, MERALCO filed a motion for
reconsideration[7] alleging that the Secretary of Labor committed
grave abuse of discretion amounting to lack or excess of
jurisdiction:
1. in awarding to MEWA a package that would cost at
least P1.142 billion, a package that is grossly excessive and
exorbitant, would not be affordable to MERALCO and would
imperil its viability as a public utility affected with national
interest.
2. in ordering the grant of a P4,500.00 wage increase, as
well as a new and improved fringe benefits, under the
remaining two (2) years of the CBA for the rank-and-file
employees.
3. in ordering the incorporation into the CBA of all existing
employee benefits, on the one hand, and those that
MERALCO has unilaterally granted to its employees by
virtue of voluntary company policy or practice, on the other
hand.
4. in granting certain political demands presented by the
union.
5. in ordering the CBA to be effective December 1995
instead of August 19, 1996 when he resolved the dispute.
MERALCO filed a supplement to the motion for
reconsideration on September 18, 1995, alleging that the
Secretary of Labor did not properly appreciate the effect of the
awarded wages and benefits on MERALCOs financial viability.
MEWA likewise filed a motion asking the Secretary of Labor
to reconsider its Order on the wage increase, leaves, decentralized
filing of paternity and maternity leaves, bonuses, retirement
benefits, optional retirement, medical, dental and hospitalization
benefits, short swing and payroll treatment. On its political
demands, MEWA asked the Secretary to rule its proposal to
institute a Code of Discipline for its members and the unions
representation in the administration of the Pension Fund.
On December 28, 1996, the Secretary issued an
Order[8] resolving the parties separate motions, the modifications
of the August 19, 1996 Order being highlighted hereunder:

2) Wage Increase:
First year - P2,200.00 per month;
Second year - P2,200.00 per month.
3) Integration of Red Circle Rate (RCR) and Longevity Allowance
into Basic Salary -the RCR allowance shall be integrated into the
basic salary of employees as of August 19, 1996 (the date of the
disputed Order).
4) Longevity Bonus - P170 per year of service starting from 10
years of continuous service.
5) Vacation Leave - The status quo shall be maintained as to the
number of vacation leave but employees scheduled vacation
may be taken one day at a time in the manner that this has
been provided in the supervisory CBA.
6) Sick Leave Reserve - is reduced to 15 days, with any excess
payable at the end of the year. The employee has the option to
avail of this cash conversion or to accumulate his sick leave credits
up to 25 days for conversion to cash at retirement or separation
from the service.
7) Birthday Leave - the grant of a day off when an employees
birthday falls on a non-working day is deleted.
8) Retirement Benefits for Retirees - The benefits granted shall be
effective on August 19, 1996, the date of the disputed order up to
November 30, 1997, which is the date the CBA expires and shall
apply to those who are members of the bargaining unit at the time
the award is made.
One sack of rice per quarter of the year shall be given to those
retiring between August 19, 1996 and November 30, 1997.
On HMP Coverage for Retirees- The parties maintain the status
quo, that is, with the Company complying with the present
arrangement and the obligations to retirees as is.
9) Medical, Dental and Hospitalization Benefits - The cost of
medicine unavailable at the J.F. Cotton Hospital shall be in
accordance with MERALCOs Memorandum dated September 14,
1976.
10) GHSIP and HMP for Dependents - The number of
dependents to be subsidized shall be reduced from 5 to 4 provided
that their premiums are proportionately increased.
11) Employees Cooperative - The original award of P3 million
pesos as seed money for the proposed Cooperative is reduced
to P1.5 million pesos.
12) Shortswing - the original award is deleted.
13) Payroll Treatment for Accident on Duty - Company ordered to
continue its present practice on payroll treatment for accident on
duty without need to pay the excess time the Union demanded.

Political Demands:

d.

14) Scope of the collective bargaining unit - The bargaining unit

shall be composed of all rank and file employees hired by the
Company in accordance with the original Order.
15) Union recognition and security - The incorporation of a
closed shop form of union security in the CBA; the Company is
prohibited from entertaining individuals or groups of individuals
only on matters that are exclusively within the domain of the union;
the Company shall furnish the union with a complete list of newly
regularized employees within a week from regularization so that
the Union can meet these employees on the Unions and the
employees own time.
16) Transfer of assignment and job security - Transfer is a
prerogative of the Company but the transfer must be for a valid
business reason, made in good faith and must be reasonably
exercised. The CBA shall provide that No transfer of an employee
from one position to another, without the employees written
consent, shall be made if motivated by considerations of sex, race,
creed, political and religious belief, age or union activity.

j.

Social benefits such as GHSIP and HMP

for dependents, employees cooperative
and housing equity assistance loan;
e.
Signing bonus;
f.
Integration of the Red Circle Rate Allowance
g.
Sick leave reserve of 15 days
h.
The 40-day union leave;
i.
High pole/high voltage and towing allowance;
and
Benefits for collectors

3) . . . in expanding the scope of the bargaining unit to all regular

rank and file employees hired by the company in all its offices and
operating centers and those it may employ by reason of
expansion, reorganization or as a result of operational exigencies;
4) . . . in ordering for a closed shop when his original order for a
maintenance of membership arrangement was not questioned by
the parties;
5) . . . in ordering that Meralco should consult the union before any
contracting out for more than six months;

17) Contracting Out - The Company has the prerogative to

contract out services provided that this move is based on valid
business reasons in accordance with law, is made in good faith, is
reasonably exercised and, provided further that if the contracting
out involves more than six months, the Union must be consulted
before its implementation.

6) . . . in decreeing that the union be allowed to have

representation in policy and decision making into matters affecting
personnel welfare, rights and benefits as well as duties;

18) Check off of union dues

8) . . . in exercising discretion in determining the retroactivity of the

CBA;

In any increase of union dues or contributions for mandatory

activities, the union must submit to the Company a copy of its
board resolution increasing the union dues or authorizing such
contributions;
If a board resolution is submitted, the Company shall deduct union
dues from all union members after a majority of the union
members have submitted their individual written
authorizations. Only those check-off authorizations submitted by
the union shall be honored by the Company.
With respect to special assessments, attorneys fees, negotiation
fees or any other extraordinary fees, individual authorizations shall
be necessary before the company may so deduct the same.
19) Union Representation in Committees - The union is granted
representation in the Safety Committee, the Uniform Committee
and other committees of a similar nature and purpose involving
personnel welfare, rights and benefits as well as duties.
Dissatisfied, petitioner filed this petition contending that the
Secretary of Labor gravely abused his discretion:
1). . . in awarding wage increases of P2,200.00 for 1996
and P2,200.00 for 1997;
2) . . . in awarding the following economic benefits:
a.

Two months Christmas bonus;

b.
Rice Subsidy and retirement benefits for
retirees;
c.
Loan for the employees cooperative;

7) . . . in ruling for the inclusion of all terms and conditions of

employment in the collective bargaining agreement;

Both MEWA and the Solicitor General; on behalf of the

Secretary of Labor, filed their comments to the petition. While the
case was also set for oral argument on Feb 10, 1997, this hearing
was cancelled due to MERALCO not having received the comment
of the opposing parties. The parties were instead required to
submit written memoranda, which they did. Subsequently, both
petitioner and private respondent MEWA also filed replies to the
opposing parties Memoranda, all of which We took into account in
the resolution of this case.
The union disputes the allegation of MERALCO that the
Secretary abused his discretion in issuing the assailed orders
arguing that he acted within the scope of the powers granted him
by law and by the Constitution. The union contends that any
judicial review is limited to an examination of the Secretarys
decision-making/discretion - exercising process to determine if this
process was attended by some capricious or whimsical act that
constitutes grave abuse; in the absence of such abuse, his
findings - considering that he has both jurisdiction and expertise to
make them - are valid.
The unions position is anchored on two premises:
First, no reviewable abuse of discretion could have attended
the Secretarys arbitral award because the Secretary complied with
constitutional norms in rendering the dispute award. The union
posits that the yardstick for comparison and for the determination
of the validity of the Secretarys actions should be the specific
standards laid down by the Constitution itself. To the union, these
standards include the State policy on the promotion of workers
welfare,[9] the principle of distributive justice,[10] the right of the
State to regulate the use of property,[11] the obligation of the State
to protect workers, both organized and unorganized, and insure

their enjoyment of humane conditions of work and a living

wage, and the right of labor to a just share in the fruits of
production.[12]
Second, no reversible abuse of discretion attended the
Secretarys decision because the Secretary took all the relevant
evidence into account, judiciously weighed them, and rendered a
decision based on the facts and law. Also, the arbitral award
should not be reversed given the Secretarys expertise in his field
and the general rule that findings of fact based on such expertise is
generally binding on this Court.
To put matters in proper perspective, we go back to basic
principles. The Secretary of Labors statutory power under Art.
263 (g) of the Labor Code to assume jurisdiction over a labor
dispute in an industry indispensable to the national interest, and, to
render an award on compulsory arbitration, does not exempt the
exercise of this power from the judicial review that Sec. 1, Art. 8 of
the Constitution mandates. This constitutional provision states:
Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable
and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the
government.
Under this constitutional mandate, every legal power of the
Secretary of Labor under the Labor Code, or, for that matter, any
act of the Executive, that is attended by grave abuse of discretion
is subject to review by this Court in an appropriate proceeding. To
be sure, the existence of an executive power alone - whether
granted by statute or by the Constitution - cannot exempt the
executive action from judicial oversight, interference or reversal
when grave abuse of discretion is, or is alleged to be,
present. This is particularly true when constitutional norms are
cited as the applicable yardsticks since this Court is the final
interpreter of the meaning and intent of the Constitution.[13]
The extent of judicial review over the Secretary of Labors
arbitral award is not limited to a determination of grave abuse in
the manner of the secretarys exercise of his statutory
powers. This Court is entitled to, and must - in the exercise of its
judicial power - review the substance of the Secretarys award
when grave abuse of discretion is alleged to exist in the award, i.e.,
in the appreciation of and the conclusions the Secretary drew from
the evidence presented.
The natural and ever present limitation on the Secretarys
acts is, of course, the Constitution. And we recognize that indeed
the constitutional provisions the union cited are State policies on
labor and social justice that can serve as standards in assessing
the validity of a Secretary of Labors actions. However, we note
that these provisions do not provide clear, precise and objective
standards of conduct that lend themselves to easy application. We
likewise recognize that the Constitution is not a lopsided document
that only recognizes the interests of the working man; it too
protects the interests of the property owner and employer as
well.[14]
For these reasons - and more importantly because a ruling
on the breadth and scope of the suggested constitutional
yardsticks is not absolutely necessary in the disposition of this
case - we shall not use these yardsticks in accordance with the
time-honored practice of avoiding constitutional interpretations
when a decision can be reached using non-constitutional
standards. We have repeatedly held that one of the essential
requisites for a successful judicial inquiry into constitutional

questions is that the resolution of the constitutional question must

be necessary in deciding the case.[15]
In this case we believe that the more appropriate and
available standard - and one does not require a constitutional
interpretation - is simply the standard of reasonableness. In
laymans terms, reasonableness implies the absence of
arbitrariness;[16] in legal parlance, this translates into the exercise
of proper discretion and to the observance of due process. Thus,
the question we have to answer in deciding this case is whether
the Secretarys actions have been reasonable in light of the parties
positions and the evidence they presented.
MEWAs second premise - i.e., that the Secretary duly
considered the evidence presented - is the main issue that we
shall discuss at length below. Additionally, MEWA implied that we
should take great care before reading an abuse of discretion on
the part of the Secretary because of his expertise on labor issues
and because his findings of fact deserve the highest respect from
this Court.
This Court has recognized the Secretary of Labors distinct
expertise in the study and settlement of labor disputes falling under
his power of compulsory arbitration.[17] It is also well-settled that
factual findings of labor administrative officials, if supported by
substantial evidence, are entitled not only to great respect but even
to finality.[18] We, therefore, have no difficulty in accepting the
unions caveat on how to handle a Secretary of Labors arbitral
award.
But at the same time, we also recognize the possibility that
abuse of discretion may attend the exercise of the Secretarys
arbitral functions; his findings in an arbitration case are usually
based on position papers and their supporting documents (as they
are in the present case), and not on the thorough examination of
the parties contending claims that may be present in a court trial
and in the face-to-face adversarial process that better insures the
proper presentation and appreciation of evidence.[19] There may
also be grave abuse of discretion where the board, tribunal or
officer exercising judicial function fails to consider evidence
adduced by the parties.[20] Given the parties positions on the
justiciability of the issues before us, the question we have to
answer is one that goes into the substance of the Secretarys
disputed orders: Did the Secretary properly consider and
appreciate the evidence presented before him?
We find, based on our consideration of the parties positions
and the evidence on record, that the Secretary of Labor
disregarded and misappreciated evidence, particularly with respect
to the wage award. The Secretary of Labor apparently also acted
arbitrarily and even whimsically in considering a number of legal
points; even the Solicitor General himself considered that the
Secretary gravely abused his discretion on at least three major
points: (a) on the signing bonus issue; (b) on the inclusion of
confidential employees in the rank and file bargaining unit, and (c)
in mandating a union security closed-shop regime in the
bargaining unit.
We begin with a discussion on the wages issue. The focal
point in the consideration of the wage award is the projected net
income for 1996 which became the basis for the 1996 wage award,
which in turn - by extrapolation - became the basis for the
(2nd Year) 1997 award. MERALCO projected that the net
operating income for 1996 was 14.7% above the 1999 level or a
total net operating income of 4.171 Billion, while the union placed
the 1996 net operating income at 5.795 Billion.
MERALCO based its projection on the increase of the
income for the first 6 months of 1996 over the same period in

1995. The union, on the other hand, projected that the 1996
income would increase by 29% to 35% because the consumption
of electric power is at its highest during the last two quarters with
the advent of the Yuletide season. The union likewise relied
heavily on a newspaper report citing an estimate by an all Asia
capital financial analyst that the net operating income would
amount to 5.795 Billion.[21]
Based essentially on these considerations, the Secretary
made the following computations and ordered his disputed wage
award:

1996

Projected net operating

Income for

Principals and
interests

5,795,000,000
1,426,571,703

Dividends at 1995
rate

1,636,949,000

Net amount left with the

Company
2,729,479,297
cost

Add: Tax credit equivalent to 35% of labor

231,804,940

Companys net operating

income
2,961,284,237
For 1997, the projected income is P7,613,612 which can easily
absorb the incremental increase of P2,200 per month or a total
of P4,500 during the last year of the CBA period.
xxx

xxx

xxx

An overriding aim is to estimate the amount that is left with the

Company after the awarded wages and benefits and the
companys customary obligations are paid. This amount can be
the source of an item not found in the above computations but
which the Company must provide for, that is - the amount the
company can use for expansion.
Considering the expansion plans stated in the Companys
Supplement that calls for capital expenditures of 6 billion, 6.263
billion and 5.802 billion for 1996, 1997 and 1998 respectively, We
conclude that our original award of P2,300 per month for the first
year and P2,200 for the second year will still leave much by way of
retained income that can be used for expansion.[22] (Underscoring
ours.)
We find after considering the records that the Secretary
gravely abused his discretion in making this wage award because
he disregarded evidence on record. Where he considered
MERALCOs evidence at all, he apparently misappreciated this
evidence in favor of claims that do not have evidentiary
support. To our mind, the MERALCO projection had every reason
to be reliable because it was based on actual and undisputed
figures for the first six months of 1996.[23] On the other hand, the
union projection was based on a speculation of Yuletide
consumption that the union failed to substantiate. In fact, as
against the unions unsubstantiated Yuletide consumption claim,
MERALCO adduced evidence in the form of historical consumption
data showing that a lengthy consumption does not tend to rise
during the Christmas period.[24] Additionally, the All-Asia Capital
Report was nothing more than a newspaper report that did not
show any specific breakdown or computations. While the union

claimed that its cited figure is based on MERALCOs 10-year

income stream,[25] no data or computation of this 10-year stream
appear in the record.
While the Secretary is not expected to accept the companyoffered figures wholesale in determining a wage award, we find it a
grave abuse of discretion to completely disregard data that is
based on actual and undisputed record of financial performance in
favor of the third-hand and unfounded claims the Secretary
eventually relied upon. At the very least, the Secretary should
have properly justified his disregard of the company figures. The
Secretary should have also reasonably insured that the figure that
served as the starting point for his computation had some
substantial basis.
Both parties extensely discussed the factors that the decision
maker should consider in making a wage award. While We do not
seek to enumerate in this decision the factors that should affect
wage determination, we must emphasize that a collective
bargaining dispute such as this one requires due consideration
and proper balancing of the interests of the parties to the
dispute and of those who might be affected by the dispute. To
our mind, the best way in approaching this task holistically is to
consider the available objective facts, including, where applicable,
factors such as the bargaining history of the company, the trends
and amounts of arbitrated and agreed wage awards and the
companys previous CBAs, and industry trends in general. As a
rule, affordability or capacity to pay should be taken into account
but cannot be the sole yardstick in determining the wage award,
especially in a public utility like MERALCO. In considering a public
utility, the decision maker must always take into account the
public interest aspects of the case; MERALCOs income and the
amount of money available for operating expenses - including
labor costs - are subject to State regulation. We must also keep in
mind that high operating costs will certainly and eventually be
passed on to the consuming public as MERALCO has bluntly
warned in its pleadings.
We take note of the middle ground approach employed by
the Secretary in this case which we do not necessarily find to be
the best method of resolving a wage dispute. Merely finding the
midway point between the demands of the company and the union,
and splitting the difference is a simplistic solution that fails to
recognize that the parties may already be at the limits of the wage
levels they can afford. It may lead to the danger too that neither of
the parties will engage in principled bargaining; the company may
keep its position artificially low while the union presents an
artificially high position, on the fear that a Solomonic solution
cannot be avoided. Thus, rather than encourage agreement, a
middle ground approach instead promotes a play safe attitude
that leads to more deadlocks than to successfully negotiated
CBAs.
After considering the various factors the parties cited, we
believe that the interests of both labor and management are best
served by a wage increase of P1,900.00 per month for the first
year and anotherP1,900.00 per month for the second year of the
two-year CBA term. Our reason for this is that these increases
sufficiently protects the interest of the worker as they are roughly
15% of the monthly average salary of P11,600.00.[26] They likewise
sufficiently consider the employers costs and its overall wage
structure, while at the same time, being within the range that will
not disrupt the wage trends in Philippine industries.
The records shows that MERALCO, throughout its long
years of existence, was never remiss in its obligation towards its
employees. In fact, as a manifestation of its strong commitment to
the promotion of the welfare and well-being of its employees, it has

consistently improved their compensation package. For instance,

MERALCO has granted salary increases[27] through the collective
bargaining agreement the amount of which since 1980 for both
rank-and-file and supervisory employees were as follows:
AMOUNT OF CBA
DIFFERENCE
INCREASES
CBACO RAN SUPERVISO
AMOU
PERCE
VERAGE
KRY
NT
NT
ANDFILE
1980
230.0 342.50
112.50
48.91%
0
1981
210.0 322.50
112.50 53.57
0
1982
200.0 312.50
112.50
56.2
0
5
TOTAL
640.0 977.50
337.50 52.73
0
1983
320.0 432.50
112.50 35.16
0
1984
350.0 462.50
112.50 32.14
0
1985
370.0 482.50
112.50 30.41
0
TOTAL
1,040.0 1,377.50
337.50 32.45
0
1986
860.0 972.50
112.50 13.08
0
1987
640.0 752.50
112.50 17.58
0
1988
600.0 712.50
112.50 18.75
0
TOTAL
2,100.0 2,437.50
337.50 16.07
0
1989
1,100.0 1,212.50
112.50 10.23
0
1990
1,200.0 1,312.50
112.50
9.38
0
1991
1,300.0 1,412.50
112.50
8.65
0
TOTAL
3,600.0 3,937.50
337.50
9.38
0
1992
1,400. 1,742.50
342.50
24.46
00
1993
1,350. 1,682.50
332.50
24.63
00
1994
1,150. 1,442.50
292.50
25.43
00
TOTAL
3,900. 4,867.50
967.50
24.81
00
Based on the above-quoted table, specifically under the
column RANK-AND-FILE, it is easily discernible that the total
wage increase of P3,800.00 for 1996 to 1997 which we are
granting in the instant case is significantly higher than the total
increases given in 1992 to 1994, or a span of three (3) years,
which is only P3,900.00 a month. Thus, the Secretarys grant
of P2,200.00 monthly wage increase in the assailed order is
unreasonably high a burden for MERALCO to shoulder.
We now go to the economic issues.
1. CHRISTMAS BONUS
MERALCO questions the Secretarys award of Christmas
bonuses on the ground that what it had given its employees were

special bonuses to mark or celebrate special occasions, such as

when the Asia Money Magazine recognized MERALCO as the
best managed company in Asia. These grants were given on or
about Christmas time, and the timing of the grant apparently led
the Secretary to the conclusion that what were given were
Christmas bonuses given by way of a company practice on top of
the legally required 13th month pay.
The Secretary in granting the two-month bonus, considered
the following factual finding, to wit:
We note that each of the grant mentioned in the commonly
adopted table of grants has a special description. Christmas
bonuses were given in 1988 and 1989. However, the amounts of
bonuses given differed. In 1988, it was P1,500. In 1989, it was
month salary. The use of Christmas bonus title stopped after
1989. In 1990, what was given was a cash gift of months
salary. The grants thereafter bore different titles and were for
varying amounts. Significantly, the Company explained the reason
for the 1995 bonuses and this explanation was not substantially
contradicted by the Union.
What comes out from all these is that while the Company has
consistently given some amount by way of bonuses since 1988,
these awards were not given uniformly as Christmas bonuses or
special Christmas grants although they may have been given at or
about Christmas time.
xxx

xxx

xxx

The Company is not therefore correct in its position that there is

not established practice of giving Christmas bonuses that has
ripened to the status of being a term and condition of
employment. Regardless of its nomenclature and purpose, the act
of giving this bonus in the spirit of Christmas has ripened into a
Company practice.[28]
It is MERALCOs position that the Secretary erred when he
recognized that there was an established practice of giving a twomonth Christmas bonus based on the fact that bonuses were given
on or about Christmas time. It points out that the established
practice attributed to MERALCO was neither for a considerable
period of time nor identical in either amount or purpose. The
purpose and title of the grants were never the same except for the
Christmas bonuses of 1988 and 1989, and were not in the same
amounts.
We do not agree.
As a rule, a bonus is not a demandable and enforceable
obligation;[29] it may nevertheless be granted on equitable
consideration[30] as when the giving of such bonus has been
the companys long and regular practice.[31] To be considered a
regular practice, the giving of the bonus should have been done
over a long period of time, and must be shown to have been
consistent and deliberate.[32] Thus we have ruled in National
Sugar Refineries Corporation vs. NLRC:[33]
The test or rationale of this rule on long practice requires an
indubitable showing that the employer agreed to continue giving
the benefits knowing fully well that said employees are not covered
by the law requiring payment thereof.
In the case at bar, the record shows the MERALCO, aside
from complying with the regular 13th month bonus, has further
been giving its employees an additional Christmas bonus at the

tail-end of the year since 1988. While the special bonuses differed
in amount and bore different titles, it can not be denied that these
were given voluntarily and continuously on or about Christmas
time. The considerable length of time MERALCO has been giving
the special grants to its employees indicates a unilateral and
voluntary act on its part, to continue giving said benefits knowing
that such act was not required by law.
Indeed, a company practice favorable to the employees has
been established and the payments made by MERALCO pursuant
thereto ripened into benefits enjoyed by the
employees. Consequently, the giving of the special bonus can no
longer be withdrawn by the company as this would amount to a
diminution of the employees existing benefits.[34]
We can not, however, affirm the Secretarys award of a twomonth special Christmas bonus to the employees since there was
no recognized company practice of giving a two-month special
grant. The two-month special bonus was given only in 1995 in
recognition of the employees prompt and efficient response during
the calamities. Instead, a one-month special bonus, We believe, is
sufficient, this being merely a generous act on the part of
MERALCO.
2. RICE SUBSIDY and RETIREMENT BENEFITS for
RETIREES
It appears that the Secretary of Labor originally ordered the
increase of the retirement pay, rice subsidy and medical benefits of
MERALCO retirees. This ruling was reconsidered based on the
position that retirees are no longer employees of the company and
therefore are no longer bargaining members who can benefit from
a compulsory arbitration award. The Secretary, however, ruled
that all members of the bargaining unit who retire between August
19, 1996 and November 30, 1997 (i.e., the term of the disputed
CBA under the Secretarys disputed orders) are entitled to receive
an additional rice subsidy.
The question squarely brought in this petition is whether the
Secretary can issue an order that binds the retirement fund. The
company alleges that a separate and independent trust fund is the
source of retirement benefits for MERALCO retirees, while the
union maintains that MERALCO controls these funds and may
therefore be compelled to improve this benefit in an arbitral award.
The issue requires a finding of fact on the legal personality of
the retirement fund. In the absence of any evidence on record
indicating the nature of the retirement funds legal personality, we
rule that the issue should be remanded to the Secretary for
reception of evidence as whether or not the MERALCO retirement
fund is a separate and independent trust fund. The existence of a
separate and independent juridical entity which controls an
irrevocable retirement trust fund means that these retirement funds
are beyond the scope of collective bargaining: they are
administered by an entity not a party to the collective bargaining
and the funds may not be touched without the trustees conformity.
On the other hand, MERALCO control over these funds
means that MERALCO may be compelled in the compulsory
arbitration of a CBA deadlock where it is the employer, to improve
retirement benefits since retirement is a term or condition of
employment that is a mandatory subject of bargaining.
3. EMPLOYEES COOPERATIVE
The Secretarys disputed ruling requires MERALCO to
provide the employees covered by the bargaining unit with a loan
of 1.5 Million as seed money for the employees formation of a
cooperative under the Cooperative Law, R.A. 6938. We see
nothing in this law - whether expressed or implied - that requires

employers to provide funds, by loan or otherwise, that employees

can use to form a cooperative. The formation of a cooperative is a
purely voluntary act under this law, and no party in any context or
relationship is required by law to set up a cooperative or to provide
the funds therefor. In the absence of such legal requirement, the
Secretary has no basis to order the grant of a 1.5 million loan to
MERALCO employees for the formation of a
cooperative. Furthermore, we do not see the formation of an
employees cooperative, in the absence of an agreement by the
collective bargaining parties that this is a bargainable term or
condition of employment, to be a term or condition of employment
that can be imposed on the parties on compulsory arbitration.
4. GHSIP, HMP BENEFITS FOR DEPENDENTS and
HOUSING EQUITY LOAN
MERALCO contends that it is not bound to bargain on these
benefits because these do not relate to wages, hours of work and
other terms and conditions of employment hence, the denial of
these demands cannot result in a bargaining impasse.
The GHSIP, HMP benefits for dependents and the housing
equity loan have been the subject of bargaining and arbitral
awards in the past. We do not see any reason why MERALCO
should not now bargain on these benefits. Thus, we agree with the
Secretarys ruling:
x x x Additionally and more importantly, GHSIP and HMP, aside
from being contributory plans, have been the subject of previous
rulings from this Office as bargainable matters. At this point, we
cannot do any less and must recognize that GHSIP and HMP are
matters where the union can demand and negotiate for
improvements within the framework of the collective bargaining
system.[35]
Moreover, MERALCO have long been extending these
benefits to the employees and their dependents that they now
become part of the terms and conditions of employment. In fact,
MERALCO even pledged to continue giving these
benefits. Hence, these benefits should be incorporated in the new
CBA.
With regard to the increase of the housing equity grant, we
find P60,000.00 reasonable considering the prevailing economic
crisis.
5. SIGNING BONUS
On the signing bonus issue, we agree with the positions
commonly taken by MERALCO and by the Office of the Solicitor
General that the signing bonus is a grant motivated by the goodwill
generated when a CBA is successfully negotiated and signed
between the employer and the union. In the present case, this
goodwill does not exist. In the words of the Solicitor General:
When negotiations for the last two years of the 1992-1997 CBA
broke down and the parties sought the assistance of the NCMB,
but which failed to reconcile their differences, and when petitioner
MERALCO bluntly invoked the jurisdiction of the Secretary of
Labor in the resolution of the labor dispute, whatever goodwill
existed between petitioner MERALCO and respondent union
disappeared. xxx.[36]
In contractual terms, a signing bonus is justified by and is the
consideration paid for the goodwill that existed in the negotiations
that culminated in the signing of a CBA. Without the goodwill, the
payment of a signing bonus cannot be justified and any order for
such payment, to our mind, constitutes grave abuse of

discretion. This is more so where the signing bonus is in the not

insignificant total amount of P16 Million.
6. RED-CIRCLE-RATE ALLOWANCE
An RCR allowance is an amount, not included in the basic
salary, that is granted by the company to an employee who is
promoted to a higher position grade but whose actual basic salary
at the time of the promotion already exceeds the maximum salary
for the position to which he or she is promoted. As an allowance, it
applies only to specifics individuals whose salary levels are unique
with respect to their new and higher positions. It is for these
reasons that MERALCO prays that it be allowed to maintain the
RCR allowance as a separate benefit and not be integrated in the
basic salary.
The integration of the RCR allowance in the basic salary of
the employees had consistently been raised in the past CBAs
(1989 and 1992) and in those cases, the Secretary decreed the
integration of the RCR allowance in the basic salary. We do not
see any reason why it should not be included in the present
CBA. In fact, in the 1995 CBA between MERALCO and the
supervisory union (FLAMES), the integration of the RCR allowance
was recognized. Thus, Sec. 4 of the CBA provides:
All Red-Circle-Rate Allowance as of December 1, 1995 shall be
integrated in the basic salary of the covered employees who as of
such date are receiving such allowance. Thereafter, the company
rules on RCR allowance shall continue to be observed/applied.[37]
For purposes of uniformity, we affirm the Secretarys order
on the integration of the RCR allowance in the basic salary of the
employees.
7. SICK LEAVE RESERVE OF 15 DAYS
MERALCO assails the Secretarys reduction of the sick leave
reserve benefit from 25 days to 15 days, contending that the sick
leave reserve of 15 days has reached the lowest safe level that
should be maintained to give employees sufficient buffer in the
event they fall ill.
We find no compelling reason to deviate from the Secretarys
ruling that the sick leave reserve is reduced to 15 days, with any
excess convertible to cash at the end of the year. The employee
has the option to avail of this cash conversion or to accumulate his
sick leave credits up to 25 days for conversion to cash at his
retirement or separation from the service. This arrangement is, in
fact, beneficial to MERALCO. The latter admits that the
diminution of this reserve does not seriously affect MERALCO
because whatever is in reserve are sick leave credits that are
payable to the employee upon separation from service. In fact, it
may be to MERALCOs financial interest to pay these leave credits
now under present salary levels than pay them at future higher
salary levels.[38]
8. 40-DAY UNION LEAVE
MERALCO objects to the demand increase in union leave
because the union leave granted to the union is already
substantial. It argues that the union has not demonstrated any real
need for additional union leave.
The thirty (30) days union leave granted by the Secretary, to
our mind, constitute sufficient time within which the union can carry
out its union activities such as but not limited to the election of
union officers, selection or election of appropriate bargaining
agents, conduct referendum on union matters and other unionrelated matters in furtherance of union objectives. Furthermore,

the union already enjoys a special union leave with pay for union
authorized representatives to attend work education seminars,
meetings, conventions and conferences where union
representation is required or necessary, and Paid-Time-off for
union officers, stewards and representatives for purpose of
handling or processing grievances.
9. HIGH VOLTAGE/HIGH POLE/TOWING
ALLOWANCE
MERALCO argues that there is no justification for the
increase of these allowances. The personnel concerned will not
receive any additional risk during the life of the current CBA that
would justify the increase demanded by the union. In the absence
of such risk, then these personnel deserve only the same salary
increase that all other members of the bargaining unit will get as a
result of the disputed CBA. MERALCO likewise assails the grant of
the high voltage/high pole allowance to members of the team who
are not exposed to the high voltage/high pole risks. The risks that
justify the higher salary and the added allowance are personal to
those who are exposed to those risks. They are not granted to a
team because some members of the team are exposed to the
given risks.
The increase in the high-voltage allowance (from P45.00
to P55.00), high-pole allowance (from P30.00 to P40.00), and
towing allowance is justified considering the heavy risk the
employees concerned are exposed to. The high-voltage allowance
is granted to an employee who is authorized by the company to
actually perform work on or near energized bare lines and bus,
while the high-pole allowance is given to those authorized to climb
poles on a height of at least 60 feet from the ground to work
thereat. The towing allowance, on the other hand, is granted to the
stockman drivers who tow trailers with long poles and equipment
on board. Based on the nature of the job of these concerned
employees, it is imperative to give them these additional
allowances for taking additional risks. These increases are not
even commensurate to the danger the employees concerned are
subjected to. Besides, no increase has been given by the
company since 1992.[39]
We do not, however, subscribe to the Secretarys order
granting these allowances to the members of the team who are not
exposed to the given risks. The reason is obvious- no risk, no
pay. To award them the said allowances would be manifestly
unfair for the company and even to those who are exposed to the
risks, as well as to the other members of the bargaining unit who
do not receive the said allowances.
10.

BENEFITS FOR COLLECTORS

MERALCO opposes the Secretarys grant of benefits for

collectors on the ground that this is grossly unreasonable both in
scope and on the premise it is founded.
We have considered the arguments of the opposing parties
regarding these benefits and find the Secretarys ruling on the (a)
lunch allowance; (b) disconnection fee for delinquent accounts; (c)
voluntary performance of other work at the instance of the
Company; (d) bobcat belt bags; and (e) reduction of quota and
MAPL during typhoons and other force majeure events,
reasonable considering the risks taken by the company personnel
involved, the nature of the employees functions and
responsibilities and the prevailing standard of living. We do not
however subscribe to the Secretarys award on the following:
(a) Reduction of quota and MAPL when the collector is on
sick leave because the previous CBA has already

provided for a reduction of this demand. There is no

need to further reduce this.
(b) Deposit of cash bond at MESALA because this is no
longer necessary in view of the fact that collectors are no
longer required to post a bond.
We shall now resolve the non-economic issues.
1. SCOPE OF THE BARGAINING UNIT
The Secretarys ruling on this issue states that:
a. Scope of the collective bargaining unit. The union is
demanding that the collective bargaining unit shall be composed of
all regular rank and file employees hired by the company in all its
offices and operating centers through its franchise and those it
may employ by reason of expansion, reorganization or as a result
of operational exigencies. The law is that only managerial
employees are excluded from any collective bargaining unit and
supervisors are now allowed to form their own union (Art. 254 of
the Labor Code as amended by R.A. 6715). We grant the union
demand.
Both MERALCO and the Office of the Solicitor General
dispute this ruling because if disregards the rule We have
established on the exclusion of confidential employee from the
rank and file bargaining unit.
In Pier 8 Arrastre vs. Confesor and General Maritime and
Stevedores Union,[40] we ruled that:
Put another way, the confidential employee does not share in the
same community of interest that might otherwise make him
eligible to join his rank and file co-workers, precisely because of a
conflict in those interests.
Thus, in Metrolab Industries vs. Roldan-Confesor,[41] We
ruled:
..that the Secretarys order should exclude the confidential
employees from the regular rank and file employees qualified to
become members of the MEWA bargaining unit.
From the foregoing disquisition, it is clear that employees
holding a confidential position are prohibited from joining the union
of the rank and file employees.
2. ISSUE OF UNION SECURITY
The Secretary in his Order of August 19, 1996,[42] ruled that:
b. Union recognition and security. The union is proposing that it
be recognized by the Company as sole and exclusive bargaining
representative of the rank and file employees included in the
bargaining unit for the purpose of collective bargaining regarding
rates of pay, wages, hours of work and other terms and conditions
of employment. For this reason, the Company shall agree to meet
only with the Union officers and its authorized representatives on
all matters involving the Union as an organization and all issues
arising from the implementation and interpretation of the new
CBA. Towards this end, the Company shall not entertain any
individual or group of individuals on matters within the exclusive
domain of the Union.

Additionally, the Union is demanding that the right of all rank and
file employees to join the Union shall be recognized by the
Company. Accordingly, all rank and file employees shall join the
union.
xxx

xxx

xxx

These demands are fairly reasonable. We grant the same in

accordance with the maintenance of membership principle as a
form of union security."
The Secretary reconsidered this portion of his original order
when he said in his December 28, 1996 order that:
x x x. when we decreed that all rank and file employees shall join
the Union, we were actually decreeing the incorporation of a
closed shop form of union security in the CBA between the
parties. In Ferrer v. NLRC, 224 SCRA 410, the Supreme Court
ruled that a CBA provision for a closed shop is a valid form of
union security and is not a restriction on the right or freedom of
association guaranteed by the Constitution, citing Lirag v. Blanco,
109 SCRA 87.
MERALCO objected to this ruling on the grounds that: (a) it
was never questioned by the parties; (b) there is no evidence
presented that would justify the restriction on employee's union
membership; and (c) the Secretary cannot rule on the union
security demand because this is not a mandatory subject for
collective bargaining agreement.
We agree with MERALCOs contention.
An examination of the records of the case shows that the
union did not ask for a closed shop security regime; the Secretary
in the first instance expressly stated that a maintenance of
membership clause should govern; neither MERALCO nor MEWA
raised the issue of union security in their respective motions for
reconsideration of the Secretarys first disputed order; and that
despite the parties clear acceptance of the Secretarys first ruling,
the Secretary motu proprio reconsidered his maintenance of
membership ruling in favor of the more stringent union shop
regime.
Under these circumstances, it is indubitably clear that the
Secretary gravely abused his discretion when he ordered a union
shop in his order of December 28, 1996. The distinctions between
a maintenance of membership regime from a closed shop and their
consequences in the relationship between the union and the
company are well established and need no further elaboration.
Consequently, We rule that the maintenance of membership
regime should govern at MERALCO in accordance with the
Secretarys order of August 19, 1996 which neither party disputed.
3. THE CONTRACTING OUT ISSUE
This issue is limited to the validity of the requirement that the
union be consulted before the implementation of any contracting
out that would last for 6 months or more. Proceeding from our
ruling inSan Miguel Employees Union-PTGWO vs
Bersamina,[43] (where we recognized that contracting out of work
is a proprietary right of the employer in the exercise of an inherent
management prerogative) the issue we see is whether the
Secretarys consultation requirement is reasonable or unduly
restrictive of the companys management prerogative. We note
that the Secretary himself has considered that management should
not be hampered in the operations of its business when he said
that:

We feel that the limitations imposed by the union advocates are

too specific and may not be applicable to the situations that the
company and the union may face in the future. To our mind, the
greater risk with this type of limitation is that it will tend to curtail
rather than allow the business growth that the company and the
union must aspire for. Hence, we are for the general limitations we
have stated above because they will allow a calibrated response to
specific future situations the company and the union may face.[44]

Uniform Committee and other committees of a similar

nature. Certainly, such participation by the Union in the said
committees is not in the nature of a co-management control of the
business of MERALCO. What is granted by the Secretary
is participation and representation. Thus, there is no impairment
of management prerogatives.

Additionally, We recognize that contracting out is not

unlimited; rather, it is a prerogative that management enjoys
subject to well-defined legal limitations. As we have previously
held, the company can determine in its best business judgment
whether it should contract out the performance of some of its work
for as long as the employer is motivated by good faith, and the
contracting out must not have been resorted to circumvent the law
or must not have been the result of malicious or arbitrary
action.[45] The Labor Code and its implementing rules also contain
specific rules governing contracting out (Department of Labor
Order No. 10, May 30, 1997, Sections. 1-25).

MERALCO also decries the Secretarys ruling in both the

assailed Orders that-

Given these realities, we recognize that a balance already

exist in the parties relationship with respect to contracting out;
MERALCO has its legally defined and protected management
prerogatives while workers are guaranteed their own protection
through specific labor provisions and the recognition of limits to the
exercise of management prerogatives. From these premises, we
can only conclude that the Secretarys added requirement only
introduces an imbalance in the parties collective bargaining
relationship on a matter that the law already sufficiently
regulates. Hence, we rule that the Secretarys added requirement,
being unreasonable, restrictive and potentially disruptive should be
struck down.
4. UNION REPRESENTATION IN COMMITTEES
As regards this issue, We quote with approval the holding of
the Secretary in his Order of December 28, 1996, to wit:
We see no convincing reason to modify our original Order on
union representation in committees. It reiterates what the Article
211 (A)(g) of the Labor Codes provides: To ensure the
participation of workers in decision and policy-making processes
affecting their rights, duties and welfare. Denying this opportunity
to the Union is to lay the claim that only management has the
monopoly of ideas that may improve management strategies in
enhancing the Companys growth. What every company should
remember is that there might be one among the Union members
who may offer productive and viable ideas on expanding the
Companys business horizons. The unions participation in such
committees might just be the opportune time for dormant ideas to
come forward. So, the Company must welcome this development
(see also PAL v. NLRC, et. al., G.R. 85985, August 13, 1995). It
must be understood, however, that the committees referred to here
are the Safety Committee, the Uniform Committee and other
committees of a similar nature and purpose involving personnel
welfare, rights and benefits as well as duties.
We do not find merit in MERALCOs contention that the
above-quoted ruling of the Secretary is an intrusion into the
management prerogatives of MERALCO. It is worthwhile to note
that all the Union demands and what the Secretarys order granted
is that the Union be allowed to participate in policy formulation and
decision-making process on matters affecting the Union
members right, duties and welfare as required in Article 211
(A)(g) of the Labor Code. And this can only be done when the
Union is allowed to have representatives in the Safety Committee,

5. INCLUSION OF ALL TERMS AND CONDITIONS

IN THE CBA

All other benefits being enjoyed by the companys employees but

which are not expressly or impliedly repealed in this new
agreement shall remain subsisting and shall likewise be included in
the new collective bargaining agreement to be signed by the
parties effective December 1, 1995.[46]
claiming that the above-quoted ruling intruded into the employers
freedom to contract by ordering the inclusion in the new CBA all
other benefits presently enjoyed by the employees even if they are
not incorporated in the new CBA. This matter of inclusion,
MERALCO argues, was never discussed and agreed upon in the
negotiations; nor presented as issues before the Secretary; nor
were part of the previous CBAs between the parties.
We agree with MERALCO.
The Secretary acted in excess of the discretion allowed him
by law when he ordered the inclusion of benefits, terms and
conditions that the law and the parties did not intend to be reflected
in their CBA.
To avoid the possible problems that the disputed orders may
bring, we are constrained to rule that only the terms and conditions
already existing in the current CBA and was granted by the
Secretary (subject to the modifications decreed in this decision)
should be incorporated in the CBA, and that the Secretarys
disputed orders should accordingly be modified.
6. RETROACTIVITY OF THE CBA
Finally, MERALCO also assails the Secretarys order that the
effectivity of the new CBA shall retroact to December 1, 1995, the
date of the commencement of the last two years of the effectivity of
the existing CBA. This retroactive date, MERALCO argues, is
contrary to the ruling of this Court in Pier 8 Arrastre and
Stevedoring Services, Inc. vs. Roldan-Confessor[47] which
mandates that the effective date of the new CBA should be the
date the Secretary of Labor has resolved the labor disputes.
On the other hand, MEWA supports the ruling of the
Secretary on the theory that he has plenary power and discretion
to fix the date of effectivity of his arbitral award citing our ruling
in St. Lukes Medical Center, Inc. vs. Torres.[48] MEWA also
contends that if the arbitral award takes effect on the date of the
Secretary Labors ruling on the parties motion for reconsideration
(i.e., on December 28, 1996), an anomaly situation will result when
CBA would be more than the 5-year term mandated by Article 253A of the Labor Code.
However, neither party took into account the factors
necessary for a proper resolution of this aspect. Pier 8, for
instance, does not involve a mid-term negotiation similar to this
case, while St. Lukes does not take the hold over principle into
account, i.e., the rule that although a CBA has expired, it continues
to have legal effects as between the parties until a new CBA has
been entered into.[49]

Article 253-A serves as the guide in determining when the

effectivity of the CBA at bar is to take effect. It provides that the
representation aspect of the CBA is to be for a term of 5 years,
while
x x x [A]ll other provisions of the Collective Bargaining Agreement
shall be re-negotiated not later than 3 years after its
execution. Any agreement on such other provisions of the
Collective Bargaining Agreement entered into within 6 months from
the date of expiry of the term of such other provisions as fixed in
such Collective Bargaining Agreement shall retroact to the day
immediately following such date. If such agreement is entered into
beyond 6 months, the parties shall agree on the duration of the
effectivity thereof. x x x.
Under these terms, it is clear that the 5-year term
requirement is specific to the representation aspect. What the law
additionally requires is that a CBA must be re-negotiated within 3
years after its execution. It is in this re-negotiation that gives rise
to the present CBA deadlock.
If no agreement is reached within 6 months from the expiry
date of the 3 years that follow the CBA execution, the law
expressly gives the parties - not anybody else - the discretion to fix
the effectivity of the agreement.
Significantly, the law does not specifically cover the situation
where 6 months have elapsed but no agreement has been
reached with respect to effectivity. In this eventuality, we hold that
any provision of law should then apply for the law abhors a
vacuum.[50]
One such provision is the principle of hold over, i.e., that in
the absence of a new CBA, the parties must maintain the status
quo and must continue in full force and effect the terms and
conditions of the existing agreement until a new agreement is
reached.[51] In this manner, the law prevents the existence of a gap
in the relationship between the collective bargaining
parties. Another legal principle that should apply is that in the
absence of an agreement between the parties, then, an arbitrated
CBA takes on the nature of any judicial or quasi-judicial award; it
operates and may be executed only respectively unless there are
legal justifications for its retroactive application.
Consequently, we find no sufficient legal ground on the other
justification for the retroactive application of the disputed CBA, and
therefore hold that the CBA should be effective for a term of 2
years counted from December 28, 1996 (the date of the Secretary
of Labors disputed order on the parties motion for
reconsideration) up to December 27, 1999.
WHEREFORE, the petition is granted and the orders of
public respondent Secretary of Labor dated August 19, 1996 and
December 28, 1996 are set aside to the extent set forth
above. The parties are directed to execute a Collective Bargaining
Agreement incorporating the terms and conditions contained in the
unaffected portions of the Secretary of Labors order of August 19,
1996 and December 28, 1996, and the modifications set forth
above. The retirement fund issue is remanded to the Secretary of
Labor for reception of evidence and determination of the legal
personality of the MERALCO retirement fund.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Melo, Kapunan, and Pardo,
JJ., concur.

[G.R. No. 124224. March 17, 2000]

NEW PACIFIC TIMBER SUPPLY COMPANY, CO.,
INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, MUSIB M. BUAT, LEON G. GONZAGA, JR., ET
AL., NATIONAL FEDERATION OF LABOR, MARIANO AKILIT
and 350 OTHERS, respondents. Juris sc
DECISION
KAPUNAN, J.:
May the term of a Collective Bargaining Agreement (CBA) as to its
economic provisions be extended beyond the term expressly
stipulated therein, and, in the absence of a new CBA, even beyond
the three-year period provided by law? Are employees hired after
the stipulated term of a CBA entitled to the benefits provided
thereunder?
These are the issues at the heart of the instant petition
for certiorari with prayer for the issuance of preliminary injunction
and/or temporary restraining order filed by petitioner New Pacific
Timber & Supply Company, Incorporated against the National
Labor Relations Commission (NLRC), et al. and the National
Federation of Labor, et al.
The antecedent facts, as found by the NLRC, are as follows:
The National Federation of Labor (NFL, for brevity) was certified as
the sole and exclusive bargaining representative of all the regular
rank-and-file employees of New Pacific Timber & Supply Co., Inc.
(hereinafter referred to as petitioner Company).[1] As such, NFL
started to negotiate for better terms and conditions of employment
for the employees in the bargaining unit which it represented.
However, the same was allegedly met with stiff resistance by
petitioner Company, so that the former was prompted to file a
complaint for unfair labor practice (ULP) against the latter on the
ground of refusal to bargain collectively.[2]Misj uris
On March 31, 1987, then Executive Labor Arbiter Hakim S.
Abdulwahid issued an order declaring (a) herein petitioner
Company guilty of ULP; and (b) the CBA proposals submitted by
the NFL as the CBA between the regular rank-and-file employees
in the bargaining unit and petitioner Company.[3]
Petitioner Company appealed the above order to the NLRC. On
November 15, 1989, the NLRC rendered a decision dismissing the
appeal for lack of merit. A motion for reconsideration thereof was,
likewise, denied in a Resolution, dated November 12, 1990.[4]
Unsatisfied, petitioner Company filed a petition for certiorari with
this Court. But the Court dismissed said petition in a Resolution,
dated January 21, 1991.[5]
Thereafter, the records of the case were remanded to the
arbitration branch of origin for the execution of Labor Arbiter
Abdulwahid's Order, dated March 31, 1987, granting monetary
benefits consisting of wage increases, housing allowances,
bonuses, etc. to the regular rank-and-file employees. Following a
series of conferences to thresh out the details of computation,
Labor Arbiter Reynaldo S. Villena issued an Order, dated October
18, 1993, directing petitioner Company to pay the 142 employees
entitled to the aforesaid benefits the respective amounts due them
under the CBA. Petitioner Company complied; and, the

corresponding quitclaims were executed. The case was

considered closed following NFL's manifestation that it will no
longer appeal the October 18, 1993 Order of Labor Arbiter
Villena.[6]Jj lex
However, notwithstanding such manifestation, a "Petition for
Relief" was filed in behalf of 186 of the private respondents
"Mariano J. Akilit and 350 others" on May 12, 1994. In their
petition, they claimed that they were wrongfully excluded from
enjoying the benefits under the CBA since the agreement with NFL
and petitioner Company limited the CBA's implementation to only
the 142 rank-and-file employees enumerated. They claimed that
NFL's misrepresentations had precluded them from appealing their
exclusion.[7]
Treating the petition for relief as an appeal, the NLRC entertained
the same. On August 4, 1994, said commission issued a
resolution[8] declaring that the 186 excluded employees "form part
and parcel of the then existing rank-and-file bargaining unit" and
were, therefore, entitled to the benefits under the CBA. The NLRC
held, thus:
WHEREFORE, the appeal is hereby granted
and the Order of the Labor arbiter dated
October 18, 1993 is hereby Set
Aside and Vacated. In lieu hereof, a new Order
is hereby issued directing respondent New
Pacific Timber & Supply Co., Inc. to pay all its
regular rank-and-file workers their wage
differentials and other benefits arising from the
decreed CBA as explained above, within ten
(10) days from receipt of this order.
SO ORDERED.[9]
Petitioner Company filed a motion for reconsideration of the
aforequoted resolution.
Meanwhile, four separate groups of the private respondents,
including the original 186 who had filed the "Petition for Relief" filed
individual money claims, docketed as NLRC Cases Nos. M001991-94 to M-001994-94, before the Arbitration Branch of the
NLRC, Cagayan de Oro City. However, Labor Arbiter Villena
dismissed these cases in Orders, dated March 11, 1994; April 13,
1994; March 9, 1994; and, May 10, 1994. The employees
appealed the respective dismissal of their complaints to the NLRC.
The latter consolidated these appeals with the aforementioned
motion for reconsideration filed by petitioner Company. New miso
On February 29, 1996, the NLRC issued a resolution, the
dispositive portion of which reads as follows:
WHEREFORE, the instant petition for
reconsideration of respondent is Denied for
lack of merit and the Resolution of this
Commission dated August 4,
1994 Sustained. The separate orders of the
Labor Arbiter dated March 11, 1994, April 13,
1994, March 9, 1994 and May 10, 1994,
respectively, in NLRC Cases Nos. M-00199194 to M-001994-94 are Set
Aside and Vacated for lack of legal bases.
Conformably, respondent New Pacific Timber
and Supply Co., Inc. is hereby directed to pay

individual complainants their CBA benefits in

the aggregate amount of P13,559,510.37, the
detailed computation thereof is contained in
Annex "A" which forms an integral part of this
resolution, plus ten (10%) percent thereof as
Attorney's fees.

Petitioner Company further contends that in filing separate

complaints and/or money claims at the arbitration level in spite of
their pending petition for relief and in spite of the final order, dated
October 18, 1993, in NLRC Case No.RAB-IX-0334-82, the private
respondents were in fact forum-shopping, an act which is
proscribed as trifling with the courts and abusing their practices. S
djad

SO ORDERED.[10]
Hence, the instant petition wherein petitioner Company raises the
following issues: Acct mis
I
THE PUBLIC RESPONDENT NLRC
COMMITTED GRAVE ABUSE OF
DISCRETION IN ALLOWING THE "PETITION
FOR RELIEF" TO PROSPER.
II
THE PUBLIC RESPONDENT NLRC
COMMITTED GRAVE ABUSE OF
DISCRETION IN RULING THAT PRIVATE
RESPONDENTS MARIANO AKILIT AND 350
OTHERS ARE ENTITLED TO BENEFITS
UNDER THE COLLECTIVE BARGAINING
AGREEMENT IN SPITE OF THE FACT THAT
THEY WERE NOT EMPLOYED BY THE
PETITIONER MUCH LESS WERE THEY
MEMBERS OF THE BARGAINING UNIT
DURING THE TERM OF THE CBA. Mis act
III
PUBLIC RESPONDENT NLRC COMMITTED
GRAVE ABUSE OF DISCRETION IN MAKING
FACTUAL FINDINGS WITHOUT BASIS.

Anent the second issue, petitioner argues that the private

respondents are not entitled to the benefits under the CBA
because employees hired after the term of a CBA are not parties to
the agreement, and therefore, may not claim benefits thereunder,
even if they subsequently become members of the bargaining unit.
As for the term of the CBA, petitioner maintains that Article 253 of
the Labor Code refers to the continuation in full force and effect of
the previous CBA's terms and conditions. By necessity, it could not
possibly refer to terms and conditions which, as expressly
stipulated, ceased to have force and effect.[14]
According to petitioner, the provision on wage increase in the 1981
to 1984 CBA between petitioner Company and NFL provided for
yearly wage increases. Logically, these provisions ended in the
year 1984 - the last year that the economic provisions of the CBA
were, pursuant to contract and law, effective. Petitioner claims that
there is no contractual basis for the grant of CBA benefits such as
wage increases in 1985 and subsequent years, since the CBA
stipulates only the increases for the years 1981 to 1984.
Moreover, petitioner alleges that it was through no fault of theirs
that no new CBA was entered pending appeal of the decision in
NLRC Case No. RAB-IX-0334-82.
Finally, petitioner Company claims that it was never given the
opportunity to submit a counter-computation of the benefits
supposedly due the private respondents. Instead, the NLRC
allegedly relied on the self-serving computations of private
respondents. Sppedsc
Petitioner's contentions are untenable.

IV
THE DISPOSITIVE PORTIONS OF THE
ASSAILED RESOLUTIONS ARE DEFECTIVE
AND/OR REVEAL THE GRAVE ABUSE OF
DISCRETION COMMITTED BY PUBLIC
RESPONDENT.[11]
Petitioner Company contends that a "Petition for Relief" is not the
proper mode of seeking a review of a decision rendered by the
arbitration branch of the NLRC.[12] According to the petitioner,
nowhere in the Labor Code or in the NLRC Rules of Procedure is
there such a pleading. Rather, the remedy of a party aggrieved by
an unfavorable ruling of the labor arbiter is to appeal said judgment
to the NLRC.[13]
Petitioner asseverates that even assuming that the NLRC correctly
treated the petition for relief as an appeal, still, it should not have
allowed the same to prosper, because the petition was filed
several months after the ten-day reglementary period for filing an
appeal had expired; and, therefore, it failed to comply with the
requirements of an appeal under the Labor Code and the NLRC
Rules of Procedure.

We find no grave abuse of discretion on the part of the NLRC,

when it entertained the petition for relief filed by the private
respondents and treated it as an appeal. even if it was filed beyond
the reglementary period for filing an appeal. Ordinarily, once a
judgment has become final and executory, it can no longer be
disturbed, altered or modified. However, a careful scrutiny of the
facts and circumstances of the instant case warrants liberality in
the application of technical rules and procedure. It would be a
greater injustice to deprive the concerned employees of the
monetary benefits rightly due them because of a circumstance
over which they had no control. As stated above, private
respondents, in their petition for relief, claimed that they were
wrongfully excluded from the list of those entitled to the CBA
benefits by their union, NFL, without their knowledge; and,
because they were under the impression that they were ably
represented, they were not able to appeal their case on time. C
alrsc
The Supreme Court has allowed appeals from decisions of the
labor arbiter to the NLRC, even if filed beyond the reglementary
period, in the interest of justice.[15] Moreover, under Article 218 (c)
of the Labor Code, the NLRC may, in the exercise of its appellate
powers, "correct, amend or waive any error, defect or irregularity
whether in substance or in form." Further, Article 221 of the same

provides that: "In any proceeding before the Commission or any of

the Labor Arbiters, the rules of evidence prevailing in courts of law
or equity shall not be controlling and it is the spirit and intention of
this Code that the Commission and its members and the Labor
Arbiters shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process.
x x x"[16]
Anent the issue of whether or not the term of an existing CBA,
particularly as to its economic provisions, can be extended beyond
the period stipulated therein, and even beyond the three-year
period prescribed by law, in the absence of a new agreement,
Article 253 of the Labor Code explicitly provides:
ART. 253. Duty to bargain collectively when
there exists a collective bargaining
agreement. - When there is a collective
bargaining agreement, the duty to bargain
collectively shall also mean that neither party
shall terminate nor modify such agreement
during its lifetime. However, either party can
serve a written notice to terminate or modify
the agreement at least sixty (60) days prior to
its expiration date. It shall be the duty of both
parties to keep the status quo and to continue
in full force and effect the terms and conditions
of the existing agreement during the 60-day
period and/or until a new agreement is reached
by the parties. (Underlining supplied. )
It is clear from the above provision of law that until a new
Collective Bargaining Agreement has been executed by and
between the parties, they are duty-bound to keep the status
quo and to continue in full force and effect the terms and
conditions of the existing agreement. The law does not provide for
any exception nor qualification as to which of the economic
provisions of the existing agreement are to retain force and effect;
therefore, it must be understood as encompassing all the terms
and conditions in the said agreement. Sccal r
In the case at bar, no new agreement was entered into by and
between petitioner Company and NFL pending appeal of the
decision in NLRC Case No. RAB-IX-0334-82; nor were any of the
economic provisions and/or terms and conditions pertaining to
monetary benefits in the existing agreement modified or altered.
Therefore, the existing CBA in its entirety, continues to have legal
effect.
In a recent case, the Court had occassion to rule that Articles 253
and 253-A[17] mandate the parties to keep the status quo and to
continue in full force and effect the terms and conditions of the
existing agreement during the 60-day period prior to the expiration
of the old CBA and/or until a new agreement is reached by the
parties. Consequently, the automatic renewal clause provided for
by the law, which is deemed incorporated in all CBA's, provides the
reason why the new CBA can only be given a prospective
effect.[18]Calrsp ped
In the case of Lopez Sugar Corporation vs. Federation of Free
Workers, et.al,[19] this Court reiterated the rule that although a CBA
has expired, it continues to have legal effects as between the
parties until a new CBA has been entered into. It is the duty of both
parties to the CBA to keep the status quo, and to continue in full
force and effect the terms and conditions of the existing agreement

during the 60-day period and/or until a new agreement is reached

by the parties.[20]
To rule otherwise, i.e., that the economic provisions of the existing
CBA in the instant case ceased to have force and effect in the year
1984, would be to create a gap during which no agreement would
govern, from the time the old contract expired to the time a new
agreement shall have been entered into. For if, as contended by
the petitioner, the economic provisions of the existing CBA were to
have no legal effect, what agreement as to wage increases and
other monetary benefits would govern at all? None, it would seem,
if we are to follow the logic of petitioner Company. Consequently,
the employees from the year 1985 onwards would be deprived of a
substantial amount of monetary benefits which they could have
enjoyed had the terms and conditions of the CBA remained in
force and effect. Such a situation runs contrary to the very intent
and purpose of Articles 253 and 253-A of the Labor Code which is
to curb labor unrest and to promote industrial peace, as can be
gleaned from the discussions of the legislators leading to the
passage of said laws, thus:
HON. CHAIRMAN HERRERA: Pag nag-survey
tayo sa mga unyon, ganoon ang
mangyayari. And I think our responsibility here
is to create a legal framework to promote
industrial peace and to develop responsible
and fair labor movement.
HON. CHAIRMAN VELOSO: In other words,
the longer the period of the effectivity.... Sce
dp
xxx
HON. CHAIRMAN VELOSO: (continuing).... in
other words, the longer period of effectivity of
the CBA, the better for industrial peace.
xxx.[21]
Having established that the CBA between petitioner Company and
NFL remained in full force and effect even beyond the stipulated
term, in the absence of a new agreement; and, therefore, that the
economic provisions such as wage increases continued to have
legal effect, we are now faced with the question of who are entitled
to the benefits provided thereunder.
Petitioner Company insists that the rank-and-file employees hired
after the term of the CBA inspite of their subsequent membership
in the bargaining unit, are not parties to the agreement, and
certainly may not claim the benefits thereunder.
We do not agree. In a long line of cases, this Court has held that
when a collective bargaining contract is entered into by the union
representing the employees and the employer, even the nonmember employees are entitled to the benefits of the contract. To
accord its benefits only to members of the union without any valid
reason would constitute undue discrimination against
nonmembers.[22] It is even conceded, that a laborer can claim
benefits from a CBA entered into between the company and the
union of which he is a member at the time of the conclusion of the
agreement, after he has resigned from said union.[23]Edp sc

In the same vein, the benefits under the CBA in the instant case
should be extended to those employees who only became such
after the year 1984. To exclude them would constitute undue
discrimination and deprive them of monetary benefits they would
otherwise be entitled to under a new collective bargaining contract
to which they would have been parties. Since in this particular
case, no new agreement had been entered into after the CBA's
stipulated term, it is only fair and just that the employees hired
thereafter be included in the existing CBA. This is in consonance
with our ruling that the terms and conditions of a collective
bargaining agreement continue to have force and effect beyond
the stipulated term when no new agreement is executed by and
between the parties to avoid or prevent the situation where no
collective bargaining agreement at all would govern between the
employer company and its employees.
Anent the other issues raised by petitioner Company, the Court
finds that these pertain to questions of fact that have already been
passed upon by the NLRC. It is axiomatic that, the factual findings
of the National Labor Relations Commission, which have acquired
expertise because its jurisdiction is confined to specific matters,
are accorded respect and finality by the Supreme Court, when
these are supported by substantial evidence. A perusal of the
assailed resolution reveals that the same was reached on the
basis of the required quantum of evidence.
WHEREFORE, in view of the foregoing, the instant petition
for certiorari is hereby DISMISSED for lack of merit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Ynares-Santiago,
JJ., concur.
Pardo, J., on official business abroad. Ed p

[G.R. No. 111809. May 5, 1997]

MINDANAO TERMINAL AND BROKERAGE SERVICE,
INC., petitioner, vs. HON. MA. NIEVES ROLDANCONFESOR, in her capacity as Secretary of Labor
and Employment, and ASSOCIATED LABOR UNIONS
(ALU-TUCP), respondents.
DECISION
MENDOZA, J.:
This is a petition for certiorari to set aside the order of
respondent Honorable Secretary of Labor and Employment,
declaring (1) wage increases granted by petitioner to its employees
not creditable as compliance by the company with future mandated
wage increases, and (2) the increases to be retroactive, in the
case of the fourth year wage increase, to August 1, 1992 to be
implemented until July 31, 1993 and, in the case of the fifth year
wage increase, to August 1, 1993 to be implemented until the
expiration of the CBA on July 31, 1994.
Petitioner Mindanao Terminal and Brokerage Service, Inc.,
(hereafter referred to as the Company) and respondent Associated
Labor Unions, (hereafter referred to as the Union) entered into a
collective bargaining agreement for a period of five (5) years,
starting on August 1, 1989 and ending July 31, 1994.
On the third year of the CBA on August 1, 1992, the
Company and the Union met to renegotiate the provisions of the
CBA for the fourth and fifth years. The parties, however, failed to
resolve some of their differences, as a result of which a deadlock
developed.
On November 12, 1992, a formal notice of deadlock was
sent to the Company on the following issues: wages, vacation
leave, sick leave, hospitalization, optional retirement, 13th month
pay and signing bonus.
On November 18, 1992, the Company announced a costcutting or retrenchment program.
Charging unfair labor practice and citing the deadlock in the
negotiations, the Union filed, on December 3, 1992, a notice of
strike with the National Conciliation and Mediation Board (NCMB).
On December 18, 1992, as a result of a conference called by
the NCMB, the Union and the Company went back to the
bargaining table and agreed on the following provisions:
a. Wage Increase (Article V, Section 2, CBA) - P3.00/day for the
fourth year of the CBA and P3.00/day for the fifth year of the CBA;
b. Vacation and Sick Leaves (Article VII, Section 1(c), CBA) 1,100 hours of aggregate service instead of the existing 1,500
hours within a year to be entitled to leave benefits but subject to
reversion to the previous CBA if majority of the gangs average
eight (8) vessels a month;
c. Hospitalization (Article VIII, Section 1, CBA) - Maximum
aggregate of 1,100 hours instead of the 1,500 hours and up to be
entitled to the benefit of P2,500.00 with the lower brackets
adjusted accordingly but subject to reversion to the previous CBA if
majority of the gangs average eight (8) vessels a month;
d. 13th Month Pay (Article XIII, Section 1, CBA) - Average of six
(6) vessels instead of the existing eight (8) vessels to be entitled to

eleven (11) days basic pay but subject to reversion to the previous
CBA if majority of the gangs average eight (8) vessels a month;
e. Signing bonus; and
f. Seniority.
The agreement left only one issue for resolution of the
parties, namely, retirement. Even this issue was soon settled as
the parties met before the NCMB on January 14, 1993 and then
agreed on an improved Optional Retirement Clause by giving the
employees the option to retire after rendering eighteen (18) years
of service instead of the previous twenty (20) years, and granting
the employees retirement benefits equivalent to sixteen (16) days
for every year of service. Thus, as the Med-Arbiter noted in the
record of the January 14, 1993 conference, the issues raised by
the notice of strike had been settled and said notice is thus
terminated.
But no sooner had he stated this than the Company claimed
that the wage increases which it had agreed to give to the
employees should be creditable as compliance with future
mandated wage increases. In addition, it maintained that such
increases should not be retroactive.
Reacting to this development, the Union again filed a Notice
of Strike on January 28, 1993, with the NCMB. On March 7, 1993,
the Union staged a strike.
The NCMB tried to settle the issues of creditability and
retroactivity, calling for this purpose a conciliation conference on
March 9, 1993. As conciliation proved futile, the Company
petitioned respondent Secretary of Labor and Employment
(hereafter Secretary of Labor) to assume jurisdiction over the
dispute. On March 10, 1993, respondent assumed jurisdiction
over the dispute and ordered the parties to submit their respective
position papers on the two unresolved issues.
After submission by the parties of their position papers, the
Secretary of Labor issued an Order dated May 14, 1993, ordering
the Company and the Union to incorporate into their existing
collective bargaining agreement all improvements reached by them
in the course of renegotiations. The Secretary of Labor held that
the wage increases for the fourth and fifth years of the CBA were
not to be credited as compliance with future mandated
increases. In addition, the fourth year wage increase was to be
retroactive to August 1992 and was to be implemented until July
31, 1993, while the fifth year wage increase was to take effect on
August 1, 1993 until the expiration of the CBA.[1]
On May 31, 1993, the Company sought reconsideration of
the May 14, 1993 order. The motion was denied for lack of merit
by the Secretary of Labor in a resolution dated July 7,
1993. Hence, this petition for certiorari, alleging grave abuse of
discretion on the part of respondent Secretary of Labor.
The petitioner contends that respondent erred in making the
fourth year wage increase retroactive to August 1, 1992. It denies
the power of the Secretary of Labor to decree retroaction of the
wage increases, as the respondent herself had stated in her order
subject of this petition, that it had been more than six (6) months
since the expiration of the third anniversary of the CBA and,
therefore, the automatic renewal clause of Art. 253-A of the Labor
Code had no application. Although petitioner originally opposed
giving retroactive effect to their agreement, it subsequently
modified its stand and agreed that the fourth year wage increase
and the other provisions of the CBA be made retroactive to the

date the Secretary of Labor assumed jurisdiction of the dispute on

March 10, 1993.
The petition is without merit. Art. 253-A of the Labor Code
reads:
Terms of a collective bargaining agreement. - Any Collective
Bargaining Agreement that the parties may enter into shall, insofar
as the representation aspect is concerned, be for a term of five (5)
years. No petition questioning the majority status of the incumbent
bargaining agent shall be entertained and no certification election
shall be conducted by the Department of Labor and Employment
outside of the sixty-day period immediately before the date of
expiry of such five year term of the Collective Bargaining
Agreement. All other provisions of the Collective
Bargaining Agreement shall be renegotiated not later than three
(3) years after its execution. Any agreement on such other
provisions of the Collective Bargaining Agreement entered into
within six (6) months from the date of expiry of the term of such
other provisions as fixed in such Collective Bargaining Agreement,
shall retroact to the day immediately following such date. If any
such agreement is entered into beyond six months, the parties
shall agree on the duration of retroactivity thereof. In case of a
deadlock in the renegotiation of the collective bargaining
agreement, the parties may exercise their rights under this Code.
The respondent indeed stated in her order of May 14, 1993
that this case is clearly beyond the scope of the automatic
renewal clause,[2] but she also stated in the same order that the
parties have reached an agreement on all the renegotiated
provisions of the CBA on January 14, 1993, i.e., within six (6)
months of the expiration of the third year of the CBA.
The signing of the CBA is not determinative of the question
whether the agreement was entered into within six months from
the date of expiry of the term of such other provisions as fixed in
such collective bargaining agreement within the contemplation of
Art. 253-A.
As already stated, on November 12, 1992, the Union sent
the Company a notice of deadlock in view of their inability to
reconcile their positions on the main issues,[3] particularly on
wages. The Union filed a notice of strike. However, on December
18, 1992, in a conference called by the NCMB, the Union and the
Company agreed on a number of provisions of the CBA, including
the provision on wage increase,[4] leaving only the issue of
retirement to be threshed out. In time, this, too, was settled, so
that in his record of the January 14, 1993 conference, the MedArbiter noted that the issues raised by the notice of strike had
been settled and said notice is thus terminated. It would therefore
seem that at that point, there was already a meeting of the minds
of the parties, which was before the February 1993 end of the sixmonth period provided in Art. 253-A.
The fact that no agreement was then signed is of no
moment. Art. 253-A refers merely to an agreement which,
according to Blacks Law Dictionary is a coming together of minds;
the coming together in accord of two minds on a given
proposition.[5] This is similar to Art. 1305 of the Civil Codes
definition of contract as a meeting of minds between two
persons.
The two terms, agreement and contract, are indeed
similar, although the former is broader than the latter because an
agreement may not have all the elements of a contract. As in the
case of contracts, however, agreements may be oral or
written.[6] Hence, even without any written evidence of the
Collective Bargaining Agreement made by the parties, a valid

agreement existed in this case from the moment the minds of the
parties met on all matters they set out to discuss. As Art. 1315 of
the Civil Code states:
Contracts are perfected by mere consent, and from that moment,
the parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage
and law.
The Secretary of Labor found that as early as January 14,
1993, well within the six (6) month period provided by law, the
Company and the Union have perfected their agreement.[7]The
claim of petitioner to the contrary notwithstanding, this is a finding
of an administrative agency which, in the absence of evidence to
the contrary, must be affirmed.
Moreover, the order of the Secretary of Labor may be
considered in the nature of an arbitral award, pursuant to Art.
263(g) of the Labor Code, and, therefore, binding on the
parties. After all, the Secretary of Labor assumed jurisdiction over
the dispute because petitioner asked the Secretary of Labor to do
so after the NCMB failed to make the parties come to an
agreement. It is also conceded that the industry in which the
petitioner is engaged is vital to the national interest. As stated in
the Order issued by the Secretary of Labor on March 10, 1993:[8]
The services being provided by the Company evidently reflect their
indispensability to the normal operations of the Davao City Pier
where millions of crates and boxes of goods are loaded and
unloaded monthly. The current disruption, therefore, of the
Companys services, if allowed to continue, will cause serious
prejudice and damages to the agricultural exporters, the cargo
handlers, the vessel owners, the foreign buyers of agricultural
products and the entire business sector in the area. These
considerations and the disputes implications on the national
economy warrant the intervention by this Office to exercise its
power under Article 263(g) of the Labor Code, as amended.
In St. Lukes Medical Center, Inc. v. Torres,[9] a deadlock also
developed during the CBA negotiations between management and
the union. The Secretary of Labor assumed jurisdiction and
ordered the retroaction of their CBA to the date of expiration of the
previous CBA. As in this case, it was alleged that the Secretary of
Labor gravely abused his discretion in making his award
retroactive. In dismissing this contention this Court held:
Therefore, in the absence of a specific provision of law prohibiting
retroactivity of the effectivity of arbitral awards issued by the
Secretary of Labor pursuant to Article 263(g) of the Labor Code,
such as herein involved, public respondent is deemed vested with
plenary and discretionary powers to determine the effectivity
thereof.
This case is controlled by the ruling in that case.
With respect to the issue of the creditability of the fourth and
fifth year wage increases, the Court takes cognizance of the fact
that the question was raised by the Company only when the sixmonth period was almost over and all that was left to be done by
the parties was to sign their agreement. Before that, the
Company did not qualify its position. It should have known that
crediting of wage increases in the CBA as compliance with future
mandated increases is the exception rather than the rule. For the
general rule is that such increases are over and above any

increase that may be granted by law or wage order. As held in

Meycauayan College v. Drilon:[10]
Increments to the laborers financial gratification, be they in the
form of salary increases or changes in the salary scale are aimed
at one thing - improvement of the economic predicament of the
laborers. As such they should be viewed in the light of the States
avowed policy to protect labor. Thus, having entered into an
agreement with its employees, an employer may not be allowed to
renege on its obligation under a collective bargaining agreement
should, at the same time, the law grant the employees the same or
better terms and conditions of employment. Employee benefits
derived from law are exclusive of benefits arrived at through
negotiation and agreement unless otherwise provided by the
agreement itself or by law.
For making a belated issue of creditability, petitioner is
correctly said to have delay[ed] the agreement beyond the six (6)
month period so as to minimize its expenses to the detriment of its
workers and its conduct to smack of bad faith and [to run counter]
to the good faith required in Collective Bargaining.[11] If petitioner
wanted to be given credit for the wage increases in the event of
future mandated wage increases, it should have expressly stated
its reservation during the early part of the CBA negotiations.
WHEREFORE, the instant petition is hereby DISMISSED for
lack of merit.
SO ORDERED.
Regalado, (Chairman), Romero, Puno, and Torres, Jr.,
JJ., concur.

[G.R. No. 113856. September 7, 1998]

SAMAHANG MANGGAGAWA SA TOP FORM
MANUFACTURING UNITED WORKERS OF THE
PHILIPPINES (SMTFM-UWP), its officers and
members,petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, HON. JOSE G. DE
VERA and TOP FORM MANUFACTURING PHIL.,
INC.,respondents.
DECISION
ROMERO, J.:
The issue in this petition for certiorari is whether or not an
employer committed an unfair labor practice by bargaining in bad
faith and discriminating against its employees. The charge arose
from the employers refusal to grant across-the-board increases to
its employees in implementing Wage Orders Nos. 01 and 02 of the
Regional Tripartite Wages and Productivity Board of the National
Capital Region (RTWPB-NCR). Such refusal was aggravated by
the fact that prior to the issuance of said wage orders, the
employer allegedly promised at the collective bargaining
conferences to implement any government-mandated wage
increases on an across-the-board basis.
Petitioner Samahang Manggagawa sa Top Form
Manufacturing United Workers of the Philippines (SMTFM) was
the certified collective bargaining representative of all regular rank
and file employees of private respondent Top Form Manufacturing
Philippines, Inc. At the collective bargaining negotiation held at the
Milky Way Restaurant in Makati, Metro Manila on February 27,
1990, the parties agreed to discuss unresolved economic
issues. According to the minutes of the meeting, Article VII of the
collective bargaining agreement was discussed. The following
appear in said Minutes:
ARTICLE VII. Wages
Section 1. Defer
Section 2. Status quo
Section 3. Union proposed that any future wage increase given by
the government should be implemented by the company acrossthe-board or non-conditional.
Management requested the union to retain this provision since
their sincerity was already proven when the P25.00 wage increase
was granted across-the-board. The union acknowledges
managements sincerity but they are worried that in case there is a
new set of management, they can just show their CBA. The union
decided to defer this provision.[1]
In their joint affidavit dated January 30, 1992,[2] union
members Salve L. Barnes, Eulisa Mendoza, Lourdes Barbero and
Concesa Ibaez affirmed that at the subsequent collective
bargaining negotiations, the union insisted on the incorporation in
the collective bargaining agreement (CBA) of the union proposal
on automatic across-the-board wage increase. They added that:
11.
On the strength of the representation of the negotiating
panel of the company and the above undertaking/promise made by
its negotiating panel, our union agreed to drop said proposal
relying on the undertakings made by the officials of the company
who negotiated with us, namely, Mr. William Reynolds, Mr. Samuel

Wong and Mrs. Remedios Felizardo. Also, in the past years, the
company has granted to us government mandated wage increases
on across-the-board basis.
On October 15, 1990, the RTWPB-NCR issued Wage Order
No. 01 granting an increase of P17.00 per day in the salary of
workers. This was followed by Wage Order No. 02 dated
December 20, 1990 providing for a P12.00 daily increase in salary.
As expected, the union requested the implementation of said
wage orders. However, they demanded that the increase be on an
across-the-board basis. Private respondent refused to accede to
that demand. Instead, it implemented a scheme of increases
purportedly to avoid wage distortion. Thus, private respondent
granted the P17.00 increase under Wage Order No. 01 to
workers/employees receiving salary of P125.00 per day and
below. The P12.00 increase mandated by Wage Order No. 02
was granted to those receiving the salary of P140.00 per day and
below. For employees receiving salary higher than P125.00 or
P140.00 per day, private respondent granted an escalated
increase ranging from P6.99 to P14.30 and from P6.00 to P10.00,
respectively.[3]
On October 24, 1991, the union, through its legal counsel,
wrote private respondent a letter demanding that it should fulfill its
pledge of sincerity to the union by granting an across-the-board
wage increases (sic) to all employees under the wage
orders. The union reiterated that it had agreed to retain the old
provision of CBA on the strength of private respondents promise
and assurance of an across-the-board salary increase should the
government mandate salary increases.[4] Several conferences
between the parties notwithstanding, private respondent adamantly
maintained its position on the salary increases it had granted that
were purportedly designed to avoid wage distortion.
Consequently, the union filed a complaint with the NCR
NLRC alleging that private respondents act of reneging on its
undertaking/promise clearly constitutes an act of unfair labor
practice through bargaining in bad faith. It charged private
respondent with acts of unfair labor practices or violation of Article
247 of the Labor Code, as amended, specifically bargaining in bad
faith, and prayed that it be awarded actual, moral and exemplary
damages.[5] In its position paper, the union added that it was
charging private respondent with violation of Article 100 of the
Labor Code.[6]
Private respondent, on the other hand, contended that in
implementing Wage Orders Nos. 01 and 02, it had avoided the
existence of a wage distortion that would arise from such
implementation. It emphasized that only after a reasonable length
of time from the implementation of the wage orders that the union
surprisingly raised the question that the company should have
implemented said wage orders on an across-the-board basis. It
asserted that there was no agreement to the effect that future
wage increases mandated by the government should be
implemented on an across-the-board basis. Otherwise, that
agreement would have been incorporated and expressly stipulated
in the CBA. It quoted the provision of the CBA that reflects the
parties intention to fully set forth therein all their agreements that
had been arrived at after negotiations that gave the parties
unlimited right and opportunity to make demands and proposals
with respect to any subject or matter not removed by law from the
area of collective bargaining. The same CBA provided that during
its effectivity, the parties each voluntarily and unqualifiedly waives
the right, and each agrees that the other shall not be obligated, to
bargain collectively, with respect to any subject or matter not
specifically referred to or covered by this Agreement, even though
such subject or matter may not have been within the knowledge or

contemplation of either or both of the parties at the time they

negotiated or signed this Agreement.[7]

prayer for moral and exemplary damages and attorneys fees may
not be granted.

On March 11, 1992, Labor Arbiter Jose G. de Vera rendered

a decision dismissing the complaint for lack of merit.[8] He
considered two main issues in the case: (a) whether or not
respondents are guilty of unfair labor practice, and (b) whether or
not the respondents are liable to implement Wage Orders Nos. 01
and 02 on an across-the-board basis. Finding no basis to rule in
the affirmative on both issues, he explained as follows:

Not satisfied, petitioner appealed to the NLRC that, in turn,

promulgated the assailed Resolution of April 29, 1993[9] dismissing
the appeal for lack of merit. Still dissatisfied, petitioner sought
reconsideration which, however, was denied by the NLRC in the
Resolution dated January 17, 1994. Hence, the instant petition
for certiorari contending that:
-A-

The charge of bargaining in bad faith that the complainant union

attributes to the respondents is bereft of any certitude inasmuch as
based on the complainant unions own admission, the latter
vacillated on its own proposal to adopt an across-the-board stand
or future wage increases. In fact, the union acknowledges the
managements sincerity when the latter allegedly implemented
Republic Act 6727 on an across-the-board basis. That such union
proposal was not adopted in the existing CBA was due to the fact
that it was the union itself which decided for its deferment. It is,
therefore, misleading to claim that the management
undertook/promised to implement future wage increases on an
across-the-board basis when as the evidence shows it was the
union who asked for the deferment of its own proposal to that
effect.
The alleged discrimination in the implementation of the subject
wage orders does not inspire belief at all where the wage orders
themselves do not allow the grant of wage increases on an acrossthe-board basis. That there were employees who were granted the
full extent of the increase authorized and some others who
received less and still others who did not receive any increase at
all, would not ripen into what the complainants termed as
discrimination. That the implementation of the subject wage orders
resulted into an uneven implementation of wage increases is
justified under the law to prevent any wage distortion. What the
respondents did under the circumstances in order to deter an
eventual wage distortion without any arbitral proceedings is
certainly commendable.
The alleged violation of Article 100 of the Labor Code, as
amended, as well as Article XVII, Section 7 of the existing CBA as
herein earlier quoted is likewise found by this Branch to have no
basis in fact and in law. No benefits or privileges previously
enjoyed by the employees were withdrawn as a result of the
implementation of the subject orders. Likewise, the alleged
company practice of implementing wage increases declared by the
government on an across-the-board basis has not been duly
established by the complainants evidence. The complainants
asserted that the company implemented Republic Act No. 6727
which granted a wage increase of P25.00 effective July 1, 1989 on
an across-the-board basis. Granting that the same is true, such
isolated single act that respondents adopted would definitely not
ripen into a company practice. It has been said that `a sparrow or
two returning to Capistrano does not a summer make.
Finally, on the second issue of whether or not the employees of the
respondents are entitled to an across-the-board wage increase
pursuant to Wage Orders Nos. 01 and 02, in the face of the above
discussion as well as our finding that the respondents correctly
applied the law on wage increases, this Branch rules in the
negative.
Likewise, for want of factual basis and under the circumstances
where our findings above are adverse to the complainants, their

THE PUBLIC RESPONDENTS GROSSLY

ERRED IN NOT DECLARING THE PRIVATE
RESPONDENTS GUILTY OF ACTS OF
UNFAIR LABOR PRACTICES WHEN,
OBVIOUSLY, THE LATTER HAS
BARGAINED IN BAD FAITH WITH THE
UNION AND HAS VIOLATED THE CBA
WHICH IT EXECUTED WITH THE HEREIN
PETITIONER UNION.
-BTHE PUBLIC RESPONDENTS SERIOUSLY
ERRED IN NOT DECLARING THE PRIVATE
RESPONDENTS GUILTY OF ACTS OF
DISCRIMINATION IN THE
IMPLEMENTATION OF NCR WAGE ORDER
NOS. 01 AND 02.
-CTHE PUBLIC RESPONDENTS SERIOUSLY
ERRED IN NOT FINDING THE PRIVATE
RESPONDENTS GUILTY OF HAVING
VIOLATED SECTION 4, ARTICLE XVII OF
THE EXISTING CBA.
-DTHE PUBLIC RESPONDENTS GRAVELY
ERRED IN NOT DECLARING THE PRIVATE
RESPONDENTS GUILTY OF HAVING
VIOLATED ARTICLE 100 OF THE LABOR
CODE OF THE PHILIPPINES, AS AMENDED.
-EASSUMING, WITHOUT ADMITTING THAT
THE PUBLIC RESPONDENTS HAVE
CORRECTLY RULED THAT THE PRIVATE
RESPONDENTS ARE GUILTY OF ACTS OF
UNFAIR LABOR PRACTICES, THEY
COMMITTED SERIOUS ERROR IN NOT
FINDING THAT THERE IS A SIGNIFICANT
DISTORTION IN THE WAGE STRUCTURE
OF THE RESPONDENT COMPANY.
-FTHE PUBLIC RESPONDENTS ERRED IN
NOT AWARDING TO THE PETITIONERS
HEREIN ACTUAL, MORAL, AND

EXEMPLARY DAMAGES AND ATTORNEYS

FEES.
As the Court sees it, the pivotal issues in this petition can be
reduced into two, to wit: (a) whether or not private respondent
committed an unfair labor practice in its refusal to grant across-theboard wage increases in implementing Wage Orders Nos. 01 and
02, and (b) whether or not there was a significant wage distortion
of the wage structure in private respondent as a result of the
manner by which said wage orders were implemented.
With respect to the first issue, petitioner union anchors its
arguments on the alleged commitment of private respondent to
grant an automatic across-the-board wage increase in the event
that a statutory or legislated wage increase is promulgated. It cites
as basis therefor, the aforequoted portion of the Minutes of the
collective bargaining negotiation on February 27, 1990 regarding
wages, arguing additionally that said Minutes forms part of the
entire agreement between the parties.
The basic premise of this argument is definitely
untenable. To start with, if there was indeed a promise or
undertaking on the part of private respondent to obligate itself to
grant an automatic across-the-board wage increase, petitioner
union should have requested or demanded that such promise or
undertaking be incorporated in the CBA. After all, petitioner union
has the means under the law to compel private respondent to
incorporate this specific economic proposal in the CBA. It could
have invoked Article 252 of the Labor Code defining duty to
bargain, thus, the duty includes executing a contract
incorporating such agreements if requested by either
party. Petitioner unions assertion that it had insisted on the
incorporation of the same proposal may have a factual basis
considering the allegations in the aforementioned joint affidavit of
its members. However, Article 252 also states that the duty to
bargain does not compel any party to agree to a proposal or make
any concession. Thus, petitioner union may not validly claim that
the proposal embodied in the Minutes of the negotiation forms part
of the CBA that it finally entered into with private respondent.
The CBA is the law between the contracting parties[10] the
collective bargaining representative and the employercompany. Compliance with a CBA is mandated by the expressed
policy to give protection to labor.[11] In the same vein, CBA
provisions should be construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic
construction upon it, giving due consideration to the context in
which it is negotiated and purpose which it is intended to
serve."[12] This is founded on the dictum that a CBA is not an
ordinary contract but one impressed with public interest. [13] It goes
without saying, however, that only provisions embodied in the CBA
should be so interpreted and complied with. Where a proposal
raised by a contracting party does not find print in the CBA,[14]it is
not a part thereof and the proponent has no claim whatsoever to its
implementation.
Hence, petitioner unions contention that the Minutes of the
collective bargaining negotiation meeting forms part of the entire
agreement is pointless. The Minutes reflects the proceedings and
discussions undertaken in the process of bargaining for worker
benefits in the same way that the minutes of court proceedings
show what transpired therein.[15] At the negotiations, it is but
natural for both management and labor to adopt positions or make
demands and offer proposals and counter-proposals. However,
nothing is considered final until the parties have reached an
agreement. In fact, one of managements usual negotiation
strategies is to x x x agree tentatively as you go along with the
understanding that nothing is binding until the entire agreement is

reached.[16] If indeed private respondent promised to continue with

the practice of granting across-the-board salary increases ordered
by the government, such promise could only be demandable in law
if incorporated in the CBA.
Moreover, by making such promise, private respondent may
not be considered in bad faith or at the very least, resorting to the
scheme of feigning to undertake the negotiation proceedings
through empty promises. As earlier stated, petitioner union had,
under the law, the right and the opportunity to insist on
the foreseeable fulfillment of the private respondents promise by
demanding its incorporation in the CBA. Because the proposal
was never embodied in the CBA, the promise has remained just
that, a promise, the implementation of which cannot be validly
demanded under the law.
Petitioners reliance on this Courts
pronouncements[17] in Kiok Loy v. NLRC[18] is, therefore,
misplaced. In that case, the employer refused to bargain with the
collective bargaining representative, ignoring all notices for
negotiations and requests for counter proposals that the union had
to resort to conciliation proceedings. In that case, the Court opined
that (a) Companys refusal to make counter-proposal, if
considered in relation to the entire bargaining process, may
indicate bad faith and this is specially true where the Unions
request for a counter-proposal is left unanswered. Considering the
facts of that case, the Court concluded that the company was
unwilling to negotiate and reach an agreement with the Union.[19]
In the case at bench, however, petitioner union does not
deny that discussion on its proposal that all government-mandated
salary increases should be on an across-the-board basis was
deferred, purportedly because it relied upon the undertaking of
the negotiating panel of private respondent.[20] Neither does
petitioner union deny the fact that there is no provision of the 1990
CBA containing a stipulation that the company will grant acrossthe-board to its employees the mandated wage increase. They
simply assert that private respondent committed acts of unfair
labor practices by virtue of itscontractual commitment made during
the collective bargaining process.[21] The mere fact, however, that
the proposal in question was not included in the CBA indicates that
no contractual commitmentthereon was ever made by private
respondent as no agreement had been arrived at by the
parties. Thus:
Obviously the purpose of collective bargaining is the reaching of
an agreement resulting in a contract binding on the parties; but the
failure to reach an agreement after negotiations continued for a
reasonable period does not establish a lack of good faith. The
statutes invite and contemplate a collective bargaining contract,
but they do not compel one. The duty to bargain does not include
the obligation to reach an agreement. x x x.[22]
With the execution of the CBA, bad faith bargaining can no
longer be imputed upon any of the parties thereto. All provisions in
the CBA are supposed to have been jointly and voluntarily
incorporated therein by the parties. This is not a case where
private respondent exhibited an indifferent attitude towards
collective bargaining because the negotiations were not the
unilateral activity of petitioner union. The CBA is proof enough that
private respondent exerted reasonable effort at good faith
bargaining.[23]
Indeed, the adamant insistence on a bargaining position to
the point where the negotiations reach an impasse does not
establish bad faith. Neither can bad faith be inferred from a partys
insistence on the inclusion of a particular substantive provision
unless it concerns trivial matters or is obviously intolerable.[24]

The question as to what are mandatory and what are merely

permissive subjects of collective bargaining is of significance on
the right of a party to insist on his position to the point of stalemate.
A party may refuse to enter into a collective bargaining contract
unless it includes a desired provision as to a matter which is a
mandatory subject of collective bargaining; but a refusal to contract
unless the agreement covers a matter which is not a mandatory
subject is in substance a refusal to bargain about matters which
are mandatory subjects of collective bargaining; and it is no
answer to the charge of refusal to bargain in good faith that the
insistence on the disputed clause was not the sole cause of the
failure to agree or that agreement was not reached with respect to
other disputed clauses."[25]
On account of the importance of the economic issue
proposed by petitioner union, it could have refused to bargain and
to enter into a CBA with private respondent. On the other hand,
private respondents firm stand against the proposal did not mean
that it was bargaining in bad faith. It had the right to insist on (its)
position to the point of stalemate. On the part of petitioner union,
the importance of its proposal dawned on it only after the wage
orders were issued after the CBA had been entered into. Indeed,
from the facts of this case, the charge of bad faith bargaining on
the part of private respondent was nothing but a belated reaction to
the implementation of the wage orders that private respondent
made in accordance with law. In other words, petitioner union
harbored the notion that its members and the other employees
could have had a better deal in terms of wage increases had it
relentlessly pursued the incorporation in the CBA of its
proposal. The inevitable conclusion is that private respondent did
not commit the unfair labor practices of bargaining in bad faith and
discriminating against its employees for implementing the wage
orders pursuant to law.
The Court likewise finds unmeritorious petitioner unions
contention that by its failure to grant across-the-board wage
increases, private respondent violated the provisions of Section 5,
Article VII of the existing CBA[26] as well as Article 100 of the Labor
Code. The CBA provision states:
Section 5. The COMPANY agrees to comply with all the
applicable provisions of the Labor Code of the Philippines, as
amended, and all other laws, decrees, orders, instructions,
jurisprudence, rules and regulations affecting labor.
Article 100 of the Labor Code on prohibition against elimination or
diminution of benefits provides that (n)othing in this Book shall be
construed to eliminate or in any way diminish supplements, or
other employee benefits being enjoyed at the time of promulgation
of this Code.
We agree with the Labor Arbiter and the NLRC that no
benefits or privileges previously enjoyed by petitioner union and
the other employees were withdrawn as a result of the manner by
which private respondent implemented the wage orders. Granted
that private respondent had granted an across-the-board increase
pursuant to Republic Act No. 6727, that single instance may not be
considered an established company practice. Petitioner unions
argument in this regard is actually tied up with its claim that the
implementation of Wage Orders Nos. 01 and 02 by private
respondent resulted in wage distortion.
The issue of whether or not a wage distortion exists is a
question of fact[27] that is within the jurisdiction of the quasi-judicial
tribunals below. Factual findings of administrative agencies are
accorded respect and even finality in this Court if they are

supported by substantial evidence.[28] Thus, in Metropolitan Bank

and Trust Company, Inc. v. NLRC, the Court said:
The issue of whether or not a wage distortion exists as a
consequence of the grant of a wage increase to certain
employees, we agree, is, by and large, a question of fact the
determination of which is the statutory function of the NLRC.
Judicial review of labor cases, we may add, does not go beyond
the evaluation of the sufficiency of the evidence upon which the
labor officials findings rest. As such, the factual findings of the
NLRC are generally accorded not only respect but also finality
provided that its decisions are supported by substantial evidence
and devoid of any taint of unfairness or arbitrariness. When,
however, the members of the same labor tribunal are not in accord
on those aspects of a case, as in this case, this Court is well
cautioned not to be as so conscious in passing upon the
sufficiency of the evidence, let alone the conclusions derived
therefrom.[29]
Unlike in above-cited case where the Decision of the NLRC
was not unanimous, the NLRC Decision in this case which was
penned by the dissenter in that case, Presiding Commissioner
Edna Bonto-Perez, unanimously ruled that no wage distortions
marred private respondents implementation of the wage
orders. The NLRC said:
On the issue of wage distortion, we are satisfied that there was a
meaningful implementation of Wage Orders Nos. 01 and 02. This
debunks the claim that there was wage distortion as could be
shown by the itemized wages implementation quoted above. It
should be noted that this itemization has not been successfully
traversed by the appellants. x x x.[30]
The NLRC then quoted the labor arbiters ruling on wage distortion.
We find no reason to depart from the conclusions of both the
labor arbiter and the NLRC. It is apropos to note, moreover, that
petitioners contention on the issue of wage distortion and the
resulting allegation of discrimination against the private
respondents employees are anchored on its dubious position that
private respondents promise to grant an across-the-board
increase in government-mandated salary benefits reflected in the
Minutes of the negotiation is an enforceable part of the CBA.
In the resolution of labor cases, this Court has always been
guided by the State policy enshrined in the Constitution that the
rights of workers and the promotion of their welfare shall be
protected.[31] The Court is likewise guided by the goal of attaining
industrial peace by the proper application of the law. It cannot
favor one party, be it labor or management, in arriving at a just
solution to a controversy if the party has no valid support to its
claims. It is not within this Courts power to rule beyond the ambit
of the law.
WHEREFORE, the instant petition for certiorari is
hereby DISMISSED and the questioned Resolutions of the
NLRC AFFIRMED. No costs.
SO ORDERED.
Narvasa, C.J., (Chairman), Kapunan and Purisima,
JJ., concur.

[G.R. No. 135547. January 23, 2002]

GERARDO F. RIVERA, ALFRED A. RAMISO, AMBROCIO
PALAD, DENNIS R. ARANAS, DAVID SORIMA, JR.,
JORGE P. DELA ROSA, and ISAGANI
ALDEA, petitioners, vs. HON. EDGARDO ESPIRITU in
his capacity as Chairman of the PAL Inter-Agency
Task Force created under Administrative Order No.
16; HON. BIENVENIDO LAGUESMA in his capacity as
Secretary of Labor and Employment; PHILIPPINE
AIRLINES (PAL), LUCIO TAN, HENRY SO UY,
ANTONIO V. OCAMPO, MANOLO E. AQUINO, JAIME
J. BAUTISTA, and ALEXANDER O.
BARRIENTOS,respondents.
DECISION
QUISUMBING, J.:
In this special civil action for certiorari and prohibition,
petitioners charge public respondents with grave abuse of
discretion amounting to lack or excess of jurisdiction for acts taken
in regard to the enforcement of the agreement dated September
27, 1998, between Philippine Airlines (PAL) and its union, the PAL
Employees Association (PALEA).
The factual antecedents of this case are as follows:
On June 5, 1998, PAL pilots affiliated with the Airline Pilots
Association of the Philippines (ALPAP) went on a three-week
strike, causing serious losses to the financially beleaguered flag
carrier. As a result, PALs financial situation went from bad to
worse. Faced with bankruptcy, PAL adopted a rehabilitation plan
and downsized its labor force by more than one-third.
On July 22, 1998, PALEA went on strike to protest the
retrenchment measures adopted by the airline, which affected
1,899 union members. The strike ended four days later, when PAL
and PALEA agreed to a more systematic reduction in PALs work
force and the payment of separation benefits to all retrenched
employees.
On August 28, 1998, then President Joseph E. Estrada
issued Administrative Order No. 16 creating an Inter-Agency Task
Force (Task Force) to address the problems of the ailing flag
carrier. The Task Force was composed of the Departments of
Finance, Labor and Employment, Foreign Affairs, Transportation
and Communication, and Tourism, together with the Securities and
Exchange Commission (SEC). Public respondent Edgardo
Espiritu, then the Secretary of Finance, was designated chairman
of the Task Force. It was empowered to summon all parties
concerned for conciliation, mediation (for) the purpose of arriving at
a total and complete solution of the problem.[1] Conciliation
meetings were then held between PAL management and the three
unions representing the airlines employees,[2] with the Task Force
as mediator.
On September 4, 1998, PAL management submitted to the
Task Force an offer by private respondent Lucio Tan, Chairman
and Chief Executive Officer of PAL, of a plan to transfer shares of
stock to its employees. The pertinent portion of said plan reads:
1. From the issued shares of stock within the group of Mr. Lucio
Tans holdings, the ownership of 60,000 fully paid shares of stock
of Philippine Airlines with a par value of PHP5.00/share will be
transferred in favor of each employee of Philippine Airlines in the
active payroll as of September 15, 1998. Should any share-owning
employee leave PAL, he/she has the option to keep the shares or

sells (sic) his/her shares to his/her union or other employees

currently employed by PAL.
2. The aggregate shares of stock transferred to PAL employees
will allow them three (3) members to (sic) the PAL Board of
Directors. We, thus, become partners in the boardroom and
together, we shall address and find solutions to the wide range of
problems besetting PAL.
3. In order for PAL to attain (a) degree of normalcy while we are
tackling its problems, we would request for a suspension of the
Collective Bargaining Agreements (CBAs) for 10 years.[3]
On September 10, 1998, the Board of Directors of PALEA
voted to accept Tans offer and requested the Task Forces
assistance in implementing the same. Union members, however,
rejected Tans offer. Under intense pressure from PALEA
members, the unions directors subsequently resolved to reject
Tans offer.
On September 17, 1998, PAL informed the Task Force that it
was shutting down its operations effective September 23, 1998,
preparatory to liquidating its assets and paying off its creditors. The
airline claimed that given its labor problems, rehabilitation was no
longer feasible, and hence, the airline had no alternative but to
close shop.
On September 18, 1998, PALEA sought the intervention of
the Office of the President in immediately convening the parties,
the PAL management, PALEA, ALPAP, and FASAP, including the
SEC under the direction of the Inter-Agency Task Force, to prevent
the imminent closure of PAL.[4]
On September 19, 1998, PALEA informed the Department of
Labor and Employment (DOLE) that it had no objection to a
referendum on the Tans offer. 2,799 out of 6,738 PALEA
members cast their votes in the referendum under DOLE
supervision held on September 21-22, 1998. Of the votes cast,
1,055 voted in favor of Tans offer while 1,371 rejected it.
On September 23, 1998, PAL ceased its operations and sent
notices of termination to its employees.
Two days later, the PALEA board wrote President Estrada
anew, seeking his intervention. PALEA offered a 10-year
moratorium on strikes and similar actions and a waiver of some of
the economic benefits in the existing CBA.[5] Tan, however,
rejected this counter-offer.
On September 27, 1998, the PALEA board again wrote the
President proposing the following terms and conditions, subject to
ratification by the general membership:
1. Each PAL employee shall be granted 60,000 shares of stock
with a par value of P5.00, from Mr. Lucio Tans shareholdings, with
three (3) seats in the PAL Board and an additional seat from
government shares as indicated by His Excellency;
2. Likewise, PALEA shall, as far as practicable, be granted
adequate representation in committees or bodies which deal with
matters affecting terms and conditions of employment;
3. To enhance and strengthen labor-management relations, the
existing Labor-Management Coordinating Council shall be
reorganized and revitalized, with adequate representation from
both PAL management and PALEA;

4. To assure investors and creditors of industrial peace, PALEA

agrees, subject to the ratification by the general membership, (to)
the suspension of the PAL-PALEA CBA for a period of ten (10)
years, provided the following safeguards are in place:
a.

b.

c.

PAL shall continue recognizing PALEA as the

duly certified bargaining agent of the regular
rank-and-file ground employees of the
Company;
The union shop/maintenance of membership
provision under the PAL-PALEA CBA shall be
respected.

No salary deduction, with full medical benefits.

5. PAL shall grant the benefits under the 26 July

1998 Memorandum of Agreement forged by and between PAL and
PALEA, to those employees who may opt to retire or be separated
from the company.
6. PALEA members who have been retrenched but have not
received separation benefits shall be granted priority in the
hiring/rehiring of employees.
7. In the absence of applicable Company rule or regulation, the
provisions of the Labor Code shall apply.[6]
Among the signatories to the letter were herein petitioners
Rivera, Ramiso, and Aranas, as officers and/or members of the
PALEA Board of Directors. PAL management accepted the
PALEA proposal and the necessary referendum was scheduled.
On October 2, 1998, 5,324 PALEA members cast their votes
in a DOLE-supervised referendum. Of the votes cast, 61% were in
favor of accepting the PAL-PALEA agreement, while 34% rejected
it.
On October 7, 1998, PAL resumed domestic operations. On
the same date, seven officers and members of PALEA filed this
instant petition to annul the September 27, 1998 agreement
entered into between PAL and PALEA on the following grounds:
I
PUBLIC RESPONDENTS GRAVELY ABUSED THEIR
DISCRETION AND EXCEEDED THEIR JURISDICTION IN
ACTIVELY PURSUING THE CONCLUSION OF THE PAL-PALEA
AGREEMENT AS THE CONSTITUTIONAL RIGHTS TO SELFORGANIZATION AND COLLECTIVE BARGAINING, BEING
FOUNDED ON PUBLIC POLICY, MAY NOT BE WAIVED, NOR
THE WAIVER, RATIFIED.

(1) Is an original action for certiorari and prohibition

the proper remedy to annul the PAL-PALEA
agreement of September 27, 1998;
(2) Is the PAL-PALEA agreement of September 27,
1998, stipulating the suspension of the PALPALEA CBA unconstitutional and contrary to public
policy?
Anent the first issue, petitioners aver that public respondents
as functionaries of the Task Force, gravely abused their discretion
and exceeded their jurisdiction when they actively pursued and
presided over the PAL-PALEA agreement.
Respondents, in turn, argue that the public respondents
merely served as conciliators or mediators, consistent with the
mandate of A.O. No. 16 and merely supervised the conduct of
the October 3, 1998 referendum during which the PALEA
members ratified the agreement. Thus, public respondents did not
perform any judicial and quasi-judicial act pertaining to
jurisdiction. Furthermore, respondents pray for the dismissal of the
petition for violating the hierarchy of courts doctrine enunciated
in People v. Cuaresma[7] and Enrile v. Salazar.[8]
Petitioners allege grave abuse of discretion under Rule 65 of
the 1997 Rules of Civil Procedure. The essential requisites for a
petition for certiorari under Rule 65 are: (1) the writ is directed
against a tribunal, a board, or an officer exercising judicial or quasijudicial functions; (2) such tribunal, board, or officer has acted
without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction; and (3) there
is no appeal or any plain, speedy, and adequate remedy in the
ordinary course of law.[9] For writs of prohibition, the requisites are:
(1) the impugned act must be that of a tribunal, corporation,
board, officer, or person, whether exercising judicial, quasi-judicial
or ministerial functions; and (2) there is no plain, speedy, and
adequate remedy in the ordinary course of law. [10]
The assailed agreement is clearly not the act of a tribunal,
board, officer, or person exercising judicial, quasi-judicial, or
ministerial functions. It is not the act of public respondents
Finance Secretary Edgardo Espiritu and Labor Secretary
Bienvenido Laguesma as functionaries of the Task Force. Neither
is there a judgment, order, or resolution of either public
respondents involved. Instead, what exists is a contract between a
private firm and one of its labor unions, albeit entered into with the
assistance of the Task Force. The first and second requisites for
certiorari and prohibition are therefore not present in this case.

II

Furthermore, there is available to petitioners a plain, speedy,

and adequate remedy in the ordinary course of law. While the
petition is denominated as one for certiorari and prohibition, its
object is actually the nullification of the PAL-PALEA
agreement. As such, petitioners proper remedy is an ordinary civil
action for annulment of contract, an action which properly falls
under the jurisdiction of the regional trial courts.[11] Neither
certiorari nor prohibition is the remedy in the present case.

PUBLIC RESPONDENTS GRAVELY ABUSED THEIR

DISCRETION AND EXCEEDED THEIR JURISDICTION IN
PRESIDING OVER THE CONCLUSION OF THE PAL-PALEA
AGREEMENT UNDER THREAT OF ABUSIVE EXERCISE OF
PALS MANAGEMENT PREROGATIVE TO CLOSE BUSINESS
USED AS SUBTERFUGE FOR UNION-BUSTING.

Petitioners further assert that public respondents were partial

towards PAL management. They allegedly pressured the PALEA
leaders into accepting the agreement. Petitioners ask this Court to
examine the circumstances that led to the signing of said
agreement. This would involve review of the facts and factual
issues raised in a special civil action for certiorari which is not the
function of this Court.[12]

The issues now for our resolution are:

Nevertheless, considering the prayer of the parties principally

we shall look into the substance of the petition, in the higher
interest of justice[13] and in view of the public interest involved,

inasmuch as what is at stake here is industrial peace in the

nations premier airline and flag carrier, a national concern.
On the second issue, petitioners contend that the
controverted PAL-PALEA agreement is void because it abrogated
the right of workers to self-organization[14] and their right to
collective bargaining.[15] Petitioners claim that the agreement was
not meant merely to suspend the existing PAL-PALEA CBA, which
expires on September 30, 2000, but also to foreclose any
renegotiation or any possibility to forge a new CBA for a decade or
up to 2008. It violates the protection to labor policy[16] laid down
by the Constitution.
Article 253-A of the Labor Code reads:
ART. 253-A. Terms of a Collective Bargaining Agreement.
Any Collective Bargaining Agreement that the parties may enter
into shall, insofar as the representation aspect is concerned, be for
a term of five (5) years. No petition questioning the majority status
of the incumbent bargaining agent shall be entertained and no
certification election shall be conducted by the Department of
Labor and Employment outside of the sixty-day period immediately
before the date of expiry of such five-year term of the Collective
Bargaining Agreement. All other provisions of the Collective
Bargaining Agreement shall be renegotiated not later than three (3)
years after its execution. Any agreement on such other provisions
of the Collective Bargaining Agreement entered into within six (6)
months from the date of expiry of the term of such other provisions
as fixed in such Collective Bargaining Agreement, shall retroact to
the day immediately following such date. If any such agreement is
entered into beyond six months, the parties shall agree on the
duration of the retroactivity thereof. In case of a deadlock in the
renegotiation of the collective bargaining agreement, the parties
may exercise their rights under this Code.
Under this provision, insofar as representation is concerned, a
CBA has a term of five years, while the other provisions, except for
representation, may be negotiated not later than three years after
the execution.[17] Petitioners submit that a 10-year CBA suspension
is inordinately long, way beyond the maximum statutory life of a
CBA, provided for in Article 253-A. By agreeing to a 10-year
suspension, PALEA, in effect, abdicated the workers constitutional
right to bargain for another CBA at the mandated time.

other is to assign specific timetables wherein negotiations become

a matter of right and requirement. Nothing in Article 253-A,
prohibits the parties from waiving or suspending the mandatory
timetables and agreeing on the remedies to enforce the same.
In the instant case, it was PALEA, as the exclusive
bargaining agent of PALs ground employees, that voluntarily
entered into the CBA with PAL. It was also PALEA that voluntarily
opted for the 10-year suspension of the CBA. Either case was the
unions exercise of its right to collective bargaining. The right to
free collective bargaining, after all, includes the right to suspend it.
The acts of public respondents in sanctioning the 10-year
suspension of the PAL-PALEA CBA did not contravene the
protection to labor policy of the Constitution. The agreement
afforded full protection to labor; promoted the shared responsibility
between workers and employers; and the
exercised voluntary modes in settling disputes, including
conciliation to foster industrial peace."[21]
Petitioners further allege that the 10-year suspension of the
CBA under the PAL-PALEA agreement virtually installed PALEA
as a company union for said period, amounting to unfair labor
practice, in violation of Article 253-A of the Labor Code mandating
that an exclusive bargaining agent serves for five years only.
The questioned proviso of the agreement reads:
a. PAL shall continue recognizing PALEA as the duly
certified-bargaining agent of the regular rank-and-file ground
employees of the Company;
Said proviso cannot be construed alone. In construing an
instrument with several provisions, a construction must be adopted
as will give effect to all. Under Article 1374 of the Civil
Code,[22] contracts cannot be construed by parts, but clauses must
be interpreted in relation to one another to give effect to the
whole. The legal effect of a contract is not determined alone by
any particular provision disconnected from all others, but from the
whole read together.[23] The aforesaid provision must be read
within the context of the next clause, which provides:
b. The union shop/maintenance of membership provision
under the PAL-PALEA CBA shall be respected.

We find the argument devoid of merit.

A CBA is a contract executed upon request of either the
employer or the exclusive bargaining representative incorporating
the agreement reached after negotiations with respect to wages,
hours of work and all other terms and conditions of employment,
including proposals for adjusting any grievances or questions
arising under such agreement.[18] The primary purpose of a CBA is
the stabilization of labor-management relations in order to create a
climate of a sound and stable industrial peace.[19] In construing a
CBA, the courts must be practical and realistic and give due
consideration to the context in which it is negotiated and the
purpose which it is intended to serve.[20]
The assailed PAL-PALEA agreement was the result of
voluntary collective bargaining negotiations undertaken in the light
of the severe financial situation faced by the employer, with the
peculiar and unique intention of not merely promoting industrial
peace at PAL, but preventing the latters closure. We find no
conflict between said agreement and Article 253-A of the Labor
Code. Article 253-A has a two-fold purpose. One is to promote
industrial stability and predictability. Inasmuch as the agreement
sought to promote industrial peace at PAL during its rehabilitation,
said agreement satisfies the first purpose of Article 253-A. The

The aforesaid provisions, taken together, clearly show the

intent of the parties to maintain union security during the period of
the suspension of the CBA. Its objective is to assure the continued
existence of PALEA during the said period. We are unable to
declare the objective of union security an unfair labor practice. It is
State policy to promote unionism to enable workers to negotiate
with management on an even playing field and with more
persuasiveness than if they were to individually and separately
bargain with the employer. For this reason, the law has allowed
stipulations for union shop and closed shop as means of
encouraging workers to join and support the union of their choice
in the protection of their rights and interests vis--vis the
employer.[24]
Petitioners contention that the agreement installs PALEA as
a virtual company union is also untenable. Under Article 248 (d) of
the Labor Code, a company union exists when the employer acts
[t]o initiate, dominate, assist or otherwise interfere with the
formation or administration of any labor organization, including the
giving of financial or other support to it or its organizers or
supporters. The case records are bare of any showing of such
acts by PAL.

We also do not agree that the agreement violates the fiveyear representation limit mandated by Article 253-A. Under said
article, the representation limit for the exclusive bargaining agent
applies only when there is an extant CBA in full force and effect. In
the instant case, the parties agreed to suspend the CBA and put in
abeyance the limit on the representation period.
In sum, we are of the view that the PAL-PALEA agreement
dated September 27, 1998, is a valid exercise of the freedom to
contract. Under the principle of inviolability of contracts
guaranteed by the Constitution,[25] the contract must be upheld.
WHEREFORE, there being no grave abuse of discretion
shown, the instant petition is DISMISSED. No pronouncement as
to costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr.,
JJ., concur.

G.R. No. L-54334 January 22, 1986

KIOK LOY, doing business under the name and style
SWEDEN ICE CREAM PLANT, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and
PAMBANSANG KILUSAN NG PAGGAWA
(KILUSAN), respondents.
Ablan and Associates for petitioner.
Abdulcadir T. Ibrahim for private respondent.
CUEVAS, J.:
Petition for certiorari to annul the decision 1 of the National Labor
Relations Commission (NLRC) dated July 20, 1979 which found
petitioner Sweden Ice Cream guilty of unfair labor practice for
unjustified refusal to bargain, in violation of par. (g) of Article
249 2 of the New Labor Code, 3 and declared the draft proposal of
the Union for a collective bargaining agreement as the governing
collective bargaining agreement between the employees and the
management.
The pertinent background facts are as follows:
In a certification election held on October 3, 1978, the
Pambansang Kilusang Paggawa (Union for short), a legitimate late
labor federation, won and was subsequently certified in a
resolution dated November 29, 1978 by the Bureau of Labor
Relations as the sole and exclusive bargaining agent of the rankand-file employees of Sweden Ice Cream Plant (Company for
short). The Company's motion for reconsideration of the said
resolution was denied on January 25, 1978.
Thereafter, and more specifically on December 7, 1978, the Union
furnished 4 the Company with two copies of its proposed collective
bargaining agreement. At the same time, it requested the
Company for its counter proposals. Eliciting no response to the
aforesaid request, the Union again wrote the Company reiterating
its request for collective bargaining negotiations and for the
Company to furnish them with its counter proposals. Both requests
were ignored and remained unacted upon by the Company.
Left with no other alternative in its attempt to bring the Company to
the bargaining table, the Union, on February 14, 1979, filed a
"Notice of Strike", with the Bureau of Labor Relations (BLR) on
ground of unresolved economic issues in collective bargaining. 5
Conciliation proceedings then followed during the thirty-day
statutory cooling-off period. But all attempts towards an amicable
settlement failed, prompting the Bureau of Labor Relations to
certify the case to the National Labor Relations Commission
(NLRC) for compulsory arbitration pursuant to Presidential Decree
No. 823, as amended. The labor arbiter, Andres Fidelino, to whom
the case was assigned, set the initial hearing for April 29, 1979.
For failure however, of the parties to submit their respective
position papers as required, the said hearing was cancelled and
reset to another date. Meanwhile, the Union submitted its position
paper. The Company did not, and instead requested for a resetting
which was granted. The Company was directed anew to submit its
financial statements for the years 1976, 1977, and 1978.

The case was further reset to May 11, 1979 due to the withdrawal
of the Company's counsel of record, Atty. Rodolfo dela Cruz. On
May 24, 1978, Atty. Fortunato Panganiban formally entered his
appearance as counsel for the Company only to request for
another postponement allegedly for the purpose of acquainting
himself with the case. Meanwhile, the Company submitted its
position paper on May 28, 1979.
When the case was called for hearing on June 4, 1979 as
scheduled, the Company's representative, Mr. Ching, who was
supposed to be examined, failed to appear. Atty. Panganiban then
requested for another postponement which the labor arbiter
denied. He also ruled that the Company has waived its right to
present further evidence and, therefore, considered the case
submitted for resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted its report
to the National Labor Relations Commission. On July 20, 1979, the
National Labor Relations Commission rendered its decision, the
dispositive portion of which reads as follows:
WHEREFORE, the respondent Sweden Ice
Cream is hereby declared guilty of unjustified
refusal to bargain, in violation of Section (g)
Article 248 (now Article 249), of P.D. 442, as
amended. Further, the draft proposal for a
collective bargaining agreement (Exh. "E ")
hereto attached and made an integral part of
this decision, sent by the Union (Private
respondent) to the respondent (petitioner
herein) and which is hereby found to be
reasonable under the premises, is hereby
declared to be the collective agreement which
should govern the relationship between the
parties herein.
SO ORDERED. (Emphasis supplied)
Petitioner now comes before Us assailing the aforesaid decision
contending that the National Labor Relations Commission acted
without or in excess of its jurisdiction or with grave abuse of
discretion amounting to lack of jurisdiction in rendering the
challenged decision. On August 4, 1980, this Court dismissed the
petition for lack of merit. Upon motion of the petitioner, however,
the Resolution of dismissal was reconsidered and the petition was
given due course in a Resolution dated April 1, 1981.
Petitioner Company now maintains that its right to procedural due
process has been violated when it was precluded from presenting
further evidence in support of its stand and when its request for
further postponement was denied. Petitioner further contends that
the National Labor Relations Commission's finding of unfair labor
practice for refusal to bargain is not supported by law and the
evidence considering that it was only on May 24, 1979 when the
Union furnished them with a copy of the proposed Collective
Bargaining Agreement and it was only then that they came to know
of the Union's demands; and finally, that the Collective Bargaining
Agreement approved and adopted by the National Labor Relations
Commission is unreasonable and lacks legal basis.
The petition lacks merit. Consequently, its dismissal is in order.
Collective bargaining which is defined as negotiations towards a
collective agreement, 6 is one of the democratic frameworks under
the New Labor Code, designed to stabilize the relation between

labor and management and to create a climate of sound and stable

industrial peace. It is a mutual responsibility of the employer and
the Union and is characterized as a legal obligation. So much so
that Article 249, par. (g) of the Labor Code makes it an unfair labor
practice for an employer to refuse "to meet and convene promptly
and expeditiously in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work, and all other
terms and conditions of employment including proposals for
adjusting any grievance or question arising under such an
agreement and executing a contract incorporating such
agreement, if requested by either party.
While it is a mutual obligation of the parties to bargain, the
employer, however, is not under any legal duty to initiate contract
negotiation. 7 The mechanics of collective bargaining is set in
motion only when the following jurisdictional preconditions are
present, namely, (1) possession of the status of majority
representation of the employees' representative in accordance with
any of the means of selection or designation provided for by the
Labor Code; (2) proof of majority representation; and (3) a demand
to bargain under Article 251, par. (a) of the New Labor Code . ... all
of which preconditions are undisputedly present in the instant
case.
From the over-all conduct of petitioner company in relation to the
task of negotiation, there can be no doubt that the Union has a
valid cause to complain against its (Company's) attitude, the
totality of which is indicative of the latter's disregard of, and failure
to live up to, what is enjoined by the Labor Code to bargain in
good faith.
We are in total conformity with respondent NLRC's pronouncement
that petitioner Company is GUILTY of unfair labor practice. It has
been indubitably established that (1) respondent Union was a duly
certified bargaining agent; (2) it made a definite request to bargain,
accompanied with a copy of the proposed Collective Bargaining
Agreement, to the Company not only once but twice which were
left unanswered and unacted upon; and (3) the Company made no
counter proposal whatsoever all of which conclusively indicate lack
of a sincere desire to negotiate. 8 A Company's refusal to make
counter proposal if considered in relation to the entire bargaining
process, may indicate bad faith and this is specially true where the
Union's request for a counter proposal is left unanswered. 9 Even
during the period of compulsory arbitration before the NLRC,
petitioner Company's approach and attitude-stalling the negotiation
by a series of postponements, non-appearance at the hearing
conducted, and undue delay in submitting its financial statements,
lead to no other conclusion except that it is unwilling to negotiate
and reach an agreement with the Union. Petitioner has not at any
instance, evinced good faith or willingness to discuss freely and
fully the claims and demands set forth by the Union much less
justify its opposition thereto. 10
The case at bar is not a case of first impression, for in the Herald
Delivery Carriers Union (PAFLU) vs. Herald Publications11 the rule
had been laid down that "unfair labor practice is committed when it
is shown that the respondent employer, after having been served
with a written bargaining proposal by the petitioning Union, did not
even bother to submit an answer or reply to the said proposal This
doctrine was reiterated anew in Bradman vs. Court of Industrial
Relations 12 wherein it was further ruled that "while the law does
not compel the parties to reach an agreement, it does contemplate
that both parties will approach the negotiation with an open mind
and make a reasonable effort to reach a common ground of
agreement

As a last-ditch attempt to effect a reversal of the decision sought to

be reviewed, petitioner capitalizes on the issue of due process
claiming, that it was denied the right to be heard and present its
side when the Labor Arbiter denied the Company's motion for
further postponement.
Petitioner's aforesaid submittal failed to impress Us. Considering
the various postponements granted in its behalf, the claimed denial
of due process appeared totally bereft of any legal and factual
support. As herein earlier stated, petitioner had not even honored
respondent Union with any reply to the latter's successive letters,
all geared towards bringing the Company to the bargaining table. It
did not even bother to furnish or serve the Union with its counter
proposal despite persistent requests made therefor. Certainly, the
moves and overall behavior of petitioner-company were in total
derogation of the policy enshrined in the New Labor Code which is
aimed towards expediting settlement of economic disputes. Hence,
this Court is not prepared to affix its imprimatur to such an illegal
scheme and dubious maneuvers.
Neither are WE persuaded by petitioner-company's stand that the
Collective Bargaining Agreement which was approved and
adopted by the NLRC is a total nullity for it lacks the company's
consent, much less its argument that once the Collective
Bargaining Agreement is implemented, the Company will face the
prospect of closing down because it has to pay a staggering
amount of economic benefits to the Union that will equal if not
exceed its capital. Such a stand and the evidence in support
thereof should have been presented before the Labor Arbiter which
is the proper forum for the purpose.
We agree with the pronouncement that it is not obligatory upon
either side of a labor controversy to precipitately accept or agree to
the proposals of the other. But an erring party should not be
tolerated and allowed with impunity to resort to schemes feigning
negotiations by going through empty gestures. 13 More so, as in the
instant case, where the intervention of the National Labor
Relations Commission was properly sought for after conciliation
efforts undertaken by the BLR failed. The instant case being a
certified one, it must be resolved by the NLRC pursuant to the
mandate of P.D. 873, as amended, which authorizes the said body
to determine the reasonableness of the terms and conditions of
employment embodied in any Collective Bargaining Agreement. To
that extent, utmost deference to its findings of reasonableness of
any Collective Bargaining Agreement as the governing agreement
by the employees and management must be accorded due respect
by this Court.
WHEREFORE, the instant petition is DISMISSED. The temporary
restraining order issued on August 27, 1980, is LIFTED and SET
ASIDE.
No pronouncement as to costs.
SO ORDERED.

G.R. No. L-77282 May 5, 1989

ASSOCIATED LABOR UNIONS (ALU) petitioner,
vs.
HON. PURA FERRER-CALLEJA, as Director of the Bureau of
Labor Relations, Ministry of Labor and Employment;
PHILIPPINE SOCIAL SECURITY LABOR UNION (PSSLU);
SOUTHERN PHILIPPINES FEDERATION OF LABOR (SPFL)
and GAW TRADING, INC., respondents.
Romeo S. Occena, Leonard U. Sawal, Edgemelo C. Rosales and
Ernesto Carreon for petitioner.
Henrick F. Gingoyon for respondent SPFL.
Wilfredo L. Orcullo for respondent Southern Philippines Federation
of Labor.
Miguel A. Enrique, Jr. for respondent GAW Trading, Inc.
REGALADO, J.:
Petitioner Associated Labor Unions (ALU, for brevity) instituted this
special civil action for certiorari and prohibition to overturn the
decision of the respondent direcstor 1 dated December 10, 1986,
which ordered the holding of a certification election among the
rank-and-file workers of the private respondent GAW Trading, Inc.
The averments in the petition therefor, which succinctly but
sufficiently detail the relevant factual antecedents of this
proceedings, justify their being quoted in full, thus:
1. The associated Labor Unions (ALU) thru its
regional Vice-Presidents Teofanio C. Nuez, in
a letter dated May 7, 1986 (ANNEX C)
informed GAW Trading, Inc. that majority of the
latter's employees have authorized ALU to be
their sole and exclusive bargaining
representative, and requested GAW Trading
Inc., in the same Letter for a conference for the
execution of an initial Collective Bargaining
Agreement (CBA);
2. GAW Trading Inc. received the Letter of
ALU aforesaid on the same day of May 7, 1986
as acknowledged thereunder and responded
(sic) ALU in a letter dated May 12, 1986
(Annex D) indicating its recognition of ALU as
the sole and exclusive bargaining agent for the
majority of its employees and for which it set
the time for conference and/or negotiation at
4:00 P.M. on May 12, 1986 at the Pillsbury
Office, Aboitiz Building Juan Luna Street, Cebu
City;
3. On the following day of May13, 1986, ALU in
behalf of the majority of the employees of
GAW Trading Inc. signed and excuted the
Collective Bargaining (ANNEX F) ...
4. On May 15, 1986, ALU in behalf of the
majority of the employees of GAW Trading Inc.
and GAW Trading Inc. signed and executed
the Collective Bargaining Agreements (ANNEX
F) . . . .
5. In the meantime, at about 1:00 P.M. of May
9, 1986, the Southern Philippines Federation of
Labor (SPFL) together with Nagkahiusang

Mamumuo sa GAW (NAMGAW) undertook a

... Strike ... after it failed to get the
management of GAW Trading Inc. to sit for a
conference respecting its demands presented
at 11: A.M. on the same day in an effort to
pressure GAW Trading Inc. to make a
turnabout of its standign recognition of ALU as
the sole and exclusive bargaining
representative of its employees, as to which
strike GAW Trading Inc. filed a petition for
Restraining Order/Preliminary Injunction,
dfated June 1, 1986 (Annex H) and which
strike Labor Arbiter Bonifacio B. Tumamak
held as illegal in a decision dated August 5,
1986 (ANNEX I);
6. On May 19, 1986, GAW Lumad Labor Union
(GALLU-PSSLU) Federation ... filed a
Certification Election petition (ANNEX J), but
as found by Med-Arbiter Candido M. Cumba in
its (sic) Order dated Ju ne 11, 1986 (ANNEX
K), without having complied (sic) the
subscription requirement for which it was
merely considered an intervenor until
compliance thereof in the other petition for
direct recogbnition as bargaining agent filed on
MAy 28, 1986 by southern Philippines
Federation of Labor (SPFL) as found in the
same order (ANNEX K);
7. Int he meantime, the Collective Bargaining
Agreement executed by ALU and GAW
Trading Inc. (ANNEX F) was duly filed May 27,
1986 with the Ministry of Labor and
Employment in Region VII, Cebu city;
8. Nevertheless, Med-Arbiter Candido M.
Cumba in his order of June 11, 1986 (Annex K)
ruled for the holding of a ceritfication election in
all branches of GAW Trading Inc. in Cebu City,
as to which ALU filed a Motion for
Reconsideration dated June 19, 1986 (ANNEX
L) which was treated as an appeal on that
questioned Order for which reason the entire
record of subject certification case was
forwarded for the Director, Bureau of LAbor
Relations, Ministry of Labor and Employment,
Manila (ANNEX M);
9. Bureau of Labor Relations Director
Cresencio B. Trajano, rendered a Decision on
August 13, 1986 (Annex B) granting ALU's
appeal (Motion for Reconsideration) and set
aside the questioned Med-Arbiter Order of
June 11, 1986 (Annex K), on the ground that
the CBA has been effective and valid and the
contract bar rule applicable;
10. But the same Decision of Director
Crecensio B. Trajano was sought for
reconsideratrion both by Southern Philippines
Federation of Labor (SPFL) on August 26,
1986 (ANNEX N), supplemented by the
'SUBMISSION OD ADDITIONAL EVIDENCE'
dated September 29, 1986 (ANNEX O), and

the Philppine Social Security Labor Union

(PSSLU) on October 2, 1986 (ANNEX P),
which were opposed by both GAW Trading,
Inc. on September 2, 1986 (ANNEX Q) and
ALU on September 12, 1986 (ANNEX R); 2
The aforesaid decision of then Director Trajano was thereafter
reversed by respondent director in her aforecited decision which is
now assailed in this action. A motion for reconsideration of
ALU 3 appears to have been disregarded, hence, its present resort
grounded on grave abuse of discretion by public respondent.
Public respondent ordered the holding of a certification election
ruling that the "contract bar rule" relied upon by her predecessor
does not apply in the present controversy. According to the
decision of said respondent, the collective bargaining agreement
involved herein is defective because it "was not duly submitted in
accordance with Section I, Rule IX, Book V of the Implementing
Rules of Batas Pambansa Blg. 130." It was further observed that
"(t)here is no proof tending to show that the CBA has been posted
in at least two conspicuous places in the 1 establishment at least
five days before its ratification and that it has been ratified by the
majority of the employees in the bargaining unit."
We find no reversible error in the challenged decision of
respondent director. A careful consideration of the facts culled from
the records of this case, especially the allegations of petitioner
itself as hereinabove quoted, yields the conclusion that the
collective bargaining agreement in question is indeed defective
hence unproductive of the legal effects attributed to it by the former
director in his decision which was subsequently and properly
reversed.
We have previously held that the mechanics of collective
bargaining are set in motion only when the following jurisdictional
preconditions are present, namely, (1) possession of the status of
majority representation by the employees' representative in
accordance with any of the means of selection and/or designation
provided for by the Labor Code; (2) proof of majority
representation; and (3) a demand to bargain under Article 251,
paragraph (a), of the New Labor Code. 4 In the present case, the
standing of petitioner as an exclusive bargaining representative is
dubious, to say the least. It may be recalled that respondent
company, in a letter dated May 12, 1986 and addressed to
petitioner, merely indicated that it was "not against the desire of
(its) workers" and required petitioner to present proof that it was
supported by the majority thereof in a meeting to be held on the
same date. 5 The only express recognition of petitioner as said
employees' bargaining representative that We see in the records is
in the collective bargaining agreement entered into two days
thereafter. 6 Evidently, there was precipitate haste on the part of
respondent company in recognizing petitioner union, which
recognition appears to have been based on the self-serving claim
of the latter that it had the support of the majority of the employees
in the bargaining unit. Furthermore, at the time of the supposed
recognition, the employer was obviously aware that there were
other unions existing in the unit. As earlier stated, respondent
company's letter is dated May 12, 1986 while the two other unions,
Southern Philippine Federation of Labor (hereafter, SPFL and
Philippine Social Security Labor Union (PSSLU, for short), went on
strike earlier on May 9, 1986. The unusual promptitude in the
recognition of petitioner union by respondent company as the
exclusive bargaining representative of the workers in GAW
Trading, Inc. under the fluid and amorphous circumstances then
obtaining, was decidedly unwarranted and improvident.

It bears mention that even in cases where it was the then Minister
of Labor himself who directly certified the union as the bargaining
representative, this Court voided such certification where there
was a failure to properly determine with legal certainty whether the
union enjoyed a majority representation. In such a case, the
holding of a certification election at a proper time would not
necessarily be a mere formality as there was a compelling reason
not to directly and unilaterally certify a union. 7
An additional infirmity of the collective bargaining agreement
involved was the failure to post the same in at least two (2)
conspicuous places in the establishment at least five days before
its ratification. 8 Petitioners rationalization was that "(b)ecause of
the real existence of the illegal strike staged by SPFL in all the
stores of GAW Trading, Inc. it had become impossible to comply
with the posting requirement in so far as the realization of tits
purpose is concerned as there were no impartial members of the
unit who could be appraised of the CBA's contents. " 9 This
justification is puerile and unacceptable.
In the first place, the posting of copies of the collective bargaining
agreement is the responsibility of the employer which can easily
comply with the requirement through a mere mechanical act. The
fact that there were "no impartial members of the unit" is
immaterial. The purpose of the requirement is precisely to inform
the employees in the bargaining unit of the contents of said
agreement so that they could intelligently decide whether to accept
the same or not. The assembly of the members of ALU wherein
the agreement in question was allegedly explained does not cure
the defect. The contract is intended for all employees and not only
for the members of the purpoted representative alone. It may even
be said the the need to inform the non-members of the terms
thereof is more exigent and compelling since, in all likehood, their
contact with the persons who are supposed to represent them is
limited. Moreover, to repeat, there was an apparent and suspicious
hurry in the formulation and finalization of said collective
bargaining accord. In the sforementioned letter where respondent
company required petitioner union to present proof of its support
by the employees, the company already suggested that petitioner
ALU at the same time submit the proposals that it intended to
embody in the projected agreement. This was on May 12, 1986,
and prompltly on thre following day the negoltiation panel; furnish
respondent company final copies of the desired agreement whcih,
with equal dispatch, was signed on May 15, 1986.
Another potent reason for annulling the disputed collective
bargaining is the finding of respondent director that one hundred
eighty-one( 181) of the two hundred eighty-one (281) workers who
"ratified" the same now " strongly and vehemently deny and/or
repudiate the alleged negotiations and ratification of the CBA.
" 10 Although petitioner claims that only sev en (7) of the
repudiating group of workers belong to the total number who
allegedly ratified the agreement, nevertheless such substantiated
contention weighed against the factujal that the controverted
contract will not promote industrial stability . The Court has long
since declared that:
... Basic to the contract bar rule is the
proposition that the delay of the right to select
represen tatives can be justified only where
stability is deemed paramount. Excepted from
the contract which do not foster industrial
stability, such as contracts where the identity of
the representative is in doubt. Any stability
derived from such contracts must be
subordinated to the employees' freedom of

choice because it does nto establish the type

of industrial peace contemplated by the law. 11
At this juncture, petitioner should be reminded that the technical
rules of rpocedure do not strictly apply in the adjudication of labor
disputes. 12 Consequently, its objection that the evidence with
respect to the aforesaid repudiiation of the supposed collective
bargaining agreement cannot be considered for the first time on
appeal on the Bureau of Labor Relations should be disregarded,
especially considering the weighty significance thereof.
Both petitioner and private respondent GAW Trading, Inc. allege
that the employees of the latter are now enjoying the benefits of
the collective bargaining agreement that both parties had forged.
However, We cannot find sufficient evidence of record to support
this contention. The only evidence cited by petitioner is supposed
payment of union fees by said employees, a premise too tenuous
to sustain the desired conclusion. Even the actual number of
workers in the respondent company is not clear from the records.
Said private respondent claims that it is two hundred eighty-one
(281) 13 but petitioner suggests that it is more than that number.
The said parties should be aware that this Court is not an
adjudicator of facts. Worse, to borrow a trite but apt phrase, they
would heap the Ossa of confusion upon the Pelion of uncertainty
and still expect a definitive ruling on the matter thus confounded.
Additionally, the inapplicability of the contract bar rule is further
underscored by the fact that when the disputed agreement was
filed before the Labor Regional Office on May 27, 1986, a petition
for certification election had already been filed on May 19, 1986.
Although the petition was not supported by the signatures of thirty
percent (30%) of the workers in the bargaining unit, the same was
enough to initiate said certification election.
WHEREFORE, the order of the public respondent for the conduct
of a certification election among the rank-and-file workers of
respondent GAW Trading Inc. is AFFIRMED. The temporary
restraining order issued in this case pursuant to the Resolution of
March 25, 1987 is hereby lifted.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

G.R. No. 100485 September 21, 1994

SAN MIGUEL CORPORATION, petitioner,
vs.
THE HONORABLE BIENVENIDO E. LAGUESMA and NORTH
LUZON MAGNOLIA SALES LABOR UNIONINDEPENDENT, respondents.

THE HONORABLE UNDERSECRETARY

LAGUESMA ACTED WITH GRAVE ABUSE
OF DISCRETION WHEN HE IGNORED AND
TOTALLY DISREGARDED PETITIONER'S
VALID AND JUSTIFIABLE GROUNDS WHY
THE ERROR MADE IN GOOD FAITH BY
PETITIONER'S COUNSEL BE CORRECTED,
AND INSTEAD RULED:

Siguion Reyna, Montecillo & Ongsiako for petitioner.

E.N.A. Cruz & Associates for private respondent.

THAT PRIVATE
RESPONDENT IS "THE
SOLE AND EXCLUSIVE
BARGAINING AGENT
FOR ALL THE REGULAR
SALES OFFICES OF
MAGNOLIA DAIRY
PRODUCTS, NORTH
LUZON SALES AREA",
COMPLETELY IGNORING
THE ESTABLISHED
BARGAINING HISTORY
OF PETITIONER SMC.

PUNO, J.:
Petitioner San Miguel Corporation (SMC) prays that the Resolution
dated March 19, 1991 and the Order dated April 12, 1991 of public
respondent Undersecretary Bienvenido E. Laguesma declaring
respondent union as the sole and exclusive bargaining agent of all
the Magnolia sales personnel in northern Luzon be set aside for
having been issued in excess of jurisdiction and/or with grave
abuse of discretion.
On June 4, 1990, the North Luzon Magnolia Sales Labor Union
(respondent union for brevity) filed with the Department of Labor a
petition for certification election among all the regular sales
personnel of Magnolia Dairy Products in the North Luzon Sales
Area. 1

B
THAT PETITIONER IS
ESTOPPED FROM
QUESTIONING THE
"AGREEMENT" ENTERED
INTO AT THE HEARING
ON
9 NOVEMBER 1990, IN
CONTRAVENTION OF
THE ESTABLISHED
FACTS OF THE CASE
AND THE APPLICABLE
LAW ON THE MATTER.

Petitioner opposed the petition and questioned the

appropriateness of the bargaining unit sought to be represented by
respondent union. It claimed that its bargaining history in its sales
offices, plants and warehouses is to have a separate bargaining
unit for each sales office.
The petition was heard on November 9, 1990 with petitioner
being represented by Atty. Alvin C. Batalla of the Siguion Reyna
law office. Atty. Batalla withdrew petitioner's opposition to a
certification election and agreed to consider all the sales offices in
northern Luzon as one bargaining unit. At the pre-election
conference, the parties agreed inter alia, on the date, time and
place of the consent election. Respondent union won the election
held on November 24, 1990. In an Order dated December 3,
1990, 2 Mediator-Arbiter Benalfre J. Galang certified respondent
union as the sole and exclusive bargaining agent for all the regular
sales personnel in all the sales offices of Magnolia Dairy Products
in the North Luzon Sales Area.
Petitioner appealed to the Secretary of Labor. It claimed that
Atty. Batalla was only authorized to agree to the holding of
certification elections subject to the following conditions: (1) there
would only be one general election; (2) in this general election, the
individual sales offices shall still comprise separate bargaining
units. 3
In a Resolution dated March 19, 1991, 4 public respondent, by
authority of the Secretary of Labor, denied SMC's appeal and
affirmed the Order of the Med- Arbiter.
Hence this petition for certiorari.
Petitioner claims that:

We find no merit in the petition.

The issues for resolution are: (1) whether or not respondent union
represents an appropriate bargaining unit, and (2) whether or not
petitioner is bound by its lawyer's act of agreeing to consider the
sales personnel in the north Luzon sales area as one bargaining
unit.
Petitioner claims that in issuing the impugned Orders, public
respondent disregarded its collective bargaining history which is to
have a separate bargaining unit for each sales office. It insists that
its prior collective bargaining history is the most persuasive
criterion in determining the appropriateness of the collective
bargaining unit.
There is no merit in the contention.
A bargaining unit is a "group of employees of a given employer,
comprised of all or less than all of the entire body of employees,
consistent with equity to the employer, indicate to be the best
suited to serve the reciprocal rights and duties of the parties under
the collective bargaining provisions of the law." 5

The fundamental factors in determining the appropriate collective

bargaining unit are: (1) the will of the employees (Globe
Doctrine); 6 (2) affinity and unity of the employees' interest, such as
substantial similarity of work and duties, or similarity of
compensation and working conditions (Substantial Mutual Interests
Rule); (3) prior collective bargaining history; and (4) similarity of
employment status. 7
Contrary to petitioner's assertion, this Court has categorically ruled
that the existence of a prior collective bargaining history is neither
decisive nor conclusive in the determination of what constitutes an
appropriate bargaining unit. 8
Indeed, the test of grouping is mutuality or commonality of
interests. The employees sought to be represented by the
collective bargaining agent must have substantial mutual interests
in terms of employment and working conditions as evinced by the
type of work they perform.
In the case at bench, respondent union sought to represent the
sales personnel in the various Magnolia sales offices in northern
Luzon. There is similarity of employment status for only the regular
sales personnel in the north Luzon area are covered. They have
the same duties and responsibilities and substantially similar
compensation and working conditions. The commonality of interest
among he sales personnel in the north Luzon sales area cannot be
gainsaid. In fact, in the certification election held on November 24,
1990, the employees concerned accepted respondent union as
their exclusive bargaining agent. Clearly, they have expressed
their desire to be one.
Petitioner cannot insist that each of the sales office of Magnolia
should constitute only one bargaining unit. What greatly militates
against this position is the meager number of sales personnel in
each of the Magnolia sales office in northern Luzon. Even the
bargaining unit sought to be represented by respondent union in
the entire north Luzon sales area consists only of approximately
fifty-five (55) employees. 9 Surely, it would not be for the best
interest of these employees if they would further be fractionalized.
The adage "there is strength in number" is the very rationale
underlying the formation of a labor union.
Anent the second issue, petitioner claims that Atty. Batalla was
merely a substitute lawyer for Atty. Christine Ona, who got
stranded in Legaspi City. Atty. Batalla was allegedly unfamiliar with
the collective bargaining history of its establishment. Petitioner
claims it should not be bound by the mistake committed by its
substitute lawyer.
We are not persuaded. As discussed earlier, the collective
bargaining history of a company is not decisive of what should
comprise the collective bargaining unit. Insofar as the alleged
"mistake" of the substitute lawyer is concerned, we find that this
mistake was the direct result of the negligence of petitioner's
lawyers. It will be noted that Atty. Ona was under the supervision
of two (2) other lawyers, Attys. Jacinto de la Rosa, Jr. and George
C. Nograles. There is nothing in the records to show that these two
(2) counsels were likewise unavailable at that time. Instead of
deferring the hearing, petitioner's counsels chose to proceed
therewith. Indeed, prudence dictates that, in such case, the
lawyers allegedly actively involved in SMC's labor case should
have adequately and sufficiently briefed the substitute lawyer with
respect to the matters involved in the case and the specific limits of
his authority. Unfortunately, this was not done in this case. The

negligence of its lawyers binds petitioner. As held by this Court in

the case of Villa Rhecar Bus v. De la Cruz: 10
. . . As a general rule, a client is bound by the
mistakes of his counsel. Only when the
application of the general rule would result
in serious injustice should an exception thereto
be called for.
In the case at bench, petitioner insists that each of the sales offices
in northern Luzon should be considered as a separate bargaining
unit for negotiations would be more expeditious. Petitioner
obviously chooses to follow the path of least resistance. It is not,
however, the convenience of the employer that constitutes the
determinative factor in forming an appropriate bargaining unit.
Equally, if not more important, is the interest of the employees. In
choosing and crafting an appropriate bargaining unit, extreme care
should be taken to prevent an employer from having any undue
advantage over the employees' bargaining representative. Our
workers are weak enough and it is not our social policy to further
debilitate their bargaining representative.
In sum, we find that no arbitrariness or grave abuse of discretion
can be attributed to public respondents certification of respondent
union as the sole and exclusive bargaining agent of all the regular
Magnolia sales personnel of the north Luzon sales area.
WHEREFORE, premises considered, the challenged Resolution
and Order of public respondent are hereby AFFIRMED in toto,
there being no showing of grave abuse of discretion or lack of
jurisdiction.
SO ORDERED.
Narvasa, C.J., Regalado and Mendoza, JJ., concur.
Padilla, J., took no part.

G.R. No. 102130 July 26, 1994

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

election and to conduct and supervise the

same within twenty (20) days from receipt by
the parties of this Order. The "Masterlist of
Office and Technical Employees" shall be the
basis in determining the employees qualified to
vote during the certification election.

J.V. Yap Law Office for petitioner.

SO ORDERED. 2

PUNO, J.:
The sole issue for resolution in this Petition for Certiorari with
prayer for the issuance of preliminary injunction and/or restraining
order is 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.
Petitioner Golden Farms, Inc., is a corporation engaged in the
production and marketing of bananas for export. On February 27,
1992, 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 Golden Farms.
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, G.R. No. 78755, July 19, 1989. 1
Respondent PFL opposed petitioner's Motion to Dismiss. It
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 Collecting
Bargaining Agreement (CBA) between petitioner and NFL. It also
contended that the case invoked by petitioner was inapplicable to
the present case.
In its reply, petitioner argued that the monthly paid office and
technical employees should have joined the existing collective
bargaining unit of the rank-and-file employees if they are not
manegerial employees.
On April 18, 1991, the Med-Arbiter granted the petition and
ordered that a certification election be conducted, viz:
WHEREFORE, premises considered, the
present petition filed by the Progressive
Federation of Labor, for certification election
among the office and technical employees of
Golden Farms, Inc., is, as it is hereby,
GRANTED with the following choices:
1. Progressive Federation of Labor (PFL);
2. No. union.
The designated representation officer is hereby
directed to call the parties to a pre-election
conference to thresh out the mechanics of the

Petitioner seasonably appealed to public respondent Secretary of

Labor. On August 6, 1991, respondent Secretary of Labor issued
the assailed Decision denying the appeal for lack of
merit. 3 Petitioner filed a Motion for Reconsideration but the same
was also denied on September 13, 1991.
Thus, this petition for certiorari interposing two (2) issues.
I
THE CREATION OF AN ADDITIONAL
BARGAINING UNIT FOR CERTAIN RANK
AND FILE EMPLOYEES WILL NOT ONLY
SPLIT THE EXISTING ONE BUT WILL ALSO
NEGATE THE PRINCIPLE OF RES
JUDICATA.
II
THE PROGRESSIVE FEDERATION OF
LABOR BEING THE EXCLUSIVE
BARGAINING AGENT OF THE
SUPERVISORY EMPLOYEES IS
DISQUALIFIED FROM REPRESENTING THE
OFFICE AND TECHNICAL EMPLOYEES.
The petition is devoid of merit.
The monthly paid office and technical rank-and-file employees of
petitioner Golden Farms enjoy the constitutional right to selforganization and collective bargaining. 4 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. 5 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.' 6
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-andfile 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. So we held in University of the Philippines vs.
Ferrer-Calleja, 7 where we sanctioned the formation of two (2)
separate bargaining units within the establishment, viz:
[T]he dichotomy of interests, the dissimilarity in
the nature of the work and duties as well as in
the compensation and working conditions of
the academic and non-academic personnel
dictate the separation of these two categories
of employees for purposes of collective
bargaining. The formation of two separate
bargaining units, the first consisting of the
rank-and-file non-academic employees, and
the second, of the rank-and-file academic
employees, is the set-up that will best assure
to all the employees the exercise of their
collective bargaining rights.
Petitioner next contends that these monthly paid office and
technical employees are managerial employees. They allegedly
include those in the accounting and personnel department,
cashier, and other employees holding positions with access to
classified information.
We are not persuaded. Article 212, paragraph (m) of the Labor
Code, as amended, defines as managerial employee as follows:
"Managerial employee" is one who is vested
with power or prerogatives to lay down and
execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory
employees are those who, in the interest of the
employer, effectively recommend such
managerial actions if the exercise of such
authority is not merely routinary or clerical in
nature but requires the use of independent
judgment. All employees not falling within any
of the above definitions are considered rankand-file employees for purposes of this Book.

join/form a labor organization of their own

choice. 9
Our decision in Golden Farms, Inc., vs. Honorable Pura FerrerCalleja, op. cit., does not pose any obstacle in holding a
certification election among petitioner's monthly paid rank-and-file
employees. The issue brought to fore in that case was totally
different, i.e., whether or not petitioner's confidential employees,
considering the nature of their work, should be included in the
bargaining unit of the daily paid rank-and-file employees. In the
case at bench, the monthly paid rank-and-file employees of
petitioner are being separated as a bargaining unit from its daily
paid rank-and-file employees, on the ground that they have
different interest to protect. The principle of res
judicata is, therefore, inapplicable.
The second assigned error which was not raised in the
proceedings below must necessarily fail. The alleged error involves
a question of fact which this Court cannot resolve. Petitioner
submitted this contention only in its Memorandum dated February
12, 1993. 10 In this Memorandum, petitioner cited LRD Case No.
OXI-UR-70 for Direct Recognition/Certification Election. But even a
side glance of the cited case will reveal that it involves a petition for
direct certification among the rank-and-file office and technical
employees of the Golden Farms Inc., (not supervisory employees)
under the House of Investment, Ladislawa Village, Buhaning,
Davao City filed by the National Federation of Labor (not the
respondent Progressive Federation of Labor). The averment of
petitioner is baseless and its recklessness borders the
contemptuous.
Finally, we note that it was petitioner company that filed the motion
to dismiss the petition for election. The general rule is that an
employer has no standing to question a certification election since
this is the sole concern of the workers. 11 Law and policy demand
that employers take a strick, hands-off stance in certification
elections. The bargaining representative of employees should be
chosen free from any extraneous influence of management. A
labor bargaining representative, to be effective, must owe its
loyalty to the employees alone and to no other.
WHEREFORE, the petition is DISMISSED for lack of merit. With
costs against petitioner.
SO ORDERED.

Given this definition, the monthly paid office and

technical employees, accountants, and cashiers of the
petitioner are not managerial employees for they do not
participate in policy-making but are given cut out policies
to execute and standard practices to observe. 8 In the
main, the discharge of their duties does not involve the
use of independent judgment. As factually found by the
Med-Arbiter, to wit:
A perusal of the list of the office and technical
employees sought to be represented in the
instant case, with their corresponding
designation does not show that said Office and
Technical employees exercises supervisory or
managerial functions.
The office believes and so hold that the
employees whose names appear in the
"Masterlist of Office and Technical Employees"
submitted during the hearing are eligible to

Narvasa, C.J., Padilla, Regalado and Mendoza, JJ. concur.

G.R. No. L-28223

August 30, 1968

MECHANICAL DEPARTMENT LABOR UNION SA PHILIPPINE

NATIONAL RAILWAYS, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and SAMAHAN NG MGA
MANGGAGAWA SA CALOOCAN SHOPS,respondents.
Sisenando Villaluz for petitioner.
Gregorio E. Fajardo for respondent Samahan ng mga
Manggagawa sa Caloocan Shops.
REYES, J.B.L., J.:
Petition by the "Mechanical Department Labor Union sa PNR" for a
review of an order of the Court of Industrial Relations, in its Case
No. 1475-MC, directing the holding of a plebiscite election to
determine whether the employees at the Caloocan Shops desire
the respondent union, "Samahan ng mga Manggagawa sa
Caloocan Shops", to be separated from the Mechanical
Department Labor Union, with a view to the former being
recognized as a separate bargaining unit.
The case began on 13 February 1965 by a petition of the
respondent "Samahan ng mga Manggagawa, etc." calling attention
to the fact that there were three unions in the Caloocan shops of
the Philippine National Railways: the "Samahan", the "Kapisanan
ng Manggagawa sa Manila Railroad Company", and the
Mechanical Department Labor Union; that no certification election
had been held in the last 12 months in the Caloocan shops; that
both the "Samahan" and the Mechanical Department Labor Union
had submitted different labor demands upon the management for
which reason a certification election was needed to determine the
proper collective bargaining agency for the Caloocan shop
workers.
The petition was opposed by the management as well as by the
Mechanical Department Labor Union, the latter averring that it had
been previously certified in two cases as sole and exclusive
bargaining agent of the employees and laborers of the PNR'S
mechanical department, and had negotiated two bargaining
agreements with management in 1961 and 1963; that before the
expiration of the latter, a renewal thereof had been negotiated and
the contract remained to be signed; that the "Samahan" had been
organized only in 21 January 1965; that the Caloocan shops unit
was not established nor separated from the Mechanical
Department unit; that the "Samahan" is composed mainly of
supervisors who had filed a pending case to be declared nonsupervisors; and that the purpose of the petition was to disturb the
present smooth working labor management relations.
By an order of 18 August 1967, Judge Arsenio Martinez, after
receiving the evidence, made the following findings:.1wph1.t
The Court, after a cursory examination of the evidence
presented made the following findings: That petitioner
union is composed of workers exclusively at the
Caloocan shops of the Philippine National Railways
charged with the maintenance of rolling stocks for
repairs; major repairs of locomotive, engines, etc. are
done in the Caloocan shops while minor ones in the
Manila sheds; workers in the Caloocan shops do not
leave their station unlike Manila shop workers who go
out along the routes and lines for repairs; workers both in
the Caloocan shops and Manila sheds are exposed to

hazards occasioned by the nature of their work; that with

respect to wages and salaries of employees, categories
under the Job Classification and Evaluation Plan of the
company apply to all workers both in the Caloocan
Shops and Manila sheds; administration over
employees, members of petitioner union as well as
oppositor is under the Administrative Division of the
company; that from the very nature of their work,
members of petitioner union and other workers of the
Mechanical Department have been under the coverage
of the current collective bargaining agreement which was
a result of a certification by this Court of the Mechanical
Department Labor union, first in 1960 and later in 1963.
Subsequently, when the latter contract expired,
negotiations for its renewal were had and at the time of
the filing of this petition was already consummated, the
only act remaining to be done was to affix the signatures
of the parties thereto; that during the pendency of this
petition, on June 14, 1965, the aforesaid collective
bargaining agreement was signed between the
Philippine National Railways and the Mechanical
Department Labor Union sa Philippine National Railways
(Manila Railroad Company).
The main issue involved herein is: Whether or not a new
unit should be established, the Caloocan shops,
separate and distinct from the rest of the workers under
the Mechanical Department now represented by the
Mechanical Department Labor Union.
The Caloocan Shops, all located at Caloocan City have
360 workers more or less. It is part and parcel of the
whole Mechanical Department of the Philippine National
Railways. The department is composed of four main
divisions or units, namely: Operations, Manila Area and
Lines; Locomotive Crew; Motor Car Crew; and the Shops
Rolling Stocks Maintenance. (Exhibits "D" and "D-1").
The Locomotive crew and Motor Car Crew, though part
of the Mechanical Department, is a separate unit, and is
represented by the Union de Maquinistas, Fogoneros Y
Motormen. The workers under the other two main units
of the departments are represented by the Mechanical
Department Labor Union. The workers of the Shops
Rolling Stocks Maintenance Division or the Caloocan
Shops now seek to be separated from the rest of the
workers of the department and to be represented by the
"Samahan Ng Mga Manggagawa sa Caloocan Shops." .
There is certainly a community of interest among the
workers of the Caloocan Shops. They are grouped in
one place. They work under one or same working
condition, same working time or schedule and are
exposed to same occupational risk.
Though evidence on record shows that workers at the
Caloocan Shops perform the same nature of work as
their counterparts in the Manila Shed, the difference lies
in the fact that workers at the Caloocan Shops perform
major repairs of locomotives, rolling stocks, engines,
etc., while those in the Manila Shed, works on minor
repairs. Heavy equipment and machineries are found in
the Caloocan Shops.

The trial judge then reviewed the collective bargaining history of

the Philippine National Railways, as follows: 1wph1.t
On several similar instances, this Court allowed the
establishment of new and separate bargaining unit in
one company, even in one department of the same
company, despite the existence of the same facts and
circumstances as obtaining in the case at bar.
The history of the collective bargaining in the Manila
Railroad Company, now the Philippine National Railways
shows that originally, there was only one bargaining unit
in the company, represented by the Kapisanan Ng
Manggagawa sa MRR. Under Case No. 237-MC, this
Court ordered the establishment of two additional units,
the engine crew and the train crew to be represented by
the Union de Maquinistas, Fogoneros, Ayudante Y
Motormen and Union de Empleados de Trenes,
respectively. Then in 1961, under Cases Nos. 491-MC,
494-MC and 507-MC three new separate units were
established, namely, the yard crew unit, station
employees unit and engineering department employees
unit, respectively, after the employees concerned voted
in a plebiscite conducted by the court for the separation
from existing bargaining units in the company. Then
again, under Case No. 763-MC, a new unit, composed of
the Mechanical Department employees, was established
to be represented by the Mechanical Department Labor
Union. Incidentally, the first attempt of the employees of
the Mechanical Department to be separated as a unit
was dismissed by this Court of Case No. 488-MC.
In the case of the yard crew, station employees and the
Engineering Department employees, the Supreme Court
sustained the order of this Court in giving the employees
concerned the right to vote and decide whether or not
they desire to be separate units (See G.R. Nos. L-1629294, L-16309 and L-16317-18, November, 1965).
In view of its findings and the history of "union representation" in
the railway company, indicating that bargaining units had been
formed through separation of new units from existing ones
whenever plebiscites had shown the workers' desire to have their
own representatives, and relying on the "Globe doctrine" (Globe
Machine & Stamping Co., 3 NLRB 294) applied in Democratic
Labor Union vs. Cebu Stevedoring Co., L-10321, 28 February
1958, Judge Martinez held that the employees in the Caloocan
Shops should be given a chance to vote on whether their group
should be separated from that represented by the Mechanical
Department Labor Union, and ordered a plebiscite held for the
purpose. The ruling was sustained by the Court en
banc; wherefore, the Mechanical Department Labor Union
appealed to this Court questioning the applicability under the
circumstances of the "Globe doctrine" of considering the will of the
employees in determining what union should represent them.
Technically, this appeal is premature, since the result of the
ordered plebiscite among the workers of the Caloocan shops may
be adverse to the formation of a separate unit, in which event, as
stated in the appealed order, all questions raised in this case
would be rendered moot and academic. Apparently, however, the
appellant Mechanical Department Labor Union takes it for granted
that the plebiscite would favor separation.

We find no grave abuse of discretion in the issuance of the ruling

under appeal as would justify our interfering with it. Republic Act
No. 875 has primarily entrusted the prosecution of its policies to
the Court of Industrial Relations, and, in view of its intimate
knowledge concerning the facts and circumstances surrounding
the cases brought before it, this Court has repeatedly upheld the
exercise of discretion of the Court of Industrial Relations in matters
concerning the representation of employee groups (Manila Paper
Mills Employees & Workers' Association vs. C.I.R. 104 Phil. 10;
Benguet Consolidated vs. Bobok Lumber Jack Association, 103
Phil. 1150).
Appellant contends that the application of the "Globe doctrine" is
not warranted because the workers of the Caloocan shops do not
require different skills from the rest of the workers in the
Mechanical Department of the Railway Company. This question is
primarily one of facts. The Industrial Court has found that there is a
basic difference, in that those in the Caloocan shops not only have
a community of interest and working conditions but perform major
repairs of railway rolling stock, using heavy equipment and
machineries found in said shops, while the others only perform
minor repairs. It is easy to understand, therefore, that the workers
in the Caloocan shops require special skill in the use of heavy
equipment and machinery sufficient to set them apart from the rest
of the workers. In addition, the record shows that the collective
bargaining agreements negotiated by the appellant union have
been in existence for more than two (2) years; hence, such
agreements can not constitute a bar to the determination, by
proper elections, of a new bargaining representative (PLDT
Employees' Union vs. Philippine Long Distance Telephone Co., 51
Off. Gaz., 4519).
As to the charge that some of the members of the appellee,
"Samahan Ng Manggagawa", are actually supervisors, it appears
that the question of the status of such members is still pending
final decision; hence, it would not constitute a legal obstacle to the
holding of the plebiscite. At any rate, the appellant may later
question whether the votes of those ultimately declared to be
supervisors should be counted.
Whether or not the agreement negotiated by the appellant union
with the employer, during the pendency of the original petition in
the Court of Industrial Relations, should be considered valid and
binding on the workers of the Caloocan shops is a question that
should be first passed upon by the Industrial Court.
IN VIEW OF THE FOREGOING, the order appealed from is
affirmed, with costs against appellant Mechanical Department
Labor Union sa Philippine National Railways.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro,
Angeles and Fernando, JJ., concur. 1wph1.t

G.R. No. 85343 June 28, 1989

PHILTRANCO SERVICE ENTERPRISES, petitioner,
vs.
BUREAU OF LABOR RELATIONS and KAPISANAN NG MGA
KAWANI, ASSISTANT, MANGGAGAWA AT KONPIDENSIYAL
SA PHILTRANCO, respondents.
Bengzon, Zarraga, Narciso, Cudala, Pecson & Bengson for
petitioner.
Lily S. Dayaon for KASAMA KO .

GUTIERREZ, JR., J.:

In this petition for certiorari, the petitioner assails the order of the
Bureau of Labor Relations (BLR) dated September 5, 1988. The
dispositive portion of the order reads:
WHEREFORE, premises considered, the Order of the Med-Arbiter
dated 4 April 1988 is hereby set aside and vacated and a new one
entered ordering the conduct of a certification election among
regular rank-and-file professional, technical, administrative and
confidential employees of respondent company, with the following
choices:
1. Kapisanan ng mga Kawani, Assistant
Manggagawa at Konpidensyal sa Philtranco
(KASAMA KO)
2. No Union.
Let, therefore the records of the case be
remanded to the Office of origin for the
immediate conduct of the election.
SO ORDERED. (Rollo, p. 33)
The antecedent facts are as follows:
Petitioner Philtranco Service Enterprises, Inc. is a land
transportation company engaged in the business of carrying
passengers and freight. The company employees included field
workers consisting of drivers, conductors, coach drivers, coach
stewards and mechanics and office employees like clerks,
cashiers, programmers, telephone operators, etc.
On February 15, 1988, the Kapisanan ng mga Kawani, Assistant,
Manggagawa at Konpidensyal sa Philtranco (KASAMA KO), a
registered labor organization filed a petition for certification election
with the Department of Labor and Employment, alleging among
others that:
xxx xxx xxx
3. Petitioner desires to represent all
professional, technical, administrative, and
confidential employees personnel of
respondent at its establishments in Luzon,
Visayas and Mindanao for purposes of
collective bargaining;

4. The aforementioned employees were

always expressly excluded from participating in
the certification election conducted among the
rank and file employees (drivers, conductors,
coach drivers, coach stewards, and
mechanics) of respondent and are excluded
from the bargaining unit covered by the CBA
between respondent and its rank and file
employees. In addition, there exist substantial
differences in the terms and conditions of
employment between the above-mentioned
employees, hence, the former are covered by
another appropriate bargaining unit which is
separate and distinct from that of the rank and
file employees of respondent and; which has
been recognized by the Bureau of Labor
Relations and upheld by the Honorable
Supreme Court. Attached hereto as Annex 'A'
and Annex 'B' are copies of the decision of the
BLR and the Supreme Court in support
thereof;
xxx xxx xxx
6. The petition is supported by the signatures
of more than twenty percent (20%) of all
covered employees as provided for by law and
which shall be presented during the initial
hearing;
xxx xxx xxx
8. There has been no Consent Election or
Certification Election held and conducted by
this Honorable Office for the past three (3)
years prior to the filing of this petition in the
bargaining unit petitioner sought to represent,
the last Certification Election having been held
last November 27, 1984. Attached hereto as
Annex "C" is a copy of the Order issued by this
Honorable Office relative to the result of the
last certification election. (Rollo, pp. 4-5)
On February 24, 1988, the National Mines and Allied Workers
Union (NAMAWU-MIF) filed a motion for intervention alleging that
it is the bargaining agent of the workers at Philtranco and as such
it has a substantial interest in the outcome of the petition.
On February 26, 1988, Arbiter Paterno Adap called the parties to a
hearing. Philtranco and NAMAWU were ordered to submit their
respective position papers and KASAMA KO was given the
opportunity to submit a reply.
On April 4, 1988, a resolution was rendered with the following
dispositive portion:
WHEREFORE, in the light of the foregoing
premises, this petition is, as it is hereby
ordered DISMISSED. If there are still individual
members of the herein petitioner eligible to join
a labor organization, it is hereby directed that
all should be included/incorporated in the
existing bargaining unit.

Parties are further directed/enjoined to device

a mechanism for the implementation of the
matter herein treated. (Rollo, pp. 29-30)
KASAMA KO appealed to the Bureau of Labor Relations (BLR) On
September 5, 1988 the BLR reversed the resolution of the MedArbiter. A motion for reconsideration was denied in an order dated
October 10, 1988.
As prayed for by the petitioner, a temporary restraining order was
issued by this Court on November 7, 1988 restraining the BLR
from enforcing and/or carrying out the decision dated September 5,
1988 and the order dated October 10, 1988.
The Labor Code recognizes two (2) principal groups of employees,
namely, the managerial and the rank and file groups. Thus, Art.
212 (k) of the Code provides:
xxx xxx xxx
(k) Managerial employee' is one who is vested
with powers or prerogatives to lay down and
execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline employees, or to effectively
recommend such managerial actions. All
employees not falling within this definition are
considered rank and file employees for
purposes of this Book.
In implementation of the aforequoted provision of the law, Section
11 of Rule II, Book V of the Omnibus Rules implementing the
Labor Code did away with existing supervisors' unions classifying
the members either as managerial or rank and file employees
depending on the work they perform. If they discharge managerial
functions, supervisors are prohibited from forming or joining any
labor organization. If they do not perform managerial work, they
may join the rank and file union and if none exists, they may form
one such rank and file organization. This rule was emphasized in
the case of Bulletin Publishing Corp. v. Sanchez, (144 SCRA 628
[1986]).
It, therefore, follows that the members of the KASAMA KO who are
professional, technical, administrative and confidential personnel of
PHILTRANCO performing managerial functions are not qualified to
join, much less form a union. This rationalizes the exclusion of
managers and confidential employees exercising managerial
functions from the ambit of the collective bargaining unit. As
correctly observed by Med-Arbiter Adap:
... managerial and confidential employees were
expressly excluded within the operational
ambit of the bargaining unit for the simple
reason that under the law, managers are
disqualified to be members of a labor
organization.
On the other hand, confidential workers were
not included because either they were
performing managerial functions and/or their
duties and responsibilities were considered or
may be categorized as part and parcel of
management as the primary reason for their
exclusion in the bargaining unit. The other
categorized employees were likewise not

included because parties have agreed on the

fact that the aforementioned group of workers
are not qualified to join a labor organization at
the time the agreement was executed and that
they were classified as outside the parameter
of the bargaining unit. (Rollo, pp. 28-29)
The respondents, on the other hand, aver that the members of the
respondent union are rank and file employees qualified to form a
union. In fact their status as rank and file employees was allegedly
recognized by this Court in the case of Pantranco South Express,
Inc. v. NAMAWU, (G.R. No. 67475, July 30, 1984).
The reliance on the Pantranco South Express, Inc. case is
misplaced. The petition filed by Pantranco South Express Inc.
simply asked for a ruling that certain employees were performing
managerial functions. We denied the petition for lack of merit in a
minute resolution. There was absolutely no discussion on the
recognition of another separate rank and file union in addition to
the existing bargaining unit.
There is no conflict. The employees of Philtranco have been
appraised and their functions evaluated. Managers by any name
may not join the rank and file union. On the other hand, those who
are rank and file workers may join the existing bargaining unit
instead of organizing another bargaining unit and compelling the
employer to deal with it.
We are constrained to disallow the formation of another union.
There is no dispute that there exists a labor union in the company,
herein intervenor, the NAMAWU-MIF which is the collective
bargaining agent of the rank and file employees in PHILTRANCO.
Article 2 of the Collective Bargaining Agreement between
PHILTRANCO and NAMAWU-MIF under the sub-title Appropriate
Bargaining Unit provides:
Section 1 -The appropriate bargaining unit
covered by this agreement consists of all
regular rank- and file employees of the
company. Managerial, confidential, casuals,
temporary, probationary and contractual
employees as well as trainees, apprentices,
security personnel and foreman are excluded
from the bargaining unit and therefore, not
covered by this AGREEMENT. The job
description outside the bargaining unit are
enumerated in the list hereto attached as
Annex '1' and made an integral part hereof
(Emphasis supplied; Rollo, p. 27)
We see no need for the formation of another union in
PHILTRANCO. The qualified members of the KASAMA KO may
join the NAMAWU-MIF if they want to be union members, and to
be consistent with the one-union, one-company policy of the
Department of Labor and Employment, and the laws it enforces.
As held in the case of General Rubber and Footwear Corp. v.
Bureau of Labor Relations (155 SCRA 283 [1987]):
... It has been the policy of the Bureau to
encourage the formation of an employer unit
'unless circumstances otherwise require. The
proliferation of unions in an employer unit is
discouraged as a matter of policy unless there
are compelling reasons which would deny a

certain class of employees the right to selforganization for purposes of collective

bargaining. This case does not fall squarely
within the exception. (Emphasis supplied).

bargaining unit because of its well established

goal towards a single employer wide unit which
is more to the broader and greater benefit of
the employees working force.

There are no compelling reasons in this case such as a denial to

the KASAMA KO group of the right to join the certified bargaining
unit or substantial distinctions warranting the recognition of a
separate group of rank and file workers. Precisely, NAMAWU-MIF
intervened to make it clear it has no objections to qualified rank
and file workers joining its union.
It is natural in almost all fairly sized companies to have groups of
workers discharging different functions. No company could
possibly have all employees performing exactly the same work.
Variety of tasks is to be expected. It would not be in the interest of
sound labor-management relations if each group of employees
assigned to a specialized function or section would decide to break
away from their fellow-workers and form their own separate
bargaining unit. We cannot allow one unit for typists and clerks,
one unit for accountants, another unit for messengers and drivers,
and so on in needless profusion. Where shall the line be drawn?
The questioned decision of the public respondent can only lead to
confusion, discord and labor strife.
The respondents state that this case is an exception to the general
rule considering that substantial differences exist between the
office employees or professional, technical, administrative and
confidential employees vis-a-vis the field workers or drivers,
conductors and mechanics of the petitioner. Against this
contention, we find that the "substantial differences" in the terms
and conditions of employment between the private respondent's
members and the rest of the company's rank and file employees
are more imagined than real. We agree with the petitioner that the
differences alleged are not substantial or significant enough to
merit the formation of another union.
PHILTRANCO is a large bus company engaged in the business of
carrying passengers and freight, servicing Luzon, Visayas and
Mindanao. Certainly there is a commonality of interest among filing
clerks, dispatchers, drivers, typists, and field men. They are all
interested in the progress of their company and in each worker
sharing in the fruits of their endeavors equitably and generously.
Their functions mesh with one another. One group needs the other
in the same way that the company needs them all. The drivers,
mechanics and conductors are necessary for the company but
technical, administrative and office personnel are also needed and
equally important for the smooth operation of the business. There
may be differences as to the nature of their individual assignments
but the distinctions are not enough to warrant the formation of
separate unions. The private respondent has not even shown that
a separate bargaining unit would be beneficial to the employees
concerned. Office employees also belong to the rank and file.
There is an existing employer wide unit in the company
represented by NAMAWU-MIF. And as earlier stated, the fact that
NAMAWU-MIF moved to intervene in the petition for certification
election filed by KASAMA KO negates the allegations that
"substantial differences" exist between the employees concerned.
We find a commonality of interest among them. There are no
compelling reasons for the formation of another union.
We quote with favor Med-Arbiter Adap's rationale, to wit:
... It is against the policy of the Department of
Labor to dismember the already wide existing

The philosophy is to avoid fragmentation of the

bargaining unit so as to strengthen the
employees bargaining power with the
management. To do otherwise, would be
contrary, inimical and repugnant to the
objectives of a strong and dynamic unionism.
Let there be a unified whole rather than a
divisive one, let them speak as one in a clear
resonant voice unmarred by dissension
towards progressive unionism. (Rollo, p. 29)
WHEREFORE, the decision of the Bureau of Labor Relations,
dated September 5, 1988 and the Order dated October 10, 1988
are hereby SET ASIDE. The resolution of the Med-Arbiter dated
April 4, 1988 is REINSTATED. The restraining order issued by the
Court on November 7, 1988 is made permanent.
SO ORDERED.
Fernan, C.J.,(Chairman), Feliciano, Bidin and Cortes, JJ.,., concur.

[G.R. No. 128845. June 1, 2000]

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS
(ISAE), petitioner, vs. HON. LEONARDO A. QUISUMBING in
his capacity as the Secretary of Labor and Employment; HON.
CRESENCIANO B. TRAJANO in his capacity as the Acting
Secretary of Labor and Employment; DR. BRIAN MACCAULEY
in his capacity as the Superintendent of International SchoolManila; and INTERNATIONAL SCHOOL, INC., respondents.
DECISION
KAPUNAN, J.:
Receiving salaries less than their counterparts hired abroad, the
local-hires of private respondent School, mostly Filipinos, cry
discrimination. We agree. That the local-hires are paid more than
their colleagues in other schools is, of course, beside the point.
The point is that employees should be given equal pay for work of
equal value. That is a principle long honored in this jurisdiction.
That is a principle that rests on fundamental notions of justice. That
is the principle we uphold today.
Private respondent International School, Inc. (the School, for
short), pursuant to Presidential Decree 732, is a domestic
educational institution established primarily for dependents of
foreign diplomatic personnel and other temporary residents.[1] To
enable the School to continue carrying out its educational program
and improve its standard of instruction, Section 2(c) of the same
decree authorizes the School to
employ its own teaching and management
personnel selected by it either locally or
abroad, from Philippine or other nationalities,
such personnel being exempt from otherwise
applicable laws and regulations attending their
employment, except laws that have been or
will be enacted for the protection of employees.
Accordingly, the School hires both foreign and local teachers as
members of its faculty, classifying the same into two: (1) foreignhires and (2) local-hires. The School employs four tests to
determine whether a faculty member should be classified as a
foreign-hire or a local hire:
a.....What is one's domicile?
b.....Where is one's home economy?
c.....To which country does one owe economic
allegiance?
d.....Was the individual hired abroad
specifically to work in the School and was the
School responsible for bringing that individual
to the Philippines?[2]

paid a salary rate twenty-five percent (25%) more than local-hires.

The School justifies the difference on two "significant economic
disadvantages" foreign-hires have to endure, namely: (a) the
"dislocation factor" and (b) limited tenure. The School explains:
A foreign-hire would necessarily have to uproot
himself from his home country, leave his family
and friends, and take the risk of deviating from
a promising career path-all for the purpose of
pursuing his profession as an educator, but
this time in a foreign land. The new foreign hire
is faced with economic realities: decent abode
for oneself and/or for one's family, effective
means of transportation, allowance for the
education of one's children, adequate
insurance against illness and death, and of
course the primary benefit of a basic
salary/retirement compensation.
Because of a limited tenure, the foreign hire is
confronted again with the same economic
reality after his term: that he will eventually and
inevitably return to his home country where he
will have to confront the uncertainty of
obtaining suitable employment after a long
period in a foreign land.
The compensation scheme is simply the
School's adaptive measure to remain
competitive on an international level in terms of
attracting competent professionals in the field
of international education.[3]
When negotiations for a new collective bargaining agreement were
held on June 1995, petitioner International School Alliance of
Educators, "a legitimate labor union and the collective bargaining
representative of all faculty members"[4] of the School, contested
the difference in salary rates between foreign and local-hires. This
issue, as well as the question of whether foreign-hires should be
included in the appropriate bargaining unit, eventually caused a
deadlock between the parties.
On September 7, 1995, petitioner filed a notice of strike. The
failure of the National Conciliation and Mediation Board to bring the
parties to a compromise prompted the Department of Labor and
Employment (DOLE) to assume jurisdiction over the dispute. On
June 10, 1996, the DOLE Acting Secretary, Crescenciano B.
Trajano, issued an Order resolving the parity and representation
issues in favor of the School. Then DOLE Secretary Leonardo A.
Quisumbing subsequently denied petitioner's motion for
reconsideration in an Order dated March 19, 1997. Petitioner now
seeks relief in this Court.
Petitioner claims that the point-of-hire classification employed by
the School is discriminatory to Filipinos and that the grant of higher
salaries to foreign-hires constitutes racial discrimination.

Should the answer to any of these queries point to the Philippines,

the faculty member is classified as a local hire; otherwise, he or
she is deemed a foreign-hire.

The School disputes these claims and gives a breakdown of its

faculty members, numbering 38 in all, with nationalities other than
Filipino, who have been hired locally and classified as local
hires.[5]The Acting Secretary of Labor found that these non-Filipino
local-hires received the same benefits as the Filipino local-hires:

The School grants foreign-hires certain benefits not accorded

local-hires. These include housing, transportation, shipping costs,
taxes, and home leave travel allowance. Foreign-hires are also

The compensation package given to local-hires has been shown to

apply to all, regardless of race. Truth to tell, there are foreigners

who have been hired locally and who are paid equally as Filipino
local hires.[6]

To our mind, these provisions demonstrate the

parties' recognition of the difference in the
status of two types of employees, hence, the
difference in their salaries.

The Acting Secretary upheld the point-of-hire classification for the

distinction in salary rates:

The Union cannot also invoke the equal

protection clause to justify its claim of parity. It
is an established principle of constitutional law
that the guarantee of equal protection of the
laws is not violated by legislation or private
covenants based on reasonable classification.
A classification is reasonable if it is based on
substantial distinctions and apply to all
members of the same class. Verily, there is a
substantial distinction between foreign hires
and local hires, the former enjoying only a
limited tenure, having no amenities of their own
in the Philippines and have to be given a good
compensation package in order to attract them
to join the teaching faculty of the School.[7]

The principle "equal pay for equal work" does

not find application in the present case. The
international character of the School requires
the hiring of foreign personnel to deal with
different nationalities and different cultures,
among the student population.
We also take cognizance of the existence of a
system of salaries and benefits accorded to
foreign hired personnel which system is
universally recognized. We agree that certain
amenities have to be provided to these people
in order to entice them to render their services
in the Philippines and in the process remain
competitive in the international market.
Furthermore, we took note of the fact that
foreign hires have limited contract of
employment unlike the local hires who enjoy
security of tenure. To apply parity therefore, in
wages and other benefits would also require
parity in other terms and conditions of
employment which include the employment
contract.
A perusal of the parties' 1992-1995 CBA points
us to the conditions and provisions for salary
and professional compensation wherein the
parties agree as follows:
All members of the
bargaining unit shall be
compensated only in
accordance with Appendix
C hereof provided that the
Superintendent of the
School has the discretion
to recruit and hire
expatriate teachers from
abroad, under terms and
conditions that are
consistent with accepted
international practice.
Appendix C of said CBA further provides:
The new salary schedule is
deemed at equity with the
Overseas Recruited Staff
(OSRS) salary schedule.
The 25% differential is
reflective of the agreed
value of system
displacement and
contracted status of the
OSRS as differentiated
from the tenured status of
Locally Recruited Staff
(LRS).

We cannot agree.
That public policy abhors inequality and discrimination is beyond
contention. Our Constitution and laws reflect the policy against
these evils. The Constitution[8] in the Article on Social Justice and
Human Rights exhorts Congress to "give highest priority to the
enactment of measures that protect and enhance the right of all
people to human dignity, reduce social, economic, and political
inequalities." The very broad Article 19 of the Civil Code requires
every person, "in the exercise of his rights and in the performance
of his duties, [to] act with justice, give everyone his due, and
observe honesty and good faith."
International law, which springs from general principles of
law,[9] likewise proscribes discrimination. General principles of law
include principles of equity,[10] i.e., the general principles of fairness
and justice, based on the test of what is reasonable.[11] The
Universal Declaration of Human Rights,[12] the International
Covenant on Economic, Social, and Cultural Rights,[13] the
International Convention on the Elimination of All Forms of Racial
Discrimination,[14] the Convention against Discrimination in
Education,[15] the Convention (No. 111) Concerning Discrimination
in Respect of Employment and Occupation[16] - all embody the
general principle against discrimination, the very antithesis of
fairness and justice. The Philippines, through its Constitution, has
incorporated this principle as part of its national laws.
In the workplace, where the relations between capital and labor are
often skewed in favor of capital, inequality and discrimination by
the employer are all the more reprehensible.
The Constitution[17] specifically provides that labor is entitled to
"humane conditions of work." These conditions are not restricted to
the physical workplace - the factory, the office or the field - but
include as well the manner by which employers treat their
employees.
The Constitution[18] also directs the State to promote "equality of
employment opportunities for all." Similarly, the Labor
Code[19] provides that the State shall "ensure equal work
opportunities regardless of sex, race or creed." It would be an
affront to both the spirit and letter of these provisions if the State, in
spite of its primordial obligation to promote and ensure equal

employment opportunities, closes its eyes to unequal and

discriminatory terms and conditions of employment.[20]
Discrimination, particularly in terms of wages, is frowned upon by
the Labor Code. Article 135, for example, prohibits and
penalizes[21] the payment of lesser compensation to a female
employee as against a male employee for work of equal value.
Article 248 declares it an unfair labor practice for an employer to
discriminate in regard to wages in order to encourage or
discourage membership in any labor organization.
Notably, the International Covenant on Economic, Social, and
Cultural Rights, supra, in Article 7 thereof, provides:
The States Parties to the present Covenant
recognize the right of everyone to the
enjoyment of just and favourable conditions of
work, which ensure, in particular:
a.....Remuneration which provides all workers,
as a minimum, with:
i.....Fair wages and equal
remuneration for work of
equal value without
distinction of any kind, in
particular women being
guaranteed conditions of
work not inferior to those
enjoyed by men, with equal
pay for equal work;
x x x.
The foregoing provisions impregnably institutionalize in this
jurisdiction the long honored legal truism of "equal pay for equal
work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be
paid similar salaries.[22] This rule applies to the School, its
"international character" notwithstanding.
The School contends that petitioner has not adduced evidence that
local-hires perform work equal to that of foreign-hires.[23] The Court
finds this argument a little cavalier. If an employer accords
employees the same position and rank, the presumption is that
these employees perform equal work. This presumption is borne
by logic and human experience. If the employer pays one
employee less than the rest, it is not for that employee to explain
why he receives less or why the others receive more. That would
be adding insult to injury. The employer has discriminated against
that employee; it is for the employer to explain why the employee
is treated unfairly.
The employer in this case has failed to discharge this burden.
There is no evidence here that foreign-hires perform 25% more
efficiently or effectively than the local-hires. Both groups have
similar functions and responsibilities, which they perform under
similar working conditions.
The School cannot invoke the need to entice foreign-hires to leave
their domicile to rationalize the distinction in salary rates without
violating the principle of equal work for equal pay.

"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward

or recompense for services performed." Similarly, the Philippine
Legal Encyclopedia states that "salary" is the "[c]onsideration paid
at regular intervals for the rendering of services." In Songco v.
National Labor Relations Commission,[24] we said that:
"salary" means a recompense or consideration
made to a person for his pains or industry in
another man's business. Whether it be derived
from "salarium," or more fancifully from "sal,"
the pay of the Roman soldier, it carries with it
the fundamental idea of compensation for
services rendered. (Emphasis supplied.)
While we recognize the need of the School to attract foreign-hires,
salaries should not be used as an enticement to the prejudice of
local-hires. The local-hires perform the same services as foreignhires and they ought to be paid the same salaries as the latter. For
the same reason, the "dislocation factor" and the foreign-hires'
limited tenure also cannot serve as valid bases for the distinction in
salary rates. The dislocation factor and limited tenure affecting
foreign-hires are adequately compensated by certain benefits
accorded them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes and home leave
travel allowances.
The Constitution enjoins the State to "protect the rights of workers
and promote their welfare,"[25] "to afford labor full
protection."[26] The State, therefore, has the right and duty to
regulate the relations between labor and capital.[27] These relations
are not merely contractual but are so impressed with public interest
that labor contracts, collective bargaining agreements included,
must yield to the common good.[28] Should such contracts contain
stipulations that are contrary to public policy, courts will not
hesitate to strike down these stipulations.
In this case, we find the point-of-hire classification employed by
respondent School to justify the distinction in the salary rates of
foreign-hires and local hires to be an invalid classification. There is
no reasonable distinction between the services rendered by
foreign-hires and local-hires. The practice of the School of
according higher salaries to foreign-hires contravenes public policy
and, certainly, does not deserve the sympathy of this Court.
We agree, however, that foreign-hires do not belong to the same
bargaining unit as the local-hires.
A bargaining unit is "a group of employees of a given employer,
comprised of all or less than all of the entire body of employees,
consistent with equity to the employer indicate to be the best suited
to serve the reciprocal rights and duties of the parties under the
collective bargaining provisions of the law."[29] The factors in
determining the appropriate collective bargaining unit are (1) the
will of the employees (Globe Doctrine); (2) affinity and unity of the
employees' interest, such as substantial similarity of work and
duties, or similarity of compensation and working conditions
(Substantial Mutual Interests Rule); (3) prior collective bargaining
history; and (4) similarity of employment status.[30] 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. [31]
It does not appear that foreign-hires have indicated their intention
to be grouped together with local-hires for purposes of collective
bargaining. The collective bargaining history in the School also

shows that these groups were always treated separately. Foreignhires have limited tenure; local-hires enjoy security of tenure.
Although foreign-hires perform similar functions under the same
working conditions as the local-hires, foreign-hires are accorded
certain benefits not granted to local-hires. These benefits, such as
housing, transportation, shipping costs, taxes, and home leave
travel allowance, are reasonably related to their status as foreignhires, and justify the exclusion of the former from the latter. To
include foreign-hires in a bargaining unit with local-hires would not
assure either group the exercise of their respective collective
bargaining rights.
WHEREFORE, the petition is GIVEN DUE COURSE. The petition
is hereby GRANTED IN PART. The Orders of the Secretary of
Labor and Employment dated June 10, 1996 and March 19, 1997,
are hereby REVERSED and SET ASIDE insofar as they uphold
the practice of respondent School of according foreign-hires higher
salaries than local-hires.
SO ORDERED.

G.R. No. 101730 June 17, 1993

PHILIPPINE TELEGRAPH AND TELEPHONE
CORPORATION, petitioner,
vs.
HON. BIENVENIDO E. LAGUESMA and PT & T SUPERVISORY
EMPLOYEES UNION-APSOTEU, respondents.
Leonard U. Sawal for private respondent.

BELLOSILLO, J.:
Can a petition for certification election filed by supervisory
employees of an unorganized establishment one without a
certified bargaining agent be dismissed on the ground that
these employees are actually performing managerial functions?
This is the issue for reconsideration in this petition
for certiorari and mandamus, with prayer for the issuance of a
temporary restraining order, of
the Resolution of 11 June 1991 1 of then Acting Secretary of Labor
and Employment Nieves D. Confesor dismissing the appeal from
the Order of 11 December 1990 2 of the Med-Arbiter which granted
the petition for certification election, and of the Order of 15 August
1991 3 denying reconsideration.
On 22 October 1990, private respondent PT&T Supervisory
Employees Union-APSOTEU (UNION, for brevity) filed a petition
before the Industrial Relations Decision of the Department of Labor
and Employment praying for the holding of a certification election
among the supervisory employees of petitioner Philippine
Telegraph & Telephone Corporation (PT&T, for brevity). On 29
October 1990, UNION amended its petition to include the
allegation that PT&T was an unorganized establishment employing
roughly 100 supervisory employees from whose ranks will
constitute the bargaining unit sought to be established.
On 22 November 1990, PT&T moved to dismiss the petition for
certification election on the ground that UNION members were
performing managerial functions and thus were not merely
supervisory employees. Moreover, PT&T alleged that a certified
bargaining unit already existed among its rank-and-file employees
which barred the filing of the petition.
On 27 November 1990, respondent UNION opposed the motion to
dismiss, contending that under the Labor Code supervisory
employees are not eligible to join the Labor organization of the
rank-and-file employees although they may form their own.
On 4 December 1990, PT&T filed its reply to the opposition and
manifested that it is the function of an employee which is
determinative of whether said employee is a managerial or
supervisory employee.
On 11 December 1990, the Med-Arbiter granted the petition and
ordered that "a certification election . . . (be) conducted among the
supervisory personnel of the Philippine Telegraph & Telephone
Corporation (PT&T)." 4Petitioner PT&T appealed to the Secretary
of Labor and Employment.
On 24 May 1991, PT&T filed its supplemental appeal and attached
copies of the job descriptions and employment service records of

these supervisory employees, including samples of memoranda

and notices they made which purportedly illustrate their excercise
of management prerogatives. On 31 May 1991, petitioner
submitted more job descriptions to further bolster its contention.
On 11 June 1991, the Acting Secretary of Labor and Employment
Nieves R. Confesor denied petitioner's appeal for lack of merit.
However, she did not rule on the additional evidence presented by
PT&T. Instead, she directed that the evidence "should be
scrutinized and . . . considered during the exclusion-inclusion
proceedings where the employees who should be part of the
bargaining unit . . . will be determined." 5
On 15 August 1991, respondent Undersecretary of Labor and
Employment Bienvenido E. Laguesma denied reconsideration of
the resolution dismissing the appeal. Hence, the instant petition
anchored on the ground that public respondent committed grave
abuse of discretion in failing to rule on the additional evidence
submitted by petitioner which would have buttressed its contention
that there were no supervisory employees in its employ and which,
as a consequence, would have barred the holding of a certification
election.
The petition is devoid of merit.
The applicable provision of law in the case at bar is Art. 257 of the
Labor Code. It reads
Art. 257. Petitions in unorganized
establishments. In any establishment where
there is no certified bargaining agent, a
certification election shall automatically be
conducted by the Med-Arbiter upon the filing of
a petition by a legitimate labor organization
(emphasis supplied).
The supervisory employees of PT&T did not yet have a certified
bargaining agent to represent them at the time the UNION, which
is legitimate labor organization duly registered with the Department
of Labor and Employment,6 filed the petition for certification
election. Since no certified bargaining agent represented the
supervisory employees, PT&T may be deemed an unorganized
establishment within the purview of Art. 257 of the Labor Code.
The fact that petitioner's rank-and-file employees were already
represented by a certified bargaining agent doe not make PT&T an
organized establishment vis-a-vis the supervisory employees. After
all, supervisory employees are "not . . . eligible for membership in a
labor organization of the rank-and-file employees." 7
Consequently, the Med-Arbiter, as sustained by public respondent,
committed no grave abuse of discretion in granting the petition for
certification election among the supervisory employee of petitioner
PT&T because Art. 257 of the Labor Code provides that said
election should be automatically conducted upon filing of the
petition. In fact, Sec. 6 of Rule V, Book V, of the Implementing
Rules and Regulations makes it mandatory for the Med-Arbiter to
order the holding of a certification election. It reads
Sec. 6. Procedure. Upon receipt of a
petition, the Regional Director shall assign the
case to a Med-Arbiter for appropriate action.
The Med-Arbiter, upon receipt of the assigned
petition, shall have twenty (20) working days

from submission of the case for resolution

within which to dismiss or grant the petition.
In a petition filed by a legitimate organization
involving an unorganized establishment, the
Med-Arbiter shall immediately order the
conduct of a certification election . . .
(emphasis supplied)
Furthermore, PT&T did not possess the legal personality to file a
motion to dismiss the petition for certification election even if based
on the ground that its supervisory employees are in reality
managerial employees. It is well-settled that an employer has no
standing to question a certification election 8 since this is the sole
concern of the workers. 9 The only exception to this rule is where
the employer has to file the petition for certification election itself
pursuant to Art. 258 10 of the Labor Code because it was requested
to bargain collectively. But, other that this instance, the choice of a
collective bargaining agent is purely the internal affair of labor. 11
What PT&T should have done was to question the inclusion of any
disqualified employee in the certification election during the
exclusion-inclusion proceedings before the representation officer.
Indeed, this is precisely the purpose of the exclusion-inclusion
proceedings, i.e., to determine who among the employees are
entitled to vote and be part of the bargaining unit sought to be
certified.
Then Acting Secretary Nieves D. Confesor therefore did not abuse
her discretion when she opted not to act upon the additional
evidence by petitioner PT&T. For, the holding of a certification
election in an unorganized establishment is mandatory and must
immediately be ordered upon petition by a legitimate labor
organization, which is the case here.
At any rate, the additional evidence presented by petitioner failed
to sufficiently show that the supervisory employees who sought to
be included in the bargaining unit were in fact performing
managerial functions. On the contrary, while these supervisory
employees did excercise independent judgment which is not
routinary or clerical in nature, their authority was merely
recommendatory in character. In all instances, they were still
accountable for their actions to a superior officer, i.e., their
respective superintendents. The Solicitor General succinctly puts it
thus
A perusal of petitioner's annexes . . . would
readily show that the power of said supervisors
in matters relating to the excercise of
prerogatives for or against rank-and-file
employees is not absolute but merely
recommendatory in character. Note that their
reports recommending or imposing disciplinary
action against rank-and-file employees always
bore the concurrence of one or two superiors .
. . and the job descriptions . . . clearly stated
that these supervisors directly reported to a
superior and were accountable to the
latter 12 (emphasis supplied).
As the Med-Arbiter himself noted, "It is incredible that only rankand-file and managerial employees are the personnel of
respondent firm, considering the line of service it offers to the
public" 13 and the fact that it employed 2,500 employees, more or
less, all over the country.

A word more. PT&T alleges that respondent UNION is affiliated

with the same national federation representing its rank-and-file
employees. Invoking Atlas Lithographic Services, Inc. v.
Laguesma, 14 PT&T seeks the disqualification of respondent
UNION. Respondent, however, denied it was affiliated with the
same national federation of the rank-and-file employees union, the
Associated Labor Union or ALU. It clarified that the PT&T
Supervisory Employees Union is affiliated with Associated
Professional, Supervisory Office, Technical Employees Union or
APSOTEU, which is a separate and distinct national federation
from ALU.
IN VIEW OF THE FOREGOING, the Petition
for Certiorari and Mandamus with prayer for the issuance of a
temporary restraining order is DENIED.
Costs against petitioner.
SO ORDERED.
Cruz, Grio-Aquino and Quiason, JJ., concur.

[G.R. No. 77539. April 12, 1989.]

declared (Memorandum for the Petitioner, Rollo, p. 209).

ASSOCIATED LABOR UNIONS (ALU)-TUCP, Petitioners, v.

HON. CRESENCIANO B. TRAJANO, as Officer-In-Charge of
the Bureau of Labor Relations, ASSOCIATION OF
DEMOCRATIC LABOR ORGANIZATION (ADLO) and MITSUMI
PHILIPPINES, INC., Respondents.

On November 3, 1986, petitioner filed a notice of strike (Rollo, p.

27). Failing to arrive at an agreement during the conciliation
following the filing of the notice of strike, on December 1, 1986
petitioner went on strike.

Romeo S. Occea for Petitioner.

Banzuela, Flores, Miralles, Raneses, Sy, Taquio and
Associates for private respondent ADLO.
The Solicitor General for public Respondent.
DECISION
PARAS, J.:
This is a petition for certiorari with prayer for a temporary
restraining order, seeking review of the resolution of the Director of
Labor Relations* dated January 30, 1987 in BLR Case No. A-1-1887 ordering a certification election among the rank and file
employees of respondent company and the order of public
respondent** dated February 24, 1987 dismissing petitioners
motion for reconsideration for lack of merit.
The dispositive portion of the questioned resolution of the Bureau
of Labor Relations dated January 30, 1987 (Rollo. p. 55), reads, as
follows:jgc:chanrobles.com.ph
"Accordingly, let a certification election be conducted within twenty
(20) days from receipt of this Resolution, subject to the usual preelection conference, with the following as choices:chanrob1es
virtual 1aw library
1. Association of Democratic Labor Union (ADLO);
2. Associated Labor union-ALU; and
3. No Union.
Let, therefore, the records be forwarded to the Office of origin for
the immediate implementation of this Resolution."cralaw virtua1aw
library
The undisputed facts of the case are as follows:chanrob1es virtual
1aw library
Petitioner herein is the recognized collective bargaining
representative of all the rank and file employees of respondent
company with a collective bargaining agreement effective January
1, 1984 to December 31, 1986. Article XX of the collective
bargaining agreement provides that the CBA shall be for a period
of three (3) years effective January 1, 1984 to December 31, 1986,
provided that within sixty (60) days before its expiration the parties
shall renegotiate for a new one (Memorandum for the Petitioner,
Rollo, p. 208).chanrobles virtual lawlibrary
On October 22, 1986, a big majority of the covered employees of
respondent Company petitioned for the renewal of the expiring
agreement which petitioner and the respondent Company agreed
to negotiate. The parties, however, failed to arrive at an acceptable
agreement so that a bargaining deadlock on CBA negotiation was

Meanwhile, on November 4, 1986 private respondent Union,

Association of Democratic Labor Organization (ADLO) file with the
Ministry of Labor and Employment, Panlalawigang Tanggapan ng
Paggawa, Bataan Export Processing Zone, a verified petition for
certification election among the regular rank and file workers of
private company, docketed as Case No. BZED-CE-11-011-86
(Rollo, p. 87).
On December 4, 1986, petitioner and respondent company came
to an agreement with representatives of the parties setting their
signature on the resulting CBA on the same date (Rollo, p. 28),
ratified by a big majority of the covered employees, 584 out of 742
covered employees, also on the same date (Rollo, p. 43).
Petitioner registered the new CBA with the Regional Director of the
Ministry of Labor and Employment San Fernando, Pampanga on
December 4, 1986 (Rollo, p. 41) as required under Article 231 of
the Labor Code.
Petitioner herein intervened in the petition for certification election.
On December 9, 1986, the Med-Arbiter called for a conference to
see whether a consent election could be agreed upon between the
intervenor union and the petitioner union, but the parties failed to
reach an agreement despite several conferences (Rollo, pp. 59;
78).
The Med-Arbiter, Eladio de Jesus, issued an order for the holding
of a certification election in a resolution dated December 10, 1986,
premised on the fact that the petitioner, respondent union herein,
"has satisfactorily complied with the jurisdictional requirement of
this Office. The same records show that the instant petition was
seasonably filed within the sixty-day freedom period." (Rollo, p.
59). The said resolution was appealed by petitioner to the Director
of Bureau of Labor Relations but the appeal was dismissed for lack
of merit, in the questioned resolution of January 30, 1987 (Rollo, p.
53). Petitioners motion for reconsideration dated February 12,
1987 (Rollo, p. 19) was likewise dismissed in the equally
questioned order of February 24, 1987 (Rollo, p. 17). The MedArbiter then set the certification election for March 17, 1987 (Rollo,
p. 60).
Instant petition was filed with the Court on March 9, 1987 (Rollo, p.
2). On the same date, petitioner filed an urgent ex parte motion for
issuance of a temporary restraining order (Rollo, p. 6). On March
16, 1987, the Second Division of this Court, without giving due
course to the petition, required the respondents to comment
thereon and issued a temporary restraining order effective on the
same date that the resolution was passed, to continue until
otherwise ordered by the Court (Rollo, p. 64).
The comment of public respondent was filed by the Office of the
Solicitor General on June 3, 1987 (Rollo, p. 75). In a resolution
dated June 29, 1987, petitioner was require to file a reply thereto
and the letters addressed to then Chief Justice Claudio
Teehankee, of twenty one (21) progressive democratic labor
unions in Japan protesting the temporary restraining order issued
by the Court on March 16, 1987 was noted (Rollo, p. 129). Again
on August 31, 1987, the Court resolved to note the letters of the
progressive democratic organization in Japan (Rollo, p. 140).
On August 10, 1987, the petition was given due both parties were

required to submit their simultaneous memoranda within thirty (30)

days from notice (Rollo, p. 166). On September 18, 1987, the
Office of the Solicitor General manifested that it was adopting for
its memorandum its comment on the petition for certiorari filed with
the Court on June 3, 1987 (Rollo, p. 194) which was noted by the
Court in its resolution dated November 11, 1987 (Rollo, p. 202). In
the same resolution, the Court also noted receipt of two telegrams
of the Mitsumi Workers Union ALDO of Mariveles, Bataan dated
September 3 and September 9, 1987 (Rollo, pp. 184, 185),
requesting for information on the status of the case and for its
expeditious resolution, and the letters all addressed to the Chief
Justice from progressive unions in Japan together with two
undated letters signed in Japanese characters, all demanding for a
certification election (Rollo, pp. 170-182).chanrobles virtual
lawlibrary
Memorandum for the Petitioner was filed on November 27, 1987
(Rollo, p. 208) noted by the Court in its resolution dated February
15, 1988 (Rollo, p. 231). The motion to admit memorandum filed
by respondent union on April 7, 1988 (Rollo, p. 232) was granted
by the Court in its resolution dated April 18, 1988 (Rollo, p. 259)
wherein the Court also noted the memorandum of respondent
union attached to the motion (Rollo, p. 234).
The issues raised by petitioner (Rollo, p. 212), are as
follows:chanrob1es virtual 1aw library
I
THAT THE PUBLIC RESPONDENT ERRED IN NOT HOLDING
THAT NO CERTIFICATION ELECTION MAY BE HELD DUE TO
THE FACT THAT A BARGAINING DEADLOCK TO WHICH
PETITIONER IS A PARTY IS SUBMITTED TO
CONCILIATION/ARBITRATION AND THERE IS A VALID NOTICE
OF STRIKE PRIOR TO THE FILING OF THE PETITION FOR
CERTIFICATION ELECTION ON DECEMBER 4, 1986.
II
THAT THE PUBLIC RESPONDENT ERRED IN NOT HOLDING
THAT THE COLLECTIVE BARGAINING AGREEMENT ENTERED
INTO AS A RESULT OF A BARGAINING DEMAND
CONCILIATION DURING THE PROGRESS OF A STRIKE
HAVING BEEN ACCORDINGLY REPORTED TO THE
DEPARTMENT OF LABOR AND EMPLOYMENT PURSUANT TO
THE PROVISIONS OF ARTICLE 231 OF THE LABOR CODE
RENDERS THE FILING OF THE PETITION FOR
CERTIFICATION ELECTION PREMATURE.
III
THAT THE PUBLIC RESPONDENT ERRED IN NOT DISMISSING
THE PETITION, ANNEXED "D" AND HOLDING THAT THE
COLLECTIVE BARGAINING AGREEMENT (ANNEX "B" to
ANNEX "B" HEREOF) HAVING BEEN RATIFIED BY THE
MEMBERS AND THE BENEFITS THEREIN ENJOYED IS A BAR
TO THE HOLDING OF A CERTIFICATION ELECTION.
The petition is devoid of merit.
Simply stated, the sole issue is whether or not public respondent
committed a grave abuse of discretion amounting to lack of
jurisdiction in ordering a certification election considering that at

the time the petition for certification election was filed there was a
bargaining deadlock between company and the petitioner union, as
a result of which petitioner union filed a notice of strike.
In fact, it actually went on strike, and pending decision on the said
petition, petitioner and respondent company came to terms on the
collective bargaining agreement duly ratified by a big majority of
the covered members and duly registered with the Department of
Labor and Employment.
Public respondent denied petitioners motion for reconsideration,
finding "no compelling justification to effect a consideration, much
less a reversal" of the resolution of January 30, 1987 (Rollo, p. 18).
The aforesaid resolution dismissed the appeal of petitioner as
intervenor in the petition for certification election based on the
following: (1) the records show that the petition for certification
election was seasonably filed within the sixty (60) day freedom
period; and (2) the records likewise reveal that the petition is
supported by two hundred forty-two (242) of the more or less six
hundred (600) rank-and-file employees of Mitsumi Philippines, Inc.,
hence, has complied with the thirty percent (30%) statutory
requirement (Rollo, p. 54). The provision of the law then in force
was Article 258 of the Labor Code inasmuch as Executive Order
No. 111 which amended it took effect only on March 4, 1987.
Article 258 reads, as follows:chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
"Art. 258. Requisites for certification election. Any petition for
certification election filed by any legitimate labor organization shall
be supported by the written consent of at least thirty percent (30%)
of all the employees in the bargaining unit. Upon receipt and
verification of such petition, it shall be mandatory for the Bureau to
conduct a certification election for the purpose of determining the
representative of the employees in the appropriate bargaining unit
and certify the winner as the exclusive collective bargaining
representative of all the employees in the unit."cralaw virtua1aw
library
There is no question that the 30% support requirement for a
certification election had been met even if the covered employees
number 742, as alleged by petitioner (Memorandum for Petitioner,
Rollo, p. 217) not 600. Hence, it became mandatory for the
Director of Labor Relations to call a certification election (Atlas
Free Workers Union (AFWU-PSSLU Local v. Noriel, 104 SCRA
565 [1981]; Vismico Industrial Workers Association (VIWA) v.
Noriel, 131 SCRA 569 [1984]; Samahang Manggagawa ng Pacific
Mills, Inc. v. Noriel, 134 SCRA 152 [1985]), and in the language of
the Labor Code, "mandatory for the Bureau to conduct a
certification election for the purpose of determining the
representative of the employees in the appropriate bargaining unit
and certify the winner as the exclusive bargaining representative of
all employees in the unit" (Federacion Obrera de la Industria
Tabaquera y Otros Trabajadores de Filipinas v. Noriel, 72 SCRA
24 [1976]; Kapisanan ng mga Manggagawa v. Noriel, 77 SCRA
414 [1977]).chanrobles virtual lawlibrary
"No administrative agency can ignore the imperative tone of the
above article. The language used is one of command. Once it has
been verified that a petition for certification election has the support
of at least 30% of the employees in the bargaining unit, it must be
granted. The specific word used yields no other meaning"
(Federation of Free Workers v. Noriel, 86 SCRA 132 [1978];
Warren Manufacturing Workers Union (WMWU) v. Bureau of Labor
Relations, G.R. No. 76185, March 30, 1988).
Petitioner, however, insists that the deadlock in negotiation already
submitted to conciliation/arbitration after the filing of a valid notice

of strike based on deadlock in negotiation the filing of the petition

for certification election bars the holding of a certification election,
basing its argument on the contract bar rule under Section 3 of
Rule V, Book V of the Omnibus Rules Implementing the Labor
Code (Memorandum for the Petitioner, Rollo, p. 213), which
provides:jgc:chanrobles.com.ph
"Sec. 3. When to file In the absence of a collective agreement
submitted in accordance with Article 231 of the Code, a petition for
certification election may be filed at any time. However, no
certification election may be held within one year from the date of
issuance of declaration of a final certification election result.
Neither may a representation question be entertained if, before the
filing of a petition for certification election, a bargaining deadlock to
which an incumbent or certified bargaining agent is a party had
been submitted to conciliation or arbitration or had become the
subject of a valid notice of strike or lockout.
"If a collective agreement has been submitted in accordance with
Article 231 of the Code, a petition for certification election or a
motion for intervention can only be entertained within 60 days to
the prior to expiry date of such agreement."cralaw virtua1aw library
As the introductory sentence of the first paragraph states, said
paragraph applies where there is no existing collective bargaining
agreement. This circumstance is not obtaining in the instant case.
As admitted by petitioner (Memorandum in the Petitioner, Rollo, p.
208) there was an existing collective bargaining agreement when
the petition for certification election was filed, which was to expire
on December 31, 1986. It is the second paragraph which is
applicable to the case at bar.
In a recent decision, this Court interpreted the above in provision
as follows:jgc:chanrobles.com.ph
"This rule simply provides that a petition for certification election or
a motion for intervention can only be entertained within 60 days
prior to the expiry date of an existing collective bargaining
agreement. Otherwise put, the rule prohibits the filing of for
certification election during the existence of a collective bargaining
agreement except within the freedom period, as it is called when
the said agreement is about to expire. The purpose, obviously, is
to ensure stability in the relationship of the workers and the
management by preventing frequent modifications of any collective
bargaining agreement earlier entered into by them in good faith
and for the stipulated original period." (Associated Trade Unions
(ATU) v. Trajano, G.R. No. 75321, June 20, 1988)
Undoubtedly, the petition for certification election was filed during
the 60-day freedom period. The fact that petitioner was able to
negotiate a new CBA with respondent company on December 4,
1986 within the freedom period of the existing CBA, does not
foreclose the right of a rival union, which in this instant case is the
respondent union, to challenge petitioners claim to majority status,
by filing earlier on November 4, 1986, a timely petition for
certification election before the old CBA expired on December 31,
1986 and before petitioner signed a new CBA with respondent
company (Kapatiran Sa Meat and Canning Division (TUPAS Local
Chapter No. 1027) v. Calleja, G.R. No. 82914, June 20, 1988).
There should be no obstacle to the right of the employees to
petition for a certification election at the proper time, that is, within
sixty (60) days prior to the expiration of the life of a certified
collective bargaining agreement (General Textiles Allied Workers
Association (GTAWA v. Director of the Bureau of Labor Relations,
84 SCRA 430 [1978]; Warren Manufacturing Workers Union
(WMWU) v. Bureau of Labor Relations, supra), not even by a
collective agreement submitted during the pendency of a

representation case.chanrobles law library

On said subject, Rule V of the Omnibus Rules Implementing the
Labor Code, provides:jgc:chanrobles.com.ph
"Sec. 4. Effects of early agreements. The representation case
shall not, however, be adversely affected by a collective
agreement submitted before or during the last 60 days of a
subsisting agreement or during the pendency of the representation
case."cralaw virtua1aw library
The new CBA negotiated by petitioners whether or no submitted to
the MOLE in accordance with Article 231 of the Labor Code cannot
be deemed permanent, precluding commencement of negotiations
by another union with management, considering that it was
entered into at a time when the petition for certification election had
already been filed by respondent union (Associated Trade Unions
(ATU) v. Trajano, supra). Meantime this interim agreement must
be recognized and given effect on a temporary basis so as not to
deprive the workers of the favorable terms of the agreement
(Vassar Industries Employers Union (VIEW) v. Estrella, 82 SCRA
280 [1978]; National Mines and Allied Workers Union
(NAMAWUMIF) v. Estrella, 87 SCRA 84 [1978], cited in Associated
Trade Unions (ATU) v. Trajano, Ibid.)
If, as a result of the certification election, respondent union or a
union other than petitioner union which executed the interim
agreement, is certified as the exclusive bargaining representative
of the rank and file employees of respondent company, then, such
union may adopt the interim collective bargaining agreement or
negotiate with management for a new collective bargaining
agreement (Associated Trade Unions (ATU) v. Trajano, Ibid).
PREMISES CONSIDERED, (a) the petition for certiorari is
DISMISSED for lack of merit; (b) the resolution of the Bureau of
Labor Relations dated January 30, 1987 and the order of the
Bureau dated February 24, 1987 are AFFIRMED; and (c)
temporary restraining order issued by the Court on March 9, 1987
is LIFTED permanently.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla, Sarmiento and
Regalado, JJ., concur.

G.R. No. 84685 February 23, 1990

On February 22, 1988, the Med-Arbiter issued an order, the

dispositive portion of which reads as follows:

ILAW AT BUKLOD NG MANGGAGAWA (IBM) LOCAL NO.

56, petitioner,
vs.
HON. PURA FERRER-CALLEJA, in her capacity as Director,
BUREAU OF LABOR RELATIONS, and SAN MIGUEL
CORPORATION, respondents.

IN VIEW OF ALL THE FOREGOING, let

therefore, a certification election be conducted
among the sales force personnel of the SMCNorth Central Luzon Beer Region covering the
following sales offices: Dagupan City, Carmen,
Alaminos, Tarlac, Cabanatuan and San Isidro,
within twenty (20) days from receipt hereof with
the following choices:

E.N.A Cruz & Associates for petitioner.

Siguion Reyna, Montecillo & Ongsiako for private respondent.

1. San Miguel Corporation

Sales Force Labor Union
Calasiao Beer Region
Ilaw at Bukod ng
Manggagawa (IBM) Local
No. 56;

GRIO-AQUINO, J.:
This is a special civil action of certiorari with a prayer for the
issuance of a writ of preliminary injunction to annul the orders
dated February 22, 1988 and June 23, 1988, of the Med-Arbiter
and the Bureau of Labor Relations (BLR), respectively, for the
holding of a certification election in the Calasiao Beer Region of
the San Miguel Corporation.
On September 7, 1987, petitioner Union, formerly registered with
the Labor Organization Division of the Bureau of Labor Relations,
as the San Miguel Corporation Sales Force Union Calasiao Beer
Region-IBM Local No. 56, a local union of Ilaw at Buklod ng
Manggagawa (IBM), which is a national union, requested San
Miguel Corporationfor voluntary recognition as the sole and
exclusive bargaining representative of all the covered employees
which consist of the monthly and daily-paid employees of the
Calasiao Sales Office, now Dagupan Sales Office. As the territorial
coverage of the Calasiao Beer Region embraces the regional sales
office and the six (6) sales offices in Calasiao, Carmen, Alaminos,
Tarlac, Cabanatuan and San Isidro, SMC denied the union's
request and instead, suggested that it avail of a certification
election. So, on November 27, 1987, SMC, through its NorthCentral Luzon Sales Operations Manager, filed a petition for
certification election among the sales personnel of the Region
only, excluding the daily-paid and monthly paid employees, but
including the sales offices of the entire beer region.
The Union filed a motion to dismiss alleging that the petition for
certification election was premature as it did not ask SMC to
bargain collectively with it. It cited Article 258 of the Labor Code
which provides:
ART. 258. When an employer may file petition.
When requested to bargain collectively, an
employer may petition the Bureau for an
election. If there is no existing certified
collective bargaining agreement in the unit, the
Bureau shall, after hearing, order a certification
election.
All certification cases shall be decided within
twenty (20) working days.
The Bureau shall conduct a certification
election within twenty (20) days in accordance
with the rules and regulations prescribed by
the Secretary of Labor.

2. No union.
Parties are hereby directed to attend a preelection conference which shall be called by
this Office one (1) week before the actual
conduct of said election, with corresponding
notices to be sent to them. (p. 6, Rollo.)
Petitioner appealed the order to the Bureau of Labor Relations
(BLR) which denied the appeal on June 23, 1988 for lack of merit.
Hence, this petition for certiorari alleging that the Director of the
BLR gravely abused her discretion in ordering the holding of a
certification election. Parenthetically, the certification election was
actually conducted on September 19, 1988 resulting in "NO
UNION" as the winner.
The petition has no merit. Ordinarily, in an unorganized
establishment like the SMC Calasiao Beer Region, it is the union
that files a petition for a certification election if there is no certified
bargaining agent for the workers in the establishment. If a union
asks the employer to voluntarily recognize it as the bargaining
agent of the employees, as the petitioner did, it in effect asks the
employer to certify it as the bargaining representative of the
employees a certification which the employer has no authority to
give, for it is the employees' prerogative (not the employer's) to
determine whether they want a union to represent them, and, if so,
which one it should be.
The petitioner's request for voluntary recognition as the bargaining
representative of the employees was in effect a request to bargain
collectively, or the first step in that direction, hence, the employer's
request for a certification election was in accordance with Article
258 of the Labor Code, and the public respondents did not abuse
their discretion in granting the request.
WHEREFORE, the petition for certiorari is dismissed for lack of
merit. Costs against the petitioner.
SO ORDERED.
Narvasa, Gancayco and Medialdea, JJ., concur.
Cruz, J., took no part.

[G.R. No. 107792. March 2, 1998]

3. No union

SAMAHANG MANGGAGAWA SA PERMEX (SMP-PIILUTUCP), petitioners, vs. THE SECRETARY OF LABOR,

NATIONAL FEDERATION OF LABOR, PERMEX
PRODUCER AND EXPORTER
CORPORATION, respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision,
dated October 8, 1992 and order dated November 12, 1992, of
Undersecretary of Labor and Employment Bienvenido Laguesma,
ordering a certification election to be conducted among the
employees of respondent company.
The facts of the case are as follows. On January 15, 1991, a
certification election was conducted among employees of
respondent Permex Producer and Exporter Corporation (hereafter
referred to as Permex Producer). The results of the elections were
as follows:
National Federation of Labor (NFL)

- 235

No Union

- 466

Spoiled Ballots

- 18

Marked Ballots

- 9

Challenged Ballots

- 7

However, some employees of Permex Producer formed a

labor organization known as the Samahang Manggagawa sa
Permex (SMP) which they registered with the Department of Labor
and Employment on March 11, 1991. The union later affiliated with
the Philippine Integrated Industries Labor Union (PIILU).
On August 16, 1991, Samahang Manggagawa sa PermexPhilippine Integrated Industries Labor Union (SMP-PIILU), wrote
the respondent company requesting recognition as the sole and
exclusive bargaining representative of employees at the Permex
Producer. On October 19, 1991 Permex Producer recognized
SMP-PIILU and, on December 1, entered into a collective
bargaining agreement with it. The CBA was ratified between
December 9 and 10, 1991 by the majority of the rank and file
employees of Permex Producer. On December 13, 1991, it was
certified by the DOLE.
On February 25, 1992, respondent NFL filed a petition for
certification election, but it was dismissed by Med-Arbiter Edgar B.
Gongalos in an order dated August 20, 1992. Respondent NFL
then appealed the order to the Secretary of Labor and
Employment. On October 8, 1992, the Secretary of Labor, through
Undersecretary Bienvenido Laguesma, set aside the order of the
Med-Arbiter and ordered a certification election to be conducted
among the rank and file employees at the Permex Producer, with
the following choices:
1. National Federation of Labor
2. Samahang Manggagawa sa Permex

Petitioner moved for a reconsideration but its motion was

denied in an order dated November 12, 1992. Hence, this petition.
Two arguments are put forth in support of the petition. First,
it is contended that petitioner has been recognized by the majority
of the employees at Permex Producer as their sole collective
bargaining agent. Petitioner argues that when a group of
employees constituting themselves into an organization and
claiming to represent a majority of the work force requests the
employer to bargain collectively, the employer may do one of two
things. First, if the employer is satisfied with the employees claim
the employer may voluntarily recognize the union by merely
bargaining collectively with it. The formal written confirmation is
ordinarily stated in the collective bargaining agreement. Second, if
on the other hand, the employer refuses to recognize the union
voluntarily, it may petition the Bureau of Labor Relations to conduct
a certification election. If the employer does not submit a petition
for certification election, the union claiming to represent the
employees may submit the petition so that it may be directly
certified as the employees representative or a certification election
may be held.
The case of Ilaw at Buklod ng Manggagawa v. FerrerCalleja,[1] cited by the Solicitor General in his comment filed in
behalf of the NLRC, is particularly apropos. There, the union also
requested voluntary recognition by the company. Instead of
granting the request, the company petitioned for a certification
election. The union moved to dismiss on the ground that it did not
ask the company to bargain collectively with it. As its motion was
denied, the union brought the matter to this Court. In sustaining
the companys stand, this Court ruled:
...Ordinarily, in an unorganized establishment like the
Calasiao Beer Region, it is the union that files a petition for a
certification election if there is no certified bargaining agent for the
workers in the establishment. If a union asks the employer to
voluntarily recognize it as the bargaining agent of the employees,
as the petitioner did, it in effect asks the employer to certify it as
the bargaining representative of the employees A
CERTIFICATION WHICH THE EMPLOYER HAS NO AUTHORITY
TO GIVE, for it is the employees prerogative (not the employers)
to determine whether they want a union to represent them, and, if
so, which one it should be. (emphasis supplied)
In accordance with this ruling, Permex Producer should not
have given its voluntary recognition to SMP-PIILU-TUCP when the
latter asked for recognition as exclusive collective bargaining agent
of the employees of the company. The company did not have the
power to declare the union the exclusive representative of the
workers for the purpose of collective bargaining.
Indeed, petitioners contention runs counter to the trend
towards the holding of certification election. By virtue of Executive
Order No. 111, which became effective on March 4, 1987, the
direct certification previously allowed under the Labor Code had
been discontinued as a method of selecting the exclusive
bargaining agents of the workers.[2] Certification election is the
most effective and the most democratic way of determining which
labor organization can truly represent the working force in the
appropriate bargaining unit of a company.[3]
Petitioner argues that of the 763 qualified employees of
Permex Producer, 479 supported its application for registration
with the DOLE and that when petitioner signed the CBA with the
company, the CBA was ratified by 542 employees. Petitioner
contends that such support by the majority of the employees
justifies its finding that the CBA made by it is valid and binding.

But it is not enough that a union has the support of the

majority of the employees. It is equally important that everyone in
the bargaining unit be given the opportunity to express himself.[4]
This is especially so because, in this case, the recognition
given to the union came barely ten (10) months after the
employees had voted no union in the certification election
conducted in the company. As pointed out by respondent
Secretary of Labor in his decision, there can be no determination
of a bargaining representative within a year of the proclamation of
the results of the certification election.[5] Here the results, which
showed that 61% of the employees voted for no union, were
certified only on February 25, 1991 but on December 1, 1991
Permex Producer already recognized the union and entered into a
CBA with it.
There is something dubious about the fact that just ten (10)
months after the employees had voted that they did not want any
union to represent them, they would be expressing support for
petitioner. The doubt is compounded by the fact that in sworn
affidavits some employees claimed that they had either been
coerced or misled into signing a document which turned out to be
in support of petitioner as its collective bargaining agent. Although
there were retractions, we agree with the Solicitor General that
retractions of statements by employees adverse to a company (or
its favored union) are oftentimes tainted with coercion and
intimidation. For how could one explain the seeming flip-flopping
of position taken by the employees? The figures claimed by
petitioner to have been given to it in support cannot readily be
accepted as true.
Second. Petitioner invokes the contract-bar rule. They
contend that under Arts. 253, 253-A and 256 of the Labor Code
and Book V, Rule 5, 3 of its Implementing Rules and Regulations,
a petition for certification election or motion for intervention may be
entertained only within 60 days prior to the date of expiration of an
existing collective bargaining agreement. The purpose of the rule is
to ensure stability in the relationships of the workers and the
management by preventing frequent modifications of any collective
bargaining agreement earlier entered into by them in good faith
and for the stipulated original period. Excepted from the contractbar rule are certain types of contracts which do not foster industrial
stability, such as contracts where the identity of the representative
is in doubt. Any stability derived from such contracts must be
subordinated to the employees freedom of choice because it does
not establish the kind of industrial peace contemplated by the
law.[6] Such situation obtains in this case. The petitioner entered
into a CBA with Permex Producer when its status as exclusive
bargaining agent of the employees had not been established yet.
WHEREFORE, the challenged decision and order of the
respondent Secretary of Labor are AFFIRMED.
SO ORDERED.
Regalado (Chairman), Melo, Puno and Martinez, JJ., concur.

[G.R. No. 128067. June 5, 1998]

SAMAHAN NG MGA MANGGAGAWA SA FILSYSTEMS
(SAMAFIL-NAFLU-KMU), petitioner, vs. HON.
SECRETARY OF LABOR AND EMPLOYMENT and
FILSYSTEMS, INC., respondents.

submitted its charter certificate to the Bureau of Labor Relations,

within thirty (30) days from issuance of such charter certificate as
amended by the rules.

PUNO, J.:

"Petitioner argued that it has complied with all the requirements for
certification election pursuant to the mandate of Sec. 2, Rule V of
Book V of the Implementing Rules of the Labor Code; that the rule
cited by respondent is not included in the Rule citing the
requirements for certification election.

Assailed under Rule 65 of the Rules of Court are the

Resolution and Order[1] of the public respondent, dated June 28,
1996 and November 18, 1996, respectively, dismissing petitioner's
petition for certification election.

"We disagree with petitioner's contention. The rule cited by the

petitioner, Sec. 2, Rule V, Book V, sub-paragraphs A, B, C, D, E, F
and G, refers to an independently registered labor organization
which has filed a petition for certification election.

It appears that petitioner Samahan ng mga Manggagawa sa

Filsystems (SAMAFIL-NAFLU-KMU) is a registered labor union
with Certificate of Registration No. NCR-UR-10-1575-95 issued by
the Department of Labor and Employment (DOLE) on October 25,
1995. On November 6, 1995, petitioner union filed a Petition for
Certification Election among the rank-and-file employees of private
respondent FILSYSTEMS, Inc. before the DOLE - National Capital
Region (NCR).[2] Attached as annexes to the petition are the
Certificate of Registration issued by the DOLE, copies of union
membership signed by thirty three (33) rank-and-file employees of
respondent company, the Charter Certificate showing its affiliation
with the National Federation of Labor Unions (NAFLU-KMU), the
list of union officers, the certification of the union secretary of the
minutes of the general membership meeting, the Books of
Accounts and its Constitution and By-Laws.[3]

"In the case at bar, an independently registered union has affiliated

with a federation, hence, strict compliance with the requirements
embodied in Sec. 3, paragraphs A, B and E of Rule II, Book V of
the Rules and Regulations implementing the Labor Code should
be complied with.

DECISION

Private respondent opposed the petition. It questioned the

status of petitioner as a legitimate labor organization on the ground
of lack of proof that its contract of affiliation with the NAFLUKMU has been submitted to the Bureau of Labor Relations (BLR)
within thirty (30) days from its execution.[4]
In reply, petitioner averred that as a duly registered labor
union, it has "all the rights and privileges x x x to act as
representative of its members for the purpose of collective
bargaining with employers."[5]
On January 12, 1996, Med-Arbiter Paterno D. Adap
dismissed the petition for certification election. He ruled that
petitioner, as an affiliate of NAFLU-KMU, has no legal personality
on account of its failure to comply with paragraphs (a), (b) and (e)
of Section 3, Rule II of the Implementing Rules of Book V of the
Labor Code,[6] viz:
"x x x
"In matters of affiliation of an independently registered union, the
rules provide that the latter shall be considered an affiliate of a
labor federation after submission of the contract or agreement of
affiliation to the Bureau of Labor Relations (BLR) within thirty (30)
days after its execution.
"Likewise, it mandates the federation or national union concerned
to issue a charter certificate indicating the creation or
establishment of a local or chapter, copy of which shall be
submitted to the Bureau of Labor Relations within thirty (30) days
from issuance of such certificate.
"A close examination of the records of the case does not reveal
that the federation and the independent union have executed a
contract or agreement of affiliation, nor had it shown that it has

"Record discloses that petitioner has not shown to have executed

a contract or agreement of affiliation nor has it established that is
has submitted its charter certificate to the Bureau of Labor
Relations (BLR) within thirty (30) days from its execution.
"Thus, petitioner in this case having failed to comply with the
mandatory requirement, there was no valid
affiliation. Consequently, petitioner has no legal personality
because the union failed to attain the status of legitimacy for failure
to comply with the requirements of law."
Petitioner appealed to the Office of the Secretary of Labor
and Employment. It reiterated its contention that as an
independently registered union, it has the right to file a petition for
certification election regardless of its failure to prove its affiliation
with NAFLU-KMU.[7]
On February 26, 1996, private respondent opposed the
appeal. It argued that petitioner should have filed its petition for
certification election as an independently registered union and not
as a union affiliated with NAFLU-KMU.[8]
Meanwhile or on February 7, 1996, another union, the
Filsystem Workers Union (FWU), filed a Petition for Certification
Election in the same bargaining unit. On March 22, 1996, the MedArbitration - NCR Branch granted the petition. The certification
election held on April 19, 1996, was won by FWU which garnered
twenty six (26) votes out of the forty six (46) eligible voters. The
FWU was certified on April 29, 1996, as the exclusive bargaining
agent of all rank-and-file employees of private
respondent. Eventually, FWU and the private respondent
negotiated a CBA.[9]
On June 11, 1996, the private respondent filed a Motion to
Dismiss Appeal of petitioner as it has become moot and
academic. It also invoked Section 3, Rule V of the Implementing
Rules of Book V of the Labor Code stating that "once a union has
been certified, no certification election may be held within one (1)
year from the date of issuance of a final certification election
[result]."[10]
In opposing the Motion to Dismiss Appeal, petitioner
contended that its appeal is not moot as the certification election
held on April 19, 1996, was void for violating Section 10, Rule V of
the Implementing Rules of Book V of the Labor Code,[11] viz:

"SEC. 10. Decision of the Secretary final and inappealable. - The

Secretary shall have fifteen (15) calendar days within which to
decide the appeal from receipt of the records of the case. The filing
of the appeal from the decision of the Med-Arbiter stays the
holding of any certification election. The decision of the Secretary
shall be final and inappealable."
Petitioner further argued that the CBA executed between the
FWU and the private respondent could not affect its pending
representation case following Section 4, Rule V of the
Implementing Rules of Book V of the Labor Code[12] which states:
"SEC. 4. Effects of early agreements. - The representation case
shall not, however, be adversely affected by a collective
bargaining agreement registered before or during the last 60 days
of the subsisting agreement or during the pendency of the
representation case."
On June 28, 1996, respondent Secretary dismissed the
appeal interposed by petitioner on the ground that it has been
rendered moot by the certification of FWU as the sole and
exclusive bargaining agent of the rank-and-file workers of
respondent company. Petitioner's Motion for Reconsideration was
denied in an Order dated November 18, 1996.[13]
Before this Court, petitioner contends:
I
Public respondent acted with grave abuse of discretion amounting
to acting without or in excess of jurisdiction in holding that the
pending appeal in the representation case was rendered moot and
academic by a subsequently enacted collective bargaining
agreement in the company.
II
Public respondent committed a serious legal error and gravely
abused its discretion in failing to hold that the legal personality of
petitioner as a union having been established by its Certificate of
Registration, the same could not be subjected to collateral attack.
The petition is meritorious.
I
We shall first resolve whether the public respondent
committed grave abuse of discretion when he effectively affirmed
the Resolution dated January 12, 1996 of the Med-Arbiter
dismissing petitioner's petition for certification election for failure to
prove its affiliation with NAFLU-KMU.
The reasoning of the public respondent and the Med- Arbiter
is flawed, proceeding as it does from a wrong premise. Firstly, it
must be underscored that petitioner is an independently registered
labor union as evidenced by a Certificate of Registration issued by
the DOLE. As a legitimate labor organization, petitioner's right to
file a petition for certification election on its own is beyond
question.[14] Secondly, the failure of petitioner to prove its affiliation
with NAFLU-KMU cannot affect its right to file said petition for
certification election as an independent union. At the most,
petitioner's failure will result in an ineffective affiliation with NAFLUKMU. Still, however, it can pursue its petition for certification
election as an independent union. In our rulings, we have stressed
that despite affiliation, the local union remains the basic unit free to
serve the common interest of all its members and pursue its own

interests independently of the federation.[15] In fine, the Med-Arbiter

erred in dismissing petitioner's petition for certification election on
account of its non-submission of the charter certificate and the
contract of affiliation with the NAFLU-KMU with the BLR. The
public respondent gravely abused his discretion in sustaining the
Med-Arbiter's Resolution.
II
We shall now resolve the issue of whether the appeal filed by
the petitioner was rendered moot and academic by the subsequent
certification election ordered by the Med-Arbiter, won by the FWU
and which culminated in a CBA with private respondent.
Public respondent's ruling is anchored on his finding that
there exists no pending representation case since the petition for
certification election filed by the petitioner was dismissed by the
Med-Arbiter. According to the public respondent, the legal effect of
the dismissal of the petition was to leave the playing field open
without any legal barrier or prohibition to any petitioner; thus, other
legitimate labor organizations may file an entirely new petition for
certification election.
We reject public respondent's ruling. The order of the MedArbiter dismissing petitioner's petition for certification election was
seasonably appealed. The appeal stopped the holding of any
certification election. Section 10, Rule V of the Implementing
Rules of Book V of the Labor Code is crystal clear and hardly
needs any interpretation.
Accordingly, there was an unresolved representation case at
the time the CBA was entered between FWU and private
respondent. Following Section 4, Rule V of the Implementing
Rules of Book V of the Labor Code, such CBA cannot and will not
prejudice petitioner's pending representation case or render the
same moot.[16] This rule was applied in the case ofAssociated
Labor Unions (ALU-TUCP) v. Trajano[17] where we held that
"[t]here should be no obstacle to the right of the employees to
petition for a certification election at the proper time, that is, within
sixty (60) days prior to the expiration of the life of a certified
collective bargaining agreement x x x, not even by a collective
agreement submitted during the pendency of the representation
case." Likewise, in Associated Labor Unions (ALU) v. FerrerCalleja,[18] we held that a prematurely renewed CBA is not a bar to
the holding of a certification election.
Finally, we bewail private respondent's tenacious opposition
to petitioner's certification election petition. Such a stance is not
conducive to industrial peace. Time and again, we have
emphasized that when a petition for certification election is filed by
a legitimate labor organization, it is good policy for the employer
not to have any participation or partisan interest in the choice of
the bargaining representative. While employers may rightfully be
notified or informed of petitions of such nature, they should not,
however, be considered parties thereto with an inalienable right to
oppose it. An employer that involves itself in a certification election
lends suspicion to the fact that it wants to create a company
union. Thus, in Consolidated Farms, Inc. II v. Noriel,[19] we
declared that "[o]n a matter that should be the exclusive concern of
labor, the choice of a collective bargaining representative, the
employer is definitely an intruder. His participation, to say the
least, deserves no encouragement. This Court should be the last
agency to lend support to such an attempt at interference with a
purely internal affair of labor. x x x [While] it is true that there may
be circumstances where the interest of the employer calls for its
being heard on the matter, x x x sound policy dictates that as much
as possible, management is to maintain a strictly hands-off
policy. For if it does not, it may lend itself to the legitimate
suspicion that it is partial to one of the contending unions. That is

repugnant to the concept of collective bargaining. That is against

the letter and spirit of welfare legislation intended to protect labor
and promote social justice. The judiciary then should be the last to
look with tolerance at such efforts of an employer to take part in
the process leading to the free and untrammeled choice of the
exclusive bargaining representative of the workers."
IN VIEW WHEREOF, the instant petition is GRANTED. The
assailed Resolution and Order of the public respondent are set
aside. The Bureau of Labor Relations is ORDERED to hold a
certification election in respondent company with petitioner as a
contending union. No costs.
SO ORDERED.
Regalado (Chairman), Mendoza and Martinez, JJ., concur.
Melo, J., on leave.

[G.R. No. 121084. February 19, 1997]

TOYOTA MOTOR PHILIPPINES CORPORATION, petitioner,

vs. TOYOTA MOTOR PHILIPPINES CORPORATION
LABOR UNION AND THE SECRETARY OF LABOR
AND EMPLOYMENT, respondents.
DECISION
KAPUNAN, J.:
On November 26, 1992, the Toyota Motor Philippines
Corporation Labor Union (TMPCLU) filed a petition for certification
election with the Department of Labor, National Capital Region, for
all rank-and-file employees of the Toyota Motor Corporation.[1]
In response, petitioner filed a Position Paper on February 23,
1993 seeking the denial of the issuance of an Order directing the
holding of a certification election on two grounds: first, that the
respondent union, being "in the process of registration" had no
legal personality to file the same as it was not a legitimate labor
organization as of the date of the filing of the petition; and second,
that the union was composed of both rank-and-file and supervisory
employees in violation of law.[2] Attached to the position paper was
a list of union members and their respective job classifications,
indicating that many of the signatories to the petition for
certification election occupied supervisory positions and were not
in fact rank-and-file employees.[3]
The Med-Arbiter, Paterno D. Adap, dismissed respondent
union's petition for certification election for lack of merit. In his
March 8, 1993 Order, the Med-Arbiter found that the labor
organization's membership was composed of supervisory and
rank-and-file employees in violation of Article 245 of the Labor
Code,[4] and that at the time of the filing of its petition, respondent
union had not even acquired legal personality yet.[5]
On appeal, the Office of the Secretary of Labor, in a
Resolution[6] dated November 9, 1993 signed by Undersecretary
Bienvenido E. Laguesma, set aside the Med-Arbiter's Order of
March 3, 1993, and directed the holding of a certification election
among the regular rank-and-file employees of Toyota Motor
Corporation. In setting aside the questioned Order, the Office of
the Secretary contended that:
Contrary to the allegation of herein respondent-appellee,
petitioner-appellant was already a legitimate labor organization at
the time of the filing of the petition on 26 November 1992. Records
show that on 24 November 1992 or two (2) days before the filing of
the said petition, it was issued a certificate of registration.

case, the mere allegation of respondent-appellee that there are

about 42 supervisory employees in the proposed bargaining unit
should have not caused the dismissal of the instant petition. Said
issue could very well be taken cared of during the pre-election
conference where inclusion/exclusion proceedings will be
conducted to determine the list of eligible voters.[7]
Not satisfied with the decision of the Office of the Secretary
of Labor, petitioner filed a Motion for Reconsideration of the
Resolution of March 3, 1993, reiterating its claim that as of the date
of filing of petition for certification election, respondent TMPCLU
had not yet acquired the status of a legitimate labor organization
as required by the Labor Code, and that the proposed bargaining
unit was inappropriate.
Acting on petitioner's motion for reconsideration, the public
respondent, on July 13, 1994 set aside its earlier resolution and
remanded the case to the Med-Arbiter concluding that the issues
raised by petitioner both on appeal and in its motion for
reconsideration were factual issues requiring further hearing and
production of evidence.[8] The Order stated:
We carefully re-examined the records vis-a-vis the arguments
raised by the movant, and we note that movant correctly pointed
out that petitioner submitted a copy of its certificate of
registration for the first time on appeal and that in its petition,
petitioner alleges that it is an independent organization which is in
the process of registration." Movant strongly argues that the
foregoing only confirms what it has been pointing out all along, that
at the time the petition was filed petitioner is (sic) not yet the holder
of a registration certificate; that what was actually issued on 24
November 1992 or two (2) days before the filing of the petition was
an official receipt of payment for the application fee; and, that the
date appearing in the Registration certificate which is November
24, 1992 is not the date when petitioner was actually registered,
but the date when the registration certificate was prepared by the
processor. Movant also ratiocinates that if indeed petitioner has
been in possession of the registration certificate at the time this
petition was filed on November 26, 1992, it would have attached
the same to the petition.
The foregoing issues are factual ones, the resolution of which is
crucial to the petition. For if indeed it is true that at the time of filing
of the petition, the said registration certificate has not been
approved yet, then, petitioner lacks the legal personality to file the
petition and the dismissal order is proper. Sadly, we can not
resolve the said questions by merely perusing the records. Further
hearing and introduction of evidence are required. Thus, there is a
need to remand the case to the Med-Arbiter solely for the purpose.
WHEREFORE, the motion is hereby granted and our Resolution is
hereby set aside. Let the case be remanded to the Med-Arbiter for
the purpose aforestated.
SO ORDERED.[9]

We also agree with petitioner-appellant that the Med-Arbiter should

have not dismissed the petition for certification election based on
the ground that the proposed bargaining unit is a mixture of
supervisory and rank-and-file employees, hence, violative of Article
245 of the Labor Code as amended.
A perusal of the petition and the other documents submitted by
petitioner-appellant will readily show that what the former really
seeks to represent are the regular rank-and-file employees in the
company numbering about 1,800 more or less, a unit which is
obviously appropriate for bargaining purposes. This being the

Pursuant to the Order, quoted above, Med-Arbiter Brigida C.

Fodrigon submitted her findings on September 28, 1994, stating
the following:[10]
[T]he controvertible fact is that petitioner could not have been
issued its Certificate of Registration on November 24, 1992 when it
applied for registration only on November 23, 1992 as shown by
the official receipt of payment of filing fee. As Enrique Nalus, Chief
LEO, this office, would attest in his letter dated September 8, 1994

addressed to Mr. Porfirio T. Reyes, Industrial Relations Officer of

Respondent company, in response to a query posed by the latter,
"It is unlikely that an application for registration is approved on the
date that it is filed or the day thereafter as the processing course
has to pass thought routing, screening, and assignment,
evaluation, review and initialing, and approval/disapproval
procedure, among others, so that a 30-day period is provided for
under the Labor Code for this purpose, let alone opposition thereto
by interested parties which must be also given due course."
Another evidence which petitioner presented . . . is the "Union
Registration 1992 Logbook of IRD" . . . and the entry date
November 25, 1992 as allegedly the date of the release of the
registration certificate . . . On the other hand, respondent company
presented . . . a certified true copy of an entry on page 265 of the
Union Registration Logbook showing the pertinent facts about
petitioner but which do not show the petitioner's registration was
issued on or before November 26, 1992.[11]
Further citing other pieces of evidence presented before her,
the Med-Arbiter concluded that respondent TMPCLU could not
have "acquire[d] legal personality at the time of the filing of (its)
petition."[12]
On April 20, 1996, the public respondent issued a new
Resolution, "directing the conduct of a certification election among
the regular rank-and-file employees of the Toyota Motor
Philippines Corporation.[13] Petitioner's motion for reconsideration
was denied by public respondent in his Order dated July 14,
1995.[14]
Hence, this special civil action for certiorari under Rule 65 of
the Revised Rules of Court, where petitioner contends that "the
Secretary of Labor and Employment committed grave abuse of
discretion amounting to lack or excess of jurisdiction in reversing,
contrary to law and facts the findings of the Med-Arbiters to the
effect that: 1) the inclusion of the prohibited mix of rank-and file
and supervisory employees in the roster of members and officers
of the union cannot be cured by a simple inclusion-exclusion
proceeding; and that 2) the respondent union had no legal
standing at the time of the filing of its petition for certification
election.[15]
We grant the petition.
The purpose of every certification election is to determine the
exclusive representative of employees in an appropriate bargaining
unit for the purpose of collective bargaining. A certification election
for the collective bargaining process is one of the fairest and most
effective ways of determining which labor organization can truly
represent the working force.[16] In determining the labor
organization which represents the interests of the workforce, those
interests must be, as far as reasonably possible, homogeneous, so
as to genuinely reach the concerns of the individual members of a
labor organization.
According to Rothenberg,[17] an appropriate bargaining unit is
a group of employees of a given employer, composed of all or less
than the entire body of employees, which the collective interests of
all the employees, consistent with equity to the employer indicate
to be best suited to serve reciprocal rights and duties of the parties
under the collective bargaining provisions of law. In Belyca
Corporation v. Ferrer Calleja,[18] we defined the bargaining unit as
"the legal collectivity for collective bargaining purposes whose
members have substantially mutual bargaining interests in terms
and conditions of employment as will assure to all employees their
collective bargaining rights." This in mind, the Labor Code has
made it a clear statutory policy to prevent supervisory employees

from joining labor organizations consisting of rank-and-file

employees as the concerns which involve members of either group
are normally disparate and contradictory. Article 245 provides:
ART. 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.
Clearly, based on this provision, a labor organization
composed of both rank-and-file and supervisory employees is no
labor organization at all. It cannot, for any guise or purpose, be a
legitimate labor organization. Not being one, an organization which
carries a mixture of rank-and-file and supervisory employees
cannot possess any of the rights of a legitimate labor organization,
including the right to file a petition for certification election for the
purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a
certification election, to inquire into the composition of any labor
organization whenever the status of the labor organization is
challenged on the basis of Article 245 of the Labor Code.
It is the petitioner's contention that forty-two (42) of the
respondent union's members, including three of its officers, occupy
supervisory positions.[19] In its position paper dated February 22,
1993, petitioner identified fourteen (14) union members occupying
the position of Junior Group Chief II[20] and twenty-seven (27)
members in level five positions. Their respective job-descriptions
are quoted below:
LEVEL 4 (JUNIOR GROUP CHIEF II) He is responsible for all
operators and assigned stations, prepares production reports
related to daily production output. He oversees smooth flow of
production, quality of production, availability of manpower, parts
and equipments. He also coordinates with other sections in the
Production Department.
LEVEL 5 He is responsible for overseeing initial production of
new models, prepares and monitors construction schedules for
new models, identifies manpower requirements for production,
facilities and equipment, and lay-out processes. He also oversees
other sections in the production process (e.g. assembly, welding,
painting)." (Annex "V" of Respondent TMP's Position Paper, which
is the Job Description for an Engineer holding Level 5 position in
the Production Engineering Section of the Production Planning and
Control Department).
While there may be a genuine divergence of opinion as to
whether or not union members occupying Level 4 positions are
supervisory employees, it is fairly obvious, from a reading of the
Labor Code's definition of the term that those occupying Level 5
positions are unquestionably supervisory employees. Supervisory
employees, as defined above, are those who, in the interest of the
employer, effectively recommend managerial actions if the
exercise of such authority is not merely routinary or clerical in
nature but require the use of independent judgment.[21] Under the
job description for level five employees, such personnel all
engineers having a number of personnel under them, not only
oversee production of new models but also determine manpower
requirements, thereby influencing important hiring decisions at the
highest levels. This determination is neither routine nor clerical but
involves the independent assessment of factors affecting
production, which in turn affect decisions to hire or transfer

workers. The use of independent judgment in making the decision

to hire, fire or transfer in the identification of manpower
requirements would be greatly impaired if the employee's loyalties
are torn between the interests of the union and the interests of
management. A supervisory employee occupying a level five
position would therefore find it difficult to objectively identify the
exact manpower requirements dictated by production demands.
This is precisely what the Labor Code, in requiring separate
unions among rank-and-file employees on one hand, and
supervisory employees on the other, seeks to avoid. The rationale
behind the Code's exclusion of supervisors from unions of rankand-file employees is that such employees, while in the
performance of supervisory functions, become the alter ego of
management in the making and the implementing of key decisions
at the sub-managerial level. Certainly, it would be difficult to find
unity or mutuality of interests in a bargaining unit consisting of a
mixture of rank-and-file and supervisory employees. And this is so
because the fundamental test of a bargaining unit's acceptability is
whether or not such a unit will best advance to all employees
within the unit the proper exercise of their collective bargaining
rights.[22] The Code itself has recognized this, in preventing
supervisory employees from joining unions of rank-and-file
employees.
In the case at bar, as respondent union's membership list
contains the names of at least twenty-seven (27) supervisory
employees in Level Five positions, the union could not, prior to
purging itself of its supervisory employee members, attain the
status of a legitimate labor organization. Not being one, it cannot
possess the requisite personality to file a petition for certification
election.
The foregoing discussion, therefore, renders entirely
irrelevant, the technical issue raised as to whether or not
respondent union was in possession of the status of a legitimate
labor organization at the time of filing, when, as petitioner
vigorously claims, the former was still at the stage of processing of
its application for recognition as a legitimate labor organization.
The union's composition being in violation of the Labor Code's
prohibition of unions composed of supervisory and rank-and-file
employees, it could not possess the requisite personality to file for
recognition as a legitimate labor organization. In any case, the
factual issue, albeit ignored by the public respondent's assailed
Resolution, was adequately threshed out in the Med-Arbiter's
September 28, 1994 Order.
The holding of a certification election is based on clear
statutory policy which cannot be circumvented.[23] Its rules, strictly
construed by this Court, are designed to eliminate fraud and
manipulation. As we emphasized in Progressive Development
Corporation v. Secretary, Department of Labor and
Employment,[24] the Court's conclusion should not be interpreted as
impairing any union's right to be certified as the employees'
bargaining agent in the petitioner's establishment. Workers of an
appropriate bargaining unit must be allowed to freely express their
choice in an election where everything is open to sound judgment
and the possibility for fraud and misrepresentation is absent.[25]
WHEREFORE, the petition is GRANTED. The assailed
Resolution dated April 20, 1995 and Order dated July 14, 1995 of
respondent Secretary of Labor are hereby SET ASIDE. The Order
dated September 28, 1994 of the Med-Arbiter is REINSTATED.
SO ORDERED.
Padilla, (Chairman), Bellosillo, Vitug, and Hermosisima, Jr.,
JJ., concur.

[ G . R . No . 118915 .

February 4 , 1997 ]

CAL CENTER ALLIANCE OF CONCERNED

EMPLOYEES UNIFIED FILIPINO SERVICE
WORKERS, (CMC ACEUFSW) , petitioners, vs. HON. BIENVENIDO
E. LAGUESMA, Undersecretary of the Department of
Labor and Employment; CAPITOL MEDICAL CENTER
EMPLOYEES ASSOCIATION - ALLIANCE OF FILIPINO
WORKERS AND CAPITOL MEDICAL CENTER
INCORPORATED AND DRA.THELMA CLEMENTE,
President, respondents .
DECISION
HERMOSISIMA , JR . , J .
This petition for certiorari and prohibition seeks to reverse
and set aside the Order dated November 18,1994 of public
respondent Bienvenido E. Laguesma, Undersecretary of the
Department of Labor and Employment, in Case No.OS-A-136 94 which dismissed the petition for certification election filed by
petitioner for lack of merit and further directed private respondent
hospital to negotiate a collective bargaining agreement with
respondent union, Capitol Medical Center Employees
Association - Alliance of Filipino Workers.
The antecedent facts are undisputed.
On February 17, 1992, Med - Arbiter Rasidali C. Abdullah
issued an Order which granted respondent unions petition for
certification election among the rank and - file employees of the
Capitol Medical Center. Respondent CMC appealed the Order to
the Office of the Secretary by questioning the legal status of
respondent unions affiliation with the Alliance of Filipino Workers
( AFW ). To correct any supposed infirmity in its legal
status, respondent union registered itself independently and
withdrew
the
petition
which
had
earlier
been
granted. Thereafter, it filed another petition for certification
election.
On May 29, 1992, Med - Arbiter Manases T. Cruz issued an
order granting the petition for certification election. Respondent
CMC again appealed to the Office of the Secretary which
affirmed the Order of the Med - Arbiter granting the certification
election.
On December 9, 1992, elections were finally held with
respondent union garnering 204 votes, 168 in favor of no union
and 8 spoiled ballots out of a total of 380 votes cast .
Thereafter, on January 4, 1993, Med - Arbiter Cruz issued an
Order certifying respondent union as the sole and exclusive
bargaining representative of the rank and file employees at CMC.
Unsatisfied with the outcome of the elections, respondent
CMC again appealed to the Office of the Secretary of Labor which
appeal was denied on February 26, 1993. A subsequent motion for
reconsideration filed by respondent CMC was likewise denied on
March 23, 1993.
Respondent CMC s basic contention was the supposed
pendency of its petition for cancellation of respondent unions
certificate of registration in Case No. NCR - OD - M - 92211 028. In the said case, Med - Arbiter Paterno Adap issued an Order
dated February 4, 1993 which declared respondent unions
certificate of registration as null and void. However, this order was
reversed on appeal by the Officer - in - Charge of the Bureau of
Labor Relations in her Order issued on April 13, 1993. The said
Order dismissed the motion for cancellation of the certificate of

registration of respondent union and declared that it was not only a

bona fide affiliate or local of a federation (AFW), but a duly
registered union as well. Subsequently, this case reached this
Court in Capitol Medical Center, Inc. v. Hon. Perlita Velasco,
G.R. No. 110718, where we issued a Resolution dated December
13, 1993, dismissing the petition of CMC for failure to sufficiently
show that public respondent committed grave abuse of
discretion. The motion for reconsideration filed by CMC was
likewise denied in our Resolution dated February
2, 1994. Thereafter, on March 23, 1994, we issued an entry of
judgment certifying that the Resolution dated December 13, 1993
has become final and executory.
Respondent union, after being declared as the certified
bargaining agent of the rank - and - file employees of respondent
CMC by Med - Arbiter Cruz, presented economic proposals for the
negotiation of a collective bargaining
agreement (CBA). However, respondent CMC contended that CBA
negotiations should be suspended in view of the Order issued on
February 4, 1993 by Med - Arbiter Adap declaring the registration
of respondent union as null and void. In spite of the refusal of
respondent CMC, respondent union still persisted in its demand for
CBA negotiations, claiming that it has already been declared as
the sole and exclusive bargaining agent of the rank - and - file
employees of the hospital.
Due to respondent CMC s refusal to bargain
collectively, respondent union filed a notice of strike on March
1, 1993. After
complying
with
the
other
legal
requirements, respondent union staged a strike on April
15, 1993. On April 16, 1993, the Secretary of Labor assumed
jurisdiction over the case and issued an order certifying the same
to the National Labor Relations Commission for compulsory
arbitration where the said case is still pending.
It is at this juncture that petitioner union, on March
24, 1994, filed a petition for certification election among the regular
rank - and - file employees of the Capitol Medical Center Inc. It
alleged in its petition that: 1) three hundred thirty one (331) out of
the four hundred (400) total rank - and - file employees of
respondent CMC signed a petition to conduct a certification
election and 2) that the said employees are withdrawing their
authorization for the said union to represent them as they have
joined and formed the union Capitol Medical Center Alliance of
Concerned Employees (CMC - ACE). They also alleged that a
certification election can now be conducted as more that 12
months have lapsed since the last certification election was
held. Moreover, no certification election was conducted during the
twelve (12) months prior to the petition, and no collective
bargaining agreement has as yet been concluded between
respondent union and respondent CMC despite the lapse of twelve
months from the time the said union was voted as the collective
bargaining representative.
On April 12, 1994, respondent union opposed the petition
and moved for its dismissal. It contended that it is the certified
bargaining agent of the rank - and - file employees of the
Hospital, which was confirmed by the Secretary of Labor and
Employment and by this Court. It also alleged that it was not
remiss in asserting its right as the certified bargaining agent for it
continuously demanded the negotiation of a CBA with the hospital
despite the latters avoidance to bargain collectively. Respondent
union was even constrained to strike on April 5, 1993, where the
Secretary of Labor intervened and certified the dispute for
compulsory arbitration. Furthermore, it alleged that majority of the
signatories who supported the petition were managerial and
confidential employees and not members of the rank - and -

file, and that there was no valid disaffiliation of its

members, contrary to petitioners allegations.
Petitioner, in its rejoinder, claimed that there is no legal
impediment to the conduct of a certification election as more than
twelve (12) months had lapsed since respondent union was
certified as the exclusive bargaining agent and no CBA was as yet
concluded. It also claimed that the other issues raised could only
be resolved by conducting another certification election.
In its surrejoinder, respondent union alleged that the petition
to conduct a certification election was improper, immoral and in
manifest disregard of the decisions rendered by the Secretary of
Labor and by this Court. It claimed that CMC employed legal
obstructionisms in order to let twelve months pass without a CBA
having been concluded between them so as to pave the way for
the entry of petitioner union.
On May 12, 1994, Med - Arbiter Brigida Fadrigon, issued an
Order granting the petition for certification election among the rank
and file employees. It ruled that the issue was the majority status
of respondent union. Since no certification election was held within
one year from the date of issuance of a final certification election
result and there was no bargaining deadlock between respondent
union and the employees that had been submitted to conciliation or
had become the subject of a valid notice of strike or lock out, there
is no bar to the holding of a certification election.
Respondent union appealed from the said Order, alleging
that the Med - Arbiter erred in granting the petition for certification
election and in holding that this case falls under Section 3, Rule
V, Book V of the Rules Implementing the Labor Code. It also
prayed that the said provision must not be applied strictly in view of
the facts in this case.
Petitioner union did not file any opposition to the appeal.
On November 18, 1994, public respondent rendered a
Resolution granting the appeal. He ratiocinated that while the
petition was indeed filed after the lapse of one year form the time
of declaration of a final certification result, and that no bargaining
deadlock had been submitted for conciliation or
arbitration, respondent union was not remiss on its right to enter
into a CBA for it was the CMC which refused to bargain
collectively.
CMC and petitioner union separately filed motions for
reconsideration of the said Order.
CMC contended that in certification election proceedings, the
employer cannot be ordered to bargain collectively with a union
since the only issue involved is the determination of the bargaining
agent of the employees.
Petitioner union claimed that to completely disregard the will
of the 331 rank - and - file employees for a certification election
would result in the denial of their substantial rights and
interests. Moreover, it contended that public
respondents indictment that petitioner capitalize (sic) on the
ensuing delay which was caused by the Hospital, . x x x was
unsupported by the facts and the records.
On January 11, 1995, public respondent issued a Resolution
which denied the two motions for reconsideration, hence this
petition.
The pivotal issue in this case is whether or not public
respondent committed grave abuse of discretion in dismissing the
petition for certification election, and in directing the hospital to
negotiate a collective bargaining agreement with the said
respondent union.

Petitioner alleges that public respondent Undersecretary

Laguesma denied it due process when it ruled against the holding
of a certification election. It further claims that the denial of due
process can be gleaned from the manner by which the assailed
resolution was written, i.e., instead of the correct name of the
mother federation UNIFIED, it was referred to as UNITED; and that
the respondent unions name CMCEA - AFW was referred to as
CMCEA - AFLO. Petitioner maintains that such errors indicate that
the assailed resolution was prepared with indecent haste.
We do not subscribe to petitioners contention.
The errors pointed to by petitioner can be classified as mere
typographical errors which cannot materially alter the substance
and merit of the assailed resolution.
Petitioner cannot merely anchor its position on the
aforementioned erroneousnames just to attain a reversal of the
questioned resolution. As correctly observed by the Solicitor
General, petitioner is merely nit - picking, vainly trying to make a
monumental issue out of a negligible error of the public
respondent.
Petitioner also assails public respondentsfindings that the
former capitalize (sic) on the ensuing delay which was caused by
the hospital and which resulted in the non - conclusion of a CBA
within the certification year. It further argues that the denial of its
motion for a fair hearing was a clear case of a denial of its right to
due process.
Such contention of petitioner deserves scant consideration.
A perusal of the record shows that petitioner failed to file its
opposition to oppose the grounds for respondent unions appeal.
It was given an opportunity to be heard but lost it when it
refused to file an appellees memorandum.
Petitioner insists that the circumstances prescribed in
Section 3, Rule V, Book V of the Rules Implementing the Labor
Code where a certification election should be
conducted, viz: (1) that one year had lapsed since the issuance of
a final certification result; and (2) that there is no bargaining
deadlock to which the incumbent or certified bargaining agent is a
party has been submitted to conciliation or arbitration, or had
become the subject of a valid notice of strike or lockout, are
present in this case. It further claims that since there is no
evidence on record that there exists a CBA deadlock, the law
allowing the conduct of a certification election after twelve months
must be given effect in the interest of the right of the workers to
freely choose their sole and exclusive bargaining agent.
While it is true that, in the case at bench, one year had
lapsed since the time of declaration of a final certification
result, and that there is no collective bargaining deadlock, public
respondent did not commit grave abuse of discretion when it ruled
in respondent unions favor since the delay in the forging of the
CBA could not be attributed to the fault of the latter.
A scrutiny of the records will further reveal that after
respondent union was certified as the bargaining agent of CMC, it
invited the employer hospital to the bargaining table by submitting
its economic proposal for a CBA. However, CMC refused to
negotiate with respondent union and instead challenged the latters
legal personality through a petition for cancellation of the certificate
of registration which eventually reached this Court. The decision
affirming the legal status of respondent union should have left
CMC with no other recourse but to bargain collectively, but still it
did not. Respondent union was left with no other recourse but to
file a notice of strike against CMC for unfair labor practice with the

National Conciliation and Mediation Board. his eventually led to a

strike on April 15, 1993.
Petitioner union on the other hand, after this Court issued an
entry of judgment on March 23, 1994, filed the subject petition for
certification election on March 24, 1994, claiming that twelve
months had lapsed since the last certification election.
Was there a bargaining deadlock between CMC and
respondent union, before the filing of petitioner of a petition for
certification election, which had been submitted to conciliation or
had become the subject of a valid notice of strike or lockout?
In the case of Divine Word University of
Tacloban v. Secretary of Labor and Employment, we had the
occasion to define what a deadlock is, viz:
A deadlock is xxx the counteraction of things producing entire
stoppage; xxx There is a deadlock when there is a complete
blocking or stoppage resulting from the action of equal and
opposed forces xxx. The word is synonymous with the word
impasse, which xx presupposes reasonable effort at good faith
bargaining which, despite noble intentions, does not conclude in
agreement between the parties.
Although there is no deadlock in its strict sense as there is
no counteraction of forces present in this case nor reasonable
effort at good faith bargaining, such can be attributed to CMC s
fault as the bargaining proposals of respondent union were never
answered by CMC. In fact, what happened in this case is worse
than a bargaining deadlock for CMC employed all legal means to
block the certification of respondent union as the bargaining agent
of the rank - and - file; and use it as its leverage for its failure to
bargain with respondent union. Thus, we can only conclude that
CMC was unwilling to negotiate and reach an agreement with
respondent union. CMC has not at any instance shown willingness
to discuss the economic proposals given by respondent union.
As correctly ratiocinated by public respondent, to wit:
For herein petitioner to capitalize on the ensuing delay which
was caused by the hospital and which resulted in the non conclusion of a CBA within the certification year, would be to
negate and render a mockery of the proceedings undertaken
before this Department and to put an unjustified premium on the
failure of the respondent hospital to perform its duty to bargain
collectively as mandated in Article 252 of the Labor Code, as
amended, which states.
Article 252. Meaning of duty to bargain collectively - the duty to
bargain collectively means the performance of a mutual obligation
to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect to
wages, hours of work and all other terms and conditions of
employment including proposals for adjusting any grievance or
questions arising under such agreement and executing a contract
incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to
make any concession.

attempts to bring an employer to the negotiation table by the

certified bargaining agent, there was no reasonable effort in good
faith on the employer to bargain collectively.
In the case of Kaisahan ng Manggagawang
Pilipino vs. Trajano, 201 SCRA 453 (1991), penned by Chief
Justice Andres R. Narvasa, the factual milieu of which is similar to
this case, this Court allowed the holding of a certification election
and ruled that the one year period known as the certification
year has long since expired. We also ruled, that:
xxx prior to the filing of the petition for election in this
case, there was no such bargaining deadlock xx (which) had
been submitted to conciliation or arbitration or had become the
subject of a valid notice of strike or lockout. To be sure, there are
in the record assertions by NAFLU that its attempts to bring VIRON
to the negotiation table had been unsuccessful because of the
latters recalcitrance, and unfulfilled promises to bargain
collectively; but there is no proof that it had taken any action to
legally coerce VIRON to comply with its statutory duty to bargain
collectively. It could have charged VIRON with unfair labor
practice ; but it did not. It could have gone on a legitimate strike in
protest against VIRONs refusal to bargain collectively and compel
it to do so; but it did not. There are assertions by NAFLU, too, that
its attempts to bargain collectively had been delayed by continuing
challenges to the resolution pronouncing it the sole bargaining
representative in VIRON; but there is no adequate substantiation
thereof, or of how it did in fact prevent initiation of the bargaining
process between it and VIRON.
Although the statements pertinent to this case are merely
obiter, still the fact remains that in the Kaisahan case, NAFLU
was counselled by this Court on the steps that it should have
undertaken to protect its interest, but which it failed to do so.
This is what is strikingly different between the Kaisahan case
and the case at bench for in the latter case, there was proof that
the certified bargaining agent, respondent union, had taken an
action to legally coerce the employer to comply with its statutory
duty to bargain collectively, i.e., charging the employer with unfair
labor practice and conducting a strike in protest against the
employers refusal to bargain. It is only just and equitable that the
circumstances in this case should be considered as similar in
nature to a bargaining deadlockwhen no certification election
could be held. This is also to make sure that no floodgates will be
opened for the circumvention of the law by unscrupulous
employers to prevent any certified bargaining agent from
negotiating a CBA. Thus, Section 3, Rule V, Book V of the
Implement Rules should be interpreted liberally so as to include a
circumstance, e. g. where a CBA could not be concluded due to
the failure of one party to willingly perform its duty to bargain
collectively.
The order for the hospital to bargain is based on its failure to
bargain collectively with respondent union.
WHEREFORE , the Resolution dated November
18 , 1994 of public respondent Laguesma is AFFIRMED and
the instant petition is hereby DISMISSED.
SO ORDERED.

The duly certified bargaining agent, CMCEA - AFW, should not be

made to further bear the brunt flowing from the respondent
hospitals reluctance and thinly disguised refusal to bargain.
If the law proscribes the conduct of a certification election
when there is a bargaining deadlock submitted to conciliation or
arbitratio, with more reason should it not be conducted if, despite

Padilla , Bellosillo , Vitug , and Kapunan , JJ .

, concur .