LABOR 2 Case Digest (January 24, 2020)

1. The ineligibility of Managerial Employees to form unions

G.R. No. 122226 March 25, 1998
UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner, vs. HON. BIENVENIDO E.
LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents.

Topic: Excluded Employees/Workers – Managerial Employees

FACTS:

 The UPSU is a union of supervisory employees.

 On March 20, 1995, the union filed a petition for certification election on behalf of the route
managers at Pepsi-Cola Products Philippines, Inc.
 Its petition was denied by the med-arbiter and, on appeal, by the Secretary of Labor and
Employment (SOLE), on the ground that the route managers are managerial employees
and, therefore, ineligible for union membership under the first sentence of Art. 245 (now
255) of the Labor Code, which provides:
o 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. [The rank and file union
and the supervisors’ union operating within the same establishment may join the
same federation or national union.]
 The Union brought this suit challenging the validity of the orders of SOLE.
 Its petition was dismissed by the Third Division for lack of showing that SOLE committed
grave abuse of discretion.
 The Union filed a motion for reconsideration, pressing for resolution its contention that the
first sentence of Art. 245 of the Labor Code, so far as it declares managerial employees
to be ineligible to form, assist or join unions, contravenes Art. III, Section 8, of the
Constitution:
o The right of the people, including those employed in the public and private sectors,
to form unions, associations, or societies for the purposes not contrary to law shall
not be abridged.
 Thus, the petition was referred to the Court en banc.

ISSUES:
1 2 Main Issues:
1. The route managers at Pepsi-Cola are managerial employees
2. The first sentence of Art. 245 of the Labor Code, prohibiting managerial employees from
forming, assisting or joining any labor organization, is unconstitutional in light of Art. III,
Sec. 8 of the Constitution
1. WoN the route managers at Pepsi-Cola are managerial employees
o YES. First, the Court distinguished between the classes of managers in an
organization. Citing the description from Stoner & Wankel, Management 11 (1987),
a distinction exist between those who have the authority to devise, implement and
control strategic and operational policies (top and middle managers) and those
whose task is simply to ensure that such polices are carried out by the rank-and-
file employees of an organization (first-level managers/supervisors). What
distinguishes them from the rank-and file employees is that they act in the interest
of the employer in supervising such rank-and-file employees. Managerial
employees may therefore be said to fall into two distinct categories: the
managers per se and the supervisors.
o Re: procedural issue – Citing Nasipit Lumber Co. v. NLRC, the Union argues that
the two previous determinations made by the SOLE (holding that route managers
were managerial employees) do not have the effect of res judicata in this case,
because "labor relations proceedings" are "non-litigious and summary in nature
without regard to legal technicalities.” Nasipit Lumber Co. involved a clearance to
dismiss an employee issued by the Department of Labor. The question was
whether in a subsequent proceeding for illegal dismissal, the clearance was res
judicata. In holding it was not, this Court made it clear that it was referring to labor
relations proceedings of a non-adversary character. But the doctrine of res
judicata certainly applies to adversary administrative proceedings. As early as
1956, in Brillantes v. Castro, the Court sustained the dismissal of an action by a
trial court on the basis of a prior administrative determination of the same case by
the Wage Administration Service, applying the principle of res judicata. xxx At the
very least, the principle of finality of administrative determination compels respect
for the finding of the SOLE that route managers are managerial employees as
defined by law in the absence of anything to show that such determination is
without substantial evidence to support it.
o On the merits, the Court found that the job evaluation made by the Secretary
of Labor is supported by substantial evidence. Unlike supervisors who
basically merely direct operating employees in line with set tasks assigned to them,
route managers are responsible for the success of the company's main line of
business through management of their respective sales teams. Such management
necessarily involves the planning, direction, operation and evaluation of their
individual teams and areas which the work of supervisors does not entail. The
route managers cannot thus possibly be classified as mere supervisors because
their work does not only involve, but goes far beyond, the simple direction or
supervision of operating employees to accomplish objectives set by those above
them. They are not mere functionaries with simple oversight functions but business
administrators in their own right.
o Article 212(m) (now 219(m)) says that "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." Thus, their only power is to recommend.
Certainly, the route managers in this case more than merely recommend effective
management action. They perform operational, human resource, financial and
marketing functions for the company, all of which involve the laying down of
operating policies for themselves and their teams. For example, with respect to
marketing, route managers, in accordance with B.1.1.1 to B.1.1.9 of the Route
Managers Job Description, are charged, among other things, with expanding the
dealership base of their respective sales areas, maintaining the goodwill of current
dealers, and distributing the company's various promotional items as they see fit.
It is difficult to see how supervisors can be given such responsibility when this
involves not just the routine supervision of operating employees but the protection
and expansion of the company's business vis-a-vis its competitors.
o While route managers do not appear to have the power to hire and fire people (the
evidence shows that they only "recommended" or "endorsed" the taking of
disciplinary action against certain employees), this is because this is a function of
the Human Resources or Personnel Department of the company. And neither
should it be presumed that just because they are given set benchmarks to observe,
they are ipso facto supervisors. Adequate control methods (as embodied in such
concepts as "Management by Objectives [MBO]" and "performance appraisals")
which require a delineation of the functions and responsibilities of managers by
means of ready reference cards as here, have long been recognized in
management as effective tools for keeping businesses competitive.

2 WoN the first sentence of Art. 245 of the Labor Code, prohibiting managerial
employees from forming, assisting or joining any labor organization, is
unconstitutional in light of Art. III, Sec. 8 of the Constitution
o NO, it is not unconstitutional.
o The Court broke down this issue into three questions:

First: Managerial employees have a right of self-organization prior to the Labor

Code

Second: Commissioner Lerum meant in his proposed amendment to Section 8,

Article III of the 1987 Constitution (1) absolute recognition of private sector
employees, without exception, to organize or (2) simply the restoration of the
right of supervisory employees to organize

Third: (the main question): The present ban against managerial employees is
unconstitutional

First: WoN managerial employees have a right of self-organization prior to the Labor Code
o YES, with respect to supervisors. The Industrial Peace Act (RA 875) defined:
  (k) "Supervisor" means any person having authority in the interest of an
employer, to hire, transfer, suspend, lay-off, recall, discharge, assign,
recommend, or discipline other employees, or responsibly to direct them,
and to adjust their grievances, or effectively to recommend such acts, if, in
connection with the foregoing, the exercise of such authority is not of a
merely routinary or clerical nature but requires the use of independent
judgment.
o The right of supervisors to form their own organizations was affirmed:
 SEC. 3. Employees' Right to Self-Organization. -- Employees shall have
the right to self-organization and to form, join or assist labor organizations
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 and protection.
Individuals employed as supervisors shall not be eligible for membership
in a labor organization of employees under their supervision but may form
separate organizations of their own.
o Although it had a definition of the term "supervisor," the Industrial Peace Act did
not define the term "manager." But, using the commonly-understood concept of
"manager," as above stated, it is apparent that the law used the term "supervisors"
to refer to the sub-group of "managerial employees" known as front-line managers.
The other sub-group of "managerial employees," known as managers per se, was
not covered. However, in Caltex Filipino Managers and Supervisors Association v.
Court of Industrial Relations, the right of all managerial employees to self-
organization was upheld as a general proposition. xxx Actually, the case involved
front-line managers or supervisors only, as the plantilla of employees, quoted in
the main opinion: “Finally, also deemed included are all other employees excluded
from the rank and file unions but not classified as managerial or otherwise
excludable by law or applicable judicial precedents.”
o The Labor Code, promulgated in 1974 under martial law, dropped the distinction
between the first and second sub-groups of managerial employees. Instead of
treating the terms "supervisor" and "manager" separately, the law lumped
them together and called them "managerial employees," as follows:
 ART. 212. Definitions . . . . (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.
o The definition shows that it is actually a combination of the commonly understood
definitions of both groups of managerial employees, grammatically joined by the
phrase "and/or." This general definition was perhaps legally necessary at that
time for two reasons. First, the 1974 Code denied supervisors their right to
self-organize as theretofore guaranteed to them by the Industrial Peace Act.
Second, it stood the dictum in the Caltex case on its head by prohibiting all
 types of managers from forming unions. The explicit general prohibition was
contained in the then Art. 246 of the Labor Code.
Second: WoN Commissioner Lerum meant in his proposed amendment to Section 8,
Article III of the 1987 Constitution (1) absolute recognition of private sector employees,
without exception, to organize or (2) simply the restoration of the right of supervisory
employees to organize
o Simply to restore the right of supervisory employees to organize. For even though
he spoke of the need to "abolish" Art. 246 of the Labor Code which prohibited
"managerial employees" in general from forming unions, the fact was that in
explaining his proposal, he repeatedly referred to "supervisory employees" whose
right under the Industrial Peace Act to organize had been taken away by Art. 246. It
is noteworthy that Commissioner Lerum never referred to the then definition of
"managerial employees" in Art. 212(m) of the Labor Code which put together,
under the broad phrase "managerial employees," top and middle managers and
supervisors. Instead, his repeated use of the term "supervisory employees," when
such term then was no longer in the statute books, suggests a frame of mind that
remained grounded in the language of the Industrial Peace Act.
o Nor did Lerum ever refer to the dictum in Caltex recognizing the right of all
managerial employees to organize, despite the fact that the Industrial Peace Act
did not expressly provide for the right of top and middle managers to organize. If
Lerum was aware of the Caltex dictum, then his insistence on the use of the term
"supervisory employees" could only mean that he was excluding other managerial
employees from his proposal. If, on the other hand, he was not aware of the Caltex
statement sustaining the right to organize to top and middle managers, then the
more should his repeated use of the term "supervisory employees" be taken at
face value, as it had been defined in the then Industrial Peace Act.
o At all events, that the rest of the Commissioners understood his proposal to refer
solely to supervisors and not to other managerial employees is clear from the
following account of Commissioner Joaquin G. Bernas, who writes: In presenting
the modification on the 1935 and 1973 texts, Commissioner Eulogio R. Lerum
explained that the modification included three categories of workers: (1)
government employees, (2) supervisory employees, and (3) security guards.
Lerum made of record the explicit intent to repeal provisions of P.D. 442, the Labor
Code. The provisions referred to were:
 ART. 245. Security guards and other personnel employed for the protection
and security of the person, properties and premises of the employers shall
not be eligible for membership in a labor organization.
 ART. 246. Managerial employees are not eligible to join, assist, and form
any labor organization.
Third (the main question): WoN the present ban against managerial employees is
unconstitutional
o NO, it is not unconstitutional. Article 245 (now 255) is the result of the amendment
of the Labor Code in 1989 by R.A. No. 6715, otherwise known as the Herrera-
Veloso Law. Unlike the Industrial Peace Act or the provisions of the Labor Code
 which it superseded, R.A. No. 6715 provides separate definitions of the terms
"managerial" and "supervisory employees," as follows:
o ART. 212 (now 219). Definitions. . . .(m) "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. 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 rank-and-file employees for purposes of this Book.
o Although the definition of "supervisory employees" seems to have been unduly
restricted to the last phrase of the definition in the Industrial Peace Act, the legal
significance given to the phrase "effectively recommends" remains the same. In
fact, the distinction between top and middle managers, who set management
policy, and front-line supervisors, who are merely responsible for ensuring that
such policies are carried out by the rank and file, is articulated in the present
definition. When read in relation to this definition in Art. 212(m), it will be seen that
Art. 245 faithfully carries out the intent of the Constitutional Commission in framing
Art. III, 8 of the fundamental law.
o Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban against
managerial employees forming a union. The right guaranteed in Art. III, 8 is subject
to the condition that its exercise should be for purposes "not contrary to law." In
the case of Art. 245, there is a rational basis for prohibiting managerial employees
from forming or joining labor organizations. As Justice Davide, Jr., himself a
constitutional commissioner, said in his ponencia in Philips Industrial
Development, Inc. v. NLRC:
 In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court
elaborated on this rationale, thus: ". . . The rationale for this inhibition has
been stated to be, because if these managerial employees would belong
to or be affiliated with a Union, the latter might not be assured of their loyalty
to the Union in view of evident conflict of interests. The Union can also
become company-dominated with the presence of managerial employees
in Union membership."
o To be sure, the Court in Philips Industrial was dealing with the right of confidential
employees to organize. But the same reason for denying them the right to organize
justifies even more the ban on managerial employees from forming unions.
2. Supervisory position employees Union on their own

R. No. L-82088 October 13, 1989

ZAMBOANGA WOOD PRODUCTS, INC., petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, NATIONAL FEDERATION OF LABOR,
DIONISIO ESTIOCA and THE STRIKERS, respondents.

Facts:

This is the seventh petition to come before this Court involving the parties. Dionisio Estioca was
first hired by the petitioner as a clerk in its personnel department, he rose to become a personnel
aide and became the Personnel Supervisor, a supervisory and/or managerial position, next in
rank to the Personnel Manager. The National Federation of Labor (NFL) of which Estioca was
president, filed a petition for direct certification as the sole and exclusive bargaining representative
of all the monthly-salaried employees (90 more or less) of the Company "composed of
administrative and supervisory personnel which is an appropriate bargaining" unit.

Estioca posted an announcement on the bulletin board of the employees' coffee shop criticizing
the Company for having earmarked the sum of P250,000 for the inter-department athletic
tournament (which he called "a farce and baloony") to be held that year, instead of using the
money to pay the employees' claims for living allowance. He urged the employees to boycott the
sports event.

It turned out that Estioca's figures were incorrect for the athletic meet budget was P54, 000 only.
The employees filed a claim for their living allowance before the Labor Arbiter thereafter. Attorney
Alberto De la Rosa, resident manager of the Company wrote a letter to Estioca asking him to
show cause why no disciplinary action should be taken against him for:

a) Spreading false rumors regarding the so called P250,000.00 budget for athletics
during this interdepartment games;

b) For agitating employees to fight against management's plan and programs of

athletic activities which are good for the employees and company; and

c) For using company materials and equipment for personal and private
use/purpose without authority.

Estioca received the letter on April 26, 1982. He answered it on April 27, 1982. On April 30, 1982,
he was notified that the Company was terminating his service as personnel supervisor for loss of
trust and confidence in him. The termination was duly reported by the Company to the Ministry of
Labor and Employment (MOLE).

Issue:
W hether or not petitioner company is guilty of unfair labor practice for
dismissing Estioca.

Held:

The Company contends that its loss of trust and confidence in him was a lawful cause for his
dismissal. The act of posting a scathing and hostile announcement in the Company's cafeteria,
falsely denouncing the Company for its supposed extravagance and fomenting discontent and
resentment among the employees on account of the Company's supposed indifference to their
claim for increased living allowance, were acts of disloyalty to the management.

Was his dismissal justified?

Art. 245 of the Labor Code provides that "managerial employees are not eligible to join, assist or
form any labor organization." Estioca is, therefore, disqualified to head a union of the rank and
file employees.

However, RA 6715 which took effect on March 21, 1989 (15 days after its publication in the
"Philippines Daily Inquirer") provides that although "supervisory employees shall not be eligible
for membership in a labor organization of the rank and file employees," they may, however, "join,
assist or form separate labor organization of their own."

In the NFL's petition for direct certification as the bargaining representative of the monthly-salaried
employees of the Company, it was expressly alleged that said organization is "composed of
administrative and supervisory personnel." Consequently, Estioca's leadership of that union was
not unlawful as it was not inconsistent with his position as personnel supervisor of the Company.
However, his act of posting a bellicose announcement critical of the Company and based on false
or erroneous information, was undoubtedly prejudicial to the Company. The Company's reaction
was understandable but too harsh in view of Estioca's subsequent apology for his action. We,
therefore, agree with the public respondent that Estioca's dismissal from the service was illegal.
 3) Exclusion of Managerial employees excluded from joining and thus voting
#3 Southern Philippines Federation Vs CAlleja 172 SCRA 676
Facts:
Petitioner Southern Philippines Federation of Labor filed a petition for certification election
among the rank-and-file employees of private respondent Apex Mining Company, Incorporated
with the Department of Labor in Region XI, Davao City. Med-Arbiter Conrado 0. Macasa, Sr.
issued an Order calling for the holding of the certification election on February 23, 1987 among
the rank-and-file employees of APEX with the following choices:
l. Southern Philippines Federation of Labor (SPFL)
2. Mindanao Miners Employees Union-Sandigan ng Manggagawang Pilipino (MMEU-
Sandigan) and
3. No union.
A pre-election conference was conducted among the petitioner Union; private respondent Union,
MMEU-Sandigan; and APEX to settle details in the conduct of the election such as the venue of
the election and the list of employees qualified to vote in the election. During the conference, the
parties agreed to delete from the list of workers prepared and submitted by APEX numbering
One Thousand Seven Hundred Sixteen (1,716), the names of nineteen (1 9) managerial
employees and seventy-three probationary employees who were statutorily disqualified from
voting. Petitioner Union objected to the inclusion in said list of the following: (1) employees
occupying the positions of Supervisor I, II, and III; (2) employees under confidential/special
payrolls; and (3) employees who were not paying Union dues, contending disqualification. Med-
arbiter issued an order declaring the 1 Nineteen (19) managerial employees, Seventy-three (73)
probationary employees, and Nineteen (19) Supervisors to not be allowed to vote.
The certification election was nonetheless conducted and Southern Philippines Federation of
Labor won with 614 votes. Total votes casted was 1,373. On the basis of the foregoing results,
respondent Union filed an Urgent Motion to Open the Challenged Ballots to determine once and
for all the winner of the certification election. The Med-Arbiter ordered for the opening of the
ballots.
Med-Arbiter Macasa opened and canvassed the 197 challenged ballots with the result as follows
SPFL 12 votes, SANDIGAN 178 votes, No Union 2 votes, Spoiled 4 votes, envelop with no
ballots 1 vote. Based on the results, Med-Arbiter declared respondent Union as the winner of the
certification election.
ISSUE:
Whether or not the public respondent committed grave abuse of discretion in allowing the 197
employees to vote in the certification election when, as alleged by the petitioner, they are
disqualified by express provision of law or under the existing collective bargaining agreement.
Ruling:
It is maintained by the petitioner that under the Labor Code, managerial employees are excluded
from forming or joining a collective bargaining unit; and under the collective bargaining
agreement executed between Apex and respondent union, among those who are excluded from
the bargaining unit are: a) managerial employees as defined in paragraph K, Article 212 of the
Labor Code; b) those performing supervisory functions; and c) those holding confidential
positions as determined by the company. Therefore, the employees holding the positions of
Supervisors II and III and those in the confidential payrolls should be excluded from joining the
bargaining unit and from voting in the certification election. Likewise, those employees who are
not paying union dues should be excluded from the same since the existing CBA contains a
Union shop provision.
Although we have upheld the validity of the CBA as the law among the parties its provisions
cannot override what is expressly provided by law that only managerial employees are ineligible
to join, assist or form any labor organization (See Art. 247, Labor Code). Therefore, regardless
of the challenged employees' designations, whether they are employed as Supervisors or in the
confidential payrolls, if the nature of their job does not fall under the definition of "managerial"
as defined in the Labor Code, they are eligible to be members of the bargaining unit and to vote
in the certification election. Their right to self-organization must be upheld in the absence of an
express provision of law to the contrary. It cannot be curtailed by a collective bargaining
agreement.
 4. PAPER INDUSTRIES CORP VS LAGUESMA

Topic: Managerial Employees

To understand the nature of the case, here’s the Doctrine:
DOCTRINE:
Managerial employees are ranked as Top Managers, Middle Managers and First Line Managers.
Top and Middle Managers have the authority to devise, implement and control strategic and
operational policies while the task of First-Line Managers is simply to ensure that such policies
are carried out by the rank-and- file employees of an organization. Under this distinction,
"managerial employees" therefore fall in two (2) categories, namely, the "managers" per se
composed of Top and Middle Managers, and the "supervisors" composed of First-Line Managers.
Thus, the mere fact that an employee is designated manager" does not ipso facto
make him one. Designation should be reconciled with the actual job description of the employee,
for it is the job description that determines the nature of employment.

FACTS :

Petitioner Paper Industries Corporation of the Philippines (PICOP ) is engaged in the manufacture
of paper and timber products PICOP-Bislig instituted a Petition for Certification Election to
determine the sole and exclusive bargaining agent of the supervisory and technical staff
employees of PICOP for collective bargaining agreement (CBA) purposes. Initial hearing was set.
Paper Industries Corp failed to file any comment or position paper.

Meanwhile, private respondents Federation of Free Workers (FFW) and Associated Labor Union
(ALU) filed their respective petitions for intervention. An Order was issued granting the petitions
for interventions of the FFW and ALU. Another Order issued on the same day set the holding of
a certification election among PICOP's supervisory and technical staff employees in with four
choices, namely: (1) PICOP Bislig Union; (2) FFW; (3)ALU; and (4) no union.

Paper Industries Corp appealed the Order which set the holding of the certification election
contending that the Med-Arbiter committed grave abuse of discretion in deciding the case
without giving the corporation the opportunity to file its comments/answer, and that PICOP-
Bislig Union had no personality to file the petition for certification election.

PICOP questioned and objected to the inclusion of some section heads and supervisors in the
list of voters whose positions it averred were reclassified as managerial employees in the light of
the reorganization effected by it. PICOP’s contention: the company was divided into four (4) main
business groups, namely: Paper Products Business, Timber Products Business, Forest Resource
Business and Support Services Business. A vice-president or assistant vice-president heads each
of these business groups. A division manager heads the divisions comprising each business group.
A department manager heads the department’s comprising each division. Section heads and
supervisors, now called section managers and unit managers, head the sections and independent
units, respectively, comprising each department. PICOP advanced the view that considering the
alleged present authority of these section managers and unit managers to hire and fire, they are
classified as managerial employees, and hence, ineligible to form or join any labor organization.
Med-Arbiter ruling: supervisors and section heads of the petitioner are managerial
employees and therefore excluded from the list of voters for purposes of certification
election.
DOLE Under Sec Laguesma : decides otherwise and issued an order declaring that the subject
supervisors and section heads are supervisory employees eligible to vote in the certification
election.

ISSUE :
W/N the positions Section Heads and, who have been designated as Section Managers and
Unit Managers, were converted to managerial employees under the decentralization and
reorganization program

RULING :
NO. they are not managerial employees

RATIONALE: (why?)
A thorough dissection of the job description of the concerned supervisory employees and
section heads indisputably show that they are not actually managerial but only supervisory
employees since they do not lay down company policies. PICOP's contention that the subject
section heads and unit managers exercise the authority to hire and fire is ambiguous and quite
misleading for the reason that any authority they exercise is not supreme but merely advisory in
character. Theirs is not a final determination of the company policies inasmuch as any action
taken by them on matters relative to hiring, promotion, transfer, suspension and termination of
employees is still subject to confirmation and approval by their respective superior. Thus, where
such power, which is in effect recommendatory in character, is subject to evaluation, review and
final action by the department heads and other higher executives of the company, the same,
although present, is not effective and not an exercise of independent judgment as required by
law.

DISPOSITIVE: Under Sec. Laguesma was correct. The members of the labor unions won
 5. Supervisory Employees cannot join labor organizations
TOYOTA MOTOR PHILIPPINES CORPORATION, petitioner,
vs.
TOYOTA MOTOR PHILIPPINES CORPORATION LABOR UNION AND THE
SECRETARY OF LABOR AND EMPLOYMENT, respondents.
FACTS:
 On November 26, 1992, the Toyota Motor Philippines Corporation Labor Union
(TMPCLU) filed a petition for certification election with the Department of Labor for
all rank-and-file employees of the Toyota Motor Corporation.
 In response, petitioner filed a Position Paper seeking the denial of the issuance of
an Order directing the holding of a certification election on two grounds: (1) that
the union, being "in the process of registration" had no legal personality to file the
same as it was not a legitimate labor organization and (2) that the union was
composed of both rank-and-file and supervisory employees in violation of law.
 The Med-Arbiter dismissed the union’s petition for certification election for lack of
merit, finding that the labor organization's membership was composed of
supervisory and rank-and-file employees and that at the time of the filing of its
petition, respondent union had not even acquired legal personality yet
 The Office of the Sec. of Labor set aside the Med-Arbiter's Order and directed the
holding of a certification election among the regular rank.-and-file employees of
Toyota Motor Corporation
 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.
ISSUE: Whether or not supervisory employees can join labor organizations
RULING:
 The petition is granted.
 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 a previous ruling, the Court has defined “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.
 Art. 245 (now Art. 255) of the Labor Code states: 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.
 Supervisory employees 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.
 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 rationale behind the Code's exclusion of supervisors from unions of rank-and-
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.
 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.
 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.
6. Legitimacy of a union when there are M and S employees who are members

CASE DIGEST #6

SAN MIGUEL CORPORATION (MANDAUE PACKAGING PRODUCTS PLANTS),

vs.
MANDAUE PACKING PRODUCTS PLANTS-SAN PACKAGING PRODUCTS –SAN MIGUEL
CORPORATION MONTHLIES RANK-AND-FILE UNION – FFW (MPPP-SMPP-SMAMRFU-
FFW)
G.R. No. 152356. August 16, 2005

Facts:
On 15 June 1998, respondent, identifying itself as an affiliate of Federation of Free Workers
(FFW), filed a petition for certification election with the DOLE Regional Office No. VII. In the
petition, respondent stated that it sought to be certified and to represent the permanent rank-and-
file monthly paid employees of the petitioner. The following documents were attached to the
petition:

(1) a Charter Certificate issued by FFW on 5 June 1998 certifying that respondent as of that date
was duly certified as a local or chapter of FFW;
(2) a copy of the constitution of respondent prepared by its Secretary and attested by its President;
(3) a list of respondent’s officers and their respective addresses;
(4) a certification signifying that respondent had just been organized and no amount had yet been
collected from its members, signed by respondent’s treasurer and
(5) a list of all the rank-and-file monthly paid employees of the Mandaue Packaging Products
Plants and Mandaue Glass Plant.

On 27 July 1998, petitioner filed a motion to dismiss the petition for certification election on the
sole ground that herein respondent is not listed or included in the roster of legitimate labor
organizations based on the certification issued by the Officer-In-Charge, Regional Director of the
DOLE Regional Office No. VII, Atty. Gabor.

On 29 July 1998, respondent submitted to the Bureau of Labor Relations the same documents
earlier attached to its petition for certification.

Petitioner filed a Comment, wherein it reiterated that respondent was not a legitimate labor
organization at the time of the filing of the petition. Petitioner also propounded that contrary to
respondent’s objectives of establishing an organization representing rank-and-file employees, two
of respondent’s officers, namely Vice-President Emannuel L. Rosell and Secretary Bathan, were
actually supervisory employees. Petitioner cited Article 245 of the Labor Code, which provides
that supervisory employees shall not be eligible for membership in a labor organization of the
rank-and-file employees.

On 20 August 1998, petitioner filed a petition to cancel the union registration of respondent.
However, this petition was denied, and such denial was subsequently affirmed by the Court of
Appeals in a decision that has since become final.

In the meantime, Med-Arbiter Manit issued an Order dismissing respondent’s petition for
certification election. No discussion was adduced on petitioner’s claims that some of respondent’s
officers were actually supervisory employees.
DOLE Undersecretary Rosalinda Dimapilis-Baldoz rendered a Decision reversing the Order. The
DOLE also ruled that the contention that two of respondent’s officers were actually supervisors
can be threshed out in the pre-election conferences where the list of qualified voters is to be
determined.

Issue:
Whether or not the alleged presence of supervisory employees as officers of the respondent union
for rank-and-file employees cannot be a legitimate labor organization and such union should not
have been registered at all.

Ruling:
No.
 Petitioner’s contention:
Petitioner cites the cases of Toyota Motors and Progressive Development Corporation-
Pizza Hut v. Ledesma wherein the Court ruled that the question of prohibited membership
of both supervisory and rank-and-file employees in the same union must be inquired into
anterior to the granting of an order allowing a certification election; and that a union
composed of both of these kinds of employees does not possess the requisite personality
to file for recognition as a legitimate labor organization.

There is no need to apply any of the above cases at present because the question raised by
petitioner on this point is already settled law, as a result of the denial of the independent petition
for cancellation filed by petitioner against respondent on 20 August 1998. The ground relied upon
therein was the alleged fraud, misrepresentation and false statement in describing itself as a union
of rank and file employees when in fact, two of its officers, Emmanuel Rosell and Noel Bathan,
were occupying supervisory positions. Said petition was denied by the Regional Director, this
action was affirmed by the DOLE, the Court of Appeals, and the Supreme Court.

Managerial employee is "one who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, layoff, recall, discharge, assign or
discipline employees." A supervisory employee is "one who, in the interest of the employer,
effectively recommends managerial actions if the exercise of such recommendatory authority is
not merely routinary or clerical in nature but requires the use of independent judgment.’" Finally,
"all employees not falling within the definition of managerial or supervisory employee are
considered rank-and-file employees". It is also well-settled that the actual functions of an
employee, not merely his job title, are determinative in classifying such employee as managerial,
supervisory or rank and file.

In the case of Rossell, evidence shows that his functions are more routinary than recommendatory
and hardly leave room for independent judgment. In the case of Noel Bathan, the evidence does
not show his job title although it shows that his recommendations on disciplinary actions appear
to have carried some weight on higher management. On this limited point, he may qualify as a
supervisory employee within the meaning of the law. This may, however, be outweighed by his
other functions which are not specified in the evidence.

Even assuming that Bathan, or Rossel for that matter, are supervisory employees, the Toyota
case cannot certainly be given an interpretation that emasculates the right to self-organization
and the promotion of free trade unionism. We take administrative notice of the realities in union
organizing, during which the organizers must take their chances, oftentimes unaware of the fine
distinctions between managerial, supervisory and rank and file employees. The grounds for
cancellation of union registration are not meant to be applied automatically, but indeed with utmost
discretion. Where a remedy short of cancellation is available, that remedy should be preferred. In
this case, no party will be prejudiced if Bathan were to be excluded from membership in the union.
The vacancy he will thus create can then be easily filled up through the succession provision of
union’s constitution and by-laws. What is important is that there is an unmistakeable intent of the
members of union to exercise their right to organize. We cannot impose rigorous restraints on
such right if we are to give meaning to the protection to labor and social justice clauses of the
Constitution.

Petitioner opposes the petition for certification election on the ground of the illegitimacy of
respondent, owing to the alleged supervisory nature of the duties of Rossell and Bathan. That
matter has already been settled in the final disposition of the petition for cancellation, and thus
cannot be unsettled by reason of this present petition.
8. confidential employees cannot be classified as rank and file
Metrolab Industries Inc. vs. Roldan Confesor

FACTS:

Herein petitioner Metrolab Industries represented by the private respondent Metro Drug
Corp. a labor organization representing the petitioners’ employees. After the CBA between
the parties expired, negotiations for new CBA ended into deadlock. Both parties failed to
settle their dispute hence the order issued by the Secretary of Labor and Employment that
any strike or acts that might exacerbate the situation is ceased and ordered the parties to
execute a new CBA. Later, the petitioner moved two lay-off acts to its rank and file
employees and was opposed by the union. Petitioner assailed that the move was
temporary and exercise of its management prerogative. Herein public respondent declared
that the petitioner’s act illegal and issued two resolution of cease and desist stating that
the move exacerbate and caused conflict to the case at bar. Included on the last resolution
issued by the public respondent which states that executive secretaries are excluded from
the closed-shop provision of the CBA, not from the bargaining unit.

A petition for certiorari seeking the annulment of the Resolution and Omnibus
Resolution of Roldan-Confesor on grounds that they were issued with grave abuse of
discretion and excess of jurisdiction.

ISSUE:

WON executive secretaries must be included as part of the bargaining unit of rank and
file employees.

RULING:

NO. By recognizing the expanded scope of the right to self-organization, the intent of
the court was to delimit the types of employees excluded from the close shop
provisions, not from the bargaining unit.

The executive secretaries of General Manager and the Management Committees

should not only be exempted from the closed-shop provision but should not be
permitted to join in the bargaining unit of the rank and file employees as well as on
the grounds that the executive secretaries are confidential employees , having access
to “vital labor information”.

As stated in several cases, confidential employees are prohibited and disqualified to

join any bargaining unit since the very nature of the functions are to assist and act in
a confidential capacity, or to have access to confidential matters of, persons who
exercise managerial functions in the field of labor relations.

Finally, confidential employees cannot be classified as rank and file from the very
nature of their work. Excluding confidential employees from the rank and file of
bargaining unit, therefore, is not tantamount to discrimination.

Therefore, executive secretaries of petitioners’ General Manager and its Management

Committee are permanently excluded from the bargaining unit of petitioner’s rank and
file employees.
9. Question of Fact- Whether or not an employee is a confidential employee
Standard Chartered Bank Employees Union (SCBEU-NUBE) vs Standard Chartered Bank

552 SCRA 284 – Labor Law – Labor Standards – Confidential Employees – Exclusion as Appropriate
Bargaining Unit

Facts:

The 1998-2000 Collective Bargaining Agreement between the Standard Chartered Bank employees
Union and the Standard Chartered Bank expired so the parties tried to renew it but then a deadlock
ensued. Under the old CBA, the following are excluded as appropriate bargaining unit:

A. All covenanted and assistant officers (now called National Officers)

B. One confidential secretary of each of the:

1. Chief Executive, Philippine Branches

2. Deputy Chief Executive/Head, Corporate Banking Group

3. Head, Finance

4. Head, Human Resources

5. Manager, Cebu

6. Manager, Iloilo

7. Covenanted Officers provided said positions shall be filled by new recruits.

C. The Chief Cashiers and Assistant Cashiers in Manila, Cebu and Iloilo, and in any other branch that the
BANK may establish in the country.
D. Personnel of the Telex Department

E. All Security Guards

F. Probationary employees, without prejudice to Article 277 (c) of the Labor Code, as amended by R.A.
6715, casuals or emergency employees; and

G. One (1) HR Staff

But then in the renewal sought by SCBEU-NUBE, they only wanted the exclusion to apply only to the
following employees from the appropriate bargaining unit, all managers who are vested with the right to
hire and fire employees, confidential employees, those with access to labor relations materials, Chief
Cashiers, Assistant Cashiers, personnel of the Telex Department and one Human Resources (HR) staff.

SCBEU-NUBE also averred that employees assigned in an acting capacity for at least a week should be
given salary raise.

A notice of strike was given to the Department of Labor due to this deadlock. Then DOLE Secretary
Patricia Sto. Tomas issued an order dismissing the Union’s plea.

ISSUE: Whether or not the confidential employees sought to be removed from the exclusion as
appropriate bargaining unit by SCBEU-NUBE holds ground.

HELD: No. Whether or not the employees sought to be excluded from the appropriate bargaining unit
are confidential employees is a question of fact, which is not a proper issue in a petition for review
under Rule 45 of the Rules of Court. SCBEU-NUBE insists that the foregoing employees are not
confidential employees; however, it failed to buttress its claim. Aside from its generalized arguments,
and despite the Secretary’s finding that there was no evidence to support it, SCBEU-NUBE still failed to
substantiate its claim. SCBEU-NUBE did not even bother to state the nature of the duties and functions
of these employees, depriving the Court of any basis on which it may be concluded that they are indeed
confidential employees.

With regards to the salary increase of employees in acting capacities, the Supreme Court agreed with
the Court of Appeals that a restrictive provision would curtail management’s prerogative, and at the
same time, recognized that employees should not be made to work in an acting capacity for long periods
of time without adequate compensation. The usual rule that “employees in acting capacities for at least
a month should be given salary raise” is upheld.
10 Security Guards may join unions

MERALCO vs Secretary of Labor

GR 91902

Facts:

On November 22, 1988, the Staff and Technical Employees Association of MERALCO, a labor
organization of staff and technical employees of MERALCO, filed a petition for certification election,
seeking to represent regular employees of MERALCO. MERALCO moved for the dismissal of the petition
on the grounds that the employees sought to be represented by petitioner are security services
personnel who are prohibited from joining or assisting the rank-and-file union, among others.

Issue: WON security guards may join rank-and-file or supervisors union.

Held:

While therefore under the old rules, security guards were barred from joining a labor organization of the
rank and file, under RA 6715, they may now freely join a labor organization of the rank and file or that of
the supervisory union, depending on their rank.

We are aware however of possible consequences in the implementation of the law in allowing security
personnel to join labor unions within the company they serve. The law is apt to produce divided loyalties
in the faithful performance of their duties. Economic reasons would present the employees concerned
with the temptation to subordinate their duties to the allegiance they owe the union of which they are
members, aware as they are that it is usually union action that obtains for them increased pecuniary
benefits.

Thus, in the event of a strike declared by their union, security personnel may neglect or outrightly
abandon their duties, such as protection of property of their employer and the persons of its officials
and employees, the control of access to the employer’s premises, and the maintenance of order in the
event of emergencies and untoward incidents.

It is hoped that the corresponding amendatory and/or suppletory laws be passed by Congress to avoid
possible conflict of interest in security personnel.

Petition dismissed.
12. ULP of Union based on drastic demands
CASE DIGEST

Case: STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE), petitioner vs. The
Honorable MA. NIEVES R. CONFESOR, in her capacity as SECRETARY OF LABOR
AND EMPLOYMENT; and the STANDARD CHARTERED BANK, respondents
(G.R. No. 114974 June 16, 2004)

Facts:

 Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation doing business in
the Philippines. The exclusive bargaining agent of the rank and file employees of the Bank is the
Standard Chartered Bank Employees Union (the Union, for brevity).
 In August of 1990, the Bank and the Union signed a five-year collective bargaining agreement
(CBA) with a provision to renegotiate the terms thereof on the third year.
 Prior to the expiration of the three-year period but within the sixty-day freedom period, the Union
initiated the negotiations.
 The Union suggested that the bank lawyers should be excluded from the negotiating team. The
Bank acceded.
 Diokno, the Bank’s HR Manager and head of the negotiating panel suggested to, Union President
that Jose P. Umali, Jr., the President of the National Union of Bank Employees (NUBE), the
federation to which the Union was affiliated, be excluded from the Union’s negotiating panel.
Umali was retained.
 On February 18, 1993, the Union sent its proposals covering political provisions and 34 economic
provisions. Included therein was a list of the names of the Union members’ negotiating panel.
 The Bank attached its counter-proposal to the non-economic provisions proposed by the Union.
 On March 12, 1993, the parties met and set the ground rules for the negotiation. Some non-
economic provisions are still "DEFERRED/DEADLOCKED" because the parties cannot agree.
 On May 18, 1993, negotiations for economic provisions commenced, the Union requested the bank
to validate it’s “guestimates” on the figures for rank and file staff. Except for the provisions on
signing bonus and uniforms, the Union and the Bank failed to agree on the remaining economic
provisions of the CBA.
 The Union declared a deadlock and filed a Notice of Strike.
 The Bank filed a complaint for Unfair Labor Practice (ULP) and Damages before the Arbitration
Branch of the NLRC in Manila against the Union on June 28, 1993.
 The Bank alleged that the Union violated its duty to bargain, as it did not bargain in good faith. It
contended that the Union demanded "sky high economic demands," indicative of blue-sky
bargaining.
 Further, the Union violated its no strike- no lockout clause by filing a notice of strike before the
National Conciliation and Mediation Board (NCMB). Considering that the filing of notice of strike
was an illegal act, the Union officers should be dismissed.
 Finally, the Bank alleged that as a consequence of the illegal act, the Bank suffered nominal and
actual damages and was forced to litigate and hire the services of the lawyer.
 The Secretary of Labor and Employment ordered the bank and the Union to execute a collective
bargaining agreement incorporating certain provisions and dismissed the charge for ULP by both
the Union and the Bank.

Issues:
 (a) Whether or not the Union was able to substantiate its claim of unfair labor practice against the
Bank arising from the latter’s alleged "interference" with its choice of negotiator; surface bargaining;
making bad faith non-economic proposals; and refusal to furnish the Union with copies of the relevant data;

(b) Whether or not the public respondent acted with grave abuse of discretion amounting to lack or
excess of jurisdiction when she issued the assailed order and resolutions; and

(c) Whether or not the petitioner is estopped from filing the instant action.

Ruling:
(a) No. The alleged ULP pertain to the interference, restraint or coercion of the employer in the
employees’ exercise of their rights to self-organization and to bargain collectively through representatives
of their own choosing; and the refusal of the employer to bargain collectively with the employees’
representatives. In order to show that the employer committed ULP under the Labor Code, substantial
evidence is required to support the claim. Substantial evidence has been defined as such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion.

The Union is likewise not guilty of ULP for engaging in blue-sky bargaining or making exaggerated
or unreasonable proposals. The Bank failed to show that the economic demands made by the Union were
exaggerated or unreasonable.

(b) No. Grave abuse of discretion implies such capricious and whimsical exercise of judgment
as is equivalent to lack of jurisdiction, or where the power is exercised in an arbitrary or despotic manner
by reason of passion or personal hostility which must be so patent and gross as to amount to an invasion of
positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.
Mere abuse of discretion is not enough.

While it is true that a showing of prejudice to public interest is not a requisite for ULP charges to
prosper, it cannot be said that the public respondent acted in capricious and whimsical exercise of judgment,
equivalent to lack of jurisdiction or excess thereof. Neither was it shown that the public respondent
exercised its power in an arbitrary and despotic manner by reason of passion or personal hostility.

(c) No. The respondent Bank argues that the petitioner is estopped from raising the issue of
ULP when it signed the new CBA.

Article 1431 of the Civil Code provides:

Through estoppel an admission or representation is rendered conclusive upon the person

making it, and cannot be denied or disproved as against the person relying thereon.

A person, who by his deed or conduct has induced another to act in a particular manner, is
barred from adopting an inconsistent position, attitude or course of conduct that thereby
causes loss or injury to another.

In the case, however, the approval of the CBA and the release of signing bonus do not necessarily
mean that the Union waived its ULP claim against the Bank during the past negotiations. After all, the
conclusion of the CBA was included in the order of the SOLE, while the signing bonus was included in the
CBA itself. Moreover, the Union twice filed a motion for reconsideration respecting its ULP charges against
the Bank before the SOLE.
13. Implementation of JE Program is a management prerogative of a company
THE HONGKONG AND SHANGHAI BANKING CORPORATION EMPLOYEES UNION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION AND THE HONGKONG AND SHANGHAI BANKING CORPORATION, LTD., respondents.
[G.R. No. 125038. November 6, 1997]

FACTS:

 The case at bar arose from the issuance of a non-executive job evaluation program (JEP) lowering the
starting salaries of future employees, resulting from the changes made in the job grades and
structures, which was unilaterally implemented by the Bank retroactive to January 1, 1993. The program in
question was announced by the Bank on January 18, 1993.

 UNION’S Answer: The Union, through its President, Peter Paul Gamelo, reiterated its previous verbal objections
to the Banks unilateral decision to devise and put into effect the said program because it allegedly was in violation
of the existing collective bargaining agreement (CBA) between the parties and thus constituted unfair labor
practice. The Union demanded the suspension of the implementation of the JEP and proposed that the same be
instead taken up or included in their upcoming CBA negotiations.

 HSBC’s Reply: The Bank replied in a letter dated January 25, 1993 that the JEP was issued in compliance with its
obligation under the CBA, apparently referring to Article III, Section 18 thereof which provides that: Within the
lifetime of this Agreement the BANK shall conduct a job evaluation of employee positions. The implementation
timetable of the said exercise shall be furnished the UNION by the BANK within two (2) months from the signing
of this Agreement.
 This prompted the Union to undertake concerted activities to protest the implementation of the JEP, such as
whistle blowing during office hours starting on March 15, 1993 up to the 23rd day, and writing to clients of the
Bank allegedly to inform them of the real situation then obtaining and of an imminent disastrous showdown
between the Bank and the Union.

 The Union engaged in said activities despite the fact that as early as February 11, 1993, it had already initiated
the renegotiation of the non-representational provisions of the CBA by submitting their proposal to the Bank, to
which the latter submitted a reply. As a matter of fact, negotiations on the CBA commenced on March 5, 1993
and continued through March 24, 1993 when the Bank was forced to declare a recess to last for as long as the
Union kept up with its concerted activities. The Union refused to concede to the demand of the Bank unless the
latter agreed to suspend the implementation of the JEP.

 The Bank filed with the Arbitration Branch of the NLRC a complaint for unfair labor practice against the Union
allegedly for engaging in the contrived activities against the ongoing CBA negotiations between the Bank and the
Union in an attempt to unduly coerce and pressure the Bank into agreeing to the Unions demand for the
suspension of the implementation of the JEP. It averred that such concerted activities, despite the ongoing CBA
negotiations, constitute unfair labor practice (ULP) and a violation of the Unions duty to bargain collectively under
Articles 249 (c) and 252 of the Labor Code.

 The Union filed a Motion to Dismiss on the ground that the complaint states no cause of action. It alleged that its
united activities were actually being waged to protest the Banks arbitrary imposition of a job evaluation program
and its unjustifiable refusal to suspend the implementation thereof. It further claimed that the unilateral
implementation of the JEP was in violation of Article I, Section 3 of the CBA which prohibits a diminution of existing
rights, privileges and benefits already granted and enjoyed by the employees. To be sure, so the Union contended,
the object of the Bank in downgrading existing CBA salary scales, despite its sanctimonious claim that the reduced
rates will apply only to future employees, is to torpedo the salary structure built by the Union through three long
decades of periodic hard bargaining with the Bank and to thereafter replace the relatively higher-paid unionized
employees with cheap newly hired personnel. In light of these circumstances, the Union insists that the right to
engage in these concerted activities is protected under Article 246 of the Labor Code regarding non-abridgment
of the right to self-organization and, hence, is not actionable in law.

 In its Opposition, the Bank stated that the Union was actually challenging merely that portion of the JEP providing
for a lower rate of salaries for future employees. Contrary to the Unions allegations in its motion to dismiss that
the JEP had resulted in diminution of existing rights, privileges and benefits, the program has actually granted
salary increases to, and in fact is already being availed of by, the rank and file staff. The Unions objections are
premised on the erroneous belief that the salary rates for future employees is a matter which must be subject of
 collective bargaining negotiation. The Bank believes that the implementation of the JEP and the resultant lowering
of the starting salaries of future employees, as long as there is no diminution of existing benefits and privileges
being accorded to existing rank and file staff, is entirely a management prerogative.

 Labor Arbiter dismissed the complaint with prejudice and ordered the parties to continue with the collective
bargaining negotiations, there having been no showing that the Union acted with criminal intent in refusing to
comply with its duty to bargain but was motivated by the refusal of management to suspend the implementation
of its job evaluation program, and that it is not evident that the concerted activities caused damage to the Bank.

 On appeal, respondent NLRC declared that based on the facts obtaining in this case, it becomes necessary to
resolve whether or not the Unions objections to the implementation of the JEP are valid and, if it is without basis,
whether or not the concerted activities conducted by the Union constitute unfair labor practice. It held that the
labor arbiter exceeded his authority when he ordered the parties to return to the bargaining table and continue
with CBA negotiations, considering that his jurisdiction is limited only to labor disputes arising from those cases
provided for under Article 217 of the Labor Code, and that the labor arbiters participation in this instance only
begins when the appropriate complaint for unfair labor practice due to a party’s refusal to bargain collectively is
filed.

Hence, this petition.

ISSUE:

Whether the petitioner acted in bad faith in implementing the JE Program.

RULING:

NO. We find no merit in the petition. In the case at bar, private respondent union has miserably failed to convince
this Court that the petitioner acted in bad faith in implementing the JE Program. There is no showing that the JE
Program was intended to circumvent the law and deprive the members of respondent union of the benefits they used
to receive.

Accordingly, this Court, in a number of cases, has recognized and affirmed the prerogative of management to
implement a job evaluation program or a reorganization for as long as it is not contrary to law, morals or public policy.
In upholding managements prerogative to implement the JEP, the Court held therein that:

x x x It is the prerogative of management to regulate, according to its discretion and judgment, all aspects of
employment. This flows from the established rule that labor law does not authorize the substitution of the judgment
of the employer in the conduct of its business. Such management prerogative may be availed of without fear of any
liability so long as it is exercised in good faith for the advancement of the employers interest and not for the purpose
of defeating or circumventing the rights of employees under special laws or valid agreement and are not exercised in
a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite.

It has been held that the crucial question whether or not a party has met his statutory duty to bargain in good
faith typically turns on the facts of the individual case. There is no per se test of good faith in bargaining. Good faith
or bad faith is an inference to be drawn from the facts. To some degree, the question of good faith may be a question
of credibility. The effect of an employers or a unions actions individually is not the test of good-faith bargaining, but
the impact of all such occasions or actions, considered as a whole, and the inferences fairly drawn therefrom collectively
may offer a basis for the finding of the NLRC. This, the court or the quasi-judicial agency concerned can do only after
it has made a comprehensive review of the allegations made in the pleadings filed and the evidence presented in
support thereof by the parties, but definitely not where, as in the present case, the accusation of unfair labor practice
was negated and subsequently discharged on a mere motion to dismiss.
It is a well-settled rule that labor laws do not authorize interference with the employer’s judgment in the conduct
of his business. The Labor Code and its implementing rules do not vest in the labor arbiters nor in the different divisions
of the NLRC nor in the courts managerial authority. The hiring, firing, transfer, demotion, and promotion of employees
has been traditionally identified as a management prerogative subject to limitations found in the law, a collective
bargaining agreement, or in general principles of fair play and justice. This is a function associated with the employers
inherent right to control and manage effectively its enterprise. Even as the law is solicitous of the welfare of employees,
it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of
management to conduct its own business affairs to achieve its purpose cannot be denied.
 Notwithstanding the relevance of the foregoing disquisition, considering however the factual antecedents in this
case, or the lack of a complete presentation thereof, we are constrained to refrain from ruling outright in favor of the
Bank. While it would appear that remanding the case would mean a further delay in its disposition, we are not inclined
to sacrifice equity and justice for procedural technicalities or expediency. The order dismissing the complaint for ULP
with prejudice, to say the least, leaves much to be desired.
14. discrimination of Union Members by the Company
WISE AND CO., INC., Petitioner, v. WISE & CO., INC. EMPLOYEES UNION-NATU
AND HONORABLE BIENVENIDO G. LAGUESMA, in his capacity as voluntary
Arbitrator, Respondents.

FACTS:

The management issued a memorandum circular introducing a profit sharing scheme for
its managers and supervisors the initial distribution. The respondent union wrote
petitioner asking for participation in this scheme but it was denied by petitioner on the
ground that it had to adhere strictly to the CBA. Petitioner distributed the profit sharing
benefit not only to managers and supervisors but also to all other rank and file employees
not covered by the CBA. This caused the respondent union to file a notice of strike
alleging that petitioner was guilty of ULP because the union members were discriminated
against in the grant of the profit sharing benefits. Management refused to proceed with
the CBA negotiations unless the last notice of strike was first resolved. The union agreed
to postpone discussions on the profit sharing demand until a new CBA was concluded.
After a series of conciliation conferences, the parties agreed to settle the dispute through
voluntary arbitration. The voluntary arbitrator issued an award ordering petitioner to
likewise extend the benefits of the 1987 profit sharing scheme to the members of
respondent union. Hence, this petition.

ISSUE:
1. Whether or not the grant by management of profit sharing benefits to its non-union
member employees is discriminatory against its workers who are union members

HELD:
NO. Under the CBA between the parties, there is a clause where the employees are
classified into those who are members of the union and those who are not. The grant by
petitioner of profit sharing benefits to the employees outside the “bargaining unit” falls
under the ambit of its managerial prerogative. It appears to have been done in good faith
and without ulterior motive. In the case of the union members, they derive their benefits
from the terms and conditions of the CBA contract which constitute the law between the
contracting parties. Both the employer and the union members are bound by such
agreement. There can be no discrimination committed by petitioner thereby as the
situation of the union employees are different and distinct from the non-union
employees. Indeed, discrimination per se is not unlawful. There can be no discrimination
where the employees concerned are not similarly situated.

DISPOSITIVE:
Petition is GRANTED reversed the decision of voluntary arbitrator.
15. Mandatory Vacation leave is not ULP
G.R. No. 80737 September 29, 1988
PHILIPPINE GRAPHIC ARTS INC., IGMIDIO R. SILVERIO AND CARLOS
CABAL, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ROSALINA M. PULPULAAN
AND EMELITA SALONGA, respondents
GUTIERREZ, JR., J

FACTS: petitioner corporation was forced by economic circumstances to require its

workers to go on mandatory vacation leave. The workers were paid while on leave but
the pay was charged against their respective earned leaves. As a result, the private
respondents filed complaints for unfair labor practice and discrimination.
Labor Arbiter rendered a decision dismissing the complaint for ULP. Ordering the
Philippine Graphic arts, inc to restore and grant to all its employees the company policy
regarding groceries previously enjoyed by them.
The private respondents filed a "partial appeal" with (NLRC) questioning the Labor
Arbiter's dismissal of their complaint for ULP and the resultant forced vacation leaves
which were actually without pay.
NLRC affirmed the arbiter's decision with modification ordering the employers to refund
the amount equivalent to the earned leave of the employees.

Issue: whether or not the forced vacation leave without pay is unfair labor practice and if
not an unfair labor practice, whether or not it was tainted with arbitrariness.

Held: The Court is convinced from the records now before it, that there was no unfair
labor practice. As found by the NLRC, the private respondents themselves never
questioned the existence of an economic crisis but, in fact, admitted its existence.
There is also no showing that the imposition of forced leave was exercised for the
purpose of defeating or circumventing the rights of employees under special laws or
under valid agreements.
Petitioner contends that before the implementation of the forced leave a consensus on
how to deal with deteriorating economic conditions was reached between the employer
and employees, and such in consonance with their collective bargaining agreement. Thus
the Court finds that the decision to resort to forced leaves was, under the circumstances, a
management prerogative.
Private respondents contend that the petitioners should discuss said management's plan in
the grievance procedure so that the Union members thereof may well be apprised of the
reason therefor. The Court however do not agree.
The statutory law on grievance procedure provides that:
ART. 261. Grievance machinery. Whenever a grievance arises from the interpretation or
implementation of a collective agreement, including disciplinary actions imposed on
members of the bargaining unit, the employer and the bargaining representative shall
meet to adjust the grievance. Where the grievance procedure as provided herein does not
apply, grievances shall be subject to negotiation, conciliation or arbitration as provided
elsewhere in this Code.
As the law stands, both employers and bargaining representative of the employees are
required to go through the grievance machinery in case a grievance arises. And though
the law does not provide who, as between labor and capital, should initiate that said
grievance be brought first to the, grievance machinery, it is only logical, just and
equitable that whoever is aggrieved should initiate settlement of the grievance through
the grievance machinery. To impose the compulsory procedure on employers alone
would be oppressive of capital, notwithstanding the fact that in most cases the grievance
is of the employees
In the case at bar private respondents instituted a case before the Labor Arbiter for unfair
labor practices and discrimination, prior to any referral to the grievance machinery, which
they are equally mandated to go through and under the circumstances they were better
situated to initiate.
The SC ordered the decision of the Labor Arbiter is REINSTATED.
16. Unfair labor practice- discrimination
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.
G.R. No. L-25291, January 20, 1971

FACTS:

The Insular Life Assurance Co., Ltd., Employees Association - NATU, FGU Insurance Group Workers and Employees
Association - NATU, and Insular Life Building Employees Association - NATU (herein 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 (herein referred to as the Companies).

Two of the lawyers and officers of the Unions namely Felipe Enaje and Ramon Garcia, tried to dissuade 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 and were
thereafter hired by the companies - Garcia as assistant corporate secretary and legal assistant, and Enaje as personnel
manager and chairman of the negotiating panel for the Companies in the collective bargaining with the Unions.

On October 1957, negotiations for the collective bargaining was conducted but resulted to a deadlock. From April 25
to May 6, 1958, the parties negotiated on the labor demands but with no satisfactory results due to the stalemate on
the matter of salary increases. This prompted the Unions to declare a strike in protest against what they considered
the Companies’ unfair labor practices. On May 20, 1958, the Unions went on strike and picketed the offices of the
Insular Life Building at Plaza Moraga.

On May 21, Jose M. Olbes, the acting manager and president, sent individual letters to the striking employees urging
them to abandon their strike with a promise of free coffee, movies, overtime pay, and accommodations. He also warned
the strikers if they fail to return to work by a certain date, they might be replaced in their jobs. Further, the Companies
hired men to break into the picket lines resulting in violence, and the filing of criminal charges against some union
officers and members. When eventually, the strikers called off their strike to return to their jobs, they were subjected
to a screening process by a management committee, among the members were Garcia and Enaje. After screening,
eighty-three (83) strikers were rejected due to pending criminal charges, and adamantly refused readmission of thirty-
four (34) officials and members of the Unions who were most active in the strike.

The CIR prosecutor filed a complaint for unfair labor practice against the Companies, specifically (1) interfering with
the members of the Unions in the exercise of their right to concerted action; 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. After the trial, the Court of Industrial Relations dismissed the Unions’ complaint for lack of
merit.

ISSUES:

I. Whether or not the Companies are guilty of unfair labor practice when they sent individual letters to the
strikers with the promise of additional benefits, and notifying them to either return to work, or lose their
jobs; and

II. Whether or not the Companies are guilty of unfair labor practice for discriminating against the striking
members of the Unions in readmission of employees after the strike.

HELD:

First issue. The Companies contended that by sending those letters, it constituted a legitimate exercise of their freedom
of expression. That contention is untenable. The Companies are guilty of unfair labor practice when they sent individual
letters to the strikers. It is an act of interference with the right to collective bargaining through dealing with the strikers
individually instead of through their collective bargaining representatives. Although the Unions are on strike, the
employer is still obligated to bargain with the union as the employees’ bargaining representative. Further, it is also an
act of interference for the employer to send individual letters to the employees notifying them to return to their jobs,
otherwise, they would be replaced. Individual solicitation of the employees urging them to cease union activity or cease
striking consists of unfair labor practice. Furthermore, when the Companies offered to “bribe” the strikers with
“comfortable cots, free coffee, and movies, overtime work pay” so they would abandon their strike and return to work,
it was guilty of strike-breaking and/or union busting which constitute unfair labor practice.

Second Issue. Some of the members of the Unions were refused readmission because they had pending criminal
charges. However, despite the fact they were able to secure clearances, 34 officials and members were still refused
readmission on the alleged ground that they committed acts inimical to the Companies. It should be noted, however,
that non-strikers who also had criminal charges pending against them in the fiscal’s office, arising from the same
incidents whence against the criminal charges against the strikers are involved, were readily readmitted and were not
required to secure clearances. This is an 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 respondent Companies did not merely discriminate against all strikers in general since they separated the active
rom the less active unionists on the basis of their militancy, or lack of it, on the picket lines. Discrimination 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.
17. The concept of runaway shop
Digest: COMPLEX ELECTRONICS CORPORATION, Petitioner, v. NATIONAL
LABOR RELATIONS COMMISSION,

Lessons Applicable: Unfair Labor Practice

Laws Applicable:

FACTS:
Complex Electronics Corporation was engaged in the manufacture of electronic
products. It was actually a subcontractor of electronic products where its customers
gave their job orders, sent their own materials and consigned their equipment to it.
The rank and file workers of Complex were organized into a union known as the
Complex Electronics Employees Association
Complex received a facsimile message from Lite-On Philippines Electronics Co.,
requiring it to lower its price by 10%.
Complex informed its Lite-On personnel that such request of lowering their selling
price by 10% was not feasible as they were already incurring losses at the present
prices of their products.
Complex regretfully informed the employees that it was left with no alternative but
to close down the operations of the Lite-On Line. Retrenchment will not take place
until after 1 month try to prolong the work for as many people as possible for as
long as it can. Retrenchment pay as provided for by law i.e. half a month for every
year of service in accordance with Article 283 of the Labor Code of Philippines.
Complex filed a notice of closure of the Lite-On Line with the Department of
Labor and Employment (DOLE) and the retrenchment of the ninety-seven (97)
affected employees.
Union filed a notice of strike with the National Conciliation and Mediation Board
In the evening of April 6, 1992, the machinery, equipment and materials being
used for production at Complex were pulled-out from the company premises and
transferred to the premises of Ionics Circuit, Inc. (Ionics) at Cabuyao, Laguna.
Fearful that the machinery, equipment and materials would be rendered inoperative
and unproductive due to the impending strike of the workers, the customers
ordered their pull-out and transfer to Ionics.
Complex was compelled to cease operations
Ionics contended that it was an entity separate and distinct from Complex and had
been in existence since July 5, 1984 or eight (8) years before the labor dispute
arose at Complex. Like Complex, it was also engaged in the semi-conductor
business where the machinery, equipment and materials were consigned to them by
their customers
President of Complex was also the President of Ionics, the latter denied having
Qua as their owner since he had no recorded subscription of P1,200,00.00 in Ionics
as claimed by the Union. Ionics further argued that the hiring of some displaced
workers of Complex was an exercise of management prerogatives.
complaint was, thereafter, filed with the Labor Arbitration Branch of the NLRC for
unfair labor practice, illegal closure/illegal lockout, money claims for vacation
leave, sick leave, unpaid wages, 13th month pay, damages and attorney's fees. The
Union alleged that the pull-out of the machinery, equipment and materials from the
company premises, which resulted to the sudden closure of the company was in
violation of Section 3 and 8, Rule XIII, Book V of the Labor Code of the
Philippines and the existing CBA
Labor Arbiter: reinstate the 531 above-listed employees to their former position;
charge of slowdown strike filed by respondent Complex against the union is
hereby dismissed for lack of merit.
NLRC: pay 531 complainants equivalent to one month pay in lieu of notice and
separation pay equivalent to one month pay for every year of service and a fraction
of six months considered as one whole year.

ISSUE: W/N there was ULP

HELD:
NO.
· A "runaway shop" is defined as an industrial plant moved by its owners from
one location to another to escape union labor regulations or state laws, but the term
is also used to describe a plant removed to a new location in order to discriminate
against employees at the old plant because of their union activities.
o It is one wherein the employer moves its business to another location or it
temporarily closes its business for anti-union purposes
o relocation motivated by anti-union animus rather than for business reasons
o Ionics was not set up merely for the purpose of transferring the business of
Complex. At the time the labor dispute arose at Complex, Ionics was already
existing as an independent company.
o The Union failed to show that the primary reason for the closure of the
establishment was due to the union activities of the employees.
o The mere fact that one or more corporations are owned or controlled by the
same or single stockholder is not a sufficient ground for disregarding separate
corporate personalities.
· No illegal lockout/illegal dismissal
o closure, therefore, was not motivated by the union activities of the employees,
but rather by necessity since it can no longer engage in production without the
much needed materials, equipment and machinery.
o The determination to cease operation is a prerogative of management that is
usually not interfered with by the State as no employer can be required to continue
operating at a loss simply to maintain the workers in employment.
· personal liability of Lawrence Qua- absence of malice or bad faith, a
stockholder or an officer of a corporation cannot be made personally liable for
corporate liabilities.
· We see no valid and cogent reason why petitioner should not be likewise
sanctioned for its failure to serve the mandatory written notice. Under the attendant
facts, we find the amount of P5,000.00, to be just and reasonable.
18. Unfair labor practice by going against the union
18. PDC vs. CIR
G.R. No. L-39546, November 29, 1977
Case Digest

FACTS:

In September 1962, Araneta Coliseum Employees Association (ACEA) a legitimate labor

organization in behalf of forty-eight (48) members, instituted Case No. 3304-ULP for unfair
labor practice in the Court of Industrial Relations against Progressive Development
Corporation (PDC), a domestic business entity operating the Araneta Coliseum, Jorge
Araneta, Judy A. Roxas, Manuel B. Jover and Ramon Llorente, as officers of the corporation
PDC and Progressive Employees Union (PEU), a labor organization existing in the PDC.

The complaint alleged that the PDC, through its officers, initiated a move to disauthorize the
counsel of the complainant ACEA from appearing in a union conference with the
respondents, petitioners herein; that the supervisors of PDC encouraged, and assisted in, the
formation of the Progressive Employees Union (PEU) and coerced the employees, particularly
the individual complainants, to disaffiliate from the complainant union and to affiliate with
the PEU; that in July and August 1962 the respondents, petitioners herein, discriminated
against the individual complainants by either not giving them their working schedules,
lessening their number of working days and eventually dismissing them from their
employment, because of their refusal to disaffiliate from their union and join the Progressive
Employees Union

That, on June 13, 1962, respondent Ramon Llorente requested the President of the
complainant union Antoni Buluran to him in his residence to take up with him the agenda for
tomorrow's meeting. It was this meeting, as well as the circumstances that preceded the same,
which the union claims started the management's exertion of all efforts to discourage
membership in the complainant union, and which eventually culminated in the formation of
the respondent union, The Progressive Employees Union (PEU), allegedly formed
purportedly to bust the complainant union.

ISSUE:
Whether or not Progressive Development Corporation and its officials were involved with
the formation of the Progressive Employees Union constituting an Unfair Labor practice?
RULING:
YES. The assertion of the petitioner Progressive Development Corporation and its officials
that they have nothing to do with the formation of the Progressive Employees Union is not
supported by the facts of record. This shows that the Progressive Employees Union was
organized to camouflage the petitioner corporation's dislike for the Araneta Coliseum
Employees Association and to stave off the latter's recognition.
It is also a fact that the Progressive Employees Union, after exerting efforts to win in the
Certification Election, Case No. 1054-MC, did not conclude and enter into a collective
bargaining agreement with the management. According to Generoso, the Progressive
Employees Union was already disbanded.
The evidence shows that Reynaldo Asis, like the other individual complainants, was
dismissed because he refused to join the Progressive Employees Union. Under the
circumstances and equity of the case, and considering the length of time and the union-
busting activities of petitioner, the individual complainants are granted back wages for five
(5) years without qualification or deduction.
As testified to by Jose Generoso, Jr., President of the Progressive Employees Union, their
members were also casual employees but are now regulars. From the facts of record, it is
clear that the individual complainants were dismissed because they refused to resign from
the Araneta Coliseum Employees Association and to affiliate with the Progressive
Employees Union which was being aided and abetted by the Progressive Development
Corporation.
19. Retirement based on CBA is valid as long as it conforms with the labor code provisions

[G.R. No. 151021 May 4, 2006]

19. CAINTA CATHOLIC SCHOOL and MSGR. MARIANO T. BALBAGO, Petitioners, vs. CAINTA
CATHOLIC SCHOOL EMPLOYEES UNION (CCSEU), Respondent.

FACTS

On 15 October 1993, petitioner school retired Llagas and Javier, President and Vice-president of
respondent union, respectively, who had rendered more than twenty (20) years of continuous
service, pursuant to Section 2, Article X of the CBA, to wit:

An employee may be retired, either upon application by the employee himself or by the decision
of the Director of the School, upon reaching the age of sixty (60) or after having rendered
at least twenty (20) years of service to the School the last three (3) years of which must be
continuous.

Because of the foregoing, the union filed a Notice of Strike with the NCMB and later staged a
strike and picketed in the school’s entrance. Later, the union filed a complaint for unfair labor
practice against petitioner school before the NLRC.

The School avers that the retirement of Llagas and Javier was clearly in accordance with a specific
right granted under the CBA. The School justifies its actions by invoking our rulings in Pantranco
North Express, Inc. v. NLRC and Bulletin Publishing Corporation v. Sanchez that no unfair labor
practice is committed by management if the retirement was made in accord with management
prerogative or in case of voluntary retirement, upon approval of management.

The Union, on the other hand, argues that the retirement of the two union officers is a mere
subterfuge to bust the union.

ISSUE

Whether or not the retirement of Llagas and Javier is legal.

HELD

The SC held that the termination of employment of Llagas and Javier was valid, arising as it did
from a management prerogative granted by the mutually-negotiated CBA between the School
and the Union.

Pursuant to the existing CBA, the School has the option to retire an employee upon reaching the
age limit of sixty (60) or after having rendered at least twenty (20) years of service to the School,
the last three (3) years of which must be continuous. Retirement is different specie of termination
of employment from dismissal for just or authorized causes under Articles 282 and 283 of the
Labor Code. While in all three cases, the employee to be terminated may be unwilling to part
from service, there are eminently higher standards to be met by the employer validly exercising
the prerogative to dismiss for just or authorized causes. In those two instances, it is indispensable
that the employer establish the existence of just or authorized causes for dismissal as spelled out
in the Labor Code. Retirement, on the other hand, is the result of a bilateral act of the parties, a
voluntary agreement between the employer and the employee whereby the latter after reaching
a certain age agrees and/or consents to sever his employment with the former.

Article 287 of the Labor Code, as amended, governs retirement of employees, stating:

ART. 287. Retirement. – Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits
as he may have earned under existing laws and any collective bargaining agreement and other
agreements: Provided, however, That an employee’s retirement benefits under any collective
bargaining agreement and other agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or more,
but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age,
who has served at least five (5) years in the said establishment, may retire and shall be entitled
to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.

By their acceptance of the CBA, the Union and its members are obliged to abide by the
commitments and limitations they had agreed to cede to management. The questioned
retirement provisions cannot be deemed as an imposition foisted on the Union, which very well
had the right to have refused to agree to allowing management to retire retire employees with
at least 20 years of service.

It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely
beyond the ambit of judicial review and nullification. A CBA, as a labor contract, is not merely
contractual in nature but impressed with public interest. If the retirement provisions in the CBA
run contrary to law, public morals, or public policy, such provisions may very well be voided.
Certainly, a CBA provision or employment contract that would allow management to subvert
security of tenure and allow it to unilaterally “retire” employees after one month of service
cannot be upheld. Neither will the Court sustain a retirement clause that entitles the retiring
employee to benefits less than what is guaranteed under Article 287 of the Labor Code, pursuant
to the provision’s express proviso thereto in the provision.

Yet the CBA in the case at bar contains no such infirmities which must be stricken down. Twenty
years is a more than ideal length of service an employee can render to one employer. Under
ordinary contemplation, a CBA provision entitling an employee to retire after 20 years of service
and accordingly collect retirement benefits is “reward for services rendered since it enables an
employee to reap the fruits of his labor — particularly retirement benefits, whether lump-sum
or otherwise — at an earlier age, when said employee, in presumably better physical and mental
condition, can enjoy them better and longer.”

A CBA may validly accord management the prerogative to optionally retire an employee under
the terms and conditions mutually agreed upon by management and the bargaining union, even
if such agreement allows for retirement at an age lower than the optional retirement age or the
compulsory retirement age.

Petition is granted.
20. Merger of corporations does not include merger of employees

BPI VS BPI EMPLOYEES UNION

G.R. No 164301

FACTS
Bangko Sentral ng Pilipinas approved the articles of merger executed by
and between BPI, herein petitioner, and Far East Bank and Trust Company(FEBTC)
and was approved by the securities and Exchange Commission. The articles of
merger and Plan of merger did not contain any specific stipulation with respect to
the employment contracts of existing personnel of the non-surviving entity which
is FEBTC. Pursuant to the said article and plan of merger, all the assets and
liabilities of FEBTC were transferred to and absorbed by BPI as the surviving
corporation. FEBTC employees, including those in its different branches across the
country, were hired by petitioner as its own employees, with their status and
tenure recognized and salaries and benefits maintained.

ISSUE
Whether or not employees are ipso jure absorbed in a merger of the two
corporations.

RULING
No. Human beings are never embraced in the term “assets and liabilities”.
Moreover BPI`s absorption of former FEBTC employees as neither by operation of
law nor by legal consequence of contract. There was no Government regulation
or law that compelled the merger of the two banks or the absorption of the
employees of the dissolved corporation by the surviving corporation. Had there
been such law or regulation, the absorption of employees of the non-surviving
entities of the merger would have been mandatory on the surviving corporation.
In the present case, the merger was voluntarily entered into both banks
presumably for some mutually acceptable consideration. In fact the corporation
code does not also mandate the absorption of employees of the non-surviving
corporation by the surviving corporation in the case of merger. The court cannot
uphold the reasoning that the general stipulation regarding transfer of FEBTC
assets and liabilities to the BPI as set forth on the articles of merger necessarily
includes the transfer of all FEBTC employees into the employ of BPI and neither
the BPI nor FEBTC employees allegedly could not do anything about it. Even if it
so, it does not follow that the absorbed employees should not be subject to the
terms and conditions of employment containing in surviving corporation.
Furthermore, the court believes that it is contrary to public policy to declare the
former FEBTC employees as forming part of the assets or liabilities of FEBTC that
were transferred and absorbed by BPI in the articles of merger. Assets and
liabilities in the instance, should be deemed to refer only to property rights and
obligation of FEBTC and do not include the employment contracts of its
personnel. A corporation cannot unilaterally transfer its employees to another
employer like chattel. Certainly if BPI as an employer had the right to choose who
to retain among FEBTC`s employees, FEBTC employees had the concomitant right
to be absorbed by BPI. Even though FEBTC employees had no control over the
merger of their employer with BPI, they had a choice whether or not they would
allow to be themselves to be absorbed by BPI. Certainly nothing prevented the
FEBTC’s employees from resigning or retiring and seeking employment elsewhere
instead of going along with the proposed absorption. FEBTC employees likewise
retained the prerogative to allow themselves to be absorbed or ; otherwise, that
would be tantamount to involuntary servitude.
The decision as to absorption of employees upon merger is reversed in the
Resolution of MR dated October 19, 2011.
21.
21. Norma Mabeza vs. NLRC, Peter Ng/Hotel Supreme
271 SCRA 670

Facts: Petitioner Norma Mabeza contends that on 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. 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.

The affidavit was drawn by management for the sole purpose of refuting findings of the Labor
Inspector of DOLE apparently adverse to the private respondent. After she refused to proceed
to the City Prosecutor's Office, petitioner states 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. According to her, respondent strongly chided her for refusing to proceed to the City
Prosecutor's Office to attest to the affidavit. 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 1991, the hotel's cashier informed her that she should not report to work and, instead,
continue with her unofficial leave of absence.

Consequently, 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.

Responding to the allegations for illegal dismissal, private respondent Peter Ng alleged before
Labor Arbiter that petitioner surreptitiously left her job without notice to the management 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.

Labor Arbiter dismissed the complaint. On April 1994, respondent NLRC promulgated its
assailed Resolution affirming the Labor Arbiter's decision.

Issue: 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 constitutes unfair labor practice.

Ruling: The Court ruled that there was unfair labor practice. 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. 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.

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. These
requirements were not met in the instant case.

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. Considering 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