Professional Documents
Culture Documents
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 162355
Article 212(g) of the Labor Code defines a labor organization as "any union
or association of employees which exists in whole or in part for the
purpose of collective bargaining or of dealing with employers concerning
terms and conditions of employment." Upon compliance with all the
documentary requirements, the Regional Office or Bureau shall issue in
favor of the applicant labor organization a certificate indicating that it is
included in the roster of legitimate labor organizations.6 Any applicant
labor organization shall acquire legal personality and shall be entitled to
the rights and privileges granted by law to legitimate labor organizations
upon issuance of the certificate of registration.7
Bargaining Unit
The concepts of a union and of a legitimate labor organization are
different from, but related to, the concept of a bargaining unit. We
explained the concept of a bargaining unit in San Miguel Corporation v.
Laguesma,8 where we stated that:
A bargaining unit is a "group of employees of a given employer, comprised
of all or less than all of the entire body of employees, consistent with
equity to the employer, indicated to be the best suited to serve the
reciprocal rights and duties of the parties under the collective bargaining
provisions of the law."
The fundamental factors in determining the appropriate collective
bargaining unit are: (1) the will of the employees (Globe Doctrine); (2)
affinity and unity of the employees interest, such as substantial similarity
of work and duties, or similarity of compensation and working conditions
(Substantial Mutual Interests Rule); (3) prior collective bargaining history;
and (4) similarity of employment status.
Contrary to petitioners assertion, this Court has categorically ruled that
the existence of a prior collective bargaining history is neither decisive nor
conclusive in the determination of what constitutes an appropriate
bargaining unit.
However, employees in two corporations cannot be treated as a single
bargaining unit even if the businesses of the two corporations are related.9
A Legitimate Labor Organization Representing
An Inappropriate Bargaining Unit
CLUP-SLECC and its Affiliates Workers Unions initial problem was that they
constituted a legitimate labor organization representing a non-appropriate
bargaining unit. However, CLUP-SLECC and its Affiliates Workers Union
subsequently re-registered as CLUP-SLECCWA, limiting its members to the
rank-and-file of SLECC. SLECC cannot ignore that CLUP-SLECC and its
Affiliates Workers Union was a legitimate labor organization at the time of
SLECCs voluntary recognition of SMSLEC. SLECC and SMSLEC cannot, by
SO DECIDED.8
LEGEND filed its Motion for Reconsideration9 reiterating its earlier
arguments. It also alleged that on August 24, 2001, it filed a Petition 10 for
Cancellation of Union Registration of KML docketed as Case No. RO3000108-CP-001 which was granted11 by the DOLE Regional Office No. III of
San Fernando, Pampanga in its Decision12 dated November 7, 2001.
In a Resolution13 dated August 20, 2002, the Office of the Secretary of
DOLE denied LEGENDs motion for reconsideration. It opined that Section
11, paragraph II(a), Rule XI of Department Order No. 9 requires a final
order of cancellation before a petition for certification election may be
dismissed on the ground of lack of legal personality. Besides, it noted that
the November 7, 2001 Decision of DOLE Regional Office No. III of San
Fernando, Pampanga in Case No. RO300-0108-CP-001 was reversed by the
Bureau of Labor Relations in a Decision dated March 26, 2002.
Ruling of the Court of Appeals
Undeterred, LEGEND filed a Petition for Certiorari 14 with the Court of
Appeals docketed as CA-G.R. SP No. 72848. LEGEND alleged that the
Office of the Secretary of DOLE gravely abused its discretion in reversing
and setting aside the Decision of the Med-Arbiter despite substantial and
overwhelming evidence against KML.
For its part, KML alleged that the Decision dated March 26, 2002 of the
Bureau of Labor Relations in Case No. RO300-0108-CP-001 denying
LEGENDs petition for cancellation and upholding KMLs legitimacy as a
labor organization has already become final and executory, entry of
judgment having been made on August 21, 2002.15
The Office of the Secretary of DOLE also filed its Comment16 asserting that
KMLs legitimacy cannot be attacked collaterally. Finally, the Office of the
Secretary of DOLE stressed that LEGEND has no legal personality to
participate in the certification election proceedings.
On September 18, 2003, the Court of Appeals rendered its Decision 17
finding no grave abuse of discretion on the part of the Office of the
Secretary of DOLE. The appellate court held that the issue on the
legitimacy of KML as a labor organization has already been settled with
finality in Case No. RO300-0108-CP-001. The March 26, 2002 Decision of
the Bureau of Labor Relations upholding the legitimacy of KML as a labor
organization had long become final and executory for failure of LEGEND to
appeal the same. Thus, having already been settled that KML is a
legitimate labor organization, the latter could properly file a petition for
certification election. There was nothing left for the Office of the Secretary
of DOLE to do but to order the holding of such certification election.
The dispositive portion of the Decision reads:
claims that the instant petition has become moot because the certification
election sought to be prevented had already been conducted.
Our Ruling
The petition is partly meritorious.
LEGEND has timely appealed the March 26, 2002 Decision of the Bureau
of Labor Relations to the Court of Appeals.
We cannot understand why the Court of Appeals totally disregarded
LEGENDs allegation in its Motion for Reconsideration that the March 26,
2002 Decision of the Bureau of Labor Relations has not yet attained
finality considering that it has timely appealed the same to the Court of
Appeals and which at that time is still pending resolution. The Court of
Appeals never bothered to look into this allegation and instead dismissed
outright LEGENDs motion for reconsideration. By doing so, the Court of
Appeals in effect maintained its earlier ruling that the March 26, 2002
Decision of the Bureau of Labor Relations upholding the legitimacy of KML
as a labor organization has long become final and executory for failure of
LEGEND to appeal the same.
This is inaccurate. Records show that (in the cancellation of registration
case) LEGEND has timely filed on September 6, 2002 a petition for
certiorari26 before the Court of Appeals which was docketed as CA-G.R. SP
No. 72659 assailing the March 26, 2002 Decision of the Bureau of Labor
Relations. In fact, KML received a copy of said petition on September 10,
200227 and has filed its Comment thereto on December 2, 2002.28 Thus,
we find it quite interesting for KML to claim in its Comment (in the
certification petition case) before this Court dated March 21, 200629 that
the Bureau of Labor Relations Decision in the petition for cancellation
case has already attained finality. Even in its Memorandum30 dated March
13, 2007 filed before us, KML is still insisting that the Bureau of Labor
Relations Decision has become final and executory.
Our perusal of the records shows that on June 30, 2005, the Court of
Appeals rendered its Decision31 in CA-G.R. SP No. 72659 reversing the
March 26, 2002 Decision of the Bureau of Labor Relations and reinstating
the November 7, 2001 Decision of the Med-Arbiter which canceled the
certificate of registration of KML.32 On September 30, 2005, KMLs motion
for reconsideration was denied for lack of merit.33 On November 25, 2005,
KML filed its Petition for Review on Certiorari34 before this Court which was
docketed as G.R. No. 169972. However, the same was denied in a
Resolution35 dated February 13, 2006 for having been filed out of time.
KML moved for reconsideration but it was denied with finality in a
Resolution36 dated June 7, 2006. Thereafter, the said Decision canceling
the certificate of registration of KML as a labor organization became final
and executory and entry of judgment was made on July 18, 2006.37
Hence, to raise the issue of the respondent unions legal personality is not
proper in this case.1avvphi1 The pronouncement of the Labor Relations
Division Chief, that the respondent union acquired a legal personality x x x
cannot be challenged in a petition for certification election.
The discussion of the Secretary of Labor and Employment on this point is
also enlightening, thus:
. . . Section 5, Rule V of D.O. 9 is instructive on the matter. It provides that
the legal personality of a union cannot be the subject of collateral attack
in a petition for certification election, but may be questioned only in an
independent petition for cancellation of union registration. This has been
the rule since NUBE v. Minister of Labor, 110 SCRA 274 (1981). What
applies in this case is the principle that once a union acquires a legitimate
status as a labor organization, it continues as such until its certificate of
registration is cancelled or revoked in an independent action for
cancellation.
Equally important is Section 11, Paragraph II, Rule IX of D.O. 9, which
provides for the dismissal of a petition for certification election based on
the lack of legal personality of a labor organization only in the following
instances: (1) appellant is not listed by the Regional Office or the BLR in
its registry of legitimate labor organizations; or (2) appellants legal
personality has been revoked or cancelled with finality. Since appellant is
listed in the registry of legitimate labor organizations, and its legitimacy
has not been revoked or cancelled with finality, the granting of its petition
for certification election is proper.52
"[T]he legal personality of a legitimate labor organization x x x cannot be
subject to a collateral attack. The law is very clear on this matter. x x x
The Implementing Rules stipulate that a labor organization shall be
deemed registered and vested with legal personality on the date of
issuance of its certificate of registration. Once a certificate of registration
is issued to a union, its legal personality cannot be subject to a collateral
attack. In may be questioned only in an independent petition for
cancellation in accordance with Section 5 of Rule V, Book V of the
Implementing Rules."53
WHEREFORE, in view of the foregoing, the petition is PARTLY GRANTED.
The Decision of the Court of Appeals dated September 18, 2003 in CA-G.R.
SP No. 72848 insofar as it affirms the May 22, 2002 Decision and August
20, 2002 Resolution of the Office of the Secretary of Department of Labor
and Employment is AFFIRMED. The Decision of the Court of Appeals
insofar as it declares that the March 26, 2002 Decision of the Bureau of
Labor Relations in Case No. RO300-0108-CP-001 upholding that the
legitimacy of KML as a labor organization has long become final and
executory for failure of LEGEND to appeal the same, is REVERSED and SET
ASIDE.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 171153
(b) The names of its officers, their addresses, the principal address
of the labor organization, the minutes of the organizational
meetings and the list of the workers who participated in such
meetings;
(c) The names of all its members comprising at least twenty percent
(20%) of all the employees in the bargaining unit where it seeks to
operate;
(d) If the applicant union has been in existence for one or more
years, copies of its annual financial reports; and
(e) Four (4) copies of the constitution and by-laws of the applicant
union, minutes of its adoption or ratification, and the list of the
members who participated in it. (Italics supplied.)
It is emphasized that the foregoing pertains to the registration of an
independent labor organization, association or group of unions or workers.
However, the creation of a branch, local or chapter is treated differently.
This Court, in the landmark case of Progressive Development Corporation
v. Secretary, Department of Labor and Employment,31 declared that when
an unregistered union becomes a branch, local or chapter, some of the
aforementioned requirements for registration are no longer necessary or
compulsory. Whereas an applicant for registration of an independent union
is mandated to submit, among other things, the number of employees and
names of all its members comprising at least 20% of the employees in the
bargaining unit where it seeks to operate, as provided under Article 234 of
the Labor Code and Section 2 of Rule III, Book V of the Implementing
Rules, the same is no longer required of a branch, local or chapter. 32 The
intent of the law in imposing less requirements in the case of a branch or
local of a registered federation or national union is to encourage the
affiliation of a local union with a federation or national union in order to
increase the local union's bargaining powers respecting terms and
conditions of labor.33
Subsequently, in Pagpalain Haulers, Inc. v. Trajano34 where the validity of
Department Order No. 9 was directly put in issue, this Court was
unequivocal in finding that there is no inconsistency between the Labor
Code and Department Order No. 9.
As to petitioner's claims that respondent obtained its Certificate of
Registration through fraud and misrepresentation, this Court finds that the
imputations are not impressed with merit. In the instant case, proof to
declare that respondent committed fraud and misrepresentation remains
wanting. This Court had, indeed, on several occasions, pronounced that
registration based on false and fraudulent statements and documents
confer no legitimacy upon a labor organization irregularly recognized,
which, at best, holds on to a mere scrap of paper. Under such
provision, other exceptions or effects are excluded. 55 Where the terms are
expressly limited to certain matters, it may not, by interpretation or
construction, be extended to other matters.56 Such is the case here. If its
intent were otherwise, the law could have so easily and conveniently
included "trade union centers" in identifying the labor organizations
allowed to charter a chapter or local. Anything that is not included in the
enumeration is excluded therefrom, and a meaning that does not appear
nor is intended or reflected in the very language of the statute cannot be
placed therein.57 The rule is restrictive in the sense that it proceeds from
the premise that the legislating body would not have made specific
enumerations in a statute if it had the intention not to restrict its meaning
and confine its terms to those expressly mentioned. 58 Expressium facit
cessare tacitum.59 What is expressed puts an end to what is implied.
Casus omissus pro omisso habendus est. A person, object or thing omitted
must have been omitted intentionally.
Therefore, since under the pertinent status and applicable implementing
rules, the power granted to labor organizations to directly create a chapter
or local through chartering is given to a federation or national union, then
a trade union center is without authority to charter directly.
The ruling of this Court in the instant case is not a departure from the
policy of the law to foster the free and voluntary organization of a strong
and united labor movement,60 and thus assure the rights of workers to
self-organization.61 The mandate of the Labor Code in ensuring strict
compliance with the procedural requirements for registration is not
without reason. It has been observed that the formation of a local or
chapter becomes a handy tool for the circumvention of union registration
requirements. Absent the institution of safeguards, it becomes a
convenient device for a small group of employees to foist a not-sodesirable federation or union on unsuspecting co-workers and pare the
need for wholehearted voluntariness, which is basic to free unionism. 62 As
a legitimate labor organization is entitled to specific rights under the
Labor Code and involved in activities directly affecting public interest, it is
necessary that the law afford utmost protection to the parties affected.63
However, as this Court has enunciated in Progressive Development
Corporation v. Secretary of Department of Labor and Employment, it is not
this Court's function to augment the requirements prescribed by law. Our
only recourse, as previously discussed, is to exact strict compliance with
what the law provides as requisites for local or chapter formation. 64
In sum, although PDMP as a trade union center is a legitimate labor
organization, it has no power to directly create a local or chapter. Thus,
SMPPEU-PDMP cannot be created under the more lenient requirements for
chartering, but must have complied with the more stringent rules for
creation and registration of an independent union, including the 20%
membership requirement.
DECISION
TINGA, J.:
The main issue for resolution herein is whether there was sufficient cause
for the dismissal of a rank-and-file employee effectuated through the
enforcement of a closed-shop provision in the Collective Bargaining
Agreement (CBA) between the employer and the union.
The operative facts are uncomplicated.
The Associated Labor Union (ALU) is the exclusive bargaining agent of
plantation workers of petitioner Del Monte Philippines, Inc. (Del Monte) in
Bukidnon. Respondent Nena Timbal (Timbal), as a rank-and-file employee
of Del Monte plantation in Bukidnon, is also a member of ALU. Del Monte
and ALU entered into a Collective Bargaining Agreement (CBA) with an
effective term of five (5) years from 1 September 1988 to 31 August
1993.1
Timbal and her co-employees filed separate complaints against Del Monte
and/or its Personnel Manager Warfredo C. Balandra and ALU with the
Regional Arbitration Branch (RAB) of the National Labor Relations
Commission (NLRC) for illegal dismissal, unfair labor practice and
damages.11 The complaints were consolidated and heard before Labor
Arbiter Irving Pedilla. The Labor Arbiter affirmed that all five (5) were
illegally dismissed and ordered Del Monte to reinstate complainants,
including Timbal, to their former positions and to pay their full backwages
and other allowances, though the other claims and charges were
dismissed for want of basis.12
Only Del Monte interposed an appeal with the NLRC.13 The NLRC reversed
the Labor Arbiter and ruled that all the complainants were validly
dismissed.14 On review, the Court of Appeals ruled that only Timbal was
illegally dismissed.15 At the same time, the appellate court found that Del
Monte had failed to observe procedural due process in dismissing the coemployees, and thus ordered the company to pay P30,000.00 to each of
the co-employees as penalties. The co-employees sought to file a Petition
for Review16 with this Court assailing the ruling of the Court of Appeals
affirming their dismissal, but the petition was denied because it was not
timely filed.17
On the other hand, Del Monte, through the instant petition, assails the
Court of Appeals decision insofar as it ruled that Timbal was illegally
dismissed. Notably, Del Monte does not assail in this petition the award of
P30,000.00 to each of the co-employees, and the ruling of the Court of
Appeals in that regard should now be considered final.
The reason offered by the Court of Appeals in exculpating Timbal revolves
around the problematic relationship between her and Artajo, the
complaining witness against her. As explained by the appellate court:
However, the NLRC should have considered in a different light the
situation of petitioner Nena Timbal. Timbal asserted before the
NLRC, and reiterates in this petition, that the statements of Gemma
Artajo, ALU's sole witness against her, should not be given weight
because Artajo had an ax[e] to grind at the time when she made the
adverse statements against her. Respondents never disputed the
claim of Timbal that in the two (2) collection suits initiated by Timbal
and her husband, Artajo testified for the defendant in the first case
and she was even the defendant in the second case which was won
by Timbal. We find it hard to believe that Timbal would so willingly
render herself vulnerable to expulsion from the Union by revealing
to an estranged colleague her desire to shift loyalty. The strained
relationship between Timbal and Artajo renders doubtful the charge
against the former that she attempted to recruit Artajo to join a rival
union. Inasmuch as the respondents failed to justify the termination
of Timbal's employment, We hold that her reinstatement to her
protection to labor."26 The CBA, which covers all regular hourly paid
employees at the pineapple plantation in Bukidnon,27 stipulates that all
present and subsequent employees shall be required to become a
member of ALU as a condition of continued employment. Sections 4 and 5,
Article II of the CBA further state:
ARTICLE II
Section 4. Loss of membership in the UNION shall not be a ground
for dismissal by the Company except where loss of membership is
due to:
1. Voluntary resignation from [ALU] earlier than the expiry
date of this [CBA];
2. Non-payment of duly approved and ratified union dues and
fees; and
3. Disloyalty to [ALU] in accordance with its Constitution and
By-Laws as duly registered with the Department of Labor and
Employment.
Section 5. Upon request of [ALU], [Del Monte] shall dismiss from its
service in accordance with law, any member of the bargaining unit
who loses his membership in [ALU] pursuant to the provisions of the
preceding section. [ALU] assumes full responsibility for any such
termination and hereby agrees to hold [Del Monte] free from any
liability by judgment of a competent authority for claims arising out
of dismissals made upon demand of [ALU], and [the] latter shall
reimburse the former of such sums as it shall have paid therefor.
Such reimbursement shall be deducted from union dues and agency
fees until duly paid.28
The CBA obviously adopts a closed-shop policy which mandates, as a
condition of employment, membership in the exclusive bargaining agent.
A "closed-shop" may be defined as an enterprise in which, by agreement
between the employer and his employees or their representatives, no
person may be employed in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a union entirely
comprised of or of which the employees in interest are a part.29 A CBA
provision for a closed-shop is a valid form of union security and it is not a
restriction on the right or freedom of association guaranteed by the
Constitution.30
Timbal's expulsion from ALU was premised on the ground of disloyalty to
the union, which under Section 4(3), Article II of the CBA, also stands as a
ground for her dismissal from Del Monte. Indeed, Section 5, Article II of the
CBA enjoins Del Monte to dismiss from employment those employees
expelled from ALU for disloyalty, albeit with the qualification "in
accordance with law."
Article 279 of the Labor Code ordains that "in cases of regular
employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by [Title I, Book Six
of the Labor Code]." Admittedly, the enforcement of a closed-shop or
union security provision in the CBA as a ground for termination finds no
extension within any of the provisions under Title I, Book Six of the Labor
Code. Yet jurisprudence has consistently recognized, thus: "It is State
policy to promote unionism to enable workers to negotiate with
management on an even playing field and with more persuasiveness than
if they were to individually and separately bargain with the employer. For
this reason, the law has allowed stipulations for 'union shop' and 'closed
shop' as means of encouraging workers to join and support the union of
their choice in the protection of their rights and interests vis-a-vis the
employer."31
It might be suggested that since Timbal was expelled from ALU on the
ground of disloyalty, Del Monte had no choice but to implement the CBA
provisions and cause her dismissal. Similarly, it might be posited that any
tribunal reviewing such dismissal is precluded from looking beyond the
provisions of the CBA in ascertaining whether such dismissal was valid. Yet
deciding the problem from such a closed perspective would virtually
guarantee unmitigated discretion on the part of the union in terminating
the employment status of an individual employee. What the Constitution
does recognize is that all workers, whether union members or not, are
"entitled to security of tenure."32 The guarantee of security of tenure itself
is implemented through legislation, which lays down the proper standards
in determining whether such right was violated.33
Agabon v. NLRC34 did qualify that constitutional due process or security of
tenure did not shield from dismissal an employee found guilty of a just
cause for termination even if the employer failed to render the statutory
notice and hearing requirement. At the same time, it should be
understood that in the matter of determining whether cause exists for
termination, whether under Book Six, Title I of the Labor Code or under a
valid CBA, substantive due process must be observed as a means of
ensuring that security of tenure is not infringed.
Agabon observed that due process under the Labor Code comprised of
two aspects: "substantive, i.e., the valid and authorized causes of
employment termination under the Labor Code; and procedural, i.e., the
manner of dismissal."35 No serious dispute arose in Agabon over the
observance of substantive due process in that case, or with the conclusion
that the petitioners therein were guilty of abandonment of work, one of
the just causes for dismissal under the Labor Code. The controversy in
Agabon centered on whether the failure to observe procedural due
process, through the non-observance of the two-notice rule, should lead to
the invalidation of the dismissals. The Court ruled, over the dissents of
some Justices, that the failure by the employer to observe procedural due
process did not invalidate the dismissals for just cause of the petitioners
therein. However, Agabon did not do away with the requirement of
substantive due process, which is essentially the existence of just cause
provided by law for a valid dismissal. Thus, Agabon cannot be invoked to
validate a dismissal wherein substantive due process, or the proper
determination of just cause, was not observed.
Even if the dismissal of an employee is conditioned not on the grounds for
termination under the Labor Code, but pursuant to the provisions of a
CBA, it still is necessary to observe substantive due process in order to
validate the dismissal. As applied to the Labor Code, adherence to
substantive due process is a requisite for a valid determination that just or
authorized causes existed to justify the dismissal.36 As applied to the
dismissals grounded on violations of the CBA, observance of substantial
due process is indispensable in establishing the presence of the cause or
causes for dismissal as provided for in the CBA.
Substantive due process, as it applies to all forms of dismissals,
encompasses the proper presentation and appreciation of evidence to
establish that cause under law exists for the dismissal of an employee.
This holds true even if the dismissal is predicated on particular causes for
dismissal established not by the Labor Code, but by the CBA. Further, in
order that any CBA-mandated dismissal may receive the warrant of the
courts and labor tribunals, the causes for dismissal as provided for in the
CBA must satisfy to the evidentiary threshold of the NLRC and the courts.
It is necessary to emphasize these principles since the immutable truth
under our constitutional and labor laws is that no employee can be
dismissed without cause. Agabon may have tempered the procedural due
process requirements if just cause for dismissal existed, but in no way did
it eliminate the existence of a legally prescribed cause as a requisite for
any dismissal. The fact that a CBA may provide for additional grounds for
dismissal other than those established under the Labor Code does not
detract from the necessity to duly establish the existence of such grounds
before the dismissal may be validated. And even if the employer or, in this
case, the collective bargaining agent, is satisfied that cause has been
established to warrant the dismissal, such satisfaction will be of no
consequence if, upon legal challenge, they are unable to establish before
the NLRC or the courts the presence of such causes.
In the matter at bar, the Labor Arbiterthe proximate trier of factsand
the Court of Appeals both duly appreciated that the testimony of Artajo
against Timbal could not be given credence, especially in proving Timbal's
disloyalty to ALU. This is due to the prior animosity between the two
engendered by the pending civil complaint filed by Timbal's husband
against Artajo. Considering that the civil complaint was filed just six (6)
days prior to the execution of Artajo's affidavit against Timbal, it would be
conducted by any public office in the Philippines, but they were committed
in the course of an internal disciplinary mechanism devised by a privately
organized labor union. Unless the authenticity of these notes is duly
proven before, and appreciated by the triers of fact, we cannot accord
them any presumptive or conclusive value.
Moreover, despite the fact that the apparent record of Piquero's testimony
was appended to ALU's position paper, the position paper itself does not
make any reference to such testimony, or even to Piquero's name for that
matter. The position paper observes that "[t]his testimony of [Artajo] was
directly corroborated by her actual attendance on July 14, 1992 at the
agreed [venue]," but no mention is made that such testimony was also
"directly corroborated" by Piquero. Then again, it was only Artajo, and not
Piquero, who executed an affidavit recounting the allegations against
Timbal.
Indeed, we are inclined to agree with Timbal's observation in her
Comment on the present petition that from the time the complaint was
filed with the NLRC-RAB, Piquero's name and testimony were invoked for
the first time only in Del Monte's motion for reconsideration before the
Court of Appeals. Other than the handwritten reference made in the raw
stenographic notes attached to ALU's position paper before the NLRC-RAB,
Piquero's name or testimony was not mentioned either by ALU or Del
Monte before any of the pleadings filed before the NLRC-RAB, the NLRC,
and even with those submitted to the Court of Appeals prior to that court's
decision.
In order for the Court to be able to appreciate Piquero's testimony as basis
for finding Timbal guilty of disloyalty, it is necessary that the fact of such
testimony must have been duly established before the NLRC-RAB, the
NLRC, or at the very least, even before the Court of Appeals. It is only
after the fact of such testimony has been established that the triers of fact
can come to any conclusion as to the veracity of the allegations in the
testimony.
It should be mentioned that the Disloyalty Board, in its Resolution finding
Timbal guilty of disloyalty, did mention that Artajo's testimony "was
corroborated by Paz Piquero who positively identified and testified that
Nena Timbal was engaged in recruitment of ALU members at [Del Monte]
to attend NFL seminars."39
The Disloyalty Board may have appreciated Piquero's testimony in its own
finding that Timbal was guilty, yet the said board cannot be considered as
a wholly neutral or dispassionate tribunal since it was constituted by the
very organization that stood as the offended party in the disloyalty
charge. Without impugning the integrity of ALU and the mechanisms it has
employed for the internal discipline of its members, we nonetheless hold
that in order that the dismissal of an employee may be validated by this
Court, it is necessary that the grounds for dismissal are justified by
from the time [she was] illegally dismisse[d] up to the time [she] will be
actually reinstated," conforms to Article 279 of the Labor Code. Hence, the
Court of Appeals was correct in affirming the Labor Arbiter insofar as
Timbal was concerned.
Finally, we address the claim that the Court of Appeals erred when it did
not rule on Del Monte's claim for reimbursement against ALU. We do
observe that Section 5 of the CBA stipulated that "[ALU] assumes full
responsibility of any such termination [of any member of the bargaining
unit who loses his membership in ALU] and hereby agrees to hold [Del
Monte] free from any liability by judgment of a competent authority for
claims arising out of dismissals made upon demand of [ALU], and latter
shall reimburse the former of such sums as it shall have paid therefore." 46
This stipulation does present a cause of action in Del Monte's favor should
it be held financially liable for the dismissal of an employee by reason of
expulsion from ALU. Nothing in this decision should preclude the operation
of this provision in the CBA. At the same time, we are unable to agree with
Del Monte that the Court of Appeals, or this Court, can implement this
provision of the CBA and accordingly directly condemn ALU to answer for
the financial remuneration due Timbal.
Before the Labor Arbiter, Del Monte had presented its cross-claim against
ALU for reimbursement should it be made liable for illegal dismissal or
unfair labor practice, pursuant to the CBA. The Labor Arbiter had actually
passed upon this claim for reimbursement, stating that "[as] for the crossclaims of respondent DMPI and Tabusuares against the respondent ALUTUCP, this Branch cannot validly entertain the same in the absence of
employer-employee relationship between the former and the latter." 47 We
have examined Article 217 of the Labor Code,48 which sets forth the
original jurisdiction of the Labor Arbiters. Article 217(c) states:
Cases arising from the interpretation or implementation of collective
bargaining agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed of
by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration as may be provided in said
agreements. [Emphasis supplied.]
In contrast, Article 261 of the Labor Code indubitably vests on the
Voluntary Arbitrator or panel of Voluntary Arbitrators the "original and
exclusive jurisdiction to hear and decide all unresolved grievances arising
from the interpretation or implementation of the Collective Bargaining
Agreement."49 Among those areas of conflict traditionally within the
jurisdiction of Voluntary Arbitrators are contract-interpretation and
contract-implementation,50 the questions precisely involved in Del Monte's
claim seeking enforcement of the CBA provision mandating restitution by
ALU should the company be held financially liable for dismissals pursuant
to the union security clause.
In reconciling the grants of jurisdiction vested under Articles 261 and 217
of the Labor Code, the Court has pronounced that "the original and
exclusive jurisdiction of the Labor Arbiter under Article 217(c) for money
claims is limited only to those arising from statutes or contracts other than
a Collective Bargaining Agreement. The Voluntary Arbitrator or Panel of
Voluntary Arbitrators will have original and exclusive jurisdiction over
money claims 'arising from the interpretation or implementation of the
Collective Bargaining Agreement and, those arising from the interpretation
or enforcement of company personnel policies', under Article 261." 51
Our conclusion that the Labor Arbiter in the instant case could not
properly pass judgment on the cross-claim is further strengthened by the
fact that Del Monte and ALU expressly recognized the jurisdiction of
Voluntary Arbitrators in the CBA. Section 2, Article XXXI of the CBA
provides:
Section 2. In the event a dispute arises concerning the application
of, or interpretation of this Agreement which cannot be settled
pursuant to the [grievance procedure set forth in the] preceding
Section, the dispute shall be submitted to an arbitrator agreed to by
[Del Monte] and [ALU].
Should the parties fail to agree on the arbitrator, the same shall be
drawn by lottery from a list of arbitrators furnished by the Bureau of
Labor Relations of the Department of Labor and Employment.
xxxx
Thus, as the law indubitably precludes the Labor Arbiter from enforcing
money claims arising from the implementation of the CBA, the CBA herein
complementarily recognizes that it is the Voluntary Arbitrators which have
jurisdiction to hear the claim. The Labor Arbiter correctly refused to
exercise jurisdiction over Del Monte's cross-claim, and the Court of
Appeals would have no basis had it acted differently. At the same time,
even as we affirm the award of backwages against Del Monte, our ruling
should not operate to prejudice in any way whatever causes of action Del
Monte may have against ALU, in accordance with the CBA.
WHEREFORE, the instant petition is DENIED. The assailed Decision of the
Court of Appeals dated 26 August 2002 is AFFIRMED. Costs against
petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
No. 1388 in the said resolution be deleted. The CA noted at the outset that
the petition must be dismissed as it merely touched on factual matters
which were beyond the ambit of the remedy availed of.14 Be that as it
may, the CA found that the factual findings of the NLRC were supported by
substantial evidence and, thus, entitled to great respect and finality. To
the CA, the NLRC did not act with grave abuse of discretion as to merit the
reversal of the resolution.15
Furthermore, the CA ratiocinated that, considering the ramifications of the
corporate merger, it was well within BPIs prerogatives "to determine what
additional tasks should be performed, who should best perform it and
what should be done to meet the exigencies of business."16 It pointed out
that the Union did not, by the mere fact of the merger, become the
bargaining agent of the merged employees17 as the Unions right to
represent said employees did not arise until it was chosen by them. 18
As to the applicability of D.O. No. 10, the CA agreed with the NLRC that
the said order did not apply as BPI, being a commercial bank, its
transactions were subject to the rules and regulations of the BSP.
Not satisfied, the Union filed a motion for reconsideration which was,
however, denied by the CA.1wphi1
Hence, the present petition with the following
ASSIGNMENT OF ERRORS:
A. THE PETITION BEFORE THE COURT OF APPEALS INVOLVED
QUESTIONS OF LAW AND ITS DECISION DID NOT ADDRESS THE
ISSUE OF WHETHER BPIS ACT OF OUTSOURCING FUNCTIONS
FORMERLY PERFORMED BY UNION MEMBERS VIOLATES THE CBA.
B. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
DOLE DEPARTMENT ORDER NO. 10 DOES NOT APPLY IN THIS CASE.
The Union is of the position that the outsourcing of jobs included in the
existing bargaining unit to BOMC is a breach of the union-shop agreement
in the CBA. In transferring the former employees of FEBTC to BOMC
instead of absorbing them in BPI as the surviving corporation in the
merger, the number of positions covered by the bargaining unit was
decreased, resulting in the reduction of the Unions membership. For the
Union, BPIs act of arbitrarily outsourcing functions formerly performed by
the Union members and, in fact, transferring a number of its members
beyond the ambit of the Union, is a violation of the CBA and interfered
with the employees right to self organization. The Union insists that the
CBA covers the agreement with respect, not only to wages and hours of
work, but to all other terms and conditions of work. The union shop clause,
being part of these conditions, states that the regular employees
belonging to the bargaining unit, including those absorbed by way of the
The Union, however, insists that jobs being outsourced to BOMC were
included in the existing bargaining unit, thus, resulting in a reduction of a
number of positions in such unit. The reduction interfered with the
employees right to self-organization because the power of a union
primarily depends on its strength in number.28
It is incomprehensible how the "reduction of positions in the collective
bargaining unit" interferes with the employees right to self-organization
because the employees themselves were neither transferred nor
dismissed from the service. As the NLRC clearly stated:
In the case at hand, the union has not presented even an iota of evidence
that petitioner bank has started to terminate certain employees, members
of the union. In fact, what appears is that the Bank has exerted utmost
diligence, care and effort to see to it that no union member has been
terminated. In the process of the consolidation or merger of the two banks
which resulted in increased diversification of functions, some of these nonbanking functions were merely transferred to the BOMC without affecting
the union membership.29
BPI stresses that not a single employee or union member was or would be
dislocated or terminated from their employment as a result of the Service
Agreement.30 Neither had it resulted in any diminution of salaries and
benefits nor led to any reduction of union membership.31
As far as the twelve (12) former FEBTC employees are concerned, the
Union failed to substantially prove that their transfer, made to complete
BOMCs service complement, was motivated by ill will, anti-unionism or
bad faith so as to affect or interfere with the employees right to selforganization.
It is to be emphasized that contracting out of services is not illegal
perse.1wphi1 It is an exercise of business judgment or management
prerogative. Absent proof that the management acted in a malicious or
arbitrary manner, the Court will not interfere with the exercise of
judgment by an employer.32 In this case, bad faith cannot be attributed to
BPI because its actions were authorized by CBP Circular No. 1388, Series
of 199333 issued by the Monetary Board of the then Central Bank of the
Philippines (now Bangko Sentral ng Pilipinas). The circular covered
amendments in Book I of the Manual of Regulations for Banks and Other
Financial Intermediaries, particularly on the matter of bank service
contracts. A finding of ULP necessarily requires the alleging party to prove
it with substantial evidence. Unfortunately, the Union failed to discharge
this burden.
Much has been said about the applicability of D.O. No. 10. Both the NLRC
and the CA agreed with BPI that the said order does not apply. With BPI, as
a commercial bank, its transactions are subject to the rules and
BPI which does not handle or manage deposit transactions. Clearly, the
functions outsourced are not inherent banking functions, and, thus, are
well within the permissible services under the circular.
The Court agrees with BPI that D.O. No. 10 is but a guide to determine
what functions may be contracted out, subject to the rules and
established jurisprudence on legitimate job contracting and prohibited
labor-only contracting.41 Even if the Court considers D.O. No. 10 only, BPI
would still be within the bounds of D.O. No. 10 when it contracted out the
subject functions. This is because the subject functions were not related or
not integral to the main business or operation of the principal which is the
lending of funds obtained in the form of deposits.42 From the very
definition of "banks" as provided under the General Banking Law, it can
easily be discerned that banks perform only two (2) main or basic
functions deposit and loan functions. Thus, cashiering, distribution and
bookkeeping are but ancillary functions whose outsourcing is sanctioned
under CBP Circular No. 1388 as well as D.O. No. 10. Even BPI itself
recognizes that deposit and loan functions cannot be legally contracted
out as they are directly related or integral to the main business or
operation of banks. The CBP's Manual of Regulations has even
categorically stated and emphasized on the prohibition against
outsourcing inherent banking functions, which refer to any contract
between the bank and a service provider for the latter to supply, or any
act whereby the latter supplies, the manpower to service the deposit
transactions of the former.43
In one case, the Court held that it is management prerogative to farm out
any of its activities, regardless of whether such activity is peripheral or
core in nature.44 What is of primordial importance is that the service
agreement does not violate the employee's right to security of tenure and
payment of benefits to which he is entitled under the law. Furthermore,
the outsourcing must not squarely fall under labor-only contracting where
the contractor or sub-contractor merely recruits, supplies or places
workers to perform a job, work or service for a principal or if any of the
following elements are present:
i) The contractor or subcontractor does not have substantial capital
or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are
directly related to the main business of the principal; or
ii) The contractor does not exercise the right to control over the
performance of the work of the contractual employee.45
WHEREFORE, the petition is DENIED.
SO ORDERED.
In as much as the cases involve the same set of parties; arose from the
same set of circumstances, i.e., from several Orders issued by then
Secretary of the Department of Labor and Employment (DOLE), Hon.
Patricia A. Sto. Tomas, respecting her assumption of jurisdiction over the
labor dispute between Nestl and UFE-DFA-KMU, Alabang and Cabuyao
Divisions;5 and likewise assail the same Decision and Resolution of the
Court of Appeals, the Court ordered the consolidation of the two petitions. 6
The Facts
From the record and the pleadings filed by the parties, we cull the
following material facts in this case:
On 4 April 2001, in consideration of the impending expiration of the
existing collective bargaining agreement (CBA) between Nestl and UFEDFA-KMU7 on 5 June 2001,8 in a letter denominated as a Letter of Intent,
the Presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU,
Ernesto Pasco and Diosdado Fortuna, respectively, informed Nestl of their
intent to "open our new Collective Bargaining Negotiation for the year
2001-2004 x x x as early as June 2001."9
In a letter10 dated 10 April 2001, Nestl acknowledged receipt of the
aforementioned letter. It also informed UFE-DFA-KMU that it was preparing
its own counter-proposal and proposed ground rules that shall govern the
conduct of the collective bargaining negotiations.
On 29 May 2001, in another letter addressed to the UFE-DFA-KMU
(Cabuyao Division), Nestl underscored its position that "unilateral grants,
one-time company grants, company-initiated policies and programs,
which include, but are not limited to the Retirement Plan, Incidental
Straight Duty Pay and Calling Pay Premium, are by their very nature not
proper subjects of CBA negotiations and therefore shall be excluded
therefrom."11 In addition, it clarified that with the closure of the Alabang
Plant, the CBA negotiations will only be applicable to the covered
employees of the Cabuyao Plant; hence, the Cabuyao Division of UFE-DFAKMU became the sole bargaining unit involved in the subject CBA
negotiations.
Thereafter, dialogue between the company and the union ensued.
In a letter dated 14 August 2001, Nestl, claiming to have reached an
impasse in said dialogue, requested12 the National Conciliation and
Mediation Board (NCMB), Regional Office No. IV, Imus, Cavite, to conduct
preventive mediation proceedings between it and UFE-DFA-KMU. Nestl
alleged that despite fifteen (15) meetings between them, the parties
failed to reach any agreement on the proposed CBA. The request was
docketed as NCMB-RBIV-CAB-PM-08-035-01.
The foregoing article clearly does not interfere with the workers right to
strike but merely regulates it, when in the exercise of such right, national
interests will be affected.
On 15 January 2002, despite the injunction22 contained in Sec. Sto. Tomas
Assumption of Jurisdiction Order and conciliation efforts by the NCMB, the
employee members of UFE-DFA-KMU at the Nestl Cabuyao Plant went on
strike.
On 16 January 2002, in consideration of the above, Sec. Sto. Tomas issued
yet another Order23 directing: (1) the members of UFE-DFA-KMU to returnto-work within twenty-four (24) hours from receipt of such Order; (2)
Nestl to accept back all returning workers under the same terms and
conditions existing preceding to the strike; (3) both parties to cease and
desist from committing acts inimical to the on-going conciliation
proceedings leading to the further deterioration of the situation; and (4)
the submission of their respective position papers within ten (10) days
from receipt thereof.
Notwithstanding the Return-To-Work Order, the members of UFE-DFA-KMU
continued with their strike and refused to go back to work as instructed.
Thus, Sec. Sto. Tomas sought the assistance of the Philippine National
Police (PNP) for the enforcement of said order.
At the hearing called on 7 February 2002, Nestl and UFE-DFA-KMU filed
their respective position papers. In its position paper,24 Nestl addressed
several issues allegedly pertaining to the current labor dispute, i.e.,
economic provisions of the CBA as well as the non-inclusion of the issue of
the Retirement Plan in the collective bargaining negotiations. UFE-DFAKMU, in contrast, limited itself to tackling the solitary issue of whether or
not the retirement plan was a mandatory subject in its CBA negotiations
with the company on the contention "that the Order of Assumption of
Jurisdiction covers only the issue of Retirement Plan."25
On 8 February 2002, Nestl moved that UFE-DFA-KMU be declared to have
waived its right to present arguments respecting the other issues raised
by the company on the ground that the latter chose to limit itself to
discussing only one (1) issue. Sec. Sto. Tomas, in an Order26 dated 11
February 2002, however, did not see fit to grant said motion. She instead
allowed UFE-DFA-KMU the chance to tender its stand on the other issues
raised by Nestl but not covered by its initial position paper paper by way
of a Supplemental Position Paper.
UFE-DFA-KMU afterward filed several pleadings: (1) an Urgent Motion to
File a Reply dated 13 February 2002; (2) a Motion for Time to File
Supplemental Position Paper dated 22 February 2002; and (3) a
Manifestation with Motion for Reconsideration of the Order dated February
11, 2002 dated 27 February 2002. The latter pleading was an absolute
contradiction of the second one praying for additional time to file the
The Issues
UFE-DFA-KMUs petition for review docketed as G.R. No. 158930-31, is
predicated on the following alleged errors:
I.
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN NOT
HOLDING THAT RESPONDENT IS GUILTY OF UNFAIR LABOR PRACTICE IN
REFUSING TO PROCEED WITH THE CBA NEGOTIATIONS UNLESS
PETITIONER FIRST ADMITS THAT THE RETIREMENT PLAN IN THE COMPANY
IS A NON-CBA MATTER; and
II.
THE CONTENTION THAT THERE IS NO EVIDENCE OF UNFAIR LABOR
PRACTICE ON RESPONDENT NESTLS PART AND THAT PETITIONER DID
NOT RAISE THE ISSUE OF ULP IN ITS ARGUMENTS BEFORE THE COURT OF
APPEALS IS GROSSLY ERRONEOUS.33
Whereas in G.R. No. 158944-45, petitioner Nestl challenges the
conclusion of the Court of Appeals on the basis of the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED SERIOUS ERROR
IN HOLDING THAT THE POWERS GRANTED TO THE SECRETARY OF LABOR
TO RESOLVE NATIONAL INTEREST DISPUTES UNDER ARTICLE 263 (G) OF
THE LABOR CODE MAY BE LIMITED BY A (SECOND) NOTICE OF STRIKE; and
II.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED SERIOUS ERROR
IN ANNULING THE SECRETARY OF LABORS JUDGMENT ON THE
RETIREMENT PLAN ISSUE WHICH WAS MERELY A PART OF THE COMPLETE
RESOLUTION OF THE LABOR DISPUTE. 34
On the whole, the consolidated cases only raise three (3) fundamental
issues for deliberation by this Court, that is, whether or not the Court of
Appeals committed reversible error, first, in finding the Secretary of Labor
and Employment to have gravely abused her discretion in her
pronouncement that the Retirement Plan was not a proper subject to be
included in the CBA negotiations between the parties; hence, nonnegotiable; second, in holding that the assumption powers of the
Secretary of Labor and Employment should have been limited merely to
the grounds alleged in the second Notice of Strike; and third, in not ruling
that Nestl was guilty of unfair labor practice despite allegedly setting a
pre-condition to bargaining the non-inclusion of the Retirement Plan as
an issue in the collective bargaining negotiations.
The companys [Nestl] contention that its retirement plan is nonnegotiable, is not well-taken. The NLRC correctly observed that the
inclusion of the retirement plan in the collective bargaining agreement as
part of the package of economic benefits extended by the company to its
employees to provide them a measure of financial security after they shall
have ceased to be employed in the company, reward their loyalty, boost
their morale and efficiency and promote industrial peace, gives "a
consensual character" to the plan so that it may not be terminated or
modified at will by either party (citation omitted).
The fact that the retirement plan is non-contributory, i.e., that the
employees contribute nothing to the operation of the plan, does not make
it a non-issue in the CBA negotiations. As a matter of fact, almost all of the
benefits that the petitioner has granted to its employees under the CBA
salary increases, rice allowances, midyear bonuses, 13th and 14th month
pay, seniority pay, medical and hospitalization plans, health and dental
services, vacation, sick & other leaves with pay are non-contributory
benefits. Since the retirement plan has been an integral part of the CBA
since 1972, the Unions demand to increase the benefits due the
employees under said plan, is a valid CBA issue. x x x
xxxx
x x x [E]mployees do have a vested and demandable right over existing
benefits voluntarily granted to them by their employer. The latter may not
unilaterally withdraw, eliminate or diminish such benefits (Art. 100, Labor
Code; other citation omitted). [Emphases supplied.]42
In the case at bar, it cannot be denied that the CBA that was about to
expire at that time contained provisions respecting the Retirement Plan.
As the latter benefit was already subject of the existing CBA, the members
of UFE-DFA-KMU were only exercising their prerogative to bargain or
renegotiate for the improvement of the terms of the Retirement Plan just
like they would for all the other economic, as well as non-economic
benefits previously enjoyed by them. Precisely, the purpose of collective
bargaining is the acquisition or attainment of the best possible covenants
or terms relating to economic and non-economic benefits granted by
employers and due the employees. The Labor Code has actually imposed
as a mutual obligation of both parties, this duty to bargain collectively.
The duty to bargain collectively is categorically prescribed by Article 252
of the said code. It states:
ART. 252. MEANING OF DUTY TO BARGAIN COLLECTIVELY. The duty to
bargain collectively means the performance of a mutual obligation to
meet and confer promptly and expeditiously and in good faith for the
purpose of negotiating an agreement with respect to wages, hours of
work, and all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising under such
agreement and executing a contract incorporating such agreement if
requested by either party, but such duty does not compel any party to
agree to a proposal or to make any concession.
Further, Article 253, also of the Labor Code, defines the parameter of said
obligation when there already exists a CBA, viz:
ART. 253. DUTY TO BARGAIN COLLECTIVELY WHEN THERE EXISTS A
COLLECTIVE BARGAINING AGREEMENT. The duty to bargain collectively
shall also mean that either party shall not terminate nor modify such
agreement during its lifetime. However, either party can serve a written
notice to terminate or modify the agreement at least sixty (60) days prior
to its expiration date. It shall be the duty of both parties to keep the status
quo and to continue in full force and effect the terms and conditions of the
existing agreement during the sixty day period and/or until a new
agreement is reached by the parties.
And, in demanding that the terms of the Retirement Plan be opened for
renegotiation, the members of UFE-DFA-KMU are acting well within their
rights as we have, indeed, declared that the Retirement Plan is consensual
in character; and so, negotiable.
Contrary to the claim of Nestl that the categorical mention of the terms
unilateral agreement in the letter and the MOA signed by the
representatives of UFE-DFA-KMU, had, for all intents and purposes worked
to estop UFE-DFA-KMU from raising it as an issue in the CBA negotiations,
our reading of the same, specifically Paragraph 6 and subparagraph 6.2:
6. Additionally, the COMPANY agree to extend the following unilateral
grants which shall not form part of the Collective Bargaining Agreement
(CBA):
xxxx
6.2. Review for improvement of the COMPANYs Retirement Plan and the
reference on the Retirement Plan in the Collective Bargaining Agreement
signed on 4 July 1995 shall be maintained. 43
hardly persuades us that the members of UFE-DFA-KMU have agreed to
treat the Retirement Plan as a benefit the terms of which are solely
dependent on the inclination of the Nestl and remove the subject benefit
from the ambit of the CBA. The characterization unilaterally imposed by
Nestl on the Retirement Plan cannot operate to divest the employees of
their "vested and demandable right over existing benefits voluntarily
granted by their employer."44 Besides, the contention that UFE-DFA-KMU
has "abandoned" or forsaken our earlier pronouncement vis--vis the
consensual nature of a retirement plan is quite inconsistent with, nay, is
negated by its conduct in doggedly asking for a renegotiation of said
benefit.
Worth noting, at this point, is the fact that the aforequoted paragraph 6
and its subparagraphs, particularly subparagraph 6.2, highlights an
undeniable fact that Nestl recognizes that the Retirement Plan is part of
the existing Collective Bargaining Agreement.
Nestl further rationalizes that a ruling declaring the Retirement Plan a
valid CBA negotiation issue will inspire other bargaining units to demand
for greater benefits in accordance with their respective appetites. Suffice
it to say that the consensual nature of the Retirement Plan neither gives
the union members the unfettered right nor the unbridled prerogative to
demand more than what the company can viably give.
As regards the scope of the assumption powers of the Secretary of the
DOLE, the appellate court ruled that Sec. Sto. Tomas assumption of
jurisdiction powers should have been limited to the disagreement on the
ground rules of the collective bargaining negotiations. The Court of
Appeals referred to the minutes of the meeting held on 30 October 2001.
That the representative Nestl was recorded to have stated that "we are
still discussing ground rules and not yet on the CBA negotiations proper, a
deadlock cannot be declared,"45 was a telling fact. The Court of Appeals,
thus, declared that the Secretary "should not have ruled on the questions
and issues relative to the substantive aspect of the CBA simply because
there was no conflict on the CBA yet."46
UFE-DFA-KMU agrees in the above and contends that the requisites of
judicial inquiry require, first and foremost the presence of an actual case
controversy. It then concludes that "[i]f the courts of law cannot act and
decide in the absence of an actual case or controversy, so should be (sic)
also the Honorable DOLE Secretary."47
Nestle, however, contradicts the preceding disquisitions on the ground
that such referral to the minutes of the meeting was erroneous and
misleading. It avers that the Court of Appeals failed to consider the
circumstance surrounding said utterance that the statement was made
during the preventive mediation proceedings and the UFE-DFA-KMU had
not yet filed any notice of strike. It further emphasizes that it was UFEDFA-KMU who first alleged bargaining deadlock as the basis for the filing
of its Notice of Strike. Finally, Nestl clarifies that before the first Notice of
Strike was filed, several conciliation conferences had already been
undertaken where both parties had exchanges of their respective CBA
proposals.
In this, we agree with Nestl. Declaring the Secretary of the DOLE to have
acted with grave abuse of discretion for ruling on substantial matters or
issues and not restricting itself merely on the ground rules, the appellate
court and UFE-DFA-KMU would have us treat the subject labor dispute in a
piecemeal fashion.
The second Notice of Strike is dated November 7, 2001 and the cited
ground is like quoted verbatim below:
"B. Unfair Labor Practices (specify)
Bargaining in bad faith
Setting pre-condition in the ground rules (Retirement issue)"
Nowhere in the second Notice of Strike is it indicated that this Notice is an
amendment to and took the place of the first Notice of Strike. In fact, our
Assumption of Jurisdiction Order dated November 29, 2001 specifically
cited the two (2) Notices of Strike without any objection on the part of the
Union x x x.48
Thus, based on the Notices of Strike filed by UFE-DFA-KMU, the Secretary
of the DOLE rightly decided on matters of substance. Further, it is a fact
that during the conciliation meetings before the NCMB, but prior to the
filing of the notices of strike, the parties had already delved into matters
affecting the meat of the collective bargaining agreement. The appellate
courts reliance on the statement49 of the representative of Nestl in ruling
that the labor dispute had yet to progress from the discussion of the
ground rules of the CBA negotiations is clearly misleading; hence,
erroneous.
Nevertheless, granting for the sake of argument that the meetings
undertaken by the parties had not gone beyond the discussion of the
ground rules, the issue of whether or not the Secretary of the DOLE could
decide issues incidental to the subject labor dispute had already been
answered in the affirmative. The Secretarys assumption of jurisdiction
power necessarily includes matters incidental to the labor dispute, that is,
issues that are necessarily involved in the dispute itself, not just to those
ascribed in the Notice of Strike; or, otherwise submitted to him for
resolution. As held in the case of International Pharmaceuticals, Inc. v.
Sec. of Labor and Employment,50 "x x x [t]he Secretary was explicitly
granted by Article 263 (g) of the Labor Code the authority to assume
jurisdiction over a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, and decide
the same accordingly. Necessarily, this authority to assume jurisdiction
over the said labor dispute must include and extend to all questions and
controversies arising therefrom, including cases over which the Labor
Arbiter has exclusive jurisdiction."51 Accordingly, even if not exactly on the
ground upon which the Notice of Strike is based, the fact that the issue is
incidental to the resolution of the subject labor dispute or that a specific
issue had been submitted to the Secretary of the DOLE for her resolution,
validly empowers the latter to take cognizance of and resolve the same.
Secretary Sto. Tomas correctly assumed jurisdiction over the questions
incidental to the current labor dispute and those matters raised by the
parties. In any event, the query as to whether or not the Retirement Plan
is to be included in the CBA negotiations between the parties ineluctably
dictates upon the Secretary of the DOLE to go into the substantive matter
of the CBA negotiations.
Lastly, the third issue pertains to the alleged reversible error committed
by the Court of Appeals in holding, albeit impliedly, Nestl free and clear
from any unfair labor practice. UFE-DFA-KMU argues that Nestls "refusal
to bargain on a very important CBA economic provision constitutes unfair
labor practice."52 It explained that Nestl set as a precondition for the
holding of collective bargaining negotiations the non-inclusion of the issue
of Retirement Plan. In its words, "respondent Nestl Phils., Inc. insisted
that the Union should first agree that the retirement plan is not a
bargaining issue before respondent Nestl would agree to discuss other
issues in the CBA."53 It then concluded that "the Court of Appeals
committed a legal error in not ruling that respondent company is guilty of
unfair labor practice. It also committed a legal error in failing to award
damages to the petitioner for the ULP committed by the respondent." 54
Nestl refutes the above argument and asserts that it was only before the
Court of Appeals, and in the second Petition for Certiorari at that, did UFEDFA-KMU raise the matter of unfair labor practice. It reasoned that the
subject of unfair labor practice should have been threshed out with the
appropriate labor tribunal. In justifying the failure of the Court of Appeals
to find it guilty of unfair labor practice, it stated that:
Under the circumstances, therefore, there was no way for the Court of
Appeals to make a ruling on the issues of unfair labor practice and
damages, simply because there was nothing to support or justify such
action. Although petitioner was afforded by the Secretary the opportunity
to be heard and more, it simply chose to omit the said issues in the
proceedings below.55
We are persuaded.
The concept of "unfair labor practice" is defined by the Labor Code as:
ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE FOR
PROSECUTION THEREOF. Unfair labor practices violate the constitutional
right of workers and employees to self-organization, are inimical to the
legitimate interests of both labor and management, including their right to
bargain collectively and otherwise deal with each other in an atmosphere
of freedom and mutual respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations.
x x x x.
The same code likewise provides the acts constituting unfair labor
practices committed by employers, to wit:
sure, it must be shown that Nestl was motivated by ill will, "bad faith, or
fraud, or was oppressive to labor, or done in a manner contrary to morals,
good customs, or public policy, and, of course, that social humiliation,
wounded feelings, or grave anxiety resulted x x x"60 in disclaiming
unilateral grants as proper subjects in their collective bargaining
negotiations.
There is no per se test of good faith in bargaining.61 Good faith or bad faith
is an inference to be drawn from the facts,62 to be precise, the crucial
question of whether or not a party has met his statutory duty to bargain in
good faith typically turns on the facts of the individual case. Necessarily, a
determination of the validity of the Nestls proposition involves an
appraisal of the exercise of its management prerogative.
Employers are accorded rights and privileges to assure their selfdetermination and independence and reasonable return of capital. 63 This
mass of privileges comprises the so-called management prerogatives. 64 In
this connection, the rule is that good faith is always presumed. As long as
the companys exercise of the same is in good faith to advance its interest
and not for purpose of defeating or circumventing the rights of employees
under the law or a valid agreement, such exercise will be upheld.65
Construing arguendo that the content of the aforequoted letter of 29 May
2001 laid down a pre-condition to its agreement to bargain with UFE-DFAKMU, Nestls inclusion in its Position Paper of its proposals affecting other
matters covered by the CBA contradicts the claim of refusal to bargain or
bargaining in bad faith. Accordingly, since UFE-DFA-KMU failed to proffer
substantial evidence that would overcome the legal presumption of good
faith on the part of Nestl, the award of moral and exemplary damages is
unavailing.
It must be remembered at all times that the Philippine Constitution, while
inexorably committed towards the protection of the working class from
exploitation and unfair treatment, nevertheless mandates the policy of
social justice so as to strike a balance between an avowed predilection for
labor, on the one hand, and the maintenance of the legal rights of capital,
the proverbial hen that lays the golden egg, on the other. Indeed, we
should not be unmindful of the legal norm that justice is in every case for
the deserving, to be dispensed with in the light of established facts, the
applicable law, and existing jurisprudence.66
In sum, from the facts and evidence extant in the records of these
consolidated petitions, this Court finds that 1) the Retirement Plan is still a
valid issue for herein parties collective bargaining negotiations; 2) the
Court of Appeals committed reversible error in limiting to the issue of the
ground rules the scope of the power of the Secretary of Labor to assume
jurisdiction over the subject labor dispute; and 3) Nestl is not guilty of
unfair labor practice. As no other issues are availing, this ponencia writes
On January 29, 2001, in the 5th CBA negotiation meeting, MIT presented
the new faculty ranking instrument to petitioner Faculty Association of
Mapua Institute of Technology (FAMIT).3 The latter agreed to the adoption
and implementation of the instrument, with the reservation that there
should be no diminution in rank and pay of the faculty members.
On April 17, 2001, FAMIT and MIT entered into a new CBA effective June 1,
2001.4 It incorporated the new ranking for the college faculty in Section 8
of Article V which states that, "A new faculty ranking shall be
implemented in June 2001. However, there shall be no diminution in the
existing rank and the policy same rank, same pay shall apply." 5
The faculty ranking sheet was annexed to the CBA as Annex "B," while the
college faculty rates sheet for permanent faculty and which included the
point ranges and corresponding pay rates per faculty level was added as
Annex "C."
When the CBA took effect, the Vice President for Academic Affairs issued a
memorandum to all deans and subject chairs to evaluate and re-rank the
faculty under their supervision using the new ranking instrument. Eight
factors were to be considered and given their corresponding
weights/points according to levels attained per factor. Among these were:
(1) educational attainment; (2) professional honors received; (3) relevant
training; (4) relevant professional experience; (5) scholarly work and
creative efforts; (6) award winning works; (7) officership in relevant
technical and professional organizations; and (8) administrative positions
held at MIT.6
After a month, MIT called FAMITs attention to what it perceived to be
flaws or omissions in the CBA signed by the parties. In a letter7 dated July
5, 2001 to FAMIT, MIT requested for an amendment of the following CBA
annexes Annex "B" (Faculty Ranking Sheet); Annex "C" (College Faculty
Rates for Permanent Faculty Only); and Annex "D" (H.S. Faculty Rates for
Permanent Faculty Only). MIT claimed that with respect to Annexes "C"
and "D," these contained data under the heading "TOTAL POINTS" that
were not germane to the two other columns in both annexes. With regard
to the Faculty Ranking Point Range sheet of the new faculty ranking
instrument, MIT avers that this was inadvertently not attached to the CBA.
FAMIT rejected the proposal. It said that these changes would constitute a
violation of the ratified 2001 CBA and result in the diminution of rank and
benefits of FAMIT college faculty. It argued that the proposed amendment
in the ranking system for the college faculty revised the point ranges
earlier agreed upon by the parties and expands the 19 faculty ranks to 23.
Meanwhile, MIT instituted some changes in the curriculum during the
school year 2000-2001 which resulted in changes in the number of hours
for certain subjects. Thus, MIT adopted a new formula for determining the
pay rates of the high school faculty: Rate/Load x Total Teaching Load =
SO ORDERED.9
On appeal, the Court of Appeals reversed the ruling of the Panel of
Voluntary Arbitrators and decreed as follows:
WHEREFORE, the petition is hereby GRANTED. The assailed
decision of the voluntary arbitrators is REVERSED. Accordingly,
petitioners proposal to include the faculty point range sheet in
Annex "B" of the 2001 CBA, as well as to replace Annex "C" with the
document on the 23-level faculty ranking instrument and replace
the column containing the heading "Total Points" which is attached
in Annexes "C" and "D" of the 2001 CBA with the correct data is also
GRANTED.
SO ORDERED.10
Hence, the instant petition.
The petitioner enumerated issues for resolution, to wit:
I
WHETHER THE PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND
VALIDLY ALTER, CHANGE AND/OR MODIFY UNILATERAL[L]Y
PROVISIONS OF THE COLLECTIVE [BARGAINING] AGREEMENT (CBA)
IT HAD NEGOTIATED, ENTERED INTO AND SIGNED WITH THE
PETITIONER AND SUBSEQUENTLY RATIFIED AND ENFORCED BY THE
PARTIES; AND
II
WHETHER PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND
VALIDLY CHANGE[,] ALTER AND/OR REPLACE UNILATERAL[L]Y A
PROVISION OR FORMULA EMBODIED IN A PERFECTED, EXISTING
AND ALREADY ENFORCED CBA TO THE PREJUDICE, OR MORE
SPECIFICALLY TO THE DIMINUTION OF SALARY/BENEFITS AND
DOWNGRADING OF RANKS, OF ITS COLLEGE AND HIGH SCHOOL
FACULTY.11
Simply put, the issues for our determination are: (1) Is MITs new proposal,
regarding faculty ranking and evaluation, lawful and consistent with the
ratified CBA? and (2) Is MITs development of a new pay formula for the
high school department, without the knowledge of FAMIT, lawful and
consistent with the ratified CBA?
On the first issue, FAMIT avers that MITs new proposal on faculty ranking
and evaluation for the college faculty is an unlawful modification,
alteration or amendment of the existing CBA without approval of the
contracting parties.
On the other hand, MIT argues that the new faculty ranking instrument
was made in good faith and in the exercise of its inherent prerogative to
freely regulate according to its own discretion and judgment all aspects of
employment.
Considering the submissions of the parties, in the light of the existing
CBA, we find that the new point range system proposed by MIT is an
unauthorized modification of Annex "C" of the 2001 CBA. It is made up of
a faculty classification that is substantially different from the one originally
incorporated in the current CBA between the parties. Thus, the proposed
system contravenes the existing provisions of the CBA, hence, violative of
the law between the parties.
As observed by Office of the Voluntary Arbitrators, the evaluation system
differs from past evaluation practices (e.g., those that give more weight to
tenure and faculty load) such that the system can lead to a demotion in
rank for a faculty member. A perfect example of this scenario was cited by
FAMIT in its Memorandum:
xxxx
Take the case of a faculty member with 17 years of teaching
experience who has a Phd. Degree. For school year 2000-2001 his
corresponding rank is Professor 3 with 4001-4500 points using the
previous CBA. If the college faculty member is ranked based on the
ratified 2001 CBA, his/her corresponding rank would increase to
Professor 5 with 5001-5500 points.
But if the proposal of private respondent is used, the professor,
would be ranked as Associate Professor 5 with 5001-5749 points,
instead of Professor 5 as recognized by the 2001 CBA. True, there
may be an increase in points but there is also a resulting diminution
in rank from Professor 3 based on the previous CBA to Associate
Professor 5. This would translate to a reduction of the salary
increase he is entitled to under the 2001 CBA.12
According to FAMIT, this patently is a violation of Section 8, Article V of the
2001 CBA.
Noteworthy, Article 253 of the Labor Code states:
ART. 253. Duty to bargain collectively when there exists a
collective bargaining agreement.When there is a collective
bargaining agreement, the duty to bargain collectively shall also
mean that neither party shall terminate nor modify such agreement
during its lifetime. However, either party can serve a written notice
to terminate or modify the agreement at least sixty (60) days prior
to its expiration date. It shall be the duty of both parties to keep the
status quo and to continue in full force and effect the terms and
Union
Wage Increase
1st Year
P1,050.00
2nd Year 850.00
40%
19.0%
23
Diokno stated that, in order for the Bank to make a better offer, the Union
should clearly identify what it wanted to be included in the total economic
package. Umali replied that it was impossible to do so because the Banks
counter-proposal was unacceptable. He furthered asserted that it would
have been easier to bargain if the atmosphere was the same as before,
where both panels trusted each other. Diokno requested the Union panel
to refrain from involving personalities and to instead focus on the
negotiations.24 He suggested that in order to break the impasse, the Union
should prioritize the items it wanted to iron out. Divinagracia stated that
the Bank should make the first move and make a list of items it wanted to
be included in the economic package. 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
deadlock25 and filed a Notice of Strike before the National Conciliation and
Mediation Board (NCMB) on June 21, 1993, docketed as NCMB-NCR-NS-06380-93.26
On the other hand, the Bank filed a complaint for Unfair Labor Practice
(ULP) and Damages before the Arbitration Branch of the National Labor
Relations Commission (NLRC) in Manila, docketed as NLRC Case No. 00-0604191-93 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.27 Further, the Union violated its no
strike- no lockout clause by filing a notice of strike before the 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.28
On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves
R. Confesor, pursuant to Article 263(g) of the Labor Code, issued an Order
assuming jurisdiction over the labor dispute at the Bank. The complaint
for ULP filed by the Bank before the NLRC was consolidated with the
complaint over which the SOLE assumed jurisdiction. After the parties
submitted their respective position papers, the SOLE issued an Order on
October 29, 1993, the dispositive portion of which is herein quoted:
WHEREFORE, the Standard Chartered Bank and the Standard
Chartered Bank Employees Union NUBE are hereby ordered to
execute a collective bargaining agreement incorporating the
dispositions contained herein. The CBA shall be retroactive to 01
April 1993 and shall remain effective for two years thereafter, or
until such time as a new CBA has superseded it. All provisions in the
expired CBA not expressly modified or not passed upon herein are
deemed retained while all new provisions which are being
demanded by either party are deemed denied, but without prejudice
to such agreements as the parties may have arrived at in the
meantime.
The Banks charge for unfair labor practice which it originally filed
with the NLRC as NLRC-NCR Case No. 00-06-04191-93 but which is
deemed consolidated herein, is dismissed for lack of merit. On the
other hand, the Unions charge for unfair labor practice is similarly
dismissed.
Let a copy of this order be furnished the Labor Arbiter in whose sala
NLRC-NCR Case No. 00-06-04191-93 is pending for his guidance and
appropriate action.29
The SOLE gave the following economic awards:
1. Wage Increase:
a) To be incorporated to present salary rates:
Fourth year : 7% of basic monthly salary
Fifth year : 5% of basic monthly salary based on the 4th year
adjusted salary
b) Additional fixed amount:
Fourth year : P600.00 per month
Fifth year : P400.00 per month
2. Group Insurance
a) Hospitalization : P45,000.00
b) Life : P130,000.00
c) Accident : P130,000.00
3. Medicine Allowance
Fourth year : P5,500.00
Fifth year : P6,000.00
4. Dental Benefits
Provision of dental retainer as proposed by the Bank, but without
diminishing existing benefits
5. Optical Allowance
Fourth year: P2,000.00
The issues presented for resolution are the following: (a) whether or not
the Union was able to substantiate its claim of unfair labor practice
against the Bank arising from the latters 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.
The Courts Ruling
The petition is bereft of merit.
"Interference" under Article
248 (a) of the Labor Code
The petitioner asserts that the private respondent committed ULP, i.e.,
interference in the selection of the Unions negotiating panel, when Cielito
Diokno, the Banks Human Resource Manager, suggested to the Unions
President Eddie L. Divinagracia that Jose P. Umali, Jr., President of the
NUBE, be excluded from the Unions negotiating panel. In support of its
claim, Divinagracia executed an affidavit, stating that prior to the
commencement of the negotiation, Diokno approached him and
suggested the exclusion of Umali from the Unions negotiating panel, and
that during the first meeting, Diokno stated that the negotiation be kept a
"family affair."
Citing the cases of U.S. Postal Service36 and Harley Davidson Motor Co.,
Inc., AMF,37 the Union claims that interference in the choice of the Unions
bargaining panel is tantamount to ULP.
In the aforecited cases, the alleged ULP was based on the employers
violation of Section 8(a)(1) and (5) of the National Labor Relations Act
(NLRA),38 which 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 both cases, the National Labor Relations
Board held that upon the employers refusal to engage in negotiations
with the Union for collective-bargaining contract when the Union includes
a person who is not an employee, or one who is a member or an official of
other labororganizations, such employer is engaged in unfair labor
practice under Section 8(a)(1) and (5) of the NLRA.
The Union further cited the case of Insular Life Assurance Co., Ltd.
Employees Association NATU vs. Insular Life Assurance Co. Ltd., 39
wherein this Court said that the test of whether an employer has
interfered with and coerced employees in the exercise of their right to selforganization within the meaning of subsection (a)(1) is whether the
employer has engaged in conduct which it may reasonably be said, tends
to interfere with the free exercise of employees rights under Section 3 of
the Act.40 Further, it is not necessary that there be direct evidence that
any employee was in fact intimidated or coerced by statements of threats
of the employer if there is a reasonable inference that anti-union conduct
of the employer does have an adverse effect on self-organization and
collective bargaining.41
Under the International Labor Organization Convention (ILO) No. 87
FREEDOM OF ASSOCIATION AND PROTECTION OF THE RIGHT TO
ORGANIZE to which the Philippines is a signatory, "workers and
employers, without distinction whatsoever, shall have the right to
establish and, subject only to the rules of the organization concerned, to
job organizations of their own choosing without previous authorization." 42
Workers and employers organizations shall have the right to draw up
their constitutions and rules, to elect their representatives in full freedom
to organize their administration and activities and to formulate their
programs.43 Article 2 of ILO Convention No. 98 pertaining to the Right to
Organize and Collective Bargaining, provides:
Article 2
1. Workers and employers organizations shall enjoy adequate
protection against any acts or interference by each other or each
others agents or members in their establishment, functioning or
administration.
2. In particular, acts which are designed to promote the
establishment of workers organizations under the domination of
employers or employers organizations or to support workers
organizations by financial or other means, with the object of placing
such organizations under the control of employers or employers
organizations within the meaning of this Article.
The aforcited ILO Conventions are incorporated in our Labor Code,
particularly in Article 243 thereof, which provides:
ART. 243. COVERAGE AND EMPLOYEES RIGHT TO SELFORGANIZATION. All persons employed in commercial, industrial
and agricultural enterprises and in religious, charitable, medical or
educational institutions whether operating for profit or not, shall
have the right to self-organization and to form, join, or assist labor
organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, selfemployed people, rural workers and those without any definite
employers may form labor organizations for their mutual aid and
protection.
and Articles 248 and 249 respecting ULP of employers and labor
organizations.
The said ILO Conventions were ratified on December 29, 1953. However,
even as early as the 1935 Constitution,44 the State had already expressly
bestowed protection to labor as part of the general provisions. The 1973
Constitution,45 on the other hand, declared it as a policy of the state to
afford protection to labor, specifying that the workers rights to selforganization, collective bargaining, security of tenure, and just and
humane conditions of work would be assured. For its part, the 1987
Constitution, aside from making it a policy to "protect the rights of workers
and promote their welfare,"46 devotes an entire section, emphasizing its
mandate to afford protection to labor, and highlights "the principle of
shared responsibility" between workers and employers to promote
industrial peace.47
Article 248(a) of the Labor Code, considers it an unfair labor practice when
an employer interferes, restrains or coerces employees in the exercise of
their right to self-organization or the right to form association. The right to
self-organization necessarily includes the right to collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators
or coerces the Union to exclude from its panel of negotiators a
representative of the Union, and if it can be inferred that the employer
adopted the said act to yield adverse effects on the free exercise to right
to self-organization or on the right to collective bargaining of the
employees, ULP under Article 248(a) in connection with Article 243 of the
Labor Code is committed.
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.48 In the case at bar, the Union
bases its claim of interference on the alleged suggestions of Diokno to
exclude Umali from the Unions negotiating panel.
The circumstances that occurred during the negotiation do not show that
the suggestion made by Diokno to Divinagracia is an anti-union conduct
from which it can be inferred that the Bank consciously adopted such act
to yield adverse effects on the free exercise of the right to selforganization and collective bargaining of the employees, especially
considering that such was undertaken previous to the commencement of
the negotiation and simultaneously with Divinagracias suggestion that
the bank lawyers be excluded from its negotiating panel.
The records show that after the initiation of the collective bargaining
process, with the inclusion of Umali in the Unions negotiating panel, the
negotiations pushed through. The complaint was made only on August 16,
1993 after a deadlock was declared by the Union on June 15, 1993.
It is clear that such ULP charge was merely an afterthought. The
accusation occurred after the arguments and differences over the
economic provisions became heated and the parties had become
frustrated. It happened after the parties started to involve personalities.
As the public respondent noted, passions may rise, and as a result,
suggestions given under less adversarial situations may be colored with
unintended meanings.49 Such is what appears to have happened in this
case.
The Duty to Bargain
Collectively
If at all, the suggestion made by Diokno to Divinagracia should be
construed as part of the normal relations and innocent communications,
which are all part of the friendly relations between the Union and Bank.
The Union alleges that the Bank violated its duty to bargain; hence,
committed ULP under Article 248(g) when it engaged in surface
bargaining. It alleged that the Bank just went through the motions of
bargaining without any intent of reaching an agreement, as evident in the
Banks counter-proposals. It explained that of the 34 economic provisions
it made, the Bank only made 6 economic counterproposals. Further, as
borne by the minutes of the meetings, the Bank, after indicating the
economic provisions it had rejected, accepted, retained or were open for
discussion, refused to make a list of items it agreed to include in the
economic package.
Surface bargaining is defined as "going through the motions of
negotiating" without any legal intent to reach an agreement.50 The
resolution of surface bargaining allegations never presents an easy issue.
The determination of whether a party has engaged in unlawful surface
bargaining is usually a difficult one because it involves, at bottom, a
question of the intent of the party in question, and usually such intent can
only be inferred from the totality of the challenged partys conduct both at
and away from the bargaining table.51 It involves the question of whether
an employers conduct demonstrates an unwillingness to bargain in good
faith or is merely hard bargaining.52
The minutes of meetings from March 12, 1993 to June 15, 1993 do not
show that the Bank had any intention of violating its duty to bargain with
the Union. Records show that after the Union sent its proposal to the Bank
on February 17, 1993, the latter replied with a list of its counter-proposals
on February 24, 1993. Thereafter, meetings were set for the settlement of
their differences. The minutes of the meetings show that both the Bank
and the Union exchanged economic and non-economic proposals and
counter-proposals.
The Union has not been able to show that the Bank had done acts, both at
and away from the bargaining table, which tend to show that it did not
want to reach an agreement with the Union or to settle the differences
between it and the Union. Admittedly, the parties were not able to agree
and reached a deadlock. However, it is herein emphasized that the duty to
bargain "does not compel either party to agree to a proposal or require
the making of a concession."53 Hence, the parties failure to agree did not
amount to ULP under Article 248(g) for violation of the duty to bargain.
We can hardly dispute this finding, for it finds support in the evidence. The
inference that respondents did not refuse to bargain collectively with the
complaining union because they accepted some of the demands while
they refused the others even leaving open other demands for future
discussion is correct, especially so when those demands were discussed at
a meeting called by respondents themselves precisely in view of the letter
sent by the union on April 29, 196054
In view of the finding of lack of ULP based on Article 248(g), the
accusation that the Bank made bad-faith provisions has no leg to stand
on. The records show that the Banks counterproposals on the noneconomic provisions or political provisions did not put "up for grabs" the
entire work of the Union and its predecessors. As can be gleaned from the
Banks counterproposal, there were many provisions which it proposed to
be retained. The revisions on the other provisions were made after the
parties had come to an agreement. Far from buttressing the Unions claim
that the Bank made bad-faith proposals on the non-economic provisions,
all these, on the contrary, disprove such allegations.
We, likewise, find that the Union failed to substantiate its claim that the
Bank refused to furnish the information it needed.
While the refusal to furnish requested information is in itself an unfair
labor practice, and also supports the inference of surface bargaining, 55 in
the case at bar, Umali, in a meeting dated May 18, 1993, requested the
Bank to validate its guestimates on the data of the rank and file. However,
Umali failed to put his request in writing as provided for in Article 242(c) of
the Labor Code:
Article 242. Rights of Legitimate Labor Organization
(c) To be furnished by the employer, upon written request, with the
annual audited financial statements, including the balance sheet
and the profit and loss statement, within thirty (30) calendar days
from the date of receipt of the request, after the union has been
duly recognized by the employer or certified as the sole and
March 6, 2006
vs.
KIMBERLY CLARK PHILIPPINES, INC., Respondent.
DECISION
CALLEJO, SR., J.:
Before the Court is a Petition for Review on Certiorari of the Decision 1 of
the Court of Appeals (CA) which partially reversed and set aside the March
19, 2001 Resolution2 of the Voluntary Arbitrator (VA).
Following are the factual antecedents:
United Kimberly-Clark Employees Union (UKCEU), a local chapter affiliate
of the Philippine Transport General Workers Organization (PTGWO), is the
certified collective bargaining agent of all rank-and-file employees of the
San Pedro milling plant of Kimberly-Clark Philippines, Inc. (KCPI), a
multinational corporation engaged in the manufacture of bathroom and
facial tissues, paper napkins, feminine care products, disposable diapers
and absorbent cotton.
Way back in 1980, KCPI and the UKCEU executed a Collective Bargaining
Agreement (CBA). Article XX, Section 1 of the CBA reads:
Section 1. The Company agrees to employ, regardless of sex, the
immediate member of the family of an employee provided qualified, upon
the employee's resignation, retirement, disability or death. In case of
resignation, however, employment of an immediate member of the family
of an employee may be allowed provided the employee has rendered a
service of ten (10) years and above and the resignation is not a forced
resignation. For the purpose of this section, the phrase "immediate
member of the family of an employee" shall refer to the employee's
legitimate children and in default thereof to the employee's collateral
relative within the third civil degree. The recommendee of the
retired/resigned employee shall, if qualified, be hired on probationary
status. (Emphasis added)3
However, KCPI did not set any other employment qualifying standards for
the recommendees of retired, resigned, deceased or disabled employees
and agreed to hire such recommendees who were high school graduates
as an act of liberality and generosity. The provision remained unchanged.4
Through the years, several UKCEU members who resigned or were
disabled availed of the said benefits and recommended their successors.
Although such recommendees were merely high school graduates, KCPI
nonetheless employed them.
Sometime in 1991, Danilo L. Guerrero retired and recommended his
nephew as his replacement. KCPI rejected Guerreros recommendation
because his nephew was not a member of his (Guerreros) immediate
family. The matter was brought to Voluntary Arbitrator Danilo Lorredo who
ruled that Guerreros nephew should be employed as his replacement in
accordance with the CBA. KCPI brought the matter to the Court. On
September 21, 1993, the Court affirmed the ruling of the VA in Kimberly
Clark Philippines v. Lorredo,5 where it was held that:
As we see it, the phrase "in default thereof" has not been intended or
contemplated by the parties as having a preclusive effect within the
group. It simply sets a priority on who can possibly be recommendees for
employment. The employee, in fine, need not be childless at all for him to
be allowed to nominate a third degree collateral relative; otherwise, his
ability to designate such relative is all but suddenly lost by the birth of an
only child and regained by the latter's demise. This situation could not
have been intended.6
However, the Court also ruled that KCPI was not obliged to unconditionally
accept the recommendee since the latter must still meet the required
employment standard theretofore set by it. Even a qualified
recommendee would be hired only on a "probationary status." As such,
KCPI was not left without its own safeguards under the agreement.7
On November 7, 1995, KCPI issued Guidelines on the Hiring of
Replacements of Retired/Resigned Employees8 for the effective
implementation of Article XX, Section 1 of the existing CBA, to take effect
on January 1, 1996. The Guidelines require, among others, that: (a) such
recommendees must be at least 18 years of age but not more than 30
years old at the time of the hiring, and (b) have completed, after
graduating from high school, at least a two-year technical/vocational
course or a third year level of college education. Moreover, where both
husband and wife are employees of the company, they shall be treated as
one family; hence, only one of the spouses would be allowed to avail of
the benefit.9
UKCEU, through its President, Reynaldo B. Hermoso, requested for a
grievance meeting, which was held on November 22, 1995.10 During the
meeting, UKCEU specifically requested the deferment of the
implementation of the Guidelines until January 1, 1997, after the next CBA
negotiations in 1997 during which the matter will be taken up. KCPI
agreed to postpone the implementation of the Guidelines until January 1,
1997 but only with respect to the educational qualification.11
During the negotiation for the 1997 CBA, UKCEU proposed the amendment
of Article XX, Section 1 of the existing CBA. After the negotiation, KCPI and
UKCEU executed a CBA to cover the period from July 1, 1997 to June 30,
1999. The educational qualifications contained in the Guidelines prepared
and issued by KCPI were not incorporated in the CBA. Neither were the
proposed amendment of UKCEU. Article XX, Section 1 of the preceding
CBA was retained without any modification. 12 KCPI continued to hire
them the right would be a clear discrimination and violation of the CBA,
since both are paying members of union dues and individually vote for
any policy determination.
In its pleadings, KCPI maintained that pursuant to its management
prerogative, it had the right to determine hiring standards under Article
XX, Section 1 of the CBA without the consent or approval of UKCEU. It
argued that like applicants for regular positions, recommendees of retiring
employees must also be college graduates, in accordance with its
November 7, 1995 Guidelines. It explained that such recommendees are
applying for regular positions and not as casual, who are hired on a
temporary basis. KCPI averred that the employment educational standards
in the Guidelines it issued on November 7, 1995 took effect on January 1,
1997 and that after its implementation was deferred, the union did not
take any action. Hence, UKCEU was estopped from questioning the
implementation of Article XX, Section 1 in the 1999 CBA. In fact, such
upgraded educational qualifications under the November 7, 1995
Guidelines were never brought up by UKCEU, and were never discussed
during the 1997 CBA negotiations. It asserted, however, that it was
justified to temporarily suspend the implementation because the freeze
hiring policy of its Asia-Pacific headquarters had affected both existing and
new regular positions in the company. It pointed out that, in order to
enforce the CBA provision, it normally fills up two regular positions
because the recommendee of a union member who resigns, retires, dies
or is disabled does not usually possess the same qualifications and skills
of his/her predecessor. KCPI averred that it never anticipated this undue
burden and was not in a position to sustain the practice, considering the
lower volume in sales and a reduction in the number of working days in
some areas of its operations.
With respect to spouses who are both employed in KCPI, it was maintained
that the policy regarding the availment of their benefits had always been
consistent since 1980: only one of the spouses is entitled thereto, like the
CBA provisions on the employees medical and funeral benefits. It pointed
out that at the time Article XX, Section 1 was adopted, there was already
an existing policy in KCPI prohibiting the hiring of a relative of an
employee within the fourth civil degree of consanguinity or affinity. Thus,
if the interpretation of UKCEU would be considered, an unwarranted and
anomalous situation would result, since children of spouses who are both
employed in the company fall within the second degree of consanguinity.
Moreover, spouses should be treated as one family, much like the tax
treatment on the claim for additional dependents. KCPI stressed that, as
stated in the guidelines, the rationale for the policy is to maintain fairness
and equality since the intended or actual beneficiary is the child of an
employee.
On May 8, 1999, the VA visited the premises of KCPI with prior notice to
the parties, and discovered that KCPI employed casuals who performed
the work of certain regular employees covered by the CBA.20
On July 23, 2003, the CA partially set aside the Resolution of the VA.26 The
fallo of the decision reads:
WHEREFORE, the petition is PARTIALLY GRANTED, and the Resolution of
Voluntary Arbitrator Jose A. Cabatuando, Jr. dated March 19, 2001 is
PARTIALLY REVERSED AND SET ASIDE. Petitioner may not suspend the
implementation of Section 1, Article XX of the Collective Bargaining
Agreement on account of alleged economic distress. Petitioner, however,
may require that recommendees under the said provision must have
completed at least a two-year technical/vocational course or reached the
third year of any college-level course, as a valid exercise of management
prerogative. And when spouses are both employed by petitioner, each
may recommend a replacement in case of his death, disability, retirement
or voluntary resignation pursuant to Section 1, Article XX of the Collective
Bargaining Agreement.
SO ORDERED.27
The CA ruled that KCPI may validly exercise its management prerogative
and impose the requirement that recommendees should have at least
completed a two-year technical/vocational course or reached the third
year of any college-level course. While the right of KCPI to set hiring
standards for recommendees under the disputed provision of the CBA is
apparent in the ruling of the Court in Kimberly Clark Philippines v.
Lorredo,28 the CA concluded that the right of retired, resigned, disabled or
deceased employees to recommend their replacements is not absolute. It
emphasized that the recommendees must still meet the standard set by
petitioner. The CA further opined that Article XX, Section 1 is not an
inheritance the right to which attaches immediately upon an employee's
death, disability, retirement or voluntary resignation. However, as to
whether spouses employed by petitioner may separately recommend a
replacement, the CA affirmed the observation of the VA that the provision
was literally made to apply to "all" employees, and does not mean that
only one of the spouses may avail of said benefit.29
The CA rejected the claim of KCPI that it (the court) should take judicial
notice of the adverse effects of the Asian economic crisis to the operation
of its business in the Philippines. As in the case of retrenchment, it was
ruled that the company must still prove financial distress by sufficient and
convincing evidence. Moreover, the CA held that for the theory of rebus
sic stantibus to apply, it must be shown that the economic crisis made it
extremely difficult for the company to comply with Article XX, Section 1 of
the CBA, and that the change in the circumstances of the parties must be
one which could not be foreseen at the time the contract was executed.30
Only UKCEU moved for a partial reconsideration of the CA Decision with
respect to its ruling on the upgraded educational qualification of the
recommendees.31 The CA denied the motion in a Resolution32 dated March
23, 2004.
UKCEU, now petitioner, seeks relief from this Court in the instant petition.
The issue in this case is whether or not the CA erred in ruling that, under
Article XX, Section 1 of the 1997 CBA, respondent is required to hire only
those recommendees of retired/resigned, deceased or disabled members
of petitioner who had completed at least a two-year technical/vocational
course or a third-year level of college education. This is anchored on the
resolution of the issue of whether the November 7, 1995 Guidelines issued
by respondent took effect on January 1, 1997.
Petitioner avers that the CA erred in holding that, under Article XX, Section
1 of the 1997 CBA and the ruling of this Court in Kimberly Clark Philippines
v. Lorredo, respondent is required to hire recommendees of
retired/resigned, deceased or disabled employees who possess the
educational qualification standards for employees contained in the
November 7, 1995 Guidelines issued by respondent.
Petitioner asserts that the employment qualification standards in Article
XX, Section 1 of the CBA requiring the recommendees to be at least high
school graduates is contrary to the practice that had been followed by
respondent since 1980 up to 1998. Petitioner further avers that such
practice, which had been established by respondent in implementing the
CBA, cannot be unilaterally revoked by it. Petitioner argues that to allow
respondent to set higher educational standards for employment of such
recommendees is to render nugatory the right granted to them under the
CBA and would defeat the ruling of the Court in Kimberly Clark Philippines
v. Lorredo. Petitioner avers that 70% of the employees of respondent are
mere high school graduates who did not finish any technical or vocational
course. This, notwithstanding, respondent had a profit of P527,000,000.00
in 1999. Petitioner stresses that the exercise of management prerogative
must be circumscribed by the CBA of the parties.
For its part, respondent maintains that under Article XX, Section 1 of its
CBA with petitioner, a recommendee of retired/resigned, deceased or
disabled members of petitioner must also be qualified for the position.
Respondent also invokes Kimberly Clark Philippines v. Lorredo, insisting
that the Court ruled therein that such recommendees must meet the
employment standards set by respondent; conformably with such ruling, it
issued said Guidelines on November 7, 1995. Thus, it is not proscribed
from setting out higher qualification standards for said recommendees,
such as those set forth in said Guidelines. Contrary to petitioners claim of
employing recommendees who were only high school graduates, was not
an established practice, as its policy had always been to hire college
graduates for regular employment. Finally, respondent avers that the
implementation of qualifications for the recommendees is a valid exercise
of its management prerogative.
Respondent also points out during their 1997 CBA negotiations, petitioner
proposed the following revisions of Article XX, Section 1:
If the terms of a CBA are clear and have no doubt upon the intention of
the contracting parties, the literal meaning of its stipulation shall prevail.42
However, if, in a CBA, the parties stipulate that the hirees must be
presumed of employment qualification standards but fail to state such
qualification standards in said CBA, the VA may resort to evidence
extrinsic of the CBA to determine the full agreement intended by the
parties. When a CBA may be expected to speak on a matter, but does not,
its sentence imports ambiguity on that subject.43 The VA is not merely to
rely on the cold and cryptic words on the face of the CBA but is mandated
to discover the intention of the parties. Recognizing the inability of the
parties to anticipate or address all future problems, gaps may be left to be
filled in by reference to the practices of the industry, and the step which is
equally a part of the CBA although not expressed in it.44 In order to
ascertain the intention of the contracting parties, their contemporaneous
and subsequent acts shall be principally considered.45 The VA may also
consider and rely upon negotiating and contractual history of the parties,
evidence of past practices interpreting ambiguous provisions. The VA has
to examine such practices to determine the scope of their agreement,46 as
where the provision of the CBA has been loosely formulated.47 Moreover,
the CBA must be construed liberally rather than narrowly and technically
and the Court must place a practical and realistic construction upon it.
In the present case, the parties are in agreement that, on its face, Article
XX, Section 1 of their 1997 CBA does not contain any provision relative to
the employment qualification standards of recommendees of
retired/resigned, deceased or disabled employees of respondent who are
members of petitioner. However, in determining the employment
qualification standards for said recommendees, the VA should have relied
on the November 7, 1995 Guidelines issued by respondent, which reads:
D. Definition of the phrase "immediate member of the family of an
employee"
1. The phrase "immediate member of the family of an employee"
shall refer to the employees legitimate children and in default
thereof to the employees collateral relatives within the third civil
degree.
2. A resigned/retired employee may be allowed to recommend a
collateral relative within the third civil degree (e.g., brother, sister,
nephew or niece) as his/her replacement only in the following cases:
a. Where the retired/resigned employee is single or if married
has no legitimate children.
b. Where the retired/resigned employees children are still
minors (below 18 years old) at the time of his/her separation
from the company. (Emphasis added)
E. General Provisions
1. The privilege to recommend a replacement can be exercised by
the employee concerned only once. Thus, in the following cases, a
recommendee who has been hired on probationary status can no
longer be substituted with another recommendee.
a. where the recommendee fails to pass in his performance
evaluation.
b. where the recommendee resigns without completing his
probationary period.
c. where the recommendee is dismissed for cause.
d. where the recommendee dies during his probationary
period.48
Respondent issued said Guidelines in light of the ruling of this Court in
Kimberly Clark Philippines v. Lorredo. Respondent saw it imperative to do
away with its practice of accommodating recommendees who were mere
high school graduates, and to require higher employment standards for
them.
By agreement of the parties, the implementation of the Guidelines was
deferred until January 1, 1997, unless revoked or amended by the 1997
CBA. Petitioner proposed that the practice of hiring recommendees of
retired/resigned, deceased or disabled employees who were union
members, who were at least high school graduates, be included in their
CBA, but respondent did not agree. Hence, Article XX, Section 1 of the
1997 CBA of the parties remained intact. There was thus no more legal
bar for respondent to implement the November 7, 1995 Guidelines. By
executing the 1997 CBA, in its present form, petitioner is bound by the
terms and conditions therein set forth.
The VA, however, ignored the plain language of the 1997 CBA of the
parties, as well as the Guidelines issued by respondent. He capriciously
based his resolution on the respondents practice of hiring which,
however, by agreement of petitioner and respondent, was discontinued.
The Court has recognized in numerous instances the undoubted right of
the employer to regulate, according to his own discretion and best
judgment, all aspects of employment, including but not limited to, work
assignments and supervision, working methods and regulations, time,
place and manner of work, processes to be followed, and hiring,
supervision, transfer, discipline, lay off, dismissal and recall of workers.
Encompassing though it could be, the exercise of this right is not absolute.
Management prerogative must be exercised in good faith for the
advancement of the employers interest and not for the purpose of
In its reply dated October 10, 1997, petitioner, challenging the unions
legitimacy, refused to bargain with respondent. Subsequently or on
October 15, 1997, petitioner filed with the Bureau of Labor Relations
(BLR), Department of Labor and Employment, a petition for cancellation of
respondents certificate of registration, docketed as NCR-OD-9710-006IRD.3
For its part, on October 29, 1997, respondent filed with the National
Conciliation and Mediation Board (NCMB), National Capital Region, a
notice of strike, docketed as NCMB-NCR-NS-10-453-97. Respondent
alleged that petitioners refusal to bargain constitutes unfair labor
practice. Despite several conferences and efforts of the designated
conciliator-mediator, the parties failed to reach an amicable settlement.
On November 28, 1997, respondent staged a strike.
On December 4, 1997, former Labor Secretary Leonardo A. Quisumbing,
now Associate Justice of this Court, issued an Order assuming jurisdiction
over the labor dispute and ordering all striking workers to return to work
and the management to resume normal operations, thus:
"WHEREFORE, this Office assumes jurisdiction over the labor disputes at
Capitol Medical Center pursuant to Article 263 (g) of the Labor Code, as
amended. Consequently, all striking workers are directed to return to work
within twenty-four (24) hours from the receipt of this Order and the
management to resume normal operations and accept back all striking
workers under the same terms and conditions prevailing before the strike.
Further, parties are directed to cease and desist from committing any act
that may exacerbate the situation.
Moreover, parties are hereby directed to submit within 10 days from
receipt of this Order proposals and counter-proposals leading to the
conclusion of the collective bargaining agreement in compliance with
aforementioned Resolution of the Office as affirmed by the Supreme
Court.
SO ORDERED."
Petitioner then filed a motion for reconsideration but was denied in an
Order dated April 27, 1998.
On June 23, 1998, petitioner filed with this Court a petition for certiorari
assailing the Labor Secretarys Orders. Pursuant to our ruling in St. Martin
Funeral Home vs.The National Labor Relations Commission, et al.,4 we
referred the petition to the Court of Appeals for its appropriate action and
disposition.
Meantime, on October 1, 1998, the Regional Director, in NCR-OD-9710006-IRD, issued an Order denying the petition for cancellation of
respondent unions certificate of registration.5
On September 20, 2001, the Appellate Court rendered a Decision affirming
the Orders of the Secretary of Labor. The Court of Appeals held:
"Anent the first issue raised by the petitioner, We find the same
untenable. The public respondent acted well within his duty to order the
petitioner hospital to bargain collectively, for it was the surest way to end
the dispute. In LMG Chemicals Corporation vs. Secretary of the
Department of Labor and Employment, the Hon. Leonardo A. Quisumbing
and Chemical Workers Union (G.R. No. 127422, April 17, 2001), the
Supreme Court made the following pronouncement, to wit:
It is well settled in our jurisprudence that the authority of the Secretary of
Labor to assume jurisdiction over a labor dispute causing or likely to cause
a strike or lockout in an industry indispensable to national interest
includes and extends to all questions and controversies arising therefrom.
The power is plenary and discretionary in nature to enable him to
effectively and efficiently dispose of the primary dispute.
xxxxxx
Indeed, We find no grave abuse of discretion on the part of respondent
Secretary of Labor whose power is plenary and includes the resolution of
all controversies arising from the labor dispute. In fact, he was merely
following the directive laid down by the Supreme Court (Decision dated
February 4, 1997) in the case of Capitol Medical Center Alliance of
Concerned Employees-Unified Filipino Service Workers (CMC-ACE-UFSW)
vs. Hon. Bienvenido E. Laguesma, Undersecretary of the Department of
Labor and Employment, Capitol Medical Center Employees AssociationAlliance of Filipino Workers and Capitol Medical Center Incorporated and
Dra. Thelma Clemente, President, ordering petitioner hospital to
collectively bargain with the Capitol Medical Center Employees
Association-Alliance of Filipino Workers (private respondent herein) the
certified bargaining agent.
As earlier mentioned, the petition for cancellation was dismissed by the
regional director in a decision dated September 30, 1998. x x x.
xxxxxx
Said decision by the regional director was affirmed by the Director of the
Bureau of Labor Relations in a resolution dated December 29, 1998,
dismissing the appeal of the petitioner hospital from the said DOLE-NCRs
decision.
Petitioner also maintains that the Secretary of Labor cannot exercise his
powers under Article 263 (g) of the Labor Code without observing the
requirements of due process.
Article 263 (g) of the Labor Code, as amended, provides:
"ART. 263. Strikes, Picketing and Lockouts.
xxxxxx
(g) When, in his opinion, there exists a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national
interest, the Secretary of Labor and Employment may assume jurisdiction
over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the
effect of automatically enjoining the intended or impending strike or
lockout as specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all striking
or locked out employees shall immediately resume operations and
readmit all workers under the same terms and conditions prevailing before
the strike or lockout. The Secretary of Labor and Employment or the
Commission may seek the assistance of law enforcement agencies to
ensure compliance with this provision as well as with such orders as he
may issue to enforce the same.
x x x. In labor disputes adversely affecting the continued operation of
such hospitals, clinics or medical institutions, it shall be the duty of the
striking union or locking-out employer to provide and maintain an
effective skeletal workforce of medical and other health personnel, whose
movement and services shall be unhampered and unrestricted, as are
necessary to insure the proper and adequate protection of the life and
health of its patients, most especially emergency cases, for the duration
of the strike or lockout. In such cases, therefore, the Secretary of
Labor and Employment is mandated to immediately assume,
within twenty-four (24) hours from knowledge of the occurrence
of such a strike or lockout, jurisdiction over the same or certify it
to the Commission for compulsory arbitration. For this purpose, the
contending parties are strictly enjoined to comply with such orders,
prohibitions and/or injunctions as are issued by the Secretary of Labor and
Employment or the Commission, under pain of immediate disciplinary
action, including dismissal or loss of employment status or payment by
the locking-out employer of backwages, damages and other affirmative
relief, even criminal prosecution against either or both of them.
The foregoing notwithstanding, the President of the Philippines shall not
be precluded from determining the industries that, in his opinion, are
indispensable to the national interest, and from intervening at any time
and assuming jurisdiction over any such labor dispute in order to settle or
terminate the same.
x x x x x x."
In Magnolia Poultry Employees Union vs. Sanchez,6 we held that the
discretion to assume jurisdiction may be exercised by the Secretary of
Labor and Employment without the necessity of prior notice or hearing
given to any of the parties. The rationale for his primary assumption of
jurisdiction can justifiably rest on his own consideration of the exigency of
the situation in relation to the national interests.
In sum, petitioners submissions are bereft of merit.
WHEREFORE, the petition is DENIED. The assailed Decision dated
September 20, 2001 and the Resolution dated October 18, 2002 of the
Court of Appeals in CA-G.R. SP No. 53479 are AFFIRMED. Costs against
petitioner.
SO ORDERED.
epublic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 149763
July 7, 2009
The Petition at bar arose from the following factual and procedural
antecedents.
(1) Case No. NCR-OD-M-9412-022
At the time when the numerous controversies in the instant case first
came about, petitioners Atty. Eduardo J. Mario, Jr., Ma. Melvyn P. Alamis,
Norma P. Collantes, and Fernando Pedrosa were among the executive
officers and directors (collectively called the Mario Group) of the
University of Sto. Tomas Faculty Union (USTFU), a labor union duly
organized and registered under the laws of the Republic of the Philippines
and the bargaining representative of the faculty members of the
University of Santo Tomas (UST).4
Respondents Gil Y. Gamilla, Rene Luis Tadle, Norma S. Calaguas, Ma.
Lourdes C. Medina, Edna B. Sanchez, Remedios Garcia, Mafel Ysrael, Zaida
Gamilla, and Aurora Domingo were UST professors and USTFU members.
The 1986 Collective Bargaining Agreement (CBA) between UST and USTFU
expired on 31 May 1988. Thereafter, bargaining negotiations ensued
between UST and the Mario Group, which represented USTFU. As the
parties were not able to reach an agreement despite their earnest efforts,
a bargaining deadlock was declared and USTFU filed a notice of strike.
Subsequently, then Secretary of the Department of Labor and
Employment (DOLE) Franklin Drilon assumed jurisdiction over the dispute,
which was docketed as NCMB-NCR-NS-02-117-89. The DOLE Secretary
issued an Order on 19 October 1990, laying the terms and conditions for a
new CBA between the UST and USTFU. In accordance with said Order, the
UST and USTFU entered into a CBA in 1991, which was to be effective for
the period of 1 June 1988 to 31 May 1993 (hereinafter 1988-1993 CBA). In
keeping with Article 253-A5 of the Labor Code, as amended, the economic
provisions of the 1988-1993 CBA were subject to renegotiation for the
fourth and fifth years.
Accordingly, on 10 September 1992, UST and USTFU executed a
Memorandum of Agreement (MOA),6 whereby UST faculty members
belonging to the collective bargaining unit were granted additional
economic benefits for the fourth and fifth years of the 1988-1993 CBA,
specifically, the period from 1 June 1992 up to 31 May 1993. The relevant
portions of the MOA read:
MEMORANDUM OF AGREEMENT
xxxx
1.0. The University hereby grants additional benefits to Faculty
Members belonging to the collective bargaining unit as defined in
Article I, Section 1 of the Collective Bargaining Agreement entered
into between the parties herein over and above the benefits now
BY:
BY:
(signed)
FR. TERESO M. CAMPILLO, JR., O.P.
Treasurer
(signed)
ATTY. EDUARDO J. MARINO,
JR.
President
Attested by[:]
(signed)
REV. FR. ROLANDO DELA ROSA, O.P. (Emphasis ours.)
On 12 September 1992, the majority of USTFU members signed individual
instruments of ratification,7 which purportedly signified their consent to
the economic benefits granted under the MOA. Said instruments uniformly
recited:
RATIFICATION OF THE UST-USTFU MEMORANDUM OF AGREEMENT DATED
SEPTEMBER 10, 1992 GRANTING A PACKAGE OF THE P42 MILLION FACULTY
BENEFITS WITH PROVISION FOR CHECK-OFF.
September 12, 1992
Date
TO WHOM IT MAY CONCERN:
I, the undersigned UST faculty member, aware that the law requires
ratification and that without ratification by majority of all faculty members
belonging to the collective bargaining unit, the Memorandum of
Agreement between the University of Santo Tomas and the UST Faculty
Union (or USTFU) dated September 10, 1992 may be questioned and all
the faculty benefits granted therein may be cancelled, do hereby ratify the
said agreement.
Under the Agreement, the University shall pay P42 million over a period of
two (2) years from June 1, 1991 up to May 31, 1992.
In consideration of the efforts of the UST Faculty Union as the faculty
members sole and exclusive collective bargaining representative in
obtaining the said P42 million package of economic benefits, a check-off
of ten percent thereof covering union dues, and special assessment for
Labor Education Fund and attorneys fees from USTFU members and
agency fee from non-members for the period of the Agreement is hereby
authorized to be made in one lump sum effective immediately, provided
that two per cent (sic) shall be for [the] administration of the Agreement
and the balance of eight per cent (sic) shall be for attorneys fees to be
donated, as pledged by the USTFU lawyer to the Philippine Foundation for
the Advancement of the Teaching Profession, Inc. whose principal purpose
to file a Petition for Certiorari before this Court, docketed as G.R. No.
131235.
While G.R. No. 131235 was pending, the term of office of the Gamilla
Group as USTFU officers expired on 4 October 1999. The Gamilla Group
then scheduled the next election of USTFU officers on 14 January 2000.
On 16 November 1999, the Court promulgated its Decision in G.R. No.
131235, affirming the BLR Resolution dated 15 August 1997 which ruled
that the purported election of USTFU officers held on 4 October 1996 was
void for violating the Constitution and By-Laws of the union.17
(5) Case No. NCR-OD-M-9611-009
On 15 November 1996, respondents18 filed before the Med-Arbiter, DOLENCR, a fourth Complaint/Petition against the Mario Group, as well as the
Philippine Foundation for the Advancement of the Teaching Profession,
Inc., Security Bank Corporation, and Bank of the Philippine Islands, which
was docketed as Case No. NCR-OD-M-9611-009.19 Respondents claimed in
their latest Complaint/Petition that they were the legitimate USTFU
officers, having been elected on 4 October 1996. They prayed for an order
directing the Mario Group to cease and desist from using the name of
USTFU and from performing acts for and on behalf of the USTFU and the
rest of the members of the collective bargaining unit.
DOLE Department Order No. 9 took effect on 21 June 1997, amending the
Rules Implementing Book V of the Labor Code, as amended. Thereunder,
jurisdiction over the complaints for any violation of the union constitution
and by-laws and the conditions of union membership was vested in the
Regional Director of the DOLE.20 Pursuant to said Department Order, all
four Petitions/Complaints filed by respondents against the Mario Group,
particularly, Case No. NCR-OD-M-9412-022, Case No. NCR-OD-M-9510028, Case No. NCR-OD-M-9610-001, and Case No. NCR-OD-M-9611-009
were consolidated and indorsed to the Office of the Regional Director of
the DOLE-NCR.
On 27 May 1999, the DOLE-NCR Regional Director rendered a Decision 21 in
the consolidated cases in respondents favor.
In Case No. NCR-OD-M-9412-022 and Case No. NCR-OD-M-9510-028, the
DOLE-NCR Regional Director adjudged the Mario Group, as the executive
officers of USTFU, guilty of violating the provisions of the USTFU
Constitution and By-laws by failing to collect union dues and to conduct a
general assembly every three months. The DOLE-NCR Regional Director
also ruled that the Mario Group violated Article 241(c)22 and (l)23 of the
Labor Code when they did not submit a list of union officers to the DOLE;
when they did not submit/provide DOLE and the USTFU members with
copies of the audited financial statements of the union; and when they
invested in a bank, without prior consent of USTFU members, the sum of
P42 million economic benefits package was merely the share of the
faculty members in the tuition fee increases pursuant to Republic Act No.
6728. The appellate court explained:
It is too plain to see that the 60% of the proceeds is to be allocated
specifically for increase in salaries or wages of the members of the faculty
and all other employees of the school concerned. Under Section 5(2) of
Republic Act 6728, the amount had been increased to 70% of the tuition
fee increases which was specifically allocated to the payment of salaries,
wages, allowances and other benefits of teaching and non-teaching
personnel of the school[,] except administrators who are principal
stockholders of the school and to cover increases as provided for in the
collective bargaining agreements existing or in force at the time the law
became effective[.]
xxxx
It is too plain to see, too, that under the "Memorandum of Agreement"
between UST and the Union, x x x, the P42,000,000.00 economic package
granted by the UST to the Union was in compliance with the mandates of
the law and pertinent Department of Education, Culture and Sports
regulation (sic) required to be allotted following the payment of salaries,
wages, allowances and other benefits of teaching and non-teaching
personnel of the University[.]
xxxx
Whether or not UST implemented the mandate of Republic Act 6728
voluntarily or through the efforts and prodding of the Union does not and
cannot change or alter a whit the nature of the economic package or the
purpose or purposes of the allocation of the said amount. For, if we
acquiesced to and sustained Petitioners stance, we will thereby be
leaving the compliance by the private educational institutions of the
mandate of Republic Act 6728 at the will, mercy, whims and caprices of
the Union and the private educational institution. This cannot and should
not come to pass.
With our foregoing findings and disquisitions, We thus agree with the
[BLR] that the aforesaid amount of P42,000,000.00 should not answer for
any attorneys fees claimed by the Petitioners. x x x.
xxxx
Moreover, [Section 5 of Rule X of] the CBL of the Union provides that:
Section 5. Special assessments or other extraordinary fees such as for
payment of attorneys fees shall be made only upon such a resolution duly
ratified by the general membership by secret balloting. x x x.
Under Article IX of the CBL, the Board of Officers of the Union shall create
a Committee on Elections, Comelec for brevity, composed of a chairman
and two (2) members appointed by the Board of Officers[.]
xxxx
It, however, appears that the term of office of the Petitioners had already
expired in September of 1996. In fact, an election of officers was
scheduled on October 6, 1996. However, on October 4, 1996,
[respondents] and the members of the faculty of UST, both union member
and non-union member, elected [respondents] as the new officers of the
USTFU. The same was, however, (sic) nullified by the Supreme Court, on
November 16, 1999. However, as the term of office of the [respondents]
had expired, on October 4, 1999, there is nothing to nullify anymore. By
virtue of an election, held on January 14, 2000, the [respondents] were
elected as the new officers of the Union, which election was not contested
by the Petitioners or any other group in the union.
xxxx
We are thus faced with a situation where one set of officers claim to be
the legitimate and incumbent officers of the Union, pursuant to the CBL of
the Union, and another set of officers who claim to have been elected by
the members of the faculty of the Union thru an election alleged to have
been supervised by the DOLE which situation partakes of and is akin to
the nature of an intra-union dispute[.] x x x.
Undeniably, the CBL gives the Board of Officers the right to create and
appoint members of the Comelec. However, the CBL has no application to
a situation where there are two (2) sets of officers, one set claiming to be
the legitimate incumbent officers holding over to their positions who have
not exercised their powers and functions therefor and another claiming to
have been elected in an election supervised by the DOLE and, at the same
time, exercising the powers and functions appended to their positions. In
such a case, the BLR, which has jurisdiction over the intra-union dispute,
can validly order the immediate conduct of election of officers, otherwise,
internecine disputes and blame-throwing will derail an orderly and fair
election. Indeed, Section 1(b), [Rule XV], Book V of the Implementing
Rules and Regulations of the Labor Code, as amended, by Department
Order No. 09, Series of 1997,39 provides that, in the absence of any
agreement among the members or any provision in the constitution and
by-laws of the labor organization, in an election ordered by the Regional
Director, the chairman of the committee shall be a representative of the
Labor Relations Division of the Regional Office[.]40
Ultimately, the Court of Appeals decreed:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is denied due course
and is hereby DISMISSED.41
system of check-off is primarily for the benefit of the Union and, only
indirectly, for the individual employees.50
The Court finds that, in the instant case, the P42 million economic benefits
package granted by UST did not constitute union funds from whence the
P4.2 million could have been validly deducted as attorneys fees. The P42
million economic benefits package was not intended for the USTFU
coffers, but for all the members of the bargaining unit USTFU represented,
whether members or non-members of the union. A close reading of the
terms of the MOA reveals that after the satisfaction of the outstanding
obligations of UST under the 1986 CBA, the balance of the P42 million was
to be distributed to the covered faculty members of the collective
bargaining unit in the form of salary increases, returns on paycheck
deductions; and increases in hospitalization, educational, and retirement
benefits, and other economic benefits. The deduction of the P4.2 million,
as alleged attorneys/agency fees, from the P42 million economic benefits
package effectively decreased the share from said package accruing to
each member of the collective bargaining unit.
Petitioners line of argument that the amount of P4.2 million became
union funds after its deduction from the P42 million economic benefits
package and, thus, could already be used to pay attorneys fees,
negotiation fees, or similar charges from the CBA is absurd. Petitioners
reasoning is evidently flawed since the attorneys fees may only be paid
from union funds; yet the amount to be used in paying for the same does
not become union funds until it is actually deducted as attorneys fees
from the benefits awarded to the employees. It is just a roundabout
argument. What the law requires is that the funds be already deemed
union funds even before the attorneys fees are deducted or paid
therefrom; it does not become union funds after the deduction or
payment. To rule otherwise will also render the general prohibition stated
in Article 222(b) nugatory, because all that the union needs to do is to
deduct from the total benefits awarded to the employees the amount
intended for attorneys fees and, thus, "convert" the latter to union funds,
which could then be used to pay for the said attorneys fees.
The Court further determines that the requisites for a valid levy and
check-off of special assessments, laid down by Article 241(n) and (o),
respectively, of the Labor Code, as amended, have not been complied
with in the case at bar. To recall, these requisites are: (1) an authorization
by a written resolution of the majority of all the union members at the
general membership meeting duly called for the purpose; (2) secretary's
record of the minutes of the meeting; and (3) individual written
authorization for check-off duly signed by the employee concerned. 51
Additionally, Section 5, Rule X of the USTFU Constitution and By-Laws
mandates that: