In this special civil action for certiorari and prohibition,

petitioner seeks the annulment of the April 27, 1994

Resolution of the Department of Labor and Employment,
affirming the order of the Med-Arbiter, dated December 9,
1993, which denied petitioner's motion to dismiss
respondent union's petition for certification election.
Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a
duly-registered banking institution with principal office in
Cebu City and a branch in Mandaue City. Private respondent
SRBI Association of Professional, Supervisory, Office, and
Technical Employees Union (APSOTEU) is a legitimate labor
organization affiliated with the Trade Unions Congress of the
Philippines (TUCP).1wphi1.nt
On October 8, 1993, the DOLE Regional Office in Cebu City
granted Certificate of Registration No. R0700-9310-UR-0064
to APSOTEU-TUCP, hereafter referred to as the union.
On October 26, 1993, the union filed a petition for
certification election of the supervisory employees of SRBI.
It alleged, among others, that: (1) APSOTEU-TUCP was a
labor
organization
duly-registered
with
the
Labor
Department; (2) SRBI employed 5 or more supervisory
employees; (3) a majority of these employees supported the
petition: (4) there was no existing collective bargaining
agreement (CBA) between any union and SRBI; and (5) no
certification election had been held in SRBI during the past
12 months prior to the petition.
On October 28, 1993, the Med-Arbiter gave due course to
the petition. The pre-certification election conference
between SRBI and APSOTEU-TUCP was set for November 15,
1993.

On November 12, 1993, SRBI filed a motion to dismiss the

union's petition. It sought to prevent the holding of a
certification election on two grounds. First, that the
members of APSOTEU-TUCP were in fact managerial or
confidential employees. Thus, following the doctrine
in Philips Industrial Development Corporation v. National
Labor Relations Commission,1 they were disqualified from
forming, joining, or assisting any labor organization.
Petitioner attached the job descriptions of the employees
concerned to its motion. Second, the Association of Labor
Unions-Trade Unions Congress of the Philippines or ALU-TUCP
was representing the union. Since ALU-TUCP also sought to
represent the rank-and-file employees of SRBI, there was a
violation of the principle of separation of unions enunciated
in Atlas Lithographic Services, Inc. v. Laguesma.2
The union filed its opposition to the motion to dismiss on
December 1, 1993. It argued that its members were not
managerial employees but merely supervisory employees.
The members attached their affidavits describing the nature
of their respective duties. The union pointed out that Article
245 of the Labor Code expressly allowed supervisory
employees to form, join, or assist their own unions.
On December 9, 1993, the Med-Arbiter denied petitioner's
motion to dismiss. He scheduled the inclusion-exclusion
proceedings in preparation for the certification election on
December 16, 1993.
SRBI appealed the Med-Arbiter's decision to the Secretary of
Labor and Employment. The appeal was denied for lack of
merit. The certification election was ordered.

On June 16, 1994, the Med-Arbiter scheduled the holding of

the certification election for June 29, 1994. His order
identified the following SRBI personnel as the voting
supervisory employees in the election: the Cashier of the
Main Office, the Cashier of the Mandaue Branch, the
Accountant of the Mandaue Branch, and the Acting Chief of
the Loans Department.
On June 17, 1994, SRBI filed with the Med-Arbiter an urgent
motion to suspend proceedings. The Med-Arbiter denied the
same on June 21, 1994. SRBI then filed a motion for
reconsideration. Two days later, the Med-Arbiter cancelled
the certification election scheduled for June 29, 1994 in
order to address the motion for reconsideration.
The Med-Arbiter later denied petitioner's motion for
reconsideration, SRBI appealed the order of denial to the
DOLE Secretary on December 16, 1993..
On December 22, 1993, petitioner proceeded to file a
petition with the DOLE Regional Office seeking the
cancellation of the respondent union's registration. It
averred that the APSOTEU-TUCP members were actually
managerial employees who were prohibited by law from
joining or organizing unions.
On April 22, 1994, respondent DOLE Undersecretary denied
SRBI's appeal for lack of merit. He ruled that APSOTEU-TUCP
was a legitimate labor organization. As such, it was fully
entitled to all the rights and privileges granted by law to a
legitimate labor organization, including the right to file a
petition for certification election. He also held that until and
unless a final order is issued cancelling APSOTEU-TUCP's
registration certificate, it had the legal right to represent its

members for collective bargaining purposes. Furthermore,

the question of whether the APSOTEU-TUCP members should
be considered as managerial or confidential employees
should not be addressed in the proceedings involving a
petition for certification election but best threshed out in
other appropriate proceedings.
On May 25, 1994, SRBI moved for reconsideration of the
Undersecretary's decision which was denied on July 7, 1994.
The Med-Arbiter scheduled the holding of certification
elections on August 12, 1994.
Hence the instant petition grounded on the following
assignments of error:
I
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH
GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED:
A: IN HOLDING THAT ART. 257 OF THE LABOR CODE
REQUIRES THE MED-ARBITER TO CONDUCT A CERTIFICATION
ELECTION IN ANY UNORGANIZED ESTABLISHMENT EVEN
WHEN THE PETITIONING UNION DOES NOT POSSESS THE
QUALIFICATION FOR AN APPROPRIATE BARGAINING AGENT;
AND
B. IN REFUSING TO ASSUME JURISDICTION OVER THE
PETITIONER'S APPEAL AND TO DISMISS THE RESPONDENT
UNION'S PETITION FOR CERTIFICATION ELECTION.
II

RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH

GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED IN
DENYING THE PETITIONER'S APPEAL DESPITE THE FACT
THAT:
A. THE ALLEGED MEMBERS OF RESPONDENT UNION ARE
MANAGERIAL EMPLOYEES WHO ARE LEGALLY DISQUALIFIED
FROM JOINING ANY LABOR ORGANIZATION.
B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF
RESPONDENT
UNION
ARE
OCCUPYING
HIGHLY
CONFIDENTIAL POSITIONS IN PETITIONER AND, THUS, THE
LEGAL DISQUALIFICATION OF MANAGERIAL EMPLOYEES
EQUALLY APPLY TO THEM.
III
IN ANY EVENT, THE CONCLUSIONS REACHED IN THE
SUBJECT RESOLUTIONS ARE CONTRARY TO LAW AND ARE
DIAMETRICALLY OPPOSED TO RESPONDENT UNION'S
RECORDED ADMISSIONS AND REPRESENTATIONS.
Considering petitioner's assigned errors, we find two core
issues for immediate resolution:
(1) Whether or not the members of the respondent
union are managerial employees and/or highlyplaced confidential employees, hence prohibited by
law from joining labor organizations and engaging in
union activities?
(2) Whether or not the Med-Arbiter may validly order
the holding of a certification election upon the filing
of a petition for certification election by a registered

union, despite the petitioner's appeal pending before

the DOLE Secretary against the issuance of the
union's registration?
The other issues based on the assigned errors could be
resolved easily after the core issues are settled.
Respecting the first issue, Article 212 (m) of the Labor Code
defines the terms "managerial employee" and "supervisory
employees" as follows:
Art. 212. Definitions
(m) "Managerial employee" is one who is vested with
powers or prerogatives to lay down and execute
management policies and/or hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline
employees.Supervisory employees are those who, in
the interest of the employer, effectively recommend
such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature
but requires the use of independent judgment. All
employees not falling within any of the above
definitions are considered rank-and-file employees
for purposes of this Book (Emphasis supplied).
Petitioner submitted detailed job descriptions to support its
contention that the union members are managerial
employees and/or confidential employees proscribed from
engaging in labor activities. 3 Petitioner vehemently argues
that the functions and responsibilities of the employees
involved constitute the "very core of the bank's business,
lending of money to clients and borrowers, evaluating their
capacity to pay, approving the loan and its amount,

scheduling the terms of repayment, and endorsing

delinquent accounts to counsel for collection."4 Hence, they
must be deemed managerial employees. Petitioner
cites Tabacalera Insurance Co. v. National Labor Relations
Commission,5 and Panday
v. National
Labor
Relations
6
Commission, to sustain its submission. InTabacalera, we
sustained the classification of a credit and collection
supervisor by management as a managerial/supervisory
personnel. But in that case, the credit and collection
supervisor "had the power to recommend the hiring and
appointment of his subordinates, as well as the power to
recommend any promotion and/or increase."7 For this reason
he was deemed to be a managerial employee. In the
present case, however, petitioner failed to show that the
employees in question were vested with similar powers. At
best they only had recommendatory powers subject to
evaluation, review, and final decision by the bank's
management. The job description forms submitted by
petitioner clearly show that the union members in question
may not transfer, suspend, lay-off, recall, discharge, assign,
or discipline employees. Moreover, the forms also do not
show that the Cashiers, Accountants, and Acting Chiefs of
the Loans Department formulate and execute management
policies which are normally expected of management
officers.
Petitioner's reliance on Panday is equally misplaced. There,
we held that a branch accountant is a managerial employee
because the said employee had managerial powers, similar
to the supervisor in Tabaculera. Their powers included
recommending the hiring and appointment of his
subordinates, as well as the power to recommend any
promotion and/or increase.8

Here, we find that the Cashiers, Accountant, and Acting

Chief of the Loans Department of the petitioner did not
possess managerial powers and duties. We are, therefore,
constrained to conclude that they are not managerial
employees.
Now may the said bank personnel be deemed confidential
employees? Confidential employees are those who (1) assist
or act in a confidential capacity, in regard (2) to persons
who formulate, determine, and effectuate management
policies [specifically in the field of labor relations]. 9 The two
criteria are cumulative, and both must be met if an
employee is to be considered a confidential employee
that is, the confidential relationship must exist between the
employee and his superior officer; and that officer must
handle the prescribed responsibilities relating to labor
relations.10
Art. 245 of the Labor Code11 does not directly prohibit
confidential employees from engaging in union activities.
However, under the doctrine of necessary implication, the
disqualification of managerial employees equally applies to
confidential employees.12 The confidential-employee rule
justifies exclusion of confidential employees because in the
normal course of their duties they become aware of
management policies relating to labor relations. 13 It must be
stressed, however, that when the employee does not have
access to confidential labor relations information, there is no
legal prohibition against confidential employees from
forming, assisting, or joining a union.14
Petitioner contends that it has only 5 officers running its
day-to-day affairs. They assist in confidential capacities and
have complete access to the bank's confidential data. They

form the core of the bank's management team. Petitioner

explains that:
. . . Specifically: (1) the Head of the Loans
Department initially approves the loan applications
before they are passed on to the Board for
confirmation. As such, no loan application is even
considered by the Board and approved by petitioner
without his stamp of approval based upon his
interview of the applicant and determination of his
(applicant's) credit standing and financial capacity.
The same holds true with respect to renewals or
restructuring
of
loan
accounts.
He
himself
determines what account should be collected,
whether extrajudicially or judicially, and settles the
problems or complaints of borrowers regarding their
accounts;
(2) the Cashier is one of the approving officers and
authorized signatories of petitioner. He approves the
opening of accounts, withdrawals and encashment,
and acceptance of check deposits. He deals with
other banks and, in the absence of the regular
Manager, manages the entire office or branch and
approves disbursements of funds for expenses; and
(3) the Accountant, who heads the Accounting
Department, is also one of the authorized signatories
of petitioner and, in the absence of the Manager or
Cashier, acts as substitute approving officer and
assumes the management of the entire office. She
handles the financial reports and reviews the
debit/credit tickets submitted by the other
departments.15

Petitioner's explanation, however, does not state who

among the employees has access to information specifically
relating to its labor to relations policies. Even Cashier
Patricia Maluya, who serves as the secretary of the bank's
Board of Directors may not be so classified. True, the board
of directors is responsible for corporate policies, the exercise
of corporate powers, and the general management of the
business and affairs of the corporation. As secretary of the
bank's governing body. Patricia Maluya serves the bank's
management, but could not be deemed to have access to
confidential information specifically relating to SRBI's labor
relations policies, absent a clear showing on this matter.
Thus, while petitioner's explanation confirms the regular
duties of the concerned employees, it shows nothing about
any duties specifically connected to labor relations.
As to the second issue. One of the rights of a legitimate
labor organization under Article 242(b) of the Labor Code is
the right to be certified as the exclusive representative of all
employees in an appropriate bargaining unit for purposes of
collective
bargaining.
Having
complied
with
the
requirements of Art. 234, it is our view that respondent
union is a legitimate labor union. Article 257 of the Labor
Code
mandates
that
a
certification
election
shallautomatically be conducted by the Med-Arbiter upon
the filing of a petition by a legitimate labor
organization.16Nothing is said therein that prohibits such
automatic conduct of the certification election if the
management appeals on the issue of the validity of the
union's registration. On this score, petitioner's appeal was
correctly dismissed.
Petitioner argues that giving due course to respondent
union's petition for certification election would violate the
separation of unions doctrine.17 Note that the petition was

filed by APSOTEU-TUCP, a legitimate labor organization. It

was not filed by ALU. Nor was it filed by TUCP, which is a
national labor federation of with which respondent union is
affiliated. Petitioner says that respondent union is a mere
alter ego of ALU. The records show nothing to this effect.
What the records instead reveal is that respondent union
was initially assisted by ALU during its preliminary stages of
organization. A local union maintains its separate
personality despite affiliation with a larger national
federation.18 Petitioner alleges that ALU seeks to represent
both respondent union and the rank-and-file union. Again,
we find nothing in the records to support this bare assertion.
The law frowns on a union where the membership is
composed of both supervisors and rank-and-file employees,
for fear that conflicts of interest may arise in the areas of
discipline, collective bargaining, and strikes. 19 However, in
the present case, none of the members of the respondent
union came from the rank-and-file employees of the bank.
Taking into account the circumstances in this case, it is our
view that respondent Undersecretary committed no
reversible error nor grave abuse of discretion when he found
the order of the Med-Arbiter scheduling a certification
election in order. The list of employees eligible to vote in
said certification election was also found in order, for none
was
specifically
disqualified
from
union
membership.1wphi1.nt
WHEREFORE, the instant petition is hereby DISMISSED. No
pronouncement as to costs.
SO ORDERED.

Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

This is a petition for certiorari seeking the nullification of the

award issued by the respondent Voluntary Arbitrator
Teodorico P. Calica dated December 8, 1990 finding that
Section 1 (c), Article I of the Collective Bargaining
Agreement between Indophil Textile Mills, Inc. and Indophil
Textile Mill Workers Union-PTGWO does not extend to the
employees of Indophil Acrylic Manufacturing Corporation as
an extension or expansion of Indophil Textile Mills,
Incorporated.
The antecedent facts are as follows:

2. G.R. No. 96490 February 3, 1992

INDOPHIL
TEXTILE
MILL
WORKERS
UNIONPTGWO, petitioner,
vs.
VOLUNTARY ARBITRATOR TEODORICO P. CALICA and
INDOPHIL TEXTILE MILLS, INC., respondents.
Romeo C. Lagman for petitioner.
Borreta, Gutierrez & Leogardo for respondent Indophil
Textile Mills, Inc.

MEDIALDEA, J.:

Petitioner Indophil Textile Mill Workers Union-PTGWO is a

legitimate labor organization duly registered with the
Department of Labor and Employment and the exclusive
bargaining agent of all the rank-and-file employees of
Indophil Textile Mills, Incorporated. Respondent Teodorico P.
Calica is impleaded in his official capacity as the Voluntary
Arbitrator of the National Conciliation and Mediation Board
of the Department of Labor and Employment, while private
respondent Indophil Textile Mills, Inc. is a corporation
engaged in the manufacture, sale and export of yarns of
various counts and kinds and of materials of kindred
character and has its plants at Barrio Lambakin. Marilao,
Bulacan.
In April, 1987, petitioner Indophil Textile Mill Workers UnionPTGWO and private respondent Indophil Textile Mills, Inc.
executed a collective bargaining agreement effective from
April 1, 1987 to March 31, 1990.
On November 3, 1967 Indophil Acrylic Manufacturing
Corporation was formed and registered with the Securities
and Exchange Commission. Subsequently, Acrylic applied

for registration with the Board of Investments for incentives

under the 1987 Omnibus Investments Code. The application
was approved on a preferred non-pioneer status.
In 1988, Acrylic became operational and hired workers
according to its own criteria and standards. Sometime in
July, 1989, the workers of Acrylic unionized and a duly
certified collective bargaining agreement was executed.
In 1990 or a year after the workers of Acrylic have been
unionized and a CBA executed, the petitioner union claimed
that the plant facilities built and set up by Acrylic should be
considered as an extension or expansion of the facilities of
private respondent Company pursuant to Section 1(c),
Article I of the CBA, to wit,.
c) This Agreement shall apply
to the Company's plant facilities
and installations and to any
extension
and
expansion
thereat. (Rollo, p.4)
In other words, it is the petitioner's contention that
Acrylic is part of the Indophil bargaining unit.
The petitioner's contention was opposed by private
respondent which submits that it is a juridical entity
separate and distinct from Acrylic.
The existing impasse led the petitioner and private
respondent to enter into a submission agreement on
September 6, 1990. The parties jointly requested the public
respondent to act as voluntary arbitrator in the resolution of

the pending labor dispute pertaining

interpretation of the CBA provision.

to

the

proper

After the parties submitted their respective position papers

and replies, the public respondent Voluntary Arbitrator
rendered its award on December 8, 1990, the dispositive
portion of which provides as follows:
PREMISES CONSIDERED, it would be a
strained interpretation and application of the
questioned CBA provision if we would extend
to the employees of Acrylic the coverage
clause of Indophil Textile Mills CBA. Wherefore,
an award is made to the effect that the proper
interpretation and application of Sec. l, (c),
Art. I, of the 1987 CBA do (sic) not extend to
the employees of Acrylic as an extension or
expansion of Indophil Textile Mills, Inc. (Rollo,
p.21)
Hence, this petition raising four (4) issues, to wit:
1. WHETHER OR NOT THE
RESPONDENT
ARBITRATOR
ERRED
IN
INTERPRETING
SECTION 1(c), ART I OF THE
CBA
BETWEEN
PETITIONER
UNION
AND
RESPONDENT
COMPANY.
2. WHETHER OR NOT INDOPHIL
ACRYLIC IS A SEPARATE AND
DISTINCT
ENTITY
FROM
RESPONDENT COMPANY FOR

PURPOSES
OF
REPRESENTATION.

UNION

3. WHETHER OR NOT THE

RESPONDENT
ARBITRATOR
GRAVELY
ABUSED
HIS
DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF HIS
JURISDICTION.
4. WHETHER OR NOT THE
RESPONDENT
ARBITRATOR
VIOLATED PETITIONER UNION'S
CARDINAL PRIMARY RIGHT TO
DUE PROCESS. (Rollo, pp. 6-7)
The central issue submitted for arbitration is whether or not
the operations in Indophil Acrylic Corporation are an
extension or expansion of private respondent Company.
Corollary to the aforementioned issue is the question of
whether or not the rank-and-file employees working at
Indophil Acrylic should be recognized as part of, and/or
within the scope of the bargaining unit.
Petitioner maintains that public respondent Arbitrator
gravely erred in interpreting Section l(c), Article I of the CBA
in its literal meaning without taking cognizance of the facts
adduced that the creation of the aforesaid Indophil Acrylic is
but a devise of respondent Company to evade the
application of the CBA between petitioner Union and
respondent Company.
Petitioner stresses that the articles of incorporation of the
two corporations establish that the two entities are engaged

in the same kind of business, which is the manufacture and

sale of yarns of various counts and kinds and of other
materials of kindred character or nature.
Contrary to petitioner's assertion, the public respondent
through the Solicitor General argues that the Indophil Acrylic
Manufacturing Corporation is not an alter ego or an adjunct
or business conduit of private respondent because it has a
separate legitimate business purpose. In addition, the
Solicitor General alleges that the primary purpose of private
respondent is to engage in the business of manufacturing
yarns of various counts and kinds and textiles. On the other
hand, the primary purpose of Indophil Acrylic is to
manufacture, buy, sell at wholesale basis, barter, import,
export and otherwise deal in yarns of various counts and
kinds. Hence, unlike private respondent, Indophil Acrylic
cannot manufacture textiles while private respondent
cannot buy or import yarns.
Furthermore,
petitioner
emphasizes
that
the
two
corporations have practically the same incorporators,
directors and officers. In fact, of the total stock subscription
of Indophil Acrylic, P1,749,970.00 which represents seventy
percent (70%) of the total subscription of P2,500,000.00 was
subscribed to by respondent Company.
On this point, private respondent cited the case of Diatagon
Labor Federation v. Ople, G.R. No. L-44493-94, December 3,
1980, 10l SCRA 534, which ruled that two corporations
cannot be treated as a single bargaining unit even if their
businesses are related. It submits that the fact that there
are as many bargaining units as there are companies in a
conglomeration of companies is a positive proof that a
corporation is endowed with a legal personality distinctly its

own, independent and separate from other corporations

(see Rollo, pp. 160-161).
Petitioner notes that the foregoing evidence sufficiently
establish that Acrylic is but an extension or expansion of
private respondent, to wit:
(a) the two corporations have
their physical plants, offices
and facilities situated in the
same compound, at Barrio
Lambakin, Marilao, Bulacan;
(b)
many
of
private
respondent's own machineries,
such as dyeing machines,
reeling, boiler, Kamitsus among
others, were transferred to and
are now installed and being
used in the Acrylic plant;
(c) the services of a number of
units, departments or sections
of private respondent are
provided to Acrylic; and
(d) the employees of private
respondent
are
the
same
persons manning and servicing
the units of Acrylic. (see Rollo,
pp. 12-13)
Private respondent insists that the existence of a bonafide
business relationship between Acrylic and private

respondent is not a proof of being a single corporate entity

because the services which are supposedly provided by it to
Acrylic are auxiliary services or activities which are not
really essential in the actual production of Acrylic. It also
pointed out that the essential services are discharged
exclusively by Acrylic personnel under the control and
supervision of Acrylic managers and supervisors.
In sum, petitioner insists that the public respondent
committed grave abuse of discretion amounting to lack or in
excess of jurisdiction in erroneously interpreting the CBA
provision and in failing to disregard the corporate entity of
Acrylic.
We find the petition devoid of merit.
Time and again, We stress that the decisions of voluntary
arbitrators are to be given the highest respect and a certain
measure of finality, but this is not a hard and fast rule, it
does not preclude judicial review thereof where want of
jurisdiction, grave abuse of discretion, violation of due
process, denial of substantial justice, or erroneous
interpretation of the law were brought to our attention.
(see Ocampo, et al. v. National Labor Relations Commission,
G.R. No. 81677, 25 July 1990, First Division Minute
Resolution citing Oceanic Bic Division (FFW) v. Romero, G.R.
No. L-43890, July 16, 1984, 130 SCRA 392)
It should be emphasized that in rendering the subject
arbitral award, the voluntary arbitrator Teodorico Calica, a
professor of the U.P. Asian Labor Education Center, now the
Institute for Industrial Relations, found that the existing law
and jurisprudence on the matter, supported the private
respondent's contentions. Contrary to petitioner's assertion,

public respondent cited facts and the law upon which he

based the award. Hence, public respondent did not abuse
his discretion.

situated in the same compound, it is our considered opinion

that these facts are not sufficient to justify the piercing of
the corporate veil of Acrylic.

Under the doctrine of piercing the veil of corporate entity,

when valid grounds therefore exist, the legal fiction that a
corporation is an entity with a juridical personality separate
and distinct from its members or stockholders may be
disregarded. In such cases, the corporation will be
considered as a mere association of persons. The members
or stockholders of the corporation will be considered as the
corporation, that is liability will attach directly to the officers
and stockholders. The doctrine applies when the corporate
fiction is used to defeat public convenience, justify wrong,
protect fraud, or defend crime, or when it is made as a
shield to confuse the legitimate issues, or where a
corporation is the mere alter ego or business conduit of a
person, or where the corporation is so organized and
controlled and its affairs are so conducted as to make it
merely an instrumentality, agency, conduit or adjunct of
another corporation. (Umali et al. v. Court of Appeals, G.R.
No. 89561, September 13, 1990, 189 SCRA 529, 542)

In the same case of Umali, et al. v. Court of Appeals (supra),

We already emphasized that "the legal corporate entity is
disregarded only if it is sought to hold the officers and
stockholders directly liable for a corporate debt or
obligation." In the instant case, petitioner does not seek to
impose a claim against the members of the Acrylic.

In the case at bar, petitioner seeks to pierce the veil of

corporate entity of Acrylic, alleging that the creation of the
corporation is a devise to evade the application of the CBA
between petitioner Union and private respondent Company.
While we do not discount the possibility of the similarities of
the businesses of private respondent and Acrylic, neither are
we inclined to apply the doctrine invoked by petitioner in
granting the relief sought. The fact that the businesses of
private respondent and Acrylic are related, that some of the
employees of the private respondent are the same persons
manning and providing for auxilliary services to the units of
Acrylic, and that the physical plants, offices and facilities are

All premises considered, the Court is convinced that the

public respondent Voluntary Arbitrator did not commit grave
abuse of discretion in its interpretation of Section l(c), Article
I of the CBA that the Acrylic is not an extension or expansion
of private respondent.

Furthermore, We already ruled in the case of Diatagon Labor

Federation Local 110 of the ULGWP v. Ople (supra) that it is
grave abuse of discretion to treat two companies as a single
bargaining unit when these companies are indubitably
distinct entities with separate juridical personalities.
Hence, the Acrylic not being an extension or expansion of
private respondent, the rank-and-file employees working at
Acrylic should not be recognized as part of, and/or within the
scope of the petitioner, as the bargaining representative of
private respondent.

ACCORDINGLY, the petition is DENIED and the award of the

respondent Voluntary Arbitrator are hereby AFFIRMED.
SO ORDERED.

Union, seeking the nullification of the October 29, 1993

Order1 of then Secretary of Labor and Employment Nieves R.
Confesor and her resolutions dated December 16, 1993 and
February 10, 1994.
The Antecedents
Standard Chartered Bank (the Bank, for brevity) is a foreign
banking corporation doing business in the Philippines. The
exclusive bargaining agent of the rank and file employees of
the Bank is the Standard Chartered Bank Employees Union
(the Union, for brevity).

3. G.R. No. 114974

June 16, 2004

STANDARD CHARTERED BANK EMPLOYEES UNION

(NUBE), petitioner,
vs.
The Honorable MA. NIEVES R. CONFESOR, in her
capacity as SECRETARY OF LABOR AND EMPLOYMENT;
and the STANDARD CHARTERED BANK, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for certiorari under Rule 65 of the Rules of
Court filed by the Standard Chartered Bank Employees

In August of 1990, the Bank and the Union signed a fiveyear collective bargaining agreement (CBA) with a provision
to renegotiate the terms thereof on the third year. Prior to
the expiration of the three-year period 2 but within the sixtyday freedom period, the Union initiated the negotiations. On
February 18, 1993, the Union, through its President, Eddie L.
Divinagracia,
sent
a
letter3 containing
its
4
proposals covering political provisions5 and thirty-four (34)
economic provisions.6 Included therein was a list of the
names of the members of the Unions negotiating panel.7
In a Letter dated February 24, 1993, the Bank, through its
Country Manager Peter H. Harris, took note of the Unions
proposals. The Bank attached its counter-proposal to the
non-economic provisions proposed by the Union. 8The Bank
posited that it would be in a better position to present its
counter-proposals on the economic items after the Union
had presented its justifications for the economic
proposals.9 The Bank, likewise, listed the members of its
negotiating panel.10 The parties agreed to set meetings to
settle their differences on the proposed CBA.

Before the commencement of the negotiation, the Union,

through Divinagracia, suggested to the Banks Human
Resource Manager and head of the negotiating panel, Cielito
Diokno, that the bank lawyers should be excluded from the
negotiating team. The Bank acceded.11 Meanwhile, Diokno
suggested to Divinagracia that Jose P. Umali, Jr., the
President of the National Union of Bank Employees (NUBE),
the federation to which the Union was affiliated, be excluded
from the Unions negotiating panel.12 However, Umali was
retained as a member thereof.
On March 12, 1993, the parties met and set the ground rules
for the negotiation. Diokno suggested that the negotiation
be kept a "family affair." The proposed non-economic
provisions of the CBA were discussed first. 13Even during the
final reading of the non-economic provisions on May 4,
1993, there were still provisions on which the Union and the
Bank could not agree. Temporarily, the notation "DEFERRED"
was placed therein. Towards the end of the meeting, the
Union manifested that the same should be changed to
"DEADLOCKED" to indicate that such items remained
unresolved. Both parties agreed to place the notation
"DEFERRED/DEADLOCKED."14
On May 18, 1993, the negotiation for economic provisions
commenced. A presentation of the basis of the Unions
economic proposals was made. The next meeting, the Bank
made a similar presentation. Towards the end of the Banks
presentation, Umali requested the Bank to validate the
Unions "guestimates," especially the figures for the rank
and file staff.15 In the succeeding meetings, Umali chided
the Bank for the insufficiency of its counter-proposal on the
provisions on salary increase, group hospitalization, death
assistance and dental benefits. He reminded the Bank, how
the Union got what it wanted in 1987, and stated that if

need be, the Union would go through the same route to get
what it wanted.16
Upon the Banks insistence, the parties agreed to tackle the
economic package item by item. Upon the Unions
suggestion, the Bank indicated which provisions it would
accept, reject, retain and agree to discuss. 17 The Bank
suggested that the Union prioritize its economic proposals,
considering that many of such economic provisions
remained unresolved. The Union, however, demanded that
the Bank make a revised itemized proposal.
In the succeeding meetings, the Union made the following
proposals:
Wage Increase:
1st Year Reduced from 45% to 40%
2nd Year - Retain at 20%
Total = 60%
Group Hospitalization Insurance:
Maximum disability benefit reduced
to P60,000.00 per illness annually

from P75,000.00

Death Assistance:
For the employee Reduced from P50,000.00 to P45,000.00
For Immediate Family Member Reduced from P30,000.00
to P25,000.00
Dental and all others No change from the original
demand.18

In the morning of the June 15, 1993 meeting, the Union

suggested that if the Bank would not make the necessary
revisions on its counter-proposal, it would be best to seek a
third party assistance.19 After the break, the Bank presented
its revised counter-proposal20 as follows:
Wage Increase : 1st Year from P1,000 to P1,050.00
2nd Year P800.00 no change
Group Hospitalization Insurance
From: P35,000.00 per illness
To : P35,000.00 per illness per year
Death Assistance For employee

Tooth Extraction
Permanent Filling 200.00
Prophylaxis 250.00
Root Canal From P2,000 per tooth
To: 1,800.00 per tooth
Death Assistance:
For Employees: From P45,000.00 to P40,000.00
For
Immediate
to P20,000.00.22

Family

Member:

From P25,000.00

From: P20,000.00

The Unions original proposals, aside from the above-quoted,

remained the same.

To : P25,000.00

Another set of counter-offer followed:

Dental Retainer Original offer remains the same21

Management

The Union, for its part, made the following counter-proposal:

Wage Increase

Wage Increase: 1st Year - 40%

Union

1st Year P1,050.00

40%

2nd Year - 850.00

19.0%23

2nd Year - 19.5%

Group Hospitalization Insurance
From: P60,000.00 per year
To : P50,000.00 per year
Dental:
Temporary Filling/ P150.00

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 counterproposal 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-06-380-93.26
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. 00-06-04191-93
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:

8. Loans

Fourth year : P600.00 per month

a) Car Loan : P200,000.00

Fifth year : P400.00 per month

b) Housing Loan : It cannot be denied that the costs

attendant to having ones own home have tremendously
gone up. The need, therefore, to improve on this benefit
cannot be overemphasized. Thus, the management is urged
to increase the existing and allowable housing loan that the
Bank extends to its employees to an amount that will give
meaning and substance to this CBA benefit.30

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 SOLE dismissed the charges of ULP of both the Union

and the Bank, explaining that both parties failed to
substantiate their claims. Citing National Labor Union v.
Insular-Yebana Tobacco Corporation,31 the SOLE stated that
ULP charges would prosper only if shown to have directly
prejudiced the public interest.
Dissatisfied, the Union filed a motion for reconsideration
with clarification, while the Bank filed a motion for
reconsideration. On December 16, 1993, the SOLE issued a
Resolution denying the motions. The Union filed a second
motion for reconsideration, which was, likewise, denied on
February 10, 1994.

a) Employee : P30,000.00

On March 22, 1994, the Bank and the Union signed the
CBA.32 Immediately thereafter, the wage increase was
effected and the signing bonuses based on the increased
wage were distributed to the employees covered by the
CBA.

b) Immediate Family Member : P5,000.00

The Present Petition

7. Emergency Leave Five (5) days for each contingency

On April 28, 1994, the Union filed this petition for certiorari
under Rule 65 of the Rules of Procedure alleging as follows:

Fifth year : P2,500.00

6. Death Assistance

A. RESPONDENT HONORABLE SECRETARY COMMITTED

GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN DISMISSING THE UNIONS CHARGE OF
UNFAIR LABOR PRACTICE IN VIEW OF THE CLEAR EVIDENCE
OF RECORD AND ADMISSIONS PROVING THE UNFAIR LABOR
PRACTICES CHARGED.33
B. RESPONDENT HONORABLE SECRETARY COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN FAILING TO RULE ON OTHER UNFAIR LABOR
PRACTICES CHARGED.34
C. RESPONDENT HONORABLE SECRETARY COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN DISMISSING THE CHARGES OF UNFAIR
LABOR PRACTICES ON THE GROUND THAT NO PROOF OF
INJURY TO THE PUBLIC INTEREST WAS PRESENTED.35
The Union alleges that the SOLE acted with grave abuse of
discretion amounting to lack or excess of jurisdiction when it
found that the Bank did not commit unfair labor practice
when it interfered with the Unions choice of negotiator. It
argued that, Dioknos suggestion that the negotiation be
limited as a "family affair" was tantamount to suggesting
that Federation President Jose Umali, Jr. be excluded from
the Unions negotiating panel. It further argued that
contrary to the ruling of the public respondent, damage or
injury to the public interest need not be present in order for
unfair labor practice to prosper.
The Union, likewise, pointed out that the public respondent
failed to rule on the ULP charges arising from the Banks
surface bargaining. The Union contended that the Bank
merely went through the motions of collective bargaining
without the intent to reach an agreement, and made bad
faith proposals when it announced that the parties should

begin from a clean slate. It argued that the Bank opened the
political provisions "up for grabs," which had the effect of
diminishing or obliterating the gains that the Union had
made.
The Union also accused the Bank of refusing to disclose
material and necessary data, even after a request was made
by the Union to validate its "guestimates."
In its Comment, the Bank prayed that the petition be
dismissed as the Union was estopped, considering that it
signed the Collective Bargaining Agreement (CBA) on April
22, 1994. It asserted that contrary to the Unions
allegations, it was the Union that committed ULP when
negotiator Jose Umali, Jr. hurled invectives at the Banks
head negotiator, Cielito Diokno, and demanded that she be
excluded from the Banks negotiating team. Moreover, the
Union engaged in blue-sky bargaining and isolated the no
strike-no lockout clause of the existing CBA.
The Office of the Solicitor General, in representation of the
public respondent, prayed that the petition be dismissed. It
asserted that the Union failed to prove its ULP charges and
that the public respondent did not commit any grave abuse
of discretion in issuing the assailed order and resolutions.
The Issues
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 self-organization
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.43Article 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 selforganization and to form, join, or assist labor organizations
of their own choosing for purposes of collective bargaining.
Ambulant, intermittent and itinerant workers, self-employed
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
44
Constitution, 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 self-organization, 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 selforganization 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 selforganization 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 counterproposals. 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 non-economic 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 exclusive bargaining
representatives of the employees in the bargaining unit, or
within sixty (60) calendar days before the expiration of the
existing collective bargaining agreement, or during the
collective negotiation;

The Union, did not, as the Labor Code requires, send a

written request for the issuance of a copy of the data about
the Banks rank and file employees. Moreover, as alleged by
the Union, the fact that the Bank made use of the aforesaid
guestimates, amounts to a validation of the data it had used
in its presentation.
No Grave Abuse of Discretion
On the Part of the Public Respondent
The special civil action for certiorari may be availed of when
the tribunal, board, or officer exercising judicial or quasijudicial functions has acted without or in excess of
jurisdiction and there is no appeal or any plain, speedy, and
adequate remedy in the ordinary course of law for the
purpose of annulling the proceeding.56 Grave abuse of
discretion implies such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, or where
the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility which must be so
patent and gross as to amount to an invasion of positive
duty or to a virtual refusal to perform the duty enjoined or to
act at all in contemplation of law. Mere abuse of discretion is
not enough.57
While it is true that a showing of prejudice to public interest
is not a requisite for ULP charges to prosper, it cannot be
said that the public respondent acted in capricious and
whimsical exercise of judgment, equivalent to lack of
jurisdiction or excess thereof. Neither was it shown that the
public respondent exercised its power in an arbitrary and
despotic manner by reason of passion or personal hostility.
Estoppel not Applicable

In the Case at Bar

The respondent Bank argues that the petitioner is estopped
from raising the issue of ULP when it signed the new CBA.
Article 1431 of the Civil Code provides:
Through estoppel an admission or representation is
rendered conclusive upon the person making it, and cannot
be denied or disproved as against the person relying
thereon.
A person, who by his deed or conduct has induced another
to act in a particular manner, is barred from adopting an
inconsistent position, attitude or course of conduct that
thereby causes loss or injury to another.58
In the case, however, the approval of the CBA and the
release of signing bonus do not necessarily mean that the
Union waived its ULP claim against the Bank during the past
negotiations. After all, the conclusion of the CBA was
included in the order of the SOLE, while the signing bonus
was included in the CBA itself. Moreover, the Union twice
filed a motion for reconsideration respecting its ULP charges
against the Bank before the SOLE.
The Union Did Not Engage
In Blue-Sky Bargaining
We, likewise, do not agree that the Union is guilty of ULP for
engaging in blue-sky bargaining or making exaggerated or
unreasonable proposals.59 The Bank failed to show that the
economic demands made by the Union were exaggerated or
unreasonable. The minutes of the meeting show that the
Union based its economic proposals on data of rank and file
employees and the prevailing economic benefits received by

bank employees from other foreign banks doing business in

the Philippines and other branches of the Bank in the Asian
region.
In sum, we find that the public respondent did not act with
grave abuse of discretion amounting to lack or excess of
jurisdiction when it issued the questioned order and
resolutions. While the approval of the CBA and the release of
the signing bonus did not estop the Union from pursuing its
claims of ULP against the Bank, we find the latter did not
engage in ULP. We, likewise, hold that the Union is not guilty
of ULP.
IN LIGHT OF THE FOREGOING, the October 29, 1993
Order and December 16, 1993 and February 10, 1994
Resolutions of then Secretary of Labor Nieves R. Confesor
are AFFIRMED. The Petition is hereby DISMISSED.
SO ORDERED.

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

KIOK LOY, doing business under the name and

style
SWEDEN
ICE
CREAM
PLANT, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC)
and
PAMBANSANG
KILUSAN
NG
PAGGAWA
(KILUSAN), respondents.
Ablan and Associates for petitioner.

Abdulcadir T. Ibrahim for private respondent.

CUEVAS, J.:
Petition for certiorari to annul the decision 1 of the
National Labor Relations Commission (NLRC) dated July 20,
1979 which found petitioner Sweden Ice Cream guilty of
unfair labor practice for unjustified refusal to bargain, in
violation of par. (g) of Article 249 2 of the New Labor
Code, 3 and declared the draft proposal of the Union for a
collective bargaining agreement as the governing collective
bargaining agreement between the employees and the
management.
The pertinent background facts are as follows:
In a certification election held on October 3, 1978, the
Pambansang Kilusang Paggawa (Union for short), a
legitimate late labor federation, won and was
subsequently certified in a resolution dated November
29, 1978 by the Bureau of Labor Relations as the sole and
exclusive bargaining agent of the rank-and-file
employees of Sweden Ice Cream Plant (Company for
short). The Company's motion for reconsideration of the
said resolution was denied on January 25, 1978.
Thereafter, and more specifically on December 7, 1978,
the Union furnished 4 the Company with two copies of its
proposed collective bargaining agreement. At the same
time, it requested the Company for its counter proposals.
Eliciting no response to the aforesaid request, the Union
again wrote the Company reiterating its request for

collective bargaining negotiations and for the Company to

furnish them with its counter proposals. Both requests were
ignored and remained unacted upon by the Company.

Left with no other alternative in its attempt to bring the

Company to the bargaining table, the Union, on February
14, 1979, filed a "Notice of Strike", with the Bureau of
Labor Relations (BLR) on ground of unresolved economic
issues in collective bargaining. 5
Conciliation proceedings then followed during the thirtyday statutory cooling-off period. But all attempts towards
an amicable settlement failed, prompting the Bureau of
Labor Relations to certify the case to the National Labor
Relations Commission (NLRC) for compulsory arbitration
pursuant to Presidential Decree No. 823, as amended.
The labor arbiter, Andres Fidelino, to whom the case was
assigned, set the initial hearing for April 29, 1979. For
failure however, of the parties to submit their respective
position papers as required, the said hearing was
cancelled and reset to another date. Meanwhile, the
Union submitted its position paper. The Company did not,
and instead requested for a resetting which was granted.
The Company was directed anew to submit its financial
statements for the years 1976, 1977, and 1978.
The case was further reset to May 11, 1979 due to the
withdrawal of the Company's counsel of record, Atty.
Rodolfo dela Cruz. On May 24, 1978, Atty. Fortunato
Panganiban formally entered his appearance as counsel
for the Company only to request for another
postponement allegedly for the purpose of acquainting

himself with the case. Meanwhile, the

submitted its position paper on May 28, 1979.

Company

When the case was called for hearing on June 4, 1979 as

scheduled, the Company's representative, Mr. Ching, who
was supposed to be examined, failed to appear. Atty.
Panganiban then requested for another postponement
which the labor arbiter denied. He also ruled that the
Company has waived its right to present further evidence
and, therefore, considered the case submitted for
resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted
its report to the National Labor Relations Commission. On
July 20, 1979, the National Labor Relations Commission
rendered its decision, the dispositive portion of which
reads as follows:
WHEREFORE, the respondent Sweden Ice
Cream is hereby declared guilty of
unjustified refusal to bargain, in violation of
Section (g) Article 248 (now Article 249), of
P.D. 442, as amended. Further, the draft
proposal for a collective bargaining
agreement (Exh. "E ") hereto attached and
made an integral part of this decision, sent
by the Union (Private respondent) to the
respondent (petitioner herein) and which is
hereby found to be reasonable under the
premises, is hereby declared to be the
collective agreement which should govern
the relationship between the parties herein.

SO ORDERED. (Emphasis supplied)

Petitioner now comes before Us assailing the aforesaid
decision contending that the National Labor Relations
Commission acted without or in excess of its jurisdiction
or with grave abuse of discretion amounting to lack of
jurisdiction in rendering the challenged decision. On
August 4, 1980, this Court dismissed the petition for lack
of merit. Upon motion of the petitioner, however, the
Resolution of dismissal was reconsidered and the petition
was given due course in a Resolution dated April 1, 1981.
Petitioner Company now maintains that its right to
procedural due process has been violated when it was
precluded from presenting further evidence in support of
its stand and when its request for further postponement
was denied. Petitioner further contends that the National
Labor Relations Commission's finding of unfair labor
practice for refusal to bargain is not supported by law
and the evidence considering that it was only on May 24,
1979 when the Union furnished them with a copy of the
proposed Collective Bargaining Agreement and it was
only then that they came to know of the Union's
demands; and finally, that the Collective Bargaining
Agreement approved and adopted by the National Labor
Relations Commission is unreasonable and lacks legal
basis.
The petition lacks merit. Consequently, its dismissal is in
order.
Collective bargaining which is defined as negotiations
towards a collective agreement, 6 is one of the democratic

frameworks under the New Labor Code, designed to

stabilize the relation between labor and management and to
create a climate of sound and stable industrial peace. It is a
mutual responsibility of the employer and the Union and is
characterized as a legal obligation. So much so that Article
249, par. (g) of the Labor Code makes it an unfair labor
practice for an employer to refuse "to meet and convene
promptly and expeditiously in good faith for the purpose of
negotiating an agreement with respect to wages, hours of
work, and all other terms and conditions of employment
including proposals for adjusting any grievance or question
arising under such an agreement and executing a contract
incorporating such agreement, if requested by either party.

While it is a mutual obligation of the parties to bargain,

the employer, however, is not under any legal duty to
initiate contract negotiation. 7 The mechanics of collective
bargaining is set in motion only when the following
jurisdictional preconditions are present, namely, (1)
possession of the status of majority representation of the
employees' representative in accordance with any of the
means of selection or designation provided for by the Labor
Code; (2) proof of majority representation; and (3) a demand
to bargain under Article 251, par. (a) of the New Labor
Code . ... all of which preconditions are undisputedly present
in the instant case.
From the over-all conduct of petitioner company in
relation to the task of negotiation, there can be no doubt
that the Union has a valid cause to complain against its
(Company's) attitude, the totality of which is indicative of
the latter's disregard of, and failure to live up to, what is
enjoined by the Labor Code to bargain in good faith.

We are in total conformity with respondent NLRC's

pronouncement that petitioner Company is GUILTY of
unfair labor practice. It has been indubitably established
that (1) respondent Union was a duly certified bargaining
agent; (2) it made a definite request to bargain,
accompanied with a copy of the proposed Collective
Bargaining Agreement, to the Company not only once but
twice which were left unanswered and unacted upon; and
(3) the Company made no counter proposal whatsoever
all of which conclusively indicate lack of a sincere desire
to negotiate. 8 A Company's refusal to make counter
proposal if considered in relation to the entire bargaining
process, may indicate bad faith and this is specially true
where the Union's request for a counter proposal is left
unanswered. 9 Even during the period of compulsory
arbitration before the NLRC, petitioner Company's approach
and attitude-stalling the negotiation by a series of
postponements, non-appearance at the hearing conducted,
and undue delay in submitting its financial statements, lead
to no other conclusion except that it is unwilling to negotiate
and reach an agreement with the Union. Petitioner has not
at any instance, evinced good faith or willingness to discuss
freely and fully the claims and demands set forth by the
Union much less justify its opposition thereto. 10
The case at bar is not a case of first impression, for in
the Herald Delivery Carriers Union (PAFLU) vs. Herald
Publications 11 the rule had been laid down that "unfair labor
practice is committed when it is shown that the respondent
employer, after having been served with a written
bargaining proposal by the petitioning Union, did not even
bother to submit an answer or reply to the said proposal
This doctrine was reiterated anew in Bradman vs. Court of
Industrial Relations 12 wherein it was further ruled that

"while the law does not compel the parties

agreement, it does contemplate that both
approach the negotiation with an open mind
reasonable effort to reach a common ground of

to reach an
parties will
and make a
agreement

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

sought to be reviewed, petitioner capitalizes on the issue
of due process claiming, that it was denied the right to be
heard and present its side when the Labor Arbiter denied
the Company's motion for further postponement.
Petitioner's aforesaid submittal failed to impress Us.
Considering the various postponements granted in its
behalf, the claimed denial of due process appeared
totally bereft of any legal and factual support. As herein
earlier stated, petitioner had not even honored
respondent Union with any reply to the latter's successive
letters, all geared towards bringing the Company to the
bargaining table. It did not even bother to furnish or
serve the Union with its counter proposal despite
persistent requests made therefor. Certainly, the moves
and overall behavior of petitioner-company were in total
derogation of the policy enshrined in the New Labor Code
which is aimed towards expediting settlement of
economic disputes. Hence, this Court is not prepared to
affix its imprimatur to such an illegal scheme and dubious
maneuvers.
Neither are WE persuaded by petitioner-company's stand
that the Collective Bargaining Agreement which was
approved and adopted by the NLRC is a total nullity for it
lacks the company's consent, much less its argument
that once the Collective Bargaining Agreement is

implemented, the Company will face the prospect of

closing down because it has to pay a staggering amount
of economic benefits to the Union that will equal if not
exceed its capital. Such a stand and the evidence in
support thereof should have been presented before the
Labor Arbiter which is the proper forum for the purpose.
We agree with the pronouncement that it is not
obligatory upon either side of a labor controversy to
precipitately accept or agree to the proposals of the
other. But an erring party should not be tolerated and
allowed with impunity to resort to schemes feigning
negotiations by going through empty gestures. 13 More so,
as in the instant case, where the intervention of the National
Labor Relations Commission was properly sought for after
conciliation efforts undertaken by the BLR failed. The instant
case being a certified one, it must be resolved by the NLRC
pursuant to the mandate of P.D. 873, as amended, which
authorizes the said body to determine the reasonableness of
the terms and conditions of employment embodied in any
Collective Bargaining Agreement. To that extent, utmost
deference to its findings of reasonableness of any Collective
Bargaining Agreement as the governing agreement by the
employees and management must be accorded due respect
by this Court.
WHEREFORE, the instant petition is DISMISSED. The
temporary restraining order issued on August 27, 1980, is
LIFTED and SET ASIDE.
No pronouncement as to costs.

Henrick F. Gingoyon for respondent SPFL.

Wilfredo L. Orcullo for respondent Southern Philippines
Federation of Labor.
Miguel A. Enrique, Jr. for respondent GAW Trading, Inc.

REGALADO, J.:
Petitioner Associated Labor Unions (ALU, for brevity)
instituted this special civil action for certiorari and
prohibition to overturn the decision of the respondent
direcstor 1 dated December 10, 1986, which ordered the
holding of a certification election among the rank-and-file
workers of the private respondent GAW Trading, Inc. The
averments in the petition therefor, which succinctly but
sufficiently detail the relevant factual antecedents of this
proceedings, justify their being quoted in full, thus:
5. G.R. No. L-77282 May 5, 1989
ASSOCIATED
LABOR
UNIONS
(ALU) petitioner,
vs.
HON. PURA FERRER-CALLEJA, as Director of the
Bureau of Labor Relations, Ministry of Labor and
Employment; PHILIPPINE SOCIAL SECURITY LABOR
UNION
(PSSLU);
SOUTHERN
PHILIPPINES
FEDERATION OF LABOR (SPFL) and GAW TRADING,
INC., respondents.
Romeo S. Occena, Leonard U. Sawal, Edgemelo C.
Rosales and Ernesto Carreon for petitioner.

1. The associated Labor Unions (ALU) thru its regional

Vice-Presidents Teofanio C. Nuez, in a letter dated May
7, 1986 (ANNEX C) informed GAW Trading, Inc. that
majority of the latter's employees have authorized ALU to
be their sole and exclusive bargaining representative,
and requested GAW Trading Inc., in the same Letter for a
conference for the execution of an initial Collective
Bargaining Agreement (CBA);
2. GAW Trading Inc. received the Letter of ALU aforesaid
on the same day of May 7, 1986 as acknowledged
thereunder and responded (sic) ALU in a letter dated May

12, 1986 (Annex D) indicating its recognition of ALU as

the sole and exclusive bargaining agent for the majority
of its employees and for which it set the time for
conference and/or negotiation at 4:00 P.M. on May 12,
1986 at the Pillsbury Office, Aboitiz Building Juan Luna
Street, Cebu City;
3. On the following day of May13, 1986, ALU in behalf of
the majority of the employees of GAW Trading Inc. signed
and excuted the Collective Bargaining (ANNEX F) ...
4. On May 15, 1986, ALU in behalf of the majority of the
employees of GAW Trading Inc. and GAW Trading Inc.
signed and executed the Collective Bargaining
Agreements (ANNEX F) . . . .
5. In the meantime, at about 1:00 P.M. of May 9, 1986,
the Southern Philippines Federation of Labor (SPFL)
together with Nagkahiusang Mamumuo sa GAW
(NAMGAW) undertook a ... Strike ... after it failed to get
the management of GAW Trading Inc. to sit for a
conference respecting its demands presented at 11: A.M.
on the same day in an effort to pressure GAW Trading Inc.
to make a turnabout of its standign recognition of ALU as
the sole and exclusive bargaining representative of its
employees, as to which strike GAW Trading Inc. filed a
petition for Restraining Order/Preliminary Injunction,
dfated June 1, 1986 (Annex H) and which strike Labor
Arbiter Bonifacio B. Tumamak held as illegal in a decision
dated August 5, 1986 (ANNEX I);
6. On May 19, 1986, GAW Lumad Labor Union (GALLUPSSLU) Federation ... filed a Certification Election petition

(ANNEX J), but as found by Med-Arbiter Candido M.

Cumba in its (sic) Order dated Ju ne 11, 1986 (ANNEX K),
without
having
complied
(sic)
the
subscription
requirement for which it was merely considered an
intervenor until compliance thereof in the other petition
for direct recogbnition as bargaining agent filed on MAy
28, 1986 by southern Philippines Federation of Labor
(SPFL) as found in the same order (ANNEX K);
7. Int he meantime, the Collective Bargaining Agreement
executed by ALU and GAW Trading Inc. (ANNEX F) was
duly filed May 27, 1986 with the Ministry of Labor and
Employment in Region VII, Cebu city;
8. Nevertheless, Med-Arbiter Candido M. Cumba in his
order of June 11, 1986 (Annex K) ruled for the holding of
a ceritfication election in all branches of GAW Trading Inc.
in Cebu City, as to which ALU filed a Motion for
Reconsideration dated June 19, 1986 (ANNEX L) which
was treated as an appeal on that questioned Order for
which reason the entire record of subject certification
case was forwarded for the Director, Bureau of LAbor
Relations, Ministry of Labor and Employment, Manila
(ANNEX M);
9. Bureau of Labor Relations Director Cresencio B.
Trajano, rendered a Decision on August 13, 1986 (Annex
B) granting ALU's appeal (Motion for Reconsideration) and
set aside the questioned Med-Arbiter Order of June 11,
1986 (Annex K), on the ground that the CBA has been
effective and valid and the contract bar rule applicable;

10. But the same Decision of Director Crecensio B.

Trajano was sought for reconsideratrion both by Southern
Philippines Federation of Labor (SPFL) on August 26, 1986
(ANNEX N), supplemented by the 'SUBMISSION OD
ADDITIONAL EVIDENCE' dated September 29, 1986
(ANNEX O), and the Philppine Social Security Labor Union
(PSSLU) on October 2, 1986 (ANNEX P), which were
opposed by both GAW Trading, Inc. on September 2, 1986
(ANNEX Q) and ALU on September 12, 1986 (ANNEX R); 2
The aforesaid decision of then Director Trajano was
thereafter reversed by respondent director in her
aforecited decision which is now assailed in this action. A
motion for reconsideration of ALU 3 appears to have been
disregarded, hence, its present resort grounded on grave
abuse of discretion by public respondent.
Public respondent ordered the holding of a certification
election ruling that the "contract bar rule" relied upon by
her predecessor does not apply in the present
controversy. According to the decision of said respondent,
the collective bargaining agreement involved herein is
defective because it "was not duly submitted in
accordance with Section I, Rule IX, Book V of the
Implementing Rules of Batas Pambansa Blg. 130." It was
further observed that "(t)here is no proof tending to show
that the CBA has been posted in at least two conspicuous
places in the 1 establishment at least five days before its
ratification and that it has been ratified by the majority of
the employees in the bargaining unit."
We find no reversible error in the challenged decision of
respondent director. A careful consideration of the facts

culled from the records of this case, especially the

allegations of petitioner itself as hereinabove quoted,
yields the conclusion that the collective bargaining
agreement in question is indeed defective hence
unproductive of the legal effects attributed to it by the
former director in his decision which was subsequently
and properly reversed.
We have previously held that the mechanics of collective
bargaining are set in motion only when the following
jurisdictional preconditions are present, namely, (1)
possession of the status of majority representation by the
employees' representative in accordance with any of the
means of selection and/or designation provided for by the
Labor Code; (2) proof of majority representation; and (3)
a demand to bargain under Article 251, paragraph (a), of
the New Labor Code. 4 In the present case, the standing
of petitioner as an exclusive bargaining representative is
dubious, to say the least. It may be recalled that
respondent company, in a letter dated May 12, 1986 and
addressed to petitioner, merely indicated that it was "not
against the desire of (its) workers" and required
petitioner to present proof that it was supported by the
majority thereof in a meeting to be held on the same
date. 5 The only express recognition of petitioner as said
employees' bargaining representative that We see in the
records is in the collective bargaining agreement entered
into two days thereafter. 6 Evidently, there was
precipitate haste on the part of respondent company in
recognizing petitioner union, which recognition appears
to have been based on the self-serving claim of the latter
that it had the support of the majority of the employees
in the bargaining unit. Furthermore, at the time of the

supposed recognition, the employer was obviously aware

that there were other unions existing in the unit. As
earlier stated, respondent company's letter is dated May
12, 1986 while the two other unions, Southern Philippine
Federation of Labor (hereafter, SPFL and Philippine Social
Security Labor Union (PSSLU, for short), went on strike
earlier on May 9, 1986. The unusual promptitude in the
recognition of petitioner union by respondent company as
the exclusive bargaining representative of the workers in
GAW Trading, Inc. under the fluid and amorphous
circumstances
then
obtaining,
was
decidedly
unwarranted and improvident.
It bears mention that even in cases where it was the then
Minister of Labor himself who directly certified the union
as the bargaining representative, this Court voided such
certification where there was a failure to properly
determine with legal certainty whether the union enjoyed
a majority representation. In such a case, the holding of a
certification election at a proper time would not
necessarily be a mere formality as there was a
compelling reason not to directly and unilaterally certify a
union. 7
An additional infirmity of the collective bargaining
agreement involved was the failure to post the same in at
least two (2) conspicuous places in the establishment at
least five days before its ratification. 8 Petitioners
rationalization was that "(b)ecause of the real existence
of the illegal strike staged by SPFL in all the stores of
GAW Trading, Inc. it had become impossible to comply
with the posting requirement in so far as the realization
of tits purpose is concerned as there were no impartial

members of the unit who could be appraised of the CBA's

contents.
" 9 This
justification
is
puerile
and
unacceptable.
In the first place, the posting of copies of the collective
bargaining agreement is the responsibility of the
employer which can easily comply with the requirement
through a mere mechanical act. The fact that there were
"no impartial members of the unit" is immaterial. The
purpose of the requirement is precisely to inform the
employees in the bargaining unit of the contents of said
agreement so that they could intelligently decide
whether to accept the same or not. The assembly of the
members of ALU wherein the agreement in question was
allegedly explained does not cure the defect. The
contract is intended for all employees and not only for
the members of the purpoted representative alone. It
may even be said the the need to inform the nonmembers of the terms thereof is more exigent and
compelling since, in all likehood, their contact with the
persons who are supposed to represent them is limited.
Moreover, to repeat, there was an apparent and
suspicious hurry in the formulation and finalization of said
collective bargaining accord. In the sforementioned letter
where respondent company required petitioner union to
present proof of its support by the employees, the
company already suggested that petitioner ALU at the
same time submit the proposals that it intended to
embody in the projected agreement. This was on May 12,
1986, and prompltly on thre following day the
negoltiation panel; furnish respondent company final
copies of the desired agreement whcih, with equal
dispatch, was signed on May 15, 1986.

Another potent reason for annulling the disputed

collective bargaining is the finding of respondent director
that one hundred eighty-one( 181) of the two hundred
eighty-one (281) workers who "ratified" the same now "
strongly and vehemently deny and/or repudiate the
alleged negotiations and ratification of the CBA.
" 10 Although petitioner claims that only sev en (7) of the
repudiating group of workers belong to the total number
who allegedly ratified the agreement, nevertheless such
substantiated contention weighed against the factujal
that the controverted contract will not promote industrial
stability . The Court has long since declared that:
... Basic to the contract bar rule is the proposition that
the delay of the right to select represen tatives can be
justified only where stability is deemed paramount.
Excepted from the contract which do not foster industrial
stability, such as contracts where the identity of the
representative is in doubt. Any stability derived from such
contracts must be subordinated to the employees'
freedom of choice because it does nto establish the type
of industrial peace contemplated by the law. 11
At this juncture, petitioner should be reminded that the
technical rules of rpocedure do not strictly apply in the
adjudication of labor disputes. 12 Consequently, its
objection that the evidence with respect to the aforesaid
repudiiation of the supposed collective bargaining
agreement cannot be considered for the first time on
appeal on the Bureau of Labor Relations should be
disregarded,
especially
considering
the
weighty
significance thereof.

Both petitioner and private respondent GAW Trading, Inc.

allege that the employees of the latter are now enjoying
the benefits of the collective bargaining agreement that
both parties had forged. However, We cannot find
sufficient evidence of record to support this contention.
The only evidence cited by petitioner is supposed
payment of union fees by said employees, a premise too
tenuous to sustain the desired conclusion. Even the
actual number of workers in the respondent company is
not clear from the records. Said private respondent
claims that it is two hundred eighty-one (281) 13 but
petitioner suggests that it is more than that number. The
said parties should be aware that this Court is not an
adjudicator of facts. Worse, to borrow a trite but apt
phrase, they would heap the Ossa of confusion upon the
Pelion of uncertainty and still expect a definitive ruling on
the matter thus confounded.
Additionally, the inapplicability of the contract bar rule is
further underscored by the fact that when the disputed
agreement was filed before the Labor Regional Office on
May 27, 1986, a petition for certification election had
already been filed on May 19, 1986. Although the petition
was not supported by the signatures of thirty percent
(30%) of the workers in the bargaining unit, the same
was enough to initiate said certification election.
WHEREFORE, the order of the public respondent for the
conduct of a certification election among the rank-andfile workers of respondent GAW Trading Inc. is AFFIRMED.
The temporary restraining order issued in this case
pursuant to the Resolution of March 25, 1987 is hereby
lifted.

SO ORDERED.
Melencio-Herrera,
concur.

Paras,

Padilla

and

Sarmiento,

JJ.,

SAN MIGUEL CORPORATION EMPLOYEES UNIONPTGWO, represented by its President RAYMUNDO

HIPOLITO,
JR., petitioner,
vs.
HON. MA. NIEVES D. CONFESOR, Secretary of
Labor, Dept. of Labor & Employment, SAN MIGUEL
CORPORATION,
MAGNOLIA
CORPORATION
(Formerly, Magnolia Plant) and SAN MIGUEL
FOODS, INC. (Formerly, B-Meg Plant), respondents.

KAPUNAN, J.:
This is a petition for certiorari assailing the Order of the
Secretary of Labor rendered on February 15, 1993
involving a labor dispute at San Miguel Corporation.
The facts are as follows:

6. G.R. No. 111262 September 19, 1996

On June 28, 1990, petitioner-union San Miguel

Corporation Employees Union PTGWO entered into a
Collective Bargaining Agreement (CBA) with private
respondent San Miguel Corporation (SMC) to take effect
upon the expiration of the previous CBA or on June 30,
1989.
This CBA provided, among others, that:
ARTICLE XIV
DURATION OF AGREEMENT

Sec. 1. This Agreement which shall be binding upon the

parties hereto and their respective successors-in-interest,
shall become effective and shall remain in force and
effect until June 30, 1992.
Sec. 2. In accordance with Article 253-A of the Labor
Code as amended, the term of this Agreement insofar as
the representation aspect is concerned, shall be for five
(5) years from July 1, 1989 to June 30, 1994. Hence, the
freedom period for purposes of such representation shall
be sixty (60) days prior to June 30, 1994.
Sec. 3. Sixty (60) days prior to June 30, 1992 either party
may initiate negotiations of all provisions of this
Agreement, except insofar as the representation aspect is
concerned. If no agreement is reached in such
negotiations, this Agreement shall nevertheless remain in
force up to the time a subsequent agreement is reached
by the parties. 1
In keeping with their vision and long term strategy for
business expansion, SMC management informed its
employees in a letter dated August 13, 1991 2 that the
company which was composed of four operating divisions
namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks,
(4) Magnolia and Agri-business would undergo a
restructuring. 3

Effective October 1, 1991, Magnolia and Feeds and

Livestock Division were spun-off and became two
separate and distinct corporations: Magnolia Corporation
(Magnolia) and San Miguel Foods, Inc. (SMFI).
Notwithstanding the spin-offs, the CBA remained in force
and effect.
After June 30, 1992, the CBA was renegotiated in
accordance with the terms of the CBA and Article 253-A
of the Labor Code. Negotiations started sometime in July,
1992 with the two parties submitting their respective
proposals and counterproposals.
During the negotiations, the petitioner-union insisted that
the bargaining unit of SMC should still include the
employees of the spun-off corporations: Magnolia and
SMFI; and that the renegotiated terms of the CBA shall be
effective only for the remaining period of two years or
until June 30, 1994.
SMC, on the other hand, contended that the
members/employees who had moved to Magnolia and
SMFI, automatically ceased to be part of the bargaining
unit at the SMC. Furthermore, the CBA should be effective
for three years in accordance with Art. 253-A of the Labor
Code.
Unable to agree on these issues with respect to the
bargaining unit and duration of the CBA, petitioner-union
declared a deadlock on September 29, 1990.
On October 2, 1992, a Notice of Strike was filed against
SMC.

In order to avert a strike, SMC requested the National

Conciliation and Mediation Board (NCMB) to conduct
preventive mediation. No settlement was arrived at
despite several meetings held between the parties.
On November 3, 1992, a strike vote was conducted which
resulted in a "yes vote" in favor of a strike.
On November 4, 1992, private respondents SMC,
Magnolia and SMFI filed a petition with the Secretary of
Labor praying that the latter assume jurisdiction over the
labor dispute in a vital industry.
As prayed for, the Secretary of Labor assumed
jurisdiction over the labor dispute on November 10,
1992. 4Several conciliation meetings were held but still
no agreement/settlement was arrived at by both parties.
After the parties submitted their respective position
papers, the Secretary of Labor issued the assailed Order
on February 15, 1993 directing, among others, that the
renegotiated terms of the CBA shall be effective for the
period of three (3) years from June 30, 1992; and that
such CBA shall cover only the employees of SMC and not
of Magnolia and SMFI.
Dissatisfied, petitioner-union now comes to this Court
questioning this Order of the Secretary of Labor.
Subsequently, on March 30, 1995, 5 petitioner-union filed
a Motion for Issuance of a Temporary Restraining Order or
Writ of Preliminary Injunction to enjoin the holding of the
certification elections in the different companies,

maintaining that the employees of Magnolia and SMFI fall

within the bargaining unit of SMC.
On March 29, 1995, the Court issued a resolution
granting the temporary restraining order prayed for. 6
Meanwhile, an urgent motion for leave to intervene 7 in
the case was filed by the Samahan ng Malayang
Manggagawa-San Miguel Corporation-Federation of Free
Workers
(SMM-SMC-FFW)
through
its
authorized
representative, Elmer S. Armando, alleging that it is one
of the contending parties adversely affected by the
temporary restraining order.
The Intervenor cited the case of Daniel S.L. Borbon
v. Hon. Bienvenido B. Laguesma, 8 G.R. No. 101766,
March 5, 1993, where the Court recognized the
separation of the employees of Magnolia from the SMC
bargaining unit. It then prayed for the lifting of the
temporary restraining order.
Likewise, Efren Carreon, Acting President of the SMCEUPTGWO, filed a petition for the withdrawal/dismissal of
the petition considering that the temporary restraining
order jeopardized the employees' right to conclude a new
CBA. At the same time, he challenged the legal
personality of Mr. Raymundo Hipolito, Jr. to represent the
Union as its president when the latter was already
officially dismissed from the company on October 4,
1994.
Amidst all these pleadings, the following primordial
issues arise:

1) Whether or not the duration of the renegotiated terms

of the CBA is to be effective for three years of for only
two years; and
2) Whether or not the bargaining unit of SMC includes
also the employees of the Magnolia and SMFI.
Petitioner-union contends that the duration for the nonrepresentation provisions of the CBA should be
coterminous with the term of the bargaining agency
which in effect shall be for the remaining two years of the
current CBA, citing a previous decision of the Secretary of
Labor on December 14, 1992 in the matter of the labor
dispute at Philippine Refining Company.
However, the Secretary of Labor, in her questioned Order
of February 15, 1993 ruled that the renegotiated terms of
the CBA at SMC should run for a period of three (3) years.
We agree with the Secretary of Labor.
Pertinent to the first issue is Art. 253-A of the Labor Code
as amended which reads:
Art. 253-A. Terms of a Collective Bargaining Agreement.
Any Collective Bargaining Agreement that the parties
may enter into shall, insofar as the representation aspect
is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent
bargaining agent shall be entertained and no certification
election shall be conducted by the Department of Labor
and Employment outside of the sixty-day period
immediately before the date of expiry of such five year

term of the Collective Bargaining Agreement. All other

provisions of the Collective Bargaining Agreement shall
be renegotiated not later than three (3) years after its
execution. Any agreement on such other provisions of the
Collective Bargaining Agreement entered into within six
(6) months from the date of expiry of the term of such
other provisions as fixed in such Collective Bargaining
Agreement, shall retroact to the day immediately
following such date. If any such agreement is entered
into beyond six months, the parties shall agree on the
duration of retroactivity thereof. In case of a deadlock in
the renegotiation of the collective bargaining agreement,
the parties may exercise their rights under this Code.
(Emphasis supplied.)
Article 253-A is a new provision. This was incorporated by
Section 21 of Republic Act No. 6715 (the Herrera-Veloso
Law) which took effect on March 21, 1989. This new
provision states that the CBA has a term of five (5) years
instead of three years, before the amendment of the law
as far as the representation aspect is concerned. All other
provisions of the CBA shall be negotiated not later than
three (3) years after its execution. The "representation
aspect" refers to the identity and majority status of the
union that negotiated the CBA as the exclusive
bargaining representative of the appropriate bargaining
unit concerned. "All other provisions" simply refers to the
rest of the CBA, economic as well as non-economic
provisions, except representation. 10
As the Secretary of Labor herself observed in the instant
case, the law is clear and definite on the duration of the
CBA insofar as the representation aspect is concerned,

but is quite ambiguous with the terms of the other

provisions of the CBA. It is a cardinal principle of
statutory construction that the Court must ascertain the
legislative intent for the purpose of giving effect to any
statute. The history of the times and state of the things
existing when the act was framed or adopted must be
followed and the conditions of the things at the time of
the enactment of the law should be considered to
determine the legislative intent. 11 We look into the
discussions leading to the passage of the law:
THE CHAIRMAN (REP. VELASCO): . . .the CBA, insofar as
the economic provisions are concerned . . .
THE CHAIRMAN (SEN. HERRERA): Maximum of three
years?

he has one year to administer and to adjust, to develop

rapport with the management. Yan ang importante.
You know, for us na nagne-negotiate, ang hazard talaga
sa negotiation, when we negotiate with somebody na
hindi natin kilala, then, we are governed by our biases na
ito ay destroyer ng Labor; ang mga employer, ito bayaran
ko lang ito okay na.
'Yan ang nangyayari, but let us give that allowance for
the one year to let them know.
Actually, ang thrust natin ay industrial peace, and there
can be no industrial peace if you encourage union to fight
each other. 'Yan ang problema. 12
xxx xxx xxx

THE CHAIRMAN (SEN. VELOSO): Maximum of three years.

THE CHAIRMAN (SEN. HERRERA): Present practice?
THE CHAIRMAN (REP. VELOSO): In other words, after three
years pwede nang magnegotiate in the CBA for the
remaining two years.

HON. ISIDRO: Madali iyan, kasi these two periods that are
mentioned in the CBA seem to provide some doubts later
on in the implementation. Sabi kasi rito, insofar as
representation issue is concerned, seven years and
lifetime. . .
HON. CHAIRMAN HERRERA: Five years.

THE CHAIRMAN (REP. HERRERA): You can negotiate for

one year, two years or three years but assuming three
years which, I think, that's the likelihood. . .

HON. ISIDRO: Five years, all the others three years.

THE CHAIRMAN (REP. VELOSO): Yes.

HON. CHAIRMAN HERRERA: No. Ang three years duon sa

terms and conditions, not later than three years.

THE CHAIRMAN (SEN. HERRERA): Three years, the new

union, assuming there will be a change of agent, at least

HON. ISIDRO: Not later than three years, so within three

years you have to make a new CBA.

HON. CHAIRMAN HERRERA: Yes.

HON. ISIDRO: That is again for purposes of renewing the
terms, three years na naman iyan then, seven
years. . .
HON. CHAIRMAN HERRERA: Not later than three years.
HON. ISIDRO: Assuming that they usually follow the
period three years nang three years, but under this law
with respect to representation five years, ano? Now,
after three years, nagkaroon ng bagong terms, tapos na
iyong term, renewed na iyong terms, ang karapatan noon
sa representation issue mayroon pang two years left.
HON. CHAIRMAN HERRERA: One year na lang because six
years nang lahat, three plus three.
HON. ISIDRO: Hindi, two years pa rin ang natitira, eh.
Three years pa lang ang natatapos. So, another CBA was
formed and this CBA mayroon na naman siyang bagong
five years with respect to representation issue.
HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan.
Iyong terms and conditions for three years.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: One the third year you can
start negotiating to change the terms and conditions.
HON. ISIDRO: Yes.

HON. CHAIRMAN HERRERA: Assuming you will follow the

practice . . .
HON. ISIDRO: Oo.
HON. CHAIRMAN HERRERA: But on the fifth year, ang
representation status now can be questioned, so baka
puwedeng magkaroon ng certification election. If the
incumbent union loses, then the new union administers
the contract for one year to give him time to know his
counterpart the employer, before he can negotiate for
a new term. Iyan ang advantage.
HON. ISIDRO: Kasi, when the CBA has only a three-year
lifetime with respect to the terms and conditions and
then, so you have to renew that in three years you
renew for another three years, mayroon na naman
another five years iyong ano . . .
HON. ANIAG: Hindi, ang natitira duon sa representation
two years na lang.
HON. CHAIRMAN HERRERA: Two years na lang sa
representation.
HON. ANIAG: So that if they changed the union, iyong last
year . . .
HON. CHAIRMAN HERRERA: Iyon lang, that you have to
administer the contract. Then, voluntary arbitration na
kayo and then mayroon ka nang probisyon "retroact on
the date of the expiry date". Pagnatalo ang incumbent
unyon, mag-aassume ang new union, administer the

contract. As far as the term and condition, for one year,

and that will give him time and the employer to know
each other.
HON. JABAR: Boy, let us be realistic. I think if a new union
wins a certification election, it would not want to
administer a CBA which has not been negotiated by the
union itself.
HON. CHAIRMAN HERRERA: That is not true, Hon. This is
true because what is happening now in the country is
that the term ng contract natin, duon din mage-expire
ang representation. Iyon ang nangyari. That is where you
have the gulo. Ganoon ang nangyari. So, ang nangyari
diyan, pag-mayroon certification election, expire ang
contract, ano ang usual issue company union. I can
you (sic) give you more what the incumbent union is
giving. So ang mangyayari diyan, pag-negotiate mo
hardline na agad.
HON. CHAIRMAN VELOSO : Mon, for four years?
HON. ISIDRO: Ang tingin ko lang dito, iyong distinction
between the terms and the representation aspect why
do we have to distinguish between three and five? What's
wrong with having a uniform expiration period?

kumpanya, mag-ne-negotiate ka ng six months, that's

the average, aabot pa minsan ng one year. Pagktapos ng
negotiation mo, signing kayo. There will be an allowed
period of one year. Third year na, uumpisahan naman
ang organizations, papasok na ang ibang unyon because
the reality in Trade Union committee, they organize, we
organize. So, actually, you have only industrial peace for
one year, effective industrial peace. That is what we are
trying to change. Otherwise, we will continue to
discourage the investors and the union will never grow
because every other year it has to use its money for the
certification election. Ang grabe pang practice diyan,
mag-a-advance ang federation for three years union dues
para panggastos lang sa certification election. That is
what we are trying to avoid.
HON. JABAR: Although there are unions which really get
advances.
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga
unyon, ganoon ang mangyayari. And I think our
responsibility here is to create a legal framework to
promote industrial peace and to develop responsible and
fair labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the
period of the effectivity . . .

HON. CHAIRMAN HERRERA: Five years.

xxx xxx xxx
HON. ISIDRO: Puro three years.
HON. CHAIRMAN HERRERA: That is what we are trying to
avoid because ang reality diyan, Mart, pagpasok mo sa

HON CHAIRMAN VELOSO. (continuing) . . . in other words,

the longer the period of effectivity of the CBA, the better
for industrial peace.

HON. CHAIRMAN HERRERA: representation status.

HON. CHAIRMAN VELOSO: Only on
HON. CHAIRMAN HERRERA: the representations.
HON. CHAIRMAN VELOSO: But on the economic issues.
HON. CHAIRMAN HERRERA: You have to review that. The
parties will have to review that.
HON. CHAIRMAN VELOSO: At least on second year.
HON. CHAIRMAN HERRERA: Not later than 3 years, ang
karamihan ng mga mag-negotiate when the companyis
(interrupted) 13
From the aforesaid discussions, the legislators were more
inclined to have the period of effectivity for three (3)
years insofar as the economic as well as non-economic
provisions are concerned, except representation.
Obviously, the framers of the law wanted to maintain
industrial peace and stability by having both
management and labor work harmoniously together
without any disturbance. Thus, no outside union can
enter the establishment within five (5) years and
challenge the status of the incumbent union as the
exclusive bargaining agent. Likewise, the terms and
conditions of employment (economic and non-economic)
can not be questioned by the employers or employees
during the period of effectivity of the CBA. The CBA is a
contract between the parties and the parties must

respect
the
terms
and
conditions
of
the
agreement. 14 Notably, the framers of the law did not give
a fixed term as to the effectivity of the terms and
conditions of employment. It can be gleaned from their
discussions that it was left to the parties to fix the period.
In the instant case, it is not difficult to determine the
period of effectivity for the non-representation provisions
of the CBA. Taking it from the history of their CBAs, SMC
intended to have the terms of the CBA effective for three
(3) years reckoned from the expiration of the old or
previous CBA which was on June 30, 1989, as it provides:
Sec. 1. This Agreement which shall be binding upon the
parties hereto and their respective successors-in-interest,
shall become effective and shall remain in force and
effect until June 30, 1992.
The argument that the PRC case is applicable is indeed
misplaced. We quote with favor the Order of the
Secretary of Labor in the light of SMC's peculiar situation
as compared with PRC's company situation.
It is true that in the Philippine Refining Company case
(OS-AJ-0031-91) (sic), Labor Dispute at Philippine Refining
Company), we ruled that the term of the renegotiated
provisions of the CBA should coincide with the remaining
term of the agency. In doing so, we placed premium on
the fact that PRC has only two (2) unions and no other
union had yet executed a renewed term of 3 years.
Nonetheless, in ruling for a shortened term, we were
guided by our considered perception that the said term
would improve, rather than ruin, the general welfare of

both the workers and the company. It is equally true that

once the economic provisions of the CBA expire, the
residual representative status of the union is effective for
only 2 more years. However, if circumstances warrant
that the contract duration which it is soliciting from the
company for the benefit of the workers, shall be a little
bit longer than its lifespan, then this Office cannot stand
in the way of a more ideal situation. We must not lose
sight of the fact that the primordial purpose of a
collective contract is to promote industrial harmony and
stability in the terms and conditions of employment. To
our mind, this objective cannot be achieved without
giving due consideration to the peculiarities and unique
characteristics of the employer. In the case at bar, there
is no dispute that the mother corporation (SMC) spun-off
two of its divisions and thereby gave birth to two (2)
other entities now known as Magnolia Corporation and
San Miguel Foods, Inc. In order to effect a smooth
transition, the companies concerned continued to
recognize the existing unions as the bargaining agents of
their respective bargaining units. In the meantime, the
other unions in these companies eventually concluded
their CBA negotiations on the remaining term and all of
them agreed on a 3-year cycle. Notably, the following
CBAs were forged incorporating a term of 3-years on the
renegotiated provisions, to wit:
1. SMC daily-paid employees union (IBM)
2. SMFI monthly-paid employees and daily-paid
employees at the Cabuyao Plant.

There is a direct link between the voluntary recognition

by the company of the continuing representative status
of the unions after the aforementioned spin-offs and the
stand of the company for a 3-year renegotiated cycle
when the economic provisions of the existing CBAs
expired, i.e., the maintain stability and avoid confusion
when the umbilical cord of the two divisions were severed
from their parent. These two cannot be considered
independently of each other for they were intended to
reinforce one another. Precisely, the company conceded
to face the same union notwithstanding the spin-offs in
order to preserve industrial peace during the infancy of
the two corporations. If the union would insist on a
shorter renegotiated term, then all the advantages
gained by both parties in this regard, would have gone to
naught. With this in mind, this office feels that it will
betray its mandate should we order the parties to
execute a 2-year renegotiated term for then chaos and
confusion, rather than tranquillity, would be the order of
the day. Worse, there is a strong likelihood that such a
ruling might spawn discontent and possible mass actions
against the company coming from the other unions who
had already agreed to a 3-year renegotiated terms. If this
happens, the purpose of this Office's intervention into the
parties' controversy would have been defeated. 15
The issue as to the term of the non-representation
provisions of the CBA need not belabored especially when
we take note of the Memorandum of the Secretary of
Labor dated February 24, 1994 which was mentioned in
the Resolution of Undersecretary Bienvenido Laguesma
on January 16, 1995 in the certification election case
involving the SMC employees. 16 In said memorandum,

the Secretary of Labor had occasion to clarify the term of

the renegotiated terms of the CBA vis-a-vis the term of
the bargaining agent, to wit:

need for these transformations in keeping with its vision

and long term strategy as it explained in its letter
addressed to the employees dated August 13, 1991:

As a matter of policy the parties are encourages (sic) to

enter into a renegotiated CBA with a term which would
coincide (sic) with the aforesaid five (5) year term of the
bargaining representative.

. . . As early as 1986, we announced the decentralization

program and spoke of the need for structures that can
react fast to competition, a changing environment,
shorter product life cycles and shifts in consumer
preference. We further stated in the 1987 Annual Report
to Stockholders that San Miguel's businesses will be more
autonomous and self sufficient so as to better acquire
and master new technologies, cope with a labor force
with different expertises and expectations, and master
and satisfy the changing needs of our customers and
end-consumers. As subsidiaries, Magnolia and FLD will
gain better industry focus and flexibility, greater
awareness of operating results, and speedier, more
responsive decision making.

In the event however, that the parties, by mutual

agreement, enter into a renegotiated contract with a
term of three (3) years or one which does not coincide
with the said 5-year term, and said agreement is ratified
by majority of the members in the bargaining unit, the
subject contract is valid and legal and therefore, binds
the contracting parties. The same will however not
adversely affect the right of another union to challenge
the majority status of the incumbent bargaining agent
within sixty (60) days before the lapse of the original five
(5) year term of the CBA.
Thus, we do not find any grave abuse of discretion on the
part of the Secretary of Labor in ruling that the effectivity
of the renegotiated terms of the CBA shall be for three (3)
years.
With respect to the second issue, there is, likewise, no
merit in petitioner-union's assertion that the employees
of Magnolia and SMFI should still be considered part of
the bargaining unit of SMC.
Magnolia and SMFI were spun-off to operate as distinct
companies on October 1, 1991. Management saw the

xxx xxx xxx

We only have to look at the experience of Coca-Cola
Bottlers Philippines, Inc., since this company was
organized about ten years ago, to see the benefits that
arise from restructuring a division of San Miguel into a
more competitive organization. As a stand-alone
enterprise, CCBPI engineered a dramatic turnaround and
has sustained its sales and market share leadership ever
since.
We are confident that history will repeat itself, and the
transformation of Magnolia and FLD will be successful as
that of CCBPI. 17

Undeniably, the transformation of the companies was a

management prerogative and business judgment which
the courts can not look into unless it is contrary to law,
public policy or morals. Neither can we impute any bad
faith on the part of SMC so as to justify the application of
the doctrine of piercing the corporate veil. 18 Ever mindful
of the employees' interests, management has assured
the concerned employees that they will be absorbed by
the new corporations without loss of tenure and retaining
their present pay and benefits according to the existing
CBAs. 19 They were advised that upon the expiration of
the CBAs, new agreements will be negotiated between
the management of the new corporations and the
bargaining representatives of the employees concerned.
As a result of the spin-offs:
1. Each of the companies are run by, supervised and
controlled by different management teams including
separate human resource/personnel managers.
2. Each Company enforces its own administrative and
operational rules and policies and are not dependent on
each other in their operations.
3. Each entity maintains separate financial statements
and are audited separately from each other. 20
Indubitably, therefore, Magnolia and SMFI became
distinct entities with separate juridical personalities.
Thus, they can not belong to a single bargaining unit as
held in the case of Diatagon Labor Federation Local 110
of the ULGWP v. Ople. 21 We elucidate:

The fact that their businesses are related and that the
236 employees of the Georgia Pacific International
Corporation were originally employees of Lianga Bay
Logging Co., Inc. is not a justification for disregarding
their separate personalities. Hence, the 236 employees,
who are now attached to Georgia Pacific International
Corporation, should not be allowed to vote in the
certification election at the Lianga Bay Logging Co., Inc.
They should vote at a separate certification election to
determine the collective bargaining representative of the
employees of Georgia Pacific International Corporation.
Petition-union's attempt to include the employees of
Magnolia and SMFI in the SMC bargaining unit so as to
have a bigger mass base of employees has, therefore, no
more valid ground.
Moreover, in determining an appropriate bargaining unit,
the test of grouping is mutuality or commonality of
interests. The employees sought to be represented by the
collective bargaining agent must have substantial mutual
interests in terms of employment and working conditions
as
evinced
by
the
type
of
work
they
22
performed. Considering the spin-offs, the companies
would consequently have their respective and distinctive
concerns in terms of the nature of work, wages, hours of
work and other conditions of employment. Interests of
employees in the different companies perforce differ.
SMC is engaged in the business of the beer
manufacturing. Magnolia is involved in the manufacturing
and processing of diary products 23 while SMFI is involved
in the production of feeds and the processing of
chicken. 24 The nature of their products and scales of

business may require different skills which must

necessarily
be
commensurated
by
different
compensation packages. The different companies may
have different volumes of work and different working
conditions. For such reason, the employees of the
different companies see the need to group themselves
together and organize themselves into distinctive and
different groups. It would then be best to have separate
bargaining units for the different companies where the
employees can bargain separately according to their
needs and according to their own working conditions.
We reiterate what we have explained in the case
of University of the Philippines v. Ferrer-Calleja 25 that:
[T]here are various factors which must be satisfied and
considered in determining the proper constituency of a
bargaining unit. No one particular factor is itself decisive
of the determination. The weight accorded to any
particular factor varies in accordance with the particular
question or questions that may arise in a given case.
What are these factors? Rothenberg mentions a good
number, but the most pertinent to our case are: (1) will of
the employees (Globe Doctrine); (2) affinity and unit of
employees' interest, such as substantial similarity of work
and duties, or similarity of compensation and working
conditions; (3) prior collective bargaining history; and (4)
employment status, such as temporary, seasonal and
probationary employees. . . .
xxx xxx xxx

An enlightening appraisal of the problem of defining an

appropriate bargaining unit is given in the 10th Annual
Report of the National Labor Relations Board wherein it is
emphasized that the factors which said board may
consider and weigh in fixing appropriate units are: the
history, extent and type of organization of employees;
the history of their collective bargaining; the history,
extent and type of organization of employees in other
plants of the same employer, or other employers in the
same industry; the skill, wages, work, and working
conditions of the employees; the desires of the
employees; the eligibility of the employees for
membership in the union or unions involved; and the
relationship between the unit or units proposed and the
employer's organization, management, and operation . . .
. . . In said report, it is likewise emphasized that the basic
test in determining the appropriate bargaining unit is that
a unit, to be appropriate, must affect a grouping of
employees who have substantial, mutual interests in
wages, hours, working conditions and other subjects of
collective bargaining (citing Smith on Labor Laws, 316317; Francisco, Labor Laws, 162). . .
Finally, we take note of the fact that the separate
interests of the employees of Magnolia and SMFI from
those of SMC has been recognized in the case of Daniel
Borbon v. Laguesma. 26 We quote:
Even assuming in gratia argumenti that at the time of the
election they were regular employees of San Miguel,
nonetheless, these workers are no longer connected with
San Miguel Corporation in any manner because Magnolia

has ceased to be a division of San Miguel Corporation and

has been formed into a separate corporation with a
personality of its own (p. 305, Rollo). This development,
which was brought to our attention by private
respondents, necessarily renders moot and academic any
further discourse on the propriety of the elections which
petitioners impugn via the recourse (p. 319, Rollo).
In view of all the foregoing, we do not find any grave
abuse of discretion on the part of the Secretary of Labor
in rendering the assailed Order.

WHEREFORE, the petition is DISMISSED for lack of merit.

The Temporary Restraining Order issued on March 29,
1995 is lifted.
SO ORDERED.