6. G.R. No.

87297 August 5, 1991

ALFREDO
VELOSO
and
EDITO
LIGUATON petitioners,
vs.
DEPARTMENT OF LABOR AND EMPLOYMENT,
NOAH'S ARK SUGAR CARRIERS AND WILSON T.
GO,respondents.

CRUZ, J.:p
The law looks with disfavor upon quitclaims and
releases by employees who are inveigled or pressured
into signing them by unscrupulous employers seeking
to evade their legal responsibilities. On the other hand,
there are legitimate waivers that represent a voluntary
settlement of laborer's claims that should be respected
by the courts as the law between the parties.
In the case at bar, the petitioners claim that they were
forced to sign their respective releases in favor of their
employer, the herein private respondent, by reason of
their dire necessity. The latter, for its part, insists that
the petitioner entered into the compromise agreement
freely and with open eyes and should not now be
permitted to reject their solemn commitments.
The controversy began when the petitioners, along
with several co-employees, filed a complaint against
the private respondent for unfair labor practices,

underpayment, and non-payment of overtime, holiday,

and other benefits. This was decided in favor of the
complainants on October 6,1987. The motion for
reconsideration, which was treated as an appeal, was
dismissed in a resolution dated February 17, 1988, the
dispositive portion of which read as follows:
WHEREFORE, the instant appeal is hereby
DISMISSED and the questioned Order
affirmed with the modification that the
monetary awards to Jeric Dequito,
Custodio Ganuhay Conrado Mori and
Rogelio Veloso are hereby deleted for
being settled. Let execution push through
with respect to the awards to Alfredo
Veloso and Edito Liguaton.
On February 23, 1988, the private respondent filed a
motion for reconsideration and recomputation of the
amount awarded to the petitioners. On April 15, 1988,
while the motion was pending, petitioner Alfredo
Veloso, through his wife Connie, signed a Quitclaim
and
Release
for
and
in
consideration
of
P25,000.00, 1 and on the same day his counsel, Atty.
Gaga Mauna, manifested "Satisfaction of Judgment" by
receipt of the said sum by Veloso. 2 For his part,
petitioner Liguaton filed a motion to dismiss dated July
16, 1988, based on a Release and Quitclaim dated July
19,1988 , 3for and in consideration of the sum of
P20,000.00 he acknowledged to have received from
the private respondent. 4

These releases were later impugned by the petitioners

on September 20, 1988, on the ground that they were
constrained to sign the documents because of their
"extreme necessity." In an Order dated December 16,
1988, the Undersecretary of Labor rejected their
contention and ruled:
IN VIEW THEREOF, complainants Motion
to Declare Quitclaim Null and Void is
hereby denied for lack of merit and the
compromise
agreements/settlements
dated April 15, 1988 and July 19, 1988
are hereby approved. Respondents'
motion for reconsideration is hereby
denied for being moot and academic.
Reconsideration of the order having been denied on
March 7, 1989, the petitioners have come to this Court
oncertiorari. They ask that the quitclaims they have
signed be annulled and that writs of execution be
issued for the sum of P21,267.92 in favor of Veloso and
the sum of P26,267.92 in favor of Liguaton in
settlement of their claims.
Their petition is based primarily on Pampanga Sugar
Development Co., Inc. v. Court of Industrial
Relations, 5where it was held:
... while rights may be waived, the same
must not be contrary to law, public order,
public policy, morals or good customs or
prejudicial to a third person with a right

recognized by law. (Art. 6, New Civil

Code) ...
... The above-quoted provision renders
the quitclaim agreements void ab initio in
their entirety since they obligated the
workers concerned to forego their
benefits, while at the same time,
exempted the petitioner from any liability
that it may choose to reject. This runs
counter to Art. 22 of the new Civil Code
which provides that no one shall be
unjustly enriched at the expense of
another.
The Court had deliberated on the issues and the
arguments of the parties and finds that the petition
must fail. The exception and not the rule shall be
applied in this case.
The case cited is not apropos because the quitclaims
therein invoked were secured by the employer after it
had already lost in the lower court and were
subsequently rejected by this Court when the
employer invoked it in a petition for certiorari. By
contrast, the quitclaims in the case before us were
signed by the petitioners while the motion for
reconsideration was still pending in the DOLE, which
finally deemed it on March 7, 1989. Furthermore, the
quitclaims in the cited case were entered into without
leave of the lower court whereas in the case at bar the
quitclaims were made with the knowledge and

approval of the DOLE, which declared in its order of

December
16,
1988,
that
"the
compromise
agreement/settlements dated April 15, 1988 and July
19, 1988 are hereby approved."
It is also noteworthy that the quitclaims were
voluntarily and knowingly made by both petitioners
even if they may now deny this. In the case of Veloso,
the quitclaim he had signed carried the notation that
the sum stated therein had been paid to him in the
presence of Atty. Gaga Mauna, his counsel, and the
document was attested by Atty. Ferdinand Magabilin,
Chief of the Industrial Relations Division of the National
Capitol Region of the DOLE. In the case of Liguaton, his
quitclaim was made with the assistance of his counsel,
Atty. Leopoldo Balguma, who also notarized it and later
confirmed it with the filing of the motion to dismiss
Liguaton's complaint.
The same Atty. Balguma is the petitioners' counsel in
this proceeding. Curiously, he is now challenging the
very same quitclaim of Liguaton that he himself
notarized and invoked as the basis of Liguaton's
motion to dismiss, but this time for a different reason.
whereas he had earlier argued for Liguaton that the
latter's signature was a forgery, he has abandoned
that contention and now claims that the quitclaim had
been executed because of the petitioners' dire
necessity.
"Dire necessity" is not an acceptable ground for
annulling the releases, especially since it has not been

shown that the employees had been forced to execute

them. It has not even been proven that the
considerations for the quitclaims were unconscionably
low and that the petitioners had been tricked into
accepting them. While it is true that the writ of
execution dated November 24, 1987, called for the
collection of the amount of P46,267.92 each for the
petitioners, that amount was still subject to
recomputation and modification as the private
respondent's motion for reconsideration was still
pending before the DOLE. The fact that the petitioners
accepted the lower amounts would suggest that the
original award was exorbitant and they were
apprehensive that it would be adjusted and reduced. In
any event, no deception has been established on the
part of the Private respondent that would justify the
annulment of the Petitioners' quitclaims.
The applicable law is Article 227 of the Labor Code
providing clearly as follows:
Art. 227. Compromise agreements. Any
compromise settlement, including those
involving labor standard laws, voluntarily
agreed upon by the parties with the
assistance of the Bureau or the regional
office of the Department of Labor, shall
be final and binding upon the parties. The
National Labor Relations Commission or
any court shall not assume jurisdiction
over issues involved therein except in
case of non-compliance thereof or if there

is prima
facie evidence
that
the
settlement was obtained through fraud,
misrepresentation or coercion.
The petitioners cannot renege on their agreement
simply because they may now feel they made a
mistake in not awaiting the resolution of the private
respondent's
motion
for
reconsideration
and
recomputation. The possibility that the original award
might have been affirmed does not justify the
invalidation of the perfectly valid compromise
agreements they had entered into in good faith and
with full voluntariness. In General Rubber and
Footwear Corp. vs. Drilon, 6 we "made clear that the
Court is not saying that accrued money claims can
never be effectively waived by workers and
employees." As we later declared in Periquet v. NLRC: 7
Not all waivers and quitclaims are invalid
as against public policy. If the agreement
was
voluntarily
entered
into
and
represents a reasonable settlement, it is
binding on the parties and may not later
be disowned simply because of a change
of mind. It is only where there is clear
proof that the waiver was wangled from
an unsuspecting or gullible person, or the
terms of settlement are unconscionable
on its face, that the law will step in to
annul the questionable transaction. But
where it is shown that the person making
the waiver did so voluntarily, with full

understanding of what he was doing, and

the consideration for the quitclaim is
credible and reasonable, the transaction
must be recognized as a valid and binding
undertaking. As in this case.
We find that the questioned quitclaims were
voluntarily and knowingly executed and that the
petitioners should not be relieved of their waivers on
the ground that they now feel they were improvident
in agreeing to the compromise. What they call their
"dire necessity" then is no warrant to nullify their
solemn undertaking, which cannot be any less binding
on them simply because they are laborers and deserve
the protection of the Constitution. The Constitution
protects the just, and it is not the petitioners in this
case.
WHEREFORE, the petition is DISMISSED, with costs
against the petitioners. It is so ordered.
7. G.R. No. 161003

May 6, 2005

FELIPE O. MAGBANUA, CARLOS DE LA CRUZ,

REMY ARNAIZ, BILLY ARNAIZ, ROLLY ARNAIZ,
DOMINGO
SALARDA,
JULIO
CAHILIG
and
NICANOR
LABUEN, petitioners,
vs.
RIZALINO UY, respondent.
DECISION

PANGANIBAN, J.:
Rights may be waived through a compromise
agreement, notwithstanding a final judgment that has
already settled the rights of the contracting parties. To
be binding, the compromise must be shown to have
been voluntarily, freely and intelligently executed by
the parties, who had full knowledge of the judgment.
Furthermore, it must not be contrary to law, morals,
good customs and public policy.
The Case
Before us is a Petition for Review1 under Rule 45 of the
Rules of Court, assailing the May 31, 2000
Decision2 and the October 30, 2003 Resolution 3 of the
Court of Appeals (CA) in CA-GR SP No. 53581. The
challenged Decision disposed as follows:
"WHEREFORE, having found that public
respondent NLRC committed grave abuse of
discretion,
the
Court
hereby SETS
ASIDE the two
assailed
Resolutions and REINSTATES the order of the
Labor Arbiterdated February 27, 1998."4
The assailed Resolution denied reconsideration.
The Facts
The CA relates the facts in this wise:

"As a final consequence of the final and

executory decision of the Supreme Court
in Rizalino P. Uy v. National Labor Relations
Commission, et. al. (GR No. 117983, September
6, 1996) which affirmed with modification the
decision of the NLRC in NLRC Case No. V-042793, hearings were conducted [in the National
Labor Relations Commission Sub-Regional
Arbitration Branch in Iloilo City] to determine the
amount of wage differentials due the eight (8)
complainants therein, now [petitioners]. As
computed,
the
award
amounted
to P1,487,312.69 x x x.
"On February 3, 1997, [petitioners] filed a
Motion for Issuance of Writ of Execution.
"On May 19, 1997, [respondent] Rizalino Uy filed
a Manifestation requesting that the cases be
terminated and closed, stating that the
judgment award as computed had been
complied with to the satisfaction of [petitioners].
Said Manifestation was also signed by the eight
(8) [petitioners]. Together with the Manifestation
is a Joint Affidavit dated May 5, 1997 of
[petitioners], attesting to the receipt of payment
from [respondent] and waiving all other benefits
due them in connection with their complaint.
xxx

xxx

xxx

"On June 3, 1997, [petitioners] filed an Urgent

Motion for Issuance of Writ of Execution wherein
they
confirmed
that
each
of
them
received P40,000 from [respondent] on May 2,
1997.
"On June 9, 1997, [respondent] opposed the
motion on the ground that the judgment award
had been fully satisfied. In their Reply,
[petitioners] claimed that they received only
partial payments of the judgment award.
xxx

xxx

xxx

"On October 20, 1997, six (6) of the eight (8)

[petitioners] filed a Manifestation requesting
that the cases be considered closed and
terminated as they are already satisfied of what
they have received (a total ofP320,000) from
[respondent]. Together with said Manifestation is
a Joint Affidavit in the local dialect, dated
October 20, 1997, of the six (6) [petitioners]
attesting that they have no more collectible
amount from [respondent] and if there is any,
they are abandoning and waiving the same.
"On February 27, 1998, the Labor Arbiter issued
an order denying the motion for issuance of writ
of execution and [considered] the cases closed
and terminated x x x.

"On appeal, the [National Labor Relations

Commission (hereinafter NLRC)] reversed the
Labor Arbiter and directed the immediate
issuance of a writ of execution, holding that a
final and executory judgment can no longer be
altered and that quitclaims and releases are
normally frowned upon as contrary to public
policy."5
Ruling of the Court of Appeals
The CA held that compromise agreements may be
entered into even after a final judgment. 6 Thus,
petitioners validly released respondent from any
claims, upon the voluntary execution of a waiver
pursuant to the compromise agreement. 7
The appellate court denied petitioners motion for
reconsideration for having been filed out of time. 8
Hence, this Petition.9
The Issues
Petitioners raise
consideration:

the

following

issues

for

our

"1. Whether or not the final and executory

judgment of the Supreme Court could be subject
to compromise settlement;

"2. Whether or not the petitioners affidavit

waiving their awards in [the] labor case
executed without the assistance of their counsel
and labor arbiter is valid;
"3. Whether or not the ignorance of the
jurisprudence by the Court of Appeals and its
erroneous counting of the period to file [a]
motion for reconsideration constitute a denial of
the petitioners right to due process." 10
The Courts Ruling
The Petition has no merit.
First Issue:
Validity of the Compromise Agreement
A compromise agreement is a contract whereby the
parties make reciprocal concessions in order to resolve
their differences and thus avoid or put an end to a
lawsuit.11 They adjust their difficulties in the manner
they have agreed upon, disregarding the possible gain
in litigation and keeping in mind that such gain is
balanced by the danger of losing. 12 Verily, the
compromise may be either extrajudicial (to prevent
litigation) or judicial (to end a litigation). 13
A compromise must not be contrary to law, morals,
good customs and public policy; and must have been
freely and intelligently executed by and between the

parties.14 To have the force of law between the

parties,15 it must comply with the requisites and
principles of contracts.16 Upon the parties, it has the
effect and the authority of res judicata, once entered
into.17
When a compromise agreement is given judicial
approval, it becomes more than a contract binding
upon the parties. Having been sanctioned by the court,
it is entered as a determination of a controversy and
has the force and effect of a judgment. 18 It is
immediately executory and not appealable, except for
vices of consent or forgery.19 The nonfulfillment of its
terms and conditions justifies the issuance of a writ of
execution; in such an instance, execution becomes a
ministerial duty of the court.20
Following
these
basic
principles,
apparently
unnecessary is a compromise agreement after final
judgment has been entered. Indeed, once the case is
terminated by final judgment, the rights of the parties
are settled. There are no more disputes that can be
compromised.
Compromise
after Final Judgment

Agreements

The Court is tasked, however, to determine

the legality of a compromise agreement after final
judgment, not theprudence of entering into one.
Petitioners vehemently argue that a compromise of a

final judgment is invalid under Article 2040 of the Civil

Code, which we quote:21
"Art. 2040. If after a litigation has been decided
by a final judgment, a compromise should be
agreed
upon,
either
or
both
parties
being unaware of the existence of the final
judgment, the compromise may berescinded.
"Ignorance of a judgment which may be revoked
or set aside is not a valid ground for attacking a
compromise." (Bold types supplied)

decision is not a ground to rescind a compromise

agreement, because the parties are still unsure of the
final outcome of the case at this time.
Petitioners argument, therefore, fails to convince.
Article 2040 of the Civil Code does not refer to the
validity of a compromise agreement entered into after
final judgment. Moreover, an important requisite,
which is lack of knowledge of the final judgment, is
wanting in the present case.
Supported by Case Law

The first paragraph of Article 2040 refers to a scenario

in which either or both of the parties are unaware of a
courts final judgment at the time they agree on a
compromise. In this case, the law allows either of them
to rescindthe compromise agreement. It is evident
from the quoted paragraph that such an agreement is
not prohibited or void or voidable. Instead, a remedy to
impugn the contract, which is an action for rescission,
is declared available.22 The law allows a party to
rescind a compromise agreement, because it could
have been entered into in ignorance of the fact that
there was already a final judgment. Knowledge of a
decisions finality may affect the resolve to enter into a
compromise agreement.

The issue involving the validity of a compromise

agreement notwithstanding a final judgment is not
novel. Jesalva v. Bautista23 upheld a compromise
agreement that covered cases pending trial, on
appeal, and with final judgment.24 The Court noted that
Article 2040 impliedly allowed such agreements; there
was no limitation as to when these should be entered
into.25 Palanca
v.
Court
of
Industrial
26
Relations sustained
a
compromise
agreement,
notwithstanding a final judgment in which only the
amount of back wages was left to be determined. The
Court found no evidence of fraud or of any showing
that the agreement was contrary to law, morals, good
customs, public order, or public policy.27

The second paragraph, though irrelevant to the

present case, refers to the instance when the courts
decision is still appealable or otherwise subject to
modification. Under this paragraph, ignorance of the

Gatchalian v. Arlegui28 upheld the right to compromise

prior to the execution of a final judgment. The Court
ruled that the final judgment had been novated and
superseded
by
a
compromise

agreement.29 Also, Northern Lines, Inc. v. Court of Tax

Appeals30 recognized the right to compromise final and
executory judgments, as long as such right was
exercised by the proper party litigants.31
Rovero v. Amparo,32 which petitioners cited, did not set
any precedent that all compromise agreements after
final judgment were invalid. In that case, the customs
commissioner imposed a fine on an importer, based on
the appraised value of the goods illegally brought to
the country. The latters appeal, which eventually
reached this Court, was denied. Despite a final
judgment, the customs commissioner still reappraised
the value of the goods and effectively reduced the
amount of fine. Holding that he had no authority to
compromise a final judgment, the Court explained:
"It is argued that the parties to a case may
enter into a compromise about even a final
judgment rendered by a court, and it is
contended x x x that the reappraisal ordered by
the Commissioner of Customs and sanctioned
by the Department of Finance was authorized by
Section 1369 of the [Revised Administrative
Code]. The contention may be correct as
regards private parties who are the
owners of the property subject-matter of
the litigation, and who are therefore free
to do with what they own or what is
awarded to them, as they please, even to
the extent of renouncing the award, or
condoning the obligation imposed by the

judgment on the adverse party. Not so,

however, in the present case. Here, the
Commissioner of Customs is not a private party
and is not the owner of the money involved in
the fine based on the original appraisal. He is a
mere agent of the Government and acts as a
trustee of the money or property in his hands or
coming thereto by virtue of a favorable
judgment. Unless expressly authorized by his
principal or by law, he is not authorized to
accept anything different from or anything less
than what is adjudicated in favor of the
Government."33 (Bold types supplied)
Compliance
Rule on Contracts

with

the

There is no justification to disallow a compromise

agreement, solely because it was entered into after
final judgment. The validity of the agreement is
determined by compliance with the requisites and
principles of contracts, not by when it was entered
into. As provided by the law on contracts, a valid
compromise must have the following elements: (1) the
consent of the parties to the compromise, (2) an object
certain that is the subject matter of the compromise,
and (3) the cause of the obligation that is
established.34
In the present factual milieu, compliance with the
elements of a valid contract is not in issue. Petitioners
do not challenge the factual finding that they entered

into a compromise agreement with respondent. There

are no allegations of vitiated consent. Neither was
there any proof that the agreement was defective or
could
be
characterized
as
35
36
37
rescissible, voidable, unenforceable, or
void.38 Instead, petitioners base their argument on the
sole fact that the agreement was executed despite a
final judgment, which the Court had previously ruled to
be allowed by law.
Petitioners voluntarily entered into the compromise
agreement, as shown by the following facts: (1) they
signed respondents Manifestation (filed with the labor
arbiter) that the judgment award had been
satisfied;39 (2) they executed a Joint Affidavit dated
May 5, 1997, attesting to the receipt of payment and
the waiver of all other benefits due them; 40 and (3) 6 of
the 8 petitioners filed a Manifestation with the labor
arbiter on October 20, 1997, requesting that the cases
be terminated because of their receipt of payment in
full satisfaction of their claims. 41These circumstances
also reveal that respondent has already complied with
its obligation pursuant to the compromise agreement.
Having already benefited from the agreement,
estoppel bars petitioners from challenging it.
Advantages of Compromise
A reciprocal concession inherent in a compromise
agreement assures benefits for the contracting parties.
For the defeated litigant, obvious is the advantage of a
compromise after final judgment. Liability arising from

the judgment may be reduced. As to the prevailing

party, a compromise agreement assures receipt of
payment. Litigants are sometimes deprived of their
winnings because of unscrupulous mechanisms meant
to delay or evade the execution of a final judgment.
The advantages of a compromise agreement appear to
be recognized by the NLRC in its Rules of Procedure. As
part of the proceedings in executing a final judgment,
litigants are required to attend a pre-execution
conference to thresh out matters relevant to the
execution.42 In the conference, any agreement that
would settle the final judgment in a particular manner
is necessarily a compromise.
Novation of an Obligation
The principle of novation supports the validity of a
compromise after final judgment. Novation, a mode of
extinguishing an obligation,43 is done by changing the
object or principal condition of an obligation,
substituting the person of the debtor, or surrogating a
third person in the exercise of the rights of the
creditor.44
For an obligation to be extinguished by another, the
law requires either of these two conditions: (1) the
substitution is unequivocally declared, or (2) the old
and the new obligations are incompatible on every
point.45 A compromise of a final judgment operates as
a novation of the judgment obligation, upon
compliance with either requisite.46 In the present case,

the incompatibility of the final judgment with the

compromise agreement is evident, because the latter
was precisely entered into to supersede the former.

The law is silent with regard to the procedure for

approving a waiver after a case has been
terminated.49Relevant, however, is this reference to
the NLRCs New Rules of Procedure:

Second Issue:
Validity of the Waiver
Having ruled on the validity of the compromise
agreement in the present suit, the Court now turns its
attention to the waiver of claims or quitclaim executed
by petitioners. The subject waiver was their concession
when they entered into the agreement. They allege,
however, that the absence of their counsel and the
labor arbiter when they executed the waiver
invalidates the document.
Not
of the Waivers Validity

"Should the parties arrive at any agreement as

to the whole or any part of the dispute, the
same shall be reduced to writing and signed by
the parties and their respective counsel, or
authorized representative, if any, 50 before the
Labor Arbiter.
"The settlement shall be approved by the Labor
Arbiter after being satisfied that it was
voluntarily entered into by the parties and after
having explained to them the terms and
consequences thereof.

Determinative

The presence or the absence of counsel when a waiver

is executed does not determine its validity. There is no
law requiring the presence of a counsel to validate a
waiver. The test is whether it was executed voluntarily,
freely and intelligently; and whether the consideration
for it was credible and reasonable.47 Where there is
clear proof that a waiver was wangled from an
unsuspecting or a gullible person, the law must step in
to annul such transaction. 48 In the present case,
petitioners failed to present any evidence to show that
their consent had been vitiated.

"A compromise agreement entered into by the

parties not in the presence of the Labor Arbiter
before whom the case is pending shall be
approved by him, if after confronting the parties,
particularly the complainants, he is satisfied
that they understand the terms and conditions
of the settlement and that it was entered into
freely and voluntarily by them and the
agreement is not contrary to law, morals, and
public policy."51
This
provision
refers
to
proceedings
in
a
mandatory/conciliation conference during the initial
stage of the litigation. Such provision should be made

applicable to the proceedings in the pre-execution

conference, for which the procedure for approving a
waiver after final judgment is not stated. There is no
reason to make a distinction between the proceedings
in mandatory/conciliation and those in pre-execution
conferences.
The labor arbiters absence when the waivers were
executed was remedied upon compliance with the
above procedure. The Court observes that the arbiter
made searching questions during the pre-execution
conference to ascertain whether petitioners had
voluntarily and freely executed the waivers. 52 Likewise,
there was evidence that they made an intelligent
choice, considering that the contents of the written
waivers had been explained to them. 53The labor
arbiters absence when those waivers were executed
does not, therefore, invalidate them.
The Court declines to rule on the allegation that
respondents
counsels
encroached
upon
the
professional employment of petitioners lawyer when
they facilitated the waivers.54 The present action is not
the proper forum in which to raise any charge of
professional misconduct. More important, petitioners
failed to present any supporting evidence.
The third issue, which refers to the timely filing of
petitioners Motion for Reconsideration filed with the
CA, will no longer be discussed because this Courts
decision has resolved the case on the merits.

WHEREFORE, the Petition is DENIED and the assailed

Decision AFFIRMED. Costs against petitioners.
SO ORDERED.

AND ITS OTHER INDIVIDUAL UNION

MEMBERS, petitioners
vs.
DIRECTOR OF LABOR RELATIONS, AND OSCAR
PILI, respondents.
Rogelio R. Udarbe for petitioners.
The Solicitor General for public respondent.
Manuel V. Nepomuceno for private respondent.

GUTIERREZ, JR., J.:

The sole issue in this petition for review on certiorari is
whether or not the public respondent committed grave
abuse of discretion in ruling that the private
respondent is entitled to the financial aid from the
compulsory contributions of the petitioner-union
afforded to its members who have been suspended or
terminated from work without reasonable cause.

8. G.R. No. 76427 February 21, 1989

JOHNSON AND JOHNSON LABOR UNION-FFW,
DANTE JOHNSON MORANTE, MYRNA OLOVEJA

The provision for the grant of financial aid in favor of a

union member is embodied in the petitioner-union's
Constitution and By-laws, Article XIII, Section 5, of
which reads:
A member who have (sic) been
suspended
or
terminated
without
reasonable cause shall be extended a

financial aid from the compulsory

contributions in the amount of SEVENTY
FIVE CENTAVOS (P0. 75) from each
member weekly. (p. 18, Rollo)
On May 6, 1985, the private respondent, a member of
the
petitioner-union
was
dismissed
from
his
employment by employer Johnson & Johnson (Phil.)
Inc., for non-disclosure in his job application form of
the fact that he had a relative in the company in
violation of company policies.
On July 1985, a complaint was filed by the private
respondent against the officers of the petitioner-union
docketed as NRC- LRD-M-7-271-85 alleging, among
others, that the union officers had refused to provide
the private respondent the financial aid as provided in
the union constitution despite demands for payment
thereof The petitioner-union and its officers counteralleged, in their answer, that the said financial aid was
to be given only in cases of termination or suspension
without any reasonable cause; that the union's
executive board had the prerogative to determine
whether the suspension or termination was for a
reasonable cause or not; and that the union, in a
general membership meeting, had resolved not to
extend financial aid to the private respondent.
While the grievance procedure as contained in the
union's collective bargaining agreement was being
undertaken, the private respondent, on August 26,
1985, filed a case for unfair labor practice and illegal

dismissal against his employer docketed as NLRC-NCR

Case No. 6-1912-85.
On September 27, 1985, Med-Arbiter Anastacio L.
Bactin issued an order dismissing for lack of merit the
complaint of the private respondent against the
petitioners for alleged violation of the union
constitution and by-laws.
On appeal, the then public respondent Director
Cresenciano B. Trajano, on April 17, 1986, rendered the
decision assailed in this petition. The dispositive
portion of the said decision reads:
WHEREFORE, premises considered, the
appeal of complainant Oscar Pili is hereby
granted and the Order appealed from is
hereby set aside. Appellees, therefore,
are
hereby
ordered
to
pay
the
complainant the sum of P0.75/week per
union member to be computed from the
time of the complainant's termination
from employment to the time he acquired
another employment should his complaint
for illegal dismissal against the company
be resolved in his favor; provided, that if
his complaint against the company be
dismissed, appellees are absolved from
paying the complainant anything. (p. 115,
Records)

Both parties moved for reconsideration. The

petitioners
reiterated
that
since
the
private
respondent's termination was for a reasonable cause,
it would be unjust and unfair if financial aid were to be
given in the event that the latter's case for illegal
dismissal is decided against him. The private
respondent, on the other hand, prayed for the
amendment of the dispositive portion in order that the
grant of financial aid be made without any
qualifications.
On June 16, 1986, a Manifestation and/or Opposition to
the Motion for Reconsideration filed by the petitioners
was filed by the private respondent stating that he was
being discriminated against considering that one
Jerwin Taguba, another union member, was terminated
for dishonesty and loss of confidence but was granted
financial aid by the petitioners while Taguba's
complaint against the company was still pending with
the National Labor Relation Commission.
The public respondent separately resolved the above
motions. On June 26, 1986, an order was issued
denying the petitioners' motion for reconsideration. On
August 19, 1986, the public respondent modified its
decision dated April 17, 1986 and its aforestated order
as follows:
Considering that complainant Pili is
similarly situated as Jerwin Taguba
coupled with the need to obviate any
discriminating treatment to the former, it

is only just and appropriate that our

Decision dated 17 April 1986 be modified
in such a manner that respondents
immediately pay the complainant the
sum of P0.75/ week per union member to
be computed from the time of his
dismissal from the company, without
prejudice to refund of the amount that
shall be paid to Pili in the event the
pending case is finally resolved against
him.
WHEREFORE, and as above qualified, this
Bureau's Decision dated 17 April 1986
and the Order dated 26 June 1986 are
hereby modified to the extent that the
respondents are directed to immediately
pay complainant the sum of P0.75/week
per union member to be computed from
the time of his termination from his
employment until his case against the
employer company shall have been finally
resolved and/or disposed. (p. 53, Rollo)
Meanwhile, on July 25, 1986, a motion for issuance of a
writ of execution was filed by the private respondent in
order to collect from the petitioners the amount of
financial aid to which the former was entitled.
On September 1, 1986, the petitioners moved for a
reconsideration of the public respondent's resolution
dated August 19, 1986 on the grounds that Taguba's

affidavit cannot support the private respondent's claim

that he is also entitled to the financial aid provided in
the union's constitution and that the union cannot be
compelled to grant the said aid in the absence of a
special fund for the purpose.
On October 28, 1986, the public respondent through
Director Pura Ferrer-Calleja denied the petitioners'
motion for reconsideration stating that Article XIII,
Section 5 of the union's constitution and by-laws does
not require a special fund so that all union members
similarly situated as the private respondent must be
entitled to the same right and privilege regarding the
grant of financial aid as therein provided.
On December 18, 1986, a writ of execution was issued
by the public respondent in the following tenor:
NOW THEREFORE, you are hereby
directed to proceed to the premises of
Johnson and Johnson (FFW) located at
Edison Road, Bo. Ibayo, Paranaque, Metro
Manila to collect from the said union
through its Treasurer, Myrna Oloveja or to
any responsible officer of the union the
amount of Twenty Thousand Five Hundred
Twenty Pesos (P20,520.00), more or less
representing financial assistance to
complainant
under
the
union's
constitution and by-laws. In case you fail
to collect said amount in cash, you are to
cause the satisfaction of the same on the

union's movable or immovable properties

not exempt from execution. You are to
return this writ within fifteen (15) days
from your compliance hereby together
with your report thereon. You may collect
your legal fees from the respondent
union. (p. 55, Rollo)
On December 24, 1986, the instant petition was filed
with prayer for a preliminary injunction. The temporary
restraining order issued by the Chief Justice on
December 24, 1986 was confirmed in our resolution
dated January 7, 1987.
The grounds relied upon by the petitioners are as
follows:
A. THAT THE DECISION/ORDER
QUESTION IS CONTRARY TO LAW.

IN

B. THAT RESPONDENT OFFICIAL ACTED

WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION.
C. THAT WITH RESPECT TO PETITIONING
MEMBERS, THEY HAVE BEEN DEPRIVED
OF THEIR CONSTITUTIONAL RIGHT TO
DUE PROCESS OF LAW. (P. 13, Rollo)
We find unmeritorious the contention of the petitioners
that the questioned decision and order are contrary to
law for being tantamount to compelling the union to

disburse it funds without the authority of the general

membership and to collect from its members without
the benefit of individual payroll authorization.
Section 5, Article XIII of the petitioner-union's
constitution and by-laws earlier aforequoted is selfexecutory. The financial aid extended to any
suspended or terminated union member is realized
from the contributions declared to be compulsory
under the said provision in the amount of seventy-five
centavos due weekly from each union member. The
nature of the said contributions being compulsory and
the fact that the purpose as stated is for financial aid
clearly indicate that individual payroll authorizations of
the union members are not necessary. The petitionerunion's constitution
and
by-laws govern
the
relationship between and among its members. As in
the interpretation of contracts, if the terms are clear
and leave no doubt as to the intention of the parties,
the literal meaning of the stipulations shall control.
(See Government Service Insurance System v. Court of
Appeals, 145 SCRA 311 [1986]). Section 5, Article XIII
of the said constitution and by-laws is in line with the
petitioner- union's aims and purposes which under Sec.
2, Article II include
To promote, establish and devise schemes
of mutual assistance among the members
in labor disputes.
Thus, there is no doubt that the petitioner-union can
be ordered to release its funds intended for the

promotion of mutual assistance in favor of the private

respondent.
We likewise find untenable the argument of the
petitioners that the public respondent, in granting
financial aid to the private respondent, in effect,
substituted the decision of the petitioner-union to do
otherwise and that in so doing, the public respondent
gravely abused its discretion amounting to lack of
jurisdiction. The union constitution is a covenant
between the union and its members and among the
members. There is nothing in their constitution which
leaves the legal interpretation of its terms unilaterally
to the union or its officers or even the general
membership. It is noteworthy to quote the ruling made
by the public respondent in this respect, to wit:
The union constitution and by-laws clearly
show that any member who is suspended
or terminated from employment without
reasonable cause is entitled to financial
assistance from the union and its
members. The problem, however, is that
the constitution does not indicate which
body has the power to determine whether
a suspension or dismissal is for
reasonable cause or not. To our mind, the
constitution's silence on this matter is a
clear recognition of the labor arbiter's
exclusive jurisdiction over dismissal
cases. After all, the union's constitution
and by-laws is valid only insofar as it is

not inconsistent with existing laws. ... .

(BLR decision, p. 2; p. 115, Records)
An aggrieved member has to resort to a government
agency or tribunal. Considering that quasi-judicial
agencies like the public respondent's office have
acquired expertise since their jurisdiction is confined to
specific matter, their findings of fact in connection with
their rulings are generally accorded not only respect
but at times even finality if supported by substantial
evidence. (See Manila Mandarin Employees Union v.
National Labor Relations Commission, 154 SCRA 368
[1987]) Riker v. Ople, 155 SCRA 85 [1987]; and
Palencia v. National Labor Relations Commission, 153
SCRA 247 [1987]. We note from the records that the
petitioners have conflicting interpretations of the same
disputed provision one in favor of Jerwin Taguba and
another against the private respondent.
On the ancillary issue presented by the petitioners
whether or not the petitioning union members have
been deprived of their right to due process of law
because they were never made parties to the case
under consideration, we rule that the fact that the
union officers impleaded since the inception of the
case acted in a representative capacity on behalf of
the entire union's membership substantially meets the
requirements of due process with respect to the said
union members. Moreover, the complaint filed against
the union involves the interpretation of its constitution
favoring an aggrieved member. The members are
bound by the terms of their own constitution. A suit to

enforce a union constitution does not have to be

brought against each individual member, especially
where
several
thousand
members
form
the
membership. If there is any violation of the right to
due process in the case at bar it is as regards the
private respondent since the petitioners-union has
dispensed with due process in deciding not to extend
financial aid to the private respondent in the absence
yet of a ruling by the labor arbiter on whether his
dismissal was for a reasonable cause or not.
The remedy of the petitioners is to strike out or amend
the objectionable features of their constitution. They
cannot expect the public respondent to assist them in
its non- enforcement or violation.
WHEREFORE, PREMISES CONSIDERED, the instant
petition is hereby DISMISSED in the absence of a
showing of grave abuse of discretion on the part of the
public respondent. The decision of the public
respondent dated April 17, 1986 as modified in a
resolution dated August 17, 1986 is AFFIRMED. The
temporary restraining order issued by the Court on
December 24,1986 is SET ASIDE.
SO ORDERED.

9. G.R. No. L-43495-99 January 20, 1990

TROPICAL HUT EMPLOYEES' UNION-CGW, JOSE
ENCINAS, JOSE LUIS TRIBINO, FELIPE DURAN,
MANUEL
MANGYAO,
MAMERTO
CAHUCOM,
NEMESIO
BARRO,
TEODULFO
CAPAGNGAN,
VICTORINO ABORRO, VIDAL MANTOS, DALMACIO
DALDE, LUCIO PIASAN, CANUTO LABADAN,
TERESO
ROMERDE,
CONRADO
ENGALAN,
SALVADOR
NERVA,
BERNARDO
ENGALAN,
BONIFACIO
CAGATIN,
BENEDICTO
VALDEZ,
EUSEBIO
SUPILANAS,
ALFREDO
HAMAYAN,
ASUERO BONITO, GAVINO DEL CAMPO, ZACARIAS
DAMING,
PRUDENCIO
LADION,
FULGENCIO
BERSALUNA,
ALBERTO
PERALES,
ROMEO
MAGRAMO, GODOFREDO CAMINOS, GILDARDO
DUMAS, JORGE SALDIVAR, GENARO MADRIO,
SEGUNDINO KUIZON, LUIS SANDOVAL, NESTOR
JAPAY, ROGELIO CUIZON, RENATO ANTIPADO,
GREGORIO
CUEVO,
MARTIN
BALAZUELA,
CONSTANCIO CHU, CRISPIN TUBLE, FLORENCIO
CHIU, FABIAN CAHUCOM, EMILIANO VILLAMOR,
RESTITUTO HANDAYAN, VICTORINO ESPEDILLA,
NOEL CHUA, ARMANDO ALCORANO, ELEUTERIO
TAGUIK, SAMSON CRUDA, DANILO CASTRO,
CENON
VALLENAS,
DANILO
CAWALING,

SIMPLICIO
GALLEROS,
PERFECTO
CUIZON,
PROCESO LAUROS, ANICETO BAYLON, EDISON
ANDRES,
REYNALDO
BAGOHIN,
IRENEO
SUPANGAN,
RODRIGO
CAGATIN,
TEODORO
ORENCIO, ARMANDO LUAYON, JAIME NERVA,
NARCISO CUIZON, ALFREDO DEL ROSARIO,
EDUARDO LORENZO, PEDRO ARANGO, VICENTE
SUPANGAN, JACINTO BANAL AND BONIFACIO
PUERTO, petitioners,
vs.
TROPICAL HUT FOOD MARKET, INC., ESTELITA J.
QUE, ARTURO DILAG, MARCELINO LONTOK JR.,
NATIONAL ASSOCIATION OF TRADE UNIONS
(NATU),
NATIONAL
LABOR
RELATIONS
COMMISSION (NLRC), HON. DIEGO P. ATIENZA,
GERONIMO
Q.
QUADRA,
FEDERICO
C.
BORROMEO, AND HON. BLAS F. OPLE,respondents.
Pacifico C. Rosal for petitioners.
Marcelino Lontok, Jr. for private respondents.
Dizon, Vitug & Fajardo Law Office for Tropical Hut Food
Market, Inc. and Que.

MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 seeking to
set aside the decisions of the public respondents
Secretary of Labor and National Labor Relations

Commission which reversed the Arbitrators rulings in

favor of petitioners herein.
The following factual background of this case appears
from the record:
On January 2, 1968, the rank and file workers of the
Tropical Hut Food Market Incorporated, referred to
herein as respondent company, organized a local union
called the Tropical Hut Employees Union, known for
short as the THEU, elected their officers, adopted their
constitution and by-laws and immediately sought
affiliation with the National Association of Trade Unions
(NATU). On January 3, 1968, the NATU accepted the
THEU application for affiliation. Following such
affiliation with NATU, Registration Certificate No. 5544IP was issued by the Department of Labor in the name
of the Tropical Hut Employees Union NATU. It
appears, however, that NATU itself as a labor
federation, was not registered with the Department of
Labor.
After several negotiations were conducted between
THEU-NATU, represented by its local president and the
national officers of the NATU, particularly Ignacio
Lacsina, President, Pacifico Rosal, Executive VicePresident and Marcelino Lontok, Jr., Vice President, and
respondent Tropical Hut Food Market, Incorporated,
thru its President and General Manager, Cesar Azcona,
Sr., a Collective Bargaining Agreement was concluded
between the parties on April 1, 1968, the term of

which expired on March 31, 1971. Said agreement'

contained these clear and unequivocal terms:

Article I
Coverage and Effectivity

This Agreement made and entered into

this __________ day of ___________, 1968,
by and between:
The Tropical Hut Food Market, Inc., a
corporation duly organized and existing
under and by virtue of the laws of the
Republic of the Philippines, with principal
office at Quezon City, represented in this
Act by its President, Cesar B. Azcona
(hereinafter referred to as the Company)

Sec. 1. The COMPANY recognizes the

UNION as the sole and exclusive
collective bargaining agent for all its
workers and employees in all matters
concerning wages, hours of work, and
other
terms
and
conditions
of
employment.
xxx xxx xxx
Article III

and
Union Membership and Union Check-off
The Tropical Hut Employees Union
NATU, a legitimate labor organization duly
organized and existing in accordance with
the laws of the Republic of the
Philippines, and affiliated with the
National Association of Trade Unions, with
offices at San Luis Terraces, Ermita,
Manila, and represented in this Act by its
undersigned officers (hereinafter referred
to as the UNION)
Witnesseth:
xxx xxx xxx

Sec. 1 . . . Employees who are already

members of the UNION at the time of the
signing of this Agreement or who become
so thereafter shall be required to maintain
their membership therein as a condition
of continued employment.
xxx xxx xxx
Sec. 3Any employee who is expelled
from the UNION for joining another
federation or forming another union, or
who fails or refuses to maintain his
membership therein as required, . . .

shall, upon written request of the UNION

be discharged by the COMPANY. (Rollo,
pp. 667-670)
And attached to the Agreement as Appendix "A" is a
check-off Authorization Form, the terms of which are
as follows:
We, the undersigned, hereby designate
the NATIONAL Association of Trade
Unions, of which the TROPICAL HUT
EMPLOYEES UNION is an affiliate as sole
collective bargaining agent in all matters
relating to salary rates, hours of work and
other
terms
and
conditions
of
employment in the Tropical Hut Food
Market, Inc. and we hereby authorize the
said company to deduct the amount
of Four (P 4.00) Pesos each every month
as our monthly dues and to deliver the
amount to the Treasurer of the Union or
his duly authorized representatives.
(Rollo, pp. 680-684)
On May 21, 1971, respondent company and THEUNATU entered into a new Collective Bargaining
Agreement which ended on March 31, 1974. This new
CBA incorporated the previous union-shop security
clause and the attached check-off authorization form.
Sometime in July, 1973, Arturo Dilag, incumbent
President of THEU-NATU, was appointed by the

respondent company as Assistant Unit Manager. On

July 24, 1973, he wrote the general membership of his
union that for reason of his present position, he was
resigning as President of the THEU-NATU effective that
date. As a consequence thereof, his Vice-President,
Jose Encinas, assumed and discharged the duties of
the presidency of the THEU-NATU.
On December 19,1973, NATU received a letter dated
December 15, 1973, jointly signed by the incumbent
officers of the local union informing the NATU that
THEU was disaffiliating from the NATU federation. On
December 20, 1973, the Secretary of the THEU,
Nemesio Barro, made an announcement in an open
letter to the general membership of the THEU,
concerning the latter's disaffiliation from the NATU and
its affiliation with the Confederation of General
Workers (CGW). The letter was passed around among
the members of the THEU-NATU, to which around one
hundred and thirty-seven (137) signatures appeared as
having given their consent to and acknowledgment of
the decision to disaffiliate the THEU from the NATU.
On January 1, 1974, the general membership of the socalled THEU-CGW held its annual election of officers,
with Jose Encinas elected as President. On January 3,
1974, Encinas, in his capacity as THEU-CGW President,
informed the respondent company of the result of the
elections. On January 9, 1974, Pacifico Rosal, President
of the Confederation of General Workers (CGW), wrote
a letter in behalf of complainant THEU-CGW to the
respondent company demanding the remittance of the

union dues collected by the Tropical Hut Food Mart,

Incorporated to the THEU-CGW, but this was refused
by the respondent company.
On January 11, 1974, the NATU thru its Vice-President
Marcelino Lontok, Jr., wrote Vidal Mantos, requiring the
latter to assume immediately the position of President
of the THEU-NATU in place of Jose Encinas, but the
position was declined by Mantos. On the same day,
Lontok, Jr., informed Encinas in a letter, concerning the
request made by the NATU federation to the
respondent company to dismiss him (Encinas) in view
of his violation of Section 3 of Article III of the
Collective Bargaining Agreement. Encinas was also
advised in the letter that NATU was returning the letter
of disaffiliation on the ground that:
1. Under the restructuring program NOT
of the Bureau of Labor but of the
Philippine National Trade Union Center in
conjunction with the NATU and other
established national labor centers, retail
clerks and employees such as our
members in the Tropical Hut pertain to
Industry II which by consensus, has been
assigned already to the jurisdiction of the
NATU;
2. The right to disaffiliate belongs to the
union membership who on the basis of
verified reports received by have not

even been consulted by you regarding the

matter;
3. Assuming that the disaffiliation
decision was properly reached; your letter
nevertheless is unacceptable in view of
Article V, Section 1, of the NATU
Constitution
which
provides
that
"withdrawal from the organization shall
he valid provided three (3) months notice
of intention to withdraw is served upon
the National Executive Council." (p.
281, Rollo)
In view of NATU's request, the respondent
company, on the same day, which was January
11, 1974, suspended Encinas pending the
application for clearance with the Department of
Labor to dismiss him. On January 12, 1974,
members of the THEU-CGW passed a resolution
protesting the suspension of Encinas and
reiterated their ratification and approval of their
union's disaffiliation from NATU and their
affiliation with the Confederation of General
Workers (CGW). It was Encinas' suspension that
caused the filing of NLRC Case No. LR-2511 on
January 11, 1974 against private respondents
herein, charging them of unfair labor practice.
On January 15,1974, upon the request of NATU,
respondent company applied for clearance with the
Secretary of Labor to dismiss the other officers and

members of THEU-CGW. The company also suspended

them effective that day. NLRC Case No. LR-2521 was
filed by THEU-CGW and individual complainants
against private respondents for unfair labor practices.
On January 19, 1974, Lontok, acting as temporary
chairman, presided over the election of officers of the
remaining THEU-NATU in an emergency meeting
pending the holding of a special election to be called
at a later date. In the alleged election, Arturo Dilag
was elected acting THEU-NATU President together with
the other union officers. On February 14, 1974, these
temporary officers were considered as having been
elected as regular officers for the year 1974.
On January 30, 1974, petitioner THEU-CGW wrote a
letter to Juan Ponce Enrile, Secretary of National
Defense, complaining of the unfair labor practices
committed by respondent company against its
members and requesting assistance on the matter.
The aforementioned letter contained the signatures of
one hundred forty-three (143) members.
On February 24,1974, the secretary of THEU-NATU,
notified the entire rank and file employees of the
company that they will be given forty-eight (48) hours
upon receipt of the notice within which to answer and
affirm their membership with THEU-NATU. When the
petitioner employees failed to reply, Arturo Dilag
advised them thru letters dated February 26, March 2
and 5, 1974, that the THEU-NATU shall enforce the

union security clause set forth in the CBA, and that he

had requested respondent company to dismiss them.
Respondent company, thereafter, wrote the petitioner
employees demanding the latter's comment on Dilag's
charges before action was taken thereon. However, no
comment or reply was received from petitioners. In
view of this, Estelita Que, President/General Manager
of respondent company, upon Dilag's request,
suspended twenty four (24) workers on March 5, 1974,
another thirty seven (37) on March 8, 1974 and two (2)
more on March 11, 1974, pending approval by the
Secretary of Labor of the application for their
dismissal.
As a consequence thereof, NLRC Case Nos. LR-2971,
LR-3015 and an unnumbered case were filed by
petitioners against Tropical Hut Food Market,
Incorporated, Estelita Que, Hernando Sarmiento and
Arturo Dilag.
It is significant to note that the joint letter petition
signed by sixty-seven (67) employees was filed with
the Secretary of Labor, the NLRC Chairman and
Director of Labor Relations to cancel the words NATU
after the name of Tropical Hut Employee Union under
Registration Certificate No. 5544 IP. Another letter
signed by one hundred forty-six (146) members of
THEU-CGW was sent to the President of the Philippines
informing him of the unfair labor practices committed
by private respondents against THEU-CGW members.

After hearing the parties in NLRC Cases Nos. 2511 and

2521 jointly filed with the Labor Arbiter, Arbitrator
Daniel Lucas issued an order dated March 21, 1974,
holding that the issues raised by the parties became
moot and academic with the issuance of NLRC Order
dated February 25, 1974 in NLRC Case No. LR-2670,
which directed the holding of a certification election
among the rank and file workers of the respondent
company between the THEU-NATU and THEU-CGW. He
also ordered: a) the reinstatement of all complainants;
b) for the respondent company to cease and desist
from committing further acts of dismissals without
previous order from the NLRC and for the complainant
Tropical
Hut
Employees
UNION-CGW
to
file
representation cases on a case to case basis during
the freedom period provided for by the existing CBA
between the parties (pp. 91-93, Rollo).

respondents to desist from further

committing acts of unfair labor practice.
The respondent company's application for
clearance filed with the Secretary of
Labor
to
terminate
the
subject
complainants' services effective March 20
and 23, 1974, should be denied.

From the orders rendered above by Abitrator Daniel

Lucas in NLRC Cases No. LR-2511 and LR-2521 and by
Arbitrator Cleto Villatuya in NLRC Cases Nos. LR-2971,
LR-3015, and the unnumbered case, all parties thereto,
namely, petitioners herein, respondent company, NATU
and Dilag appealed to the National Labor Relations
Commission.

With regard to NLRC Case Nos. LR-2971, LR-3015, and

the unnumbered case, Arbitrator Cleto T. Villatuya
rendered a decision dated October 14, 1974, the
dispositive portion of which states:

In a decision rendered on August 1, 1975, the National

Labor Relations Commission found the private
respondents' appeals meritorious, and stated, inter
alia:

Premises considered, a DECISION is

hereby rendered ordering respondent
company to reinstate immediately the
sixty three (63) complainants to their
former positions with back wages from
the time they were illegally suspended up
to their actual reinstatement without loss
of seniority and other employment rights
and
privileges,
and
ordering
the

WHEREFORE, in view of the foregoing

premises, the Order of Arbitrator Lucas in
NLRC CASE NOS. LR-2511, 2521 and the
decision of Arbitrator Villatuya in NLRC
CASE NOS. LR-2971, 3015 and the
unnumbered Case are hereby REVERSED.
Accordingly, the individual complainants
are deemed to have lost their status as
employees of the respondent company.

SO ORDERED. (pp. 147-148, Rollo)

However, considering that the individual

complainants are not presumed to be
familiar with nor to have anticipated the
legal mesh they would find themselves in,
after their "disaffiliation" from National
Association of Trade Unions and the
THEU-NATU,
much
less
the
legal
consequences of the said action which we
presume they have taken in all good
faith; considering, further, that the thrust
of the new orientation in labor relations is
not towards the punishment of acts
violative of contractual relations but
rather towards fair adjustments of the
resulting complications; and considering,
finally,
the
consequent
economic
hardships that would be visited on the
individual complainants, if the law were to
be strictly enforced against them, this
Commission
is
constrained
to
be
magnanimous
in
this
instant,
notwithstanding its obligation to give full
force and effect to the majesty of the law,
and hereby orders the respondent
company, under pain of being cited for
contempt for failure to do so, to give the
individual complainants a second chance
by
reemploying
them
upon
their
voluntary reaffirmation of membership
and loyalty to the Tropical Hut Employees
Union-NATU and the National Association

of Trade Unions in the event it hires

additional personnel.
SO ORDERED. (pp. 312-313, Rollo)
The petitioner employees appealed the decision of the
respondent National Labor Relations Commission to
the Secretary of Labor. On February 23, 1976, the
Secretary of Labor rendered a decision affirming the
findings of the Commission, which provided inter alia:
We find, after a careful review of the
record, no sufficient justification to alter
the decision appealed from except that
portion of the dispositive part which
states:
. . . this Commission . . .
hereby orders respondent
company under pain of
being cited for contempt for
failure to do so, to give the
individual complainants a
second
chance
by
reemploying them upon their
voluntary reaffirmation of
membership and loyalty to
the Tropical Hut Employees
UNION-NATU
and
the
National Association of Trade
Union in the event it hires
additional personnel.

Compliance by respondent of the above

undertaking is not immediately feasible
considering that the same is based on an
uncertain event, i.e., reemployment of
individual complainants "in the event that
management hires additional personnel,"
after they shall have reaffirmed their
loyalty to THEU-NATU, which is unlikely.

President; 2) whether or not the disaffiliation of the

local union from the national federation was valid; and
3) whether or not the dismissal of petitioner
employees resulting from their unions disaffiliation for
the mother federation was illegal and constituted
unfair labor practice on the part of respondent
company and federation.
We find the petition highly meritorious.

In lieu of the foregoing, and to give

complainants positive relief pursuant to
Section 9, Implementing Instruction No. 1.
dated November 9, 1972, respondent is
hereby ordered to grant to all the
individual
complainants
financial
assistance equivalent to one (1) month
salary for every year of service.
WHEREFORE, with the modification as
above indicated, the Decision of the
National Labor Relations Commission is
hereby affirmed.
SO ORDERED.(pp. 317-318, Rollo)
From the various pleadings filed and arguments
adduced by petitioners and respondents, the following
issues appear to be those presented for resolution in
this petition to wit: 1) whether or not the petitioners
failed to exhaust administrative remedies when they
immediately elevated the case to this Court without an
appeal having been made to the Office of the

The applicable law then is the Labor Code, PD 442, as

amended by PD 643 on January 21, 1975, which
states:
Art. 222. Appeal . . .
xxx xxx xxx
Decisions
of
the
Secretary
of
Labor may be appealed to the President
of the Philippines subject to such
conditions or limitations as the President
may direct. (Emphasis ours)
The remedy of appeal from the Secretary of Labor to
the Office of the President is not a mandatory
requirement before resort to courts can be had, but an
optional relief provided by law to parties seeking
expeditious disposition of their labor disputes. Failure
to avail of such relief shall not in any way served as an
impediment to judicial intervention. And where the
issue is lack of power or arbitrary or improvident

exercise thereof, decisions of the Secretary of Labor

may be questioned in a certiorari proceeding without
prior appeal to the President (Arrastre Security
Association TUPAS v. Ople, No. L-45344, February 20,
1984, 127 SCRA 580). Since the instant petition raises
the same issue of grave abuse of discretion of the
Secretary of Labor amounting to lack of or in excess of
jurisdiction in deciding the controversy, this Court can
properly take cognizance of and resolve the issues
raised herein.
This brings Us to the question of the legality of the
dismissal meted to petitioner employees. In the
celebrated case of Liberty Cotton Mills Workers Union
v. Liberty Cotton Mills, L-33187, September 4, 1975,
66 SCRA 512, We held that the validity of the
dismissals pursuant to the union security clause in the
collective bargaining agreement hinges on the validity
of the disaffiliation of the local union from the
federation.
The right of a local union to disaffiliate from its mother
federation is well-settled. A local union, being a
separate and voluntary association, is free to serve the
interest of all its members including the freedom to
disaffiliate when circumstances warrant. This right is
consistent with the constitutional guarantee of
freedom of association (Volkschel Labor Union v.
Bureau of Labor Relations, No. L-45824, June 19, 1985,
137 SCRA 42).

All employees enjoy the right to self organization and

to form and join labor organizations of their own
choosing for the purpose of collective bargaining and
to engage in concerted activities for their mutual aid
or protection. This is a fundamental right of labor that
derives its existence from the Constitution. In
interpreting the protection to labor and social justice
provisions of the Constitution and the labor laws or
rules or regulations, We have always adopted the
liberal approach which favors the exercise of labor
rights.
Relevant on this point is the basic principle We have
repeatedly in affirmed in many rulings:
. . . The locals are separate and distinct
units primarily designed to secure and
maintain an equality of bargaining power
between
the
employer
and
their
employee-members in the economic
struggle for the fruits of the joint
productive effort of labor and capital; and
the association of the locals into the
national union (PAFLU) was in furtherance
of the same end. These associations are
consensual entities capable of entering
into such legal relations with their
member. The essential purpose was the
affiliation of the local unions into a
common enterprise to increase by
collective action the common bargaining
power in respect of the terms and

conditions of labor. Yet the locals

remained the basic units of association,
free to serve their own and the common
interest of all, subject to the restraints
imposed by the Constitution and By-Laws
of the Association, and free also to
renounce the affiliation for mutual welfare
upon the terms laid down in the
agreement
which
brought
it
into
existence. (Adamson & Adamson, Inc. v.
CIR, No. L-35120, January 31, 1984, 127
SCRA 268; Elisco-Elirol Labor Union
(NAFLU) v. Noriel, No. L-41955, December
29, 1977, 80 SCRA 681; Liberty Cotton
Mills Workers Union v. Liberty Cotton Mills,
Inc., supra).

the absence of enforceable provisions in the

federation's constitution preventing disaffiliation of a
local union a local may sever its relationship with its
parent (People's Industrial and Commercial Employees
and Workers Organization (FFW) v. People's Industrial
and Commercial Corporation, No. 37687, March 15,
1982, 112 SCRA 440).

The inclusion of the word NATU after the name of the

local union THEU in the registration with the
Department of Labor is merely to stress that the THEU
is NATU's affiliate at the time of the registration. It
does not mean that the said local union cannot stand
on its own. Neither can it be interpreted to mean that
it cannot pursue its own interests independently of the
federation. A local union owes its creation and
continued existence to the will of its members and not
to the federation to which it belongs.

There is nothing in the constitution of the NATU or in

the constitution of the THEU-NATU that the THEU was
expressly forbidden to disaffiliate from the federation
(pp. 62, 281, Rollo), The alleged non-compliance of the
local union with the provision in the NATU Constitution
requiring the service of three months notice of
intention to withdraw did not produce the effect of
nullifying the disaffiliation for the following grounds:
firstly, NATU was not even a legitimate labor
organization, it appearing that it was not registered at
that time with the Department of Labor, and therefore
did not possess and acquire, in the first place, the legal
personality to enforce its constitution and laws, much
less the right and privilege under the Labor Code to
organize and affiliate chapters or locals within its
group, and secondly, the act of non-compliance with
the procedure on withdrawal is premised on purely
technical grounds which cannot rise above the
fundamental right of self-organization.

When the local union withdrew from the old federation

to join a new federation, it was merely exercising its
primary right to labor organization for the effective
enhancement and protection of common interests. In

Respondent Secretary of Labor, in affirming the

decision of the respondent Commission, concluded
that the supposed decision to disaffiliate was not the
subject of a free and open discussion and decision on

the part of the THEU-NATU general membership (p.

305, Rollo). This, however, is contradicted by the
evidence on record. Moreover, We are inclined to
believe Arbitrator Villatuya's findings to the contrary,
as follows:
. . . . However, the complainants refute
this
allegation
by
submitting
the
following: a) Letter dated December 20,
1.973 signed by 142 members (Exhs. "B
to B-5") resolution dated January 12,
1974, signed by 140 members (Exhs. "H
to H-6") letter dated February 26, 1974 to
the Department of Labor signed by 165
members (Exhs. "I to I-10"); d) letter
dated January 30, 1974 to the Secretary
of the National Defense signed by 144
members (Exhs. "0 to 0-5") and; e) letter
dated March 6, 1974 signed by 146
members addressed to the President of
the Philippines (Exhs. "HH to HH-5"), to
show that in several instances, the
members of the THEU-NATU have
acknowledged their disaffiliation from
NATU. The letters of the complainants
also indicate that an overwhelming
majority have freely and voluntarily
signed their union's disaffiliation from
NATU, otherwise, if there was really
deception employed in securing their
signatures as claimed by NATU/ Dilag, it
could not be possible to get their

signatures in five different documents. (p.

144, Rollo)
We are aware of the time-honored doctrine that the
findings of the NLRC and the Secretary of Labor are
binding on this Court if supported by substantial
evidence. However, in the same way that the findings
of facts unsupported by substantial and credible
evidence do not bind this Court, neither will We uphold
erroneous conclusions of the NLRC and the Secretary
of Labor when We find that the latter committed grave
abuse of discretion in reversing the decision of the
labor arbiter (San Miguel Corporation v. NLRC, L-50321,
March 13, 1984, 128 SCRA 180). In the instant case,
the factual findings of the arbitrator were correct
against that of public respondents.
Further, there is no merit in the contention of the
respondents that the act of disaffiliation violated the
union security clause of the CBA and that their
dismissal as a consequence thereof is valid. A perusal
of the collective bargaining agreements shows that the
THEU-NATU, and not the NATU federation, was
recognized as the sole and exclusive collective
bargaining agent for all its workers and employees in
all matters concerning wages, hours of work and other
terms and conditions of employment (pp. 667706, Rollo). Although NATU was designated as the sole
bargaining agent in the check-off authorization form
attached to the CBA, this simply means it was acting
only for and in behalf of its affiliate. The NATU
possessed the status of an agent while the local union

remained the basic principal union which entered into

contract with the respondent company. When the
THEU disaffiliated from its mother federation, the
former did not lose its legal personality as the
bargaining union under the CBA. Moreover, the union
security clause embodied in the agreements cannot be
used to justify the dismissals meted to petitioners
since it is not applicable to the circumstances
obtaining in this case. The CBA imposes dismissal only
in case an employee is expelled from the union for
joining another federation or for forming another union
or who fails or refuses to maintain membership
therein. The case at bar does not involve the
withdrawal of merely some employees from the union
but of the whole THEU itself from its federation.
Clearly, since there is no violation of the union security
provision in the CBA, there was no sufficient ground to
terminate the employment of petitioners.
Public respondents considered the existence of Arturo
Dilag's group as the remaining true and valid union.
We, however, are inclined to agree instead with the
Arbitrator's findings when he declared:
. . . . Much more, the so-called THEUNATU under Dilag's group which assumes
to be the original THEU-NATU has a very
doubtful and questionable existence not
to mention that the alleged president is
performing supervisory functions and not
qualified to be a bona fide member of the
rank and file union. (p. 146, Rollo)

Records show that Arturo Dilag had resigned in the

past as President of THEU-NATU because of his
promotion to a managerial or supervisory position as
Assistant Unit Manager of respondent Company.
Petitioner Jose Encinas replaced Dilag as President and
continued to hold such position at the time of the
disaffiliation of the union from the federation. It is
therefore improper and contrary to law for Dilag to
reassume the leadership of the remaining group which
was alleged to be the true union since he belonged to
the managerial personnel who could not be expected
to work for the betterment of the rank and file
employees. Besides, managers and supervisors are
prohibited from joining a rank and file union
(Binalbagan Isabela Sugar Co., Inc. (BISCOM) v.
Philippine Association of Free Labor Unions (PAFLU), et
al., L-18782, August 29, 1963, 8 SCRA 700).
Correspondingly, if a manager or supervisor organizes
or joins a rank and file union, he will be required to
resign therefrom (Magalit, et al. v. Court of Industrial
Relations, et al., L-20448, May 25, 1965,14 SCRA 72).
Public respondents further submit that several
employees who disaffiliate their union from the NATU
subsequently
retracted
and
reaffirmed
their
membership with the THEU-NATU. In the decision
which was affirmed by respondent Secretary of Labor,
the respondent Commission stated that:
. . . out of the alleged one hundred and
seventy-one (171) members of the THEUCGW whose signatures appeared in the

"Analysis of Various Documents Signed by

Majority Members of the THEU-CGW,
(Annex
"T",
Complainants),
which
incidentally was relied upon by Arbitrator
Villatuya in holding that complainant
THEU-CGW commanded the majority of
employees in respondent company,
ninety-three
(93)
of
the
alleged
signatories reaffirmed their membership
with the THEU-NATU and renounced
whatever connection they may have had
with other labor unions, (meaning the
complainant THEU-CGW) either through
resolution or membership application
forms they have unwittingly signed." (p.
306, Rollo)
Granting arguendo, that the fact of retraction is true,
the evidence on record shows that the letters of
retraction were executed on various dates beginning
January 11, 1974 to March 8, 1974 (pp. 278280, Rollo). This shows that the retractions were made
more or less after the suspension pending dismissal on
January 11, 1974 of Jose Encinas, formerly THEU-NATU
President, who became THEU-CGW President, and the
suspension pending their dismissal of the other
elected officers and members of the THEU-CGW on
January 15, 1974. It is also clear that some of the
retractions occurred after the suspension of the first
set of workers numbering about twenty-four (24) on
March 5, 1974. There is no use in saying that the
retractions obliterated the act of disaffiliation as there

are doubts that they were freely and voluntarily done

especially during such time when their own union
officers and co-workers were already suspended
pending their dismissal.
Finally, with regard to the process by which the
workers were suspended or dismissed, this Court finds
that it was hastily and summarily done without the
necessary due process. The respondent company sent
a letter to petitioners herein, advising them of
NATU/Dilag's recommendation of their dismissal and at
the same time giving them forty-eight (48) hours
within which to comment (p. 637, Rollo). When
petitioners failed to do so, respondent company
immediately suspended them and thereafter effected
their dismissal. This is certainly not in fulfillment of the
mandate of due process, which is to afford the
employee to be dismissed an opportunity to be heard.
The prerogative of the employer to dismiss or lay-off
an employee should be done without abuse of
discretion or arbitrainess, for what is at stake is not
only the employee's name or position but also his
means of livelihood. Thus, the discharge of an
employee from his employment is null and void where
the employee was not formally investigated and given
the opportunity to refute the alleged findings made by
the company (De Leon v. NLRC, L-52056, October 30,
1980, 100 SCRA 691). Likewise, an employer can be
adjudged guilty of unfair labor practice for having
dismissed its employees in line with a closed shop
provision if they were not given a proper hearing

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

Philippine Association of Free Labor Unions (PAFLU) et
al., L-18782, August 29, 1963, 8 SCRA 700).
In view of the fact that the dispute revolved around the
mother federation and its local, with the company
suspending and dismissing the workers at the instance
of the mother federation then, the company's liability
should be limited to the immediate reinstatement of
the workers. And since their dismissals were effected
without previous hearing and at the instance of NATU,
this federation should be held liable to the petitioners
for the payment of their backwages, as what We have
ruled in the Liberty Cotton Mills Case (supra).
ACCORDINGLY, the petition is hereby GRANTED and
the assailed decision of respondent Secretary of Labor
is REVERSED and SET ASIDE, and the respondent
company is hereby ordered to immediately reinstate
all the petitioner employees within thirty (30) days
from notice of this decision. If reinstatement is no
longer feasible, the respondent company is ordered to
pay petitioners separation pay equivalent to one (1)
month pay for every year of service. The respondent
NATU federation is directed to pay petitioners the
amount of three (3) years backwages without
deduction or qualification. This decision shall be
immediately executory upon promulgation and notice
to the parties.

10. G.R. No. 131235 November 16, 1999

UST FACULTY UNION (USTFU), GIL Y. GAMILLA,
CORAZON
QUI,
NORMA
CALAGUAS,
IRMA
POTENCIANO, LUZ DE GUZMAN, REMEDIOS
GARCIA, RENE ARNEJO, EDITHA OCAMPO, CESAR
REYES, CELSO NIERRA, GLICERIA BALDRES, MA.
LOURDES MEDINA, HIDELITA GABO, MAFEL
YSRAEL, LAURA ABARA, NATIVIDAD SANTOS,
FERDINAND
LIMOS,
CARMELITA
ESPINA,
ZENAIDA
FAMORCA,
PHILIP
AGUINALDO,
BENEDICTA
ALAVA
and
LEONCIO

CASAL, petitioners,
vs.
Dir. BENEDICTO ERNESTO R. BITONIO JR. of the
Bureau of Labor Relations, Med-Arbiter TOMAS
F. FALCONITIN of The National Capital Region,
Department of Labor and Employment (DOLE),
EDUARDO J. MARIO JR., MA. MELVYN ALAMIS,
NORMA
COLLANTES,
URBANO
ALABAGIA,
RONALDO
ASUNCION,
ZENAIDA
BURGOS,
ANTHONY CURA, FULVIO M. GUERRERO, MYRNA
HILARIO, TERESITA MEER, FERNANDO PEDROSA,
NILDA REDOBLADO, RENE SISON, EVELYN TIROL
and ROSIE ALCANTARA,respondents.

PANGANIBAN, J.:
There is a right way to do the right thing at the right
time for the right reasons, 1 and in the present case, in
the right forum by the right parties. While grievances
against union leaders constitute legitimate complaints
deserving appropriate redress, action thereon should
be made in the proper forum at the proper time and
after observance of proper procedures. Similarly, the
election of union officers should be conducted in
accordance with the provisions of the union's
constitution and bylaws, as well as the Philippine
Constitution and the Labor Code. Specifically, while all
legitimate faculty members of the University of Santo
Tomas (UST) belonging to a collective bargaining unit
may take part in a duly convened certification election,

only bona fide members of the UST Faculty Union

(USTFU) may participate and vote in a legally called
election for union officers. Mob hysteria, however wellintentioned, is not a substitute for the rule of law.
The Case
The Petition for Certiorari before us assails the August
15, 1997 Resolution 2 of Director Benedicto Ernesto R.
Bitonio Jr. of the Bureau of Labor Relations (BLR) in BLR
Case No. A-8-49-97, which affirmed the February 11,
1997 Decision of Med-Arbiter Tomas F. Falconitin. The
med-arbiters Decision disposed as follows:
WHEREFORE,
premises
considered,
judgment is hereby rendered declaring
the election of USTFU officers conducted
on October 4, 1996 and its election
results as null and void ab initio.
Accordingly, respondents Gil Gamilla, et
al are hereby ordered to cease and desist
from acting and performing the duties
and functions of the legitimate officers of
[the] University of Santo Tomas Faculty
Union (USTFU) pursuant to [the] union's
constitution and by-laws (CBL).
The Temporary Restraining Order (TRO)
issued by this Office on December 11,
1996 in connection with the instant

petition, is hereby made and declared

permanent. 3
Likewise challenged is the October 30, 1997
Resolution 4 of
Director
Bitonio,
which
denied
petitioners' Motion for Reconsideration.
The Facts
The factual antecedents of the case are summarized in
the assailed Resolution as follows:
Petitioners-appellees
[herein
Private
Respondents] Marino, et. al. (appellees)
are duly elected officers of the UST
Faculty Union (USTFU). The union has a
subsisting five-year Collective Bargaining
Agreement with its employer, the
University of Santo Tomas (UST). The CBA
was registered with the Industrial
Relations Division, DOLE-NCR, on 20
February 1995. It is set to expire on 31
May 1998.
On 21 September 1996, appellee
Collantes, in her capacity as Secretary
General of USTFU, posted a notice
addressed to all USTFU members
announcing a general assembly to be
held on 05 October 1996. Among others,
the general assembly was called to elect
USTFU's next set of officers. Through the

notice, the members were also informed

of the constitution of a Committee on
Elections (COMELEC) to oversee the
elections. (Annex "B", petition)
On 01 October 1996, some of herein
appellants filed a separate petition with
the Med-Arbiter, DOLE-NCR, directed
against
herein
appellees
and
the
members of the COMELEC. Docketed as
Case
No.
NCR-OD-M-9610-001,
the
petition alleged that the COMELEC was
not constituted in accordance with
USTFU's constitution and by-laws (CBL)
and that no rules had been issued to
govern the conduct of the 05 October
1996 election.
On 02 October 1996, the secretary
general of UST, upon the request of the
various UST faculty club presidents (See
paragraph VI, Respondents' Comment
and Motion to Dismiss), issued notices
allowing all faculty members to hold a
convocation on 04 October 1996 (See
Annex "C" Petition; Annexes "4" to "10",
Appeal). Denominated as [a] general
faculty assembly, the convocation was
supposed to discuss the "state of the
unratified UST-USTFU CBA" and "status
and election of USTFU officers" (Annex
"11", Appeal)

On 04 October 1996, the med-arbiter in

Case No. NCR-OD-M-9610-001 issued a
temporary restraining order against
herein appellees enjoining them from
conducting the election scheduled on 05
October 1996.
Also on 04 October 1996, and as earlier
announced by the UST secretary general,
the general faculty assembly was held as
scheduled. The general assembly was
attended by members of the USTFU and,
as admitted by the appellants, also by
"non-USTFU members [who] are members
in good standing of the UST Academic
Community Collective Bargaining Unit"
(See
paragraph
XI,
Respondents'
Comment and Motion to Dismiss). On this
occasion, appellants were elected as
USTFU's
new
set
of
officers
by
acclamation and clapping of hands (See
paragraphs 40 to 50, Annex "12",
Appeal).
The election of the appellants came about
upon a motion of one Atty. Lopez,
admittedly not a member of USTFU, that
the USTFU CBL and "the rules of the
election be suspended and that the
election be held [on] that day" (See
paragraph 39, Idem.)

On 11 October 1996, appellees filed the

instant petition seeking injunctive reliefs
and the nullification of the results of the
04 October 1996 election. Appellees
alleged that the holding of the same
violated the temporary restraining order
issued in Case No. NCR-OD-M-9610-001.
Accusing
appellants
of
usurpation,
appellees characterized the election as
spurious for being violative of USTFU's
CBL, specifically because the general
assembly resulting in the election of
appellants was not called by the Board of
Officers of the USTFU; there was no
compliance with the ten-day notice rule
required by Section 1, Article VIII of the
CBL; the supposed elections were
conducted without a COMELEC being
constituted by the Board of Officers in
accordance with Section 1, Article IX of
the CBL; the elections were not by secret
balloting as required by Section 1, Article
V and Section 6, Article IX of the CBL,
and, the general assembly was convened
by faculty members some of whom were
not members of USTFU, so much so that
non-USTFU members were allowed to
vote in violation of Section 1, Article V of
the CBL.
On 24 October 1996, appellees filed
another urgent ex-parte motion for a

temporary restraining order, this time

alleging that appellants had served the
former a notice to vacate the union office.
For their part, appellants moved to
dismiss the original petition and the
subsequent motion on jurisdictional
grounds. Both the petition and the motion
were captioned to be for "Prohibition,
Injunction with Prayer for Preliminary
Injunction and Temporary Restraining
Order." According to the appellants, the
med-arbiter has no jurisdiction over
petitions for prohibition, "including the
ancillary remedies of restraining order
and/or preliminary injunction, which are
merely incidental to the main petition for
PROHIBITION"
(Paragraph
XVIII3,
Respondents' Comment and Motion to
Dismiss). Appellants also averred that
they now constituted the new set of union
officers
having
been
elected
in
accordance with law after the term of
office of appellees had expired. They
further
maintained
that
appellees'
scheduling of the 5 October 1996
elections was illegal because no rules and
regulations governing the elections were
promulgated as required by USTFU's CBL
and that one of the members of the
COMELEC was not a registered member of
USTFU. Appellants likewise noted that the

elections called by the appellees should

have been postponed to allow the
promulgation of rules and regulations and
to "insure a free, clean, honest and
orderly elections and to afford at the
same time the greater majority of the
general membership to participate" (See
paragraph V, Idem). Finally, appellants
contended that the holding of the general
faculty assembly on 04 October 1996 was
under the control of the Council of
College/Faculty
Club
Presidents
in
cooperation with the USTFU Reformist
Alliance and that they received the
Temporary Restraining Order issued in
Case No. NCR-OD-M-9610-001 only on 07
October 1996 and were not aware of the
same on 04 October 1996.
On 03 December 1996, appellants and
UST allegedly entered into another CBA
covering the period from 01 June 1996 to
31 May 2001 (Annex 11, appellants'
Rejoinder to the Reply and Opposition).
Consequently, appellees again moved for
the issuance of a temporary restraining
order to prevent appellants from making
further representations that [they] had
entered into a new agreement with UST.
Appellees also reiterated their earlier
stand that appellants were usurping the

former's duties and functions and should

be stopped from continuing such acts.
On 11 December 1996, over appellants'
insistence that the issue of jurisdiction
should first be resolved, the med-arbiter
issued a temporary restraining order
directing the respondents to cease and
desist from performing any and all acts
pertaining to the duties and functions of
the officers and directors of USTFU.
In the meantime, appellants claimed that
the new CBA was purportedly ratified by
an overwhelming majority of UST's
academic community on 12 December
1996 (Annexes 1 to 10, Idem). For this
reason, appellants moved for the
dismissal of what it denominated as
appellees' petition for prohibition on the
ground that this had become moot and
academic. 5
Petitioners appealed the med-arbiter's Decision to the
labor secretary, 6 who transmitted the records of the
case to the Bureau of Labor Relations which, under
Department Order No. 9, was authorized to resolve
appeals of intra-union cases, consistent with the last
paragraph of Article 241 of the Labor Code. 7
The Assailed Ruling

Agreeing with the med-arbiter that the USTFU officers'

purported election held on October 4, 1994 was void
for having been conducted in violation of the union's
Constitution and Bylaws (CBL), Public Respondent
Bitonio rejected petitioners' contention that it was a
legitimate exercise of their right to self-organization.
He ruled that the CBL, which constituted the covenant
between the union and its members, could not be
suspended during the October 4, 1996 general
assembly of all faculty members, since that assembly
had not been convened or authorized by the USTFU.
Director Bitonio likewise held that the October 4, 1996
election could not be legitimized by the recognition of
the newly "elected" set of officers by UST or by the
alleged ratification of the new CBA by the general
membership of the USTFU. Ruled Respondent Bitonio:
This submission is flawed. The issue at
hand
is
not
collective
bargaining
representation but union leadership, a
matter that should concern only the
members of USTFU. As pointed out by the
appellees, the privilege of determining
who the union officers will be belongs
exclusively to the members of the union.
Said privilege is exercised in an election
proceeding in accordance with the union's
CBL and applicable law.
To accept appellants' claim to legitimacy
on the foregoing grounds is to invest in

appellants
the
position,
duties,
responsibilities, rights and privileges of
USTFU officers without the benefit of a
lawful electoral exercise as defined in
USTFU's CBL and Article 241(c) of the
Labor Code. Not to mention the fact that
labor laws prohibit the employer from
interfering with the employees in the
latter' exercise of their right to selforganization. To allow appellants to
become USTFU officers on the strength of
management's recognition of them is to
concede to the employer the power of
determining who should be USTFU's
leaders. This is a clear case of
interference in the exercise by USTFU
members
of
their
right
to
self8
organization.
Hence, this Petition.

The Issues
The main issue in this case is whether the public
respondent committed grave abuse of discretion in
refusing to recognize the officers "elected" during the
October 4, 1996 general assembly. Specifically,
petitioners in their Memorandum urge the Court to
resolve the following questions: 10
(1) Whether the Collective Bargaining
Unit of all the faculty members in that

General Faculty Assembly had the right in

that General Faculty Assembly to suspend
the provisions of the Constitution and ByLaws of the USTFU regarding the
elections of officers of the union[.]
(2) Whether the suspension of the
provisions of the Constitution and ByLaws of the USTFU in that General Faculty
Assembly is valid pursuant to the
constitutional right of the Collective
Bargaining Unit to engage in "peaceful
concerted activities" for the purpose of
ousting the corrupt regime of the private
respondents[.]
(3) Whether the overwhelming ratification
of the Collective Bargaining Agreement
executed by the petitioners in behalf of
the USTFU with the University of Santo
Tomas has rendered moot and academic
the issue as to the validity of the
suspension of the Constitution and ByLaws and the elections of October 4, 1996
in the General Faculty Assembly[.]
The Courts Ruling
The petition is not meritorious. Petitioners fail to
convince this Court that Director Bitonio gravely
abused his discretion in affirming the med-arbiter and
in refusing to recognize the binding effect of the

October 4, 1996 general assembly called by the UST

administration.
First Issue:
Right to Self-Organization
and Union Membership
At the outset, the Court stresses that National
Federation of Labor (NFL) v. Laguesma 11 has held that
challenges against rulings of the labor secretary and
those acting on his behalf, like the director of labor
relations, shall be acted upon by the Court of Appeals,
which has concurrent jurisdiction with this Court over
petitions for certiorari. However, inasmuch as the
memoranda in the instant case have been filed prior to
the promulgation and finality of our Decision in NFL,
we deem it proper to resolve the present controversy
directly, instead of remanding it to the Court of
Appeals. Having disposed of the foregoing procedural
matter, we now tackle the issues in the present
case seriatim.
Self-organization is a fundamental right guaranteed by
the Philippine Constitution and the Labor Code.
Employees have the right to form, join or assist labor
organizations for the purpose of collective bargaining
or for their mutual aid and protection. 12 Whether
employed for a definite period or not, any employee
shall be considered as such, beginning on his first day

of service, for purposes of membership in a labor

union. 13
Corollary to this right is the prerogative not to join,
affiliate with or assist a labor union. 14 Therefore, to
become a union member, an employee must, as a
rule, not only signify the intent to become one, but
also take some positive steps to realize that intent.
The procedure for union membership is usually
embodied in the union's constitution and bylaws. 15 An
employee who becomes a union member acquires the
rights and the concomitant obligations that go with
this new status and becomes bound by the union's
rules and regulations.
When a man joins a labor union (or
almost
any
other
democratically
controlled group), necessarily a portion of
his individual freedom is surrendered for
the benefit of all members. He accepts
the will of the majority of the members in
order that he may derive the advantages
to be gained from the concerted action of
all. Just as the enactments of the
legislature bind all of us, to the
constitution and by-laws of the union
(unless contrary to good morals or public
policy, or otherwise illegal), which are
duly
enacted
through
democratic
processes, bind all of the members. If a
member of a union dislikes the provisions
of the by-laws, he may seek to have them

amended or may withdraw from the

union; otherwise, he must abide by them.
It is not the function of courts to decide
the wisdom or propriety of legitimate bylaws of a trade union.

Petitioners' frustration over the performance of private

respondents, as well as their fears of a "fraudulent"
election to be held under the latter's supervision, could
not justify the method they chose to impose their will
on the union. Director Bitonio aptly elucidated: 17

On joining a labor union, the constitution

and by-laws become a part of the
member's contract of membership under
which he agrees to become bound by the
constitution and governing rules of the
union so far as it is not inconsistent with
controlling
principles
of
law.
The
constitution
and
by-laws
of
an
unincorporated trade union express the
terms of a contract, which define the
privileges and rights secured to, and
duties assumed by, those who have
become members. The agreement of a
member on joining a union to abide by its
laws and comply with the will of the
lawfully constituted majority does not
require a member to submit to the
determination of the union any question
involving his personal rights. 16

The
constitutional
right
to
selforganization is better understood in the
context of ILO Convention No. 87
(Freedom of Association and Protection of
Right to Organize), to which the
Philippines is signatory. Article 3 of the
Convention
provides
that
workers'
organizations shall have the right to draw
up their constitution and rules and to
elect their representatives in full freedom,
free from any interference from public
authorities. The freedom conferred by the
provision is expansive; the responsibility
imposed on union members to respect
the
constitution
and
rules
they
themselves draw up equally so. The point
to be stressed is that the union's CBL is
the fundamental law that governs the
relationship between and among the
members of the union. It is where the
rights, duties and obligations, powers,
functions and authority of the officers as
well as the members are defined. It is the
organic law that determines the validity
of acts done by any officer or member of
the union. Without respect for the CBL, a

Petitioners claim that the numerous anomalies

allegedly committed by the private respondents during
the latter's incumbency impelled the October 4, 1996
election of the new set of USTFU officers. They assert
that such exercise was pursuant to their right to selforganization.

union
as
a
democratic
institution
degenerates into nothing more than a
group of individuals governed by mob
rule.
Union Election vs.
Certification Election
A union election is held pursuant to the union's
constitution and bylaws, and the right to vote in it is
enjoyed only by union members. A union election
should be distinguished from a certification election,
which is the process of determining, through secret
ballot, the sole and exclusive bargaining agent of the
employees in the appropriate bargaining unit, for
purposes of collective bargaining. 18 Specifically, the
purpose of a certification election is to ascertain
whether or not a majority of the employees wish to be
represented by a labor organization and, in the
affirmative
case,
by which particular
labor
19
organization.
In a certification election, all employees belonging to
the appropriate bargaining unit can vote. 20 Therefore,
a unionmember who likewise belongs to the
appropriate bargaining unit is entitled to vote in said
election. However, the reverse is not always true; an
employee belonging to the appropriate bargaining unit
but who is not a member of the union cannot vote in
the union election, unless otherwise authorized by the
constitution and bylaws of the union. Verily, union

affairs and elections cannot be decided in a non-union

activity.
In both elections, there are procedures to be followed.
Thus, the October 4, 1996 election cannot properly be
called a union election, because the procedure laid
down in the USTFU's CBL for the election of officers
was not followed. It could not have been a certification
election either, because representation was not the
issue, and the proper procedure for such election was
not followed. The participation of non-union members
in the election aggravated its irregularity.
Second Issue:
USTFU's Constitution and
By Laws Violated
The importance of a union's constitution and bylaws
cannot be overemphasized. They embody a covenant
between a union and its members and constitute the
fundamental law governing the members' rights and
obligations. 21 As such, the union's constitution and
bylaws should be upheld, as long as they are not
contrary to law, good morals or public policy.
We agree with the finding of Director Bitonio and MedArbiter Falconitin that the October 4, 1996 election
was tainted with irregularities because of the following
reasons.

First, the October 4, 1996 assembly was not called by

the USTFU. It was merely a convocation of faculty
clubs, as indicated in the memorandum sent
to all faculty members by Fr. Rodel Aligan, OP, the
secretary general of the University of Santo
Tomas. 22 It was not convened in accordance with the
provision on general membership meetings as found in
the USTFU's CBL, which reads:
ARTICLE VIII-MEETINGS OF THE UNION
Sec. 1. The Union shall hold regular
general membership meetings at least
once every three (3) months. Notices of
the meeting shall be sent out by the
Secretary-General at least ten (10) days
prior to such meetings by posting in
conspicuous places, preferably inside
Company premises, said notices. The
date, time and place for the meetings
shall be determined by the Board of
Officers. 23
Unquestionably, the assembly was not a union
meeting. It was in fact a gathering that was called and
participated in by management and non-union
members. By no legal fiat was such assembly
transformed into a union activity by the participation
of some union members.

Second, there was no commission on elections to

oversee the election, as mandated by Sections 1 and 2
of Article IX of the USTFU's CBL, which provide:
ARTICLE IX - UNION ELECTION
Sec. 1. There shall be a
Committee
on
Election
(COMELEC) to be created by
the Board of Officers at least
thirty (30) days before any
regular or special election.
The
functions
of
the
COMELEC
include
the
following:
a) Adopt and promulgate
rules and regulations that
will ensure a free, clean,
honest and orderly election,
whether regular or special;
b) Pass upon qualifications of
candidates;
c) Rule on any question or
protest
regarding
the
conduct of the election
subject to the procedure that
may be promulgated by the
Board of Officers; and

d) Proclaim
officers.

duly

elected

Sec. 2. The COMELEC shall

be composed of a chairman
and two members all of
whom shall be appointed by
the Board of Officers.
xxx xxx xxx

Petitioners contend that the October 4, 1996 assembly

"suspended" the union's CBL. They aver that the
suspension and the election that followed were in
accordance with their "constituent and residual powers
as members of the collective bargaining unit to choose
their representatives for purposes of collective
bargaining." Again they cite the numerous anomalies
allegedly committed by the private respondents as
USTFU officers. This argument does not persuade.

24

Third, the purported election was not done by secret

balloting, in violation of Section 6, Article IX of the
USTFU's CBL, as well as Article 241 (c) of the Labor
Code.
The foregoing infirmities considered, we cannot
attribute grave abuse of discretion to Director Bitonio's
finding and conclusion. In Rodriguez v. Director,
Bureau of Labor Relations, 25 we invalidated the local
union elections held at the wrong date without prior
notice to members and conducted without regard for
duly prescribed ground rules. We held that the
proceedings were rendered void by the lack of due
process undue haste, lack of adequate safeguards
to ensure integrity of the voting, and the absence of
the notice of the dates of balloting.
Third Issue:
Suspension of USTFU's CBL

First, as has been discussed, the general faculty

assembly was not the proper forum to conduct the
election of USTFU officers. Not all who attended the
assembly were members of the union; some,
apparently, were even disqualified from becoming
union members, since they represented management.
Thus, Director Bitonio correctly observed:
Further, appellants cannot be heard to
say that the CBL was effectively
suspended during the 04 October 1996
general assembly. A union CBL is a
covenant between the union and its
members and among members (Johnson
and Johnson Labor Union-FFW, et al. v.
Director of Labor Relations, 170 SCRA
469). Where ILO Convention No. 87
speaks of a union's full freedom to draw
up its constitution and rules, it includes
freedom from interference by persons
who are not members of the union. The
democratic principle that governance is a

matter for the governed to decide upon

applies to the labor movement which, by
law and constitutional mandate, must be
assiduously insulated against intrusions
coming from both the employer and
complete strangers if the "protection to
labor clause" of the constitution is to be
guaranteed. By appellant's own evidence,
the general faculty assembly of 04
October 1996 was not a meeting of
USTFU. It was attended by members and
non-members alike, and therefore was
not a forum appropriate for transacting
union matters. The person who moved for
the suspension of USTFU's CBL was not a
member of USTFU. Allowing a non-union
member to initiate the suspension of a
union's CBL, and non-union members to
participate in a union election on the
premise that the union's CBL had been
suspended
in
the
meantime,
is
incompatible with the freedom of
association and protection of the right to
organize.
If there are members of the so-called
"academic
community
collective
bargaining unit" who are not USTFU
members but who would nevertheless
want to have a hand in USTFU's affairs,
the appropriate procedure would have
been for them to become members of

USTFU
first.
The
procedure
for
membership is very clearly spelled out in
Article IV of USTFU's CBL. Having become
members, they could then draw guidance
from Ang Malayang Manggagawa Ng Ang
Tibay v. Ang Tibay, 103 Phil. 669. Therein
the Supreme Court held that "if a member
of the union dislikes the provisions of the
by-laws he may seek to have them
amended or may withdraw from the
union; otherwise he must abide by them."
Under Article XVII of USTFU's CBL, there is
also a specific provision for constitutional
amendments. What is clear therefore is
that USTFU's CBL provides for orderly
procedures
and
remedies
which
appellants could have easily availed
[themselves] of instead of resorting to an
exercise of their so-called "residual
power". 26
Second, the grievances of the petitioners could have
been brought up and resolved in accordance with the
procedure laid down by the union's CBL 27 and by the
Labor Code. 28 They contend that their sense of
desperation and helplessness led to the October 4,
1996 election. However, we cannot agree with the
method they used to rectify years of inaction on their
part and thereby ease bottled-up frustrations, as such
method was in total disregard of the USTFU's CBL and
of due process. The end never justifies the means.

We agree with the solicitor general's observation that

"the act of suspending the constitution when the
questioned election was held is an implied admission
that the election held on that date [October 4, 1996]
could not be considered valid under the existing USTFU
constitution . . .." 29

WHEREFORE, the Petition is hereby DISMISSED and the

assailed
Resolutions
AFFIRMED.
Costs
against
petitioners.
SO ORDERED.
Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.

The ratification of the new CBA executed between the

petitioners and the University of Santo Tomas
management did not validate the void October 4, 1996
election. Ratified were the terms of the new CBA, not
the issue of union leadership a matter that should
be decided only by union members in the proper forum
at the proper time and after observance of proper
procedures.
Epilogue
In dismissing this Petition, we are not passing upon the
merits of the mismanagement allegations imputed by
the petitioners to the private respondents; these are
not at issue in the present case. Petitioners can bring
their grievances and resolve their differences with
private respondents in timely and appropriate
proceedings. Courts will not tolerate the unfair
treatment of union members by their own leaders.
When the latter abuse and violate the rights of the
former, they shall be dealt with accordingly in the
proper forum after the observance of due process.

5THIRD DIVISION
11. G.R. No. 100898 July 5, 1993
ALEX FERRER, RAFAEL FERRER HENRY DIAZ,
DOMINGO BANCOLITA, GIL DE GUZMAN, and
FEDERATION OF DEMOCRATIC LABOR UNIONS,
(FEDLU), petitioners,
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION
(SECOND DIVISION), HUI KAM CHANG (In his
capacity as General Manager of Occidental
Foundry Corporation), OCCIDENTAL FOUNDRY
CORPORATION, MACEDONIO S. VELASCO (In his
capacity as representative of the Federation of
Free
Workers),
GENARO
CAPITLE,
JESUS
TUMAGAN, ERNESTO BARROGA, PEDRO LLENA,
GODOFREDO PACHECO, MARCELINO CASTILLO,
GEORGE IGNAS, PIO DOMINGO, and JAIME
BAYNADO, respondents.
Genrosa P. Jacinto and Raymundo D. Mallilin for private
respondents.

MELO, J.:
The petition for certiorari before us seeks to annul and
set aside: (a) the decision dated June 20, 1991 of the
Second Division of the National Labor Relations
Commission (NLRC) (Penned by Commissioner Rustico
L. Diokno and concurred in by Presiding Commissioner
Edna Bonto-Perez and Commissioner Domingo H.
Zapanta) which affirmed in toto the decision of April 5,
1990 of Labor Arbiter Eduardo J. Carpio dismissing the
complaint for illegal dismissal and unfair labor practice
on the ground that both the company and the union
merely complied with the collective bargaining
agreement provision sanctioning the termination of
any employee who fails to retain membership in good
standing with the union; and (b) the NLRC resolution
denying the motion for the reconsideration of said
decision (NLRC NCR Case No. 00-10-04855-89).
Petitioners were regular and permanent employees of
the Occidental Foundry Corporation (OFC) in Malanday,
Valenzuela, Metro Manila which was under the
management of Hui Kam Chang. As piece workers,
petitioners' earnings ranged from P110 to P140 a day.
They had been in the employ of OFC for about ten
years at the time of their dismissal in 1989 (p.
38, Rollo).
On January 5, 1989, the Samahang Manggagawa ng
Occidental Foundry Corporation-FFW (SAMAHAN) and

the OFC entered into a collective bargaining

agreement (CBA) which would be effective for the
three-year period between October 1, 1988 and
September 30, 1991 (Memorandum for OFC and Hui
Kam Chang, p. 6, Rollo; p. 551). Article II thereof
provides for a union security clause thus:
Sec. 1 The company agrees that all
permanent and regular factory workers in
the company who are members in good
standing of the union or who thereafter
may become members, shall as a
condition of continued employment,
maintain their membership in the union in
good standing for the duration of the
agreement.
xxx xxx xxx
Sec. 3 The parties agree that failure to
retain membership in good standing with
the UNION shall be ground for the
operation of paragraph 1 hereof and the
dismissal by the company of the aforesaid
employee upon written request by the
union. The aforesaid request shall be
accompanied by a verified carbon original
of the Board of (sic) Resolution by the
UNION signed by at least a majority of its
officers/directors. (p. 562, Rollo.)

On May 6, 1989, petitioner Alex Ferrer and the

SAMAHAN, filed in the Department of Labor and
Employment (DOLE), a complaint for the expulsion
from SAMAHAN of the following officers: Genaro
Capitle (president), Jesus Tumagan (vice-president),
Godofredo Pacheco (auditor), and Marcelino Pacheco
(board member) (Case No. NCR-00-M-89-11-01). The
complaint was founded on said officers' alleged
inattentiveness to the economic demands of the
workers. However, on September 4, 1989, petitioners
Diaz and Alex Ferrer withdrew the petition (p.
590, Rollo).
On September 10, 1989, petitioners conducted a
special election of officers of the SAMAHAN (pp. 205 &
583,Rollo). Said election was, however, later
questioned by the FFW. Nonetheless, the elected set of
officers tried to dissuade the OFC from remitting union
dues to the officers led by Capitle who were allied with
the FFW. Later, however, Romulo Erlano, one of the
officers elected at the special election, manifested to
the DOLE that he was no longer objecting to the
remittance of union dues to the officers led by Capitle.
Petitioners' move to stage a strike based on economic
demands was also later disowned by members of the
SAMAHAN.
The intraunion squabble came to a head when, on
September 11, 1989, a resolution expelling petitioners
from the SAMAHAN was issued by the aforesaid union
officials headed by Capitle, together with board
members George Ignas, Pio Domingo, and Jaime

Baynado (pp. 286 & 599, Rollo). The following day,

Capitle sent OFC the following letter:

12 Septembe
Mr.
Hui
General
Malanday,
Metro Manila

Kam

Chang
Manager
Valenzuela

Dear Mr. Chang:

In compliance with Article II, Sec. 3 of the
Union Security Clause as enunciated in
our Collective Bargaining Agreement, I
would like you to dismiss the following
employees on the ground of failure to
retain membership in good standing:
1. Alex Ferrer
2.
Gil
de
Guzman
3. Henry Diaz
4.
Domingo
Bancolita
5. Rafael Ferrer,
Jr.
Attached herewith is the verified carbon
original of the Board Resolution of the
union signed by the majority of its
officers/directors.

Thank you very much.

Thus, contending that their dismissal was without

cause and in utter disregard of their right to due
Very truly
yours,
process
of law, petitioners, through the FEDLU, filed a
complaint for illegal dismissal and unfair labor practice
(Sgd.) before the NLRC against Hui Kam Chang, OFC,
GENARO
Macedonio S. Velasco (as representative of the FFW)
CAPITLE
the FFW, and the SAMAHAN officers headed by Capitle
President
(p. 75, Rollo).

(p. 66, Rollo.)

Although petitioners received this letter weeks after its
date, it appears that on that same date, they had
learned about their dismissal from employment as
shown by the letter also dated September 13, 1989
which they sent the Federation of Democratic Labor
Unions (FEDLU). They volunteered therein to be
admitted as members of the FEDLU and requested that
they be represented ("katawanin") by said federation
before the DOLE in the complaint which they intended
to file against the union (SAMAHAN), the FFW and the
company for illegal dismissal, reinstatement, and other
benefits
in
accordance
with
law
(p. 74, Rollo).
Thereafter, on various dates, petitioners sent
individual letters to Hui Kam Chang professing
innocence of the charges levelled against them by the
SAMAHAN and the FFW and pleading that they be
reinstated (pp. 69-73,Rollo). Their letters appear to
have elicited no response.

In due course, after the case was ventilated through

position papers and other documents, the labor arbiter
rendered a decision dismissing petitioners' complaint
(pp. 79-89, Rollo). He found that in dismissing
petitioners, OFC was "merely complying with the
mandatory provisions of the CBA the law between it
and the union." He added:
To register compliance with the said
covenant, all that is necessary is a written
request of the union requesting dismissal
of the employees who have failed to
retain membership in good standing with
the union. The matter or question,
therefore of determining why and how did
complainants fail to retain membership in
good standing is not for the company to
inquire via formal investigation. By having
the request of the union, a legal
presumption that the request was born
out of a formal inquiry by the union that
subject employees failed to exist. This
means generally that where a valid closed

shop or similar agreement is in force with

respect to a particular bargaining unit as
in the case a quo, the employer shall
refuse to employ any person unless he is
a member of the majority union and the
employer shall dismiss employees who
fail to retain their membership in the
majority union. This must be deemed a
just cause recognized by law and
jurisprudence. The effect is discrimination
to encourage membership in other
unions. (pp. 86-87, Rollo.)
Hence, the labor arbiter concluded, the dismissal of
petitioners was an exercise of legitimate management
prerogative which cannot be considered as an unfair
labor practice. On whether the SAMAHAN and the FFW
could be held liable for illegal dismissal and unfair
labor practice, the arbiter opined that since there was
no
employer-employee
relationship
between
petitioners and respondent unions, the complaint
against the latter has no factual and legal bases,
because petitioners "should not have confused
expulsion from membership in the union as one and
the same incident to their subsequent employment
termination."
Consequently, petitioners appealed to the NLRC on the
grounds that there was prima facie evidence of abuse
of discretion on the part of the labor arbiter and that
he committed serious errors in his findings of facts.

On June 20, 1991, the NLRC rendered the herein

questioned decision affirming in toto the decision of
the arbiter. Petitioners motion for the reconsideration
of the NLRC decision having been denied, they
resorted to the instant petition for certiorari which
presents the issue of wether or not respondent
Commision gravely abused its discretion in affirming
the decision of the labor arbiter which is allegedly in
defiance of the elementary principles of procedural
due process as the petitioners were summarily
dismissed from employment without an investigation
having been conducted by the OFC on the veracity of
the allegation of the SAMAHAN-FFW that they violated
the CBA.
A CBA is the law between the company and the union
and compliance therewith is mandated by the express
policy to give protection to labor. Said policy should be
given paramount consideration unless otherwise
provided for by law (Meycauayan College vs. Drilon,
185 SCRA 50 [1990]. A CBA provision for a closed shop
is a valid form of union security and it is not a
restriction on the right or freedom of association
guaranteed by the Constitution (Lirag Textile Mill, Inc.
vs. Blanco, 109 SCRA 87 [1981]. However, in the
implementation of the provisions of the CBA, both
parties thereto should see to it that no right is violated
or impaired. In the case at bar, while it is true that the
CBA between OFC and the SAMAHAN provided for the
dismissal of employees who have not maintained their
membership in the union, the manner in which the
dismissal was enforced left much to be desired in

terms of respect for the right of petitioners to

procedural due process.
In the first place, the union has a specific provision for
the permanent or temporary "expulsion" of its erring
members in its constitution and by-laws ("saligang
batas at alituntunin"). Under the heading membership
and removal ("pag-aanib at pagtitiwalag"), it states:
Sec. 4. Ang sinumang kasapi ay maaring
itwalag (sic) ng Samahan pangsamantala
o tuluyan sa pamamagitan (sic) ng tatlo't
ikaapat () na bahagi ng dami ng bilang
ng
Pamunuang
Tagapagpaganap. Pagkaraan lamang sa
pandinig sa kanyang kaso. Batay sa
sumusunod:
(a) Sinumang gumawa ng mga bagay
bagay na labag at lihis sa patakaran ng
Samahan.
(b) Sinumang gumawa ng mga bagay na
maaaring ikabuwag ng Samahan.
(c) Hindi paghuhulog ng butaw sa loob ng
tatlong buwan na walang sakit o Doctor's
Certificate.
(d) Hindi pagbibigay ng
itinatadhana ng Samahan.

abuloy

na

(e) Sinumang kasapi na natanggal sa

kapisanan at gustong, sumapi uli ay
magpapanibago ng bilang, mula sa taon
ng kanyang pagsapi uli sa Samahan.
(Emphasis supplied; Ibid., p. 177).
No hearing ("pandinig") was ever conducted by the
SAMAHAN to look into petitioners' explanation of their
moves to oust the union leadership under Capitle, or
their subsequent affiliation with FEDLU. While it is true
that petitioners' actions might have precipitated
divisiveness and, later, showed disloyalty to the union,
still, the SAMAHAN should have observed its own
constitution and by-laws by giving petitioners an
opportunity to air their side and explain their moves. If,
after an investigation the petitioners were found to
have violated union rules, then and only then should
they be subjected to proper disciplinary measures.
Here lies the distinction between the facts of this case
and that of Cario vs. NLRC (185 SCRA 177 [1990])
upon which the Solicitor General heavily relies in
supporting the stand of petitioners. In Cario, the
erring union official was given the chance to answer
the complaints against him before an investigating
committee created for that purpose. On the other,
hand, herein petitioners were not given even one
opportunity to explain their side in the controversy.
This procedural lapse should not have been overlooked
considering the union security provision of the CBA.

What aggravated the situation in this case is the fact

that OFC itself took for granted that the SAMAHAN had
actually conducted an inquiry and considered the CBA
provision for the closed shop as self-operating that,
upon receipt of a notice that some members of the
SAMAHAN had failed to maintain their membership in
good standing in accordance with the CBA, it
summarily dismissed petitioners. To make matters
worse, the labor arbiter and the NLRC shared the same
view in holding that "(t)he matter or question,
therefore, of determining why and how did
complainants fail to retain membership in good
standing is not for the company to inquire via formal
investigation" (pp. 87 & 135, Rollo). In this regard, the
following words of my learned brother, Mr. Justice
Feliciano, in the Resolution in Cario are apt:
4. Turning now to the involvement of the
Company in the dismissal of petitioner
Cario, we note that the Company upon
being formally advised in writing of the
expulsion of petitioner Cario from the
Union, in turn simply issued a termination
letter to Cario, the termination being
made effective the very next day. We
believe that the Company should have
given petitioner Cario an opportunity to
explain his side of the controversy with
the Union. Notwithstanding the Union's
Security Clause in the CBA, the Company
should have reasonably satisfied itself by
its own inquiry that the Union had not

been merely acting arbitrarily and

capriciously in impeaching and expelling
petitioner Cario . . .
xxx xxx xxx
5. We conclude that the Company had
failed to accord to petitioner Cario the
latter's right to procedural due process.
The right of an employee to be informed
of the charges against him and to
reasonable opportunity to present his side
in a controversy with either the Company
or his own Union, is not wiped away by a
Union Security Clause or a Union Shop
Clause in a CBA. An employee is entitled
to be protected not only from a company
which disregards his rights but also from
his own Union the leadership of which
could yield to the temptation of swift and
arbitrary expulsion from membership and
hence dismissal from his job. (pp. 186 &
189.)
The need for a company investigation is founded on
the consistent ruling of this Court that the twin
requirements of notice and hearing which are essential
elements of due process must be met in employmenttermination cases. The employee concerned must be
notified of the employer's intent to dismiss him and of
the reason or reasons for the proposed dismissal. The
hearing affords the employee an opportunity to answer

the charge or charges against him and to defend

himself therefrom before dismissal is effected
(Kwikway Engineering Works vs. NLRC, 195 SCRA 526
[1991]; Salaw vs. NLRC, 202 SCRA 7 [1991]).
Observance to the letter of company rules on
investigation of an employee about to be dismissed is
not mandatory. It is enough that there is due notice
and hearing before a decision to dismiss is made
(Mendoza vs. NLRC, 195 SCRA 606 (1991]). But even if
no hearing is conducted, the requirement of due
process would have been met where a chance to
explain a party's side of the controversy had been
accorded him (Philippine Airlines, Inc. vs. NLRC, 198
SCRA 748 [1991]).
If an employee may be considered illegally dismissed
because he was not accorded fair investigation
(Hellenic Philippine Shipping vs. Siete, 195 SCRA 179
(1991]), the more reason there is to strike down as an
inexcusable and disdainful rejection of due process a
situation where there is no investigation at all (See:
Colegio del Sto. Nio vs. NLRC, 197 SCRA 611 [1991];
Artex Development Co., Inc. vs. NLRC, 187 SCRA 611
[1990]). The need for the observance of an employee's
right to procedural due process in termination cases
cannot
be
overemphasized.
After
all,
one's
employment, profession, trade, or calling is a "property
right" and the wrongful interference therewith gives
rise to an actionable wrong (Callanta vs. Carnation
Philippines, Inc., 145 SCRA 268 (1986]). Verily, a man's
right to his labor is property within the meaning of
constitutional guarantees which he cannot be deprived

of without due process (Batangas Laguna Tayabas Bus

Co. vs. Court of Appeals, 71 SCRA 470 [1976]).
While the law recognizes the right of an employer to
dismiss employees in warranted cases, it frowns upon
arbitrariness as when employees are not accorded due
process (Tan, Jr. vs. NLRC, 183 SCRA 651 [1990]). Thus,
the prerogatives of the OFC to dismiss petitioners
should not have been whimsically done for it unduly
exposed itself to a charge of unfair labor practice for
dismissing petitioners in line with the closed shop
provision of the CBA, without a proper hearing (Tropical
Hut Employees' Union-CGW vs. Tropical Hut Food
Market, Inc., 181 SCRA 173 [1990]; citing BinalbaganIsabela Sugar Co., Inc. (BISCOM) vs. Philippine
Association of Free Labor Unions (PAFLU), 8 SCRA 700
[1983]). Neither can the manner of dismissal be
considered
within
the
ambit
of
managerial
prerogatives, for while termination of employment is
traditionally considered a management prerogative, it
is not an absolute prerogative subject as it is to
limitations founded in law, the CBA, or general
principles of fair play and justice (University of Sto.
Tomas vs. NLRC, 190 SCRA 758 [1990]).
Under Rule XIV, Sections 2, 5, and 6 of the rules
implementing Batas Pambansa Blg. 130, the OFC and
the SAMAHAN should solidarity indemnify petitioners
for the violation of their right to procedural due
process (Great Pacific Life Assurance Corporation vs.
NLRC, 187 SCRA 694[1990], citing Wenphil vs. NLRC,
170 SCRA 69 [1989], Cario vs. NLRC, supra).

However, such penalty may be imposed only where

the termination of employment is justified and not
when the dismissal is illegal as in this case where the
damages are in the form of back wages.
As earlier discussed, petitioners' alleged act of sowing
disunity among the members of the SAMAHAN could
have been ventilated and threshed out through a
grievance procedure within the union itself. But resort
to such procedure was not pursued. What actually
happened in this case was that some members,
including petitioners, tried to unseat the SAMAHAN
leadership headed by Capitle due to the latter's
alleged inattention to petitioners' demands for the
implementation of the P25-wage increase which took
effect on July 1, 1989. The intraunion controversy was
such that petitioners even requested the FFW to
intervene to facilitate the enforcement of the said
wage increase (Petition, p. 54; p. 55, Rollo).
Petitioners
sought
the
help
of
the
FEDLU
only after they had learned of the termination of their
employment upon the recommendation of Capitle.
Their alleged application with federations other than
the FFW (Labor Arbiter's Decision, pp. 4-5; pp. 8283, Rollo) can hardly be considered as disloyalty to the
SAMAHAN, nor may the filing of such applications
denote that petitioners failed to maintain in good
standing their membership in the SAMAHAN. The
SAMAHAN is a different entity from FFW, the federation
to which it belonged. Neither may it, be inferred that
petitioners sought disaffiliation from the FFW for

petitioners had not formed a union distinct from that of

the SAMAHAN. Parenthetically, the right of a local
union to disaffiliate from a federation in the absence of
any provision in the federation's constitution
preventing disaffiliation of a local union is legal
(People's Industrial and Commercial Employees and
Worker's Org. (FFW) vs. People's Industrial and
Commercial Corp., 112 SCRA 440 (1982]). Such right is
consistent with the constitutional guarantee of
freedom of association (Tropical Hut Employees UnionCGW vs. Tropical Hut Food Market, Inc., 181 SCRA 173
[1990]).
Hence, while petitioners' act of holding a special
election to oust Capitle, et al. may be considered as an
act of sowing disunity among the SAMAHAN members,
and, perhaps, disloyalty to the union officials, which
could have been dealt with by the union as a
disciplinary matter, it certainly cannot be considered
as constituting disloyalty to the union. Faced with a
SAMAHAN leadership which they had tried to remove
as officials, it was but a natural act of self-preservation
that petitioners fled to the arms of the FEDLU after the
union and the OFC had tried to terminate their
employment. Petitioners should not be made
accountable for such an act.
With the passage of Republic Act No. 6715 which took
effect on March 21, 1989, Article 279 of the Labor
Code was amended to read as follows:

Security of Tenure. In cases of regular

employment, the employer shall not
terminate the services of an employee
except for a just cause or when
authorized by this Title. An employee who
is unjustly dismissed from work shall be
entitled to reinstatement without loss of
seniority rights and other privileges and
to his full backwages, inclusive of
allowances, and to his other benefits or
their monetary equivalent computed from
the time his compensation was withheld
from him up to the time of his actual
reinstatement.
and as implemented by Section 3, Rule 8 of the 1990
New Rules of Procedure of the National Labor Relations
Commission, it would seem that the Mercury Drug Rule
(Mercury Drug Co., Inc. vs. Court of Industrial
Relations, 56 SCRA 694 [1974]) which limited the
award of back wages of illegally dismissed workers to
three (3) years "without deduction or qualification" to
obviate the need for further proceedings in the course
of execution, is no longer applicable.
A legally dismissed employee may now be paid his
back wages, allowances, and other benefits for
the entire period he was out of work subject to the rule
enunciated before the Mercury Drug Rule, which is that
the employer may, however, deduct any amount which
the employee may have earned during the period of
his illegal termination (East Asiatic Company, Ltd. vs.

Court of Industrial Relations, 40 SCRA 521 [1971]).

Computation of full back wages and presentation of
proof as to income earned elsewhere by the illegally
dismissed employee after his termination and before
actual reinstatement should be ventilated in the
execution proceedings before the Labor Arbiter
concordant with Section 3, Rule 8 of the 1990 new
Rules of Procedure of the National Labor Relations
Commission.
Inasmuch as we have ascertained in the text of this
discourse that the OFC whimsically dismissed
petitioners without proper hearing and has thus
opened OFC to a charge of unfair labor practice, it
ineluctably follows that petitioners can receive their
back wages computed from the moment their
compensation was withheld after their dismissal in
1989 up to the date of actual reinstatement. In such a
scenario, the award of back wages can extend beyond
the 3-year period fixed by the Mercury Drug Rule
depending, of course, on when the employer will
reinstate the employees.
It may appear that Article 279 of the Labor Code, as
amended by Republic Act No. 6715, has made the
employer bear a heavier burden than that pronounced
in the Mercury Drug Rule, but perhaps Republic Act No.
6715 was enacted precisely for the employer to realize
that the employee must be immediately restored to his
former position, and to impress the idea that
immediate reinstatement is tantamount to a costsaving measure in terms of overhead expense plus

incremental productivity to the company which lies in

the hands of the employer.
WHEREFORE, the decision appealed from is hereby
SET ASIDE and private respondents are hereby ordered
to reinstate petitioners to their former or equivalent
positions without loss of seniority rights and with full
back wages, inclusive of allowances and other benefits
or their monetary equivalent, pursuant to Article 279
of the Labor Code, as amended by Republic Act No.
6715.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur.

12. G.R. No. 85333 February 26, 1990

CARMELITO L. PALACOL, ET AL., petitioners,
vs.
PURA FERRER-CALLEJA, Director of the Bureau of
Labor Relations, MANILA CCBPI SALES FORCE
UNION,
and
COCA-COLA
BOTTLERS
(PHILIPPINES), INC., respondents.
Wellington B. Lachica for petitioners.
Adolpho M. Guerzon for respondent Union.

GANCAYCO, J.:
Can a special assessment be validly deducted by a
labor union from the lump-sum pay of its members,
granted under a collective bargaining agreement
(CBA), notwithstanding a subsequent disauthorization
of the same by a majority of the union members? This
is the main issue for resolution in the instant petition
for certiorari.
As gleaned from the records of the case, the pertinent
facts are as follows:
On October 12, 1987, the respondent Manila CCBPI
Sales Force Union (hereinafter referred to as the

Union), as the collective bargaining agent of all regular

salesmen, regular helpers, and relief helpers of the
Manila Plant and Metro Manila Sales Office of the
respondent Coca-Cola Bottlers (Philippines), Inc.
(hereinafter referred to as the Company) concluded a
new collective bargaining agreement with the
latter. 1 Among the compensation benefits granted to
the employees was a general salary increase to be
given in lump sum including recomputation of actual
commissions earned based on the new rates of
increase.
On the same day, the president of the Union submitted
to the Company the ratification by the union members
of the new CBA and authorization for the Company to
deduct union dues equivalent to P10.00 every payday
or P20.00 every month and, in addition, 10% by way of
special assessment, from the CBA lump-sum pay
granted to the union members. The last one among
the aforementioned is the subject of the instant
petition.
As embodied in the Board Resolution of the Union
dated September 29, 1987, the purpose of the special
assessment sought to be levied is "to put up a
cooperative and credit union; purchase vehicles and
other items needed for the benefit of the officers and
the general membership; and for the payment for
services rendered by union officers, consultants and
others." 2 There was also an additional proviso stating
that the "matter of allocation ... shall be at the
discretion of our incumbent Union President."

This "Authorization and CBA Ratification" was obtained

by the Union through a secret referendum held in
separate local membership meetings on various
dates. 3 The total membership of the Union was about
800. Of this number, 672 members originally
authorized the 10% special assessment, while 173
opposed the same. 4

authorization, or having signed one, subsequently

withdrew or retracted their signatures therefrom.
Petitioners assailed the 10% special assessment as a
violation of Article 241(o) in relation to Article 222(b)
of the Labor Code. Article 222(b) provides as follows:
ART. 222. Appearances and Fees.

Subsequently however, one hundred seventy (170)

members of the Union submitted documents to the
Company stating that although they have ratified the
new CBA, they are withdrawing or disauthorizing the
deduction of any amount from their CBA lump sum.
Later, 185 other union members submitted similar
documents expressing the same intent. These
members, numbering 355 in all (170 + 185), added to
the original oppositors of 173, turned the tide in favor
of disauthorization for the special assessment, with a
total of 528 objectors and a remainder of 272
supporters. 5
On account of the above-mentioned disauthorization,
the Company, being in a quandary as to whom to
remit the payment of the questioned amount, filed an
action for interpleader with the Bureau of Labor
Relations in order to resolve the conflicting claims of
the parties concerned. Petitioners, who are regular
rank-and-file employees of the Company and bona fide
members of the Union, filed a motion/complaint for
intervention therein in two groups of 161 and 94,
respectively. They claimed to be among those union
members who either did not sign any individual written

xxx xxx xxx

(b) No attorney's fees,
negotiation fees or similar
charges of any kind arising
from
any
collective
bargaining negotiations or
conclusion of the collective
agreement shall be imposed
on any individual member of
the
contracting
union;
Provided,
however,
that
attorney's fees may be
charged against union funds
in an amount to be agreed
upon by the parties. Any
contract,
agreement
or
arrangement of any sort to
the contrary shall be null
and void.
On the other hand, Article 241(o) mandates that:

ART. 241. Rights and conditions of

membership in a labor organization.
xxx xxx xxx
(o) Other than for mandatory
activities under the Code, no
special
assessments,
attorney's fees, negotiation
fees
or
any
other
extraordinary fees may be
checked
off
from
any
amount due to an employee
without an individual written
authorization duly signed by
the
employee.
The
authorization
should
specifically
state
the
amount,
purpose
and
beneficiary of the deduction;
As authority for their contention, petitioners
cited Galvadores v. Trajano, 6 wherein it was ruled that
no check-offs from any amount due employees may be
effected without individual written authorizations duly
signed by the employees specifically stating the
amount, purpose, and beneficiary of the deduction.
In its answer, the Union countered that the deductions
not only have the popular indorsement and approval of
the general membership, but likewise complied with
the legal requirements of Article 241 (n) and (o) of the

Labor Code in that the board resolution of the Union

imposing the questioned special assessment had been
duly approved in a general membership meeting and
that the collection of a special fund for labor education
and research is mandated.
Article 241(n) of the Labor Code states that
ART. 241. Rights and conditions of
membership in a labor organization.
xxx xxx xxx
(n) No special assessment or other
extraordinary fees may be levied upon
the members of a labor organization
unless authorized by a written resolution
of a majority of all the members at a
general membership meeting duly called
for the purpose. The secretary of the
organization shall record the minutes of
the meeting including the list of all
members present, the votes cast, the
purpose of the special assessment or fees
and the recipient of such assessments or
fees. The record shall be attested to by
the president;
Med-Arbiter Manases T. Cruz ruled in favor of
petitioners in an order dated February 15, 1988
whereby he directed the Company to remit the amount

it had kept in trust directly to the rank-and-file

personnel without delay.
On appeal to the Bureau of Labor Relations, however,
the order of the Med-Arbiter was reversed and set
aside by the respondent-Director in a resolution dated
August 19, 1988 upholding the claim of the Union that
the special assessment is authorized under Article 241
(n) of the Labor Code, and that the Union has complied
with the requirements therein.
Hence, the instant petition.
Petitioners allege that the respondent-Director
committed a grave abuse of discretion amounting to
lack or excess of jurisdiction when she held Article 241
(n) of the Labor Code to be the applicable provision
instead of Article 222(b) in relation to Article 241(o) of
the same law.
According to petitioners, a cursory examination and
comparison of the two provisions of Article 241 reveals
that paragraph (n) cannot prevail over paragraph (o).
The reason advanced is that a special assessment is
not a matter of major policy affecting the entire union
membership but is one which concerns the individual
rights of union members.
Petitioners further assert that assuming arguendo that
Article 241(n) should prevail over paragraph (o), the
Union has nevertheless failed to comply with the
procedure to legitimize the questioned special

assessment by: (1) presenting mere minutes of local

membership meetings instead of a written resolution;
(2) failing to call a general membership meeting; (3)
having the minutes of three (3) local membership
meetings recorded by a union director, and not by the
union secretary as required; (4) failing to have the list
of members present included in the minutes of the
meetings; and (5) failing to present a record of the
votes cast. 7 Petitioners concluded their argument by
citingGalvadores.
After a careful review of the records of this case, We
are convinced that the deduction of the 10% special
assessment by the Union was not made in accordance
with the requirements provided by law.
Petitioners are correct in citing the ruling of this Court
in Galvadores which is applicable to the instant case.
The principle "that employees are protected by law
from unwarranted practices that diminish their
compensation
without
their
known
edge
8
and consent" is in accord with the constitutional
principle of the State affording full protection to labor. 9
The respondent-Union brushed aside the defects
pointed out by petitioners in the manner of compliance
with the legal requirements as "insignificant
technicalities." On the contrary, the failure of the
Union to comply strictly with the requirements set out
by the law invalidates the questioned special
assessment. Substantial compliance is not enough in
view of the fact that the special assessment will

diminish the compensation of the union members.

Their express consent is required, and this consent
must be obtained in accordance with the steps
outlined by law, which must be followed to the letter.
No shortcuts are allowed.
The applicable provisions are clear. The Union itself
admits that both paragraphs (n) and (o) of Article 241
apply. Paragraph (n) refers to "levy" while paragraph
(o) refers to "check-off" of a special assessment. Both
provisions must be complied with. Under paragraph
(n), the Union must submit to the Company a written
resolution of a majority of all the members at a general
membership meeting duly called for the purpose. In
addition, the secretary of the organization must record
the minutes of the meeting which, in turn, must
include, among others, the list of all the members
present as well as the votes cast.
As earlier outlined by petitioners, the Union obviously
failed to comply with the requirements of paragraph
(n). It held local membership meetings on separate
occasions, on different dates and at various venues,
contrary to the express requirement that there must
be a general membership meeting. The contention of
the Union that "the local membership meetings are
precisely the very general meetings required by
law" 10 is untenable because the law would not have
specified a general membership meeting had the
legislative intent been to allow local meetings in lieu of
the latter.

It submitted only minutes of the local membership

meetings when what is required is a written resolution
adopted at the general meeting. Worse still, the
minutes of three of those local meetings held were
recorded by a union director and not by the union
secretary. The minutes submitted to the Company
contained no list of the members present and no
record of the votes cast. Since it is quite evident that
the Union did not comply with the law at every turn,
the only conclusion that may be made therefrom is
that there was no valid levy of the special assessment
pursuant to paragraph (n) of Article 241 of the Labor
Code.
Paragraph (o) on the other hand requires an individual
written authorization duly signed by every employee in
order that a special assessment may be validly
checked-off. Even assuming that the special
assessment was validly levied pursuant to paragraph
(n), and granting that individual written authorizations
were obtained by the Union, nevertheless there can be
no valid check-off considering that the majority of the
union members had already withdrawn their individual
authorizations.
A
withdrawal
of
individual
authorizations is equivalent to no authorization at all.
Hence, the ruling in Galvadores that "no check-offs
from any amounts due employees may be effected
without an individual written authorization signed by
the employees ... " is applicable.
The
Union
points
out,
however,
that
said
disauthorizations are not valid for being collective in

form, as they are "mere bunches of randomly procured

signatures, under loose sheets of paper." 11 The
contention deserves no merit for the simple reason
that the documents containing the disauthorizations
have the signatures of the union members. The Court
finds these retractions to be valid. There is nothing in
the law which requires that the disauthorization must
be in individual form.
Moreover, it is well-settled that "all doubts in the
implementation and interpretation of the provisions of
the Labor Code ... shall be resolved in favor of
labor." 12 And as previously stated, labor in this case
refers to the union members, as employees of the
Company. Their mere desire to establish a separate
bargaining unit, albeit unproven, cannot be construed
against them in relation to the legality of the
questioned special assessment. On the contrary, the
same may even be taken to reflect their dissatisfaction
with their bargaining representative, the respondentUnion, as shown by the circumstances of the instant
petition, and with good reason.
The Med-Arbiter correctly ruled in his Order that:
The mandate of the majority rank and file
have (sic) to be respected considering
they are the ones directly affected and
the realities of the high standards of
survival nowadays. To ignore the mandate
of the rank and file would enure to
destabilizing
industrial
peace
and

harmony within the rank and file and the

employer's fold, which we cannot
countenance.
Moreover, it will be recalled that precisely
union dues are collected from the union
members to be spent for the purposes
alluded to by respondent. There is no
reason shown that the regular union dues
being now implemented is not sufficient
for the alleged expenses. Furthermore,
the rank and file have spoken in
withdrawing their consent to the special
assessment, believing that their regular
union dues are adequate for the purposes
stated by the respondent. Thus, the rank
and file having spoken and, as we have
earlier mentioned, their sentiments
should be respected.
Of the stated purposes of the special assessment, as
embodied in the board resolution of the Union, only
the collection of a special fund for labor and education
research is mandated, as correctly pointed out by the
Union. The two other purposes, namely, the purchase
of vehicles and other items for the benefit of the union
officers and the general membership, and the
payment of services rendered by union officers,
consultants and others, should be supported by the
regular union dues, there being no showing that the
latter are not sufficient to cover the same.

The last stated purpose is contended by petitioners to

fall under the coverage of Article 222 (b) of the Labor
Code. The contention is impressed with merit. Article
222 (b) prohibits attorney's fees, negotiations fees and
similar charges arising out of the conclusion of a
collective bargaining agreement from being imposed
on any individual union member. The collection of the
special assessment partly for the payment for services
rendered by union officers, consultants and others may
not be in the category of "attorney's fees or
negotiations fees." But there is no question that it is an
exaction which falls within the category of a "similar
charge," and, therefore, within the coverage of the
prohibition in the aforementioned article. There is an
additional proviso giving the Union President unlimited
discretion to allocate the proceeds of the special
assessment. Such a proviso may open the door to
abuse by the officers of the Union considering that the
total amount of the special assessment is quite
considerable P1,027,694.33 collected from those
union members who originally authorized the
deduction, and P1,267,863.39 from those who did not
authorize the same, or subsequently retracted their
authorizations. 13 The former amount had already been
remitted to the Union, while the latter is being held in
trust by the Company.

The Court, therefore, stakes down the questioned

special assessment for being a violation of Article 241,
paragraphs (n) and (o), and Article 222 (b) of the Labor
Code.
WHEREFORE, the instant petition is hereby GRANTED.
The Order of the Director of the Bureau of Labor
Relations dated August 19, 1988 is hereby REVERSED
and SET ASIDE, while the order of the Med-Arbiter
dated February 17, 1988 is reinstated, and the
respondent Coca-Cola Bottlers (Philippines), Inc. is
hereby ordered to immediately remit the amount of
P1,267,863.39 to the respective union members from
whom
the
said
amount
was
withheld.
No
pronouncement as to costs. This decision is
immediately executory.
SO ORDERED.
Narvasa, Grio-Aquino and Medialdea, JJ., concur.
Cruz, J., took no part.