Title V

COVERAGE
Article 243. Coverage and employees right to self-organization. All
persons employed in commercial, industrial and agricultural
enterprises and in religious, charitable, medical, or educational
institutions, whether operating for profit or not, shall have the right to
self-organization and to form, join, or assist labor organizations of
their own choosing for purposes of collective bargaining. Ambulant,
intermittent and itinerant workers, self-employed people, rural
workers and those without any definite employers may form labor
organizations for their mutual aid and protection. (As amended by
Batas Pambansa Bilang 70, May 1, 1980).
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1. ORGANIZING IN GENERAL
The rights to organize and to bargain, in a general sense, are given not
exclusively to employees. Even workers who are not employees of
any particular employer may form their organizations to protect their
interests.
Under Art. 243 of this Code, the right to organize refers also to
forming, joining or assisting a labor organization. Connected to Art.
246 this right carries with it the right to engage in group action,
provided it is peaceful, to support the organizations objective which
is not necessarily bargaining but, simply, to aid and protect its
members. But this kind of group action must be differentiated from
strike which, because it is work stoppage, must observe certain
regulation; otherwise, the strike may be declared illegal and its leaders
may be thrown out of their jobs.

LABOR RELATIONS
form any labor organization. Therefore, regardless of the challenged
employees' designations, whether they are employed as Supervisors or
in the confidential payrolls, if the nature of their job does not fall
under the definition of "managerial" as defined in the Labor Code,
they are eligible to be members of the bargaining unit and to vote in
the certification election. Their right to self-organization must be
upheld in the absence of an express provision of law to the contrary. It
cannot be curtailed by a collective bargaining agreement.
3. EMPLOYEES OF NONPROFIT INSTITUTIONS
Under Article 243 of the Labor Code, the rank-and-file employees of
non-profit medical institutions are permitted to form, organize or join
labor unions of their choice for purposes of collective bargaining. If
the union has complied with the requisites provided by law for calling
a certification election, it is incumbent upon the DOLE Regional
Director to conduct such certification election to ascertain the
bargaining representative of the hospital employees.
4.
EXCEPTION:
COOPERATIVE

EMPLOYEE-MEMBERS

OF

A cooperative is by its nature different from an ordinary business

concern being run either, by persons, partnerships or corporations. Its
owners and/or members are the ones who run and operate the business
while the others are its employees. As above stated, irrespective of the
name of shares owned by its members they are entitled to cast one
vote each in deciding upon the affair of the cooperative. Their share
capital earn limited interests. They enjoy special privileges as
exemption from income tax and sales taxes, preferential right to
supply their products to State agencies and even exemption from
minimum wage laws.

1.1 Coverage of the Right to Organize; Exceptions

The right to form, join or assist a labor organization is granted to all
kinds of employees of all kinds of employerspublic or private,
profit or non-profit, commercial or religious. Their usual form of
organization is a union and the usual purpose is collective bargaining
with their employers.
But the seemingly all-inclusive coverage of all persons in Article
243 actually admits exceptions. Under Art. 245, for instance,
managerial employees, regardless of the kind of organization where
they are employed, may not join, assist or form any labor
organization, meaning a labor union.
Accordingly, managerial employees cannot, in the absence of an
agreement to the contrary, be allowed to share in the concessions
obtained by the labor union through collective negotiation. Otherwise,
they would be exposed to the temptation of colluding with the union
during the negotiations to the detriment of the employer. However,
there is nothing to prevent the employer from granting benefits to
managerial employees equal to or higher than those afforded to union
members.
Supervisors are allowed to organize, but they cannot for, join or assist
a rank-and-file union.
2. RIGHT TO ORGANIZE CANNOT BE BARGAINED AWAY
Although we have upheld the validity of the CBA as the law among
the parties, its provisions cannot override what is expressly provided
by law that only managerial employees are ineligible to join, assist or

An employee of such a cooperative who is a member and co-owner

thereof cannot invoke the right to collective bargaining for certainly
an owner cannot bargain with himself or his co-owners.
However, in so far as it involves cooperatives with employees who are
not members or co-owners thereof, certainly such employees are
entitled to exercise the rights of all workers to organization, collective
bargaining, negotiations and others as are enshrined in the
Constitution and existing laws of the country.
In another case, the court clarified that it is the fact of ownership of
the cooperative, and not involvement in the management thereof,
which disqualifies a member from joining any labor organization
within the cooperative. Thus, irrespective of the degree of their
participation in the actual management of the cooperative, all
members thereof cannot form, assist or join a labor organization for
the purpose of collective bargaining.
But member-employees of a cooperative may withdraw as members
of the cooperative in order to join a labor union. Membership in a
cooperative is voluntary; inherent in it is the right not to join.
4.1 Exception to Exception: Association, not Union
While the members of a cooperative who are also its employees
cannot unionize for bargaining purposes, the law does not prohibit
them from forming an association for their mutual aid and protection
as employees.

LABOR RELATIONS
D.O. No. 40-03 allows and defines a workers association as one
which is organized for the mutual aid and protection of its members or
for any legitimate purpose other than collective bargaining.

Waiver of its immunity is discretionary to IRRI. Without such express

waiver the NLRC or its labor arbiters have no jurisdiction over IRRI
even in cases of alleged illegal dismissal of any of its employees.

5. EXCEPTION: INTERNATIONAL ORGANIZATIONS

5.2 Foreign Workers
A certification election cannot be conducted in an international
organization which the Philippine Government has granted immunity
from local jurisdiction.
The grant of such immunity is a political question whose resolution by
the executive branch of government is conclusive upon the courts
(1) International Organization and Specialized AgenciesThe term
"international organization" is generally used to describe an organization set up
by agreement between two or more states. Under contemporary international
law, such organizations are endowed with some degree of international legal
personality such that they are capable of exercising specific rights, duties and
powers. They are organized mainly as a means for conducting general
international business in which the member states have an interest. The United
Nations, for instance, is an international organization dedicated to the
propagation of world peace. "Specialized agencies" are international
organizations having functions in particular fields. The term appears in Articles
57 and 63 of the Charter of the United Nations.
(2) Principles Underlying the Grant of International Immunities to
International OrganizationsThere are basically three propositions underlying
the grant of international immunities to international organizations. These
principles, contained in the ILO Memorandum are stated thus: 1) international
institutions should have a status which protects them against control or
interference by any one government in the performance of functions for the
effective discharge of which they are responsible to democratically constituted
international bodies in which all the nations concerned are represented; 2) no
country should derive any national financial advantage by levying fiscal
charges on common international funds; and 3) the international organization
should, as a collectivity of States members, be accorded the facilities for the
conduct of its official business customarily extended to each other by its
individual member States. The theory behind all three propositions is said to be
essentially institutional in character. "It is not concerned with the status, dignity
or privileges of individuals, but with the elements of functional independence
necessary to free international institutions from national control and to enable
them to discharge their responsibilities impartially on behalf of all their
members. The raison d'etre for these immunities is the assurance of unimpeded
performance of their functions by the agencies concerned.
(3) Labors Basic Rights RemainThe immunity of International Catholic
Migration Commission (ICMC) and the International Rice Research Institution
(IRRI) from local jurisdiction by no means deprives labor of its basic rights,
which are guaranteed by Article II, Section 18, Article III, Section 8, and
Article XIII, Section 3, of the 1987 Constitution; and implemented by Articles
243 and 246 of the Labor Code.
(4) Certification Election Barred by ImmunityThe immunity granted being
"from every form of legal process except in so far as in any particular case they
have expressly waived their immunity," it is inaccurate to state that a
certification election is beyond the scope of that immunity for the reason that it
is not a suit against ICMC. A certification election cannot be viewed as an
independent or isolated process. It could trigger off a series of events in the
collective bargaining process together with related incidents and/or concerted
activities, which could inevitably involve ICMC in the "legal process," which
includes any penal, civil and administrative proceedings. The eventuality of
Court litigation is neither remote and from which international organizations
are precisely shielded to safeguard them from the disruption of their functions.
Clauses on jurisdictional immunity are said to be standard provisions in the
constitutions of international Organizations. The immunity covers the
organization concerned, its property and its assets...

5.1 Waiver of Immunity

Foreigners, whether natural or juridical, as well as foreign corporations are

strictly prohibited from engaging directly or indirectly in all forms of trade
union activities. However, aliens working in the country with valid work
permits may exercise the right to self-organization if they are nationals of a
country that grants the same or similar rights to Filipino workers. (Art. 269)

6. EXCEPTION: RELIGIOUS OBJECTORS; IGLESIA NI

CRISTO MEMBERS
Under the Industrial Peace Act (1953) which preceded the Labor Code
(and even under the present Code) the employer and the union could
enter into a closed shop agreement which would compel employees
to become union workers as a condition of continued employment.
But in 1961 R.A. No. 3350 was passed to exempt from such
compulsory union membership the followers of any religious sect
(such as the Iglesia ni Cristo) whose teachings forbid membership in
labor unions. The constitutionality of R.A. No. 3350 was upheld by
the Supreme Court in Victoriano v. Elizalde.
It may not be amiss to point out here that the free exercise of religious
profession or belief is superior to contract rights. In case of conflict,
the latter must, therefore, yield to the former.
6.1 Does the Exemption Still Stand?
6.2 Iglesia Ni Cristo Members May Form and Join Own Union
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Article 244. Right of employees in the public service. Employees of
government corporations established under the Corporation Code
shall have the right to organize and to bargain collectively with their
respective employers. All other employees in the civil service shall
have the right to form associations for purposes not contrary to law.
(As amended by Executive Order No. 111, December 24, 1986).
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1. GOVERNMENT EMPLOYEES RIGHT TO ORGANIZE;
LIMITATIONS
The highest law of the land guarantees to government employees the
right to organize and to negotiate, but not the right to strike.
1.1 Limited Purpose
The extent of the government employees' right of self-organization
differs significantly from that of employees in the private sector. The
latter's right of self-organization, i.e., "to form, join or assist labor
organizations for purposes of collective bargaining," admittedly
includes the right to deal and negotiate with their respective
employers in order to fix the terms and conditions of employment and
also, to engage in concerted activities for the attainment of their
objectives, such as strikes, picketing, boycotts. But the right of
government employees to "form, join or assist employees
organizations of their own choosing" under Executive Order No. 180
is not regarded as existing or available for "purposes of collective

LABOR RELATIONS
bargaining," but simply "for the furtherance and protection of their
interests."
In other words, the right of Government employees to deal and
negotiate with their respective employers is not quite as extensive as
that of private employees. Excluded from negotiation by government
employees are the "terms and conditions of employment...that are
fixed by law," it being only those terms and conditions not otherwise
fixed by law that "may be subject of negotiation between the duly
recognized employees' organizations and appropriate government
authorities."
Declared to be 'not negotiable' are matters "that require appropriation of funds;"
e.g., increase in salary emoluments and other allowances, car plan, special
hospitalization, medical and dental services, increase in retirement benefits
(Sec. 3, Rule VIII), and those "that involve the exercise of management
prerogatives;" e.g., appointment, promotion, assignment/detail, penalties as a
result of disciplinary actions, etc. (Sec. 4, Id.) Considered negotiable are such
matters as schedule of vacation and other leaves, work assignment of pregnant
women; recreational, social, athletic, and cultural activities and facilities, etc.
(Sec. 2, Id.).

1.2 No Signing Bonus

Employees and officers of SSS are not entitled to the signing bonus
provided for in the collective negotiation agreement because the
process of collective negotiations in the public sector does not
encompass terms and conditions of employment requiring the
appropriation of public funds. The Court reminds the Social Security
Commission officials that the SSS fund is not their money
1.3 Excepted Employees
Excepted from the application of Executive Order 180, however, are
members of the Armed Forces of the Philippines, including police
officers, policemen, firemen, and jail guards (Sec. 4). For reasons of
security and safety, they are not allowed to unionize.
A high level employee is one whose functions are normally
considered policy determining, managerial or one whose duties are
highly confidential in nature. A managerial function refers to the
exercise of powers such as: (1) to effectively recommend such
managerial actions; (2) to formulate or execute management policies
and decisions; or (3) to hire, transfer, lay-off, recall, dismiss, assign or
discipline employees.
1.3a Professors as rank-and-file employees
Professors at the University of the Philippines who are not exercising
managerial or highly confidential functions are rank-and-file
employees and may unionize separately from the non-academic
personnel.
In short, the professors, associate professors and assistant professors
of the University of the Philippines are rank-and-file employees. The
full professors, associate professors, assistant professors, instructors
and the research, extension and professional staff may, if so minded,
organize themselves into a separate collective bargaining unit.
1.4 Right to Strike
EO No. 180 also concedes to government employees, like their counterparts in
the private sector, the right to engage in concerted activities, including the right
to strike, the executive order is quick to add that those activities must be

exercised in accordance with law, i.e. are subject both to "Civil Service Law
and rules" and "any legislation that may be enacted by Congress," that "the
resolution of complaints, grievances and cases involving government
employees" is not ordinarily left to collective bargaining or other related
concerted activities, but to "Civil Service Law and labor laws and procedures
whenever applicable;" and that in case "any dispute remains unresolved after
exhausting all available remedies under existing laws and procedures, the
parties may jointly refer the dispute to the (Public Sector Labor-Management)
Council for appropriate action." What is more, the Rules and Regulations
implementing Executive Order No. 180 explicitly provide that since the "terms
and conditions of employment in the government, including any political
subdivision or instrumentality thereof and government-owned and controlled
corporations with original charters are governed by law, the employees therein
shall not strike for the purpose of securing changes thereof.

2. REGISTRATION
Sec. 7. Government employees' organizations shall register with the Civil
Service Commission and the Department of Labor and Employment. The
application shall be filed with the Bureau of Labor Relations of the Department
which shall process the same in accordance with the provisions of the Labor
Code of the Philippines, as amended. Applications may also be filed with the
Regional Offices of the Department of Labor and Employment which shall
immediately transmit the said applications to the Bureau of Labor Relations
within three (3) days from receipt thereof.
Sec. 8. Upon approval of the application, a registration certificate be issued
to the organization recognizing it as a legitimate employees' organization with
the right to represent its members and undertake activities to further and defend
its interest. The corresponding certificates of registration shall be jointly
approved by the Chairman of the Civil Service Commission and Secretary of
Labor and Employment. (E.O. No. 180)

3.
CERTIFICATION
CORPORATION

ELECTION

IN

GOVERNMENT

A certification election to choose the union that will represent the

employees may be conducted by the Bureau of Labor Relations in a
government corporation, whether governed by the Labor Code or the
Civil Service rules.
3.1 Election of Officers in Government Unions
It is quite clear from this provision that BLR has the original and
exclusive jurisdiction on all inter-union and intra-union conflicts. An
intra-union conflict would refer to a conflict within or inside a labor
union, and an inter-union controversy or dispute, one occurring or
carried on between or among unions. The subject of the case at bar,
which is the election of the officers and members of the board of
KMKK-MWSS, is, clearly, an intra-union conflict, being within or
inside a labor union. It is well within the powers of the BLR to act
upon.
4. WHEN PSLMC MAY RULE ON LEGALITY OF DISMISSAL
The Public Sector Labor-Management Council, created by Executive
Order No. 180 (June 1, 1987) has jurisdiction to hear charges of unfair
labor practice filed by government employees against their employer,
e.g., the Pamantasan ng Lungsod ng Maynila. In deciding the ULP
charge the PSLMC may also rule on the complainants dismissal if the
two issuesULP and dismissalare unavoidably interlinked.
5. UNION-BUSTING IN A GOVERNMENT AGENCY, U.L.P.
5.1 Even Temporary Employees May Organize

LABOR RELATIONS
Even temporary employees enjoy the basic right to form organization
or association for purposes not contrary to law.
Under Art. 277(c) of the Labor Code, any employee, whether
employed for a definite period of not, shall beginning on his first day
of service, be considered an employee for purposes of membership in
any labor union.
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Article 245. Ineligibility of managerial employees to join any labor
organization; Right of Supervisory Employees. - Managerial
employees are not eligible to join, assist or form any labor
organization. Supervisory employees shall not be eligible for
membership in the collective bargaining unit of the rank-and-file
employees but may join, assist or form separate collective bargaining
units and/or legitimate labor organizations of their own. The rank-andfile union and the supervisors union operating within the same
establishment may join the same federation or national union. (As
amended by Section 18, Republic Act No. 6715, March 21, 1989 and
Section 8, Republic Act No. 9481 which lapsed into law on May 25,
2007 and became effective on June 14, 2007).
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1. CATEGORIES OF EMPLOYEES
RA 6715 which took effect on March 21, 1989 (15 days after its
publication in the "Philippines Daily Inquirer") provides that although
"supervisory employees shall not be eligible for membership in a
labor organization of the rank and file employees," they may,
however, "join, assist or form separate labor organization of their
own."
2. INELIGIBILITY OF MANAGERS
2.1 Types of Managerial Employees
The term "manager" generally refers to "anyone who is responsible for
subordinates and other organizational resources." As a class, managers
constitute three levels of a pyramid, namely, top management, middle
management, and first-line management which is also called supervisor. Below
this third level are the operatives or operating employees who, we may add, are
also called rank-and-file.
FIRST-LINE MANAGERS The lowest level in an organization at which
individuals are responsible for the work of others is called first-line or firstlevel management. First-line managers direct operating employees only; they
do not supervise other managers. Examples of first-line managers are the
"foreman" or production supervisor in a manufacturing plant, the technical
supervisor in a research department, and the clerical supervisor in a large office.
First-level managers are often called supervisors.
MIDDLE MANAGERS The term middle management can refer to more
than one level in an organization. Middle managers direct the activities of other
managers and sometimes also those of operating employees. Middle managers'
principal responsibilities are to direct the activities that implement their
organizations' policies and to balance the demands of their superiors with the
capacities of their subordinates. A plant manager in an electronics firm is an
example of a middle manager.
TOP MANAGERS Composed of a comparatively small group of
executives, top management is responsible for the overall management of the
organization. It establishes operating policies and guides the organization's
interactions with its environment. Typical titles of top managers are "chief
executive officer," "president," and "senior vice-president." Actual titles vary
from one organization to another and are not always a reliable guide to
membership in the highest management classification.

As can be seen from this description, a distinction exists between those who
have the authority to devise, implement and control strategic and operational
policies (top and middle managers) and those whose task is simply to ensure
that such policies are carried out by the rank-and-file employees of an
organization (first-level managers/supervisors). What distinguishes them from
the rank-and-file employees is that they act in the interest of the employer in
supervising such rank-and-file employees.
"Managerial employees" may therefore be said to fall into two distinct
categories: the "managers" per se, who compose the former group described
above, and the "supervisors" who form the latter group. Whether they belong to
the first or the second category, managers, vis-a-vis employers, are, likewise,
employees.

2.2 Constitutionality of the Prohibition

The question is whether the first sentence of Art. 245 of the Labor
Code, prohibiting managerial employees from forming, assisting or
joining any labor organization, is constitutional in light of Art. III,
Sec. 8 of the Constitution which provides:
The right of the people, including those employed in the public and private
sectors, to form unions, association, or societies for purposes not contrary to
law shall not be abridged.

The present Article 245 is the result of the amendment of the Labor
Code in 1989 by R.A. No. 6715, otherwise known as the HerreraVeloso Law. Unlike the Industrial Peace Act or the provisions of the
Labor Code which it superseded, R.A. No. 6715 provides separate
definitions of the terms "managerial" and "supervisory employees"
(See Art. 212[m]).
Although the definition of "supervisory employees" seems to have
been unduly restricted to the last phrase of the definition in the
Industrial Peace Act, the legal significance given to the phrase
"effectively recommends" remains the same. In fact, the distinction
between top and middle managers, who set management policy, and
front-line supervisors, who are merely responsible for ensuring that
such policies are carried out by the rank and file, is articulated in the
present definition.
The rationale for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with a Union, the latter
might not be assured of their loyalty to the Union in view of evident conflict of
interests. The Union can also become company-dominated with the presence of
managerial employees in Union membership.

2.2a Other Opinions

Justice Puno further airs a warning: To declare Article 245 of the Labor Code
unconstitutional cuts deep into our existing industrial life and will open the
floodgates to unionization at all levels of the industrial hierarchy. Such a ruling
will wreak havoc on the existing set-up between management and labor. If all
managerial employees will be allowed to unionize, then all who are in the
payroll of the company, starting from the president, vice-president, general
managers and everyone, with the exception of the directors, may go on strike or
picket the employer. Company officers will join forces with the supervisors and
rank-and-file.

3. EVOLUTION OF SUPERVISORS RIGHT TO ORGANIZE

Unlike managers, supervisors can unionize.
3.1 First Period: Under the Industrial Peace Act

LABOR RELATIONS
The problem was that although the Industrial Peace Act defined a
supervisor, it failed to define a manager or managerial
employee. So the question arose: Did the word supervisor include
manager? Could managers also unionize? In a case involving Caltex
managers, the Court answered affirmatively.
3.2 Second Period: Under the Labor Code Before Amendment by
R.A. No. 6715
This time the question was: Did managerial employee include
supervisor? Were supervisors also banned from unionizing? Yes.
The prohibition was applied to supervisors in the case of Bulletin
Publishing Corp. V. Sanchez, 144 SCRA 428, decided on October 7,
1986.
3.3 Third Period: Under the Labor Code as Amended by RA 6715
R.A. No. 6715 presents a compromise formula: retain the ineligibility
of managerial employees but revive the right of supervisory
employees to unionize.
4. DEFINITION OF MANAGER AND SUPERVISOR
Unlike in the Industrial Peace Act and the Labor Code before such
amendment, the power to decide on managerial acts is now separated
from the power to recommend those managerial acts, such as laying
down policy, hiring or dismissing employees, etc. A supervisor has the
power only to recommend while a managerial employee has the
power to decide and do those acts.
But to make one a supervisor, the power to recommend must not be
merely routinary or clerical in nature but requires the use of
independent judgment. In other words, the recommendation is (1)
discretionary or judgmental (not clerical), (2) independent (not a
dictation of someone else), and (3) effective (given particular weight
in making the management decision). If these qualities are lacking or,
worse, if the power to recommend is absent, then the person is not
really a supervisor but a rank-and-file employee and therefore belongs
or should belong to a rank-and-file organization.
Similarly, a so-called manager, no matter how his position is titled, is
not really a manager in the eyes of the law if he does not possess
managerial powers (to lay down and execute management policies
and/ or to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees). If he can only recommend the exercise of any
of these powers, he is only a supervisor, hence, may join, assist or
form a supervisors organization.
5. TEST OF SUPERVISORY STATUS
The test of "supervisory" or "managerial status" depends on whether a person
possesses authority to act in the interest of his employer in the matter specified
in Article 212 (k) of the Labor Code and Section 1 (m) of its Implementing
Rules and whether such authority is not merely routinary or clerical in nature,
but requires the use of independent judgment. Thus, where such
recommendatory powers as in the case at bar, are subject to evaluation, review
and final action by the department heads and other higher executives of the
company, the same, although present, are not effective and not an exercise of
independent judgment as required by law.
It is the nature of an employee's functions and not the nomenclature or title
given to his job which determines whether he has rank-and-file or managerial
status. Among the characteristics of managerial rank are: (1) He is not subject
to the rigid observance of regular office hours; (2) His work requires the

consistent exercise of discretion and judgment in its performance; (3) the output
produced or the result accomplished cannot be standardized in relation to a
given period of time; (4) He manages a customarily recognized department or
subdivision of the establishment, customarily and regularly directing the work
of other employees therein; (5) He either has the authority to hire or discharge
other employees or his suggestions and recommendations as to hiring and
discharging, advancement and promotion or other change of status of other
employees are given particular weight; and (6) As a rule, he is not paid hourly
wages nor subjected to maximum hours of work.

5.1 The Power to Recommend

The power to recommend, in order to qualify an employee as a
supervisor, must not only be effective but should require the use of
independent judgment. It should not be merely of a routinary or
clerical nature.
5.2 Examples of Ineffective or Clerical Recommendation
6. SEGREGATION OF RANK-AND-FILE AND SUPERVISORS
Article 245 allows supervisory employees to form, join, or assist
separate labor organizations of their own, but they are not eligible for
membership in a labor organization of the rank-and-file employees.
Neither may a rank-and-file join a union of supervisors.
This policy of segregating the supervisors union from that of the
rank-and-file is founded on fairness to the employees themselves. It
will be doubly detrimental to the employer if the supervisors and the
rank-and-file, as members of only one union, could take a common
stand against the employer.
6.1 Effects of Having Mixed Membership
A union whose membership is a mixture of supervisors and rank-andfile is not and cannot become a legitimate labor organization. It cannot
petition for a certification election, much less ask to be recognized as
the bargaining representative of employees.
The Labor Code has made it a clear statutory policy to prevent supervisory
employees from joining labor organizations consisting of rank-and-file
employees as the concerns which involve members of either group are normally
disparate and contradictory.
Clearly, based on Article 245, a labor organization composed of both rank-andfile and supervisory employees is no labor organization at all. It cannot, for any
guise or purpose, be a legitimate labor organization. Not being one, an
organization which carries a mixture of rank-and-file and supervisory
employees cannot possess any of the rights of a legitimate labor organization,
including the right to file a petition for certification election for the purpose of
collective bargaining. It becomes necessary, therefore, anterior to the granting
of an order allowing a certification election, to inquire into the composition of
any labor organization whenever the status of the labor organization is
challenged on the basis of Article 245 of the Labor Code.
The rationale behind the Code's exclusion of supervisors from unions of rankand-file employees is that such employees, while in the performance of
supervisory functions, become the alter ego of management in the making and
the implementing of key decisions at the sub-managerial level. Certainly, it
would be difficult to find unity or mutuality of interests in a bargaining unit
consisting of a mixture of rank-and-file and supervisory employees. And this is
so because the fundamental test of a bargaining unit's acceptability is whether
or not such a unit will best advance to all employees within the unit the proper
exercise of their collective bargaining rights. The Code itself has recognized
this, in preventing supervisory employees from joining unions of rank-and-file
employees.

LABOR RELATIONS
6.2 How Many? How Few?

7.3 Third Swing: Inclusion Among Supervisors

6.3 Illegal Mixed Membership Must Be Raised and Proved

7.4 Fourth Swing: Inclusion Among Monthly Paid Rank-and-File

6.4 Cancellation of Union Registration on Ground of Inclusion of

Disqualified Positions: What needs to be Proved

7.4a Limited Exclusion; Doctrine of Necessary Implication

What is essential is the nature of the employees function and not the
nomenclature or title given to the job which determines whether the employee
has rank-and-file or managerial status or whether he is a supervisory employee.

The implementing Rules state that the legal personality of the

petitioner union cannot be subject to collateral attack but may be
questioned only in an independent petition for cancellation.
To summarize, the petition for certification election is not the proper
forum to raise the issue of legal personality of the union. Also, a
petition to cancel union registration cannot be heard or decided by the
Med-Arbiter but either the DOLE Regional Director for enterpriselevel or the BLR Director for national unions.
6.5 Affiliation of Supervisors and Rank-and-File Unions
Even in affiliating with a federation, the unions of the supervisors and
of the ran-and-file should be segregated.
The peculiar role of supervisors is such that while they are not managers, when
they recommend action implementing management policy or ask for the
discipline or dismissal of subordinates, they identify with the interests of the
employer and may act contrary to the interests of the rank-and-file.
We agree with the petitioner's contention that a conflict of interest may arise in
the areas of discipline, collective bargaining and strikes. Members of the
supervisory union might refuse to carry out disciplinary measures against their
co-member rank-and-file employees. In the area of bargaining, their interests
cannot be considered identical. The needs of one are different from those of the
other. Moreover, in the event of a strike, the national federation might influence
the supervisors' union to conduct a sympathy strike on the sole basis of
affiliation.
Thus, if the intent of the law is to avoid a situation where supervisors would
merge with the rank and-file or where the supervisors' labor organization would
represent conflicting interests, then a local supervisors' union should not be
allowed to affiliate with the national federation of union of rank-and-file
employees where that federation actively participates in union activity in the
company.

6.6 Restriction in Affiliation Clarified in De La Salle

First, the rank-and-file employees are directly under the authority of
the supervisory employees. Second, the national federation is actively
involved in union activities in the company. If these two conditions
are absent, the rule prohibiting supervisors from affiliating with the
mother union of the rank-and-file union does not apply.
The affiliation of two local unions in a company with the same national
federation is not by itself a negate-on of their independence since in relation to
the employer, the local unions are considered as the principals, while the
federation is deemed to be merely their agent.

7. CONFIDENTIAL EMPLOYEES
7.1 First Swing: Inclusion Among Rank-and-File
7.2 Second Swing: Exclusion from Rank-and-File

A confidential employee is one entrusted with confidence on delicate

matters, or with the custody, handling, or care and protection of the
employer's property. While Art. 245 of the Labor Code singles out
managerial employees as ineligible to join, assist or form any labor
organization, under the doctrine of necessary implication, confidential
employees are similarly disqualified.
The doctrine of necessary implication means that what is implied in a
statute is as much a part thereof as that which is expressed.
7.4b The Metrolab and Meralco Summations: Exclusion from
Bargaining unit and Closed-shop Clause
Although Article 245 of the Labor Code limits the ineligibility to join, form and
assist any labor organization to managerial employees, jurisprudence has
extended this prohibition to confidential employees or those who by reason of
their positions or nature of work are required to assist or act in a fiduciary
manner to managerial employees and hence, are likewise privy to sensitive and
highly confidential records.

7.4c Who Are Confidential Employees?

Confidential employees assist and act in a confidential capacity to, or
have access to confidential matters of, persons who exercise
managerial functions in the field of labor relations. As such, the
rationale behind the ineligibility of managerial employees to form,
assist or join a labor union equally applies to them.
Confidential employees are those who by reason of their positions or
nature of work are required to assist or act in a fiduciary manner to
managerial employees and hence, are likewise privy to sensitive and
highly confidential records.
By the very nature of their functions, they assist and act in a
confidential capacity to, or have access to confidential matters of,
persons who exercise managerial functions in the field of labor
relations.
7.4d The Labor Nexus
The broad rationale behind this rule is that employees should not be placed in a
position involving a potential conflict of interests. "Management should not be
required to handle labor relations matters through employees who are
represented by the union with which the company is required to deal and who
in the normal performance of their duties may obtain advance information of
the company's position with regard to contract negotiations, the disposition of
grievances, or other labor relations matters."

Art. 245 of the Labor Code does not directly prohibit confidential
employees from engaging in union activities. However, under the
doctrine of necessary implication, the disqualification of managerial
employees equally applies to confidential employees. The
confidential-employee rule justifies exclusion of confidential
employees because in the normal course of their duties they become
aware of management policies relating to labor relations. It must be
stressed, however, that when the employee does not have access to
confidential labor relations information, there is no legal prohibition

against confidential employees from forming, assisting, or joining a

union.
7.4e New CBA may include employees excluded from old CBA;
Expired CBA may be Modified, not just Renewed
The employer and the union in an enterprise may negotiate and agree
whom to cover in their CBA. And they are free to change their
agreement: people excluded before may be included now, or vice
versa.

LABOR RELATIONS
abridged in the workplace, the abridgment is termed ULP (unfair
labor practice).
Article 246, is both (in mixed metaphors), the conceptual mother and
the formidable fortress of the prohibition expounded in the next three
articles.
________
Title VI
UNFAIR LABOR PRACTICES

8. SECURITY GUARDS MAY JOIN RANK-AND-FILE OR

SUPERVISORS UNION

Chapter I
CONCEPT

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

Article 247. Concept of unfair labor practice and procedure for

prosecution thereof. Unfair labor practices violate the constitutional
right of workers and employees to self-organization, are inimical to
the legitimate interests of both labor and management, including their
right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial peace
and hinder the promotion of healthy and stable labor-management
relations.

Article 245-A. Effect of inclusion as members of employees outside

the bargaining unit. - The inclusion as union members of employees
outside the bargaining unit shall not be a ground for the cancellation
of the registration of the union. Said employees are automatically
deemed removed from the list of membership of said union.
(Introduced as new provision by Section 9, Republic Act No. 9481
which lapsed into law on May 25, 2007 and became effective on June
14, 2007).
________
Article 246. Non-abridgment of right to self-organization. It shall be
unlawful for any person to restrain, coerce, discriminate against or
unduly interfere with employees and workers in their exercise of the
right to self-organization. Such right shall include the right to form,
join, or assist labor organizations for the purpose of collective
bargaining through representatives of their own choosing and to
engage in lawful concerted activities for the same purpose or for their
mutual aid and protection, subject to the provisions of Article 264 of
this Code. (As amended by Batas Pambansa Bilang 70, May 1, 1980).
________

Consequently, unfair labor practices are not only violations of the civil
rights of both labor and management but are also criminal offenses
against the State which shall be subject to prosecution and punishment
as herein provided.
Subject to the exercise by the President or by the Secretary of Labor
and Employment of the powers vested in them by Articles 263 and
264 of this Code, the civil aspects of all cases involving unfair labor
practices, which may include claims for actual, moral, exemplary and
other forms of damages, attorneys fees and other affirmative relief,
shall be under the jurisdiction of the Labor Arbiters. The Labor
Arbiters shall give utmost priority to the hearing and resolution of all
cases involving unfair labor practices. They shall resolve such cases
within thirty (30) calendar days from the time they are submitted for
decision.
Recovery of civil liability in the administrative proceedings shall bar
recovery under the Civil Code.

1. CONCEPT OF THE RIGHT TO SELF ORGANIZATION

This is a key article that offers an inclusionary definition of the right
to self-organization (S.O.) by saying not what it is but what it
includes. It includes at least two rights: (1) the right to form, join or
assist labor organizations, and (2) the right to engage in lawful
concerted activities. The labor organization may be a union or
association of employees, as mentioned in Article 212(g). Its purposes
may be collective bargaining (as stated in this Article) or dealing with
the employer [as stated in Article 212(g)].
The right to form labor organization is twin to the right to engage in
concerted activities.
It is worth noting, finally, that the right to self-organization is granted
not only to employees but to workers, whether employed or not. In
fact, constitutionally speaking, the right to form associations or
societies is a right of the people, whether workers or not.
No personinside or outside of government, employer or nonemployer, unionist or non-unionistmay abridge these rights. If

No criminal prosecution under this Title may be instituted without a

final judgment finding that an unfair labor practice was committed,
having been first obtained in the preceding paragraph. During the
pendency of such administrative proceeding, the running of the period
of prescription of the criminal offense herein penalized shall be
considered interrupted: Provided, however, that the final judgment in
the administrative proceedings shall not be binding in the criminal
case nor be considered as evidence of guilt but merely as proof of
compliance of the requirements therein set forth. (As amended by
Batas Pambansa Bilang 70, May 1, 1980 and later further amended by
Section 19, Republic Act No. 6715, March 21, 1989).
________
1. CONCEPT OF UNFAIR LABOR PRACTICE
As noted at the start of Book V a major aim of labor relations policy is
industrial democracy whose realization is most felt in free collective
bargaining or negotiation over terms and conditions of employment.
But for bargaining negotiation to be true and meaningful, the
employees, first of all, must organize themselves. Because selforganization is a prerequisitethe lifebloodof industrial

LABOR RELATIONS
democracy, the right to self-organize has been enshrined in the
Constitution, and any act intended to weaken or defeat the right is
regarded by law as an offense. The offense is technically called
unfair labor practice (ULP). Literally, it does not mean an unfair
practice by labor but a practice unfair to labor, although the offender
may either be an employer or a labor organization.
The victim of the offense is not just the workers as a body and the
well-meaning employers who value industrial peace, but the State as
well. Thus, the attack to this constitutional right is considered a crime
which therefore carries both civil and criminal liabilities.
A consideration of the entire law on the matter clearly discloses the intention of
the lawmaker to consider acts which are alleged to constitute unfair labor
practices as violations of the law or offenses, to be prosecuted in the same
manner as a criminal offense. The reason for this provision is that the
commission of an unfair labor practice is an offense against a public right or
interest and should be prosecuted in the same manner as a public offense. The
reason for the distinction between an unfair labor practice case and a mere
violation of an employer of its contractual obligation towards an employees is,
x x x that unfair labor practice cases involve violations of a public right or
policy, to be prosecuted like criminal offenses whereas a breach of an
obligation of the employer to his employee is only a contractual breach to be
redressed like an ordinary contract or obligation.

1.1 Elements
Commission of unfair labor practice at the enterprise level needs the
presence of certain elements: first, there is employer-employee
relationship between the offender and the offended; and second, the
act done is expressly defined in the Code as an act of unfair labor
practice. The first element is required because ULP is negation of, a
counteraction to, the right to organize which is available only to
employees in relation to their employer. No organizational right can
be negated or assailed if employer-employee relationship is absent in
the first place.
The second element is that the act done is prohibited by the Code,
specifically in Articles 248 and 261 for an employer and Article 249
for a labor organization. Art. 212(k) emphatically defines unfair
labor practice as any unfair labor practice as expressly defined in
this Code. Art. 261 amplifies Art. 248(i) by stating that violation of a
CBA is unfair labor practice only if the violation is gross in character.
The prohibited acts, it should be stressed, are all related to the
workers self-organizational right and to the observance of a
collective bargaining agreement (CBA). The only possible exception
is Art. 248(f) referring to dismissing or prejudicing an employee
giving testimony under this Code [regardless of the subject of the
testimony].
Because ULP is and has to be related to the right to self-organization
and to the observance of the CBA, it follows that not every unfair act
is unfair labor practice.
ULP, therefore, has a limited, technical meaning because it is a labor
relations concept with a statutory definition. It refers only to acts
opposed to workers right to organize. Without that element, the act,
no matter how unfair, is not unfair labor practice as legally defined.
Stripped of legalese, unfair labor practice, when committed by the
employer, commonly connotes anti-unionism.
1.2 Prejudice to Public Interest not an Element of U.L.P.

A showing of prejudice to public interest is not a requisite for ULP

charges to prosper.
2. PROSECUTION OF U.L.P.
Under Art. 247 ULP has civil as well as criminal aspects. The civil
aspect may include liability for damages and these may be passed
upon by a labor arbiter.
To prosecute ULP as criminal offense is not possible until after
finality of judgment in the labor case, finding that the respondent
indeed committed unfair labor practice. But such judgment will not
serve as evidence of ULP in the criminal case; the criminal charge
must be proved independently from the labor case. Moreover, while
only substantial evidence is required in labor case in the NLRC, proof
beyond reasonable doubt is needed to convict in the criminal case of
ULP.
The criminal charge, states Art. 228, falls under the concurrent
jurisdiction of the Municipal or Regional Trial Court. The same article
defines the penalty of fine and/ or imprisonment.
Under Art. 289, the penalty shall be imposed upon the guilty officers
of a corporation, partnership, association or entity. If the ULP is
committed by a labor organization the parties liable are those
mentioned in Art. 249.
The offense prescribes in one year. (Art. 290)
________
Chapter II
UNFAIR LABOR PRACTICES OF EMPLOYERS
Article 248. Unfair labor practices of employers. It shall be unlawful
for an employer to commit any of the following unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of
their right to self-organization;
(b) To require as a condition of employment that a person or an
employee shall not join a labor organization or shall with-draw from
one to which he belongs;
(c) To contract out services or functions being performed by union
members when such will interfere with, restrain or coerce employees
in the exercise of their rights to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the
formation or administration of any labor organization, including the
giving of financial or other support to it or its organizers or
supporters;
(e) To discriminate in regard to wages, hours of work and other terms
and conditions of employment in order to encourage or discourage
membership in any labor organization. Nothing in this Code or in any
other law shall stop the parties from requiring membership in a
recognized collective bargaining agent as a condition for employment,
except those employees who are already members of another union at
the time of the signing of the collective bargaining agreement.
Employees of an appropriate bargaining unit who are not members of
the recognized collective bargaining agent may be assessed a
reasonable fee equivalent to the dues and other fees paid by members

LABOR RELATIONS
of the recognized collective bargaining agent, if such non-union
members accept the benefits under the collective bargaining
agreement: Provided, that the individual authorization required under
Article 242, paragraph (o) of this Code shall not apply to the nonmembers of the recognized collective bargaining agent;

1. Workers' and employers' organisations shall enjoy adequate protection

against any acts of interference by each other or each other's agents or members
in their establishment, functioning or administration.

(f) To dismiss, discharge or otherwise prejudice or discriminate

against an employee for having given or being about to give testimony
under this Code;

2. In particular, acts which are designed to promote the establishment of

workers' organisations under the domination of employers or employers'
organisations, or to support workers' organisations by financial or other means,
with the object of placing such organisations under the control of employers or
employers' organisations, shall be deemed to constitute acts of interference
within the meaning of this Article.

(g) To violate the duty to bargain collectively as prescribed by this

Code;

3. NO U.L.P.: ILLUSTRATIVE INSTANCES OF VALID

EXERCISE OF MANAGEMENT RIGHTS

(h) To pay negotiation or attorneys fees to the union or its officers or

agents as part of the settlement of any issue in collective bargaining or
any other dispute; or

The law on unfair labor practices is not intended to deprive

employers of their fundamental right to prescribe and enforce such
rules as they honestly believe to be necessary to the proper, productive
and profitable operation of their business. Nor are his rights of
selection and discharge of his employees wrested from him by the
Act. Rothenberg stresses that an employer, subject to the provisions of
his contract with his employees, has the same full measure of control
over his business as he had prior to the enactment of the Wagner Act
and undiminished by the amended Act. The only condition imposed
upon this control is that it must not be exercised so as to effect a
violation of the Act and its several prohibitions.

(i) To violate a collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the
officers and agents of corporations, associations or partnerships who
have actually participated in, authorized or ratified unfair labor
practices shall be held criminally liable. (As amended by Batas
Pambansa Bilang 130, August 21, 1981).
________

3.1 Personnel Movements

1. CONDITIONS PRECEDENT TO U.L.P. CHARGE
Before an employee may be considered aggrieved by an alleged unfair
labor practice (ULP) by an employer, it must be demonstrated, firstly,
that the injured party comes within the definition of employee as
that term is defined by the Code, and secondly, the act charged as ULP
must fall under the prohibition of Art. 248 (acts of the employer) or
249 (acts of the union).

As a rule, it is the prerogative of the company to promote, transfer or

even demote its employees to other positions when the interests of the
company reasonably demand it. Unless there are instances which
directly point to interference by the company with the employees'
right to self-organization, the transfer of private respondent should be
considered as within the bounds allowed by law. Furthermore,
although private respondent was transferred to a lower position, his
original rank and salary remained undiminished.

Nonetheless, specific denomination of the act is not necessary to

prosecute ULP. In resolving the question of whether or not an
employer committed the act charged in the complaint, it is of no
consequence, either as a matter of procedure or of substantive law,
how the act is denominatedwhether as a restraint, interference or
coercion, or a discriminatory discharge, or as a refusal to bargain, or
even as a combination of any or all of these. For however the
employers conduct may be characterized, what is important is that it
constituted an unfair labor practice.

It is the companys prerogative to promote its employees to

managerial positions. Managerial positions are offices which can only
be held by persons who have the trust of the corporation and its
officers. It should not be prevented from doing so. A promotion which
is manifestly beneficial to an employee should not give rise to a
gratuitous speculation that such a promotion was made simply to
deprive the union of the membership of the promoted employee.
3.2 Acceptance of Mass Resignation

2. ILO CONVENTION NO. 98

Article 1
1. Workers shall enjoy adequate protection against acts of anti-union
discrimination in respect of their employment.
2. Such protection shall apply more particularly in respect of acts calculated
to-(a) make the employment of a worker subject to the condition that he shall not
join a union or shall relinquish trade union membership;
(b) cause the dismissal of or otherwise prejudice a worker by reason of union
membership or because of participation in union activities outside working
hours or, with the consent of the employer, within working hours.
Article 2

Acceptance of a voluntary resignation is not ULP. In a Philippine

Airlines case the court said that the pilots "protest
retirement/resignation" was not a concerted activity which was
protected by law. They did not assume the status of strikers. They
cannot, therefore, validly claim that the company committed unfair
labor practice. When the pilots voluntarily terminated their
employment relationship with the company, they cannot claim that
they were dismissed.
3.3 Grant of Profit-Sharing Benefits to Non-Union Members
Management has the prerogative to regulate, according to its
discretion and judgment, all aspects of employment. This flows from
the established rule that labor law does not authorize the substitution
of the judgment of the employer in the conduct of its business. Such
management prerogative may be availed of without fear of any
liability so long as it is exercised in good faith for the advancement of

LABOR RELATIONS
the employers' interest and not for the purpose of defeating or
circumventing the rights of employees under special laws or valid
agreement and are not exercised in a malicious, harsh, oppressive,
vindictive or wanton manner or out of malice or spite.

Persistent interrogation of employees to elicit information as to what

had happened at union meetings and the identity of the active union
employees was held as violative of organizational rights of
employees.

3.4 Forced Vacation Leave

Where the vacation leave without pay, which the employer requires
employees to take in view of the economic crisis, is neither malicious,
oppressive or vindictive, ULP is not committed.
3.5 Issuance of Rules or Policy
Every business enterprise endeavors to increase its profits. In the
process, it may adopt or devise means designed towards that goal.

In order that the questioning of an employee concerning his union

activities would not be deemed coercive, the employer must
communicate to the employee the purpose of the questioning, assure
him that no reprisal would take place, and obtain his participation on a
voluntary basis. In addition, questioning must also occur in a context
free from employer hostility to union organization and must not itself
be coercive in nature.
5.2 U.L.P. Even Before Union is Registered

Even as the law is solicitous of the welfare of the employees, it must

also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied.

An employer who interfered with the right to self-organization before

the union is registered can be held guilty of ULP.

3.6 Taking Action Against Slowdown

A rule prohibiting solicitation of union membership in company

property is unlawful if it applies to non-working time as well as to
working time.

Employees have the right to strike, but they have no right to continue
working on their own terms while rejecting the standards desired by
their employer. Hence, an employer does not commit an unfair labor
practice by discharging employees who engaged in a slowdown, even
if their object is a pay increase which is lawful. Moreover, an
employer does not violate the act by discharging only some of the
employees who participate in the slowdown where he discharges them
to serve as an example to stop the slowdown and not for
discriminatory reasons.
4. DETERMINATION OF VALIDITY
Necessarily, determining the validity of an employers act involves an
appraisal of his motives.
An employer may treat freely with an employee and is not obliged to support
his actions with a reason or purpose. However, where the attendant
circumstances, the history of employer's past conduct and like considerations,
coupled with an intimate connection between the employer's action and the
union affiliations or activities of the particular employee or employees taken as
a whole raise a suspicion as to the motivation for the employer's action, the
failure of the employer to ascribe a valid reason therefor may justify an
inference that his unexplained conduct in respect of the particular employee or
employees was inspired by the latter's union membership or activities.
While the presence of this mere suspicion neither takes the place of evidence
that the employer's conduct was improperly motivated nor dispenses with the
requirement of proof of the fact, such suspicion, when coupled with other facts
which in themselves, might have been inadequate to support an adverse finding
against the employer, may suffice to sustain a finding that the employer's action
violated the prohibition of the Act.

5. FIRST U.L.P.: INTERFERENCE (ART. 248[a])

In summarized form, the nine U.L.P. acts of an employer under Art.
248 are: (1) Interference, (2) yellow dog condition, (3) contracting
out, (4) company unionism, (5) discrimination, (6) discrimination
because of testimony, (7) violation of duty to bargaining, (8) paid
negotiation, and (9) violation of CBA.
5.1 Interrogation

5.3 Prohibiting Organizing Activities

Where majority of the employees live on the premises of the employer

and cannot be reached by any means or procedures practically
available to union organizers, the employer may be required to permit
non-employee union organizers to come within its premises, in order
to solicit employees.
However, in the absence of showing that the illegal dismissal was
dictated by anti-union motives, the same does not constitute an unfair
labor practice as would be a valid ground for strike. The remedy is an
action for reinstatement with backwages and damages.
We have held that unfair labor practice cases are not, in view of the
public interest involved, subject to compromises.
5.4 Violence or Intimidation
An employer unlawfully coerced employees by directing two
individuals to his office at gun point on the day of representation
election after the individuals had informed the employer that they
were on the premises to vote in the election.
5.5 Espionage and Surveillance
One form of pressure which some over-eager employers sometimes
use is the practice of spying upon employees. This device consists of
using one or a small group of employees, or other agents, inspired by
profit opportunism, vengeance or come kindred human frailty to use
his or their access to employees quarters and affairs for the purpose
of spying upon fellow employees and reporting back to the employer.
It is plainly evident that such conduct on the employers part, however
subtly it may be accomplished, constitutes interference with the
employees exercise of their rights. Inasmuch as the pressure results
more from the employees apprehension than from the employers
purpose in spying and the use of its result, it has been held to be no
answer to a charge of unfair labor practice that the fruits of espionage
were not used.

LABOR RELATIONS
When an employer engages in surveillance or takes steps leading his
employees to believe it is going on, a violation results because the
employees come under threat of economic coercion or retaliation for
their union activities. Unlawful surveillance was properly found
where supervisors were present near the place where union meeting
was being held to check the names of employees leaving the meeting.
5.6 Economic Inducements
A violation results from an employers announcement of benefits prior
to a representation election, where it is intended to induce the
employees to vote against the union.
It is well-settled rule that while a representation election is pending,
the conferral of employee benefits for the purpose of inducing the
employees to vote against a union is unlawful.
5.7 Employers Expression of Opinion; Totality of Conduct Doctrine
The doctrine holds that the culpability of employers remarks was to
be evaluated not only on the basis of their implications, but against the
background of and in conjunction with collateral circumstances.
(1) Letter to individual employeesIt is an act of interference for the employer
to send a letter to all employees notifying them to return to work at a time
specified therein, otherwise new employees would be engaged to perform their
jobs. Individual solicitation of the employees or visiting their homes, with the
employer or his representative urging the employees to cease union activity or
cease striking, constitutes unfair labor practice. All the above-detailed activities
are unfair labor practices because they tend to undermine the concerted activity
of the employees, an activity to which they are entitled free from the employer's
molestation.
(2) Strike-breakingWhen the respondent company offered reinstatement and
attempted to "bribe" the strikers with "comfortable cots," "free coffee and
occasional movies," "overtime" pay for "work performed in excess of eight
hours," and "arrangements" for their families, so they would abandon the strike
and return to work, they were guilty of strike-breaking and/or union-busting
and, consequently, of unfair labor practice.
(3) Acts violative of right to organizeViolative of the right to organize, form
and join labor organizations are the following acts: the offer of a Christmas
bonus to all "loyal" employees of a company shortly after the making of a
request by the union to bargain; wage increases given for the purpose of
mollifying employees after the employer has refused to bargain with the union,
or for the purpose of inducing striking employees to return to work; the
employer's promises of benefits in return for the strikers' abandonment of their
strike in support of their union; and the employer's statement, made about 6
weeks after the strike started, to a group of strikers in a restaurant to the effect
that if the strikers returned to work, they would receive new benefits in the
form of hospitalization, accident insurance, profit-sharing, and a new building
to work in.
(4) Test of interference or coercionThe test of whether an employer has
interfered with and coerced employees within the meaning of subsection (a) (1)
is whether the employer has engaged in conduct which it may reasonably be
said tends to interfere with the free exercise of employees' rights under section
3 of the Act, and it is not necessary that there be direct evidence that any
employee was in fact intimidated or coerced by statements of threats of the
employer if there is a reasonable inference that anti-union conduct of the
employer does have an adverse effect on self-organization and collective
bargaining.
(5) The totality of conduct doctrinethe letters of the company president to
the individual strikers should not be considered by themselves alone but should
be read in the light of the preceding and subsequent circumstances. The letters
should be interpreted according to the "totality of conduct doctrine," whereby

the culpability of an employer's remarks has to be evaluated not only on the

basis of their implicit implications, but were to be appraised against the
background of and in conjunction with collateral circumstances.

5.8 Mass Layoff Amounting to U.L.P.

A companys capital reduction efforts, to camouflage the fact that it
has been making profits, and to justify the mass lay-off of its
employees especially union members, were an unfair labor practice
which can neither be countenanced nor condoned.
5.9 Lockout or Closure Amounting to U.L.P.
A lockout, actual or threatened, as a means of dissuading the
employees from exercising their rights under the Act is clearly an
unfair labor practice. However, to hold an employer who actually or
who threatens to lock out his employees guilty of a violation of the
Act, the evidence must establish that the purpose thereof was to
interfere with the employees exercise of their rights.
An honest closing of ones plant is not a violation of the Act.
However, cessation of operations, actual or threatened, does constitute
an unfair labor practice, if it is, directly or indirectly, expressly or by
innuendo, calculated or employed to interfere with the employees
rights under the Act. Proof of the employers state of mind, unless it is
expressed, is often very difficult. However, it may be proven by
circumstantial evidence.
The rule is that it is unlawful for the employer to threaten its
employees with moving or shutting down the plant and consequent
loss of employment, as the result of their support for the union.
An employer which closed its business to put an end to a unions
activities, and which made no effort to allow the employees attempt
to exercise their right to self-organization and collective bargaining,
and even threatening the employees that they would lose their jobs if
they did not cease affiliation with the union, commits unfair labor
practice.
5.9a Sale in Bad Faith
Where the sale of a business enterprise was attended with bad faith, there is no
need to consider the applicability of the rule that labor contracts being in
personam are not enforceable against the transferee. The latter is in the position
of tort-feasor having been a party likewise responsible for the damage inflicted
on the members of the aggrieved union and therefore cannot justly escape
liability.

It is irrational to suppose that a purchaser of a manufacturing

enterprise is not aware of the labor-management situation in the firm
he bought.
5.9b Assumption of Obligations by New Company
5.10 Successor Employer; Piercing the Corporate Veil
Closure is likewise not legal and the employees cannot be separated
if, in fact, there is no closure because the closed department or
company reappeared although under a new name. If the new
company is, for instance, engaging in the same business as the closed
company or department, or is owned by the same people, and the
closure is calculated to defeat the workers organizational right,
then, the closure may be declared a subterfuge and the doctrine of
successor employer will be applied, that is, the new company will be

treated as a continuation or successor of the one that closed. If such be

the case, the separated employees will have to be employed in the
new firm because in the first place they should not have been
separated at all.
The successor employer ruling is an enforcement of the legal
recourse called piercing the veil of corporate entity.
Under the doctrine of piercing the veil of corporate entity, when valid grounds
therefore exist, the legal fiction that a corporation is an entity with a juridical
personality separate and distinct from its members or stockholders may be
disregarded. In such cases, the corporation will be considered as a mere
association of persons. The members or stockholders of the corporation will be
considered as the corporation, that is, liability will attach directly to the officers
and stockholders. The doctrine applies when the corporate fiction is used to
defeat public convenience, justify wrong, protect fraud, or defend crime, or
when it is made as a shield to confuse the legitimate issues or where a
corporation is the mere alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so conducted as to
make it merely an instrumentality, agency, conduit or adjunct of another
corporation.

6. SECOND U.L.P.: YELLOW DOG CONDITION (ART.

248[b])
Contract provisions whereby an employee agrees that during the
period of his employment he will not become a member of a labor
union have been outlawed in the United States, by legislation in some
states, as well as by Federal legislation.
The yellow dog contract is a promise exacted from workers as a
condition of employment that they are not to belong to, or attempt to
foster, a union during their period of employment.
An American scheme, the typical yellow dog contract is an at-will
employment agreement which contains, in addition to the usual
provisions for employment, the following three provisions: (1) a
representation by the employee that he is not a member of a labor
union; (2) a promise by the employee not to join a labor union; (3) a
promise by the employee that, upon joining a labor union, he will quit
his employment.
7. THIRD U.L.P.: CONTRACTING OUT (ART. 248[c])
Contracting out itself, is not ULP; it is the ill intention that makes it
so.
An employers contracting out of work is itself an unfair labor
practice where motivated by a desire to prevent his employees from
organizing and selecting a collective bargaining representative, rid
himself of union men, or escape his statutory duty to bargain
collectively with his employees bargaining representative.
As we have previously held, the company can determine in its best business
judgment whether it should contract out the performance of some of its work
for as long as the employer is motivated by good faith, and the contracting out
must not have been resorted to to circumvent the law or must not have been the
result of malicious or arbitrary action.

7.1 Contracting out restricted by CBA

7.2 Runaway Shop
Resorting to a runaway shop is a U.L.P. A runaway shop is defined
as an industrial plant moved by its owners from one location to

LABOR RELATIONS
another to escape union labor regulations or state laws, but the term is
also used to describe a plant removed to a new location in order to
discriminate against employees at the old plant because of their union
activities. Moreover, it has been held that where a plant removal is for
business reasons but the relocation is hastened by anti-union
motivation, the early removal is an unfair labor practice. It is
immaterial that the relocation is accompanied by a transfer of title to a
new employer who is an alter ego of the original employer.
Runaway shop refers to business relocation animated by anti-union
animus. Sameness of business is not reason enough to show run-away
shop to pierce the veil of separate corporate entity.
A "runaway shop" is defined as an industrial plant moved by its owners from
one location to another to escape union labor regulations or state laws, but the
term is also used to describe a plant removed to a new location in order to
discriminate against employees at the old plant because of their union activities.
It is one wherein the employer moves its business to another location or it
temporarily closes its business for anti-union purposes. A "runaway shop" in
this sense, is a relocation motivated by anti-union animus rather than for
business reasons.
Mere ownership by a single stockholder or by another corporation of all or
nearly all of the capital stock of a corporation is not of itself sufficient ground
for disregarding the separate corporate personality.
This fiction of corporate entity can only be disregarded in certain cases such as
when it is used to defeat public convenience, justify wrong, protect fraud, or
defend crime. To disregard said separate juridical personality of a corporation,
the wrongdoing must be clearly and convincingly established.

8. FOURTH U.L.P.: COMPANY-DOMINATION OF UNION

(ART. 248[d])
Domination of a labor union usually manifests in the following forms:
(a) Initiation of the company union idea. This may further occur in
three styles: (1) outright formation by the employer or his
representatives; (2) employee formation on outright demand or
influence by employer; and (3) managerially motivated formation by
employees.
(b) Financial support to the union. An employer commits unfair labor
practice if he defrays the union expenses or pays the attorneys fees to
the attorney who drafted the constitution and by-laws of the union.
(c) Employer encouragement and assistance. Immediately granting the
union exclusive recognition as a bargaining agent without determining
whether the union represents the majority of employees is an illegal
form of assistance amounting to unfair labor practice.
(d) Supervisory assistance. This takes the form of soliciting
membership, permitting union activities during working time or
coercing employees to join the union by threats of dismissal or
demotion.
An employer was held to have unlawfully aided a union by assisting
its attempt to secure authorization cards from employees and by
executing a contract with such union when it was not the authorized
representative of the employees.
A labor union is company-dominated where it appears that key officials of the
company have been forcing employees belonging to a rival labor union to join
the former under pain of dismissal should they refuse to do so; that hey officials
of the company, as well as its legal counsel, have attended the election of

LABOR RELATIONS
officers of the former union; that officers and members of the rival union were
dismissed allegedly pursuant to a retrenchment policy of the company, after
they had presented demands for the improvement of the working conditions
despite its alleged retrenchment policy; and that, after dismissal of the aforesaid
officers of the rival labor union, the company engages the services of new
laborers.

9. FIFTH U.L.P.: DISCRIMINATION (ART. 248[e])

What the law prohibits is discrimination to encourage or discourage
membership in a labor organization. Where the purpose is to influence
the union activity of employees, the discrimination is unlawful. But
discrimination is not the same as differentiation or classification. For
instance, it is common management practice to classify jobs and grant
them varying levels of pay benefits package. These are valid
differentiations that recognize differences in job requirements or
contributions. They are not necessarily discrimination classifiable as
ULP.
Under the Industrial Peace Act, to constitute an unfair labor practice, the
discrimination committed by the employer must be in regard to the "hire or
tenure of employment or any term or condition of employment to encourage or
discourage membership in any labor organization." The exaction, by the
Company, from the strikers returning to work, of a promise not to destroy
company property and not to commit acts of reprisal against the Unionmembers who did not participate in the strike, cannot be considered as intended
to encourage or discourage Union-membership. Taking the circumstances
surrounding the prescribing of that condition, the requirement by the Company
is actually an act of self-preservation and designed to insure the maintenance of
peace and order in the Company premises.

employment. While the right of strikes at the very heart of an employer to

dismiss an employee is conceded in a valid retrenchment, the right differs from
and should not be confused with the manner in which such right is exercised. It
should not be oppressive and abusive since it affects one's person and property.
Due process of law demands nothing less.

9.4 Discrimination in Regularization

9.5 Discrimination by Blacklisting
A blacklist has been defined as a list of persons marked out for
special avoidance, antagonism or enmity on the part of those who
prepare the list, or those among whom it is intended to circulate, as
where a trade union blacklists workmen who refuse to conform to its
rules, or where a list of insolvent or untrustworthy persons is
published by a commercial agency or mercantile association.
When it is resorted to by a combination of employers to prevent
employment of employees for union activities, it may constitute unfair
labor practice. Aside from constituting an unfair labor practice, it may
give rise to a right of action for damages by the employees prejudice
under Article 28 of the new Civil Code.

Discouraging membership in a labor organization includes not only

discouraging adhesion to union membership but also discouraging
participation in union activities such as legitimate strike.

In its broad sense, however that is, in the sense of the employers circulating a
list of former employees of notorious laziness or negligence in the performance
of their duties or of incorrigible propensity to create trouble in the place of
employment, it may be a proper measure for the protection of employers. Thus,
it has been held that unless the action of the employers in combining or in
passing communications among themselves for the purpose of excluding
unwanted workers from employment, constitutes a libel or slander (and
according to some decisions the defamation, to be actionable, must be
malicious), the excluded employee possesses no right of action because the
employers community of interest acts both to justify the combination and to
privilege the communication.

9.1 Discrimination in Work Quota

9.6 Indirect Discrimination

Considered in the light of the anti-union attitude exhibited by respondent

company in transferring union president Leones from the main office in Manila
to Cebu when the union was still being organized, and which act was found by
the NLRC as constituting unfair labor practice and union-busting in connection
with the application for clearance to terminate Leones filed by respondent
company, 34 the uneven application of its marketing plan by respondent
company is patently an act of discrimination, considered as an unfair labor
practice under Art. 248(e) of the Labor Code.

It is a well settled rule of law that what is prohibited to be done

directly shall not be allowed to be accomplished indirectly.

9.2 Discrimination in Bonus Allocation or Salary Adjustments

There is unfair and unjust discrimination in the granting of salary
adjustments where the evidence shows that (a) the management paid
the employees of the unionized branch; (b) where the salary
adjustments were granted to employees of one of its nonunionized
branches although it was losing in its operations; and (c) the total
salary adjustments given every ten of its unionized employees would
not even equal the salary adjustments given one employee in the
nonunionized branch.
9.3 Discrimination in Layoff or Dismissal
Even where business conditions justified a layoff of employees, unfair
labor practices in the form of discriminatory dismissal were found
where only unionists were permanently dismissed while nonunionists
were not.
Labor is a person's means of livelihood. He cannot be deprived of his labor or
work without due process of law. Retrenchment very heart of one's

Thus, the following acts have been held unfair labor practices: (1) the
dismissal of a laborer in account of union activities of his brother; (2)
the discharge of an employee due to the union activities of the wife;
and (3) the discharge of a wife due to the union activities of the
husband.
9.7 Test of Discrimination
For the purpose of determining whether or not a discharge is
discriminatory, it is necessary that the underlying reason for the
discharge be established. The fact that a lawful cause for discharge is
available is not a defense where the employee is actually discharged
because of his union activities. If the discharge is actually motivated
by a lawful reason, the fact that the employee is engaged in union
activities at the time will not lie against the employer and prevent him
from the exercise of his business judgment to discharge an employee
for cause.
Where circumstances establish a discriminatory motive on the part of
the employer, the assignment of a just cause will be unavailing. If it
can be established that the true and basic inspiration for the
employers act is derived from the employees union affiliations or
activities, the assignment by the employer of another reason, whatever
its semblance of validity, is unavailing.

An interference that the discharge of an employee was motivated by

his union activity must be based upon evidence, direct or
circumstantial, not upon mere suspicion.

LABOR RELATIONS
Maintenance of Membership Shop: No employee is compelled to join
the union, but all present or future members must, as a condition of
employment, remain in good standing in the union.

9.8 Constructive Discharge

Exclusive Bargaining Shop: The union is recognized as the exclusive

bargaining agent for all employees in the bargaining unit, whether
union members or not.

Where the employer prohibits employees from exercising their rights

under the Act, on pain of discharge, and the employee quits as a result
of the prohibition, a constructive discharge occurs, which may be
remedies in an unfair labor practice proceeding.

Bargaining for Members Only: The union is recognized as the

bargaining agent only for its own members

9.9 Discharge Due to Union Activity, A Question of Fact

The question of whether an employee was discharged because of his union
activities is essentially a question of fact as to which the findings of the Court
of Industrial Relations are conclusive and binding if supported by substantial
evidence considering the record as a whole. This is so because the Industrial
Court is governed by the rule of substantial evidence, rather than by the rule of
preponderance of evidence as in any ordinary civil cases. Substantial evidence
has been defined as such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion. It means such evidence which affords a
substantial basis from which the fact in issue can be reasonably inferred.

Agency Shop: An agreement whereby employees must either join the

union or pay the union as exclusive bargaining agent a sum equal to
that paid by the members. This is directed against free rider
employees who benefits from union activities without contributing
financially to union support. It prevents situation where non-union
members enrich themselves at the expense of union members.
Another term for agency shop agreement is maintenance of treasury
shop.
The above variations are opposite of open shop, an arrangement which
does not require union membership as a condition of employment.

9.10 Valid Discrimination: Union Security Clause

9.10b Validity of Closed-Shop Agreement

There is a form of encouragement of union membership which is not

considered ULP. This is where Management and Union enter into a
collective bargaining agreement containing a union security clause.
Despite variations and limitations, a union security clause essentially
requires membership in the union so that an employee may retain his
job and the unions existence is assured.

It is true that disaffiliation from a labor union is not open to legal objection. It is
implicit in the freedom of association ordained by the Constitution. But this
Court has laid down the ruling that a closed shop is a valid form of union
security, and such provision in a collective bargaining agreement is not a
restriction of the right of freedom of association guaranteed by the Constitution.

Union security is a generic term which is applied to and

comprehends closed shop, union shop, maintenance of
membership or any other form of agreement which imposes upon
employees the obligation to acquire or retain union membership as a
condition affecting employment. It is indeed compulsory union
membership whose objective is to assure continued existence of the
union. In a sense, there is discrimination when certain employees are
obliged to join a particular union. But it is discrimination favouring
unionism; it is a valid kind of discrimination.
The employer is not guilty of unfair labor practice if it merely
complies in good faith with the request of the certified union for the
dismissal of employees expelled from the union pursuant to the union
security clause in the collective bargaining agreement.
9.10a Kinds of Union Security Agreements
Closed-shop: Only union members can be hired by the company and
they must remain as union members to retain employment in the
company.
Union Shop: Nonmembers may be hired, but to retain employment
must become union members after a certain period. The requirement
applies to present and future employees.
Modified Union Shop: Employees who are not union members at the
time of signing the contract need not join the union, but all workers
hired thereafter must join.

It is the policy of the State to promote unionism to enable the workers to

negotiate with management on the same level and with more persuasiveness
than if they were to individually and independently bargain for the
improvement of their respective conditions. To this end, the Constitution
guarantees to them the rights "to self-organization, collective bargaining and
negotiations and peaceful concerted actions including the right to strike in
accordance with law." There is no question that these purposes could be
thwarted if every worker were to choose to go his own separate way instead of
joining his co-employees in planning collective action and presenting a united
front when they sit down to bargain with their employers. It is for this reason
that the law has sanctioned stipulations for the union shop and the closed shop
as a means of encouraging the workers to join and support the labor union of
their own choice as their representative in the negotiation of their demands and
the protection of their interest vis-a-vis the employer.
A closed-shop agreement is an agreement whereby an employer binds himself
to hire only members of the contracting union who must continue to remain
members in good standing to keep their jobs. It is "the most prized achievement
of unionism." It adds membership and compulsory dues. By holding out to
loyal members a promise of employment in the closed-shop, it welds group
solidarity. It is a very effective form of union security agreement.

9.10c Advantages and Disadvantages of Closed-Shop Agreement

A closed-shop agreement is advantageous because it
a. Increases the strength and bargaining power of labor organizations.
b. Prevents non-union workers from sharing in the benefits of the
unions activities without also sharing its obligations.
c. Prevents the weakening of labor organizations by discrimination
against union members.

d. Eliminates the lowering of standards caused by competition with

non-union workers.

LABOR RELATIONS
implication any dismissal of employees already working before the
agreement was made.

e. Enables labor organizations effectively to enforce collective

agreements.

9.10f Due Process Required in Enforcing Union Security Clause;

Intra-union Matter becomes Termination Dispute with Employer

f. Facilitates the collection of dues and the enforcement of union rules.

Although a union security clause in a CBA may be validly enforced

and that dismissal pursuant thereto may likewise be valid, this does
not erode the fundamental requirement of due process. The reason
behind the enforcement of union security clauses which is the sanctity
and inviolability of contracts cannot override one's right to due
process.

g. Creates harmonious relations between the employer and employee.

But it is disadvantageous as it
a. Results in monopolistic domination of employment by labor
organizations.
b. Interferes with the freedom of contract and personal liberty of the
individual worker.
c. Compels employers to discharge all non-union workers regardless
of efficiency, length of service, etc.
d. Facilitates the use of labor organizations by unscrupulous union
leaders for the purpose of extortion, restraint of trade, etc.
e. Denies to non-union workers equal opportunity for employment.
f. Enables union to charge exorbitant dues and initiation fees.
9.10d Valid Dismissal Because of Application of Union Security
Clause
Union security clauses in collective bargaining agreements, if freely and
voluntarily entered into, are valid and binding. Corollary, dismissals pursuant to
union security clauses are valid and legal subject only to the requirement of due
process, that is, notice and hearing prior to dismissal. Thus, the dismissal of an
employee by the company pursuant to a labor union's demand in accordance
with a union security agreement does not constitute unfair labor practice.
Even if the union members were unaware of the closed-shop stipulation in the
CBA, they were bound by it. Neither their ignorance of, nor their dissatisfaction
with its terms and conditions would justify breach thereof or the formation by
them of a union of their own. This is so because a union member who is
employed under an agreement between the union and his employer is bound by
the provisions thereof, since it is a joint and several contract of the members of
the union entered into by the union as their agent.
This provision is an indirect restriction on the right of an employee to selforganization. It is a solemn pronouncement of a policy that while an employee
is given the right to join a labor organization, such right should only be asserted
in a manner that will not spell the destruction of the same organization The law
requires loyalty to the union on the part of its members in order to obtain to the
full extent its cohesion and integrity.

9.10e Dismissal Pursuant to Closed-Shop Clause Must Clearly Appear

in Contract
In order to validly dismiss an employee by force of the union security
clause, there should be a clear and unequivocal statement that the loss
of the status of a member of good standing in the union shall be a
cause for dismissal.
Union shop, as with closed-shop provisions, should be strictly
construed against the existence of union shop. Sometimes harsh and
onerous, such provisions should not be extended beyond the explicit
coverage of their terms, and will not be deemed to authorize by

9.10g Liability of Union to Pay Wages and Fringe Benefits of Illegally

Dismissed Employee
9.10h Employer in Good Faith Not Liable
9.10i Closed-Shop, To Whom Not Applicable
All employees in the bargaining unit covered by a closed-shop
agreement are subject to its terms, except the following: (1) any
employee who at the time the closed-shop agreement takes effect is a
bona fide member of religious organization which prohibits its
members from joining labor unions on religious grounds; (2)
employees already in the service and already members of a labor
union or unions other than the majority union at the time the closedshop agreement took effect; (3) Confidential employees who are
excluded from the rank-and-file bargaining unit; and (4) employees
excluded from the closed-shop by express terms of the agreement.
It is well settled in this jurisdiction that, in the absence of a manifest intent to
the contrary, "closed shop" provisions in a collective bargaining agreement
"apply only to persons to be hired or to employees who are not yet members of
any labor organization" and that said provisions of the agreement are not
applicable to those already in the service at the time of its execution. To hold
that the employees in a company who are members of a minority union may be
compelled to disaffiliate from their union and join the majority or contracting
union, would render nugatory the right of all employees to self organization and
to form, join or assist labor organizations of their own choosing, a right
guaranteed by the Industrial Peace Act (sec. 3, Rep. Act No. 875) as well as by
the Constitution (Art. III, sec. 1[6]).

9.10j Agency Fee Instead of Union Membership

The employees who are benefitting from the CBA, without being
members of the bargaining union, may be required to pay an agency
fee. The collection of agency fees in an amount equivalent to union
dues and fees, from employees who are not union members, is
recognized by Article 248 (e) of the Labor Code. A written
authorization from the non-union employee is imposed. The
employee's acceptance of benefits resulting from a collective
bargaining agreement justifies the deduction of agency fees from his
pay and the union's entitlement thereto. In this aspect, the legal basis
of the union's right to agency fees is neither contractual nor statutory,
but quasi-contractual, deriving from the established principle that nonunion employees may not unjustly enrich themselves by benefiting
from employment conditions negotiated by the bargaining union.
The justification of collecting agency fee is the unions
accomplishment in having negotiated a CBA in behalf of the
employees. The union served as agent of the employees, and the
agency fee is recognition of the agents efforts. The fee is collectible

LABOR RELATIONS
only from employees deriving economic benefits from the unionnegotiated CBA.
10. SIXTH U.L.P.: DISCRIMINATION
TESTIMONY (ART. 248[f])

BECAUSE

OF

The law protects not only the employees right to form, join, or assist
labor organizations but also their right to testify on matters covered by
the Code. If this right is not protected, the right to self-organization
will be indirectly defeated because the employees will fear their
employers reprisal. By protecting the employees right to testify, the
law therefore shields the workers right to self-organization from
indirect assault by the employer. Thus, it is ULP to dismiss,
discharge, or otherwise prejudice or discriminate against an employee
for having given or being about to give testimony under this Code.
Employers reprisal against a testifying employee is ULP because,
furthermore, it violates the right to engage in concerted activity, a
right included in the right to self-organize (Art. 246) and reiterated in
Article 263(b). Concerted activity does not always require a number
of people acting in unison. An employee acting alone in pursuing a
group interest may be said to be doing a concerted activity which the
employer may not curtail.

12. EIGHT U.L.P.: PAID NEGOTIATION (ART. 248[h])

Self-organization and collective bargaining are treasured rights of
workers. The law zealously shields them from corruption. It is a
punishable act of ULP for the employer to pay the union or any of its
officers or agents any negotiation fee or attorneys fee as part of
settlement in collective bargaining or any labor dispute. To do so is
not unlawful. It is ethically reprehensible.
13. NINTH U.L.P.: VIOLATION OF THE CBA (ART. 248[i])
After a CBA is concluded, its implementation follows.
Implementation is still part of the bargaining process which, it should
be recalled, rests on the parties duty to bargain. The duty to
bargain, it should also be recalled, requires good faith. And good faith
implies faithful observance of what has been agreed upon. It logically
follows that noncompliance with the agreement is non-observance of
good faith in bargaining; therefore, the noncompliance amounts to
ULP.
But such violation, to constitute ULP, must be gross, according to
Art. 261.

10.1 Refusal to Testify

14. RELIEF IN U.L.P. CASES

Clearly, the efforts to justify petitioner's dismissal on top of the private

respondent's scheme of inducing his employees to sign an affidavit absolving
him from possible violations of the Labor Code taints with evident bad faith
and deliberate malice petitioner's summary termination from employment. The
pivotal question in any case where unfair labor practice on the part of the
employer is alleged is whether or not the employer has exerted pressure, in the
form of restraint, interference or coercion, against his employee's right to
institute concerted action for better terms and conditions of employment.
Without doubt, the act of compelling employees to sign an instrument
indicating that the employer observed labor standards provisions of law when
he might have not, together with the act of terminating or coercing those who
refuse to cooperate with the employer's scheme constitutes unfair labor
practice. The first act clearly preempts the right of the hotel's workers to seek
better terms and conditions of employment through concerted action.

14.1 Cease and Desist Order

10.2 Labor Standards Violation May Lead to a Srike

Art. 118. Retaliatory measures. It shall be unlawful for an employer to
refuse to pay or reduce the wages and benefits, discharge or in any
manner discriminate against any employee who has filed any
complaint or instituted any proceeding under this Title or has testified
or is about to testify in such proceedings.
And yet, Articles 118 and 248 are related. They both speak of
employees filing a complaint or giving testimony. But the subject of
complaint or testimony under Article 118 is limited to matters about
wages, the subject of Title I of Book III. Under Article 248, on the
other hand, the subject testified to is any issue covered by the Code.
Both articles likewise speak of retaliation by the employer. Retaliation
is wrong, and more than that, Article 248 considers it an unfair labor
practice which, under Art. 263, is a legal reason for employees to hold
a strike.
11. SEVENTH U.L.P.: VIOLATION OF THE DUTY TO
BARGAIN (ART. 248[g])
The seventh ULP act under Art. 248 refers to violating the duty to
bargain. See Articles 252 and 253

To support a cease and desist order, the record must show that the
restrained misconduct was an issue in the case; that there was a
finding of fact of said misconduct and such finding of fact was
supported by evidence. The Court is not authorized to issue blank
cease and desist orders, but must confine its injunction orders to
specific act or acts which are related to past misconduct. A cease and
desist order is not invalidated because the act complained of was
voluntarily discontinued prior to or during the course of the
proceedings. But if the act complained of happened so long a time that
there is no longer any threat or probability of a recurrence, a cease and
desist order will not be justified.
14.2 Affirmative Order
The Court does not only have the power to issue negative or
prohibitive orders but also affirmative or positive orders.
The order may usually direct the full reinstatement of the discharged
employees to their substantially equivalent position without prejudice
to their seniority and other rights and privileges.
14.3 Order to Bargain; Mandated CBA
Likewise, when an employer has failed or refused to bargain with the
proper bargaining agent of his employees, the Court may, in addition
to the usual cease and desist orders, issue an affirmative order to
compel the respondent to bargain with the bargaining agent.
14.4 Disestablishment
Where the employer had initiated, dominated or assisted in or
interfered with the formation or establishment of any labor
organization or contributed financial or other support to it, the Court
may issue, in addition to a cease and desist order, an order directing

the employer to withdraw all recognition from the dominated labor

union and to disestablish the same.
15. U.L.P. NOT SUBJECT TO COMPROMISE
Unfair labor practice cases are not, in view of the public interest
involved, subject to compromises. The relation between capital and
labor are not merely contractual. They are so impressed with the
public interest that labor contracts must yield to the common good.
16. U.L.P. IN A GIVEN PERIOD SHOULD BE INCLUDED IN
SINGLE CHARGE
When a labor union accuses an employer of acts of unfair labor
practice allegedly committed during a given period of time, the
charges should include all acts of unfair labor practice committed
against any and all members of the Union during that period. The
Union should not, upon the dismissal of the charges first preferred, be
allowed to split its cause of action and harass the employer with
subsequent charges. based upon acts committed during the same
period of time.
17. EMPLOYERS RESPONSIBILITY FOR U.L.P. ACTS BY
SUBORDINATE OFFICIALS
Knowledge by the employer of the employees improper acts: Where it
was established that the employer was aware of the employees
wrongdoing, his failure to prevent continuation of the course of
conduct or his failure to renounce any connection or affinity
therewith, invited the imputation of fault and responsibility to the
employer.
Continuity of improper conduct by employee: A single utterance by a
supervisory employee, whether improvident or deliberate on the
employees part, was not ordinarily and n absence of proof of actual
authority held to be sufficient to convict an employer of an unfair
labor practice; however, continued, repeated or widespread activities
by such supervisory employee in affront of the rights of the body of
employees was deemed ample justification for ascribing knowledge
and blame to the employer.
Employers past policy and attitude: It has been held that, among other
things, the similarity between the past attitude or policy of the
employer and that of the offending supervisory employee might, in
certain cases, be indicative of a concert of effort between the two.
________
Chapter III
UNFAIR LABOR PRACTICES OF LABOR ORGANIZATIONS

LABOR RELATIONS
and conditions under which membership or continuation of
membership is made available to other members;
(c) To violate the duty, or refuse to bargain collectively with the
employer, provided it is the representative of the employees;
(d) To cause or attempt to cause an employer to pay or deliver or
agree to pay or deliver any money or other things of value, in the
nature of an exaction, for services which are not performed or not to
be performed, including the demand for fee for union negotiations;
(e) To ask for or accept negotiation or attorneys fees from employers
as part of the settlement of any issue in collective bargaining or any
other dispute; or
(f) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the
officers, members of governing boards, representatives or agents or
members of labor associations or organizations who have actually
participated in, authorized or ratified unfair labor practices shall be
held criminally liable. (As amended by Batas Pambansa Bilang 130,
August 21, 1981).
________
1. RESTRAINT OR COERCION BY LABOR ORGANIZATION;
INTERFERENCE BY UNION IS NOT ULP
A labor organization commits ULP when it restrains or coerces
employees in their right to self-organization. This provision of Art.
249(a) parallels with Art. 248(a). But interference is left out. This
deliberate omission is the equivalent of license of labor organization
to engage in those practices which, at the hands of an employer,
would constitute actionable unfair labor practices by way of
interference. In other words, a labor organization may interfere in
the employees right to self-organization as long as the interference
does not amount to restraint or coercion.
Interference by a labor organization is not ULP because interfering in
the exercise of the right to organize is itself a function of selforganizing.
1.1 Coercing Participation in Strike
The provision is violated by a unions restraining or coercing an
employee in the exercise of his right to refuse to participate in or
recognize a strike. Similarly, violation is committed when a union
threatens employees with bodily harm in order to force them to strike.
2. UNION-INDUCED DISCRIMINATION

Article 249. Unfair labor practices of labor organizations. - It shall be

unfair labor practice for a labor organization, its officers, agents or
representatives:
(a) To restrain or coerce employees in the exercise of their right to
self-organization. However, a labor organization shall have the right
to prescribe its own rules with respect to the acquisition or retention
of membership;
(b) To cause or attempt to cause an employer to discriminate against
an employee, including discrimination against an employee with
respect to whom membership in such organization has been denied or
to terminate an employee on any ground other than the usual terms

The law forbids as ULP union attempts to cause an employer to grant

advantages for union members over non-members, for union members
in good standing over suspended or expelled members, for union
members over permit holders, for members of the union executive
board over more senior employees, for members of one union over
members of another union, or for members of one local over members
of another local.
The forbidden discrimination may refer to terms of hiring or firing, in
layoff, in seniority, or in benefits.
2.1 Arbitrary Use of Union Security Clause

LABOR RELATIONS
The broad rule is that the union has the right to determine its
membership and to prescribe the conditions for the acquisition and
retention thereof. Consequently, admission to membership may not be
compelled. This rule, however, is qualified in the case of labor unions
holding a monopoly in the supply of labor, either in a given locality,
or as regards a particular employer by reason of a closed-shop or
similar agreements. In such case, qualified applicants may not be
arbitrarily excluded from membership and their admission may not be
barred by unreasonable rules.
It is well settled that labor unions are not entitled to arbitrarily exclude qualified
applicants for membership, and a closed-shop provision would not justify the
employer in discharging, or a union in insisting upon the discharge of, an
employee whom the union thus refuses to admit to membership, without any
reasonable ground therefor.4 Needless to say, if said unions may be compelled
to admit new members, who have the requisite qualifications, with more reason
may the law and the courts exercise the coercive power when the employee
involved is a long standing union member, who, owing to provocations of
union officers, was impelled to tender his resignation, which he forthwith
withdrew or revoked. Surely, he may, at least, invoke the rights of those who
seek admission for the first time, and cannot arbitrarily he denied readmission.
The Court stresses, however, that union security clauses are also governed by
law and by principles of justice, fair play, and legality. Union security clauses
cannot be used by union officials against an employer, much less their own
members, except with a high sense of responsibility, fairness, prudence, and
judiciousness.

(a) When a party desires to negotiate an agreement, it shall serve a

written notice upon the other party with a statement of its proposals.
The other party shall make a reply thereto not later than ten (10)
calendar days from receipt of such notice;
(b) Should differences arise on the basis of such notice and reply,
either party may request for a conference which shall begin not later
than ten (10) calendar days from the date of request.
(c) If the dispute is not settled, the Board shall intervene upon request
of either or both parties or at its own initiative and immediately call
the parties to conciliation meetings. The Board shall have the power to
issue subpoenas requiring the attendance of the parties to such
meetings. It shall be the duty of the parties to participate fully and
promptly in the conciliation meetings the Board may call;
(d) During the conciliation proceedings in the Board, the parties are
prohibited from doing any act which may disrupt or impede the early
settlement of the disputes; and
(e) The Board shall exert all efforts to settle disputes amicably and
encourage the parties to submit their case to a voluntary arbitrator. (As
amended by Section 20, Republic Act No. 6715, March 21, 1989).
________

2.2 Not Disloyalty to Ask Help from Another Union

Article 251. Duty to bargain collectively in the absence of collective

bargaining agreements. In the absence of an agreement or other
voluntary arrangement providing for a more expeditious manner of
collective bargaining, it shall be the duty of employer and the
representatives of the employees to bargain collectively in accordance
with the provisions of this Code.
________

3. REFUSAL TO BARGAIN

1. NATURE OF COLLECTIVE BARGAINING

ULP under Art. 249(c) is intended to insure that unions approach the
bargaining table with the same attitude of willingness to agree as the
Act requires of management.

1.1 Definition

A union member may not be expelled from her union, and consequently from
her job, for personal or impetuous reasons or for causes foreign to the closedshop agreement and in a manner characterized by arbitrariness and
whimsicality.

A union violates its duty to bargain collectively by entering

negotiations with a fixed purpose of not reaching an agreement or
signing a contract.
4. FEATHERBEDDING AND MAKE-WORK ARRANGEMENTS
Art. 249(d) refers to featherbedding. Featherbedding is the name
given to employee practices which create or spread employment by
unnecessarily maintaining or increasing the number of employees
used, or the amount of time consumed, to work on a particular job.
In spite of employee assertions that these so-called featherbedding
practices are directly related to job security, health and safety, most
courts at common law found these practices to be economically
wasteful and without any legitimate employee justification.
________
Title VII
COLLECTIVE BARGAINING AND
ADMINISTRATION OF AGREEMENTS
ART. 250. Procedure in collective bargaining. - The following
procedures shall be observed in collective bargaining:

Collective bargaining or negotiations towards a collective agreement

is a democratic framework to stabilize the relation between labor and
management and to create a climate of sound and stable industrial
peace. It is a mutual responsibility of the employer and the Union and
is characterized as a legal obligation.
Collective bargaining includes four related but distinguishable
processes:
(1) negotiation between representatives of the management and the
union over wages, hours, and other terms of employment;
(2) the execution of a written contract embodying the terms agreed
upon;
(3) negotiation of any question arising as to the interpretation or
application of the contract; and
(4) negotiation over the terms of a new contract or proposed
modifications, when an existing agreement is validly opened for
negotiations.
Collective bargaining is a system made up of a set of continuous
processes; it is customary and helpful to distinguish negotiation of
contracts (the legislative phase of the union-employer relationship),

administration of contracts (the executive phase), and interpretation

or application of contracts (the judicial phase).
In common usage as well as in legal terminology, collective
bargaining denotes negotiations looking forward to a collective
agreement. However, it does not end with the execution of an
agreement. It is a continuous process. It requires both parties, the
employer and duly authorized representatives of employees, to deal
with each other with open and fair minds and sincerely endeavor to
fight the obstacles in the process to stabilize employer-employee
relationship.

LABOR RELATIONS
important element in employment, and consent assures stability
because parties who have accepted an agreement will live by its
terms.
2. EMERGENCE OF COLLECTIVE BARGAINING
First in Great Britain, but not much later in other countries, working
men sought to protect themselves against the harsh effects of new
machines, new methods of production, new divisions of labor and
new intensities of competition by forming organizations capable of
representing their interests as a group vis--vis employees and the
State.

1.1a CBA Defined

2.1 Originator
A collective bargaining agreement (CBA), as used in Article 252 of
the Labor Code, refers to a contract executed upon request of either
the employer or the exclusive bargaining representative incorporating
the agreement reached after negotiations with respect to wages, hours
of work and all other terms and conditions of employment, including
proposals for adjusting any grievances or questions arising under such
agreement.
While the terms and conditions of a CBA constitute the law between the
parties, it is not, however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. A CBA, as a labor contract
within the contemplation of Article 1700 of the Civil Code of the Philippines
which governs the relations between labor and capital, is not merely contractual
in nature but impressed with public interest, thus, it must yield to the common
good. As such, it must be construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic construction upon
it, giving due consideration to the context in which it is negotiated and purpose
which it is intended to serve.

A CBA is more than a contract; it is a generalized code to govern a

myriad of cases which the draftsmen wholly anticipate. It covers the
whole employment relationship and prescribes the rights and duties of
the parties.

The credit for coining the expression belongs to Beatrice Webb, who
first used it in 1891 in her study on The Cooperative Movement in
Great Britain.
In non-English speaking countries, particularly on the European
continent, where the process of collective bargaining has an equally
long history, the emphasis was placed on the term collective
agreement because during the early period the workers aimed not so
much at establishing the procedure of bargaining itself as at having
such agreements recognized and enforced as legally binding contracts.
2.2 Adoption in the Philippines
In the Philippines the idea of collective bargaining first gained formal
and official recognition through Commonwealth Act No. 213,
approved by President Manuel L. Quezon on November 21, 1936.
But it is the Industrial Peace Act (RA No. 875, approved by President
Elpidio Quirino on June 17, 1953), that defined collective bargaining
and outlined its procedure.
3. PARTIES TO COLLECTIVE BARGAINING

1.2 Rationale
By collective bargaining the employee shares through his chosen
representatives in fixing the conditions under which he works, and a
rule of law is substituted for absolute authority.

The duty to bargain collectively arises only between the employer

and its employees. Where neither party is an employer nor an
"employee" of the other, no such duty would exist. Needless to add,
where there is no duty to bargain collectively the refusal to bargain
violates no right.

1.3 Strength of the Collective Bargaining Method

Collective bargaining is also a means of ensuring workers
participation in decision-making. The notion that workers are entitled
to participate in setting the terms under which they are to work is
inherent in collective bargaining; even the most rudimentary form of
collective bargaining involves a transfer of certain issues, be it only
wages, from the area of unilateral to the area of bilateral decisionmaking.
It provides an opportunity for the exchange of information tending to
enhance the understanding of the parties for each other problems and
objectives, both where they differ and where they are identical.
Moreoverand this is very importantit provides an orderly
procedure by which each side can seek to present to the other the best
possible case for the satisfaction of its particular demands.
It elicits the consent of those who will have to live under the terms of
any agreement derived from the bargaining process. Stability is an

The parties, then, to collective bargaining as traditionally understood,

are the employer and the employees represented by their labor union.
Article. 212. (j) "Bargaining representative" means a legitimate labor
organization whether or not employed by the employer.

The bargaining representative of the employees is an entitythe

unionand not the officers of the union.
4. JURISDICTIONAL PRECONDITIONS OF COLLECTIVE
BARGAINING
While it is a mutual obligation of the parties to bargain, the employer,
however, is not under any legal duty to initiate contract negotiation.
The mechanics of collective bargaining is set in motion only when the
following jurisdictional preconditions are present, namely:
(1) possession of the status of majority representation of the
employees' representative in accordance with any of the means of
selection or designation provided for by the Labor Code;

(2) proof of majority representation; and

LABOR RELATIONS
the basic reason the bargaining procedure is governed primarily by
agreement of the parties.

(3) a demand to bargain under Article 251, par. (a) of the New Labor
Code.

In the presence of validly agreed procedure, the Labor Code

procedure applies suppletorily only.

An employers duty to recognize and bargain collectively with a union

as the collective bargaining representative of his employees does not
arise until after the union requests the employer to bargain. Hence, an
employer is not in default respecting the duty to bargain until a
request therefor has been made.

D.O. No. 40-03 supplements the codal provisions:

It is essential to the right of a putative bargaining agent to represent the

employees that it be the delegate of a majority of the employees and,
conversely, an employer is under duty to bargain collectively only when the
bargaining agent is representative of the majority of the employees. A natural
consequence of these principles is that the employer has the right to demand of
the asserted bargaining agent proof of its representation of its employees.
Having the right to demonstration of this fact, it is not an 'unfair labor practice'
for an employer to refuse to negotiate until the asserted bargaining agent has
presented reasonable proof of majority representation. It is necessary however,
that such demand be made in good faith and not merely as a pretext or device
for delay or evasion. The employer's right is however to reasonable proof.

4.1 Bargaining with Minority Union, ULP

Where a majority representative has been designated, it is an unfair
labor practice, [for the employer] as a refusal of collective bargaining,
to deal and negotiate with the minority representative.
On the union side, where there exists a legitimate issue as to which of
several unions is the legitimate representative of employees, it is ULP
for one of the unions to stage a strike and demand that the employer
sit down with it for collective bargaining.

If the three jurisdictional preconditions are present, the collective

bargaining should begin within the 12 months following the
determination and certification of the employees exclusive bargaining
representative. This period is known as the certification year.
The employers duty to bargain during the certification year has been
held to extend throughout the entire year. Absent unusual
circumstances, an employer commits an unfair labor practice by
refusing to bargain with the union during its certification year,
notwithstanding the repudiation of the union by a majority of its
employees before the expiration of the one-year period. The rule is the
same whether the union lost its majority as a result of the employers
unfair labor practices or through no fault of the employer.
A union which has been certified by the NLRB as a bargaining
representative for a particular unit enjoys an irrefutable presumption
of a majority status for one year, absent special circumstances.
Following the expiration of the one-year certification period, there
continues to be a presumption in favor of a union majority, though the
presumption is rebuttable. Employee turnover does not constitute
unusual circumstances shortening the period.
BARGAINING

Section 4. Procedure in single enterprise bargaining - A recognized or certified

labor union that desires to negotiate with its employer shall submit such
intention in writing to the employer, together with its proposals for collective
bargaining.

The recognized or certified labor union and its employer may adopt
such procedures and processes they may deem appropriate and
necessary for the early termination of their negotiations. They shall
name their respective representatives to the negotiation, schedule the
number and frequency of meetings, and agree on wages, benefits and
other terms and conditions of work for all employees covered in the
bargaining unit.
7. MULTI-EMPLOYER BARGAINING
Collective bargaining may take place at the national, industry, or
enterprise level.
The Philippines so far has tried only enterprise-level, or decentralized
bargaining.
7.1 Rationale of Multi-employer Bargaining

5. WHEN BARGAINING SHOULD BEGIN

6. SINGLE ENTERPRISE
BROADLY DESCRIBED

Section 3. When single enterprise bargaining available. - Any voluntarily

recognized or certified labor union may demand negotiations with its employer
for terms and conditions of work covering employees in the bargaining unit
concerned.

PROCEDURE

The law gives primacy to free collective bargaining (Art. 211) and
allows the parties to devise their bargaining rules (Art. 251). This is

When a number of employees join forces for purposes of collective

bargaining, the unit structure is described as a multi-employer
bargaining unit. The structure may consist of an association
representing employers, or even a whole industry, or it may be
composed of only a few employers who bargain as a group, or
through an association.
Competitive pressures are the dominant forces that encourage both
unions and employers to enter into multi-employer or industry-wide
bargaining relationships. Small employers in highly competitive and
labor-intensive fields may find it easier to operate with uniformity of
labor cost.
The multi-employer unit is particularly advantageous to both sides in
industries composed of many small, financially weak employers.
Multi-employer bargaining provides both management and unions
with significant cost savings in negotiation of labor agreements. It is
cheaper to negotiate one master multi-employer agreement than a
number of single-employer agreements.
There are, however, other considerations than costs, such as intraorganizational issues, that the parties take into account before opting
for multi-employer units. Multi-employer bargaining may not only
overlook the needs of various employee groups, but also ignore
particular requirements of individual employers.

LABOR RELATIONS
What may be readily acceptable to one employer may be considered
as financially disastrous by another.
To arrive at multi-employer agreements is much more difficult than to
arrive at single-employer contracts. The expanded size of the unit
composed of many heterogeneous groups leads to intensive intraorganizational bargaining both on the unions and on the employers
side. At times, these intra-organizational pressures may lead to
lengthy delays in negotiations and even to breakdown of bargaining.

(c) Each employer or concerned labor union shall express its willingness or
refusal to participate in multi-employer bargaining in writing, addressed to its
corresponding exclusive bargaining agent or employer. Negotiations may
commence only with regard to respective employers and labor unions who
consent to participate in multi-employer bargaining;
(d) During the course of negotiations, consenting employers and the
corresponding legitimate labor unions shall discuss and agree on the following:
1) the manner by which negotiations shall proceed;

7.2 Multi-employer Bargaining Procedure (D.O. No. 40-03)

Section 5. When multi-employer bargaining available. - A legitimate labor
union(s) and employers may agree in writing to come together for the purpose
of collective bargaining, provided:
(a) only legitimate labor unions who are incumbent exclusive bargaining agents
may participate and negotiate in multi-employer bargaining;
(b) only employers with counterpart legitimate labor unions who are incumbent
bargaining agents may participate and negotiate in multi-employer bargaining;
and
(c) only those legitimate labor unions who pertain to employer units who
consent to multi-employer bargaining may participate in multi-employer
bargaining.
Section 6. Procedure in multi-employer bargaining. - Multi-employer
bargaining may be initiated by the labor unions or by the employers.
(a) Legitimate labor unions who desire to negotiate with their employers
collectively shall execute a written agreement among themselves, which shall
contain the following:
1) the names of the labor unions who desire to avail of multi-employer
bargaining;
2) each labor union in the employer unit;
3) the fact that each of the labor unions are the incumbent exclusive bargaining
agents for their respective employer units;
4) the duration of the collective bargaining agreements, if any, entered into by
each labor union with their respective employers.
Legitimate labor unions who are members of the same registered federation,
national, or industry union are exempt from execution of this written
agreement.
(b) The legitimate labor unions who desire to bargain with multi-employers
shall send a written notice to this effect to each employer concerned. The
written agreement stated in the preceding paragraph, or the certificates of
registration of the federation, national, or industry union, shall accompany said
notice.
Employers who agree to group themselves or use their existing associations to
engage in multiemployer bargaining shall send a written notice to each of their
counterpart legitimate labor unions
indicating their desire to engage in multi-employer bargaining. Said notice shall
indicate the following:
1) the names of the employers who desire to avail of multi-employer
bargaining;
2) their corresponding legitimate labor organizations;
3) the fact that each corresponding legitimate union is any incumbent exclusive
bargaining agent;
4) the duration of the current collective bargaining agreement, if any, entered
into by each employer with the counterpart legitimate labor union.

2) the scope and coverage of the negotiations and the agreement; and
3) where appropriate, the effect of the negotiations on current agreements or
conditions of employment among the parties.
Section 7. Posting and registration of collective bargaining agreement. - Two
(2) signed copies of collective bargaining agreement reached through multiemployer bargaining shall be posted for at least five ( 5) days in two
conspicuous areas in each workplace of the employer units concerned. Said
collective bargaining agreement shall affect only those employees in the
bargaining units who have ratified it.
The same collective bargaining agreement shall be registered with the
Department in accordance with the following Rule.

7.4 Optional
Under D.O. No. 40-03 multi-employer bargaining is purely optional
for employers and unions.
Unlike other bargaining units, the multi-employer unit is based
primarily on the consent of the firms involved.
________
Article 252. Meaning of duty to bargain collectively. The duty to
bargain collectively means the performance of a mutual obligation to
meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement with respect to wages, hours of
work and all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising under such
agreement and executing a contract incorporating such agreements if
requested by either party but such duty does not compel any party to
agree to a proposal or to make any concession.
________
Article 253. Duty to bargain collectively when there exists a collective
bargaining agreement. When there is a collective bargaining
agreement, the duty to bargain collectively shall also mean that
neither party shall terminate nor modify such agreement during its
lifetime. However, either party can serve a written notice to terminate
or modify the agreement at least sixty (60) days prior to its expiration
date. It shall be the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of the
existing agreement during the 60-day period and/or until a new
agreement is reached by the parties.
________
1. DUTY TO BARGAIN DEFINED
The law contemplates and defines two situations when the duty to
bargain exists: Situation one, when there is yet no collective
bargaining agreement (Art. 252), and Situation two, where a CBA
exists (Art. 253).

For Situation One, the duty to bargain means in essence the mutual
obligation of the employer and the employees majority union to meet
and convene.
The purposes of the meeting and convening are:
(1) to negotiate an agreement on the subjects of:

LABOR RELATIONS
The failure of refusal of an employer to bargain collectively with his
employees constitutes an enjoinable unfair labor practice not only
under the subdivision of the Act dealing expressly with collective
bargaining, but also under the subsection making it an unfair labor
practice to: interfere with, restrain or coerce employees in the
exercise of their guaranteed rights, on the theory that refusal by an
employer to bargain collectively with his employees constitutes
interference with the latters right of self-organization.

(a) wages, (b) hours of work, and (c) all other terms and conditions of
employment including proposals for adjusting grievances or questions
arising under such agreement; and

2.1 Unresolved Petition for Union Cancellation

(2) to execute a contract incorporating such agreement if requested by

either party.

If an employer is guilty of unfair labor practice when he directly

discharges his employees to forestall a demand for collective
bargaining, he certainly should not be allowed to evade responsibility
if he indirectly causes that discharge by selling to a company that he
knows is unwilling to accept his employees.

The kind of compliance required is prompt, expeditious, and in good

faith.
The limitations or reservations of the duty are that it does not compel
any party to agree to a proposal or to make a concession.
For Situation Two, the duty to bargain means all of the above and,
additionally, the obligation not to terminate or modify the CBA during
its lifetime. But 60 days before the CBA expires, either party may
notify the other in writing that it desires to terminate or modify the
agreement. During the 60-day period and until a new agreement is
reached, the CBA remains in full force and effect; the parties are dutybound to keep the status quo. The law therefore provides for
automatic renewal or extension of the CBA. This 60-day period under
Art. 253 refers to submission of proposals to renegotiate the
nonrepresentational provisions of the CBA. It does not always
coincide with the 60-day period mentioned in Articles 253-A and 256
pertaining to freedom period to resolve representation contest
between unions
1.1 Four Forms of ULP in Bargaining
(1) failure to meet and convene; (2) evading the mandatory subjects of
bargaining; (3) bad faith in bargaining, including failure or refusal to
execute the collective agreement, if requested; and (4) gross violation
of the CBA.
2. FIRST U.L.P. IN BARGAINING: FAILURE OR REFUSAL TO
MEET AND CONVENE
An employer is guilty of an unfair labor practice in refusing to bargain
with the representative of a majority of his employees. To bargain in
good faith, an employer must not only meet and confer with the union
which represents his employees, but also must recognize the union for
the purpose of collective bargaining. In addition, he must recognize
the union as the bargaining representative of all the employees in the
appropriate bargaining unit, even if they are not all members of the
union.
The duty to bargain extends beyond the period of contract
negotiations, and applies to labor-management relations during the
term of the agreement. Since a collective bargaining agreement does
not define all the rights and obligations of the employer and his
employees, negotiation of grievances is part and parcel of the
bargaining process.

2.2 Selling the Company

The basic rule is that if the transfer of assets and employees from one
employer to another leaves intact the identity of the employing
enterprise, the transferors duty to recognize and bargain with an
incumbent union devolves upon the transferee as successor
employer. That means that an acquiring employer is a successor to
the bargaining obligations of his predecessor if there is a continuity in
the business operation. Only a high degree of enterprise continuity
will justify imposing obligations under a contract with the union to
which the new employer was not a party.
A mere change in ownership of a business is insufficient to alter a
unions status as bargaining representative.
2.3 Successor Employer: Continuity and Identity
In making the determination as to whether an employer is successor,
the NLRB looks to the totality of circumstances to determine whether
there has been a substantial and material alteration in the employing
enterprise. If there is a substantial and material alteration in the
employing enterprise, the new employer need not bargain with the
incumbent union.
2.4 Conversion to Independent Franchise or Operation
A decision to withdraw capital from a company-operated facility and
relinquish the operating control to an independent dealership lies very
much at the core of entrepreneurial control, and hence is not a
mandatory subject of bargaining
2.5 Do Economic Exigencies Justify Refusal to Bargain?
An employer has been held not guilty of a refusal to bargain by
adamantly rejecting the unions economic demands where he is
operating at a loss, on a low profit margin, or in a depressed industry,
as long as he continues to negotiate.
2.6 Acts not Deemed Refusal to Bargain
The duty to bargain is not violated by:
(1) adoption of an adamant bargaining position in good faith,
particularly when the company is operating at a loss;

LABOR RELATIONS
(2) refusal to bargain over demands for commission of unfair labor
practices;

with impunity to resort to schemes feigning negotiations by going through

empty gestures.

(3) refusal to bargain during period of illegal strike.

3. SECOND U.L.P. IN
MANDATORY SUBJECTS

If a union engages in an illegal strike, the employer has no obligation

to bargain until he is notified that the illegal strike has been
terminated.
Where, pursuant to an honest doubt, the employer has demanded
additional proof or acquisition of an official certification of bargaining
agency, there is no obligation or duty on the employers part to enter
into negotiations until the demanded proof is presented pending the
certification proceedings, unless it can be established that the demand
lacks in good faith and is intended as an obstruction to negotiations.
Neither is the duty to bargain violated where:
(1) there is no request for bargaining;
(2) the union seeks recognition for an inappropriately large unit;
(3) the union seeks to represent some persons who are excluded from
the Act;
(4) the rank-and-file unit includes supervisors or inappropriate
otherwise;
(5) the demand for recognition and bargaining is made within the year
following a certification election in which the clear choice was no
union and no ad interim significant change has taken place in the unit;
(6) the union makes unlawful bargaining demands.
2.7 Alleged Interference in the Selection of the Unions Negotiation
Panel
In order to show that the employer committed ULP under the Labor Code,
substantial evidence is required to support the claim. Substantial evidence has
been defined as such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.

BARGAINING:

THE

It is the obligation of the employer and the employees representative

to bargain with each other with respect to wages, hours, and other
terms and conditions of employment. They are statutory or
mandatory proposals. An employers refusal to negotiate a
mandatory subject of bargaining is an unfair labor practice although
the employer has every desire to reach agreement and earnestly and in
all good faith bargains to that end. On the other hand, an employers
duty to bargain is limited to the mandatory bargaining subjects; as to
other matters, he is free to bargain or not to bargain.
A mere remote, direct, or incidental impact is insufficient to render a
subject a mandatory subject of bargaining; in order for a matter to be
subject to mandatory collective bargaining, it must materially or
significantly affect the terms or conditions of employment.
3.1 Wages and Employment Conditions
The term wages, as used in 29 USCS Sec. 158(d), has been held to
include not only compensation but also other emoluments of value
furnished by the employer to his employees. Under our Labor Code,
wage refers to remuneration or earnings, however designated,
capable of being expressed in terms of money, etc.
Since the passage of the Taft-Hartley Act, the National Labor Relations Board
has held that industrial pensions, group insurance, and merit increases all are
matters about which employers must bargain collectively.

The following are examples of matters considered as mandatory

subjects of bargaining:
(1) Wages and other types of compensation, including merit increases;
(2) Working hours and working days, including work shifts;
(3) Vacations and holidays;

2.8 Non-reply to Proposal; CBA Imposed on Employer

(4) Bonuses;

Collective bargaining, designed to stabilize the relation between labor and

management and to create a climate of sound and stable industrial peace. It is a
legal obligation, so much so that Article 248 of the Labor Code makes it an
unfair labor practice for an employer to refuse "to meet and convene promptly
and expeditiously in good faith for the purpose of negotiating an agreement
with respect to wages, hours of work, and all other terms and conditions of
employment.

(5) Pensions and retirement plans;

We agree with the pronouncement that it is not obligatory upon either side of a
labor controversy to precipitately accept or agree to the proposals of the other.
But an erring party should not be tolerated and allowed with impunity to resort
to schemes feigning negotiations by going through empty gestures.

EVADING

(6) Seniority;
(7) Transfer;
(8) Lay-offs;
(9) Employee workloads;
(10) Work rules and regulations;

2.8a Repetition in Divine Word University

(11) Rent of company houses;

A companys refusal to make counter proposal if considered in relation to the

entire bargaining process, may indicate bad faith and this is especially true
where the Unions request for a counter proposal is left unanswered.
Moreover, the Court added in the same case that it is not obligatory upon
either side of a labor controversy to precipitately accept or agree to the
proposals of the other. But an erring party should not be tolerated and allowed

(12) Union security arrangements.

3.1a Wage Agreement; Solomonic Approach

LABOR RELATIONS
We take note of the "middle ground" approach employed by the Secretary in
this case which. we do not necessarily find to be the best method of resolving a
wage dispute. Merely finding the midway point between the demands of the
company and the union, and "splitting the difference" is a simplistic solution
that fails to recognize that the parties may already be at the limits of the wage
levels they can afford. It may lead to the danger too that neither of the parties
will engage in principled bargaining; the company may keep its position
artificially low while the union presents an artificially high position, on the fear
that a "Solomonic" solution cannot be avoided. Thus, rather than encourage
agreement, a "middle ground approach" instead promotes a "play safe" attitude
that leads to more deadlocks than to successfully negotiated CBAs.

An employers statutory duty to bargain requires him to negotiate over

the unions proposal that their agreement include a clause binding him
not to lock out the employees. An employers refusal to bargaining
over the duration of the contract to be entered into is also an unfair
labor practice. But an employers obligation to enter into a collective
bargaining agreement does not require that the employer enter into an
unalterable obligation for an extended period of time, and many
collective bargaining agreements contain a clause permitting
termination or modification by either party upon prescribed notice.

3.2 Workloads and Work Rules

3.7 Signing Bonus

Employee workloads are a mandatory subject of bargaining.

Employer rules concerning coffee breaks, lunch periods, smoking,
employee discipline, and dress are also mandatory subjects of
bargaining, as are plant safety rules and general regulations.

Signing bonus is a grant motivated by goodwill created when a CBA

is successfully negotiated and signed between the employer and the
union. Where goodwill does not exist, why ask for a signing bonus?

Company rules relating to safety and work practices come within the
meaning of the phrase other terms and conditions of employment as
used in the Act and, therefore, constitute a mandatory subject of
collective bargaining.
3.2a Code of Conduct
Work rules and regulations are commonly compiled into a booklet
usually called Code of Discipline or Code of Conduct. Such dos
and donts for employees of the enterprise are work rules, forming
part of terms and conditions of employment, that are proper subjects
of collective bargaining. Hardly may the employer contend that they
are non-negotiable matters.
3.3 Management Prerogatives Clause
An employer does not commit an unfair labor practice by insisting, to
the point of a bargaining impasse, on the inclusion in the contract of a
management prerogatives clause, even though some of the matters
covered by the clause are conditions of employment which are
mandatory subjects of bargaining under 29 USCS Sec. 158(d). Thus,
an employers insistence that its decisions regarding hiring and tenure
of employment should not be reviewable by arbitration is not a refusal
to bargain.
3.4 Union Discipline Clause
An employer may bargain to an impasse over his proposal that the
union eliminate a piecework ceiling imposed by a union rule which
subjects members to discipline for exceeding the production quota.
However, an employers insistence to the point of a bargaining
impasse on the unions withdrawal of fines imposed on memberemployees who crossed a picket line around the employers plant is an
unlawful refusal to bargain, since the right not to withdraw fines is an
internal union affairs, a matter involving relations between employees
and their unions, and therefore not a mandatory bargaining item.
3.5 Arbitration, Strike-Vote, or No-Strike Clause
An employer may lawfully bargain to an impasse over his proposal
that the collective bargaining agreement include an arbitration clause
or a no-strike clause which prohibits the employees from striking
during the life of the agreement.
3.6 No-Lockout Clause; Clause Fixing Contractual Term

In contractual terms, a signing bonus is justified by and is the consideration

paid for the goodwill that existed in the negotiations that culminated in the
signing of a CBA. Without the goodwill, the payment of a signing bonus cannot
be justified and any order for such payment, to our mind, constitutes grave
abuse of discretion.

In short, if the reason behind a signing bonus is absent, no signing

bonus need be given.
3.8 No Duty to Agree Even on Mandatory Subjects
The Act does not compel agreements between employers and
employees, and neither party is legally obligated to yield even on a
mandatory bargaining subject. Where the subject of the dispute is a
mandatory bargaining subject, either party may bargain to an impasse
as long as he bargains in good faith. The duty to bargain does not
obligate a party to make concessions or yield a position fairly held.
Hence, an employers adamant insistence on a bargaining position is
not necessarily a refusal to bargain in good faith.
Even if the negotiating party thumbs down the other partys proposals,
there is no violation of the duty to bargainhence, no ULPas long
as the negative reply can be explained in good faith.
3.9 Non-mandatory Subjects
An employer cannot insist, to the point of creating a bargaining
impasse, on the inclusion of a provision outside the scope of the
statutory bargaining subjects, even if he acts in good faith. On the
other hand, it is lawful to insist on the inclusion of a provision in a
collective bargaining agreement if the provision is within the scope of
a statutory subject of bargaining.
An employer bargains to an impasse over a non-mandatory bargaining
subject when he refuses to reach any agreement with the union unless
the union capitulates to him on that subject. However, it has been held
that a bargaining impasse may be reached over a non-mandatory
bargaining subject although that subject is not the sole cause for the
parties failure to agree. When a subject under discussion is not
mandatory, it may be discussed if both parties agree, but a strike or
lockout may not be used to compel a negotiation or agreement.
While most matters that might be discussed or proposed in collective
bargaining are likely to bear some relation, even if tenuous, to wage,
hours, and other terms and conditions of employment, not all
proposals that somehow respond to a problem that is customarily
bargained about may themselves be insisted upon to impasse. By once

bargaining and agreeing on a permissive subject of bargaining, the

parties do not make the subject a mandatory topic of future
bargaining.

LABOR RELATIONS
Deadlock does not mean the end of bargaining. It signals rather the
need to continue the bargaining with the assistance of a third party as
conciliator or arbitrator whose first aim is to get the parties back to the
negotiating table and help them craft a win-win solution.

3.10 Bargaining to the Point of Impasse: Not necessarily Bad Faith

3.11b Strike or Lockout in Case of Deadlock
The adamant insistence on a bargaining position to the point where
the negotiations reach an impasse does not establish bad faith. Neither
can bad faith be inferred from a partys insistence on the inclusion of a
particular substantive provision unless it concerns trivial matters or is
obviously intolerable.
The question as to what are mandatory and what are merely permissive subjects
of collective bargaining is of significance on the right of a party to insist on his
position to the point of stalemate. A party may refuse to enter into a collective
bargaining contract unless it includes a desired provision as to a matter which is
a mandatory subject of collective bargaining; but a refusal to contract unless the
agreement covers a matter which is not a mandatory subject is in substance a
refusal to bargain about matters which are mandatory subjects of collective
bargaining, and it is no answer to the charge of refusal to bargain in good faith
that the insistence on the disputed clause was not the sole cause of the failure to
agree or that agreement was not reached with respect to other disputed clauses.

Stated in another way, the ruling means that bargaining to the point of
deadlock may or may not amount to bargaining in bad faith depending
on whether the insistence refers to a mandatory or a non-mandatory
subject of bargaining.
The reason is that the duty to bargain requires meeting and convening
on terms and conditions of employment but does not require assent to
the other partys proposals.
Over a non-mandatory subject, on the other hand, a party may not
insist on bargaining to the point of impasse, otherwise his insistence
can be construed as bargaining in bad faith. It may be construed as
evasion of the duty to bargain; such evasion is ULP.
The above rulings do not mean that non-mandatory subjects cannot be
proposed or that the proponent cannot demand serious discussion of
such proposal. What the rulings forbid is the posture of making
settlement on a non-mandatory subject a precondition to the
discussion or settlement of a mandatory subject. If a non-mandatory
subject is proposed and agreed upon, the agreeing party, by itself, is
binding.
3.11 When Is There Deadlock or Impasse?
A bargaining impasse over an issue exists where good faith bargaining
on the part of the parties has failed to resolve the issue and there are
no definite plans for further efforts to break the deadlock.
Impasse, within the meaning of the federal labor laws, presupposes
reasonable effort at good faith bargaining which, despite noble
intentions, does not conclude in an agreement between the parties. In
the NLRBs view, whether a bargaining impasse exists is a matter of
judgment dependent on such factors as the bargaining history, the
parties good faith in negotiations, the length of the negotiations, the
importance of the issue or issues as to which there is disagreement,
and the contemporaneous understanding of the parties as to the state
of negotiations.
3.11a Duty to Bargain When There Is Deadlock or Impasse

Bargaining may proceed smoothlyand this is the wish of most

negotiation panelsbut it may also be marred by insinuations,
misunderstandings, and apparently irreconcilable bargaining
positions. Deadlock develops. In fact, deadlock may occur anytime
for various reasons such as unacceptability of a proposal or counter
proposal, grandstanding of a negotiator, autocratic or arrogant stance,
or imprecise wording of a stipulation.
The law (Art. 263) recognizes bargaining deadlock as a valid reason
to declare a strike or lockout. Strike/ lockout presents a major
deviation from the preferred smooth route of bargaining. At this point
of bargaining scenario, strike/ lockout is supposed to be a method of
resolving an impasse, a device to constrain the parties to end an
impasse and go back to the negotiation table. But strike/ lockout,
while meant to be a solution, frequently becomes a problem in itself.
Although the union's petition was for "compulsory arbitration," the subsequent
agreement of petitioner to submit the matter for arbitration in effect made the
arbitration a voluntary one. The essence of voluntary arbitration, after all, is
that it is by agreement of the parties, rather than compulsion of law, that a
matter is submitted for arbitration. It does not matter that the person chosen as
arbitrator is a labor arbiter who, under Art. 217 of the Labor Code, is charged
with the compulsory arbitration of certain labor cases. There is nothing in the
law that prohibits these labor arbiters from also acting as voluntary arbitrators
as long as the parties agree to have him hear and decide their dispute.

4. THIRD U.L.P. IN BARGAINING: BAD FAITH

Bargaining deadlock may be precipitated not only by hard-line
positions on mandatory or non-mandatory subjects. It may also arise
because of lack of good faith in bargaining.
Good-faith bargaining demands more than sterile and repetitive
discussion of formalities precluding actual negotiation, more than
formal replies which constitute in effect a refusal to treat with the
union, and more than a willingness to enter upon a sterile discussion
of union-management differences. It requires a sincere effort to reach
agreement, although it does not require agreement itself. Moreover,
the duty to bargain does not end with the negotiation of the
agreement.
The duty to bargain collectively may be violated without a general
failure of subjective good faith, and there is no occasion to consider
the issue of good faith if a party refuses even to negotiate in fact about
any of the mandatory subjects. AN employer cannot be guilty of a
refusal to bargain if the union is not itself bargaining in good faith.
4.1 Determination of Good Faith
The crucial question whether or not a party has met his statutory duty to
bargain in good faith typically turns on the facts of the individual case. There is
no per se test of good faith in bargaining. Good faith or bad faith is an inference
to be drawn from the facts and is largely a matter for the NLRBs expertise. To
some degree, the question of good faith may be a question of credibility.

A fair criterion of good faith in collective bargaining requires that the

parties involved deal with each other with open and fair mind and

sincerely endeavor to overcome obstacles or difficulties existing

between them to the end that employment relations may be
established and obstruction to the free flow of commerce prevented.
Mere pretended bargaining will not suffice; neither must the mind be
hermetically sealed against the thought of entering into an agreement.
To do less that is required by the standards of good faith and conduct
is a refusal to bargain collectively and violates the spirit and intent of
the Act.
4.2 When Can Bargaining in Bad Faith Occur?
Bargaining in bad faith is considered ULP under Art, 248(g). But if
one will be charged with bargaining in bad faith, the charge should be
raised while the bargaining is in progress. When the bargaining is
finished and the CBA has been executed voluntarily by the parties, a
charge of bargaining in bad faith is too late and untenable.
With the execution of the CBA, bad faith bargaining can no longer be imputed
upon any of the parties thereto. All provisions in the CBA are supposed to have
been jointly and voluntarily incorporated therein by the parties. This is not a
case where private respondent exhibited an indifferent attitude towards
collective bargaining because the negotiations were not the unilateral activity of
petitioner union. The CBA is proof enough that private respondent exerted
"reasonable effort at good faith bargaining."
The unions proposal, not being part of the signed contract, cannot serve as
basis of holding the management guilty of bad faith in bargaining or in
implementing their contract as signed.

4.3 Instances of Bad Faith: Delay of, or Imposing Time Limit on,
Negotiations
An unwarranted delay in negotiations may be evidence of bad faith on
the part of the employer. However, an employer has been held not
guilty of bad faith for failing to complete a collective bargaining
contract during a 3-year period, where many conferences had been
held during the period, even though the employer had insisted on a
no-strike clause and had raised wages during negotiations for the
purpose of meeting competition.
The National Labor Relations Board of the United States reported that
lack of good faith is indicated where the employer engages in unfair
labor practices while bargaining with the union; where it engages in
dilatory tactics during negotiations; or where it institutes a wage cut
by unilateral action and without consulting the majority
representative.
Nonetheless, the prior adjudication of bad faith on an earlier occasion
is not itself substantial evidence of present bad faith.
As the Court held in the case of Kiok Loy v. NLRC, 141 SCRA 179, 186 (1986),
the company's refusal to make counter-proposal to the union's proposed CBA is
an indication of its bad faith.

4.3a Bad Faith: Surface Bargaining; Shifting Bargaining Positions;

Blue Sky Bargaining
Surface bargaining, which means a sophisticated pretense in the
form of apparent bargaining, does not satisfy the statutory duty to
bargain. The duty is not discharged by merely meeting together or
simply manifesting a willingness to talk. It requires more than a
willingness to enter upon a sterile discussion of union-management
differences. Collective bargaining is not simply an occasion for purely
formal meetings between management and labor while each maintains

LABOR RELATIONS
an attitude of take it or leave it, but presupposes a desire to reach an
ultimate agreement to enter into a collective bargaining contract. An
employers proposals which could not be offered with any reasonable
expectation that they would be accepted by the union constitute
surface bargaining.
Repeated shifts in position and attitude on the part of an employer
whenever a tentative agreement is reached are evidence of a refusal to
bargain collectively in good faith. It has also been held that an
employer cannot reject a unions acceptance of the employers counter
offer on the ground that the union had earlier rejected the offer.
Surface bargaining is defined as "going through the motions of negotiating"
without any legal intent to reach an agreement. The resolution of surface
bargaining allegations never presents an easy issue. The determination of
whether a party has engaged in unlawful surface bargaining is usually a
difficult one because it involves, at bottom, a question of the intent of the party
in question, and usually such intent can only be inferred from the totality of the
challenged partys conduct both at and away from the bargaining table. It
involves the question of whether an employers conduct demonstrates an
unwillingness to bargain in good faith or is merely hard bargaining. x x x We,
likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky
bargaining or making exaggerated or unreasonable proposals.

4.3b Bad Faith: Inflexible Demands; Strike Amid Negotiation

4.3c Bad Faith: Boulwarism; Take-It-or-Leave-It Bargaining
The new plan was threefold. As negotiations approached, the Company would
use its local management personnel on the desires of the work force on the type
and level of benefits; these were then translated into specific proposals, whose
cost and effectiveness were researched in order to determine an attractive
bargaining offer within the Company's means; the Company then attempted to
"sell" its proposals to its employees and the general public through a publicity
campaign in plant newspapers, bulletins, letters, television and radio
announcements and personal contacts. The Company announced in negotiations
that it rejected the usual horse trading approach to bargaining, with each side
eventually compromising initial unreasonable positions; it advertised its initial
proposals as fair and firm. Though willing to accept Union suggestions
based on facts it might have overlooked, the Company refused to change its
position simply because the Union disagreed with it.
We have already indicated that one of the central tenets of "the Boulware
approach" is that the "product" or "firm, fair offer" must be marketed
vigorously to the "consumers" or employees, to convince them that the
Company, and not the Union, is their true representative.
The aim, in a word, was to deal with the Union through the employees, rather
than with the employees through the Union.

4.4 Not Bad Faith to Propose Modifications to the Expiring CBA

It is not bad-faith bargaining when a party proposes modifications to
the expiring CBA. The second sentence of Article 253 explicitly refers
to serving a written notice to terminate or modify the agreement.
Modification may mean addition to, subtraction from, or other ways
of changing the contents or phraseology of contents of the expiring
CBA. It does not connote a one-direction movement. But whichever
way it is proposed to go, the proposed changes require honest
explanation.
What was excluded from the old CBA may be proposed for inclusion
in the forthcoming CBA, or vice-versa. Negotiation precisely
contemplates proposals and counter-proposals.
4.5 Giving of Information

LABOR RELATIONS
Part of good-faith bargaining, and a method to expedite the process, is
supplying of information to the other party, as required by law. It
should be recalled that under Art. 242 one of the rights of a legitimate
labor organization which is certified as the exclusive bargaining agent,
is to ask for and be furnished with the employers annual audited
financial statements, including the balance sheet and the profit and
loss statement. Such information is crucial in bargaining.
An employer is under a duty, upon request of the bargaining
representative, to provide information relevant to the issues at the
bargaining table. Refusal to provide relevant information after the
same has been requested constitutes per se violation of the duty to
bargain. Relevant information or data may include information
concerning the employees in the bargaining unit, such as their names,
addresses, and seniority standing, or concerning the financial status of
the employer, especially where needed to substantiate claims of
inability to pay.
5. FOURTH U.L.P. IN BARGAINING: GROSS VIOLATION OF
THE CONTRACT
At this stage, the negotiations are over; the document has been signed,
sealed, and delivered. Implementation should follow. But at this stage
the collective bargaining process is not yet over, and the duty to
bargain is still operative because such duty further requires faithful
adherence to the contractual provisions. Violation of the contract
amounts to ULP, if the violation is gross.
6.
RATIFICATION
REQUIREMENTS

BY

THE

CBU;

MANDATORY

The agreement negotiated by the employees bargaining agent should

be ratified or approved by the majority of all the workers in the
bargaining unit.
The proper ratifying group is not just the majority union but the
majority of all the workers in the bargaining unit represented in the
negotiation.
The ratification and the manner of doing it are mandatory.

In any of those situations the CBA still needs to be posted in two

conspicuous places in the workplace, but the posting is for the
information of, and not ratification by, the employees affected.
Moreover, the CBA has to be registered with the DOLE regional
office.
To require ratification of the CBA in case of arbitral awards will be
inconsistent with the nature of arbitration as a dispute-settlement
device.
The preceding comment, however, does not mean that the arbitral
award is beyond question. Certiorari on proper grounds is available.
6.3 Ratified but Unsigned
Lack of the purely ministerial act of signing the formal contract did
not obviate the fact that there was a binding contract.
6.4 Unratified but Implemented
The parties to a collective agreement are required to furnish copies to the
appropriate Regional Office with accompanying proof of ratification by the
majority of all the workers in the bargaining unit. This was not done in the case
at bar. But we do not declare the CBA invalid or void considering that the
employees have enjoyed benefits from it. They cannot receive benefits under
provisions favorable to them and later insist that the CBA is void simply
because other provisions turn out not to the liking of certain employees. It is
iniquitous to receive benefits from a CBA and later on disclaim its validity.

7. EXECUTION OF CONTRACT
A party to a collective bargaining may be required to sign a contract
where the agreement has been reached by the parties and only one
partys refusal to execute a contract is preventing its being carried into
effect. Such refusal is an unfair labor practice
7.1 Unwritten or Unsigned Agreement
American courts have held that a collective bargaining agreement is
valid though not reduced to writing or signed, if neither party requests
a written instrument.

The Implementing Rules require posting of the CBA in two

conspicuous places for five days. In one case, the CBA was not posted
for at least five days in two conspicuous places in the establishment
before ratification, to enable the workers to clearly inform themselves
of its provisions. Moreover, the CBA submitted to the MOLE did not
carry the sworn statement of the union secretary, attested by the union
president, that the CBA had been duly posted and ratified, as required
by the Implementing Rules and Regulations. The court ruled that
these requirements being mandatory, non-compliance therewith
rendered the said CBA ineffective.

7.2 Effect of Signing on Other Disputes

6.1 Invalid Ratification

It is believed that failure to register the CBA does not make it invalid
or unenforceable. Its non-registration, however, renders the contractbar rule inoperative.

6.2 When Ratification Not Needed

Ratification of the CBA by the employees in the bargaining unit is not
needed when the CBA is a product of an arbitral award by appropriate
government authority or by a voluntary arbitrator. The arbitral award
may result from voluntary arbitration under Art.262 or from the
secretarys assumption of jurisdiction or certification of the dispute to
the NLRC, under Art. 263(g).

8. REGISTRATION OF C.B.A.
The collective agreement, having been properly ratified, should be
registered with the DOLE Regional Office where the bargaining union
is registered or where it principally operates. Art. 231 requires the
registration within thirty (3) calendar days from execution of the
agreement. Multi-employer collective bargaining agreements shall be
filed with the Bureau.

8.1 Requirements for Registration

Section 2. Requirements for registration. - The application for CBA registration
shall be accompanied by the original and two (2) duplicate copies of the
following documents which must be certified under oath by the
representative(s) of the employer(s) and labor union(s) concerned

LABOR RELATIONS
(a) the collective bargaining agreement;
(b) a statement that the collective bargaining agreement was posted in at least
two (2) conspicuous places in the establishment or establishments concerned
for at least five (5) days before its ratification; and
(c) a statement that the collective bargaining agreement was ratified by the
majority of the employees in the bargaining unit of the employer or employers
concerned.
No other document shall be required in the registration of collective bargaining
agreements

The application may be denied if the supporting documents are

incomplete or not verified under oath. The denial, if by the Regional
office, is appealable to the Bureau within ten (10) days or to the
Secretary if the denial is by the Bureau.
9. AUTOMATIC RENEWAL OF CBA
The parties shall continue the CBA in full force and effect until they
reach a new agreement.
It is clear from the above provision of law that until a new Collective
Bargaining Agreement has been executed by and between the parties, they are
duty-bound to keep the status quo and to continue in full force and effect the
terms and conditions of the existing agreement. The law does not provide for
any exception nor qualification as to which of the economic provisions of the
existing agreement are to retain force and effect, therefore, it must be
understood as encompassing all the terms and conditions in the said agreement.

________
Article 253-A. Terms of a collective bargaining agreement. Any
Collective Bargaining Agreement that the parties may enter into shall,
insofar as the representation aspect is concerned, be for a term of five
(5) years. No petition questioning the majority status of the incumbent
bargaining agent shall be entertained and no certification election
shall be conducted by the Department of Labor and Employment
outside of the sixty-day period immediately before the date of expiry
of such five-year term of the Collective Bargaining Agreement. All
other provisions of the Collective Bargaining Agreement shall be
renegotiated not later than three (3) years after its execution.
Any agreement on such other provisions of the Collective Bargaining
Agreement entered into within six (6) months from the date of expiry
of the term of such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day immediately
following such date. If any such agreement is entered into beyond six
months, the parties shall agree on the duration of retroactivity thereof.
In case of a deadlock in the renegotiation of the Collective Bargaining
Agreement, the parties may exercise their rights under this Code. (As
amended by Section 21, Republic Act No. 6715, March 21, 1989).
________
1. DURATION OF A C.B.A.
RA No. 9715 (March 21, 2989) has introduced through Art. 253-A a
significant change in setting the durations or terms of a CBA at five
years for the representation aspect and not more than three years for
all other provisions. The representation aspect refers to the
identity and majority status of the union that negotiated the CBA as
the exclusive representative of the bargaining unit. All other
provisions: simply refers to the rest of the CBA, economic as well as
non-economic other than representational.

The conference agreed to make the terms and conditions or

economic provision of the CBA good only for three years so as to
protect the economic gains of the workers.
Obviously, the framers of the law wanted to maintain industrial peace and
stability by having both management and labor work harmoniously together
without any disturbance. Thus, no outside union can enter the establishment
within five (5) years and challenge the status of the incumbent union as the
exclusive bargaining agent. Likewise, the terms and conditions of employment
(economic and non-economic) cannot be questioned by the employers or
employees during the period of effectivity of the CBA. The CBA is a contract
between the parties and the parties must respect the terms and conditions of the
agreement. Notably, the framers of the law did not give a fixed term as to the
effectivity of the terms and conditions of employment. It can be gleaned from
their discussions that it was left to the parties to fix the period.
The issue as to the term of the non-representation provisions of the CBA need
not belabored especially when we take note of the Memorandum of the
Secretary of Labor dated February 24, 1994. In said memorandum, the
Secretary of Labor had occasion to clarify the term of the renegotiated terms of
the CBA vis-a-vis the term of the bargaining agent, to wit:
As a matter of policy the parties are encourages (sic) to enter into a
renegotiated CBA with a term which would coincide (sic) with the aforesaid
five (5) year term of the bargaining representative.
In the event however, that the parties, by mutual agreement, enter into a
renegotiated contract with a term of three (3) years or one which does not
coincide with the said 5-year term, and said agreement is ratified by majority of
the members in the bargaining unit, the subject contract is valid and legal and
therefore, binds the contracting parties. The same will however not adversely
affect the right of another union to challenge the majority status of the
incumbent bargaining agent within sixty (60) days before the lapse of the
original five (5) year term of the CBA.

2. EFFECTIVITY AND RETROACTIVITY OF A C.B.A.

If the CBA is the very first for the bargaining unit, the Code does not
state any rule on the CBAs effectivity date. The parties have to decide
it for themselves. But if the ensuing CBA is renewal, modification or
renegotiation of an expiring one, the Code offers a formula for the
effectivity date. Article 253-A provides that the ensuing agreement, if
entered into within six (6) months from expiry of the old one, shall
retroact to the date following such expiry date; thus, if the CBA
expired on December 31 and the new one is concluded on, say, March
31, its effectivity date is January 1. If, on the other hand, the new
agreement is concluded after June 30, then the matter of retroaction
and the possible retroactive date are left to the parties.
When, precisely, is the date an agreement is concluded or entered
into?
The determining point is the date the parties agreed, not the date they signed.
Art. 253-A refers merely to an "agreement" which, according to Black's Law
Dictionary is "a coming together of minds; the coming together in accord of
two minds on a given proposition." This is similar to Art. 1305 of the Civil
Code's definition of "contract" as "a meeting of minds between two persons."
The two terms, "agreement" and "contract," are indeed similar, although the
former is broader than the latter because an agreement may not have all the
elements of a contract. As in the case of contracts, however, agreements may be
oral or written. Hence, even without any written evidence of the Collective
Bargaining Agreement made by the parties, a valid agreement existed in this
case from the moment the minds of the parties met on all matters they set out to
discuss, as provided under Art. 1315 of the Civil Code.

2.1 Effectivity of CBA Concluded After Six Months from Expiration

of Old CBA
Significantly, the law does not specifically cover the situation where
six months have elapsed but the parties have reached no agreement
with respect to effectivity. In this eventuality, we hold that any
provision of law should then apply, for the law abhors a vacuum.
One such provision is the principle of hold over, i.e., that in the absence of a
new CBA, the parties must maintain the status quo and must continue in full
force and effect the terms and conditions of the existing agreement until a new
agreement is reached. In this manner, the law prevents the existence of a gap in
the relationship between the collective bargaining parties. Another legal
principle that should apply is that in the absence of an agreement between the
parties, then, an arbitrated CBA takes on the nature of any judicial or quasijudicial award; it operates and may be executed only prospectively unless there
are legal justifications for its retroactive application.

3. EXTENSION OF EFFECTIVITY OF C.B.A., WHEN VALID

3.1 Ten-Year Suspension of CBA
________
Article 254. Injunction prohibited. No temporary or permanent
injunction or restraining order in any case involving or growing out of
labor disputes shall be issued by any court or other entity, except as
otherwise provided in Articles 218 and 264 of this Code. (As amended
by Batas Pambansa Bilang 227, June 1, 1982).
________
1. NO-INJUNCTION POLICY
An injunction may require or restrain the doing of an act.
Article 254 announces the policy that labor disputes are generally not
subject to injunction. If the rule were otherwise, it would contradict
the declared policy, under Article 211(a), to promote and emphasize
the primacy of free collective bargaining and negotiations, including
voluntary arbitration, mediation and conciliation, as modes of settling
labor or industrial disputes.
The policy, basically, is freedom at the workplace. The law, true to the
tenets of free enterprise system, allows management and labor to
fashion the contents and incidents of their relationship. If there is
dispute between the parties, the responsibility to solve it devolves
upon them primarily, not upon the government. Government
intervention is the exception rather than the rule. This anti-injunction
policy applies even as regards wage-fixing by the wage commission
or regional wage boards.
Moreover, any injunctive order in non-national interest disputes can
be directed only against the illegal acts being committed in connection
with the labor dispute; it cannot be directed against the dispute itself.
There is no power the exercise of which is more delicate which requires grater
caution, deliberation, and sound discretion, or (which is) more dangerous in a
doubtful case than the issuing of an injunction; it is the strong arm of equity
that never ought to be extended unless to cases of great injury, where courts of
law cannot afford an adequate or commensurate remedy in damages. The right
must be clear, the injury impending or threatened, so as to be averted only by
protection preventive process of injunction.

1.1 Reason of the No-Injunction Policy

LABOR RELATIONS
The labor injunction is an employers most effective remedy in labor
dispute. However narrow its scope and form, the issuance of an
injunction for any purpose in a labor dispute will generally tip the
scales of the controversy. The issuance of an injunction in the early
phases of a strike can critically sway the balance of the economic
struggle against the union. Enforced by the courts contempt powers,
even a preliminary injunction is an effectual strike-breaking weapon
because so much time ordinarily elapses between the issuance of a
preliminary injunction and the time when a final decree can be
reviewed on appeal.
1.2 Injunction Issued by Regular Court, When Proper
Regular courts are without authority to issue injunction orders in cases
involving or originating from labor disputes even if the complaint was
filed by non-striking employees and the employer was also made a
respondent to the action or even if the complainant was a customer of
the strike-bound employer or a sister company of the strike-bound
employer, whose premises were picketed by the strikers.
The court may issue an injunction, whether temporary or permanent, as
provided in said section of Republic Act 875, only in a case involving or
growing out of a labor dispute.

________
Article 255. Exclusive bargaining representation and workers
participation in policy and decision-making. The labor organization
designated or selected by the majority of the employees in an
appropriate collective bargaining unit shall be the exclusive
representative of the employees in such unit for the purpose of
collective bargaining. However, an individual employee or group of
employees shall have the right at any time to present grievances to
their employer.
Any provision of law to the contrary notwithstanding, workers shall
have the right, subject to such rules and regulations as the Secretary of
Labor and Employment may promulgate, to participate in policy and
decision-making processes of the establishment where they are
employed insofar as said processes will directly affect their rights,
benefits and welfare. For this purpose, workers and employers may
form labor-management councils: Provided, That the representatives
of the workers in such labor-management councils shall be elected by
at least the majority of all employees in said establishment. (As
amended by Section 22, Republic Act No. 6715, March 21, 1989).
________
1.
WORKERS
PARTICIPATORY
CONSTITUTIONAL MEANING

RIGHT:

ITS

The crucial question is: what is the meaning or extent of the workers
right to participate in policy and decision-making?
Enlightening in this regard are the deliberations of the 1986
Constitutional Commission. They reveal that the intention was to refer
to participation in grievance procedures and voluntary modes of
settling disputes and not to formulation of corporate programs or
policies.
There are three levels in which employees could influence
management in their decision-making, and one would be at the
corporate level. This would refer to strategic policies pertaining to the
mergers, acquisitions, pricing and marketing policies, disposition of
profits and the like. The second level would be the plant or

department level. It is here where administrative decisions are made.

Decisions made in this level may refer to hiring, firing, and promotion
of employees, cost and quality control, resource allocations,
achievement of target quotas, etc. And the third will be the shop-floor
level. It is here where the so-called operating decisions are made.
Decisions made in this level usually refer to scheduling of work,
safety regulations, work methods, training of new employees. So
these are the different levels in which we hope there would be this
democratic participation of workers in vital issues that affect both
management and the workers.
1.1 Employees Participation in Formulating the Code of Discipline
Indeed, it was only on March 2, 1989, with the approval of Republic Act No.
6715, amending Article 211 of the Labor Code, that the law explicitly
considered it a State policy "(t)o ensure the participation of workers in decision
and policy-making processes affecting the rights, duties and welfare." However,
even in the absence of said clear provision of law, the exercise of management
prerogatives was never considered boundless.
Verily, a line must be drawn between management prerogatives regarding
business operations per se and those which affect the rights of the employees.
In treating the latter, management should see to it that its employees are at least
properly informed of its decisions or modes action.

2. WORKERS PARTICIPATION AS THE REAL OBJECTIVE;

THE LMC
Article 255 deals with the crucial concept of employee participation.
The law, while promoting collective bargaining, really aims at
employee participation in policy and decision-making. Collective
Bargaining is just one of the forms of employee participation. Despite
so much interest in and promotion of collective bargaining, it is
incorrect to say that the device which secures industrial democracy is
collective bargaining and no other. And it is equally misleading to say
that collective bargaining is the end-goal of employee representation.
Rather, the real aim is employee participation in whatever form it may
appearbargaining or no bargaining, union or no union.
This is why Art. 255, second sentence, reserves the right of an
individual employee or group of employees (unionized or
ununionized, or inside or outside a union) to present grievances to
their employer at any time. Effectively voicing ones grievance is
reserved and hallowed by law, with or without collective bargaining.
But individual representation in dealing or bargaining with the
employer is weak. For this reason the law provides another forum
the labor-management council aside from or instead of a union. An
LMC is versatile. It can exist where there is no union or co-exist with
a union. One thing it cannot and must not do is to replace a union.
While a labor union is hamstrung by such legal prescriptions as
formal registration, limited bargaining unit, majority status,
mandatory and non-mandatory subjects, etc., an LMC need not be
held back by any of these. It can represent employees across the
enterprise, present grievances regardless of the grievants rank, and
proffer proposals unhindered by formalities. It can also handle
projects and programs whoever is the proponent, form committees for
myriad purposes, instill discipline and improve productivity.
The LMC, in short, can deal with the employer on matters affecting
the employees rights, benefits and welfare. Dealing with the
employer, we have seen, is broader, freer, and (from the employers
viewpoint) less threatening method than collective bargaining.

LABOR RELATIONS
2.1 Departments Promotion of LMC and Other Councils
Section 1. Creation of labor-management and other councils. - The Department
shall promote the formation of labor-management councils in organized and
unorganized establishments to enable the workers to participate in policy and
decision-making processes in the establishment, insofar as said processes will
directly affect their rights, benefits and welfare, except those which are covered
by collective bargaining agreements or are traditional areas of bargaining.

3. INDIVIDUAL GRIEVANCE
As briefly indicated above, the presence of an employees
organization,--a union, an LMC or other forumdoes not replace the
individual employees right to pursue grievances. Each employee
retains the right to deal with his or her employer, and vice-versa. The
labor organization is a representative of the collective employees, but
this fact does not mean that an employee can act only through the
representative. For these reasons, the law (rt. 255) explicitly preserves
and respects the right of an individual employee or any group of
employees to directly present grievances to their employers at any
time. Even when under investigation, an employee can choose to
handle personally his defense, unassisted by any representative (Art.
277[b]). The second sentence of Art. 255 is meant to be an exception
to the exclusiveness of the representative role of the labor
organization. Such individual right cannot be taken away even by a
unions constitution and by-laws.
American jurisprudence holds that notwithstanding a unions
obligation as exclusive bargaining representative to process the
grievances of all bargaining unit employees, individual employees
may at any time present grievances directly to the employer for
adjustment without the intervention of the bargaining representative,
and without subjecting the employer to liability for refusing to bargain
with the union. However, the adjustment of the grievances must be
consistent with the terms of the current collective bargaining contract
or agreement. Moreover, the bargaining representative must be given
the opportunity to be present at the meeting between the employer and
employee.
4. COLLECTIVE BARGAINING UNIT (CBU) DEFINED
At the enterprise level there are three democratic devices, statutorily
embedded, to advance the cause of industrial peace, namely: airing of
grievance even by an individual employee directly to the employer
anytime; participation in policy and decision-making by employees,
whether unionized or not; and collective bargaining with the employer
by unionized employees.
The collective bargaining that the law envisions occurs between the
employer and the employees comprised in an appropriate collective
bargaining unit (CBU) represented by a union. As initially explained
in Art. 234, the CBU is that group of jobs and jobholders
represented by the recognized or certified union when it bargains with
the employer. The group may comprise all the supervisors or,
separately, all the rank-and-file population in the company. Or it may
be less than all of these two categories, although the law prefers to
have only one grouping per category in one enterprise because the
more solid the unit, the stronger its bargaining capacity. But if a single
unit (only one for all supervisors or only one for all rank-and-file) is
not feasible, the law allows subgroups as bargaining units, provided
only that each sub-group is appropriate. It is appropriate if its
members share substantially common concerns and interests.

LABOR RELATIONS
As defined in D.O. No. 40-03 which is now the revised Book V of the
Rules Implementing the Labor Code, bargaining unit refers to a
group of employees sharing mutual interests within a given employer
unit, comprised of all or less than all of the entire body of employees
in the employer unit or any specific occupational or geographical
grouping within such employer unit.
Within one unit there may be one or more unions. The bargaining unit
therefore is not the same as, and usually a bigger group than, a union.
But only one union should represent the whole CBU in bargaining
with the employer. The chosen union is called the bargaining agent, its
principal being the CBU members themselves.
The bargaining union has to be the majority union, the one where
majority of the CBU members belong.
Representative union, bargaining union, majority union,
bargaining agent, and bargaining representative are one and the
same. It refers to the union that represents the CBU in bargaining or
dealing with the employer.
5. APPROPRIATENESS OF BARGAINING UNIT; FACTORS
CONSIDERED
The determination of what constitutes a proper bargaining unit lies primarily in
the discretion of the Bureau, since no individual factor is given by law decisive
weight. But while the determination of the appropriate collective bargaining
unit (CBU) is a primary function of the Bureau, it is subject to the legal
requirement that proper consideration should be given to all legally relevant
factors.
The basic test of an asserted bargaining unit's acceptability is whether or not it
is fundamentally the combination which will best assure to all employees the
exercise of their collective bargaining rights. Industrial experience indicates
that the most efficacious bargaining unit is one which is comprised of
constituents enjoying a community of interest. This community of interest is
reflected in groups having substantial similarity of work and duties or similarity
of compensation and working conditions.

In making judgments about community of interest in these different

settings, the Board will look to such factors as: (1) similarity in the
scale and manner of determining earnings; (2) similarity in
employment benefits, hours of work and other terms and conditions of
employment; (3) similarity in the kinds of work performed; (4)
similarity in the qualifications, skills and training of the employees;
(5) frequency of contact or interchange among the employees; (6)
geographic proximity; (7) continuity or integration of production
processes; (8) common supervision and determination of laborrelations policy; (9) history of collective bargaining; (10) desires of
the affected employees; or (11) extent of union organization.
Geographical location can be completely disregarded if the communal
or mutual interests of the employees are not sacrificed.
5.1 Bargaining History Not Decisive Factor
The basic test of an asserted bargaining unit's acceptability is whether or not it
is fundamentally the combination which will best assure to all employees the
exercise of their collective bargaining rights.

5.2 Exclusion of Confidential Employees

By the very nature of their functions, they assist and act in a confidential
capacity to, or have access to confidential matters of, persons who exercise
managerial functions in the field of labor relations. As such, the rationale

behind the ineligibility of managerial employees to form, assist or join a labor

union equally applies to them.

5.3 Temporary or Part-Time Employees

The NLRB has been upheld in excluding temporary employees from
bargaining units of workers in certain jobs. In determining whether
temporary or part-time employees are sufficiently identified with the
regular employees, so as to be properly included in the bargaining
unit, one of the important factors considered by the NLRB is the
reasonable likelihood that the temporary or part-time employees will
eventually become adequately identified in employment with the
other members of the bargaining unit.
5.4 Seasonal Employees
The full-time seasonal employees who have a reasonable expectation
of substantial seasonal employment from year to year have been held
properly included in the unit, but part-time seasonal employees who
receive none of the fringe benefits enjoyed by full-time employees
have insufficient common interest with the full-time employees to be
included in the same bargaining unit.
5.5 Probationary Employees
The fact that an employee is given a classification such as beginner,
trainee or probationary employee, and the fact that contemplation of
permanent tenure is subject to satisfactory completion of an initial
trial period, are insufficient to warrant such employees exclusion
from a bargaining unit. Moreover, the eligibility of probationary
employees does not turn on the proportion of such employees who,
willingly or not, fail to continue to work for the employer throughout
the trial period.
6. REFERENDUM WHERE INTERESTS ARE DISSIMILAR
The decision then of the Executive Labor Arbiter in merely directing
the holding of a referendum to determine the will of the service
engineers, sales representatives as to their inclusion or exclusion in
the bargaining unit is the most appropriate procedure that conforms
with their right to form, assist or join a labor union or organization.
6.1 Desire of the Employees; The Globe Doctrine
The desires of the employees are relevant to the determination of the
appropriate bargaining unit. The relevancy of the wishes of employees
concerning their inclusion or exclusion from a proposed bargaining
unit is inherent in the basic right to self organization. While the
desires of the employees with respect to their inclusion in a bargaining
unit is not controlling, it is a factor which would be taken into
consideration in reaching a decision.
7. SINGLE OR EMPLOYER UNIT IS FAVORED
It has been the policy of the Bureau of Labor Relations to encourage
the formation of an employer unit unless circumstances otherwise
require. In other words, one employer enterprise constitutes only one
bargaining unit. The more solid the employees are, the stronger is
their bargaining capacity.
The proliferation of unions in an employer unit is discouraged as a
matter of policy unless there are compelling reasons which would

deny a certain class of employees the right to self-organization for

purposes of collective bargaining.
Single plant units are presumed to be appropriate for purposes of
collective bargaining.
Instead of forming another bargaining unit, the law requires them to be
members of the existing one. The ends of unionism are better served if all the
rank-and-file employees with substantially the same interests and who invoke
their right to self-organization are part of a single unit so that they can deal with
their employer with just one and yet potent voice. The employees' bargaining
power with management is strengthened thereby.

7.1 Exception to One-unit Policy

The one unit-one company rule is not without exception. The
exclusion of the subject employees from the rank-and-file bargaining
unit and the CBA is definitely a compelling reason, for it
completely deprived them of the chance to bargain collectively with
petitioner and are thus left with no recourse but to group themselves
into a separate and distinct bargaining unit and form their own
organization.
The usual exception, of course, is where the employer unit has to give way to
the other units like the craft unit, plant unit, or a subdivision thereof; the
recognition of these exceptions takes into account the policy to assure
employees of the fullest freedom in exercising their rights. Otherwise stated,
the one company-one union policy must yield to the right of the employees to
form unions or associations for purposes not contrary to law, to selforganization and to enter into collective bargaining negotiations, among others,
which the Constitution guarantees.

8. TWO COMPANIES WITH RELATED BUSINESSES

Two corporations cannot be treated as a single bargaining unit even if
their businesses are related.
8.1 Subsidiaries and Spun-Off Corporations
Subsidiaries or corporations formed out of former divisions of a
mother company following a bona fide reorganization may constitute
separate bargaining units.
Moreover, in determining an appropriate bargaining unit, the test of grouping is
mutuality or commonality of interests. The employees sought to be represented
by the collective bargaining agent must have substantial mutual interests in
terms of employment and working conditions as evinced by the type of work
they performed. Considering the spin-offs, the companies would consequently
have their respective and distinctive concerns in terms of the nature of work,
wages, hours of work and other conditions of employment. Interests of
employees in the different companies perforce differ. SMC is engaged in the
business of the beer manufacturing. Magnolia is involved in the manufacturing
and processing of dairy products while SMFI is involved in the production of
feeds and the processing of chicken. The nature of their products and scales of
business may require different skills which must necessarily be commensurated
by different compensation packages. The different companies may have
different volumes of work and different working conditions. For such reason,
the employees of the different companies see the need to group themselves
together and organize themselves into distinctive and different groups. It would
then be best to have separate bargaining units for the different companies where
the employees can bargain separately according to their needs and according to
their own working conditions.

9. SUMMATION OF SIGNIFICANCE

LABOR RELATIONS
It is helpful to reiterate that the bargaining unit is not the same as the
union; in fact, there may be several unions (majority and minority) in
one bargaining unit. Determining the scope or membership of the
bargaining unit is significant and far-reaching because it leads to the
determination also of: (1) the employees who can vote in the
certification election; (2) the employees to be represented in
bargaining with the employer; and (3) the employees who will be
covered by the resulting CBA.
Distinguishing the CBU from the union is important because
1. in a CE the voters are the CBU, whether union or non-union
members;
2. in CBA ratification the voters are the unit, not just the union
members;
3. in strike voting, the voters are the members of the union, not all of
the unit.
________
Article 256. Representation Issue in Organized Establishments. - In
organized establishments, when a verified petition questioning the
majority status of the incumbent bargaining agent is filed by any
legitimate labor organization including a national union or federation
which has already issued a charter certificate to its local chapter
participating in the certification election or a local chapter which has
been issued a charter certificate by the national union or federation
before the Department of Labor and Employment within the sixty
(60)-day period before the expiration of the collective bargaining
agreement, the Med-Arbiter shall automatically order an election by
secret ballot when the verified petition is supported by the written
consent of at least twenty-five percent (25%) of all the employees in
the bargaining unit to ascertain the will of the employees in the
appropriate bargaining unit. To have a valid election, at least a
majority of all eligible voters in the unit must have cast their votes.
The labor union receiving the majority of the valid votes cast shall be
certified as the exclusive bargaining agent of all the workers in the
unit. When an election which provides for three or more choices
results in no choice receiving a majority of the valid votes cast, a runoff election shall be conducted between the labor unions receiving the
two highest number of votes: Provided, That the total number of votes
for all contending unions is at least fifty percent (50%) of the number
of votes cast. In cases where the petition was filed by a national union
or federation, it shall not be required to disclose the names of the local
chapters officers and members.
At the expiration of the freedom period, the employer shall continue
to recognize the majority status of the incumbent bargaining agent
where no petition for certification election is filed. (As amended by
Section 23, Republic Act No. 6715, March 21, 1989 and Section 10,
Republic Act No. 9481 which lapsed into law on May 25, 2007 and
became effective on June 14, 2007).
________
Article 257. Petitions in Unorganized Establishments. - In any
establishment where there is no certified bargaining agent, a
certification election shall automatically be conducted by the MedArbiter upon the filing of a petition by any legitimate labor
organization, including a national union or federation which has
already issued a charter certificate to its local/chapter participating in
the certification election or a local/chapter which has been issued a
charter certificate by the national union or federation. In cases where

the petition was filed by a national union or federation, it shall not be

required to disclose the names of the local chapters officers and
members. (As amended by Section 24, Republic Act No. 6715, March
21, 1989 and Section 11, Republic Act No. 9481 which lapsed into
law on May 25, 2007 and became effective on June 14, 2007).
________
Article 258. When an employer may file petition. When requested to
bargain collectively, an employer may petition the Bureau for an
election. If there is no existing certified collective bargaining
agreement in the unit, the Bureau shall, after hearing, order a
certification election.
All certification cases shall be decided within twenty (20) working
days.
The Bureau shall conduct a certification election within twenty (20)
days in accordance with the rules and regulations prescribed by the
Secretary of Labor.
________
Article 258-A. Employer as Bystander. - In all cases, whether the
petition for certification election is filed by an employer or a
legitimate labor organization, the employer shall not be considered a
party thereto with a concomitant right to oppose a petition for
certification election. The employers participation in such
proceedings shall be limited to:
(1) being notified or informed of petitions of such nature; and
(2) submitting the list of employees during the pre-election conference
should the Med-Arbiter act favorably on the petition. (As amended by
Section 12, Republic Act No. 9481 which lapsed into law on May 25,
2007 and became effective on June 14, 2007).
________
Article 259. Appeal from certification election orders. Any party to
an election may appeal the order or results of the election as
determined by the Med-Arbiter directly to the Secretary of Labor and
Employment on the ground that the rules and regulations or parts
thereof established by the Secretary of Labor and Employment for the
conduct of the election have been violated. Such appeal shall be
decided within fifteen (15) calendar days. (As amended by Section 25,
Republic Act No. 6715, March 21, 1989).
________
1. DETERMINING THE BARGAINING UNION: OVERVIEW
OF THE METHODS
To bargain with the employer, the employees in the collective
bargaining unit (CBU) can be represented by one and only one union
which has to be a legitimate labor organization duly designated or
selected by the employees in the CBU.
Under the Code a bargaining representative is defined as a
legitimate labor organization or any officer or agent of such
organization whether or not employed by the employer. The
Implementing Rules, however, as amended by D.O. No. 40-03 drops
the officer or agent as it states: Exclusive bargaining representative
means any legitimate labor union duly recognized or certified as the
sole and exclusive bargaining representative or agent of all the
employees in a bargaining unit.

LABOR RELATIONS
The selection of such bargaining agent may take place in an organized
or an unorganized establishment. Organized establishment refers to
an enterprise where there exists a recognized or certified sole and
exclusive bargaining agent. The employer company is unorganized
where no union has yet been duly recognized or certified as
bargaining representative. Art. 256 speaks of an organized firm; Art.
257, of the unorganized.
Whether the proceedings take place in an organized or an unorganized
bargaining unit, and whether the proceedings are called consent
election or certification election, the objective is the same, namely, to
identify the union that will represent the employees in bargaining with
the employer. Until this representation dispute is resolved, no CBA
can be entered into.
In an unorganized establishment, the employer may voluntarily
recognize the bargaining agent. If there are obstacles to this, the
petition to hold an election may be filed anytime by any legitimate
labor organization (LLO), except within 12 months from a previous
CE, run-off, or consent election.
In an organized establishment, on the other hand, voluntary
recognition is not possible. A petition to hold a CE has to be filed
within the freedom period which means the last sixty (60) days of
the fifth year of the expiring CBA; in other words, the contest
between unions comes at intervals of roughly four years and ten
months. The petition may be filed by any LLO, but the petition must
have the written support of at least twenty-five percent (25%) of the
employees in the bargaining unit. The 25% initial support indicates
that the petitioner has a fair chance of winning and that the petition is
not just a nuisance.
Conceivably but rarely an employer may also file a petition for a CE.
The election is conducted under the supervision and control of DOLE
officials. It ends up with a formal and official statement of results,
certifying which union won, if any. Hence, the election is
appropriately called certification election.
Where one casting of votes is not decisive enough to elect a union, the
election officials may require a run-off election if certain other
conditions exist, as explained below.
But a certification election, a run-off election, or a consent election is
needed only when two or more unions are vying for the office of
exclusive bargaining representative (EBR). Where there is but one
union in the bargaining unit and there is ample proof that that union
carries the majority of the employees, the law allows the employer to
voluntarily recognize such union. Voluntary recognition does away
with the more tedious electoral contest between unions.
There are, therefore, three methods to determine the bargaining union:
(1) voluntary recognition; (2) certification election with or without
run-off; and (3) consent election.
2. FIRST METHOD: VOLUNTARY RECOGNITION (V.R.)
The employers voluntary recognition of the employees union
significantly facilitates the bargaining process. The employees,
especially the union leaders and organizers, rejoice when they are able
to convince the employer to voluntarily recognize and subsequently
bargain with their union. But VR requires three concurrent conditions.

LABOR RELATIONS
First, voluntary recognition is possible only in an unorganized
establishment. In an organized setting the employer cannot voluntarily
recognized any new union because the law (Art. 256) requires him to
continue recognizing and dealing with the incumbent union as long as
it has not been properly replaced by another union.
Second, only one union is asking for recognition; if there are two or
more unions asking to be recognized the employer cannot recognize
any of them; the rivalry must be resolved through an election;
Third, the union voluntarily recognized should be the majority union
as indicated by the fact that members of the bargaining unit did not
object to the projected recognition. If no objection is raised, the
recognition will proceed, the DOLE will be informed and CBA
negotiation will commence. If objection is raised, the recognition is
barred, and a certification election or consent election will have to
take place.
2.1 VR Under D.O. No. 40-03
Section 1. When and where to file. - In unorganized establishments with only
one legitimate labor organization, the employer may voluntarily recognize the
representation status of such a union. Within thirty (30) days from such
recognition, the employer and union shall submit a notice of voluntary
recognition with the Regional Office which issued the recognized labor union's
certificate of registration or certificate of creation of a chartered local.
Section 2. Requirements for voluntary recognition. - The notice of voluntary
recognition shall be accompanied by the original copy and two (2) duplicate
copies of the following documents:
(a) a joint statement under oath of voluntary recognition attesting to the fact of
voluntary recognition;
(b) certificate of posting of the joint statement of voluntary recognition for
fifteen (15) consecutive days in at least two (2) conspicuous places in the
establishment or bargaining unit where the union seeks to operate;
(c) the approximate number of employees in the bargaining unit, accompanied
by the names of those who support the voluntary recognition comprising at
least a majority of the members of the bargaining unit; and
(d) a statement that the labor union is the only legitimate labor organization
operating within the bargaining unit.
All accompanying documents of the notice for voluntary recognition shall be
certified under oath by the employer representative and president of the
recognized labor union.
Section 3. Action on the Notice. - Where the notice of voluntary recognition is
sufficient in form, number and substance and where there is no other registered
labor union operating within the bargaining unit concerned, the Regional
Office, through the Labor Relations Division shall, within ten (10) days from
receipt of the notice, record the fact of voluntary recognition in its roster of
legitimate labor unions and notify the labor union concerned.
Where the notice of voluntary recognition is insufficient in form, number and
substance, the Regional Office shall, within the same period, notify the labor
union of its findings and advise it to comply with the necessary requirements.
Where neither the employer nor the labor union failed to complete the
requirements for voluntary recognition under Section 2 of this Rule within
thirty (30) days from receipt of the advisory, the Regional Office shall return
the notice for voluntary recognition together with all its accompanying
documents without prejudice to its re-submission.
Section 4. Effect of recording of fact of voluntary recognition. - From the time
of recording of voluntary recognition, the recognized labor union shall enjoy

the rights, privileges and obligations of an existing bargaining agent of all the
employees in the bargaining unit.
Entry of voluntary recognition shall bar the filing of a petition for certification
election by any labor organization for a period of one (1) year from the date of
entry of voluntary recognition. Upon expiration of this one-year period, any
legitimate labor organization may file a petition for certification election in the
same bargaining unit represented by the voluntarily recognized union, unless a
collective bargaining agreement between the employer and voluntarily
recognized labor union was executed and registered with the Regional Office in
accordance with Rule XVII of these Rules.

Simply said, the last paragraph means that the employer and the union
should conclude and register a CBA within one year from the
voluntary recognition, otherwise, the recognition will lapse and a rival
union may petition for a certification election.
3. SECOND METHOD: CERTIFICATION ELECTION (C.E.)
Whenever there is doubt as to whether a particular union represents the
majority of the rank-and-file employees, in the absence of a legal impediment,
the holding of a certification election is the most democratic method of
determining the employees' choice of their bargaining representative. It is the
appropriate means whereby controversies and disputes on representation may
be laid to rest, by the unequivocal vote of the employees themselves.
Exercising their suffrage through the medium of the secret ballot, they can
select the exclusive bargaining representative that, emboldened by their
confidence and strengthened by their support shall fight for their rights at the
conference table. That is how union solidarity is achieved and union power is
increased in the free society. Hence, rather than being inhibited and delayed, the
certification election should be given every encouragement under the law, that
the will of the workers may be discovered and, through their freely chosen
representatives, pursued and realized.

3.1 Fact-Finding
In labor legislation, certification proceedings is not a litigation in the
sense in which the term is ordinarily understood, but an investigation
of non-adversary and fact finding character. As such, it is not bound
by technical rules of evidence.
The law does not contemplate the holding of a certification election
unless the preliminary inquiry shows a reasonable doubt as to which
of the contending unions represents a majority, or unless ten per
centum of the laborers demand this election. But these grounds
necessarily depend on the weight of the evidence adduced by the rival
unions, and this weight, in turn, cannot be determined properly if the
right to cross examination is denied.
Certification proceedings directly involve only two issues: (a) proper
composition and constituency of the bargaining unit; and (b) veracity
of majority membership claims of the competing unions so as to
identify the one union that will serve as the bargaining representative
of the entire bargaining unit.
But some of the employees may not want to have a union; hence, No
Union is one of the choices (candidates) named in the ballot. If
No Union wins, the company pr the bargaining unit remains
ununionized for at least 12 months, the period known as the 12-month
bar. After that period, a petition for a CE may be filed again.
3.1a Certification Election Differentiated from Union 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.
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 organization.
In a certification election, all employees belonging to the appropriate
bargaining unit can vote. Therefore, a union member 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.

The winners in a union election become officers and representatives

of the union only. The winner in a certification election is an entity, a
union, which becomes the representative of the whole bargaining unit
that includes even the members of the defeated unions.
3.2 Direct Certification No Longer Allowed
Even in a case where a union has filed a petition for certification
election, the mere fact that there was no opposition does not warrant a
direct certification.
The holding of a certification election at the proper time is not necessarily a
mere formality as there was a compelling legal reason not to directly and
unilaterally certify a union whose legitimacy is precisely the object of litigation
in a pending cancellation case filed by certain "concerned salesmen," who also
claim majority status.
The direct certification originally allowed under Article 257 of the Labor Code
has apparently been discontinued as a method of selecting the exclusive
bargaining agent of the workers. This amendment affirms the superiority of the
certification election over the direct certification which is no longer available
now under the change in said provision.

3.3 Who Files Petition for CE

Any legitimate labor organization or any employer, when requested to
bargain collectively while the majority status of the union is in doubt,
may file a petition for certification election (PCE)
In an unorganized establishment one a petition is filed by a legitimate
labor organization, the Med-arbiter shall automatically order the
conduct of a certification election. The tenor of Article 257 is one of
command, so such order is not appealable. To make it appealable will
contradict the objective stated in Article 211, to promote free trade
unionism. But the application of Article 257 has to be initiated by a
genuine petition from a legitimate labor organization. Indeed, the law
did not reduce the Med-Arbiter to an automaton which can instantly
be set to impulse by the mere filing of a petition for certification
election. He is still tasked to satisfy himself that all the conditions of
the law are met, and among the legal requirements is that the
petitioning union must be a legitimate labor organization in good
standing.
In an organized establishment the incumbent bargaining agent, of
course, will not file a PCE because it will not contest its own
incumbency. The filer will most likely be a union that was defeated in
the CE held some five years before. In any such petition the
incumbent union is a necessary party, a forced intervenor. But even
so, it does not thereby lose its representative status; it remains the sole

LABOR RELATIONS
bargaining representative until it is replaced by another. And until so
replaced it has the right to retain the recognition by the employer.
The employer, says Article 258, may file a PCE when it has been
asked to bargain. If this happens, the holding of the CE becomes
mandatory if there is no existing registered collective bargaining
agreement. However, instead of itself filing a petition, the employer
usually lets the unions interplead to determine who among them will
bargain with the employer.
Other unions which are interested in joining a certification election
may file a motion for intervention. Such motion is governed by the
same rules that apply to a PCE.
Whether petitioner or intervenor, the union has to be an LLO.
If the petition for certification election was filed by the federation which is
merely an agent, the petition is deemed to be filed by the chapter, the principal,
which must be a legitimate labor organization. The chapter cannot merely rely
on the legitimate status of the mother union.
Where the constitution, by-laws and the list of members who supposedly
ratified the same were not attested to by the union president, and the
constitution and by-laws were not verified under oath, the local union has no
personality to file a petition for certification election it not being a legitimate
labor organization. The petition should be dismissed.
A union that has no legal personality to file a petition for CE has no personality
either to file a petition-in-intervention.

3.4 Where to File the Petition for CE

A petition for certification election (PCE) shall be filed with the
Regional Office which issued the petitioning unions certificate of
registration or certificate of creation of chartered local. The petition
shall be heard and resolved by the Med-Arbiter.
Where two or more petitions involving the same bargaining unit are
filed in one Regional Office, the same shall be automatically
consolidated with the Med-Arbiter who first acquired jurisdiction.
Where the petitions are filed in different Regional Offices, the
Regional Office in which the petitions are first filed shall exclude all
others; in which case, the latter shall indorse the petition to the former
for consolidation.
3.5 When to File the Petition
The proper time to file a petition for CE depends on whether the CBU
has a CBA or not. If it has no CBA , the petition may be filed anytime
outside the 12-month bar. If it has a CBA, it can be filed only within
the last 60 days of the fifth year of the CBA.
3.6 Action on the Petition: Preliminary Conference
The preliminary conference shall determine the following:
(a) the bargaining unit to be represented;
(b) contending labor unions;
(c) possibility of a consent election;
(d) existence of any of the bars to certification election under Section3
of D.O. No. 40-03;

(e) such other matters as may be relevant for the final disposition of
the case.
If at the preliminary conference the unions agree to hold a consent
election, then the PCE will no longer be heard and the unions will
instead prepare for the consent election.
If the unions fail to agree to hold a consent election, the Med-arbiter
proceeds to consider the petition. He may deny and dismiss, or he
may grant, the petition. Denial or grant of the petition is always
appealable to the Secretary. Never appealable, however, is the
approval of a PCE in an unorganized (ununionized) bargaining unit,
the reason being that the law wants the ununionized unionized.
3.7 Action on the Petition: Hearings and Pleadings
If the contending unions fail to agree to a consent election during the
preliminary conference, the Med-arbiter may conduct as many
hearings as he may deem necessary. But the conduct of the hearings
cannot exceed fifteen (15) days from the date of the scheduled
preliminary conference/ hearing. After that time the petition shall be
considered submitted for decision. The Med-arbiter shall have control
of the proceedings. Postponements or continuances are discouraged.
The failure of any party to appear in the hearing(s) when notified or to
file its pleadings shall be deemed a waiver of its right to be heard. The
Med-arbiter, however, upon the agreement of the parties for
meritorious reasons, may allow the cancellation of scheduled
hearing(s). The cancellation of any scheduled hearing(s) shall not be
used as a basis for extending the 15-day period within which to
terminate the same.

LABOR RELATIONS
Excepting Article 258, only a legitimate labor organization (LLO) can
file a petition for certification election. Thus, if the petitioning union
is not listed in the DOLEs list of LLOs or it has no CBA registered in
the DOLE, these facts raise doubt as to its being an LLO, and the
med-arbiter may dismiss the PCE.
But even if the union is listed as LLO or is a party to a CBA, its
legitimacy may still be questioned in a separate and independent
petition for cancellation to be heard and decided by the BLR Director
or the Regional Director himself.
Does the filing of a petition to cancel the petitioners registration
cause the suspension or dismissal of the PCE? No, the mere filing foes
not. To serve as a ground for dismissal of a PCE, the legal personality
of the petitioner should have been revoked or cancelled with
finality.
The filing or pendency of any inter/intra-union dispute and other related labor
relations dispute is not a prejudicial question to any petition for certification
election and shall not be a ground for the dismissal of a petition for certification
election or suspension of proceedings for certification election.

The justification for this rule is that the employees opportunity to

choose a bargaining agent can easily be blocked or forestalled by an
employer through the simple expedience of questioning the legitimacy
of the petitioner union.
Suspension of Proceedings: Company Union Charge

Within ten (10) days from the date of the last hearing, the Med-arbiter
shall issue a formal order denying or granting the petition. In
organized establishments, however, no order or decision shall be
issued by the Med-arbiter during the freedom period.

A complaint for unfair labor practice may be considered a prejudicial question

in a proceeding for certification election when it is charged therein that one or
more labor unions participating in the election are being aided, or are
controlled, by the company or employer. The reason is that the certification
election may lead to the selection of an employer-dominated or company union
as the employees bargaining representative, and when the court finds that said
union is employer-dominated in the unfair labor practice case, the union
selected would be decertified and the whole election proceedings would be
rendered useless and nugatory.

The reason for the last-mentioned rule is that during the entire 60-day
freedom period, up to its last day, the door should remain open for any
union to file a PCE or a motion for intervention.

NONETHELESS, a certification election cannot be stayed during the

pendency of unfair labor practice charge against a union filed by the
employer.

3.8 Action on the Petition: Denial; Grounds

Similarly, certification election may be ordered despite pendency of a

petition to cancel the unions registration certificate founded on
alleged illegal strike by the union.

The Med-arbiter, after due hearing may dismiss the petition on any of
the following grounds:
(1) Not an LLO
(2) Twelve-month Bar
(3) Negotiation Bar or Deadlock Bar
(4) No 25% Support
(5) Contract Bar; PCE Filed Outside the Freedom Period
The first three grounds are applicable to establishments with or
without a CBA; the last two are pertinent only to an establishment
with a CBA about to expire on its fifth year.
3.8a Ground 1: Petitioner not an LLO

3.8b Ground 2: The 12-month Bar (certification year bar)

No petition for a CE may be filed within one year from the date of a
valid certification, consent, or run-off election or from the date of
entry of a voluntary recognition of the union by the employer. Thus, if
an election had been held but not one of the unions won a PCE may
be filed again but only after 12 months. The law does not want more
than one election in a 12-month period. The same bar applies if No
Union won in the previous election.
On the other hand, if a union has won, such union and the employer
must within 12 months start negotiating a collective agreement. If
they fail to do so, they are defeating the employees wish to have a
CBA; hence, the union or unions that lost can petition again for a
certification election after 12 months from the last election so as to
replace the unproductive bargaining agent which, perhaps, is
cavorting with the employer.

LABOR RELATIONS
Ordinarily, a bargaining agent who failed to secure a CBA within 12 months
could be suspected as a tool of management and should deserve to be replaced.
But if circumstances show that the cause of not having concluded a CBA was
not the unions fault, such union should not be blamed, and a CE should not be
authorized even though no CBA has been concluded despite passage of twelve
months. The situation takes the nature of a deadlock bar.
The 12-month prohibition presupposes that there was an actual conduct of
election i.e. ballots were cast and there was a counting of votes. In this case,
there was no certification election conducted precisely because the first petition
was dismissed, on the ground of a defective petition which did not include all
the employees who should be properly included in the collective bargaining
unit, the certification year bar does not apply.

Neither does this bar apply if in fact there was a failure of election
because less than majority of the CBU members voted. In that case,
another PCE may be filed within six (6) months.
An election held less than a year after an invalid election is not barred.
Also not barred would be a second election held among a group of
employees who had not participated in the first election and had not
been given the opportunity to be represented as part of the unit in the
first election.
A radical change in the size of a bargaining unit within a short period
of time, raising a question as to the majority status of the certified
representative, may also prompt the NLRB to entertain a petition for
an election during the certification year.
The one-year rule does not apply to a unit clarification petition filed
during the certification year.
In a CE, the No Union choice won. Within 12 months from that
election the employer voluntarily recognized a new union and then
concluded with it a CBA. Is the 12-month bar violated? Are the
recognition and the CBA valid?
Excepted from the contract-bar rule are certain types of contracts which do not
foster industrial stability, such as contracts where the identity of the
representative is in doubt. Any stability derived from such contracts must be
subordinated to the employees' freedom of choice because it does not establish
the kind of industrial peace contemplated by the law.

In other words, the court strongly doubted that the union voluntarily
recognized by the employer was really the employees choice. Most
probably, it was a company union.
3.8c Ground 3: Negotiation or Deadlock Bar
Neither will a PCE prosper if the negotiation is caught in a deadlock.
The deadlock does not erase that fact that there is negotiation which is
a barrier to holding a certification election. The parties should be
allowed to try to resolve their deadlock; replacing the negotiating
union will not help.
The Deadlock Bar Rule simply provides that a petition for
certification election can only be entertained if there is no pending
bargaining deadlock submitted to conciliation or arbitration or had
become the subject of a valid notice of strike or lockout. The principal
purpose is to ensure stability in the relationship of the workers and the
management.
A "deadlock" is the counteraction of things producing entire stoppage; there is a
deadlock when there is a complete blocking or stoppage resulting from the

action of equal and opposed forces. The word is synonymous with the word
impasse, which "presupposes reasonable effort at good faith bargaining which,
despite noble intentions, does not conclude in agreement between the parties."
If the law proscribes the conduct of a certification election when there is a
bargaining deadlock submitted to conciliation or arbitration, with more reason
should it not be conducted if, despite attempts to bring an employer to the
negotiation table by the "no reasonable effort in good faith" on the employer
certified bargaining agent, there was to bargain collectively. It is only just and
equitable that the circumstances in this case should be considered as similar in
nature to a "bargaining deadlock" when no certification election could be held.

Deadlock Bar Rule, When Not Applicable; Artificial Deadlock

The deadlock that bars a CE must be genuine and not a drama. One
indicator that it is genuine is the submission of the deadlock to a thirdparty conciliator or arbitrator. Another is that the deadlock is the
subject of a valid notice of strike or lockout. An artificial deadlocka
deadlock prearranged or preserved by collusion of the employer and
the majority unionis deception of the workers, hence, not a barrier
to a petition for a CE.
3.8d Ground 4: 25 Percent Support to PCE
Article 256 requires that the petition for a CE in an organized
establishment which may be filed within the freedom period should
be supported by at least twenty-five percent (25%) of the bargaining
unit.
The support requirement is explained by government policy to favor
the self-organization of workers. In a company still unorganized the
workers should find it easy to organize, but one a union has
established itself as the employees representative, it should not be so
easy for another union to replace the incumbent. Trying to so will
disturb the peace in the enterprise. To justify the disturbance, it must
appear that a sizeable portion of the employeesat least 25%
desires to have a new union. Without this minimum support the
challenge to the incumbent looks like a nuisance.
The CBU, Not the Enterprise
If a companys rank-and-file employees are unionized but the
supervisors are not, does the supervisors petition need the 25%
minimum support?
NO, because the company is considered unorganized. The petition for
CE involves only the supervisors, not the rank-and-file. Insofar as the
supervisors are concerned, the establishment is considered
ununionized. Hence the requirement for 25% support to the petition
does not apply.
In other words, in deciding whether the 25% requirement is applicable
or not, the law considers the CBU involved, not the whole enterprise.
This, again, makes it easy for workers to unionize, a basic objective of
labor relations law.
Election Despite Lack of 25 Percent Support
Even in the situation where the 25% is needed. This requirement may
be relaxed.
Compliance with the said requirement need not even be established with
absolute certainty. The Court has consistently ruled that "even conceding that
the statutory requirement of 30% of the labor force asking for a certification

election had not been strictly complied with, respondent Director is still
empowered to order that it be held precisely for the purpose of ascertaining
which of the, contending labor organizations shall be the exclusive collective
bargaining agent."

Effect of Withdrawal of Signatories

If a petition for a certification election lacks the 25% support because
a sizeable number of union members has withdrawn their
membership, may the petition still be granted? Or must it be
dismissed? A critical fact to consider is whether the withdrawal
happened before or after the filing of the petition. If it happened
before the filing, the withdrawal is presumed voluntary and it does
not affect the propriety of the petition; if after, the withdrawal is
deemed involuntary (perhaps pressured by the employer) and it does
not necessarily cause the dismissal of the petition
The presumption would arise that the withdrawal was procured through duress,
coercion or for valuable consideration. In other words, the distinction must be
that withdrawals made before the filing of the petition are presumed voluntary
unless there is convincing proof to the contrary, whereas withdrawals made
after the filing of the petition are deemed involuntary.
The reason for such distinction is that if the withdrawal or retraction is made
before the filing of the petition, the names of employees supporting the petition
are supposed to be held secret to the opposite party. Logically, any such
withdrawal or retraction shows voluntariness in the absence of proof to the
contrary. Moreover, it becomes apparent that such employees had not given
consent to the filing of the petition, hence the subscription requirement has not
been met.
When the withdrawal or retraction is made after the petition is filed, the
employees who are supporting the petition become known to the opposite party
since their names are attached to the petition at the time of filing. Therefore, it
would not be unexpected that the opposite party would use foul means for the
subject employees to withdrawal their support.

3.8e Ground 5: PCE Filed Outside the Freedom Period; the Contract
Bar
This means that there exists in the bargaining unit a CBA still in effect
at the time the PCE is filed. The ban spans a period of five years,
excluding, however, the last sixty (60) days of the fifth (last) year of
the CBA.

LABOR RELATIONS
bargaining union; the freedom period is a political event involving
only the unions and the employees. The two periods, of course, may
coincide on the fifth year of the CBA.
Registered CBA
To bar a certification election it is no longer necessary that the CBA
be certified; it is enough that it is registered in accordance with Art.
231.
Contract-Bar Rule Applied: Extended CBA Under Deadlock
No petition for certification election may be filed before the onset of
the freedom period not after such period. The old CBA is extended
until a new one is signed.
Section 6, Rule V, Book V of the implementing Rules provides that a petition
for certification election or a motion for intervention can only be entertained
within sixty days prior to the expiry date of an existing collective bargaining
agreement. Otherwise put, the rule prohibits the filing of a petition for
certification election during the existence of a collective bargaining agreement
except within the freedom period, as it is called, when the said agreement is
about to expire.
Article 253 of the Labor Code provides that: "it shall be the duty of both parties
to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period and/or until a
new agreement is reached by the parties." Despite the lapse of the formal
effectivity of the CBA the law still considers the same as continuing in force
and effect until a new CBA shall have been validly executed. Hence, the
contract bar rule still applies.

Contract-Bar Rule Applied: Unproved Surreptitious Registration of

CBA
Even if the existing CBA is registered surreptitiously, as alleged by
the petitioner union, but no evidence is presented proving the alleged
surreptitious registration, the petition for CE cannot be granted. The
contract-bar rule applies. Whether or not the CBA was indeed
surreptitiously registered is a factual matter whose determination is
outside the ambit of a petition for certiorari.
Contract-Bar Rule Not Applied: (a) Defective CBA

The contract bar rule prohibits the filing of a petition for certification election
during the existence of a collective bargaining agreement except within the
freedom period, as it is called, when the said agreement is about to expire. The
purpose, obviously, is to ensure stability in the relationships of the workers and
the management by preventing frequent modifications of any collective
bargaining agreement earlier entered into by them in good faith and for the
stipulated original period.

To be a bar to a certification election, the CBA must be adequate in that it

comprises substantial terms and conditions of employment.

The freedom period under Articles 253-A and 256 is different from
and ought not to be mistaken for the other sixty-day period mentioned
in Art. 253. The latter speaks of the right of the parties to propose
modifications to the existing CBA, as an exception to the rule that the
CBA cannot be modified during its lifetime. To clarify terms, the sixty
days in Art. 253 may be called renegotiation notice period or simply
notice/proposal period, in contrast to the freedom period under
Arts. 253-A and 256.

(c) CBA Signed Before or Within Freedom Period Despite Injunctive

Order

The notice period is the last 60 days of the second or third year of the
nonrepresentational provisions; the freedom period is the last 60 days
of the CBAs fifth year of the representational aspect. The notice
period is an economic event involving the employer and the

(b) Referendum to Register on Independent Union

This referendum is neither union disaffiliation nor severance; it is not
disallowed by law even while a CBA exists.

A collective bargaining agreement which was prematurely renewed is not a bar

to the holding of a certification election. Such indecent haste in renewing the
CBA despite an order enjoining them from doing so is designed to frustrate the
constitutional right of the employees to self-organization. Moreover, We cannot
countenance the actuation of the petitioner and the management in this case
which is not conducive to industrial peace.

Validity of CBA Signed During Representation Dispute

It is true that the contract-bar rule does not apply during the freedom period;
i.e., within that period a petition for CE may be entertained. But it is equally

true that the petition for CE does not bar the employer and the incumbent union
from renegotiating and renewing the expiring CBA. In other words, a CBA may
be renegotiated before, during, or after the 60-day freedom period. But if during
such period a PCE is filed, the Med-arbiter can order the suspension of the
renegotiation until the representation proceedings finally end.

The law is attempting a balancing feat. By allowing a PCE during the

freedom period the law preserves democratic between unions, and, in
the same breadth, by allowing CBA renegotiation during the same
freedom period, the law safeguards the opportunity to possibly
upgrade the employees employment condition.
The question may be asked: What would be the effect on the
renegotiated CBA if a union other than the one that executed it should
win the CE? In a pertinent case, it was held that the union thus
certified would have to respect the contract, but that it may bargain
with the management to shorten the life of the contract if it is too
long.
When a collective bargaining agreement is entered into at a time when the
petition for certification election had already been filed by a union and was then
pending resolution, the said CBA cannot be deemed permanent, precluding the
commencement of negotiations by another union with the management. In the
meantime however, so as not to deprive the workers of the benefits of the said
agreement, it shall be recognized and given effect on a temporary basis, subject
to the results of the certification election. The agreement may be continued in
force if the union is certified as the exclusive bargaining representative of the
workers or may be rejected and replaced in the event that the rival emerges as
the winner.

But in a 2005 decision the Court took one step further. It invalidated
the hasty recognition of a union and the signing of a CBA with that
union where such acts were done while there was a pending petition
for certification election by another union.
Basic to the contract bar rule is the proposition that the delay of the right to
select representatives can be justified only where stability is deemed
paramount. Excepted from the contract bar rule are certain types of contracts
which do not foster industrial stability, such as contracts where the Identity of
the representative is in doubt. Any stability derived from such contracts must be
subordinated to the employees' freedom of choice because it does not establish
the type of industrial peace contemplated by the law.
A CBA automatically renewed usually operates as a bar to a certification
election. But it is not a bar if the employer has served notice that it will
terminate the contract if and when the union no longer represents the majority
of the employees.

3.9 Invalid Grounds for the Denial/Suspension of the Petition

Questions pertaining to the validity of petitioning unions certificate
of registration, or its legal personality as a labor organization, or the
validity of registration and execution of collective bargaining
agreements shall be heard and resolved by the Regional Director in an
independent petition for cancellation of the unions registration. They
are not reasons for the Med-arbiter to suspend hearing the PCE.
However, the Med-arbiter himself may rule on the objection if the
pending union is not found in the Departments roster of legitimate
labor organizations or an alleged collective bargaining agreement is
unregistered with the Department.
3.9a Authority to Decide Existence of Employer-Employee
Relationship; Med-Arbiters Order Appealable to Secretary

LABOR RELATIONS
Does the Med-arbiter or the Secretary of Labor and Employment have
the authority to determine the existence of an employer-employee
relationship between the parties in a petition for certification election?
All issues pertaining to the existence of employer-employee
relationship or to eligibility to union membership shall be resolved in
the order or decision ranting or denying the petition for certification
election. In other words, those issues do not stall the PCE and they are
not grounds for dismissing a PCE.
It is absurd to suggest that the med-arbiter and Secretary of Labor cannot make
their own independent finding as to the sentence of such relationship and must
have to rely and wait for such a determination by the labor arbiter or NLRC in a
separate proceeding. For then, given a situation where there is no separate
complaint filed with the labor arbiter, the med-arbiter and/or the Secretary of
Labor can never decide a certification election case or any labor-management
dispute properly brought before them as they have no authority to determine the
existence of an employer-employee relationship. Such a proposition is, to say
the least, anomalous.
Once there is a determination as to the existence of such a relationship, the
med-arbiter can then decide the certification election case. 9 As the authority to
determine the employer-employee relationship is necessary and indispensable
in the exercise of jurisdiction by the med-arbiter, his finding thereon may only
be reviewed and reversed by the Secretary of Labor who exercises appellate
jurisdiction under Article 259 of the Labor Code, as amended.

It is apparent that incidental to the power of the med-arbiter to hear

and decide representation cases is the power to determine who the
eligible voters are. In so doing, it is axiomatic that the med-arbiter
should determine the legality of the employees' membership in the
union.
3.10 Action on the Petition: Is the Employer a Bystander? See Art.
258-A
3.10a Employer a Bystander; Cannot Oppose PCE
3.11 Action on the Petition: Approval
Section 13. Order/Decision on the petition. - Within ten (10) days from the date
of the last hearing, the Med-Arbiter shall issue a formal order granting the
petition or a decision denying the same. In organized establishments, however,
no order or decision shall be issued by the Med-Arbiter during the freedom
period.
The order granting the conduct of a certification election shall state the
following:
(a) the name of the employer or establishment;
(b) the description of the bargaining unit;
(c) a statement that none of the grounds for dismissal enumerated in the
succeeding paragraph exists;
(d) the names of contending labor unions which shall appear as follows:
petitioner union/s in the order in which their petitions were filed, forced
intervenor, and no union; and
(e) a directive upon the employer and the contending union(s) to submit within
ten (10) days from receipt of the order, the certified list of employees in the
bargaining unit, or where necessary, the payrolls covering the members of the
bargaining unit for the last three (3) months prior to the issuance of the order

3.12 Appeal of Order Granting or Denying Petition

LABOR RELATIONS
Section 17. Appeal. - The order granting the conduct of a certification election
in an unorganized establishment shall not be subject to appeal. Any issue
arising therefrom may be raised by means of protest on the conduct and results
of the certification election.
The order granting the conduct of a certification election in an organized
establishment and the decision dismissing or denying the petition, whether in
an organized or unorganized establishment, may be appealed to the Office of
the Secretary within ten (10) days from receipt thereof.
The appeal shall be verified under oath and shall consist of a memorandum of
appeal, specifically stating the grounds relied upon by the appellant with the
supporting arguments and evidence.

In short, denial of any petition for CE is always appealable, but never

appealable is the approval of any PCE in an enterprise still
ununionized. The reason is sound and simple: the law wants to
unionized the ununionized.
Section 18. Where to file appeal. - The memorandum of appeal shall be filed in
the Regional Office where the petition originated, copy furnished the
contending unions and the employer, as the case may be. Within twenty-four
(24) hours from receipt of the appeal, the Regional Director shall cause the
transmittal thereof together with the entire records of the case to the Office of
the Secretary.
Section 19. Finality of Order/Decision. - Where no appeal is filed within the
ten-day period, the Med-Arbiter shall enter the finality of the order/decision in
the records of the case and cause the transmittal of the records of the petition to
the Regional Director.
Section 20. Period to Reply. - A reply to the appeal may be filed by any party to
the petition within ten (10) days from receipt of the memorandum of appeal.
The reply shall be filed directly with the Office of the Secretary.
Section 21. Decision of the Secretary. - The Secretary shall have fifteen (15)
days from receipt of the entire records of the petition within which to decide the
appeal. The filing of the memorandum of appeal from the order or decision of
the Med-Arbiter stays the holding of any certification election.
The decision of the Secretary shall become final and executory after ten (10)
days from receipt thereof by the parties. No motion for reconsideration of the
decision shall be entertained.
Section 22. Transmittal of records to the Regional Office. - Within forty-eight
(48) hours from notice of receipt of decision by the parties and finality of the
decision, the entire records of the case shall be remanded to the Regional Office
of origin for implementation. Implementation of the decision shall not be
stayed unless restrained by the appropriate court.

May a certification election be held legally upon petition of Union B

while a petition for CE by Union A is pending on appeal at the Office
of the Secretary? No, the appeal should first be resolved.
3.13 Conducting the CE
3.13a Pre-election Conference
Section 1. Raffle of the case. - Within twenty-four (24) hours from receipt of
the notice of entry of final judgment granting the conduct of a certification
election, the Regional Director shall cause the raffle of the case to an Election
Officer who shall have control of the pre-election conference and election
proceedings.
Section 2. Pre-election conference. - Within twenty-four (24) hours from
receipt of the assignment for the conduct of a certification election, the Election
Officer shall cause the issuance of notice of preelection conference upon the

contending unions and the employer, which shall be scheduled within ten (10)
days from receipt of the assignment.
The pre-election conference shall set the mechanics for the election and shall
determine, among others, the following:
(a) date, time and place of the election, which shall not be later than forty-five
(45) days from the date of the first pre-election conference, and shall be on a
regular working day and within the employer's premises, unless circumstances
require otherwise;
(b) list of eligible and challenged voters;
(c) number and location of polling places or booths and the number of ballots to
be prepared with appropriate translations, if necessary;
(d) name of watchers or representatives and their alternates for each of the
parties during election;
(e) mechanics and guidelines of the election.
Section 3. Waiver of right to be heard. - Failure of any party to appear during
the pre-election conference despite notice shall be considered as a waiver to be
present and to question or object to any of the agreements reached in said preelection conference. Nothing herein, however, shall deprive the non-appearing
party or the employer of its right to be furnished notices of subsequent preelection conferences and to attend the same.
Section 4. Minutes of pre-election conference. - The Election Officer shall keep
the minutes of matters raised and agreed upon during the pre-election
conference. The parties shall acknowledge the completeness and correctness of
the entries in the minutes by affixing their signatures thereon. Where any of the
parties refuse to sign the minutes, the Election Officer shall note such fact in
the minutes, including the reason for refusal to sign the same. In all cases, the
parties shall be furnished a copy of the minutes.
The pre-election conference shall be completed within thirty (30) days from the
date of the first hearing.
Section 6. Posting of Notices. - The Election Officer shall cause the posting of
notice of election at least ten (10) days before the actual date of the election in
two (2) most conspicuous places in the company premises. The notice shall
contain:
(a) the date and time of the election;
(b) names of all contending unions;
(c) the description of the bargaining unit and the list of eligible and challenged
voters.
The posting of the notice of election, the information required to be included
therein and the duration of posting cannot be waived by the contending unions
or the employer.

3.13b Conducting the CE: The Voters

One of the matters the pre-election conference threshes out is the list
of voters.
Section 5. Qualification of voters; inclusion-exclusion. - All employees who are
members of the appropriate bargaining unit sought to be represented by the
petitioner at the time of the issuance of the order granting the conduct of a
certification election shall be eligible to vote.

The list of voters should be based on the employer-certified list of

employees in the CBU or payrolls. If the employer does not submit
the list or payrolls, the union may submit its own list.
Even the list of employees submitted to the SSS may be used as basis
to comprise the list of voters for the CE. It should ideally be the

LABOR RELATIONS
payroll which should have been used for the purpose of the election.
However, the unjustified refusal of a company to submit the payroll in
its custody, despite efforts to make it produce it, compelled resort to
the SSS list as the next best source of information. After all, the SSS
list is a public record whose regularity is presumed.
Only the employees who are directly employed by the employer and
working along the activities to which the employer is engaged and
linked by employer-employee relationship are qualified to participate
in the certification election, irrespective of the period of their
employment.
Employees of an independent contractor who undertakes to do a piece
of work for his account and responsibility, with minimum interference
on the part of the other contracting party (indirect employer), not
being laborers or employees of the latter, are not qualified to
participate therein.
In case of disagreement over the voters' list or over the eligibility of voters, all
contested voters shall be allowed to vote. But their votes shall be segregated
and sealed in individual envelopes in accordance with Sections 10 and 11 of
this Rule.

Dismissed Employee
An employee who has been dismissed from work but has contested
the legality of the dismissal in a forum of appropriate jurisdiction at
the time of the issuance of the order for the conduct of a certification
election shall be considered a qualified voter, unless his/her dismissal
was declared final judgment at the time of the conduct of the
certification election.
In Philippine jurisprudence it is now settled that employees who have been
improperly laid off but who have a present, unabandoned right to or expectation
of re-employment, are eligible to vote in certification elections. 10 Thus, and to
repeat, if the dismissal is under question, as in the case now at bar whereby a
case of illegal dismissal and/or unfair labor practice was filed, the employees
concerned could still qualify to vote in the elections.

Probationary Employee
In a certification election all rank-and-file employees in the appropriate
bargaining unit are entitled to vote. This principle is clearly stated in Art. 255 of
the Labor Code which states that the "labor organization designated or selected
by the majority of the employees in an appropriate bargaining unit shall be the
exclusive representative of the employees in such unit for the purpose of
collective bargaining."
Collective bargaining covers all aspects of the employment relation and the
resultant CBA negotiated by the certified union binds all employees in the
bargaining unit. Hence, all rank-and-file employees, probationary or
permanent, have a substantial interest in the selection of the bargaining
representative. The Code makes no distinction as to their employment status as
basis for eligibility in supporting the petition for certification election. The law
refers to "all" the employees in the bargaining unit. All they need to be eligible
to support the petition is to belong to the "bargaining unit.".

INK Believers May Vote

In the CE all members of the unit, whether union members or not,
have the right to vote. Union membership is not a prerequisite. If
majority of the unit members do not want a union, as expressed in the
CE, such majority decision must be respected.
Logically, the right NOT to join, affiliate with, or assist any union, and to
disaffiliate or resign from a labor organization, is subsumed in the right to join,

affiliate with, or assist any union, and to maintain membership therein. The
right to form or join a labor organization necessarily includes the right to refuse
or refrain from exercising said right. It is self-evident that just as no one should
be denied the exercise of a right granted by law, so also, no one should be
compelled to exercise such a conferred right. The fact that a person has opted to
acquire membership in a labor union does not preclude his subsequently opting
to renounce such membership.
The purpose of a certification election is precisely the ascertainment of the
wishes of the majority of the employees in the appropriate bargaining unit: to
be or not to be represented by a labor organization, and in the affirmative case,
by which particular labor organization. If the results of the election should
disclose that the majority of the workers do not wish to be represented by any
union, then their wishes must be respected, and no union may properly be
certified as the exclusive representative of the workers in the bargaining unit in
dealing with the employer regarding wages, hours and other terms and
conditions of employment. The minority employees who wish to have a
union represent them in collective bargaining can do nothing but wait for
another suitable occasion to petition for a certification election and hope that
the results will be different. They may not and should not be permitted,
however, to impose their will on the majority who do not desire to have a
union certified as the exclusive workers' benefit in the bargaining unit upon
the plea that they, the minority workers, are being denied the right of selforganization and collective bargaining.
The respondents' argument that the petitioners are disqualified to vote because
they "are not constituted into a duly organized labor union" "but members of
the INK which prohibits its followers, on religious grounds, from joining or
forming any labor organization" and "hence, not one of the unions which
vied for certification as sole and exclusive bargaining representative," is
specious. Neither law, administrative rule nor jurisprudence requires that only
employees affiliated with any labor organization may take part in a certification
election. On the contrary, the plainly discernible intendment of the law is to
grant the right to vote to all bona fide employees in the bargaining unit, whether
they are members of a labor organization or not.

3.13c Conducting the CE: The Voting

Section 7. Secrecy and sanctity of the ballot. - To ensure secrecy of the ballot,
the Election Officer, together with the authorized representatives of the
contending unions and the employer, shall before the start of the actual voting,
inspect the polling place, the ballot boxes and the polling booths.
Section 8. Preparation of ballots. - The Election Officer shall prepare the ballots
in English and Filipino or the local dialect, corresponding to the number of
voters and a reasonable number of extra ballots. All ballots shall be signed at
the back by the Election Officer and authorized representative of each of the
contending unions and employer. Failure or refusal to sign the ballots shall be
considered a waiver thereof and the Election Officer shall enter the fact of such
refusal or failure in the records of the case as well as the reason for the refusal
or failure to sign.
Section 9. Marking of votes. - The voter must put a cross () or check ()
mark in the square opposite the name of the union of his choice or "No Union"
if he/she does not want to be represented by any union.
If a ballot is torn, defaced or left unfilled in such a manner as to create doubt or
confusion or to identify the voter, it shall be considered spoiled. If the voter
inadvertently spoils a ballot, he/she shall return it to the Election Officer who
shall destroy it and give him/her another ballot.
Section 10. Challenging of votes. - An authorized representative of any of the
contending unions and employer may challenge a vote before it is deposited in
the ballot box only on any of the following grounds:
(a) that there is no employer-employee relationship between the voter and the
company;
(b) that the voter is not a member of the appropriate bargaining unit which
petitioner seeks to represent.

LABOR RELATIONS
Section 11. Procedure in the challenge of votes. - When a vote is properly
challenged, the Election Officer shall place the ballot in an envelope which
shall be sealed in the presence of the voter and the representatives of the
contending unions and employer. The Election Officer shall indicate on the
envelope the voter's name, the union or employer challenging the voter, and the
ground for the challenge. The sealed envelope shall then be signed by the
Election Officer and the representatives of the contending unions and employer.
The Election Officer shall note all challenges in the minutes of the election and
shall be responsible for consolidating all envelopes containing the challenged
votes. The envelopes shall be opened and the question of eligibility shall be
passed upon only if the number of segregated voters will materially alter the
results of the election.
Section 12. On-the-spot questions. - The Election Officer shall rule on any
question relating to and raised during the conduct of the election. In no case,
however, shall the election officer rule on any of the grounds for challenge
specified in the immediately preceding section.
Section 13. Protest; when perfected. - Any party-in-interest may file a protest
based on the conduct or mechanics of the election. Such protests shall be
recorded in the minutes of the election proceedings. Protests not so raised are
deemed waived.
The protesting party must formalize its protest with the Med-Arbiter, with
specific grounds, arguments and evidence, within five (5) days after the close of
the election proceedings. If not recorded in the minutes and formalized within
the prescribed period, the protest shall be deemed dropped.
Section 15. Conduct of election and canvass of votes. - The election precincts
shall open and close on the date and time agreed upon during the pre-election
conference. The opening and canvass shall proceed immediately after the
precincts have closed. Failure of any party or the employer or his/her/their
representative to appear during the election proceedings shall be considered a
waiver to be present and to question the conduct thereof.

ULP in Relation to Election

The employer deserves our strongest condemnation for ignoring the petitioners'
request for permission for some time out to attend to the hearing of their
petition before the med-arbiter. It is not only an act of arrogance, but a brazen
interference as well with the employees right to self-organization, contrary to
the prohibition of the Labor Code against unfair labor practices.
It is unfair labor practice for the company to suspended the workers on the
ground of "abandonment of work" on the day on which the pre-election
conference had been scheduled. It is the employees right to hold a certification
election, the exercise of which is their sole prerogative.
A company commits unfair labor practice where it issued suspension and
termination orders while the employees are in the midst of a certification
election preliminary to a labor management conference "to normalize
employer-employee relations."

3.13d Conducting the CE: Canvassing of Votes

The voting shall close on the date and time agreed upon in the preelection conference. Canvassing shall immediately follow.
Section 14. Canvassing of votes. - The votes shall be counted and tabulated by
the Election Officer in the presence of the representatives of the contending
unions. Upon completion of the canvass, the Election Officer shall give each
representative a copy of the minutes of the election proceedings and results of
the election. The ballots and the tally sheets shall be sealed in an envelope and
signed by the Election Officer and the representatives of the contending unions
and transmitted to the Med-Arbiter, together with the minutes and results of the
election, within twenty-four (24) hours from the completion of the canvass.
Where the election is conducted in more than one region, consolidation of
results shall be made within fifteen (15) days from the conduct thereof.

3.13e Who Wins in CE: Proclamation and Certification

Section 20. Proclamation and certification of the result of the election. - Within
twenty-four (24) hours from final canvass of votes, there being a valid election,
the Election Officer shall transmit the records of the case to the Med-Arbiter
who shall, within the same period from receipt of the minutes and results of
election, issue an order proclaiming the results of the election and certifying the
union which obtained a majority of the valid votes cast as the sole and
exclusive bargaining agent in the subject bargaining unit, under any of the
following conditions:
(a) no protest was filed or, even if one was filed, the same was not perfected
within the five-day period for perfection of the protest;
(b) no challenge or eligibility issue was raised or, even if one was raised, the
resolution of the same will not materially change the results of the elections.
The winning union shall have the rights, privileges and obligations of a duly
certified collective bargaining agent from the time the certification is issued.
Where majority of the valid votes cast results in "No Union" obtaining the
majority, the Med-Arbiter shall declare such fact in the order.
Section 16. Certification of Collective Bargaining Agent. - The union which
obtained a majority of the valid votes cast shall be certified as the sole and
exclusive bargaining agent of all the employees in the appropriate bargaining
unit within five (5) days from the day of the election, provided no protest is
recorded in the minutes of the election.

3,13f Failure of Election: Motion for a Remedial Election

Section 17. Failure of election. - Where the number of votes cast in a
certification or consent election is less than the majority of the number of
eligible voters and there are no material challenged votes, the Election Officer
shall declare a failure of election in the minutes of the election proceedings.
Section 18. Effect of failure of election. - A failure of election shall not bar the
filing of a motion for the immediate holding of another certification or consent
election within six (6) months from date of declaration of failure of election.
Section 19. Action on the motion. - Within twenty-four (24) hours from receipt
of the motion, the Election Officer shall immediately schedule the conduct of
another certification or consent election within fifteen (15) days from receipt of
the motion and cause the posting of the notice of certification election at least
ten (10) days prior to the scheduled date of election in two (2) most
conspicuous places in the establishment. The same guidelines and list of voters
shall be used in the election.

3.13g Run-off Election

Section 1. When proper. - When an election which provides for three (3) or
more choices results in none of the contending unions receiving a majority of
the valid votes cast, and there are no objections or challenges which if sustained
can materially alter the results, the Election Officer shall motu propio conduct a
run-off election within ten (10) days from the close of the election proceedings
between the labor unions receiving the two highest number of votes; provided,
that the total number of votes for all contending unions is at least fifty (50%)
percent of the number of votes cast.
"No Union" shall not be a choice in the run-off election.
Notice of run-off elections shall be posted by the Election Officer at least five
(5) days before the actual date of run-off election.
Section 2. Qualification of voters. - The same voters' list used in the
certification election shall be used in the run-off election. The ballots in the runoff election shall provide as choices the unions receiving the highest and
second highest number of the votes cast. The labor union receiving the greater

number of valid votes cast shall be certified as the winner, subject to Section
20, Rule IX.

To summarize, a run-off election is proper if five concurrent

conditions exist, namely:
1. a valid election took place because majority of the CBU members
voted.
2. the election presented a least three choices, e.g., Union One, Union
Two, and No Union, meaning there are at least two union
candidates.
3. not one of the unions obtained the majority ofthe valid votes.
4. the total number of votes for all the unions is at least 50% of the
valid votes cast.
5. there is no unresolved challenge of voter or election protest.
3.14 Appeal to Secretary as to Election ResultSee D.O. No. 40-E-03
(dated 30 November 2005)
3.15 Election Irregularities, Protest by Employer
The manner in which the election was held could make the difference between
industrial strife and industrial harmony in the company. What an employer is
prohibited from doing is to interfere with the conduct of the certification
election for the purpose of influencing its outcome. But certainly an employer
has an abiding interest in seeing to it that the election is clean, peaceful, orderly
and credible.

LABOR RELATIONS
provisions of the Act, constitutes the agent as the representative of all
the employees within the particular bargaining unit. The Act provides
that such bargaining agent shall be the exclusive representative of
the employees. The term exclusive was interpreted under the
original Act to mean that the employer must treat with the
representative to the exclusion of all other claiming bargaining agents.
5.1 Exclusive Bargaining Agent Represents Even the Minority Union
On the part of the union that won in the certification election, it becomes, and is
certified as, the exclusive bargaining agent of all the workers in the bargaining
unit. It represents even the members of the minority union.
However, although the union has every right to represent its members in the
negotiation regarding the terms and conditions of their employment, it cannot
negate their wishes on matters which are purely personal and individual to
them.

5.2 Protection and Capacity of the Loser; the Duty of Fair

Representation
What if the majority union neglects the interest of the employees in
the minority union? The majority union in such case will be violating
its duty of fair representation. This duty obligates the majority union
to serve the interest of all members of the whole bargaining unit
without hostility or discrimination.

4. THIRD METHOD: CONSENT ELECTION

What can the minority do? The minority union, although a loser in the
election, does not lose its character as a lawful labor organization
entitled to protection under Article 246 which makes it unlawful for
any person to abridge the right to self-organization. (see also Article
255)

Like a CE, its purpose is the same, namely, to find out which union
should serve as the bargaining agent. The difference is that a
certification is ordered by the Department while a consent election is
voluntarily agreed upon by the parties, with or without the
intervention of the Department.

May a minority union charge the employer with ULP? Yes. It can file
an individual or group complaint for ULP. It can even engage in
peaceful concerted activity. But it cannot resort to work stoppage or
strike because strike is reserved, under Article 263, to an exclusive
bargaining representative (i.e., the majority union), if there is one.

Two or more unions are involved in a consent election. And like

certification election, consent election may take place in an
unorganized or organized establishment.

5.3 Is the Bargaining Union a Majority Union?

4.1 Effect of Consent Election

Section 23. Effects of consent election. - Where a petition for certification
election had been filed, and upon the intercession of the Med-Arbiter, the
parties agree to hold a consent election, the results thereof shall constitute a bar
to the holding of a certification election for one (1) year from the holding of
such consent election. Where an appeal has been filed from the results of the
consent election, the running of the one-year period shall be suspended until the
decision on appeal has become final and executory.
Where no petition for certification election was filed but the parties themselves
agreed to hold a consent election with the intercession of the Regional Office,
the results thereof shall constitute a bar to another petition for certification
election.

5.
THE
WINNER
REPRESENTATIVE

AS

SOLE

AND

EXCLUSIVE

Collective bargaining contemplates the representation of the collective

bargaining interests of all the employees in the particular bargaining
unit by a properly selected bargaining agent. The selection of a
bargaining agent by a majority of such employees, under express

The minority unions entitlement to protection gains greater force and

respect if it is remembered that the bargaining union does not always
comprise the numerical majority in the bargaining unit.
Article 256 requires, for a union to win a CE, only a majority of the
valid votes cast. The majority of the valid votes may be lesser that the
majority of the employees in the bargaining unit.
Article 256 therefore does not support Article 255; in fact, they are
incongruent. Whereas Article 255 requires selection by majority of the
unit members, Article 256 requires only majority of the valid votes
cast. The result may be a bargaining agent that does not carry the
mandate of the majority of the employees.
5.4 May the Bargaining Agent Represent Retired Employees?
In pursuing their claim for retirement benefits under the CBA, the
claimant retirees are represented by the union of which they were
former members.
________
Title VII-A
GRIEVANCE MACHINERY

AND VOLUNTARY ARBITRATION

LABOR RELATIONS
Unilaterally formulated rules and policy can neither contradict nor
undermine the CBA provisions.

Article. 260. Grievance machinery and voluntary arbitration. - The

parties to a Collective Bargaining Agreement shall include therein
provisions that will ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the adjustment and
resolution of grievances arising from the interpretation or
implementation of their Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel
policies.

Since the collective bargaining agreement is considered the law between the
parties, containing as it does the agreed terms of employment of the employee
with his employer, unilaterally imposed orders or rules qualifying the terms
contained in the agreement are subordinate to the CBA. At most, such rules,
such as the rules on trips abroad formulated by petitioner [school] a few months
before Legaspis application, are merely suppletory and can neither contradict
nor undermine the terms found in the CBA.

All grievances submitted to the grievance machinery which are not

settled within seven (7) calendar days from the date of its submission
shall automatically be referred to voluntary arbitration prescribed in
the Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall
name and designate in advance a Voluntary Arbitrator or panel of
Voluntary Arbitrators, or include in the agreement a procedure for the
selection of such Voluntary Arbitrator or panel of Voluntary
Arbitrators, preferably from the listing of qualified Voluntary
Arbitrators duly accredited by the Board. In case the parties fail to
select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the
Board shall designate the Voluntary Arbitrator or panel of Voluntary
Arbitrators, as may be necessary, pursuant to the selection procedure
agreed upon in the Collective Bargaining Agreement, which shall act
with the same force and effect as if the Arbitrator or panel of
Arbitrators has been selected by the parties as described above.
________
1. CONTRACT ADMINISTRATION AS PART OF THE DUTY
TO BARGAIN
Collective bargaining is not an end in itself. It is a means to an end,
which is the making of collective agreements stabilizing employment
relations for a period of time with results advantageous both to the
worker and the employer.
However narrowly it may canalize its course, the execution of a
contract does not complete collective bargaining. Piece rates and work
assignments frequently require day-to-day adjustments; periodic
decisions must be made concerning such matters as shop rules, job
content, and the letting of subcontracts. There will be ambiguities in
the agreement to be clarified and gaps be filled. In other words, the
duty to bargain continues into the contract administration stage.
In effect, therefore, contract negotiations are the legislative process
of collective bargaining; the day-to-day working out of plant problems
is its administrative or judicial aspects.
Strengthening the binding force of the CBA, Art. 248 considers as
unfair labor practice any act that violates an existing collective
bargaining agreement. But this law must be related to Art, 261 which
limits that kind of ULP to gross violations only.
2. C.B.A., LAW BETWEEN THE PARTIES
The provisions of the collective bargaining agreement must be respected since
its terms and conditions "constitute the law between the parties." Those who are
entitled to its benefits can invoke its provisions. In the event that an obligation
therein imposed is not fulfilled, the aggrieved party has the right to go to court
for redress.

2.1 Construing the Contract

The CBA being a contract, the rules embodied in the Civil Code on
interpretation of contracts should govern. The intent of the parties should be
ascertained by considering relevant provisions of the said CBA. The intention
of the parties is primordial; if the terms of the contract are clear, the literal
meaning of the stipulations shall control, but if the words appear to be contrary
to the evident intention of the parties, the latter shall prevail over the former.
Any doubts or ambiguity in the contract between management and the union
members should be resolved in the light of Article 1702 of the Civil Code that:
In case of doubt, all labor legislation and all labor contracts shall be construed
in favor of the safety and decent living for the laborer. This is also in
consonance with the principle enunciated in the Labor Code that all doubts
should be resolved in favor of the worker.
But contracts which are not ambiguous are to be interpreted according to their
literal meaning and should not be interpreted beyond their obvious intendment.
Compliance with a CBA is mandated by the expressed policy to give protection
to labor. In the same vein, CBA provisions should be "construed liberally rather
than narrowly and technically, and the courts must place a practical and realistic
construction upon it, giving due consideration to the context in which it is
negotiated and purpose which it is intended to serve." This is founded on the
dictum that a CBA is not an ordinary contract but one impressed with public
interest. It goes without saying, however, that only provisions embodied in the
CBA should be so interpreted and complied with.

2.2 Proposal Contained in Minutes but Not in the CBA Itself

A proposal mentioned in the negotiation but not embodied in the
collective bargaining contract itself is not part of the CBA. It cannot
serve as basis of a charge of violating the CBA or of bargaining in bad
faith.
2.3 Zipper Clause
A device to forestall negotiation proposals after the CBA has been
signed is the zipper clause. It is a stipulation in a CBA indicating
that issues that could have been negotiated but not contained in the
CBA cannot be raised for negotiation when the CBA is already in
effect. In short, the CBA is a complete agreement; negotiation is
closed, as a zipper does.
3. LAW DEEMED WRITTEN IN CONTRACT
The principle is thus well-settled that an existing law enters into and
forms part of a valid contract without the need for the parties
expressly making reference to it. Only thus could its validity insofar
as some of its provisions are concerned be assured.
4. BINDING EFFECT OF AGREEMENT
A collective bargaining agreement entered into by officers of a union, as agent
of the members, and an employer, gives rise to valid enforceable contractual

LABOR RELATIONS
relations, against the individual union members in matters that affect them
peculiarly, and against the union in matters that affect the entire membership or
large classes of its members," and "a union member who is employed under an
agreement between the union and his employer is bound by the provisions
thereof, since it is a joint and several contract of the members of the union
entered into by the union as their agent."

4.1 Persons Entitled to Benefits

It is true that whatever benefits the majority union obtains from the employer
accrue to its members as well as to non-members. For the benefits of a
collective bargaining agreement are extended to all employees regardless of
their membership in the union because to withhold the same from the nonmembers would be to discriminate against them.
It is even conceded that a laborer can claim benefits from a collective
bargaining agreement entered into between the company and the union of
which he is a member at the time of the conclusion of the agreement, even after
he has resigned from said union.

4.2 Managers Not Entitled to CBA Benefits; Exception

Managers, who are not allowed to unionize to bargain collectively
with the employer, cannot claim the benefits contained in the CBA
negotiated by the workers under them. They cannot obtain indirectly
what they cannot do directly.
Accordingly, managerial employees cannot, in the absence of an agreement to
the contrary, be allowed to share in the concessions obtained by the labor union
through collective negotiation. Otherwise, they would be exposed to the
temptation of colluding with the union during the negotiations to the detriment
of the employer.
However, there is nothing to prevent the employer from granting benefits to
managerial employees equal to or higher than those afforded to union members.
There can be no conflict of interest where the employer himself voluntarily
agrees to grant such benefits to managerial employees. In the case at bar, at the
beginning of petitioner's employment, he was told that those who are not
covered by the CBA would nevertheless be entitled to benefits which would be,
if not higher, at least equivalent to those provided in the CBA. That private
respondents made such a promise to petitioner is not denied by them.

4.3 Effect of Collective Agreement on the Individual Contracts of

Employment
When a collective agreement is concluded between a labor union and
an employer, the members of the labor union are precluded from
entering into individual contracts of employment. But if the
agreement merely fixes wages and working conditions, the employer
may enter into particular contracts of employment with his employees
even though both are bound by the general contract as to wages and
working conditions.
5.
ENFORCEABILITY
ENTERPRISE

AGAINST

TRANSFEREE

As a general rule, there is no law requiring a bona fide purchaser of assets of an

on-going concern to absorb in its employ the employees of the latter.

5.2 Exceptions
Although the purchaser of the assets or enterprise is not legally bound to absorb
in its employ the employers of the seller of such assets or enterprise, the parties
are liable to the employees if the transaction between the parties is colored or
clothed with bad faith.

5.3 Merger and Consolidation

Merger takes place when two or more corporations join into a single
corporation which is one of the merging corporations; the separate
existence of the other constituent corporations ceases. Consolidation
occurs when two or more corporations join into a new single
corporation; the separate existence of all the constituent corporations
ceases, except that of the consolidated corporation.
Section 80. Effects of merger or consolidation. - The merger or consolidation
shall have the following effects:
xxx
5. The surviving or consolidated corporation shall be responsible and liable for
all the liabilities and obligations of each of the constituent corporations in the
same manner as if such surviving or consolidated corporation had itself
incurred such liabilities or obligations; and any pending claim, action or
proceeding brought by or against any of such constituent corporations may be
prosecuted by or against the surviving or consolidated corporation. The rights
of creditors or liens upon the property of any of such constituent corporations
shall not be impaired by such merger or consolidation. (n)

5.4 Wiley Doctrine

The disappearance by merger of a corporate employer which has
entered into a collective bargaining agreement with a union does not
automatically terminate all rights of the employees covered by the
agreement, even though the merger is for genuine business reasons.
Under the Wiley doctrine, a duty to arbitrate arising from a collective
bargaining agreement survives the employers ceasing to do business
as a separate entity after its merger with a substantially large
corporation, so as to be binding on the larger corporation, where
relevant similarity and continuity of operations across the change in
ownership is evidenced by the wholesale transfer of the smaller
corporations employees to the larger corporations plant. If a
contractual duty to arbitrate survives the employers merger into
another corporate employer, question as to the effect of the merger on
the rights of the employees covered by the agreementthe former
employees of the merged employerare arbitrable if questions as to
those rights would have been arbitrable before the merger.

OF

5.1 Purchase of Assets

The rule is that unless expressly assumed, labor contracts such as employment
contracts and collective bargaining agreements are not enforceable against a
transferee of an enterprise, labor contracts being in personam, thus binding only
between the parties. A labor contract merely creates an action in personally and
does not create any real right which should be respected by third parties. This
conclusion draws its force from the right of an employer to select his
employees and to decide when to engage them as protected under our
Constitution, and the same can only be restricted by law through the exercise of
the police power.

But a duty to arbitrate arising from collective bargaining agreement

does not survive in every case in which the ownership or corporate
structure of an enterprise is changed. It does not survive where there is
lack of any substantial continuity of identity in the business enterprise
before and after a change, or where the union abandons its right to
arbitration by failing to make its claims known.
6. CHANGE OF BARGAINING AGENT; SUBSTITUTIONARY
DOCTRINE
How does disaffiliation affect the CBA?

The agreement is binding on the parties for the period therein specified. The
employees cannot revoke the validly executed collective bargaining contract
with their employer by the simple expedient of changing their bargaining
representative. Thus, when there occurs a shift in employees' union allegiance
after the execution of a bargaining contract with their employer, and the
employees change their bargaining representative, the contract continues to
bind them up to its expiration date. The new agent, however, may bargain for
the shortening of the contract period.
In formulating the "substitutionary" doctrine, the only consideration involved
was the employees' interest in the existing bargaining agreement. The agent's
interest never entered the picture. In fact, the justification 9 for said doctrine
was:
xxx that the majority of the employees, as an entity under the statute, is the true
party in interest to the contract, holding rights through the agency of the union
representative. Thus, any exclusive interest claimed by the agent is defeasible at
the will of the principal.... (Emphasis supplied)
Stated otherwise, the "substitutionary" doctrine only provides that the
employees cannot revoke the validly executed collective bargaining contract
with their employer by the simple expedient of changing their bargaining agent.
And it is in the light of this that the phrase "said new agent would have to
respect said contract" must be understood. It only means that the employees,
thru their new bargaining agent, cannot renege on their collective bargaining
contract, except of course to negotiate with management for the shortening
thereof.
The "substitutionary" doctrine, therefore, cannot be invoked to support the
contention that a newly certified collective bargaining agent automatically
assumes all the personal undertakings like the no-strike stipulation here
in the collective bargaining agreement made by the deposed union. When
BBWU bound itself and its officers not to strike, it could not have validly
bound also all the other rival unions existing in the bargaining units in question.
BBWU was the agent of the employees, not of the other unions which possess
distinct personalities. To consider UNION contractually bound to the no-strike
stipulation would therefore violate the legal maxim that res inter alios nec
prodest nec nocet.

7. GRIEVANCES
A grievance is defined as any question by either the employer or the
union regarding the interpretation or application of the collective
bargaining agreement or company personnel policies or any claim by
either party that the other party is violating any provision of the CBA
or company personnel policies.

LABOR RELATIONS
collective agreement. The usual source of grievances, however, is the
rules and regulations governing disciplinary actions.
7.1 By-passing the Grievance Machinery: ULP
All grievances arising from the implementation or interpretation of the
collective bargaining agreement and/or interpretation and enforcement
of company personnel policies are compulsorily subject to the
grievance of machinery.
Upholding the requirement, the Court has ruled that the grievance
procedure provided in the CBA should be adhered to by the parties.
Refusal or failure to do so is an unfair labor practice, because the
grievance procedure is part of the continuous process of collective
bargaining. It is intended to promote friendly dialogue between labor
and management as a means of maintaining industrial peace.
Before an aggrieved employee may resort to the courts to enforce his
individual rights under a bargaining contract, the employee must
exhaust all the remedies available to him under such contract. And a
court should not entertain any complaint by an aggrieved employee
until proper use has been made of the contract grievance procedure
agreed upon by employer and the bargaining representative.
The grievance machinery under the agreement is the very heart of
industrial self0government.
May a grievance be brought to voluntary arbitration without passing
through the grievance procedure under the CBA?
This appears to be proscribed by the Labor Code which directs the
parties to a CBA to establish a grievance machinery for the adjustment
and resolution of grievances arising from the interpretation or
enforcement of company personnel policies.
In view, however, of the State policy to encourage voluntary
arbitration of all other labor-management disputes, it is submitted that
a grievance may be brought directly to voluntary arbitration without
passing through the grievance machinery, especially when the latter
has been proven to be ineffective in the past, or when the parties
inadvertently failed to include a grievance machinery provision in
their CBA.

If the term grievance is to be applied in the loose or generic sense, any

dispute or controversy respecting terms and conditions of employment
which an employee or group of employees may present to the
employer can be a grievance, even without a union or CBA.

7.2 Waiver of Grievance Machinery Procedure and Submission to VA

The expansion of the original and exclusive jurisdiction of voluntary

arbitrators to include questions arising from the interpretation and
enforcement of company personnel policies has the effect of widening
the meaning and interpretation of a grievance to include a situation
where there is no collective bargaining agent and no CBA.

Contrary to the finding of the Court of Appeals, voluntary arbitration as a mode

of settling the dispute was not forced upon respondents. Both parties indeed
agreed to submit the issue of validity of the dismissal of petitioner to the
jurisdiction of the voluntary arbitrator by the Submission Agreement duly
signed by their respective counsels. As the voluntary arbitrator had jurisdiction
over the parties' controversy, discussion of the second issue is no longer
necessary.

Personnel policies are guiding principles stated in broad, long-range

terms that express the philosophy or beliefs of an organizations top
authority regarding personnel matters.
They deal with matters affecting efficiency and well-being of
employees and include, among others, the procedures in
administration of wages, benefits, promotions, transfer and other
personnel movements which are usually not spelled out in the

Article 262 of the Labor Code provides that upon agreement of the parties, the
voluntary arbitrator can hear and decide all other labor disputes.

The employees waiver of her option to submit her case to grievance machinery
did not amount to relinquishing her right to avail herself of voluntary
arbitration.

7.3 Structure and Procedure

In the absence of applicable provision in the collective bargaining agreement, a
grievance committee shall be created within ten (10) days from signing of the
collective bargaining agreement. The committee shall be composed of at least

LABOR RELATIONS
two (2) representatives each from the members of the bargaining unit and the
employer, unless otherwise agreed upon by the parties. The representatives
from among the members of the bargaining unit shall be designated by the
union.

choice and by consent submit their controversy to him for determination. Under
voluntary arbitration, on the other hand, referral of a dispute by the parties is
made, pursuant to a voluntary arbitration clause in their collective agreement, to
an impartial third person for a final and binding resolution.

Section 2. Procedure in handling grievances. - In the absence of a specific

provision in the collective bargaining agreement or existing company practice
prescribing for the procedures in handling grievance, the following shall apply:

Ideally, arbitration awards are supposed to be complied with by both parties

without delay, such that once an award has been rendered by an arbitrator,
nothing is left to be done by both parties but to comply with the same. After all,
they are presumed to have freely chosen arbitration as the mode of settlement
for that particular dispute. Pursuant thereto, they have chosen a mutually
acceptable arbitrator who shall hear and decide their case. Above all, they have
mutually agreed to de bound by said arbitrator's decision.

(a) An employee shall present this grievance or complaint orally or in writing to

the shop steward. Upon receipt thereof, the shop steward shall verify the facts
and determine whether or not the grievance is valid.
(b) If the grievance is valid, the shop steward shall immediately bring the
complaint to the employee's immediate supervisor. The shop steward, the
employee and his immediate supervisor shall exert efforts to settle the
grievance at their level.
(c) If no settlement is reached, the grievance shall be referred to the grievance
committee which shall have ten (10) days to decide the case.
Where the issue involves or arises from the interpretation or implementation of
a provision in the collective bargaining agreement, or from any order,
memorandum, circular or assignment issued by the appropriate authority in the
establishment, and such issue cannot be resolved at the level of the shop
steward or the supervisor, the same may be referred immediately to the
grievance committee.

8. VOLUNTARY ARBITRATION
Section 3. Submission to voluntary arbitration. - Where grievance remains
unresolved, either party may serve notice upon the other of its decision to
submit the issue to voluntary arbitration. The notice shall state the issue or
issues to be arbitrated, copy thereof furnished the board or the voluntary
arbitrator or panel of voluntary arbitrators named or designated in the collective
bargaining agreement. If the party upon whom the notice is served fails or
refuses to respond favorably within seven (7) days from receipt thereof, the
voluntary arbitrator or panel of voluntary arbitrators designated in the collective
bargaining agreement shall commence voluntary arbitration proceedings.
Where the collective bargaining agreement does not so designate, the board
shall call the parties and appoint a voluntary arbitrator or panel of voluntary
arbitrators, who shall thereafter commence arbitration proceedings in
accordance with the proceeding paragraph.
In instances where parties fail to select a voluntary arbitrator or panel of
voluntary arbitrators, the regional branch of the Board shall designate the
voluntary arbitrator or panel of voluntary arbitrators, as may be necessary,
which shall have the same force and effect as if the parties have selected the
arbitrator.

The parties to a CBA will decide on the number of arbitrators who

may hear a dispute only when the need for it arises. Even the law
itself does not specify the number of arbitrators. Their alternatives
whether to have one or three arbitrators have their respective
advantages and disadvantages. In this matter, cost is not the only
consideration; full deliberation on the issues is another, and it is best
accomplished in a hearing conducted by three arbitrators. In effect, the
parties are afforded the latitude to decide for themselves the
composition of the grievance machinery as they find appropriate to a
particular situation.
Labor arbitration is the reference of a labor dispute to a third party for
determination on the basis of evidence and arguments presented by
such parties, who are bound to accept the decision.
Voluntary arbitration has been defined as a contractual proceeding whereby the
parties to any dispute or controversy, in order to obtain a speedy and
inexpensive final disposition of the matter involved, select a judge of their own

Compulsory arbitration is a system whereby the parties to a dispute are

compelled by the government to forego their right to strike and are compelled
to accept the resolution of their dispute through arbitration by a third party. 1
The essence of arbitration remains since a resolution of a dispute is arrived at
by resort to a disinterested third party whose decision is final and binding on
the parties, but in compulsory arbitration, such a third party is normally
appointed by the government.
In Philippine context, the judge in voluntary arbitration is called arbitrator,
while that in compulsory is labor arbiter. The jurisdiction of a VA is stated in
Articles 261 and 262 while that of an LA is in Article 217.

8.1 Voluntary Arbitration: A Private Judicial System

A voluntary arbitrator is not a public tribunal imposed upon the
parties by a superior authority which the parties are obliged to accept.
He has no general character to administer justice for a community
which transcends the parties. He is rather part of a system of selfgovernment created by and confined to the parties.
The primary function of voluntary labor arbitration is to provide (1) a
process for the orderly disposition of disputes and (2) a foundation for
stable labor-management relations.
8.2 Voluntary Arbitration: A Master Procedure
In labor-management relations voluntary arbitration is a master
procedure. Any and all kinds of labor disputes may be submitted to,
settled, or resolved through voluntary arbitration, if the parties so
desire. Money claims, bargaining deadlocks, strike or lockout,
employment termination, and even questions about existence or
absence of employer-employee relationship, may be resolved by the
partieswith finalityby availing themselves of voluntary
arbitration.
As a master procedure voluntary arbitration takes precedence over
other dispute settlement devices (i.e., cases before the labor arbiter or
Secretary of Labor or the NLRC)
A dispute pending in voluntary arbitration (or compulsory arbitration,
for that matter) cannot be the subject of a strike or lockout notice.
9. WHO MAY
ARBITRATOR

BE

ACCREDITED

AS

VOLUNTARY

The following are the minimum criteria for accreditation as voluntary

arbitrator:
1. A Filipino citizen residing in the Philippines;
2. A holder of at least a Bachelors Degree in any field of behavioral or applied
sciences or equivalent educational training short of a Bachelors Degree;

3. At least five (5) years experience in the field of Labor-Management relations;

4. Completion of a training course on voluntary arbitration conducted by the
Board; and
5. A person of good moral character, noted for impartiality, probity, and has not
been civilly, criminally and administratively adjudged guilty of any offense
involving moral turpitude as evidenced by a duly sworn affidavit.

10. HOW VOLUNTARY ARBITRATOR IS CHOSEN

A voluntary arbitrator is chosen by the parties themselves (preferably
accredited by the NCMB). The choice is usually influenced by the
trust in the persons fairness and knowledge of the dynamics,
including law, of labor-management relation.
The preferred method of selection is by mutual agreement of the
parties. Alternative methods include the selection or appointment by
an administrative agency like the NCMB.
Parties in general may choose between the use of a temporary (when a
dispute is already at hand; specific) or permanent arbitrator (before a
dispute arises; for a period of time, usually during the life of the
CBA). They have also a choice as to the number of arbitrators, either
a sole arbitrator or a panel of arbitrators or Arbitration Board.
11. DISTINGUISHED FROM A COURT OF LAW
Court of Law
Formal
Follow precedents
Rules of evidence observed
Decisions may be appealed
to the higher court
Hear a great variety of
cases
Services of a lawyer is
essential due to complexity

Arbitration
Informal
Not obliged
Not observed
No comparable appeal
recourse
Hear
only
industrial
disputes
Not essential

Arbitration, in sum, is a non-technical and relatively inexpensive

procedure for obtaining a quick solution to industrial disputes by
persons who have specialized knowledge of labor management
relations.
________
Article. 261. Jurisdiction of Voluntary Arbitrators or panel of
Voluntary Arbitrators. - The Voluntary Arbitrator or panel of Voluntary
Arbitrators shall have original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel
policies referred to in the immediately preceding article. Accordingly,
violations of a Collective Bargaining Agreement, except those which
are gross in character, shall no longer be treated as unfair labor
practice and shall be resolved as grievances under the Collective
Bargaining Agreement. For purposes of this article, gross violations of
Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such
agreement.
The Commission, its Regional Offices and the Regional Directors of
the Department of Labor and Employment shall not entertain disputes,
grievances or matters under the exclusive and original jurisdiction of

LABOR RELATIONS
the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance Machinery
or Voluntary Arbitration provided in the Collective Bargaining
Agreement.
________
Article. 262. Jurisdiction over other labor disputes. - The Voluntary
Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including
unfair labor practices and bargaining deadlocks.
________
1. ARBITRABLE DISPUTES
In the field of labor relations, arbitration applies to two kinds of
disputes: (1) contract-negotiation disputes; and (2) contractinterpretation disputes. Contract negotiation disputes are disputes as to
the terms of a collective bargaining agreement. Where there is an
existing agreement to arbitrate such disputes, and a bargaining
deadlock or impasse has arisen, the disputants submit to an impartial
outsider for settlement the collective bargaining issue which they had
been unable to settle by themselves, whether or not aided by
conciliators. Contract interpretation disputes are disputes arising
under an existing collective bargaining agreement, involving such
matters as the interpretation and application of the contract, or alleged
violation of its provisions.
Arbitration of contract negotiation disputes is often known as
arbitration of interest, while arbitration of contract interpretation
disputes is known as arbitration of grievance or rights.
2. JURISDICTION OF L.A. AND V.A.
The aforecited provisions of law cannot be read in isolation or separately. They
must be read as a whole and each Article of the Code reconciled one with the
other. An analysis of the provisions of Articles 217, 261, and 262 indicates,
that:
1. The jurisdiction of the Labor Arbiter and Voluntary Arbitrator or Panel of
Voluntary Arbitrators over the cases enumerated in Articles 217, 261 and 262,
can possibly include money claims in one form or another.
2. The cases where the Labor Arbiters have original and exclusive jurisdiction
are enumerated in Article 217, and that of the Voluntary Arbitrator or Panel of
Voluntary Arbitrators in Article 261.
3. The original and exclusive jurisdiction of Labor Arbiters is qualified by an
exception as indicated in the introductory sentence of Article 217 (a), to wit:
Art. 217. Jurisdiction of Labor Arbiters . . . (a) Except as otherwise provided
under this Code the Labor Arbiter shall have original and exclusive jurisdiction
to hear and decide . . . the following cases involving all workers. . . .
The phrase "Except as otherwise provided under this Code" refers to the
following exceptions:
A. Art. 217. Jurisdiction of Labor Arbiters . . .
xxx
(c) Cases arising from the interpretation or implementation of collective
bargaining agreement and those arising from the interpretation or enforcement
of company procedure/policies shall be disposed of by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitrator as may
be provided in said agreement.

LABOR RELATIONS
B. Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator
or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear
and decide all other labor disputes including unfair labor practices and
bargaining deadlocks.
4. The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is
provided for in Arts. 261 and 262 of the Labor Code as indicated above.
A. A close reading of Article 261 indicates that the original and exclusive
jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is limited
only to:
. . . unresolved grievances arising from the interpretation or implementation of
the Collective Bargaining Agreement and those arising from the interpretation
or enforcement of company personnel policies . . . Accordingly, violations of a
collective bargaining agreement, except those which are gross in character,
shall no longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. . . . .
B. Voluntary Arbitrators or Panel of Voluntary Arbitrators, however, can
exercise jurisdiction over any and all disputes between an employer and a union
and/or individual worker as provided for in Article 262.
It must be emphasized that the jurisdiction of the Voluntary Arbitrator or Panel
of Voluntary Arbitrators under Article 262 must be voluntarily conferred upon
by both labor and management. The labor disputes referred to in the same
Article 262 can include all those disputes mentioned in Article 217 over which
the Labor Arbiter has original and exclusive jurisdiction.
As shown in the above contextual and wholistic analysis of Articles 217, 261,
and 262 of the Labor Code, the National Labor Relations Commission correctly
ruled that the Labor Arbiter had no jurisdiction to hear and decide petitioner's
money-claim-underpayment of retirement benefits, as the controversy between
the parties involved an issue "arising from the interpretation or
implementation" of a provision of the collective bargaining agreement. The
Voluntary Arbitrator or Panel of Voluntary Arbitrators has original and
exclusive jurisdiction over the controversy under Article 261 of the Labor
Code, and not the Labor Arbiter.

policies. Note the phrase "unresolved grievances." In the case at bar, the
termination of petitioner is not an unresolved grievance.
Article 260 further provides that the parties to a CBA shall name or designate
their respective representative to the grievance machinery and if the grievance
is unsettled in that level, it shall automatically be referred to the voluntary
arbitrators designated in advance by the parties to a CBA of the union and the
company. It can thus be deduced that only disputes involving the union and the
company shall be referred to the grievance machinery or voluntary arbitrators.

2.1a Policies, Rules, Procedures

Policies are formulated by management even before a company opens
for business in order to guide the men in the operational level, the line
manager or supervisor as to the scope of their activities, authority and
responsibility, and to enable them to arrive at sound decisions.
Policies are valuable in fixing definite objectives for the organization.
Policy statements are also needed to allow subordinate executives to
make fair and consistent decisions on recurrent problems. They
promote uniformity of action and prevent conflicting decisions
especially as regards labor matter.
Company policies must be issued by top management which is
responsible for making major policies that are by nature companywide in application.
Minor policies, better known as rules and procedures, are the
extension of major policies and are usually formulated by minor
executives or department managers. Rules are specific guides
intended to govern conduct and action of operating supervisors and
employees in the performance of their designated activities.
Procedures are made to specify ways or methods of carrying out
policies and rules. A procedure tells what work or task to do, how to
do it, and when to do it.
2.2 Jurisdiction over CBA Violations

2.1 Jurisdiction over Termination Disputes

The preference or bias of the law in favor of voluntary arbitration
justifies the view that employment termination disputes, arising from
CBA or personnel policy implementation, are cognizable by a
voluntary arbitrator and not a labor arbiter. Such termination cases, if
filed with a labor arbiter, is to be dismissed for lack of jurisdiction and
referred to the concerned NCMB Regional Branch for appropriate
action.
Article 260 of the Labor Code on grievance machinery and voluntary arbitrator
states that "(t)he parties to a Collective Bargaining Agreement shall include
therein provisions that will ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the adjustment and resolution
of grievances arising from the interpretation or implementation of their
Collective Bargaining Agreement and those arising from the interpretation or
enforcement of company personnel policies." It is further provided in said
article that the parties to a CBA shall name or designate their respective
representatives to the grievance machinery and if the grievance is not settled in
that level, it shall automatically be referred to voluntary arbitrators (or panel of
voluntary arbitrators) designated in advance by the parties. It need not be
mentioned that the parties to a CBA are the union and the company. Hence,
only disputes involving the union and the company shall be referred to the
grievance machinery or voluntary arbitrators.
Article 261 of the Labor Code which grants to voluntary arbitrators original and
exclusive jurisdiction to hear and decide all unresolved grievances arising from
the interpretation or implementation of the collective bargaining agreement and
those arising from the interpretation or enforcement of company personnel

CBA violations not constituting ULP are likewise cognizable by a

voluntary arbitrator if not resolved through the grievance machinery.
If the violations, however, are gross in character, these are to be
treated as unfair labor practice which, following Art. 217 (a-1), are to
be heard and decided by a labor arbiter.
The law wants the industrial players to resolve their differences by
and among themselves as much as possible. And if they need help,
they are likewise free to agree where that help may come from.
For a ULP case to be cognizable by the Labor Arbiter, and the NLRC to
exercise its appellate jurisdiction, the allegations in the complaint should show
prima facie the concurrence of two things, namely: (1) gross violation of the
CBA; AND (2) the violation pertains to the economic provisions of the CBA.
Unsubstantiated conclusions of bad faith and unjustified refusal to re-employ
petitioners, to our mind, do not constitute gross violation of the CBA for
purposes of lodging jurisdiction with the Labor Arbiter and the NLRC.
Although evidentiary matters are not required (and even discouraged) to be
alleged in complaint, still, sufficient details supporting the conclusion of bad
faith and unjust refusal to re-employ petitioners must be indicated.
Furthermore, it is even doubtful if the CBA provision on re-employment fits
into the accepted notion of an economic provision of the CBA.

2.3 Other Cases

Section 4. Jurisdiction of voluntary arbitrator or panel of voluntary arbitrators. The voluntary arbitrator or panel of voluntary arbitrators shall have exclusive

LABOR RELATIONS
and original jurisdiction to hear and decide all grievances arising from the
implementation or interpretation of the collective bargaining agreements and
those arising from the interpretation or enforcement of company personnel
policies which remain unresolved after exhaustion of the grievance procedure.
They shall also have exclusive and original jurisdiction, to hear and decide
wage distortion issues arising from the application of any wage orders in
organized establishments, as well as unresolved grievances arising from the
interpretation and implementation of the productivity incentive programs under
RA 6971.
Upon agreement of the parties, any other labor dispute may be submitted to a
voluntary arbitrator or panel of voluntary arbitrators. Before or at any stage of
the compulsory arbitration process, the parties may opt to submit their dispute
to voluntary arbitration.
The National Labor Relations Commission, its regional branches and Regional
Directors of the Department of Labor and Employment shall not entertain
disputes, grievances or matters under the exclusive and original jurisdiction of
the voluntary arbitrator or panel of voluntary arbitrators and shall immediately
dispose and refer the same to the appropriate grievance machinery or voluntary
arbitration provided in the collective bargaining agreement.

2.4 Dispute over Companys Drug Abuse Policy

A unions petition to enjoin implementation of the companys drug policy is a
labor dispute beyond RTCs jurisdiction. It is a personnel policy dispute within
the jurisdiction of a VA.

3. HOW VOLUNTARY ARBITRATION IS INITIATED

Voluntary arbitration may be initiated either by 1) a Submission or 2)
by a Demand or Notice invoking a collective agreement arbitration
clause. Sometimes both instruments are used in a case.
Submission is sometimes called a Stipulation or an Agreement to
Arbitrate. It is used where there is no previous agreement to arbitrate.
The Submission, which must be signed by both parties, describes an
existing dispute; it often names the arbitrator, procedures in the
hearing and it sometimes contains considerable details of the
arbitrators authority and other matters which the parties wish to
control. Submission is more appropriate in interest disputes since
collective agreement generally do not provide for the arbitration of
such disputes that may arise in the future. Submission is often entered
into after the dispute has materialized and the issues can already be
defined.
However, Demand or Notice of Intent to Arbitrate is more applicable
to rights dispute because collective agreements are required under RA
6715 to provide for a grievance procedure and a voluntary arbitration
clause with respect to disputes arising from the application or
interpretation of the agreement. Thus, there is an agreement to
arbitrate future dispute that may arise under and during the term of
the CBA. If a dispute is covered by such an arbitration clause,
arbitration may be initiated unilaterally by one party by serving upon
the other a written demand or notice of intent to arbitrate.
3.1 The Submission Agreement; Extent of Arbitrators Authority
Although the contract may establish the breadth of the arbitrators
power and the limits of his authority, his power may be more sharply
defined in the submission agreement. Frequently, the parties jointly
formulate in writing the specific issues to be decided by the arbitrator.
Sometimes the arbitrator is asked by the parties to help them frame
the issue on the basis of the written grievance or the case as presented.

In general, the arbitrator is expected to decide those questions

expressly stated and limited in the submission agreement. However,
since arbitration is the final resort for the adjudication of disputes, the
arbitrator will assume that he has the power to make a final
settlement.
It is thus essential to stress that the Voluntary Arbitrator had plenary
jurisdiction and authority to interpret the agreement to arbitrate and to
determine the scope of hs own authority subject only, in a proper case,
to the certiorari jurisdiction of this Court.
Generally, the arbitrator is expected to decide only those questions
expressly delineated by the submission agreement. Nevertheless, the
arbitrator can assume that he has the necessary power to make a final
settlement since arbitration is the final resort for adjudication of
disputes.
The issue of regularization should be viewed as two-tiered issue. While the
submission agreement mentioned only the determination of the date or
regularization, law and jurisprudence give the voluntary arbitrator enough
leeway of authority as well as adequate prerogative to accomplish the reason
for which the law on voluntary arbitration was created speedy labor justice. It
bears stressing that the underlying reason why this case arose is to settle, once
and for all, the ultimate question of whether respondent employees are entitled
to higher benefits. To require them to file another action for payment of such
benefits would certainly undermine labor proceedings and contravene the
constitutional mandate providing full protection to labor.

4. POWERS OF THE ARBITRATOR

The study of collective bargaining agreements discloses different
types of arbitration clauses with varying degrees of power granted to
the arbitration. This power may be very limited or unusually broad in
scope.
4.1 Power to Arbitrate Any Dispute
The contract clause that gives the arbitrator the broadest scope of
power is commonly known as the disputes clause.
This type of clause grants the arbitrator jurisdiction to hear and
determine practically any matter in dispute between the parties.
Moreover, he is not necessarily limited to matters specifically stated
in the contract. It is common, however, for some relationship to be
shown between the matter in dispute and the provisions of the
contract.
4.2 No Power to Add To or Subtract From the Contract
Some arbitration clauses limit the arbitrators power to an
interpretation and application of the contract and further specifically
provide that he shall have no power to add to or subtract from the
contract.
Such clauses clearly state the parties intention that the arbitrator will
be empowered only to interpret the contract but not add to or modify
it.
As a general rule, the authority of an arbitrator embraces or covers the
following:

1. General authority to investigate and hear the case upon notice of the
parties and to render an award based on the contract and record of the
case;
2. Incidental authority to perform all acts necessary to an adequate
discharge of his duties and responsibilities like setting and conduct of
hearing, attendance of witnesses and proof documents and other
evidences, fact-finding and other modes of discovery, reopening of
hearing, etc.;
3. Special power in aid of his general contractual authority like the
authority to determine arbitrability of any particular dispute and to
modify any provision of existing agreement upon which a proposed
change is submitted for arbitration.

LABOR RELATIONS
All parties to the dispute shall be entitled to attend the arbitration
proceedings. The attendance of any third party or the exclusion of any
witness from the proceedings shall be determined by the Voluntary
Arbitrator or panel of Voluntary Arbitrators. Hearing may be
adjourned for cause or upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory for the
Voluntary Arbitrator or panel of Voluntary Arbitrators to render an
award or decision within twenty (20) calendar days from the date of
submission of the dispute to voluntary arbitration.
The award or decision of the Voluntary Arbitrator or panel of
Voluntary Arbitrators shall contain the facts and the law on which it is
based. It shall be final and executory after ten (10) calendar days from
receipt of the copy of the award or decision by the parties.

5. FUNCTIONS OF ARBITRATOR
The labor arbitrator under a collective bargaining agreement is an
indispensable agency in the continuous collective bargaining process.
He sits to settle disputes at the plant leveldisputes which require for
their solution knowledge of the custom and practices of a particular
factory or of a particular industry as reflected in particular
agreements.
On the other hand, the power and authority of arbitrators in labor
dispute cases is derived from and limited by the terms of the parties
agreement. The arbitrator is confined to interpretation and application
of the CBA; he does not sit to dispense his own brand of industrial
justice. The arbitrators authority is contractual rather than judicial in
nature; his power is conferred by the CBA; and his duty with respect
to that agreement is to settle disputes arising thereunder by applying
and interpreting that agreement.
But so long as an arbitrator is not arbitrary, he has wide latitude in
exercising his authority, especially in fashioning an appropriate
remedy.
5.1 Arbitrators Interpretation of CBA
It is said that an arbitral award does not draw its essence from the CBA; hence,
there is an unauthorized amendment or alteration thereof, if:
1. It is so unfounded in reason and fact;
2. It is so unconnected with the working and purpose of the agreement;
3. It is without factual support in view of its language, its context, and any other
indicia of the parties' intention;
4. It ignores or abandons the plain language of the contract;
5. It is mistakenly based on a crucial assumption which concededly is a
nonfact;
6. It is unlawful, arbitrary or capricious; and
7. It is contrary to public policy.

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Article. 262-A. Procedures. - The Voluntary Arbitrator or panel of
Voluntary Arbitrators shall have the power to hold hearings, receive
evidences and take whatever action is necessary to resolve the issue or
issues subject of the dispute, including efforts to effect a voluntary
settlement between parties.

Upon motion of any interested party, the Voluntary Arbitrator or panel

of Voluntary Arbitrators or the Labor Arbiter in the region where the
movant resides, in case of the absence or incapacity of the Voluntary
Arbitrator or panel of Voluntary Arbitrators, for any reason, may issue
a writ of execution requiring either the sheriff of the Commission or
regular courts or any public official whom the parties may designate
in the submission agreement to execute the final decision, order or
award.
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1. COMPLIANCE WITH DUTY TO ARBITRATE
If a CBA requires settlement of disputes exclusively by the
arbitration, then arbitration is needed before court suits for breach of
the contract may be filed.
Nonetheless, the parties to a CBA may waive the arbitration covenants
of the agreement, but their conduct must clearly show that intention.
2. WHO DETERMINES THE ARBITRATION PROCEDURES
In practice, voluntary arbitration of labor cases use procedures based
on the Labor Code as amended by RA 6715 and its Implementing
Rules, the CBA, and other agreements of the parties, the directives of
the arbitrator, and the procedural rules of appropriate agencies like the
NCMB Procedural Guidelines in Conduct of Voluntary Arbitration
Proceedings.
3. ETHICAL STANDARDS OF ARBITRATORS
An arbitrator is obliged to maintain a high level of professional ethics
in his relationship with the parties and the appointing agencies. He
also has a responsibility to society. His conduct should be above
reproach. Since in effect, he is a judge, and his ethics must be on the
same high level as the code that governs the conduct of judicial
tribunals.
Failure on the part of the voluntary arbitrator to render a decision, resolution,
order or award within the prescribed period, shall upon complaint of a party, be
sufficient ground for the Board to discipline said voluntary arbitrator, pursuant
to the guidelines issued by the Secretary. In cases that the recommended
sanction is de-listing, it shall be unlawful for the voluntary arbitrator to refuse
or fail to turn over to the board, for its further disposition, the records of the
case within ten (10) calendar days from demand thereof.

4. VOLUNTARY ARBITRATION AWARD GENERALLY FINAL;

EXCEPTIONS

LABOR RELATIONS
The decisions of voluntary arbitrators must be given the highest respect and as
a general rule must be accorded a certain measure of finality. This is especially
true where the arbitrator chosen by the parties enjoys the first rate credentials. It
is not correct, however, that this respect precludes the exercise of judicial
review over their decisions.
Inspite of statutory provisions making 'final' the decisions of certain
administrative agencies, we have taken cognizance of petitions questioning
these decisions where want of jurisdiction, grave abuse of discretion, violation
of due process, denial of substantial justice, or erroneous interpretation of the
law were brought to our attention.

4.3 Findings of Facts of a Voluntary Arbitrator

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Article. 262-B. Cost of voluntary arbitration and Voluntary
Arbitrators fee. - The parties to a Collective Bargaining Agreement
shall provide therein a proportionate sharing scheme on the cost of
voluntary arbitration including the Voluntary Arbitrators fee. The
fixing of fee of Voluntary Arbitrators, whether shouldered wholly by
the parties or subsidized by the Special Voluntary Arbitration Fund,
shall take into account the following factors:

A voluntary arbitrator by the nature of her fucntions acts in quasi-judicial

capacity. There is no reason why herdecisions involving interpretation of law
should be beyond this Court's review. Administrative officials are presumed to
act in accordance with law and yet we do hesitate to pass upon their work
where a question of law is involved or where a showing of abuse of authority or
discretion in their official acts is properly raised in petitions for certiorari.

(a) Nature of the case;

The Labor Code and its Implementing Rules thus clearly reflect the
important public policy of encouraging recourse to voluntary
arbitration and of shortening the arbitration process by rendering the
arbitral award non- appealable to the NLRC. The result is that a
voluntary arbitral award may be modified and set aside only upon the
same grounds on which a decision of the NLRC itself may be
modified or set aside, by the Supreme Court.

(d) Capacity to pay of the parties; and

4.1 Motion for Reconsideration*

Section 7. Finality of Award/Decision. - The decision, order, resolution or
award of the voluntary arbitrator or panel of voluntary arbitrators shall be final
and executory after ten (10) calendar days from receipt of the copy of the award
or decision by the parties and it shall not be subject of a motion for
reconsideration.

4.2 Review of Award by Certiorari

The voluntary arbitrator no less performs a state function pursuant to a
governmental power delegated to him under the provisions therefor in the
Labor Code and he falls, therefore, within the contemplation of the term
"instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him
within the exceptions to said Sec. 9 since he is a quasi-judicial instrumentality
as contemplated therein.
A fortiori, the decision or award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the Court of Appeals, in line with
the procedure outlined in Revised Administrative Circular No. 1-95, just like
those of the quasi-judicial agencies, boards and commissions enumerated
therein.
In effect, this equates the award or decision of the voluntary arbitrator with that
of the regional trial court. Consequently, in a petition for certiorari from that
award or decision, the Court of Appeals must be deemed to have concurrent
jurisdiction with the Supreme Court. As a matter of policy, this Court shall
henceforth remand to the Court of Appeals petitions of this nature for proper
disposition.

4.2a From VA to CA: Mode of Appeal is Rule 43, not 65

The mode of appeal from VA to the CA is therefore Rule 43 of the 1997 Rules
of Procedure. It is not Rule 65 because a petition for certiorari under that Rule
lies only where there is no appeal and no plain, speedy and adequate remedy
in the ordinary course of law. Certiorari under Rule 65 cannot be allowed when
a party to a case fails to appeal a judgment despite the availability of that
remedy, certiorari not being a substitute for lost appeal. The remedies of appeal
and certiorari are mutually exclusive and not alternative or successive.

(b) Time consumed in hearing the case;

(c) Professional standing of the Voluntary Arbitrator;

(e) Fees provided for in the Revised Rules of Court.

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