G.R. No.

123782 September 16, 1997
CALTEX REFINERY EMPLOYEES ASSOCIATION (CREA) vs.HON. JOSE S.
BRILLANTES, in his capacity as Acting Secretary of the Department of Labor and
Employment, and CALTEX (PHILIPPINES), Inc.
FACTS: Anticipating the expiration of their CBA on July 31, 1995, petitioner and
private respondent negotiated the terms and conditions of employment to be
contained in a new CBA. The negotiation between the two parties was
participated in by the NCMB and the Office of the Secretary of Labor and
Employment. Some items in the new CBA were amicably arrived at and agreed
upon, but others were unresolved.
and Employment committed grave abuse of discretion in resolving the instant
labor dispute.
HELD: The petition is partly meritorious.
1. Wage Increase. Petitioner maintains that the salaries of Shell Refinery
employees be used as a “reference point” in upgrading the compensation of
private respondent’s employees because these two companies are in the “same
industry and their refineries are both in Batangas.” Thus, the wage increase of
petitioner’s members should be “15%/15%/15%.” Private respondent counters
with a “proposed 9% 7% 7% increase for the same period with automatic
adjustment should the increase fall short of the inflation rate.

To settle the unresolved issues, eight meetings between the parties were
conducted. Because the parties failed to reach any significant progress in these
meetings, petitioner declared a deadlock. On July 24, 1995, petitioner filed a
notice of strike. 6 conciliation meetings conducted by the NCMB failed, failed.
Marathon meetings at the plant level, but this remedy proved also unavailing.
Secretary assumed jurisdiction and ordered “Accordingly, any strike or lockout,
whether actual or intended, is hereby enjoined.”xxx But the members of
petitioner defied them and continued their mass action (despite repeated orders)
Thereafter, the contending parties filed their position papers pertaining to
unresolved issues. Because of the strike, private respondent terminated the
employment of some officers of petitioner union. The legality of these dismissals
brought additional contentious issues.
Again, the parties tried to resolve their differences through conciliation. Failing to
come to any substantial agreement, the parties decided to refer the problem to
the secretary of labor and employment.
(guys, what the SC did in this case, is to decide upon the conflicting issues ng
parties with regard dun sa CBA kaya nilagay ko na lang lahat)
ISSUE: (1) petitioner questions public respondent’s resolution of five issues in the
CBA, specifically on wage increase, union security clause, retirement benefits or
application of the new retirement plan, signing bonus and grievance and
arbitration machineries; and (2) Whether or not the Honorable Secretary of Labor
The alleged “similarity” in the situation of Caltex and Shell cannot be considered a
valid ground for a demand of wage increase, in the absence of a showing that the
two companies are also similar in “substantial aspects,” as discussed above.
True, union members have the right to demand wage increases through their
collective force; but it is equally cogent that they should also be able to justify
an appreciable increase in wages. We observe that private respondent’s detailed
allegations on productivity are unrebutted. It is noteworthy that petitioner
ignored this argument of private respondent and based its demand for wage
increase not on the ground that they were as productive as the Shell employees.
Thus, we cannot attribute grave abuse of discretion to public respondent.
2. Union Security Clause. Petitioner argues that in spite of the provisions on the
“union security clause,” it may expel a member only on any of three grounds: non-
payment of dues, subversion, or conviction for a crime involving moral turpitude.
If the employee’s act does not constitute any of these three grounds, the member
would continue to be employed by private respondent. Thus, the disagreement
between petitioner and private respondent on this issue is not only “procedural”
but also “substantial.”
We agree with petitioner. The disagreement between petitioner and private
respondent on the union security clause should have been definitively resolved
by public respondent. The labor secretary should take cognizance of an issue
which is not merely incidental to but essentially involved in the labor dispute
itself, or which is otherwise submitted to him for resolution. The secretary of
labor assumed jurisdiction over this labor dispute in an industry indispensable to
national interest, precisely to settle once and for all the disputes over which he
has jurisdiction at his level. In not performing his duty, the secretary of labor
committed a grave abuse of discretion.
3. New Retirement Plan. Petitioner contends that “40 of its members who are still
covered by the Old Retirement Plan because they were not able to exercise the
option to shift to the New Retirement Plan, for one reason or another, when such
option was given in the past” are included in the New Retirement Plan.
We hold that public respondent did not commit grave abuse of discretion in
respecting the free and voluntary decision of the employees in regard to the
Provident Plan and the irrevocable one-time option provided for in the New
Retirement Plan. 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. In this case, the forty employees freely opted to be covered by the Old
Plan; their decision should be respected. The company gave them every
opportunity to choose, and they voluntarily exercised their choice. The union
cannot pretend to know better; it cannot impose its will on them.
4. Grievance Machinery and Arbitration. Petitioner contends that public
respondent “derailed the grievance and arbitration scheme proposed by the
Union.” Petitioner’s recommendation for a “single arbitrator is based on the
proposition that if voluntary arbitration should be resorted to at all, this recourse
should entail the least possible expense.”
No particular setup for a grievance machinery is mandated by law. Rather,
Article 260 of the Labor Code, as incorporated by RA 6715, provides for only a
single grievance machinery in the company to settle problems arising from
“interpretation or implementation of their CBA and those arising from the
interpretation or enforcement of company personnel policies.”
We believe that the procedure described by public respondent sufficiently
complies with the minimum requirement of the law. Public respondent even
provided for two steps in hearing grievances prior to their referral to arbitration.
The parties 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. . 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. At bottom, we cannot really impute grave abuse of
discretion to public respondent on this issue.
5. Signing Bonus. Petitioner asseverates that the “signing bonus is an existing
benefit embodied in the old CBA.” 42 It explains that public respondent erred in
removing the award of a signing bonus xxx
Although proposed by petitioner, 45 the signing bonus was not accepted by private
respondent. 46 Besides, a signing bonus is not a benefit which may be demanded
under the law. Rather, it is now claimed by petitioner under the principle of
“maintenance of existing benefits” of the old CBA. However, as clearly explained
by private respondent, a signing bonus may not be demanded as a matter of
right. If it is not agreed upon by the parties or unilaterally offered as an
additional incentive by private respondent, the condition for awarding it must
be duly satisfied. In the present case, the condition sine qua non for its grant —
a non-strike — was not complied with.In fact, private respondent categorically
sated in its counter-proposal — to the exclusion of those agreed upon before —
that the new CBA would constitute the only agreement between the parties.
II. In the present case, the foregoing requirement has been sufficiently met.
Petitioner’s claim of grave abuse of discretion is anchored on the simple fact that
public respondent adopted largely the proposals of private respondent. It should
be understood that bargaining is not equivalent to an adversarial litigation where
rights and obligations are delineated and remedies applied. It is simply a process
of finding a reasonable solution to a conflict and harmonizing opposite positions
into a fair and reasonable compromise. When parties agree to submit unresolved
issues to the secretary of labor for his resolution, they should not expect their
positions to be adopted in toto. It is understood that they defer to his wisdom
and objectivity in insuring industrial peace. And unless they can clearly
demonstrate bias, arbitrariness, capriciousness or personal hostility on the part
of such public officer, the Court will not interfere or substitute the said officer’s
judgment with its own.
Kiok Loy vs. NLRC, G.R. L-54334, January 22, 1986
Doctrine: Unfair labor practice is committed when it is shown that the respondent
employer, after having been served with a written bargaining proposal by the
petitioning Union, did not even bother to submit an answer or reply to the said
proposal.
Facts:
· The Pambansang Kilusang Paggawa, a legitimate late labor federation, won
and was subsequently certified in a resolution by the Bureau of Labor Relations as
the sole and exclusive bargaining agent of the rank-and-file employees of Sweden
Ice Cream Plant.
· The Union furnished the Company with two copies of its proposed collective
bargaining agreement. At the same time, it requested the Company for its counter
proposals. Both requests were ignored and remained unacted upon by the
Company.
mutual responsibility of the employer and the Union and is characterized as a
legal obligation.
· Article 249, par. (g) of the Labor Code makes it an unfair labor practice for
an employer to refuse "to meet and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement with respect to wages, hours of
work, and all other terms and conditions of employment including proposals for
adjusting any grievance or question arising under such an agreement and
executing a contract incorporating such agreement, if requested by either party.
· The mechanics of collective bargaining are set in motion only when the
following jurisdictional preconditions are present, namely,
o (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;

· Thereafter, the Union filed a "Notice of Strike", with the Bureau of Labor o (2) proof of majority representation; and
Relations (BLR) on ground of unresolved economic issues in collective bargaining.
o (3) a demand to bargain under Article 251, par. (a) of the New Labor Code.
· Conciliation proceedings then followed during the thirty-day statutory
cooling-off period. But all attempts towards an amicable settlement failed.
· A Company's refusal to make counter proposal if considered in relation to
· The case was brought to the National Labor Relations Commission (NLRC)
the entire bargaining process, may indicate bad faith since the Union's request for
for compulsory arbitration pursuant to Presidential Decree No. 823, as amended.
a counter proposal is left unanswered. Besides, petitioner Company's approach
But the Company requested for a lot of postponements. NLRC ruled that
and attitude-stalling the negotiation by a series of postponements, non-
respondent Sweden Ice Cream is guilty of unjustified refusal to bargain, in
appearance at the hearing conducted, and undue delay in submitting its financial
violation of Section (g) Article 248 (now Article 249), of P.D. 442, as amended.
statements, lead to no other conclusion except that it is unwilling to negotiate and
reach an agreement with the Union.

Issue: Whether the Company is guilty of unfair labor practice for refusal to bargain

Held: Yes. Petition dismissed for lack of merit.

· Collective bargaining is one of the democratic frameworks under the New

Labor Code, designed to stabilize the relation between labor and
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs. HON.
management and to create a climate of sound and stable industrial peace. It is a
LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and
Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting
Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his capacity as
the Superintendent of International School-Manila; and INTERNATIONAL
SCHOOL, INC., respondents.,
G.R. No. 128845, June 1, 2000
FACTS:
Private respondent International School, Inc. (School), pursuant to PD 732, is a
domestic educational institution established primarily for dependents of foreign
diplomatic personnel and other temporary residents. The decree authorizes the
School to employ its own teaching and management personnel selected by it
either locally or abroad, from Philippine or other nationalities, such personnel
being exempt from otherwise applicable laws and regulations attending their
employment, except laws that have been or will be enacted for the protection of
employees. School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires.
The School grants foreign-hires certain benefits not accorded local-hires. Foreign-
hires are also paid a salary rate 25% more than local-hires.
When negotiations for a new CBA were held on June 1995, petitioner ISAE, a
legitimate labor union and the collective bargaining representative of all faculty
members of the School, contested the difference in salary rates between foreign
and local-hires. This issue, as well as the question of whether foreign-hires should
be included in the appropriate bargaining unit, eventually caused a deadlock
between the parties.
ISAE filed a notice of strike. Due to the failure to reach a compromise in the
NCMB, the matter reached the DOLE which favored the School. Hence this
petition.
ISSUE:
Whether the foreign-hires should be included in bargaining unit of local- hires.
RULING:
NO. The Constitution, Article XIII, Section 3, specifically provides that labor is
entitled to “humane conditions of work.” These conditions are not restricted to
the physical workplace – the factory, the office or the field – but include as well
the manner by which employers treat their employees.
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.
Article 248 declares it an unfair labor practice for an employer to discriminate in
regard to wages in order to encourage or discourage membership in any labor
organization.
The Constitution enjoins the State to “protect the rights of workers and promote
their welfare, In Section 18, Article II of the constitution mandates “to afford labor
full protection”. The State has the right and duty to regulate the relations between
labor and capital. These relations are not merely contractual but are so impressed
with public interest that labor contracts, collective bargaining agreements
included, must yield to the common good.
However, foreign-hires do not belong to the same bargaining unit as the local-
hires.
A bargaining unit is a group of employees of a given employer, comprised of all or
less than all of the entire body of employees, consistent with equity to the
employer indicate to be the best suited to serve the reciprocal rights and duties of
the parties under the collective bargaining provisions of the law.
The factors in determining the appropriate collective bargaining unit are (1) the
will of the employees (Globe Doctrine); (2) affinity and unity of the employees’
interest, such as substantial similarity of work and duties, or similarity of
compensation and working conditions (Substantial Mutual Interests Rule); (3)
prior collective bargaining history; and (4) similarity of employment status. 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.
In the case at bar, it does not appear that foreign-hires have indicated their
intention to be grouped together with local-hires for purposes of collective
bargaining. The collective bargaining history in the School also shows that these
groups were always treated separately. Foreign-hires have limited tenure; local-
hires enjoy security of tenure. Although foreign-hires perform similar functions
under the same working conditions as the local-hires, foreign-hires are accorded
certain benefits not granted to local-hires such as housing, transportation,
shipping costs, taxes and home leave travel allowances. These benefits are
reasonably related to their status as foreign-hires, and justify the exclusion of the
former from the latter. To include foreign-hires in a bargaining unit with local-hires
would not assure either group the exercise of their respective collective
bargaining rights.

WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED
IN PART.

G.R. No. 110399 August 15, 1997

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO
L. PONCE, President V. HONORABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY
AS UNDERSECRETARY OF LABOR AND EMPLOYMENT, HONORABLE DANILO L.
REYNANTE IN HIS CAPACITY AS MED-ARBITER AND SAN MIGUEL CORPORATION
FACTS: Petitioner union filed before DOLE a Petition for Direct Certification or
Certification Election among the supervisors and exempt employees of the SMC
Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis.
Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of
certification election among the abovementioned employees of the different
plants as one bargaining unit.
San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal,
pointing out, among others, the Med-Arbiter’s error in grouping together all three
(3) separate plants, into one bargaining unit, and in including supervisory levels 3
and above whose positions are confidential in nature.
The public respondent, Undersecretary Laguesma, granted respondent company’s
Appeal and ordered the remand of the case to the Med-Arbiter of origin for
determination of the true classification of each of the employees sought to be
included in the appropriate bargaining unit.
Upon petitioner-union’s motion, Undersecretary Laguesma granted the
reconsideration prayed for and directed the conduct of separate certification
elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and
the exempt employees in each of the three plants at Cabuyao, San Fernando and
Otis.
ISSUE:
1. Whether Supervisory employees 3 and 4 and the exempt employees of the
company are considered confidential employees, hence ineligible from joining a
union.
2. If they are not confidential employees, do the employees of the three plants
constitute an appropriate single bargaining unit.
RULING:
(1) On the first issue, this Court rules that said employees do not fall within the
term “confidential employees” who may be prohibited from joining a union.
They are not qualified to be classified as managerial employees who, under Article
245 of the Labor Code, are not eligible to join, assist or form any labor
organization. In the very same provision, they are not allowed membership in a
labor organization of the rank-and-file employees but may join, assist or form
separate labor organizations of their own.
Confidential employees are those who (1) assist or act in a confidential capacity,
(2) to persons who formulate, determine, and effectuate management policies in
the field of labor relations. The two criteria are cumulative, and both must be met
if an employee is to be considered a confidential employee — that is, the
confidential relationship must exist between the employee and his supervisor, and
the supervisor must handle the prescribed responsibilities relating to labor
relations.
The exclusion from bargaining units of employees who, in the normal course of
their duties, become aware of management policies relating to labor relations is a
principal objective sought to be accomplished by the ”confidential employee
rule.” 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.”
The Court held that “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 interest. The Union can also become company-
dominated with the presence of managerial employees in Union membership.”
An important element of the “confidential employee rule” is the employee’s need
to use labor relations information. Thus, in determining the confidentiality of
certain employees, a key question frequently considered is the employee’s
necessary access to confidential labor relations information.
(2) The fact that the three plants are located in three different places, namely, in
Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando,
Pampanga is immaterial. Geographical location can be completely disregarded if
the communal or mutual interests of the employees are not sacrificed.

An appropriate bargaining unit may be defined as “a group of employees of a

given employer, comprised of all or less than all of the entire body of employees,
which the collective interest of all the employees, consistent with equity to the
employer, indicate to be best suited to serve the reciprocal rights and duties of
the parties under the collective bargaining provisions of the law.”

A unit to be appropriate must effect a grouping of employees who have

substantial, mutual interests in wages, hours, working conditions and other
subjects of collective bargaining.

SAN MIGUEL CORP. VS HON. LAGUESMA and NORTH LUZON MAGNOLIA SALES
LABOR UNION-INDEPENDENT

G.R. No. 100485. September 21, 1994

FACTS: evinced by the type of work they perform. In the case at bench, respondent union
sought to represent the sales personnel in the various Magnolia sales offices in
Private respondent union filed for a petition for certification election
northern Luzon. There is similarity of employment status for only the regular sales
among all the regular sales personnel of Magnolia Dairy Products in the North
personnel in the north Luzon area are covered. They have the same duties and
Luzon Area. This was opposed by the petitioner and questioned the
responsibilities and substantially similar compensation and working conditions.
appropriateness of the bargaining unit to be represented by the union. It claimed
The commonality of interest among the sales personnel in the north Luzon sales
that its bargaining history in its sales offices, plants and warehouses is to have a
area cannot be gainsaid. Further, the petitioner cannot insist that there should be
separate bargaining unit for each sales office. During the hearing of the petition,
one bargaining unit. What greatly militates against this position is the meager
the substitute lawyer of the petitioner withdrew its opposition and agreed to
number of sales personnel in each of the Magnolia sales office in northern Luzon.
consider one bargaining unit in the mentioned sales office. Upon the order of the
Even the bargaining unit sought to be represented by respondent union in the
Mediator-Arbiter certifying the union as the sole and exclusive bargaining agent
entire north Luzon sales area consists only of approximately
for all the regular sales personnel in the North Luzon area, the petitioner
fifty-five (55) employees. Surely, it would not be for the best interest of these
appealed to the Secretary of Labor contending a mistake in the decision brought
employees if they would further be fractionalized. The adage "there is strength in
by its substitute lawyer. In a petition for certiorari,the petitioner contends that the
number" is the very rationale underlying the formation of a labor union.
prior collective bargaining is the most pervasive criterion in determining the
approriateness of the CBA.

ISSUE: Whether or not the union represents an appropriate bargaining unit.

HELD:

Yes. The court ruled in accordance with the tests in determining an

appropriate bargaining unit. The fundamental factors in determining the
appropriate collective bargaining unit are: (1) the will of the employees (Globe
Doctrine); (2) affinity and unity of the employees' interest, such as substantial
similarity of work and duties, or similarity of compensation and working
conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining
history; and (4) similarity of employment status. Contrary to petitioner's assertion,
the Court has categorically ruled that the existence of a prior collective bargaining
history is neither decisive nor conclusive in the determination of what constitutes
an appropriate bargaining unit.

Indeed, 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